IML looks past aged care troubles
Investors Mutual is retaining its exposure to aged care provider Regis Healthcare despite the troubles in the sector during the pandemic.
Aged care hit the news in recent months as the COVID-19 pandemic swept Australia and homes were forced to go into quarantine as over 200 residents passed away.
Shares in Regis Healthcare, one of Australia’s largest aged care providers, fell 50% since the start of the year compared to losses of 8.9% by the ASX 200 and 3% by the ASX Small Ordinaries index.
In its full-year results for the year to 30 June, 2020, Regis said it had encountered COVID-19 in “several of its Victorian homes” but that the firm was “in a strong position” to respond. Direct COVID-19 costs such as cleaning and protective equipment were $3.5 million.
IML Australian Small Companies fund manager Marc Whittaker said the firm’s full-year results had been a “disappointment” but that he was reassured by the Government’s actions on the sector. There was currently a Royal Commission into the Aged Care Quality and Safety which was due to provide a final report in 26 February 2021.
Whittaker said: “Regis is a reasonable weight in the fund and it was a bit of disappointment in reporting season. It is one of the pre-eminent aged care providers. It was a tough result in an industry that is going through a tough time.
“But we take comfort from aged care and the quality and degree of funding going into this sector is front of mind for the government and community currently.”
There were no funds in the Australian Core Strategies universe which held Regis Healthcare in their top 10, according to FE Analytics.
The IML Australian Small Companies fund had lost 7.6% over the year to 31 August, 2020, versus returns by the Australian small and mid-cap equity sector of 7.8%.
AUTHOR
Laura Dew
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