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Daily ShareChat: Ryman Healthcare

By Jenny Ruth

Monday 6th June 2011

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 Jenny Ruth

Ryman Healthcare is positioned to continue to benefit from its favourable business model, positive aging population fundamentals and strong management and operations, says Jason Familton, an analyst at First NZ Capital.

Familton has raised his forecast underlying profit for Ryman to $76.8 million for the year ending March 2012 from $75 million previously and his 2013 forecast to $84.8 million from $77.5 million previously.

Familton says the 2012 forecast implies earnings growth of 6.5%, below the medium-term target of 15%. “The main drivers for our slowing earnings growth in full-year 2012 are a flat housing market, new sales numbers being similarly to full-year 2011 and also resale margins declining slightly once again,” he says.

“Key risks to our forecasts remain changes in the general housing market and our house price assumptions. Other risks include the timing of developments being delayed and also execution risk around future land acquisitions.”

First NZ Capital is forecasting zero nominal house price inflation in the year ending March and then a return of close to long-term forecasts of 4.9% in full-year 2013.

Familton has also raised his valuation of the shares significantly from $2.47 to $3.14, partly reflecting changes in his underlying assumptions and Ryman's intention to step up its rate of development.

Rating: Outperform.

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