STI Holdings Posts Strong Earnings Despite Enrollment Dip; Stock Seen as Undervalued

STI Education Systems Holdings, Inc. (PSE: STI) delivered a robust financial performance for the quarter ended September 30, 2025, defying a slight decline in student headcount with a higher revenue mix and improved operating leverage.

The listed education group reported ₱1.44 billion in revenues, up 39% year-on-year, driven by strong tuition collections and a shift toward higher-yield tertiary programs. Net income surged 135% to ₱619 million, while earnings per share doubled to ₱0.06 from ₱0.03 in the same period last year.

Operating income soared to ₱657.5 million, driven by tight cost control and a 75% gross margin. EBITDA climbed to ₱878 million, translating to an EBITDA margin of 61%, underscoring the group’s efficiency gains.

The upbeat results came despite a 4% drop in total enrollment to 132,941 students for School Year 2025–2026. Management attributed the decline to an earlier start of classes in public schools, which affected Senior High School intake. However, CHED-regulated programs grew to 77% of total enrollment, up from 73% last year. These programs generate significantly higher revenue per student compared to DepEd-regulated levels, helping offset the impact of fewer Senior High School enrollees.

Liquidity remained strong with ₱3.2 billion in cash, while interest-bearing debt fell to ₱1.44 billion, improving the debt-to-equity ratio to 0.30x. STI also booked ₱955 million in operating cash flow, reinforcing its ability to fund ongoing campus expansion projects, including new academic centers in Meycauayan, Tanauan, and Alabang.

Stock Price and Valuation

STI shares closed at ₱1.42 on November 17, 2025, giving the company a market capitalization of about ₱14.06 billion. The stock has traded between ₱1.17 and ₱1.81 over the past 52 weeks and is up roughly 18–22% year-on-year, outperforming the broader PSE index.

Valuation metrics suggest STI remains undervalued relative to peers:

Price-to-Earnings (P/E): ~6.1x vs peer average of ~9x (FEU: 9.4x, CEU: 9.7x, iPeople: 5.8x).
Fair Value Estimate: Independent models peg STI’s intrinsic value at ₱3.48, implying a ~59% upside from current levels.

The company also offers a 3.1% dividend yield, supported by a policy to distribute at least 25% of prior year core income.

Investor Takeaway

With strong quarterly earnings, a favorable enrollment mix, and a healthy balance sheet, STI Holdings appears positioned for sustained profitability. At current levels, the stock trades at a discount to both its estimated fair value and sector multiples, making it an attractive option for investors seeking exposure to the Philippine education sector.

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