G8 continues its expansion push

G8 Education is back to all-time highs on news of further expansion to Australian education centres.

GEM has announced the acquisition of 63 new centres from a variety of vendors, taking its total centre portfolio to 296.

The settlement price is approximately $104.7 million, which GEM believes equates to four times the forecasted EBIT of CY14 of $26 million. Having seen GEM report an NPAT of $15.7 million in the first half of 2013, expectations are high for the full year numbers when they are released on February 17.

GEM’s funding plans for the acquisition will be divided between existing cash reserves and debt with a settlement date of April 30. This deal will see GEM being able to house 21,792 early learning and preschool students per day, with the new centres adding 4254 extra positions.

With dual-income families becoming the norm, demand for early learning centres is only expected to increase and this is something GEM is well aware of, which is why it is investing heavily now in centre numbers. If, come February 17, the NPAT is aligning with this social trend, today’s record high may be replaced with another record.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.