Newly listed rest-home provider Oceania Healthcare has met or bettered most of its prospectus forecasts, and future growth prospects are buoyed by progress on several major projects.
Operating revenue rose from $173.7million a year ago to $174.8million, but with the addition of investment property values the total income rose from $223.8million to $232million.
At $45million, Oceania’s underlying earnings before interest, income tax, depreciation and amortisation (ebitda) were ahead of its $44.3million prospectus forecast, while its after-tax profit of $44.9million was well ahead of the $25.3million forecast, thanks to a significant increase in valuation of care and retirement village assets.
Oceania chief executive Earl Gasparich said the $200million in funds raised from the share offer gave Oceania the opportunity to reduce debt and speed up its development plans.
Net debt was slashed from $274million to $84million, leaving a low gearing of 15%, while total assets increased from $135million to $918million with the material increase in development capital expenditure and acquisition of sites.
Oceania’s shares have gained more than 21% since listing and were unchanged yesterday at 96c.
Craigs Investment Partners broker Peter McIntyre said the underlying $34million after-tax profit was in line with the prospectus forecast, while ebitda of $26.8million, realised resale gains of $12.8million and development profits of $5.2million were ahead of the prospectus.
"Of more interest than the result itself, Oceania has released a detailed update on development progress.
"This confirms its marquee projects are being progressed, which, if delivered and executed well, will help underwrite further growth in 2019 and 2020, which is beyond the prospectus period."
Oceania is finalising a fixed price contract for its facility in Meadowbank, Auckland, adding 49 units and 32 care suites, construction starting in September.
A development in Browns Bay, Auckland is on track for completion in April 2019, earthworks having been started, while in Tauranga a construction contract has been signed for a block of 80 new care suites.
Oceania expects to start construction of a 90-unit block in Hamilton and has received consent for a 128-residence boutique
retirement village in Papanui, Christchurch. The Garden City, where it has seven facilities, is its southernmost reach.
"This [work] should provide investors with comfort on the full-year 2018 earnings growth outlook, as development profits from stage 3 at Meadowbank underwrite a large part of underlying earnings growth forecast in the prospectus for 2018," Mr McIntyre said.
Oceania Healthcare
• Listed on NZX in May; raised $200million.
• NZ’s third-largest residential aged-care provider, sixth-largest retirement village operator.
• Total of 3950 beds, suites, units; 50 sites across North and South Islands.
• Pipeline — Current and planned 354 care beds, 635 care suites, 1001 units.
