Latest news with #childcareoperators
News.com.au
18-07-2025
- Business
- News.com.au
Criterion: Childcare abuse allegations overshadow value in struggling listed sector
Share price rot across listed childcare operators began well before this month's disturbing child sex abuse allegations A dwindling birth rate is contributing to the first post-pandemic supply glut Growth drivers include the government abolishing the work activity test for the childcare rebate Not surprisingly, the dozens of child sex abuse charges levelled at a former Melbourne childcare worker have seen parents questioning whether their offspring are safe. The accused, Joshua Dale Brown, faces around 70 charges pertaining to his time at multiple centres over the last eight years. For the childcare operators, the repercussions are intense scrutiny and likely bolstered regulation. For investors, it's time for a deep breath as the course of justice takes its place. One question is whether parents will stop using childcare, especially when they work and have little choice anyway. Bear in mind the sector already faces wider scrutiny about serious lapses: anything from lax hygiene to runaway kids to staff underpayments. Under pressure Brown's alleged crimes have exacted the greatest share price toll on G8 Education (ASX:GEM), by far the biggest of the four ASX-listed childcare exponents. Reports of three families lodging a civil claim against G8 have compounded the initial shock. Brown worked at two G8 centres at Point Cook in Melbourne's west. G8 says it will implement measures including rolling out closed circuit cameras across all its centres. After the outcome of the criminal proceedings, the company will commission an independent review to 'inform further changes'. G8 shares have tumbled around 23% since police charged Brown at the start of the month. The shares in the other listed childcare exponents – Mayfield Childcare (ASX:MFD), Nido Education (ASX:NDO) and Embark Education Group (ASX:EVO) – have lost around 13%, 4% and 3% respectively. Baby bust curtails demand Childcare supply has outstripped demand for the first time since 2021. On the demand side, even Big Ted could work out that more babies would help. According to KPMG Australia's analysis this week, Australia's birth rate recovered 2.6% to 292,500 in 2024. But the rate is still 3.8% below the 2019 pre-pandemic level of 304,000. The fertility rate stands at 1.51 per female, well below the replacement rate of 2.1. Separately, broker Canaccord estimates that in 2025 there are likely to be 8000 fewer kids enrolled, a 2.8% decline. The firm expects 400 centres to open, taking the national complement to 9463 centres (up 4.3%). Brighter times in the sand pit? But a deeper dive into the sandpit doesn't necessarily paint a gloom-and-doom picture. In the short term, the dwindling birth rate affects the baby rooms. These are less profitable than the older 'kindie' rooms because of a higher staff-to-child ratio. From January 2026, the feds will abolish the 'activity rule'. This means parents don't have to be working or studying to be eligible for childcare subsidies for three days a week. They may just want a break from their billy lids and who can blame 'em? Canaccord estimates the change will create $1 billion of extra subsidies, thus generating 2-5% of additional demand. Meanwhile, the Reserve Bank's rate cuts to date have provided cost of living relief. This week's spiky unemployment number suggests there are more to come, despite this month's surprise pause. Today's lesson is: resilience Given the travails, the performance of the listed operators hasn't been that bad. With G8, Macquarie Equities expects a net profit for the year to June 2025 of $69.4 million, rising to $78.5 million in FY26. G8 on April 20 reported a year-to-date occupancy decline of 3% across its 400 centres. But from February, the decline had abated to 1.9%. In calendar 2024, Nido overcame staffing issues to turn a previous $14.9 million loss into a $19.5 million profit, with revenue climbing 74% to $166 million. While the sex abuse charges are likely to continue to weigh on the sector, the shares look keenly valued on earnings multiples of ten times or less and yields of 6-9%. (In recovery mode under a new CEO, Mayfield is the exception having posted only a token profit last year). Alternatively, property trust Charter Hall Social Infrastructure REIT (ASX:CQE) owns a swag of centres accounting for 74% of its overall $2.1 billion portfolio. Key tenants are the not-for-profit Good Start – the country's biggest childcare operator – and G8. The average weighted lease is 11.9 years. Landlords are a step removed from changing the nappies and cleaning snot from the walls. Whatever the case, investors shouldn't throw out the baby with the bath water.
CBC
07-06-2025
- General
- CBC
Parent voices frustration over delayed opening of new child-care centres
Parents are joining a chorus of others who are voicing concerns over government delays that are keeping $10-a-day child-care spaces from opening across parts of Newfoundland and Labrador. "This is life-changing for families," Erin Cullen, a founding member of ABCs and ECEs N.L., told CBC News Friday. "It's really, really just totally disheartening to hear that we have operators who are saying 'I'm ready to go, I'm ready to open up spaces.'" Cullen said she's heard from several prospective child-care operators that are stuck waiting for approval from the provincial government to get new facilities open. Some operators have told her that they've gotten permits from their towns or municipalities, but approval from the province is the final hurdle," she said. "We've been hearing [they're] waiting on one signature to get funding released, but essentially no funds are coming through," Cullen said. "It's being hung up, and [they're] not sure why." Cullen said she's also heard about other hang-ups from operators. In one instance, a child-care centre has been able to be regulated for care, but is unable to join the province's operating grant program that would allow them to provide $10-a-day child care. She said those spaces are invaluable for parents trying to avail of them. "Each individual family getting access to $10-a-day child care, it makes a huge difference for them," she said. "It feels like winning the lottery for most people." Stay tuned, minister says Early Childhood Development Minister Bernard Davis said Friday that hundreds of applicants are seeking to open child-care spaces — and that staff are working with them through all stages of the process. "There's some people in this application process that would have just been reaching out, initial stages saying 'This is the idea we have, can this work? How would we work in the system?' And our staff are working with them," Davis said. "There's others that are closing in on the end of this continuum.… Just this past week, we approved one in Bay St. George that was ready to go, while others are not in that final stage of readiness. There is others that we're working very closely with, so I would say stay tuned." WATCH | Opening child-care centres a priority of government, says Bernard Davis: 'I can't give you a date' but opening child-care centres is a priority, says N.L. minister as frustration mounts 11 hours ago Duration 2:19 Minister of Education of Early Childhood Development Bernie Davis is finally weighing in after several prospective daycare operators say they're waiting on the provincial government to greenlight and fund new spaces. The CBC's Heather Gillis reports. The approved centre Davis spoke of is in St. George's. Parents in that community were the first to voice their concerns in May. Daycare operator Rhonda Sheppard confirmed Friday that the centre was approved. Davis said creating $10-a-day child-care spaces is a priority for himself and for Premier John Hogan. He said he's committed to opening spaces as quickly as possible, but avoided mentioning potential timelines. "If you're going to ask what the date is, I can't give you a date," he said, adding it could take years for some applications to be approved. Cullen said the province's silence on the issue prior to Friday has made her and other parents nervous. She wants to see child care as a key issue in this fall's provincial election with party platforms that show a plan to improve access. "We need to understand that they know that child care is essential for our province. Child care isn't just about having kids go to 'care'. It's about allowing parents to go back to work," Cullen said. "It solves so many problems for us as a province."
