G8 Education's FVE Cut 11% to AUD 4.00 Due to Long-Term Competitive Pressures
We have cut our fair value estimate for no-moat-rated G8 Education by 11% to AUD 4.00 per share, largely due to a reduction in long-term profit margin forecasts. We are concerned about the oversupply of child-care centres and the fall in G8's occupancy rates to 78% as at the end of April, the lowest the company has reported since 2011. Surprisingly, management expects first-half EBIT and EBIT margin to increase, thanks to price rises and cost-cutting; however, this response is arguably unsustain...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.
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