Considering the COVID-19 lockdown’s impact on the economy, we compare ADH’s enrolment growth history to SA’s GDP growth to determine what may lie ahead for the company and its enrolments. We find ADH experienced a period of low enrolment growth following the 2008/09 recession, as enrolment growth averaged 1.0% p.a. between 2010 and 2014. Excluding acquisitions, we believe ADH may be heading into a period of low enrolment growth as the SA economy recovers from the COVID-19 pandemic. Amidst concerns of another COVID-19 lockdown, we believe there is low risk of enrolment losses at primary and high schools given ADH proved it could deliver education remotely. We estimate and compare ADH’s School and Tertiary provisions to those of competitors and find that unlike Curro, ADH Schools loss allowance to gross receivables experienced a modest spike in 1H20. Also, ADH’s exposure to higher-income consumers could be an advantage in the current economic environment.
