Private tertiary counter Stadio Holdings has been the standout stock in the education sector for some years.
IM has recommended the company, our view being that if we had to own only one private education stock in the long term, it would be Stadio. On a one-year basis the share is up 82.64%. This analyst’s most recent IM recommendation, made in July 2024, when it stood at 525c, was that it was “the smart pick in education”.
To allow Stadio to focus on higher education, it was spun out of Curro Holdings in February 2017. IM finds it ironic that the pupil is now larger than its former master — Stadio’s market value is now R8.6bn and Curro’s R6.6bn. On a five-year perspective Stadio is up 606% and Curro 37%.
Investors have clearly followed growth. Curro’s results have disappointed the market for a few years; the stock slid to a 52-week recent low of 800c before its bacon was saved by the philanthropic buy-out by the Mouton family foundation.
The private education sector can be said to be booming. The shortcomings of the state tertiary system have led to this growth, as the private sector’s strategy of offering applicable, career-enabling qualifications has been powering demand.
This was evident in recent sector results. Stadio’s interim results to June 2025 detailed the best growth in the sector. Headline EPS increased 28% to 20c a share and revenue rose 16% to R957m, with a 25% increase in operating profit to R253m. Stadio does not pay an interim dividend.
The company reported a 9% increase in learner growth to 51,197, a 10% compound average growth rate since its listing, with a 16% growth in revenue in both contact and distance learning and an uptick of 200 basis points in margin to 30.6%. Contact learning grew 11%, to 7,018 learners, and distance learning rose 9%, to 44,179. The 54,000 prelisting target for 2026 will easily be met early; Stadio’s ambition is to have 80,000 learners by 2030. All this growth, in a capex-light, cash-generative scenario, is augmented by a policy of solid fiscal prudence and generous investor dividend payouts.
New courses in engineering, architecture, law, technology, data sciences and commerce have all been accredited and rolled out, leading to intake demand
At Stadio’s results webinar CEO Chris Vorster, not known for his effervescence, was positively fizzing when reporting on the company’s growth initiatives. The first of these is the new Durbanville campus in the Western Cape, now under construction. It is set to open in January 2026. Such is the extent of the demand and expectation that Stadio has pulled forward its phase two build with this campus. A third phase is also mooted, in the form of a campus for 6,000 learners.
New courses in engineering, architecture, law, technology, data sciences and commerce have all been accredited and rolled out, leading to intake demand. There is interest in offering qualifications in agriculture and health sciences in future.
Management says all Stadio campuses are performing well and expansion to cope with demand is under way. The real bottleneck is regulation by the department of higher education & training relating to first-year intake in new courses. This cap on learners in year one until the courses are proven adds to costs, but in year two onwards usually leads to a surge in new intake. Thus, investors should look forward to robust learner growth in 2027, given the availability of newly accredited courses.
Regarding the push by the private tertiary sector to gain university status, both AdvTech and Stadio are in ongoing engagement with the department. University status would add additional lustre to the private tertiary sector, highlighting the quality of its education and qualifications. It is IM’s opinion that both private tertiary institutions are fully ready for university accreditation; yet the department keeps kicking the can down the road. IM suspects that at some stage a court challenge may ensue.
Stadio is well placed to use its solid core of bricks-and-mortar teaching facilities to further its ambitions to extend its distance learning capabilities offshore. More than 80% of its current learners are in contact learning, and Stadio is building additional scale via its Krugersdorp distance learning hub. IM would not be surprised to see expansion, possibly through an acquisition in the year ahead to further Stadio’s growth and territorial ambitions.
After a heady rise in the share price and earnings multiple, IM’s prior target has been exceeded. With the stock at another new 52-week high, we maintain the stance of wanting to own Stadio in the longer term. However, after an 82% run in 12 months IM would prefer the stock to have a spring break to consolidate its gains.
Anthony Clark
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