GEM
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.
In charts
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).
Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.
This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.
Please note that past performance is not a reliable indicator of future performance.
General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.
Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.