Investors Chronicle Buy rating 14th16 Jun 2010 03:24
AEC Education's share price may have gone nowhere in 2009 but its sales have skyrocketed and profits topped £1m for the first time. So what's going on?
First it has a successful formula of selling UK academic and business courses to students in emerging markets. Then, last July, the company paid a maximum of £4m in cash and issued 7.5m shares at 12p for Malvern House, a provider of English language training to overseas students in London. The business operates three teaching colleges located in Piccadilly, Bloomsbury and Kings Cross, employing approximately 75 qualified teachers. Malvern contributed revenues of £5.47m and profits of £317,000 in the six months since the acquisition.
A combination of internal growth from selling more UK courses to a wider student population in emerging markets should help drive the business forward. In October, AEC paid £0.44m for the remaining shares it did not already own in IMS Professional Training Services and Kasturi Management Consultancy, the educational institutes based in Malaysia.
Profit expectations look good, with the end-December balance sheet showing a jump in deferred income from £1.13m to over £4m. Broker WH Ireland forecasts 2010 revenues of £20m, adjusted pre-tax profits of £1.62m and flat EPS of 2.6p.