We remove our Moat Rating from ASX listed share

Morning Star AU

Jan 05

While shares in IDP Education (ASX: IEL) are up 80% from their lows in June, the firm guides to industry student volumes falling 25% in fiscal 2026. Much focus has been on the troubled student ...

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Much focus has been on the troubled student ...</p>\n\n<a href=\"https://www.morningstar.com.au/stocks/we-remove-our-moat-rating-asx-listed-share\">Source Link</a>\n\n</div>\n","source":"morningstar_stock","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>We remove our Moat Rating from ASX listed share</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nWe remove our Moat Rating from ASX listed share\n</h2>\n\n<h4 class=\"meta\">\n\n\n2026-01-05 00:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.morningstar.com.au/stocks/we-remove-our-moat-rating-asx-listed-share><strong>Morning Star AU</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>While shares in IDP Education (ASX: IEL) are up 80% from their lows in June, the firm guides to industry student volumes falling 25% in fiscal 2026. Much focus has been on the troubled student ...</p>\n\n<a href=\"https://www.morningstar.com.au/stocks/we-remove-our-moat-rating-asx-listed-share\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"IEL.AU","symbol_name":"IDP EDUCATION LTD","start_time":0,"source_url":"https://www.morningstar.com.au/stocks/we-remove-our-moat-rating-asx-listed-share","article_id":"2601832739","we_media_id":null,"thumbnails":[],"rights":{"source":"morningstar_stock","url":"https://www.morningstar.com.au/stocks/we-remove-our-moat-rating-asx-listed-share","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2601832739","pubTimestamp":1767542400,"columns":[],"sourceInfo":{"source_id":"morningstar_stock","name":"Morning Star"},"weMediaInfo":null,"summary":"While shares in IDP Education (ASX: IEL) are up 80% from their lows in June, the firm guides to industry student volumes falling 25% in fiscal 2026. Much focus has been on the troubled student placeme","collect":0,"end_time":0,"defaultTopTitle":"morningstar.com.au","property":[],"viewcount":null,"language":"en","relate_stocks":{"IEL.AU":"IDP EDUCATION LTD","BK7132":"教育服务"},"translate_title":"我们取消澳大利亚证券交易所上市股票的护城河评级","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"IEL.AU":1},"content_text":"While shares in IDP Education (ASX: IEL) are up 80% from their lows in June, the firm guides to industry student volumes falling 25% in fiscal 2026. Much focus has been on the troubled student placement business, but competitive advantage in its English testing division is also weakening.Why it matters: We no longer award IDP a moat. Our prior narrow moat rating was based on a network effect in its English testing business. But exclusivity of its IELTS English test has significantly eroded in recent years—English testing now contributes just 31% of group gross profit.While IDP co-owns IELTS, one of the most widely accepted English tests, it’s losing market share. English proficiency testing is now increasingly commoditized. IDP previously held some exclusive licenses for education admissions and visa applications, but this has largely disappeared.We also raise the discount rate for our valuation after reassessing political and regulatory risk. Changing immigration policies and increased competition mean revenue and earnings are unlikely to be as stable as we thought. Our weighted cost of capital increases to 8.7% from 7.3%.The bottom line: We cut our fair value estimate for no-moat IDP by 49% to $8.20. Of the cut, 80% reflects removing the moat rating and the higher discount rate. The rest is largely from lower expectations for placement volumes. But shares are cheap as we expect an eventual rebound.We raise our Morningstar Uncertainty Rating to Very High. Meaningful political and regulatory risks exist from rising public concerns about housing affordability and immigration. Key opposition parties in Australia, the UK, and Canada have stated policies to reduce student visas.We downgrade our Capital Allocation Rating to Standard, with the investment strategy being mixed. Acquiring IELTS operations in India from the British Council has diluted ROICs, with exclusivity eroding recently. But we think service improvements in placements, such as FastLane, are positive.IDP Education’s competitive advantage in English testing weakensIDP Education is an education services company, providing English language testing and teaching, student placement services, digital marketing, and education events.Student placement services is IDP’s largest business segment and the main engine for growth, with growth primarily coming from India as a fast-growing source country and Australia, the United Kingdom, and Canada as key destination countries. Since the covid-19 pandemic and the ensuing temporary closure of Australia’s borders to foreign students, IDP’s Australian student placement business had shrunk by more than half. Although some of this volume has been picked up by other destination countries, IDP’s overall student placement business only recovered to prepandemic levels in fiscal 2022, but then subsequently declined again with student visa restrictions in some key countries. Given that half of IDP’s prospective students find IDP through word of mouth, we believe IDP’s key near-term challenge will be to reignite demand for its student placement services amid regulatory pressures and depressed student sentiment.The English language testing business is IDP’s second-largest business. As part-owner of the International English Language Testing System, IDP operates one of the world’s most widely accepted English language tests for access to education institutions, professional bodies, and visas. Over the past decade, IELTS has lost English proficiency certification exclusivity for most of the institutions where IELTS is accepted, leading to increased competition for test takers. With the acquisition of the British Council’s Indian operations, another part-owner of IELTS, IDP has less competitive pressure in India, the world’s largest English language testing market and holding almost half of IDP’s testing volumes.Bulls sayIDP benefits from long-term tailwinds including increasing international mobility and a growing middle class in the developing world.Through its part-ownership of IELTS, IDP owns a stake in one of the world’s most widely accepted English language tests.IDP operates one of the world’s largest student placement services with diversification across source and destination countries.Bears sayIDP’s business is challenged by restrictive immigration policies across its key destination markets.The IELTS language test has been losing exclusive English proficiency certification licensing rights over the past decade and faces increasing competition.IDP’s business is challenged by public concerns as to housing affordability and immigration.Get Morningstar insights in your inboxTerms used in this articleStar Rating: Our one- to five-star ratings are guideposts to a broad audience and individuals must consider their own specific investment goals, risk tolerance, and several other factors. A five-star rating means our analysts think the current market price likely represents an excessively pessimistic outlook and that beyond fair risk-adjusted returns are likely over a long timeframe. A one-star rating means our analysts think the market is pricing in an excessively optimistic outlook, limiting upside potential and leaving the investor exposed to capital loss.Fair Value: Morningstar’s Fair Value estimate results from a detailed projection of a company’s future cash flows, resulting from our analysts’ independent primary research. Price To Fair Value measures the current market price against estimated Fair Value. If a company’s stock trades at $100 and our analysts believe it is worth $200, the price to fair value ratio would be 0.5. A Price to Fair Value over 1 suggests the share is overvalued.Moat Rating: An economic moat is a structural feature that allows a firm to sustain excess profits over a long period. Companies with a narrow moat are those we believe are more likely than not to sustain excess returns for at least a decade. For wide-moat companies, we have high confidence that excess returns will persist for 10 years and are likely to persist at least 20 years. To learn about finding different sources of moat, read this article by Mark LaMonica.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"}}}