Just a bit too small

Finweek English Edition - - MARKET PLACE - By Si­mon Brown

This re­cent, and very small, list­ing is hopping on the ed­u­ca­tion band­wagon hop­ing to be the next Curro. But this com­pany is much smaller, doesn’t have a large share­holder as Curro does with PSG, and will strug­gle to raise the cash needed to ex­pand.

The re­cent an­nounce­ment that it is po­ten­tially buy­ing the six Pem­bury re­tire­ment lodges and vil­lages is in­ter­est­ing and frankly I pre­fer this part of the busi­ness. This move may also help with cash flow as po­ten­tially these are ma­ture, prof­itable busi­nesses.

But while the com­pany is in the hot ed­u­ca­tion space, the prob­lem re­mains size. Not only the size of its cur­rent ed­u­ca­tion of­fer­ing, but also the small na­ture of the stock. With a mar­ket cap of only some R300m, no large in­sti­tu­tional in­vestors are look­ing to in­vest, leav­ing it up to small pri­vate in­vestors to push the stock higher and we’re not see­ing that.

If Pem­bury had listed a few years back in bet­ter eco­nomic and po­lit­i­cal times, it may have done bet­ter and in time it may start to see in­vestor de­mand. But for now, price weak­ness is the more likely out­come.

Last trade ideas

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