Good Ryman result forecast

Lyn Howe.
Lyn Howe.
Ryman Healthcare, which operates two retirement villages in Dunedin, is expected to report a strong result tomorrow in line with its guidance range and close to its long-run target growth rate of 15%.

Forsyth Barr broker Lyn Howe said following a relatively quiet first half in terms of new stock delivery, the second half would be significantly stronger.

''We expect Ryman to maintain sector-leading aged care occupancy and very low resales vacancy.''

The company was also likely to signal strong presales at key high-value villages at Brandon Mark (Melbourne) and Bert Sutcliffe (Devonport) Lynfield and Logan Campbell (both Auckland).

Ryman remained well placed to leverage the demand from the ageing population and a solid housing market across broader New Zealand, Ms Howe said.

The result was likely to be boosted by care revenue and deferred management fee growth, strong resale volumes, pricing and margins.

Development margins and new sales would improve in the second half. The full-year result would be below recent levels, given weak first-half numbers.

Barriers to entry for retirement village operators included care expertise, brand scale and access to capital. Ryman had all three, she said.

Ryman was the only nationwide operator of integrated villages with a full continuum of care.

Entry into the Australian market provided significant long-term earnings upside.

Ryman's second Australian village was expected to open this year and the company was confident of having five villages open in Australia by 2020, given it now had five development sites, Ms Howe said.

One of the risks Ryman faced was oversupply. A significant industry pipeline posed the threat of short-term oversupply, offset by a likely shortage of quality beds longer term.

Any sizeable downturn in the buoyant housing market conditions posed a threat to sales volumes and pricing, she said.

Ryman shares last traded at $11.63, up 1%.

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