Acquisition to boost Janison’s earnings by 70%

By Trevor Hoey. Published at Mar 28, 2019, in Trev's Stock Tips

The timing of an announcement this week regarding an important acquisition by Janison Education Group Ltd (ASX:JAN) couldn’t have been worse.

Both global and Australian equities markets went into freefall on the day the group informed the market that it had entered into a binding agreement to acquire LTC Holdco Pty Ltd (LTC), the parent company of Language & Testing Consultants Pty Ltd.

JAN is an integrated learning business that is used by large enterprises and government departments to build capability in their workforce, indicating that the company benefits by being leveraged to relatively essential spending.

The group also provides a leading global platform for the provision of digital exam authoring, testing and marking which is sold to national education departments, tertiary institutions and independent educational institutions.

LTC will be a good fit with the business as it is a market-leading examination services business headquartered in Sydney with operations both domestically and, increasingly, internationally.

The company facilitates outsourced end-to-end exam management services on behalf of large universities, colleges and professional certification bodies.

Acquisition represents a bargain

The cash and scrip acquisition will be immediately earnings per share accretive, and it will have a significant impact on earnings in fiscal 2020.

Such is the earnings boost provided by the acquisition that it prompted Bell Potter analyst Alex Mclean to upgrade his underlying EBITDA forecasts for 2020 by 71%.

This would be the first full year contribution by LTC, and in increasing his forecasts from $3.9 million to $6.7 million, it has made fiscal 2020 a transformational year for the group.

In terms of the bottom line, it will increase more than three-fold and earnings per share will nearly treble to 2.3 cents taking into account the increased shares on issue from the $6 million equity raising that the company has undertaken in conjunction with the acquisition.

Upgrades to earnings and price target

Mclean views the acquisition as extremely good value, noting that it is paying approximately five times fiscal 2018 EBITDA, while Janison’s underlying earnings multiple for fiscal 2020 prior to the transaction was 14.

Taking into account the upgraded earnings impact and the strategic advantages of the acquisition, he has increased his earnings per share estimates for fiscal years 2019, 2020 and 2021 by 52%, 43% and 22% respectively.

This has prompted him to increase his 12 month share price target from 50 cents to 60 cents, implying upside of approximately 60% to Wednesday’s closing price of 38 cents.

While the downturn in equities markets arguably overshadowed this promising development, it would appear that Janison’s financial metrics will do the talking in the near to medium-term, providing share price momentum commensurate with its substantially upgraded earnings profile.

Where to invest $1,000 right now

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Australian ASX Small Cap stocks | Why is Australia’s leading small cap publication

Founded seven years ago, is Australia’s leading and longest standing website for investor and finance news, education and expert opinion.

Published by StocksDigital, Finfeed was created to report daily on the comings and goings of ASX listed stocks in the small cap market.

As the first digital publication dedicated specifically to this space, Finfeed soon became the most trusted publication in the market, quickly garnering over two million page views – a number that continues to rise. provides its readers with informative articles that tackle the latest in market moving #ASX small cap news, plus exclusive content you won’t find anywhere else. It is aimed at those with an interest in investing, market education, company performance, start-ups and much more. is the only media organisation operating under the strength of a Financial Services License and is backed by leading journalists and analysts all with brands of their own.

The website aims to inform, educate and entertain with content that drills down into the heart of financial matters.

Finfeed is a leading source of investor and market information, with everything investors need to know about how to invest written in a way that anyone can understand. 

Over the years, the website has expanded beyond exclusively reporting on small caps, to profile Australia’s leading ASX listed small, mid and large caps as well as some of the country’s most successful CEOs and business leaders to find out what makes them tick.

Every day you will find fresh content covering:

Fast Facts

Over 4,000 articles published

Over 2.3 Million Page Views and counting

Over 10,000 followers on social media

Subscriber list growing by 2% monthly

Thanks for subscribing!