EVO - Evolve Education

[Snapper]

Hi Waiken
Look, best of luck with this and it's great that the management have some skin in the game. ECEs can definitely do well but it is a lot harder than 5 to 10 years ago.

I suppose I am just a skeptic whether a listed corporate model can work in this sector. The other big players are either charities or unlisted - they have been around a bit longer than Evolve and don't operate under the same imperatives (or debt levels).

Your typical ECE centre is usually subsidized by a very hard working owner/operator. If you factor in the cost of their input ( and often their spouse's input) there are many of them that operate at very low EBITDA, sometimes negative.

[Beagle]

You've hit the nail on the head Snapper. The biggest competitor is a charity and then there are the hundreds of privately owned centres run by caring young couples who are well connected in their communities and working extremely hard and often for what amounts to a lower effective hourly rate than a qualified staff member.

Sealord have had to lower to quota so the Hoki fishery is sustainable. The analogy here is that the sector is basically over fished and returns are sub par. The fall in occupancy rate has been dramatic to say the very least. Stabilising it at an unprofitable level is not an achievement. It doesn't matter that the owner has a huge stake in the fishing boats or that he captains them himself, if the fishery is over fished, it is what it is and returns will be sub par going forward, especially for those carrying significant debt.

BUT we are told the fishing is better in Australia so everything is going to be okay. Nice story...let's see how that plays out over time.

WAIKEN - "You are motivated by an altruistic desire to keep visitors to sharetrader fully informed about EVO or you are hoping to see the price drop so you can load up".
I'm completely disinterested in investing in this sector so by deduction that gives you your answer.

[WAIKEN]

I apologize Beagle for doubting your sincerity. We have different viewpoints on EVO and this time next year we will know whether buying, holding or selling was the most profitable path.
We do however have identical viewpoints on MET in which we should both make a good gain over the next year irrespective of the success of the likely upwardly revised bid of the current bidder for the whole company.

[Beagle]

There is a systemic issue with ongoing growth in the numbers of childcare centres in N.Z. leading to years of declines in the occupancy rate of existing centres.
Turning around the long established declining trend in occupancy rates, (if they can do it), will be key to stopping the ongoing decline in N.Z. profitability.
To date my sources tell me there is no sign of a cohesive plan to achieve this. I am highly sceptical we will see any meaningful progress on N.Z. profitability, (still the vast majority of their business model), for quite some time.

Interesting chat with an industry insider working for Evolve on the weekend.
Management attempting to screw costs down even further.
Evolve now asking parents to pay for their children's attendance on statutory holidays when the kids are not there and the centre's are not even open to provide care if the parents did drop them off ! One wonders if that's even legal. Charging people for a service that's not provided and cannot be provided is surely a breech of the fair trading act ? Thought's anyone ?

On the topic of more and more centres opening up, its absolutely relentless and the feedback I get is that parents have almost no loyalty whatsoever, (doesn't matter how nice the staff are) and are often swayed by appearances, i.e. the new and fancy early child care centre with brand new facilities and play equipment must be better than the older Evolve centre…

For mine...there is no evidence whatsoever that management can stop the rot at NZ childcare facilities which is still the vast majority of their business model and the widespread proliferation of newer centres will keep intense pressure on occupancy, (read profitability), at existing N.Z. centres.

I just comment mate to share what industry insiders tell me, and they are usually bang on the money. The above 2 posts from earlier this month, (when others are waxing lyrical about the Australian expansion), are good examples. I highlighted this bit above and the insiders did tell me occupancy is a real problem and sure enough its fallen around 4% in the last few months which is profoundly shocking and a major acceleration of the rate at which occupancy has been declining up until quite recently. Impossible to overstate the size of the challenge in turning around N.Z. profitability and this is still the VAST BULK of their present business model. Agree, Go MET !!!!!!!!

[Balance]

I just comment mate to share what industry insiders tell me, and they are usually bang on the money. The above 2 posts from earlier this month, (when others are waxing lyrical about the Australian expansion), are good examples. I highlighted this bit above and the insiders did tell me occupancy is a real problem and sure enough its fallen around 4% in the last few months which is profoundly shocking and a major acceleration of the rate at which occupancy has been declining up until quite recently. Impossible to overstate the size of the challenge in turning around N.Z. profitability and this is still the VAST BULK of their present business model. Agree, Go MET !!!!!!!!

Good insights, Beagle.

Anecdotally, there are many new childcare centers seemingly opening all over my area - even on top of a new block of shops with no greenery!

And they are all discounting to get parents to enroll.

[winner69]

Good insights, Beagle.

Anecdotally, there are many new childcare centers seemingly opening all over my area - even on top of a new block of shops with no greenery!

And they are all discounting to get parents to enroll.

One opening 6am to 8pm and thinking 24 hours

[winner69]

Not an Evolve centre but obviously running centres is hard work ..let alone making money out of doing it

https://www.stuff.co.nz/national/edu...safe-practices

[Beagle]

Centres are supposed to have a minimum number of qualified staff which varies depending upon the number of children at a daycare.
One operator is known to move qualified staff around between centres to meet those requirements when audits occur. Probably best I don't name that company but I am sure people can join the dots for themselves...

[stoploss]

Share placement ...
"EVO expects to be in a position to make an announcement on the outcome of theplacement prior to the commencement of trading on Friday, 13 December 2019.EVO anticipates that the settlement of the placement will take place on Wednesday, 18December 2019 and allotment and quotation of the new shares on the ASX and NZX MainBoard will take place on Thursday, 19 December 2019."

[winner69]

Share placement ...
"EVO expects to be in a position to make an announcement on the outcome of theplacement prior to the commencement of trading on Friday, 13 December 2019.EVO anticipates that the settlement of the placement will take place on Wednesday, 18December 2019 and allotment and quotation of the new shares on the ASX and NZX MainBoard will take place on Thursday, 19 December 2019."

Wonder how much this time around?

And no doubt further dilutes those who aren’t the big end of town....unless it’s more to those associated with the insiders