Lower US Yields | Ryman Update

29 May 2019

Global markets were lower overnight with stocks on Wall Street struggling for direction. Uncertainty has pushed investors toward safe-haven assets, which resulted in key benchmark US Treasury yields dropping to the lowest levels since October 2017. The benchmark US market (S&P 500) index is now about 4% below its record high hit on May 1.
 

Stock in Focus: Ryman Healthcare (RYM:ASX)

​​​​​​​​​​​​​​Ryman shares were lower after releasing their 2019 full year result but have outperformed retirement village peers in recent times.  Ryman posted an underlying profit (which excludes revaluations in the property portfolio and is their preferred measure of profitability) of $227m, which was up +11.5% from last year – driven by increased development margins and solid demand – despite slightly slower sales.
 
As a result, Ryman hiked its dividend in line with underlying profit growth and signalled a ramp in development as it looks to offset anticipated weaker margins with increased volumes. However, reported net profit after tax was down -16% from last year to $326m, due to lower unrealised fair-value gain on its assets which was $102.4m for the year, compared with $185.3m in the same corresponding period last year – showing signs of a slowing property market.
 
While we have viewed the business & retirement sector positively given the tailwind of an ageing population, there are near term concerns around a softer property market, and Ryman does trade at a full valuation, in our view.
 
We currently have a HOLD recommendation on Ryman.
 

 

 
Australia & New Zealand Market Movers

​​​​​​​​​​​​​​​​​​The Australian share market was higher yesterday (ASX 200 index +0.51%) as the major iron ore miners gained on the back of the commodity's soaring price. The price of iron ore rose to $US108 a tonne as Brazilian regulators have said a quick restart to production at Vale's largest mine is unlikely. Port stocks in China have been dwindling and steelmakers, which have been holding off buying are now being forced back to the market to replenish their stocks.
 
 
The New Zealand market was lower on Tuesday (NZX 50 index -0.24%) once again led by Fisher & Paykel Healthcare. The breathing mask maker has been one of the top performers this year, but gave up some of those gains for a second day having yesterday reported a record profit. On the flipside, Mainfreight posted the biggest gain on the day, up 4% as the transport and logistics firm lifted annual profit 28%. Retirement village company Arvida was also a touch higher after reporting strong earnings growth from its new village acquisitions and resales of existing occupation rights.
 

3 Things Markets Will be Watching this Week

  1. ​​​Mini reporting season across Australasia sees a number of Aussie & Kiwi stocks make earnings announcements this week.
  2. The latest ​US economic growth figures​ (GDP) are released on Friday morning (AU/NZ time).
  3. The ​NZ​ government​ budget ​is ​released​ on Thursday. 

Have a Great Day,
 

Team

Global markets were lower overnight with stocks on Wall Street struggling for direction.

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