By Dan Stratful
Thursday 14th June 2012
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Ryman Healthcare (NZX: RYM ) reported an excellent result in the year to 31 March 2012 (FY12) with underlying profit increasing by 17% to $84 million - a new record while unrealised valuation gains saw the reported profit result come in at $121 million.
RYM has an excellent long term trend running in its favour as the NZ Government reports 12,000 - 20,000 new aged care beds will be required each year to meet the projected growth rate over the next 15 years, while Statistics NZ estimates New Zealanders aged 75+ will more than double from 250,000 to 516,000 over the next 20 years.
The FY12 result was a significant milestone as it marked 10 years of successive record profit results for the company. RYM shareholders received a 17% increase in their annual dividend to 8.4 cents per share and the company built 710 retirement units and aged care beds, up 24% on the previous year, and well ahead of its target build rate of 550 units and beds p.a.
The lift in build rate reflects significant investments RYM has made in hospital and dementia facilities in FY12 and its decision to fast-track new Christchurch facilities post-earthquake.
New villages were opened in Gisborne and Tauranga in FY12 and operating cashflows were up 27% to $169 million for the year allowing the company to self-fund the bulk of its building activity.
RYM is currently working through the planning process for its Melbourne and Howick villages and several new sites in New Zealand are currently under active consideration.
RYM has expanded into Australia which brings more risk, but it is a smart operator and should be successful in a country which has similar building regulations to NZ.
FY12's reported profit of $121 million (including unrealised valuation gains) produced earnings per share (EPS) of 24.3c which leaves RYM trading on an undemanding FY12 PE ratio of 13.8x. The FY12 underlying profit (excluding unrealised valuation gains) came in at $84 million, and Analysts' expect an increase in underlying profit in the next 2 years with $98 million underlying profit expected in FY13 and $112 million underlying profit expected in FY14.
The shares may suit longer term investors looking for growth in share price and an annual increase in dividends, and as long as the residential housing market remains firm, RYM should continue to do well.
About Ryman Healthcare:
RYM is a leading provider of retirement living options with activities in the design, development and operation of retirement villages throughout New Zealand and Australia. Established in 1984, RYM has over 22 operational retirement villages from Auckland to Invercargill and is a 6 time winner of the Australasian Aged Care Awards for "Best Retirement Village in New Zealand". RYM has delivered a total return to shareholders (including share price appreciation and dividends) of over 1,000% or over 24%p.a. since listing in 1999.
Status: GROWTH BUY
RYM's shares today traded at $3.35
For portfolio, sharemarket and fixed income enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232, firstname.lastname@example.org
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