Islay, slide 7 in the August HY15 presentation is entitled "Like...

Islay, slide 7 in the August HY15 presentation is entitled "Like for Like EBIT Growth -- By Year of Acquisitions". It shows EBIT growth for centres purchased in each calendar year, thereby effectively removing EBIT growth due to acquisitions from the data. For instance, HY14 to HY15 EBIT growth increased 12.1% for centres acquired pre 2011, 20.4% for centres acquired in 2011, and so forth. Most results are well above fee increases. This is why investment analysts refer to GEM's ORGANIC as well as acquisitional growth potential (the two or three amateur finance writers I alluded to falsely say GEM has no organic growth)

Macquarie updated its guidance today, retaining both its "neutral" recommendation and $3.75 target price. Its concerns are (a) effect of price increases on occupancy, (b) effect of new educator-child ratios on organic growth, and (c) more clarity on GEM's current debt situation. At the same time, Macquarie states: "The broker likes the child care theme and the opportunity to consolidate a fragmented market."

Canaccord Genuity (CG) updated its GEM report yesterday. Buy recommendation with target price of $5.15. CG estimates 28% EPS growth in 2016, giving GEM a P/E of 8. CG states: "We believe G8 Education remains well positioned to continue delivering strong EPS growth via a combination of organic growth and acquisition. We do not believe that the current market valuation is reflecting this growth profile."