Taaleem Management Services (EGX: “TALM”) is the owner and operator of El Nahda University in Beni Seuf (“NUB”) the largest private university in Upper Egypt.
Scratching the surface, we can say without doubt that Upper Egypt is one of the areas with a very high population size and minimal market offering with only 2 operational private universities in the Region. An area spanning more than half of Egypt where it’s a 600KM drive from Luxor to Fayoum making NUB’s sphere of focus further away than the two additional universities in the construction/launch phase.
Capitalizing on the market need and unique offering Taaleem has been able to generate a strong financial performance over the past couple of years registering a 2021/22 revenues of EGP 602mn while net profit stands at EGP 185mn for the same period both registering a 3 year compounded growth rate of 22% and 52% respectively.
Moreover, the company maintains a net cash balance of EGP 323mn and no debt making it a net beneficiary of higher interest rates as it generates interest income from the excess cash as well as a potential dividends play for investors if management believes it doesn’t need these cash balances in its expansion plans.
TALM has also demonstrated its operational resilience throughout most of the economic turmoil since 2015 by maintaining its EBITDA margin above 50% for the past 7 years despite:
- High inflation rates
- EGP depreciation
- Ministry of higher education quota system changes
- Higher utility prices driven by the economic reform program
All of the above hammers down on the defensibility and attractiveness of investing in the higher education market as well as TALM’s unique positioning within the market.
- I/we have a beneficial Long or Short position in the mentioned security.
- This is not investment advice, & you should do your own research before making investment decisions.
Leave a Reply