How is it better than its competitors?

Ingenia believes it has around seven competitors of comparable scale across Australia, operating in the tourist park/manufactured home estate business. Two competitors are ASX-listed and would share Ingenia’s flexibility in sourcing equity capital from the ASX for the purpose of expansion. Each model varies in its stage of maturity, geographic footprint and ultimate strategy. Ingenia has targeted the South East corner of mainland Australia, being the biggest operator in NSW today. Its model remains relatively immature.

What do you like about its management?

We are very familiar with CEO, Simon Owen, from his days running listed, retirement home operator, Aevum (ultimately bid for by Stockland). He was also, until recently, the national president of the Retirement Villages Association, so he has great empathy with the aged care and seniors-living industries.

What is your target price?

We do not tend to set price targets for our investments, preferring to assess our appraised valuation of the business, relative to the share price at a given point in time. When the underlining fundamentals are deemed expensive, then our process cycles us into counters offering better relative value.

At what point would you sell it?

Naturally, if valuation became excessive in our eyes, then we would look to trim our exposure. If we believed that the MHE consolidation story was maturing, with less and less desirable properties available, then this might prompt us to revisit the investment thesis. Additionally, the model is potentially exposed to regulatory change (i.e. changes to Federal government rental assistance), so our ongoing vigilance here will be important.

Eley Griffiths Group Pty Limited (‘EGG’) is a boutique fund manager specialising in Australian small companies. It is jointly owned by Brian Eley and Ben Griffiths, former small companies’ portfolio managers at BT Funds Management and ING Investment Management.