Edu Holdings Limited (EDU.AX) (ENG)

Not long ago, Floebertus introduced Cedergrenska, a private school operator in Sweden, on his blog. In the end, I decided not to buy the shares due to the potential risk of a change of government in Sweden and possible pressure on the company’s margins, which is highly dependent on state funding and on which I was unable to form a strong opinion. I noticed that there are also cheap companies in the education sector in Australia, but none of them caught my attention. If you are interested, take a look at companies such as Embark Early Education or Nido Education. Recently, however, I came across Australian investor Jeremy Raper on X. At the beginning of the year, Jeremy noticed that the Australian company Edu Holdings Limited attempted to buy out minority shareholders and delist from the stock exchange. This was a signal to him that something was changing in the company, and indeed it did. The company reported massive growth in revenue, profit, and margins thanks to its IKON educational programs, especially for foreigners, and the stock price followed suit. The best time to buy was for most of last year, but in my opinion, the second-best time is right now, because the company is still very cheaply priced, is doing massive buybacks, and will continue to grow at a decent pace in 2026.

Edu Holdings is a private provider of higher education, particularly in soft disciplines. Recently, they have begun to focus primarily on providing courses to immigrants to Australia, which has been the engine of their business.

Edu was hit hard by Covid, and the company’s value plummeted. At the beginning of the year, they attempted a buyout from the stock exchange, which was blocked by Raper and other activists. During 2025, it became apparent that the company was making massive profits, and revaluation began. We will get to the numbers and valuation later.

I tried to get at least a rough idea of what their courses cost and what exactly they teach students. Here are some pictures.

To be honest, their educational courses give me a bit of a “bullshit liberal arts degree” vibe. A few pictures from their Instagram.

However, from an investor’s perspective, the model works for them and their diplomas are recognized by employers. It is also still private education, which I find significantly better than direct funding from the state. Given that Edu Holdings thrives on foreign students and migration, it is worth asking whether this is sustainable.

In my opinion, yes, in the foreseeable future. Australia is also experiencing the classic scenario of developed Western economies: low birth rates and increasing migration. I don’t think this trend will change significantly. Even after the recent massacre at Bondi Beach, I don’t expect any significant restrictions on migration, at most some background checks and stricter selection. The left-wing Labor Party currently has a secure majority in Australia, and although their popularity is declining, as is the case with most ruling parties, they still lead in the polls. The elections are not until 2028, and I don’t think it’s very likely that a right-wing coalition would win and then introduce reforms that would fundamentally threaten Edu Holdings’ business. Moreover, the company is cheap, and I have time to react if necessary. I don’t think I’m very good at analyzing macroeconomics, but I think it still plays into our hands here.

Let’s look at the numbers. The company is trading at a share price of AUD 0.82, and it’s quite fun to figure out how many shares are actually in circulation right now, because the company is doing a massive buyback. If we take the 1H presentation as a basis and calculate a fully diluted figure of approximately 158 million shares, this gives a market capitalization of approximately AUD 130 million with AUD 21 million in net cash. However, according to a report released by Edu, they bought 6 million shares from the stock exchange as of December 1, 2025, and also entered into an agreement with major shareholders to buy back 18 million shares at a price of AUD 0.55 per share. I will assume that they bought the shares from the stock exchange for AUD 0.6 (it was probably less) and deduct the shares from the agreement. That would give me 134 million shares x AUD 0.82 = a market cap of about 110 million. Buying back the shares at the above values would cost them AUD 13.5 million, leaving them with AUD 7.5 million in cash. And they will make a profit of approximately AUD 8 million in H2. So, for the new year, I personally calculate an enterprise value of AUD 95 million. Edu Holdings announced that its net profit guidance for 2025 is somewhere between 13.6 and 15.1 million. If I calculate a profit of 14 million for 2025, then EV after deducting all buybacks, etc., is 6.8 times the profits for 2025.

I expect further growth in 2026. Could profits be 20% higher than in 2025? The influx of new students is unlikely to end, and their IKON program clearly has strong momentum. In 2026, the company will probably make a lot of money again and can continue with buybacks and increase dividends. Although Edu Holdings is probably not the company with the biggest moat, it is clearly doing well in the current environment. While I don’t think it’s the best business in the world, the company is so cheap that there is still room for revaluation, while also providing us with a margin of safety. The migration trend should also play into its hands, and if any problems arise over time, there will be time to react. And let’s not forget that activist-minded owners, who have shown that they are capable of taking action, have a large stake in the company. That’s about it.