{"id":547030,"date":"2022-06-06T04:08:48","date_gmt":"2022-06-06T04:08:48","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/blackboards\/as-a-sector-the-normally-defensive-education-industry-is-tracking-the-wider-market\/"},"modified":"2022-06-06T04:08:48","modified_gmt":"2022-06-06T04:08:48","slug":"as-a-sector-the-normally-defensive-education-industry-is-tracking-the-wider-market","status":"publish","type":"blackboard","link":"https:\/\/enterpriseam.com\/egypt\/blackboards\/as-a-sector-the-normally-defensive-education-industry-is-tracking-the-wider-market\/","title":{"rendered":"As a sector, the normally-defensive education industry is tracking the wider market"},"content":{"rendered":"

<\/a> In times of crisis (or when the going simply gets tough), plenty of investors <\/strong>look to <\/strong>so-called \u201cdefensive\u201d sectors \u2014 shares of companies that are a bit less likely to fall off a cliff <\/strong>at the first sign that an economy might catch a cold. Defensive stocks may not offer crazy price appreciation, but conventional wisdom has it that a \u201cgood\u201d defensive name is one in which you\u2019re a lot less likely to lose your shirt when the stock market goes south.<\/p>\n

Among the shares investors tend to think of as \u201cdefensive\u201d: Education<\/strong>, alongside healthcare and some consumer staples \u2014 companies that produce food, beverages and other things people need to buy every day, regardless of how well the economy is doing.<\/p>\n

The problem here in Omm El Donia: Education shares haven\u2019t exactly lived up to their <\/strong>reputation. <\/strong>Four issuers are badged as education by the EGX. They\u2019re moving in tandem with the wider market \u2014 down 16.0% year-to-date according to EGX data, compared to -16.4% for the benchmark EGX 30 in the same period. By comparison, the sector weathered the storm<\/a> that was the peak of covid-19.<\/p>\n

How does that compare to other defensive industries? <\/strong>EGX-listed healthcare and pharma shares are together down 13.0% year-to-date, while food, beverages, and tobacco is down just 8.1%. EGX-listed banks \u2014 not a defensive sector, but broadly considered a bellwether for the economy \u2014 are down 17.1% YTD.<\/p>\n

Let\u2019s dive a bit deeper: Meet Egypt\u2019s listed education companies. <\/strong>Industry leader CIRA<\/strong> operates K-12 schools Mavericks and Futures, as well as Badr University, and leads the sector with a market cap of some EGP 7 bn. Then there\u2019s Cairo for Educational Services<\/strong> (CAED, a CIRA subsidiary), the Suez Canal Company for Technology Settling (SCTS<\/strong>, which owns and operates the Sixth of October University) and Taaleem Management Services<\/strong>, which operates a university brand.<\/p>\n

Taaleem has led the plunge. <\/strong>The company, which made its EGX debut last year, led all decliners in the sector by a wide margin, with its shares down 50.4% year-to-date<\/a>, according to market data. CIRA shares are down just 10.8%<\/a> after a strong rally in mid-April (beating the EGX30\u2019s YTD return of -16.4%), while SCTS is down 13.7% YTD<\/a>. The much more illiquid CAED bucked the trend, gaining 16.1%<\/a> so far this year.<\/p>\n

How does this correlate to earnings quality? <\/strong><\/p>\n