Metlifecare considering buyback to lift share price
By Paul McBeth
Oct. 18 (BusinessDesk) - Metlifecare is considering ways to boost the share price, including a potential buyback, says chairman Kim Ellis.
The shares recently traded at $5.98, down from a peak of $6.51 in September, and a sizeable discount to their net asset value of $6.93.
Ellis told shareholders at today's annual meeting that the board has a strong belief in the long-term value of Metlifecare's portfolio and land bank, and the discount has been an ongoing frustration. The board is considering ways to bridge that gap and will update shareholders of any decision at the first-half result in February.
"There are a number of initiatives that we could take to try and narrow the gap, such as a possible share buyback and diversification of the share register to assist with creating marginal buying support," he said.
Metlifecare had 4,499 shareholders as at July 12, of which 61 owned 90 percent of the retirement village operator. Of that, it has three substantial shareholders: the New Zealand Superannuation Fund with 19.8 percent, ANZ funds with 10.8 percent, and Investment Services Group at 6.4 percent.
The company has a market capitalisation of $843.8 million, just behind Summerset Group's $1.03 billion value. Ryman Healthcare is valued at $4.21 billion.
Ellis said the company is reviewing its debt structure, and will also update shareholders on that work at the first-half update.
Metlifecare's net debt almost doubled to $138.4 million in the year ended June 30. The gearing ratio - net debt as a percentage of debt plus equity - was 9 percent, a level the company described as showing the "exceptional strength" of its balance sheet and capacity for future growth.
Chief executive Glen Sowry said the company's accelerated growth has required the management of more projects than it's ever handled before. That pace will continue to pick up in the current year, with activity across 11 existing and new villages and 145 units and two new care homes set to be delivered before the end of June.
The following year, Metlifecare anticipates a build rate of at least 300 units, he said. It delivered 254 in the 2018 financial year.
"We are still expecting to deliver higher volumes of occupation right agreements for both new homes and resales in FY19," Sowry said.