Listed retirement giant Metlifecare is tipped to be trading cheaply, well below its peers even after a good financial result out yesterday.
Chris Gaskin of Devon Funds Management praised the annual net profit after tax, up 18 per cent from $58.3 million to $68.8 million after removing non-recurring items. But he said the stock, which traded yesterday around $4.48 before eventually closing up 15c at $4.50, was well below Ryman Healthcare's $8.03 and low-priced compared to the book value of Summerset Group, trading at $2.90.
"This is a solid result, good cash flow generation and very good cost control," Gaskin said of the result.
"Metlifecare remains significantly cheaper than listed peers trading on 1.2 times book value, versus Summerset on 2.1 times book and Ryman on 5.5 times book value."
Gaskin welcomed the appointment of Kim Ellis as a director and the new chairman replacing Peter Brown. Ellis' appointment would be viewed positively by the market, he said.
Metlifecare said the result for the year to June 30 showed settlement of 458 occupation right agreements, the second highest in the past six years.
Underlying profit, which removes non-cash items including unrealised valuation gains, increased by 37 per cent to $46 million, which Metlifecare said was at the top end of the market guidance range of $43 million to $46 million.
The value of its asset base rose $65.7 million to be worth $1.96 billion.
Alan Edwards, the chief executive, said a $63.6 million "gain on acquisition" listed in last year's result but not appearing this year was a "bargain gain" on the value of Metlifecare's acquisition of the Vision Senior Living and Private Lifecare assets.
The 2014 year had been a successful one "as we have continued our focus on portfolio growth and realising benefits from our increased scale and large operational environments," Edwards said.
"Our villages are strategically located in residential markets where quality retirement lifestyle options continue to enjoy strong demand."
The company's focus was firmly on growing its portfolio to meet the needs of New Zealand's growing population of over-65-year-olds.
"We have a number of large developments under way and confirm that we are on track to meet the delivery of 200-plus units and beds by [the 2015 financial year] and onwards.
"Additionally, we are continually identifying and carefully assessing land acquisitions and other opportunities to expand our portfolio".
The company has a land-bank of more than 1000 units and rest home beds and is building two new villages in the Auckland area. Stages 1 and 2 of The Orchards, the $40 million village in Glenfield on the North Shore, is under way. Resource consent has been granted for the $160 million Greenwich Gardens village in Unsworth Heights, also on the Shore. The earthworks have been done and building is due to start soon. Presales have started for the first 27 villas.
At The Poynton in Takapuna, Stage 3 has been completed, with 55 apartments, and Stage 4 has started which will offer a further 62 apartments, the company has said.
A resource consent application has been submitted for a further development at The Avenues in Tauranga, for 42 units and 38 care beds, and at Coastal Villas in Paraparaumu, building consent has been obtained for 15 units. Construction is due to start in the first quarter of the new financial year.