Yovich & Co. Market Update - 30 May 2016

May 30, 2016 | Commentary

Changes In Market

 

 

 

Market Themes

  • The Government 2016 Budget was announced last week with very few surprises.
  • Mainfreight was one of the best performing stocks over the past week as they announced an impressive full year result with revenues up 11.8% for the year.
  • The Australian market continued its streak as it recorded its seventh weekly positive gain in a row. The financial sector led the market with ANZ one of the bigger movers, gaining over 3% for the week.
  • US markets reacted positively to further indications that that Fed Reserve is likely to raise rates sooner rather than later.
  • The possibility of interest rate rises in the US had carry traders sell the Kiwi in favour of US dollars.

Investment News

Ryman Healthcare Limited – Full Year Result

Ryman’s profit for the March year increased 16% from $136m to a record $158 million.  The profit inclusive of valuation gains increased 26% from $242m to $365m. A final dividend of 8.5 cents per share has been declared and will be paid on 24 June 2016. Operating Cash flows grew 34% to reach $312m in the year to 31 March driving a second level of investments in new villages. The record profit and cash flows have enabled the company to invest $369m back into the business.

The first village in Melbourne was completed and sold out during the year. Construction of Ryman’s second village at Brandon Park is expected to start within six months, with the sales team already experiencing significant resident demand. Returns from the first investment in Melbourne have been better than expected. Ryman has significant growth opportunities in the Australian market as it rolls out integrated aged care and residential developments. It is the only operator in Australia that offers independent living, aged care and hospital services combined in a single site.

Total assets grew 20% to almost $4bn and Ryman’s balance sheet is stronger than ever before. There are five new villages under construction: Petone, Pukekohe, Rangiora, Birkenhead and Greenlane. There are three new villages awaiting consent: Devonport, Tropicana Auckland and Brandon Park Melbourne. There are four new villages planned: Burwood East Melbourne, Newtown Wellington, River Road Hamilton and “Site A” New Zealand.

Rymans share price is $9.67 after reaching an all time record of $9.80. The gross dividend yield is 1.53%. Ryman remains an outperforming stock. Analysts have all increased their target prices since the announcement and range from $7.52 to $11.00 and First NZ capital has increased their target price from $8.25 to $9.10. 

Financials & Forecasts

 

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Jarrod Goodall



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