Caution - HIGHLY SPECULATIVE AND VERY HIGH RISK
Quote:
Originally Posted by
WAIKEN
They are on the upward journey. Salt is trimming, not rushing for the doors. I see the move to a female CEO as being positive. The vast majority of pre school teachers are young women and need a lot of TLC which was lacking up to now. They are putting time and resources into resolving staff matters. I have a daughter teaching in a preschool. She has recently changed from a husband wife single site operation to another single operation. The previous school was struggling with high turnover and limited resources. The current one is doing better. I had an accounting client who operated two preschools and sold prematurely as the staff problems and compliance demands were overwhelming her. The new environment with a higher ratio of qualified teachers, rising wages, health and safety and other compliance matters will lead to many small operators departing. The kindergarten model works well as they are backed by infinite government funds and work shorter hours. Well run corporate operators with scale can do well if they create a happy working environment like any successful business. Scott is astute and heavily invested and is turning the business around. Alan Wham the previous CEO bought willy nilly just to get scale. He never addressed staff issues. I spoke to Mark Finlay who came back in as temporary CEO before he sold his holding to Scott. He didn't seem to have the energy to address the female centred problems in front of him and capitulated. There will need to be a cash issue to get the bank on board. Maybe 80mill at 0.25. I see a restored dividend and price above 0.50 by June next year.
Welcome to the forum and good to see some robust debate on this one. They may be on an upward journey but its from the very depth's of a deep dark well with no readily apparent ladder to use... Using another analogy...Turning the Titanic around before it hits the iceberg (assuming the rudders even work AKA is staff morale now so bad it's not a recoverable situation ?) will take time and as for asking long suffering shareholders who have seen their capital decimated by years of mismanagement for millions more...this is by no means a foregone conclusion at any price let alone 25 cents per share.
I think you are well and truly jumping the gun calling the share price as doubling in the next 14-15 months and resumption of dividends.
The fact that the bank has ostensibly removed the headroom from the company facility tells you they have lost confidence so I agree a capital raise is necessary but how and who is going to underwrite that ?
This stock should come with a 'HIGHLY SPECULATIVE WARNING" so I have titled this post accordingly.
If this stock is "investable" and that's still a big IF in my mind the time to do it would appear to be contemporaneously with the capital raise so at least its de-risked from the bank's perspective. Buying someone's else's right's to subscribe to new shares at say 20 cents per share for a fraction of a cent each might have some merit provided they can demonstrate the ship is actually starting to turn around. Average centre occupancy will be a key statistic to watch in my opinion and if they can't turn that around then...