Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Afya Ltd (NASDAQ: AFYA) is a Brazil-based company engaged in the education sector. The Company is mainly focused on operating medical schools, offering health sciences courses, which comprise medicine, dentistry, nursing, radiology, psychology, pharmacy, physical education, physiotherapy, nutrition and biomedicine. In addition, the Firm provides degree programs and courses in other subjects and disciplines, including undergraduate and post graduate courses in business administration, accounting, law, civil engineering, industrial engineering and pedagogy.

Kalkine’s Diversified Opportunities Report covers the Company Overview, Key positives & negatives, Investment summary, Key investment metrics, Top 10 shareholding, Business updates and insights into company recent financial results, Key Risks & Outlook, Price performance and technical summary, Target Price, and Recommendation on the stock.

Stock Performance:

• The stock has given a return of 59% in the last six months as well as by 25.89% in past nine months.
• The stock is leaning towards the higher band of its 52-week range of USD 17.69 and 52-week low price of USD 9.66, with the current price broken above an important resistance zone of USD 15.00-USD 16.00.
• The price is currently above both its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of 66.86.

             

1.2 The Key Positives, Negatives, and Investment summary

1.3 Top 10 shareholders:

The top 10 shareholders together form ~65.68% of the total shareholding, signifying concentrated shareholding. Bertelsmann SE & Co KGaA, and Baron Capital Management, Inc., are the biggest shareholders, holding the maximum stake in the company at ~29.91% and ~7.57%, respectively.

1.4 Key Metrics:

In the financial performance analysis of AFYA, presented as a percentage of industry median figures, several key metrics were evaluated over the years FY18 to FY22. The revenue for AFYA increased significantly during this period, growing from 91.4 million BRL in FY18 to 451.1 million BRL in FY22, demonstrating a compound annual growth rate (CAGR) of approximately 46.13%. Gross profit also exhibited substantial growth, rising from 45.4 million BRL in FY18 to 284.6.4 million BRL in FY22, reflecting a CAGR of approximately 58.11%.

Section 2: Business Updates and Corporate Business Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

2.2 Insights of Q2FY23:

Section 3: Key Risks & Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

Stock Performance:

• The stock has given a return of 59% in the last six months as well as by 25.89% in past nine months.
• The stock is leaning towards the higher band of its 52-week range of USD 17.69 and 52-week low price of USD 9.66, with the current price broken above an important resistance zone of USD 15.00-USD 16.00.
• The price is currently above both its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of 66.86.

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation

 

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is November 08, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

 Stop-loss: It is a level to protect against further losses in case of unfavorable movement in the stock prices.