Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<li>
<strong><a href="https://www.smartkarma.com/entities/arvida-group-ltd" target="_blank" data-smartkarma-citation="entities:14485:1" rel="noopener">Arvida (ARV NZ)</a></strong>, a leading retirement living and aged care service provider in New Zealand, <a href="https://www.arvida.co.nz/investors/nzx-releases/release/arvida-board-unanimously-recommends-stonepeak-acquisition-38581" target="_blank" rel="noopener">announced</a> a Scheme from PE-outfit Stonepeak at NZ$1.70/share, in cash, a 65% premium to undisturbed. </li>
<li>The Offer has unanimous board support. ~18% of shares out are supportive. Standard Scheme voting applies. Consent from NZ's Overseas Investment Office also required. </li>
<li>A Scheme Meeting is expected to be held in 4Q24 with implementation in the same quarter. Optics are a tad opportunistic; but this looks priced to complete. </li>
</ul>



Arvida (ARV NZ), a leading retirement living and aged care service provider in New Zealand, announced a Scheme from PE-outfit Stonepeak at NZ$1.70/share, in cash, a 65% premium to undisturbed. 
The Offer has unanimous board support. ~18% of shares out are supportive. Standard Scheme voting applies. Consent from NZ's Overseas Investment Office also required. 
A Scheme Meeting is expected to be held in 4Q24 with implementation in the same quarter. Optics are a tad opportunistic; but this looks priced to complete. 


New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

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Equity Bottom-Up

<div><div><div><div><ul><li>Reliable, accurate and relevant metrics are crucial to the valuing company.</li><li>For the listed aged care operators, opaque and unusual representation of value creation has moved from a nuisance to business-critical.</li><li>There has been a near total loss of investor confidence in the aged care operators ability to generate value for shareholders. </li></ul></div></div></div></div>

Reliable, accurate and relevant metrics are crucial to the valuing company.For the listed aged care operators, opaque and unusual representation of value creation has moved from a nuisance to business-critical.There has been a near total loss of investor confidence in the aged care operators ability to generate value for shareholders. 

<ul><li>Digital Hearts Holdings is a provider of QA testing for corporate customers, the second-largest in Japan by market cap.</li><li>After a volatile FY3/24, the company expects to return to double-digit growth and margin expansion this year in preparation for the spin-off in 2025 of its enterprise-focused businesses (AGEST Group).</li><li>Similar growth rates are expected over the medium term due to the expansion of services, the provision of a wide range of adaptable solutions, and the tailwind of an acceleration in AI-driven demand for data collection and tagging.</li></ul>

Digital Hearts Holdings is a provider of QA testing for corporate customers, the second-largest in Japan by market cap.After a volatile FY3/24, the company expects to return to double-digit growth and margin expansion this year in preparation for the spin-off in 2025 of its enterprise-focused businesses (AGEST Group).Similar growth rates are expected over the medium term due to the expansion of services, the provision of a wide range of adaptable solutions, and the tailwind of an acceleration in AI-driven demand for data collection and tagging.

Ryman Healthcare - Two Growth Engines to Tap

<ul><li>At its FY24 result Ryman Healthcare's (<wbr>RYM) new management and board lifted the veil on a decade plus of opaque accounting practices and half truths.</wbr></li><li>What was behind the veil was worse than we had anticipated.</li><li>The aggressive revenue recognition and poor cash recovery of capex was largely expected. Capitalising village start up costs (now abandoned), a meaningful valuation uplift (~+NZ$400m, now written down) at directors' discretion, as well as overstating expected cash recycling from villages under construction to the tune of ~NZ$250m was not. </li></ul>

At its FY24 result Ryman Healthcare's (RYM) new management and board lifted the veil on a decade plus of opaque accounting practices and half truths.What was behind the veil was worse than we had anticipated.The aggressive revenue recognition and poor cash recovery of capex was largely expected. Capitalising village start up costs (now abandoned), a meaningful valuation uplift (~+NZ$400m, now written down) at directors' discretion, as well as overstating expected cash recycling from villages under construction to the tune of ~NZ$250m was not. 

Ryman Healthcare - A Bitter Pill to Swallow, But a Necessary One

<ul><li>Ryman Healthcare (RYM) downgraded its expectations for FY24 underlying earnings by -13% at the midpoint due to weak new sales volumes and weak resales margins.</li><li>A silver lining is that net debt is expected to remain stable, likely due to lower capex.</li><li>The relative weakness in new sales (still expected to be up ~+50% from the very weak first half, but down ~-10% versus 2H23) is not that surprising, in particular as it appears to be concentrated in a few villages where the main building is yet to be completed. </li></ul>

Ryman Healthcare (RYM) downgraded its expectations for FY24 underlying earnings by -13% at the midpoint due to weak new sales volumes and weak resales margins.A silver lining is that net debt is expected to remain stable, likely due to lower capex.The relative weakness in new sales (still expected to be up ~+50% from the very weak first half, but down ~-10% versus 2H23) is not that surprising, in particular as it appears to be concentrated in a few villages where the main building is yet to be completed. 

New Zealand

Ryman Healthcare Limited provides private health care services through its development, management and operation of retirement villages, nursing homes and geriatric hospitals.  The Company's facilities are located in Christchurch, Dunedin, Invercargill and Wellington.

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Ryman Healthcare (RYM NZ)

Arvida (ARV NZ): Stonepeak's Offer

Assuming mid-Dec payment, this is trading at a reasonable gross/annualised spread of 4.9%/12.6%. Also run a ruler over other NZ peers such as...

David Blennerhassett

Ryman Healthcare - Metrics Matter

For the listed aged care operators, opaque and unusual representation of value creation has moved from a nuisance to business-critical.

Forsyth Barr

Ryman Healthcare - Two Growth Engines to Tap

Digital Hearts Holdings is a provider of QA testing for corporate customers, the second-largest in Japan by market cap. After a volatile FY3/24,...

Forsyth Barr

Ryman Healthcare - A Bitter Pill to Swallow, But a Necessary One

At its FY24 result Ryman Healthcare's (RYM) new management and board lifted the veil on a decade plus of opaque accounting practices and half...

Forsyth Barr

Ryman Healthcare - A Painful Transition

Ryman Healthcare (RYM) downgraded its expectations for FY24 underlying earnings by -13% at the midpoint due to weak new sales volumes and...

Forsyth Barr

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