Shares in online education services provider Wey Education (WEY:AIM) soared 11.1% to 40.5p as it said it expects to exceed market forecasts in both turnover and pre-tax profit for its year to 31 August.
In an update, the £53.5 million market cap company said the first four months of its financial year had seen trading ‘significantly ahead’ of budget and market expectations, with its services very much in demand during lockdown.
Its services are primarily aimed at schools and local authorities who need to provide alternative education services to children who find attending mainstream school difficult.
It also has a non-selective fee paying online secondary school called InterHigh, which provides live, interactive teaching of GCSEs, A Levels and some vocational courses.
The company’s shares have been on a roll in the past year and have almost trebled from the 13.5p mark they stood last January.
In its full year results to 31 August 2020 published in November, the firm reported a 38% rise in turnover to £8.4 million and swung to a £500,000 pre-tax profit compared to a £693,000 loss the previous year.
The firm said at the time that it’s outlook was ‘unequivocally optimistic’ and that the pandemic and subsequent changes in behavior ‘have presented yet further opportunities’.
WEY TO ‘CONTINUE INVESTING IN GROWTH’
In today’s update chairman Barrie Whipp said: ‘We are very pleased with the company's performance in the early part of the financial year which we envisage continuing during the rest of the year.
‘The board intends to continue investing in growth; this is not the time to consolidate, but to continue to push forward.’
Meanwhile, following a group structure and tax review, the company also reported that InterHigh will now charge VAT to its UK clients.
It said this change will also allow it to recover VAT on UK expenditure and ensure that future InterHigh profits are distributable.
Analysts at broker WH Ireland said: ‘Today’s announcement is one of the clearest indications yet of the momentum in the business.
‘The company continues to do more to grow its platform, present and future, and has highlighted an ongoing commitment to investing in the business to provide further support for future profit acceleration.
‘Nonetheless, despite this investment, the operating gearing is now clearly coming through.’
The analysts have upwardly revised their fair value estimate of the stock to 45p from 34p, equivalent to a 2022 EV/EBITDA multiple of 16.7 times.