G8 Education Limited (GEM)

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General Information
Company Name: G8 Education Limited
Stock Code: GEM
Website: www.g8education.com.au
GICS Sub-Industry: Education Services
Market Cap ($M): 1,296
Equiv. Shares (M): 362

Current Price Data+
Current Price Open High Low Last Close Volume Price Movement
 $ 3.580 $ 3.690 $ 3.690 $ 3.500 $ 3.690 2,843,629 $ -0.110  -2.981 %

Current Broker Consensus Recommendation more
Recommendation: Buy (1.5)
Recommendation Date: 16th Apr 2015
Brokers Surveyed: 2

Company Overview

Business Description:
G8 Education Limited (GEM) is a childcare center operator providing developmental and educational child care services mainly in Australia. GEM conducts a range of child care service activities, including: the acquisition of child care centres, the management of child care centres, industry-related project management, services and consultancy. GEM also operates child care centres, both owned and franchised, in Singapore.

Strategy Analysis:
G8 currently holds a portfolio of premier childcare brands and chooses to navigate this quality tilt through its corporate architecture as the company continues to stress the tremendous importance of outstanding childcare. This strategic positioning of its product, disseminating quality and safety allows the G8 to command relatively high margins. In addition to this, a wide distribution spanning Australia and Singapore gives the company leverage to capitalise on demographical changes. Growth will stem from both potential acquisition opportunities and through more organic means. G8 Education reported NPAT up 11% to $19.21m for the year ended 31 December 2012. Revenues from ordinary activities were $179.99m, up 26% from last year. Diluted EPS was 8.94 cents compared to 9.27 cents last year. Net operating cash flow was $19.95m compared to $11.76m last year. The final dividend declared was 2 cents, taking the full year dividend to 6 cents compared with 4 cents last year.

Financial Summary
Year to Dec NPAT EPS EPS chg (%) PER DPS Yield (%) Franking (%)
2016  F 122.4 30.7 11.8 11.7 28.6 8.0 100.0
2015  F 103.5 27.4 47.6 13.1 24.2 6.8 100.0
2014  A 60.6 18.6 58.5 24.4 19.0 4.2 100.0
Source: Morningstar analyst estimates.

Peer Comparison
EPS Growth (%) P/E (%) Dividend Yield (%)
Company Mkt Cap 2014 A 2015 F 2016 F 2014 A 2015 F 2016 F 2014 A 2015 F 2016 F
Affinity Education Group (AFJ) $243 M -- 0.3807 0.3120 12.5298 9.0752 6.9170 0.00 6.72 8.90
G8 Education (GEM) $1,336 M 0.5810 0.4911 0.1491 19.9137 13.3550 11.6220 5.15 6.66 7.67
Navitas (NVT) $1,690 M 0.0996 0.1680 0.1125 20.5492 17.5940 15.8154 4.34 5.68 6.33

Market Comparison
Earnings P/E Ratio P/B Ratio P/E Growth P/S Ratio
GEM 0.41 16.9 2.34 0.54 2.44
Market 0.91 16.4 1.30 2.38 1.62
Sector 1.20 19.4 2.45 1.17 2.10

Name Position Start Date
Mr Chirstopher John Scott Managing Director 25 March 2010
Ms Jennifer Joan Hutson Non-Executive Chairman 25 March 2010
Mr Brian Hilton Bailison Non-Executive Director 25 March 2010
Mr Matthew Reynolds Non-Executive Director 17 March 2015
Ms Susan Margaret Forrester Non-Executive Director 01 November 2011

Name Position
Jason Roberts Chief Executive Officer
Christopher Sacre Chief Financial Officer,Company Secretary,Chief Operating Officer

Substantial Shareholders
Holding Name
19,206,406 (5.35%) UBS Group AG and its related bodies corporate
19,576,569 (5.45%) National Australia Bank Limited and associated companies
28,291,421 (7.87%) Bennelong Funds Management Group Limited

Calendar of Events
Date Event
15 February 2016 Report (Annual)
15 February 2016 Report (Prelim)
10 August 2015 Report (Interim)
© 2011 Morningstar, Inc. All rights reserved. The data and content contained herein are not guaranteed to be accurate, complete or timely. Neither Morningstar, nor its affiliates nor their content providers will have any liability for use or distribution of any of this information. To the extent that any of the content above constitutes advice, it is general advice that has been prepared by Morningstar Australasia Pty Ltd ABN: 95 090 665 544, AFSL: 240892 (a subsidiary of Morningstar, Inc.), without reference to your objectives, financial situation or needs. Before acting on any advice, you should consider the appropriateness of the advice and we recommend you obtain financial, legal and taxation advice before making any financial investment decision. If applicable investors should obtain the relevant product disclosure statement and consider it before making any decision to invest. Some material is copyright and published under licence from ASX Operations Pty Limited ACN 004 523 782 ("ASXO"). DISCLOSURE: Employees may have an interest in the securities discussed in this report. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/fsg.asp.


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