Some Positive Perspective

I noticed this commentary this morning in the Morningstar weekly newsletter. Interesting and positive for those of us that have weathered the pandemic hit.

G8 Education, the second-largest provider of childcare services in Australia, was affected in early 2020 by the coronavirus-related economic downturn, which exacerbated its already weak share price. However, the combination of additional federal government financial support for the childcare sector, a relatively large equity capital raising for G8 Education, and a recovery in childcare demand has supported the company. We expect occupancy rates at G8’s childcare centres to continue to recover during 2022 and that this will drive a rebound in G8’s profits and help close the share price/fair value discount. We remain confident in the long-term outlook for the childcare industry and G8. We expect childcare demand to grow with the population and female workforce participation. The federal government bears most of the cost of childcare services, and we expect this to continue, meaning that the sector is reasonably defensive. (Gareth James)