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NZ Stock Update - Ryman Healthcare

RYMAN HEALTHCARE - LUCKY COUNTRY PROVING TO BE A WINNING BET

By James Smalley, Investment Adviser

Ryman Healthcare (RYM.NZ) has been a long term staple holding in  many of HHG client’s portfolios, with investors having a total return of 332% on their investment in the four years from 1 Jan 2010 to 31 Dec 2014. However in the following 4 years up until the company’s recent release of its ½ year result on the 23rd Nov 2017, as shown by the graph above, the stock had only returned 24.13% over that almost 4 year period.

Since the result though, the stock is up 13.4% in little under a month, hitting an all-time high of $10.69 on the 1st of December 2017. This recent rise we believe, is in part due the increasing “Australasian” nature of the company, due to its expansion into Victoria in Australia, with a focus on Melbourne.

Nowhere is that more evident in its “New site land bank”, where Australian sites number 2,384 units, compared to the Whole of NZ being 2,571 Units. Melbourne alone represents 93% of new builds in NZ. The future growth potential that Australia represents for Ryman is therefore significant to say the least.

We suspect the catalyst for the recent break higher in the share price is due to increasing Australian institutional interest in Ryman, as the aforementioned business over the Tasman becomes a larger part of their development and investment portfolio.

RECOMMENDATION


Ryman has long been HHG’s ‘best of breed’ exposure to the Aged Care Sector and in its recent result and prospects, we see nothing to change this view. That said, it would be prudent for long term holders with large over-weight positions to use the recent strong price rise to reduce their exposure, with the stock trading at, or close to, all-time highs. We are comfortable for equal weight clients to continue to hold the stock, and to recommend it to new investors with no aged care exposure.

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