EVO - Evolve Education

[carrom74]

Looks like a dead cat bounce... and with fund managers selling(salt),not much punch left... Get out if you can....and i reckon it will be back to 18-20c soon....

[silverblizzard888]

Looks like a dead cat bounce... and with fund managers selling(salt),not much punch left... Get out if you can....and i reckon it will be back to 18-20c soon....

These guys just announced a estimate of reasonable earnings coming through. Salt funds is just managing their positions and reducing accordingly since it has basically doubled in the space of a week. If this was a stock that wasn't making much in the way of earnings then I'd see it falling and see where it could be a dead cat bounce, but this is a material announcement they just made. Many people are sitting on huge profits so they are selling down, though 18-20 cents isn't likely or else it'd end up being too much of a bargain not to buy in to. Turnaround going smoothly and three new centers about to open.

Also end of last year Chris Scott the former Managing Director of G8 Education came on board, this is where the smart money is. For anyone who doesn't know G8 Education you should go read up on this ASX company, beautiful story that became an Australian market darling.

[Beagle]

The vast majority of investors are sitting on MASSIVE LOSSES.
Highly speculative in my view.

[silverblizzard888]

The vast majority of investors are sitting on MASSIVE LOSSES with the poorly managed flea, worm and mange infested MUTT.

I'd like to see that I had a knack for picking mutts at their worse, but still finding some value in them. Everyone was calling Orion Healthcare, Sli and not too long ago PLexure a mutt, but they were all at least 50% gains for me. Current result looks quite promising and Chris Scott coming on is enough smart money to follow.

[carrom74]

These guys just announced a estimate of reasonable earnings coming through. Salt funds is just managing their positions and reducing accordingly since it has basically doubled in the space of a week. If this was a stock that wasn't making much in the way of earnings then I'd see it falling and see where it could be a dead cat bounce, but this is a material announcement they just made. Many people are sitting on huge profits so they are selling down, though 18-20 cents isn't likely or else it'd end up being too much of a bargain not to buy in to. Turnaround going smoothly and three new centers about to open.

Also end of last year Chris Scott the former Managing Director of G8 Education came on board, this is where the smart money is. For anyone who doesn't know G8 Education you should go read up on this ASX company, beautiful story that became an Australian market darling.

Yes.. I have heard about Chris Scott when he picked up a stake for about 64cents and the update is showing an improved sentiment.

A lot to prove but the signals are getting better and I do hope it’s not a dead cat bounce...

Could you please let me know where these three new centres will be based?

[silverblizzard888]

Yes.. I have heard about Chris Scott when he picked up a stake for about 64cents and the update is showing an improved sentiment.

A lot to prove but the signals are getting better and I do hope it’s not a dead cat bounce...

Could you please let me know where these three new centres will be based?

Yup Chris Scott put $20 million Australian into his stocks, so theres a lot of skin in the game for him. He also brought on Chris Sacre his second in commandant, which together those two performed a miracle run for G8 education between 2011- 2014, what a golden period that was.

Everything takes time to turn around, so I'm not expecting everything to change overnight, but looks to be improvements going forward. The best indicators going forward is the occupancy rate, which stands at 80% and any company with a staff turnover rate of 33% has a massive job just spending time and resources sorting out staffing issues. In a way if you sort staff turnover, you have a steady ship, created better internals and with that you should see occupancy rates improve. Staff leaving creates inconsistent delivery in service, puts communication between the centers and the childs families in disarray and you likely lose a lot of good staff for the ones that think they can get better elsewhere and don't have to put up with the on going complaints and ongoing training and hassle with dealing with new staff. Business 101 in order to offer a good product you need good knowledgeable staff to execute it.

Government funding would have also had an impact too, given funding did not increase until January this year, this should have a positive flow on effect for the next financial year.

The center locations have not been disclosed. Heres an article that relates to one that opened last year, though the three opening are stated for this year https://www.stuff.co.nz/business/105...hildcare-group It does seem like they are putting resources into building new centers in areas where new subdivisions are.

[Beagle]

Not sure if there's anyone left that's interested in this pup any more but I caught up with both my sister in law's on the weekend who both are involved with Evolve and as you would expect Evolve issues came up. They're in real trouble. Early child care centers are sprouting up like wild mushrooms all over the place and occupancy is under real pressure.
Head office and their management team seem hopelessly out of their depth from what I heard and have no idea how to stem the tide of dissatisfaction.
Incentives within the industry and becoming more normal, (eg. half priced daycare for the first six weeks if you sign up for a year), centres are under intense pressure to get occupancy up and heaps more pressure to get enough qualified staff. The supply glut is becoming a very serious issue facing the industry with flash new centres drawing parents away from older less attractive facilities because they look better and parents think its a better look for their kids. What parent doesn't want the best for their kids... This will probably limp along for years as a penny dreadful or go under in due course.
How do you compete with a corporate business model with its primary responsibility to shareholders with a much larger charitable organisation which puts the kids interest first, left right and centre ? Which type of centre would you take your kids too...
They owe their bankers more than $50m and they have put Evolve under a choker hold with their banking facility. Talk about being snookered !

From 5 March 2019. I haven't seen my sister in law's since but I doubt much has changed. From a boots on the ground perspective this Pup looks very sick.

[silverblizzard888]

From 5 March 2019. I haven't seen my sister in law's since but I doubt much has changed. From a boots on the ground perspective this Pup looks very sick.

Its a fair analysis, this company seems to have let a lot of issues run wild throughout and only starting to address them. Though you do have to take you sister in laws perspective as one view and consider if everyone around her feels the same way too.

With new management only coming in 9 months ago there is a lot that needs to be done, first there would be 3 months of planning in the likely case, the first action is looking after the financials, they have also sold down non core assets, they have done the fat trimming, I'd say now they would only start to do up all the old centers with the extra expense of $2.9 million they've allocated yearly, hence the reduced earnings.

Regarding new centers opening up its alright if it caters for the shortage, between 2009 and 2017 the increase has been quite large and with centers most catering for 50-100 kids to be able to absorb 200,000 kids would require 2000-4000 centers, which Beststart has 260 and Evolve has 120, so theres plenty of room for many in this space, seeing more open isn't the main problem, its a matter of keeping good staff and creating a well furnished center that looks good to the parents (cause kids rarely notice if they have toys, heck even a cardboard box pleases them).
https://www.stats.govt.nz/news/more-...childhood-care

[Beagle]

Morale is VERY low throughout Evolve centres from what I hear and their is widespread discontent that head office are incompetent, unsupportive penny pinching corporates with little or no regard for highly experienced staff or grass roots quality care for the young ones. Staff turnover is absolutely shocking and most who were any good have left already and many others are thinking of leaving.

Its going to be like turning the Titanic around and we all know that was conceptually flawed with rudders that were far too small. Not saying it can't be turned around but there's plenty of icebergs around too not the least of which is the size of the bank debt and the vastly overstated intangible assets figure on the balance sheet.

I've got to be honest and admit I played with the idea of speculating on some when it hit 20 cents a while ago but decided I have no need to bottom fish and take speculative positions which look like having a binary outcome one way or the other.

[percy]

33% staff turn over?
Year one top 33% leave.
Year two top 33% leave.
Year three you have no top staff left.?