If school lockdowns become widespread - these small caps could help

In the last week, a handful of schools in Australia have closed due to coronavirus cases — so far two in Sydney and two in Melbourne.

In China and Italy society-wide lockdowns have hit schools as well and inevitably if a similar lockdown were to happen in Australia, it would not exempt educational facilities.

Victorian Premier Daniel Andrews and Federal Education Minister Dan Tehan refused to rule this out this morning.

Even if only individual schools close, keeping students keep up to speed will be a challenge. But there are companies, including a handful on the ASX, that may be able to help.

Kiki Tanousis, the CEO of unlisted company Accelerus XUNO told Stockhead students and teachers needed a sense of normality in their education even if life was disrupted.

“Life’s gotta go on and people have to be prepared and I think it’s important that educators retain a measure of control,” he said.

Last night Accelerus XUNO asked schools to consider what they would do if they were compelled to close.

“The important thing we do is allow two-way communication. So that’s something that the latest technology can do and was impossible 10 years ago,” Tanousis said.

The ASX beneficiaries

One of the ASX-listed players that could potentially benefit from the need for education stability is 3P Learning (ASX:3PL), which offers digital learning resources, specialising in mathematics, literacy and science. It is the company behind Mathletics and Spellodrome.

3P Learning did not comment on the coronavirus when it released its half-yearly results last month, but the company did say it expected to see earnings growth in the second half of the financial year.

Meanwhile, China-based Retech Technology (ASX:RTE) offers online courses including in English language, ESG education and vocational education for the digital media industry.

In late January Retech said “our business continues to thrive as education groups turn to online resources to train and educate their employees”.

The company reiterated its ability to thrive in the current situation when it released its preliminary final report a month later, noting that it made the Australian government’s whitelist of online delivery solution providers to help students stuck in China.

Retech has several multinational corporate clients including Mercedes-Benz, Bank of China, Huawei and McDonalds.

ReadCloud (ASX:RCL) distributes textbooks online for schools and VET providers all on one platform. Like 3P Learning, it did not comment on the coronavirus situation, but is also expecting growth this year.

And even if schools move online, they’ll still need teachers. Schrole (ASX:SCL) has a solution that covers teacher recruitment and management.

So far this year Schrole has seen stronger growth than last year. For the first half of FY20 it reported $4.9m in annual recurring revenue, a gain of over 6 per cent compared to FY19.