RYM - Ryman Healthcare

[Beagle]

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:.

Yes I think that's fair comment...a classic retirement stock in more ways that one and arguably the best buy and stick in the bottom drawer stock to own over the very long run. One wonders if they can keep the 15 % earnings growth going indefinitely ?

[axe]

7739

this is from sharesight. www.sharesight.co.nz/

A theoretical purchase of just over $10k - 10 years ago...........

[axe]

The %ages from my psot above are a bit exteme looking. I had the "simple%" box ticked instead of the "compound%".

Obviously the past 10 years performance will not guarantee the next 10 years will be as good. The next 10 years could be better?

The dividend yield is interesting to watch how even on purchase the div % was low but the ever increasing divvy has ramped up the yield on original invested capital.

Kind of a beautiful sight to behold.

7741

[winner69]

Axe posts might be confusing - because I posted something that I have since deleted

10 year compound return has been 23% pa

[Beagle]

http://www.4-traders.com/RYMAN-HEALTHCARE-LTD-6492072/consensus/

Brokers aren't all that keen on it.

[winner69]

http://www.4-traders.com/RYMAN-HEALTHCARE-LTD-6492072/consensus/

Brokers aren't all that keen on it.

Whose that with a $6.84 target - you been talking to them ha ha

[Baa_Baa]

http://www.4-traders.com/RYMAN-HEALTHCARE-LTD-6492072/consensus/

Brokers aren't all that keen on it.

Those 4-traders (brokers? whoever they are) are neutral, I can see how that = "aren't ... keen", if you mean keen = buy/outperform, where consensus is 'hold? Seems to agree in the main with this outfit. http://www.reuters.com/finance/stocks/analyst?symbol=RYM.NZ 4 hold, 1 outperform, 1 sell. Maybe they're the same analysts!

But I really like Vaygor1's story, thanks for that.

[Beagle]

Whose that with a $6.84 target - you been talking to them ha ha

LOL mate. I'll stick with my $7.32 for now...if you can't believe your own valuations you're really in trouble :)


Those 4-traders (brokers? whoever they are) are neutral, I can see how that = "aren't ... keen", if you mean keen = buy/outperform, where consensus is 'hold? Seems to agree in the main with this outfit. http://www.reuters.com/finance/stocks/analyst?symbol=RYM.NZ 4 hold, 1 outperform, 1 sell. Maybe they're the same analysts!
.
Essentially those two websites do similar things mate, compile analysts forecasts and four holds, 1 outperform and 1 sell leads to a rating of just under 5 out of ten.

[OldGuy]

well this is going nicely so far!

[gv1]

well this is going nicely so far!
yes, no matter what happens in the world, people will grow old and will need a place.... people will stop travelling BUT can't stop growing old.

[Biscuit]

well this is going nicely so far!

Looks like its not far off testing 800 again?

[OldGuy]

Indeed, although resistance does look strong at that level.

Having said that, the most recent US state job stats were pretty good, a common "leading indicator" of global sentiment.

Happy to hold :cool:

[Nasi Goreng]

I'm not so sure about $8 being a strong resistance level, it failed to break out of $8 last month but it doesn't look like a major resistance point. It seems to have gone through $8 just as many times as it has bounced off $8 in the last few years. I think potentially more resistance at around $8.50. Once it gets past there, I think we start to look at $10.

Again, I think there is more upside potential than downside.

[macduffy]

Nothing we didn't already know about RYM, but worth a read.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11552469

[winner69]

Ryman maintain a place on the BCG Top Value Creators globally in the healthcare segment - ie Total Shareholder Returns

Ranked 5th - even with a rerating down by the market (lower P/E) but growth and margin increases pulled them through

Well done Ryman

[LAC]

RYM will have to speed it up in the next few years to keep up with demand.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11557046

[OldGuy]

Up 8% in 12 working days. Subtracting the cost of funds, that gives me a total return of about 7.7% for 12 days.

Happy with that!

[stoploss]

Yes all good above $ 8.00 again thats a long way off some posters on here incessant call for $ 6.50 ....."tell him he's dreaming "

[winner69]

Yes all good above $ 8.00 again thats a long way off some posters on here incessant call for $ 6.50 ....."tell him he's dreaming "

When punters work out that Arvida is the place to really be and the stock to be in Ryman will be rerated down

[Vaygor1]

RYM will have to speed it up in the next few years to keep up with demand.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11557046

That's the beauty of it LAC. There is no way RYM can keep up with demand in NZ and Victoria for the next 5 years let alone the next 20, and neither can their competitors.

7754

[Vaygor1]

When punters work out that Arvida is the place to really be and the stock to be in Ryman will be rerated down

I have no idea (yet) whether Arvida is the place to be, but I doubt their business, or RYM's SUM's MET's will materially influence each other's SP. The retirement-sector pie I think is currently too big for that.

[percy]

Yes all good above $ 8.00 again thats a long way off some posters on here incessant call for $ 6.50 ....."tell him he's dreaming "

I think the fact RYM is trading at $8.17 which is above the 50day EMA $7.78,the 100 day EMA $7.79, and the 200 day EMA $7.86 confirms $6.50 is for dreamers only.

[dobby41]

When punters work out that Arvida is the place to really be and the stock to be in Ryman will be rerated down

Why is it the place to be?

[winner69]

I think the fact RYM is trading at $8.17 which is above the 50day EMA $7.78,the 100 day EMA $7.79, and the 200 day EMA $7.86 confirms $6.50 is for dreamers only.

Current price makes the dreamers purchase at $7.20 odd a month or so ago look really good, especially so after the same dreamers sold out in the high 800s last year.

Price movements still going to plan .... dreamers see taking profits soon and then having another go when the share price has a 7 in front of it (dreaming of say $7.30 this time as that $6.50 is now a couple of years old)

[winner69]

Why is it the place to be?

t_j presents a good case on this thread http://www.sharetrader.co.nz/showthread.php?9942-Arvida-The-latest-IPO&highlight=Arv

As usual when someone has some strong convictions about a business the knockers come out and put them down

[Biscuit]

Current price makes the dreamers purchase at $7.20 odd a month or so ago look really good, especially so after the same dreamers sold out in the high 800s last year.

Price movements still going to plan .... dreamers see taking profits soon and then having another go when the share price has a 7 in front of it (dreaming of say $7.30 this time as that $6.50 is now a couple of years old)

That is a strange statement. When I said it was good value at $7.20 and that I was buying, weren't you an Roger going on at some length about what a poor investment it was???

[OldGuy]

t_j presents a good case


LOL. You are a crack up, mate!

[winner69]

That is a strange statement. When I said it was good value at $7.20 and that I was buying, weren't you an Roger going on at some length about what a poor investment it was???

Biscuit

What I was saying was that when valuations reach extremes the subsequent 3 to 5 years returns are poor (mostly negative). Ryman multiples peaked early last year and is still in the process of reverting to more normal levels. In this context Ryman at $7.20 still not a 'good' investment as returns for the next year or so are possibly still going to be poor.

What's important in the short term though is how punters feel about a company, fundamentals mean squat all on a day to day or week by week basis. Prevailing market sentiment drives day to day activity. Punters started feeling happy again and started buying shares, including Ryman ones.

Probably the different thinking of long term investors v short medium term 'traders' (for want of a better word). Mind you the dreamers previous 'trade' in Ryman lasted several years. Goodness knows how long this 'trade' will last

Still reckon RYM shareprice will hover around the $8 mark for a year or so .....but maybe some good opportunities to make money in the mean time.

[Biscuit]

Biscuit

What I was saying was that when valuations reach extremes the subsequent 3 to 5 years returns are poor (mostly negative). Ryman multiples peaked early last year and is still in the process of reverting to more normal levels. In this context Ryman at $7.20 still not a 'good' investment as returns for the next year or so are possibly still going to be poor.

What's important in the short term though is how punters feel about a company, fundamentals mean squat all on a day to day or week by week basis. Prevailing market sentiment drives day to day activity. Punters started feeling happy again and started buying shares, including Ryman ones.

Probably the different thinking of long term investors v short medium term 'traders' (for want of a better word). Mind you the dreamers previous 'trade' in Ryman lasted several years. Goodness knows how long this 'trade' will last

Still reckon RYM shareprice will hover around the $8 mark for a year or so .....but maybe some good opportunities to make money in the mean time.

I agree with that to some extent but I think if you were buying at that time it might have been better to disclose that considering that you were simultaneously making negative statements about the prospects of the shares and appeared (to me) to be supporting Roger's stance about the prospects of the company. I think at $7.20, given the quality of the company and that it was close to making an announcement that would inevitably be positive, for a short/medium term buy it was a pretty safe bet (as apparently did you).

[troyvdh]

...WOW....good volumn too....well on reflection should I say...reasonably good dollar value ...cheers

[macduffy]

I had a look at the new Bob Scott village in Petone over the holidays. It's an impressive complex, much bigger than any of the other, mainly Wellington, Ryman villages that I've seen. Several 4 and 5 level buildings and foundations starting for more. Hard to avoid an "institutional" impression, I would think although it does look out to parks and gardens.

The first block looks to be completed - first occupants moved in during December. Ryman's numbers will get a big boost when it's fully occupied!

[Beagle]

Reasonable sized correction over the last few weeks has me putting this back on my watch list. Like many I think this is a very well managed company with tremendous credibility. Its getting close to my buy price. I will stick with my own internal valuation methodology and look for an entry around $7.40 -$7.50 which is where I see good long term value. This is a time adjusted derivative of my original $6.50 value stated about 2 years ago and reflects EPS growth since then. I would be happy to be a shareholder again at that level but if it doesn't happen I'm quite relaxed and philosophical about it.

[Vaygor1]

Reasonable sized correction over the last few weeks has me putting this back on my watch list. Like many I think this is a very well managed company with tremendous credibility. Its getting close to my buy price. I will stick with my own internal valuation methodology and look for an entry around $7.40 -$7.50 which is where I see good long term value. This is a time adjusted derivative of my original $6.50 value stated about 2 years ago and reflects EPS growth since then. I would be happy to be a shareholder again at that level but if it doesn't happen I'm quite relaxed and philosophical about it.

Nice to see you back Roger.

I too hope RYM's SP drops to your desired range so I can buy more too, but at what I see as a small bargain (fair price at the moment by my methods is just a tad over $8.00).

I am expecting four (probably) separate announcements from RYM before 31 March this year as per their H1 guidance that they will open 4 new villages by then. I predict that each announcement (should they come) will temporarily boost the SP from the $8.00 that it is today. As such I will be a bit surprised (and delighted) if it drops to $7.50 or less in the short term.

[trader_jackson]

I could be interested if it drops to $7.50, although I'm not sure if it will happen...

[Rob Optimist]

Dropped to $7.05 back in October I think

[Onion]

Dropped to $7.05 back in October I think
That would be right -- I picked up my holding at $7.15 on 7th October.

[macduffy]

Ryman buys its third Melbourne site. Burwood East, in the affluent eastern suburbs.

[LAC]

Ryman buys its third Melbourne site. Burwood East, in the affluent eastern suburbs.

Really nice area Burwood East. Lived there for a while. Would have thought the share price would have jumped on this news but I think most expected it.

[macduffy]

Really nice area Burwood East. Lived there for a while. Would have thought the share price would have jumped on this news but I think most expected it.

I lived in Glen Waverley in the late 60's, early 70's. A bit further out but couldn't afford Burwood East or closer to the city. Agree, BE's a nice area and should do well for RYM.

[troyvdh]

Last year there was some talk about listing on the ozzy exchange.One reason being ..supposedly that new clients in Ryman institutions were supposedly so enamoured with there new digs they wanted buy shares in the company.
This perhaps maybe an ideal time for some dilution of shares...a share split...last one was about 7 ? 8? years ago at $11.33 5/1

Any thoughts ? cheers

[Beagle]

I don't see any need or merit in a Share split unless its cracked $10.00. My $0.02

[axe]

I don't see any need or merit in a Share split unless its cracked $10.00. My $0.02

Should crack 10 bucks in the next 12-18 months right? :)

[troyvdh]

dear axe..."should" ...me thinks that would only occur if there is fundamental change of thought/expectation/valuation et al of all retirement entities...Logically with all 3 major players ...the on going "story" is perfect...but therein lies the problem...seldom does outcome of any story become "perfect"...just saying after 30 + years in the MKT.

[macduffy]

I've never understood our Kiwi enthusiasm to see a share split for a successful company. Yes, I know the "more marketable" argument but a high SP hasn't hindered the likes of CBA, Blackmores, CSL, Macquarie Bank etc. Does being Aussie companies make a difference? Apple?

:cool:

[777]

I've never understood our Kiwi enthusiasm to see a share split for a successful company. Yes, I know the "more marketable" argument but a high SP hasn't hindered the likes of CBA, Blackmores, CSL, Macquarie Bank etc. Does being Aussie companies make a difference? Apple?

:cool:

It is like a bonus issue. Makes no actual difference to the value of the company but people like the process. The opposite happens on consolidation of shares. Weird behaviour.

[troyvdh]

777 Totally agree...weird behaviour indeed...its my experience that folk would rather buy a $1 share than a $5 share...because its more acceptable/affordable...and it sounds more impressive to say I have 5000 of something than 1000....come on guys you know this...it aint rocket science...this issue I believe has held back many investors from buying....

[Vaygor1]

777 Totally agree...weird behaviour indeed...its my experience that folk would rather buy a $1 share than a $5 share...because its more acceptable/affordable...and it sounds more impressive to say I have 5000 of something than 1000....come on guys you know this...it aint rocket science...this issue I believe has held back many investors from buying....

I agree too.. even though I think it's weird and shouldn't really happen in theory.

My experience is about a permanent 10% increase in Market Cap (equals a 10% increase in adjusted SP) following a 4:1 to 10:1 share split. Visa versa, a 10% drop (or even more) for a comparable share consolidation.

[troyvdh]

Is it correct to assume that given the value of shares traded today that the current SP of around $8...that the SP will not venture south again ?....

[macduffy]

Is it correct to assume that given the value of shares traded today that the current SP of around $8...that the SP will not venture south again ?....

That depends on how many shareholders with how many shares think that RYM is a sell at these levels. And ditto those still prepared to buy .......

[troyvdh]

That's my point..given the amount of trades...have not more than a few displayed their 'positions"...cheers

[stoploss]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11590806

[macduffy]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11590806

Blackstone are investors as opposed to retirement village operators/developers. They are buying existing villages - at least, at this stage.

[Snow Leopard]

Happy Anniversary
Paper Tiger

So with things getting all equinoxial again it is time to pay homage to the sun god by the ritual of posting the table of annualised capital gains for Ryman:

http://i7.photobucket.com/albums/y269/TheTigerWithNoName/SharetraderImages/NZX-RYM/20160319-1.png

However I have taken steps in order to break the tradition of the ShareTrader website throwing the attachment away after a while.

Best Wishes
Paper Tiger

[winner69]

So with things getting all equinoxial again it is time to pay homage to the sun god by the ritual of posting the table of annualised capital gains for Ryman:

http://i7.photobucket.com/albums/y269/TheTigerWithNoName/SharetraderImages/NZX-RYM/20160319-1.png

However I have taken steps in order to break the tradition of the ShareTrader website throwing the attachment away after a while.

Best Wishes
Paper Tiger

Looking pretty safe if we buy on the 21st then?

Price will never be this low again

[Vaygor1]

So with things getting all equinoxial again it is time to pay homage to the sun god by the ritual of posting the table of annualised capital gains for Ryman:

…<image>……..

However I have taken steps in order to break the tradition of the ShareTrader website throwing the attachment away after a while.

Best Wishes
Paper Tiger

Thanks of the update PT. Appreciated as always.

All my images from days gone by seem to have evaporated too. I take it that the problem has been fixed (at least a bit) for new posts from now on?

RYM looking like fair value at the moment to me with a potential RYM bull on the horizon.
I wonder if they will announce the 4 new villages opening (or at least 1 or 2) before 31 March? I still expect them to do so, but looking back at their November 2015 presentation, they said they would complete them "Six months from now", which could make the announcement(s) as late as May.

C'mon Roger.. time to dust the cobwebs off that wallet !! :eek2:

[Beagle]

Please don't hate me mate but I've been busy buying up SUM. Growing faster and on a cheaper PE. Build rate expansion this year 33%. I expect continued gradual improvements in the efficiency and effectiveness of the manner in which they execute their development programme whereas Ryman's systems were perfected quite some time ago. To SUM it up, SUM IMO has the most potential to outperform in this sector and is on a slightly cheaper underlying PE than RYM whereas I expect steady as she goes from RYM. Might get a few as a diversification strategy which are much preferred over MET. MET the underlying PE is fairly cheap at about 16 but I think they have a VERY long road ahead of them to prove up the capabilities of their development team.

[OldGuy]

Please don't hate me mate but I've been busy buying up SUM. Growing faster and on a cheaper PE. Build rate expansion this year 33%. I expect continued gradual improvements in the efficiency and effectiveness of the manner in which they execute their development programme whereas Ryman's systems were perfected quite some time ago. To SUM it up, SUM IMO has the most potential to outperform in this sector and is on a slightly cheaper underlying PE than RYM whereas I expect steady as she goes from RYM. Might get a few as a diversification strategy which are much preferred over MET. MET the underlying PE is fairly cheap at about 16 but I think they have a VERY long road ahead of them to prove up the capabilities of their development team.

I seem to recall saying something like this a while ago....:cool:

[percy]

Drove past RYM's new village site at Rangiora today.
All go.
Another huge village in the making.

[LAC]

Drove past RYM's new village site at Rangiora today.
All go.
Another huge village in the making.

I took a drive a couple weeks back to look at the Pukekohe one.....geez that's a massive project. It kinda looks like the own Valley road lol, all u see is Ryman cars and construction workers/machinery

[Hectorplains]

Some interesting comments about the ethics of Ryman's charging regime.

Chris Lee Taking Stock 7th April 2016

THE arrival of an overseas hedge fund (Blackstone) targeting our small rest home market is either a mistake that will prove expensive for the hedge fund, or on omen for a much lower level of price control at the country’s hundreds of rest homes.


Currently care of the aged is regulated and frequently subsidised by the Crown, at a maximum level that is well below the amount that enables operators to make a fair profit. Profits come from re-selling villas, not from providing care. Retirement villages make large profits. Rest homes barely break even.


But about a year or two ago, the Crown authorities allowed private care operators to increase substantially their revenues by charging extra for what the care operators, with a straight face, could call ‘’premium’’ facilities.


A room with a window became a ‘’premium’’ room, as did a room with an ensuite bathroom (or with a vase full of flowers?).


Toast served with marmalade may not have made the grade, though of that I am uncertain, but very clearly there is now an opportunity to increase the income of the providers without asking the Crown to pay.


The hedge fund has recently spent a decent sum buying a number of rest homes, whose owners for many years have had lousy returns for all their effort, their capital and their risk.


The Crown will always underpay in every social endeavour, whether in education, healthcare or housing, so the providers seek to find other ways of collecting money from their “clients”.


The recent Crown approval of “premium” charges has really let the providers go on a binge.


Some of the rest home or retirement village operators now charge, as an addition, hundreds of dollars every week for very basic extra facilities. These extra charges are paid by the client, not the Crown, so you can imagine that the rest home providers are differentiating between clients who have money of their own, and those who have not.


I have long thought it fair that those with money should be given the choice of “extra comforts” but have never believed that the charges should be more than a few dollars a day.


I have long wondered why the likes of Ryman Healthcare could charge an extra $15 per hour for shower assistance, similar sums for bed-making, and similar sums for acts of simple kindness, such as changing the dressings on a sore toe.


Now Rymans are charging an extra $350 per week for rest home care rooms with a view and an ensuite!


The new Crown approval for such premium charges may well be what attracted the money-obsessed hedge fund to buy a chain of rest homes.


It may also provide hope for Arvida and Oceania, both of which have shareholders who simply want to exit what has been a very lean business model.


I expect the hedge fund will be looking at Arvida and Oceania, using a model of charging based on putting a window and a toilet/shower into every room.


Such improvements might cost $10,000 but at $350 per week the payback would not take long.


Does anyone believe that any hedge fund’s principal aspiration is to provide kindness and care to the elderly?


Disclosure:- The writer chairs New Zealand’s first and largest retirement village, owned and run by a charitable trust. The difference between its most expensive and cheapest care units is $56 per week.


No charges are made for call-out, care or for kindness!

[couta1]

It's not about the ethics of Ryman's charging regime, its happening across the whole sector. Might I also point out that the above article has a few inaccuracies in it.

[Bjauck]

Some interesting comments about the ethics of Ryman's charging regime.

Chris Lee Taking Stock 7th April 2016...
A relative is in a rest home (not RYM , MET or SUM) and gets no rest home subsidy. Consequently they cannot afford any extras. The basic room however still includes a window and wash basin! The room, while old is well cleaned and is big enough for their needs. The ensuite is shared with the next door neighbour - there does not seem to be any issue with that and it's well cleaned. I would expect an exclusive ensuite to be "an extra" luxury. Surely lack of a bedroom window would be against regulations?

[Grunter]

Interestingly, a local fund manager has taken a short position on RYM

[couta1]

Interestingly, a local fund manager has taken a short position on RYM They are going to get their arse kicked then arn't they:cool:

[Vaygor1]

Ryman outbid by Benetas in potential Doncaster Hill site. Article from 10 days ago.

"Mr Minton said it was unusual that the two final bidders for the site were aged care providers, with New Zealand-based Ryman Healthcare the runner up.".

http://www.smh.com.au/business/property/aged-care-outmuscles-developers-on-doncaster-hill-20160328-gnsa8o.html


I guess you can't win 'em all. The above providing further insight as to RYM's activity around Melbourne at present. Interesting to note the height restriction for the site (6 stories) significantly lower than the surrounding area (14-16 stories).

[kizame]

Ryman outbid by Benetas in potential Doncaster Hill site. Article from 10 days ago.

"Mr Minton said it was unusual that the two final bidders for the site were aged care providers, with New Zealand-based Ryman Healthcare the runner up.".

http://www.smh.com.au/business/property/aged-care-outmuscles-developers-on-doncaster-hill-20160328-gnsa8o.html


I guess you can't win 'em all. The above providing further insight as to RYM's activity around Melbourne at present. Interesting to note the height restriction for the site (6 stories) significantly lower than the surrounding area (14-16 stories).

Tells me that they won't just pay anything for a site,obviously the position was excellent,but why overpay,that affects the return on investment to RYM and shareholders.

[Vaygor1]

Tells me that they won't just pay anything for a site,obviously the position was excellent,but why overpay,that affects the return on investment to RYM and shareholders.

I completely agree. It could well have been a marginally-qualifying site in weighing it up against Ryman's location criteria. Pure conjecture of course, but my feeling is that if RYM really badly wanted it, they would have got it.

[Snow Leopard]

I occasionally used to go to this place when the company I worked for had their offices up the road.
I can not actually remember what it was then but it was not a Pappa Rich (and I do not generally eat in Pappa Rich restaurants in Malaysia).
Anyway we much preferred La Porchetta (Italian) nearby.

The site is part way up a long steep hill and the immediately surrounding area is/was basically residential 2 & 3 story.
It is up at the top of the hill, at the junction, where the multi-story stuff is allowed, like a big shopping mall and an hotel back in 2007-9.

Best Wishes
Paper Tiger

[Beagle]

I completely agree. It could well have been a marginally-qualifying site in weighing it up against Ryman's location criteria. Pure conjecture of course, but my feeling is that if RYM really badly wanted it, they would have got it.

Gidday mate. Just wondering about our last discussion where you mentioned there would be a series of positive announcements before balance date 31 March 2016...just curious and not trying to rain on your parade but what's happened to all the good news ? What sort of underlying EPS growth are you expecting for the year end 31 March 2016 given that if my memory serves me correctly they didn't make their 15% medium term target at the interim announcement but made reassuring noises about meeting it at year end. If Mr market was expecting a good result wouldn't the analysts have been talking to RYM management and be more upbeat on the stock especially given its due to announce its result in the not too distant future ? (Consensus price target is only $8.50 and average rating a hold
http://www.4-traders.com/RYMAN-HEALTHCARE-LTD-6492072/consensus/ Wouldn't we be seeing some momentum in the SP if Mr market thought there was a extra good result coming ?

Why do you think Nikko asset management and Fisher Funds are on record about or issuing substantial notices confirming they're are piling into SUM but not RYM and when do you honestly expect RYM to break out of its multi year trading range and trade above $9 ?

Sorry for the 101 questions but pPlease don't misinterpret this as a slight on RYM, I think they're a great company, (perhaps still fully priced ?), and am just curious for your thoughts and update.

Here's something mildly amusing that I have never seen before http://www.4-traders.com/SUMMERSET-GROUP-HOLDINGS-10089438/consensus/ SUM has some more headroom especially in percentage terms between its current price $4.25 and average analyst target price $4.60 but we have five different analysts with five different ratings covering the full recommendation spectrum !
Any wonder investors are confused :)

[Vaygor1]

Gidday mate. Just wondering about our last discussion where you mentioned there would be a series of positive announcements before balance date 31 March 2016...just curious and not trying to rain on your parade but what's happened to all the good news ?

Hi Roger.
Regarding this question, read my earlier post here:
http://www.sharetrader.co.nz/showthread.php?626-Ryman-Too-boring-to-talk-about&p=612328&viewfull=1#post612328
I must say, I really did think they would be announcing 1 or 2 new villages being open by 31-March just gone. As they have not, I am not entirely sure where the 15%+ increase for the year will come from, suffice to say that at the H1 presentation it was put across as a fait accompli.


What sort of underlying EPS growth are you expecting for the year end 31 March 2016 given that if my memory serves me correctly they didn't make their 15% medium term target at the interim announcement but made reassuring noises about meeting it at year end. If Mr market was expecting a good result wouldn't the analysts have been talking to RYM management and be more upbeat on the stock especially given its due to announce its result in the not too distant future ? (Consensus price target is only $8.50 and average rating a hold
http://www.4-traders.com/RYMAN-HEALTHCARE-LTD-6492072/consensus/ Wouldn't we be seeing some momentum in the SP if Mr market thought there was a extra good result coming ?

Underlying Profit of $158 million for YE-31-March-2016. By my calcs, this equates to a share price by about mid July of over $9.00 … still yet to see any real momentum to even the $8.80 mark but I think its close. FY announcement about 6 weeks away (May 20th or there abouts).


Why do you think Nikko asset management and Fisher Funds are on record about or issuing substantial notices confirming they're are piling into SUM but not RYM and when do you honestly expect RYM to break out of its multi year trading range and trade above $9 ?

As per above, actually $9.15 to $9.35 range on the assumption of a rational market and a no-surprises RYM result of UP of $158M.
No idea re Nikko and FF. I am still not interested in SUM personally until any hangover from the Nora effect has gone… a couple of years away for me I think.


Sorry for the 101 questions but please don't misinterpret this as a slight on RYM, I think they're a great company, (perhaps still fully priced ?), and am just curious for your thoughts and update.

Here's something mildly amusing that I have never seen before http://www.4-traders.com/SUMMERSET-GROUP-HOLDINGS-10089438/consensus/ SUM has some more headroom especially in percentage terms between its current price $4.25 and average analyst target price $4.60 but we have five different analysts with five different ratings covering the full recommendation spectrum !
Any wonder investors are confused :)

No worries Roger…as always, time will tell. The two of us seem to be pretty good at arguing the toss re RYM and coming up with a middle ground that more-or-less reflects reality as it unfolds.

Yeah, Analyst's worth of SUM as confusing as it is for RYM I think. Both long-term winners but RYM with a more reliable (less volatile relatively speaking) history for my style of analysis anyway.

[couta1]

Vaygor, have a read of my post #3386 over on the Sum thread, its easy to see where that 15% plus growth is going to come from and that $9 share price. PS-Petone village is up and running and Pukekohe village already has some residents living in it, so there's your 2 new villages with the other 2 mentioned in my post to open this year also.

[Beagle]

No worries Roger…as always, time will tell. The two of us seem to be pretty good at arguing the toss re RYM and coming up with a middle ground that more-or-less reflects reality as it unfolds.

Yeah, Analyst's worth of SUM as confusing as it is for RYM I think. Both long-term winners but RYM with a more reliable (less volatile relatively speaking) history for my style of analysis anyway.

Thanks for your thoughts mate.


20/11/2015 08:36
HALFYR
PRICE SENSITIVE
REL: 0836 HRS Ryman Healthcare Limited

HALFYR: RYM: Ryman reports half year profit of $70.3m

Ryman reports half year profit of $70.3m
On track for 15% profit growth for the full year

Ryman Healthcare's underlying profit rose 6% to $70.3 million in the first
half, and valuation gains lifted the reported profit after tax by 23% to
$132.6 million.

Operating cashflows reached a record $157 million for the half year ended
September 30.

With residents moving into four new villages over the next six months, the
company confirmed it is on track to achieve 15% underlying profit growth for
the full year.

I guess in simple mathematical terms they need underlying profit growth of 24% this half to remain on track. Market a little sceptical ?

[LAC]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11620424

Any ideas what has brought about these articles? Two articles on the Herald on the same day. Has there been any concerns brought forward in the last week that I have missed? I tried searching but nothing has come up of recent, would be nice to know if anyone has some info.

[winner69]

I guess in simple mathematical terms they need underlying profit growth of 24% this half to remain on track. Market a little sceptical ?

No not at all - this 26% is all priced into current share price.

[Beagle]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11620424

Any ideas what has brought about these articles? Two articles on the Herald on the same day. Has there been any concerns brought forward in the last week that I have missed? I tried searching but nothing has come up of recent, would be nice to know if anyone has some info.

People move in for the lifestyle, care support and camaraderie of fellow residents. Some kids accept that they will inherit less, some of them don't care and occasionally one is bitter and twisted. I think Couta1 who is closest to the coal face would agree that the vast majority of people make a well informed decision. I know in my case I was active in encouraging my parents into a good quality retirement village fully cognisant of the effect on my inheritance. The most important thing for me is knowing my parents would be happy, well cared for and supported in their twilight years. Surely that matters more than money ?

[stoploss]

People move in for the lifestyle, care support and camaraderie of fellow residents. Some kids accept that they will inherit less, some of them don't care and occasionally one is bitter and twisted. I think Couta1 who is closest to the coal face would agree that the vast majority of people make a well informed decision. I know in my case I was active in encouraging my parents into a good quality retirement village fully cognisant of the effect on my inheritance. The most important thing for me is knowing my parents would be happy, well cared for and supported in their twilight years. Surely that matters more than money ?

Spot on Roger , remember it's their money ,they worked hard for it . So if they want somewhere secure and they like a Ryman go for it .

[Beagle]

100% agree mate. The other thing is that with the exercise programs, social functions, nursing care and support and multiple on site amenities they provide there's every chance that people will be much happier at a quality retirement village but also live a bit longer. Most residents as I am sure Couta1 would be happy to attest..one of their first comments on moving in is "why didn't we make the move years ago" !
What sort of child would begrudge their parents enjoying their last circa seven years of their life with their own hard earned money just so they can inherit some more of it themselves ? Reckon when I'm writing my will I might dock them a bit if they bleat like a lamb lost from its mother about the financial implications to them....give some of it too the SPCA instead just for good measure :D

[LAC]

People move in for the lifestyle, care support and camaraderie of fellow residents. Some kids accept that they will inherit less, some of them don't care and occasionally one is bitter and twisted. I think Couta1 who is closest to the coal face would agree that the vast majority of people make a well informed decision. I know in my case I was active in encouraging my parents into a good quality retirement village fully cognisant of the effect on my inheritance. The most important thing for me is knowing my parents would be happy, well cared for and supported in their twilight years. Surely that matters more than money ?

I agree totally, and I understand what the article is referring to but I am unsure why on one day there are two articles about it. It's as if there has been complaints about the retirement homes business model. Has there been anyone taken to the courts over being paid less than expected when they have sold their units?

[stoploss]

100% agree mate. The other thing is that with the exercise programs, social functions, nursing care and support and multiple on site amenities they provide there's every chance that people will be much happier at a quality retirement village but also live a bit longer. Most residents as I am sure Couta1 would be happy to attest..one of their first comments on moving in is "why didn't we make the move years ago" !
What sort of child would begrudge their parents enjoying their last circa seven years of their life with their own hard earned money just so they can inherit some more of it themselves ? Reckon when I'm writing my will I might dock them a bit if they bleat like a lamb lost from its mother about the financial implications to them....give some of it too the SPCA instead just for good measure :D

Unfortunately from what I see day to day from the current generation , I believe the problem "of entitlement" will get worse before it gets better. My mother went into a Ryman independent unit , sadly too late ..but it was a matter of waiting for what she wanted . She was only there just short of 3 months until her passing , so the 4 or 5 % tariff did not apply . I have 2 Aunties who are in another and they absolutely love it .

[Bjauck]

100% agree mate. The other thing is that with the exercise programs, social functions, nursing care and support and multiple on site amenities they provide there's every chance that people will be much happier at a quality retirement village but also live a bit longer. Most residents as I am sure Couta1 would be happy to attest..one of their first comments on moving in is "why didn't we make the move years ago" !
What sort of child would begrudge their parents enjoying their last circa seven years of their life with their own hard earned money just so they can inherit some more of it themselves ? Reckon when I'm writing my will I might dock them a bit if they bleat like a lamb lost from its mother about the financial implications to them....give some of it too the SPCA instead just for good measure :D

I know people who love the retirement village ambiance and lifestyle. Some treat their retirement units as the ultimate lock-up and leave so that they can easily go away at the drop of a hat. They were aware of the terms of their contract and entered with their eyes wide open. My parents prefer to stay in their large old property for as long as they can - with assistance where necessary. Maintenance and home care could be expensive too, and eat into their estate.

When house prices in Auckland next stagnate or price increases drop to low single digits, will the articles of complaint continue? If villages, from now on, adopt contracts with a share of land value movements, will it be in time for a period of more muted land price movements? Will there then be articles of complaints of unfairness?

Maybe some younger generations complain about the loss of their possible inheritance because they themselves have been shut out of an expensive house market, increasingly affected by NZ investors and foreign investors who can afford larger deposits. Maybe they think that the only way they could afford a family-sized home in a good area is with the help of an inheritance from an existing home owner. Also, if you have had an unfortunate event which has affected your earning power, for even a few years, then with today's prices, you may be locked out of home ownership for a considerable period.

[Beagle]

For me it was a no brainer. Dad had the early stages of the onset of dementia and Mum was facing living alone in a quiet street where most of her neighbour's were away during the day and maintaining a 50 something year old house all on her own. I knew she would be lonely when Dad died and we live a full one hour drive away so can't be there as often as we would like. Mum knew quite a large number of residents in the local retirement village already and she is much closer to her local church there too so when she eventually loses the ability to drive I know she can catch a lift with her friends to the shops, church e.t.c.

Dad passed on a few years ago now and she has been fairly lonely seeing as they were married for nearly 60 years. She has pretty average health now and is on a large number of medications to keep the old ticker going and everything else spluttering on okay. Knowing she has the support of on site nursing care, panic buttons in various rooms she can crawl too if she falls e.t.c. and supportive residents that look out for her is a tremendous peace of mind as is the fact that my brother who has a caring nature lives just down the road too. She still enjoys many social things at the village and I know for a fact that she is much happier than she would have been if she was stuck away in her former quiet street mostly on her own. Peace of mind is a commodity that's hard to put a price on. I guess there will always be a percentage of kids that feel disaffected financially but I would hope most see the bigger picture.

[couta1]

So we're having the annual beat up on retirement villages that offer a license to occupy, these companies are doing the people that occupy them and the Government a great service through offering a great secure lifestyle and plenty of social interaction(Don't underestimate how important that is) and without them the health budget would blow out completely and we would have a large crisis on our hands. These villages by and large are vibrant happy places and I'm afraid I can't say the same about the home care based model which in many cases leads to mild to severe neglect( Sometimes that even comes their own families) social isolation,poor nutrition etc etc

[Bjauck]

For me it was a no brainer... Peace of mind is a commodity that's hard to put a price on. I guess there will always be a percentage of kids that feel disaffected financially but I would hope most see the bigger picture. Retirement villages definitely tick the boxes for many people. I am sure children and grandchildren want the best for grandparents. The best thing may or may not be a move to a retirement village.

There are definitely many disaffected people especially in Auckland I would guess. Auckland house prices at higher multiples of average incomes will undoubtedly preclude more people from rustling up a deposit and stepping onto the first rung or moving to a second rung of the property ladder. Wealthy parents or a nice legacy will give a helping hand to some! Since the 1970's and 80's wealth and income disparities have grown and NZ home ownership rates have dropped from 73.5% (1986) to 64.8% (2013). No doubt, the trend has continued since 2013 and is more pronounced among young adults in Auckland.

[Bjauck]

So we're having the annual beat up on retirement villages that offer a license to occupy, these companies are doing the people that occupy them and the Government a great service through offering a great secure lifestyle and plenty of social interaction(Don't underestimate how important that is) and without them the health budget would blow out completely and we would have a large crisis on our hands. These villages by and large are vibrant happy places and I'm afraid I can't say the same about the home care based model which in many cases leads to mild to severe neglect( Sometimes that even comes their own families) social isolation,poor nutrition etc etc Whether from Home Care or in Retirement Villages, there have been cases of neglect and isolation. A poor senior in a poorer suburb is less likely to be able to afford to buy a licence to occupy in a retirement village, so may have no choice but to rely on home help and a possibly deficient family network. A choice may arise, if they were assessed as being eligible for rest home level care.

[couta1]

Whether from Home Care or in Retirement Villages, there have been cases of neglect and isolation. A poor senior in a poorer suburb is less likely to be able to afford to buy a licence to occupy in a retirement village, so may have no choice but to rely on home help and a possibly deficient family network. A choice may arise, if they were assessed as being eligible for rest home level care. Yes I should have clarified when I referred to home based care ,I was comparing it with the care received in the care section of these facilities not the license to occupy section. Those care sections still provide all the positive attributes mentioned. Many people under home based care are eligible for rest home level care but for them to actually get to a rest home can be a complex puzzle to put together in many cases.

[Harvey Specter]

I know people who love the retirement village ambiance and lifestyle. Some treat their retirement units as the ultimate lock-up and leave so that they can easily go away at the drop of a hat. They were aware of the terms of their contract and entered with their eyes wide open. My parents prefer to stay in their large old property for as long as they can - with assistance where necessary. Maintenance and home care could be expensive too, and eat into their estate. My grand mother is burning through $200k a year in carer costs at home and that is not including housing or food costs. I also think the standard of care, especially in an emergency situation, would be better in a retirement home. I also think she would have had a more enjoyable time, but sadly the lack of activity (mental or physical) has probably resulted in her deteriatoring quicker than if she had moved. Her money, her choose but I think it would have been better spent in a RYM etc.

[Beagle]

No not at all - this 26% is all priced into current share price.

Yes, with only 6% first half growth in underlying earnings if second half earnings don't grow by the mid 20% mark we could see a bad blot on RYM's perfect copy book of year on year underlying profit growth of 15%. I wonder how the market would react to the market darling, arguably still priced for perfection, not achieving perfection ?


My grand mother is burning through $200k a year in carer costs at home and that is not including housing or food costs. I also think the standard of care, especially in an emergency situation, would be better in a retirement home. I also think she would have had a more enjoyable time, but sadly the lack of activity (mental or physical) has probably resulted in her deteriatoring quicker than if she had moved. Her money, her choose but I think it would have been better spent in a RYM etc.

OUCH, that is a MASSIVE cash burn :eek2:

[Bjauck]

My grand mother is burning through $200k a year in carer costs at home and that is not including housing or food costs. I also think the standard of care, especially in an emergency situation, would be better in a retirement home. I also think she would have had a more enjoyable time, but sadly the lack of activity (mental or physical) has probably resulted in her deteriatoring quicker than if she had moved. Her money, her choose but I think it would have been better spent in a RYM etc. I think, if my parents were at the stage of requiring toileting and 24 hour carer-attention at home, they would be seriously considering a good RYM or SUM rest home. It is just that they prefer their existing property, with low-level help when needed, to a licence-to-occupy unit/villa in a village.

[Harvey Specter]

I think, if my parents were at the stage of requiring toileting and 24 hour carer-attention at home, they would be seriously considering a good RYM or SUM rest home. It is just that they prefer their existing property, with low-level help when needed, to a licence-to-occupy unit/villa in a village.They want to live in their own home. The old can be stubborn and dont see the benefits. They now have 24 hour care. If we need to go to two, then we will force the issue.

[Bjauck]

They want to live in their own home. The old can be stubborn and dont see the benefits. They now have 24 hour care. If we need to go to two, then we will force the issue. It must be psychological barrier to overcome to admit to yourself that you can no longer safely stay in your own home. From my experience with a relative, someone who needs two-person assistance would be more likely to be assessed as needing hospital-level care as opposed to rest-home level.

[winner69]

Yes, with only 6% first half growth in underlying earnings if second half earnings don't grow by the mid 20% mark we could see a bad blot on RYM's perfect copy book of year on year underlying profit growth of 15%. I wonder how the market would react to the market darling, arguably still priced for perfection, not achieving perfection ?




They'll do it by hook or by crook

Interesting times if the 26% not achieved - seeing already built into the price

[Zaphod]

I think, if my parents were at the stage of requiring toileting and 24 hour carer-attention at home, they would be seriously considering a good RYM or SUM rest home. It is just that they prefer their existing property, with low-level help when needed, to a licence-to-occupy unit/villa in a village.

During a discussion with a colleague whose parents are at that stage in life, they revealed that they intend to look after their parents to the end, which is admirable but perhaps misguided. My opinion changed after they later revealed that one of the key reasons what that they did not want greedy rest-homes to chew through their inheritance.

[Bjauck]

During a discussion with a colleague whose parents are at that stage in life, they revealed that they intend to look after their parents to the end, which is admirable but perhaps misguided. My opinion changed after they later revealed that one of the key reasons what that they did not want greedy rest-homes to chew through their inheritance. When it comes down to the intimate 24/7 toiletting of their parents, I wonder if their opinion may change as to "looking after to the end"? When some-one is high-needs, it is like attending to an adult-size baby.

[percy]

During a discussion with a colleague whose parents are at that stage in life, they revealed that they intend to look after their parents to the end, which is admirable but perhaps misguided. My opinion changed after they later revealed that one of the key reasons what that they did not want greedy rest-homes to chew through their inheritance.

We tried it with my wife's mother,before she went into dementia care.
We lasted one night.
She was up and down the hallway all night wanting to know where her breakfast was.!

[kura]

My neighbor lasted two weeks with her mum. Several times I helped to drive round the streets @ midnight looking for her, as she would sneak out to go walkabout.

[Vaygor1]

…. I guess in simple mathematical terms they need underlying profit growth of 24% this half to remain on track. Market a little sceptical ?

I think the market must be a bit skeptical Roger, even with RYM up 15c yesterday. With 40 days before announcing, and such a clear signal 5 months ago re attaining FY lift of 15%, I am feeling positive.

Sounds like winner and possibly yourself believe such a result is already priced in. I think it has a bit of room to move yet.

Winner makes a good point though. In my view, if RYM fall short of the 15% by even a smidgeon, the market will be very unsympathetic (as always) and theoretically provide some excellent buying opportunities.

[kizame]

I think the move into Aussie has slowed them down a wee bit,once they get their momentum in that market going,your 15% will be assured again.

[OldGuy]

I'm thinking of exiting briefly before the next announcement. I doubt they will achieve 15%, and I expect the market to express its disappointment.

[voltage]

timing the market is really gambling, you have a 50% change of being right.

[percy]

From Couta1's post #3386 SUM thread.
Simon Challies from the latest Ryman times;
"We've got a busy year ahead and we are off to a flying start.I can't remember a busier period in the history of the company.etc.Hang on to your hats folks because it's going to be a great year."
Does not seem he shares posters concerns?

[Beagle]

I think the market must be a bit skeptical Roger, even with RYM up 15c yesterday. With 40 days before announcing, and such a clear signal 5 months ago re attaining FY lift of 15%, I am feeling positive.

Sounds like winner and possibly yourself believe such a result is already priced in. I think it has a bit of room to move yet.

Winner makes a good point though. In my view, if RYM fall short of the 15% by even a smidgeon, the market will be very unsympathetic (as always) and theoretically provide some excellent buying opportunities.

Not sure if they've ever been this far behind the eight ball in recent years (first half growth at 6% so far under annual target) so it will be interesting that's for sure.


From Couta1's post #3386 SUM thread.
Simon Challies from the latest Ryman times;
"We've got a busy year ahead and we are off to a flying start.I can't remember a busier period in the history of the company.etc.Hang on to your hats folks because it's going to be a great year."
Does not seem he shares posters concerns?

Simon is talking about the year ahead, the one they're reporting on next month is already done and dusted.

On a positive note it was great to see real estate prices across much of New Zealand continue their upward momentum last month.
What intrigue's me a little is we've seen them absolutely boom in Auckland over the last two years in particular and yet the SP's of RYM in particular and SUM to a lesser extent haven't shown a similar momentum. I'd suggest this augers very well for embedded value and future realisation of same.

[percy]

Not sure if they've ever been this far behind the eight ball in recent years (first half growth at 6% so far under annual target) so it will be interesting that's for sure.



Simon is talking about the year ahead, the one they're reporting on next month is already done and dusted.

On a positive note it was great to see real estate prices across much of New Zealand continue their upward momentum last month.
What intrigue's me a little is we've seen them absolutely boom in Auckland over the last two years in particular and yet the SP's of RYM in particular and SUM to a lesser extent haven't shown a similar momentum. I'd suggest this augers very well for embedded value and future realisation of same.

Markets are forward looking.

[Beagle]

Markets are forward looking.

That's a given Percy but the discussion we were having centred on whether they would achieve their target for the year ended 31 March 2016 of 15% underlying profit growth in the context of first half growth of only 6%, so Couta1's comment although very much appreciated in terms of outlook doesn't shed any light on the debate we were having.

[freddagg]

I have started to look at RYM and SUM in the last few weeks and it looks to me that they rely heavily on property appreciation to generate profits.
I am very interested in peoples thoughts on how RYM and SUM would fare if residential property had several years of reducing values.

[Bjauck]

I have started to look at RYM and SUM in the last few weeks and it looks to me that they rely heavily on property appreciation to generate profits.
I am very interested in peoples thoughts on how RYM and SUM would fare if residential property had several years of reducing values.

I think that turnover in licences to occupy would still continue and that the companies would still make money from licences even in a market where licence values were declining (they would still make money from the deferred fess charge of up to about 1/3 of the licence cost). Plus they still would be charging the annual maintenance fees. However I think the market reaction and sentiment with dropping real estate prices would be more exaggerated despite this.

[OldGuy]

I have started to look at RYM and SUM in the last few weeks and it looks to me that they rely heavily on property appreciation to generate profits.
I am very interested in peoples thoughts on how RYM and SUM would fare if residential property had several years of reducing values.

Yes, a significant proportion of profit is derived from property price increases. The company at greatest risk from a downward correction in said prices is MET (and ARV), both of whom derive the majority of profits from resales (rather than the initial sale of newly-developed units). SUM and RYM, conversely, also derive significant profits from sales of new units, which are more insulated from the effects of correction.

If I was entering the market RIGHT NOW, I would buy SUM, followed by RYM. Wouldn't touch MET or ARV.
HTH :)

[couta1]

That's a given Percy but the discussion we were having centred on whether they would achieve their target for the year ended 31 March 2016 of 15% underlying profit growth in the context of first half growth of only 6%, so Couta1's comment although very much appreciated in terms of outlook doesn't shed any light on the debate we were having. I have been giving this some more thought and it is possible they may not make the 15% plus underlying profit growth based solely on the new villages coming on tap (As at the end of March balance date only a small number of sales from these will be included in the result) However what we don't know is how many resales they have had over the last 6 months(Could have been a bumper period) so the 15% may be acheived. Whatever the result I know for sure that the following year going forward is going to be a stunner and so i am extremely positive, if the irrational market sends the price lower it will be short lived as im certain the forward guidance will be very bullish. Look at Sums very lacklustre Q1 sales metrics and the market wasn't too harsh on the share price(I'm sure in times past that result would have sent the price below $4) but because of the bullish forward guidance the market has been lenient, how much more so should that be the case with the best operator in the sector with the most consistent long term results and management that can be trusted on what they say.

[percy]

I have been giving this some more thought and it is possible they may not make the 15% plus underlying profit growth based solely on the new villages coming on tap (As at the end of March balance date only a small number of sales from these will be included in the result) However what we don't know is how many resales they have had over the last 6 months(Could have been a bumper period) so the 15% may be acheived. Whatever the result I know for sure that the following year going forward is going to be a stunner and so i am extremely positive, if the irrational market sends the price lower it will be short lived as im certain the forward guidance will be very bullish. Look at Sums very lacklustre Q1 sales metrics and the market wasn't too harsh on the share price(I'm sure in times past that result would have sent the price below $4) but because of the bullish forward guidance the market has been lenient, how much more so should that be the case with the best operator in the sector with the most consistent long term results and management that can be trusted on what they say.

Getting a bit of a habit,but I totally agree with you.!..lol.

[freddagg]

Oldguy and Bjauck. thanks for your comments.

[Beagle]

I have been giving this some more thought and it is possible they may not make the 15% plus underlying profit growth based solely on the new villages coming on tap (As at the end of March balance date only a small number of sales from these will be included in the result) However what we don't know is how many resales they have had over the last 6 months(Could have been a bumper period) so the 15% may be acheived. Whatever the result I know for sure that the following year going forward is going to be a stunner and so i am extremely positive, if the irrational market sends the price lower it will be short lived as im certain the forward guidance will be very bullish. Look at Sums very lacklustre Q1 sales metrics and the market wasn't too harsh on the share price(I'm sure in times past that result would have sent the price below $4) but because of the bullish forward guidance the market has been lenient, how much more so should that be the case with the best operator in the sector with the most consistent long term results and management that can be trusted on what they say.

Thanks mate, appreciate you sharing your thoughts. SUM got some treatment for one quarter of perceived under-performance ($4.45 marked down to $4.22 at one stage, circa 5%) so for a well respected company to miss on one of its crucial all time ANNUAL lynchpins, that being the coveted 15% annual growth I don't think its beyond the realms of possibility the market could treat this more harshly, (after all if it happens this would amount to a crucial earnings guidance miss, guidance they put too the market as being confident of achieving) and its guidance that the market has always seen as one of the fundamental pillars upon which this company's reputation has been built. I agree that forward guidance is always the most important thing but failure to meet previous forward guidance would be a new thing for RYM and a big blemish on their otherwise almost perfect record.

I don't necessarily disagree with you mate but just want to highlight that SUM made no specific guidance regarding individual quarters sales performance, indeed they reiterated forward build rate guidance at the same time), whereas the RYM situation is different and potentially more serious.

I think a correction of possibly somewhat more than 5% might eventuate..but if we're being charitable we should say the stock in theory should find support at around $8 with an earnings miss but who can be sure, whereas on the other hand we are locked in a multi year trading range with a ceiling of $9. To me, it seems at $8.50 RYM is presently in some sort of no man's land equidistant from either possibility which looks like 50-50 to me. Anyone got a spare coin I could toss :) On reflection I think the chance of a short term sustained bounce above $9 is slightly outweighed by the possibility of a short term correction slightly below $8 so I shall keep my powder dry for now.

[Bjauck]

I have started to look at RYM and SUM in the last few weeks and it looks to me that they rely heavily on property appreciation to generate profits.
I am very interested in peoples thoughts on how RYM and SUM would fare if residential property had several years of reducing values. Some prefer to look at underlying profits. In which case, it is possible that during a period of land value appreciation, there could be a drop in underlying profit(stripping out the unrealised movement in property value). See SUM in 2014: http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11307671

I guess the corollary could happen...whereby underlying profit could actually increase even though land values could be declining.

[Vaygor1]

Vaygor, have a read of my post #3386 over on the Sum thread, its easy to see where that 15% plus growth is going to come from and that $9 share price. PS-Petone village is up and running and Pukekohe village already has some residents living in it, so there's your 2 new villages with the other 2 mentioned in my post to open this year also.


I have been giving this some more thought and it is possible they may not make the 15% plus underlying profit growth based solely on the new villages coming on tap (As at the end of March balance date only a small number of sales from these will be included in the result) However what we don't know is how many resales they have had over the last 6 months(Could have been a bumper period) so the 15% may be acheived. ….

Thanks Couta.

I just scanned back at the last 5 years of RYM announcements. Unless I missed something, I can't find one instance where RYM announce to the market that they have opened a new village. Announcements in this respect seem to be limited to announcing land acquisitions, where they will be building a village, and occasionally the naming of a village.

If a village is open and operating then the completed or practically-complete pre-sold units within it, even if not occupied, would likely (or should) become part of the groups realised profit.

This being the case, and based upon your comment that residents have moved into Petone and Pukekohe, together with RYM's reputation, and their solid commitment to the market of 15% growth in Underlying Profit per annum with no news to the contrary, I think a YE profit lift of 15% is highly likely. A potential boost in resales adding further weight.

[macduffy]

Just for the record, the first Petone apartments were occupied last December. It's an extensive complex with much construction work still to be done. My guess, as a mere observor, is that RYM will be progressively completing and selling units in this village for the next couple of years.

[couta1]

Just for the record, the first Petone apartments were occupied last December. It's an extensive complex with much construction work still to be done. My guess, as a mere observor, is that RYM will be progressively completing and selling units in this village for the next couple of years. A lot of the units are sold off the plans so the village can be almost totally sold out long before final completion.

[OldGuy]

Thanks Couta.

I just scanned back at the last 5 years of RYM announcements. Unless I missed something, I can't find one instance where RYM announce to the market that they have opened a new village. Announcements in this respect seem to be limited to announcing land acquisitions, where they will be building a village, and occasionally the naming of a village.


If that's the case, aren't you slightly suspicious why they are suddenly announcing the opening of new villages???

[Beagle]

A lot of the units are sold off the plans so the village can be almost totally sold out long before final completion.

As you probably already know mate the accounting rules preclude companies recognising the profit from the sale until settlement has actually occurred, normally as I am sure you will appreciate this happens just before occupation. All other things being equal, and I'm not suggesting they are exactly, (as there's no denying RYM's superb track record), the rate at which RYM or SYM can grow their build rate, (SUM 33% this year) is a strong pointer to underlying profit growth ahead.

[couta1]

As you probably already know mate the accounting rules preclude companies recognising the profit from the sale until settlement has actually occurred, normally as I am sure you will appreciate this happens just before occupation. Yeah, I was just trying to highlight the fact that you can't tell how the village sales are progressing just by viewing construction progress, the two don't often line up in this business.

[couta1]

If that's the case, aren't you slightly suspicious why they are suddenly announcing the opening of new villages??? They haven't announced it publically, only progress reports in the Ryman Times mags as always OG.

[couta1]

Roger I'm not as bullish as you regarding Sums build rate this year, if they don't show any progress at Q2 sales metrics(Which is the half year report period) then regardless of their 400 unit build projection the market will thump the share price and according to your thinking on Rymans upcoming result then so the market should.

[Beagle]

Fair enough mate. You're much closer to the coal face than I am so I totally respect what you have to say BUT perhaps worth noting that Julian Cook did look supremely confident of his new 400 build rate target in that video the other day (plus 100 care beds) and they've never missed a build rate target before. I guess you could say the same about RYM's 15% underlying profit growth target, they're certainly the company with the longer track record and its a superb one, more than happy to concede that.

[OldGuy]

Fair enough mate. You're much closer to the coal face than I am so I totally respect what you have to say BUT perhaps worth noting that Julian Cook did look supremely confident of his new 400 build rate target in that video the other day (plus 100 care beds) and they've never missed a build rate target before. I guess you could say the same about RYM's 15% underlying profit growth target, they're certainly the company with the longer track record and its a superb one, more than happy to concede that.

P(RYM underlying earnings >=15%) < P(SUM build rate >=400)

[couta1]

I think the point I'm trying to make Roger is that if either company is either perceived to be going to miss it's build target/profit growth target or actually does then either companies share price will take a hit, it's not one company above the other in that respect. As an aside Sum would do itself a service if it stopped reporting quarter metrics as it does tend to paint the wrong picture of sales at times and puts it on the back foot in some ways.

[OldGuy]

I think the point I'm trying to make Roger is that if either company is either perceived to be going to miss it's build target or actually does then either companies share price will take a hit, it's not one company above the other in that respect. As an aside Sum would do itself a service if it stopped reporting quarter metrics as it does tend to paint the wrong picture of sales at times and puts it on the back foot in some ways.

ha! I think the quarterly metrics are great. They provide regular opportunities for well-informed investors like us to capitalise on the wavering sentiment of the ill-informed.... :D

[couta1]

ha! I think the quarterly metrics are great. They provide regular opportunities for well-informed investors like us to capitalise on the wavering sentiment of the ill-informed.... :D From that viewpoint fair call:cool:

[percy]

ha! I think the quarterly metrics are great. They provide regular opportunities for well-informed investors like us to capitalise on the wavering sentiment of the ill-informed.... :D

Well put.!!

[Vaygor1]

If that's the case, aren't you slightly suspicious why they are suddenly announcing the opening of new villages???

But they haven't announced anything about opening a new village (well I can't find any) and this is consistant with at least the last 5 years. So no suspicion at all.

[Beagle]

P(RYM underlying earnings >=15%) < P(SUM build rate >=400)

SUM's the situation up very succinctly.

[Vaygor1]

P(RYM underlying earnings >=15%) < P(SUM build rate >=400)

If P(RYM underlying earnings >=15%) <= P(SUM build rate >=400) then P(SUM build rate >=400) = 1 :D

[Beagle]

If P(RYM underlying earnings >=15%) <= P(SUM build rate >=400) then P(SUM build rate >=400) = 1 :D

Very impressive that could string together a formula like that at 2.00 in the morning mate. Myself, I find Inland Revenue Department technical information bulletins the perfect cure for any bouts of insomnia :)

Anyway, its nice to see both RYM and SUM going up...everyone's a winner !

[OldGuy]

If P(RYM underlying earnings >=15%) <= P(SUM build rate >=400) then P(SUM build rate >=400) = 1 :D

which implies that P(RYM underlying earnings >=15%) = 1 - delta, where delta is sufficiently small as to be deemed near zero?

Nah.

[OldGuy]

And....I am out!

Made a tidy 15% gain (including divvy) over 5 months. Happy to get back in after the results are announced. :)

[kizame]

And....I am out!

Made a tidy 15% gain (including divvy) over 5 months. Happy to get back in after the results are announced. :)

Great work.

[Beagle]

And....I am out!

Made a tidy 15% gain (including divvy) over 5 months. Happy to get back in after the results are announced. :)

Congrats, I am sure you will find SUMwhere else to invest your enlarged capital base :)

[couta1]

And....I am out!

Made a tidy 15% gain (including divvy) over 5 months. Happy to get back in after the results are announced. :) Nice one, I reckon it's got more to run yet before the results announcement,could hit $9 or close to it:cool:

[couta1]

Congrats, I am sure you will find SUMwhere else to invest your enlarged capital base :) Roger if you keep this Sum obsession up you might need to get Sum therapy for obsessive/compulsive disorder.PS-Norah would be proud of you:cool:

[Beagle]

Roger if you keep this Sum obsession up you might need to get Sum therapy for obsessive/compulsive disorder.PS-Norah would be proud of you:cool:

OCD therapy a great idea, SUMtime soon :)

[troyvdh]

Giday ...Old guy....with all due all due respect...I actually detest folk like you....the SM is not a casino.....holding shares et al in my mind is a method of accumulating wealth.....not cash...personally I've never ever have had cash....just saying Troy

[OldGuy]

Giday ...Old guy....with all due all due respect...I actually detest folk like you....the SM is not a casino.....holding shares et al in my mind is a method of accumulating wealth.....not cash...personally I've never ever have had cash....just saying Troy

Excuse me? There are so many things wrong with this statement that I don't even know where to begin! good day sir

[couta1]

Giday ...Old guy....with all due all due respect...I actually detest folk like you....the SM is not a casino.....holding shares et al in my mind is a method of accumulating wealth.....not cash...personally I've never ever have had cash....just saying Troy Have you been drinking? Please keep your nastiness to yourself, it has a habit of raising its ugly head from time to time, thank-you.

[percy]

Have you been drinking? Please keep your nastiness to yourself, it has a habit of raising its ugly head from time to time, thank-you.

Maybe it is easy to take offence at Troy's post.
On sharetrader too often we are "traders",but there are a great deal of extremely wealthy investors,who spend a great deal of time researching a share before they buy it,with the view of never selling it..
What I see Troy pointing out, is Ryman is such a share.
Perhaps we all should think about this approach.ie we look to buy just 4 to 6 companies with the view of never selling.
May make us focus our attention.
So I can understand Troy's post,and think we can learn from it; "the share market is not a casino, but is a method of accumulating wealth.".

[couta1]

Fair enough Percy,but buying a block of shares as OG did and holding for 6 months or so and then selling (Positional Trade) is a well know and legitimate way to make money and is not a gambling strategy in its essence.

[iceman]

Maybe it is easy to take offence at Troy's post.
On sharetrader too often we are "traders",but there are a great deal of extremely wealthy investors,who spend a great deal of time researching a share before they buy it,with the view of never selling it..
What I see Troy pointing out, is Ryman is such a share.
Perhaps we all should think about this approach.ie we look to buy just 4 to 6 companies with the view of never selling.
May make us focus our attention.
So I can understand Troy's post,and think we can learn from it; "the share market is not a casino, but is a method of accumulating wealth.".

You make a valid point percy BUT, we are on a public forum called SHARETRADER where people have many different ways and methods for investing and share their various views freely. But I think all of us on here are investing in the sharemarket to the best of our ability with the purpose of accumulating wealth. To say to someone on here that you " actually detest folk like you", like troyd did to oldguy, who's posts I value greatly, is out of line and plain rude. Surely the point could be made without personal attacks

[percy]

You make a valid point percy BUT, we are on a public forum called SHARETRADER where people have many different ways and methods for investing and share their various views freely. But I think all of us on here are investing in the sharemarket to the best of our ability with the purpose of accumulating wealth. To say to someone on here that you " actually detest folk like you", like troyd did to oldguy, who's posts I value greatly, is out of line and plane rude. Surely the point could be made without personal attacks

Agreed.!!!.........

[stoploss]

Giday ...Old guy....with all due all due respect...I actually detest folk like you....the SM is not a casino.....holding shares et al in my mind is a method of accumulating wealth.....not cash...personally I've never ever have had cash....just saying Troy
Just saying ,you need "cash" to buy shares......

[axe]

Fair enough Percy,but buying a block of shares as OG did and holding for 6 months or so and then selling (Positional Trade) is a well know and legitimate way to make money and is not a gambling strategy in its essence.

For me I like to think positional trades are for accumulating more shares rather than money. :)

[OldGuy]

Thanks to those that didn't take offence to my actions!

For the record - I was planning to hold these shares for quite a while, but I have some concerns about the forthcoming announcement, so have exited to avoid any potential fall.

Also, Troy, your shares would be worth a lot less if there was no active market for buying and selling them. Indeed, markets without buyers and sellers even have a special name (i.e. illiquid or thinly-traded) which creates significant risks for holders. Imagine if you had to sell out one day but there was no-one there to buy. OR, imagine really wanting to buy some shares but no one wanted to sell them because they all held your point of view. Not great, right?

Thanks :)

[OldGuy]

Also, I chose to post my exit because I know others have been thinking along similar lines, and I think its useful to share information with like-minded people. Looks like I'll just leave that to PM from here.

Good luck to all!

[OldGuy]

Maybe it is easy to take offence at Troy's post.
On sharetrader too often we are "traders",but there are a great deal of extremely wealthy investors,who spend a great deal of time researching a share before they buy it,with the view of never selling it..
What I see Troy pointing out, is Ryman is such a share.
Perhaps we all should think about this approach.ie we look to buy just 4 to 6 companies with the view of never selling.
May make us focus our attention.
So I can understand Troy's post,and think we can learn from it; "the share market is not a casino, but is a method of accumulating wealth.".

Anyone investing in this company is doing so for capital gains. It simply is not worth holding just for dividends.

And, to realise those capital gains, you actually have to sell the shares at some stage, right? Thanks.

[percy]

Anyone investing in this company is doing so for capital gains. It simply is not worth holding just for dividends.

And, to realise those capital gains, you actually have to sell the shares at some stage, right? Thanks.

Agreed.
I think also a lot of us appreciate you stating you sold.
I wonder what the dividend yield on cost price would be for those who brought at the float price?

[axe]

7988

sourre : www.sharesight.co.nz

[In4a$]

Also, I chose to post my exit because I know others have been thinking along similar lines, and I think its useful to share information with like-minded people. Looks like I'll just leave that to PM from here.

Good luck to all!
Nah, keep sharing Oldguy. It's good to hear what others are doing, I don't always follow suit but helps me rationalise my own decisions. I am holding out for next update in hope we will see $9, if so I'll sell a 1000 or 2 and wait for the next dip and buy again. I float about a 1/3 of my holding, selling at a high and buying when price dips again. Don't always get it right but more interesting than just buying and holding. keeping a base holding means if price soars at anytime, I'll own some. Cant live of dividends with this stock. !!

[Vaygor1]

Anyone investing in this company is doing so for capital gains. It simply is not worth holding just for dividends.

And, to realise those capital gains, you actually have to sell the shares at some stage, right? Thanks.

I do not agree with you in this case OG as I am not into RYM for capital gains at all.

My average hold period is 4.3 years and I have never sold a share.

The dividend might appear small to begin with but it goes up by 15%/annum minimum every year as regular as clockwork.

Assuming I retain my current holding, my pre-tax return on investment in the next 12 months by way of dividend alone will be over 6.7% of my average weighted investment$/share.

Next year it will be over 7.7%, and the year after it will be 9%…. these numbers are divorced from the SP and market sentiment. As such I am not the slightest bit concerned about a global stock market crash.

Capital gains I guess are the cherry on the cake if for some inexplicable reason I am forced to sell. Currently sitting at 240% increase in capital worth from my weighted average investment over an average holding period of 4 years … and not a single 'trading' buy/sell cent to the brokers, and as I am not trading, entirely tax free.

[kura]

Anyone investing in this company is doing so for capital gains. It simply is not worth holding just for dividends.

And, to realise those capital gains, you actually have to sell the shares at some stage, right? Thanks.

Name of this forum is "sharetrader" maybe it is time it was renamed ?

[OldGuy]

I do not agree with you in this case OG as I am not into RYM for capital gains at all.

My average hold period is 4.3 years and I have never sold a share.

The dividend might appear small to begin with but it goes up by 15%/annum minimum every year as regular as clockwork.

Assuming I retain my current holding, my pre-tax return on investment in the next 12 months by way of dividend alone will be over 6.7% of my average weighted investment$/share.

Next year it will be over 7.7%, and the year after it will be 9%…. these numbers are divorced from the SP and market sentiment. As such I am not the slightest bit concerned about a global stock market crash.

Capital gains I guess are the cherry on the cake if for some inexplicable reason I am forced to sell. Currently sitting at 240% increase in capital worth from my weighted average investment over an average holding period of 4 years … and not a single 'trading' buy/sell cent to the brokers, and as I am not trading, entirely tax free.

You're using the wrong denominator. This is a common problem. The opportunity cost of holding is determined by current market value, not purchase price. I am surprised that you'd made this mistake, as your posts are normally pretty good. :)

[Bjauck]

I do not agree with you in this case OG as I am not into RYM for capital gains at all.....

I agree. I have held Ryman for years and intend to hold for as long as possible. It has been able consistently to exceed the dividend growth of many other companies. http://www.rymanhealthcare.co.nz/investor-centre/share-performance . However I understand this type of investing may not be possible or suit everyone.

[Bjauck]

You're using the wrong denominator. This is a common problem. The opportunity cost of holding is determined by current market value, not purchase price. I am surprised that you'd made this mistake, as your posts are normally pretty good. :) Wouldn't there be a risk that an alternative investment to Ryman would deliver a worse result over the long term?

[percy]

You're using the wrong denominator. This is a common problem. The opportunity cost of holding is determined by current market value, not purchase price. I am surprised that you'd made this mistake, as your posts are normally pretty good. :)

Maybe wrong,but the most fantastic way to look at it.!!!

[Vaygor1]

You're using the wrong denominator. This is a common problem. The opportunity cost of holding is determined by current market value, not purchase price. I am surprised that you'd made this mistake, as your posts are normally pretty good. :)

Utilising opportunity cost is one method that has a place among all the methods. None totally right, none totally wrong. The basis behind my figures is transparent. Readers are able to take from it what they may.

[BIRMANBOY]

"Opportunity cost" is a vague and shifting sand concept. Why? it depends on who is given the "opportunity", and what the opportunity is and of course how you handle that particular opportunity. So a more measurable and meaningful system is how much money do you have tied up in the situation.
You're using the wrong denominator. This is a common problem. The opportunity cost of holding is determined by current market value, not purchase price. I am surprised that you'd made this mistake, as your posts are normally pretty good. :)

[Vaygor1]

"Opportunity cost" is a vague and shifting sand concept. Why? it depends on who is given the "opportunity", and what the opportunity is and of course how you handle that particular opportunity. So a more measurable and meaningful system is how much money do you have tied up in the situation.

I agree BB.

My opinion as to what an opportunity cost constitutes is:

Interest forgone to the extent that your are using free funds.
Interest accrued as a result of borrowing to buy
Brokerage/legal/valuers fees.
Holding costs over time can be looked at as either opportunity costs or sometimes not.
Buying another share instead of say RYM can be an opportunity cost but at the time it relates to an uncertain and as yet unknown real return.

In certain circumstance it is appropriate to subtract opportunity costs from the overall gain before arriving at ones final gain, or loss.

The schoolbook definition of opportunity cost may have altered over the years but the application of including opportunity costs solves some problems but raises others.

[troyvdh]

Okay okay..that comment was perhaps unwise...however.My point remains but perhaps I could have rephrased the comment.
Its just as you get older..the "world" appears to me to be quite focused on money..i.e. possessions purchased to portray wealth ..flash cars,300sqm houses...etc along side huge levels of debt....Old guy ..great stuff you made 15 % in 5 months..cool...

Whats been the return per annum of RYM over the past 5 years ...10 15 20 % ?

Why is Mr W Buffet so successful....Why have most of those of huge wealth have held commercial property long term...Why ..on the NZX ..one of the most successful of property entites over the past approx. 20 years (PFI 9.5 compounding-thanks Roger) is the only entity which retains its original name...go figure.

Why historically has the NZX been considered "the wild west"...why have folk shunned same in preference to buying rentals...Its my belief that has occurred because it still is viewed as a casino...

Old guy...perhaps thats the way I should have said it...cheers troy

[James108]

You're using the wrong denominator. This is a common problem. The opportunity cost of holding is determined by current market value, not purchase price. I am surprised that you'd made this mistake, as your posts are normally pretty good. :)

I believe it may be a good idea to invest in RYM for dividends. An investor may believe that the dividends received from RYM over the lifetime of the company, discounted appropriately, will be in excess of other investments.

[OldGuy]

With the greatest of respect, I am somewhat shocked at the lack of financial/economic literacy expressed above.

Opportunity cost is defined as the return foregone on an investment with a similar risk profile to the one in question. The amount you invested years ago is totally irrelevant. Seriously.

Consider this example. You wisely invested $10,000 in something 10 years ago when the price was $1. The price is now $10 and it has a dividend yield of 1%. So, your annual dividends are $100,000 * 1% = $1,000.

You suddenly realise that there is a similar investment opportunity with a dividend yield of 2%. Should you switch? Why or why not??

Keen to hear everybody's answers! :)

[Cricketfan]

On the subject of opprtunity cost, I'm also confused as to why some people use the term 'free' when they refer to shares left in a company after selling their initial investment. Surely the that's profit from your initial investment (which you earned by risking your capital) and keeping the shares incurs an opportunity cost just like anything else?

[Bjauck]

Consider this example. You wisely invested $10,000 in something 10 years ago when the price was $1. The price is now $10 and it has a dividend yield of 1%. So, your annual dividends are $100,000 * 1% = $1,000.

You suddenly realise that there is a similar investment opportunity with a dividend yield of 2%. Should you switch? Why or why not??

Keen to hear everybody's answers! :)

From the point of view of a long term investor:
1.Will Company B with 2% yield be able to grow their dividend as fast as Co.A with 1%?
2.Has Co B got as good a track record as Co A?
3. What sectors are the Companies in?

[freddagg]

From the point of view of a long term investor:
1.Will Company B with 2% yield be able to grow their dividend as fast as Co.A with 1%?
2.Has Co A got as good a track record as Co A?
3. What sectors are the Companies in?

OldGuy said a similar investment opportunity so on balance you can pick nothing between them.
I would say it makes no difference at all as obviously the better dividend is offset by a balancing factor in the other opportunity

[percy]

On the subject of opprtunity cost, I'm also confused as to why some people use the term 'free' when they refer to shares left in a company after selling their initial investment. Surely the that's profit from your initial investment (which you earned by risking your capital) and keeping the shares incurs an opportunity cost just like anything else?

One of my simple pleasures in life has been building a growing portfolio of "free" shares.Includes AIA,FPH,RYM,SUM.
And now you come along and try to spoil it all by talking such things as opportunity cost etc.
In reality by taking advantage of great opportunities I have made them "free". I have taken my capital at no cost to the next opportunity.
Is nothing sacred.???????!!
Leave my "free" shares alone.!!! ..lol.

ps.I find it difficult trying to work out my yields on "free" shares.
I think 100% is close enough.!!

[Beagle]

No absolutely right and absolutely wrong investment approaches. RYM has been a massive wealth generator for long term investors and is a superbly managed company, no argument with that but sometimes a simply buy and hold strategy does involve opportunity cost and sitting out a period of time holding a growth stock is absolutely a valid investment technique when you honestly believe the SP has appreciated to a point where its significantly overvalued based on fundamentals.

Opportunity cost is the cost of the forgone opportunity that ones bears by having their money invested in something. Simplest way to understand this is that while long term investors have enjoyed fantastic returns over the very long term, in the last two years by holding the shares from when they were $9 and they closed on Friday at $8.60 this hasn't been the case, investors have not only suffered a slight reduction in the capital profits but also to the extent of the sum they had invested in RYM at $9.00, lost the opportunity to invest that profitably elsewhere in the market over those two years when the NZX50 went up 35%.

Two people on here were adamant that RYM had run well ahead of itself two years ago and I doubt any of you need reminding who they are.

Doubling your money on a stock and / or more and then taking profits on half such that remaining shares have no specific cost is a great way for people to ignore opportunity cost.

[winner69]

On the subject of opprtunity cost, I'm also confused as to why some people use the term 'free' when they refer to shares left in a company after selling their initial investment. Surely the that's profit from your initial investment (which you earned by risking your capital) and keeping the shares incurs an opportunity cost just like anything else?

Me too.

On how these people do their sums I think i have been paid more than $15 (yes negative cost) for each of the RYM shares i now hold

And i get a dividend as well but find it hard to work out a yield.

But then I get totally confused quite often

[Beagle]

Yes the whole free shares thing doesn't make sense to me either. Anyone could claim to have free shares in any company that had gone up by a reasonable amount. For example while not investing in RYM for the last two years I invested in another property company a REIT GMT which has shown a total shareholder return of 60% so I could easily sell some of these take my 60% gain, add in previous significant profits I've made on RYM and get a whole bunch of free shares myself. I'd also probably have a great deal of difficulty working out my dividend yield going forward.

[percy]

Me too.

On how these people do their sums I think i have been paid more than $15 (yes negative cost) for each of the RYM shares i now hold

And i get a dividend as well but find it hard to work out a yield.

But then I get totally confused quite often

Nice to know that in a perfect world,there are others who blunder along making great profits, in the exact science of share investing.
What a bugger we clean up so many professionals...lol.
And yes that yield on negative cost has never been properly explained to me.Maybe the professionals have missed out on it because of that funny saying of theirs "opportunity cost"???.!! lol.
Each to their own.

ps.Looks as though this year will be my biggest year for collecting "free" shares.

[kura]

I don't discriminate, all my shares are treated equally. (Regardless of cost )

[kura]

I recall reading some lenghty background report on retirement sector, which explained basics of their business model. (will try to find a link latter ) and differences between NZ & Aust.

What I didn't understand, was regarding a unit being vacated it may be refurbished and then re sold to the next customer.
In NZ the capital appreciation accrues to the village operator, but in Aust it is often split between the operator & occupier.
My questions being:
- Is there a standard reference point, that determines the new selling price ? ( or just whatever operator feels like on the day )
- What % of capital gain do RYM share with occupiers (if any )

[Vaygor1]

...In NZ the capital appreciation accrues to the village operator, but in Aust it is often split between the operator & occupier.

I think the sharing of capital gain/loss you may have heard of in Australia is not the norm. I have heard of only one small-time operator in Australia to-date that may be doing this but happy to be corrected.


My questions being:
- Is there a standard reference point, that determines the new selling price ? ( or just whatever operator feels like on the day )
- What % of capital gain do RYM share with occupiers (if any )

New selling price (not quite the correct term... should be 'new license to occupy price') is determined by supply and demand. As the elderly population balloons in NZ and Victoria as it will through demographics, supply cannot keep up. The number of units simply cannot be built fast enough to meet the accelerating demand.

My understanding re capital gain is that RYM and all the other main players in NZ (and as far as I know, Victoria) do not share any capital gain with the occupiers. RYM being the only one that I know of who is prepared to take a capital loss. RYM also being the only one I am currently aware of that will pay back what is ultimately owed (ie the occupancy advance plus any interest component) to the last occupier if the unit isn't re-occupied within any time frame; being 6 months for RYM.

The following from RYM 's website http://www.rymanhealthcare.co.nz/the-ryman-difference/peace-of-mind-guarantees (Guarantee numbers 6 and 7):

“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.”

“We guarantee that if the new resident has not settled within six months of you vacating your unit, then we will pay you interest on your occupancy advance until it is paid in full.”

[Biscuit]

RYM sp into record territory today

[winner69]

RYM sp into record territory today

Good eh .....taken a while to get back there

[bohemian]

It has taken it's time to get back above $9.00. A four bagger for me.

[Joshuatree]

2 years ago it was the same price + or- 10c. So a 4 bagger for you then too:mellow:. Hopefully the beginning of a new uptrend and if so may buy back in; meanwhile my money has been working far better elsewhere.

[bohemian]

You are right, but the thing about foresight and hindsight is they're a bit like Arthur and Marta, the sound the same but there's a big difference.

[troyvdh]

Biscuit..I do not intend to be pedantic ..record territory ...no sorry....about 8-10 years ago the SP was $11.38 ??...anyways there was a 1 for 5 split...so in a funny kinda way...the SP today is $45 dollars...just saying

[Joshuatree]

You are right, but the thing about foresight and hindsight is they're a bit like Arthur and Marta, the sound the same but there's a big difference.

Thanks for the hindsight but i took the foresight instead and left a ways back. I try and use the simple M/A chart to help time in and out and slowly getting better at it but the RYM chart wasn't much use to this novice.

[Vaygor1]

I recall being asked a question years(?) ago by Winner regarding my view on the relationship between Underlying Profit for RYM compared to Unrealised Gains. The difference between the two being predominantly (exclusively?) the increase in value of their villages as provided by an independent valuer.

At the time I stated that I believed, through the passage of time, that one (Underlying Profit) must eventually translate into the other (Unrealised Gains) at the point when the unit is actually re-occupied. Maybe my view holds (possibly) but I now believe it is not an accurate way to look at it.

What has prompted me into writing this message is my recent readings from some of Sauce's old posts in the 'Owner Earnings vs Free Cash Flow' thread, posts 349 to 353 (link below)… in particular post 353. His posts are still so relevant today…wish he was still a contributor.


http://www.sharetrader.co.nz/showthread.php?7877-Owner-Earnings-vs-Free-Cash-Flow&p=319689&viewfull=1#post319689

Vaygor1.

[winner69]

Share price going well at the moment

[OldGuy]

I recall being asked a question years(?) ago by Winner regarding my view on the relationship between Underlying Profit for RYM compared to Unrealised Gains. The difference between the two being predominantly (exclusively?) the increase in value of their villages as provided by an independent valuer.

At the time I stated that I believed, through the passage of time, that one (Underlying Profit) must eventually translate into the other (Unrealised Gains) at the point when the unit is actually re-occupied. Maybe my view holds (possibly) but I now believe it is not an accurate way to look at it.

What has prompted me into writing this message is my recent readings from some of Sauce's old posts in the 'Owner Earnings vs Free Cash Flow' thread, posts 349 to 353 (link below)… in particular post 353. His posts are still so relevant today…wish he was still a contributor.


http://www.sharetrader.co.nz/showthread.php?7877-Owner-Earnings-vs-Free-Cash-Flow&p=319689&viewfull=1#post319689

Vaygor1.

Glad that you finally got this sorted. I recall you, Roger and I debating this a few times... :)

[Vaygor1]

Share price going well at the moment
Yes indeed. FY result out a week tomorrow.

Recent SP movement suggests a non-negative result compared to market expectations.

I'm expecting an Underlying Profit of $158M. If this is correct, and assuming a rational market, this puts the Share Price in the $9.15 to $9.40 territory imho.

In terms of sensitivity analysis. If for instance an Underlying profit of say $160M is announced then the Share Price (rational market) price range becomes $9.30 to $9.55 by my calcs.

I'm also expecting an 8.4 cent, maybe 8.5 cent divvy.

[OldGuy]

Hi Vaygor, what % growth rate do your underlying earnings estimates correspond to??

[Vaygor1]

Hi Vaygor, what % growth rate do your underlying earnings estimates correspond to??

Last year's Underlying Profit was $136.3 Million so the growth in UP to get to $158M is 15.9%

I know the H1 result compared to last year's H1 was only up 6% meaning H2 needs to be up about 26% to make the FY15.9% but, in the absence of any profit warning and RYM's good reputation, I will be surprised if I'm too far off the mark.

[Gerard]

Greetings

This is my first comment on the forum as a new member, but I have been following posts for some months.

We have held Ryman for a number of years and forms a very large part of our portfolio, which does fly in the face of the more orthodox "diversify" doctrine.

Like others on here I am looking forward to Fridays annual result announcement. Given the strong signal given at the half year briefing that Ryman are on track for an increase of 15% in underlying profit, I have no doubt thats exactly (or at the least) what we will be presented with.

On another note, quite by chance I recently came across a Bayleys property advert for sections being sold in Rangiora by Ryman. The advert states "Ryman Healthcare Subdivision" and is adjacent to the new Charles Upham village. This is quite a new direction for Ryman I believe, and whether it is a "one off" or something that may look to be in addition to the ORA structure of villages will certainly be of interest.

[Vaygor1]

Greetings

This is my first comment on the forum as a new member, but I have been following posts for some months.

We have held Ryman for a number of years and forms a very large part of our portfolio, which does fly in the face of the more orthodox "diversify" doctrine.

Like others on here I am looking forward to Fridays annual result announcement. Given the strong signal given at the half year briefing that Ryman are on track for an increase of 15% in underlying profit, I have no doubt thats exactly (or at the least) what we will be presented with.

On another note, quite by chance I recently came across a Bayleys property advert for sections being sold in Rangiora by Ryman. The advert states "Ryman Healthcare Subdivision" and is adjacent to the new Charles Upham village. This is quite a new direction for Ryman I believe, and whether it is a "one off" or something that may look to be in addition to the ORA structure of villages will certainly be of interest.

Hi Gerard and welcome to the forum.

I am confident the result will reflect 15% or more increase in UP as per Ryman's Nov 2015 forward guidance, and as such will be yet another boring predictable result. :)

Regarding the Bayley's property advert, I assume you mean this one:
https://www.bayleys.co.nz/Listing/Canterbury/Waimakariri/Rangiora/550411

A bit strange I agree. Nowhere does it state a sale of property. The only mention of price is 'By Negotiation' and there is no information related to timing.

It appears the greyed out section is for the retirement village and the rest open to anyone to occupy (or buy?). Very confusing. The "….there is scope to accommodate all family configurations." at the bottom of the article confuses further.

Phoning the agent should in theory provide some clarity.

[OldGuy]

I really hope you guys are right about achieving the 15% target. Have they achieved a 26% return before in the second half of the FY?

[Beagle]

I really hope you guys are right about achieving the 15% target. Have they achieved a 26% return before in the second half of the FY?

I don't think so. To the best of my knowledge in terms of the first half second half numbers, they've never been so far behind the overall run rate required at the first half interval.

[OldGuy]

yeah, that was my impression too. Will be interesting to see how this pans out!

[Vaygor1]

Today I reviewed Ryman's webcast to Shareholders on 20 Nov 2015 when they announced their H1 increase of 6% in Underlying Profit.

Three times at least during the presentation they stated that they would reach their goal of 15% Underlying Profit for the full year. In all instances it was put across as a fait accompli… in a delivery manner that any reputable board would avoid if there was even the slightest hint of doubt.

I am so confident they will make an FY Underlying Profit of 15% or more in the announcement this Friday, I am prepared to put a friendly wager on it if there are any takers. I have a few rough reds to get rid of in the event I lose.

[macduffy]

I suspect (hope!) that you are right, Vaygor. Sales of occupation rights will be "lumpy" when new developments are in the pipeline but RYM's management have shown that they have a pretty good handle on forward completions, sales and profitability. We"ll see.

Disc: Holding RYM.

[OldGuy]

I sold a bit early on the assumption they wouldn't make it. Will be surprised if they do.

[777]

Up another 3% today. Another day like today and they will crack $10.

[Gerard]

Ryman underlying profit up 16%. Full profit up 26%.

The webcast should be interesting

[LAC]

https://www.nzx.com/companies/RYM/announcements/282672

Good result

[BC_Doc]

Well they delivered on their 15% target. Impressive stuff

[trader_jackson]

Nothing outstanding, but solid none the less.

Bang on Forsyth's forecasts (who also have a price target on $9.30, currently)

Don't expect much share price action given the substantial gains in the run up to today's results

Interesting note: For the first time ever, fair value gains made up more of 'revenue' than tangible (eg Care) revenues

[Beagle]

Congrats to holders especially Vaygor1 - Mate I look forward to shouting you a beer when I see you in due course. Agree that the SP has had a big run-up. Is a good hold for the long run...Disc - Presently not holding but looking to add some on any meaningful dip. (Not to be considered professional advice, DYOR)

[kizame]

This company is an absolute No Brainer,especially for anyone wanting a long term investment that you don't really need to keep your eyes on.
And you can see the future growth happening with new sites. Aussie has such huge potential.

[minimoke]

Currently sitting on a 1,867% profit on RYM and still happy to hold

[Lewylewylewy]

Hmmm, either your a trader or you sold down

[minimoke]

Hmmm, either your a trader or you sold down
It comes from being a holder since 2003 with only a few sell/buys since

[percy]

Currently sitting on a 1,867% profit on RYM and still happy to hold

Fantastic..
Well done.
Trust the next 13 years are as good for you.!

[minimoke]

Fantastic..
Well done.
Trust the next 13 years are as good for you.!by then i might be an occupant of one of their properties. Maybe theyll offer a discount to long term holders.

[Vaygor1]

Congrats to holders especially Vaygor1 - Mate I look forward to shouting you a beer when I see you in due course. Agree that the SP has had a big run-up. Is a good hold for the long run...Disc - Presently not holding but looking to add some on any meaningful dip. (Not to be considered professional advice, DYOR)

Thanks Roger.

I will happily accept a beer from you on the condition you gracefully accept one from me too. :)

As per my earlier post a $158M Underlying Profit equates to a fair SP range of $9.15 to $9.40 by my calcs.

Assuming consistent growth, an SP approaching $11 this time next year is on the cards imho.

In the meantime any dip below $9.00 represents reasonable buying in my view, and during the course of the next 12 months this is reasonably likely to occur on at least one occasion. So long as RYM maintains its current consistent growth rate, I find it difficult to imagine the Share Price dropping below the $8.30 mark in the foreseeable future.

[Beagle]

Thanks Roger.

I will happily accept a beer from you on the condition you gracefully accept one from me too. :)

As per my earlier post a $158M Underlying Profit equates to a fair SP range of $9.15 to $9.40 by my calcs.

Assuming consistent growth, an SP approaching $11 this time next year is on the cards imho.

In the meantime any dip below $9.00 represents reasonable buying in my view, and during the course of the next 12 months this is reasonably likely to occur on at least one occasion. So long as RYM maintains its current consistent growth rate, I find it difficult to imagine the Share Price dropping below the $8.30 mark in the foreseeable future.

Thanks mate, looking forward too it. Always appreciate your insights :)

[Joshuatree]

Is this going to affect Ryman in Aus too?.Int link at the bottom too but my eyes glazed over.



http://1.gravatar.com/avatar/4af2ca296b02c77c8ccee614f27b4342?s=50&d=identicon&r=G (http://findthemoat.com/?author=2)
A step closer to the end game (http://findthemoat.com/2016/06/03/step-closer-to-endgame/)by findthemoat (http://findthemoat.com/?author=2)


In light of yesterday's sharemarket rout of listed residential aged care players, triggered by the release of a BAML research report forecasting a potential 13% decrease in ACFI funding rates, I want to discuss briefly (1) ACFI claiming practices in the industry; and (2) balance sheet implications.
Aggressive ACFI claiming PracticesThe listed sector have thrived of late on constant increases in ACFI claims achieved per resident - at a rate of 10.7%, 8.0% and 8.7% per annum for Estia, Japara and Regis respectively.
http://findthemoat.com/wp-content/uploads/2016/06/Screenshot-2016-06-02-15.49.43.png
This is twice the growth rate that the government is comfortable with (as per below from its ACFI Monitoring Report):
http://findthemoat.com/wp-content/uploads/2016/06/Screenshot-2016-06-02-15.51.49.png
In fact, Estia brags about its ability to claw higher ACFI payment per resident out of the government under its ownership, charging the Australian Government 15% more per resident within 6 months after acquiring a new facility.
http://findthemoat.com/wp-content/uploads/2016/06/Screenshot-2016-06-02-15.27.52.png
How? Apparently through "improved documentation and compliance standards":
http://findthemoat.com/wp-content/uploads/2016/06/Screenshot-2016-06-02-15.27.39.pngProbably not the most prudent assertion for Estia to have made in the public domain in an environment where the government states explicitly in its most recent Mid Year Economic and Fiscal Outlook (http://www.health.gov.au/internet/budget/publishing.nsf/Content/MYEFO-agedcare-provider-funding) that:

Expenditure on residential aged care subsidies under the ACFI for 2014-15 has exceeded budget estimates by approximately $150 million. This level of growth is not sustainable for Government. It is clear that the growth is being driven by claims in the complex health care domain which are higher than can be explained by the increase in the frailty of residents.
While the overwhelming majority of ACFI claims from aged care providers audited by the Department of Health are correct, one-in-eight of 20,000 checked last year (2014-15) were deemed to be incorrect or false. This figure is already tracking even higher at one-in-seven in 2015-16.
Balance Sheet FragilityGiven that more than 70% of industry revenue is derived from the government, industry economics is obviously hugely sensitive to changes in government policy. The apparent sector-wide "EPS reductions of -19% to -27% by FY2019E" (taken from BALM research report at face value) from a seemingly small revision in the May Federal budget is demonstrative of this.
As we've established in my previous article (http://findthemoat.com/2016/05/17/aged-care-sector-leverage/), balance sheet assets of Estia, Regis and Japara comprise a huge amount goodwill from acquisitions, without which Net Assets are actually negative or close to negative.

http://findthemoat.com/wp-content/uploads/2016/05/Screenshot-2016-05-16-11.47.23.pngNote: Regis numbers Incorporates Masonic Care Acquisition

Now, goodwill valuations are typically justified via cashflow projections - refer below for Estia's impairment testing guidelines:
http://findthemoat.com/wp-content/uploads/2016/06/Screenshot-2016-06-02-16.21.04.png
It is then not too difficult to see a scenario where, given any deterioration in industry conditions, a material amount of balance sheet goodwill is deemed impaired especially in context of huge acquisition multiples having been paid for those assets in question.
Note that a significant portion of those goodwill assets have been paid for using liabilities in the form of Refundable Accommodation Deposits (lent to the providers by its residents).
This could very well wreck havoc on already thinly capitalised Balance Sheets.
Here's my original detailed article on Leverage in the Australian Residential Aged Care Sector (http://findthemoat.com/2016/05/17/aged-care-sector-leverage/).

[percy]

JT.I think we can understand from this article why development margins, and re-sales are so important to the likes of RYM,as there is little or no profit in care.

[janner]

Fantastic..
Well done.
Trust the next 13 years are as good for you.!

It is all about faith ... Aye perc

Just like your beloved HBL... Still have six figures of HBL that are FREE..

The best word in the English language.. :-))

[percy]

It is all about faith ... Aye perc

Just like your beloved HBL... Still have six figures of HBL that are FREE..

The best word in the English language.. :-))

Certainly is....lol.

[dobby41]

JT.I think we can understand from this article why development margins, and re-sales are so important to the likes of RYM,as there is little or no profit in care.

Does that mean they should really be in the listed property sector rather than rest homes where they are?

[macduffy]

Does that mean they should really be in the listed property sector rather than rest homes where they are?

Not really. The care bit is an essential part of the business that makes the property side profitable.

[Joshuatree]

It is all about faith ... Aye perc

Just like your beloved HBL... Still have six figures of HBL that are FREE..

The best word in the English language.. :-))

FREE CARRIED even better .Got more nous too it i.e. no free lunch stigma.:t_up: ps not free carried (i don't hold anymore) directly; but indirectly Ive a share in RYM ;a few baggers up but not free carried as we didn't sell any at all to free carry, which maybe we should have as RYM has spent two years doing nothing but is starting to make up for it now. Am now thinking a bout whats for lunch; may heat up leftovers from last nights dinner; does that make it a free lunch?:mellow::)

[macduffy]

The Aussie retirement sector stocks have taken a hit since the Aust Budget but Morgans have upped their rating on Estia today from Hold to Add on the presumption that they will be able to increase fees to compensate for reduced govt funding.

FWIW, bearing in mind RYM's Aussie exposure and growth plans.

[macduffy]

More glum predictions on the Aussie retirement sector. From FN Arena:

"Two events last week showed investors risk is very much omnipresent in today's share market, even though it doesn't exactly look like it when money from the sidelines is flowing back in.

First we saw a sudden and sharp sell-off in aged care stocks after Ben Griffith from fund manager Eley Griffiths announced he'd had sold out of the sector in anticipation of tougher times ahead. Then Bank of America-Merrill Lynch issued a report that essentially declared the sector is about to turn ex-growth on the back of the Federal government changing co-payment rules, stating the rest of the market has been caught napping.
More Government, More Risk

In case you missed it, or aged care is not really your thing, analysts at BA-ML have declared Estia Health ((EHE)), Japara Healthcare ((JHC)) and Regis Healthcare ((REG)) "ex-growth" for the next three years as the Federal government looks to rein in spending, which means less subsidies and a more stringent approach to what services should apply and who should be eligible.

For a sector that is on a rough estimate 70% subsidised and operating on cost levels well above many unlisted peers, such change of heart can be nothing but devastating. Share prices had already been de-rated from the moment this government started flagging its intentions, after a substantial re-rating in 2015 when Eley Griffith too was on board, but nobody was prepared for the content and predictions made in the BA-ML report.

Not everybody agrees with BA-ML's dour assessment. CLSA analysts essentially called it BS on Friday and analysts at UBS and Morgans seem to agree with CLSA rather than with BA-ML.
Nobody is contesting the fact more government savings will impact on the industry's profitability, but there are offsets through higher service fees and an increase in accommodation charges. Also, analysts point out the sector is seeking independent appraisal of proposed changes and the expectation is that if the overall impact turns out too much, there will be negotiations between the government and the sector.

After all, both share a common interest in that these services need to be provided, and the sector needs to expand in the decade ahead, and both see the importance of a profitable and motivated set of operators.

The bottom line from all of the above is not whether CLSA is right, or BA-ML, or none of the calculations published to date, but that in a world wherein most governments are facing budget deficits, sluggish growth, older populations and a plethora of other challenges, the risk for a negative impact through changes in rules or government spending is increasing exponentially."


Not a big part of RYM's business - yet.

I hold.

[Beagle]

Speaking of risk, what did I catch the last bit of on the radio the other day ? Something about a significant increase in stamp duty to be imposed on foreigners buying real estate in South Australia ? Most states seem to be either imposing substantial increases in stamp duty or thinking about it as a major tool to suppress house prices and make them affordable for Australians. We saw what happened to the SP when house prices tanked a little during the GFC so is this a possible new headwind for expansion plans in Australia, lower house price growth translating into more skinny development margins going forward ?

Disc - This is just an idea, not pretending to know if this stamp duty push-back on foreign buyers thing is the villain for the SP correction or not or whether its just the general market correction being the reason.

[couta1]

No mate, just general market correction as has happened with Sum plus it was always going to come back to sub $9 at some point after its big run up from $8 to $9.80 in a short space of time.

[stevevai1983]

Rym is so expensive.
My valuation for Rym : 8.1$ for now.

[Vaygor1]

Rym is so expensive.
My valuation for Rym : 8.1$ for now.

Did you use the age old stab-in-the-dark methodology?

[percy]

Did you use the age old stab-in-the-dark methodology?

Classic.!
Well put.!!.lol.

[kura]

For what it's worth Morningstar value them at $9.10

[stevevai1983]

Did you use the age old stab-in-the-dark methodology?

realized profit PEG=1.5 method
PEG > 1.5 is "expensive" for me, the underlying long term returns is not so good when it's above 9.5$.
now it's better, i hope RYM sp drop abit more

[percy]

realized profit PEG=1.5 method
PEG > 1.5 is "expensive" for me, the underlying long term returns is not so good when it's above 9.5$.
now it's better, i hope RYM sp drop abit more

PEG ratio is an excellent ratio to use.Maybe not the best one to use with the companies in the retirement sector, as growth is being funded by retained earnings,which does not fit in with the PEG ratio.
To better understand what I am referring to there is an excellent thread here on Sharetrader,"Owners earnings vs free cash flow."
Note, Sauce was the best analyst in NZ on Ryman.

[couta1]

The best way to analyse Ryman is to study their past track record and their future potential.

[Beagle]

The best way to analyse Ryman is to study their past track record and their future potential.

Superb company no question whatsoever mate, arguably N.Z's preeminent growth stock but I can't help wondering if real estate has already peaked on both sides of the Tasman ?, never been less affordable in terms of multiple of average person's income. Perhaps this translates into lower development margins over the medium term ? Certainly plenty of pressure in terms of cost of construction from what I can see in the N.Z. building industry but that said RYM's own construction company is a superb and efficient unit and SUM making good strides with there's too.
Be interested to know your thoughts on future development margin's Vaygor1. Seems to be affecting SUM as well but to a lesser extent MET, because they're not such a big developer.
Maybe its just the general market correction and we should all just have sold in May and gone away ?

[Food4Thought]

Superb company no question whatsoever mate, arguably N.Z's preeminent growth stock but I can't help wondering if real estate has already peaked on both sides of the Tasman ?, never been less affordable in terms of multiple of average person's income. Perhaps this translates into lower development margins over the medium term ? Certainly plenty of pressure in terms of cost of construction from what I can see in the N.Z. building industry but that said RYM's own construction company is a superb and efficient unit and SUM making good strides with there's too.
Be interested to know your thoughts on future development margin's Vaygor1. Seems to be affecting SUM as well but to a lesser extent MET, because they're not such a big developer.
Maybe its just the general market correction and we should all just have sold in May and gone away ?


Gone away in May, run with the cash, and return in spring to watch the stock market rising?
From past analysis, winter always gets a bit blue on market sentiment. More time indoors contemplating the meaning of life. Still think this retirement sector is a good place to put your funds long term. Better than kiwi saver. I love the New Zealand retirement sector, what a good place to be... in shares, or if you are retired... or soon to be

[kura]

Some ASX aged care providers have been hit with incorrectly classifying some of the people in their care (to max the govt subsidy )
I'm wondering if RYM has been tarred with same brush ? Such that anyone operating in retirement sector in Au-land is now out of favour ?

Disc: Was a buyer today

[couta1]

Some ASX aged care providers have been hit with incorrectly classifying some of the people in their care (to max the govt subsidy )
I'm wondering if RYM has been tarred with same brush ? Such that anyone operating in retirement sector in Au-land is now out of favour ?

Disc: Was a buyer today Some Aussie aged care providers have been on the pigs back for quite a while now even bragging about their profits, now they have been caught with their pants down. Any rub off effect on Ryman will be short lived once the offenders get their wings clipped and funding trimmed. It's a different story in NZ as apart from the industry being under funded by the Govt,classifications are only done via the DHB's and not the providers themselves thus ruling out the possibility of the Aussie situation occurring here. Disc-Was also a buyer today.

[Baa_Baa]

RYM are an "Aussie aged care provider" with ambition to expand. Shareholders might hope that their business case for expansion into Australia was not founded on the government subsidies that have been clipped severely. It is immaterial at present, whether the Aus model influences the NZ funding model. More relevant is whether the RYM case for expansion in Australia is now flawed.

[percy]

Ryman model is based on development and resales of units,where the greatest profits are to be made.
Sale of occupancy rights gives them the cash to develop their next village.
In time resales of right to occupy units provides on going profits.
Care providing makes a very small % of Ryman's business and profits.
The way sales of Ryman's units in Australia are going, their expansion there will be rapid.

[couta1]

Ryman model is based on development and resales of units,where the greatest profits are to be made.
Sale of occupancy rights gives them the cash to develop their next village.
In time resales of right to occupy units provides on going profits.
Care providing makes a very small % of Ryman's business and profits.
The way sales of Ryman's units in Australia are going, their expansion there will be rapid. Yes Percy, under or over funded care centre models won't hinder the Ryman expansion.Resource consent declines are one of the only things that could.

[percy]

Yes Percy, under or over funded care centre models won't hinder the Ryman expansion.Resource consent declines are one of the only things that could.

Well I think you know the situation better than me,but I think should the retirement village developers start having resource consent issues, governments will become involved,because with the huge tailwinds of ageing populations,if private enterprise does not build the villages, governments are faced with the problem of providing units for the aged.Governments will not be able to cope.They know this. My understanding of the issue is there is going to be a huge short fall,as it is. And that is with the likes of RYM and SUM going gangbusters with their developments.

[couta1]

Yes Percy, under or over funded care centre models won't hinder the Ryman expansion.Resource consent declines are one of the only things that could. Percy I don't see any significant problems in this area going forward other than the odd blip, excepting the likes of Sum's Boulcott site. I was using an extreme problem to highlight what it would take to derail progress going forward in comparison to the care centre funding model.

[troyvdh]

Obviously not many folk here listen to RNZ...just saying

[QOH]

Obviously not many folk here listen to RNZ...just saying

I was listening.
http://www.radionz.co.nz/national/programmes/ninetonoon/audio/201805441/top-tips-for-global-investment

[couta1]

Obviously not many folk here listen to RNZ...just saying Yes but how does the possibility of the share market being 30% overvalued determine whether Ryman are successful or not in their expansion plans, just saying.

[Beagle]

I was listening.
http://www.radionz.co.nz/national/programmes/ninetonoon/audio/201805441/top-tips-for-global-investment

Thanks for sharing and well worth listening too. I think his comments about the NZX being up to 30% overvalued in historical terms compared to 50 year average have to be viewed in the context of interest rates being the lowest they've ever been.

With subdued worldwide growth one of my central thesis going forward is that we'll have ultra low interest rates for many many years as there's simply no other way to stimulate growth and no other way for heavily indebted nations to recover from the effects of various excesses including excess debt.

There are of course many high quality companies paying a higher gross dividend yield than 6% and finding those with sustainable growth and holding them makes the most sense to me.

That said holding some cash like he is and patiently waiting for opportunities to present themselves, (while avoiding car and boat dealers who might tempt one), and avoiding any form of leverage makes sense to me too.

[Biscuit]

Thanks for sharing and well worth listening too. I think his comments about the NZX being up to 30% overvalued in historical terms compared to 50 year average have to be viewed in the context of interest rates being the lowest they've ever been.

Yes, agree, it is hard to see the upside of a "contrarian strategy" - switching from shares to bonds in the hope that interest rates will go down, when interest rates are already on the floor.

[Harvey Specter]

Thanks for sharing and well worth listening too. I think his comments about the NZX being up to 30% overvalued Housing is 50 -100% overvalued so shares are currently a bargain. Its all relative.

[Beagle]

Housing is 50 -100% overvalued so shares are currently a bargain. Its all relative.

Good quality investment grade bonds are also heavily overvalued, (yield too low) on a risk adjusted basis in my opinion. No question Mr Ryder is a highly astute businessman but I struggle to see the relevance of comparing PE's over a 50 year average (Interest rates were in the late teens, 18% and higher in the 1980's and PE's have to be super realistic in that environment) to the present market PE.
Comparing our market PE with other markets which are also experiencing lowest ever interest rates is something that makes far more sense to me. Perhaps there's more detail on that in his book.

[Vaygor1]

Superb company no question whatsoever mate, arguably N.Z's preeminent growth stock but I can't help wondering if real estate has already peaked on both sides of the Tasman ?, never been less affordable in terms of multiple of average person's income. Perhaps this translates into lower development margins over the medium term ? Certainly plenty of pressure in terms of cost of construction from what I can see in the N.Z. building industry but that said RYM's own construction company is a superb and efficient unit and SUM making good strides with there's too.
Be interested to know your thoughts on future development margin's Vaygor1. Seems to be affecting SUM as well but to a lesser extent MET, because they're not such a big developer.
Maybe its just the general market correction and we should all just have sold in May and gone away ?

Hi Roger.

Regarding the issue you raise about real estate possibly peaking on both sides of the Tasman, even if this turns out to be the case I don't think it would cause too much of an impact on Ryman's development margins. From past presentations, Ryman have made it quite clear that they sell down the units in their new villages at a substantial discount. This achieves 2 things:

(1) It ensures Ryman gets their development money back which achieves their goal of making each new village self-funding, and

(2) A marked increase in realised value will be seen when in due course the resales begin coming in, even if house prices have dropped.

Here is a graph from Ryman's last presentation which gives an idea just how much house prices would need to drop before any real impact was felt:

8116

Having said that, Ryman's development margins for this financial year will be reduced (compared to last financial year) for sure I believe… not necessarily because of any shift in real estate prices but because Ryman's development margin last financial year were very high at 28% and Ryman themselves expect development margins to reduce to the normal 20-25% range for this financial year because:

(1) Labour cost pressures in the market, particularly in Auckland will have a partial impact, and

(2) More so, all the villages currently under construction this financial year will be in their very early opening stage during the annual reporting period, at which time the sell price per unit is even more conservative when compared to the later opening stages which won't occur until the next reporting period. Refer to the chart below for Ryman's take on this:

8117

[Beagle]

Hi Vaygor1

Thanks mate, always appreciate your input :)

[babymonster]

Good buy at this level

[kizame]

But wait! There's more!

[percy]

But wait! There's more!

Certainly is;
from the latest Ryman Times;
"Dr.Kerr said Ryman was working on securing its fourth and fifth sites in Melbourne,putting the company on track to have five villages open in Victoria by 2020."

[stoploss]

I wonder if one day Ryman will create a "share trader" village for us to all sit around and tell our greatest investment stories day after day as we forgot we told them yesterday ..
It could be named the "Kevin Hickman " or "John Ryder" surely for a dollar in on day one , this company must be one of the best wealth creators for NZ investors ?
Any ideas on the top 5 anyone ???
Chuck in a couple of Bloomberg terminals we would be away .....
I hope I am still in this sort of shape at 80 + .....

https://www.youtube.com/watch?v=kDurYyFFt_M&feature=youtu.be

[Blendy]

I wonder if one day Ryman will create a "share trader" village for us to all sit around and tell our greatest investment stories day after day as we forgot we told them yesterday ..


Love it!!! No doubt that will happen organically as we all will have purchased the rights to a fancy apartment in a not-yet-built Ryman facility long in advance...