March 5, 2008 VANCOUVER (Dow Jones) With all the hoopla associated with resource companies these days, it's also important to think about what's behind the basic everyday needs of such companies - a skilled workforce, one that's educated.
When talking to chief executives from around the world, education continually pops up as a key issue, whether it's the need for skilled day labor or an MBA-trained student who can handle the functions of the back office.
The emergence of India, China and southeast Asia mean everything from the English language to diesel repair must be taught in order to equip a giant-size workforce that can work and function in a global economy.
Enter CIBT Education Group Inc. (CPT.V).
It's only been around since 1994, but it's been consistantly growing - more so recently, with its acquisition of Sprott-Shaw Community College, a century-old career and academic college in Canada.
That acquisition has given CIBT President and Chief Executive Toby Chu the wherewithal to further expand a 14-year-old education business outside of China, across Asia and into North America.
Fundamental Research Corp. analyst Brian Tang said in a recent report that "CIBT has been progressing very well with their new spoke-and-hub strategy."
Since December, CIBT has ramped up eight agreements to start vocational and education centers in various locations, he said.
Chu affirms that view. "We continue to expand; we now have 23 locations in China alone and we are still growing," he said. "We've been growing from northern China to the south...because we're building this hub-and-spoke system."
That basically means a central teaching facility and a number of satellite "classrooms" where students can congregate and watch and learn - from a distance.
Taking Education On The Road
And, as mentioned, Chu is finally taking this business model into other parts of Asia, now that the management structure has matured and is firmly in place. He started out by taking a relatively cautious approach to his business, focusing on the northern part of China as he solidified CIBT's team. And now that that's done, he's on a bit of an expansion push across Asia.
"Most of the Asian counties, right from South Korea all the way to China, they all realize that in order for you to make more money, as individuals, you need to move your skills, especially language skills, towards being able to deal with international trade and working for multi-national companies," he said.
In other words, these are people who realize that working for a state-owned enterprise probably isn't the best use of their skills in the long run. And Chu is taking advantage of that by giving people what they want - education, skills and the building blocks to improve themselves.
Ultimately, running an education business is all about healthy margins and what is a fairly predictable revenue stream - students pay for a course or degree and generally stay until that's been obtained after one to four years. CIBT offers everything from MBAs to language courses to casino and hotel management - what can only be a big draw at its Zhuhai campus, which is just down the road from Macau and its many casinos.
"There's not a lot of surprises in this business and the margins are good because it's a service-oriented business," Chu said. "And, on top of that, it's recession-proof because when there is a recession, people tend to go back to school."
What's more, in China, for example, Chu is really only going for the top 5% of the population - that's something in the neighborhood of 100 million people, which is still about three times the population of Canada.
"We look at consumer spending; if you can afford a car - and China has now become the second-biggest automotive market in the world - then you can afford to put your children into school," he said.
Company Web Site: http://www.cibt.net
-Brian Truscott, Dow Jones Newswires; 604-669-1595; firstname.lastname@example.org