Pembury poised for blue-sky growth
EDUCATION: PEMBURY POISED FOR BLUE-SKY GROWTH
Group lists on the JSE’s AltX exchange on Friday amid technical glitches wrought by high volumes.
Private schooling continues branching out across South Africa and some are saying Pembury’s new listing could be the chance many missed with Curro.
Education and property group Pembury listed on the JSE’s AltX exchange in the thick of Friday’s Cabinet-reshuffle panic and amid technical glitches wrought by the high volumes.
It was low key with the share listing at 100c and falling to 95c – reminiscent of sector darling Curro’s market entrance six years ago, some said. Pembury started out as a provider of rental accommodation for the elderly, but then branched out into education, which is now the main revenue driver in the business. The listing will enable PLG Schools to reach its goal of growing its education portfolio from seven campuses and 19 schools to 19 campuses and about 55 schools by 2022.
“We anticipate growth of three campuses per year between 2016 and 2020,” says Andrew McLachlan, CEO of Pembury Lifestyle Group. Through the listing, the group will raise R140 million to fund its growth aspirations.”
The group lists with a forecast 2017 revenue of R68.5 million and a profit before tax (loss) of R6.3 million. The business is forecast from its pre-listing statement to break even in 2018-2019, when revenue is projected at R135.6 million and a profit before tax of R17.9 million (Pembury prospectus data) and HEPS of 3.67cps.
There has been little institutional interest in the counter, but small cap watcher and Vunani analyst Anthony Clark says the listing of Curro Holdings in June 2011 is reminiscent. “Pembury, upon its listing, will be much the same as Curro was back in its embryonic day, just smaller, and at an earlier stage of development,” he said. “Curro upon its listing had a revenue to its December 2010 year-end of R74 million, operating profit of R9.78 million and a profit before tax of R4.65 million.”
Curro Holdings raised R322 million from a rights issue at 400 cents per share. At its listing, Curro had 12 schools and 5 500 learners, a stratospheric PE ratio and a micro-cap market valuation. Six years down the line, Curro is priced at R48.74 and has a market cap of R20.2 billion. Those who missed the boat back then may be ruing the day.
Pembury has 1 900 learners with plans to expand its campuses by three to five per annum, with a 2020 target of 8 800 learners. It now has about 1 900 new shareholders. “The lack of any institutional support in the Pembury IPO may curtail the aftermarket demand and thus opening price,” Clark said. “At 100 cents… I can see Pembury having a muted opening listing and may [like Curro back in the day]… be lethargic until some deal and result traction catches the market’s imagination. Either way, given the risk-reward scenario, Pembury is a counter I was prepared to back.”