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NVT - Navitas Limited

Discussion in 'Stocks I-P' started by Muschu, Feb 10, 2008.

  1. Muschu

    Muschu

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    Re: NVT - Navitas

    It might interest some to research the progress of Shorelight Education and others who have entered the UP realm in North America in recent times.
     
  2. icemanmelb

    icemanmelb

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    Re: NVT - Navitas

    They are down 7% on their Australian figures while only up 3% on their US figures.

    I'll put a small test short on this.

    Ive
     
  3. Klogg

    Klogg

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    Re: NVT - Navitas

    You might want to check out why they're down 7% on their Aus figures... There's a reason they're quoting two sets of figures (with and without SIBT).
     
  4. Ves

    Ves Beyond Good and Evil

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    Anyone know if the $17m (or so) EBITDA boost from moving an agreement to a JV arrangement (non PR speak: it's accounting bull****) was included in the original full-year guidance figure they gave last year?

    Off the top of my head guidance was something along the lines of 2017FY being around the same as the 2016FY results.

    However, clearly the accounting entry of $17m has nothing to do with the underlying EBITDA, and given its not an insignificant amount if looking at a single year in isolation, was there a bit of underhanded trickery here? Or are they saying that 2017 will be similar to 2016 if the $17m is excluded. I doubt this is the same, they'd need to achieve a fair bit of growth than reported for the continuing colleges than in the first half to make up for the colleges closed (ie. SIBT) this year.

    There is nothing else unexpected in the report (and I've probably missed mention of the $17m previously) but it's definitely interesting to look at the cash flow strain on the business model when colleges close.
     
  5. So_Cynical

    So_Cynical The Contrarian Averager

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    UBS has a buy rating on Navitas, released yesterday after the sell off...just sayn.
     
  6. Klogg

    Klogg

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    The investor presentation for 1H17 says:
    "FY17 EBITDA result expected to remain broadly in line with FY16 (on a constant currency basis and including the addition of EBITDA from the new ECU Joint Venture)"

    I was surprised when I read that to be honest, but I'm not sure if that means including the one-off $17m accounting hit, or including the EBITDA the JV generates...


    As for today's announcement - interesting to say the least. I didn't really expect it and it's likely management didn't either, given one of the directors bought recently, and the buyback is on-going.

    Nevertheless, it doesn't break the model longer term. UP (the cash-cow) is still generating cash and opening colleges.
     
  7. VSntchr

    VSntchr

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    Starting to feel like NVT is just taking hit after hit! Just when the UP news is starting to become distant, now PEP has a 35% earnings hit....

    There was a warning on tender negotiations in the 1H result but I also doubt this was strongly expected.
     
  8. Klogg

    Klogg

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    To be honest, it's only two. Significant hits, but two nevertheless.
    It just seems much more because of the impact of the first and how long ago we found out about it.


    I do hope they continue with that share buyback. Given there's little capex for the 2nd half (they mentioned this on the webcast for 1H17), they should have more cash to continue with buying back shares.

    EDIT:
    FWIW, I just received confirmation from Investor relations that the ECU EBITDA amounts included in guidance only refer to earnings from that particular college, which are generally not included in EBITDA as it's part of a JV. (Added as "Share of net profit/(loss) of joint ventures accounted for using the equity method" on the P&L).
    Hence, the reported EBITDA figure, not including the JV conversion accounting earnings of $17m, will be lower. But if the ECU college is included, it should be 'broadly in line with FY16'
     
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  9. VSntchr

    VSntchr

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    True, although I think to a lesser extent we can include some of the regulation tightening that has crimped enrolment growth to make it three.
     
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  10. skc

    skc Goldmember

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    I read the news this morning and for some strange reason I read "$12-14m decrease in revenue".... so I decided it'd be 1-2% impact on profits at most... so I couldn't believe where NVT was matching and for the first 10 minutes keep thinking there'd be a bounce soon.

    Common sense prevailed eventually and I decided to have a re-read of the announcement.

    I feel like a total idiot...:banghead: :bigtears:
     
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  11. Muschu

    Muschu

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    The USA is also now proving a major challenge for NVT. Far more competitors for them than when they first entered that market - and that number of competitors growing annually.
     
  12. Klogg

    Klogg

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    This is true, but I hardly see this as an issue. They're still growing using the same cash cow of a model, although some colleges have some time before reaching critical mass. Further, if you look at the percentage of international students in comparison to the entire higher education sector, the US is well under other regions (3.9% compared to 7% Germany, 10% France, 18% Aus). Granted they may not want to get to that sort of ratio, but there is clearly demand for it.
    Slide 5 on the full year presentation has decent stats around eligible students per placement, per region.
     
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  13. Ves

    Ves Beyond Good and Evil

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    Thanks for that mate.

    I don't think the $17m would form part of the JV earnings any way. Correct me if I'm wrong, but because it's from the creation of the JV so the paper profit would be at NVT's group level?

    I'm assuming at the creation of the JV, there was some kind of independent valuation done. Some of these would be physical assets and the rest is intangible value. An artificial accounting value is struck upon transfer from NVT to the JV entity and as NVT probably wouldn't have much in relation to this on their balance sheet before the valuation, the difference is treated as a $17m paper gain. $17m goes to the P&L and the difference is added to NVT's investment in the JV on their balance sheet.

    I don't think we get the underlying details of this until the full-year accounts are released in Aug/Sept 2017. But that'd be my guess.
     
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  14. Ves

    Ves Beyond Good and Evil

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    There's actually some information on this at Note 6 of the half yearly accounts. It looks like what I sloppily described above is what has happened.
     
  15. Muschu

    Muschu

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    USA competition not an issue to a company based in Perth? Not a risk I fancy any more...
     
  16. icemanmelb

    icemanmelb

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    Not as big an idiot as me. I worked that that it's eps is about 18-19c but didn't put a short in until much much later. It was a matter of too little too late.. coffee money...

    :mad:
     
  17. MrChow

    MrChow

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    Share Price is the same as November 2009, not sure why I mention it just seemed like an interesting fact.
     
  18. icemanmelb

    icemanmelb

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    Things are different now with a different sent of circumstances. Loss of contracts + gaining others.

    Ice
     
  19. So_Cynical

    So_Cynical The Contrarian Averager

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    Screaming buy if your a believer at all.
     
  20. galumay

    galumay learner

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    Yep, even factoring in the impact on cash flow and profit, NVT looks cheap, I have added more to signifcantly average down my holding.
     

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