Latest / Best of Business / Jeremy Hutton: Milford Asset Management Equities Analyst on Ryman Healthcare entering a trading halt

Transcript

Jeremy Hutton: Milford Asset Management Equities Analyst on Ryman Healthcare entering a trading halt · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talk sed B.
• 0:12
  Speaker 1: Follow this and our wide range of podcasts now on iHeartRadio.
• 0:16
  Speaker 2: Right now, let's have a look at the market's Jeremy
• 0:18
  Speaker 2: Hutton from Milford Asset Managements with us.
• 0:20
  Speaker 3: Hey, Jeremy, Hey, Rian, how are you going? Yeah?
• 0:23
  Speaker 2: Good? Thank you? Shareholders feeling the pain this with the
• 0:26
  Speaker 2: capital rays from Ryman Healthcare.
• 0:29
  Speaker 3: Yeah, retirement village operator. Ryman is conducting a second massive
• 0:34
  Speaker 3: capital raise in as many years, asking the market for
• 0:37
  Speaker 3: another one billion dollars, and this is following the nine
• 0:41
  Speaker 3: hundred odd million it raised in February twenty twenty three,
• 0:45
  Speaker 3: so Ryman had to raise this money at quite a
• 0:47
  Speaker 3: big discount to try and get investors on board. The
• 0:50
  Speaker 3: offer price was at three dollars and five cents, and
• 0:52
  Speaker 3: that was almost thirty percent lower than the last closed
• 0:56
  Speaker 3: price on Friday before the deal. So the proceeds are
• 0:59
  Speaker 3: again being used to pay down debt. But the last
• 1:03
  Speaker 3: FADS was done at five dollars in twenty twenty three,
• 1:06
  Speaker 3: and Ryman at its peak was almost that fifteen dollars
• 1:09
  Speaker 3: in the boom time, so it's been a really painful
• 1:12
  Speaker 3: reset for Ryman shareholders as well.
• 1:15
  Speaker 2: Certainly has now a new CEO at the helm. Is
• 1:18
  Speaker 2: she clearing the decks and calling the bottom here?
• 1:22
  Speaker 3: Yeah, potentially, you know, this should take Ryman to a
• 1:25
  Speaker 3: much more comfortable place. Naomi James is the new CEO.
• 1:30
  Speaker 3: She's still relatively new in the role, but clearly of
• 1:32
  Speaker 3: the view that the large interest bill on the debt
• 1:36
  Speaker 3: was impacting the business operationally, putting a lot of pressure
• 1:39
  Speaker 3: on other parts of Ryman. And she has coupled this
• 1:42
  Speaker 3: big debt reduction with plans for big cost savings as well,
• 1:46
  Speaker 3: so trying to find another one hundred million dollars per
• 1:49
  Speaker 3: year of cost savings. So hopefully, you know, this is
• 1:52
  Speaker 3: the last reset for Ryman. But it is a massive
• 1:55
  Speaker 3: change from the former high flyer that we saw a
• 1:58
  Speaker 3: few years ago.
• 1:59
  Speaker 2: Certainly, especially when you look at that share price coming
• 2:01
  Speaker 2: off the pig of fifteen dollars that you mentioned, what's
• 2:04
  Speaker 2: the growth that looked like?
• 2:06
  Speaker 3: Yeah, that's the big question still out there for investors.
• 2:10
  Speaker 3: Ryman previously had the mantra of build, build, build and
• 2:14
  Speaker 3: build its retirement units at pretty much any cost, and
• 2:18
  Speaker 3: you know, this did enable huge growth for the business,
• 2:20
  Speaker 3: but that was in more buoyant property markets. But it
• 2:23
  Speaker 3: also did add a huge amount of debt and clearly
• 2:26
  Speaker 3: overextended the business too much. Times have change now, and
• 2:31
  Speaker 3: so has Ryman's near term retirement unit build rate. The
• 2:35
  Speaker 3: go for build rate that they've guided to has been
• 2:38
  Speaker 3: slashed to about a quarter between a quarter and a
• 2:42
  Speaker 3: third of what it was this year. So huge changes
• 2:46
  Speaker 3: in their growth profile going forward.
• 2:47
  Speaker 2: Yeah, big shift. How does it look against its competitors?
• 2:53
  Speaker 3: Yeah, it's interesting, you know, it's a very big change
• 2:56
  Speaker 3: in the retirement village models. Investors will need to think
• 3:00
  Speaker 3: about that. Ryman's effectively running the business morph on a
• 3:04
  Speaker 3: cash flow focus, where its key pair Somerset is is
• 3:08
  Speaker 3: still continuing to go all in on growth. So it
• 3:11
  Speaker 3: does present an interesting trade off or a decision for
• 3:14
  Speaker 3: investors if they want to pick between these two retirement operators.
• 3:18
  Speaker 2: How's this effecting, because obviously this has been a massive
• 3:20
  Speaker 2: story this week, one of the bigger ones from over
• 3:23
  Speaker 2: reporting season. How's it impacting the wider interet X?
• 3:29
  Speaker 3: Yeah, the inst X has had a really tough month
• 3:32
  Speaker 3: to day so far. In February, you know, it was
• 3:34
  Speaker 3: down over five percent at one point, mainly as investors
• 3:37
  Speaker 3: were weighing up this large capital raise and what tends
• 3:41
  Speaker 3: to happen in these capital rais is, particularly the bigger ones,
• 3:43
  Speaker 3: is that investors do sell a lot of other shares
• 3:46
  Speaker 3: to help fund funder this, so it does create a
• 3:49
  Speaker 3: bit of sogginess in the market. But I do note
• 3:51
  Speaker 3: that the insiet X did bounce back a bit today,
• 3:54
  Speaker 3: up about one percent, so investors perhaps have got their
• 3:57
  Speaker 3: head round this big Rhyman capital raise and have a
• 4:00
  Speaker 3: little bit more confidence.
• 4:01
  Speaker 2: Jeremy, thank you Jeremy Hutton and Milford Aesset Management.
• 4:04
  Speaker 1: For more from News Talks, there'd be listen live on
• 4:07
  Speaker 1: air or online and keep our shows with you wherever
• 4:10
  Speaker 1: you go with our podcasts on iHeartRadio