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Ryman shares reach record high as profits rise

Thursday 17th May 2012

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Ryman Healthcare, New Zealand’s largest retirement village operator, posted a 17 percent increase in underlying profit to a record, beating guidance. The shares rose to an all-time high.

Underlying net profit rose to $84 million in the 12 months ended March 31, from $72 million a year earlier, marking 10 years of earnings growth, the company said in a statement. Sales rose about 20 percent to about $155 million.

Ryman has accelerated its building plan to cater for rising demand for its units from an aging population, opening new facilities in Gisborne, Tauranga and Christchurch and lifting its annual build rate by 24 percent to 710 units and aged care beds. The company is also looking to the Australian market for growth, starting with Melbourne.

"The biggest challenge is for Ryman is delivering on the execution of the rollout," said Shane Solly, portfolio manager at Mint Asset Management. "Entering into the Australian market they need to be focused on delivering expansion while looking after their residents."

Ryman shares have risen 53 percent in the last two years and are rated as 'outperform' based on the consensus of five analysts, polled by Reuters. The stock is currently trading at $3.42, up 5.2 percent on the day.

The company cited estimates by Statistics New Zealand that the number of kiwis aged 75 or over will more than double to 516,000 over the next 20 years, boding well for the long-term prospects of rest-home operators. Across the Tasman the outlook is similar, with the number aged 75 plus, doubling to 2.8 million.

"Last year the market finally clicked it is a long-term industry," Solly said. "It is a business that has long term growth potential and people need to be patient."

Among other developments, the company has received planning approval for its Waikanae village and is currently undertaking planning for its Howick village. It's also reviewing several other sites across New Zealand, it said.
Shareholders will receive a 17 percent increase in final dividend to 8.4 cents per share to be paid out June 22.

Operating cash flows in the latest year rose 27 percent to $169 million, enabling the company to self-fund the bulk of its building activity. Profit after tax increased about 20 percent to about $120 million.

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