The listed childcare sector has been popular with investors, but emerging oversupply and affordability issues mean that all is not well in the sandpit. The operators are banking on the government’s revised subsidy scheme to revive their fortunes.
G8 Education ((GEM)) is withstanding headwinds in its business, amid increased supply of childcare places. The company has renewed its management, board and operating perspective and, having raised new equity, is now focused on growing occupancy.
Brokers find the current valuation of child care provider G8 Education ((GEM)) undemanding, although uncertainty surrounding occupancy keeps several from being more positive. The company is intent on transforming its operations and increasing occupancy levels while government rebate changes, due in July, are expected to improve the industry’s dynamics.
While supply remains a concern, UBS suggests the overall availability has not deteriorated further. The broker expects the demand/supply balance to return over time and the changes in government funding should be a major positive over the next few years.