Purchase of IDP Education Limited (ASX:IEL)

Across the Australian equity component of investor accounts, we have bought IDP Education Limited (ASX: IEL), a global leader in international student placement services & English language testing.

IDP Education’s two key business segments, English Testing & Student Placements, operate in very close verticals and are mutually beneficial. Through an extensive testing centre network, IDP Education provides high-stakes English Language tests for immigration and student visa requirements. We like that the industry has been very stable historically, with only a few providers recognised by immigration departments, creating high barriers to new entrants.

IDP Education’s Student Placement business has continued to take market share globally, increasing the number of education institutions offered as destinations and improving market positioning in key student source markets such as India. The global platform they have established is hard to replicate and positions the business to continue taking share for years to come.

We are positive on the outlook for IDP Education for the following reasons:

IDP Education is an integrated market leader with a strong network effect. Through offering both English testing and placement services, IDP Education has become a natural one-stop shop for international students looking to gain a student visa and study abroad. In turn, the large pool of international students makes IDP Education an ideal partner for higher education providers looking to fill their international student allocation;
India’s rising middle class and growing population have provided structural tailwinds for students studying abroad. We expect IDP Education to continue taking market share in this large and growing international student market;
Earnings growth is to be supported by further margin expansion as IDP scales its placements business and achieves greater operating leverage. Placements is a high-margin segment for IDP and will drive margin expansion at a group level as it becomes a higher proportion of the business mix.

The purchase of IEL has been funded through the de-weighting of several portfolio holdings.

As always, thank you for your ongoing support, it is very much appreciated. If you have any questions or would like more information, please contact your adviser.

Warnings and disclosures

This material has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in this material is General Advice and does not take into account any person’s individual investment objectives, financial situation or needs. Before making an investment decision based on this advice you should consider whether it is appropriate to your particular circumstances, alternatively seek professional advice. Where the General Advice relates to the acquisition or possible acquisition of a financial product, you should obtain a Product Disclosure Statement (“PDS”) relating to the product and consider the PDS before making any decision about whether to acquire the product. You will find further details of the service we provide and any cost to you within the Financial Services Guide. Any references to past investment performance are not an indication of future investment returns. Prepared by EP Financial Service Pty Ltd ABN 52 130 772 495 AFSL 325 252 (“Elston”). Although every effort has been made to verify the accuracy of the information contained in this material, Elston, its officers, representatives, employees and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this material or any loss or damage suffered by any person directly or indirectly through relying on this information.