- Aged group fight against COVID-19 is the toughest
- The demand for aged care facilities remained unchanged during the difficult times and the company like Oceania, assured that they have enough capability to handle though fortunately they reported no case till date
- On the other hand, Ryman Healthcare used the class waiver facility to delay its results announcement in lieu of COVID-19 impact
- Though New Zealand has a strong control of COVID-19 spread by not only early detection but also by having the appropriate number of test kits and test centers
- The need for technological upgrading is important for quick detection of immunity levels – as provided by Orbis Diagnostics
Aged group people are considered the most susceptible of getting infection of COVID-19 disease, but New Zealand is well prepared to face this crisis and is focusing on the early detection of disease thereby reducing the spread. Meanwhile, on 22 April 2020, the Ministry of Health New Zealand has approved point of care test kits for COVID-19 that would be able to import and sell across the country.
There are two primary test kits for COVID-19 - one is the Polymerase chain reaction (PCR) test that is used by the Ministry of Health that uses tissue sample for detection of the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The second test kit can be used at home or workplace known as point of care testing uses blood sample for detection of antibodies
Additionally, one Bio-science start-up Orbis Diagnostics in New Zealand is providing a fast-track solution to reveal immunity of a person to COVID-19. As countries after the COVID-19 lockdown are now looking to restart their economies and re-enable global movements, the only thought they have is to permit safe movement through borders- international and regional for people who are immune to COVID-19. This new technology developed by Orbis will help to detect whether they are currently infected or does a person has immunity to SARS-CoV2 or not.
The aged care homes are clearly under huge pressure at this time of crisis as old age people are more vulnerable to catch the infection. However, the safety standards and the service deals between district health boards and aged care service indicate high-level of care, with the intent of maintaining freedom as well as social lives for residents. Let us delve deep and discuss aged care services in New Zealand focusing on two NZX listed stocks- OCA and RYM
Aged care home in New Zealand
The biggest problem New Zealand confronts is the attitude that the country has triumphed over COVID-19 pandemic and this time providing care to the most vulnerable group of people is important. Even though the countrymen are now relaxed and enjoying the transformation back to normal life after been given the new found freedom of Level 2, the only group which needs to be more careful going forward is the old people leading aged care homes to be more vigilant.
On 21 May 2020, New Zealand Aged Care Association (NZACA) advised to aged care homes on COVID-19 Alert Level 2 in New Zealand. For aged residential care, most restrictions are at the discretion of the provider. The NZACA mentioned that best practice for prevention and control of infection is to be maintained. The association also suggests providers take a risk management method using clinical judgement.
The NZACA has provided specific advises for aged care homes such as screening form should be completed before admission, restrictions for visitors, residents can go out but have to follow physical distancing measure.
Let us now discuss two NZX-listed aged care service providers- OCA and RYM
Oceania Healthcare Limited (NZX:OCA)
New Zealand based company Oceania Healthcare Limited is a developer of new aged care and retirement villages facilities. The existing portfolio of the Company includes a substantial brownfield developmental pipeline across New Zealand. Oceania has a total 46 sites of which 24 are existing sites with mature operations, 20 are existing sites with brownfield developments and two are undeveloped.
On 7 May 2020, the Company updated the market with its Macquarie Conference Investor Presentation. In its presentation the company highlighted the increasing demand for aged care and stated that it is set to more than double in the next 20 years-
COVID-19 Update- Oceania stated that the status of essential service provider and defensive care earnings stream ensured the Company is positioned to weather impact of COVID-19.
In addition, OCA disclosed that Aged care operations deemed as an essential service and continued throughout lockdown. The operations responsible for care of resident population with heightened vulnerability to COVID-19. Notably, Oceania has not reported any case of COVID-19.
The retirement village operations received good unit sales prior to lockdown but not able to settle sales application during lockdown. However, sales were able to recommence after lockdown and the existing applicant’s intent to complete the settlement as soon as possible.
Oceania is Well positioned to weather COVID-19
The Company specified that it is well positioned operationally as well as financially to withstand COVID-19 while delivering the highest level of services and remains to progress growth initiatives. Moreover, the occupancy remained stable during lockdown and Oceania anticipates the settlement of sales to recommence after lockdown.
Oceania stated that demographics driving demand remain unchanged in the aged care sector as many New Zealanders are set to retire and would require aged care home.
On 25 May 2020, OCA stock closed the day’s trade at $0.830 up by 3.75% with a market cap of nearly $510.36 million. The gross dividend yield of the stock remained at 6.125% and its P/E ratio was noted at 11.990x.
Ryman Healthcare Limited (NZX:RYM)
NZX-listed aged care service provider Ryman Healthcare Limited was founded in 1984, owns and operates 36 villages across New Zealand and Australia, which are home to more than 11,600 residents. With nearly 5,700 employees Ryman has become one of the largest listed companies in New Zealand.
On 8 May 2020, the Company announced that full year results for the financial year ended 31 March 2020 would be released on 12 June 2020.
On 19 March 2020, NZX Regulation approved a class waiver by seeing the COVID-19 situation. Under this waiver, the time requirements for releasing results announcements and yearly reports have been extended for issuers with specific balance dates, if they consider that additional period is required for meeting these periodic reporting requirements.
Ryman has contemplated the effect of coronavirus pandemic and determined that further time is required to meet the periodic reporting requirements. Therefore, Ryman would count on the class waiver by NZX regulations with respect to the announcement of its full year results for the year ended 31 March 2020.
On 25 May 2020, RYM stock closed the day’s trade at $12.500 up by 0.97% with a market cap of $6.2 billion. The gross dividend yield of the RYM stock stood at 1.890% and its P/E ratio was noted at 17.960x.
NOTE: Currency is reported in NZ dollars unless otherwise indicated.