STI Education Systems [STI 1.27, up 0.8%; 90% avgVol] [link] posted a Q1 net income of P263 million, which is up 1,233% y/y. STI, which is owned by Eusebio Tanco and bills itself as the “largest network of private schools in the country”, attributed the huge increase to the “significant growth in enrollments” and “improvements in operational efficiency.” Q1 revenues increased 60% y/y to P1.0 billion (the first time quarterly revenue breached the P1B line) thanks to a “15% increase in total enrollment and an earlier start of classes for School Year 2024-2025”. The company reported a record high 138,060 enrolled students for this school year (capacity is 146,585), with over 100,000 of those registered with programs regulated by CHED (Commission on Higher Education). STI said that it’s investing to “support the growing student population” through the buildout of campus infrastructure like building future “academic centers” and renovating to expand classroom sizes.
MB bottom-line: Education had been a big component of my middle-class thesis, and I loaded up after STI got crushed by COVID with the thought that it might pivot to taking on way more virtual students resulting in inflated enrollment well beyond its physical capacity. That dream never really came to fruition. The “Zoomification” of higher education didn’t take hold like I thought it might, and I probably should have known based on how poorly my son’s remote learning was going at that time. Regardless of how wrong I was about the “why”, my investment in STI paid off handsomely. Eventually. It was a long hold from my buys in the P0.40s and P0.30s, but the 160% YTD increase has been worth it, and the 265% three-year return has turned my mistake into a happy accident. Am I a stock-picking genius or a lazy investor who happened to get lucky? Based on my investing history, it’s definitely the latter. All of my best investments have been buy-and-holds that could have just as easily done nothing for several more years. It’s important that I not get high smelling my own farts here. I always had (what I felt to be) valid reasons for holding STI through 2021, 2022, and 2023, but they just weren’t the correct reasons. Profitable errors are still profitable. And they’re still errors.
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