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JHC - Japara Healthcare

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peaceofmind

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Hi new ipo just released! largest ipo of the year

Business: Retirement homes, aged care. 3000 places.

current metrics

about $525m mkt cap
FY15 PE ratio- 19
yield - 5.4% FF(fully franked)
FY 15 growth - ~18%
no debt

Growth - development & acquisition in highly fragmented market. 3000 to 5000 places in a few years.

Considering success of ipos in healthcare or technology recently, might be worth a punt.

risks - very highly regulated & potential changes to regulation can hurt this coy. Owner cashing out a large portion of shares. 75% of income comes from government subsidies. High p/e at 19 times implies growth.

positive - very high dividend yield for healthcare stock. Solid growth prospects. Very strong demographics(aging population). Very high premium for healthcare stocks like CSL and RHC.
 
Re: JHC - Japara Healthcare IPO

just read the prospectus for the 3rd time.

it looks terrible. im going to give it a miss-

key risks-

occupancy higher in FY15 to derive higher profit forecasts. Mostly higher earnings due to occupancy higher which is a one off and unlikely to be repeated. historical occupancy isnt that high.
very highly regulated by govt.
acquisitions not much history of profit. last acquisition 60 bed facility give 1.5million revenue only. Another 110bed facility 7 mil revenue only.
not much profit in this coy
the owner vendor is blatantly taking advantage of high valuations for healthcare companies and cashing out.
 
Re: JHC - Japara Healthcare IPO

I was looking at it. Apparently hugely oversubscribed possibly due to the proposed attractive yield. Looking further I held back as I couldn't see how the group was actually going to run a profitable aged care facility without the use of accommodation bonds.
 
Re: JHC - Japara Healthcare IPO

Judd said:
I was looking at it. Apparently hugely oversubscribed possibly due to the proposed attractive yield. Looking further I held back as I couldn't see how the group was actually going to run a profitable aged care facility without the use of accommodation bonds.
Click to expand...

i ended up subscribing a tiny amount. didnt see a huge profit in the business long term.
 
Re: JHC - Japara Healthcare IPO

peaceofmind said:
the owner vendor is blatantly taking advantage of high valuations for healthcare companies and cashing out.
Click to expand...

Despite the word "healthcare" in its name, are you sure it is a healthcare stock?

It's a retirement home operator then it is more akin to a REIT.

AOG is a market leader in this space but they haven't been doing that great over the long term.

INA is in the similar space with student accommodations. Their valuation is skyhigh.
 
Re: JHC - Japara Healthcare IPO

skc said:
Despite the word "healthcare" in its name, are you sure it is a healthcare stock?

It's a retirement home operator then it is more akin to a REIT.

AOG is a market leader in this space but they haven't been doing that great over the long term.

INA is in the similar space with student accommodations. Their valuation is skyhigh.
Click to expand...

agreed it is property REIT & development at best.

INA is just a high growth property developer and not subject to regulation. valuation now too expensive.
 
Re: JHC - Japara Healthcare IPO

skc said:
Despite the word "healthcare" in its name, are you sure it is a healthcare stock?

It's a retirement home operator then it is more akin to a REIT.

AOG is a market leader in this space but they haven't been doing that great over the long term.

INA is in the similar space with student accommodations. Their valuation is skyhigh.
Click to expand...

you cant compare AOG versus JHC. AOG had GFC legacy issues from FKP property group. AOG is formerly FKP which had other assets like office and residential where it had losses.

JHC is pure play retirement home.

AOG's share price since its restructure has skyrocketed. it is more higher growth than JHC being retirement villages developments.
 
Re: JHC - Japara Healthcare IPO

Merely some observations. I note according to the financials in the prospectus, the pro forma current assets are $28M while the pro forma current liabilities (after repaying borrowings via the float) stand at $265.6M.

Of interest is that as Japara Trust has held its land and buildings as investment property it has not depreciated them. However, in the pro forma historical results it is assumed they have been held since 1 July 2011 and depreciated in line with the Company’s accounting policy that will apply going forward.

The Company has also indicated that the growth in the amount of the accommodation bond (which, unlike now, will be capped from 1 July 2014) is set at a level equivalent to approximately 50% of the median house price in the relevant Local Government Area, ie based on assumption (certainty?) house prices will increase 9and variations thereof.)
 
Re: JHC - Japara Healthcare IPO

Judd said:
I was looking at it. Apparently hugely oversubscribed possibly due to the proposed attractive yield. Looking further I held back as I couldn't see how the group was actually going to run a profitable aged care facility without the use of accommodation bonds.
Click to expand...

yield is now a miniscule 3.5% @ 2.70, partly franked only
this must be the most expensive property company on the asx.
 
One year later and price is back near all time highs.

The break-out of the small ascending triangle pattern was too tempting.

jhc2804.PNG
 
Japara stock price took a dive today on average yet consistent FY 17 results. A breakaway gap resulted and I think the reaction will be overdone and a trading opportunity will present itself. Watching.
 
So observed a small bounce today but overall market negative and North Korea playing with fire contributed (in my view) to closing below yesterdays low. Capital preservation and safety first as external forces affect the market.
 
Downgrades from estia and regis due to occupancy numbers being down across the sector. No doubt in my mind that Japara is not going against the trend. Too many small players in the industry. Might have a nibble at one of these after the reporting season has kicked them back to reasonably low valuations.
 
JHC did not rally with the rest of the market after the Covid selloff. I was non-plussed when it appeared in my pm scan and let it go. Price has bolted higher and there's no news (?). I'm guessing that the @Skate Duc-VIX system jumped onto it (circled) and is making out like a bandit.

jhc1311.PNG


Edit: I should note similar price spikes in other listed aged care companies (EHE, REG, LIC).
 
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Japara Healthcare on Friday said it had received a $1.04-a-share offer from Calvary Health Care to acquire all the shares of the owner, operator and developer of aged care homes under a scheme of arrangement.

Japara was considering the bid in the context of what it said were "expected improvements in trading conditions", along with the federal budget on May 11 as well as the government's final regulatory response to the royal commission into aged care quality and safety also expected in May.

Calvary, as a not for profit operator, at least has material advantages over potential for profit rivals, such as not being subject to payroll tax. Japara had 6064 staff on December 31.

The outcome of any tussle for Japara is unclear, but it could lead to a split of the company's operations from its real estate.
 
On November 8th, 2021, Japara Healthcare Limited (JHC) was removed from the ASX's Official List in accordance with Listing Rule 17.11, following implementation of the scheme of arrangement between JHC and its shareholders in connection with the acquisition of all the issued capital in JHC by Little Company of Mary Health Care Limited.
 
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