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Morningstar Equities Research
Morningstar Equities Research - RYM-NZ, IFT, IFT-NZ and EHL, MFT-NZ, MIN, NWH, RRL on price change
Ryman Healthcare
Limited RYM-NZ| Stupendous Growth by Ryman in 2014 on Lofty
New Sales Margins but 2015 Is Unlikely to Be as
Rosy
Morningstar Recommendation: Reduce
Nachiket Moghe,
CFA, Morningstar Analyst - 64 9 915 6776
Ryman
Healthcare reported outstanding results for fiscal 2014,
with underlying net profit after tax, or NPAT, exceeding our
estimates by 3.5%. This was driven by slightly higher EBITDA
and lower-than-estimated depreciation and interest costs.
NPAT was 18% higher versus the prior period and represents
uninterrupted double-digit earnings growth for the firm
since listing in 1999. We have not made any material changes
to our fiscal 2015 and 2016 forecasts. We believe earnings
growth will taper off in the next few years as a result of
lower margins on new construction and flat care
earnings.
Our fair value estimate rises to NZD 7.00 per share from NZD 6.50 as a result of changes to our longer term forecasts, as we incorporate additional village rollouts in New Zealand and Australia. However, we still believe strong earnings growth is more than adequately factored into the stock price and valuations appear rich at the moment, with the stock trading at a 20% premium to fair value. While our valuation has unfortunately trailed the share price, we find it very hard to justify the market's implied outlook. We make no changes to our narrow economic moat rating which reflects the firm's low-cost position and brand strength.
Infratil Limited IFT-NZ, IFT | No
Surprises in Infratil’s 2014 Results, 2015 Will be Buoyed
by Trustpower's Snowtown Wind Farm
Morningstar
Recommendation: Hold
Nachiket Moghe, CFA, Morningstar
Analyst - 64 9 915 6776
Infratil's full-year result
was at the top end of its recently downgraded guidance range
for earnings before interest, tax, depreciation and
amortisation, or EBITDA, of NZD 490 to AUD 500 million. It
was, however, 5.2% down on the previous year, reflecting
softer trading conditions at TrustPower and NZ Bus,
translation impact of a weaker Australian dollar and lower
ownership in Z Energy. We maintain our 2015 EBITDA forecast
of NZD 545 million, implying year-on-year growth of 9%
mainly reflecting an uptick in earnings at TrustPower from
the contribution of Snowtown.
We maintain our fair value estimate of NZD 2.50 per share. We view the shares as fairly valued, trading close to our fair value estimate. We maintain our no-moat rating on the company as we don't consider TrustPower or Infratil Energy Australia, IEA, (comprising 56% of Infratil's value) to have economic moats. TrustPower and Infratil Energy Australia are key value drivers for Infratil. However, in the medium term, we believe Infratil can reap rich rewards through prudent investment in key infrastructure assets that have good long-term growth prospects.
Emeco Holdings - Upgrade
due to price change
Mineral Resources - Downgrade due to price change
Mainfreight - Downgrade due to price change
NRW Holdings - Upgrade due to price change
Ends
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