The lessons from IDP Education's week from Hell
The student recruiter has been hit by the migration backlash not just here, but in Canada, the UK and the US
Other listed colleges are tweaking their business models to focus on domestic students
While there's no end of the pain in sight, some brokers reckon IDP Education is a buy at its marked-down valuation
It's not unusual for a small cap stock to decline 50% in value or more in one day.
But when the top 200 stock IDP Education (ASX:IEL) achieved that this week – erasing more than $1 billion of market value – it was a case of 'class, take note'.
The dramatic plunge came after the overseas student wrangler's confession on Tuesday that full-year revenue and earnings would plummet on the back of visa crackdowns.
The stock has lost an astonishing 75% over the last year.
Arguably the downgrade was years in the making, given the quality issues besetting both the tertiary and vocational sectors for some years.
Still, investors were shocked by the scale of the revision or maybe they just hadn't done their homework.
IDP guided to a 28-30% decline in student placement volumes, with its language testing arm likely to fall by 18-20%.
Adjusted earnings before interest and tax (ebit) are expected at $115-125 million, a circa 50% year-on-year decline and well shy of market expectations of $166 million.
Trump-like 'regulation by fiat'
The visa crackdown was contained in a bill that the old Parliament did not pass, but government went ahead via a Trump-style Ministerial Directive (MD107).
The measure means visa applications are processed on the perceived risk of the education provider and the student's country of origin.
Dubbed by college operator Academies Australasia (ASX:AKG) as 'regulation by fiat', the measure compounds the problems of providers with high visa rejection rates.
The reasons for the knock-backs are likely to be beyond the colleges' control.
Nowhere to hide as migration policies bite
IDP's problems don't start and end at home.
Half-owned by sandstone universities, the company started out as a local uni recruiter but now touts for colleges in the UK, Canada and the US. Half of the company's revenue deriving from English language testing and teaching.
The UK is even more zealous on reducing migration, as is Canada given the backdrop of the recent close election.
We'll simply call US a no-go zone, given Trump's order to block Harvard University from admitting international students.
Heeding the lessons
IDP is not the only ASX-listed, overseas student focused education play feeling the pinch.
It's a case of accepting the new reality and adapting.
The amalgam of Icollege and Redhill Education, NextEd Group (ASX:NXD) reported a $2.2 million first half loss, amid a 21% revenue decline (to $47 million).
However Nexted offset some of the impact of a 52% English language services decline with increased international vocation enrolment.
The aforementioned Academies managed to grow half year revenue by 2.8% (to $23.9 million). The company also narrowed a previous $7.5 million loss to a $958,000 deficit.
Operator of the Ikon (tertiary) and ALG (vocational) colleges, EDU Holdings (ASX:EDU) gets a gold star by doubling calendar 2024 revenue to $42 million.
The company also managed a $2.6 million profit after three years of losses.
Gary Burg told last month's AGM the impact of the visa changes remained unclear and the company was focusing on the domestic student market.
A free kick of the 'political football'?
Despite the IDP sell down there's still a country mile between its $1 billion market cap and the circa $20-40 million valuation ascribed to the other providers.
As with all harsh sell-offs, have investors have over-reacted?
Broker UBS contends IDP's business model is unbroken and the company 'remains a high-quality business in challenging conditions'.
The firm rates the stock a 'buy' with a price target of $4.95, implying around 40% of upside.
IDP is undertaking a detailed business review, with an update promised at its August full-year results.
At Academies' AGM last year, acting chairman Chiang Meng Heng decried the sector being turned into a political Sherrin.
'Certain comments being bandied about smack of populism, rather than carefully considered positions that are good for the country,' he said.
'The air may not clear until after the federal election.'
More than a month after the poll, clarity awaits.
Originally published as Criterion: IDP Education's share plunge is a harsh lesson for the overseas student industry
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
7NEWS
an hour ago
- 7NEWS
Donald Trump has 'no plans' to speak to Elon Musk as feud deepens over tax bill and billions in contracts
Donald Trump says he has no plans to speak with Elon Musk, signalling the US president and his former ally might not resolve their feud over a sweeping tax-cut bill any time soon. Addressing reporters on Friday aboard Air Force One, Trump said he wasn't 'thinking about' the Tesla CEO. 'I hope he does well with Tesla,' Trump said. However, Trump said a review of Musk's extensive contracts with the federal government was in order. 'We'll take a look at everything,' the president said. 'It's a lot of money.' Trump may get rid of the red Tesla Model S that he bought in March after showcasing Musk's electric cars on the White House lawn, a White House official said, speaking on condition of anonymity. Musk, for his part, did not directly address Trump but kept up his criticism of the massive Republican tax and spending bill that contains much of Trump's domestic agenda. On his social-media platform X, Musk amplified remarks made by others that Trump's 'big beautiful bill' would hurt Republicans politically and add to the nation's $US36.2 trillion ($A55.8 trillion) debt. He replied 'exactly' to a post by another X user that said Musk had criticised Congress and Trump had responded by criticising Musk personally. Musk also declared it was time for a new political party in the United States 'to represent the 80 per cent in the middle!' People who have spoken to Musk said his anger has begun to recede and they think he will want to repair his relationship with Trump, according to one person who has spoken to Musk's entourage. The White House statements came one day after the two men battled openly in an extraordinary display of hostilities that marked a stark end to a close alliance. On Thursday, Musk claimed that President Trump is listed in the Epstein files, alleging this is why they have not been released to the public. '@RealDonaldTrump is in the Epstein files. That is the real reason they have not been made public,' Musk wrote on X. 'Have a nice day, DJT!' The White House later responded, calling the claims 'an unfortunate episode from Elon'. Tesla stock rose on Friday, clawing back some losses from Thursday's session, when it dropped 14 per cent and lost $US150 billion ($A231 billion) in value, the largest single-day decline in the company's history. Musk, the world's richest person, bankrolled a large part of Trump's 2024 presidential campaign. Trump named Musk to head a controversial effort to downsize the federal workforce and slash spending. Trump feted Musk at the White House a week ago as he wrapped up his role as head of the Department of Government Efficiency. Musk cut only about half of one per cent of total spending, far short of his brash plans to axe $US2 trillion ($A3.1 trillion) from the federal budget. Since then, Musk has denounced Trump's tax-cut and spending bill as a 'disgusting abomination'. His opposition is complicating efforts to pass the bill in Congress where Republicans hold a slim majority. Trump had initially stayed quiet while Musk campaigned to torpedo the bill, but broke his silence on Thursday, telling reporters he was 'very disappointed' in Musk. Musk, who spent nearly $US300 million ($A462 million) in the 2024 elections, said Trump would have lost without his support and suggested he should be impeached. Trump suggested he would terminate government contracts with Musk's businesses, which include rocket company SpaceX and its satellite unit Starlink. The billionaire then threatened to decommission SpaceX's Dragon spacecraft, the only US spacecraft capable of sending astronauts to the International Space Station. Musk later backed off that threat. A prolonged feud could make it harder for Republicans to keep control of Congress in the 2026 midterm elections if Musk withholds financial support or other major Silicon Valley business leaders distance themselves from Trump. Musk had already said he planned to curtail his political spending, and on Tuesday called for 'all politicians who betrayed the American people' to be fired in 2026. His involvement with the Trump administration has provoked widespread protests at Tesla sites, driving down sales while investors fretted that Musk's attention was too divided.
The Advertiser
an hour ago
- The Advertiser
Trump has 'no plans' to speak to Musk as feud persists
Donald Trump says he has no plans to speak with Elon Musk, signalling the US president and his former ally might not resolve their feud over a sweeping tax-cut bill any time soon. Addressing reporters on Friday aboard Air Force One, Trump said he wasn't "thinking about" the Tesla CEO. "I hope he does well with Tesla," Trump said. However, Trump said a review of Musk's extensive contracts with the federal government was in order. "We'll take look at everything," the president said. "It's a lot of money." Trump may get rid of the red Tesla Model S that he bought in March after showcasing Musk's electric cars on the White House lawn, a White House official said, speaking on condition of anonymity. Musk, for his part, did not directly address Trump but kept up his criticism of the massive Republican tax and spending bill that contains much of Trump's domestic agenda. On his social-media platform X, Musk amplified remarks made by others that Trump's "big beautiful bill" would hurt Republicans politically and add to the nation's $US36.2 trillion ($A55.8 trillion) debt. He replied "exactly" to a post by another X user that said Musk had criticised Congress and Trump had responded by criticising Musk personally. Musk also declared it was time for a new political party in the United States "to represent the 80 per cent in the middle!" People who have spoken to Musk said his anger has begun to recede and they think he will want to repair his relationship with Trump, according to one person who has spoken to Musk's entourage. The White House statements came one day after the two men battled openly in an extraordinary display of hostilities that marked a stark end to a close alliance. Tesla stock rose on Friday, clawing back some losses from Thursday's session, when it dropped 14 per cent and lost $US150 billion ($A231 billion) in value, the largest single-day decline in the company's history. Musk, the world's richest person, bankrolled a large part of Trump's 2024 presidential campaign. Trump named Musk to head a controversial effort to downsize the federal workforce and slash spending. Trump feted Musk at the White House a week ago as he wrapped up his role as head of the Department of Government Efficiency. Musk cut only about half of one per cent of total spending, far short of his brash plans to axe $US2 trillion ($A3.1 trillion) from the federal budget. Since then, Musk has denounced Trump's tax-cut and spending bill as a "disgusting abomination". His opposition is complicating efforts to pass the bill in Congress where Republicans hold a slim majority. Trump had initially stayed quiet while Musk campaigned to torpedo the bill, but broke his silence on Thursday, telling reporters he was "very disappointed" in Musk. Musk, who spent nearly $US300 million ($A462 million) in the 2024 elections, said Trump would have lost without his support and suggested he should be impeached. Trump suggested he would terminate government contracts with Musk's businesses, which include rocket company SpaceX and its satellite unit Starlink. The billionaire then threatened to decommission SpaceX's Dragon spacecraft, the only US spacecraft capable of sending astronauts to the International Space Station. Musk later backed off that threat. A prolonged feud could make it harder for Republicans to keep control of Congress in the 2026 midterm elections if Musk withholds financial support or other major Silicon Valley business leaders distance themselves from Trump. Musk had already said he planned to curtail his political spending, and on Tuesday called for "all politicians who betrayed the American people" to be fired in 2026. His involvement with the Trump administration has provoked widespread protests at Tesla sites, driving down sales while investors fretted that Musk's attention was too divided. Donald Trump says he has no plans to speak with Elon Musk, signalling the US president and his former ally might not resolve their feud over a sweeping tax-cut bill any time soon. Addressing reporters on Friday aboard Air Force One, Trump said he wasn't "thinking about" the Tesla CEO. "I hope he does well with Tesla," Trump said. However, Trump said a review of Musk's extensive contracts with the federal government was in order. "We'll take look at everything," the president said. "It's a lot of money." Trump may get rid of the red Tesla Model S that he bought in March after showcasing Musk's electric cars on the White House lawn, a White House official said, speaking on condition of anonymity. Musk, for his part, did not directly address Trump but kept up his criticism of the massive Republican tax and spending bill that contains much of Trump's domestic agenda. On his social-media platform X, Musk amplified remarks made by others that Trump's "big beautiful bill" would hurt Republicans politically and add to the nation's $US36.2 trillion ($A55.8 trillion) debt. He replied "exactly" to a post by another X user that said Musk had criticised Congress and Trump had responded by criticising Musk personally. Musk also declared it was time for a new political party in the United States "to represent the 80 per cent in the middle!" People who have spoken to Musk said his anger has begun to recede and they think he will want to repair his relationship with Trump, according to one person who has spoken to Musk's entourage. The White House statements came one day after the two men battled openly in an extraordinary display of hostilities that marked a stark end to a close alliance. Tesla stock rose on Friday, clawing back some losses from Thursday's session, when it dropped 14 per cent and lost $US150 billion ($A231 billion) in value, the largest single-day decline in the company's history. Musk, the world's richest person, bankrolled a large part of Trump's 2024 presidential campaign. Trump named Musk to head a controversial effort to downsize the federal workforce and slash spending. Trump feted Musk at the White House a week ago as he wrapped up his role as head of the Department of Government Efficiency. Musk cut only about half of one per cent of total spending, far short of his brash plans to axe $US2 trillion ($A3.1 trillion) from the federal budget. Since then, Musk has denounced Trump's tax-cut and spending bill as a "disgusting abomination". His opposition is complicating efforts to pass the bill in Congress where Republicans hold a slim majority. Trump had initially stayed quiet while Musk campaigned to torpedo the bill, but broke his silence on Thursday, telling reporters he was "very disappointed" in Musk. Musk, who spent nearly $US300 million ($A462 million) in the 2024 elections, said Trump would have lost without his support and suggested he should be impeached. Trump suggested he would terminate government contracts with Musk's businesses, which include rocket company SpaceX and its satellite unit Starlink. The billionaire then threatened to decommission SpaceX's Dragon spacecraft, the only US spacecraft capable of sending astronauts to the International Space Station. Musk later backed off that threat. A prolonged feud could make it harder for Republicans to keep control of Congress in the 2026 midterm elections if Musk withholds financial support or other major Silicon Valley business leaders distance themselves from Trump. Musk had already said he planned to curtail his political spending, and on Tuesday called for "all politicians who betrayed the American people" to be fired in 2026. His involvement with the Trump administration has provoked widespread protests at Tesla sites, driving down sales while investors fretted that Musk's attention was too divided. Donald Trump says he has no plans to speak with Elon Musk, signalling the US president and his former ally might not resolve their feud over a sweeping tax-cut bill any time soon. Addressing reporters on Friday aboard Air Force One, Trump said he wasn't "thinking about" the Tesla CEO. "I hope he does well with Tesla," Trump said. However, Trump said a review of Musk's extensive contracts with the federal government was in order. "We'll take look at everything," the president said. "It's a lot of money." Trump may get rid of the red Tesla Model S that he bought in March after showcasing Musk's electric cars on the White House lawn, a White House official said, speaking on condition of anonymity. Musk, for his part, did not directly address Trump but kept up his criticism of the massive Republican tax and spending bill that contains much of Trump's domestic agenda. On his social-media platform X, Musk amplified remarks made by others that Trump's "big beautiful bill" would hurt Republicans politically and add to the nation's $US36.2 trillion ($A55.8 trillion) debt. He replied "exactly" to a post by another X user that said Musk had criticised Congress and Trump had responded by criticising Musk personally. Musk also declared it was time for a new political party in the United States "to represent the 80 per cent in the middle!" People who have spoken to Musk said his anger has begun to recede and they think he will want to repair his relationship with Trump, according to one person who has spoken to Musk's entourage. The White House statements came one day after the two men battled openly in an extraordinary display of hostilities that marked a stark end to a close alliance. Tesla stock rose on Friday, clawing back some losses from Thursday's session, when it dropped 14 per cent and lost $US150 billion ($A231 billion) in value, the largest single-day decline in the company's history. Musk, the world's richest person, bankrolled a large part of Trump's 2024 presidential campaign. Trump named Musk to head a controversial effort to downsize the federal workforce and slash spending. Trump feted Musk at the White House a week ago as he wrapped up his role as head of the Department of Government Efficiency. Musk cut only about half of one per cent of total spending, far short of his brash plans to axe $US2 trillion ($A3.1 trillion) from the federal budget. Since then, Musk has denounced Trump's tax-cut and spending bill as a "disgusting abomination". His opposition is complicating efforts to pass the bill in Congress where Republicans hold a slim majority. Trump had initially stayed quiet while Musk campaigned to torpedo the bill, but broke his silence on Thursday, telling reporters he was "very disappointed" in Musk. Musk, who spent nearly $US300 million ($A462 million) in the 2024 elections, said Trump would have lost without his support and suggested he should be impeached. Trump suggested he would terminate government contracts with Musk's businesses, which include rocket company SpaceX and its satellite unit Starlink. The billionaire then threatened to decommission SpaceX's Dragon spacecraft, the only US spacecraft capable of sending astronauts to the International Space Station. Musk later backed off that threat. A prolonged feud could make it harder for Republicans to keep control of Congress in the 2026 midterm elections if Musk withholds financial support or other major Silicon Valley business leaders distance themselves from Trump. Musk had already said he planned to curtail his political spending, and on Tuesday called for "all politicians who betrayed the American people" to be fired in 2026. His involvement with the Trump administration has provoked widespread protests at Tesla sites, driving down sales while investors fretted that Musk's attention was too divided. Donald Trump says he has no plans to speak with Elon Musk, signalling the US president and his former ally might not resolve their feud over a sweeping tax-cut bill any time soon. Addressing reporters on Friday aboard Air Force One, Trump said he wasn't "thinking about" the Tesla CEO. "I hope he does well with Tesla," Trump said. However, Trump said a review of Musk's extensive contracts with the federal government was in order. "We'll take look at everything," the president said. "It's a lot of money." Trump may get rid of the red Tesla Model S that he bought in March after showcasing Musk's electric cars on the White House lawn, a White House official said, speaking on condition of anonymity. Musk, for his part, did not directly address Trump but kept up his criticism of the massive Republican tax and spending bill that contains much of Trump's domestic agenda. On his social-media platform X, Musk amplified remarks made by others that Trump's "big beautiful bill" would hurt Republicans politically and add to the nation's $US36.2 trillion ($A55.8 trillion) debt. He replied "exactly" to a post by another X user that said Musk had criticised Congress and Trump had responded by criticising Musk personally. Musk also declared it was time for a new political party in the United States "to represent the 80 per cent in the middle!" People who have spoken to Musk said his anger has begun to recede and they think he will want to repair his relationship with Trump, according to one person who has spoken to Musk's entourage. The White House statements came one day after the two men battled openly in an extraordinary display of hostilities that marked a stark end to a close alliance. Tesla stock rose on Friday, clawing back some losses from Thursday's session, when it dropped 14 per cent and lost $US150 billion ($A231 billion) in value, the largest single-day decline in the company's history. Musk, the world's richest person, bankrolled a large part of Trump's 2024 presidential campaign. Trump named Musk to head a controversial effort to downsize the federal workforce and slash spending. Trump feted Musk at the White House a week ago as he wrapped up his role as head of the Department of Government Efficiency. Musk cut only about half of one per cent of total spending, far short of his brash plans to axe $US2 trillion ($A3.1 trillion) from the federal budget. Since then, Musk has denounced Trump's tax-cut and spending bill as a "disgusting abomination". His opposition is complicating efforts to pass the bill in Congress where Republicans hold a slim majority. Trump had initially stayed quiet while Musk campaigned to torpedo the bill, but broke his silence on Thursday, telling reporters he was "very disappointed" in Musk. Musk, who spent nearly $US300 million ($A462 million) in the 2024 elections, said Trump would have lost without his support and suggested he should be impeached. Trump suggested he would terminate government contracts with Musk's businesses, which include rocket company SpaceX and its satellite unit Starlink. The billionaire then threatened to decommission SpaceX's Dragon spacecraft, the only US spacecraft capable of sending astronauts to the International Space Station. Musk later backed off that threat. A prolonged feud could make it harder for Republicans to keep control of Congress in the 2026 midterm elections if Musk withholds financial support or other major Silicon Valley business leaders distance themselves from Trump. Musk had already said he planned to curtail his political spending, and on Tuesday called for "all politicians who betrayed the American people" to be fired in 2026. His involvement with the Trump administration has provoked widespread protests at Tesla sites, driving down sales while investors fretted that Musk's attention was too divided.
Sky News AU
3 hours ago
- Sky News AU
Trade talks to start between US and China next week
US President Donald Trump has confirmed trade talks between the US and China will commence next week in London. President Trump and Chinese President Xi Jinping have spoken on the phone in the last 24 hours. Allegedly, the US government has asked the UK government to facilitate these talks.
