Site Group International Enters Major Training Cooperation with Saudi Water Academy
SITE GROUP INTERNATIONAL LIMITED (SIT) Share Update July 2024 Monday 29th
Site Group International Signs Training Cooperation Agreement with Saudi Water Academy
Site Group International Limited (ASX: SIT) has announced a significant partnership with the Saudi Water Academy, aiming to enhance workforce training in Saudi Arabia.
Instant Summary:
- Agreement finalized with a major governmental department to facilitate training.
- Exclusive use of SWA's training facility with a capacity of up to 1,100 students.
- New revenue model increases potential earnings to over US$7 million annually per training center.
- Site is well-positioned to support Saudi Arabia's Saudisation project.
- Access to state-of-the-art facilities including 32 halls, 20 laboratories, and 7 simulators.
Agreement Details
Site Group International Limited (ASX: SIT), a leading provider of education and training services, has signed a training cooperation agreement with the Saudi Water Academy (SWA). This agreement establishes a long-term partnership aimed at enhancing workforce training in Saudi Arabia.
Under this agreement, Site gains exclusive access to the SWA training facility in Jubail. The facility includes 32 halls for lectures and seminars, 20 laboratories and training workshops, 7 simulators, and fully equipped housing for 240 trainees. This setup allows Site to train 550 students on a single shift, with the potential to double capacity by running dual shifts.
Revenue and Operational Impact
The new revenue model is a significant upgrade for Site. Previously, as a subcontractor, Site earned US$375 per student per month. Under the new agreement, Site will receive between US$980 and US$1,120 per student per month. This change increases the annual revenue potential to over US$7 million for each training center operating on a single shift.
Additionally, Site is eligible for funding from the Human Resource Development Fund (HRDF), which sponsors 75% of training fees, with the remaining 25% covered by employers. This funding model will form a substantial part of Site's business strategy moving forward.
Supporting Saudisation
The agreement aligns with Saudi Arabia's Saudisation project, which aims to increase the employment of Saudi nationals in various sectors. The Ministry of Human Resources and Social Development has mandated that companies must have 25% of engineering roles filled by Saudi nationals. As Saudisation extends to more trades, the demand for high-quality vocational training services is expected to rise.
Future Prospects
Site is in the final stages of formalizing training licenses and expects to commence training by September, coinciding with the start of the academic year. The placements available at SWA are anticipated to be quickly absorbed due to the shortage of industrial training centers in the region.
The new revenue model allows Site to recognize all revenue generated, significantly increasing its revenue potential. While Site will now be responsible for all operational costs, this model enhances the capability to replicate the training model across the Kingdom in other sectors and regions.
With these operational constraints addressed, Site is well-positioned to expand its training services and support the growing demand in the region.
This agreement is a significant milestone for Site Group International. The new revenue model drastically increases potential earnings, which is likely to positively impact the company's stock price. The partnership also positions Site as a key player in Saudi Arabia's Saudisation project, potentially attracting more governmental and private sector contracts.
Investor Reaction:
Analysts are likely to react positively to this announcement, given the substantial increase in revenue potential and the strategic alignment with Saudi Arabia's national workforce goals. The exclusive access to state-of-the-art facilities further strengthens Site's market position.
Conclusion:
Investors should keep an eye on Site Group International as it begins to implement this new agreement. The potential for increased revenue and strategic positioning in Saudi Arabia makes Site a compelling investment opportunity. Stay informed on further developments and consider the long-term benefits of this partnership.