Sienna Senior Living Inc. (TSX: SIA) is a leading Canada-based seniors’ living provider. The business offers a full range of seniors' living options, which includes independent living, assisted living, long-term care, and specialized programs and services while the group also provides expert management services. For Q1FY19, the group reported Average occupancy in LTC at 97.9%.

The Board of directors has announced a quarterly dividend of CAD 0.078 per common share, payable on May 29, 2020.

Q1FY20 Income Statement Highlights: SIA declared its quarterly results, wherein the Company posted revenue of CAD 166.43 million, as compared to CAD 163.66 million in pcp, due to softness in occupancy, partially offset by higher in-place annual rental rate as per market conditions. Income before net finance charges, transaction costs and provision stood at CAD 14.40 million, as compared to CAD 12.62 million in the previous corresponding period, thanks to improved revenue and lower administrative expense. The quarter was marked by a spike in total other expenses at CAD 17.79 million, as compared to CAD 12.33 million in pcp, due to a drastic increase in net finance charges and a higher transaction cost. The increase in the net finance charges was primarily due to a fair value loss on interest rate swap contracts. Net loss during the quarter stood at CAD 2.49 million, as compared to a net profit of CAD 442 million. The Group exited the quarter with cash and cash equivalent of CAD 60.98 million and total assets of CAD 1,718.72 million.

Q1FY20 Income Statement Highlights (Source: Company Reports)

Stock Recommendation: The business model of the Company depends on the growth rate in the population of senior citizen. The long-term view of the business remains positive due to the ageing population in the country. The Company has strengthened its balance sheet during the past eight quarters and reported a lower debt to gross book of 46.9% in Q1FY20 from 49.4% in Q2FY18. Meanwhile, the interest coverage ratio improved to 4.2x as at Q1FY20 from 4.1x as at Q2FY18. The stock is trading at an EV to sales of 12.4x on NTM basis, as compared to the industry median (Healthcare provider and Services) 17.7x. The stock offers a dividend yield of 8.83%, which is commendable looking at the current interest rate environment. Considering the aforesaid facts, a resilient business model and demographic potential, we remain upbeat on the stock. Hence, we recommend a ‘Speculative Buy’ on the stock at the current market price of CAD 11.20 as on May 19, 2020.

One Year Daily Price Chart, Source: Refinitiv (Thomson Reuters)

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