Report

Systematic Ideas -Asia Pacific - Australia 30 Oct

Long G8 Education (GEM AU)

G8 Education is a company in the child care / education business that has, within 5 years grown revenues from $179m in 2012 to $778m in 2016. They have also grown from 80 centers in 2010 to over 400 in these 6 years including 20 in Singapore.  They have been profitable every year and have been steadily improving gross margins since 2009.

It looks like the market is starting to recognize the merits of this being a consistent Return on Equity and strong margin business.

The runaway ahead continues to look strong; both organic and acquisition opportunities lie ahead for the group subsequent to their foray into Singapore.  China First Capital Group has recently acquired a 12% stake in G8 at US$210 mn with a view to get foothold into the Asian ramp-up in Singapore and beyond.

The stock has been consolidating for the last 3 years after the meteoric rally from 2011 to 2014 (Fig. 1). This consolidation looks complete now and the stock looks ready for its next chapter of growth.  Our systematic models are highlighting this potential.

 

Underlying
G8 Education Limited

G8 Education is engaged in the operation of early education centres owned by Co., and ownership of early education centre franchises. Co. operates in Australia and Singapore.

Provider
Deydun
Deydun

Deydun Markets

 Deydun Markets, founded in 2010 and based in London, is a specialist quantamental research boutique. The client base includes institutional equity investors across the spectrum audience primarily from fundamentally driven long term investors to long / short high turnover hedge funds. Deydun covers all global markets through a macro lens as well as bottom up stock picking with the major overlay being the proprietary quantitative models that we have built over the years. The models are rebalanced to suit clients specific needs including quarterly, semi-annual and up to annual rebalance.

 Deydun specialises in providing real-time securities recommendations including providing market timing advice and actionable short-only strategies. They use robust quantitative approaches to help isolate alpha for their clients. The systematic models attempt to be:

 Right at the right time

  • Avoid drawdowns
  • Maximise diversification

 The differentiated suite of empirical models that Deydun has developed adapt dynamically to mean reversion and momentum states.

 The Deydun service is delivered through notes, “Key Thoughts”, that highlight new stock ideas and track the real-time performance of all the Live Book as well as those in the (unique) Flip Book when they have changed the side of the recommendation. These prove outstanding records of divining alpha in very liquid global equities. The models typically achieve 15% to 35% CAGRs in blind forward and real time proofing over one to two business cycles.

 Deydun endeavours to provide each client with independent and relevant ideas and transparently track all their calls. Tier one clients receive a bespoke portfolio service and often share their positions to enhance the impact of the Deydun service.

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