Growth Focus: Lifestyle Communities Ltd (LIC)

by Patrick Taylor

Date of Data Capture: 7/6/2018
Classification: Real Estate: Aged Care Living
Current Price: $5.85
Market Capitalisation: $595M
Forecast EBITDA Growth: 18.57%
Yield Estimate: 0.70%
Consensus Price Target: $6.17
# Covering Analysts: 2
Discount at Current Price: 5.47%
Price Target Trend: Increasing-Flat
Signal Timeframe: Monthly-Weekly-Daily
TrendBias: Up-Flat/ Long-Short

Short-term: Positive
Medium-term: Positive-Neutral
Long-term: Positive-Neutral

Focus:Capital Growth
Set up Notes:
·    It may not seem like it but LIC just went through a significant pullback and should be entering a new leg on its five-year 500% long-term uptrend.
·    The last two times this happened was in 2016 and in 2013 and in both occurrences the stock returned to renewed growth and further gains.
·    A strong performer for years, LIC had earnings growth of 40% last year and has increasing sales, margins and profits forecast out to 2020.
·    The price has been running hard in recent weeks and we could see some volatility before cracking $6 resistance overhead, so there could be some useful dips coming for opportunistic entries.
·    No further resistance levels remain above $6.00 and there is good support layered down between $5.50, $5.00 and $4.50 if needed.

Growth Focus: Lifestyle Communities Limited (LIC)       

Our primary focus here is capital gain, we will select our stocks from the ASX Top 500 All Ordinaries Index.

When we search for good investment opportunities we often look for strongly performing companies offering favourable entries off fresh growth signals, but they don’t always look like bargains at first. This is sure to be the case here as we take a closer look at Lifestyle Communities Limited (LIC), currently priced just beneath all-time highs but looking like it has plenty of life in it yet.

Starting out in 2003, Lifestyle Communities develops and operates secure, gated and low-maintenance resort-style retirement villages catering to the over 50 across Victoria and is based in Melbourne. Lifestyle Communities has grown to become one of Australia’s largest aged care property operators, currently managing 16 communities with over 2,800 homeowners, and also have around 1,600 homes being developed and remain wide open for further organic expansion.

General strong growth is expected in this sector catering to Australia’s expanding retiree population and more specifically the aging Boomer demographic. It is this large age group that has defined so many investment trends over the decades and it is now feeding a growth phase in this industry expected to continue for at least the next few decades.

Our positive view is bolstered by LIC showing improved earnings guidance this year, up more than 20% so far in 2018 with analysts majority positive in sentiment. This broad-based aged-sector strength is reflected in forecasts with strong gains seen across sales, margins and profits through to 2020. This is in addition to the current 5% discount to sharply rising aggregate price targets, and should see a steadily increasing dividend yield add to an already vigorous fundamental outlook.

Pricing history tells a happy tale of expansion with the price rallying by over 500% since 2013 and looks set to travel further with a successful test of support near $5 after a sharp 23% fall from recent highs just below $6. Signal correlation in the monthly-frame is good and the signal we are following here has been seen twice before now, in 2013 and 2016 with the third coming this month as pricing rallied hard off $5 support after failing to crack $6 on the first attempt. We view any dips back from this resistance level as ideal for favourable entries.

With aggressive forecasts in front of them and a cresting wave of an aging population behind them we think LIC is still firmly on the growth path and should offer further gains before this long-term uptrend reaches its full maturity.


This report was produced by Taylor Securities Pty Ltd, which is a Corporate Authorised Representative (Number 414063) of Bespoke Portfolio Pty Ltd (AFSL 341991). Taylor Securities and Patrick Taylor (Representative number 414064) have made every effort to ensure that the information and material contained in this report is accurate and correct and has been obtained from reliable sources. However, no representation is made about the accuracy or completeness of the information and material and it should not be relied upon as a substitute for the exercise of independent judgment. Except to the extent required by law, Taylor Securities and Patrick Taylor does not accept any liability, including negligence, for any loss or damage arising from the use of, or reliance on, the material contained in this report. This report is for information purposes only and is not intended as an offer or solicitation with respect to the sale or purchase of any securities or financial products. The securities or financial products recommended by Taylor Securities and Patrick Taylor carry no guarantee with respect to return of capital or the market value of those securities or financial products. There are general risks associated with any investment in securities or financial products. Investors should be aware that these risks might result in loss of income and capital invested. Neither Taylor Securities and Patrick Taylor nor any of its associates guarantees the repayment of capital. WARNING: This report is intended to provide general financial product advice only. It has been prepared without having regarded to or taking into account any particular investor’s objectives, financial situation and/or needs. Accordingly, no recipients should rely on any recommendation (whether express or implied) contained in this document without obtaining specific advice from their advisers. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. Where applicable, investors should obtain a copy of and consider the product disclosure statement for that product (if any) before making any decision.

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