Pembury lists in JSE disorder

Muted listing as investors focused on protecting other investments.

On a morning when the JSE is adjusting its circuit breakers in response to the cabinet reshuffle and online trading sites were reporting technical issues due to high trading volumes, education and property group Pembury listed its schools business, PLG Schools, on the JSE’s AltX exchange.

The listing was low key with the share listing at 100c and falling to 95c.

Pembury started out life 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. “This growth will enable us to provide quality and affordable education to thousands more South African learners who are hungry for knowledge and a brighter future.”

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.

While there has been little institutional interest in the counter, avid 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 in a note to investors. “Curro upon its listing had a revenue to its December 2010 year-end of R74 million, and 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 am micro-cap market valuation.

Pembury has 1 900 learners currently with plans to expand its campuses by three to five per annum with a 2020 target of 8 800 learners.

Pembury now has about 1 900 new shareholders, mainly private clients and private client wealth managers.

“The lack of any institutional support in the Pembury IPO may curtail the after-market 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.”

Seven 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 rueing the day.

“Again, I say that Pembury is not a Curro. The education sector remains a sector I like a great deal. Pembury has a novel, small niche. If its makes its PLS forecasts it has a bright future, or perhaps it may just be snapped up by a company that has the capital to fully develop the story. Either way, given the risk-reward scenario, Pembury is a counter I was prepared to back.”



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