Date: April 2023
Growth investors often look for undercovered companies with the potential to deliver multibagger returns in the long run. Because investing in growth companies carries substantial risks, it is reasonable to expect market-beating returns in exchange for bearing these risks.
With global capital markets continuing to be volatile this year on the back of a disappointing 2022, many new investment opportunities have come to light today. EpicQuest Education Group International Limited (EEIQ) is one such company that deserves some attention from investors who are looking for outsized long-term returns.
EpicQuest Education Business Model
EpicQuest Education Group International Limited, previously known as Elite Education Group International Limited, is an American company that offers comprehensive education solutions for domestic and international students seeking college and university programs in the U.S., Canada, and the UK. The company aims to internationalize its student body and equip them with the necessary skills and knowledge to thrive in the global job market.
EpicQuest’s diverse portfolio includes English proficiency courses, transfer pathways, and a career-training college. The company also offers a range of services, such as academic guidance, international student services, internship and employment guidance, and student entrepreneurship services, to help students make the most of their studies abroad. Additionally, EpicQuest acts as a recruiting agent for Coventry University and the University of the West of Scotland.
EpicQuest focuses on colleges and universities that offer a wide range of academic and skills training programs for students who want to pursue higher education and career opportunities in various fields. EpicQuest’s customers are primarily international students who are looking for affordable, flexible, and quality education options in Western countries.
The company helps these students with admission, enrollment, visa application, housing, transportation, academic support, and career services. The company also partners with other colleges and universities around the world to offer dual-degree programs, transfer pathways, and exchange opportunities for its students.
EpicQuest currently owns 70% of Davis College, a private college in Ohio that offers associate degrees, diplomas, and certificates in business, healthcare, technology, and design. Davis College has partnered with seven international universities, including Northeastern University’s College of Professional Studies, the University of Cincinnati, Trinity Western University, and Rennes School of Business, to provide various pathways for students to complete their Bachelor’s degrees. In addition, Davis College’s leadership team is finalizing arrangements with several other North American universities this year.
On January 15, 2023, EpicQuest’s subsidiary Highrim Holding International Limited acquired 20% of EduGlobal College, a Canadian private college that offers English language programs to international students who aim to improve their academic and career prospects.
EduGlobal specializes in English for Academic Purposes programs, also referred to as English as a Second Language programs, that concentrate on assisting international students in obtaining the advanced academic English skills that are essential for completing their degree programs.
The company also has a recruitment partnership with the regional campuses of Miami University of Ohio where it manages residential amenities, a complete cafeteria, recreational facilities, shuttle buses, and an office for the regional campuses that provides study abroad and post-study services for its students.
EpicQuest Education Business Segments
Source: Company presentation
EpicQuest’s competitive advantages include its diversified portfolio of educational institutions and programs, its strong network of international partners and collaborators, its experienced management team and faculty, and its innovative use of technology and online platforms.
EpicQuest is committed to expanding its presence and influence in the international education market by providing a unique, cost-effective, and personalized learning experience for its students that prepares them for the global job market.
The company aims to achieve this by acquiring or investing in more colleges and universities, developing new programs and curricula, enhancing its online capabilities and offerings, and increasing its student recruitment and retention efforts.
EpicQuest Education Partnerships At The Center Of Growth
EpicQuest Education has been expanding its reach globally through collaborations with various international institutions. In September 2022, the company announced that both Davis College and EduGlobal College had signed non-binding MOUs with ICBT Campus of Sri Lanka.
These MOUs are aimed at fostering academic collaborations, including the exchange of academic staff for teaching and research, participation in joint seminars and training, and exploring potential program collaborations. The MOUs are also aimed at exploring opportunities for formal partnerships in areas such as English for academic purpose pathways, academic bridging programs, student recruitment, and teaching and research opportunities.
Furthermore, Davis College and EduGlobal College have entered into agency recruitment agreements with ICBT, designating ICBT as their exclusive recruiting agent in Sri Lanka for a term of three years. This means that ICBT will engage in a wide range of activities to recruit prospective students to both colleges, including publicity activities that provide information about academic programming, assistance with applications and visas, and other services that could help prospective students with the matriculation process.
EpicQuest Education aims to build cross-border relationships and make strategic acquisitions around the globe to establish itself as a truly international service provider of higher learning. In July 2020, EpicQuest Education signed an agreement with PSB Academy, a Singapore-based private educational institution that offers Certificates, Diplomas, and Bachelor’s and Master’s degree programs.
Last year, the company confirmed that PSB will recognize credits earned by Davis College students from business or economics programs and grant them entry to selected programs at PSB which can lead to PSB undergraduate business administration degrees.
Moreover, EduGlobal College has been approved for Education Quality Assurance designation in British Columbia, Canada through May 31, 2023. This designation enables EduGlobal College to host international students on study permits and allows the college to participate in overseas recruitment and partnership events organized by the Department of Global Affairs Canada.
The EQA designation is available to public and private institutions in British Columbia that meet or exceed institutional quality assurance standards set by the province of British Columbia. EpicQuest believes that achieving this designation will promote EduGlobal’s English for Academic Purposes program and its International University Pathways Program (iUPP), including the one with Algoma University in Canada, and attract a diverse student body from China, India, LATAM, the ASEAN countries, and other regions.
Additionally, in December 2022, Ameri-Can Education Group Corp., EpicQuest’s 70%-owned subsidiary, completed its acquisition of Davis College. In 2021, EpicQuest purchased 70% of Ameri-Can, which owned the rights to the equity of Davis College through a $1 million loan. The loan was then converted into 100% of the common stock of Davis College.
This acquisition is in full alignment with the sustainable growth strategies of EpicQuest Education, as Davis College has a long history in post-secondary education since 1858 and is devoted to student learning and the engagement of both domestic and international students. Diane Brunner, President of Davis College, expressed her satisfaction with the acquisition and affirmed Davis College’s commitment to EpicQuest Education’s mission of diversity, inclusion, and internationalization.
The company continued expanding its international recruitment activities in the first quarter of 2023. In March, EpiQuest hired a recruiting agent in Mexico to initiate Latin American recruitment activities as part of its international expansion strategy. This marks the company’s first entry into the LATAM markets, adding to its already existing initiatives in numerous ASEAN countries.
EpicQuest’s LATAM recruiting plan includes identifying international institutions such as high schools that have international interests and goals for their students, collaborating with LATAM educational institutions for partnership opportunities, and developing programs that allow for student and faculty exchanges, curriculum development, summer school programs, and online workshops.
The company has also created an English as a Second Language summer program for high school students from Mexico, which will take place in July 2023 and be offered by Davis College. The program includes English language classes and a variety of activities to provide students with an experience of collegiate life. EpicQuest plans to expand its summer program to include EduGlobal College, to generate significant recruitment opportunities.
In addition, Davis College and Chongqing Technology and Business Institute (CTBI) signed a Supplementary Agreement in April. This will allow CTBI students to attend Davis College and receive Diplomas and Associate degrees upon completion of course requirements. Under the agreement, a cohort of 46 students will enroll in the CTBI and Davis College joint program each year for a period of three years leading to a Diploma and Associate degree in interior design.
At least 46 CTBI students will be enrolled in the program in September 2023, 96 CTBI students in September 2024, and 138 CTBI students in September 2025. The agreement also includes bilateral exchange activities, with CTBI sending a team of faculty and staff members to visit Davis College in August 2023.
Growing Market Opportunity for Global Education
Research and Markets predicts the global Educational Services market will grow to $1.9 trillion by 2027, at a compounded annual growth rate of 6.6% between 2020-2027. Elementary & Secondary Schools are projected to grow at a CAGR of 7.7% to reach $952.2 billion whereas Colleges, Universities, & Professional Schools, which as of 2020 held a 47.6% share of the global Educational Services market, are expected to grow at a 5.7% CAGR.
The market is led by the U.S. which accounted for 28.9% of the global market size in 2020. China is expected to grow at a CAGR of 10.3% through 2027, reaching an estimated market size of $361.5 billion.
EpicQuest is well-positioned to take advantage of the growth opportunities in the global Educational Services market. With its international expansion strategy, including its entry into the Latin American market and its partnerships with institutions such as Chongqing Technology and Business Institute, EpicQuest is poised to capture a share of this growing market.
EpicQuest Education Financial Performance
EpicQuest reported a 19% increase in revenue for fiscal year 2022 compared to fiscal year 2021. The in-person attendance has continued to normalize at the English Language Program at the Miami University Regional Campuses. While the operating performance was stronger than in the previous fiscal year, the company is still recovering from the significant impact of COVID-19 disruptions. The company’s financial performance is likely to trend in the right direction in the coming quarters aided by the positive impact of acquired colleges and the possibility to realize cost synergies.
The company’s strategic plan aims at international expansion, including its recruiting efforts to further internationalize the student body. Davis College entered into seven educational relationships with international universities in 2022, and both Davis College and EduGlobal College offer cost-effective and practical education for students.
EpicQuest Education has held more than 70 online promotional and training sessions since January 2023, including business training with partners and live broadcast activities for potential students. The company has also increased the number of online activities to spur student enrollment rates.
As of September 30, 2022, the company had $11.4 million in cash and cash equivalents, a decrease of $5.1 million compared to the previous year. The net loss was $6.2 million compared to a net loss of $1.1 million for the previous year, due to the increase in operating expenses, including higher general and administrative expenses, non-cash expenses attributable to share-based compensation, and professional fees related to acquisitions and expansion efforts.
Source: EpicQuest Company Presentation April 2023
EpicQuest reported a significant increase in international high school student applications to Miami University Regionals and Davis College for the 2023 academic year. As of March 31, 2023, there were 93 applicants from 32 international high schools with international curricula, which is a 72% increase compared to the 54 applicants from 12 international high schools for the same period in 2022.
The company has been successful in directing its focus towards this recruiting channel, with international high school applications accounting for 61% of Miami University Regionals and Davis College student applications for the 2023 academic year, as compared to only 30% for the 2022 academic year. The application period has been extended until the end of May due to the impact of the pandemic, and the company expects more applications from this channel in the coming months.
Source: EpicQuest Company Presentation April 2023
To ensure the long-term development of the international high school channel, EpicQuest plans to engage directly with its potential international high school customers and deploy primary service products that enrich their educational experience.
The company’s international study service platform is unique in both its dimensions and scale. The role of third-party intermediaries will be diminished, allowing for more direct and accurate communication with students and their parents in the future.
Davis College has experienced a 26% increase in the enrollment of international students for the first three quarters of the 2022-2023 academic year, with 107 international students enrolled as compared to 85 for the same period in the previous academic year. For the 2022-2023 academic year, international students comprised 31% of Davis College’s student body, up from 28% in the academic year 2021-2022.
Looking Forward
The global market for educational services is projected to grow substantially in the coming years, presenting opportunities for companies that provide education-related services. EpicQuest Education is well-positioned to benefit from this growth given the wide range of services offered by the company such as pre-entry preparatory classes, campus guidance, and one-on-one tutoring.
Additionally, the company’s focus on admission planning and application services for international school and university cooperative programs is a smart move, given the increasing demand for global education.
The company’s objective is to develop relationships with colleges around the world and create an intercultural educational experience that will better prepare its students for the global economy. With its continued efforts to establish strategic collaborations and expand its international reach, EpicQuest Education is likely to see improving financials in the coming years.
Disclosures
- The author does not have any shares in any of the securities mentioned in this article and is not planning to initiate an investment in any of the mentioned securities within the next 72 hours.
- This article does not contain investment advice and should be used for information purposes only.
References
EpicQuest Education Announces Operations Update (prnewswire.com)
EpicQuest Education Announces Davis College and EduGlobal College Updates (prnewswire.com)
EpicQuest Education Announces Fiscal Year End 2022 Financial Results (prnewswire.com)