Golden period tipped for Ryman Healthcare

Simon Challies, chief executive of Rymans Healthcare, photographed at Ryman's Edmund Hillary Retirement Village in Remuera, Auckland. Photograph by Natalie Slade

Earnings and dividends for Ryman Healthcare, New Zealand's biggest listed retirement village specialist, will rise phenomenally as it builds new accommodation for elderly people here and in Australia, an expert has forecast.

Nachiket Moghe of Morningstar has just issued a two-page update on Ryman Healthcare, predicting a stellar performance through until around 2019.

"During the next five years, we expect Ryman Healthcare's earnings and dividends to rise by 15 per cent per annum on average, driven by new construction in New Zealand and Australian and from the sale of existing units due to portfolio growth," Moghe said.

A big Australasian construction drive will push up returns and subsequent shareholder dividends.

"In the next 20 years, we expect Ryman Healthcare's business to expand three-fold to around 10,000 units from 3300 units currently, underpinned by strong demand growth and market share gains," he said.

Ryman was a well-managed company with a strong reputation due to high standards of service and care but with a low-cost position, he said.

Sales revenue is forecast to rise from $300 million in 2013 to $336 million by 2015. Adjusted net profit after tax is forecast to increase from $100.1 million in 2013 to $115.6 million then $131.9 million and earnings per share from 20c to 23.2c then 26.4c.

Moghe noted how Ryman's shares had ranged from $4.45 to $8.32 in the last year and said the business built townhouses, serviced apartments and care centres with resthome and hospital level care.

It has 24 villages, employs more than 2600 staff and provides services to more than 5400 residents, he noted.