EVO - Evolve Education

[Snow Leopard]

First I have heard of this:

Evolve IPO runs hot (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11358535)

Best Wishes
Paper Tiger

[Jay]

Had heard that PORSE was being sold, did not know who to though.
Is this where some of the selling in RYM and Sum have/will go??

[Snow Leopard]

Another article in the Herald (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11358673)

going for $1,
loss this FY (2015),
profit next,
dividends all round.

and Norah Barlow.

Best Wishes
Paper Tiger

[GoldenStag]

Loving the prospectus. It has all the box ticking bits. Especially like the dividend policy of 40%-60% NPAT - nice and conservative. The net dividend is okay assuming they can deliver the harmonious amalgamation. A generally professional prospectus.

Not overly keen on only forecast info and none of the previous year info. Presumably they would argue that this is without PORSE and Lollipops, but I still want to know what was running prior to their empire build.

Seems to be a bit rushed to get everything clear before Christmas.

I'm in for this one I think, if I can get some that is.

[GoldenStag]

Not overly keen on only forecast info and none of the previous year info.

Ignore this, it is supplied on the website. A non-event.

[Slam dunk]

Another acquisition for Evolve. Looking forward to the float this morning
https://nz.news.yahoo.com/a/-/top-stories/25687543/au-pair-link-acquired-by-evolve-education/

[axe]

What happened to ABC learning with its MCAP of 2.5 billion in 2006 on the ASX?
They were running the same strategy as evolve.

Good luck for those who are in for the long term. Too much risk for me. Govt changes to funding in this industry are messy to say the least.

I have a feeling that this one will always underperform due to "external factors".

DYOR

[benjitara]

Really like the look of this one myself. Thought the offer price of $1 was very competitive, Impressive margins on projections. Not too worried about regulation pressures... Nice long -termer

[Slam dunk]

Really like the look of this one myself. Thought the offer price of $1 was very competitive, Impressive margins on projections. Not too worried about regulation pressures... Nice long -termer

I agree, I like it too Benjitara. I'm not concerned about govt regulation - it would be an incredibly unpopular move to reduce funding for early childhood education (ECE) with the cost of living the way it is - many families need two earners. From memory the prospectus talked about how the number of women going back into the workforce is increasing by 2% per year. I love companies with significant macro trends fueling demand (think Ryman etc).

I have friends who own ECE centres and they're cash cows.

The directors of this company also have a successful record of consolidating companies (from memory they did it with pharmacy companies) and this model has been successful with ECE centres in Australia recently (delivering significant shareprice appreciation for shareholders). Institutional demand for EVO was strong in Australia (probably in part for this reason).

[noodles]

A broker(Forbar) has started coverage on EVO. Outperform rating and target of 1.21
More details here
http://markets.ft.com/research/Markets/Tearsheets/Forecasts?s=EVO:NZC
and here
http://www.reuters.com/finance/stocks/analyst?symbol=EVO.NZ

[noodles]

A broker(Forbar) has started coverage on EVO. Outperform rating and target of 1.21
More details here
http://markets.ft.com/research/Markets/Tearsheets/Forecasts?s=EVO:NZC
and here
http://www.reuters.com/finance/stocks/analyst?symbol=EVO.NZ

If they do make the target price in the next year, couple that up with a dividend, and you could see 25% returns.

Of course there is further upside if (when) more eps accretive acquisitions are made.

[Beagle]

Norah Barlow and Forsyth Barr, names you can really "trust". Credit Sails, Feltex, South Canterbury Finance, SUM insider trading. Good luck Noodles.

[hilskin]

3 million shares yesterday and another 3 million today - milford buying even more ?

[Slam dunk]

3 million shares yesterday and another 3 million today - milford buying even more ?

Apparently because similar companies to EVO in Aus have had largely positive earnings announcements recently there is Australian institutional demand for EVO (i.e. looking for similar company in NZ)

[hilskin]

Thanks Slam dunk, that would explain it and I will be watching with interest.

Hold.

[Traderwannabe]

Does anyone understand why the share price has dropped after a positive financial report?

[Hectorplains]

Does anyone understand why the share price has dropped after a positive financial report?

They appear fully priced if you compare to their Aussie counterparts. Affinity are trading at a low (79c) down from a Feb high (1.40.) G8 are at 3.30 (hovering around their 12 month low mark.) G8 have a PE of 20. EVO is at 23.

I'm struggling it see where the growth will come from to support those valuations? It's hard to evaluate the earnings potential of an EEC - but there has to be some concrete ceilings around roll size etc. Other aspects of the business, especially Lollipops, are mature (it probably needs revitalising.) Perhaps, they will get some cost savings synergies from centralising the 80 odd aspects of their business, if that's what they're planning? Either way, that's not something that sets my pulse racing.

Looking at the pricing of established dividend yield stock in the current market, EVOs share price, if it is seen as primarily a future dividend play , looks like it has more downside risk yet. Nothing is the report suggests they are chasing growth.

[Joshuatree]

Appreciate you sharing your observations H/P and joining dots. Great first post which wouldn't have come without the question from another first poster:t_up:

[noodles]

They appear fully priced if you compare to their Aussie counterparts. Affinity are trading at a low (79c) down from a Feb high (1.40.) G8 are at 3.30 (hovering around their 12 month low mark.) G8 have a PE of 20. EVO is at 23.

I'm struggling it see where the growth will come from to support those valuations? It's hard to evaluate the earnings potential of an EEC - but there has to be some concrete ceilings around roll size etc. Other aspects of the business, especially Lollipops, are mature (it probably needs revitalising.) Perhaps, they will get some cost savings synergies from centralising the 80 odd aspects of their business, if that's what they're planning? Either way, that's not something that sets my pulse racing.

Looking at the pricing of established dividend yield stock in the current market, EVOs share price, if it is seen as primarily a future dividend play , looks like it has more downside risk yet. Nothing is the report suggests they are chasing growth.
Welcome to the forum Hectorplains.

We can't use FY15 earnings (giving pe=23) as a indicator of value. This is because they are trading for only 3 months for FY15. FY16 is a far better measure. This would give you a pe=10. I would argue that EVO is one of the few bargains left on the NZX.

Their main risk is their short trading history and ability for management to execute without a track record. To date, they have exceeded all their PFI metrics.

I own EVO.

[benjitara]

They appear fully priced if you compare to their Aussie counterparts. Affinity are trading at a low (79c) down from a Feb high (1.40.) G8 are at 3.30 (hovering around their 12 month low mark.) G8 have a PE of 20. EVO is at 23.

I'm struggling it see where the growth will come from to support those valuations? It's hard to evaluate the earnings potential of an EEC - but there has to be some concrete ceilings around roll size etc. Other aspects of the business, especially Lollipops, are mature (it probably needs revitalising.) Perhaps, they will get some cost savings synergies from centralising the 80 odd aspects of their business, if that's what they're planning? Either way, that's not something that sets my pulse racing.

Looking at the pricing of established dividend yield stock in the current market, EVOs share price, if it is seen as primarily a future dividend play , looks like it has more downside risk yet. Nothing is the report suggests they are chasing growth.

I have to disagree. They've stated that acquisition and expansion is firmly on their minds (as stated in the quarterly report they continue to acquire centers ) and even with these acquisitions they'll only occupy approx. 5% of the total eec's in NZ. I thought they were reasonable with their IPO price and have them 10-15% underpriced. It'll be interesting to see how it all goes but I do like the prospects.

[noodles]

I have to disagree. They've stated that acquisition and expansion is firmly on their minds (as stated in the quarterly report they continue to acquire centers ) and even with these acquisitions they'll only occupy approx. 5% of the total eec's in NZ. I thought they were reasonable with their IPO price and have them 10-15% underpriced. It'll be interesting to see how it all goes but I do like the prospects.
The average broker target is $1.28 (or 24% underpriced)

[Hectorplains]

Welcome to the forum Hectorplains.

We can't use FY15 earnings (giving pe=23) as a indicator of value. This is because they are trading for only 3 months for FY15. FY16 is a far better measure. This would give you a pe=10. I would argue that EVO is one of the few bargains left on the NZX.

Their main risk is their short trading history and ability for management to execute without a track record. To date, they have exceeded all their PFI metrics.

I own EVO.


Thank you for the welcome and correcting my PE based assumption. Another aspect that concerns me is the level of intangible assets, most of which I assume is goodwill from their acquisition frenzy? What times EBIT were those purchases made at?

[noodles]

Thank you for the welcome and correcting my PE based assumption. Another aspect that concerns me is the level of intangible assets, most of which I assume is goodwill from their acquisition frenzy? What times EBIT were those purchases made at?

Centres are being bought on 4.9 times EBITDA and are eps accretive

[winner69]

Paradice becoming a SSH is a positive. They stock pickers who generally pick more winners than losers.

Norah being Chair puts the shivers up some people's spine.

And noodles being a shareholder ....don't know if that a good sign or not (couldn't resist that)

Might have a closer look myself .....that definitely a bad sign.

[noodles]

And noodles being a shareholder ....don't know if that a good sign or not (couldn't resist that)

lol. It is a fair call. I get about 50% of my picks wrong. But I quickly work out that I'm wrong and sell. I add to my winners and let them run. For me, I need become a shareholder for a while to really understand the business. What I'm trying to say is that once you have skin in the game, you become a lot more focused.

I also take a lot of comfort from Paradice joining the register.

[Hectorplains]

Centres are being bought on 4.9 times EBITDA and are eps accretive

Thanks for that.

This is interesting - http://www.fool.com.au/2015/06/24/now-is-the-time-to-sell-g8-education-ltd - some of the same factors are in play with EVO.

[winner69]

Thanks for that.

This is interesting - http://www.fool.com.au/2015/06/24/now-is-the-time-to-sell-g8-education-ltd - some of the same factors are in play with EVO.

That's a pretty sad story

One thing I have learnt over the years is that you need to follow the charts with these sort of outfits that growing by acquisition and consolidating a fragmented market.

Sentiment rules. Fundamentals/broker targets and whether acquisitions are eps accretive generally mean squat all. At times they will appear undervalued and at times appear to get more and more outrageously overvalued. Just follow the squiggly line and ride any wave up but when punters turn against the company so does the share price.

One other observation ....at some point in time there always appears to be a point where further acquisitions (counter intuitively) Dont seem to add any more value.

So watching that squiggly line I am .....not that bright at the moment but maybe early days ....or is Norah a drag on the share price.

[winner69]

Different market but same sort of acquisition / consolidation / capturing efficiencies model is Greencross GXL

Their chart reflects whst I was trying to say in above post

[winner69]

Jeez that GEM chart looks pretty sad as well.

Common theme here ..... EVO will need to be something special if tarred with the same brush

Interesting

[noodles]

My favs:
http://www.amazon.com/Beyond-The-Zulu-Principle-Extraordinary/dp/0857190024/ref=pd_sim_14_1?ie=UTF8&refRID=04CZQRTA693WF40RYPJS
http://www.amazon.com/One-Up-On-Wall-Street/dp/0743200403/ref=pd_sim_14_3?ie=UTF8&refRID=04CZQRTA693WF40RYPJS

[winner69]

Hope you have these as well noodles:


Applied Equity Analysis: Stock Valuation Techniques for Wall Street Professionals – May 14, 2001 by James English


Behavioural Investing: A Practitioners Guide to Applying Behavioural Finance – October 29, 2007 by James Montier

[winner69]

and this is a must

Predictably Irrational: The Hidden Forces That Shape Our Decisions Paperback – April 27, 2010 by Dan Ariely

Good to have a skim through when you do something really stupid and wonder why .... confirms you are normal after all

[Xirr]

EVO - another stock that meets my wouldnt touch with a barge pole test.

#1 risk - Assets - childcare - the value is 'generally' in the location. What, you mean you let them float the company without the underlying property assets? When the lease is up, the owner can in theory tell them to GTFO, rebadge as Poplolly Childcare and reap the benefits. Or just put up rents to eye-watering levels. Quite staggering the market is assuming this will NEVER happen.

Government subsidy - if you dont see the risk in income relying on 60%+ of government money, while at the same time declaring fabulous profits, you are pretty blinkered.

Yep there is home childcare packaged in there as well, but the big sell is the educare centres.

For the reasons above, I see Evolve as one of the riskiest stocks on the NZX, but not being priced that way.

[noodles]

EVO - another stock that meets my wouldnt touch with a barge pole test.

#1 risk - Assets - childcare - the value is 'generally' in the location. What, you mean you let them float the company without the underlying property assets? When the lease is up, the owner can in theory tell them to GTFO, rebadge as Poplolly Childcare and reap the benefits. Or just put up rents to eye-watering levels. Quite staggering the market is assuming this will NEVER happen.

Government subsidy - if you dont see the risk in income relying on 60%+ of government money, while at the same time declaring fabulous profits, you are pretty blinkered.

Yep there is home childcare packaged in there as well, but the big sell is the educare centres.

For the reasons above, I see Evolve as one of the riskiest stocks on the NZX, but not being priced that way.
From the Investment statement
"Evolve Education’s leases vary, but the term of the majority ofleases will be for approximately 15 years or more"
That is longer than DCF calculations! So I don't see this as a risk.

Fair call on the government subsidy. However, we should expect EVO to be one of the lowest cost operators in the industry due to their economies of scale. If government decide to cut subsidies, we might see a lot of other child care businesses close. It is also worth noting that the last budget actually increased child care funding

[Xirr]

From the Investment statement
"Evolve Education’s leases vary, but the term of the majority ofleases will be for approximately 15 years or more"
That is longer than DCF calculations! So I don't see this as a risk.

Fair call on the government subsidy. However, we should expect EVO to be one of the lowest cost operators in the industry due to their economies of scale. If government decide to cut subsidies, we might see a lot of other child care businesses close. It is also worth noting that the last budget actually increased child care funding

Fair cop - I didnt realise the lease terms were that long - have they provided an average lease term across the portfolio?

But - the discounted terminal value after 15 years is around 40% of the sum of discounted terminal value and discounted interim stream of cash flows - so it isn't immaterial.***

I presume any new assets they buy will not be subject to such long lease terms?

Still a risk for mine.

*** depends on the assumptions you use of course, I'm assuming 2.5% growth and an 8.5% discount rate.

[noodles]

Fair cop - I didnt realise the lease terms were that long - have they provided an average lease term across the portfolio?

But - the discounted terminal value after 15 years is around 40% of the sum of discounted terminal value and discounted interim stream of cash flows - so it isn't immaterial.***

I presume any new assets they buy will not be subject to such long lease terms?

Still a risk for mine.

*** depends on the assumptions you use of course, I'm assuming 2.5% growth and an 8.5% discount rate.

I don't have any more info on leases.

In any case, I don't think they will lose their lease. I do not believe the leaser will be nearly as profitable as EVO as they won't have the back office and flexible staff arrangements that come with EVO.

[Beagle]

Anecdotal feedback - I had an interesting discussion with my sister-in-law over coffee yesterday. She works at what was previously an upmarket day care centre in one of Auckland more affluent suburbs which was taken over by Evolve some months back.
I asked her how's things at work and got the following.
Bloody awful.!!...said with a highly discontented frowning look. I took the bait..as you do and asked why ?
Her - The whole atmosphere of the place has changed. We're not allowed to even heat the place properly, (this piqued my interest as I'm aware that according to the world health organisation the minimum temperature for a healthy workplace is 16 degrees Celsius).
Me - What do you mean don't they have a heat pump or two ?
Her - No they have a single electric heater and we're not allowed to run it much.
Me - What has been a typical temperature during the last week inside the centre ?
Her - 11 degrees and if we complain we run a real risk of being fired like my friend was last week. She went on - The kids used to get fresh fruit and decent lunches, now they get cheap rice crackers, (for those that don't know these are the $1 packs of cheap biscuits) and for lunch its mainly pasta and rice.
Me - Because that's the cheapest food they can provide right ?
Her- You got it.
She continued - I wouldn't dare ask for new teacher aids, equipment or toys for the kids...the word has come down, we keep costs to the absolute minimum.
Me - How are parents reacting to this ?
Her - We've had quite a number of parents pull their kids out of the centre in the last few weeks. She continued - I'm really not happy and to make matters worse we don't have quite the ideal number of qualified v unqualified care givers...really they have one too many qualified caregivers for the ideal ratio and I think they're trying to get rid of me and hire an unqualified replacement because its cheaper.
Me - They want to run the leanest legally allowable qualified v unqualified care-giver ratio for the number of kids at the centre to keep costs to the lowest level don't they ?
Her - How did you guess ?
Me - What would happen if you reported the unhealthy environment, (meaning lack of heating), to the authorities ?
Her - I'd be certain to lose my job and get a bad reference so would probably be unable to find another one.
Me - Do the other staff feel the same way ?
Her - Yep.

We then went on and discussed my brothers problems at his workplace....I felt bloody happy to be self employed at the end of that discussion.

Undernourished, cold, discontented kids...is this the future of early childcare in N.Z ?

Me ol mate Norah Barlow...you can really trust her to direct this company in a manner that's in the best interests of our young kids right ??????

Do you really want to invest in a company knowing they're not committed to the very best standards for early childhood education and welfare and that its only for profit. Profit comes before kids welfare...something makes me really uneasy about that.

[couta1]

Hey Roger I think Norah will do an excellent job of teaching kids good eating habits and the consequences of unhealthy choices aye:eek2:

[Snapper]

Anecdotal feedback - I had an interesting discussion with my sister-in-law over coffee yesterday. She works at what was previously an upmarket day care centre in one of Auckland more affluent suburbs which was taken over by Evolve some months back.
I asked her how's things at work and got the following.
Bloody awful.!!...said with a highly discontented frowning look. I took the bait..as you do and asked why ?
Her - The whole atmosphere of the place has changed. We're not allowed to even heat the place properly, (this piqued my interest as I'm aware that according to the world health organisation the minimum temperature for a healthy workplace is 16 degrees Celsius).
Me - What do you mean don't they have a heat pump or two ?
Her - No they have a single electric heater and we're not allowed to run it much.
Me - What has been a typical temperature during the last week inside the centre ?
Her - 11 degrees and if we complain we run a real risk of being fired like my friend was last week. She went on - The kids used to get fresh fruit and decent lunches, now they get cheap rice crackers, (for those that don't know these are the $1 packs of cheap biscuits) and for lunch its mainly pasta and rice.
Me - Because that's the cheapest food they can provide right ?
Her- You got it.
She continued - I wouldn't dare ask for new teacher aids, equipment or toys for the kids...the word has come down, we keep costs to the absolute minimum.
Me - How are parents reacting to this ?
Her - We've had quite a number of parents pull their kids out of the centre in the last few weeks. She continued - I'm really not happy and to make matters worse we don't have quite the ideal number of qualified v unqualified care givers...really they have one too many qualified caregivers for the ideal ratio and I think they're trying to get rid of me and hire an unqualified replacement because its cheaper.
Me - They want to run the leanest legally allowable qualified v unqualified care-giver ratio for the number of kids at the centre to keep costs to the lowest level don't they ?
Her - How did you guess ?
Me - What would happen if you reported the unhealthy environment, (meaning lack of heating), to the authorities ?
Her - I'd be certain to lose my job and get a bad reference so would probably be unable to find another one.
Me - Do the other staff feel the same way ?
Her - Yep.

We then went on and discussed my brothers problems at his workplace....I felt bloody happy to be self employed at the end of that discussion.

Undernourished, cold, discontented kids...is this the future of early childcare in N.Z ?

Me ol mate Norah Barlow...you can really trust her to direct this company in a manner that's in the best interests of our young kids right ??????

Do you really want to invest in a company knowing they're not committed to the very best standards for early childhood education and welfare and that its only for profit. Profit comes before kids welfare...something makes me really uneasy about that.

Hi Roger, very interesting discussion you had. I have had quite a bit to do with childcare centres and find most childcare centre owners very smart, good people. Invariably they have one thing in common, a passion for providing quality childcare. How you translate that to a corporate ownership is beyond me. The corporate operators all look at childcare with sharemarket eyes - they buy at PEs of 4-5 thinking that it is very cheap but not realising how quickly a centre can go from being very profitable to losing money. Most parents can smell a disinterested or stingy owner a mile off.

Re government funding, the government have got good research showing the low term benefits of good quality childcare. Obviously the return gets lower where the kids have a good home environment; at the moment basic funding for children is the same in Remuera as it is in Kawerau which you wouldn't think is sustainable long-term. What is happening now is that the basic funding is staying pretty static while equity funding (which targets low socio-economic, isolation, special needs) is increasing. Funnily enough, I don't see any Evolve centres in Kawerau.

Participation rates are very high now and if you look at long-term population projections of 0-4 year olds then the only major driver of increased demand is going to be increasing attendance hours. For some reason, people have this idea that ECE centres are a license to print money; I would say that a number I dealt with last year were breaking even on an EBIT basis and some were losing money. With a lot more popping up in the main centres there is huge pressure on occupancy - those that had waiting lists a couple of years ago might have vacancies now.

Home-based is where Evolve may shine but that is a relatively small part of their business. If your friend's experience is indicative of the rest of Evolve's centres then parents will desert in droves as there is plenty of choice these days.

[Beagle]

Good post Snapper. I agree with what you've said. For my money and more importantly for the best care for my grandchildren on the face of it a nice caring couple are best placed to lead a team that provides the best possible environment for an early childcare centre. They live and work in the community and build respect and in so doing build profitability.
Corporatizing based on lowest possible input costs appears at least on the face of it to be counter intuitive in terms of maximising profitability given that as you quite rightly point out, there's lots of choice and people generally want the very best for their kids. I was shocked at the temperature issue, cheap and nasty food didn't shock as much.

In my opinion short term measures (like reducing electricity and food costs and lowering qualified staff ratio's and teacher aids to the bare legal minimum), to boost profitability will backfire on this company in the medium to long term as most parents have a finely tuned radar system when it comes to their kids satisfaction and wellbeing.

[noodles]

Anecdotal feedback - I had an interesting discussion with my sister-in-law over coffee yesterday. She works at what was previously an upmarket day care centre in one of Auckland more affluent suburbs which was taken over by Evolve some months back.
I asked her how's things at work and got the following.
Bloody awful.!!...said with a highly discontented frowning look. I took the bait..as you do and asked why ?
Her - The whole atmosphere of the place has changed. We're not allowed to even heat the place properly, (this piqued my interest as I'm aware that according to the world health organisation the minimum temperature for a healthy workplace is 16 degrees Celsius).
Me - What do you mean don't they have a heat pump or two ?
Her - No they have a single electric heater and we're not allowed to run it much.
Me - What has been a typical temperature during the last week inside the centre ?
Her - 11 degrees and if we complain we run a real risk of being fired like my friend was last week. She went on - The kids used to get fresh fruit and decent lunches, now they get cheap rice crackers, (for those that don't know these are the $1 packs of cheap biscuits) and for lunch its mainly pasta and rice.
Me - Because that's the cheapest food they can provide right ?
Her- You got it.
She continued - I wouldn't dare ask for new teacher aids, equipment or toys for the kids...the word has come down, we keep costs to the absolute minimum.
Me - How are parents reacting to this ?
Her - We've had quite a number of parents pull their kids out of the centre in the last few weeks. She continued - I'm really not happy and to make matters worse we don't have quite the ideal number of qualified v unqualified care givers...really they have one too many qualified caregivers for the ideal ratio and I think they're trying to get rid of me and hire an unqualified replacement because its cheaper.
Me - They want to run the leanest legally allowable qualified v unqualified care-giver ratio for the number of kids at the centre to keep costs to the lowest level don't they ?
Her - How did you guess ?
Me - What would happen if you reported the unhealthy environment, (meaning lack of heating), to the authorities ?
Her - I'd be certain to lose my job and get a bad reference so would probably be unable to find another one.
Me - Do the other staff feel the same way ?
Her - Yep.

We then went on and discussed my brothers problems at his workplace....I felt bloody happy to be self employed at the end of that discussion.

Undernourished, cold, discontented kids...is this the future of early childcare in N.Z ?

Me ol mate Norah Barlow...you can really trust her to direct this company in a manner that's in the best interests of our young kids right ??????

Do you really want to invest in a company knowing they're not committed to the very best standards for early childhood education and welfare and that its only for profit. Profit comes before kids welfare...something makes me really uneasy about that.

Roger, That really is a quite shocking account. Maybe I have this one wrong.

[Joshuatree]

Sorry i cannot believe 11 degrees no way.

[winner69]

Sorry i cannot believe 11 degrees no way.

That's why punters are moving to Tauranga .... where it never gets to 11 degrees

[Beagle]

Sorry i cannot believe 11 degrees no way.

I am just telling you what we discussed. In her 50's with over a decade of experience in the sector.
I asked why the temperature was so low and she explained that some of the time, (all the time ?) I can't remember to be honest, they have to keep the door that leads to the outside play area open...something to do with regulations if my memory serves me correctly.

You may recall that it was bitterly cold last week, lowest temperature I can recall in Auckland for years in June so that's probably not a common temperature in there but what does it cost to run a couple of decent heat pumps for goodness sake ? Some of the new model heat pumps have nearly 5:1 efficiency in terms of coefficient of performance. Too much to ask for the centre to be heated adequately ? You'd be happy for your kids / grandkids to be fed cheap rice crackers pasta, rice and noodles with a bit of garnishing...basically the cheapest fillers you can provide ?

[Snapper]

That's why punters are moving to Tauranga .... where it never gets to 11 degrees

You obviously weren't here last week!

[Joshuatree]

You'd be happy for your kids / grandkids to be fed cheap rice crackers pasta, rice and noodles with a bit of garnishing...basically the cheapest fillers you can provide ?[/QUOTE]

Why not ;a billion or 2 Asians do and are healthier and more productive then us. Alternative is fat and sugar laden chippies and snack bars, and 10 teaspoon sugar drinks. they are the cheapest and nastiest. I couldn't make a decision based on one persons opinion; who knows what her agenda is(losing her job maybe) and how accurate; but thanks for sharing anyway Roger.

[winner69]

Before Rogers rather sad post last week the EVO share price was over $1

Now it's not much more than 90 cents

Lets blame Roger for this calamity eh.

Bloody cold throughout the country today, wonder what the temp inside some of the centres are today?

[winner69]

Good H1 announcement ......seems all honky dory with Evolve. Share price up 14% according to headlines

Noodles always said this would come right and be a really good investment.

Wonder what noodles up to these days?

[Beagle]

Back to its issue price of nearly a year ago. Hardly a ringing endorsement of the business model is it ! Word on the floor is many staff are still disillusioned, (those that haven't already moved on).

I understand that at this stage Noodles is not planning on coming back...another victim of...well...you know what... Couta1...I'm giving him support by e.mail and he's a 60/40 chance.

[kiwidollabill]

The Early Childcare space is now very (if it wasn't already) competitive. Alot of capacity has been built which is struggling to be filled.

I hear similar bad stories, including lack of oversight in PORSE

DISC: Family members directly involved in the ECE sector

[noodles]

4th quarter cashflows out today. It is not as strong as it should be.

The prospectus cashflow forecasts are on pg.73
http://stocknessmonster.com/news-item?S=EVO&E=ASX&N=829761

Compare this to today's announcement
https://www.nzx.com/files/attachments/234476.pdf

Receipts from Customers: Actual $137200 vs IPO Forecast $137489
- On the face of it, this is pretty much in line. But when you consider the forecast did not include the 15 ECE's purchased during the year, it is a major miss.

Net cash flows from operating activities: Actual $17660 vs IPO Forecast $23095
- A big miss here. There were some acquisition and integration costs of around 2000, but there is still a major shortfall. Interesting that actual tax paid was less than forecast. This implies less profit.

Full year profit next month. Will they miss forecasts?

[Beagle]

4th quarter cashflows out today. It is not as strong as it should be.

The prospectus cashflow forecasts are on pg.73
http://stocknessmonster.com/news-item?S=EVO&E=ASX&N=829761

Compare this to today's announcement
https://www.nzx.com/files/attachments/234476.pdf

Receipts from Customers: Actual $137200 vs IPO Forecast $137489
- On the face of it, this is pretty much in line. But when you consider the forecast did not include the 15 ECE's purchased during the year, it is a major miss.

Net cash flows from operating activities: Actual $17660 vs IPO Forecast $23095- A big miss here. There were some acquisition and integration costs of around 2000, but there is still a major shortfall. Interesting that actual tax paid was less than forecast. This implies less profit.

Full year profit next month. Will they miss forecasts?

Good post. One wonders if profitability might be diminished as much as is possible / probable by this indicator whether they're honouring their obligations in terms of continuous disclosure surrounding profitability ?

[Beagle]

anecdotal feedback - I had an interesting discussion with my sister-in-law over coffee yesterday. She works at what was previously an upmarket day care centre in one of Auckland more affluent suburbs which was taken over by Evolve some months back.
I asked her how's things at work and got the following.
Bloody awful.!!...said with a highly discontented frowning look. I took the bait..as you do and asked why ?
Her - The whole atmosphere of the place has changed. We're not allowed to even heat the place properly, (this piqued my interest as I'm aware that according to the world health organisation the minimum temperature for a healthy workplace is 16 degrees Celsius).
Me - What do you mean don't they have a heat pump or two ?
Her - No they have a single electric heater and we're not allowed to run it much.
Me - What has been a typical temperature during the last week inside the centre ?
Her - 11 degrees and if we complain we run a real risk of being fired like my friend was last week. She went on - The kids used to get fresh fruit and decent lunches, now they get cheap rice crackers, (for those that don't know these are the $1 packs of cheap biscuits) and for lunch its mainly pasta and rice.
Me - Because that's the cheapest food they can provide right ?
Her- You got it.
She continued - I wouldn't dare ask for new teacher aids, equipment or toys for the kids...the word has come down, we keep costs to the absolute minimum.
Me - How are parents reacting to this ?
Her - We've had quite a number of parents pull their kids out of the centre in the last few weeks. She continued - I'm really not happy and to make matters worse we don't have quite the ideal number of qualified v unqualified care givers...really they have one too many qualified caregivers for the ideal ratio and I think they're trying to get rid of me and hire an unqualified replacement because its cheaper.
Me - They want to run the leanest legally allowable qualified v unqualified care-giver ratio for the number of kids at the centre to keep costs to the lowest level don't they ?
Her - How did you guess ?
Me - What would happen if you reported the unhealthy environment, (meaning lack of heating), to the authorities ?
Her - I'd be certain to lose my job and get a bad reference so would probably be unable to find another one.
Me - Do the other staff feel the same way ?
Her - Yep.

We then went on and discussed my brothers problems at his workplace....I felt bloody happy to be self employed at the end of that discussion.

Undernourished, cold, discontented kids...is this the future of early childcare in N.Z ?

Me ol mate Norah Barlow...you can really trust her to direct this company in a manner that's in the best interests of our young kids right ??????

Do you really want to invest in a company knowing they're not committed to the very best standards for early childhood education and welfare and that its only for profit. Profit comes before kids welfare...something makes me really uneasy about that.

From June 2015 ^^^^
What with it approaching winter and all and being out that way last evening I thought I'd pop in and see my brother and sister in law last evening after visiting my mum out that way.
After the usual pleasantries I asked her how's things at work.
Much the same she said. Most of the staff that used to work there before Evolve took over have now left.
Why's that I quizzed.
They're sick of the corporate B.S. the place has totally changed its all about profit and not about the kids anymore.
Can you give me some examples I asked.
Sure. Anything that breaks down isn't replaced, for example we had 4 ipad's now only two are working and there's no move to replace them.
Basically we have to keep the kids entertained and educated with less and less resources.
She continued on a Sunday evening at 8.30 as she was gathering up craft resources for the next day.
When it comes to art and craft resources for the kids we do it on an absolute bare minimum basis, often I supply them myself. We now have to do after hours parent events unpaid and if we refuse we're told we're not team players. (I didn't go into what's involved with after hours parent events but I am sure people can imagine there's lots of hard work public relations stuff involved).
I asked how is that not part of your normal work duties ? Good question but Evolve aren't the only ones by any means asking staff to do this sort of thing unpaid.
Speaking of bare minimum's I asked how they were getting on with heating with winter almost upon us.
Oh she said, they're supposed to be installing some new heat pumps. She continued, apparently they're required by law to maintain a minimum basic temperature so they've decided some heat pumps are the most efficient way to achieve that.
I had a quiet chuckle to myself and then asked, so when are they coming ? Apparently soon. Christmas is coming soon too I said, rather cheekily, but she replied that she was pretty confident they'd be installed soon.
Any other changes of any merit...not really she said.

Had plenty of other things to talk about so sorry, it was just a brief discussion about her work... just thought I'd update from last year FWIW

[forest]

Interesting snippets of info Roger, much appreciated.

[macduffy]

Well, that shattered my illusions about the mild weather in the winterless North - he said from a much colder, windier climate far, far away.

;)

[Hectorplains]

Lordy, what is it with Edu stocks?

[percy]

Lordy, what is it with Edu stocks?

You may need to rethink,and think Think.
They are going really well.
Code TNK,asx.

[percy]

EVO up 4 cents or 3.8% today,however TNK was "all go" being up 9.2% or 12cents,after a good presentation.

Disc.I hold TNK.

[Beagle]

4th quarter cashflows out today. It is not as strong as it should be.

The prospectus cashflow forecasts are on pg.73
http://stocknessmonster.com/news-item?S=EVO&E=ASX&N=829761

Compare this to today's announcement
https://www.nzx.com/files/attachments/234476.pdf

Receipts from Customers: Actual $137200 vs IPO Forecast $137489
- On the face of it, this is pretty much in line. But when you consider the forecast did not include the 15 ECE's purchased during the year, it is a major miss.

Net cash flows from operating activities: Actual $17660 vs IPO Forecast $23095
- A big miss here. There were some acquisition and integration costs of around 2000, but there is still a major shortfall. Interesting that actual tax paid was less than forecast. This implies less profit.

Full year profit next month. Will they miss forecasts?

Nicely flagged and down she goes again to the IPO level with few buyers with any interest at the close. Again not a ringing endorsement of the business model and with a wider proliferation of early childhood centres and a more fragmented approach with something of an excess supply from what I hear, one wonders if this sector is worth bothering with at all ? Thought I'd ring my sister in law for fun...yes you guessed it, on Auckland's coldest day so far this year no sign of those promised heat pumps, what a surprise. I suppose if you were being generous one might accept the view that normalised profit excluding acquisition costs of new centres did marginally exceed the IPO prospectus forecast. Mr market is underwhelmed and so am I.

[tim23]

Have just added this stock to my portfolio anyone else holding/following?

[percy]

Yes I recently added EVO to both my wife's, and my own portfolio.
Paid 95cents ps.
Thought the agm speeches were very positive.
I am expecting eps growth to be between 11% and 13% which is slightly higher than their current PE of 10.87.The yield is also a satisfactory 5%.

[tim23]

Agree - I also like that Nora Barlow (ex Summerset) is the chair - growth plus income perfect combo!

[Hectorplains]

Agree - I also like that Nora Barlow (ex Summerset) is the chair

Somewhat of a polarising figure...

[percy]

She was a fantastic CEO of Summerset,and is very highly regarded in that field .She is acting CEO at EHE Estia in Australia,as well as being a board member.And that will show how skilled she is.
I still hold some SUM shares,and reaping the rewards of her ground work
Being a people type person I think she is the ideal person to be EVO's chairperson.
I also respect fellow board members Alistair Ryan who was CFO at SKC ,and CEO Alan Wham who was CEO at GXH.

[janner]

The name Nora Barlow, always conjures up images of Coro Street.. and Last of the summer wine.. :-)))))

Sorry ... Will have to do some research..

[DarkHorse]

Yes I recently added EVO to both my wife's, and my own portfolio.
Paid 95cents ps.
Thought the agm speeches were very positive.
I am expecting eps growth to be between 11% and 13% which is slightly higher than their current PE of 10.87.The yield is also a satisfactory 5%.

I've also bought a few recently. Recent SDI gains should cover cost of corresponding expensive dental work; hopefully EVO will take care off some childcare costs and wife's ECE course :)

Wrt to Roger's reports, you always get the odd manager overeager to please the top brass... has lead to all kind of unintended historical as well as modern atrocities... If we knew which centre happy to make an anonymous tip off to NB.

[percy]

Wrt to Roger's reports, you always get the odd manager overeager to please the top brass... has lead to all kind of unintended historical as well as modern atrocities... If we knew which centre happy to make an anonymous tip off to NB.

If we cast our minds back a few years, those type of bad reports were the norm in retirement villages.
Once Ryman and Summerset set the standards the rest had to up their game.
Nora Barlow led by example at SUM,and I expect she brought the same leadership qualities to EVO.

[Hectorplains]

If we cast our minds back a few years, those type of bad reports were the norm in retirement villages.
Once Ryman and Summerset set the standards the rest had to up their game.
Nora Barlow led by example at SUM,and I expect she brought the same leadership qualities to EVO.

Hmmm, I wouldn't hitch too much expectation to one person. Dame Paterson had an exemplary record...until Intueri.

[percy]

I disagree,Ralph Norris,Mark Waller,Bruce Plested,Tim Glasson,Michael Hill,Kevin Hickman, Rod Duke as just a few names that come to mind.
The power of one.!!

[tim23]

Nice rise this week on decent volume liking this stock

[Turtle2]

Nice rise this week on decent volume liking this stock

Bought in at $1.00. Was hoping for a little lower but the intraday $1.03 got me a little worried I'd miss out.

[winner69]

Article nothing to do with Evolve - but highlights that the business model is not sustainable: corporate and shareholder greed will see to that.

http://www.smh.com.au/nsw/its-shocking-their-greed-private-equity-squeezing-profits-from-childcare-20161117-gsrjuq.html

[percy]

Article nothing to do with Evolve - but highlights that the business model is not sustainable: corporate and shareholder greed will see to that.

http://www.smh.com.au/nsw/its-shocking-their-greed-private-equity-squeezing-profits-from-childcare-20161117-gsrjuq.html

As in any business if you give the customer what they want you will get what you want.
Failure to be customer focussed, your chances of staying in business are nil.
If EVO can retain being customer focussed,their prospects remain good.
It should be noted EVO's directors and CEO come from very successful customer focussed businesses.

[Beagle]

Article nothing to do with Evolve - but highlights that the business model is not sustainable: corporate and shareholder greed will see to that.

http://www.smh.com.au/nsw/its-shocking-their-greed-private-equity-squeezing-profits-from-childcare-20161117-gsrjuq.html

As posted before, from inside sources that's pretty much how I have heard Evolve has been run and the results in terms of the poor share price performance since listing speak for themselves. The shares are lower than when they listed just on two years ago and in the same period of time the NZX50 is up 25% including dividends. Even taking into account dividends paid by EVO their listed performance has been poor. The child care centre I referred too in early posts finally got their heat pumps, otherwise its still being run as before. Mrs Barlow as the chair...enough said :D

[Scrunch]

Article nothing to do with Evolve - but highlights that the business model is not sustainable: corporate and shareholder greed will see to that.

There are a number of private equity firms that look to buy well, make short-term improvements in reported profitability and flip the companies based on the new, higher earnings that their "efficient management" have generated. Buying into their IPO's can be a value destroying exercise.

I'm not sure if the private equity firm in the article is operating with this model but it may be. If it is, this article says essentially nothing about the operating model of early childhood centers and everything about private equity trying to squeeze improved profitability (before flipping). With Evolve being a long-term holder it should be concerned with both short-term reported profits and issues like reputation that will impact longer-term profitability.

Also Evolve is a larger group within the sector. This should assist its centers to be slightly more profitable than your "average" center due to scale efficiencies. If the Government then funds sufficiently for modest profitability to exist, Evolves business model can generate could sustainable profitability.

Disc holder.

[winner69]

There are a number of private equity firms that look to buy well, make short-term improvements in reported profitability and flip the companies based on the new, higher earnings that their "efficient management" have generated. Buying into their IPO's can be a value destroying exercise.

I'm not sure if the private equity firm in the article is operating with this model but it may be. If it is, this article says essentially nothing about the operating model of early childhood centers and everything about private equity trying to squeeze improved profitability (before flipping). With Evolve being a long-term holder it should be concerned with both short-term reported profits and issues like reputation that will impact longer-term profitability.

Also Evolve is a larger group within the sector. This should assist its centers to be slightly more profitable than your "average" center due to scale efficiencies. If the Government then funds sufficiently for modest profitability to exist, Evolves business model can generate could sustainable profitability.

Disc holder.

Said like a true investor and probably expecting / demanding higher profits year after year.

Hope not too much of these profits come from what Evolve call 'parental increases' and 'cost constraint'. We know what those terms mean eh

I sometimes wonder if the $20m of profits were reinvested back into the children's development would result in a better outcome for the children/caregivers. Or maybe some price relief would make care more affordable for caregivers.

It just seems that of the $135m of fees/income some $20m going into shareholders pockets seems rather excessive ......probably at the expense of the children/parents ........and not sustainable.

[winner69]

Lots of shares come out escrow next month.

Those involved say they are committed shareholders and have no intention of selling

That's good

[tim23]

Result must be due any day now?

[winner69]

"Parental increases' can't be too bad - Evolve have a NPS of +37

“Our families rave about our centres” it is said

[DarkHorse]

CEO Alan Wham made a presentation at the Shareholders Association meeting last week and noodles and I had a good chance to chat to him at length afterwards. He seems a very genuine and down to earth guy, and with a heartfelt concern for the teachers and children. Nothing "private equity...flip the company" about his attitude. He did say centre managers are crucial - they are like business owner/managers - which I think is the right way to see it.
He had tremendous mentoring at 3M and a great track record with Pharmacy Brands - he took them from a small operator with $5m mcap to $170m mcap over 10 years. He sees similarities in childcare also being a fragmented sector where it's about a public service provided by professionals who are passionate about what they do.
Evolve are not going to shoot the lights out, but look pretty low risk and inexpensive to me for a well-managed company with good cashflows and steady growth prospects over several years
There are a string of great companies which investors have lost interest in for a year or two after the initial IPO hype - Collins Foods is my favourite example of many (esp on the ASX). It's the kind of irrational investor behaviour which creates opportunities.

[percy]

DarkHorse,
Thank you for your post.

[Beagle]

Lots of shares come out escrow next month.

Those involved say they are committed shareholders and have no intention of selling

That's good

How many times have we heard that story before !

[James108]

First impressions are solid result, will look deeper when I get more time. Good to see efficiency increase in base aquisitions.

Chief concerns at the moment are that RoE is only marginally greater than (or even less than) cost of capital. I believe the development centres will increase RoE but this remains to be seen. At the moment have valued company as no growth as I am not fully convinced that RoE>Cost of Capital

For the record I value company as around $1.40

[Beagle]

EPS 5 cps v 4.8 Assume 10 cps for the full year, (my no growth PE is the same one Ben Grahame used 8.5), fair value 85 cps in my opinion if you believe the intangible asset valuation ?

Total Assets $210m of which $197.6m is intangible assets. (Refer to my comments in the Veritas thread for my jaundiced view of intangible assets).

Taking into account debt the net NTA is -18 cps up from -15 cps in the previous corresponding period.

Divvy yield 5% net or 6.9% gross. Disc: Don't hold.

[James108]

To clarify my model is a bit more complex than a p/e.

I modelled it as no growth after the current portfolio has a full year impact + allowing for some increase in efficiency (totally reasonable I believe) and taking into account debt etc. but I have not modelled the impact of future acquisitions as I believe RoE is around about the Cost of acpital currently (hopeful this will prove to not be the case as they develop their own centres).

[percy]

First impressions are solid result, will look deeper when I get more time. Good to see efficiency increase in base aquisitions.

Chief concerns at the moment are that RoE is only marginally greater than (or even less than) cost of capital. I believe the development centres will increase RoE but this remains to be seen. At the moment have valued company as no growth as I am not fully convinced that RoE>Cost of Capital

For the record I value company as around $1.40

Yes a very good steady result.Solid growth with more to come.Business model working.
Revenue growth.
eps growth.
Dividend growth.
Ticks all the boxes for me.
James108,I am very close to you, on your valuation.

[tim23]

Happy with result I bought because I like combination of income and growth

[forest]

The operational cash flow being more then $11mil negative for 6 months does not look to positive to me. Is there an acceptable explanation for this high outflow of cash?

[winner69]

The operational cash flow being more then $11mil negative for 6 months does not look to positive to me. Is there an acceptable explanation for this high outflow of cash?

Evolve said -

Half year operating cash flows are reflective of the phasing of MoE funding receipts, which are received every four months. Only one receipt in the first half of the year.

[forest]

Thanks Winner69

[noodles]

EPS 5 cps v 4.8 Assume 10 cps for the full year, (my no growth PE is the same one Ben Grahame used 8.5), fair value 85 cps in my opinion if you believe the intangible asset valuation ?



The headline eps are not reflective of underlying performance because they paid a lower tax rate and other non-recurring items in 1H16. Pg.13 of the presentation describes this. Actual NPAT growth was 16%.

[Beagle]

Welcome back Noodles, you're a man of very few words these days. Profit growth whichever number you want to hang your hat on, at least in part is coming from the hollowing out of centres in terms of providing children with the absolute bare bones basics. Based on what I have heard I wouldn't be comfortable sending one of my grandkids to an Evolve centre so the question of whether this is an ethical investment is a no brainer for me... but each to their own.

[tim23]

Gee - what have you geard Roger.

[tim23]

Sorry meant "heard"

[noodles]

Welcome back Noodles, you're a man of very few words these days. Profit growth whichever number you want to hang your hat on, at least in part is coming from the hollowing out of centres in terms of providing children with the absolute bare bones basics. Based on what I have heard I wouldn't be comfortable sending one of my grandkids to an Evolve centre so the question of whether this is an ethical investment is a no brainer for me... but each to their own.
I am comfortable that Evolve is an ethical investment for the following reasons:
-Competition is fierce in the ECE world. Parents would simply move to another centre if it was that bad. I think the opposite has happened and parents have been recommend Evolve centres to their friends. Occupancy for the core 84 centres has increased since Evolve took over (by 1 %).
- Evolve undertakes customer surveys. They have a net promoter store of 37
-Teacher ratios are well above government standard.
- The ERO does reviews of the centre. Most ECE are on a 3 year review (good). A few are on 4 (very good). So no issue from the ERO.
- The pay rates for teachers are slightly above the sector average

[Beagle]

Sorry meant "heard"

Have a read from the start of the thread mate.

Noodles, What I have reported is a exceptionally good early childhood centre morphing into a corporatized centre and feedback was from a senior employee that I am related too and hold in very high regard. This was in an area where parents are able to afford the very best for their kids and to be fair may not necessarily be representative of the changes an average privately owned childcare centre would experience changing into a corporatized model. The reality for logistical reasons is I think most parents just take what they can get in their local area and changes in EVO's occupancy could be as much to do with demographic factors including the rapid influx of migrants as anything else. You absolutely loved Veritas at one stage it was your top pick. I made the argument that those sort of business's are poorly suited to the corporate model. Corporatizing bars and food outlets hasn't worked and that is a company choc-a-bloc full of intangible assets too.
Two of my extended family have been involved in the sector for over 20 years each. From their observations profitability in this sector can be materially affected by a shift in government policies. Can you think of a recent reason why the Government purse strings might be dramatically tighter in the years ahead ?
Its not for me and the SP has been most underwhelming since listing but good luck to all, I will leave holders in peace now :)

[DarkHorse]

It's good to hear different points of view Roger, but in my view those above tend to be either too narrow or a bit too broad.
I'd prefer to look at metrics and reports across all centres than just feedback on one. Even the ABs lose sometimes, and even the best corporate with a large number of branches will have the odd poor performer, while some - but certainly not all - small owner operators are outstanding.
We have several options here for our kids and like most parents wouldn't hesitate to change if the service was poor.
Roger, how many of your holdings have high tangible asset backing? (excluding property and infrastructure companies of course)
How do you foresee a future National or Labour government changing policy? (remembering encouraging mothers to work increases the tax take)
One ongoing trend in most sectors is ever-increasing regulation around health and safety, HR etc etc, driving up fixed costs and making it very hard for small operators to compete as economies of scale become ever important.
Some private operators - eg kidicorp - have made made great profits; others will have poor returns. It will come down to management. I'm fairly neutral on the sector, but see value here as long as management is doing a great job.

[Snow Leopard]

Having thrown toys around, cried for no apparent reason and then gone to sleep for a while I have now, with the aide of my financial calculator,

http://thumbs1.ebaystatic.com/d/l225/m/mLlagXKSRm6-D7XNxdVYyGA.jpg

valued Evolve.

So current (21-Nov-16) value: $1.174
end of year (31-Mar-17) value: $1.197
one year out (21-Nov-17) value: $1.239

All on the assumption that they do not go overboard on buying more kindies.

Best Wishes
Paper Tiger

Disclaimers:
Do Your Own Research,
Valuations will change as information comes to light,
I want a biscuit, now.

[winner69]

First impressions are solid result, will look deeper when I get more time. Good to see efficiency increase in base aquisitions.

Chief concerns at the moment are that RoE is only marginally greater than (or even less than) cost of capital. I believe the development centres will increase RoE but this remains to be seen. At the moment have valued company as no growth as I am not fully convinced that RoE>Cost of Capital

For the record I value company as around $1.40

ROIC (invested capital being equity plus debt) is just over 8%

James - what you reckon their cost of capital is?

More than 8% not adding any economic value are they

[James108]

ROIC (invested capital being equity plus debt) is just over 8%

James - what you reckon their cost of capital is?

More than 8% not adding any economic value are they

10-10.5%, my spreadsheet says WACC is 10.1%, although proportion of debt will have changed by now. Keep in mind that their profitability will very likely increase without any further investment as we get full year impact and efficiency increases for the first few years of center acquisition.

I recall drilling down to the acquisitions of centres and it seemed like return on investment would only be around 10% even after allowing for some increase in profitability.

I do think that the centres developed by evolve have the potential to deliver very attractive returns on investment though.

[Joshuatree]

Thanks to all for a great analysis and discussion today and on..Sharetrader at its best:t_up:

[winner69]

EPS 5 cps v 4.8 Assume 10 cps for the full year, (my no growth PE is the same one Ben Grahame used 8.5), fair value 85 cps in my opinion if you believe the intangible asset valuation ?

Total Assets $210m of which $197.6m is intangible assets. (Refer to my comments in the Veritas thread for my jaundiced view of intangible assets).

Taking into account debt the net NTA is -18 cps up from -15 cps in the previous corresponding period.

Divvy yield 5% net or 6.9% gross. Disc: Don't hold.

What's wrong with intangibles in Evolves case?

After all it's what they paid for their ECE centres - without them they dont have a business

[winner69]

So future growth is what extra they can squeeze out of existing centres plus acquisition of new centres

Love this comment in recent announcements - 'Vendor price expectations are elevated'

Greedy bunch of operators aren't they - not seeing a gift horse when one appears willing to enrich them.

Hope evolve don't pay over the odds for centres

Spose this statement says they happy with the prices they paid - Average purchase price EBITDA multiple expectation up approx. 1x from those of FY16, (multiples calculated on budgeted first year under Evolve operation), to approx. 6x. (Whatever hat means)

[Beagle]

What's wrong with intangibles in Evolves case?

After all it's what they paid for their ECE centres - without them they dont have a business

With negative net assets of 18 cps and EVO looking to acquire another 20 or so early childhood centres this year using debt I think the theory behind this is worthy of discussion.
Disc: I don't know the industry well but I have no choice sometimes at family gatherings to listen to my two sister in law's chatter on about issues affecting the sector and their centre's and crikey do they know how to talk !

At a fundamental level I have an issue with the non amortisation of goodwill on acquisition when the industry can be affected both positively and negatively by government policies.
No amortisation of goodwill at all suggests the goodwill on acquisition can never be diminished and has an infinite life.
I don't believe this is appropriate with childcare centres for a number of reasons:-
1. Potential changes in future government policy. We saw tremendous growth in the industry when parents were allowed 20 hours free care per week, what if that policy changes at some stage in the future and there is grossly excessive capacity in the industry ?
2. Competition increases - lack of barriers to entry. I've seen the profitability on centres hollowed out by more upmarket centres opening in the same neighbourhood
3. Potential for mismanagement - A centre is only as good as the management. To suggest that there is no possibility whatsoever of goodwill erosion through mismanagement or management at a lesser level than the former owner, or parents being disaffected by the change to the corporatized model is a brave call.

As I suggested on the Veritas thread, goodwill on acquisition sometimes has a mysterious habit of disappearing at a faster rate than any contemplated amortisation rate. Seeing as there's no amortisation rate with EVO's intangible assets shareholders are entirely relying on management's ability to maintain goodwill indefinitely.

As Noodles pointed out recently their stat's are good thus far...but that's predicated off a rapidly expanding population base due to the highest migration level's N.Z. has ever had. Will those migration level's continue indefinitely ?
What about demographic factors, kids don't stay in these centres for long, what about if less babies are born in the future ?

From what I have observed I think this is a cyclical industry with cycles primarily driven by factors mentioned earlier. In my view at least at a theoretical level I don't feel comfortable that goodwill can be maintained indefinitely in any cyclical industry. I'm not suggesting EVO is not complying with generally accepted accounting principle's with the preparation of their financial statements but all I am suggesting is the fact that their is debate within the accounting profession as to the current accounting standards in this area and whether they are appropriate at a blanket level or for some industries in particular.

I'd feel more comfortable if the bulk of their model was starting new centres from scratch rather than paying full price when the industry aided by positive cyclical factors at present is booming.

As I said in the Veritas thread my default position when thinking about any company is to strip out intangible assets and value them at NIL and then start to ask myself if they might indeed be worth something or not i.e. I never rely on what some other accountant says they're worth.

Noodles suggested we can rely on ERO audits for quality control...I have a low level of the assurance you can gain from any auditing process. (I know its a different auditing process but all those finance companies that collapsed during the GFC were audited, see my point ?) All those finance companies were also overseen by so called professional trustees.

[winner69]

Has anybody tried to reconcile what the recently acquired centres have generated in the way of revenues and by default what the existing centres are doing

Like the 20 acquired in FY16 were reported as doing $11.0m ($19m if they were open for the full year) and the 5 acquired in H117 did $1.4m.

Question - is this purported strong growth really that strong.

[winner69]

The EVO looks a bit moribund

Seems to fluctuate around the $1 plus or minus 10 cents - in spite of 25 new centres (~$35m revenues)

Is EVO going to be one of those stocks that promises so much but at the end of the day it can't seem to excite the punters

Or other reasons not liked?

[forest]

Or other reasons not liked?

For me the fact that some of there competition are not for profit organisations is a negative. These organisations don't pay tax and therefor will put a limit of how much EVO can grow there profits.

[forest]

"It's just an impossible situation. You can't satisfy parents who want to hold fee costs, the teachers who want a raise and the shareholders that want a dividend. That's why I re privatised it. We just couldn't survive in that scenario.(Kidicorp owner)

Last years article on stuff,

The owners of the country's biggest childcare company, Kidicorp, are ditching the corporate name and giving the whole operation to charity.

Wayne and Chloe Wright, whose family trust has owned Kidicorp since privatising it in 2007, have transferred the company to the Wright Family Foundation, a new registered charity.

Wayne Wright said it was their passion to make a difference to the lives of children.

"We were very successful financially younger in life and money has never been of much interest to us. We're just interested in making a difference. There's not too many people that have that view – in fact I'm regularly surprised at the way people want to hang on to their money. We're just not like that."

The company, which runs 256 childcare centres up and down the country, has been renamed Best Start Educare. As a company wholly owned by a registered charity, Best Start will benefit from tax-exempt status.

Its services will continue to operate under current brand names, including Top Kids, ABC, First Steps and Edukids. Collectively they look after about 19,000 children and employ more than 4800 people.

Wayne Wright said although the operation would have been valuable to outside investors, "we wanted to protect the quality features and community-centric approach we've built up over the years.

"We've accepted the reality that commercially driven owners would be focused on returns to shareholders and likely compromise what Best Start stands for – improving children's lives across New Zealand."

The Wrights have previously flirted with an overtly corporate model, listing KidiCorp through a reverse takeover in 2003.

The move was not an outstanding success and the family bought Kidicorp back in 2007 in a deal valuing it about $42m.

In an interview with the Sunday Star-Times last year, Wayne Wright said the public markets were difficult for a childcare-focused business.

"It's just an impossible situation. You can't satisfy parents who want to hold fee costs, the teachers who want a raise and the shareholders that want a dividend. That's why I reprivatised it. We just couldn't survive in that scenario."

Chloe Wright said moving ownership into a charitable foundation was a natural progression.

"Profit and returns have never been a priority for us, so this seemed to be the natural and right thing to do. We wanted to make our not-for-profit structure clear and official."

The Wright Family Foundation was registered as a charity in August last year. Its officers are Wayne and Chloe Wright and Tauranga solicitor William Holland.

[percy]

The points Wayne Wright make could apply to a number of industries/sectors;
Food .Sanitarium pay no tax,yet the supermarkets are full of other companies' breakfast products.
Retirement Sector.Not for profit,and small operators are giving away to RYM,MET,SUM because compliance,health and safety issues cost them too much.
Education.In NZ private schools compete with both Church and State schools.
General.Why would you pay $150 for a pair of jeans when you can buy some for $20,a bottle of Oyster Bay wine for $20 when you can buy others for $10,pay $250 for a flight to ChCh when the person sitting next to you paid under $100?
The answer is CHOICE.
EVO gives parents the choice.
For EVO to succeed they have to do the following;Be in the right location,and offer their customers great service/safety,.If you give the customer what they want,you will get what you want,applies to any business in any sector.
EVO have a good business model which is working.So they are giving their customers what they want.
The revenue is growing,both by occupancy rates and number of sites.They have the choice of starting their own new premises, or buying existing businesses.The business is on track.
The eps is growing,
The dividend is growing.
The sector is growing.
They have the finnancial capacity to expand the business without coming back to shareholders for more capital.

[Beagle]

Thanks Forest, interesting article. Sounds like the sort of centre I'd like my grandchildren to attend. Putting kids before profit. The whole deal, making money from a corporatized model from very young children makes me uncomfortable but each to their own.

[Joshuatree]

As an aside Im curious if wayne wright owns some of the childcare centres and leases them to the charitable foundation he gifted the business to; anyone know?

[winner69]

Spose if mum and dad both have to work and little kid has to spend 40 hours plus a week in day care EVO should do well.

http://www.stuff.co.nz/life-style/parenting/baby/caring-for-baby/86884977/parents-forced-to-put-babies-in-childcare-for-more-than-42-hours-a-week

Poor kids though - cant be good for them. Jeez the kid in the article got to play in the sand pitthe other day.

[percy]

Spose if mum and dad both have to work and little kid has to spend 40 hours plus a week in day care EVO should do well.

http://www.stuff.co.nz/life-style/parenting/baby/caring-for-baby/86884977/parents-forced-to-put-babies-in-childcare-for-more-than-42-hours-a-week

Poor kids though - cant be god for them. Jeez the kid in the article got to play in the sand pitthe other day.

Well I read the article as pointing out it was good for them,which does not surprise me.

[winner69]

Good news for Evolve ....possibly

http://www.stuff.co.nz/life-style/parenting/little-kids/preschool/87553589/fears-for-children-as-early-childhood-education-providers-fail-to-meet-standards

Evolve squeaky clean - if the mentioned centres close more kids for Evolve - or the owners might. just decide to sell them cheaply to Evolve

[percy]

Sounds exactly like the retirement sector before Ryman set new standards.
Lets hope Evolve set the bench mark.

[Joshuatree]

Evolve (EVO) Releases Interim Financial Report (https://www.nzx.com/companies/EVO/announcements/294716)

Up 1 cent after hitting 96c. Little vol , little int . Right on the 180 DMA

[percy]

Our dividends are in the bank today.

[winner69]

EVO multiple pick by analysts in their Top 5 for the year

Might have to include in my picks - likely to be the star of 2017

[percy]

EVO multiple pick by analysts in their Top 5 for the year

Might have to include in my picks - likely to be the star of 2017

Maybe?
I am expecting EVO to just be a steady, solid, performer,with a sp target of between $1.30 and $1.45.

[trader_jackson]

The brokers are not the only ones tempted, it is certainly high up on my "2017 Hit List". Seems a good "growth + dividend" play

[Beagle]

EVO multiple pick by analysts in their Top 5 for the year

Might have to include in my picks - likely to be the star of 2017

Just JB Were from what I can see mate. Can you post a chart comparing EVO with the NZX50 since it listed ? Looks like a complete flop so far to me.
The hound knows every dog can bark now and again but this one has been a strangely silent pup since listing and no sign of any form to date.

[winner69]

Just JB Were from what I can see mate. Check to see if they were involved in the float. Can you post a chart comparing EVO with the NZX50 since it listed ? Looks like a complete flop so far to me, (Mrs Barlow factor anyone ?).

And a Forbar pick - you might have guessed that eh

The JB Were guy says


'Ward says his team see Evolve as well placed to benefit from further government moves to support mothers in the workforce and notes the trend has similarities to the retirement sector several years ago.

"Acquisitions, developments and cost-out initiatives will see strong near-term earnings growth from a roll up growth opportunity," he says.

Similar comments to what percy posted a week or so

Surely a future market darling - maybe 2017

[Beagle]

LOL I missed that, going cross eyed from all the boxing day sales :) Sticking with my views expressed in #104.

[winner69]

Just JB Were from what I can see mate. Can you post a chart comparing EVO with the NZX50 since it listed ? Looks like a complete flop so far to me.
The hound knows every dog can bark now and again but this one has been a strangely silent pup since listing and no sign of any form to date.

From Dec5 2014 when listed EVO down 9% and NZX50 up 24% (yahoo info). Capture below

But EVO might have been a sleeping dog but the dog has woken and EVO is about to roar ahead

I reckon 2017 will the year for stocks like EVO - the poor neglected ones getting a bit of attention will be the catalyst for huge gains. Stocks that people have loved liked TIL will be ditched and the punters will be piling into the next big thing.

EVO definitely one for 2017

[King1212]

From Dec5 2014 when listed EVO down 9% and NZX50 up 24% (yahoo info). Capture below

But EVO might have been a sleeping dog but the dog has woken and EVO is about to roar ahead

I reckon 2017 will the year for stocks like EVO - the poor neglected ones getting a bit of attention will be the catalyst for huge gains. Stocks that people have loved liked TIL will be ditched and the punters will be piling into the next big thing.

EVO definitely one for 2017

being watching n tempted to get in...strong buying lately ...a lot of buyers.....u might be right...sleeping dog that slowly woken up....will see tomorrow...might jump on board...

run through thier intern....looking very promising...revenue to grow as well as its dividend.....

[tim23]

Ran up to about $1.09 before Christmas I like the growth/yield combo

[King1212]

Any suggestions guys?

[Snow Leopard]

Any suggestions guys?

I suggest, if my memory serves me well, that EVO has a current value of about $1.18 and a 1 year forward value of about $1.26.

I suggest that sustainable, not getting into trouble, growth is limited and that it should be viewed as an income stock.

I suggest you Make Your Own Decisions.

Best Wishes
Paper Tiger

[King1212]

I suggest, if my memory serves me well, that EVO has a current value of about $1.18 and a 1 year forward value of about $1.26.

I suggest that sustainable, not getting into trouble, growth is limited and that it should be viewed as an income stock.

I suggest you Make Your Own Decisions.

Best Wishes
Paper Tiger

thanks PT..looking to jump on board today...

[percy]

I suggest, if my memory serves me well, that EVO has a current value of about $1.18 and a 1 year forward value of about $1.26.

I suggest that sustainable, not getting into trouble, growth is limited and that it should be viewed as an income stock.

I suggest you Make Your Own Decisions.

Best Wishes
Paper Tiger

Using your figures ,and expecting them to be "stripe on", an investor buying EVO at yesterday's $1.05 ,can enjoy a 6.5% gross yield and a 20% share price increase over the next year.
Pretty exciting boring income stock I would think.
I think Craig's target price is $1.33,while Forbar's is $1.37.
I remain "well positioned" having brought in at 95 cents awhile ago,and enjoyed a dividend.

[tim23]

Paper Tiger - more growth ahead plenty of acquisitions available the incomes ther too.

[King1212]

Jump on board today...sold my AIR n swap with this sleeping dog....

[percy]

Jump on board today...sold my AIR n swap with this sleeping dog....

Looks as though the market took your buying as a positive indicator.!!..lol.

[Mitch]

Percy - Whats your prediction for the share price at the time of the next dividend?

[percy]

Percy - Whats your prediction for the share price at the time of the next dividend?

Sorry,I have no idea.
I try to buy shares where the eps growth is higher than the PE ratio.EVO is one such share, which also pays a good dividend.
The agm stated their business model is working,and since I brought, they have done further acquisitions,so I am very pleased with my investment.
The company is getting more coverage,which is generating more interest,with the result the share price is increasing.Whether the sp will continue its upward trajectory at increased speed or not,we will have to wait and see.
In the meantime I will just sit back and enjoy the ride.!!..lol.

[Mitch]

Sorry,I have no idea.
I try to buy shares where the eps growth is higher than the PE ratio.EVO is one such share, which also pays a good dividend.
The agm stated their business model is working,and since I brought, they have done further acquisitions,so I am very pleased with my investment.
The company is getting more coverage,which is generating more interest,with the result the share price is increasing.Whether the sp will continue its upward trajectory at increased speed or not,we will have to wait and see.
In the meantime I will just sit back and enjoy the ride.!!..lol.

Good insight. will happily buy shares in EVO! cheers percy

[percy]

Good insight. will happily buy shares in EVO! cheers percy

Before you buy Mitch ,go to www.nzc.com and in company search put in EVO, then go to announcements.The one I would like you to read is dated 25th August 2016;Annual Meeting speeches and presntation.

[Mitch]

Percy - How do you compare the eps growth relative to the P/E ratio?

for this instance, what is this calculation for EVO?

[winner69]

Before you buy Mitch ,go to www.nzc.com and in company search put in EVO, then go to announcements.The one I would like you to read is dated 25th August 2016;Annual Meeting speeches and presntation.

HNA taken them over already?

[percy]

HNA taken them over already?

He he he.!!!
Maybe Mitch it may pay to try www.nzx.com...lol.
Thanks w69.

[Mitch]

He he he.!!!
Maybe Mitch it may pay to try www.nzx.com...lol (http://www.nzx.com...lol).
Thanks w69.

hahaha okay will do!! could you explain to me a little bit more about the eps growth and PE ratio calculation please Percy?

[winner69]

hahaha okay will do!! could you explain to me a little bit more about the eps growth and PE ratio calculation please Percy?

Mitch percy wantsvyou read this

https://www.nzx.com/files/attachments/242229.pdf


I'll leave it to him to explain eps growth and pe

[Mitch]

Mitch percy wantsvyou read this

https://www.nzx.com/files/attachments/242229.pdf


I'll leave it to him to explain eps growth and pe

Awesome thanks. Winner69 are you personally holding in EVO?

[percy]

Here goes.
A company has earnings per share of 10 cents.
Going from www.4-traders.com,brokers research and company presentations we can work out they are projecting 12 cents earnings per share in the coming year.
We know that is 20% growth.I look for eps growth.
Now we can work out a PE [price earnings] ratio should be under that 20..So if we can buy that share at either a PE of 10= $1.20 or even a PE of 15=$1.50 we know we have a big margin of safety as with such strong eps growth of 20% the sp should go to 20 times eps ,which is $2.00.
So back to EVO.At present time I see ANZ Securities are showing eps of 13.57 cents,and a PE of 7.89 and a dividend yield of 4.58%.
I am expecting eps growth of between 11% and 14%,so with the PE is very reasonable.
Had the PE been 18 and growth 14% I would not have brought.
I have recently sold AIA pe 30.42,POT pe 34.68, and FPH pe 31.33 because I feel their growth rate is half their PE.This is the wrong way round.

[Mitch]

Here goes.
A company has earnings per share of 10 cents.
Going from www.4-traders.com,brokers (http://www.4-traders.com,brokers) research and company presentations we can work out they are projecting 12 cents earnings per share in the coming year.
We know that is 20% growth.I look for eps growth.
Now we can work out a PE [price earnings] ratio should be under that 20..So if we can buy that share at either a PE of 10= $1.20 or even a PE of 15=$1.50 we know we have a big margin of safety as with such strong eps growth of 20% the sp should go to 20 times eps ,which is $2.00.
So back to EVO.At present time I see ANZ Securities are showing eps of 13.57 cents,and a PE of 7.89 and a dividend yield of 4.58%.
I am expecting eps growth of between 11% and 14%,so with the PE is very reasonable.
Had the PE been 18 and growth 14% I would not have brought.
I have recently sold AIA pe 30.42,POT pe 34.68, and FPH pe 31.33 because I feel their growth rate is half their PE.This is the wrong way round.

Superb explanation, cheers Percy.

Say having an Eps growth of 2x the PE ratio, you would expect the share price to rise by a lot or is this a reasonably average health for a security?

Also, this seems like a very logical method, this works for you consistently?

[percy]

Superb explanation, cheers Percy.

Say having an Eps growth of 2x the PE ratio, you would expect the share price to rise by a lot or is this a reasonably average health for a security?

Also, this seems like a very logical method, this works for you consistently?

Yes it really works.
Always good to use when companies give forward forecasts,or surprise updates.
A lot of people do not do the maths.
When you find a company with eps growth 2x the PE,buy it.
Most times you will find a lot of good companies' PE is just above or below their growth rate.
When PE is 2x the growth rate, be prepared to sell, especially when the dividend yield is very low.
You can be right or wrong on the growth rate,but as it changes the ratios we are using remain true.
Well worth a read is the HLG thread.Current PE is 13.64 and eps of 23.09 cents.Yet a number of us are expecting eps of between 35 cents and 40 cents.
That is eps growth of between 50% and 70%.Makes the current PE look a bit odd.!!!???.Should the eps come in at 30 cents that is only 29% growth rate which is still 2x the PE.A good margin of safety.
Basically I base my investing on the book The Zulu Principal by Jim Slater.
Google that as there is a lot of imformation there.PEG is really what it is about.PE divided by Growth.Another one useful for NZ, because our companies pay out high dividends, is PEGD which is PE divided by growth plus dividend.

[winner69]

Awesome thanks. Winner69 are you personally holding in EVO?

At the moment yes - even though a sin stock which I don't normally 'invest' in

Just pretending EVO is #2 in Race 2 and worth a punt at overs.

[King1212]

Looks as though the market took your buying as a positive indicator.!!..lol.


Haha..good one Percy.....I could get in when it was 99cents but was waiting for AIR to hit $2.20 ish so I could sold n swap..but still happy to get in $1.05...

[Mitch]

Yes it really works.
Always good to use when companies give forward forecasts,or surprise updates.
A lot of people do not do the maths.
When you find a company with eps growth 2x the PE,buy it.
Most times you will find a lot of good companies' PE is just above or below their growth rate.
When PE is 2x the growth rate, be prepared to sell, especially when the dividend yield is very low.
You can be right or wrong on the growth rate,but as it changes the ratios we are using remain true.
Well worth a read is the HLG thread.Current PE is 13.64 and eps of 23.09 cents.Yet a number of us are expecting eps of between 35 cents and 40 cents.
That is eps growth of between 50% and 70%.Makes the current PE look a bit odd.!!!???.Should the eps come in at 30 cents that is only 29% growth rate which is still 2x the PE.A good margin of safety.
Basically I base my investing on the book The Zulu Principal by Jim Slater.
Google that as there is a lot of imformation there.PEG is really what it is about.PE divided by Growth.Another one useful for NZ, because our companies pay out high dividends, is PEGD which is PE divided by growth plus dividend.

Awesome help man, thanks heaps!
Makes a lot of sense, will definitely use this a tool for each investment in the future.
What is the main indicator for what the expected eps growth in the future will be? do you just get that from general analysts?

[Mitch]

At the moment yes - even though a sin stock which I don't normally 'invest' in

Just pretending EVO is #2 in Race 2 and worth a punt at overs.

What do you mean by a "sin stock"?
I'm partially new to some of the terminology.

[percy]

Awesome help man, thanks heaps!
Makes a lot of sense, will definitely use this a tool for each investment in the future.
What is the main indicator for what the expected eps growth in the future will be? do you just get that from general analysts?

Often a company will give an earnings update.Depending on the company it is usually a bit conservative.SCL for example, always under promise and over deliver.
Brokers' research is pretty reliable,as is www.4-traders.com.
And yes general analysts; record cars sales means CMO,TNR and HBL will do well,
Drought/flood could affect PGW earnings .Hail storms,disease will affect SCL and SEK.
High NZ$ will be good for retailers such as WHS,HLG etc,and bad for exporters such as SCL.
Ageing population is good for the retirement and medical supply sectors,RYM,SUM EBO etc.

[Mitch]

Often a company will give an earnings update.Depending on the company it is usually a bit conservative.SCL for example, always under promise and over deliver.
Brokers' research is pretty reliable,as is www.4-traders.com (http://www.4-traders.com).
And yes general analysts; record cars sales means CMO,TNR and HBL will do well,
Drought/flood could affect PGW earnings .Hail storms,disease will affect SCL and SEK.
High NZ$ will be good for retailers such as WHS,HLG etc,and bad for exporters such as SCL.
Ageing population is good for the retirement and medical supply sectors,RYM,SUM EBO etc.


Oh yeah, as you'd expect.
I am a macro economic enthusiast so that stuff I understand fluently.
What is the main cause for an expected 35-40 cents for EVO?

[percy]

[QUOTE=percy;651324].
Well worth a read is the HLG thread.Current PE is 13.64 and eps of 23.09 cents.Yet a number of us are expecting eps of between 35 cents and 40 cents.
That is eps growth of between 50% and 70%.Makes the current PE look a bit odd.!!!???.Should the eps come in at 30 cents that is only 29% growth rate which is still 2x the PE.A good margin of safety.
Mitch.
The 35 cents to 40 cents was for HLG,not EVO.!!!!!!!!!!!!!!!!!!

[Mitch]

Well worth a read is the HLG thread.Current PE is 13.64 and eps of 23.09 cents.Yet a number of us are expecting eps of between 35 cents and 40 cents.
That is eps growth of between 50% and 70%.Makes the current PE look a bit odd.!!!???.Should the eps come in at 30 cents that is only 29% growth rate which is still 2x the PE.A good margin of safety.
Mitch.
The 35 cents to 40 cents was for HLG,not EVO.!!!!!!!!!!!!!!!!!!

Ahh yes! sorry that's where I was confused still.
And yeah that does make the PE ratio look odd, maybe a little too optimistic perhaps?

[percy]

Ahh yes! sorry that's where I was confused still.
And yeah that does make the PE ratio look odd, maybe a little too optimistic perhaps?

HLG are due to update the market late this month,so we will then be able to make a better judgement.

[Mitch]

HLG are due to update the market late this month,so we will then be able to make a better judgement.

Awesome, cheers for all the info! :)

[DarkHorse]

Welcome Mitch. At the risk of stating the obvious, just a brief comment on the PEG. I agree with Percy that PEG is an extremely useful filter. At the same time, as I'm sure that he would agree, you need to also consider volatility and sustainability of earnings (for example cyclical stocks are best bought at the bottom of the cycle - when PE is higher - look at PS). Imagine you're buying a small business outright - you'd look back and forward more than just one year. Of course it also pays to consider the skills and credibility of management, financial soundness, business prospects...etc.
While I'm happy to own EVO and HLG, I don't seem them as big winners long term.

[LAC]

And try and use sustainable growth figures when calc PEG ratios. Try not to pick just the couple of good years growth when the average has been bad and might be going fwd.

[percy]

I totally agree with both Darkhorse and LAC's comments.

[Mitch]

okay, will do, thanks guys!

[winner69]

Just as an apple a day keeps the doctor away

A cent a day makes EVO shareholders richer and richer

Go you good thing

Feels like nothing can go wrong

[King1212]

Just as an apple a day keeps the doctor away

A cent a day makes EVO shareholders richer and richer

Go you good thing

Feels like nothing can go wrong

Love it! Hopefully will reach $1.40 soon...:t_up:

[percy]

A very strong week for EVO,and to finish at,I think an all time high of $1.14,bodes well for the present upward trajectory to continue.

[sb9]

A very strong week for EVO,and to finish at,I think an all time high of $1.14,bodes well for the present upward trajectory to continue.

Chart looks pretty good...dipped in my toes on this one last week :)

[King1212]

I am glad, sold my AIR n swapped with EVo....:t_up:

[tim23]

Good for you - odd depth happening today which looks okay for continued price appreciation

[sb9]

Looks like a day of consolidation with few decent sized off market parcels being traded...

[winner69]

Price been a bit weak lately but up trend not broken so all honky dory still

[sb9]

Price been a bit weak lately but up trend not broken so all honky dory still

https://nzx.com/companies/EVO/announcements/298189

Blame it on Milford for price weakness...

[winner69]

https://nzx.com/companies/EVO/announcements/298189

Blame it on Milford for price weakness...Jeez guru fund manager selling .... not a good sign

[tim23]

But if a fund manager is selling someone is buying...

[Elles]

Any ideas why the SP has been stagnant and dropping recently? I couldn't see any news or ex-div dates, unless I've missed something? Considering the previous discussion here it seems a good time to get in.

[percy]

There has been no news other than Milford selling some.
The full year result is due at the end of May.
I am expecting a steady solid result.
The company is trading on a very modest PE and the current dividend yield is 4.67%
The share price is currently $1.05, which is below the 100 day EMA $1.06,but still above the 200 day EMA $1.03.
I hold.

[Beagle]

A broker(Forbar) has started coverage on EVO. Outperform rating and target of 1.21
More details here
http://markets.ft.com/research/Markets/Tearsheets/Forecasts?s=EVO:NZC
and here
http://www.reuters.com/finance/stocks/analyst?symbol=EVO.NZ


Norah Barlow and Forsyth Barr, names you can really "trust". Credit Sails, Feltex, South Canterbury Finance, .....


Any ideas why the SP has been stagnant and dropping recently? I couldn't see any news or ex-div dates, unless I've missed something? Considering the previous discussion here it seems a good time to get in.

Welcome to the forum. Sometimes a good idea to go right back to the start of a thread and have a read about others point of view rather than just looking at recent posts.
Fact is the share price has not "evolved" into anything other than a real disappointment for investors since listing over two years ago and the shares have dramatically underperformed the NZX50 index.
I suggest reading the whole thread and asking yourself why this stock has been such a poor performer since listing. Maybe there's some very sound reasons why it might always trade on a very modest PE ? Good luck. Disc: I don't hold.

[winner69]

Technically still in an uptrend from October 15 lows when it was in the 80s - ie higher highs and higher lows

A sin stock but for those who only trade ticker codes no worries, esp if Forbar reckons its worth $1.33

[Beagle]

That was their very old 12 month price target way back when they commenced coverage when the company listed and proved to be "highly accurate" didn't it !

http://www.4-traders.com/EVOLVE-EDUCATION-GROUP-LT-24007917/consensus/

One analyst covering it now, possibly still Forbar but they now reckon its worth $1.53 :lol:
Possibly the same analyst that came out in February 2017 and downgraded AIR and put a value of $2.08 on them.
Disc: I stopped paying them 1% brokerage for their "expertise" many many years ago. Same brokers that told me many years ago that Apple was not a good investment when they were $U.S.100.00..(that was before the 7:1 split, enough said)

[Scrunch]

A sin stock but for those who only trade ticker codes no worries

Puzzled by your classification of this as a sin stock. Its unclear to me what is unethical or immoral around the provision of childcare? For companies on the NZX like Sky city I could understand a sin classification but EVO?

[percy]

Technically still in an uptrend from October 15 lows when it was in the 80s - ie higher highs and higher lows

A sin stock but for those who only trade ticker codes no worries, esp if Forbar reckons its worth $1.21
Craigs update 7th April 2017 target sp $1.33 for EVO..
I am a little higher than that.

[winner69]

Puzzled by your classification of this as a sin stock. Its unclear to me what is unethical or immoral around the provision of childcare? For companies on the NZX like Sky city I could understand a sin classification but EVO?

Nothing more important that a child's early care and education - what's wrong is that for every dollar parents pay for that care about 15 cents is profit for EVO - most eventually finding its way into shareholders profits.

Just imagine if that $30m odd a year (in Evolves case) was spent on the children developing them even further instead of enriching shareholders.

Childcare/education and the relentless pursuit of ever increasing shareholder returns aren't a good combination

[Beagle]

EVO was one of Forbar's conviction picks, (see stocktastic) and has them at 125th place so I guess they're the ones at $1.53.
Agree with Winner, corporate model probably not the very best for kids, early child care centers in my opinion are best run by really caring owner operators who are well respected in their local community.

[percy]

Same arguements were used when RYM started out.
Awfull they should look to profit from oldies.
Leave it to the not for profit groups.......................,who provided poor care and lost heaps doing it.
EVO provides a service in a strong growth sector.
Their business model is sound.Their eps is growing,which will see a growing dividend.

[LAC]

Nothing more important that a child's early care and education - what's wrong is that for every dollar parents pay for that care about 15 cents is profit for EVO - most eventually finding its way into shareholders profits.

Just imagine if that $30m odd a year (in Evolves case) was spent on the children developing them even further instead of enriching shareholders.

Childcare/education and the relentless pursuit of ever increasing shareholder returns aren't a good combination

Well it gives people options right? Parents can always send their kids to an alternative - the same as with private schools, if you dont like what the state provides you can choose another option which I guess is the same options here with childcare. The same as the retirement sector.... We can't honestly expect a business not to make a profit because it performs better than the competition? What I think needs to happen is the competition needs to step up their services which in turn will take up their costs....and ultimately end up being paid by parents or the tax payers.

[bung5]

I have estimated EVO sitting at aprox 10.5 PE ratio with the assumption of 18mil fy earnings . While 7.7 PE is cheap on its own it could be slightly higher npat when earnings are announced next month?

Greatly undervalued for a growing company imo

[noodles]

I have estimated EVO sitting at aprox 7.7 PE ratio with the assumption of 25mil fy earnings . While 7.7 PE is cheap on its own it could be slightly higher npat when earnings are announced next month?

Greatly undervalued for a growing company imo
I think your assumption of NPAT=$25m is incorrect. It will be much lower.

[JoeGrogan]

I think your assumption of NPAT=$25m is incorrect. It will be much lower.

Maybe he meant an EBIT of 25m as 4traders is forecasting? and NPAT could be slightly higher than last year?

Unless he knows something that we don't :ohmy:

[hardt]

Even though he was speaking about the P/E here, he has to be talking about EBIT, FY2016 NPAT was around 8m...

[tim23]

I bought late last year liked the combination of growth plus reasonable dividend - nice mix

[percy]

I bought late last year liked the combination of growth plus reasonable dividend - nice mix

Me too.!!!!!!!!!!!!!!!.Plus they are in a growth sector.
With Norah Barlow busy as CEO of EHE in Australia, I am pleased that Alistar Ryan will take over as Chairman on 1st June.
The appointment of Ms Grainne Troute, who is already on the boards of SUM and THL, is also positive.

[JoeGrogan]

Even though he was speaking about the P/E here, he has to be talking about EBIT, FY2016 NPAT was around 8m...

Half year for the current period was NPAT of 8.8m. Last FY profit was 15.6m

[Hectorplains]

Me too.!!!!!!!!!!!!!!!.Plus they are in a growth sector.
With Norah Barlow busy as CEO of EHE in Australia, I am pleased that Alistar Ryan will take over as Chairman on 1st June.
The appointment of Ms Grainne Troute, who is already on the boards of SUM and THL, is also positive.

I'm not seeing where the growth is in this stock?

[bung5]

oops sorry you are right I miscalculated that . Should be 10.5 PE ratio with the assumption of 18mil fy npat

[tim23]

I'm not seeing where the growth is in this stock?
Acquisition of more centres looks like growth to me?

[trader_jackson]

Acquisition of more centres looks like growth to me?

... Not if it doesn't increase EPS

Although I do like EVO's growth + dividend approach (if acquisitions can increase EPS)

[percy]

Yes I recently added EVO to both my wife's, and my own portfolio.
Paid 95cents ps.
Thought the agm speeches were very positive.
I am expecting eps growth to be between 11% and 13% which is slightly higher than their current PE of 10.87.The yield is also a satisfactory 5%.
Above posted on 23-09-2016
I am therefore looking forward to their result,to see what their eps growth turns out to be.

[James108]

... Not if it doesn't increase EPS

Although I do like EVO's growth + dividend approach (if acquisitions can increase EPS)

From memory centre acquisitions provide around 10% RoC (which is pretty low). But they are now funded by debt at 4-5% so they will be earnings accretive.

The real question is do they increase the valuation of the business? Imo no, not from the get go anyway. My discount rate is 10-11%

[BlackPeter]

I'm not seeing where the growth is in this stock?

Acquisition of smaller players. Sure, that alone will not significantly increase earnings, but economy of scale might. A larger base of preschools will (if used wisely) allow for improved quality as well as reduced costs (higher purchasing power and less admin costs) per centre.

Discl: hold a small parcel.

[sb9]

2
8
11:56:36 am
106
225,000
$238,500
Off Market


3
7
11:56:29 am
106
725,000
$768,500
Off Market

[Beagle]

Me too.!!!!!!!!!!!!!!!.Plus they are in a growth sector.
With Norah Barlow busy as CEO of EHE in Australia, I am pleased that Alistar Ryan will take over as Chairman on 1st June.
The appointment of Ms Grainne Troute, who is already on the boards of SUM and THL, is also positive.

Good moves but you left out the important detail that Norah is still staying on the board. Also I note recently that Milford posted a substantial shareholder notice reducing their stake from ~ 9% to ~8%. As we have seen with their reduction in THL holding, the SP has stagnated while they're selling out. I think the SP performance since inception in Dec 2014 has been most underwhelming relative to the NZX and with Milford obviously disappointed with results to date (as well as other institutional holders I am sure), they really are going to have to start delivering some genuine highly credible EPS growth for this to break out of what has ostensibly been a long flat trading range since listing. This is one for very patient investors, you'll be okay Percy, you're very good at being patient.

[percy]

Last year EVO result was announced on 22nd of May.
Not long to wait.Also waiting for AWF and TNR results.
Am expecting all three to be on track.
I purchased our EVO on and around 9th September last year, at 95 cents per share.
Since then we have received a 2.5 cent divie paid in December.
So on rough figures we are up 14% in 8 months .Very happy with them so far.

[winner69]

Milford sold heaps more last week - cant be meeting their expectations

But no doubt some happy buyers

[percy]

Milford sold heaps more last week - cant be meeting their expectations

But no doubt some happy buyers

No doubt..But no new shareholding notices?

[hardt]

I wonder why the market has decided to only allow a PE of 8-11 for Evolve, small cap growth stock and a great yield.

Can anyone shed some light on why this stock is so cheap?

[percy]

I wonder why the market has decided to only allow a PE of 8-11 for Evolve, growth stock and a great yield.

Can anyone shed some light on why this stock is so cheap?

I hope the answers will be forth coming with the result,which is due before the end of the month .
I have been expecting their eps growth rate to be higher than their PE ratio.

[James108]

I wonder why the market has decided to only allow a PE of 8-11 for Evolve, small cap growth stock and a great yield.

Can anyone shed some light on why this stock is so cheap?

IMO because their growth is only at approx their cost of capital. So they aren't really growing. they need to prove they can re invest and earn returns at a rate significantly higher than their cost of capital.

Having said that I still think they are below fair value atm.

[hardt]

I hope the answers will be forth coming with the result,which is due before the end of the month .
I have been expecting their eps growth rate to be higher than their PE ratio.

It is priced for flat growth, dividend yield is looking close to 7% for 2017... I am trying to look for a downside here!


IMO because their growth is only at approx their cost of capital. So they aren't really growing. they need to prove they can re invest and earn returns at a rate significantly higher than their cost of capital.

Having said that I still think they are below fair value atm.

ROCE of 10% not bad, even if they stopped expanding... the distributable cash flow will continue to grow and will come right back to shareholders... again, where is the downside?

Discl not held, possibly soon though.

[winner69]

Even Regal now disclose they've reduced their interest in EVO

[forest]

I wonder why the market has decided to only allow a PE of 8-11 for Evolve, small cap growth stock and a great yield.

Can anyone shed some light on why this stock is so cheap?

Last year I posted a view of an insider in this industry (post 108). Maybe read it and see if you agree.

[Beagle]

I wonder why the market has decided to only allow a PE of 8-11 for Evolve, small cap growth stock and a great yield.

Can anyone shed some light on why this stock is so cheap?

Have a read back on this thread right from the start. All I have to add is that Norah Barlow is staying on the board, another negative at least as far as I am concerned.
I agree with your post #108 Forest.

[hardt]

Have a read back on this thread right from the start. All I have to add is that Norah Barlow is staying on the board, another negative at least as far as I am concerned.
I agree with your post #108 Forest.

I remember thinking at the time of reading that article it sounded like soppy bollocks to me, yes, running a business is difficult, no more difficult than anyone else has it...

" having to balance shareholders, staff and the parents was hard! " - yea no sh!t

Good for the very wealthy Wright family who were not after profits, back in the real world of the free market, there is money to be made in this sector for a long time to come...

Lets look at EVO's current metrics and the likelihood of continued earnings performance, high chance of shareholders being rewarded here.

[Antipodean]

Balancing multiple interests is part of any business. The listed retirement sector does well enough, you could use the same quote and just replace parents of the kids with kids of the parents....

[percy]

Balancing multiple interests is part of any business. The listed retirement sector does well enough, you could use the same quote and just replace parents of the kids with kids of the parents....

Exactly............

[forest]

Balancing multiple interests is part of any business. The listed retirement sector does well enough, you could use the same quote and just replace parents of the kids with kids of the parents....

Except that EVO does not have any occupation rights to resell over and over again.

[percy]

Except that EVO does not have any occupation rights to resell over and over again.

Pity.............

[Beagle]

Except that EVO does not have any occupation rights to resell over and over again.
Exactly. Increasing labor costs will hit this sector too in my opinion.

[percy]

Exactly. Increasing labor costs will hit this sector too in my opinion.

With growing demand for child care I think the sector will cope OK.
Will not slow down the sector's growth.
Something I have noticed is the demise of Bowling clubs,Golf clubs, Rose Societies, and the likes.
Wonder if the grand parents are spending more time minding the grand children,or are oldies to busy touring,[or still working]..?

[Beagle]

With growing demand for child care I think the sector will cope OK.
Will not slow down the sector's growth.
Something I have noticed is the demise of Bowling clubs,Golf clubs, Rose Societies, and the likes.
Wonder if the grand parents are spending more time minding the grand children,or are oldies to busy touring,[or still working]..?

In very recent years, sadly there has been a massive increase in the number of grandparents needing to parent grandchildren full time due to the enormous growth in the numbers of young people using methamphetamine and becoming so addicted they cannot raise their own children.

[percy]

In very recent years, sadly there has been a massive increase in the number of grandparents needing to parent grandchildren full time due to the enormous growth in the numbers of young people using methamphetamine and becoming so addicted they cannot raise their own children.

Yes unfortunately.
A friend of mine in the police force, told me if an addict's house was on fire,and his wife and children were in the house,the P addict would try and save his stash first.
I try on ST to save posters losing capital,when I can,but seeing young people losing their way with drugs deeply saddens me.
Visiting schools and seeing so many happy,bright, young kids with so much energy, does give me hope for the future.
[ps also knowing they will enjoy the fantastic books I have sold into their library]

[tim23]

If they reduce someone else is buying aren't they? QUOTE=Roger;666124]Exactly. Increasing labor costs will hit this sector too in my opinion.[/QUOTE]

[trader_jackson]

https://nzx.com/files/attachments/258548.pdf

I thought Evolve was a growth company?
You know its not great when they talk about how revenue increased 10% but very little mention of how last years profit compares to this years... which was only up 1.5%
(EPS has "jumped" from 8.8 cps to 8.9 cps)
Surely I'm not reading this right?

[winner69]

Y
https://nzx.com/files/attachments/258548.pdf

I thought Evolve was a growth company?
You know its not great when they talk about how revenue increased 10% but very little mention of how last years profit compares to this years... which was only up 1.5%
(EPS has "jumped" from 8.8 cps to 8.9 cps)
Surely I'm not reading this right?

I think you have read it right

Of the $14.0m increase in revenues only a miserable $0.2m flowed through to the bottom line

But t_j no need to despair - it'll all come right one day

Divie up though - did you miss that in the headline

[winner69]

Adjusted NPAT up 12.7% on pcp in line with revenue growth

So t_j its all honky dory .....no worries

[winner69]

T_j me old mate - methinks we need to read the financials in the presentation pack

They are much better reading when you adjust for this and adjust for that and get a different result.

[Beagle]

Evolve announces strong growth and all the rest of their public relations corporate speak. My bean counting radar is always switched on high alert when there's not a single mention of net profit after tax in the headline news release. Creative accounting 101, ignore the most fundamental measuring stick of corporate performance and accentuate any other possible financial measuring sticks you can find !
Why am I not surprised that they are using the old smoke and mirrors to paint a glossy picture ? I call if the Norah factor.
8.9 cps v 8.8 cps last year. Strong growth LOL. Thanks Evolve, its always great to start the business week with a good laugh.
No doubt they'll have their bean counters working overtime to highlight how on a "normalised basis" there was strong growth but on a really quick review of the financials I did pick up one area of very strong growth, they moved from a NTA of -17 cps to an NTA of -25 cps a whopping 47% increase in their net negative NTA, extremely impressive !

[trader_jackson]

Y

I think you have read it right

Of the $14.0m increase in revenues only a miserable $0.2m flowed through to the bottom line

But t_j no need to despair - it'll all come right one day

Divie up though - did you miss that in the headline

Yea... I knew when they had that headline something was wrong, but didn't know how bad it was till I opened up the attachment... Late Jan old Forsyth increased their rating from $1.40 something to $1.53 with a FY17 estimate of 10 cps... then on 16 May they promptly removed it from their "Conviction list"... hmm... they have a tea cup meeting last week you think? (got the old wink wink nudge nudge...)

[trader_jackson]

hmm share price hasn't crashed... defying gravity really

[winner69]

There was a favourable $1.3m 'earn out' adjustment that boosted F16 profit (not normalised by them but noted)

So of course it's OK to 'adjust' F16 profit by this amount to compare F17 against a lower prior period.

But at the end of the day F17 profit of 8.9 cents a share is what matters and the market wil see top line growth and assume eps growth and send the share price towards 120 in no time.

[Antipodean]

Also the repayment of the $20m senior revolving facility in the F17 year is a good sign.

[sb9]

Evolve announces strong growth and all the rest of their public relations corporate speak. My bean counting radar is always switched on high alert when there's not a single mention of net profit after tax in the headline news release. Creative accounting 101, ignore the most fundamental measuring stick of corporate performance and accentuate any other possible financial measuring sticks you can find !
Why am I not surprised that they are using the old smoke and mirrors to paint a glossy picture ? I call if the Norah factor.
8.9 cps v 8.8 cps last year. Strong growth LOL. Thanks Evolve, its always great to start the business week with a good laugh.
No doubt they'll have their bean counters working overtime to highlight how on a "normalised basis" there was strong growth but on a really quick review of the financials I did pick up one area of very strong growth, they moved from a NTA of -17 cps to an NTA of -25 cps a whopping 47% increase in their net negative NTA, extremely impressive !


Pretty poor result overall whichever way you slice and dice it. No wonder Milford been reducing their holding leading upto results date in past few weeks.

Glad I've sold mine last month at 1.09 after basically watching it go no where for about 2 months or so....costed me brokerage both ways, that's it!!!

[Beagle]

There was a favourable $1.3m 'earn out' adjustment that boosted F16 profit (not normalised by them but noted)

So of course it's OK to 'adjust' F16 profit by this amount to compare F17 against a lower prior period.

But at the end of the day F17 profit of 8.9 cents a share is what matters and the market wil see top line growth and assume eps growth and send the share price towards 120 in no time.

That a bit of dry humor there mate ? Can't see it, even scraping the bottom of the barrel and normalizing this its an underwhelming result from a financial perspective but of course they paint it as strong growth...they couldn't possibly be trying to be creative for more bonus's and directors and management salary increases... surely not !

A very average share with below par growth, lest just call a lemon a lemon and be done with it !

[winner69]

'Normalising' the F16 tax expense to make F17 growth better is quite a good trick.

Cash Flow is harder to 'normalise'. That showed Operating Cash Flow of $22.3m with Investing Cash Flows of $21.8m.

Good they investing profits for growth but free cash flow didn't cover the dividends - why pay divies?

[Beagle]

Pretty poor result overall whichever way you slice and dice it. No wonder Milford been reducing their holding leading upto results date in past few weeks.

Glad I've sold mine last month at 1.09 after basically watching it go no where for about 2 months or so....costed me brokerage both ways, that's it!!!

Agreed. Other insto's been reducing lately too. Nothing in this result that would make them want to increase again. Most likely result is there's a massive undisclosed overhang of stock ready to come onto the market by disenfranchised institutional holders at the slightest hint of a SP increase. Very hard to see how the stock gains momentum upwards from here and the dividend yield case really isn't all that compelling either.
Children can be a very rewarding experience and running a day care by a caring family for others in the community can be an enriching experience all round for the kids / parents / caregivers but how much money is really in it and does this suit the corporate model ?...

[percy]

Not the result I was expecting.
Sold 75% of our holding.
Has brought the average cost of the balance to 68 cents per share.

[Beagle]

Not the result I was expecting.
Sold 75% of our holding.
Has brought the average cost of the balance to 68 cents per share.

Key advantage of being a retail investor over an institution is liquidity. I wouldn't mind having a few bob, (I like backing things that are 100% certain), there would be several institutions that would love to be able to extricate themselves from a tight spot as quickly as you have but the liquidity simply isn't there. If you'd sold a few more your remaining holding could have been free, (I would have if I were you) :D

[percy]

Totally agree,being a small retail investor means buying and selling can be easy.
Even then you often have be quick on the button .
Yes working on having "free ones".
Money was recycled very quickly into buying more LOV [asx].

[Hectorplains]

Not the result I was expecting.
Sold 75% of our holding.
Has brought the average cost of the balance to 68 cents per share.

Isn't their low since listing 82 cents? How'd you manage this feat?

[percy]

Isn't their low since listing 82 cents? How'd you manage this feat?

Piece of cake.

Buy 60,000 at 95 cents.$57,000
Sell 45,000 at $1,04 .$46,800.
Left with 15,000 costing $10,200 or 68 cents each.[plus received December's divie]
Next up if need be,sell 10,000 at $1.02, and hold onto 5,000 "free ones."

[King1212]

Piece of cake.

Buy 60,000 at 95 cents.$57,000
Sell 45,000 at $1,04 .$46,800.
Left with 15,000 costing $10,200 or 68 cents each.[plus received December's divie]
Next up if need be,sell 10,000 at $1.02, and hold onto 5,000 "free ones."

this is we call areal guru...all hail up to Percy!

Sold mine one when at $1.14:D

[sb9]

Anyone notice a big cross trade of more than 2mln shares transacted at $1 little while ago....

[winner69]

Anyone notice a big cross trade of more than 2mln shares transacted at $1 little while ago....

Those big shareholders continuing to sell down? ....plenty more to go

But Tim would say some lucky buyer

[sb9]

Those big shareholders continuing to sell down? ....plenty more to go

But Tim would say some lucky buyer

Yes, Milford have a plenty to offload. Guessing its them this time too ;)

[Beagle]

Yes, Milford have a plenty to offload. Guessing its them this time too ;)

They're not the only ones either. As expected institutions, professional and experienced retail investors saw right through the highly creative talk of "strong growth".

[winner69]

Anyone notice a big cross trade of more than 2mln shares transacted at $1 little while ago....

Director Kern selling .... hmm

At least he kept 50,000 to show he has faith

[sb9]

Director Kern selling .... hmm

At least he kept 50,000 to show he has faith

Ahh...that's him then who offloaded at $1 a piece, must've been quite desperate to get rid of them...

[Beagle]

Director Kern selling .... hmm

At least he kept 50,000 to show he has faith
I love your dry sense of humor mate. Any way you slice and dice this the disposal of over two million shares at $1 is a shocking vote of no confidence in the future of EVO. Norah Barlow probably suggested he had to keep some to look good like she does :)


Ahh...that's him then who offloaded at $1 a piece, must've been quite desperate to get rid of them...

Yeap, it literally SCREAMS GET ME OUT !!!!!!!!!!

[forest]

Director Kern selling .... hmm

At least he kept 50,000 to show he has faith

So this director is keeping less than 5% of his share portfolio in EVO, mm thats an other insider in this industry who is not showing faith.

[winner69]

Seems Westpac have ceased ti be a SSH

[winner69]

Oh dear the share price below $1 ... a bit ominous

Having a morbid fascination of trying to make sense of what's said and whats in the accounts I have taken the challenge to answer a question a friend asked 'How much extra profit is coming from the new centres they buy?'

Good question - so working on how much or how little they make from the new centres. Not looking too good at the moment.

[sb9]

Oh dear the share price below $1 ... a bit ominous

Having a morbid fascination of trying to make sense of what's said and whats in the accounts I have taken the challenge to answer a question a friend asked 'How much extra profit is coming from the new centres they buy?'

Good question - so working on how much or how little they make from the new centres. Not looking too good at the moment.

Yes, a definite "oh dear..." what was the IPO issue price by the way....

[Beagle]

$1.00 in December 2014. Feel sad for shareholders, (especially on a relative basis to the NZX50), but I have posted quite a number of negative posts over the years and warned that I really don't believe childcare suits the corporatized model.

[percy]

Sold the balance of our holding at 98 cents per share this morning,after not being impressed by either The Chairman's,or the CEO comments, in the annual report.