RYM - Ryman Healthcare

[Rob Optimist]

What's happening with Ryman guys?

[couta1]

What's happening with Ryman guys?
Has been under MA200 for a while and has had no news for some time may have to wait till closer to next set of results to see any significant price increase, notice that Sum also testing the old $3.20 level again after its lastest set of good results both stocks at around the price they were 2 years ago so pretty stagnant overall.

[percy]

Ryman share price is looking weak trading at $7.79 today, which is under both the 50 day EMA [moving average] $8.10, and the 200 day EMA $8.03.It did drop to $7.22 on the 17th October last year.Will be interesting to see if it tests that price again.
The full year result is due mid May.

[777]

Not a dividend yield company. That appears to be where the money is going at present.

[Rob Optimist]

Thanks for the info, see what happens I think

[Snow Leopard]

(posted on 20-Mar-2014)
5606
YoY for specified time period
(SP accuracy not guaranteed)

Best Wishes
Paper Tiger

7211

Happy Anniversary
Paper Tiger

[kizame]

Of the super charts menu on ANZ securities, performance for the 2 years to 18 February 2015
SUM up 24%
MET up 51%
RYM up 74%
NZX50 up 37%
and just to put the sector into context because I think the whole sector has run too hard and PE's are really stretched...here's a couple of stocks, still with very modest PE's notwithstanding recent performance for comparison
HNZ up 91%
AIR up 109%

Hmmm...does performance for the last five minutes really matter...or should we focus on the quality of the management and their ability to execute well over time and whether a stock's PE multiple is stretched or not ?

PE s really stretched? Crikey I don't think so mate,look at the growth potential of RYM and a pe of 17?

Actually they are pretty good value in my books,but of course timing with the help of charts is key.

[Beagle]

Underlying earnings is what counts. Underlying earnings takes full account of all income actually earned in the year including the resale of occupation licences during the year at higher values than they were previously sold for and takes into account all realised development margins and any income these companies make from the actual operation of their villages, which in SUM's case is ostensibly nothing. International financial reporting standards (IFRS), requires property companies to declare income inclusive of the revaluation of all property to current market value each year. This gives a false view of earnings as values can track up, down or sideways and no matter which way they track the company doesn't actually earn money on the unit value changes until the year in which they are subsequently resold.

Simply put, a profit isn't a profit until it is actually realised. IFRS accounting standards accounts for unrealised profits which may not in fact be earned for a decade out or potentially even longer when the unit is eventually vacated and resold to another occupier.

SUM are the best of the bunch at clearly articulating the difference between accounting methodologies...LOL at least they get that right. RYM and SUM on circa 30 times underlying earnings and MET on about 18.

In my opinion RYM and more especially SUM have got a bit ahead of their fair value and we may now be in a long slow grind of under-performance while earnings growth slowly catches up to the SP. Both stocks have significantly under-performed the market in the last year and I expect they'll continue to under-perform for at least one more year, probably significantly longer. Its interesting to note consensus 12 month broker price targets are very close to where SUM and RYM are currently trading whereas consensus for MET is circa $5.80 v the current SP of $4.75. Clearly on a discounted cash flow basis the brokers are using MET is the only stock in this sector to offer any real value.

Disc - Own MET. Happy to wait indefinitely for $6.50 for RYM. Most likely in my opimnion is RYM won't go down to $6.50 but will track sideways and with earnings growth over the next year or two will probably be fair value around where they are now, in due course. For those that want (for whatever reason), to use IFRS earnings its worth noting that while RYM is on 17 times IFRS earnings MET is on about 9.

[kizame]

Hmmn very interesting Roger,well I'll continue to watch the charts and see when either the sideways stall has ceased,or the slow trek down has turned.

[Vaygor1]

Gee this share must still be extremely boring.

FY announcement in 2 days and not a word on this thread in the past 2 months.

That $6.50/share looking more and more elusive Roger. :)

My forecast... Underlying profit up around 17% on previous year and a divvy of 7.2c/share for H2 (Total of 13.5c/share for the full year).

Disc. Still a happy holder.

[couta1]

Record profit 136 Million, best of breed aye.

[winner69]

Record profit 136 Million, best of breed aye.

That $240m plus profit pretty good as well next year over $300m ....amazing

With new builds and even morevsupersized revaluations to come next

Still slightly overvalued but time will sort that out in due course.

[Bjauck]

Record profit 136 Million, best of breed aye.
“Our first village in Melbourne is one of our fastest selling ever. We’ve got ample proof that our expansion into Melbourne was the right thing to do.''
Many commentators had doubted their expansion into Australia. So the good Doctor must have enjoyed stating that!

[couta1]

“Our first village in Melbourne is one of our fastest selling ever. We’ve got ample proof that our expansion into Melbourne was the right thing to do.''
Many commentators had doubted their expansion into Australia. So the good Doctor must have enjoyed stating that!
As we all know cracking the Aussie market is no mean feat so all kudos to them and you've just gotta love the Ryman management team an example for( Sum )others to follow:cool:

[Beagle]

As we all know cracking the Aussie market is no mean feat so all kudos to them and you've just gotta love the Ryman management team an example for( Sum )others to follow:cool:

LOL, classic post mate. I reiterate my previous viewpoint that what matters most is underlying profit, a fact the company itself points out is the relevant measurement basis. (BUT see below)
Underlying profit is $136,316,000 which on 500,000,000 shares, (good they see no need to issue vast swaths of shares to directors and management on really cheap advantageous terms so that the CEO can subsequently sell them using inside knowledge like SUM companies do), so underlying EPS is 27.26 cps and on $8.10 odd last time I looked the PE is 29.71. Decide for yourself if this is value or not.
For me I recognise this is without any question whatsoever the best of breed and one of N.Z.'s premier growth companies, incredibly well managed and operating is a sector will strong demographic tailwinds.
Unfortunately all those factors are already priced into the current SP in my opinion BUT its interesting to note that using the Ben Graham valuation formula, (and note this is one of the very very few companies that you can reliably count on a sustained g number for this formula where v = eps 27.26 x (8.5 +2g, where g = 15%) we get $10.50.

Its also possible to make the argument that underlying EPS is a very conservative, (yes accountants are conservative) way to measure EPS.
You could argue with some degree of validity that at the very least housing goes up in line with inflation and in line with generally rising construction costs so some degree of the annual revaluation is baked into the core of this model i.e. say 2% underlying increase per annum on their asset base, (I use 2% as a proxy for estimated long term inflation and increase in build cost).
Now I need to look at their asset base and add 2% annual growth as part of earnings and we get...
Asset base, quick look off the analysts presentation is $3.3b. Fair value movement in investment properties 2015 $217.6m last year $174m.
If one took the view that 2% of growth in the asset base is baked in each year, (rather than subject to various ups and down of the property cycle), over the very long haul through inflation and rising construction costs, (which seems a fair viewpoint to me given the 100+ years of data on house price inflation we have in N.Z. then you could make the argument with a fair degree of credibility that earnings of $66m in revaluations on average over the property cycle are fairly certain each year and therefore adding that into underlying earnings we get underlying earnings $136.3m plus baked in inflation based revaluations of $66m = underlying earnings of $202.3m. This gives EPS of 40.46 cps and puts the stock on a trailing PE of 20.

I think this post is a Eueka moment for me in understanding the fundamental shareholder value drivers of this company.

Putting that 40.46 cps into the Ben Grahame valuation formula gives a fair value of $15.57. Hmmmm

Disc just bought a modest shareholding.

I'd be interested in others viewpoint on the theory of long term baked in revaluations through inflation and rising construction costs, does that seem a legitimate theory to include those with underlying profit or does underlying profit already adequately capture those gains anyway through the resale process when units change hands every 7 years or so ? Thoughts ?

[Vaygor1]

I think this post is a Eueka moment for me in understanding the fundamental shareholder value drivers of this company….

I'd be interested in others viewpoint on the theory of long term baked in revaluations through inflation and rising construction costs, does that seem a legitimate theory to include those with underlying profit or does underlying profit already adequately capture those gains anyway through the resale process when units change hands every 7 years or so ? Thoughts ?

Hi Roger and thanks for the post.

You viewpoint offers a different way of looking at how I have viewed Rym's worth using a component of unrealised gains and (I think) we end up with a similar outcome. I guess for me, the question is "How much of the unrealised gains can I legitimately put in the 'bank' now?". In attempting to work out a reasonable present and future RYM share price (given a rational market), I think to answer "None" is unrealistically conservative, just as answering "All" is fraught with danger. The right answer is likely to be (as usual) somewhere in-between.

There are two elements about RYM and the retirement sector in general that my mind keeps going back to :-
1. You have honed in on the 7-year tenure. Given any datum point in NZ's history, house prices anywhere in the country have never ever been cheaper 7 years on. Time irons out the bumps and 7 years has proven itself to be long enough. So, as you have pointed out, something should be added to take this into account when evaluating RYM.

2. Predictability. The 7-year ironing out period means that the amount one might adjust for, by including the baked-in part, is 99.99% going to be a positive number, and a 7-year look-ahead provides (for me anyway) a greater level of certainty in choosing a number than a look-ahead of say 1,2, or 20 years. This predictability, along with the ease of forecasting (almost knowing) RYM's future results due to their uniform growth pattern over 15 years must also be worth something.

Both of these components are pretty hard to quantify, but the method you have recently employed appears to be as valid as any.

[Vaygor1]

p.s. today's market action seems to reinforce Roger's comment that today's announcement was already priced in. SP is flat now from this morning.

You may well be right. No surprises from RYM again... but I wonder if the growth projections announced today will buoy them up to over $9 again once the insto's digest the info. Will take a few weeks before we know. Additionally, many overseas investors yet to wake up... only 5am in the UK at the minute... could potentially impact tomorrows price but not overly likely I think.

[couta1]

You may well be right. No surprises from RYM again... but I wonder if the growth projections announced today will buoy them up to over $9 again once the insto's digest the info. Will take a few weeks before we know. Additionally, many overseas investors yet to wake up... only 5am in the UK at the minute... could potentially impact tomorrows price but not overly likely I think.
More the Macro picture Vaygor than Ryman specific ( See my comment re Ryman over on the Bull cycle thread) the NZX is in correction/consolidation mode currently IMHO. Ryman share price went from $3 odd up to $6 odd in fairly smart order so maybe it will have a another good step up after this quiet period, I don't believe the latest report and outlook is built into the current price. Another good thing about Ryman is that they are making these record profits whilst spending mega bucks on refurbs and upgrades to some of their facilities, I know of one of their villages where they are spending over 3 million currently doing this, that's what I like they keep the value of their properties high with a proactive approach and that goes for everything they do right down to modernizing their staffs uniforms etc.

[Beagle]

Hi Roger and thanks for the post.

You viewpoint offers a different way of looking at how I have viewed Rym's worth using a component of unrealised gains and (I think) we end up with a similar outcome. I guess for me, the question is "How much of the unrealised gains can I legitimately put in the 'bank' now?". In attempting to work out a reasonable present and future RYM share price (given a rational market), I think to answer "None" is unrealistically conservative, just as answering "All" is fraught with danger. The right answer is likely to be (as usual) somewhere in-between.

There are two elements about RYM and the retirement sector in general that my mind keeps going back to :-
1. You have honed in on the 7-year tenure. Given any datum point in NZ's history, house prices anywhere in the country have never ever been cheaper 7 years on. Time irons out the bumps and 7 years has proven itself to be long enough. So, as you have pointed out, something should be added to take this into account when evaluating RYM.

2. Predictability. The 7-year ironing out period means that the amount one might adjust for, by including the baked-in part, is 99.99% going to be a positive number, and a 7-year look-ahead provides (for me anyway) a greater level of certainty in choosing a number than a look-ahead of say 1,2, or 20 years. This predictability, along with the ease of forecasting (almost knowing) RYM's future results due to their uniform growth pattern over 15 years must also be worth something.

Both of these components are pretty hard to quantify, but the method you have recently employed appears to be as valid as any.

I think regardless of how you measure the underlying earnings in terms of valuing this stock one thing is for absolute certain. There is not a single other company that has built the extremely long and highly credible and predictable growth record RYM has and their management are extremely well regarded in the investment community. This is arguably the only company you can really be quite confident about in terms of its consistent growth rate which arguers well for the validity of valuing this company using the aforementioned Benjamin Graham formula. The stock has had a very quiet 12 months and in my view this is as good a time as any to re establish a portfolio position. The key with this puppy is to put it in the bottom drawer and forget about it.
Not a cheap stock but then again genuine quality is never cheap is it :)

[couta1]

Good to have you back on board Roger, now you hold MET and RYM you wouldn't be thinking of adding SUM other one to your portfolio now would you:cool:

[Beagle]

Good to have you back on board Roger, now you hold MET and RYM you wouldn't be thinking of adding SUM other one to your portfolio now would you:cool:
LOL not unless SUM one puts a gun to my head :) Nope, I only invest in companies with boards and management that have an absolutely impeccable record of integrity.
First class management and top quality boards and governance will always create more value over time than any other single factor IMHO. As Mercedes-Benz say "The best or Nothing" although I am not too sure about them anymore but that's another story for another time.

[winner69]

Ryman another great year with earnings (underlying) up 15% plus

That should have added $1.34 to the share price

But the market thought Ryman was way overvalued and took $2.25 away.

From March 14 to March 15 share price down $0.91, in spite of Ryman making heaps more money.

Market reratings down can be painful. Ryman still at historically high multiples ......the rerating might just continue

[couta1]

Ryman another great year with earnings (underlying) up 15% plus

That should have added $1.34 to the share price

But the market thought Ryman was way overvalued and took $2.25 away.

From March 14 to March 15 share price down $0.91, in spite of Ryman making heaps more money.

Market reratings down can be painful. Ryman still at historically high multiples ......the rerating might just continue
Just goes to show how intelligent the market really is aye, pass another Tui mate.

[James108]

Where do you see fair value then Couta, and how long do you expect current growth to last? You seem to know better than the market.

My very simple model has 13% growth p.a for the next 20 years and 2% growth thereafter at a discount rate of 10%. Gives fair value at around $9.50, I think the market has it about right.

Keep in mind if Rym grows at 13% for the next 20 years it will we 11.5 times the size it is now, which means it will probably be expanding further abroad than aus. However due to company history and well established demographics peaking in 20-30 years Rym is probably the only company I would project such growth over such a long term.


IMHO, underlying earnings is the only truly relevant metric for this sector. Unrealised gains are already captured in the projected growth rate of future profits and therefore do not need to be added back in. Doing so leads to double counting and is unhelpful for valuation purposes.

I agree with this and only use underlying earnings, as newguy says unrealised gains are taken into account with the growth forecast.

[couta1]

James like yourself I see growth continuing for a similar timeframe at a rate ranging between 15-18% per year but after that I see a stagnant growth period as occupancy rates fall post the baby boom peak and then the stock will become more of a dividend play IMHO. Re the market remember this is the same market that took the likes of Xero to $45 last year so is very fickle and often wrong and I believe is in a correction phase at present otherwise I think Rymans price would be sitting at around the $8.50 range post its results.

[Beagle]

Great retirement planning stock and one of the very few you can be really confident about regarding the consistency of their long term growth rate. Someone in their fifties need look no further. Buy $100K of stock now and retire in one of their new units in 20 years using the proceeds of the sale of RYM shares. Investing doesn't get any simpler than that :)

[couta1]

Meanwhile the SP is back to where it was when I sold out last February... :)
Ditto for Summerset;)

[Harvey Specter]

Meanwhile the SP is back to where it was when I sold out last February... :)I sold out July 14. Cant see a reentry point yet.

[couta1]

I sold out July 14. Cant see a reentry point yet.
Anytime at these levels if your going long,went to $7.22 and I doubt you'll see it there again unless some major macro event unfolds.

[gv1]

Very soon... NZ economy on borrowed time. Greece can't repay.... needs extension before defaults.

[stoploss]

Very soon... NZ economy on borrowed time. Greece can't repay.... needs extension before defaults.
Greece doesn't owe us any money .

[Harvey Specter]

Greece doesn't owe us any money .Only the NZ Super fund would be dumb enough to invest in the PIIGS!

[gv1]

Greece doesn't owe us any money .[/QUOTE]
yeah right.... but that's the start of things to have an effect. As investors I don't think we are not dumb to know the effects..
Problem is that people doesn't learn....Aussies did the same....stiff necked and now the repercussions of it.

[Beagle]

Greece doesn't owe us any money .
yeah right.... but that's the start of things to have an effect. As investors I don't think we are not dumb to know the effects..
Problem is that people doesn't learn....Aussies did the same....stiff necked and now the repercussions of it.

There's always something to worry about in the world at large mate, usually many more than one big issue. RYM came through the GFC just fine because people need to live somewhere and they're a superbly managed very slick operation.
The GFC was arguably the biggest financial calamity ever to occur since the great depression and while its fair to say the effects of same are still playing themselves out RYM keep on going from strength to strength.

Greece's problem's, Argentina's problems, Syria's problems, the Ukraine problem with Russia, the Yemen IRAQ e.t.c. e.t.c. won't be resolved anytime soon and older folks won't be changing their desire to retire in a safe, well equipped, well managed retirement village incorporating the full continuum of care anytime soon either. The more things change the more they stay the same. "The circle of life" goes on and on with apologies to the Lion King movie :) and the giant sized baby boomer tsunami approaches, myself included.

[troyvdh]

great post roger...lets not forget...the more house prices go up (acknowledging of course house appreciation is only occurring in two centers).... more folk can buy something nice to live in...I heard a story last week...a retired woman (teacher)...signed up to RYM unit here in CHCH...and made a comment about to a person employed by same that some "costs" were a "bit dear"....the response she got was...along the lines of "how much have you made on your house"....says it all really.

PS What is TRULLY TRULLY amazing is how successful RYM has been in Oz....Victoria for gods sake !!!!...like how often has that (success) happened.cheers

[kizame]

great post roger...lets not forget...the more house prices go up (acknowledging of course house appreciation is only occurring in two centers).... more folk can buy something nice to live in...I heard a story last week...a retired woman (teacher)...signed up to RYM unit here in CHCH...and made a comment about to a person employed by same that some "costs" were a "bit dear"....the response she got was...along the lines of "how much have you made on your house"....says it all really.

PS What is TRULLY TRULLY amazing is how successful RYM has been in Oz....Victoria for gods sake !!!!...like how often has that (success) happened.cheers

That is not an appropriate response from an employee or representative of that organiseation,it is irelevent what she made on her house,if she thinks the costs are a bit expensive then that is her view,because a person has made a certain amount on their property,does not justify a company to charge more for services. I'm sure that isn't the case though with this company,they are just expensive.

[Beagle]

That is not an appropriate response from an employee or representative of that organiseation,it is irelevent what she made on her house,if she thinks the costs are a bit expensive then that is her view,because a person has made a certain amount on their property,does not justify a company to charge more for services. I'm sure that isn't the case though with this company,they are just expensive.

Expensive relative to what ? Tried looking at the costs to insure a 300 sq metre property in Auckland or the annual rates bill and what about the cost we spent to repaint it a couple of years ago $15,000 :eek2:
Too scared to even get a quote to re-carpet and re-do the bathrooms. People often forget that Ryman's maintenance levy includes everything, rates, insurance, maintenance, grounds maintenance, maintenance of common area's, power and utilities for common area's e.t.c. e.t.c.

[troyvdh]

Dear ..Kizame...no offense but you must be young...in commercial discussions...in fact any discussions we humans pick up que's...be it a smile/wink/smi
rk/avoidance/grunt/ blah blah...even fart....take a deep breath....bye the way your spelling is worse than mine...go well

[trader_jackson]

I have been watching and researching Ryman for a while and I like their Australian ambitions... but who on here thinks now is a good time to buy? (I thought anything under $8 would be pretty good). Although I already hold Arvida shares (brought in IPO)

[Harvey Specter]

I have been watching and researching Ryman for a while and I like their Australian ambitions... but who on here thinks now is a good time to buy? (I thought anything under $8 would be pretty good). Although I already hold Arvida shares (brought in IPO)It has essentially flat lined since the start of 2014 and the dividends are minimal. At some point, it will be a good buy but I will wait (I accept I may miss out on a bit of the rise).

[Joshuatree]

Don't think Ryman is offering this to its residents?This from AOG ;AVEO a competitor in Aus.

John Treadgold: You recently announced the new My Aveo Way contracts for residents. Can you explain that offering?



Geoff Grady: So My Aveo Way came about because of customer feedback. And this is a very important thread through our business overall, listening to what the customers have to say. So out of the survey of over 5,000 residents last year, there were a number of touch points that concerned customers in retirement villages, generally. And they related to the way they come into the villages and the way they exit.

So we set about engineering a new relationship, a new contract with our residents that solves some of those problems for Giving them a 21 day cooling-off period, a 90 day settling-in assurance and then on the way out, they don’t have to worry about when their property will sell. We’ll buy it back after certain periods. We don’t charge them any selling fees, or any marketing fees and they don’t have to worry about refurbishing their units. And we know already that customers will accept those, as addressing part of their concerns.

[Harvey Specter]

Guarateed buyback (after a certain period) is only relevant if you dont think there will be demand for you unit. I'm pretty sure Ryman would clear any stock they have within 6m (or whatever the certain period is). SOme of those other thinks may be beneficial but they would just be factored into the price.

[percy]

Ryman encourage people to become involved in the Ryman community, before they actually move into a village.

[Joshuatree]

Its the exit that can be a concern.6 months and a lot longer can be alongtime to keep up payments for something your loved is no longer around to use.Have heard horror stories in the past ; maybe its different now with more demand.

[percy]

It is usual for a buy back to be written into the original contract.
We had experience with my mother's unit taking time to sell in Australia.We advised then in that case as per my mother's contract we will sell back to you.
That focussed their attention.It was not a Ryman village.

[troyvdh]

Despite the on going positive announcements/prospects of this company being announced... the share price flat lines...perhaps a share split...last time I believe was at about $11.50...as we know folk like "cheap" shares....could be beneficial...maybe...

can anyone comment on the percentage of shares held by instos...as opposed to "mums and dads'....cheers

[macduffy]

Despite the on going positive announcements/prospects of this company being announced... the share price flat lines...perhaps a share split...last time I believe was at about $11.50...as we know folk like "cheap" shares....could be beneficial...maybe...

can anyone comment on the percentage of shares held by instos...as opposed to "mums and dads'....cheers

Nominee shareholdings dominate the register so who the beneficial owners are isn't apparent. The three declared substantial holders are interests associated with the founders - and Ngai Tahu Holdings.

[troyvdh]

Given the appalling history of Kiwi companies attempting to flourish "across the ditch"... the prospect of RYM listing in Oz is quite exciting......
Who would have thought that a property/investment company would flourish in a state of Oz where historically "unions' rule...its not that I dislike unions...but they can hamper things...

[Marilyn Munroe]

Just a thought I want to throw out and see what others think.

We are constantly bombarded with stories about accomodation shortages in Auckland. One solution to ease this presseure would be to encourage apartment living for those who want it.

There seems to be a market failure in building new quality apartments to meet this demand. Which listed company has the chops to undertake this? Ryman.

Think about it, they have a track record in successfully building communal residential buildings, expertise in facilities management and tenant relations.

Would Ryman be interested and could they make a buck out of it?

Boop boop de do
Marilyn

[percy]

A big part of the RYM model is based on reselling units,once the occupiers have left for the big rest home in the sky.
Think broker churn.
RYM would make the units too comfortable,and have residents for life.Why would they ever leave.?
More profitable churning every 5 to 10 years than once every 60 years.

[percy]

Wow. I'm a little speechless.

And that was one of my better posts.!!!! lol.
Marilyn did ask!!

[rayonline]

Just a newbie question on this. Is this a long term view, I have been hesitant look back a year or year and a half the capital hasn't gone up much if any for the last 12 months and the dividend yield I read is around 1.7%. However I heard there are lots of demand from the ASX and Forsyth and Barr have said all people should have RYM in their portfolio.

[Harvey Specter]

Forsyth and Barr have said all people should have RYM in their portfolio.JB Were prefers MET.

[percy]

Least we forget;
Ryman raised $25mil of equity on listing in 1999 and have not been back for capital since.
Since then they have invested $1.7 billion in new villages.
They have paid $431mil in dividends.

[jmsnz]

Very interesting Percy, I am nearing a 10 year anniversary of holding RYM and they are showing a huge return for me.

Who knows if that will continue for the next 10 years Rayonline, but you can not deny:
a) The services of this sector will be in demand as the population ages
b) Ryman are the 'best of breed' in this sector

I suspect that whether Ryman is the right choice depends on your investment horizon, the longer it is the stronger case you are likely to be able to make for them.

[Zaphod]

Once units resales bring in the new villages (including Melbourne) start occurring in a few years, things will pick up quite markedly. Having a positive underlying profit (unlike most operators) certainly helps from day one.

MET have had a very good run recently as the company has been turned around, but they face some major issues with their building stock. Some serious capital is going to need to be invested into the older villages, so it's probably a good thing IFT involved.

[rayonline]

If I look back more than 3 or 4yrs then sure, they have done fantastically. But as a investor who gets into them now. I am a bit hesitant.

[percy]

If I look back more than 3 or 4yrs then sure, they have done fantastically. But as a investor who gets into them now. I am a bit hesitant.

The fun is just starting.!
Been years getting the model right,now rolling it out with extra momentum.!!

[longy]

In about 5 years time there will be a lot of baby boomer going to retire so the demand for this sector is quite bright... I think.

[percy]

In about 5 years time there will be a lot of baby boomer going to retire so the demand for this sector is quite bright... I think.

The facts back you up.

[couta1]

I hear though the Couta hotline that demand for units at the 2nd Aussie village is staggering.

[percy]

I hear though the Couta hotline that demand for units at the 2nd Aussie village is staggering.

Thanks for your post.
Hope it is OK to say "no surprises there", the fun is just starting.!

[Beagle]

I had a good read through the annual report over the weekend. Excellent report and well worth a good read with lots of nice pictures to keep one interested. Unprecedented demand at our Auckland and Melbourne villages and concentrating on those area's as they have the highest profit margins sounds bloody good to me as does the fact that this is a needs based business.
You'd struggle to find a company with a more impressive long term track record of strong growth on the NZX and that would be because there isn't a finer example of a growth company in N.Z.
This is arguably the only company that you can reliably predict future earnings with any degree of certainty which makes the use of the Benjamin Grahame valuation formula the most applicable to Ryman and has the stock valued at over $10. I hold for long term capital gain. This is classic investment at its simplest. Just look at their market capitalisation and their track record and how they've grown over the last fifteen years and those of us in our fifties can imagine what it will be when we retire in fifteen years time.

[stevevai1983]

Hello guys, I am new to this forum.
Did everyone receive dividends? It says the payable date is 26/06/2015 but i still didn't receive it yet hmm....

Btw I believe Ryman is one of the best company in NZ. I am willing to hold it for more than 10 years as long as they can keep up this level of performance :)

[macduffy]

Yes, the div was paid on 26 June. I'm quietly adding a few more at prices sub $8.

[Jim]

Hello guys, I am new to this forum.
Did everyone receive dividends? It says the payable date is 26/06/2015 but i still didn't receive it yet hmm....

Btw I believe Ryman is one of the best company in NZ. I am willing to hold it for more than 10 years as long as they can keep up this level of performance :)

I paid $1.80 on 2007 and been topping up ever since

[percy]

I paid $1.80 on 2007 and been topping up ever since

Clever...Great investing.!

[LAC]

Hi Guys,
What makes Ryman a good buy at the moment. I am looking at the last 2 years and the SP has not risen much and the div yield is <2%. Is if because they have good growth?
I am sure I missed the boat when it was really cheap but is it really a good buy now?

[percy]

Hi Guys,
What makes Ryman a good buy at the moment. I am looking at the last 2 years and the SP has not risen much and the div yield is <2%. Is if because they have good growth?
I am sure I missed the boat when it was really cheap but is it really a good buy now?

First of all welcome to sharetrader...
You can find the answer to your question right on this thread.
Start reading from either the first post,or No.100, and come back and tell us the answer.

[trader_jackson]

I am not so sure about the 3 'big' retirement villages at this moment (Ryman, Summerset, Metlifecare), with the Auckland housing market (that has heavily helped these villages make money) apparently 'topping off', and residents now "banding together" (or words to that effect) to try and get better care or prices or something from retirement villages, it is hard to say if these 3 big ones are 'buys'

I have liked the fact Ryman does also have a strong care focus (unlike Summerset which is heavily 'property focused' - great for now, maybe not so much in coming years), but just because Ryman has come back in recent weeks doesn't automatically make it a buy, valuations still seem a bit 'stretched' for me to get really excited about Ryman

(Mean while ARV continues to go unnoticed at 86c with 5-6% cash dividend yield, and Price/FY16 pro-forma underlying profit of just 13! - not 100% sure on these figures... DYOR)

However, as with any retirement villages, I believe they can only increase over time, some have just already priced in that increase.

[percy]

Trader Jackson.
Start from post No.1.
You have a lot to learn about where MET, RYM,and SUM earn above average returns ,compared to ARV.
Meanwhile take advantage of those savvy investors who have shared their knowledge with us on this thread.
Then try to answer this:
Would Percy invest in a retirement village operator such as Ryman, who make HUGE profits from developing retirement villages without coming back to shareholders for more capital,or would he invest in a LOW margin care operator, such as ARV who need to raise more capital from shareholders to expand.?.

[stevevai1983]

I paid $1.80 on 2007 and been topping up ever since
Classic! Buy good company at good price then hold forever.

[trader_jackson]

Wise words percy, I know there are a few members on here who are very knowledgeable on the retirement sector, and I appreciate that very much.

I should have mentioned that it is hard to compare ARV as I know they are 'structured' slightly differently to 'the rest', and also have only been running for less than a year!

I do know a few people that work in the retirement sector moving seniors around, mostly to these villages, and it is interesting to hear what they say about their experiences, and their customers (ie seniors) experiences regarding the various villages (moving in, staying there, how nice the staff are etc). All I will say is that I have heard ARV (mainly the villages they recently acquired) and SUM are great, not sure on MET, and RYM potentially not so 'nice' (so I have heard).

But as always, Do Your Own Research.

[LAC]

First of all welcome to sharetrader...
You can find the answer to your question right on this thread.
Start reading from either the first post,or No.100, and come back and tell us the answer.
Thanks Percy,
Really enjoying this forum, ok will get onto reading this thread for that answer. Its bound to be their model of sum sort.

[percy]

Thanks Percy,
Really enjoying this forum, ok will get onto reading this thread for that answer. Its bound to be their model of sum sort.

LAC and Trader Jackson.
The poster who knew the most about,and who was always ahead of brokers and the market,was a poster by the name of Sauce.
So any posts by him are worth reading..In fact I would read just his.!
If you want to learn more about RYM's earnings there is a great thread "owner earnings vs free cash flow".
I had trouble finding it just now,but I went to advance search and put sauce in user name and it came up.

[limmy]

Percy, I started reading from page 1 about 2 or 3 months ago and I've recently received my first divvy from Ryman. I intend to hold for the long term. I've since added MET to my pot as they appear to have aligned their strategy to be similar to RYM. Hope to be like many people here and look back successfully in a few years.

[percy]

Percy, I started reading from page 1 about 2 or 3 months ago and I've recently received my first divvy from Ryman. I intend to hold for the long term. I've since added MET to my pot as they appear to have aligned their strategy to be similar to RYM. Hope to be like many people here and look back successfully in a few years.

Again welcome limmy and good for you.
Another poster I greatly admired was Sparky The Clown,who unfortunately no longer posts.He too had a great knowledge of Ryman.
I rececently heard from him.He is still passionate about Ryman,and had visited the Wheelers Hill Village in Melbourne, and their new site not far from Wheelers Hill.He was impressed and feels the rollout in Australia will go really well.This has been since confirmed.
So Ryman are going "great guns" in NZ and look to repeat their success in Australia.
The fun looks to be gaining mommentum ,therefore I think we are "well positioned,"!

[Bjauck]

Classic! Buy good company at good price then hold forever.

Good point although it can get a bit hairy on the market roller coaster at times. RYM price dropped to around $1.15 in 2009 during the GFC. Many RYM holders failed to keep faith! So time in the market is important as is the time of your entry.

[Beagle]

The key to understanding Ryman is they're the only company on the NZX that has consistently show strong EPS growth over the last 15 years and given the strong demographic tailwinds in the sector its probably the only company on the NZX that will continue to show strong growth over the next 15 years. Simplest investment is often the easiest. Just extrapolate their last 15 years growth in cash flow and earnings per share over the next fifteen years. All you need to do is invest and show lots of patience. Recent SP performance is a reflection of the fact that it got a bit ahead of itself as noted by Sparky the Clown and myself at quite some length about a year and a half ago. Its fair value now in my opinion but don't expect quick gains.
No need to over analyse it, its really a classic long term growth investment and the current underlying earnings PE of late 20's is reasonable given their unmatched earnings growth record. Get rich safely and slowly :) This stock should be a core part of any serious long term investors portfolio in my opinion.

[percy]

I concur with Roger.

[winner69]

Summerset better bet at this time

[Beagle]

Good to see SUM not only continue to do well, but ALSO provide forward guidance.

https://www.nzx.com/companies/SUM/announcements/266717

Better late than NEVER...finally this teenager of a company realises that investors expect this sort of thing. Mid point of $33m translates to eps of 15 cps. Apply whatever forward multiple you think is appropriate for SUM.
Disc Own MET and RYM, not SUM.

[winner69]

Better late than NEVER...finally this teenager of a company realises that investors expect this sort of thing. Mid point of $33m translates to eps of 15 cps. Apply whatever forward multiple you think is appropriate for SUM.
Disc Own MET and RYM, not SUM.

So 30 times 15 is $4.50

Seems about right by Xmas

[Beagle]

and 25 times is $3.75.

[limmy]

Again welcome limmy and good for you.
Another poster I greatly admired was Sparky The Clown,who unfortunately no longer posts.He too had a great knowledge of Ryman.
I rececently heard from him.He is still passionate about Ryman,and had visited the Wheelers Hill Village in Melbourne, and their new site not far from Wheelers Hill.He was impressed and feels the rollout in Australia will go really well.This has been since confirmed.
So Ryman are going "great guns" in NZ and look to repeat their success in Australia.
The fun looks to be gaining mommentum ,therefore I think we are "well positioned,"!
They'll simply have to repeat the growth experience from NZ, in Aus. I think the market there is probably 3-5 times larger.

[percy]

Understanding The Retirement Sector.Brilliant article.
Go to www.NZX.com
Put IFT into "search by company ' box
Then click onto announcements
then click 11th May Infratil Update.
Would some kind person post the link.

[winner69]

Understanding The Retirement Sector.Brilliant article.
Go to www.NZX.com
Put IFT into "search by company ' box
Then click onto announcements
then click 11th May Infratil Update.
Would some kind person post the link.


https://www.nzx.com/files/attachments/212754.pdf

[percy]

https://www.nzx.com/files/attachments/212754.pdf

Winner69.
As always thank you.

[LAC]

Hi guys, this might be a silly question but when a company/business like RYM indicated as NTA of x, does that value include all their units in their Villages at the time they were built or are these revaluated every year? Or are the units not included in their tangible assets at all (reported as something else? do accountants call them something else on the Bal sheet?)

[winner69]

Hi guys, this might be a silly question but when a company/business like RYM indicated as NTA of x, does that value include all their units in their Villages at the time they were built or are these revaluated every year? Or are the units not included in their tangible assets at all (reported as something else? do accountants call them something else on the Bal sheet?)

From the Annual Report -

Retirement village units and community facilities are revalued on a semi-annual basis and restated to fair value as determined by an independent registered valuer. Any change in fair value is taken to the income statement. The fair value is determined using discounted cash flow methodology.

So to answer your question all units are revalued twice a year and revalued amounts included in NTA. Just some of the fair value adjustments are unrealised (realised when sold)

[Beagle]

Yes, the salient lesson here for you newbies is to make sure you read the full annual report of companies you're investing in. Crazy if you don't...just saying...
RYM's latest annual report is a very good read and available on their website for those that don't have a printed copy..see www.ryman.co.nz Click on investor centre and fill ya boots with info !!

[LAC]

Thanks guys,
I have had a read now after Winner69 posted. I was kind of asking the NTA question in general for all businesses such as RYM but now understand each business will value their assets differently and just have to do research individually. Thanks again

[macduffy]

Ryman's AGM as reported in today's DomPost ( and on Stuff ).

http://www.stuff.co.nz/the-press/business/70659160/ryman-healthcare-plans-new-villages-for-70-more-residents

Construction at Bob Scott certainly continues apace. I counted over 40 working on site a few weeks ago.

:)

[LAC]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11494726

[trader_jackson]

(as mentioned on the Summerset forum - applies here as well...)

The ugly side of retirement villages...(at least in the long[er] term)
There was disputes over fee rises each year (from what I heard), now it is common to have a 'fixed fee for life' scheme...
Eventually there will be more disputes about why they get 30% of their house's/apartments capital value over x period, depreciated (ie taken away from them), when there house/apartment has actually increased say 30% over the same period... as supply is (only recently) starting to exceed demand, residents will have 'more power', and the days of "easy money" are most likely numbered... Summerset being one of the most aggressive in expansion in this country could be exposed to this the most should things change. (edit: saw that the top issue was in fact related to "Disposal matters including marketing, valuation, length of sale, refurbishment, ongoing charges and exit payments")

This is however a longer term issue, probably wont have an effect for a couple of years... those villages with a strong care focus shouldn't be impacted as much (Ryman, Arvida)

On another note, Forsyth bar noted that, over the long term, as people get older, care beds will become more relevant and important than "lifestyle villages" (ie apartment building)... Ryman and Arvida are to benefit from this, Summerset not so much

[LAC]

(as mentioned on the Summerset forum - applies here as well...)


Eventually there will be more disputes about why they get 30% of their house's/apartments capital value over x period, depreciated (ie taken away from them), when there house/apartment has actually increased say 30% over the same period...

Yeah I think this bit is going to be an issue with any village. Ryman buy in prime locations and I would think these area the property values are going to soar, residents are not going to like this...

[trader_jackson]

Yes true, but Ryman also have a care focus so are not as exposed as more lifestyle villages like Summerset... but yes will still be something for them to watch out for

[couta1]

TJ disputes have and always will be a routine part of retirement village life, just like this forum you get all sorts of people with all sorts of motivations converging, some genuine and some not then added to that you have the influence of the residents families which can expose a down right ugly side of human nature, I've seen it all over the last 25 years yet none of it will have an effect on the massive tailwinds and demographic explosion continuing to drive this sector long term. As an aside Ryman have always had a fixed fees for life guarantee.

[couta1]

Yes true, but Ryman also have a care focus so are not as exposed as more lifestyle villages like Summerset... but yes will still be something for them to watch out for
Sum also have reasonably sized care facilities, its their lack of dementia care which sets them apart in a negative way at this point in time IMHO which backs up what you were saying about re increasing care bed needs and dementia is a fast growing area of care need.

[Harvey Specter]

Eventually there will be more disputes about why they get 30% of their house's/apartments capital value over x period, depreciated (ie taken away from them), when there house/apartment has actually increased say 30% over the same period... The response is quite simple. Your 'fixed fee for life' does not actually cover our full costs. We take the risk on capital appreciation to give you a lower fixed cost and certainty. Further to this, we also incur all property holding costs and also maintain your accommodation and also pay for a complete renovation when you exit to remove the smell of death for the next occupant. I think most operators have also removed the downside risk so if they dont sell for the original cost, the exiting resident doesn't have to pay.

The key words in there are lower fixed costs and certainty, something that a retired person wants to hear - its just the children who are concerned about the forgone capital appreciation.

[LAC]

- its just the children who are concerned about the forgone capital appreciation.
Yes very very true

[couta1]

Correct HS re your comment on the children being the only ones concerned about the capital appreciation and they sometimes make it unpleasant for their parents by focusing on this and going on about how unhappy they are about this aspect of things.

[trader_jackson]

Yes very true about the children ("don't want the inheritance lost to corporates") but at the same time (some of) the elderly might also care about this... that what they leave for their children is substantially less than what they should really be leaving, it is not something retirement operators can continue to ignore forever

[couta1]

TJ why is it less than they SHOULD be leaving?

[LAC]

I guess its up to their children to provide the services elsewhere which RYM/SUM etc. provide if they feel the deal is too sour. Guess they cant have it both ways, dump the oldies in the Village and get the full capital value while paying less for the actual costs of the care.
As long as there is demand in this sector, the RYM's and SUM's will always have the last say on their contracts....

[trader_jackson]

What my thoughts are is that one village, whether it is listed or not, will come out with some marketing campaign around "we will not take any capital value off your purchase! Come retire with us and have confidence!" (this is what happened not that long ago when some residents started worrying about fees - born was the "fixed fees for life" promise that is now almost standard)... then another village will follow, and suddenly alot of villages will follow (as supply of new units is now just recently outstripping demand, as previous mentioned, operators may have to 'compete' for retirees). The easy money making scheme will still be present (because the values should still go up over the long run of the unit) but it won't be as easy as it use to be (no 30% "automatic depreciation")... this is what I am getting at, although it may be years, potentially decades before this comes true, it is inevitable.

When (not if - in my view) it will have an effect, and what effect this actually has, is something to be speculated on

[Zaphod]

A few years in the future, subsequent to the howls of indignation from family members at the size of much larger care, management and maintenance fees, a new methodology will arise whereby capital is depreciated over the tenure resulting in smaller fees payable by tenants. And so the cycle goes, rinse, lather, repeat....

[trader_jackson]

NewGuy I don't think you should write off my previous comments completely, it may not happen, but I think it is highly likely something like what I previously stated could happen... (or some other cost management structure which will ultimately not provide "lifestyle" retirement village with as much revenue)

[Bjauck]

NewGuy I don't think you should write off my previous comments completely, it may not happen, but I think it is highly likely something like what I previously stated could happen... (or some other cost management structure which will ultimately not provide "lifestyle" retirement village with as much revenue)

All prospective licensees have to have independent legal advice. No-one has forced them to buy a licence to occupy. Presumably they have all decided that a Ryman's village offers them what they want at a price and with a contract they accepted and voluntarily undertook with independent advice.

It would be great to see freehold retirement complexes enter the market, allowing retiree owners to enjoy capital gains (and losses). It would be interesting to see how maintenance, village facilities etc. would be organised and paid for and who would undertake the risk/reward of developing the complex. There already exist blocks of units which are restricted as to age of the puchaser/occupier.

[Arthur]

Correct HS re your comment on the children being the only ones concerned about the capital appreciation and they sometimes make it unpleasant for their parents by focusing on this and going on about how unhappy they are about this aspect of things.
Of course the kids could always look after their parents like they used to. If they feed them, provide them with 24 hr care and shelter, then maybe they deserve the inheritance. If they fob them off to somebody else, they can hardly whinge about how they can getting less than they should.

[Vaygor1]

At least with Ryman it's a 2-way street and they're happy to take the risk on Capital Loss.

This one of their 9 guarantees...

No Capital Loss

It will be important to you and your family that you have certainty regarding the amount you are repaid when you leave the village, and that you are not exposed to any capital loss when the unit is on-sold.

“We guarantee to repay you the balance of your occupancy advance, and that the amount repaid will not be affected by a decline in the value of the unit.”

Reference. http://www.rymanhealthcare.co.nz/the-ryman-difference/peace-of-mind-guarantees then click guarantee #7

I don't know what SUM & Metlife's policy is in this area.

[winner69]

Great company .... delivers year after year .... and no doubt another 20% increase in underlying profit this year to $120m plus

That a multiple of 36 at todays price

History says buying today at that multiple will result in a negative returns over the next 3 and 5 years (even though earnings will go up 20% pa)

Only make serious money (as a medium/long term investment) when you buy in with that multiple at 20 or less.

Already holding .... ride it as long as you can but it be inevitable that the market will take away some of the past few years gains if you hold ..... or just put in the bottom draw and don't look at the RYM shareprice until 2020 when it will be $15 - that way you would have missed the pain of seeing it fall to $7 before it rises again

Posted that May 2014 when share price was $8.80

Negative returns from then for the next 3 to 5 years still likely ...at least on track after 18 months

Just history repeating itself - Roger still might just get his $6.50

I will just follow the chart

And meanwhile Ryman earnings continue to boom

[Biscuit]

Posted that May 2014 when share price was $8.80

Negative returns from then for the next 3 to 5 years still likely ...at least on track after 18 months

Just history repeating itself - Roger still might just get his $6.50

I will just follow the chart

And meanwhile Ryman earnings continue to boom

Might be worth a flutter that they will jump up 10-20% from here on next months update?

[Biscuit]

Might be worth a flutter that they will jump up 10-20% from here on next months update?

Having sold down when it was over $8, I've started buying back now. To me, it no longer looks overpriced on underlying earnings - hasn't been this cheap since end of 2012, start 2013.

[couta1]

Having sold down when it was over $8, I've started buying back now. To me, it no longer looks overpriced on underlying earnings - hasn't been this cheap since end of 2012, start 2013.
Excellent buying at current prices for a company thats doing the business as usual behind the scenes, I'm expecting a big jump in underlying profit come years end with a good jump in the share price to go with it but DYOR.

[Master98]

been watching and hoping buy few around $6.8 if lucky.

[percy]

I too am looking to buy some more,just the timing.I did not think they would fall below $7.50.I will however wait until the share price heads upwards.

[Master98]

I too am looking to buy some more,just the timing.I did not think they would fall below $7.50.I will however wait until the share price heads upwards.
today close at $7.14, but volume is light.

[NZSilver]

Yes, its back to late 2013 levels. Id say good buying in terms of value, but with this downtrend - it could get even lower!

[Biscuit]

I too am looking to buy some more,just the timing.I did not think they would fall below $7.50.I will however wait until the share price heads upwards.

You are wiser than me Percy, I have already lost 17 cents a share on the parcel I bought yesterday! I like to back my view of the story against the trend, but I think I will also wait a bit before buying the next parcel in case it really tanks.

[LAC]

You are wiser than me Percy, I have already lost 17 cents a share on the parcel I bought yesterday! I like to back my view of the story against the trend, but I think I will also wait a bit before buying the next parcel in case it really tanks.

Same:( I should have waited

[Master98]

You are wiser than me Percy, I have already lost 17 cents a share on the parcel I bought yesterday! I like to back my view of the story against the trend, but I think I will also wait a bit before buying the next parcel in case it really tanks.
still heavy discount to $8.5, right?

[couta1]

Same:( I should have waited
Why worry about small change? rather you should ponder what the Ryman share price could potentially be in 5 years time, I'd be very surprised if it doesn't hit $9 again some time next year.

[Biscuit]

Why worry about small change? rather you should ponder what the Ryman share price could potentially be in 5 years time,

Yes, the story as we know looks something special in the medium term, especially as they appear to have successfully taken the model over the ditch. With a good update, this bird should resume its upward trudge, IMO. It got ahead of itself a couple of years ago, but unless a whole load of soon-to-be wrinklies are swept off the planet, I don't see the price being held back for very long.

[percy]

October does not look to be a good month for RYM;
October 2013..sp $6.95
October 2013..sp.$$7.22
Today $7.12.
I use Yahoo interactive charts.Go to Yahoo,put in RYM.nz then go to interactive.
The EMA moving average is showing 50 day EMA $7.63 and the more important 200 day is $7.92.
The "real" buy signal will be when the sp goes up through the 200day EMA.That looks some time away.
What difference does it make buying at $7.65 compared with $7.15.Well on 1,000 shares it is the cost of our Xmas luncheon.!!!! lol.

[LAC]

at $7.65 compared with $7.15.Well on 1,000 shares it is the cost of our Xmas luncheon.!!!! lol.

That's what I was hinting at...:)

[Biscuit]

October does not look to be a good month for RYM;


Yes, agree, but look where it went after that... crap in October, update in November and up, up and away... so, buy in October?

[RRR]

Bought a small parcel today after waiting for a long time.

[Biscuit]

The EMA moving average is showing 50 day EMA $7.63 and the more important 200 day is $7.92.
The "real" buy signal will be when the sp goes up through the 200day EMA.


The difficulty with that strategy is that if the share price turns up today, you will have to wait until the price goes to nearly $8 before you can buy any. I struggle with that strategy myself, it is probably the better strategy, but I'm drawn towards trying to catch those falling knives.

[Beagle]

Posted that May 2014 when share price was $8.80

Negative returns from then for the next 3 to 5 years still likely ...at least on track after 18 months

Just history repeating itself - Roger still might just get his $6.50
I will just follow the chart

And meanwhile Ryman earnings continue to boom

I hear the Auckland market is like a balloon that's been pricked at present. All that speculative dodgy ? Chinese money is looking for a new tax free casino / playground.
Revaluations have underpinned this sector for years. Sure there's the well known tsunami of aging folk to underpin the sector's growth going forward but I reckon the revaluation's could take a breather for many years. The whole sector is fully priced IMO and dividend yields are absolutely pathetic all the more so because they're unimputed. Not sure I'd bother even if it does get to $6.50. As you've suggested it could take up to five years for this sector to become really attractive value again...

[percy]

The difficulty with that strategy is that if the share price turns up today, you will have to wait until the price goes to nearly $8 before you can buy any. I struggle with that strategy myself, it is probably the better strategy, but I'm drawn towards trying to catch those falling knives.

I have too few fingers left to loose any more catching falling knives.!!
With the sp dropping both EMAs will fall.Once the sp has moved up through the 50 day EMA, you can then just about judge it will go through the 200day EMA.Then buy.
Try looking at Yahoo SUM chart, and you can see I timed my entry in early January at $2.92 perfectly.

[winner69]

I hear the Auckland market is like a balloon that's been pricked at present. All that speculative dodgy ? Chinese money is looking for a new tax free casino / playground.
Revaluations have underpinned this sector for years. Sure there's the well known tsunami of aging folk to underpin the sector's growth going forward but I reckon the revaluation's could take a breather for many years. The whole sector is fully priced IMO and dividend yields are absolutely pathetic all the more so because they're unimputed. Not sure I'd bother even if it does get to $6.50. As you've suggested it could take up to five years for this sector to become really attractive value again...

At least you 'get it' mate

Just because a share is cheaper than a year ago doesn't make it cheap or good value does it

Most shares when they get supercharged PE ratios (RYM included) show poor or negative returns for the next 3 to 5 years (sometimes longer) as PEs revert to more reasonable levels. PE currently still supercharged but beginning to fall back

And RYM itself will continue to grow, probably with increasing profits

[Biscuit]

I hear the Auckland market is like a balloon that's been pricked at present.

The Auckland housing market is always giddy (either with exuberance or with vertigo). If it ever were truly burst like a balloon, I suspect the ramifications would be much broader than just Rymans. No more overseas trips for all those middleclass Aucklanders who thought they were doing so well.

[Biscuit]

I hear the Auckland market is like a balloon that's been pricked at present. All that speculative dodgy ? Chinese money is looking for a new tax free casino / playground.
Revaluations have underpinned this sector for years.

I also don't see any evidence that the Ryman shareprice correlates at all with the CPI-corrected Auckland residential property market. It seems almost the opposite trend?

[Bjauck]

I also don't see any evidence that the Ryman shareprice correlates at all with the CPI-corrected Auckland residential property market. It seems almost the opposite trend?
I broadly agree. In 2010-12 when the Auckland property market was flat RYM's sp increased by about 50%. In 2014 & 2015 RYM sp has dropped by about 20% whilst the Auckland house market has boomed.

Interestingly, it seems RYM sp has increased by about 600% over the last 10 years. (Incidentally - It has seen price growth similar to ATM over that period - with ATM having the edge). Perhaps the SP performance is linked to demand for its services, general economic conditions and investor sentiment rather than specifically to Auckland or NZ property prices

[percy]

I broadly agree. In 2010-12 when the Auckland property market was flat RYM's sp increased by about 50%. In 2014 & 2015 RYM sp has dropped by about 20% whilst the Auckland house market has boomed.

Interestingly, it seems RYM sp has increased by about 600% over the last 10 years. (Incidentally - It has seen price growth similar to ATM over that period - with ATM having the edge). Perhaps the SP performance is linked to demand for its services, general economic conditions and investor sentiment rather than specifically to Auckland or NZ property prices

Ryman CEO Simon Challis has often pointed out Ryman is not collated to NZ property prices.

[troyvdh]

Thankyou Couta...I agree...given that RYM had a share split 5-1 at around ...$11.30 ???? a few years back....me thinks that many folk could view the current share price as being "expensive" which we both agree is quite nonsensical...and when the SP eventually does rise to similar territory...folk may well see better value in a share that is available at $2..something....just saying...cheers

[Beagle]

RYM's SP took a pretty solid hit during the GFC. The main issue I have is (unless you've been living under a rock on another planet for the last seven years), this tailwind demographic story is so well known by everyone its already built into the price and then some. Also technically its in a clear downtrend. It will be a good investment over the very long run but try telling that to someone who paid about $9 circa 2 years ago who has "enjoyed" a pathetic circa 1.5% unimputed annual dividend rate since then. Closing price of $7.05 a new low for the year speaks for itself. I don't buy stocks in a downtrend.

[stevevai1983]

RYM's historical dividend%.
07 4.96%
08 2.92%
09 3.72%
10 2.95%
11 3.04%
12 2.72%
13 1.98%
14 1.35%
now 2.01%

The SP is close to 'good investment' now.

[winner69]

RYM's SP took a pretty solid hit during the GFC. The main issue I have is (unless you've been living under a rock on another planet for the last seven years), this tailwind demographic story is so well known by everyone its already built into the price and then some. Also technically its in a clear downtrend. It will be a good investment over the very long run but try telling that to someone who paid about $9 circa 2 years ago who has "enjoyed" a pathetic circa 1.5% unimputed annual dividend rate since then. Closing price of $7.05 a new low for the year speaks for itself. I don't buy stocks in a downtrend.

Yes RYM shareprice did take a hit during the last GFC but it wasn't because of declining earnings. They were still selling plenty of units and were booking favourable fair value adjustments and all that sort of stuff.

The share price fell because market sentiment drove the PE down from just under 30 to about 15. Again negative returns for a few years when Ryman has a lofty PE. Happens with a lot of stocks (and even markets). Reversion to the mean and that sort of stuff.

Methinks the same process is underway at the moment.

And while the PE falls (a measure of market sentiment) Ryman keep on making heaps of money.

[Biscuit]

Yes RYM shareprice did take a hit during the last GFC but it wasn't because of declining earnings. They were still selling plenty of units and were booking favourable fair value adjustments and all that sort of stuff.

The share price fell because market sentiment drove the PE down from just under 30 to about 15. Again negative returns for a few years when Ryman has a lofty PE. Happens with a lot of stocks (and even markets). Reversion to the mean and that sort of stuff.

Methinks the same process is underway at the moment.

And while the PE falls (a measure of market sentiment) Ryman keep on making heaps of money.

PE is under 15 now, although it is about 25 on underlying profit. It doesn't just keep making heaps of money, but it makes more and more money consistently and the big question mark over whether they could take this model to the Australian market has now been answered. Of course that does not mean that this is exactly the best time to buy, who knows when that is.

[couta1]

The best time to buy Ryman is basically anytime you have the money to do so if you have a long term outlook, my current parcel was purchased a couple of years ago in the mid $8 range and I am not concerned about the current lag phase. Prior to that I held parcels bought in the $5 range.

[Biscuit]

Ryman CEO Simon Challis has often pointed out Ryman is not collated to NZ property prices.

The reason for that is that fair value movements in Ryman's properties are calculated using a valuation method that includes the long term house price inflation which ranges from 1-3% nominal, so not directly affected by short term fluctuations in the property market. So, not only would unrealised profits continue regardless of a burst in the Auckland property bubble, but you could probably make the case that they have been understated in recent years.

[NZSilver]

Interesting Satan, thanks for that. just found it in the AR

The carrying value of completed investment property is the fair value as determined by an independent valuation reportprepared by registered valuers CBRE Limited, as at 31 March 2015. This report combines discounted future cash fl ows andoccupancy advances received from residents in respect of practically complete retirement village units for which there isan unconditional occupation agreement. Signifi cant assumptions used by the valuer include long term house price infl ation(which ranges from 1% to 3% nominal) and discount rate (which ranges from 13% to 16%). Principal assumptions areunchanged from the prior year. Investment property includes investment property work in progress of $40.8 million (2014:$64.9 million), which has been fair valued at cost by CBRE Limited.The signifi cant unobservable inputs used in the fair value measurement of the Group’s investment property portfolio are thediscount rate, the long term nominal house price infl ation rate and the occupancy period. A signifi cant decrease (increase)in the discount rate or the unit occupancy period would result in a signifi cantly higher (lower) fair value measurement. Asignifi cant increase (decrease) in the average age of entry of residents or the long-term nominal house price infl ation ratewould result in a signifi cantly higher (lower) fair value measurement.

[Vaygor1]

Using my whizz-bang formula from posts long ago, based on a 31 March 2016 Full Year Underlying Profit of $160 million, I get a fair price for a RYM share today (assuming a rational market) of $7.97

Anything under that is likely a reasonably good buy, anything over is likely a reasonably good sell.

I think their H1 result, about a month away from being announced, will be an underlying profit of circa $74 million.

As an aside, RYM's big debt for Melbourne's Brandon Park purchase was required to be paid off during the soon-to-be-announced H1 period, if I recall correctly.

I haven't disclosed for a long time now so, yes, I'm still holding… have acquired a few more lately at $7.30 and never sold any yet, and with no intention to do so.

[Biscuit]

What difference does it make buying at $7.65 compared with $7.15.Well on 1,000 shares it is the cost of our Xmas luncheon.!!!! lol.

Its $7.65 now Percy, I can sell my $7.27 parcel and buy a few Xmas luncheons on the profit now! But I think I'll hold on till after the November announcement at any rate.

[skid]

Thats a pretty big SP hit even after making up for the last scare--Overvalued before?

Its kind of hard to quantify the last rise as many shares have done the same as the general market has improved from the last glitch(jury is still out on that i suppose though)

[LAC]

Is there some news today that I'v missed? $7.75

[couta1]

Is there some news today that I'v missed? $7.75 No, the stock has just been heavily oversold of late and is moving back toward a more realistic value IMO plus maybe just a little leak in the ship with the upcoming results in November.

[axe]

The best time to buy Ryman is basically anytime you have the money to do so if you have a long term outlook, my current parcel was purchased a couple of years ago in the mid $8 range and I am not concerned about the current lag phase. Prior to that I held parcels bought in the $5 range.

This was/is a great call IMO. :)

Anyways chart wise things might be starting to look OK. Through the 50MA and looking to breach to 200MA. There are a few stocks that fell out of their uptrend in the september correction that have breached the 50 and close to cutting through the 200MA.

AIR, HNZ and TME already through 200MA. RYM close.

[skid]

From what I have gathered from chartists an uptrend is established when the 50MA breaks through the 200MA--still a fair ways to go for that (even the SP hasn't gotten there yet)--bit early to be talking an uptrend

but its a pretty good day for the old folks shares SUM up as well

[Nasi Goreng]

50/200 is just one signal to confirm an uptrend has started. What is interesting is that today or in the last few days, RYM, SUM and MET have all broken through the 50 day avg and it looks like they have a long way to go. This could be quite a bounce if momentum continues.

[skid]

Yep the ''last few days chart'' is looking pretty good (doing better than alot of the last 50days)

[Biscuit]

Yep the ''last few days chart'' is looking pretty good (doing better than alot of the last 50days)

It's had a quick run up from the low 700's, now seems to be bogged down under $8. Might need the push of a good announcement to get much higher from here?

[Biscuit]

The EMA moving average is showing 50 day EMA $7.63 and the more important 200 day is $7.92.
The "real" buy signal will be when the sp goes up through the 200day EMA.That looks some time away.


We must be there by now Percy, where are all those TA buyers? Are you buying now?

[percy]

We must be there by now Percy, where are all those TA buyers? Are you buying now?

Yes we are there Biscuit.
The speed we got there caught me by surprise.!!
Today the share price is $7.90, above the 50 day EMA [$7.64],the 100day EMA $7.75 and the 200day EMA $7.87.
Just have to do a budget, as I will have little income from now until February, and a lot of expenses [two daughters] coming up with Xmas etc.But am very tempted.lol.

[gv1]

yes, after selling down heavily during times of doom and gloom... I invested heavily in this and another stock I mentioned lately. IMO I see it as safe stock.

[Biscuit]

Today the share price is $7.90, above the 50 day EMA [$7.64],the 100day EMA $7.75 and the 200day EMA $7.87.


Interesting that it has knocked off the TA milestones and stalled. I'd have rather thought that once it breached those TA marks, it would have got a bit of a kick up?

[percy]

Interesting that it has knocked off the TA milestones and stalled. I'd have rather thought that once it breached those TA marks, it would have got a bit of a kick up?

That's what we enjoy about the market.!!!
Just when we think we can understand it,it does something different.!!!..lol.
TA is just another tool for us to use.
Most movement is caused by a positive/negative announcement, that the market did not expect.

[Biscuit]

That's what we enjoy about the market.!!!

Most movement is caused by a positive/negative announcement, that the market did not expect.

yes, market perception and assumption is whacked in the face by reality, not every unexpected announcement is impossible to anticipate

[Bjauck]

Perhaps all the retirement stocks have been affected by press reports that Chinese buyers are now staying away from the Auckland property market with the result that auction clearance rates are below 50%. Funny that - a few months back, I thought that the government and real estate agents had been assuring us that overseas buyers had negligible effect on the overheated market...

[Zaphod]

Perhaps all the retirement stocks have been affected by press reports that Chinese buyers are now staying away from the Auckland property market with the result that auction clearance rates are below 50%. Funny that - a few months back, I thought that the government and real estate agents had been assuring us that overseas buyers had negligible effect on the overheated market...

You can't conclude anything from a press report based upon little to no actual evidence.

[trader_jackson]

You can't conclude anything from a press report based upon little to no actual evidence.

I also don't think they have had an affect on the retirement villages, yet at least...

Maybe Auckland house auctions, but then again, it is probably the whole market weakening as a result of new restrictions coming in tomorrow... but as per usual with the property industry, where information is NOT transparent at all, they [real estate agents and most property websites etc] will tell us "its probably overseas buyers" to try and reassure all the kiwis fully leveraged that the 20% gains will continue and "property is the way to get ahead!"

[skid]

I think the property market slowing is a good thing (if that is what happens) otherwise you get firmly into the crash territory--This IMO is a good time for a breather--US stocks are also getting back into the overbought territory (but that can still have legs)expect volatility

[Zaphod]

I also don't think they have had an affect on the retirement villages, yet at least...

Maybe Auckland house auctions, but then again, it is probably the whole market weakening as a result of new restrictions coming in tomorrow... but as per usual with the property industry, where information is NOT transparent at all, they [real estate agents and most property websites etc] will tell us "its probably overseas buyers" to try and reassure all the kiwis fully leveraged that the 20% gains will continue and "property is the way to get ahead!"

I agree; Real-estate agents are as bad as politicians and will tell each party involved in the transaction what they want to hear! If property prices do decline or hopefully just remain static/slowing (as per Skid's post) for some time, at least RYM are generating a decent underlying profit.

[Biscuit]

I agree; Real-estate agents are as bad as politicians and will tell each party involved in the transaction what they want to hear! If property prices do decline or hopefully just remain static/slowing (as per Skid's post) for some time, at least RYM are generating a decent underlying profit.

I think you will find that even if the entire residential property market moved sideways or down for a few years, Rymans would still make a profit from property revaluations on top of the underlying profit as their property revaluations are not linked to short term movements in the residential market.

[Beagle]

Friend of ours tried auctioning their modest West Auckland home on Saturday 31st October. A classic basic 3 bedroom property at the affordable end of the market for Auckland, (reserve was under $600K).
After spending several thousand dollars on advertising and promotion no buyers showed up to the auction at 2.00 p.m.
I spoke with the general manager N.Z. of one of the major real estate franchises last week. Market's turned completely on its head Rodge was what he told me. Its now a buyers market.
I spoke with another client / real estate agent the week before and got the same story.

Thing is, our friend now can't move into the retirement village she wanted too and was counting on a sale to eliminate her remaining mortgage and have a comfortable retirement. She's so broke, (can't really afford her remaining $150k mortgage mortgage), that she put the $4K marketing and promotion costs on her credit card and now she's really snookered. Just one example, granted, but valuable feedback from others at the coal face that should know.

Hmmm...If people can't sell their homes they can't move into the retirement villages can they ?...and then if that happens en masse stocks priced for perfection in this sector on a PE of circa 30 might find their operating environment isn't perfect anymore. After many years of increases in the Auckland market it won't surprise me if there's a decent sized correction.

BUT retirement sector stocks are immune to a housing downturn supposedly so you guys will be alright...too early for a Tui ?

[Biscuit]

Hopefully there is a correction in the Auckland residential market, and soon. I doubt rest homes would be the first part of the economy affected by that. Increasing property prices leads to feelings of wealth that increase discretionary spending - cars, boats, overseas vacations. It will affect individual decisions about moving into a rest home but most demand is likely from people who have been in the market for a long time and have real equity. They are not going to grimly hold on just to maximize the inheritance for the kiddies IMHO.

[stoploss]

Friend of ours tried auctioning their modest West Auckland home on Saturday 31st October. A classic basic 3 bedroom property at the affordable end of the market for Auckland, (reserve was under $600K).
After spending several thousand dollars on advertising and promotion no buyers showed up to the auction at 2.00 p.m.
I spoke with the general manager N.Z. of one of the major real estate franchises last week. Market's turned completely on its head Rodge was what he told me. Its now a buyers market.
I spoke with another client / real estate agent the week before and got the same story.

Thing is, our friend now can't move into the retirement village she wanted too and was counting on a sale to eliminate her remaining mortgage and have a comfortable retirement. She's so broke, (can't really afford her remaining $150k mortgage mortgage), that she put the $4K marketing and promotion costs on her credit card and now she's really snookered. Just one example, granted, but valuable feedback from others at the coal face that should know.

Hmmm...If people can't sell their homes they can't move into the retirement villages can they ?...and then if that happens en masse stocks priced for perfection in this sector on a PE of circa 30 might find their operating environment isn't perfect anymore. After many years of increases in the Auckland market it won't surprise me if there's a decent sized correction.

BUT retirement sector stocks are immune to a housing downturn supposedly so you guys will be alright...too early for a Tui ?

Roger I think the point here is when you say "people can't sell their house " They can sell them it is just not at the unrealistic price they want to sell at or have been told be a estate agent they can get ..... Bearing in mind people in Auckland have effectively been living off their property revaluations with ever increasing mortgages to boot for a number of years now . This is a much bigger problem than retirees not being able to sell to get into a retirement home . As biscuit has pointed out the retirees would have on average much more equity in their homes and more realistic expectations on sale prices as they are effectively "trading down" not looking to trade up .....
If the whole Auckland housing market is stuffed I'd be shorting the big 4 Aussie bank stocks ..in particular CBA..how much of the Auck mortgage market does ASB hold ? Used to be something crazy , reminiscent of AMI and the CHCH insurance market .
Anyway I am more of a believer in a 15/20 % pull back in the market ( that probably only takes us back to last years prices ) Of course there will be some extreme examples where people have paid a ridiculous price in not the best area where the bank wants there money at all costs and they
may take a 30/40 % hit .... that will always make it into the press .
But to bash RYM ..(still a long way from your $ 6.50 Roger ) on a property correction , maybe take the argument to the FBU threat .

[couta1]

99% of all retirees buying Ryman units are mortgage free and most have houses worth more than the intended unit purchase.

[macduffy]

If the shortage of housing in Auckland is as acute as the experts tell us then stoploss is on the money. Retirees will still be selling their homes - less auctions, more negotiated offers and bargaining? - and RYM and its "imitators" will still thrive. Time and age catches up with all of us!

[gv1]

99% of all retirees buying Ryman units are mortgage free and most have houses worth more than the intended unit purchase.
Yes, they are the ones who can afford to lower the sell price. NZ has ageing population, no doubt about that!

[Beagle]

99% of all retirees buying Ryman units are mortgage free and most have houses worth more than the intended unit purchase.

Hi mate,

Over time I think we'll see that percentage change. I'm seeing more people using their homes as ATM machines against my advice. I guess a certain percentage of people learned nothing from the GFC, go figure ?

Stoploss - I am patient...sad reality is over the last two years the SP hasn't done much which suggests the stock got well ahead of itself 18 months or so ago at $9.00.

[winner69]

Hi mate,



Stoploss - I am patient...sad reality is over the last two years the SP hasn't done much which suggests the stock got well ahead of itself 18 months or so ago at $9.00.

Buy at elevated multiples = low (if not negative) returns over the subsequent few years

In Rym case when pe >30 the next 3 years returns have negative

Almost a rule, works for markets, stocks and fatten even housing

[Beagle]

http://www.interest.co.nz/property/78344/only-bids-weeks-city-sales-apartment-auction-were-made-auctioneer-behalf-vendors

But won't matter as apparently the retirement sector is completely immune to property price corrections ;)

[Beagle]

Buy at elevated multiples = low (if not negative) returns over the subsequent few years

In Rym case when pe >30 the next 3 years returns have negative

Almost a rule, works for markets, stocks and fatten even housing

Another 18 - 24 months of sideways and we're all good to go on this one mate :cool:

[macduffy]

http://www.interest.co.nz/property/78344/only-bids-weeks-city-sales-apartment-auction-were-made-auctioneer-behalf-vendors

But won't matter as apparently the retirement sector is completely immune to property price corrections ;)

The apartments referred to in the article were hardly representative of the wider Auckland property market - one had a "leaky building" history, one was a leasehold property and in the case of the other two, the agent started the bidding at, or close to, their recent sale prices. Not surprising that no-one was prepared to bid them even higher than that!

Yes, a correction, probably, but I doubt that we will look back and call it a major correction.

[Biscuit]

Probably the best commentary on NZ residential property is found in Tony Alexander's BNZ Weekly Overview, which recently started up again after a long break:

"Just a quick comment regarding the widespread anecdotal evidence we have been receiving for up to three months now regarding fewer people attending Open Homes and a lower proportion of properties selling successfully at auctions. Some people are seeing evidence of prices falling. This is not likely to be the start of a downward trend. Instead it is likely to be asking price cuts by over-optimistic sellers who had been essentially taking the proverbial by holding out for an unrealistic price in the hope that some mug would feel panicked enough to pay through the nose so they avoided missing out. The fundamentals still strongly support prices going higher though, as we have noted for some time now, rising at a slowing pace now that the Reserve Bank has knocked many of the uninformed, undercapitalised people driven by FOMO out of the market. Chinese buyers have also backed off as they see a lengthening series of small roadblocks put in their way, consider wealth lost through China’s sharemarket rout, and struggle to get funds out of China amidst a new crackdown on capital outflows by the authorities."

Alexander is far closer to the money on property than "Interest.co"

[LAC]

I think Ryman's the cream of the crop in Retirement villages and they will attract the top end with deep pockets. So the oldie looking to sell up out west to buy in Ryman might not be the best example. If an oldie in Epsom cant sell up for 800k then I would start to worry....
There's many other villages out there to suit different price ranges but Ryman is dear and targets a certain group of buyers.

[Beagle]

I spoke with the general manager N.Z. of one of the major real estate franchises last week. Market's turned completely on its head Rodge was what he told me. Its now a buyers market.

This from a very smart guy who's also one of the top Auckland auctioneer's...been in real estate for 30 years and really knows his stuff. Tony Alexander is a good economist who's relying on official REINZ date that is out of date and will change when official stat's confirm what I'm hearing from smart people on the ground regarding October's conditions. The worm has well and truly turned BIG TIME.

[Biscuit]

Tony Alexander is a good economist who's relying on official REINZ date that is out of date

Alexander uses REINZ but also does his own regular surveys of the industry. Still, it is the guys on the ground who should have the best insight...

[Snow Leopard]

Do not care a hoot whether the Auckland property market is going to boom some more or bust - I sold the last of my Ryman in July-14.

As of today I would be 'interested' if the share price was less that $6.72 and by the time next March arrives that interest will have risen to $7.25.

I believe far too many have lost sight of what they are actually buying when they buy Ryman and in historical terms it is still trading well in excess of long term average multiples.

Best Wishes
Paper Tiger

[Beagle]

As of today I would be 'interested' if the share price was less that $6.72 and by the time next March arrives that interest will have risen to $7.25.

I believe far too many have lost sight of what they are actually buying when they buy Ryman and in historical terms it is still trading well in excess of long term average multiples.

Best Wishes
Paper Tiger

Bang on the money and inline with Winner69's and my thinking. More likely the SP will just continue to track sideways and investors will "enjoy" their ~ 1.5% divvy yield until earnings growth catches up with fair value. My best guess...another 2 years sideways for the SP.

[Biscuit]

As of today I would be 'interested' if the share price was less that $6.72 and by the time next March arrives that interest will have risen to $7.25.



You are confident then that the value of Rymans will increase by 7.9% in the next 4 months? Maybe its that kind of predictability and growth, that explains why it was a good buy at $7.20 a few weeks ago.

[macduffy]

You are confident then that the value of Rymans will increase by 7.9% in the next 4 months? Maybe its that kind of predictability and growth, that explains why it was a good buy at $7.20 a few weeks ago.

Hmmm.... I don't think that the tiger was saying that. His 7.9% growth is predicated on a current shareprice of less than $6.72 - which, of course, isn't the case.

;)

[Biscuit]

Hmmm.... I don't think that the tiger was saying that. His 7.9% growth is predicated on a current shareprice of less than $6.72 - which, of course, isn't the case.

;)
I think he was saying that, in his opinion, the value (not the share price) would increase by 7.9%.

[Joshuatree]

I don't know what the share price will do and i sold a while back,but what I'm reading ,and hearing on National Radio news today; permits/ consents still arn't matching the inflow of new residents and that prices are slowing but still increasing i.e. demand still exceeding supply so to say the market is plunging is just misleading based on that. Don't panic Mr Mannering:).

[Bjauck]

I don't know what the share price will do and i sold a while back,but what I'm reading ,and hearing on National Radio news today; permits/ consents still arn't matching the inflow of new residents and that prices are slowing but still increasing i.e. demand still exceeding supply so to say the market is plunging is just misleading based on that. Don't panic Mr Mannering:). Capt Mainwaring surely, you stupid boy ;) IMO, if we relied on underlying profit only and ignored land values, I think we would have to wait a long time before underlying profit justified the current price.

[winner69]

In Auckland - Monthly sales volumes fell 21 percent to 1,068, compared with a 3.3 percent gain in September.

http://www.sharechat.co.nz/article/66b61fa7/auckland-house-price-growth-moderates-in-october-as-new-rules-introduced.html?utm_medium=email&utm_campaign=Auckland+house+price+growth+moderates +in+October+as+new+rules+introduced&utm_content=Auckland+house+price+growth+moderates+ in+October+as+new+rules+introduced+CID_487b6b0c182 5efe30842faa356e86c26&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle66b61fa7auckla nd-house-price-growth-moderates-in-october-as-new-rules-introducedhtml

[Snow Leopard]

Do not care a hoot whether the Auckland property market is going to boom some more or bust - I sold the last of my Ryman in July-14.

As of today I would be 'interested' if the share price was less that $6.72 and by the time next March arrives that interest will have risen to $7.25.

I believe far too many have lost sight of what they are actually buying when they buy Ryman and in historical terms it is still trading well in excess of long term average multiples.

Best Wishes
Paper Tiger

More [unquoted] quotes found between the above quote and the below quote but not quoted here :confused:


I think he was saying that, in his opinion, the value (not the share price) would increase by 7.9%.

Firstly an apology 'by the time next March arrives' should have been 'by the time next April arrives'.

Those numbers fell out of this mess which was part of a larger mess:
http://i7.photobucket.com/albums/y269/TheTigerWithNoName/SharetraderImages/NZX-RYM/RYM-Snip-20151103.png

The 3rd column is the FY reported NTA for 2002 to 2015 inclusive which appears to have a fairly reliable average 10 YoY growth rate of nearly 20%.

The 1st column is the ratio of the share price at the end of Oct in calendar year XX to the 3rd column, which is the NTA at the end of Mar in calendar year XX (I did say it was a mess :ohmy: and in writing this I have spotted the error which makes my $6.72 and $7.25 too high :eek2:) and the second column is the natural log of column one.

So with our annual 20% NTA growth and the 14 year average ratio of SP to NTA out popped $6.72 now and $7.25 later, which should have been $6.04 now and $6.72 at the end of Mar-16.

So that is all there is to it.

But the good news is of course, if the past repeats into the future at 31-Mar-2020 the value of the company, even by this Tiger model is $13.93.

So what are you willing to pay now for that?

Best Wishes
Paper Tiger

Homework question: Why is a glorified property company worth many times it's NTA ?

[macduffy]

Homework question: Why is a glorified property company worth many times it's NTA ?

A tiger ate my homework but I had compiled a lengthy explanation, the essence of which was that this particular property company, unlike most others, gets to clip the ticket in several ways as it lets and re-lets its properties.

Cheers, PT.

:)

[macduffy]

Duplicated post.

:(

[percy]

Answer to your question.
Because they when they have sold occupancy rights for each completed village they have all their capital back,and can repeat the process when they complete their next villages ,and so on,and on and on!!.

[winner69]

More [unquoted] quotes found between the above quote and the below quote but not quoted here :confused:



Firstly an apology 'by the time next March arrives' should have been 'by the time next April arrives'.

Those numbers fell out of this mess which was part of a larger mess:
http://i7.photobucket.com/albums/y269/TheTigerWithNoName/SharetraderImages/NZX-RYM/RYM-Snip-20151103.png

The 3rd column is the FY reported NTA for 2002 to 2015 inclusive which appears to have a fairly reliable average 10 YoY growth rate of nearly 20%.

The 1st column is the ratio of the share price at the end of Oct in calendar year XX to the 3rd column, which is the NTA at the end of Mar in calendar year XX (I did say it was a mess :ohmy: and in writing this I have spotted the error which makes my $6.72 and $7.25 too high :eek2:) and the second column is the natural log of column one.

So with our annual 20% NTA growth and the 14 year average ratio of SP to NTA out popped $6.72 now and $7.25 later, which should have been $6.04 now and $6.72 at the end of Mar-16.

So that is all there is to it.

But the good news is of course, if the past repeats into the future at 31-Mar-2020 the value of the company, even by this Tiger model is $13.93.

So what are you willing to pay now for that?

Best Wishes
Paper Tiger

Homework question: Why is a glorified property company worth many times it's NTA ?

Good work there PT

An astute reader might have worked out that the higher the SP/NTA (or its natural log) the subsequent 3 year returns gets lower.

From your table for instance when the SP/NTA was 4.18 the share price up 0% over the next 3 years (ie it was the same price in year XX+3 then it was in year XX) even though the NTA almost doubled in the same time.

Spooky eh - esp when that SP/NTA was higher 3 and 2 years ago and is now only slowing 'reverting' to some sort of mean.

All points to a share price of $7.50 - $8.00 in 1 to 2 years time.

That can't be right - we both must be talking rubbish

Like your use of natural logs to highlight things

[Vaygor1]

So with our annual 20% NTA growth and the 14 year average ratio of SP to NTA out popped ..... $6.04 now and $6.72 at the end of Mar-16.

So that is all there is to it.

But the good news is of course, if the past repeats into the future at 31-Mar-2020 the value of the company, even by this Tiger model is $13.93.

So what are you willing to pay now for that?

Thanks once again Paper Tiger.

SP-NTA, SP-Underlying Profit, SP-IFRS Profit, SP-DCF, etc etc all form historical and forecast ratios that drop out different results.. none of them right & none of them wrong.

I am sure you recall my Log/Log 10-year analysis of SP vs Underlying Profit, yielding a log-log straight line correlation of R² = 0.98

So, using that method, and to answer your question, the amount that I am willing to pay currently for RYM is anything under $7.97 .... the further under, the more willing.

By 1-Apr-2016 (but technically post-announcement in mid-May 2016), for me that number will have risen to $8.57

Now I'm not saying I am right (or wrong) but that is my conclusion.. the one of many (as is yours) that eventually forms a market sentiment and shareprice based upon the hundreds of different raw data sets, different calculation methods, different appetites for risk, and different interpretations of the number(s) that drop out.

Of course PT, I am not really saying this to you as you already know the above, but more for the some of the newer ST contributors out there who may be interested.

[Snow Leopard]

...I am sure you recall my Log/Log 10-year analysis of SP vs Underlying Profit, yielding a log-log straight line correlation of R² = 0.98...

I remember it and I have found it (http://www.sharetrader.co.nz/showthread.php?626-Ryman-Too-boring-to-talk-about&p=511907&viewfull=1#post511907) but the nice graph has gone! (which has happened to lots of attachments, I have gone back to using Photobucket and linking them).

RYM must be the most consistent, reliable growth company on the exchange, the share price to choose your metric ratio is, very definitely, a lot more of an indication of market sentiment than the company itself.

A buy them when they are relatively cheap, keep them when they are expensive has been a good long term and straight forward strategy so far.

But....

For a while I have had this curious feeling about the valuations applied to them and despite a couple of posters attempting my homework for me I still play with OpenOffice Calc (Excel for frugal Tiger's).

But I guess 'I will be back someday'

Best Wishes
Paper Tiger

Obscure? references to Tony Banks album

[winner69]

Another boomer result for Ryman coming up this week. Plenty in way of revaluations still coming through

I reckon they on track for 1/4 billion real profit in FY16. Book value will rise in lie with this.

[LAC]

Did Ryman open the Puke village this year?

[OldGuy]

Back in yesterday at $7.60. Sold out 2 years ago at $7.85.

This should be interesting. Target exit price is $10 within the next 2 years.

[troyvdh]

dear old guy...just remember..Ive said it before....the last share split was $11.30 odd....yonks ago...1-5......you may exit at $3 something...times 5...cheers...

[Master98]

Solid HY results beats analysts:

https://nzx.com/companies/RYM/announcements/273767

[winner69]

Another boomer result for Ryman coming up this week. Plenty in way of revaluations still coming through

I reckon they on track for 1/4 billion real profit in FY16. Book value will rise in lie with this.

First half $130m - so 1/4 billion for full year an the light side methinks

Book value has increased to $1.2 billion as at H1 so share price currently at 3.1 times or 2.8 times f16 forecast.

So becoming more 'realistically' priced but markets just love stars so anything can happen

[LAC]

Great news....even better when it makes the Herald

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11548410

[percy]

Great news....even better when it makes the Herald

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11548410

Another cracker.!

[LAC]

Q&A's "we expected to have 50% sold at 250k, we instead have 80% at an average of 400k" :)

[Beagle]

Back in yesterday at $7.60. Sold out 2 years ago at $7.85.
This should be interesting. Target exit price is $10 within the next 2 years.

This. Market darling priced for absolute perfection and is performing to absolute perfection so that's good but we could easily see another year when the SP simply tracks sideways...then effectively through EPS growth the SP becomes reasonable value again, (In my opinion) and I effectively get my $6.50 I've been waiting quite some time for. Divvy yield is now about 2%.

[Nasi Goreng]

First half $130m - so 1/4 billion for full year an the light side methinks

Book value has increased to $1.2 billion as at H1 so share price currently at 3.1 times or 2.8 times f16 forecast.

So becoming more 'realistically' priced but markets just love stars so anything can happen

Are we not supposed to value retirement villages by underlying profit? It is all well and good to look at NPAT but I base my valuations on underlying profit which is $70.3m. Looking at underlying earnings at $70.3m, assume $140m for year, this gives forward PE of around 27. Not too bad for a company growing at 15-20%. Compare that with FPH and RYM looks cheap.

I haven't had chance to review todays communications in full so don't know if they have provided forecast for 2nd half or further out.

[winner69]

Are we not supposed to value retirement villages by underlying profit? It is all well and good to look at NPAT but I base my valuations on underlying profit which is $70.3m. Looking at underlying earnings at $70.3m, assume $140m for year, this gives forward PE of around 27. Not too bad for a company growing at 15-20%. Compare that with FPH and RYM looks cheap.

I haven't had chance to review todays communications in full so don't know if they have provided forecast for 2nd half or further out.

Nasi, I see underlying earnings as a measure of operational day day performance. it is also the base used to determine dividend payments

Some use it to value RYM but a lot of investment managers use the full NPAT and Book Values. Those represent the full value of what the company is worth.

On this basis a PE of 13/14 and 3 times book value. Cheap?

[Master98]

Are we not supposed to value retirement villages by underlying profit? It is all well and good to look at NPAT but I base my valuations on underlying profit which is $70.3m. Looking at underlying earnings at $70.3m, assume $140m for year, this gives forward PE of around 27. Not too bad for a company growing at 15-20%. Compare that with FPH and RYM looks cheap.

I haven't had chance to review todays communications in full so don't know if they have provided forecast for 2nd half or further out.
RYM confirmed FY16 underlying profit growth 15%,so this full year underlying profit will be 136.3x1.15=156.7m.

[gv1]

Pls let me know if I am doing something not right. I used the valuation formula:
V=EPS*(7.5*2g) with g only as 10%
=1331
Is this correct.

[winner69]

Pls let me know if I am doing something not right. I used the valuation formula:
V=EPS*(7.5*2g) with g only as 10%
=1331
Is this correct.

Seems OK even though you have a typo in that it should be +2g and not *2g. The original formula was 8.5 and not 5.5

Working backwards you seemed to have used an EPS of 48.4,- the FY15 number

So just under half price eh

[gv1]

Seems OK even though you have a typo in that it should be +2g and not *2g. The original formula was 8.5 and not 5.5

Working backwards you seemed to have used an EPS of 48.4,- the FY15 number

So just under half price eh

Thanks winner, typo error, should be addition, I have used 7.5 because sparky used it . Yeah EPS of 48.41.
If 8.5 used then it will be around $18.
Winner what EPS should I use.

[stevevai1983]

Thanks winner, typo error, should be addition, I have used 7.5 because sparky used it . Yeah EPS of 48.41.
If 8.5 used then it will be around $18.
Winner what EPS should I use.


I would use PEG for growth stock (med term growth >=10%)
I consider PEG=1.5 as "fair value" and PEG <=1 as "extremely under value"
so for RYM my fair value is (156.7/500)*15*1.5 = 7.05$ for now.

[winner69]

Thanks winner, typo error, should be addition, I have used 7.5 because sparky used it . Yeah EPS of 48.41.
If 8.5 used then it will be around $18.
Winner what EPS should I use.

The 48.1 eps is FY15 NPAT

Many should say you should use underlying earnings which would be 27.1 cets.

Using the 27.1 gives you 748 (with your 10% g)

Takes your pick - and soe wold say your g of 10 could/should be say 15%

What you reckon is a pretty fair intrinsic value

[Beagle]

Long overdue I crunched my numbers again, ($6.50 was a VERY long time ago). Using my own personal modified Ben Grahame intrinsic value formula where v = best estimate of current year true EPS, that's underlying earnings (27.1 x 1.15) = 31.17 cps x (8.5+ 1G) where G = growth 15, (Note Ben Grahame uses 2G based on historical earnings) I now see good value at 31.17 x 23.5 =$7.32.

Hey Winner, it looks like the SP ostensibly tracking sideways for two years has nearly worked its magic for us and its nearly time to reconsider this one.

[winner69]

Long overdue I crunched my numbers again, ($6.50 was a VERY long time ago). Using my own personal modified Ben Grahame intrinsic value formula where v = best estimate of current year true EPS, that's underlying earnings (27.1 x 1.15) = 31.17 cps x (8.5+ 1G) where G = growth 15, (Note Ben Grahame uses 2G based on historical earnings) I now see good value at 31.17 x 23.5 =$7.32.

Hey Winner, it looks like the SP ostensibly tracking sideways for two years has nearly worked its magic for us and its nearly time to reconsider this one.

Didn't we start that discussion when the share price was about $9

Not much in the way of shareholder returns over 2 years or more eh Roger. And in that time Ryman profits have gone up at 15% a year. NOT FAIR IS IT.

Yes getting closer to a good buy again ....maybe in another year?

[trader_jackson]

It's gone from massively overvalued, to almost worth considering for me

[Beagle]

Didn't we start that discussion when the share price was about $9

Not much in the way of shareholder returns over 2 years or more eh Roger. And in that time Ryman profits have gone up at 15% a year. NOT FAIR IS IT.

Yes getting closer to a good buy again ....maybe in another year?

Yes it was $8 something if my memory serves me correctly so quite a disappointing two years, (all the more so with the really low unimputed dividend yield), for holders and we quite rightly picked it as overvalued two years ago. After having a look at the result / outlook and running the numbers again I'm thinking sooner than 12 months now mate.

I agree with you TJ, it was massively over-valued and almost everyone thought I was nuts saying it was only worth $6.50 about two years ago but with the benefit of hindsight its become clear that was really all it was worth back then.

P.S. Just brought up the comparative chart between NZX50 and RYM for the last 24 months on the super chart menu on ANZ securities, (sorry don't know how to post an image) but NZX50 is up 24% and RYM is actually down 5% in the last 2 years, a 29% under-performance v the index, ouch ! And you are quite right Winner it got to $9.00 in May 2014. SP performance in the last 18 months especially has been really dreadful !

[troyvdh]

roger..have you looked at say 3 4 5 year comparison....again being old school ....why on earth would someone invest in a retirement entity with a two year horizon.....?????????.......and again I say what if they have another share split....am I wrong ?.......man I feel like an Island...

[gv1]

Thank you all, good to see everyone helping out...coming on board. Greatly appreciated!!:t_up::t_up:

[gv1]

roger..have you looked at say 3 4 5 year comparison....again being old school ....why on earth would someone invest in a retirement entity with a two year horizon.....?????????.......and again I say what if they have another share split....am I wrong ?.......man I feel like an Island...
Yes thanks troyvdh..I was thinking the same.

[Beagle]

Nobody is saying its not a great investment over the long haul mate, its just that with a circa 300% SP appreciation in the few years to late 2013 the stock got well ahead of itself. That's what Winner and I strongly believed at that time and the SP performance in the last two years has vindicated our viewpoint. I think you can take it as read that given the circa 30% underlying earnings growth in total in the last two years we both think it's now around about fair value and good buying for the long haul on any meaningful dip. My one concern is where's the catalyst to break it out of its current trading range ?
There's not much point owning this puppy for it's dividend yield is there !

[percy]

FOR THE RECORD.

For the umpteenth time Ryman's MD,Simon Challies has stated;
"Ryman experienced steady sales no matter what the market conditions were."
ps pleasingly enough The Press reported this twice, in this mornings issue..!..lol.

[trader_jackson]

Nobody is saying its not a great investment over the long haul mate, its just that with a circa 300% SP appreciation in the few years to late 2013 the stock got well ahead of itself. That's what Winner and I strongly believed at that time and the SP performance in the last two years has vindicated our viewpoint. I think you can take it as read that given the circa 30% underlying earnings growth in total in the last two years we both think it's now around about fair value and good buying for the long haul on any meaningful dip. My one concern is where's the catalyst to break it out of its current trading range ?
There's not much point owning this puppy for it's dividend yield is there !

I agree completely, it did get 'out of hand', people got far to optimistic, and although there is no denying they have done well, it was simply trading at far far to much of a premium for me (and it seems many others) to get excited about it, and the dividend yield alone is not enough to support an investment from me (what is it, like 2%? not imputed?)

At least with ARV, which for little reason is still viewed as the 'dog of retirement village stocks (although 'all will be revealed' this coming Thursday), they have a 5% expected dividend yield 'to back it up'...

I'm also not sure how it will break out because although its doing well, the share price is still at a premium, although no where near as overvalued as it was a few years ago

[winner69]

The much admired investor and author Peter Lynch liked to look at a stocks price over time compared to a reasonable PE. It quickly told him when it was under/over valued.

Here is updated chart showing RYM price compared to what it would be if it traded at 22 times underlying earnings. The 22 number is a long term average but before the last few years madness it was closer to 20.

Easy to see the best buying opportunities to maximise returns (even for the diehard long time investor)

I find such thingsiInteresting

[winner69]

and this one shows degree of under/overvalued relative to a PE of 22

Getting closer to a more reasonable level. The red line is sort of forward looking and that's why I think the price has got another 6 months to a year of going sideways

But then a global market collapse could stuff that theory anyway

[mickey2]

Thanks Winner69 for the images - seems like a good way to put things into perspective.

[Zaphod]

I've read Peter's book, and I always thought selecting a PE of 22 across all business types seems rather arbitrary. Perhaps the PE selected should be relative to its peers?

[trader_jackson]

I always compare 'the general company' to the nzx 50 average, which I think is around 18 or 19, although this comparison is far from fool proof.

If you want to be more precise comparing it to peers can be beneficial, although some may be in different stages (eg summerset more growth) or differently structured to others (eg arvida more care focused)

[winner69]

I've read Peter's book, and I always thought selecting a PE of 22 across all business types seems rather arbitrary. Perhaps the PE selected should be relative to its peers?

The PE of 22 I use for Ryman isn't arbitrary - it's what the market over time has rewarded Ryman with and if they continue to grow earnings at 15% pa in future the PE will probably average out about there again.

It's also a multiple of underlying earnings. Using real NPAT the PE is about 13%/14%

[Nasi Goreng]

I like the 22 PE underlying earnings chart Winner, it is quite interesting.

In an environment where interest rates are low, growth stocks should be in high demand and we have seen that with elevated PE's. So when I look at this chart, I have to take into account that interest rates today are a lot different to what they were in 2008 when valuation for Ryman would have been considered very cheap. Ryman and retirement sector have grown considerably over the last few years and it looks like the sector fundamentals stack up for further growth over the next few years and beyond.

At current valuations, as long as we get continued underlying profit growth over the next few years, your original investment if you bought today is going to look very good. I see it as a buying opportunity with more positives than potential negatives.

[winner69]

I always compare 'the general company' to the nzx 50 average, which I think is around 18 or 19, although this comparison is far from fool proof.

If you want to be more precise comparing it to peers can be beneficial, although some may be in different stages (eg summerset more growth) or differently structured to others (eg arvida more care focused)

According to Morningstar the nz market PE is 15.5

Ryman on reported earnings ( npat) is at 13/14 .......interesting

[Nasi Goreng]

Yes but how much of the NPAT is capital gain? If you are basing RYM on PE, you have to price in year on year capital gains similar to this year. If value of assets stay the same year on year, NPAT would fall. It is conceivable that NPAT could fall and underlying earnings continue to grow. I imagine if this was to happen, RYM would pay less tax because there were no capital gains, this would increase cashflow and potentially go into the dividend pool.

[winner69]

Yes but how much of the NPAT is capital gain? If you are basing RYM on PE, you have to price in year on year capital gains similar to this year. If value of assets stay the same year on year, NPAT would fall. It is conceivable that NPAT could fall and underlying earnings continue to grow. I imagine if this was to happen, RYM would pay less tax because there were no capital gains, this would increase cashflow and potentially go into jthe dividend pool.

zaphod - not too sure what you really saying here.

As I have said before I prefer using real NPAT (including unrealised fair value adjustments) and the basis for valuation is Book Value.

[Beagle]

Thanks for the charts Winner. I really think Ryman as our premier growth stock with the most consistent record of growth over the long haul is worth at least a PE of 23.5 based on 8.5 for no growth + 1G. G= 15.
Looked at another way this places it on a PE premium to the market of about 5-6 and I think it's worth all of that.

Using Ben Graham's formula of v = historical underlying earnings eps x (8.5 +2G) gives 27.1 x 38.5 = $10.43. I stick with my 1G formula based on current year earnings which gives $7.32 with a little bit of wiggle room then RYM is on my radar for a re-entry at some stage but I am also watching the technical's which don't really look all that flash. Possibly better to wait on the side-lines because the unimputed dividend yield is only circa 2% per annum until there's a very clear break over $8. That said sitting there waiting with cash in the bank isn't going to give you much more than 2% anyway.

[winner69]

Roger - in Ben Graham's days did they have such things as 'underlying earnings'?

He might have come up with an alternative formula if they did?

[Beagle]

Just my way of eliminating the capital gains mate. I guess back then earnings were simply earnings so if we apply his formula to the capital gain inclusive earnings the stock is very cheap. But let's forget about capital gains because the Auckland market has the skids under it after gaining 25% last year. I think its about fair value now but as we've discussed before its easy enough for the stock to continue to track sideways for 3 or 4 years in total and undershoot on the downside, so its possible we could see as much as another 24 months of the SP doing very little. Definitely one to put on the watch list but I struggle to see the catalyst for a breakout ?

[winner69]

Just my way of eliminating the capital gains mate. I guess back then earnings were simply earnings so if we apply his formula to the capital gain inclusive earnings the stock is very cheap. But let's forget about capital gains because the Auckland market has the skids under it after gaining 25% last year. I think its about fair value now but as we've discussed before its easy enough for the stock to continue to track sideways for 3 or 4 years in total and undershoot on the downside, so its possible we could see as much as another 24 months of the SP doing very little. Definitely one to put on the watch list but I struggle to see the catalyst for a breakout ?

Fair comment.

Doing a DCF for such companies is fraught with danger unless you really have some inside knowledge. I did one earlier this year after FY15 results and it came out about $7.50. Really sensitive to house price inflation assumptions and the number of new builds. Playing around with some scenarios gives ranges of $7-$8.

So like you I can't see any real real break out of the current range. When things do revert to the the average / norm invariably they do undershoot.

We might just get that $6.50

[gv1]

They are not just relaying on Akld but huge profit mark up in Melbourne...Mel will be generating good profit for them.

[Zaphod]

zaphod - not too sure what you really saying here.

As I have said before I prefer using real NPAT (including unrealised fair value adjustments) and the basis for valuation is Book Value.

That's Nasi Goreng's post that you've quoted, not mine :)

[Master98]

following is Morning Star new review after 1H results:
"Focus on Quality and Demographic Trends Underpins Further Strong Demand for Ryman's Services
Ryman Healthcare reported first-half fiscal 2016 underlying profit of NZD 70.3 million, up 6% on the prior corresponding period. The company maintained its guidance for growth of 15% for the full year, implying second-half growth of around 10%. This seems like a big step-up, but should not be a stretch, given that the number of developments completing in the second half will step up materially, and given that the firm is also seeing a contraction in its sales cycle. In essence, those wishing to buy into retirement villages are doing so now off the plan, when in the past most resident sales occurred following completion of the development. This provides confirmation of the acute shortage of retirement living and aged care properties in certain corridors. Ryman has been quite strategic in this regard, specifically building villages in areas that were first settled in the 1960s. These areas have a high weighting to residents who are 75-85 years of age, an age cohort that has high demand for Ryan's retirement living and aged care offering.

We make minor compositional changes to our earnings forecasts, with our NZD 8.50 fair value estimate and narrow moat rating both unchanged. At current levels, Ryman is slightly undervalued, with a forecast fiscal 2016 distribution yield of 2.0%, based on a 50% payout ratio."

[winner69]

That's Nasi Goreng's post that you've quoted, not mine :)

Sorry mate - all my life i have had a problem of getting people mixed up.

Must have been thinking of you at the time.

[winner69]

following is Morning Star new review after 1H results:
"Focus on Quality and Demographic Trends Underpins Further Strong Demand for Ryman's Services
Ryman Healthcare reported first-half fiscal 2016 underlying profit of NZD 70.3 million, up 6% on the prior corresponding period. The company maintained its guidance for growth of 15% for the full year, implying second-half growth of around 10%. This seems like a big step-up, but should not be a stretch, given that the number of developments completing in the second half will step up materially, and given that the firm is also seeing a contraction in its sales cycle. In essence, those wishing to buy into retirement villages are doing so now off the plan, when in the past most resident sales occurred following completion of the development. This provides confirmation of the acute shortage of retirement living and aged care properties in certain corridors. Ryman has been quite strategic in this regard, specifically building villages in areas that were first settled in the 1960s. These areas have a high weighting to residents who are 75-85 years of age, an age cohort that has high demand for Ryan's retirement living and aged care offering.

We make minor compositional changes to our earnings forecasts, with our NZD 8.50 fair value estimate and narrow moat rating both unchanged. At current levels, Ryman is slightly undervalued, with a forecast fiscal 2016 distribution yield of 2.0%, based on a 50% payout ratio."

Part of that says - NZD 70.3 million, up 6% on the prior corresponding period. The company maintained its guidance for growth of 15% for the full year, implying second-half growth of around 10%. This seems like a big step-up, but should not be a stretch,

Unfortunately Morningstar analyst +6% in H1 and +10% in H2 doesn't give you +15% for the full year

Ryman need +23% in H2 to get full year up to +15% for full year

Morningstar mentioned 'a big step up' - sure is but Ryman will do it

Quality of analysts these days

[Master98]

Part of that says - NZD 70.3 million, up 6% on the prior corresponding period. The company maintained its guidance for growth of 15% for the full year, implying second-half growth of around 10%. This seems like a big step-up, but should not be a stretch,

Unfortunately Morningstar analyst +6% in H1 and +10% in H2 doesn't give you +15% for the full year


Ryman need +23% in H2 to get full year up to +15% for full year

Morningstar mentioned 'a big step up' - sure is but Ryman will do it

Quality of analysts these days
lol winner69, seems like Morningstar analysts didn't get well paid.

[trader_jackson]

lol winner69, seems like Morningstar analysts didn't get well paid.

For what its worth, I think it was above what Forsyth had expected by a few %

[Vaygor1]

The catalyst for the $8 breakout will come in 6 months when the unrealised gains from the pre-bookings of 4 entire villages being completed in H2 this FY become realised. Maybe even as early as Feb/Mar 2016 if the speculators out there kick in a bit sooner.. as they do.

I keep hearing about the poor dividend that Ryman pay, but how many companies grow that dividend year on year by at least 15%? Not many.

I have been buying RYM at a fairly constant rate since Sept 2007. My average buy price right now is $2.54 and the dividend about to be paid plus the one 6 months back totals 14.6 cents. That is a pre-tax 5.75% per annum return on my investment by way of dividend alone. Assuming I don't buy/sell, in one year that return will be minimum 6.7%. Two years from now it will be minimum 7.8%, the year after that I'll get at least 9% and so on.

In terms of capital gains to-date I can't complain (SP increase over 200% during an average hold period of 4 years), and I have bought loads at PE's higher than they are today. Buying today would yield much the same result as that above… but I guess if such a virtually guaranteed outcome would leave a bad taste in ones mouth then greener and more certain pastures can always be found elsewhere... maybe.

[winner69]

The catalyst for the $8 breakout will come in 6 months when the unrealised gains from the pre-bookings of 4 entire villages being completed in H2 this FY become realised. Maybe even as early as Feb/Mar 2016 if the speculators out there kick in a bit sooner.. as they do.

I keep hearing about the poor dividend that Ryman pay, but how many companies grow that dividend year on year by at least 15%? Not many.

I have been buying RYM at a fairly constant rate since Sept 2007. My average buy price right now is $2.54 and the dividend about to be paid plus the one 6 months back totals 14.6 cents. That is a pre-tax 5.75% per annum return on my investment by way of dividend alone. Assuming I don't buy/sell, in one year that return will be minimum 6.7%. Two years from now it will be minimum 7.8%, the year after that I'll get at least 9% and so on.

In terms of capital gains to-date I can't complain (SP increase over 200% during an average hold period of 4 years), and I have bought loads at PE's higher than they are today. Buying today would yield much the same result as that above… but I guess if such a virtually guaranteed outcome would leave a bad taste in ones mouth then greener and more certain pastures can always be found elsewhere... maybe.

You doing well mate and Ryman making you rich

My investing approach is different to yours. I take an 'active investor' with one of the key drivers being don't lose your money - and that means don't give back what the market giveth / lock in most of the profits or whatever you want to call it. I would have hated seeing 50% of what I had disappear over 2 years in 2007/2008 for instance

Simple Ryman chart below, Easy to see when winner has been a shareholder and periods when he hasn't been. One day no doubt I will be a shareholder again

Yes Ryman has consistently had great financial results - just that the market has valued this performance at extremes lows and highs

[LAC]

I wish I could pick the highs and lows with this stock, having a lot less experience than most people on here, I just keep it simple, I will buy as long as price doesn't get toooo ridiculous and sell in 2035:) I would hope it's worth more than I am purchasing today.
I will keep taking profits on other riskier stocks in my portfolio and throw them at Ryman. Hope it works out for me.

[Vaygor1]

You doing well mate and Ryman making you rich

My investing approach is different to yours. I take an 'active investor' with one of the key drivers being don't lose your money - and that means don't give back what the market giveth / lock in most of the profits or whatever you want to call it. I would have hated seeing 50% of what I had disappear over 2 years in 2007/2008 for instance ...

Hi Winner, & thanks for the chart.

Your investing approach is a bit different to mine for sure…and yes, it was very uncomfortable to see so many shares I'd bought for circa $2.10 in late 2007 worth only $1.30 by late 2008 (a 42% drop all up). But I was convinced that $2.10 in late 2007 was still a good price given the company's fundamentals, so as the price dropped, and dropped, .. and dropped, all it meant was I had to find more capital to buy more and more RYM at even better bargains... with the side benefit of lowering my average RYM buy price.

Given the situation I was in, I don't know if I could have followed your approach even if I wanted to… I had already put my stake in the ground at $2.10 and I couldn't bear to sell at a loss in late 2008 when RYM's fundamentals looked so good.

But here's the funny thing…if with hindsight, I had followed your approach (and there is absolutely nothing wrong with it), I would have held off buying until late 2008, but I know I wouldn't have bought anywhere near the volume as I did via the circumstances I described above. I couldn't have ever jumped in (at least back then) with such a large volume in comparatively such a short time frame. The upshot being, that in %age terms I would have done a lot better had I followed your approach for sure, but in dollar terms I don't think I would have made 1/4, or at least 1/2 as much.

…… But I have learnt a lot since then. If history repeated itself, who knows? :)

[Vaygor1]

I wish I could pick the highs and lows with this stock, having a lot less experience than most people on here, I just keep it simple, I will buy as long as price doesn't get toooo ridiculous and sell in 2035:) I would hope it's worth more than I am purchasing today.
I will keep taking profits on other riskier stocks in my portfolio and throw them at Ryman. Hope it works out for me.

It will work out for you Lac…, nothing surer. I can't see a better long-term bet with such a predictable outcome on the NZX… but remember, I am biased :cool:.