UBS observes, while labour pressures exist, the child care sector has been able to pass through a substantial portion of cost inflation to the consumer.
Initiatives from both the federal and NSW government should drive incremental demand and the main risk is ongoing delays in visa approvals affecting the historical portion of workers obtained offshore.
The broker considers the valuation of G8 Education appealing on a relative basis and retains a Buy rating and $1.34 target.
Sector: Consumer Services.
Target price is $1.34.Current Price is $1.03. Difference: $0.31 – (brackets indicate current price is over target). If GEM meets the UBS target it will return approximately 23% (excluding dividends, fees and charges – negative figures indicate an expected loss).
