The upshot is that all that stock not taken up by the retail investors has created a stock overhang, which is depressing the share price.
Then there has been selling from Australian institutions, notably Cooper Investor.
According to the last notice, Cooper’s now has 6.64% of Ryman, down from 11.08% in early March.
There is also some apprehension around Ryman’s result due out next Thursday, which will most likely comprise a weak set of numbers.
Ryman has already said it expects the challenging economic conditions in New Zealand and Victoria to continue through to the end of its 2025 year.
The once-favoured Ryman trades on a net tangible asset backing of 0.5 times compared to three times back in its heyday.
The stock is out of favour, and has been for the last 12-18 months but thanks to the capital raise its balance sheet is in much better shape.
Analysts say the new board and management – headed up by CEO Naomi James – will require some runs on the board to regain some credibility.
Compounding Ryman’s problems has been a slow residential property market, which is strongly correlated to the retirement village sector.
If prospective Ryman residents can’t sell their own house, then they’re not in a position to move into a Ryman unit, so the theory goes.
There is also a higher-than-normal inventory across the retirement village sector.
While Ryman and the sector navigate difficult times, analysts are optimistic that the New Zealand theme of an increasing aged demographic will again come to the fore.
“Structurally, over the medium to long term, it’s still a sector that you would expect to do well,” said one analyst.
Meanwhile, Harbour Asset Management has been taking a longer-term view of Ryman and now has a 6.4% stake, built up over the last few months.
A long term view
Harbour portfolio manager Shane Solly noted there had been a big change in the ownership structure of Ryman.
“Some of the funds have sold down their stakes or have reduced their stakes as a result of the last two capital raises (the first was in February 2023, which raised $902m).
“We like the long-term thesis behind the industry.
“There is strong, fundamental, underlying demand, particularly for integrated villages.
“The key here is of course how you convert that back to reasonable returns for investors,” he said.
Solly said the immediate post-Covid period saw a flush of supply come on stream from a wide range of retirement village participants on the back of a spike in the real estate market.
While the ensuing high interest rates took the heat out of real estate, that then exposed some models and there was a build-up of inventory, which will take time to work through, he says.
Selling by Cooper’s looked to be a reflection of changing mandates and management at the Aussie fund manager, he said.
“That’s put a lot of pressure on the share price, particularly over the last month, and the slow recovery in the New Zealand residential property market has perhaps weighed on it,” Solly said.
Despite its various issues, demand for retirement village accommodation is strong, Solly added.
“But the time it takes for people to sell their residential homes to pay for those units remains slow.
“What we have done is take the opportunity at what may prove to be a low point in the industry’s profitability to invest in Ryman, which we think is on a path to improving returns, but we are going to have to be patient.
“We think that this is a long-term growth industry that has gone through a correction and that will ultimately deliver better returns for shareholders over time.”
Fletcher investor day
Forsyth Barr expects further business-improvement initiatives to be outlined at Fletcher Building’s (FBU) investor day on June 24.
The company last week outlined a plan to disestablish its Australian division, with its operating businesses being integrated into two new trans-Tasman divisions.
“FBU’s strategy to move to a more decentralised operating model (another back-to-the-future concept) and cost review is ongoing,” Forsyth Barr said in a note.
“We expect further initiatives around: (1) further right-sizing and cost reductions; (2) closure or divestment of loss-making and/or structurally challenged non-core operations; and (3) new management incentive structures and targets,” it said.
Gentrack weakens
Gentrack (GTK) reported a weaker-than-expected first-half result.
The software firm’s revenue and ebitda (earnings before interest, tax, depreciation and amortisation) guidance was below consensus expectations for 2025.
“This is disappointing,” Forsyth Barr said.
“However, the long-term growth story remains intact.”
“Gentrack is well-positioned for contract wins in 2H25, underpinning acceleration of growth into FY26 and FY27, as implied by the reiteration of its medium-term revenue guidance (compound annual growth rate of 15% or greater).
“We have re-based our earnings forecasts but retain our outperform rating, given the strong pipeline and potential contract announcements over the next six months,” Forsyth Barr said.
Chorus lines
S&P Global Ratings has assigned its BB+ long-term issue rating to proposed subordinated capital notes of $170 million issued by NZX-listed Chorus.
The telecommunications infrastructure company’s proposed issue is intended to replace some of the existing securities issued by Chorus related to National Infrastructure Funding and Financing (NIFF, a government-owned entity).
Chorus received New Zealand Government funding of about $1.3b in the form of NIFF securities (debt and equity-like securities) to finance construction costs of its ultra-fast broadband roll-out.
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.
