Daily ShareChat: Ryman Healthcare

By Jenny Ruth

Tuesday 30th November 2010

Ryman Healthcare's latest result highlights that the company's business model continues to deliver on the significant growth opportunity the growing elderly demographic offers, says Matt Henry, an analyst at Goldman Sachs & Partners.

The company maintains its strong defensive qualities which are proving resilient in a challenging housing market environment, Henry says.

Ryman reported a 36% rise in reported net profit to $52.3 million for the six months ended September with realised profit (excluding unrealised property valuation gains) up 25% to a record $36.1 million.

"We expect Ryman to maintain strong earnings growth through the medium term, driven by further development of new villages and maturing of existing assets," Henry says.

Ryman's accrued capital gains rose significantly to $160 million from $140 million at March 31, reflecting the strong price performance of its new villages.

"The size of future resale gains 'bucket' strengthens our confidence in the continued medium-term growth prospects for Ryman," he says.

Net debt rose only $12.5 million to $152.5 million in the latest six months, despite investing $65 million of cashflow spending on new assets and paying $17 million in dividends, "once again highlighting the exceptional capital efficiency of Ryman's business model."
Henry is forecasting full-year realised net profit will be $70.5 million, up from $61.4 million the previous year.

Recommendation: Buy.

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