G8 Education Ltd

GEM Details
Rise in fee and acquisition: G8 Education Ltd (ASX: GEM) reported full year results for FY16 entailing a revenue growth of 10.2% to $778.5 million. Operating revenues growth was driven by growth in LFL parent fee revenue of $27.9 million and acquisitions. Underlying EBITDA rose 11.3% to $172.4 million while underlying NPT was up 7.1% to $93.3 million. Underlying EPS grew 3.4% to 24.68 cents. However, there was about 9% slip in profit for the year. The company has announced an equity placement of $212 million at an 8% premium to a subsidiary of China First Capital Group. The company intends to use the funds for repaying bond and bank debt facilities as well as assisting in funding the growth of child care center network. Raising funds will enable GEM to deliver on an additional $100 million of network growth opportunities. The company has operated 490 centers in Australia and 20 centers in Singapore bringing the total licensed places to 38,713. Further, the company settled 19 centers in Australia and two in Singapore with a total purchase price of $62.9 million during 2016. Further, the company has also repaid the SGD unsecured note associated with the proposed Affinity education acquisition.
 

Financial Performance (Source: Company Reports)
 
Going forward, the company said there are 28 acquisitions scheduled to be completed during the year for total cost of approx. $80 million with annualized EBIT of circa $20 million. The company plans to complete 28 acquisitions during the year for a total cost of $80 million with annualized EBIT of circa $20 million. The company said that the timing of acquisition would lead to 2017 EBIT contribution of approx. $7 million.  We rate the stock a “Buy” at the current market price of $ 3.82
 

GEM Daily Chart (Source: Thomson Reuters) 

Nanosonics Ltd

NAN Details
Strong H1 FY17 results:Nanosonics Ltd (ASX: NAN) reported sales growth of 33% to $36.1 million for H1 FY17 while operating profit before tax was at $10.3 million, up 203% on prior half. The company has generated free cash flow of $8.2 million for the reported period and has cash reserve of $56.9 million. The net income tax benefit for the period was $11.7 million and cash balance was $56.9 million. The company has sold 2000 more units in North America over the period taking total to 10,700 units. The company’s global capacity is at 12,300 units. Nanosonics has been largely focusing on the US market but now planning to extend its focus on large European markets like UK, France, and Germany. Nanosonics also sees a plenty of opportunities in Australia, Asia and rest of the world to replicate its US success story. However, it is yet to be seen how NAN’s efforts would target the European market that remains underpenetrated and some markets in Asia that remain completely untapped. Currently, the company aims to expand its R&D spend for new products. We believe that the stock is “Expensive” at the current market price of $ 2.67
 

NAN Daily Chart (Source: Thomson Reuters) 

oOh!Media Ltd

OML Details
Digital Expansion in FY16: oOh!Media Ltd (ASX: OML) reported 20.1% rise in revenues to $336.1 million for FY16. Underlying EBITDA was at $73.5 million, up 27.4% over prior year and EBITDA margins were at 21.9% up from 20.6%. The company reported 16.8% rise in net profit to $21.5 million and has declared final dividend of 10 cents per share. Accounting this final dividend, total dividend paid for FY16 was 14 cents up from 9.5 cents paid in 2015. During the year, OML acquired Executive Channel International (ECN) for $68.5 million, The company also announced merger with APN Outdoor Group to form a combined company with pro forma FY16 EBITDA of $171 million. The merger would bring significant cost savings and deliver pro forma EPS accretion of just above 14% to shareholders in each company. 

Product Portfolio (Source: Company Reports)
 
During the year, the company added 29 Road large format screens, 39 EVOKE Retail large format screens, 25 Fly large format screens, and 200 ShopaLive screens, under digital expansion efforts. oOh! Media launched NZ’s first retail measurement system and has also expanded to eight online platforms. The company has not provided any concrete guidance in view of proposed scheme of arrangement with APN Outdoor. However, OML stock surged over 11.03% in the last three months (as at February 21, 2017) and is currently trading at higher levels. We rate the stock as “Expensive” at the current market price of $ 4.72
 

OML Daily Chart (Source: Thomson Reuters)

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