RYM - Ryman Healthcare

[percy]

Looks as though RYM [and possibly SUM] will concentrate on their Australian expansion.
I seem to remember RYM have a 7 year NZ land bank.

[peat]

I tend to think this (restriction on NZ listed companies with X% of foreign ownership buying land) is necessary to achieve the goal.
Otherwise they will become vehicles of ownership of NZ land.

It could be streamlined so I don't see it as too negative for the companies.

[forest]

I tend to think this (restriction on NZ listed companies with X% of foreign ownership buying land) is necessary to achieve the goal.
Otherwise they will become vehicles of ownership of NZ land.

It could be streamlined so I don't see it as too negative for the companies.

Peat do we know what the X% is.
Fishing quota I believe the X% is 25%, if the fishing company is owned by overseas interest by over 25% then it can not hold (certain/any fish) quotas.
For this reason I understand Sanford made changes so foreign ownership is held below 25%.
I guess retirement companies can do something similar.

[Joshuatree]

Always good to see your logical commonsense posts forest. The overseas investment amendment bill with a few tweaks will protect our land and properties im sure and support our retirement prop companies, all good for our country and companies.

[peat]

Peat do we know what the X% is.

The OIO rules consider a company with more than 25% of ownership to be foreign. Its the same rule as the fishing situation forest, all coming under the Overseas Investment regulations

The new legislation is the Overseas Amendment Bill which will ban anyone except NZ and Australian citizens and permanent residents from buying an existing NZ home or residential property without Overseas Investment Office approval. Essentially making residential land sensitive

[Beagle]

The OIO rules consider a company with more than 25% of ownership to be foreign. Its the same rule as the fishing situation forest, all coming under the Overseas Investment regulations

The new legislation is the Overseas Amendment Bill which will ban anyone except NZ and Australian citizens and permanent residents from buying an existing NZ home or residential property without Overseas Investment Office approval. Essentially making residential land sensitive

Not to forget any farm land over 5 ha is also now in the touchy feely category.

[percy]

Google ; Lend lease is breaking ranks over retirement village contracts.
An extremely interesting article.
Appears to me, by offering more choices, retirement villages will attract more residents.

[LAC]

Interesting article, good to have options but it needs to be simple, by complicating the contracts it might just have an adverse effect. Was explaining the current model to my mum who turned 60 this year and she was saying she didnt know that is how Retirement Villages work but then went on to say I can just give "the three siblings" the current house and you three can buy me a retirement home because she does not like having the fee at the end and not getting the true market value of the retirement unit. So the options in the article will suit that way of thinking - on the other hand, it was a simple model to explain, now if I was to explain the 3 options in the article to my mum (knowing the type of person she is), she will just nod off after 5 minutes and say its too complicated. She just needs to know how much to buy it and how much can I sell it.
The current formula seems to be working here with demand still as high as ever:)

[Ggcc]

Interesting article, good to have options but it needs to be simple, by complicating the contracts it might just have an adverse effect. Was explaining the current model to my mum who turned 60 this year and she was saying she didnt know that is how Retirement Villages work but then went on to say I can just give "the three siblings" the current house and you three can buy me a retirement home because she does not like having the fee at the end and not getting the true market value of the retirement unit. So the options in the article will suit that way of thinking - on the other hand, it was a simple model to explain, now if I was to explain the 3 options in the article to my mum (knowing the type of person she is), she will just nod off after 5 minutes and say its too complicated. She just needs to know how much to buy it and how much can I sell it.
The current formula seems to be working here with demand still as high as ever:)
Be careful when gifting more than $27,000 per year is involved. You are allowed to gift 100% of what you own, but at a cost.... I can’t remember how much the government subsidy for retirement living is, but you lose that benefit when you gift more than $27,000 per year ($54,000 per couple). Get your lawyers advice on gifting

[777]

Be careful when gifting more than $27,000 per year is involved. You are allowed to gift 100% of what you own, but at a cost.... I can’t remember how much the government subsidy for retirement living is, but you lose that benefit when you gift more than $27,000 per year ($54,000 per couple). Get your lawyers advice on gifting

Gift duty was abolished some years ago after it had been zero rated for some time.

[Beagle]

https://www.smh.com.au/money/super-and-retirement/lendlease-breaks-ranks-over-retirement-village-contracts-20180405-p4z7xz.html

Anyone hoping they're introducing these new payments options as some altruistic move is highly likely to be disappointed.
At the end of the day they're a large listed entity and their primary obligations are to their shareholders. All this does is create options to pay...but people will still be paying handsomely one way or the other !

[hamish]

Hmmm..

Been mulling/mindful of the Couta reversion theorem over the past couple of months as our beloved SUM SP has soared......

So, this morning looked at the SUM sales result and thought, hmm...is it about to play out.. Maybe, In the coming months SUM consolidates slightly down to $6.30 to RYM heads up to $ 12 to $12.50 assuming they achieve the forecast 2HFY result and report a strong FY19 outlook.. The Rym Dec half-year report indicated a stronger second half of the FY in it's outlook in terms of sales and underlying profit.. How well are their developments in AKL and Vic going? Staff recruitment/retention and knowledge? They said they were looking to streamline and accelerate their design processes and add staff.. has it worked?

Expecting another RYM record full year result in mid May, 4-5 weeks away.... some risk of course may be baked into the SP somewhat after the Dec17 uplift...

Disc: After 2 years holding, took a deep breath and sold 1/2 SUM today, happily taking gains (hedging a possible short-term SUM SP decline and hope buy back in) and re-allocated portion to first foray into RYM this morning. Maybe jumping a gun, yet the Melb expansion by 2020 feels like good risk/reward opportunity.. Hold OCA and ARV also.

[kiwico]

Gift duty was abolished some years ago after it had been zero rated for some time.

True, but as Ggcc says, WINZ have a different view when it comes to a government subsidy for retirement living. His (her?) advice is sound.

[kiwico]

Courtesy of WINZ (https://www.workandincome.govt.nz/products/a-z-benefits/residential-care-subsidy.html#null):

Gifting of assets
If you or your partner give away assets, they still may be counted as assets in your financial means assessment.

You can gift up to $6,000 within a 12 month period in each of the five years before you apply (this applies to each application for the Residential Care Subsidy).
Eg, if both you and your partner apply for the Residential Care Subsidy, gifts of $6,000 each per year can be excluded. Gifts of more than $27,000 per year, per application made before the 5 year gifting period, may be added into the assessment (for couples, gifting is $27,000 in total, not per person).

[Filthy]

Hmmm.. Maybe, In the coming months SUM consolidates slightly down to $6.30 to RYM heads up to $ 12 to $12.50

your SUM $6.30 target price might be a little low - agree it will consolidate in the coming weeks, but it is more likely to bottom around $6.44-$6.59 before the next leg up (dependent on the macro/micro environments of course). still a great long-term hold though & should def outperform.

RYM results should be great. Some of this is already baked in though. think the 'Couta-theorem' might lose its equilibrium this year ;) lol - its already out of whack!

disc, hold both

[dabsman]

The price has been over $10 for quite some time now - any ideas when a share split may be considered? Anyone know the price when they split last time?

[troyvdh]

Dear dab....its been a while but i believe it was at 7-8 years ago at about $11.37 cheers.

[Beagle]

I'm migrating to the Auckland Islands https://en.wikipedia.org/wiki/Auckland_Islands if the Couta1 theory comes back into play as I'll never hear the end of it. Hopefully they don't have internet, telephone, cellphone or any other connectivity down there and Couta1, mate, I won't be taking a satellite phone either lol

[percy]

Promises,promises,promises....lol.

[silu]

Boring old Ryman hitting a new all-time high before its FY result announcement.

[troyvdh]

Pathetic volumn....I dont believe it can be considered an all time high....a 1/5 split in the early 2000's at I believe at $11.30 something ??????.
cheers

[silu]

Pathetic volumn....I dont believe it can be considered an all time high....a 1/5 split in the early 2000's at I believe at $11.30 something ??????.
cheers

I referred to Market Capitalisation. Also yesterday was its highest ever volume day in a year.

[troyvdh]

oooops....the volumn picked up somewhat after my post.

[ace5715]

oooops....the volumn picked up somewhat after my post.

This will be why the volume went up, 5% brought on the 11th and another 1.7% since.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/RYM/317883/279074.pdf
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/RYM/317941/279161.pdf

[trader_jackson]

Another period of sub par (aka under 15%) underlying profit growth...
The share price will some how push higher, and the PE will somehow get even more ridiculous

[LAC]

Another period of sub par (aka under 15%) underlying profit growth...
The share price will some how push higher, and the PE will somehow get even more ridiculous

Will be surprised if the SP heads too much higher with <15% profit growth.

[Nasi Goreng]

How can PE be ridiculous at current level of 27.6 based on underlying earnings?

Ryman had a reasonably strong second half to achieve 14.2% as first half growth was 11.4%. I'm fairly happy with this and its in line with Ryman's expectation of doubling the size of the business every 5 years.

[JeremyALD]

17 years in a row of growth is the reason for the high PE.

[winner69]

Another period of sub par (aka under 15%) underlying profit growth...
The share price will some how push higher, and the PE will somehow get even more ridiculous

That’s how the market works tj

Well deserved rating

Got to prove yourself over many years .....others have a long way to go in that respect in spite of the hype around them.

[silu]

How can PE be ridiculous at current level of 27.6 based on underlying earnings?

Ryman had a reasonably strong second half to achieve 14.2% as first half growth was 11.4%. I'm fairly happy with this and its in line with Ryman's expectation of doubling the size of the business every 5 years.

Haven't looked at the PE for a while but yahoo and anzsecurities tell me the PE is 15.1?!

[Nasi Goreng]

Haven't looked at the PE for a while but yahoo and anzsecurities tell me the PE is 15.1?!

Ryman use underlying earnings to measure their profit growth which doesn't take into account property valuation movements. The reported net profit is used for PE on those sites so will be different. I and others choose to use underlying earnings for PE calculation.

[silu]

Ryman use underlying earnings to measure their profit growth which doesn't take into account property valuation movements. The reported net profit is used for PE on those sites so will be different. I and others choose to use underlying earnings for PE calculation.

Thanks for the clarification.

[couta1]

Another period of sub par (aka under 15%) underlying profit growth...
The share price will some how push higher, and the PE will somehow get even more ridiculous At 14.2% growth, I think you might be nit picking, Ryman would arguably be the safest, most reliable, wet and forget company on the NZX.Their expansion into Aussie is proving to be very impressive I might add.

[Ggcc]

Solid result. I do think Summerset will catch up to Ryman’s share price quickly and pass it on by in the coming years (2-3 years). Both companies are fantastic, but Summerset in my view is the bigger winner in the next 2-3 years for shareholders.

[Filthy]

wet and forget company

that just reminds me of the 'spray and walk-away' TV advert that always used to play between the overs of the cricket.

happy holder. 14% is good enough for me.

looks like they are getting some great traction in Oz

[Beagle]

Good solid result, (as usual) and very good pipeline. Superb blue chip stock to own for the long run.
Agree with Couta1 that this is a bottom drawer invest and forget about it stock and it has without doubt the longest and most durable track record of consistent growth on the NZX. I don't think its cheap like SUM other stocks but this stock is THE stock to own on the NZX when it comes to being "Mr Consistent".
$203.5m underlying profit on 500m shares gives EPS of 40.7 cps. If they can grow at 15% this year, (which is highly likely), that gives 47 cps and at $11.20 puts them on a forward PE of 24 bang on the money of fair value by my reckoning. No brainer stock to have in one's portfolio for their retirement...(silly beagle not having any...I need to embrace these ultra boring stocks as part of my new ultra boring sleep my way to a comfortable retirement strategy)

Looking forward to reading Vaygor1's take on the result and outlook.

[couta1]

Solid result. I do think Summerset will catch up to Ryman’s share price quickly and pass it on by in the coming years (2-3 years). Both companies are fantastic, but Summerset in my view is the bigger winner in the next 2-3 years for shareholders. That's like saying XRO will catch up to Intuit's share price and overtake it.

[Ggcc]

That's like saying XRO will catch up to Intuit's share price and overtake it.
Share price not total value of the company

[couta1]

Share price not total value of the company I realise that but Ryman will have so much coming on tap starting next year, it's not going to happen.

[winner69]

One analyst saying Ryman suffering from a ‘margin squeeze” which is hurting their growth

[dabsman]

Excellent result and 8th site in Melbourne purchased and another new site in NZ in Havelock North. How can you not love this company for boring me into my bali villa to miss those cold Auckland winters ;)

[dabsman]

I'm picking a share split this year. Any thoughts?

[Beagle]

Interesting to note Kevin Hickman's trust trimmed their stake very slightly and banked a cool ~ $9m in the process.
Still has $35m shares worth a cool $402.5m...not too shabby for the $10,000 capital share that he originally invested eh !
Anyway...back to the real world for the rest of us. I might be reading too much into this but quite obviously he's a very astute guy so I think the timing of the sale is interesting coming just a week before the MSCI index rebalancing. With ATM going in with what one would assume would be a very high weighting one could safely make the assumption that the existing incumbent NZX stocks that are presently included within that index would have their weightings materially reduced and of course one of the bigger present allocations is RYM.
Good time to buy some on potential weakness with the pending MSCI rebalance ?

[winner69]

Next Thursday afternoon is going to be massive on NZX .....zillions of ATM being bought and zillions of RYM, SPK, FPH etc being sold

How much ‘cooperation’ is their amongst funds?

[Beagle]

Next Thursday afternoon is going to be massive on NZX .....zillions of ATM being bought and zillions of RYM, SPK, FPH etc being sold

How much ‘cooperation’ is their amongst funds?


I would speculate a fair bit of cooperation goes on from what I have observed in the past. Its almost like some major funds agree a price and that's where the really big volume is done.

[Vaygor1]

..... Looking forward to reading Vaygor1's take on the result and outlook.

I look forward to posting about the result and the outlook too Beagle :))

Just so short on time for the last few weeks (and the next couple).... will post my take soon mate. :cool:

Only managed couple of quick posts on the ALF thread this morning.

[777]

Boring old RYM now at a new high.

[BlackPeter]

Boring old RYM now at a new high.

Yep, but couta's formula broken. One SUM are now already 62.5% of RYM. Equality in a couple of years?;);

[Ggcc]

Yep, but couta's formula broken. One SUM are now already 62.5% of RYM. Equality in a couple of years?;);
I gave it two to three years, but Couta said not going to happen. So I give it 5 and the sp will surpass it easily

[couta1]

Yep, but couta's formula broken. One SUM are now already 62.5% of RYM. Equality in a couple of years?;); It's far too early to say the formula is broken, remember the Couta theorum has stood for many years to date whereas SUM has only recently moved outside the 50-60% reversion channel. Balance will return to the force in due course. PS-I reckon SUM companies are only going to have an average result over the next year or so.

[winner69]

Couts theory/hypothesis is still valid - the relationship has not broken down yet


Updated the judges chart that shows the relationship since SUM floated

Look at whats happened the last few months - the dotted line showing the relative % is turning down ----possibly reverting to the mean of 50%.

Never dismiss the reversion to the mean

And often things overshoot on both the downside and upside ....maybe SUM just overshot on the upside

[winner69]

I gave it two to three years, but Couta said not going to happen. So I give it 5 and the sp will surpass it easily

Dreaming I reckon ....only way that'll happen is if Ryman lose the plot completely and I can't see that happening

[couta1]

Couts theory/hypothesis is still valid - the relationship has not broken down yet


Updated the judges chart that shows the relationship since SUM floated

Look at whats happened the last few months - the line showing the relative % is turning down ----possibly reverting to the mean of 50%.

Never dismiss the reversion to the mean

And often things overshoot on both the downside and upside ....maybe SUM just overshot on the upside Nice one winner, Beagle will already be searching for overseas holiday destinations as the reversion has started.

[winner69]

Nice one winner, Beagle will already be searching for overseas holiday destinations as the reversion has started.

So by Christmas SUM $8 and RYM $16

Or is RYM $14 and SUM drifted back to $7 (or less)

[couta1]

So by Christmas SUM $8 and RYM $16

Or is RYM $14 and SUM drifted back to $7 (or less) To achieve the reversion baseline that would be the case, however once RYM gets to $12 odd and SUM goes to $7(or less) then we are back in the reversion channel. Talk of the SUM share price exceeding RYM is extremely wishful thinking.

[winner69]

To achieve the reversion baseline that would be the case, however once RYM gets to $12 odd and SUM goes to $7(or less) then we are back in the reversion channel. Talk of the SUM share price exceeding RYM is extremely wishful thinking.

Wasn’t that long ago the relativity ‘overshot’ the 60% mark but soon retreated back to 50% odd

that reverting to the mean can be a cruel beast

Assuming both RYM and SUM shareprice will increase over time this is saying RYM is the ‘better’ buy at the moment .....but one day SUM might/will become the better buy

[BlackPeter]

Wasn’t that long ago the relativity ‘overshot’ the 60% mark but soon retreated back to 50% odd

that reverting to the mean can be a cruel beast

Assuming both RYM and SUM shareprice will increase over time this is saying RYM is the ‘better’ buy at the moment .....but one day SUM might/will become the better buy

Well, yes - but this is only if you accept the underlying hypothesis.

And obviously - while both SUM and RYM operate in the same industry (i.e. SP will be correlated), there is absolutely no reason for the market to keep their relative share prices in any particular ratio band.

Over time the share price will follow earnings - and given that SUM's forward PE is at current 10.4 (at a PE CAGR of 20) and RYM's forward PE is 14.5 (at a PE CAGR of 15) is it fair to assume that the market will over time either appreciate SUM or depreciate RYM (or, as I think - appreciate both, but SUM more than others ;);

[winner69]

Well, yes - but this is only if you accept the underlying hypothesis.

And obviously - while both SUM and RYM operate in the same industry (i.e. SP will be correlated), there is absolutely no reason for the market to keep their relative share prices in any particular ratio band.

Over time the share price will follow earnings - and given that SUM's forward PE is at current 10.4 (at a PE CAGR of 20) and RYM's forward PE is 14.5 (at a PE CAGR of 15) is it fair to assume that the market will over time either appreciate SUM or depreciate RYM (or, as I think - appreciate both, but SUM more than others ;);

Agree shareprice will follow earnings ...just like it has for both RYM and SUM during the period of the chart I posted

But over the same period SUMs earnings have grown faster than RYMs ......but the share price relativity sort of hovers around the 50% mark. Not fair is it ....but that’s how the market works.

Your assumption is that PEs should match growth (meaning SUM should have at least the same PE if not higher than RYM’s PE) ...maybe that’s a flawed assumption?

[BlackPeter]

Your assumption is that PEs should match growth (meaning SUM should have at least the same PE if not higher than RYM’s PE) ...maybe that’s a flawed assumption?

Not sure I said that PE should match growth - did I? Unless you mean SP growth ... and obviously - there are many other factors which a rational market would need to consider to determine a fair SP. However - markets are not rational and I never postulated that either ...

Growth (aka CAGR) and PE are both important factors to determine the value of a share. Obviously there are plenty more like risk, leverage, quality of management, ...

BTW - I am not complaining that the market prices SUM lower than I value it (re your "not fair" comment) - quite the opposite: great opportunity to buy SUM more.

Anyway - I am just saying that I expect over time the SUM SP to grow faster than the RYM SP (Which will move the Couta coefficient from a past 0.5 over a current 0.625 towards 1) - unless RYM improves either EPS or CAGR - or alternatively SUM reduces them respectively (less desirable option ;): Obviously - there is as well nothing which will stop the growth of this coefficient at 1 :p (all other things being unchanged): And obviously as well - the move won't happen in a linear fashion ...

But I think you knew that anyway - didn't you?

[winner69]

Not sure I said that PE should match growth - did I? Unless you mean SP growth ... and obviously - there are many other factors which a rational market would need to consider to determine a fair SP. However - markets are not rational and I never postulated that either ...

Growth (aka CAGR) and PE are both important factors to determine the value of a share. Obviously there are plenty more like risk, leverage, quality of management, ...

BTW - I am not complaining that the market prices SUM lower than I value it (re your "not fair" comment) - quite the opposite: great opportunity to buy SUM more.

Anyway - I am just saying that I expect over time the SUM SP to grow faster than the RYM SP (Which will move the Couta coefficient from a past 0.5 over a current 0.625 towards 1) - unless RYM improves either EPS or CAGR - or alternatively SUM reduces them respectively (less desirable option ;): Obviously - there is as well nothing which will stop the growth of this coefficient at 1 :p (all other things being unchanged): And obviously as well - the move won't happen in a linear fashion ...

But I think you knew that anyway - didn't you?

Hasn’t happened so far ......so (over time) what’s going to change market sentiment.

If that sentiment doesn’t change SUM will forever be relatively cheap and a bargain

[Beagle]

Shares should always be assessed based on their track record and outlook not some arbitrary relativity theory.

[couta1]

Shares should always be assessed based on their track record and outlook not some arbitrary relativity theory. Don't mess with the Couta Theorum mate, it's got a very long proven track record. PS-Have you thought about which country your going to head to. PPS-I'm currently working at a Ryman facility.

[Nasi Goreng]

The Couta Theory is one with a long proven track record - however, since SUM's last earnings report and another year of 40% growth, I don't see the 1:0.5 ratio returning. Market forces can only withstand that sort of pressure for so long until the Couta Theory becomes folklore. In saying that, the Couta Theory should be discussed by Directors at both of their AGM's.

[winner69]

Shares should always be assessed based on their track record and outlook not some arbitrary relativity theory.

Then why has SUMs shareprice only increased at about the half the rate that earnings have grown

PE has contracted steadily while earnings are booming .... interesting

Maybe retirement sector stocks are priced on other things than a profit multiple ... which really is a methodology used by most to avoid a bit of hard yakka

Anyway SUMs PE ratio of the years below. RYM trend is much the same (but of course bigger numbers)

[couta1]

The Couta Theory is one with a long proven track record - however, since SUM's last earnings report and another year of 40% growth, I don't see the 1:0.5 ratio returning. Market forces can only withstand that sort of pressure for so long until the Couta Theory becomes folklore. In saying that, the Couta Theory should be discussed by Directors at both of their AGM's. SUM will grow slower from here on in, about 20-25%this year and then in around 3 years will be 15% like RYM, hence the Couta Theory will remain intact.

[Beagle]

SUM will grow slower from here on in, about 20-25%this year and then in around 3 years will be 15% like RYM, hence the Couta Theory will remain intact.

LOL mate. Share prices follow earnings and future earnings expectations. Always have done and always will do. Future relativity will be a function of their relative underlying EPS and growth rates of the two companies and perceptions about future growth rates in underlying earnings. I still have SUM at $100m underlying at this stage for 44 cps which puts them on a forward PE of just 16.6 and this for a company that's demonstrated over the last 6 years an underlying earnings compound growth rate average of 45% per annum.
I agree with your assessment of SUM's growth rate this year. Too early to say regarding next year or the year after but they are investigating Australia carefully and are on record at looking to ramp their build rate up to ~ 600 units per annum over the next few years. RYM on the other hand probably trading on a forward PE of about 25 at the current price and I would expect a continuation of their 15% growth rate for the foreseeable future. RYM fairly valued in the late $11's in my opinion, SUM others like SUM and OCA are better value with the (same / slightly better) growth prospects.

[winner69]

Market happy with SUM’s PE of 16/17 and to me that seems a pretty realistic price

So share price will hang around the low 700’s until punters start thinking about next, probably sometime after half year and some guidance. That’ll be the trigger to take it to 830/850 early next year

Yes share price will follow earnings expectations

[Beagle]

So with respect to RYM, another reasonable year of ~15% growth took them to underlying earnings of $203.5m or 40.7 cps. If they replicate that again this year we'll see 46.8 cps. I reckon a forward PE of 23.5 has always been good value for RYM so good value in my book is $11 and I back that multiple up with many many years of watching their SP. Anything more than that its getting a bit ahead of itself in my opinion and leads to short term underperformance.
2020 or 2021 year we could see SUM's EPS exceed RYM's. The effect on their relative share prices could be interesting to watch.

[winner69]

2020 or 2021 year we could see SUM's EPS exceed RYM's. The effect on their relative share prices could be interesting to watch.

Probably SUM shareprice about 55%/60% of RYM shareprice if that earnings scenario played out

You asked .......

[Beagle]

Probably SUM shareprice about 55%/60% of RYM shareprice if that earnings scenario played out

You asked .......

LOL I'm not biting anymore :)

[Ggcc]

LOL I'm not biting anymore :)

Only time will tell who is correct, but I am thinking Summerset will surpass Rymans sp within 5 years.... take into account a possible share split for SUM may occur.

[777]

Dividend gone and RYM up to $12.00.

[minimoke]

Dividend gone and RYM up to $12.00.Hmm, puts me up about 2,350% (excluding dividends) on this share. I wont be concerned if SUM does half as well for me.

[Vaygor1]

...Irrespective of [FY Ending 31-Mar-2018] result, the Shareprice around June 2019 (about 22 months from now) will be circa $15/share (or equivalent if there is a split). This because RYM's underlying profit for 31-Mar-2019 will be close to $240 million.

The Shareprice figures above of course are subject (as always) to the whim of the market.


Hey Vaygor - $240m profit is an eps of 48 cents

PE of 20 would give a share price of $9.60 ant not your $15

About today’s price - spooky eh


The above written October 2017.
I'm interested in any comments you might have about your comment above Winner. :)
I think my forecast is nicely on target.

[Beagle]

I agree that $240m is achievable for FY19 which gives 48 cps but where I see the PE as being good value based on historical norms is 23.5 which suggests $11.28 as a target price for RYM. I note brokers average target price is $10.60. http://www.4-traders.com/RYMAN-HEALTHCARE-LTD-6492072/consensus/ and average rating is underperform which is what I also think they'll do for the rest of the year from here.

RYM have enjoyed a very strong run recently. Too strong for the fundamental's in my opinion.

OCA (the dark horse of this sector) could do a real bolter this year being on a FY19 estimated PE, (my estimate) of just 10-11 which is too cheap for this sector considering their care reputation which is second to no one including RYM.

With RYM at over $12 you're paying a Rolls Royce forward PE for very early in the FY19 year of over 25...nothing ever goes wrong with Rolls Royce right ?...oh hang on a minute...

[Vaygor1]

....With RYM at over $12 you're paying a Rolls Royce forward PE for very early in the FY19 year of over 25...nothing ever goes wrong with Rolls Royce right ?...oh hang on a minute...

Fair price for RYM at the moment is approx $11.50 so yeah.... about 6-7% overvalued based on 15 years historical SP vs Underlying Profit (UP) analysis... but based on the bright year ahead, no one is paying a Rolls Royce price at the $12.20 mark... just a bit more than history suggests.

RYM will have a boomer this financial year. They have, in my opinion, already stolen some of the current financial year's UP and put it in the announcement for Financial Year End 31-Mar-2018 just to get it near the 15% mark. They can easily afford to.. but, again in my opinion, they have (albeit slightly) contravened a key criterion for defining "Practical Completion' before which UP on new builds can be claimed.

[Beagle]

Fair price for RYM at the moment is approx $11.50 so yeah.... about 6-7% overvalued based on 15 years historical SP vs Underlying Profit (UP) analysis... but based on the bright year ahead, no one is paying a Rolls Royce price at the $12.20 mark... just a bit more than history suggests.

RYM will have a boomer this financial year. They have, in my opinion, already stolen some of the current financial year's UP and put it in the announcement for Financial Year End 31-Mar-2018 just to get it near the 15% mark. They can easily afford to.. but, again in my opinion, they have (albeit slightly) contravened a key criterion for defining "Practical Completion' before which UP on new builds can be claimed.

Agreed. Better to wait till they're trading under fair value in my opinion.

[couta1]

Agreed. Better to wait till they're trading under fair value in my opinion. Nearly all the stocks on the NZX are currently over cooked bar a few IMO, I'm only buying stocks where I see value over the next 12 months.

[Beagle]

Nearly all the stocks on the NZX are currently over cooked bar a few IMO, I'm only buying stocks where I see value over the next 12 months.

Agreed. RYM have just shed their dividend so there's no logical reason to pay 107% of fair value right at the moment which will most likely lead to frustration as it underperforms in the short run.

I think with the market where it is you are very wise to try and focus on what's best value and likely to appreciate the most in the next year. OCA and TNR two obvious candidates.

[voltage]

Beagle who is TNR

[Beagle]

Beagle who is TNR

Opps sorry that's TRA, its obviously the weekend :)

[winner69]

Stupid government doesn’t know when they are on to a good thing with these horrible foreigners build villages for mostly New Zealanders to retire took

http://www.sharechat.co.nz/article/ccd4b787/retirement-village-exemption-rejected-by-committee-considering-foreign-buyer-ban.html?utm_medium=email&utm_campaign=Retirement%20village%20exemption%20re jected%20by%20committee%20considering%20foreign%20 buyer%20ban&utm_content=Retirement%20village%20exemption%20rej ected%20by%20committee%20considering%20foreign%20b uyer%20ban+CID_1faca1d11e5764771407c17b07af0a6e&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticleccd4b787retire ment-village-exemption-rejected-by-committee-considering-foreign-buyer-banhtml

[Timesurfer]

Like all legislation it actually gives the advantage to the big boys as the small players don't have the resources to comply/fight it.

[tipsy]

Ryman Healthcare's chief executive Gordon MacLeod said it was disappointing to miss a chance to streamline the approval process, though "the reality is the position is no different to what it was previously. None of this stops us from buying land through the OIO process in the future.’"

[limmy]

I've been invited to attend a shareholder update at the Bruce McLaren Retirement village in Howick on the 4th of July.
Anyone here going ? I rang the RSVP and was told that their phone line was running hot.

[minimoke]

Blah blah blah yawn. Up to page 60 and no financial s yet in the Annual Report.

88 pages later I get
• Underlying profit up 14.2 percent to $203.5 million
• Reported (IFRS) profit up 8.8 percent to $388.2 million
• Full-year dividend up 14.6 percent to 20.4 cents per share
• Site for eighth village in Victoria secured; target remains to open five villages by 2020
• New villages in Karori and Havelock North planned
• 16 new villages in the pipeline
• Residents and staff happier than ever

Edit - that will teach me to scan too quick. on page 11
"The board is pleased to report another solid year for Ryman, with underlying profit up 14.2 percent to $203.5 million and our reported profit, including unrealised gains, up 8.8 percent to $388.2 million. We’ve matched the growth in underlying profit with a similar increase in dividend to shareholders. The dividend has been increased by 14.6 percent, with a total annual dividend to shareholders of 20.4 cents per share."

[winner69]

C’mon mini ...they told you all that stuff weeks ago

[Beagle]

A lot of the blah, blah blah was good info on Ryman's early years but beagle's are also notorious for their short attention span's so I only made it to page 40 and then very nearly fell asleep lol

Very good company that's trading right at the top of where I see fair value. When it gets back to a forward PE of 23.5 I'm planning on buying back in.
$11 is where I see it...the rest at this point is just the market being too expensive.

[peat]

a longtime underperformer according to this 5 year comparison of RYM with NZX50

9768
Ryman is blue

[Beagle]

a longtime underperformer according to this 5 year comparison of RYM with NZX50

9768
Ryman is blue

Depends on your comparison timeframe. Couple of people on here about 4 years ago went out on a limb and called that there was going to be a number of years of underperformance, because of a significant period of outperformance before that. They were right but I no longer hold that view. They listed in 1999 at $1.35 and have had a 5:1 share split, so adjusted IPO price is 27 cents. 19 years later they are >$12. This is more than 44 times your money so over the lifetime of the company they have dramatically outperformed.

If one looks out a decade I think on the balance of probabilities they will beat the market. Currently they're about $1 north of where I see good value, so are simply fair value in my view.

Fair value with a fantastic brand, great business model, excellent management and very strong demographic tailwinds = substantial wealth creation in the years ahead provided the politicians don't sabotage this sector.

[h2so4]

Depends on your comparison timeframe. Couple of people on here about 4 years ago went out on a limb and called that there was going to be a number of years of underperformance, because of a significant period of outperformance before that. They were right but I no longer hold that view. They listed in 1999 at $1.35 and have had a 5:1 share split, so adjusted IPO price is 27 cents. 19 years later they are >$12. This is more than 44 times your money so over the lifetime of the company they have dramatically outperformed.

If one looks out a decade I think on the balance of probabilities they will beat the market. Currently they're about $1 north of where I see good value, so are simply fair value in my view.

Fair value with a fantastic brand, great business model, excellent management and very strong demographic tailwinds = substantial wealth creation in the years ahead provided the politicians don't sabotage this sector.

10 years is a long timeframe for a beagle...LOL

[Ggcc]

https://www.noted.co.nz/money/property/cost-of-living-in-a-retirement-village/

[dabsman]

From the way this is trading there must be big expectations on not only this year but big increases in revenues year on year. I'm still hoping on a share split this year...

[Patient Panda]

From the way this is trading there must be big expectations on not only this year but big increases in revenues year on year. I'm still hoping on a share split this year...


Yes these expectations are well founded. The next couple of years will see their biggest ever villages come to fruition. I am sure we will get an average of 15% eps growth at a minimum. Divi payout ratio only 22% or so IIRC so will be expecting an increase to divi as well.

esit; its also only around $1 more than where I see good buying value so hardly overvalued too much. There are many others boasting much more stretched multiples.

[dabsman]

Yes these expectations are well founded. The next couple of years will see their biggest ever villages come to fruition. I am sure we will get an average of 15% eps growth at a minimum. Divi payout ratio only 22% or so IIRC so will be expecting an increase to divi as well.

esit; its also only around $1 more than where I see good buying value so hardly overvalued too much. There are many others boasting much more stretched multiples.

Yeah I dont see it being overvalued - I see it as a big beast getting into its stride. Just think about embedded value and sales numbers and in time resales when these sites in Aussie come online? By then they will have confidence in the model over there and secured 10 more sites at least and maybe into different states as well. A juggernaut!

[Patient Panda]

Yes and importantly resident satisfaction at all time high and almost zero empty units.

RYM comprises 70% of my listed equities so not hard to see I’m a believer :D

[Timesurfer]

Off to a rocky start on this one ryman-healthcare-paid-28m-for-victoria-universitys-karori-campus (https://www.stuff.co.nz/business/105870509/ryman-healthcare-paid-28m-for-victoria-universitys-karori-campus)

[Ggcc]

Off to a rocky start on this one ryman-healthcare-paid-28m-for-victoria-universitys-karori-campus (https://www.stuff.co.nz/business/105870509/ryman-healthcare-paid-28m-for-victoria-universitys-karori-campus)
Wow paying more than market value........ They must have done the figures to justify that sort of price?

[macduffy]

Wow paying more than market value........ They must have done the figures to justify that sort of price?

I'm sure they have. But I doubt that there was any accurate way to set a Rateable Value for the site, given it's prior use and subsequent history. A classic case of value being what a willing buyer will pay for it.

[Baa_Baa]

I'm sure they have. But I doubt that there was any accurate way to set a Rateable Value for the site, given it's prior use and subsequent history. A classic case of value being what a willing buyer will pay for it.

Precisely. Will be interesting to see what they do with it, such a large site right in the middle of Karori. More interesting may be the reaction of the nimby's, especially if a Bob Scott monstrosity is the plan. At least it won't have a busy railway line running right past it.

[minimoke]

Wow paying more than market value........ They must have done the figures to justify that sort of price?
No - they paid more than rateable value. They paid market vslue

[dobby41]

I'm sure they have. But I doubt that there was any accurate way to set a Rateable Value for the site, given it's prior use and subsequent history. A classic case of value being what a willing buyer will pay for it.

Guess what the new rateable value will be when done next.

Anyone who buys property will tell you that RV is a relative indication of value only.

[BlackPeter]

Wow paying more than market value........ They must have done the figures to justify that sort of price?

Nobody said they paid more than market value. They paid more than rate-able value! And lets face it - while the rate-able value of standard quarter of an acre sections in town (where there are plenty of comparable properties around and regularly sold) is normally reasonable close correlated to the market value - the market for university campuses is quite less liquid. Which means QV has little comparable data to determine the GV and nobody is interested anyway to get the rateable values for such sections up.

I am pretty sure that Ryman paid the market value - willing seller, willing buyer ;).

[Vaygor1]

Nobody said they paid more than market value. They paid more than rate-able value! And lets face it - while the rate-able value of standard quarter of an acre sections in town (where there are plenty of comparable properties around and regularly sold) is normally reasonable close correlated to the market value - the market for university campuses is quite less liquid. Which means QV has little comparable data to determine the GV and nobody is interested anyway to get the rateable values for such sections up.

I am pretty sure that Ryman paid the market value - willing seller, willing buyer ;).

No need to even do any research into the detail. RYM will have got it right. :)

[Beagle]

https://www.afr.com/real-estate/apartment-prices-to-fall-hardest-in-melbourne-20180410-h0yk36

RYM building lots of little multi level apartments in Melbourne, Hmmmm

[Ggcc]

Nobody said they paid more than market value. They paid more than rate-able value! And lets face it - while the rate-able value of standard quarter of an acre sections in town (where there are plenty of comparable properties around and regularly sold) is normally reasonable close correlated to the market value - the market for university campuses is quite less liquid. Which means QV has little comparable data to determine the GV and nobody is interested anyway to get the rateable values for such sections up.

I am pretty sure that Ryman paid the market value - willing seller, willing buyer ;).

I do stand corrected and I agree with you that it was more than rateable value. It just baffles me how high these properties are going for and how much Ryman need to do try and make a profit out of it....... I am sure they have done the SUMs, but the bigger they get one hopes their purse strings don’t get looser (wasting). At the end of the day a brilliant company with a great track record!!

[dabsman]

https://www.afr.com/real-estate/apartment-prices-to-fall-hardest-in-melbourne-20180410-h0yk36

RYM building lots of little multi level apartments in Melbourne, Hmmmm

Melbourne apartment market "about to be smashed" every year for 3 years now...

[silu]

A stock so boring we don't even notice an all-time high. I might give my mate a call tonight who told me I was stupid for buying RYM in 2016.

[Beagle]

Melbourne apartment market "about to be smashed" every year for 3 years now...

SUM things just don't make sense do they ! Like RYM consistently growing at one third to half the rate of SUM over the years but trading at a 50% PE premium.
Bean counters know eventually the numbers MUST do the talking and silly relativity theories will be exposed for the old wives tales they surely are.
Me, I reckon big city prices in Eastern Australia have reached peak affordability just like Auckland has and the chances of further gains over and above inflation in the medium term are slim to none.
Makes SUM people wonder if a little company building a fair bit in provincial N.Z. is the better bet...

[Arbroath]

Morningstar upgraded their FV estimate from $11.30 to $13.60 yesterday based mainly off increased optimism about the Australian (Melbourne) expansion.

[Ggcc]

SUM things just don't make sense do they ! Like RYM consistently growing at one third to half the rate of SUM over the years but trading at a 50% PE premium.
Bean counters know eventually the numbers MUST do the talking and silly relativity theories will be exposed for the old wives tales they surely are.
Me, I reckon big city prices in Eastern Australia have reached peak affordability just like Auckland has and the chances of further gains over and above inflation in the medium term are slim to none.
Makes SUM people wonder if a little company building a fair bit in provincial N.Z. is the better bet...
Hey I will be laughing when Summersets sp catches up to Rymans. It will happen, but when? Who knows maybe Ryman sp might fall to a value of Summerset.

[Beagle]

Morningstar upgraded their FV estimate from $11.30 to $13.60 yesterday based mainly off increased optimism about the Australian (Melbourne) expansion.

LOL that's a SELL then :)

[winner69]

Beagle ...RYM v SUM

It’s all about narrative and not a beauty contest ...and RYM win hands down

The top post ‘Facebook, facts, and alternative fictions: How to predict the narrative of the future’ is worth a read

http://www.paulormerod.com/blog-2/

[couta1]

Hey I will be laughing when Summersets sp catches up to Rymans. It will happen, but when? Who knows maybe Ryman sp might fall to a value of Summerset. Like I said before, I'm happy to put money on the table that it won't happen. RYM best of breed in every way and command the premium, remember RYM in the Top 10 healthcare companies in the world for the last 4 yrs, SUM others not even a blip on that radar screen.

[777]

The premium is getting larger by the day. Boring as.

[Patient Panda]

Their profits are also increasing by the day and very boring it is too :D

[couta1]

And there we have it, reversion to the mean has occurred, based on today's highs SUM has slipped under the 60% channel line again.Its party time winner, I'm looking forward to all those free ciders in a few weeks Beagle.

[dabsman]

Quality always comes thru... how come the world cup in so many sports only been won by a few nations? Quality prevails

[Beagle]

And there we have it, reversion to the mean has occurred, based on today's highs SUM has slipped under the 60% channel line again.Its party time winner, I'm looking forward to all those free ciders in a few weeks Beagle.

It hasn't stuck yet mate. Close of trade my friend.

[Patient Panda]

Very close to hitting $13. Another nice wee stepping stone. Needs another $1.20 to be a 4x return on my original purchase price.

Well positioned as Percy would say

[couta1]

It hasn't stuck yet mate. Close of trade my friend. And there we have it Beagle $7.71 divided by $12.93 equals 59.6%, the Couta theorum continues to stand true after 6 yrs.

[Beagle]

And there we have it Beagle $7.71 divided by $12.93 equals 59.6%, the Couta theorum continues to stand true after 6 yrs.

SUM things are difficult to figure.

[Ggcc]

Like I said before, I'm happy to put money on the table that it won't happen. RYM best of breed in every way and command the premium, remember RYM in the Top 10 healthcare companies in the world for the last 4 yrs, SUM others not even a blip on that radar screen.
Thanks for the offer, but so far you have been very correct on the analysis and I have to say, I maybe blinded by the love of SUM other company. One thing is for sure we will all benefit on these sorts of shares as they continue throughout the years appreciating.

[Beagle]

And there we have it, reversion to the mean has occurred, based on today's highs SUM has slipped under the 60% channel line again.Its party time winner, I'm looking forward to all those free ciders in a few weeks Beagle.

772 / 1268 = 60.9% :p Under or over 60% on 7th September eh mate is I reckon who's buying the first dozen.

[couta1]

772 / 1268 = 60.9% :p HaHa, clutching at straws there Beagle, will change day by day but SUM has still been reverted to the mean.PS-There is no getting off those cider shouts mate.

[winner69]

HaHa, clutching at straws there Beagle, will change day by day but SUM has still been reverted to the mean.PS-There is no getting off those cider shouts mate.

Monthly closes are what matters ...not the day to day noise

End of month when fundies etc sort of balance things up as their funds go

[Beagle]

HaHa, clutching at straws there Beagle, will change day by day but SUM has still been reverted to the mean.PS-There is no getting off those cider shouts mate.

:lol: You can't blame me for trying. I'm definitely going to draw the line at not immigrating to the Auckland Islands though :lol:

[Jim]

RYM has passed the $13 again

[minimoke]

RYM has passed the $13 again
Thankfully I have One Ole Faithful in Portfolio #1. When I need a ray of sunshine RYM provides it.

[Valuegrowth]

It doesn't look boring these days.Investors are looking for defensive assets. More surprisingly gold is no longer a safe haven. It also dropped along with base metals. The precious metals normally go up in times of investor panic, but not this week. . Investors pulled the most money from technology stocks since February's sell-off. Financials stocks also suffered big outflows.

[Beagle]

RYM up 90% in the last 5 years (below their benchmark of doubling every 5 years) Note 15% compound earnings growth = double your earnings every 5 years.
I have found buying RYM shares on a forward PE of 23.5 or less underlying earnings as being the most rewarding times to buy and hold the company.
RYM currently trades at 28 times FY19 my estimated FY19 underlying earnings. I like the company but there is no way in the world I will pay 28 times FY19 underlying earnings most especially with this government running us the potential risk of major left field tax reform.

Good luck to holders.

[forest]

RYM up 90% in the last 5 years (below their benchmark of doubling every 5 years) Note 15% compound earnings growth = double your earnings every 5 years.
I have found buying RYM shares on a forward PE of 23.5 or less underlying earnings as being the most rewarding times to buy and hold the company.
RYM currently trades at 28 times FY19 my estimated FY19 underlying earnings. I like the company but there is no way in the world I will pay 28 times FY19 underlying earnings most especially with this government running us the potential risk of major left field tax reform.

Good luck to holders.

Beagle RYM might look expensive compared to SUM if one looks at the annual reports and analyse the 2 companies the standard bean counter way.
However I perceive SUM as having a number of risk which effect RYM less or not at all.

A few examples, RYM grows approximately 15% per year. Any faster grow and the company increases the risk of growing pains.

I believe RYM pays their caregivers and nursers more than other outfits in this industry, also RYM has a higher ratio of caregivers to residents/patients than other in the retirement sector. The higher pay and more caregivers means that if government regulations increases requirements on minimum wages and or care givers ratios to residents/patients, RYM wont be effected as much SUM others.

RYM charges a max of 20% deferred management fee, others range between 24% and 30%. Therefore RYM got more room to increase this fee than all others.

There are more hidden gem in this company, to find them I would suggest you attend an investors information event or AGM.

I agree with you that SUM is a good company, however RYM in my mind is in a league above anything else in the industry.

[couta1]

Beagle RYM might look expensive compared to SUM if one looks at the annual reports and analyse the 2 companies the standard bean counter way.
However I perceive SUM as having a number of risk which effect RYM less or not at all.

A few examples, RYM grows approximately 15% per year. Any faster grow and the company increases the risk of growing pains.

I believe RYM pays their caregivers and nursers more than other outfits in this industry, also RYM has a higher ratio of caregivers to residence/patience than other in the retirement sector. The higher pay and more caregivers means that if government regulations increases requirements on minimum wages and or care givers ratios to residence/patience, RYM wont be effected as much SUM others.

RYM charges a max of 20% deferred management fee, others range between 24% and 30%. Therefor RYM got more room to increase this fee than all others.

There are more hidden gem in this company, to find them I would suggest you attend an investors information event or AGM.

I agree with you that SUM is a good company, however RYM in my mind is in a league above anything else in the industry. Most of your post is spot on especially the last sentence. Regarding caregiver to resident ratios, all the companies are basically the same,however when it comes to activities staff RYM provides more staff to residents than both SUM and OCA, in fact RYM provide more overall for their residents than any other provider.

[Beagle]

I respect you guys point of view and have no argument about the standard of facilities / services that RYM provides and accept it is the "gold standard" in the industry.
Further, I think their 20% retention rate is the fairest to residents in the industry and they may well pay a little more than other industry participants BUT from a SHAREHOLDER point of view and that's what this site is all about their growth numbers in recent years have disappointed and these fairness's and niceties' to residents come from somewhere and you guessed it, its shareholders.

I have done nicely out of RYM over the years I've owned them and as mentioned the best periods have been where their forward PE is under 23.5, presently 28 !

My point is that RYM presently trades towards the top end of its historical PE range, whereas SUM presently trades towards the bottom end of its historical range. They both face similar risks and have similar opportunities. I think on a risk reward basis on the balance of probabilities SUM is a considerably better buy than RYM at present but each to their own.

The plain undisputed fact of the matter is SUM have enjoyed a compound annual average growth rate in their underlying earnings of 45% per annum, nearly three times RYM over the six years SUM has been listed. Nobody can dispute this, it is a matter of clear historical fact. You must expect that accountants will want to deal in facts and numbers not subjective feel good matters. Any accountant worth his salt is going to take notice of the vastly superior growth rate in SUM. Others invest on the basis of whatever they feel is appropriate, (RYM facilities are nicer, their pay rates are better, their exercise programs are better or whatever else they deem as an appropriate measure) I invest based on factual numbers, growth and estimated outlook and try and leave sentiment and feel good factors out of it as much as possible.

I would reiterate there is a genuine risk of some radical left field change in tax policy affecting the entire sector. Nobody can reliably predict what this tax committee looking at potential widespread reform of the taxation system might do. If people want to invest in RYM at the current price and 28 forward PE with this potential overhanging risk, which I would argue is in no way priced into RYM shares, fill your boots and good luck. Personally I would want to see a PE discount of 2-3 below my normal buy price of 23.5 times to be really interested in RYM shares at present to account for this risk.

[winner69]

Yes Beagle - you are reminding us that when PEs are above average future returns are generally below average (Investing 204 I think) Applies to individual stocks as well as markets ..... and RYM historically has been no exception


From my database since 2002 Ryman's average PE has been just over 20. From 2002 to 2013 the average was 17 - about where SUM is now....hmmm

RYM PE was 10 in March 2003 and subsequent 3 year return was 64% pa .....other side of the coin was the PE of 37 in 2014 and subsequent 3 year return was -1% (as monitored on this thread eh)

[Valuegrowth]

When investing sometimes boring is beautiful. Boring stocks will have more demand during bear market. Boring stocks also tend to offer above-average dividend yields. These boring stocks are often forgotten when investors or traders see stocks like Facebook or Amazon. They also tend to be less volatile during corrections and bear markets thanks to their steady business models and predictable cash flow. They can take as examples of buy and forget type of investments. However buying price is important. Can we expect correction after current rally and possibly hitting new 52 week high or all time high?

[Patient Panda]

Beauty of a quote from p88 of the 2018 annual report

“Our growth will be supported by the ageing population, ongoing development, and the maturing of our villages. Each new village takes about 6 or 7 years to mature after the initial influx of capital from the first sales. That’s the point where the village matures in its earnings potential and becomes business as usual.

We’ve built 12 large villages since 2011, so we have a lot of potential earnings due to come
on stream as those villages mature. When you consider that we have another 16 villages in the pipeline, that’s a lot of potential future earnings yet to be realised.”

[Beagle]

Yes Beagle - you are reminding us that when PEs are above average future returns are generally below average (Investing 204 I think) Applies to individual stocks as well as markets ..... and RYM historically has been no exception


From my database since 2002 Ryman's average PE has been just over 20. From 2002 to 2013 the average was 17 - about where SUM is now....hmmm

RYM PE was 10 in March 2003 and subsequent 3 year return was 64% pa .....other side of the coin was the PE of 37 in 2014 and subsequent 3 year return was -1% (as monitored on this thread eh)

Good info mate, makes it dead easy for those dazzled by RYM's fancy village razzmatazz reception area's to understand. Absolutely correct. I am sure you will recall that both you and I went out on a limb in a few years ago and called RYM overvalued at that PE of 37 and correctly predicted years of underperformance. You would think given that fact more people would make an effort to understand our point of view...human beings are funny though...they get emotionally attached to "pet" stocks that they have done well with, emotional attachment even if it costs them money relative to other stocks in the same sector.

[couta1]

Good info mate, makes it dead easy for those dazzled by RYM's fancy village razzmatazz reception area's to understand. Absolutely correct. I am sure you will recall that both you and I went out on a limb in a few years ago and called RYM overvalued at that PE of 37 and correctly predicted years of underperformance. You would think given that fact more people would make an effort to understand our point of view...human beings are funny though...they get emotionally attached to "pet" stocks that they have done well with, emotional attachment even if it costs them money relative to other stocks in the same sector. HaHa Beagle,emotionally attached to "pet"stocks, SUM what ironic that statement mate. PS-Ive become very attached to a certain retail chain and their glossy, pleasing to the eye annual reports.Lol.

[Beagle]

HaHa Beagle,emotionally attached to "pet"stocks, SUM what ironic that statement mate. PS-Ive become very attached to a certain retail chain and their glossy, pleasing to the eye annual reports.Lol.

LOL for SUM "strange reason" I keep all their annual reports :D

[Onion]

Good info mate, makes it dead easy for those dazzled by RYM's fancy village razzmatazz reception area's to understand. Absolutely correct. I am sure you will recall that both you and I went out on a limb in a few years ago and called RYM overvalued at that PE of 37 and correctly predicted years of underperformance. You would think given that fact more people would make an effort to understand our point of view...human beings are funny though...they get emotionally attached to "pet" stocks that they have done well with, emotional attachment even if it costs them money relative to other stocks in the same sector.

I'm happy with the return from both SUM and RYM (with DRP).





1 yr


2 yr



SUM
47%
21%


RYM
44%
23%



I wouldn't mind if all my shares underperformed like RYM.

[couta1]

SP certainly smoking it, $13.60 and little sell depth.

[winner69]

Historically if you held Ryman for 5 years or more you will have done very well with outstanding returns. That is why Ryman always appear on Boston Consulting's list of great global wealth creators.


However the returns are far greater when the starting point is cheap (lower than average PE) than when the starting point is 'expensve (high PE). See the difference between the 2003 and 2006/2007 starting points. I think that is what beagle is trying to say.

Hasnt been too many periods when punters have lost on RYM (the redcells) or got pretty low returns (yellow cells) ....but those periods started when the PE was way above average (or high)

pretty sure the numbers are correct

[winner69]

My conclusion from all these discussions is that over the next 5 years -


RYM returns will be slightly less than the long term average of 24% pa - say 18%-20% pa (because starting PE is above average)

SUM returns will be about the long term average of 25% pa because its PE is about average (fairly valued for the sector)

[Beagle]

Historically if you held Ryman for 5 years or more you will have done very well with outstanding returns. That is why Ryman always appear on Boston Consulting's list of great global wealth creators.


However the returns are far greater when the starting point is cheap (lower than average PE) than when the starting point is 'expensve (high PE). See the difference between the 2003 and 2006/2007 starting points. I think that is what beagle is trying to say.

Hasnt been too many periods when punters have lost on RYM (the redcells) or got pretty low returns (yellow cells) ....but those periods started when the PE was way above average (or high)

pretty sure the numbers are correct

Yes thanks mate, returns from 2013 to 2016 were absolutely abysmal. You and I went way out on a limb and emphatically stated that we predicted very low returns for those years...but I give up, with that track record....many posters think we obviously know nothing.... Markets often irrational eh mate. Might go to a PE of 37 again (up another 32%) before 3 more years of extremely poor returns. History never repeats itself does it...(sarcasm intended)

[Beagle]

My conclusion from all these discussions is that over the next 5 years -


RYM returns will be slightly less than the long term average of 24% pa - say 18%-20% pa (because starting PE is above average)

SUM returns will be about the long term average of 25% pa because its PE is about average (fairly valued for the sector)


If RYM's earnings grow at 15% per annum average their PE would have to stay well above average and in fact expand from its current level to generate that return. Far more likely their PE returns to about average (for them) and the SP underperforms earnings growth. Reversion to the mean. I think you might be about right for SUM and their average earnings growth for the next 5 years might be about that level.
Probable PE expansion when the market finally wakes up to a decade plus of growth well above the sector average.

[couta1]

Yes thanks mate, returns from 2013 to 2016 were absolutely abysmal. You and I went way out on a limb and emphatically stated that we predicted very low returns for those years...but I give up, with that track record....many posters think we obviously know nothing.... Markets often irrational eh mate. Might go to a PE of 37 again (up another 32%) before 3 more years of extremely poor returns. History never repeats itself does it...(sarcasm intended) I doubt whether the people that bought at $8.80 a year ago and now with a price of $13.60 really give a toss about the next few years, those inclined will probably cash in their chips and lay on a beach for a while.

[Beagle]

I doubt whether the people that bought at $8.80 a year ago and now with a price of $13.60 really give a toss about the next few years, those inclined will probably cash in their chips and lay on a beach for a while.

That's one theory. I have another one. I think there are a lot of holders that have become enamored with the company for the value its created for them and will simply stick with what they are attached too and comfortable with.

[couta1]

That's one theory. I have another one. I think there are a lot of holders that have become enamored with the company for the value its created for them and will simply stick with what they are attached too and comfortable with. And good on them, sometimes fickleness can be a curse.

[winner69]

That's one theory. I have another one. I think there are a lot of holders that have become enamored with the company for the value its created for them and will simply stick with what they are attached too and comfortable with.


They are the true long term investors ......and not that many of them around

The rest of us are just traders .....you can’t put it any other way

[minimoke]

That's one theory. I have another one. I think there are a lot of holders that have become enamored with the company for the value its created for them and will simply stick with what they are attached too and comfortable with.
I'm up 2,700% and cant see any reason to sell

[dabsman]

I'm up 2,700% and cant see any reason to sell

That is about the most emphatic post you'll ever get. Well done on your returns!

[iceman]

A clever move from Ryman https://www.yudu.co.nz/news/ryman-to-grow-its-own-tradies/39268/

[winner69]

A clever move from Ryman https://www.yudu.co.nz/news/ryman-to-grow-its-own-tradies/39268/

Yep ..a brilliant move

[percy]

Australia should grow for Ryman, as 700 Australians a day turn 65.

[minimoke]

Yep ..a brilliant moveI am a little surprised. This is so logical I just assumed they had done it years ago. Lesson there for SUM

[dabsman]

All we need now is a share split...

[Patient Panda]

All we need now is a share split...


Wouldn’t mind seeing 2billion shares on issue at $4 in 6 months

[Tiddlywinks]

Hi guys, first time poster and certainly a beginner. I've been reading the RYM thread and SUM thread. It seems that the PE ratios many of you quote are much higher than what the ANZ trading platform quotes. I think this might be because you're using Underlying Profit to calculate EPS whereas perhaps ANZ is using Reported Net Profit After Tax. Not sure, but it confuses me a bit why ANZ would use something that gives such a different PE to what many of you would use. Would anyone be kind enough to take a minute to explain? Thanks, Tiddly

[couta1]

Just had a look at the chart over the last few months, what a thing of beauty and even though I don't currently hold any one must always admire beauty.

[Patient Panda]

Hi guys, first time poster and certainly a beginner. I've been reading the RYM thread and SUM thread. It seems that the PE ratios many of you quote are much higher than what the ANZ trading platform quotes. I think this might be because you're using Underlying Profit to calculate EPS whereas perhaps ANZ is using Reported Net Profit After Tax. Not sure, but it confuses me a bit why ANZ would use something that gives such a different PE to what many of you would use. Would anyone be kind enough to take a minute to explain? Thanks, Tiddly


Hey Tiddlywinks and welcome.

ANZ quotes all stocks using their IFRS EPS and therefore too the PE.

Underlying profit gives a better representation of how the business is doing and shows much more clearly the cashflows as it removes the effects of asset price changes included in IFRS figures.

however IFRS figures can also be used to an extent to see how future underlying profit will look as the asset price movements accounted for in IFRS figures have a delayed flow through as villages are able to increase the cost of their license to occupy in line with the asset price increases (or increase them to a level the demand can handle at least). Whilst their correlated with the time delay I think its only indicative.

[winner69]

Just had a look at the chart over the last few months, what a thing of beauty and even though I don't currently hold any one must always admire beauty.

Good discussion on the ATM thread about investor behaviour - worth a quick read

Explains to some extent why Ryman is seen by some as outrageously over priced compared to SUM ( or why SUM is incredibly cheap relative to RYM) on things like PE ratios etc

What those punters overlook is that no matter what the fundamentals say Ryman is more popular than the sexy beautiful (cheap) SUM.

The market is a popularity ‘contest’ rather than a beauty ‘contest’

[Beagle]

SUM famous investor said in the short term the market is a voting machine but in the long term its a weighing machine. I still believe that is the case and I am not alone. Professional analysists have this as underperform and a price target of just $10.60. Even if they grow underlying earnings by 20% this year to $244m that's 48.8 cps and this puts RYM on a forward PE of 28.9 times right towards the top of their historical trading range. I think people buying at this level will find it does indeed underperform the sector in the medium term. (Wouldn't rule out the market according an even higher PE in the short term...momentum a powerful force and things often overshoot a fair way before coming back down to earth over time). Over time I think there are SUM better ways for investors to build their retirement capital but each to their own and I can certainly understand why many long term investors are very loyal to the company and will continue holding regardless of the metrics.
https://www.marketscreener.com/RYMAN-HEALTHCARE-LTD-6492072/consensus/

[Patient Panda]

SUM famous investor said in the short term the market is a voting machine but in the long term its a weighing machine. I still believe that is the case and I am not alone. Professional analysists have this as underperform and a price target of just $10.60. Even if they grow underlying earnings by 20% this year to $244m that's 48.8 cps and this puts RYM on a forward PE of 28.9 times right towards the top of their historical trading range. I think people buying at this level will find it does indeed underperform the sector in the medium term. (Wouldn't rule out the market according an even higher PE in the short term...momentum a powerful force and things often overshoot a fair way before coming back down to earth over time). Over time I think there are SUM better ways for investors to build their retirement capital but each to their own and I can certainly understand why many long term investors are very loyal to the company and will continue holding regardless of the metrics.
https://www.marketscreener.com/RYMAN-HEALTHCARE-LTD-6492072/consensus/

I concur about the famed Warren Buffet quote, in the long run it is a weighing machine. I think the only time you’re going to see 10.60 per share is after a share split.

For another perspective
Rym are on a similar PE to POT but growing much faster and RYM have very similar growth to FPH but trade on a PE almost 20 less than FPH.

[Beagle]

I concur about the famed Warren Buffet quote, in the long run it is a weighing machine. I think the only time you’re going to see 10.60 per share is after a share split.

For another perspective
Rym are on a similar PE to POT but growing much faster and RYM have very similar growth to FPH but trade on a PE almost 20 less than FPH.

Hi Panda bear,
Appreciate your perspective but I find its best to stick to PE comparatives within the same sector as you could just as easily for instance make the case that a forward PE of 29 for RYM looks far to high compared to ATM on 30 who have just grown their profit 100% or SML on a estimated FY19 PE of 25. Buying RYM now at $14.09 taking a five year view I really think one is going to do better with SUM or OCA but having a bob or two on all 3 probably isn't silly and some would say ARV might do well too, not so sure about MET. The best approach with these growth shares is to stay invested and be a patient Panda or Beagle :)

[macduffy]

I concur about the famed Warren Buffet quote, in the long run it is a weighing machine. I think the only time you’re going to see 10.60 per share is after a share split.

For another perspective
Rym are on a similar PE to POT but growing much faster and RYM have very similar growth to FPH but trade on a PE almost 20 less than FPH.

Yes, a great quote, but it was Benjamin Graham's, not Buffett's.

:)

[Patient Panda]

Yes, a great quote, but it was Benjamin Graham's, not Buffett's.

:)


Too true! Thank you for the reminder

[Patient Panda]

Hi Panda bear,
Appreciate your perspective but I find its best to stick to PE comparatives within the same sector as you could just as easily for instance make the case that a forward PE of 29 for RYM looks far to high compared to ATM on 30 who have just grown their profit 100% or SML on a estimated FY19 PE of 25. Buying RYM now at $14.09 taking a five year view I really think one is going to do better with SUM or OCA but having a bob or two on all 3 probably isn't silly and some would say ARV might do well too, not so sure about MET. The best approach with these growth shares is to stay invested and be a patient Panda or Beagle :)


yes maybe important to take different sector comparisons with a grain of salt but I think theres still some use in it.

Could be a decent chance RYM is getting close to a point where we might see it track sideways for a year or two till EPS growth pushes it higher again. No doubt I will continue to hold. If it hits 4x NTA I might sell a portion but certainly not all. Yes the key ingredient as always is time and patience :)

[RupertBear]

yes maybe important to take different sector comparisons with a grain of salt but I think theres still some use in it.

Could be a decent chance RYM is getting close to a point where we might see it track sideways for a year or two till EPS growth pushes it higher again. No doubt I will continue to hold. If it hits 4x NTA I might sell a portion but certainly not all. Yes the key ingredient as always is time and patience :)

Yes this impatient bear sold out at $8 after it kept going sideways :( and I cant make myself buy back in at the current price but if it drops I will get back in and I wont be selling! Another lesson learned :cool:

[Beagle]

Yes this impatient bear sold out at $8 after it kept going sideways :( and I cant make myself buy back in at the current price but if it drops I will get back in and I wont be selling! Another lesson learned :cool:

I wouldn't be too hard on yourself mate. It ostensibly tracked sideways for 3 years as correctly predicted by SUM on here and the way the SP has been going lately its well into the process of setting itself up for a repeat. For what its worth I would be a buyer at $11.50 in a pullback otherwise I am happy to remain more fully invested elsewhere. I know I probably won't get them at that price and I'm quite okay with that.

[Tiddlywinks]

Thanks Patient Panda - really appreciate it.


Hey Tiddlywinks and welcome.

ANZ quotes all stocks using their IFRS EPS and therefore too the PE.

Underlying profit gives a better representation of how the business is doing and shows much more clearly the cashflows as it removes the effects of asset price changes included in IFRS figures.

however IFRS figures can also be used to an extent to see how future underlying profit will look as the asset price movements accounted for in IFRS figures have a delayed flow through as villages are able to increase the cost of their license to occupy in line with the asset price increases (or increase them to a level the demand can handle at least). Whilst their correlated with the time delay I think its only indicative.

[winner69]

Do Ryman still have plans for that site in Newtown next door to Countdown and just down from the funeral home?

That Rita Angus in Kilbirnie must be leaky as. Always seems to have scaffold up and cladding guys clambering around.

The Melvina Major building seems to be taking forever

Just a few observations from travels around Wellington

[Joshuatree]

RYM could buy up AOG Aveo which is discounted by 44% to NTA due to poison chalice Mulpha owning 22% and negative publicity in 2017(still facing a class action).
AOG mkt cap re A$1.3 billion with 13,000 residents in 89 villages
Commencement of Strategic Review (https://hotcopper.com.au/threads/4394636/)

Im holding a few AOG

[Patient Panda]

RYM could buy up AOG Aveo which is discounted by 44% to NTA due to poison chalice Mulpha owning 22% and negative publicity in 2017(still facing a class action).
AOG mkt cap re A$1.3 billion with 13,000 residents in 89 villages
Commencement of Strategic Review (https://hotcopper.com.au/threads/4394636/)

Im holding a few AOG

would be highly unusual as they’ve never done an acquisition before to the best of my knowledge but of course, possible. Edit; actually on second thought they might’ve done an acquisition or two in their early days back in early 2000’s.

generally speaking they prefer to grow organically to preserve the Ryman culture and have things done the Ryman way.

[Beagle]

RYM could buy up AOG Aveo which is discounted by 44% to NTA due to poison chalice Mulpha owning 22% and negative publicity in 2017(still facing a class action).
AOG mkt cap re A$1.3 billion with 13,000 residents in 89 villages
Commencement of Strategic Review (https://hotcopper.com.au/threads/4394636/)

Im holding a few AOG

No chance of that happening in my opinion. Ryman do things the Ryman way, always have and highly likely they always will and they really put a huge emphasis on valuing the Ryman culture. With steady organic growth there no reason whatsoever to go out on a limb and buy some underperforming Australian operation riddled with Australian culture. Why would you pay big money to grab a crocodile by the tail ?

[Patient Panda]

No chance of that happening in my opinion. Ryman do things the Ryman way, always have and highly likely they always will and they really put a huge emphasis on valuing the Ryman culture. With steady organic growth there no reason whatsoever to go out on a limb and buy some underperforming Australian operation riddled with Australian culture. Why would you pay big money to grab a crocodile by the tail ?


An excellent summation !

[Joshuatree]

Yes i agree.I think Mulpha is the only real buyer atm ,but what a bargain price atm !:eek2:.Will see what the strategic review throws up or if any other contenders appear. 4traders have av target price of $3.18, current price $2.26

[Patient Panda]

You could also argue Met lifecare is an absolute bargain from an NTA value standpoint but IMO in this industry intangibles are king.

[Joshuatree]

Yes MET hasn't performed for years , i just dont know why , its been a value trap for sure.

[macduffy]

You could also argue Met lifecare is an absolute bargain from an NTA value standpoint but IMO in this industry intangibles are king.

Well, the NZ Super fund seem to see value in MET, holding around 20% of the stock, but don't seem to be holders of the others, at least not in SSH territory. I'm a bit intrigued by that, perhaps they'll take a chunk of Macq's OCA's - if offered?

;)

[winner69]

Well, the NZ Super fund seem to see value in MET, holding around 20% of the stock, but don't seem to be holders of the others, at least not in SSH territory. I'm a bit intrigued by that, perhaps they'll take a chunk of Macq's OCA's - if offered?

;)

Super Fund Report May 18 said they had $83m in SUM and were a SSH with 5% holding

[macduffy]

Thanks, winner. (I'm usually behind the play on these things.)

:blush:

But OCA must surely still come on their radar at times.

[Food4Thought]

If I had 1 RYM share in 2007... what would the compound divi and share split etc value my stock at today?... purchase price... $2.30

11 years down the track...

[Patient Panda]

If I had 1 RYM share in 2007... what would the compound divi and share split etc value my stock at today?... purchase price... $2.30

11 years down the track...

the 5;1 sharesplit was in jan 2007.

so around. 6x increase in share price.

[winner69]

If I had 1 RYM share in 2007... what would the compound divi and share split etc value my stock at today?... purchase price... $2.30

11 years down the track...

Heaps ......

[Snow Leopard]

If I had 1 RYM share in 2007... what would the compound divi and share split etc value my stock at today?... purchase price... $2.30

11 years down the track...

I am missing information on the four relevant dividends before 07-Dec-09, but also this calculation does not allow for lack of imputation credits.

So, on the assumption that those two limitations balance each other out:

that $2.30 buy was worth $16.45 at close (of $13.55) yesterday.


You do not buy RYM for the dividends :mellow:

[777]

If you deal through ANZ Securities, and have RYM in you portfolio, then click on movements and when that page comes up go to the sub menu which shows trades and select dividends. I have held since 2011 and they are all there so hopefully they go back to 2009 for you.

[Patient Panda]

https://www.rymanhealthcare.co.nz/investor-centre/share-performance

I had not seen their new investor centre but its a real treat.


that graph of the growing dividends is such a thing of beauty.

the other tabs are worth a look too.

[bull....]

looks like the royal commission is affecting the share price

[sonny n share]

If I had 1 RYM share in 2007... what would the compound divi and share split etc value my stock at today?... purchase price... $2.30

11 years down the track...


Since 18/9/2007 18.69%pa
$2.19 had a return of $12.25

As per Sharesight.com

I hope you bought more than 1 share :p

9952

[Vaygor1]

If I had 1 RYM share in 2007... what would the compound divi and share split etc value my stock at today?... purchase price... $2.30

11 years down the track...

I bought a few parcels of RYM between late Sept 2007 and late Nov 2007.
There have been no share splits between then and now.

Average Price paid was $2.103 per share.
Pre-tax Dividend income (for all of them) from purchase until now adds up to $1.213 per share
By this time next year, this dividend income will total over $1.45 per share I believe.

My best buy was in November 2008.
Average price paid $1.38 per share
Pre-tax Dividend income since purchase adds up to $1.164 per share
By this time next year dividend income will total over $1.40 per share. i.e.. These ones will have paid for themselves entirely by gross-dividend distribution in 11 years (carrying costs ignored).

Dividends paid since record date of 7-Dec-2007 for RYM in cents/share (with the last two dividends as a (conservative?) forecast:

9958

9959

9960

[Food4Thought]

I bought a few parcels of RYM between late Sept 2007 and late Nov 2007.
There have been no share splits between then and now.

Average Price paid was $2.103 per share.
Pre-tax Dividend income (for all of them) from purchase until now adds up to $1.213 per share
By this time next year, this dividend income will total over $1.45 per share I believe.

My best buy was in November 2008.
Average price paid $1.38 per share
Pre-tax Dividend income since purchase adds up to $1.164 per share
By this time next year dividend income will total over $1.40 per share. i.e.. These ones will have paid for themselves entirely by gross-dividend distribution in 11 years (carrying costs ignored).

Dividends paid since record date of 7-Dec-2007 for RYM in cents/share (with the last two dividends as a (conservative?) forecast:

9958

9959

9960


Thank you for your quality reply Vaygor1. You have done very well with this and the share return. I can imagine your comfortable position now.

It gives me some more clarification on to potential for RYM and Co.
Sincerely appreciate your response.

I also appreciate your response Winner69. You made me laugh, you cheaky :P

[Beagle]

Well done Vaygor1. OCA shareholders take note while their metrics are still cheap as chips. Just hold for a decade and let compound growth and PE expansion work its magic. SUM other companies also are well on their way to generating massive gains for long term shareholders.

[Baa_Baa]

I bought a few parcels of RYM between late Sept 2007 [snip]
My best buy was in November 2008.
Average price paid $1.38 per share


Better than well done! Casual observers may not have connected the dots that you were buying the whole down-trend phase of the NZX during the GFC!

Remarkable conviction and courage. :t_up:

[Patient Panda]

Yes extremely well done and more than that Vaygor I’m very grateful to you and a few others who taught me a lot about RYM back around when I first bought in a bit over 6 years ago.

[Vaygor1]

Wow. Thank you all for your kind words.

You are correct BaaBaa. It was an extremely nerve-racking time hanging onto RYM through the GFC. After all those RYM buys in 2007 at circa $2.10 (and borrowing money to do it at interest rates higher than they are today), over a year later by Nov 2008 those 2007 share purchases were only worth $1.38 on paper.... a 35% loss and trading at very low volumes... with interest accumulating on my borrowings.

After that, the price dropped even further to a low of $1.20... a 42% loss. It really was a testing time, and fear nearly took over at that point, but thankfully I managed to hang in there.

Thinking back, I in turn took heed of comments early on from posters like SparkyTheClown, Sauce, Paper Tiger, KW, Noodles amongst others, who helped steer me in the right direction. Later on, robust discussion with Winner, Beagle, Hoop et al also helped me think about whether or not I was being too bullish on occasions about RYM.. I was... so you really have them all to thank too Patient Panda. :)

I am under no illusion that for the foreseeable future, RYM (along with others in the sector) will continue to grow in just the same manner as it has over the last 11 years so long as their build rate continues to grow. Wth RYM's dividend growth, purchases like those in 2008 have an effective gross divided yield averaging over 8%/annum over a 10 year period.. and then still continue to grow.

Given the above, I can say I do buy RYM for the dividends.. patience is the key.

For those curious, RYM's dividends pre-December 2007 were as follows:

9966

Vaygor

[Beagle]

I used to enjoy those robust discussions. Now to a point I accept that RYM deserves a premium for their unrivalled consistent growth in the sector however I am not the only one by any means who thinks they're overpriced at present.

Attended a very interesting presentation by Earl Gasparich CEO of OCA at last nights NZ shareholders association meeting. In question time one person asked him which share he would buy in the sector other than OCA and which he would sell. He went on to say in no uncertain terms that he thinks RYM is very fully priced for all the reasons I have espoused on this thread.

Interestingly, the one he would buy other than OCA was MET. He reckoned trading under NTA and starting to build in their development capabilities its possibly the best value pick. It has been for quite some time though and I think the weathertightness issues they have with some of their villages will be a rat hole that's got a lot more wood rot than what's apparent at face value.

Probably much better to buy a company with a great care reputation, close to NTA, trading on well under half RYM's metrics eh :) Probably only need to wait 3-4 years to get one's 8% dividend yield :p

[Patient Panda]

Perhaps a matter of semantics Beagle but calling it overpriced is a stretch by any imagination. Not good value buying - sure. Over valued would be >15.25 imo.

[Beagle]

FWIW my buy price is $11.28...I start to lose interest at a fairly quick rate of knots going north from there. I am not alone. Professional analysts have a consensus similar view with an average 12 months hence target price of just $10.77 which suggests net present value right now of just under $10 !...so yes I think the term overpriced is appropriate but feel free to use whatever term you like mate :) The market in my opinion is paying a crazy price premium for predictable growth at present which could lead to years of future relative sector underperformance for anyone paying the current price https://www.marketscreener.com/RYMAN-HEALTHCARE-LTD-6492072/consensus/

While many of us admire Vaygor1's tenacity with buying during the GFC and holding for so long and reaping massive rewards that doesn't mean RYM at the current price will give the same rewards going forward. I prefer to look at what smart investors like him have done and ask myself how are these lessons best applied to shares today so as to give me the best rewards based off the current SP going forward ? That suggests to me that buying OCA at close to one third of the fundamental metrics of RYM and holding that high growth share for a decade or more is the optimum strategy. Remember they churn their care suites every 2.5 - 3 years not every 7 years...what does that suggest for long term capital gains going forward ?

[Patient Panda]

I can’t remember my current exact valuation for RYM off the top of my head but my buy price is very similar to yours in the mid $11 region. For reference my last buys were in Dec 2016 for 8,15 and 8.20.
At todays current price an increase of 62.5% in under 2 years isn’t bad.

The value of predictability is highly underrated by many imo

[kerryo]

If you deal through ANZ Securities, and have RYM in you portfolio, then click on movements and when that page comes up go to the sub menu which shows trades and select dividends. I have held since 2011 and they are all there so hopefully they go back to 2009 for you.

Thanks for pointing that tip out 777. :)

[minimoke]

Interesting Board appointment. Anthony Leighs is more your vertical construction guy. Given Leighs Construction is still around (and Mainzeal, Fletcher Eberts etc aren't) I presume he's not into under quoting / mis managing costs to win work.

[dabsman]

And boring old Ryman climbs and climbs...

[hamish]

FWIW -

After the passing of her husband early this year, Mother in Law purchased one of the new to be constructed units at Malvina Major village in Wellington. Was originally due to be completed November 18, then Feb 19, the latest update is now end-May 19..... Causing some stress and anxiety with uncertainty around when to sell the current house, and she is now second guessing if its the right decision etc... Selected Ryman as seemed to be the most 'on top of it's game' and trustworthy.. Due brand influence etc.. (Once she's there, am sure it will be amazing.)

Makes me wonder though... Is this a one off? Is Malvina Major symptomatic of a build rate slower than anticipated ? or Just Welly? ..then how are they progressing overall ?

[stoploss]

Ever know a builder to complete on time ....,,

[Beagle]

Ever know a builder to complete on time ....,,

OCA completing villages on time and on budget and on well under half the PE of RYM....you asked :)

[winner69]

No doubt the carry ons up Karori way will be in the news for years to come

Ryman run rough shod over the WCC but that’s pretty easy to do these days ....money speaks

http://wellington.scoop.co.nz/?p=112921

[Beagle]

I emphatically made the point a month ago at $14 that indeed it was overpriced. Anyone who listened and acted on that is $2 per share better off. Down 14.3% against the NZX50 which is down about 5.5%. Momentum a powerful force...could easily lose another dollar or two.
Might be reasonable buying at ~ $11 in my opinion but I will probably just stick with OCA which is still trading on less than half the forward PE and also has a stellar reputation for care and I think has a better business model (for shareholders).

[winner69]

I emphatically made the point a month ago at $14 that indeed it was overpriced. Anyone who listened and acted on that is $2 per share better off. Down 14.3% against the NZX50 which is down about 5.5%. Momentum a powerful force...could easily lose another dollar or two.
Might be reasonable buying at ~ $11 in my opinion but I will probably just stick with OCA which is still trading on less than half the forward PE and also has a stellar reputation for care and I think has a better business model (for shareholders).


Mind you SUM down about the same %age


I reckon OCA could follow suit and drift back to 110 or so now the excitment of it getting to 120 plus is over

[Beagle]

Mind you SUM down about the same %age
I reckon OCA could follow suit and drift back to 110 or so now the excitment of it getting to 120 plus is over

SUM down slightly less in percentage terms. No, the new kid in town is already trading very close to NTA and people are paying "Jack" for their IP whereas with RYM people are paying close to three times NTA so megabucks for their IP. The market is giving the value of RYM and SUM's IP a haircut because their business model's are arguably inferior to OCA's from a shareholders perspective.
I expect the relative SP of OCA to continue to materially outperform other sector participants.

[winner69]

SUM down slightly less in percentage terms. No, the new kid in town is already trading very close to NTA and people are paying "Jack" for their IP whereas with RYM people are paying close to three times NTA so megabucks for their IP. The market is giving the value of RYM and SUM's IP a haircut because their business model's are arguably inferior to OCA's from a shareholders perspective.
I expect the relative SP of OCA to continue to materially outperform other sector participants.


Yep if the others take a haircut and OCA stays around 120 they will materially outperform the other sector participants ...except maybe MET who is way below NTA

[RupertBear]

Geepers I am almost tempted to buy some....could be a bargin but could go even lower....patience young Bear :mellow:

[Baa_Baa]

Geepers I am almost tempted to buy some....could be a bargin but could go even lower....patience young Bear :mellow:

If you bring up RYM price chart with the 200MA, which it has only just dipped beneath, you will see that RYM has little respect for that MA but it is useful that it illustrates that RYM SP can travel an equal distance down through it as it has risen above it, and stay beneath the 200MA for quite a long time.

[Patient Panda]

Just saw its down to 11.60 time to start loading up the account.11.50 is when to hit the buy button.

[Ggcc]

I would wait as it might go even lower like all the others. I am thinking if this continues for a while we could see Ryman well under $11 at some stage

[Beagle]

I think the vast majority of high PE stocks regardless of their credentials are vulnerable, even after recent declines.

[Vaygor1]

Just saw its down to 11.60 time to start loading up the account.11.50 is when to hit the buy button.

Current price is great news for those of us buying... and it may get better.... or not.... but I am relieved to have just secured my position of buying more... Happy to top-up further if the SP drops to $11. Those buying in the next 6 weeks will also pick up the H1 approx 11c/share gross dividend on the early December record date.

[Beagle]

Current price is great news for those of us buying... and it may get better.... or not.... but I am relieved to have just secured my position of buying more... Happy to top-up further if the SP drops to $11. Those buying in the next 6 weeks will also pick up the H1 approx 11c/share gross dividend on the early December record date.

TA looks horrible, real estate looks vulnerable, markets look problematic...good luck mate.

For me fundamentally. Traditionally in years gone by in a steadily rising real estate environment a good time to buy RYM has been when the forward underlying PE is under 23.5. I think we're looking at around 48 cps underlying for FY19 which suggests given normal market functionality $11.28 would be a good entry point for those looking to add or come back on board.

Unfortunately bear markets are no respecter or normal valuation metrics. I think risk averse people will wait for the share price to go back up through the 100 day MA line, whenever that might be. A reminder that RYM got smashed during the GFC like almost every other stock so those thinking this is a defensive place to hide in a bear market might like to reconsider.

[winner69]

TA looks horrible, real estate looks vulnerable, markets look problematic...good luck mate.

For me fundamentally. Traditionally in years gone by in a steadily rising real estate environment a good time to buy RYM has been when the forward underlying PE is under 23.5. I think we're looking at around 48 cps underlying for FY19 which suggests given normal market functionality $11.28 would be a good entry point for those looking to add or come back on board.

Unfortunately bear markets are no respecter or normal valuation metrics. I think risk averse people will wait for the share price to go back up through the 100 day MA line, whenever that might be. A reminder that RYM got smashed during the GFC like almost every other stock so those thinking this is a defensive place to hide in a bear market might like to reconsider.


RYM share price got as low as 12 times underlying earnings at GFC time ....even though earnings continued to grow

jeez eps 48 cents times 12 is less than 6 bucks .....hope things dont get that bad ...but you never know where we might be late next year

[Beagle]

RYM share price got as low as12 times underlying earnings at GFC time

Jeex eps 48 cents times 12 is less than 6 bucks .....hope things dont get that bad ...but you never know where we might be late next year

RYM grew underlying earnings throughout the GFC, (due to the embedded value in existing units getting realised over the 7 year average occupancy cycle) so that's a comforting thing but as you say the PE got smacked really hard. This looks vulnerable to me but I know Vaygor1 has plenty so won't be concerned but there's plenty of others out there that could see their retirement savings / lifestyle seriously affected by a savage rout so take care out there folks and don't forget to watch the charts.

[longy]

I do wondering if people would delay going into these villages while the property market is cooling?

[traineeinvestor]

I do wondering if people would delay going into these villages while the property market is cooling?

If anything, I would think the opposite. For some, moving is not a choice – their physical and mental needs dictate when they will make the move. For many of those who have some flexibility in timing, the value of their current home exceeds the value of the unit in the retirement home they will buy with the proceeds leaving cash left over which they can use for other things (like travel).

IMHO, the risk of house prices falling would be likely to encourage people to move sooner rather than later rather than have watch the excesses cash decline (with adverse consequences for post-move plans) or, in a worst case scenario, fall below the buy-in price.

[troyvdh]

trainee...Bang on mate...the issue of falling house prices and its effect has been discussed ad nauseam..,.folk will move anyways...Its almost like the anti vac./1080/fluoride debate...some folk never "get it"..cheers.

[Beagle]

They can only move if they can afford it. If they can't afford it they'll choose a lesser "Rolls Royce" alternative if they still have to move. Check out the prices of RYM units in Auckland and then consider that the median house price is $850K. Then there's the decline in house prices in Melbourne which nobody seems to want to talk about. Consider also the forward PE of about 24-25 when you can buy OCA who also have a stellar reputation for care on a forward PE of less than half that and still get great growth and in OCA's case a decent dividend yield too.

I think RYM's business model has been underwritten by steadily rising house prices. What if house prices face many, many years of slight annual declines ?

[BlackPeter]

They can only move if they can afford it. If they can't afford it they'll choose a lesser "Rolls Royce" alternative if they still have to move. Check out the prices of RYM units in Auckland and then consider that the median house price is $850K. Then there's the decline in house prices in Melbourne which nobody seems to want to talk about. Then there's the forward PE of about 24-25 when you can buy OCA who also have a stellar reputation for care on a forward PE of less than half that and still get great growth a in OCA's case a decent dividend yield.

Hmm - so why are you comparing top prices for super luxury units with the average house prices? Somebody owning an average priced house (which still might be quite nice) surely only needs to be able to afford a median priced unit (which are still quite nice)? Apples - Pears?

[Beagle]

Hmm - so why are you comparing top prices for super luxury units with the average house prices? Somebody owning an average priced house (which still might be quite nice) surely only needs to be able to afford a median priced unit (which are still quite nice)? Apples - Pears?


Not doing that BP. Apples with apples. Discussions I have had with village managers suggest most people want to move into a village within 7-10 km's of where they used to live. Typically an average village unit has been somewhere around 75-80% of the houses in the suburb in which the village is located.
What I'm suggesting is simply this. RYM's units are typically toward the top end of the scale. If we start to see declines in house prices in N.Z. like we're already seeing in Sydney and Melbourne as the cost of construction moves inexorably higher the margin between what the resident can sell their house for, (if indeed they can sell) and the cost of the new unit will probably get a lot tighter. I think RYM as the top end developer are more vulnerable than others.

[troyvdh]

Like I say some folk "never get it ".
Never stand in front of a moving train.

[macduffy]

Like I say some folk "never get it ".
Never stand in front of a moving train.

I notice that the RYM train gained 6.2% today.

;)

[Vaygor1]

... Discussions I have had with village managers suggest most people want to move into a village within 7-10 km's of where they used to live. Typically an average village unit has been somewhere around 75-80% of the houses in the suburb in which the village is located...

For independent living (approx 42% of Ryman's portfolio) , it's between 60% to 70% of the local house price.
For serviced units (approx 20% of Ryman's portfolio), it's between 45% to 50% of the local house price.
For aged care beds (approx 38% of Ryman's portfolio), I am unsure but believe it to be equal to or less than services units.

10116

I can't see house priced dropping by 30% anytime soon.
Even if they halved, it wouldn't have any real impact.
When ya gotta go, ya gotta go.

[nizzy]

They can only move if they can afford it. If they can't afford it they'll choose a lesser "Rolls Royce" alternative if they still have to move. Check out the prices of RYM units in Auckland and then consider that the median house price is $850K. Then there's the decline in house prices in Melbourne which nobody seems to want to talk about. Consider also the forward PE of about 24-25 when you can buy OCA who also have a stellar reputation for care on a forward PE of less than half that and still get great growth and in OCA's case a decent dividend yield too.

I think RYM's business model has been underwritten by steadily rising house prices. What if house prices face many, many years of slight annual declines ?

Selling parent's unit (occupation rights) at a well regarded Auckland Ryman village. Remains unsold after 6 months, as are others. 2 main reasons given to me are the slow housing market plus a temporary surplus of new units coming onto E Auckland market from various companies - Ryman, Summerset, Oceania and others. To Ryman's credit they pay you out regardless after 6 mths - a big plus in current market.

[BlackPeter]

Thanks for sharing - interesting. Anybody else with similar experiences?

[Beagle]

For independent living (approx 42% of Ryman's portfolio) , it's between 60% to 70% of the local house price.
For serviced units (approx 20% of Ryman's portfolio), it's between 45% to 50% of the local house price.
For aged care beds (approx 38% of Ryman's portfolio), I am unsure but believe it to be equal to or less than services units.

10116

I can't see house priced dropping by 30% anytime soon.
Even if they halved, it wouldn't have any real impact.
When ya gotta go, ya gotta go.

You rather conveniently overlook talking about the Melbourne real estate market...seen some reports indicating that's in a pretty grim state :p
Pretty sad state of affairs when RYM can't sell units in their premier Remuera retirement village which according to some rumors having being built on a former dump site is suffering from land subsidence issues. I believe anecdotal reports of an oversupply of units in Auckland are quite possibly correct which would explain why SUM other company is struggling to get meaningful sales traction with their big Ellerslie and Hobsonville villages. That said RYM are as cunning as a very hungry beagle discounting the heck out of their weekly fees to get units sold off the plans and all the oldies are thinking about is their fixed for life dirt cheap weekly fees and overlook the fact that RYM are "absolutely creaming it" on the sale price of the unit. I think your last statement is far more applicable to OCA care suite units for the (generally) over mid 80's demographic. I still think most people move into other retirement villages for lifestyle choice reasons not through compulsion.
I do love a good debate with you :D

[Timesurfer]

Is RYM trying to compete with A2 for volatility?

[Vaygor1]

You rather conveniently overlook talking about the Melbourne real estate market...seen some reports indicating that's in a pretty grim state :p......

Hi Beagle.

I'm not the slightest bit worried about the Melbourne 'downturn'. Melbourne house-price growth, even over the short term, looks much the same as NZ....

10135

Using the chart below (created 2 years ago now) Melbourne house prices would need to drop by over 35% before an average local residence' house wouldn't meet the cost of a RYM independent living apartment there. Over 60% drop for a serviced unit. Given the chart above, I can't see that happening anytime soon when the city only experienced a max 10% drop through the GFC on any given year.

10136

The source of the top graph above does make for a bit of interesting reading though...
https://corporate.amp.com.au/newsroom/2018/april/oliver-s-insights--falling-sydney-and-melbourne-home-prices

[winner69]

Good stuff there Vayagor and no worries eh .....but Couts would saybe fearful of the reversion to the mean

One chart in that report suggests a 30% correction could happen

Cheers

[winner69]

A bit from an interest.co.nz story —

In Australia, the new sport for economists seems to be outdoing each other in calling the size of their housing market declines. Macquarie analysts now say the overall decline could be -10% in nominal prices with Sydney and Melbourne being more like -20% from the peak. At those levels, that would make it the largest housing market retreat in 40 years.

Just as well economists are useless at, well, most things

[couta1]

Is RYM trying to compete with A2 for volatility? The answer is yes eg RYM currently down 3.5%,A2 down 2.8%.

[hereweare]

The answer is yes eg RYM currently down 3.5%,A2 down 2.8%.
And closed at -4.44%......

[Baa_Baa]

Another dollar & a bit down and that's the whole of 2018 capital gains stuffed.

[winner69]

I see Ryman up for a couple of awards at today’s Plain English Awards. Last Annual Report pretty good

[bull....]

aveo - aog had there annual meeting yesterday there comments about the resales market etc in aus was very bad so not a good sign for rymans aus operations

[Beagle]

Market sentiment will never cease to amaze me. The reason for RYM's high PE Ratio is its certainty and predictability. i.e. You can count on it.
I was surprised with 22%. It was more than I was expecting, but not by much, I was expecting 20% and that in my view is a very good result, and I would have also been surprised too if it was any less than 15%.

So HS, your question is an excellent one. Just what were people expecting?... or is this a coincidental big-holder sell-off for some reason? By selling now, one foregoes the dividend that would be paid in about 3 weeks from now, so you can effectively add another 5 cents to drop in share price.

Are there overseas entities for instance that do not want a dividend for some reason (ie to avoid scrutiny or tax)? or has a big seller just sparked a herd mentality for a while? Will still be very interesting to see what happens next week.


Whether its markets as a whole or just individual stocks buying at elevated multiples invariably leads to disappointing returns. Conversely buying at low multiples invariably leads to the good returns. Sort of buy cheap (low) sell expensive (high) approach.

In simple terms - high PE leads to low future returns / low PE leads to superior future returns.

Plenty of academia to show this works in so far as markets go but it seems to work out this way for even the best companies, even ones who have demonstrated decades of continuous growth

RYM has had enough history to do a meaningful analysis

Chart shows the 3 and 5 year annual returns for RYM from different starting PEs

Based on underlying earnings. Currently a PE of over 40 on this basis

History would indicate negative returns over the next 3 and 5 year periods - even though RYM will no doubt continue to grow earnings

That's why I watch the linear regression line on the RYM chart ......the squiggly line will one day head down

Each dot represents a PE and the subsequent 3 (or 5) year annual returns. share price only / no dividends

Vertical axis is % return pa and horizontal axis starting PE

Good to look back 4-5 years and see how things have played out and ask why ? Gives us possible insight into the future.
Vaygort1, Winner and I had some great debates and exchanges of point of view in late 2013 and early 2014, a small sample of which I've reproduced above.10156

As we can see from the chart I have just provided RYM's SP has significantly under performed the NZX50 since early 2014 despite very bullish real estate markets on both sides of the Tasman, (until recently).
A move from about $8 to around $11.75 up just on 47% plus modest dividends of about 2 % per annum, total return approx. 57% in five years has neither matched the market nor has it matched the implied medium term company goal of 15 % annual average earnings growth (15% underlying earnings growth for five years = almost exactly a doubling in earnings in five years which should theoretically all else being equal reflect a doubling of the share price).

It has materially underperformed the market and the sector as some of us predicted despite bullish real estate markets.
So where to from here now that there is material uncertainty with real estate prices in Auckland and in Australia. Their growth is below sector average yet their PE remains well above other retirement company's metrics.
I think the degree of uncertainty has moved up a couple of notches and RYM's fulsome metrics continue to look expensive compared to other sector participants and accordingly think this is one to continue to avoid.
5 more years of market under-performance ? You be the judge...
I think RYM is becoming more volatile because of two factors.
1. Increasing uncertainty over the direction of the real estate market and how this might affect underlying earnings over the years ahead.
2. Increasing overseas ownership and overseas market volatility.

I favour OCA as being more defensive and better prospects for growth and on far more compelling metrics and if one believes the Auckland market is still in a reasonably healthy state, (I am not sure I do), SUM.

[Onion]

Good to look back 4-5 years and see how things have played out and ask why ? Gives us possible insight into the future.
Vaygort1, Winner and I had some great debates and exchanges of point of view in late 2013 and early 2014, a small sample of which I've reproduced above.10156

As we can see from the chart I have just provided RYM's SP has significantly under performed the NZX50 since early 2014 despite very bullish real estate markets on both sides of the Tasman, (until recently).


I know we could play the "choose the period " game all day and find evidence every which way ... but choose a shorter duration and the results look better for RYM. Using Super Charts from ANZ (as I think you have used) choose 3yr, 2yr or 1yr periods and RYM outperforms the index.

I note that SUM betters RYM over those periods for 1, 2, 3 and 5 year periods.

[Beagle]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12161226

No question in my mind this sucks some wind out of RYM's sails (and SUM if they expand over there) in the years ahead. RYM still a good company with sound growth prospects but so is OCA and its trading on half of RYM's PE, more than double RYM's dividend yield and OCA very close to NTA not three times NTA like RYM.
The "Australian risk factor" is also avoided with a stock like OCA.

[Vaygor1]

Good morning Beagle

Regarding your 15-Nov-2018 post here on this thread, I stand by my statement posted 5 years ago (almost to the day) regarding RYM's certainty and predictability. I also stated in that same post that market sentiment never ceased to amaze me.

It can only be market sentiment and rumours causing RYM's recent 'volatility' as there is no recent price-sensitive RYM announcements. I put 'volatility' in inverted commas because the volatility of RYM's SP I believe is not materially different to the volatility of most liquid-trading shares around the $12 mark.

Meanwhile, RYM's results and dividend growth have been as consistent and predictable as ever:

10163

Over the years, many posters on this thread seem to think no one buys RYM for their dividends. I am in RYM solely for the dividends. Selling any RYM is simply not on my radar in the foreseeable future, so I am only interested in the share price for the purpose of buying more.

Up until very recently when I bought some parcels sub $12 my average RYM buy price was $2.67 and this average includes my until-now latest purchases at $8.15/share in Dec 2016 and $7.30/share in Oct 2015.

Dividends within the next 12 months (assuming no special dividends and no share-split forthcoming) will be approx H1 of $0.109 (record date 7-Dec-2018) + $0.128 (record date 7-June-2019) = $0.237
So my pretax return on investment for RYM by way of dividends over the next 12 months will be 8.9%
On the same basis, the next 12 month period will see this climb from 8.9% to 10.2%

RYM's shareprice in 5.5 years under normal market conditions will be over $30 (or equivalent in the event of a share split).

I believe RYM's H1 result this financial year will be mediocre but their full year result will be excellent. The SP may slip to under $11 following their H1 announcement in less than a week from now, but I have bought some largish volumes just recently because I like the price, I am relieved to have secured my recent position, and as with RYM's H1 result last year, the Directors may well publish guidance for the full year next week and if so, there's a fair chance such guidance will drive up the SP.

This is how RYM presented their full year guidance in last year's H1 presentation...

10162

[winner69]

RYMAN won the best Annual Report in the Plaon English Awards the other night ....thats good

Maybe that helps global investors understand Ryman that much better and what makes it one of the highest TSR health sector companies globally (BCG)

[winner69]

No need to justify / defend your position / startegy Vaygor

I dont think many on here knock Ryman for its company performance - it's just that some think there are better future returns in this sector elsewhere at this point in time


that 'volatility' is just a sentiment measure anyway so no worries

Admire you passion

[Beagle]

Hi Vaygor1.

I appreciate your perspective and congrats on doing so well and having the patience and perseverance to hold for such a long time.
I understand your analysis and understand your reasons for continuing to hold and the yield it gives you on your average price.
That said, most people when considering the dividend yield run their analysis on the current SP and perhaps there's logical reasons for that seeing as you could easily sell and invest elsewhere if you choose to.

There is a lot of value in what you've posted for other investors to consider in terms of what their yield might be for example on OCA if they hold long term which already has a prospective yield about 2 1/2 times the yield of RYM.

I think the nub of our divergence in viewpoints is I don't believe we will have normal market conditions over the next 5 or so years. (See PM I sent you on why)
The chances of real estate stalling (long term charts I have seen indicate the price of housing in N.Z. seldom falls in dollar terms but can go into an extended sideways pattern), falling in real inflation adjusted terms for many years is quite high in my view. I think based on the extraordinary level housing has risen too in N.Z. on a per capita basis (second in the world only to Hong Kong), a new sideways pattern is a very real prospect in the years ahead. There is also the real chance we follow Australia down so I am fairly defensive with my thinking in this sector and I won't use leverage under any circumstances.

I favor OCA for its higher churn rate, cheaper entry costs, yield, PE relativity and defensive needs based attributes. When you've got to go into late stage care you really do have to go whereas with RYM a large percentage of new entrants are making discretionary lifestyle choices (if they can sell their homes for a satisfactory price).

I know you're not going to sell and the only reason for me posting this is to give food for thought to others. I expect OCA will materially outperform RYM over the next five years but like many things, time will tell. They'll probably both do very well....I am sure we can find common ground and agree on that :)

[winner69]

Repost of previous table

There have been times when buying RYM has resulted in below average terms - each time is when RYMs PE multiple was very high. Expected because generally fpr stocks and markets buy when valuations are stretched (above average) expectured future returns will be below average

There have been periods of poor returns from RYM over periods up to 5 years ...but as Vaygor will attest to to long term (>5 years) have been very good - but note sometimes trhat can be 15% pa nd sometimes 30% pa depending on the starting point and whether RYM's starting PE is low or high.

RYM's PE (underlying profit trailing) has averaged about 20 this century ranging from below 10 to the high 30s. Its that change in PE that drives the change in returns rather than that consistent earnings growth

[Beagle]

2013 to 2016 was a dud wasn't it mate, like a couple of blokes on here predicted :cool: I gave a nice big clear Beagle bark or two when it was $14 too but most chose to ignore that and thought I was a dumb dog.