Top performer suffers share drop
Shares in Ryman Healthcare have dropped about 12 per cent from a peak earlier in the year, a reflection of weakness in the retirement-village sector, analysts say.
And there could be a further downside for retirement shares, with new listings expected in Australasia.
Christchurch-based Ryman yesterday told the market a new Boston Consulting Group report placed Ryman among the 10 best-performing healthcare companies in the world - at No 8.
Forsyth Barr aged-care analyst Jeremy Simpson said that rating was certainly worth something to Ryman. But the company, and others in the sector, faced some challenges.
Ryman's shares have fallen from a peak of $9.05 on May 8 to $7.83 at the start of trade yesterday.
Other listed companies had also suffered: Metlifecare shares fell about 6 per cent from a recent peak, and Summerset about 20 per cent, Simpson said.
"Summerset has also got a few growing pains, in the sense that it has grown its business very quickly, but it is incurring quite a few upfront related costs . . . that's probably impacted on sentiment for the sector as well."
A new entrant on the Australian Securities Exchange (ASX), Japara Healthcare, had fallen 15 per cent from peak value since listing in April. The company was likely to have attracted some investors out of Ryman.
A series of new listings were due in Australia and, potentially, the Oceania Group in New Zealand.
There were risks around any softness in the Auckland housing market and an oversupply of retirement units, Simpson said. "The other concern is the sector has been an amazing performer in New Zealand in the last couple of years. It's massively outperformed."
On the positive side, retirement facilities were still needed in the longer term for a "very rapidly ageing population".
Forsyth Barr had recently upgraded its Ryman recommendation to "outperform".
Craigs Investment Partners had a sell recommendation in a May research paper when Ryman shares were at their peak, reflecting a "stretched valuation".
The Boston Consulting rankings were compiled after researching shareholder returns of 10,000 global companies from 2009 to 2013. Ryman gave an average annual "total shareholder return" of 45.5 per cent.
Hamilton Hindin Greene director James Smalley said that annual return was compounding, and reflected share and dividend gains for shareholders on their investment. Ryman would continue to benefit from an ageing population.
He said that many liked to pick March 2009 as a starting point for performance, because it was the trough of the global financial crisis share slump. That being said, Ryman's performance had been "phenomenal".
"It perhaps does reflect how well Ryman has done for its shareholders on a global-return basis in that sector," Smalley said.
By far the bulk (up to 95 per cent) of that return to shareholders was from share price gains rather than through dividends, which were taxed, he said.
Ryman managing director Simon Challies said the ranking was recognition of how the company had performed, particularly during the global financial crisis.
"I think it recognises that we came through the GFC in good shape - those were tough years," he said. "We had a strong balance sheet, a conservative debt position and we kept investing in growth throughout those years. . ."