A note re Aveo
During the week, the ABC show Four Corners released a piece about the aged-care sector, and the government announced a Royal Commission into aged care.
As mentioned in What Matters above, this resulted in the share price of the major listed players in the sectors being smashed (which could end up being rather short sighted; if the Royal Commission is given adequate scope i.e. terms of reference and does its job, the structural flaws and funding of the sector will be addressed, including allowing both not-for-profit and for-profit players to generate adequate returns and thus expand to meet future need – which is not happening now. Sorry I got side-tracked.)
Whilst aged-care is not the same thing as retirement living (and it is subject to a high degree of government regulation and government funding) Aveo’s security price was also impacted (-7.2% on the day of the Commission announcement). Aveo does have a limited exposure to aged care – as part of increasing its holistic approach to care (providing a continuum of care from independent living to supported living to aged care at the same village). As at 30-Jun-18, it had 406 beds at five of its facilities (i.e. not a significant part of Aveo’s overall operations), with no new beds planned for FY-19 and 850 beds planned for FY-20 and beyond.
Thus we see Aveo’s share price reaction as not warranted – certainly not to the extent it was impacted.