Shareholding Review: Japara Healthcare (ASX:JHC) 2016 results

By | October 21, 2016

shareholding-review-japara-asx-jhc-2016-results-dividends-down-under-blogAuthor: Mr and Mrs DDU.

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Every six months Australia has a reporting season; nearly all the major companies on the Australian Stock Exchange report their full-year financials at the end of the tax/financial year (the financial year ends on the 30th June). So we get a busy few weeks of company reports to read in August (as well as the half-year result in 6 month’s time). We find it the most exciting time of year (for shares) because we get to see how our companies have actually performed. For 363 days of the year, the share price moves up and down whilst bearing no correlation to actual results, but on the 2 reporting dates the truth is revealed.

 

Since we bought Japara Healthcare (ASX:JHC) (aged care operator) it’s been a mixed bag. Let’s have a look at what they’ve achieved in their results.

 

Japara Healthcare (ASX:JHC) full year results ending 30th June 2016

All these figures are taken directly from Japara’s annual investor presentation and are comparing against the 2015 figures.
Revenue up 16.4% to $327.3m
Earnings Before Interest, Tax, Depreciation and Amortisation up 10.9% to $56.1m
Net Profit After Tax (NPAT) up 5.6% to $30.4m
Dividend up 4.5% to 11.5 cents per share

 

Initial thoughts
It’s always good when there are increases across the board. We want Japara’s  revenue, NPAT and dividend to be increasing, which they have done over the last year.

Japara is expanding their business through acquisitions, renovations of current buildings and construction of more aged care beds for the elderly. Obviously the more beds Japara has, the higher potential revenue.
There has been a lot of talk about funding reductions for aged care. The Government is reducing the speed of increases to funding and cracking down on aged carers claiming excessive money for their guests – Japara’s industry is being rocked. We hope to be very long-term, happy shareholders of Japara as the demographic changes over the next 25 years should benefit them substantially. Hopefully, good things come to those that wait.

 

Investment breakdown
If you’d like to see Japara’s dividends over the last few years, check out their ASX and dividend page (which is one of resources we use when checking out stocks).

Here is a graph showing the dividend yield we’re receiving on the initial cost of our 762 Japara shares.

japara-october-2016-dividend-yield-on-cost-dividends-down-under

We are pretty happy with this growth. It’s showing we’re earning extra money

Japara activated a dividend re-investment plan in the last half-yearly results, which we signed up to. In May 2016 we received another 15 shares. We will re-invest Japara dividends for the foreseeable future.

 

What other things did Japara report?
They said they expect 2017’s Earnings Before Interest, Depreciation and Amortisation to increase at a similar rate to 2016. Considering it grew by around 10%, another 10% growth would be welcome.

They’re also expecting a low digit increase in funding per resident, although it’s disappointing that the funding is less, it’s still extra funding.

Japara currently has 3,717 operational beds/places across all their facilities. By 2019 they expect to add an extra 1,000 beds/places, by 2025 they want to have an additional 2500 places. So there’s a fair amount of potential growth there.

 

Final thoughts
The Australian population aging is an undeniable change. It’s impossible to say what the share price and dividends will do in the short term, but hopefully in the long term Japara turns out to be a good one for us. Though we need to keep our eye on what changes are made to Government funding and how Japara deals with that.

We’re going to keep re-investing our dividends and see where that takes us in the future.

 

Thanks for reading this article about our investing journey Down Under.

Onwards and upwards!

11 thoughts on “Shareholding Review: Japara Healthcare (ASX:JHC) 2016 results

  1. Team CF

    Seems like a good investment, and your yield is pretty sweet for this one! The business model (i.e. elderly care) should be solid as you noted, hope they can keep up profitability going forward.

    Reply
  2. Graham @ Reverse The Crush

    The Japara performance looks good!
    Can’t complain about the dividend or increase, especially when you’re going to be re-investing all dividends.
    From the sounds of it, Australia is in a similar place as Canada right now where all the baby boomer generation is going to need increased care soon. Thanks for sharing 🙂

    Reply
    1. Dividends Down Under Post author

      Yeah the numbers weren’t bad at all. Long-term it should play out nicely, you’re right Australia and Canada are very similar in a lot of ways. The oldest boomers are just getting to that age where they need care, so you’d think the places needed will keep growing for a long time to come 🙂

      Mr DDU

      Reply
  3. AustralianDividendInvestor

    This industry has been a bit frustrating of late. Of course they should benefit from the long term trends driving elderly care. Unfortunately, theres so much uncertainty surrounding government support, so I’m avoiding it for now.

    Having said that, I think you own the pick of the litter. At least you didn’t get stuck with Estia!

    Reply
    1. Dividends Down Under Post author

      You’re right, at least it wasn’t Estia 🙂

      We’re happy to re-invest the dividends for now, so hopefully over the long, long-term all of this has blown over and it’s a solid, grown investment in many years time.

      Mr DDU

      Reply
  4. My Money Design

    I’m a big believer in Healthcare related stocks and funds. After being in management for a number of years and watching our healthcare costs for the employees go through the roof, the only smart place to be is on the other side of the table as the money gets handed over.

    Reply
  5. Mustard Seed Money

    Based on what you’ve reported it looks like you have a winner. While short term it may be a little volatile, I think you’ll be happy based on your long term analysis. Congrats on the awesome pick!!!

    Reply

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