What Led to Rise in G8 Education Limited and Think Childcare Limited?

  • Dec 03, 2018 AEDT
  • Team Kalkine
What Led to Rise in G8 Education Limited and Think Childcare Limited?

Two stocks which are engaged in the business of childcare services have managed to close the session on December 3, 2018 on the strong note. G8 Education Limited (ASX: GEM) and Think Childcare Limited (ASX: TNK) ended today’s session by witnessing a rise of 4.643% and 1.974%, respectively. The primary reason which have supported these stocks was the favourable outlook by the Commonwealth Bank of Australia (ASX: CBA). As per the bank, the mergers as well as acquisitions are expected to boost moving forward in the childcare operators. This view from one of the leading banks operating in the Australia has actually supported the stocks on December 3, 2018.

Not so long ago, Think Childcare Limited has issued a press release which contained information related to the acquisitions done by the company. As per the press release, the company has managed to acquire five childcare centres. The company at that point stated that it would be purchasing these childcare centres from incubator partners. It also stated that the purchases of the centres would be financed with the help of the debt facility. It seems like Think Childcare is more inclined towards the marketing activities. The company had stated that they would be shelling out $350,000 towards the marketing campaign which would be organised between November to February.

Earlier, Think Childcare Limited also reported their H1 2018 financial numbers. As per the presentation which was released by the company, there was a rise in the revenues because of the management fees as well as acquisitions. However, these increased revenues got offset by the deployments towards the operations as well as unfavourable performance in regard to the 2017 Base centres. In the H1 2018, the company generated revenues amounting to $33.9 million which implies the rise of $4.7 million on the YoY basis. This rise was mainly aided by the acquisitions which were done by the company in 2017 as well as in H1 2018. The presentation also consists of the information related to the balance sheet of Think Childcare Limited. At the end of June 30, 2018, the company had cash of $3.9 million.

Over the past one month, Think Childcare Limited (ASX: TNK) has delivered the return of 29.91% while G8 Education Limited (ASX: GEM) has managed to deliver the return of 39.30%. The market capitalization of G8 Education Limited stood at $1.28 billion while its annual dividend yield stood at 9.46%.

While CBA came up with some viewpoint on the childcare industry, the stock of CBA itself moved up by 0.449% on December 03, 2018 and closed the session at $71.550 per share. The market capitalisation of the bank is $126.09 billion, and the annual dividend yield of the bank is 6.05%. The stock of Commonwealth Bank of Australia is trading slightly towards the lower range. In the past one month, the bank has delivered the return of 4.50%.


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