Sorry, but I beg to disagree with you on this one.
It is true that G8’s acquisition strategy has materially increased the top line over time, but describing this process as a “camouflage” is misleading at best.
As I think I have abundantly shown with numbers in our parallel thread (“My investment case for GEM”), the following facts stand out:
1) The underlying EBIT trend on a same-centres basis (i.e. stripping out the impact of acquisitions) has shown above-inflation growth throughout.
2) The capital allocation strategy has been increasingly efficient, both on an absolute return level (ROCE) and on a funding-adjusted level (ROCE-WACC).
3) Reported earnings have been solidly backed by recurring cashflow.
While I do acknowledge that persisting low occupancy rates represent a risk, the truth is that up to this point the Company has been able to constantly improve its EBIT margins (both on a pre- and post-acquisitions basis), pretty much regardless of occupancy levels.
And I think that makes an integral part of the investment rationale for G8.
Regards (all IMHO, DYOR, etc.)
GEM Price at posting:
$4.10 Sentiment: Buy Disclosure: Held
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