Earning curve

Will Curro’s smart suggestions to tackle local education challenges be of academic interest only?

he passion and confidence that characterised Curro’s AGM presentation by CEO Chris van der Merwe would make the most cynical investor forget, momentarily, that the shares of this private education venture are trading at a dizzy trailing earnings multiple of around 130 times.

Curro clearly has room for growth, as I pointed out in my article in Business Day earlier this week. The business is buzzing, and even the revised profit/ expansion parameters now look to have been markedly underestimated. But what was more impressive was that even though Curro is tapping one of the few sweet spots in the moribund local economy, there is still a great determination to find further growth opportunities.

Here I speak specifically of the company’s willingness to engage government on finding solutions to solving a growing education crisis in SA. Let’s not

Tbe naive, there needs to be at the outset a political will to implement plans, especially potential solutions bandied about by the private sector. Still, for what it’s worth, I think Curro has come up with some smart suggestions that could have mutual benefits for the company, government and (most importantly) learners.

Van der Merwe is postulating that government provide vouchers of R1,500/month (the value currently spent on each child by the state) to learners.

The rub is that vouchers can be extended to a private school of choice, allowing parents to pay in the difference (R200 or R400/month).

Admittedly this would play beautifully into Curro’s affordable school model (Curro school fees are R3,600/month, but Curro Academies are pitched at R1,700/month).

But it also means state schools are relieved of overcrowding; Van der Merwe estimates