IDP Education：IDP教育：优质业务，艰难环境-升级为买入评级-20250604

Investment Rating - The report upgrades the investment rating of IDP Education to "Buy" from "Neutral" with a 12-month price target of A$4.95, down from A$12.00 [5][15]. Core Views - The report indicates that very low expectations are currently priced into IDP Education's stock, suggesting that the business is not fundamentally broken despite challenging market conditions [1]. - There is a recognition of ongoing uncertainty surrounding government policies affecting international students, particularly in the UK, which is expected to impact revenues in the second half of FY25 [1]. - The report highlights potential positive catalysts, including the approval of IELTS by the Chinese government and a favorable outcome from the Home Office English Language Test tender [1][10]. Financial Performance Summary - FY25 EBIT guidance (excluding customer contract amortization) is projected to be between A$115 million and A$125 million, which is a 30% miss compared to previous estimates of A$171 million [2]. - Expected volume declines for FY25 are approximately 28-30% year-over-year for Student Placement and 18-20% for Language Testing [2]. - The report anticipates a significant EBIT decline of 10% year-over-year for FY26, with a forecast of A$113 million [1][16]. Valuation Metrics - The price target of A$4.95 reflects a significant reduction due to conservative forecast revisions, with EPS estimates downgraded by 37% to 53% for FY25-28 [3][15]. - IDP Education is currently trading at a FY26E PE of 19x, which is 47% below its pre-COVID average [11]. - The report notes that the valuation does not appear expensive, with a projected 3-year EPS CAGR of +20% [10]. Revenue and Earnings Forecasts - Revenue forecasts for FY25 are expected to decline to A$866 million, down 16.5% from the previous year, with a gradual recovery projected in subsequent years [16]. - The report projects a recovery in revenues starting in FY27, with an estimated growth of 4.5% in volume and 3.5% in pricing [1][9]. - The forecast for net earnings in FY25 is A$65 million, a significant drop from A$154 million in FY23 [16]. Market Position and Outlook - IDP Education is recognized as a high-quality business operating in a challenging environment, with a strong track record in market share gains within the fragmented student placement sector [10]. - The report suggests that the current operating environment is closer to trough conditions, indicating potential for recovery as market conditions improve [1][10]. - The long-term outlook for IELTS revenue is projected to deliver a +9% revenue CAGR over FY26-30E, while Student Placement is expected to achieve an +8% revenue CAGR over the same period [8][9].