New Zealand Professional Investment Services Firm

Forsyth Barr

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.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Ryman Healthcare</h2>
Investor Day — Victoria proving Victorious
Ryman Healthcare (RYM) provided investors with an encouraging update on its building presence in the Victorian market and we have lifted our medium to longer term growth assumptions slightly in terms of sales pricing and margins. We continue to expect RYM will hit a sustainable build rate of two villages per annum in FY23. NEUTRAL.
What’s changed?
<ul>
<li>Earnings: FY22 up +3%</li>
<li>Target Price: Lifted from NZ$14.00 to NZ$15.70 after a lift in our DCF valuation due to stronger Melbourne growth assumptions in FY22–FY26</li>
<li>Rating: Remains NEUTRAL</li>
</ul>
Presence and profile
RYM now has around 50 staff in Melbourne, with another 50 in Auckland and 300 in Christchurch (up from around 50 in six years). We expect that once RYM is building sustainably in Victoria, at two villages per annum (we estimate ~8 sites on the go at various stages), RYM will look to expand to a new state (our pick remains NSW) and/or lift the Melbourne build rate to three villages per year. RYM has six villages and two development sites in Christchurch, which has a population of less than 400,000 people; Melbourne has 5 million people, indicating the massive development upside for RYM.
RYM remains very well placed from a demand, regulatory and staff attraction/retention perspective with its unique, fully integrated offering, building profile and reputation, plus new facilities.
Progress and presales
RYM remains on track to have five villages open by the end of 2020 and we expect a significant lift in the Victorian build rate over FY21–23. The next three villages we expect to open are Burwood East, Highton and Aberfeldie. RYM continues to get access to a wider mix of sites in terms of geographic location and style of development. As its market presence lifts, combined with a larger in-house team and valuable consenting experience, momentum is lifting.
RYM noted that presales continue to be strong and at record levels, with 40 units pre-sold in a month at the first stage of Burwood East and 20 units at its Highton village in Geelong. This sort of preselling is not only record speed for RYM but is well ahead of what anyone else achieves in the sector in NZ and Australia.
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Investment View
With the rapidly aging population there is increasing demand for retirement village accommodation and aged care, in particular RYM’s hospital and dementia facilities. RYM remains very well positioned given its fully integrated villages, strong brand and track record. RYM is a leading NZ growth story while also having defensive qualities due to the strength of its franchise and its ‘needs based’ focus. Victoria is gaining momentum and RYM expects to have five villages open by the end of 2020. NEUTRAL.&nbsp;
</div>
Jeremy Simpson, CFA jeremy.simpson@forsythbarr.co.nz +64 9 368 0022

Ryman Healthcare
Investor Day — Victoria proving Victorious
Ryman Healthcare (RYM) provided investors with an encouraging update on its building presence in the Victorian market and we have lifted our medium to longer term growth assumptions slightly in terms of sales pricing and margins. We continue to expect RYM will hit a sustainable build rate of two villages per annum in FY23. NEUTRAL.
What’s changed?

Earnings: FY22 up +3%
Target Price: Lifted from NZ$14.00 to NZ$15.70 after a lift in our DCF valuation due to stronger Melbourne growth assumptions in FY22–FY26
Rating: Remains NEUTRAL

Presence and profile
RYM now has around 50 staff in Melbourne, with another 50 in Auckland and 300 in Christchurch (up from around 50 in six years). We expect that once RYM is building sustainably in Victoria, at two villages per annum (we estimate ~8 sites on the go at various stages), RYM will look to expand to a new state (our pick remains NSW) and/or lift the Melbourne build rate to three villages per year. RYM has six villages and two development sites in Christchurch, which has a population of less than 400,000 people; Melbourne has 5 million people, indicating the massive development upside for RYM.
RYM remains very well placed from a demand, regulatory and staff attraction/retention perspective with its unique, fully integrated offering, building profile and reputation, plus new facilities.
Progress and presales
RYM remains on track to have five villages open by the end of 2020 and we expect a significant lift in the Victorian build rate over FY21–23. The next three villages we expect to open are Burwood East, Highton and Aberfeldie. RYM continues to get access to a wider mix of sites in terms of geographic location and style of development. As its market presence lifts, combined with a larger in-house team and valuable consenting experience, momentum is lifting.
RYM noted that presales continue to be strong and at record levels, with 40 units pre-sold in a month at the first stage of Burwood East and 20 units at its Highton village in Geelong. This sort of preselling is not only record speed for RYM but is well ahead of what anyone else achieves in the sector in NZ and Australia.

Investment View
With the rapidly aging population there is increasing demand for retirement village accommodation and aged care, in particular RYM’s hospital and dementia facilities. RYM remains very well positioned given its fully integrated villages, strong brand and track record. RYM is a leading NZ growth story while also having defensive qualities due to the strength of its franchise and its ‘needs based’ focus. Victoria is gaining momentum and RYM expects to have five villages open by the end of 2020. NEUTRAL.&nbsp;

Jeremy Simpson, CFA jeremy.simpson@forsythbarr.co.nz +64 9 368 0022

Ryman Healthcare: Investor Day — Victoria Proving Victorious