Humansoft Holding Company KSCP Investor Presentation Q Results

Transcription

1 Humansoft Holding Company KSCP Investor Presentation Q Results Disclaimer This presentation is for discussion purposes only and is incomplete without reference to, and should be viewed in conjunction with, any oral briefing provided by Humansoft Nothing in this document constitutes an offer to sell or a solicitation of an offer to buy any securities

2 Table of contents Page Humansoft overview 3-5 Share price performance 6 16 th largest by market cap 7 Indices and research coverage 8 Q financial performance 9 Student enrollment Fall AUM ACM campus 12 Key financials

3 Humansoft at a glance Leading private higher education company in the GCC 20+ years of operating experience 11,760 1 enrolled students in AUM and ACM University of choice for Engineering, IT and Business USD 197 million in revenue (LTM) 2 USD 105 million in EBITDA (LTM) 2 50% 5 year EBITDA CAGR ( ) 80% dividend payout ratio 1 enrolled for Fall 2017 semester 2 Last 12 months Q

4 Over 20 years of dedication to quality education Humansoft has a history of over 20 years of operation in the field of Education and Training Initially the company started as an IT and Language training company in Kuwait and expanded its activities to Dubai, Qatar and Abu Dhabi The initial 10 years since inception shaped the culture of Humansoft, where the company was the education partner for all the major IT vendors such as Microsoft, Oracle, Novell, SCO Unix, Autodesk, CISCO, HP, etc This expertise and success of Humansoft laid the foundation for entry into Higher Education 1997 Humansoft listed on the Kuwait Stock Exchange Humansoft received necessary licenses to start American University of Middle East (AUM) 2005 Currently, AUM and ACM together are one of the leading private higher education provider in the GCC with 11,760 students enrolled for the Fall 2017 semester Humansoft received necessary licenses to start American College of Middle East (ACM) 2008 ACM and AUM started operations AUM and ACM are located in Egaila and the campus is built on 261,000 sqm of land leased from the Kuwait government This existing size of land allows for capacity expansion for further student growth in the future 4

5 Board & key management Board of Directors Name Tareq Fahad Al-Othman Mayank Baxi Ahmad Sulaiman Al-Khaled Othman Abdullah Al-Othman Abdulrazaq Abdulla Mohammad Ahmed Position Chairman Vice Chairman Director - Representative of Al-Imtiaz Group Director Director Key management Name Mayank Baxi Dalal Sabti Anup Dhand Mohammed Aslam Dr. Emad Al Atiqi Dr. Mohaned Hassanin Position CEO Vice President - Administration and Finance & CEO of Al Arabiya Educational Enterprises Head of Internal Audit and Risk Management CEO - Humansoft Learning President of AUM Provost AUM and ACM 5

6 Share price performance Public 51% Shareholding (12 October 2017) Al-Othman 39% Al-Imtiaz Group 10% KD Closing price as at 12 October Market Cap (KD mn) Market Cap (USD bn) 1.6 6m avg. daily trading volume (% of shares outstanding) 0.11% 52-weeks high weeks low Current trading multiples 2 EV/ EBITDA (LTM Q3 2017) 15.7x P/E (LTM Q3 2017) 18.3x Dividend yield (2016) 4.0% Share price performance Volume Closing Price KD ,000, ,000 Closing Price (KD) , , , , ,000 Volume 2 (in shares) 300, , , Jan-17 Mar-17 May-17 Jul-17 Sep-17-1 Based on 122,236,800 shares issued 2 Based on closing share price of KD as of 12 October 2017 and LTM Q financials 6

7 Humansoft is the 16 th largest by market cap on Boursa Kuwait 1 As of 12 October 2017 Name Sector Market Cap 1 (KD million) Rank Part of Kuwait 15 National Bank of Kuwait SAKP Banking 4,651 1 Yes Kuwait Finance House KSCP Banking 3,442 2 Yes Mobile Telecommunications Co KSC (Zain) Telecom 2,202 3 Yes Ahli United Bank BSC Banking 1,732 4 No Agility Public Warehousing Co KSC Logistics 1,120 5 Yes Boubyan Bank KSCP Banking 1,024 6 Yes Kuwait Food Co Americana SAK Consumer Yes Gulf Bank KSCP Banking Yes Ahli United Bank KSCP/Kuwait Banking No Burgan Bank SAK Banking Yes Mabanee Co SAK Real Estate Yes Commercial Bank of Kuwait KPSC Banking Yes Ooredoo Kuwait Telecom No Kuwait Projects Co Holding KSCP Diversified No Al Ahli Bank of Kuwait KSCP Banking Yes Human Soft Holding Co KSC Education Yes GFH FINANCIAL GROUP BSC Banking No VIVA Kuwait Telecom Co Telecom No Qurain Petrochemical Industries Co KSC Industrial Yes ALAFCO Aviation Lease & Finance Co KSCP Industrial No 16 th largest by market cap 7 th largest non banking stock 7

8 Indices and research coverage Index Inclusion date Kuwait 15 Index (KSX 15) June 15, 2017 MSCI Kuwaiti Small Cap Index June 1, 2017 Could potentially be upgraded to the MSCI Kuwait mid and large cap index during the November 2017 review FTSE Coast Kuwait 40 Index May 22, 2017 Kuwait has been upgraded to Secondary Emerging Market by FTSE (effective September 2018) Broker Target price Initiation date Analysts Arqaam Capital July 12, 2017 HSBC July 5, 2017 Citi June 13, 2017 EFG Hermes April 20, March 13, 2017 Mohammad Kamal Xavier Zawisza Ankur Agarwal Parsita Kundu Taher Safieddine Andrew Howell Hatem Alaa Mirna Maher Nada Amin Faisal Hasan Junaid Ansari Thomas Mathew Most analysts refer to Humansoft as one of their top stock picks in the MENA region 8

9 Q financial performance A total of 11,760 students are enrolled in AUM and ACM for the Fall 2017 semester Q revenue grew by 18% over Q3 2016, due to strong summer 2017 student enrollment and Fall 2017 student intake Humansoft s 9m 2017 EBITDA grew by 18%, while EBITDA margins improved by 2.2% over 9m 2016 Q net profit is KD 5.9 mn, a growth of 18% on Q3 2016, leading to an EPS of 48 fils per share Key figures and ratios Q Q Change Total number of enrolled students (Fall 2017) 10,360 11, % Revenue (KD mn) % EBITDA (KD mn) % EBITDA margin 52.0% 52.1% 0.1% Net profit (KD mn) % Net margin 43.2% 42.9% -0.3% EPS (in fils) % Equity (KD mn) % Total Assets (KD mn) % 9m m 2017 Change 10,360 11, % % % 49.6% 51.8% 2.2% % 41.8% 43.4% 1.6% % % % Students Revenue (KD mn) Net profit (KD mn) 10,360 11, m m m m m m

10 Fall 2017 total student enrollment increased by 14% over Fall 2016 Total student enrolled (beginning of Fall term of academic year) 2,552 1,063 1,489 Total AUM ACM 5,348 3,657 1,182 1,426 3,922 2,475 Total CAGR 29% AUM CAGR 36% ACM CAGR 14% 6,853 1,477 5,376 8,620 1,663 6, ,011 8,349 11,760 2,286 9, AUM % 58% 68% 73% 78% 81% 81% 81% ACM % 42% 32% 27% 22% 19% 19% 19% Student enrollment at AUM has grown at a CAGR of 29% between the academic years to AUM, which is Humansoft s flagship institution, represents 81% of the students enrolled at Humansoft Deferred income as of 30 September 2017 The deferred income as of 30 September 2017 (which mainly reflects the higher education revenue for October 2017 to January 2018) was KD 23.1 mn, which is 14% higher than the deferred income as of 30 September

11 New enrollments in Fall 2017 grew by 10% over Fall 2016, with ACM enrollments growing by 30% New enrollments Institution New enrollments Total enrolled students Fall 2016 Fall 2017 Growth Fall 2016 Fall 2017 Growth AUM 2,169 2,263 4% 8,349 9,474 13% ACM % 2,011 2,286 14% Total 2,764 3,038 10% 10,360 11,760 14% AUM new enrollments AUM has enrolled 2,263 students in Fall 2017, the highest fall term intake in AUM s history Historically, AUM s new enrollment has grown, in conjunction with the introduction of new majors (e.g. Electrical Engineering in 2014, Mechanical Engineering in 2015 and Chemical Engineering in 2016). AUM has achieved 4% growth in new enrollment, despite no new majors being introduced in 2017 ACM new enrollments ACM s new enrollment in Fall 2017 grew by 30% over Fall 2016 This reflect high demand for the 2 year diploma segment in which ACM operates, and a conscious effort to manage growth effectively in this high potential segment 11

12 AUM ACM Campus The infrastructure and facilities at the AUM+ACM campus continues to progress The Opera and convention center are ready for launch in Q new building and 1 multistory parking are under construction and expected to be completed in 2018 The pictures below and video (link below) show a glimpse of campus life Campus video: or 12

13 Humansoft s revenues grew at a CAGR of 38% between 2013 and m 2017 revenue growth of 13% Humansoft s revenue grew at a CAGR of 38% between , due to strong student growth in AUM and ACM and tuition increase in 2014 (AUM) and 2015 (ACM) CAGR 38% 43.6 Revenue (KD mn) 54.5 The higher education segment, accounted for 95.2% of the Company s revenues and 99.0% of EBITDA in LTM 9m m m 2017 Kuwait accounted for 97.4% Revenue segmentation of the Company s revenues and 99.5% of EBITDA in 2016 By segment (LTM September 2017) By geography (2016) Training & career development 2.0% English training 1.5% Learning solutions 1.3% Other 2.6% Higher education 95.2% Kuwait 97.4% Revenue KD 59.6 mn Revenue KD 54.5 mn 13

14 EBITDA margin reached 51.8% in 9m 2017, registering a 220 bps improvement over 9m 2016 EBITDA grew at a CAGR of 59% in the period EBITDA margin was 51.8% in 9m 2017, an improvement of 220 bps over 9m 2016 Humansoft s net profit grew at a CAGR of 68% between m 2017 net profit of KD 19.0 mn was 17% higher than 9m Gross profit (KD mn) and gross profit margin 21.2 CAGR 43% % 73.9% 76.4% 76.7% 76.8% 77.1% m m % EBITDA (KD mn) and EBITDA margin 13.0 CAGR 59% % 47.1% 52.5% 49.6% 51.8% m m 2017 Net profit (KD mn) and net profit margin CAGR 68% % 28.8% % 44.4% 41.8% % m m 2017 Earning per share (in fils) Dividend per share (in fils) na na 14

15 ROAE reached 61% for LTM Sep 2017 Humansoft has invested capex of KD 23.6 mn in 2015 and 2016 combined, to expand capacity and provide state of the art facilities for students. Capex in 9m 2017 was KD 8.9 mn In spite of the increased asset base, Humansoft s Return on Average Assets grew steadily reaching 31% in % Total assets (KD mn) and ROAA % 31.1% 27.6% 17.2% % Total equity (KD mn) and ROAE % % 61.4% 28.1% Humansoft s strong earnings have resulted in a strong dividend payment and steady growth in shareholders equity to KD 47.8 mn as of September 2017 Humansoft generated a Return on Average Equity of 61% in Sep 2017 (LTM Sep 17) while operating with net debt/equity ratio of 6% Humansoft owns a 2,500 Sqm plot of land in Sharq (Kuwait city), which is carried on the books at cost of KD 5.3 mn. This land, which was bought in 2006/07 is a non-operating asset Sep Net Debt 1 (KD mn) Sep-17 1 Debt less cash Dividend payout Sep % 132% 79% 80% Capex (KD mn) and capex as % of revenue % % 8.2% 26.4% 19.1% 20.4% m m