AEC Education Share Discussion Threads

[jl9] 01/9/2010 09:48

I'm invested here too and must admit to being bullish. Where did you get those growth figures?

[interceptor2] 01/9/2010 07:40

If you held a gun to my head for an answer, I would lean towards answer b) but warning! I am biased being a shareholder.

Regards ic2.....

[jl9] 01/9/2010 02:38

Thanks interceptor 2. Is AEC: a) a terminally mismanaged piece of junk and present day value trap; or b) a cracking business now in the making? The numbers are the numbers; the crucial assessment here is qualitative.

[interceptor2] 31/8/2010 18:16

I agree that AEC looks very undervalued.

The last statement with the Final results in June was very positive, as were the results. Interims are due in September and I see no reason why these won't be very good results.

With forecast growth of 17.34% and 19.23% for a per of 5.96 and 5, plus the £3.2m of cash, AEC are a very strong growth share. And they also operate in a very exciting growth area, with students from the far east who are very keen to finish off their education in the UK. Hence the acquisition of Malvern House.

Worth mentioning that most students who historically use Malvern House come from India, Sri Lanka and Nepal. So the potential for increased numbers from AEC areas in the far East must be very significant.

Regards ic2......

[jl9] 31/8/2010 14:40

At the last count this company had uncommitted cash reserves of £3.1 Subtracting this from the current market cap gives £3.8m. With forecast profits of £1.7m. this business looks cheap. Can someone please comment here. Thanks.

[interceptor2] 16/8/2010 12:36

Just noticed a 18k buy @ 17.64p gone through, I nearly fell off my chair. This is such an overlooked and unloved company that this was only the fifth transaction so far in August (plus included.)

Regards ic2.......

[interceptor2] 16/8/2010 09:20

I was looking through the limited RNS this morning and noticed two companies that reported very strong growth in Asia and South America. (not surprising)
Delcam DLC highlighted continued strong demand in both areas.
Michael Page MPI, reported growth of 43%.

Which made me take another look at AEC. Well Geographically they have operations in the right countries, Singapore, Malaysia, Vietnam and China. And with Acquisitin of Malvern House in London their should be a huge benefit this year with Asian student completing their studies in the UK. The last financial period saw most of the students at Malvern House from India, Sri Lanka and Nepal, so M.H looks a great fit with AEC Asian operations.

I also did another Zulu check and they are looking stronger apart from the weak share price action and small market cap.
PE = 7.45
PER = 6.3
PER = 5.3
PEG 2011 = 0.36
PEG 2012 = 0.27
Maiden Dividend
Net Cash = £3.3m (cashflow looks very strong in last 2 reporting years, so expect this figure to increase and no diluting in more share placings)

I know it can be frustrating watching the share price flatlining at this time, but it's just a matter of patience. I have seen many caps companies recently which had similar price undervaluations, then in less than a week the price takes off. It doesn't take much, a broker upgrade, tip sheet write up, acquisition, trading update, we just need one catalyst here to set these in motion imo.

Still holding and waiting

Regards ic2

[interceptor2] 06/7/2010 22:13

I know how you feel steg........

They are so far under the radar that I have resigned myself to a long wait, if I have to. Like many far east AIM shares, the market just isn't interested in them.

But I like the sector and the geographic area they operate in very much, a great growth stock for the future imho.

The market sentiment will change one day, it always will but when is the question.

Regards ic2........

[stegrego] 06/7/2010 22:00

Very disappointing price action here.
Could easily reach 6 month plus lows.

Not a happy chappy.

[effortless cool] 25/6/2010 11:31

Saucepan,

Thanks for your reply, but I've decided to pass on this. It may prove not be an issue, but it makes me uncomfortable.

EC

[saucepan] 24/6/2010 08:03

Effortless Cool: it is a fair point to some degree, but I am not unduly concerned in the case of AEC. Age tends to be king in Asian cultures, (where a high proportion of the Company's operations are). It gives you gravitas - more than qualifications sometimes. The latest published results all seemed very thorough.

[effortless cool] 24/6/2010 07:57

Did anyone pick up on post 104 regarding the FD's qualifications?

Although this company looks interetsing, I'm concerned about governance, e.g. the FD is 76 and has directorships in 14 other companies (although admittedly at least one is part of the AEC group).

EC

[interceptor2] 15/6/2010 11:46

The link posted below is an excellent even handed account of the the AEC Education business imv.

Well worth a read.

[interceptor2] 15/6/2010 11:11

Some selling pressure effecting the price this morning, first a 20,000 sale @ 17p on plus then 20,000 @ 15.25p. This after the 100,000 sell last week could mean one large seller in the background, lets hope they are finished soon.

At least this will give a good entry price for new investors, who want to invest after the latest tips.

[barnsey] 14/6/2010 23:29

Hi, Saucepan

Yes the turnover figure is great showing good growth but i would think they
are being very cautious re the profit figure, but you can be sure the team
at AEC will be working there socks off to improve the bottom line.

[saucepan] 14/6/2010 19:40

Thanks, Barnsey

Interesting figures. ShareScope has consensus broker forecasts for 2010 as being £13.4 million turnover and £1.7 million profit. W H Ireland's figures (the ones quoted by IC) are thus significantly higher for turnover, but slightly less for profit.

For those that cannot access the IC article, the summary is "Buy"!

[barnsey] 14/6/2010 19:19

Latest from investorschronicle, broker forecast 20m turnover, 1.62m profit for
2010, Strong hold for me and top up when funds available.

[saucepan] 14/6/2010 08:48

Interceptor2

Thanks for sharing. It seems a fair enough summary.

[interceptor2] 14/6/2010 08:43

From Hoodless Brennan..........

AEC Education (AEC, 19.5p, £8.62m) Finals to December 2009 saw revenues increase to £14.01m (£6.15m) with reported PBT of £1.08m (£0.79m) but a lower EPS of 2.5p (3.1p) due to the increased number of shares. The group acquired a UK college, Malvern House, on the 01/07/09 and it contributed £5.47m sales and post tax profits of £0.20m to the group in the half year of ownership, and on 13/10/09 it acquired Smart Eduprocess group with it contributing £0.49m of sales and £0.07m of post tax profits in the 2.5 months. Underlying the group thus saw revenues rise from £6.15m to £8.05m with post tax profits increasing to £0.61m from £0.60m – a much more muted increase. Net cash increased to £3.2m (£1.9m) post a £0.56m increase in cap exp, £3.1m acquisition spend and £2m share placing, masking healthy underlying cash generation. The group announced its intention to pay a maiden dividend of 0.15p. The outlook has been partially damaged by the review by the UK's Border Agency of student visas that disrupted applications in January and February, thought eh group notes the number of registrations in March and April will help mitigate the impact by the year end. Despite the impact on Malvern House the group is still expecting profits and sales growth for the year. The forecasts for £1.7n seem achievable, though may be H2 weighted, and would give 2.6p EPS, putting the group on a 7.5x PER, leaving plenty of upside. BUY to the 23p level.

[interceptor2] 11/6/2010 12:23

W H Ireland have upgraded to a buy from outperform this morning, with a price target of 25p from 19p before. Will post new forecast when I see them.

Just had a top up after that 100k sell pulled the share price back, this is my last purchase and am fully invested here, now I will sit back and wait.

Regards ic2......

[saucepan] 11/6/2010 12:13

Cheers IC2

I fully agree. Basically, AEC is a young growth company and a P/E of around 7 seems far too cheap for that kind of beast. The outlook is very upbeat, arguably better than it has ever been. In 2006, AEC traded on a P/E multiple greater than 20. Even if the stock re-rates to a more modest P/E of 14 that implies a doubling of the share price: and that is without any EPS forecast upgrades to add to the mix - and we could well get these.

I was slightly tempted to try to make a quick buck on my entry a week ago when the share price spiked to +25%, but have decided to tuck this one away.

[interceptor2] 11/6/2010 11:45

Saucepan: imo you are not missing anything, having had a closer look at the results I believe 3p EPS would be very possible even when the weighted number of shares increases to over 44 million.

With £3.2m of net cash I cant see any reason for any more share dilution. 2009 was clearly a transformational year for AEC, with the acquisition of Malvern House and IMS Malaysia contributing 6 months and 3 months respectfully, clearly much more to come.

With revenue increasing over 100% to £14.0m, I would expect to see some strong margin improvement. With Malvern House being a key driver as AEC promotes the brand name internationally.

The statement contained so many positives, it is easier to list negatives here, of which I only found two.

The fist is the reduction in the issue of student visa to the UK in January and February due to the UK Government review in November. But AEC states that new registration seen in March and April was much stronger, and are confident for the rest of the year.

The second negative was some margin reduction seen in Singapore in the second half due to increased competition. But here again are confident of taking advantage of the new Sinapore Education act last October to offset the lower margins by going for new opportunities,

On balance I believe AEC is in a goog position for strong growth, and will continue to hold.

Regards ic2.......

[saucepan] 11/6/2010 10:04

Battlebus: take your point to a degree. However, the raising of funds (dilution of shares) to support acquisitions, resulting in a reduced Earnings per share this year, was a one off. The increased profit and turnover will be a recurring benefit to the Company.

The Company said in its results statement today that it now expects benefits from synergies and cross-selling, etc - especially from Malvern - and that will be a key area of concentration in the year to come.

If we assume next years EPS will be 3p (which I think will be too low), at 20p a share, the P/E is less than 7. That seems far too cheap to me. In 2006 the shares traded on a P/E of over 20.

The company seems in better shape now than then.

Or am I missing something?

[battlebus] 11/6/2010 09:11

Not that impressed with the results. If you take out aquisitions what was organic growth.