�۶���Ƶ

No silver bullet, but composition of macro factors could help understand intake

In this report we analyse which macro factors have greater potential to suggest future intake trends and the sector drivers for 2025. Our analysis suggests three main factors are worth��monitoring on intake: 1) income levels; 2) unemployment rates; and 3) household indebtedness. In our view, combining these factors could help to explain an overall softer demand for higher education courses, considering that unemployment levels in Brazil continue to be in the lower limit of the historical range. Overall, we believe decelerating economic activity along with potentially higher unemployment rates and inflation in the short/mid-term could bring headwinds on intake trends.

Higher correlation on unemployment; income and indebtedness also important

We ran a correlation study encompassing 28 macroeconomic and trend indicators over the past decade. The main conclusions we got were: i) a 75% negative correlation between total intake and unemployment rates; ii) positive correlation between sector growth and all 11 income group breakdowns; and iii) a negative correlation of 51% between private courses' intake and household indebtedness levels. We highlight that, with the ramp-up of DL courses in the last years, correlation studies seem��fuzzier for this modality and we found clearer conclusions when analysing private on-campus figures.

Mixed drivers and new variables could explain the soft recent intake

Most relevant data from 2024 reveals a marginally improved landscape compared to the challenging years of 2021 and 2022, but intake performance remains largely flat relative to 2023. Besides unemployment, other key macroeconomic indicators continue to paint a picture of a challenging environment for the education sector in the near term. Notably, the DL segment, which had been a significant growth driver in recent years, appears to be losing momentum. In our view, it is also important to take into account the potential negative impacts of individual income being directed to Bets, even though we still lack relevant data to draw conclusions.

What to monitor in 2025: DL Regulation, Mais Médicos III (MM III) and more

The remaining decisions of the 196 injunctions regarding new Medical seats outside the MM III notice will continue to be an important driver for the sector. On MM III, market consensus expects that authorized through injunctions may be cut from MM III notice. Considering the seats already approved through injunctions in MM III regions, we highlight that this decision would materially weaken the Notice. On M&A, we continue to have a more conservative approach on larger M&A. In our view, most of the potential synergies between two large groups could take a while to materialize (as recent examples suggest). On the other hand, integration challenges between two large groups could be significant in the short term.