MFD-Mayfair childcare -mirco-cap- yield play 8%+ P/E-8

Small cap -growth yield play -undervalued to peers

net profit after tax from continuing operations of $3.38 million ...Read more at https://thesector.com.au/2019/02/01/...eld-in-2018-2/


well worth a look I purchased a chunk today @1.06 and will be eligible for the 8.93c divie(ex date tomorrow) but will go for the MRP and get the value in shares at a 5% discount

Good to have its own thread. Ive been posting on the gEM thread about it and still hold albeit with a higher overall entry then you. Looks to be heading back into a good cycle and management are savvy. Roll up rollup thats what its all about.

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Originally Posted by Joshuatree

Good to have its own thread. Ive been posting on the gEM thread about it and still hold albeit with a higher overall entry then you. Looks to be heading back into a good cycle and management are savvy. Roll up rollup thats what its all about.

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Very good have you been taking shares for the dividend? as we kiwis get double taxed otherwise with nil aus Franking credits

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Originally Posted by Joshuatree

Good to have its own thread. Ive been posting on the gEM thread about it and still hold albeit with a higher overall entry then you. Looks to be heading back into a good cycle and management are savvy. Roll up rollup thats what its all about.

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Having got in low 80's - I'm now out.

The lack of headway made after the CCS - occupancy rates actually went down - is concerning. I'm wary of the debt funded acquisition model (note: their revenues were up but profit down. See EVO) and Victorian childcare provision remains a tight market.

Good trade Hec, im in for a longer investment. Cant see when you bought btw.

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Originally Posted by Hectorplains

Having got in low 80's - I'm now out.

The lack of headway made after the CCS - occupancy rates actually went down - is concerning. I'm wary of the debt funded acquisition model (note: their revenues were up but profit down. See EVO) and Victorian childcare provision remains a tight market.

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Nice trade if you sold +$1 ... still, I think MFD will increase profits from the 2018fy 3.38mill NPAT towards 4mill for 2019fy with the increase of another centre to 20x...move out of the poorely performing centres etc .. 29mill mktcap not exactly expensive on a P/E basis.

Westpac debt facility increased by $10.6mill from 8.5mill to 19.1mill during a period where banks lending criteria continues to tighten so shows WP confidence in MFD business model and forward outlook.

AUS RES property under pressure in-RBA comes out with neutral view rates could go either way(IMHO down more likely) which will be positive to MFD on both the Debt front and investors hunting for yield.

On a peer valuation, MFD also stacks up well in the space

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Originally Posted by Joshuatree

Good trade Hec, im in for a longer investment. Cant see when you bought btw.

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Have traded them a couple of times. Last purchase late November. Currently not holding. `

An email I received back within the hour from CEO ... always a positive

The growth plan is simple enough, get more out of what we have through improvements in quality and investment in the physical assets, to drive better occupancy, along with continued cost management.

The second piece is the expansion. I maintain my belief that there is plenty of scope / opportunity for growth in the Victorian market. This approach allows us to maintain appropriate HO structure without unnecessary cost, maintain close control of the centres and leverage the experience and knowledge we have of the Victorian market. The question will become though on how we fund acquisitions going forward. While we have available funds with Westpac we will need to look towards the market at some point.

Always happy to discuss further, so please don’t hesitate to call

Regards
Dean

Dean Clarke
Chief Executive Officer

ASX-listed Mayfield Childcare will spurn national expansion and stick to its home state of Victoria for acquisitions in a market where better occupancy rates are likely to be bolstered further if the Labor Party wins the federal election.



RBC Capital Markets predicts an ''occupancy tailwind'' will come from the Labor's $1.75 billion proposal to guarantee 15 hours a week of education for three- and four-year-olds, in a sector that is still highly fragmented.

Think Childcare entered into a trading halt on Monday as it undertook a placement to raise $18 million to acquire four centres in Perth and to bolster its balance sheet as it expands the upmarket Nido brand. The proposed fundraising, at $1.58 per share, was first reported by Street Talk in The Australian Financial Review.



Think has also said it is planning a further six acquisitions late this year.



Mayfield and Think are small operators compared with the largest Australian Securities Exchange-listed childcare group, G8 Education, which runs 500 centres in Australia and 20 in Singapore.

Sentiment surrounding G8 also has largely improved, with stock rising to $3.63 on February 22 from $1.91 in late October. It has retreated below $3 in the past month.



Mayfield chief executive Dean Clarke said on Monday that conditions were generally better than in 2018, and his group was on the lookout for extra acquisitions. "There's a lot of opportunities,'' he said.



Mayfield listed on the ASX in late 2016, and runs 20 centres in metropolitan Melbourne.



Mr Clarke said Mayfield would stick to the Victorian market and had no aspirations to expand into a national network.

"I think there's plenty of scope here,'' he said.



The sentiment in the childcare sector had been slowly improving after a difficult market last year because of an industry oversupply and some uncertainty about just how a new federal government subsidy scheme, introduced in July, would play out.



"The middle of last year was a period of confusion,'' Mr Clarke said.



RBC Capital Markets analyst Garry Sherriff said should Labor win the election, the timing to implement its childcare proposals was unclear, but the changes were a positive for the industry. Prime Minister Scott Morrison has indicated the election will be in May.

'Occupancy tailwind'

The plan to guarantee 15 hours per week of education nationally for three- and four-year-olds was an ''occupancy tailwind'' because it would increase demand.



A second Labor policy of removing upfront course fees for 10,000 early-education TAFE courses would help stimulate the supply of new childcare workers.



RBC has a 12-month price target of $3.50 per share on G8 Education, and said occupancy was trending in the right direction.



Think managing director Mathew Edwards said on Monday that the initial purchase costs for the four centres in Perth totalled $6.8 million, and average daily fees per child were $117 across 308 licensed places.



The centres were acquired on an enterprise value-to-earnings earnings before interest, tax, depreciation and amortisation multiple of four times.

The centres were all built in the past two years.



The capital raising would increase funding flexibility for further acquisitions and provide Think with a ''capital runway to acquire, develop, upgrade and execute on the premium Nido brand transition'', Mr Edwards said.



The capital raising is being handled by Cannacord Genuity and Wilsons.