Recently, on 29 April 2019, the shares of GEM and TNK, childcare companies zoomed up on ASX. The reason behind this sudden upsurge of stocks is attributed to the announcement, of taxpayer-funded childcare package, made by the Labor leader Mr Bill Shorten on 28 April 2019. As per the analysts, the new Labor childcare policies would prove to be advantageous to the shareholders in the childcare groups on ASX.
Let’s quickly have a look at the two childcare stocks: GEM, TNK
G8 Education Limited
G8 Education Limited (ASX: GEM) offers quality care and education facilities throughout the Australian and Singapore region, by an array of well-known brands. The company was listed on ASX on 5 December 2007 and is domiciled in Queensland, Australia.
On 30 April 2019, the company announced that its Securities Trading Policy had been renewed.
In its annual report for the period ending on 31 December 2018, the company mentioned that in 2018, more than 170 refurbishment and asset improvement activities were commenced in 2018 (a record outcome). It further mentioned that successful execution of a $500 million syndicated bank debt facility was made during the year. On the operational front, during the period, the company procured 16 early education centres and divested 8 centres in Australia.
By the end of the period, the company noted the revenue of $858.2 million. The underlying NPAT was recorded at $79.4 million, while the underlying EBIT was noted at $136.3 million. Also, the underlying EPS was at 17.54 cents per share.
The stock of the company last traded at A$3.00, down by 1.961% (as on 3rd May 2019) from its previous day’s closing price. The market capitalisation of the company is around A$1.4 billion with 458.4 million shares outstanding. In the last six months period, the stock has given a yield of 51.49%, and its YTD stands at 12.50%.
Think Childcare Limited
Think Childcare Limited (ASX: TNK) offers exceptional childcare and education for children across the Australian region. The company was listed on ASX on 24 October 2018 and is domiciled in Drummoyne, NSW.
On 18 April 2019, the company released the documentation for the 2019 Annual General Meeting to be held on 28 May 2019. The meeting would be held at 10: 30 AM at RACV City Club, Melbourne VIC 3000.
In its Annual report for the period ending on 31 December 2018, the company reported the underlying NPAT at $5 million. The net cash from operating activities was noted at $ 8.9 million from $ 5.4 million on pcp. The net cash used in investing activities was at $21.4 million from 14.9 million on pcp. The company recorded the revenue at $85.3 million from $65.5 million on pcp. The cash and cash equivalents at the end of the year were noted at $ 3.6 million from $ 0.451 million on pcp.
During the period, the company acquired 9 childcare services at four times EBITDA multiples, of which 8 were on an earn-out and clawback arrangement.
The stock of the company last traded at A$1.735, up by 4.518% (as on 3rd May 2019) from its previous day’s closing price. The market capitalisation of the company is around A$100.39 million with 60.47 million shares outstanding. In the last three months period, the stock has given a yield of 2.47%, and its YTD stands at 22.96%.
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