Daily ShareChat: Ryman Healthcare

By Jenny Ruth

Thursday 4th June 2009

Ryman Healthcare's earnings don't appear to be affected by the current weakness in the housing market with prospective new occupants selling their homes because they need to buy a unit in a retirement village, says McDouall Stuart.

Last month, Ryman reported a 5% increase in realised profit to $53 million for the year ended March 31. McDouall Stuart is forecasting that will rise to $56.8 million this year and to $62.5 million the following year.

McDouall Stuart says the company is gaining an increasing level of recurring earnings as care fees and management fees increase their contribution to total earnings.

The demographics driving Ryman's business are favourable because more than 3,000 people are reaching 85 each year, well above the retirement industry's capacity to expand, it says.

Ryman's land bank is sufficient to build a further 1,790 units compared to its existing portfolio of 3,783 units with growth funded by internally generated operating cash flow, it says.

The company, which has won the best retirement village in New Zealand award for six years running, is benefiting from regulatory changes, including a greater audit of retirement villages following malpractice revealed at smaller homes, it says.

McDouall Stuart values Ryman's shares at $2.09 compared with Wednesday's closing price at $1.63.

BROKER CALL: McDouall Stuart rate Ryman Healthcare (NZX: RYM ) as BUY

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