iCollege Limited

ICT Details

iCollege Limited (ASX: ICT) is a vocational training provider consisting of six businesses delivering accredited and non-accredited vocational education and training solutions across Australia.

FY21 Results Performance (For the Year Ended 30 June 2021)

• Revenue stood at $16.29 million in FY21, up 50.75% YoY with Australian student enrolments accounting for 54% of the total revenue base in FY21.
• JobKeeper and ATO cashflow accelerated payments amounted to $936.10k in FY21 (FY20: $444.89) which indicates the resilience and diversity of domestic training operations.
• EBITDA reported at $2.02 million in FY21, a $3.06 million uplift on the pcp (FY20: -$1.04 million loss).
• Generated a Net Profit After Tax of $317.33k in FY21, a $2.96 million increase on the pcp (FY20: -$2.64 million loss).

Income Statement (Source: Company Reports)

Key Update:

• On 30 April 2021, RedHill Education Limited (RDH) released its target's statement in response to the off-market takeover bid by ICT for the proposed consideration of 7.6 ordinary shares in ICT for every one ordinary share in RDH (Offer).
• As per the release dated 12 August 2021, iCollege and RedHill (RDH) jointly stated a transaction following the accomplishment of a collaborative and broad due diligence process. Under the updated ICT Offer, RDH shareholders will get 9.5 ICT shares for every one RDH share held. As per ICT’s closing share price of $0.130 per share as of 11 August 2021, this indicates a value of $1.235 per RDH share.
• On 12 August 2021, the company stated that it expects to lodge its Supplementary Bidder’s Statement as early as 18 August 2021, and the Revised ICT offer is anticipated to remain open until 20 September 2021 (unless extended).
• As per the release dated 24 September 2021 and the date of the change as of 23 September 2021, the holder of relevant interest was ICT for an off-market takeover offer for ‘9.5 ICT shares for one RDH share’ that resulted in 85.22% of person's voting rights (equivalent to 43,335,189 ordinary shares)

Outlook:

The company is focused on its existing offerings in aged care, hospitality, building and construction, community services, and healthcare to accelerate enrolments as domestic students look to reskill. Further, the company ventured into an agreement to develop a second purpose-built campus in the Brisbane CBD. This new facility is anticipated to be completed during H1FY21. This campus will be fully facilitated with a commercial kitchen, skills lab for aged care training, multipurpose rooms, and classrooms. Also, the company is currently running on building a traineeship and apprenticeship division on priority and anticipates seeing strong enrolments during Q1FY22.

Key Risks:

Any further restrictions on the travel ban and international border closure might have an impact on overseas student enrolments which contributes 47% of total revenue.

Stock Recommendation

The stock posted 9-month and 1-year returns of ~+14.29% and ~+46.34%, respectively. It is currently trading hovering around the average 52-week high price of $0.17 and 52-week low price of $0.072.

Considering the aforementioned factors, the current trading levels, and the associated business risks, we advise the investors to book profits.

Hence, we give a “Sell” rating at the stock price of $0.125 per share, (Time: 12:40 PM (GMT+10), Sydney, Australia), as of 24^th September 2021.

Technical Overview:

Chart:

Source: REFINITIV; (Note: The purple color line in the chart shows RSI (14-period)) 

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined:-

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

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