New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

<h2>Metlifecare (MET)</h2>
FY19 Result — Initial Thoughts
Steady operating performance
The FY19 result was in line expectations with underlying profit up +4% to NZ$90.5m compared with our forecast of NZ$91.5m. The 2H dividend was 7.25 cps (+7%), also ahead of expectations. The result was driven by steady gains in all areas with resales gains the standout as expected. Operating revenue was up +7%, slightly below expectations but was offset by lower operating costs. Realised gains on resales and new sales were also very close to forecast leading to underlying EBITDA of NZ$98m, in line with our forecast.
Resales gains were a key driver and well above the pcp at $71.5m driven by higher pricing (up +6% at NZ$572k per units), margins (very attractive at 35.3% and helped by the high embed value per unit in the portfolio) and volumes (up +3%).&nbsp; Resales vacancy of uncontracted stock is around 2-3% and looks consistent with prior periods. Demand indicators remain robust with village occupancy at 97% and care occupancy at 96%.
New sales gains at NZ$16.9m were in line with our forecasts with stronger volumes (116 units) and pricing offset by weaker margins.
Softer near-term development activity flagged
The FY19 &nbsp;build rate was below expectations at 112 units versus our forecast of 148 units. As forecast 70 new care beds were built.
MET has signalled&nbsp; a more cautious build rate is expected in FY20 as it readjusts its processes in a difficult market, but expects to deliver around 280 units and beds in FY21, in line with our forecast.
Gearing has increased but remains modest at 15% and is all project related. NTA was up slightly at NZS$6.96.
Investor briefing
Conference call: 10.30am (NZ time) dial 09 950 5335, 04 830 1013 or 0800 122 360, AU 1 800 760 146. Passcode: 10001221
Result summary
<table class="table table-striped">
<tbody>
<tr>
<td>
12 months ending 30 June
</td>
<td>
FY18
</td>
<td>
FY19
</td>
<td>
Chg
</td>
<td>
Forbar
</td>
</tr>
<tr>
<td>
Revenue
</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td>
Care fees &amp; village fees
</td>
<td>
59.9
</td>
<td>
65.4
</td>
<td>
9%
</td>
<td>
67.4
</td>
</tr>
<tr>
<td>
Management fees/other
</td>
<td>
56.8
</td>
<td>
59.0
</td>
<td>
4%
</td>
<td>
62.2
</td>
</tr>
<tr>
<td>
Operating revenue
</td>
<td>
116.7
</td>
<td>
124.4
</td>
<td>
7%
</td>
<td>
129.6
</td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td colspan="3">
Fair value movement of investment property
</td>
<td></td>
<td></td>
</tr>
<tr>
<td>
Realised value movement
</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td>
Resales
</td>
<td>
62.3
</td>
<td>
71.5
</td>
<td>
15%
</td>
<td>
70.3
</td>
</tr>
<tr>
<td>
New Sales
</td>
<td>
16.4
</td>
<td>
16.9
</td>
<td>
3%
</td>
<td>
17.2
</td>
</tr>
<tr>
<td>
Total realised value movement
</td>
<td>
78.7
</td>
<td>
88.4
</td>
<td>
12%
</td>
<td>
87.5
</td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td>
Total underlying revenue
</td>
<td>
195.4
</td>
<td>
212.8
</td>
<td>
9%
</td>
<td>
217.1
</td>
</tr>
<tr>
<td>
Total Costs
</td>
<td>
104.0
</td>
<td>
114.8
</td>
<td>
10%
</td>
<td>
119.1
</td>
</tr>
<tr>
<td>
Total Underlying EBITDA
</td>
<td>
91.4
</td>
<td>
98.0
</td>
<td>
7%
</td>
<td>
98.1
</td>
</tr>
<tr>
<td>
Depreciation &amp; impairment
</td>
<td>
4.2
</td>
<td>
5.8
</td>
<td>
38%
</td>
<td>
4.2
</td>
</tr>
<tr>
<td>
EBIT
</td>
<td>
87.2
</td>
<td>
92.2
</td>
<td>
6%
</td>
<td>
93.8
</td>
</tr>
<tr>
<td>
Net interest
</td>
<td>
0.0
</td>
<td>
-1.7
</td>
<td></td>
<td>
-2.4
</td>
</tr>
<tr>
<td>
EBT
</td>
<td>
87.2
</td>
<td>
90.5
</td>
<td>
4%
</td>
<td>
91.5
</td>
</tr>
<tr>
<td>
Tax/other
</td>
<td>
0.0
</td>
<td>
0.0
</td>
<td></td>
<td>
0.0
</td>
</tr>
<tr>
<td>
Underlying profit
</td>
<td>
87.2
</td>
<td>
90.5
</td>
<td>
4%
</td>
<td>
91.5
</td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td>
EPS - Underlying profit (cps)
</td>
<td>
49.7
</td>
<td>
42.5
</td>
<td>
-15%
</td>
<td>
42.9
</td>
</tr>
<tr>
<td>
2H Dividend
</td>
<td>
6.75
</td>
<td>
7.25
</td>
<td>
7%
</td>
<td>
6.75
</td>
</tr>
<tr>
<td>
FY Dividend (cps)
</td>
<td>
10.00
</td>
<td>
11.00
</td>
<td>
10%
</td>
<td>
10.50
</td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td>
NTA (per share)
</td>
<td>
6.89
</td>
<td>
$6.96
</td>
<td>
1%
</td>
<td></td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td>
Key drivers
</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td>
12 months ending 30 June
</td>
<td>
FY18
</td>
<td>
FY19
</td>
<td>
Chg
</td>
<td></td>
</tr>
<tr>
<td>
Sales - new units
</td>
<td>
98.0
</td>
<td>
116.0
</td>
<td>
18%
</td>
<td>
103.6
</td>
</tr>
<tr>
<td>
Ave unit price - new sales (NZ$000)
</td>
<td>
655.0
</td>
<td>
689.0
</td>
<td>
5%
</td>
<td>
706.7
</td>
</tr>
<tr>
<td>
Sales - resold units
</td>
<td>
343.0
</td>
<td>
354.0
</td>
<td>
3%
</td>
<td>
363.1
</td>
</tr>
<tr>
<td>
Ave unit price - resales (NZ$000)
</td>
<td>
541.9
</td>
<td>
571.9
</td>
<td>
6%
</td>
<td>
578.1
</td>
</tr>
<tr>
<td>
Gross development margin (%)
</td>
<td>
26.5
</td>
<td>
21.1
</td>
<td>
-20%
</td>
<td>
23.5
</td>
</tr>
<tr>
<td>
Gross resales margin (%)
</td>
<td>
33.9
</td>
<td>
35.3
</td>
<td>
4%
</td>
<td>
33.5
</td>
</tr>
<tr>
<td>
New apartments/units
</td>
<td>
185.0
</td>
<td>
112.0
</td>
<td>
-39%
</td>
<td>
148.0
</td>
</tr>
<tr>
<td>
New beds
</td>
<td>
69.0
</td>
<td>
70.0
</td>
<td>
1%
</td>
<td>
70.0
</td>
</tr>
</tbody>
</table>
Source: Forsyth Barr analysis, company reports
<a href="http://www.forsythbarr.co.nz/about-us/our-people/research/jeremy-simpson/" target="_blank" data-saferedirecturl="https://www.google.com/url?q=http://www.forsythbarr.co.nz/about-us/our-people/research/jeremy-simpson/&amp;source=gmail&amp;ust=1566870023713000&amp;usg=AFQjCNF1xw_qVzUu6L9CK4VHDB26A0Jqwg" rel="noopener">Jeremy Simpson</a>&nbsp; CFA
Director / Senior Analyst, Equities&nbsp;
<table class="table table-striped">
<tbody>
<tr>
<td>
T:&nbsp;
</td>
<td>
+64 9 368 0022
</td>
</tr>
<tr>
<td>
M:&nbsp;
</td>
<td>
+64 21 995 998
</td>
</tr>
<tr>
<td>
TF:&nbsp;
</td>
<td>
0800 367 227
</td>
</tr>
<tr>
<td>
F:&nbsp;
</td>
<td>
+64 9 368 0092
</td>
</tr>
<tr>
<td>
P:&nbsp;
</td>
<td>
PO Box 97, Auckland 1140
</td>
</tr>
<tr>
<td>
&nbsp;
</td>
<td>
&nbsp;
</td>
</tr>
<tr>
<td>
W:&nbsp;
</td>
<td>
<a href="http://www.forsythbarr.co.nz/" target="_blank" data-saferedirecturl="https://www.google.com/url?q=http://www.forsythbarr.co.nz&amp;source=gmail&amp;ust=1566870023713000&amp;usg=AFQjCNFoFE9jTCCkTK_MXzeQ2xLSNfgo8Q" rel="noopener">www.forsythbarr.co.nz</a>
</td>
</tr>
<tr>
<td>Twitter:</td>
<td>
<a href="http://twitter.com/forsythbarr" target="_blank" data-saferedirecturl="https://www.google.com/url?q=http://twitter.com/forsythbarr&amp;source=gmail&amp;ust=1566870023714000&amp;usg=AFQjCNFMCALraDEIB5sdsznJu5OyQV786Q" rel="noopener">@forsythbarr</a>
</td>
</tr>
</tbody>
</table>

Metlifecare (MET)
FY19 Result — Initial Thoughts
Steady operating performance
The FY19 result was in line expectations with underlying profit up +4% to NZ$90.5m compared with our forecast of NZ$91.5m. The 2H dividend was 7.25 cps (+7%), also ahead of expectations. The result was driven by steady gains in all areas with resales gains the standout as expected. Operating revenue was up +7%, slightly below expectations but was offset by lower operating costs. Realised gains on resales and new sales were also very close to forecast leading to underlying EBITDA of NZ$98m, in line with our forecast.
Resales gains were a key driver and well above the pcp at $71.5m driven by higher pricing (up +6% at NZ$572k per units), margins (very attractive at 35.3% and helped by the high embed value per unit in the portfolio) and volumes (up +3%).&nbsp; Resales vacancy of uncontracted stock is around 2-3% and looks consistent with prior periods. Demand indicators remain robust with village occupancy at 97% and care occupancy at 96%.
New sales gains at NZ$16.9m were in line with our forecasts with stronger volumes (116 units) and pricing offset by weaker margins.
Softer near-term development activity flagged
The FY19 &nbsp;build rate was below expectations at 112 units versus our forecast of 148 units. As forecast 70 new care beds were built.
MET has signalled&nbsp; a more cautious build rate is expected in FY20 as it readjusts its processes in a difficult market, but expects to deliver around 280 units and beds in FY21, in line with our forecast.
Gearing has increased but remains modest at 15% and is all project related. NTA was up slightly at NZS$6.96.
Investor briefing
Conference call: 10.30am (NZ time) dial 09 950 5335, 04 830 1013 or 0800 122 360, AU 1 800 760 146. Passcode: 10001221
Result summary




12 months ending 30 June


FY18


FY19


Chg


Forbar




Revenue








Care fees &amp; village fees


59.9


65.4


9%


67.4




Management fees/other


56.8


59.0


4%


62.2




Operating revenue


116.7


124.4


7%


129.6











Fair value movement of investment property






Realised value movement








Resales


62.3


71.5


15%


70.3




New Sales


16.4


16.9


3%


17.2




Total realised value movement


78.7


88.4


12%


87.5











Total underlying revenue


195.4


212.8


9%


217.1




Total Costs


104.0


114.8


10%


119.1




Total Underlying EBITDA


91.4


98.0


7%


98.1




Depreciation &amp; impairment


4.2


5.8


38%


4.2




EBIT


87.2


92.2


6%


93.8




Net interest


0.0


-1.7



-2.4




EBT


87.2


90.5


4%


91.5




Tax/other


0.0


0.0



0.0




Underlying profit


87.2


90.5


4%


91.5











EPS - Underlying profit (cps)


49.7


42.5


-15%


42.9




2H Dividend


6.75


7.25


7%


6.75




FY Dividend (cps)


10.00


11.00


10%


10.50











NTA (per share)


6.89


$6.96


1%












Key drivers








12 months ending 30 June


FY18


FY19


Chg





Sales - new units


98.0


116.0


18%


103.6




Ave unit price - new sales (NZ$000)


655.0


689.0


5%


706.7




Sales - resold units


343.0


354.0


3%


363.1




Ave unit price - resales (NZ$000)


541.9


571.9


6%


578.1




Gross development margin (%)


26.5


21.1


-20%


23.5




Gross resales margin (%)


33.9


35.3


4%


33.5




New apartments/units


185.0


112.0


-39%


148.0




New beds


69.0


70.0


1%


70.0




Source: Forsyth Barr analysis, company reports
Jeremy Simpson&nbsp; CFA
Director / Senior Analyst, Equities&nbsp;




T:&nbsp;


+64 9 368 0022




M:&nbsp;


+64 21 995 998




TF:&nbsp;


0800 367 227




F:&nbsp;


+64 9 368 0092




P:&nbsp;


PO Box 97, Auckland 1140




&nbsp;


&nbsp;




W:&nbsp;


www.forsythbarr.co.nz



Twitter:

@forsythbarr





Metlifecare (MET): FY19 Result — Initial Thoughts

New Zealand

Metlifecare Limited provides private health care services through its ownership, operation and management of retirement villages, nursing homes and geriatric hospitals along with the marketing of services allied to these facilities throughout New Zealand.

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52-week Range	0.00 - 0.00
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Metlifecare Ltd (MET NZ)

Metlifecare (MET): FY19 Result — Initial Thoughts

Metlifecare (MET) FY19 Result — Initial Thoughts Steady operating performance The FY19 result was in line expectations with underlying profit up...

Forsyth Barr

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52-week Range

Market Cap (USDm)

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