Jeremy Hutton: Milford Asset Management expert on Ryman Healthcare leading the NZX for July

Ryman Healthcare's share price has gone up for the first half of July, leading experts to speculate about the company's future. 

This follows a downturn from earlier in the year.

Milford Asset Management's Jeremy Hutton explains further.

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Episode Transcript

Speaker 1 (00:00):
Jeremy Hutton's will the Milford Asset Management for our market
update tonight. Hey Jeremy, Hey Rian, how you going. You're good?
Thank you. Ryman we're talking Ryman Healthcare. They've been leading
the index so far in July. Is the worst do
you think now passed for them?

Speaker 2 (00:16):
Yeah, that's correct. Ryman Healthcare, the fairly embattled retirement village operator.
They're leading the index boards so far this month. In July,
the share price is up fourteen percent, and this was
mainly driven by a stronger than expected unit sales update
over the April and June period, so that's the first
quarter of their financial year. But it just shows to

(00:37):
me how much, you know, the stock market is expectations driven,
because I wouldn't say that these sales were great. I mean,
they're still down ten percent versus the same quarter as
last year, but they are a lot stronger than what
Ryman was expecting at their result in May. They're expecting
down twenty to thirty percent. So know, the market reasonably
happy that at least there's some clear evidence that sales

(00:59):
are on an improving trajectory.

Speaker 1 (01:01):
Is there any read through at all on the housing
market from the operators, the retirement village operators.

Speaker 2 (01:08):
Yeah, the retirement village operators do trade is a little
bit of a proxy for the New Zealand housing market.
Their share prices have ripped really high when the times
are good, but as we're all well aware, they've had
a tough couple of years and that's also reflective of
the housing market too, and you know that's continued into
twenty twenty five. We've had pretty much no price growth

(01:29):
in the housing market in New Zealand over twenty twenty
five and that does impact the retirement village model over
the long term. They do need that price growth. But
I suppose on the positive side, and what's tending to
drive the share prices of these retirement villages and the
short term is more sales volumes in the housing market,
so more transactions, more liquidity, and that has steadily been

(01:52):
increasing this year pretty consistently, around ten percent above last year.
So having that, you know, more liquidity in the market's important.
You can clear their stock quicker. For the retirement village operators,
new residences can have that confidence to commit to buying
a new unit.

Speaker 1 (02:07):
Which is obviously good for Ryman. Is it going to
turn that share price around because it's fallen well eighty
percent over four years.

Speaker 2 (02:16):
Yeah, it has been a really torrid time for Ryman shareholders.
I mean the business has had a lot thrown at it,
the construction cost inflation boom during the COVID times, huge
interest rate hikes, They've had too much debt, and then
into the sluggish housing market as well, so shareholders have
had to stump up. They've supported two huge equity raises.

(02:37):
Almost two billion dollars in fresh money has had to
go into this business. But now there's a new management
team and new CFO, new CEO. They're taking a time
to form their new strategy, but investors will take a
bit of confidence in the sales momentum. And you know,
if we get a few more interest rate cuts from
the RBNZ this year and that starts flowing through into

(02:57):
the housing market, then you know, Ryman and and the
other retirement village operators could be in for a much
bit of time going forward.

Speaker 1 (03:06):
Jeremy, appreciate your time tonight, Jeremy Hutton, Milford Essett Management.
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