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Speaker 1: Jeremy Hutton's will the Milford Asset Management for our market

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Speaker 1: update tonight. Hey Jeremy, Hey Rian, how you going. You're good?

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Speaker 1: Thank you. Ryman we're talking Ryman Healthcare. They've been leading

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Speaker 1: the index so far in July. Is the worst do

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Speaker 1: you think now passed for them?

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Speaker 2: Yeah, that's correct. Ryman Healthcare, the fairly embattled retirement village operator.

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Speaker 2: They're leading the index boards so far this month. In July,

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Speaker 2: the share price is up fourteen percent, and this was

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Speaker 2: mainly driven by a stronger than expected unit sales update

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Speaker 2: over the April and June period, so that's the first

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Speaker 2: quarter of their financial year. But it just shows to

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Speaker 2: me how much, you know, the stock market is expectations driven,

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Speaker 2: because I wouldn't say that these sales were great. I mean,

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Speaker 2: they're still down ten percent versus the same quarter as

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Speaker 2: last year, but they are a lot stronger than what

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Speaker 2: Ryman was expecting at their result in May. They're expecting

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Speaker 2: down twenty to thirty percent. So know, the market reasonably

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Speaker 2: happy that at least there's some clear evidence that sales

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Speaker 2: are on an improving trajectory.

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Speaker 1: Is there any read through at all on the housing

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Speaker 1: market from the operators, the retirement village operators.

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Speaker 2: Yeah, the retirement village operators do trade is a little

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Speaker 2: bit of a proxy for the New Zealand housing market.

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Speaker 2: Their share prices have ripped really high when the times

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Speaker 2: are good, but as we're all well aware, they've had

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Speaker 2: a tough couple of years and that's also reflective of

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Speaker 2: the housing market too, and you know that's continued into

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Speaker 2: twenty twenty five. We've had pretty much no price growth

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Speaker 2: in the housing market in New Zealand over twenty twenty

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Speaker 2: five and that does impact the retirement village model over

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Speaker 2: the long term. They do need that price growth. But

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Speaker 2: I suppose on the positive side, and what's tending to

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Speaker 2: drive the share prices of these retirement villages and the

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Speaker 2: short term is more sales volumes in the housing market,

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Speaker 2: so more transactions, more liquidity, and that has steadily been

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Speaker 2: increasing this year pretty consistently, around ten percent above last year.

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Speaker 2: So having that, you know, more liquidity in the market's important.

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Speaker 2: You can clear their stock quicker. For the retirement village operators,

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Speaker 2: new residences can have that confidence to commit to buying

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Speaker 2: a new unit.

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Speaker 1: Which is obviously good for Ryman. Is it going to

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Speaker 1: turn that share price around because it's fallen well eighty

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Speaker 1: percent over four years.

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Speaker 2: Yeah, it has been a really torrid time for Ryman shareholders.

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Speaker 2: I mean the business has had a lot thrown at it,

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Speaker 2: the construction cost inflation boom during the COVID times, huge

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Speaker 2: interest rate hikes, They've had too much debt, and then

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Speaker 2: into the sluggish housing market as well, so shareholders have

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Speaker 2: had to stump up. They've supported two huge equity raises.

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Speaker 2: Almost two billion dollars in fresh money has had to

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Speaker 2: go into this business. But now there's a new management

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Speaker 2: team and new CFO, new CEO. They're taking a time

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Speaker 2: to form their new strategy, but investors will take a

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Speaker 2: bit of confidence in the sales momentum. And you know,

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Speaker 2: if we get a few more interest rate cuts from

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Speaker 2: the RBNZ this year and that starts flowing through into

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Speaker 2: the housing market, then you know, Ryman and and the

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Speaker 2: other retirement village operators could be in for a much

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Speaker 2: bit of time going forward.

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Speaker 1: Jeremy, appreciate your time tonight, Jeremy Hutton, Milford Essett Management.

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