Curro | Riding the j-curve
Curro Holdings (COH) reported impressive FY '18 results with HEPS increasing by 23%. EBITDA increased by 33% due to more schools reaching maturity and generating positive cash flows. We expect earnings to grow at a 30% CAGR over the next four years, which will see the PE unwind to 14x. COH's capacity utilisation remains low at 53%. COH declared a maiden dividend, which signals the end of equity raises, in our view. We believe COH's improving cash flow profile over the next three years will support the share price.Curro Holdings Limited is engaged in the provision of independent schools and education services. The Company develops, acquires and manages independent schools throughout South Africa. The Company's segments include Curro and Meridian. The Curro segment offers independent education and ancillary services. The Curro segment also includes Select Schools, Curro Academy Schools, Curro Castles and Teacher Training College. The Meridian segment offers independent education and ancillary services. Curro schools consist of Durbanville, Langebaan, Hazeldean, Helderwyk, Hermanus, Serengeti, Nelspruit, Heuwelkruin, Embury, Hillcrest, Bloemfontein, Krugersdorp, Rosen Castle, Curro Castle George and Curro Academy Pretoria. Its ancillary services include boarding facilities, aftercare centers, cafeterias, school transport and activity centers. The Company provides education services to approximately 42,000 learners in over 110 schools across South Africa and Namibia.
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