Retirement village operators

[Panda-NZ-]

RYM is located mostly in Auckland and there's probably room for fee increases.

Good price I think.

[Baa_Baa]

RYM up 15c despite news today of "Almost 40 residents at a Tauranga retirement village are isolating in their rooms after an employee returned a positive rapid antigen test."

[Panda-NZ-]

Auckland house prices up a further 200k in one year.

https://www.stuff.co.nz/life-style/h...foot--thompson

[Baa_Baa]

Aged care covid cases in Australia https://www.health.gov.au/resources/...7-january-2022

[allfromacell]

Aged care covid cases in Australia https://www.health.gov.au/resources/...7-january-2022

Interesting information, thanks for sharing.

I hope retirement operators have planned for the upcoming Omicron outbreak as there won't be much time to plan when it rips through us.

The biggest challenge I think will be staffing levels and maintaining adaquate numbers when people are isolating.

[bull....]

guessing they will all be hit today on news of the summerset village news and the red light decision yesterday

[Newman]

At the last minute Ryman share price dropped 3% with a large amount of shares sold at $10.45. There must be something happened to Rymsn, Omicron?

[JohnnyTheHorse]

At the last minute Ryman share price dropped 3% with a large amount of shares sold at $10.45. There must be something happened to Rymsn, Omicron?

Just some index balancing. Will likely open tomorrow at $10.80+ for a quick easy profit.

[Beagle]

https://www.nzherald.co.nz/business/...HWYSSX3IF4ZOI/ Paywalled, published at 5.35 p.m.
Someone in the know sold out first ?
Headline "Six years on, Ryman continues to lose battle to develop Mt Eliza site"
Looks like its a real headache to me.

Got thinking about this one yesterday. NTA is just on $6.
I think Simon Challis is a real legend and the company did extremely well under his leadership but that was a long, long time ago and it has always underperformed the sector under Gordon McLeod's leadership. Who knows how it goes with the new CEO. Not for me.

[Greekwatchdog]

For Bars latest Valuations.

Aged Care
Valuation Support versus Negative Momentum


Omicron has arrived in NZ and with it an acceleration of the underperformance in the aged care names, now down
approximately -20% over the last three months, under performing the S&P/NZX 50 Index by around -10%. We believe the
sell-off is a combination of (1) nervousness around residential house prices, and (2) fears around what the consequences of
Omicron will be for the sector. Neither of these issues are likely to go away short term, however, valuation support is
starting to look very strong, particularly for the smaller aged care names. Near-term we see momentum keeping the upper
hand but on a 12 month and longer-term view we continue to view the aged care sector as attractive. During the 2020
COVID-19 sell-off, the aged care names sold off very aggressively but recovered quickly.
Omicron is here, short-term headwinds are material, medium-term cost pressures will likely persist
On Sunday, January 23, New Zealand was placed into the red traffic light setting due to community spread of Omicron. For the aged
care sector, as discussed in our strategy report "Omicron — Ready or Not", published on January 20, this will impact the sector primarily
in two ways; (1) sales activity is likely to reduce significantly during the acute phase of the outbreak, which could last for several
months, and (2) operating expenses are likely to increase. With respect to fundamental value, we foresee a modest impact. The aged
care sector has navigated previous outbreaks relatively unscathed and has the benefit of almost two years of preparation. However,
this outbreak will be different and meaningful outbreaks at aged care facilities are highly likely.
House price risks increasing
The New Zealand aged care names make the majority of their underlying earnings from new sales and resales of independent living
units (ILUs) which are highly geared to house prices. We are of the view that the risks of a meaningful house price correction has
increased significantly over the last six months. However, the aged care names have only modestly started to eat into the ~+45%
national house price appreciation experienced since prior to COVID-19. Hence, we see the risks around house prices to primarily be
one of multiple contraction (a proportion of which we view has most likely already occurred) rather than earnings. Our base case is for
largely flat residential house prices which should be enough to support strong growth in underlying earnings for at least another 24
months. The Omicron outbreak may blur this picture during the May (March year-end) earnings season, underpinning our view that
negative momentum will dominate near-term.
Valuation support near record levels
The aged care names are currently valued at an average P/E of ~15x and a P/B of ~1.35x — near record low levels in recent years
(excluding the March 2020 sell-off). Oceania Healthcare (OCA) is currently valued below book value, and Arvida (ARV) just above
book value, a book value which we expect to continue to increase despite house price growth stalling. We continue to prefer the
smaller (and lower valued) aged care names and rate both OUTPERFORM. We also believe Ryman Healthcare (RYM's) high leverage
and high (relative) valuation makes it more susceptible even on a medium to longer-term basis and reiterate our UNDERPERFORM
rating.
Reducing earnings estimates
We reduce our FY22 estimates by an average of ~-20% due to our expectations of meaningfully lower resales and new sales in
Q1CY22 as well as higher operating costs. We have also reduced our FY23 and FY24 estimates by ~-10% primarily reflecting our
expectations that higher costs, operational and construction, will be sticky. Our target prices decline by ~-6% reflecting the lowered
estimates, partly offset by roll forward of our target price period.

Rym
Earnings: FY22E/FY23E/FY24E underlying profit down -22%/-12%/-8%. Annuity EBITDA down -16%/-9%/-9%
Target price: Decreased to NZ$10.80 (from NZ$11.90)
SUM
Earnings: FY21E/FY22E/FY23E/FY24E underlying profit down -4%/-20%/-11%/-7%. Annuity EBITDA down -3%/-15%/-9%/-6%
Target price: Decreased to NZ$13.70 (from NZ$13.85) with earnings changes slightly offset by valuation roll forward
ARV
Earnings: FY22E/FY23E/FY24E underlying profit down -22%/-10%/-10%. Annuity EBITDA down -18%/-9%/-9%
Target price: Decreased to NZ$2.50 (from NZ$2.65)
OCA
Earnings: FY22E/FY23E/FY24E underlying profit down -22%/-9%/-6%. Annuity EBITDA down -26%/-11%/-6%
Target price: Decreased to NZ$1.65 (from NZ$1.80)