Result highlights two things in my view: 1) Childcare centres are basically privileged assets hence why they can sell them at substantial premiums to book. 2) CHC need to be removed as the manager here considering the atrocious capital management they continue to demonstrate year in and year out. Here's my view on why this latest action demonstrates terrible capital management:
-> They sold $84m of childcare assets at a premium to book and MASSIVE premium to impled market value and immediately plowed it back into buying yet another social infrastructure asset (which would have generated transaction fees for the manager and stamp duty payments to the WA Government) rather than buying back more stock!
-> I.e. If the physical market is telling you your assets are worth more than book (let alone the absurdly discounted market value) why aren't you buying the pants off the portfolio you know and already own when doing so is highly accretive, generates no incremental stamp duty expense and no incremental transcation fees to the manager!!!???
CQE Price at posting:
$2.58 Sentiment: Buy Disclosure: Held
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