Yovich & Co. Weekly Update - 21 May 2013

May 21, 2013 | Commentary

This Week's Themes

• The local exchange retraced from all time highs last week as Standard &Poor's announced that the New Zealand economy and stability of the local banks were vulnerable to a correction in the housing market.

• The Aussie market was also down on further slides in metal prices.

• For the fourth week in a row the U.S markets pushed to fresh highs after a successful reporting season. The top performing sectors over the past year have been Consumer Staples (+18.9%), Consumer Discretionary (+20.7%), Financials (+20.8%) and Health Care (+22.0%) compared to the S&P 500 which is up 16.9%.

• The markets in Europe also extended on their four week rally, following the U.S lead thanks to strong corporate and economic data.

• The USD continued to strengthen, posting a 5.5% rally over the Kiwi in two weeks.

Investment News

Ryman Healthcare (RYM.nz) – Record Underlying Profit Announced

Ryman announced underlying profit of 100.2 million for the year, a new record for the company and up 19% on last year. The company achieved their target for the year of opening 700 beds in New Zealand and commenced construction of their first village in Melbourne. It was announced that the annual dividend would be increased to 10 cents per share with a final dividend of 5.4 cents per share being paid on 21 June. Ryman continues to outperform the market and has now increased in value by 2,363% since it listed in 1999.

Research from First NZ Capital comments that the expansion into Melbourne could double the size of the company with Melbourne demographics matching New Zealand's as the population in the over 70 age bracket is set to increase significantly over the next 20 years. By 2031 the Australian Bureau of Statistics predicts that the over 70 age bracket will increase to 777,000 people from 404,000, which closely matches the growth expected in New Zealand, growing to 796,000 from 406,000. Frist NZ Capital has a price target of $6.90 and an outperform recommendation, current price is $6.37

The below forecasted figures only account for 40% of the expected earnings from the Melbourne development due to uncertainty and risk of entering into a new market.

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Jarrod Goodall

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