Daily ShareChat: Ryman Healthcare

By Jenny Ruth

Thursday 28th May 2009

Ryman Healthcare's results reported last week highlights that the company is performing well in a highly challenging property market, says Goldman Sachs JB Were analyst Matt Henry.

Ryman's realised net profit for the year ended March rose 5% to $53.7 million, in line with the company's guidance.

Key points from the result are Ryman's average resale price of existing units in its retirement villages was effectively flat compared with a 9% decline in the average New Zealand house price and its resales volumes climbed 27% during the year, Henry says.

The company's inventory isn't accumulating because second-half new sales matched the 146 new units built. Over the full year, sales of 292 units exceeded the 278 new units built.

Henry says Ryman's development margins on new sales remain robust at 22.3%, although they were down 160 basis points on 2008.

Ryman is succeeding where its competitors are not: "We believe the quality of Ryman's product and its greater provision of care facilities (promoting demand driven by need, not want) provide significant defensive attributes," he says.

Nevertheless, he expects Ryman will take a more measured approach to development, given current housing market conditions. "The market is capitalising super-normal profits (accrued capital gains), that will not likely be replenished beyond the medium-term, into future expectations," Henry says.

BROKER CALL: Goldman Sachs JB Were rate Ryman Healthcare (NZX: RYM ) as HOLD.

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