Ann: Appendix 4E and 30 June 2017 Annual Report, page-15

@JamesRS
I agree. But if franchise owners make 2X with Kumon in half the time compared to KME, they are always going to go to Kumon first and given that KMEs current model depends on franchises it is pretty difficult.

Moreover, Kumon is driven by demand from Asian families which in my opinion represent a very large proportion of the addressable market in Australia. For KME to really take off it has to be attractive to both franchise owners as well as students.

What I really want to know are the comparative economics of Kumon vs KME for franchise owners as that will ultimately drive growth. Advertising will merely be an accelerant for an organic process. If however, the economics are still less favour able there will be a couple of years of developing the model to be more enticing (some runs on the board for students and franchsies resulting in the tried and tested word of mouth growth).

In the latter case I think the appreciation in share price is more likely to be a 50-100% over 2-3 years (mainly driven by earnings alone and with less PE expansion) but in the former you get the triumvirate of being undervalued, earnings growth as well as multiple expansion which is the holy grail of investing!