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GEM - G8 Education

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ukulele said:
a 12 month closing high on friday on decent volume. Any more opinions on the chart by our esteemed members; it does look like it could break out.

Or perhaps it's just a bit of a run due to it's dividend which should be announced soon?
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IMO the BO has already occurred. I have been holding for a while as a momentum trade - but reduced my position as the big spikes down have been giving me worries...and I felt there was plenty of safer opportunities to redistribute into.
 
Cheers for the insight. I suspect you and I differ a bit on time frames. I am still deciding on an "overall strategy". At the minute I have a "trading account" and a longer term "investing account" which the GEM purchase falls into. The wild swings do scare me but I will be holding longer term.

For my own education, and possibly others, care to share your entry and exit into GEM? Would a technical trader buy when the gap was filled on 29 apr or 02 May. Still a noob and working on strategies.
 
G8 is one of Canaccord's top Australian stock picks for their September quarter report. Their 12 month target is $4.94.
http://www.codan.com.au/DesktopModules/Orizonti_NukeNews/getLink.aspx?pid=0&tid=-1&newsid=833

"G8 Education (GEM-ASX) – GEM is the largest operator of childcare and learning centres in Australia operating over 450 centres. The company trades on attractive metrics despite its strong track record of growth - 5 year (2010-2015) EPS CAGR of 36.7%. We are forecasting EPS growth of 24.2% in FY16 and 10.3% in FY17 driven by a combination of organic and acquisitions growth. With a fragmented market offering further acquisition growth and regulatory tailwinds we see further growth ahead."
 
Half Year results are out and they are less than stellar.

It was a blood bath at opening today at only $2.76. As of posting this post, the stock is down 75 cents (-20.33% vs yesterday's close).

My biggest questions is, how does this affect dividends?
 
got out of it. Will keep an eye on it for a re-entry though!

Headline says quarterly div will remain the same.
 
ukulele said:
got out of it. Will keep an eye on it for a re-entry though!

Headline says quarterly div will remain the same.
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You got out today? Or before? It really looks like the market is severely overreacting right now. It looks like a great time to buy under $3.
 
Dzaak said:
G8 is one of Canaccord's top Australian stock picks for their September quarter report. Their 12 month target is $4.94.
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Wow what a recommendation!

Growth by acquisition via debt is all they seem to be able to do. When interest rates rise, they could put Eddie behind the wheel.

 
GEM looks primed for a leg up now that it has broken $3.20. This stock sure was a dog's breakfast for those who bought in pre-earnings report and there continues to be risk with such as highly leveraged business.

That being said, TA is looking good right now. For those who have accumulated anywhere between $3.00 to $3.10, they would be jumping up and down with their great div yield and the pricing turning around now.

This half is also seasonally the good half for this industry. So GEM is looking good for the next few months so GEM is looking good in both FA and TA right now.

We'll see if it stays this way in 6-8 month's time, but this looks like a good buy if you at least are looking to sell out in 6 months.

DYOR
 
Dzaak said:
GEM looks primed for a leg up now that it has broken $3.20.

That being said, TA is looking good right now.

GEM is looking good in both FA and TA right now.

DYOR
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What is special about breaking $3.20.....please explain..????

Technically the stock is still in a downtrend.

The FA I am looking at shows this company in a distressed state financially.
 
Triathlete said:
What is special about breaking $3.20.....please explain..????

Technically the stock is still in a downtrend.

The FA I am looking at shows this company in a distressed state financially.
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I have to agree, i know the fools seem to like this stock but that usually rises more alarm bells to me.

It has a load of debt due to its acquisition strategy a few poor acquisitions could see this stock price tumble.
 
And now it's $3.31!

Call me a fool if you like, I never said it was a smart long-term investment. I quite clearly outlined it being risky due to the high debt. I have to agree that it is not a smart long-term investment, but that wasn't the point of my post.
All I said is that the indicators are there to buy now and sell out in 6 months. Seasonally, we are coming up to the larger earnings half for the childcare industry and GEM was confirmed as an up-trend when it broke $3.20 before my last post.
 
Dzaak said:
And now it's $3.31!

I never said it was a smart long-term investment.

I quite clearly outlined it being risky due to the high debt.

All I said is that the indicators are there to buy now and sell out in 6 months.
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So can you give us a further indication as to what price you are expecting this stock to run to..??

or at what price you would get out at.
 
Triathlete said:
So can you give us a further indication as to what price you are expecting this stock to run to..??

or at what price you would get out at.
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First of all, It's too late to buy now. At the current price, the risk/reward just isn't worth it now, but it was great when it was in the trading range of $3.00 to $3.10 to accumulate for the stronger 2nd half that seasonally happens in this industry.

Being very conservative, there should be major resistance t $3.60. So I would be looking between $3.60 and $3.65 as the exit point. This stock took it's huge hit after closing at $3.69, so I really don't see this hitting $3.70 unless some dramatic improvements show up on the next report.


Edit: Sorry I thought I'd just putting a large warning on this. I just realized that Shortman listed that last Friday (4th Nov) had 99.45% of stock sold as shorts. That sounds like some sort of error, but if it's not, then it looks very scary for GEM.
As I previously said, this is just a short/mid term play for a trader working on TA. The fundamentals of GEM look pretty average for a long-term investor with such a highly leveraged business. They might be able to really turn things around if they start working on organically increasing occupancy, however any FA based investor should be looking at facts, not the "if's" or "might's" for the future.
 
Reliving this thread, I have bought into GEM even after 3.55. Currently hovering at around 3.54 to 3.58. I intend to buy more if it trends downwards,... Childcare and Education has always been a top priority in the Australian and Singapore governments.
 
Hi WRiley,

I was quite bullish on GEM as a short-term trade a few months ago, and my predictions have come true so far regarding where it would hit resistance and exit strategy around $3.65 (if you are being conservative). It's outstanding div return makes it a strong performer between it's quarterly div announcement and the ex div date that follows it. That's why I haven't exited yet, as I believe it can take the next leg up in the lead up to the next div.

That-being-said, GEM is quite risky, long-term, due to the following reasons:

- Childcare reforms will be announced soon. It sounds like it will make parents better off which should, in theory, mean more business for operators like G8. That being said, we don't really know what the final outcome will be. Also we don't know if parents will be better off due to further government spending (good for G8) or measures put in place to force childcare centres to make their services more affordable (bad for G8). So in some ways, this makes GEM volatile and more of a gamble, than a safe long-term stock.

- G8 has acquired a lot of debt due to their fast expansion. So plenty of risk there.

- G8's div is VERY VERY good. Considering the debt they have, there might be risk for the div to be reduced. G8's performance is really propped up by the great div, so there is risk in the SP falling should that div be reduced.

- And finally, there the huge shadow of ABC learning cast over them. Plenty believe that they are identical business models.

Now some positive points:

- Take what a company publicly says with a grain of salt if you like, but g8 have said that their primary focus now is improving their quality of service. If they can delivery that, then they should have organic growth (instead of growth by acquisition). This would great long-term.

- Change in senior management. Their recent changes are focused towards operational and financial experience. This is good news considering they need to manage their debt while improving quality of service.

- Of course, the previously mentioned childcare reforms can simply just workout perfectly for the industry (still, this is a gamble to bank on).

Good luck.
 
Dzaak said:
G8's div is VERY VERY good. Considering the debt they have, there might be risk for the div to be reduced. G8's performance is really propped up by the great div, so there is risk in the SP falling should that div be reduced.
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Tq Dzaak,.. good explanations there and tq again for the time to write that up,...

I would just comment on yr point in the above - having read many materials and having invested in a few dividend counters, I see in every ctr, there are always possibilities for dividends to be reduced, and there are always reasons that will cause this to happen. There is no way to run away from dividend cut or dividend reduction possibilities.

At least if we have managed to buy a ctr with a good price giving an acceptable higher yield, then even if the dpu is cut, the yield may still be acceptable since it was high earlier.
 
What are posters thoughts on the recent announcement of cap raising and the new Chinese investor coming in?

Against by better judgement, I still hold.

In theory, the share dilution worries me, however the market doesn't agree. This stock has only soared further... probably because the new shares were purchases at such a premium to the current SP.

The thing is, a lot of negative sentiment with GEM has to do with the large debt. The cap raising as alleviated much of this. So is this why the stock continues to soar, even with the share dilution? Its really puzzling.
 
Dilution is when you added a lot more shares or units and the amt of funds in the company is constant or has grown a little only - this is dilution. Hence, more shares 'sharing' same or less funds.

BUT - if the amt of funds has grown very much bigger, as in the shares being sold to this investor at such a premium, then this additional number of shares raised wouldn't constitute dilution too much !
 
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