Summerset Group, the best-performing retirement village stock in the past 12 months, said 2017 underlying earnings may rise as much as 33 per cent, driven by new sales of occupation rights to its units.
"We are continuing to see strong development margins from new sales of occupation rights, a key driver of the underlying profit forecast," the Wellington-based company said in a statement. Underlying earnings, which exclude property revaluations, are forecast at $72 million to $75m in calendar 2017, from $56.6m in 2016, when profit jumped 50 per cent.
The company didn't provide a net profit forecast, saying that was "due to the inherent uncertainty in fair value movement of investment property, a key component of this profit measure."
Summerset shares last traded at $4.65 and have gained 8.4 per cent in the past 12 months, outpacing Metlifecare's 1.1 per cent gain and Ryman Healthcare's 6.2 per cent decline.
New Zealand retirement village operators are acquiring land and preparing for a record building spree in anticipation of increased demand as people born in the country's post-war era reach the target age for operators, including Summerset and its larger rivals. Summerset had a land bank of about 2,609 retirement units and 366 care beds, and expects the population aged over 75 to grow 239 per cent from 2016 to 2068, it said in February.
