Slater & Gordon Ltd

SGH Details
·         ASIC’s positive notification boosted the stock sentiment: Slater & Gordon Ltd (ASX: SGH) stock rallied over 13.6% on March 24, 2017 as Australian Securities and Investment Commission (ASIC) has concluded its investigation and notified that information and evidence available to it does not indicate that there was a breach of law. Accordingly, ASIC would not take any enforcement action against the group. ASIC has investigated SGH’s financial records for the period between December 01, 2014 and September 29, 2015 to evaluate for any falsification or manipulation thereof.
 
·         Recommendation: SGH stock lost over 71.4% in the last six months as at March 23, 2017, but the recent update brings some level of positive news for the group. We maintain a “Hold” recommendation on the stock at the current price of – $ 0.125

G8 Education Ltd

GEM Details
·         Decent 2016 performance: G8 Education Ltd (ASX: GEM) stock surged over 3.73% on March 24, 2017 with improving sentiments while the group traded ex-dividend on March 23, 2017. GEM has witnessed a total rally of over 9% in the last four weeks (as at March 24, 2017). The group reported a full year FY16 revenue rise of 10.2% as compared to the prior corresponding period on the back of fee increases and acquisitions in 2015 and 2016. The group’s underlying EBIT surged 10.5%, boosted by organic growth in the second half of 2017. GEM is making investments in potential opportunities with enhanced expenditure in centre upgrades and refurbishments. The group’s debt profile improved during the year, with expiring SGD bond and bank working capital facilities both extended by 2 years. Meanwhile, the group’s LFL revenue was 2% lower than the fee increase level on the back of lower occupancy. Underlying NPAT enhanced 7.1% for the year, lower than EBIT growth on the back of higher financing costs. The group operated 490 centers in Australia and 20 centers in Singapore leading the total licensed places to 38,713 as of December 2016. The group settled 19 centres in Australia and two in Singapore with a total purchase price of $62.9 million.
 
·         Recommendation: GEM stock rallied over 30.5% in the last six months (as of March 23, 2017). We give a “Hold” recommendation on the stock at the current price of - $ 4.17 

Growing center portfolio (Source: Company Reports)

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