Care to make money? Buy Aged Care

Care to make some money?….Then BUY into Aged Care.

I think it is time to start investing in the aged care sector as a bit of value has emerged. Estia Health (EHE) is the one that stands out to me.  In 2015 EHE was trading above $7.00; today just $2.70.

Recently Estia reported a pretty good result and locked in a net profit of $41mil for the last Financial Year.  The company has debt of just $110mil vs a market cap of $741mil and a $200mil line of credit at its disposal. Estia trades on a juicy yield of over 5% fully franked; not too shabby in this low interest rate environment.

Portfolio

The Aged Care Royal Commission interim report will be handed down on the 31st of October.  In my view it is not in the best interest of the community to damage the sector any further and I am hoping that one of the recommendations will be more financial support for incumbents that are playing by the rules.

Operators that are doing the right thing should be rewarded and actually get promoted within the report.  We should clearly get to know who the good guys are and based on the below it looks like Estia is one of them.

Quality and Accreditation

There is plenty of fat backing the stock with Estia owning the freehold on 62 of 69 sites. Below are a couple of recently finished centres. They look pretty good to me….

Delivering Growth

There is room on the balance sheet to fund their growth pipeline, plus management say there are a quite a few centres up for sale…..  

Underway

You are kidding yourself if you don’t think you will end up in one of these facilities.  So you may as well invest in Estia now to help pay for your future bed. The more money you have the more comfortable that bed is going to be.

Remember what that banks did post Royal Commission (they took off). The same is likely to happen with aged care stocks. BUY EHE – Last sale $2.70

 

 

 

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