KEY POINTS:
The country's biggest listed aged-care provider, Ryman Healthcare, expects earnings will expand by 15 per cent in each of the next five years as an ageing population and booming property market underpin its growth.
The company develops, owns and runs retirement villages, rest homes and hospitals, with 17
existing sites and two under development.
Overall it caters to more than 2500 people in its facilities and expects steady growth as baby boomers retire.
"We've managed it for four or five years now, and we envisage continuing to do it for at least that period in the future," chairman David Kerr said.
The company faced few headwinds, he said.
"People do tend to come to us because something happens, they need a bit more assistance, and that's not going to change with external factors such as the economy or the New Zealand dollar."
In 2004, there were 54,000 people aged 85 and over, a number forecast to increase to 320,000 by 2051.
Exposure to the ageing population is cited by analysts as Ryman's main strength, with brokerage ABN Amro Craigs describing it in a research note as "a quality growth story with a defensive business model and a strong earnings outlook".
Ryman, with a current market value of $1.2 billion, joined the list of top 15 companies in June last year.
It caps off a swift rise for the Christchurch-based company, which listed in 1999 with a capitalisation of $135 million.
Its success has caught the eye of Australian investment firm Babcock & Brown, which took a 6 per cent stake on February 22.
Kerr said Babcock & Brown had said it would be a passive investor. Babcock & Brown's stake raised the possibility of a full takeover move being made on Ryman. The company has an open register with the largest shareholder, private investor Emerald Capital, holding 16 per cent.
"I'm sure the entry of Babcock & Brown introduces that thought, but ... as a board we don't spend a lot of time agonising over what-ifs, and I'd put a takeover in that category," Kerr said.
Ryman's shares closed up 5c at $2.31. The company had a five-for-one share split in January to increase the stock's affordability, he said.
One of the key drivers for Ryman's growth has been the hot New Zealand housing market, where the median house value has more than doubled since 2001.
Ryman benefits because it sells new units at a market rate, and also pockets the difference in market value when a vacated unit is sold to new occupants.
Its other main revenue stream is occupation fees from residents at its hospitals and rest homes.
Kerr said average turnover in retirement village units was normally several years, which flattened out short-term fluctuations in the property market.
Even if the growth in the housing market should fall sharply from its current level of about 10 per cent, Ryman would continue to see the gains on future sales, he said.
"A steady increase in the cost of domestic housing is all we need to factor in to achieve our 15 per cent."
Ryman keeps a "landbank" of sites for at least three years ahead, although Kerr said sites were getting harder to find as the value of urban land increased.
"At any moment in time we're looking at three to five sites."
The company's policy is to develop 300 retirement units and 100 hospital beds a year and he did not anticipate borrowing to fund growth.
- REUTERS
