The G8 result is out. Overall, we think it solid, with a slight beat to guidance (NPAT of $45.7m, vs $44.7m consensus) and remain happy holders. Guidance is vague, given the Dec-Jan impacts of Omicron, pointing to weaker occupancy, which is unsurprising, and we think, temporary.
Omicron causing a lot of day-care centres to close, as it ramped up over December and Jan, which weighs on occupancy, and obviously revenues and earnings. Hopefully, with COVID flows declining, this is somewhat in the “rear mirror” moving forwards, as the February numbers would suggest (with Feb looking like the pre-Omicron phase).
Operationally, outcomes are strong, with NPS and Quality of Centre assessments continuing to improve. No matter the company, or industry, if end users (customers/clients) aren’t happy, it’ll show up in the returns over time.
The buyback will likely be well received, underpinned by a strong balance, and (in our view) supporting an undervalued share price.
Bottom line, Jan COVID impacts will weigh on EPS this half, and hence the cautious guidance, but we’ve seen what a return to mid-cycle occupancy looks like (mid 70’s or more)…
…which should drive revenues back to pre-pandemic levels, and ideally higher given the tailwind of supportive macro factors (in this case participation rates, government support, employment growth).
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