The G8 Education (ASX: GEM) share price is currently up more than 6% after making an announcement about the government measures.
What is G8 Education?
G8 Education is the largest ASX listed childcare provider. At the end of 2018, G8 had more than 500 childcare centres in Australia, as well as a few in Singapore. G8 Education has used an acquisition strategy to grow the number of brands it operates including Buggles, The Learning Sanctuary, Kool Kids, Bambinos and Creative Garden.
What did G8 Education announce?
G8 gave an update about the government’s early childhood education and care relief package (ECEC Relief Package), the jobkeeper wage subsidy as well as outlining a new transition payment to support the sector.
ECEC Relief Package
The government has announced that the package would cease the week ending 12 July 2020 and that normal arrangements would resume after, meaning the government CCS payments and parent co-payments.
The jobkeeper wage subsidy for employees of the early learning sector will cease from 20 July 2020.
Transition payment
To support the sector during this period of lower occupancy levels, early learning and care providers will get a transition payment equal to 25% of each centre’s fee level prior to COVID-19, based on the fees in the fortnight prior to 1 March 2020.
This will be about half of the support of the current ECEC package, but is paid in addition to the normal government subsidies. It will be paid from 13 July 2020 to 27 September 2020 and is conditional on the providers maintaining average gross employment levels during the period.
Summary
G8 said its booked occupancy is currently around 65%, though attendance is around 52% with some children being kept away. It generates revenue on bookings. In April it was 30% occupancy. The gap between occupancy and attendance is expected to keep narrowing.
The company looks cheap, but I’m not sure if it’s great value today. I prefer the growth share Bubs (ASX: BUB).
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Disclosure: At the time of writing, Jaz doesn’t own shares in any of the businesses mentioned.
