The Newswire

Your daily serving of financial goodness

Will investors Turn to Mayfield 8 Years after ABC Learning Collapse?

Will investors Turn to Mayfield 8 Years after ABC Learning Collapse?
All of Mayfield's childcare centres are located within a 160 kilometre radius from the Melbourne CBD.
Nov 16, 2016 By Simon Herrmann Tags: IPO, MFD

Mayfield Childcare plans to list on the ASX in November via conventional IPO by raising $24million.

Eight years after the liquidation of ABC Learning, the childcare sector continues to experience growth but have investors fully recovered from the disastrous collapse of the former industry giant? The success of industry peers G8 Education (ASX:GEM) and Think Childcare (ASX:TNK) indicates that the sector is still in favour and the coming IPO of Mayfield Childcare will add another listed competitor to the mix.

Upon completion of the offer Mayfield Childcare will own and operate 16 childcare centres in Victoria with 1,360 licensed places and projected revenues of nearly $29 million for 2017. Mayfield is raising $24 million for the purpose of acquiring these childcare centres, which are predominantly located in suburban Melbourne.

 

 Video: Wise-owl's view on the Mayfield IPO sponsored by OnMarket

While we have already witnessed some consolidation in the industry, the childcare sector remains a highly fragmented industry and Mayfield seeks to gain market share through further acquisitions. The 16 new childcare centres have been EBIT positive for the 1 months to June 2016 and management predicts earnings before interest and tax of over $5million for fiscal year 2017.

Will the market associate the Mayfield IPO with the story of ABC Learning? The answer is maybe, hence an adequate capital management strategy will be a value driver as it will soothe investors. In addition, management targets the distribution of dividends with a payout ratio of 65 per cent of pro forma NPAT.

However, Mayfield is focused on growth via acquisitions and there are integration and balance sheet risks associated with the purchase of new childcare centres. As all of its centres are located within a 160 kilometre radius from the Melbourne CBD, the concentration risk is also high.

Conclusively, successful integration of recent acquisitions and adequate capital management will be crucial to create long-term value for shareholders. Increased government funding should support growth in the industry and as the sector remains relatively fragmented, there is an opportunity for Mayfield to increase market share. As management targets the distribution of dividends, the float appears appealing to investors seeking a mix of capital growth and income.

ASX Code: MFD
Shares on Offer: 24m
Listing Price: $1
Market Capitalisation: $30m
Listing Date: November 28 

Share this article

Simon Herrmann Author: Simon Herrmann Nov 16, 2016

Simon is a financial analyst at independent research firm Wise-owl who wants to change the world by disrupting the cliché approach to investment decision making with convergent thinking. Wise-owl’s goal is plain and simple: Find the best opportunities for our members by following a proven methodology and to create long-term value through high-quality advice, innovation, technology and education. We combine industry experience and the agile mentality of a start-up. Wise-owl is the future of stock market investing.


Interested in IPOs? Bid directly here:

Loading...
Disclaimer: Clicking on this link will take you to a third-party website. We do not control or give advice regarding the content or links that appear on these sites and Wise-owl accepts no responsibility or liability in respect of any third party materials. Wise-owl may earn a commission from any product or service from third party websites.

Growing Cases of Cancer Fuel Demand for Diagnostic Technology: Sienna Cancer IPO

The Australian government estimates that over 130,000 new cancer cases will be diagnosed in 2017 and the risk of individuals dying from cancer by their 85th birthday will be one in five.

Author: Simon Herrmann Jun 23, 2017

Errors

Sign Up for Free Trial
Subscribe
Recent Tweets
Recent News