Ryman's profit justifies price

Ryman Healthcare  has more than 6000 units across the country. Pictured is its Frances Hodgkins...
Ryman Healthcare has more than 6000 units across the country. Pictured is its Frances Hodgkins retirement village at St Clair, Dunedin. Photo by Gerard O'Brien.
Ryman Healthcare's stellar share price during the past year has been vindicated after it yesterday booked its 11th consecutive after-tax profit, rising 13% from $120.7 million to $136.7 million.

Ryman shares have almost doubled, from $3.25 a year ago to a year-high of $6.45 last week and were trading up almost 3% at $6.39 after the announcement yesterday.

A record operating cashflow, for its full year result to the end of March, was up more than 30% at $222 million and underpinned Ryman being able to self fund its hectic construction activity.

It built 517 new retirement units and 226 aged care rooms during the past financial year, exceeding its target of 700.

Craigs Investment Partners broker Peter McIntyre said development profits were ahead of expectations. The combined realised resale and development profits were $68.9 million, compared to $55.7 million a year ago. Profit margins were in line with Craigs' forecasts at 23%, he said.

''After the spectacular share-price run to date, Ryman needed to justify that with a result like this, showing growth in its earnings and dividends,'' Mr McIntyre said.

Shareholders will get a 19% boost to their annual dividend, to 10c per share.

Forsyth Barr broker, Peter Young, said Ryman's reported after-tax profit profit of almost $137 million included unrealised revaluation gains within its portfolio.

''We expect to upgrade earnings and price target. The `buy' recommendation is under review given Ryman's very strong share price performance,'' Mr Young said.

While Ryman offered no formal financial guidance yesterday, Mr Young said he expected its earlier growth target, of more than 15%, to remain in place.

All areas of operation were ''up strongly''. Both care revenues and management fees up more than 17% and fair value portfolio change up more than 17%.

''The operating cash flow was very strong at $222 million, or up more than 31%. This is the stand-out feature of the result,'' Mr Young said.

The total number of retirement village units and residential care beds now stands at 6191 across the country, with a 26% overall increase in new and resold units during the year, standing at 985, and worth $345.6 million.

Ryman chairman Dr David Kerr, said it was an ''outstanding result'' for Ryman and marked another ''very successful year of growth''.

''We achieved our target of opening 700 units and beds in New Zealand, and commenced construction of our first village in Melbourne,'' he said.

Dr Kerr announced the purchase of a new Auckland site in Birkenhead yesterday, and said the market could expect to see more land acquisitions during the year ahead, as Ryman lifted its New Zealand land-bank from three years' stock to four.

Mr McIntyre said while the four-year land-bank was positive, ''the reality'', based on data of ageing population needs, was that Ryman had 20 years of growth prospects ahead.

Statistics New Zealand has estimated the number of New Zealanders aged over 75 would almost triple, to 731,000, during the next 30 years.

Ryman has $105.5 million of undrawn New Zealand banking facilities, and $A63.5 million ($NZ76 million) of undrawn Australian facilities.

-simon.hartley@odt.co.nz


Ryman Healthcare

• Established 1984
• Has 25 villages, combined retirement and aged care beds, for more than 7000 people
• First Australian village construction started in Melbourne

2012 2013
• Retirement village units 3274 → 3791
• Residential care beds 2174 → 2400
• New units 374 → 506
• Resale existing units 406 → 479

Land-bank to be developed; total 2438, of 1829 village units and 609 care beds.

Source: Ryman Healthcare.


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