RYM - Ryman Healthcare

[forest]

I am going to the AGM on TUE 31 July and are wondering if their are any Share Traders interested in a catchup before or after the meeting. Would be nice to meet some more people who are posting here.
Cheers Forest

[scamper]

My understanding is that rym is required to pay within 6 months of vacancy 'by law'.
Presumably a delay can be considered a negotiated loan, so with interest being paid (hopefully at commercial rates), there's no problem.
Had trouble explaining to my venerable and ancient parents that probate can take 6 months anyway...

[macduffy]

From today's AGM:

Trading in first quarter ahead of last year.

Plans to build their 28th village on site of former Petone High School.

[percy]

From today's AGM:

Trading in first quarter ahead of last year.

Plans to build their 28th village on site of former Petone High School.

Be good for Petone High School old girls and old boysThey will able to have daily school reunions.!!!
Again appears it was a very positive meeting,and I note the share price is moving up [as always].

[ENP]

What did they mention about the land they have purchased in Australia at the AGM?

Any facts or figures regarding how fast or big they intend to build in the short and longer term?

[percy]

What did they mention about the land they have purchased in Australia at the AGM?

Any facts or figures regarding how fast or big they intend to build in the short and longer term?

In the 10th August update they stated "building in Australia is due to start in a few months."

[Sauce]

They noted that margins won't be as good as they are here in New Zealand, at least not for the short term, and that they don't have the reputation in Australia they enjoy here.

Hi Sparky,
Us Ryman shareholders might end up owning a Summerset type appendage after all ;)
Cheers
Sauce

[ratkin]

Ryman been accelerating uptrend , could be topping out for a while? Have to wait and see, but if the gap closes i will be taking profits on the first blue bar that occurs

4117

[skid]

This seems like an excellent operation but Im always cautious when they start to expand overseas.
Many good operations have come unstuck by doing this to quickly.Might wait and see how this unfolds.

[Joshuatree]

Thats what i like about management they are NOT rushing in, initially building one, NOT buying out other peoples mistakes ; being careful ,despite doing their homework.

[percy]

Thats what i like about management they are NOT rushing in, initially building one, NOT buying out other peoples mistakes ; being careful ,despite doing their homework.

Should they get it completely wrong,they will have to right off say approx $30mil.
Should they get it half pie wrong and sell they may loose $10mil.
Either case it is not a lot loose.
However should they get it right,the sky is the limit.
I understand most Aussie villages are more "life style" rather than total care.
If they had n't tried Aussie the market,then I think we would be right to say they should have.
So with little to loose,a lot to gain I think it well worth "going for'.

[percy]

The ODT covers Ryman's increased build rate.

http://www.odt.co.nz/news/business/225625/ryman-boosts-building-rate-satisfy-demand

Craigs IP put a price of $4.42 on Ryman.

Be interesting if Sauce gives us an update with his valuation, as he has always been right on the money.In the meantime I am very happy with Craig's $4.42.

[Sauce]

Hi Percy,

I like to think I am conservative in valuation, but from what I can ascertain, RYM's share price is now building in some success in Australia.

Based on a DCF methodology with roughly 15% growth in underlying profits for the next 5 years (they will probably beat this hurdle this year) and growth declining to zero and ROE declining to the cost of capital in a straight line over the subsequent 5 years, and a terminal cap rate of 8.5% (which sounds about right for a net return from a mature but high quality property play) I get around $3.80 per share.

If RYM can continue their growth period for a lot longer than this, then they are worth considerably more on a NPV basis.

I think it is prudent to assume they will need success in Australia to add impetus to keep the growth rate in double digits past 5 years.

It is a real shame the market has woken up to the extreme undervaluation that existed a couple of years ago. As a net saver for a couple of decades yet, I would like to put more money to work in RYM. But I won't pay the current price.

No way would I sell my holding however, as this is a rare growth story and the potential for a continuing secular growth period, in NZ and AUS is high. AUS could be a game changer over time. Just no margin of safety; buyers now are to starting to pay for perfection which is risky. And in my view some success in AUS is starting to be priced in.

Cheers

Sauce

[Sauce]

There is something else is note worthy; RYM is undergoing a strategic change of direction that I believe will further enhance and solidify RYMs competitive position over time.

Don't have time to go into the numbers, but the summary is that RYMs care/dementia units are now being built at a scale which are profitable; in the past the care element provided immense intangible value, but on their own were loss making or break even. Indeed this is still the case for Summerset.

RYM have been building larger and larger villages and with the scale they enjoy, they can, and are, switching the mix of units more towards care beds and can do this profitably now. The reason that this is significant is that it positions them very well for the wave of demand that is coming in the full time care space as more baby boomers crap out totally before wanting to move to a village for lifestyle reasons.

I would be highly suprised if they do not enjoy considerable pricing power in this space as demand grows, which could provide a lot of future profit growth from the villages being built now without any additional capital.

They are so far ahead of the competition (besides MET and Summerset, its all tiny fragmented players with no scale and little profitability) in this regard, that no one will be able to offer the same level of care/service or have the same capacity. And, importantly for shareholders, no one else will have the same profitability per bed.

Perhaps Summerset will get there one day, but I personally doubt they will ever be as profitable by a measure of return on shareholders funds. RYM are able to steer the ship in this strategic direction nice and early, and I think it will lead to even more dominance in the future.

With regards,

Sauce

[percy]

Sauce,
Thank you for your update and research.

[troyvdh]

....thanks Sauce...are we/you...implying that this company is trully one of "blue sky"....like a perfect model....gee in this world where can one assume such comfort....constantly in my head i hear "if it sounds like its to good to be true'...blah ...blah....I lost $30k on RJI...in the late 80's.......(..example....we/RJI bought the now Forsyth barr building in CHCH for $40..million in the late 80's).....a mate of mine (and a few mates) bought that building about 10 years ago for $18m......

..what am i saying.....not sure really.....but I am confident that you get my point.

cheers troy

[Sauce]

Hi Troyvdh

Totally understand. And the point you make is very a good. Having an optimism bias can be very expensive!

I think you need to balance my comments about the strength of RYMs model with my discussion that I think the market is pricing that strength into the share price and that I would not buy it at current levels.

To me the risk has gone up with the share price. But at $1.90 when I tipped a large portion of my net worth into RYM, I felt the risk was a lot less because the market was not pricing it for perfection, yet the business model was very strong from both a competitive and a demand perspective.

So the decision back then was that the expected value of the investment was, based on my assessment, positive, even when both the downside and upside case were factored. I do not feel as confident of this now because of the change in price vs the more modest increase in intrinsic value.

RYM is not without risks. There is the risk of regulation in the future that could undermine the business model. They could stumble and execute poorly while growing so fast. In the future development land might be too expensive to build their villages profitably. Perhaps someone will find a more outsourced rental model, that generates good returns on lower capex, and use that to compete more effectively with RYM in the future.

These are just some of the potential risks that need to be considered and weighed up with the positive outcomes as described in other posts. I think hard about these scenarios all the time and none of these, at this stage in time, and in my view, significantly alter the investment case for RYM. But from a probability perspective the odds of something coming from left field make a further commitment of funds at current prices to risky for me as my exposure is already large.

Basically what I am getting at (the short version!) is that my optimism for RYM is balanced by the price I am willing to pay for it.

I hope this helps

Cheers

Sauce

[troyvdh]

cheers and thanks...as an...aside I have an inherent issue ...totally nonsensical i agree ....I should buy more at these prices...I i bought in when you did.....I should and i know it...but i cannot...how pathetic am I !!!...have you bought any more.....?

In all likely hood the SP will assume $10 plus status..again...and again there will be 5/1 split......cheers......

[Sauce]

Hi Troyvdh

I know how you feel. Consider this:

RYM trades on a PE of about 27 x underlying cash earnings. That is a very hefty multiple, even if there is unrealised cash generation locked into the portfolio.

Last time it traded this high (relative to earnings) was at the peak of the market in 2007. From memory the all time high was about 2.70 and, if I am not mistaken, it was also on a multiple of underlying cash earnings of about 27. If you had paid that peak price you would have, until recently, been feeling pretty silly with yourself; taking about four years just to break even. But if you had not capitulated at any time and stayed the course, you would now, just 5 years later, be sitting on a 9% compound return EXCLUDING dividends.

$2.70 * (1.09) ^ 5 = $4.15

With dividends its a double digit compound return. Time is the friend of a wonderful business as the saying goes.

Over even more time that compound rate for the 'unlucky' souls who paid $2.70, will undoubtedly look even better. So even a high price can look good with enough patience.

The caveat is that you have to be right about the business.

Cheers

Sauce

[Sauce]

Hi Troyvdh.

No I have not bought any more. And I must also admit to selling a few off the top at much lower prices.

But I won't be selling any more, and as previously disclosed, my RYM holding is the largest asset I own by a large margin now..

Cheers

Sauce

[percy]

Sorry I don't know the details,but a broker has been doing Ryman presentations in Asia which has generated overseas buying interest.
Sorry I do not know full details.I spoke to my broker on another matter today and he made the above comments .
Posted in good faith.

[Sauce]

Makes sense Percy; it would appear demand has been outstripping supply :)

[Sauce]

Indeed.

I see an opening for a very politically incorrect joke there Sparky but lets not go there ;)

[troyvdh]

gee percy....what are you saying...can you please ask your broker how many shareshe has bought..and owns from his own money....

I am not a conspiracy theorist....but in the real world ....but give me a break....if those "Ryman reps"...were bonefide and collectively thought that RYM was a screaming "buy"...then why on earth would you publise that fact RYM was a "buy"....and not totally engorge your self ....without telling other folk....

....does anyone get my point....troy

[Sauce]

Because they operate on the sell side. I.e. they make money from commission. They wan't people to buy because that's how they make money.

As Buffett would say, asking a broker if you should buy a stock is like asking your hairdresser if you need a haircut.

Regards,

Sauce

[forest]

RYM trades on a PE of about 27 x underlying cash earnings. That is a very hefty multiple, even if there is unrealised cash generation locked into the portfolio

Hi Sauce, just wondering what you mean by underlaying cash earnings?
I see $169mil of operating CF this gives a operating CF of 12, NPAT of $121mil this gives me a P/E of 16.7, underlying profit of $84.1mil this gives me a underlying profit P/E of 24.1 and a free cash flow (as opCF - Cap ex) of $94mil this makes the P/FCF of 21.5.

[Sauce]

$84.1mil this gives me a underlying profit P/E of 24.1

Hi Forest

Sorry your right; I just approximated all the numbers in that post off the top of my head. Say PE of about 25 then ($4.15 / EPS 0.1682 = 24.67)

I suppose its a relevant difference ;)

Cheers

Sauce

[forest]

Thanks Sauce did not want to be pedantic, didnot know what was ment by the term underlying cash earnings :)

[Sauce]

On a side note though; don't get caught up in NPAT or Operating cashflow. Ryman's NPAT is near on irrelevant. And Operating Cashflow largely consists of RYM's capital recycling activity.

Regards,

Sauce

[troyvdh]

...Giday...I would appreciate if those folk who quote/and or take advice from financial advisors;brokers....actually ask the aforementioned if they actually personally hold and have paid for the shares themselves....

[jmsnz]

Sorry I don't know the details,but a broker has been doing Ryman presentations in Asia which has generated overseas buying interest.
Sorry I do not know full details.I spoke to my broker on another matter today and he made the above comments .
Posted in good faith.
It is also quoted online here http://www.stuff.co.nz/business/market-data/7689509/Stocks-rise-as-investors-buoyed.

If "a bit of a tour through asia to fund managers"was driving the price shouldn't the matket have been notified. Mind you he also said "a lot of uncertainty cleared out of the way" which I'm not too convinced by....

I have some spare cash I am trying to stop the family spending and are a Ryman fan but at this price?

[Joshuatree]

Room for a village in the Cayman Islands Sauce?:). If, you, do, live there whats it like?

[percy]

It is also quoted online here http://www.stuff.co.nz/business/market-data/7689509/Stocks-rise-as-investors-buoyed.

If "a bit of a tour through asia to fund managers"was driving the price shouldn't the matket have been notified. Mind you he also said "a lot of uncertainty cleared out of the way" which I'm not too convinced by....

I have some spare cash I am trying to stop the family spending and are a Ryman fan but at this price?

Thank you for the link.
Your spare cash.Go to www.chrislee.co.nz and go to market news.HNZ."Sale of FPF will confirm the current market value of net lending assets and balance sheet equity in the finance sector,which is unlikely to be at the discount currently ascribed to HNZ share on the market."
RYM.Like Sauce I am not buying,but I am too scared to sell any either.!!!!!!

[Sauce]

Hi JT,

No I don't live in the Caymans. Never been there. For some reason, 8 years ago when I joined Sharetrader, I thought it sounded cooler. Which, with the clarity that 8 years brings, was almost as dumb and pointless as posting random thoughts online under an anonymous moniker for other anonymous people to read. Since then more than a few people have thought it was genuine. Come to think of it, it's also possible someone may have mistakenly believed a post or two of mine.

I must change it. I live in the capital city of NZ.

Cheers
Sauce

[Sauce]

...Giday...I would appreciate if those folk who quote/and or take advice from financial advisors;brokers....actually ask the aforementioned if they actually personally hold and have paid for the shares themselves....

Good advice I think... skin in the game as they say.

[jmsnz]

Thank you for the link.
Your spare cash.Go to www.chrislee.co.nz and go to market news.HNZ."Sale of FPF will confirm the current market value of net lending assets and balance sheet equity in the finance sector,which is unlikely to be at the discount currently ascribed to HNZ share on the market."
RYM.Like Sauce I am not buying,but I am too scared to sell any either.!!!!!!

Thanks for that Percy, I am certainly not selling RYM either.

[voltage]

I have looked used Yahoo finance and used 5 and 10 year performance of RYM compared with global giants like KO, YUMS, MDL, DIA. RYM outperforms easily. If it maintains 15% growth per year this is your 1 stop shop growth share.
My question is I want to top my holding up. Do I wait for a dip or forget timing and just buy.

[percy]

I have looked used Yahoo finance and used 5 and 10 year performance of RYM compared with global giants like KO, YUMS, MDL, DIA. RYM outperforms easily. If it maintains 15% growth per year this is your 1 stop shop growth share.
My question is I want to top my holding up. Do I wait for a dip or forget timing and just buy.

Very good question.I do not really know the answer.
At present $4.09 to $4.10 is stopping it.If it goes to $4.11 I think you will find it is away again,so you should buy at $4.11 or $4.12 .
The SP has moved up a long way in a very short time,so if it does not go through $4.09 to $4.11 it may well drop down to below $4.
I would hold off,as I expect it to come back.

[stoploss]

Might need a few more villages in Wellington !!!!
http://www.stuff.co.nz/dominion-post/news/7750102/Wellington-elderly-set-to-exceed-young

[percy]

Might need a few more villages in Wellington !!!!
http://www.stuff.co.nz/dominion-post/news/7750102/Wellington-elderly-set-to-exceed-young

Thanks for the link.
Maybe they can keep building retirement villages on disused school grounds????
You can't stop the ageing process.

[gonzo56]

Thanks for the link.
Maybe they can keep building retirement villages on disused school grounds????
You can't stop the ageing process.

When you take the train into Wellington you can see the construction site at the old Petone College.

http://www.stuff.co.nz/dominion-post/business/commercial-property/7385872/Ryman-to-build-100m-Hutt-village

[CJ]

I have looked used Yahoo finance and used 5 and 10 year performance of RYM compared with global giants like KO, YUMS, MDL, DIA. RYM outperforms easily. If it maintains 15% growth per year this is your 1 stop shop growth share.
My question is I want to top my holding up. Do I wait for a dip or forget timing and just buy.Morningstar (via ASB securities) has just downgraded to Reduce with a target price of $3.50.

My understanding is everyone pretty much disregards the Morningstar recommendations.

[Hoop]

I have looked used Yahoo finance and used 5 and 10 year performance of RYM compared with global giants like KO, YUMS, MDL, DIA. RYM outperforms easily. If it maintains 15% growth per year this is your 1 stop shop growth share.
My question is I want to top my holding up. Do I wait for a dip or forget timing and just buy.


Very good question.I do not really know the answer.
At present $4.09 to $4.10 is stopping it.If it goes to $4.11 I think you will find it is away again,so you should buy at $4.11 or $4.12 .
The SP has moved up a long way in a very short time,so if it does not go through $4.09 to $4.11 it may well drop down to below $4.
I would hold off,as I expect it to come back.

“The market can stay irrational longer than you can stay solvent.” ....John Maynard Keynes

This famous quote illustrates the unpredictability of a market with regard to its valuation (FA)..although this quote originated during a bear market it could also be relevant at the other end of the spectrum.. a bull market....It proves a point that picking tops and bottoms using rational logic is futile.

Voltage I can not answer your question as there is no way yet to determine how long this price can stay in an accelerated upswing It could be years and rises to ridiculous levels or it could be over now...FA is not going to help you...except by telling you that the stock at a PE of about 17 is probably underpriced for a growth stock..but property stocks tend to have lower PE Ratios than the market average don't they?

Percy offers the best solution.. buy in if the shareprice enters a new high.

To illustrate RYM behaviour it is best to look at other growth stocks that enter blue sky territory and look for similar patterns or to get a feeling to how irrational these share market darling stocks can get....Emotion is a definite no no with these stocks you have to ride them to wherever it takes you...With emotion it is too easy to think rationally that it can't go any higher...it will reach a point when it wont but it will be when the market decides not you.

Below I have used one example Mainfreight....Notice the long rallies this darling stock had ...notice although MFT is still growing** it can enter a stagnant phase for years too...A ex-darling stock gets the cold shoulder treatment just like the behaviour from a jilted lover. Whoever would have thought in Jan2007 that a growth stock share like MFT would be half its share price in a year time.....irrational ..eh?
***decreased profit PE Ratio 12.5

I have used only one example here MFT but if you own a growth stock it would pay to do your homework and look at many other growth stock examples that enter blue sky area to gauge their behavioural patterns.

http://i458.photobucket.com/albums/qq306/Hoop_1/RYM30092012-1.png
http://i458.photobucket.com/albums/qq306/Hoop_1/MFT30092012.png

[Sauce]

Hoop

FYI

PE using reported profits is useless with RYM due to IFRS accounting.

Cheers

Sauce

[Hoop]

Hoop

FYI

PE using reported profits is useless with RYM due to IFRS accounting.

Cheers

Sauce

Duly noted Thxs sauce

[ratkin]

Chalkie not a fan

http://www.stuff.co.nz/business/opinion-analysis/7793951/Money-in-hero-stocks-a-risky-wager

[POSSUM THE CAT]

Ratkin He is the first one to take a realistic look at RYMAN without having blinkers on

[ratkin]

Ratkin He is the first one to take a realistic look at RYMAN without having blinkers on

Not the only one , it a good company , but it certainly no longer cheap

[rocketman11]

http://www.stuff.co.nz/waikato-times/business/7817003/Pouring-money-into-hero-stocks-a-risky-wager

^ Just read this article, certainly worth a look at. I've had a similar feeling; nearly every article with Ryman has the words 'darling of the market' or 'solid growth stock' and I think some of this hype has created a bit of a bubble for Ryman's stock price recently. But somehow I get the feeling there is still lots of space for that bubble to expand so I wouldn't want to be jumping of the wagon right now.

It seems the slow growers have become the go to stocks recently. Will be interesting to see where Metlife is in a couple of years, they have a much lower price to capital ratio and perhaps they could become the new 'hero stock' of the NZX. We all know that Ryman's business models are said to be better but does that really matter with the amount of growth potential in this sector?

[rocketman11]

Aha only just saw Ratikin's link is the same, my mistake- article just came in my email alerts today

[CJ]

http://www.stuff.co.nz/waikato-times/business/7817003/Pouring-money-into-hero-stocks-a-risky-wager

^ Just read this article, certainly worth a look at. I've had a similar feeling; nearly every article with Ryman has the words 'darling of the market' or 'solid growth stock' and I think some of this hype has created a bit of a bubble for Ryman's stock price recently. But somehow I get the feeling there is still lots of space for that bubble to expand so I wouldn't want to be jumping of the wagon right now.

It seems the slow growers have become the go to stocks recently. Will be interesting to see where Metlife is in a couple of years, they have a much lower price to capital ratio and perhaps they could become the new 'hero stock' of the NZX. We all know that Ryman's business models are said to be better but does that really matter with the amount of growth potential in this sector?I am keeping an eye on the price. As RYM gets bigger, it gets harder for it to grow fast enought to justify the hard PE. Currenlty building 700 units per year so in a few years time will need to be building 1000+ pa?

I have also bought into MET as it is in the same industry (growth industry), and in theory should be starting to copy RYM superior business model. It has the scale. I weighted up Somerset and MET but though MET was the better bet due to the lower SP/NBV you meantioned.

[NZSilver]

CJ, I agree with you,

I still think ryman is cheap for a growth stock, cosidering its strong buisness model and history, in 5 years im sure the share price will be up around the $8 mark - I topped up my holding at 3.82 and 3.95, I have never thought much of metlifecare in the past but since the merger/change in holdings I believe there is alot of upside (and with NTA of approx $3 they are cheap), if they get their buisness running and make some profits +/- div it will be a good stock to hold, however a riskier buy than sum/ryman, but i like a little risk. I dont hold summerset, they seem to be doing all right but margins arn't as good as rymans, I would rather put my money into ryman, if I hadnt placed it in metlifecare.

[scamper]

Just a nit-pick from a parochial Dunedin-ite -- the "write-up from the Herald" is actually by Simon Hartley of the Otago Daily Times.
But the Herald correctly attributes this so suppose i can't be grumpy.
my increasingly ancient parents are at the Francis Hodgkins village here.
This has the advantage of glorious views from a high-rise tucked under a cliff, but sadly it faces east, and does not have double glazing. I sure hope all newer villages have insulation every-which-way plus double-glazing, because the elderly can become really really miserable at anything under 24 degrees and get very worried about power bills.
All regular visitors to FH know to dress in layers and peel off as appropriate. Would still recommend FH to others. Cheers.

[modandm]

perhaps sauce could take us through the results.

I am not familiar with the stock but understand there are some odd accounting things going on which confuse many (myself included). In the media release I notice a 51m revaluation of properties - is this what distorts earnings? This number is actually huge relative to revenue.

[skid]

If you are playing the devils advocate-then property values do play a large part in the value of even this well run co.
Things are humming along nicely ATM but a dip in the property market would be one of the things to keep an eye out for.

[modandm]

so 48m is underlying earnings - this is what about 6cps. Then full year might be another 7 or 8c so lets say 14cps. Put the stock on a 25x multiple to reflect its strong growth prospects and quality of earnings and you get $3.50. hmm

I think focusing on the FCF generation may be a better method.

[Sauce]

Hi Modandm

48m is 9.6cps (500m shares on issue)

But yes, your first analysis, and to some degree your reaction, was more appropraite - as the underlying earnings are, for lack of a better term, closer to 'owner earnings' than free cashflow. Traditional free cashflow measures are misleading due to the enormous operating cashflows which are effectively a 'recycling' of capital, rather than distributable cashflow.

However, with RYM generating well into the 30's percentage return on 'shareholders funds' (the most appropriate measure for RYM) consistently for 10 years and with a secular growth story ahead - and genuine competitive barriers unlike any other large listed NZ business, it can support a lofty valuation.

I am not an advocate for pouring funds into any business at these levels, but there are good odds that you could still do very satisfactorily with a long holding period. Hence why I wouldn't sell...

Cheers

Sauce

[Sauce]

No - Ryman make it clear that there are unrealised earnings and underlying earnings. This is not odd, rather it reflects Ryman's business model which is a mixture of property and healthcare.

Unrealised earnings reported at $69m. This includes valuation gains in the value of their retirement village units. However, this is not actually cash, and therefore can be subjective, since is it, of course, unrealised.

Then, there are the underlying earnings, which we should focus on. This is the lesser figure of $48 million, which reflects all parts of the their business in healthcare, new unit sales and resales of existing units (at higher prices). However, it doesn't include any of the valuation increases for units currently tenanted by Ryman residents.

The underlying earnings are key for Ryman. The higher unrealised gains are useful to see, because they show what Ryman COULD earn in the future over time from property sales/re-sales, and of course enable Ryman to borrow more money (they don't need to), but investors should concentrate on the underlying earnings which indicate how the business is doing, rather than macro-economic property movements.

Hi Sparky,

I just wanted to say how much I enjoy reading your excellent posts on RYM. Your posts represent sound thinking.

I have spent a lot of time researching this RYM, which is in an area of business which I have some experience, and in my opinion, this post is absolutely spot on.

A lot of people seem to really misunderstand the economics of this industry, the accounting, and specifically the differences between the three listed players.

Keep posting your insights, I will read with pleasure.

Regards,

Sauce

[Sauce]

Hahaha

Great analogy with the Underpants Model - I agree.

I wouldn't worry about missing out on short term gains in MET. It's assets simply do not even compare, and in fact, have been producing losses for years. RYM will trounce MET as an investment over time... The longer the timeframe the more certainty around that - in my opinion of course.

Cheers
Sauce

[percy]

Sauce and Sparky The Clown.
Thank you both for your research,and taking the time to share it and your thoughts with us.

[troyvdh]

...percy.....ditto from me as well....whats more its fairly entertaining to boot...cheers all...troy...

[ratkin]

3. Jeremy Siegel's O-Metrix score ((Growth + Yield / PE) * 5) for a score where the current price is a 10 for outstanding, 8 is excellent, 6 is good, 5 is average)

3. Jeremy Siegel says it's worth 5.2, which is above average on current value, but not great. Call it a B- or C+


I might be wrong but your calculation gives the o-metrix score of 5.2 which isnt the same as saying the value of the stock is 5.2
The 5.2 is just the rating , and the object is to find stocks rating over 10

[ratkin]

Correct, I should not have used "worth" to suggest value. My bad. I should have used the word "scored".

If you were to use o-metrix, then obviously the higher the better. I wouldn't rely on one indicator by itself, hence why I use several screeners. O-Metrix looks slightly above average for Ryman, but other indicators still suggest "buy". I personally look at potential investments with an O-Metrix score of higher than 6.5 in conjunction with five other screener tests. When they all flash buy, I start getting interested!

Where do you find the earnings per share estimates? This is what i find the most difficult part in all these formula based calculations.
Is there a website that gives five year projections?

[ratkin]

How do you arrive at your PEG figure being under one?

I rate the PEG to be about 1.40

annual EPS growth rate of 15% and a P/E of about 21

Have i underestimated the growth rate? or overestimed the P/E ?

[ratkin]

We calculate EPS growth differently , i take the previous two known years and two into the future , to get an average .
Basically following Slaters approoach as laid out in the zulu investor.
Our P.Es are also not the same , im going on those given on asb securities for the next 12 months.

Its all an aproximation which is why like to see the ratio much lower , allows more leeway. The shares seem a little pricey to me , however it always the way on our market , there so few decent shares that any that exist are priced too high.

[Sauce]

The shares seem a little pricey to me , however it always the way on our market , there so few decent shares that any that exist are priced too high.

Hi Ratkin

Except that RYM was a low hanging fruit waiting to be plucked in 2009 and well into 2010.

Regards,

Sauce

[Sauce]

Sorry that was meant to read 2011

[CJ]

ASB (morningstar) has a sell recommendation with target price of $3.50.

Disc: hold and as is normally the case, ignoring ASB recommendations.

[ratkin]

Hi Ratkin

Except that RYM was a low hanging fruit waiting to be plucked in 2009 and well into 2010.

Regards,

Sauce

Indeed it was , think when i bought my first shares in the company (2002?) PE was in single digits and growth was still around 15% . Its been very consistant over the years , no suprise that the P/E has expanded
Certainly wouldnt consider selling any , however they looking fully priced at the moment

[Sauce]

Indeed it was , think when i bought my first shares in the company (2002?) PE was in single digits and growth was still around 15% . Its been very consistant over the years , no suprise that the P/E has expanded
Certainly wouldnt consider selling any , however they looking fully priced at the moment

Those are my thoughts too
Cheers
Sauce

[Jim]

I bought mine in 2007 at $1.89 and I am not selling it

[ratkin]

Ryman Health care is on a tear today! Now on $4.28, up 10 cents for today's trading!

Also named as one of Forsyth Barr's top five stock picks for 2013, along with SKC, SKL, PGW and MFT, with their propaganda saying thus:

RYM continues to deliver a high-quality product that is enjoying increased demandgiven the compelling demographics in its favour. It has the scale, in-house expertiseand development pipeline to capitalise on this demand and is a recognised marketleader. RYM is a leading NZ-focused success story with a solid growth profile.

Do you really pay attention to Forsyth Barr? Their top five picks have a terrible record in the sharetrader competition

[Xerof]

I wouldn't cross Forbars ratty - the last (korean) person to infuriate their analyst got tyre imprints across the back

:p

[Silverlight]

Do you really pay attention to Forsyth Barr? Their top five picks have a terrible record in the sharetrader competition


http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10775512

Forsyth Barr 71%
McDouall Stuart 47%
Macquarie 31%
Craigs 29%
Goldman Sachs 28%
First NZ 24%
Hamilton Hindin Greene 22%

[ratkin]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10775512

Forsyth Barr 71%
McDouall Stuart 47%
Macquarie 31%
Craigs 29%
Goldman Sachs 28%
First NZ 24%
Hamilton Hindin Greene 22%

Thats one year , going back ten years their picks have been very, very average, the firms research been a standing joke for donkeys

[percy]

Ryman Health care is on a tear today! Now on $4.28, up 10 cents for today's trading!

Also named as one of Forsyth Barr's top five stock picks for 2013, along with SKC, SKL, PGW and MFT, with their propaganda saying thus:

RYM continues to deliver a high-quality product that is enjoying increased demandgiven the compelling demographics in its favour. It has the scale, in-house expertiseand development pipeline to capitalise on this demand and is a recognised marketleader. RYM is a leading NZ-focused success story with a solid growth profile.

Gee Wizz I hope they are right as I hold all of them.!!!!!!!!!!!!!!!

[Xerof]

Yeah, but hang on percy, is there anything you DON'T own :D

[percy]

Yeah, but hang on percy, is there anything you DON'T own :D

Yeah Right.!!!! lol.

[winner69]

Do you really pay attention to Forsyth Barr? Their top five picks have a terrible record in the sharetrader competition

Anybody try their iPhone app yet

[Vaygor1]

I am keeping an eye on the price. As RYM gets bigger, it gets harder for it to grow fast enought to justify the hard PE. Currenlty building 700 units per year so in a few years time will need to be building 1000+ pa?

Yes they will need to grow their build-rate and land-bank by an average of the same %age/annum as their historical growth rate in order to maintain it, and I am under no illusion that that is exactly what they will do. The NZ/AUS market size will easily accommodate RYM's growing facilities/services for the next 20+years for them and their competitors. Cannot believe MorningStar's advice on a Reduce to $3.50... are they trying to keep the price down? I value RYM at over $5.00 as of right now, but then again I am not the market. If share price stagnates at (last week's) $4.50 then with projected increased earnings at next announcement, PE will drop to 15.1 and still a great buy. MMIWMMI.

[Vaygor1]

I think you guys are missing something important.

Once a village is completed it takes up to 4 years for it to maximise its cashflow contribution to the group. A completed village is not necessarily a sold village, and the village itself doesn't really start to extract cream from the cash cow until depreciated village units turn over to a new set of residents. (think profits from a depreciated unit with minimal improvements needed, being resold at higher prices three-four-five years on).

You should be looking at whether their build rate started in earnest four-five years ago. And what was completed two and three years ago.


Hi Sparks.

You are correct in what you state and these are aspects I have not missed. I have bought and accumulated RYM for well over 5 years now. Bought the 1st lot before the GFC when they were a shade over $2.
Incidentally, on the fair assumption that $2.00-$2.20 was a fair price back then, and using historical growth figures it is not hard to work out what they are worth now (just another measure of the many) given the growth in underlying profit over the same period.

The 4-5 year wait for full realisation is true, however RYM make it very clear that their annual results do not include unrealised valuation gains and hence all sharemarket data/stats omits all this extra 'worth', which would otherwise lower the PE or raise the price/share (or a combo of both). RYM do mention their unrealised profit in their annual reports and presentations to shareholders though, which may influence the price/share someone is prepared to pay, but IMHO this does not have a big price/share impact and then only in the short-term soon after announcement.

RYM are also very proficient in pre-sales of units under construction (as well as re-licensing existing units) and as a result have an extremely high occupancy rate. I am comfortable that RYM's build rate over the last 4-5 years will keep their growth rate steaming along. They may be playing a bit of catch-up having lifted their target build rate by around 28% last year from 550 to 700 units & beds/annum (achieved 710). There may also be a negative impact due to a lack of economy-of-scale in their Australian business for the medium term until more villages are established there.

You mention depreciated villages. My understanding is that only RYM's facilities that are not subject to occupiers' licenses (admin buildings for example) are depreciated. Also, all those departing a retirement unit agree (when they sign up) that they must leave the place 'as found' incl carpets and appliances, chattels etc etc (non-structural stuff). I would appreciate your view on this. ie Do you concur?

Cheers,
Vaygor1.

[Vaygor1]

The fair use clauses, if any, probably are there for legal rather than operational reasons, in the event an old biddy loses her marbles and tries to sow grass into her carpet, or re-enacts that fine teenage boy trick - Campbells Soup Nagasaki in the microwave.

Thanks for the response! The above had me chortling away all morning. I have seen the result of a goat (with buckets of water and hay bales) put into someones apartment just after they went away for a 1 week holiday.... total and utter destruction of everything under the 1.2 metre mark including a half eaten bed. A prank backfire bigger than Tiger Woods swing... and that's big.

[skid]

My concern with this sort of thing is that the share price then begins to reflect overseas interest instead of the co.s performance alone.
It adds a larger element of speculation into the mix and can work both ways.
Ryman can be doing everything right and still get walloped from money being pulled out to safer havens when things go pear shaped overseas

[Vaygor1]

An interesting article on Stuff today about my favourite company.

....

It is most odd for Ryman to be almost bragging about its ambitions like this, though I am heartened to hear about overseas buying interest. The secret is out - globally!

The biggest listing on the NZX is FBU with market cap of $5.78b, with Ryman sitting on 2.32B.

Either Fletchers is heading for utter disaster, or Ryman is aiming to be a $6B or $7B plus company (because FBU would be growing too), which would value each share at $6B / 498m shares, or $12 a share. At $7B they will be $14 a share.[/FONT][/COLOR]

I agree Sparks. Highly uncharacteristic of Ryman and Simon.
Maybe Simon is on a bit of a high after making $5 maxijillion on paper in RYM capital gain recently.

Here's food for thought then.
Assuming RYM's market cap climbs at the same rate as its underlying profit and we assume that is 16% per annum each year for the next 8 years with nice steady market sentiment over all that time (yeah right). Then market cap will be:



Today
2.00
Billion


In 1 Year
2.32
Billion


In 2 Years
2.69
Billion


In 3 Years
3.12
Billion


In 4 Years
3.62
Billion


In 5 Years
4.20
Billion


In 6 Years
4.87
Billion


In 7 Years
5.65
Billion


In 8 Years
6.56
Billion



To get to #1, one must assume that FBU (and others) will largely stagnate.

Have not done the quick calc on share price over the same time frame but I assume it would follow accordingly as per your post.

..... so it is possible, but announcing it 6 or 7 years out is a little bit premature in my most humble of views.

I am not complaining though. I have enough RYM (my fav too) so no longer desire the sp to stay undervalued (as it still is) in order to acquire. Shout it from the roof-tops I say!

Vaygor1.

[Vaygor1]

Slip of the pen in my table below.
The row 'In 1 year' is already today (NZ$2.32B). So okay... 1 year sooner but still a bit early to publicly state (from a management perspective).

Can we change the name of this thread to "Ryman - Too interesting not to talk about?" ?

[macduffy]

I'm a happy RYM shareholder too - great business and well-managed.

I hope, though, that managements' new bullish tone doesn't reflect undue acceleration of its cautious expansion into Australia. A more competitive, mature retirement village market there as companies such as AVE have found. And then, there's this:

http://www.smh.com.au/business/warning-on-becton-projects-20130106-2cb2e.html

[winner69]

I'm a happy RYM shareholder too - great business and well-managed.

I hope, though, that managements' new bullish tone doesn't reflect undue acceleration of its cautious expansion into Australia. A more competitive, mature retirement village market there as companies such as AVE have found. And then, there's this:

http://www.smh.com.au/business/warning-on-becton-projects-20130106-2cb2e.html


Maybe Simon sees this as a quick way to make real inroads into Australia

[percy]

"It was too soon to start looking at other sites in Australia yet,with the emphasis on building the first Victorian project," Challis said.So I think he still has his feet firmly on the ground.

[winner69]

"It was too soon to start looking at other sites in Australia yet,with the emphasis on building the first Victorian project," Challis said.So I think he still has his feet firmly on the ground.

I was just building on Simon's bullish statement upon being #1 on the NZX ... as mcduffy says hope this is not going to make things more urgent .... liking taking one foot of the ground ..... and take big opportunities if they arise ....... just thinking aloud .... you never know how the C-suite thinks

[percy]

I was just building on Simon's bullish statement upon being #1 on the NZX ... as mcduffy says hope this is not going to make things more urgent .... liking taking one foot of the ground ..... and take big opportunities if they arise ....... just thinking aloud .... you never know how the C-suite thinks

Ryman have a history of doing things right.Careful planning,makes for good results.The statement sounded so unlike Challis, I checked to see who wrote it.It was written by Alan Wood who usually gets things right,so I am left like all of us, trying to figure out why Challis said it.

[Newman]

I was just building on Simon's bullish statement upon being #1 on the NZX ...

Being the #1 on NZX was the interpretation of the journalist, not the words of Managing Director. I think there is a difference between them.

[macduffy]

Being the #1 on NZX was the interpretation of the journalist, not the words of Managing Director. I think there is a difference between them.

I'm not so sure about that.

In the print edition of the DomPost, quoting "Challies".

" With the growth path we're on, we're No 5 on the index, we've got our eyes on No 1."

[CJ]

Maybe he is predicting an easy ride to #1 with FBU being bought up and delisted or just moving to a sole ASX listing.

[JayRiggs]

Interesting to see that Morningstar have just put a SELL rating on RYM today.

[777]

Morningstar (via ASB securities) has just downgraded to Reduce with a target price of $3.50.

My understanding is everyone pretty much disregards the Morningstar recommendations.

This is what CJ posted on 2/10/2012

[Vaygor1]

This is what CJ posted on 2/10/2012

They have had the price at $3.50 for ages but today it went from 'Reduce' to 'Sell'.
Sorry for the negativity but MorningStar really haven't got a clue on this one.
Following their recommendations would have meant selling RYM years ago and I would have lost a fortune if I'd followed it.

[Vaygor1]

What utter foolishness from Morningstar!
...(abridged)...
Will those fools who listen to Morningstar today and sell for $4.80 then buy back in at higher prices and lessened profits, or ignore the 10 year demographic tailwind mixed with consistent execution?

I couldn't agree more.
I am pretty sure MorningStars recommendation went from Reduce to Sell on some type of automated procedure/algorithm with no human intervention whatsoever.
.... Just another sign to ignore their advice.

[troyvdh]

gee a few got out today..and a few got in....huge volumn....even MET joined the party....albiet in a very minor way....listening to RNZ yesterday (1730 hrs Gaynor et al...ava on line)...was quite interesting....basically ..as I have said before...low % rates...shares go up ...and up....and.....cheers ....

[winner69]

Ryman investors shun sale tip

Instos still support RYM and rubbish Morningstar. Of course instos alraedy in will continue to support RYM - after all it is 5% plus of the index and who would risk their career on getting it wrong

Interesting guru Sam got it wrong - Tower's Sam Stubbs admitted Tower had called it wrongly and had been underinvested in Ryman for a long time. "They have played a near perfect hand" but there was a limit to how fast a company could grow, Stubbs said, and Tower preferred to invest in cheaper companies.

http://www.stuff.co.nz/business/industries/8165427/Ryman-investors-shun-sale-tip

[Newman]

Ryman investors shun sale tip

Instos still support RYM and rubbish Morningstar. Of course instos alraedy in will continue to support RYM - after all it is 5% plus of the index and who would risk their career on getting it wrong

Interesting guru Sam got it wrong - Tower's Sam Stubbs admitted Tower had called it wrongly and had been underinvested in Ryman for a long time. "They have played a near perfect hand" but there was a limit to how fast a company could grow, Stubbs said, and Tower preferred to invest in cheaper companies.

http://www.stuff.co.nz/business/industries/8165427/Ryman-investors-shun-sale-tip

With limited (overseas) buyers and thus low traded volume this week, RYM price seems stabilise at $4.7-$4.8. Would announcement of land purchase (as mentioned in the artile in Dominion Post a few days ago) be the next push for price hike?

[Vaygor1]

Ryman investors shun sale tip

Instos still support RYM and rubbish Morningstar.... (abridged)

http://www.stuff.co.nz/business/industries/8165427/Ryman-investors-shun-sale-tip

Near the bottom of the above article:
"Shane Solly of fund manager Mint Asset Management said... ...Ryman was going through a growth spurt and entering Australia."

What growth spurt? For over 10 years it's been Steady As She Goes.
I would say its the recognition of the stock that's doing the growth spurt.

[CJ]

Yes, the company's growth has essentially been linear, the share price parabolic (is that the right word?)Parabolic or exponential??

Growth spurt I assume refers to the increase in bed builds per year. Didn't they increase their target from 550ish to 700?

[Vaygor1]

Parabolic or exponential??

Growth spurt I assume refers to the increase in bed builds per year. Didn't they increase their target from 550ish to 700?

I guess if Shane Solly was referring to build-rate growth (it is unclear from the journalists press release) then he may have a point.
But even with the increased build-rate, as a %age of the RYM's existing assets this still pretty linear.

'Parabolic' or 'expodential'. No huge difference unless you're a mathematician. How about 'meteoric'?

[Hoop]

A nice write up about the retirement sector this morning. Seems all positive for Ryman, Summerset and Metlife.

.....

Not all positive for Ryman atm....There are technical signs of a possible bull market correction in progress.
From the past ...RYM has suffered very slight corrections (less than 10%) and no advantage to be gained from exiting and re-entering...
However...remember the phrase "no trend last forever"...so attention should focus on that EMA50 around the 4.40 - 4.50 area.. if RYM past behaviour continues the share price should bottom out here...if not then your caution warning bells should start ringing.

The Caution bell starts ringing when ???

Exponential price rises are usually viewed as unsustainable and are only OK if the company can match it with exponential growth...when price outstrips growth within a bull market phase look out for extended breathers when the share price stalls and waits for the fundamentals to catch up.
This behaviour is common with Blue Sky Stocks. I briefly covered this topic on post 827 2nd October 2012 (http://www.sharetrader.co.nz/showthread.php?626-Ryman-Too-boring-to-talk-about/page56) when I wrote about darling stocks reaching the point of being irrational. I used Mainfreight as an example with its share price stalling for 16 months after it broke above its trend channel
Usually a bull market correction is a good time to accumulate (average up strategy)...but its wise to wait for buy signals to confirm it was a correction.....so to avoid buying in at the top / market cycle change, or waiting a long time during its breather (could be many many months) and occur a portfolio opportunity loss..

The second chart is an up date to my previous chart ...showing the longer term share price history....its break above the trend channel and its look of exponential unsustainable? rise

http://i458.photobucket.com/albums/qq306/Hoop_1/RYM20012013_zpscbf0c32e.png

http://i458.photobucket.com/albums/qq306/Hoop_1/RYM5year20012013_zpsa2ffb983.png

[percy]

Not all positive for Ryman atm....There are technical signs of a possible bull market correction in progress.
From the past ...RYM has suffered very slight corrections (less than 10%) and no advantage to be gained from exiting and re-entering...
However...remember the phrase "no trend last forever"...so attention should focus on that EMA50 around the 4.40 - 4.50 area.. if RYM past behaviour continues the share price should bottom out here...if not then your caution warning bells should start ringing.

The Caution bell starts ringing when ???

Exponential price rises are usually viewed as unsustainable and are only OK if the company can match it with exponential growth...when price outstrips growth within a bull market phase look out for extended breathers when the share price stalls and waits for the fundamentals to catch up.
This behaviour is common with Blue Sky Stocks. I briefly covered this topic on post 827 2nd October 2012 (http://www.sharetrader.co.nz/showthread.php?626-Ryman-Too-boring-to-talk-about/page56) when I wrote about darling stocks reaching the point of being irrational. I used Mainfreight as an example with its share price stalling for 16 months after it broke above its trend channel
Usually a bull market correction is a good time to accumulate (average up strategy)...but its wise to wait for buy signals to confirm it was a correction.....so to avoid buying in at the top / market cycle change, or waiting a long time during its breather (could be many many months) and occur a portfolio opportunity loss..

The second chart is an up date to my previous chart ...showing the longer term share price history....its break above the trend channel and its look of exponential unsustainable? rise

http://i458.photobucket.com/albums/qq306/Hoop_1/RYM20012013_zpscbf0c32e.png

http://i458.photobucket.com/albums/qq306/Hoop_1/RYM5year20012013_zpsa2ffb983.png

Hoop.
Thank you for the very interesting post.

[Hoop]

See MFT chart (http://www.sharetrader.co.nz/showthread.php?760-MFT&p=390910#post390910) ...MFT had a long breather but all good news in the end..as it should be with all growth stocks

[ENP]

I find it hard to believe that people think the trend of RYM's stock price can continue.

Since 2009 the share price has gone up around 400% from $1.20 or so to $4.80 but the profit of the company has only increased from 60 million to 90 million. Book value and earnings per share have also increased from 50-60% or so.

Do you really think the share price can continue to grow 8 times faster than earnings/profits/book value and not hit a brick wall at some stage?

[Vaygor1]

I find it hard to believe that people think the trend of RYM's stock price can continue.

Since 2009 the share price has gone up around 400% from $1.20 or so to $4.80 but the profit of the company has only increased from 60 million to 90 million. Book value and earnings per share have also increased from 50-60% or so.

Do you really think the share price can continue to grow 8 times faster than earnings/profits/book value and not hit a brick wall at some stage?

Thanks for your posts hoop and ENP.

I am wondering why you both have elected to choose a datum at a point in time (2009) when the share price was so low ($1.20) for a very short period of time, and trading at low volumes. Do you think that $1.20 was a fair price at the time?

Here is RYM's share price history over the last 10 years.
4279

I first bought RYM in early to mid 2007 at prices above $2 following considerable analysis based on the company's fundamentals. I considered (and definitely still consider) that $2/share at the time was a very very good price.
Over time and through the GFC, the price continued to drop, and each time it did, I couldn't believe it had sunk to the new 'low' and just bought more and more and more. I bought an enormous amount at $1.38 towards the end of 2008 as I considered the price, frankly, to be unbelievable and I honestly felt guilty buying shares at that price from sellers who obviously didn't know better... yet it still dropped further getting as low as $1.20... your datum.

Without the strength of my convictions I would have sold out of fear. Instead I bought more as the price recovered from this ridiculous low.

Now considering my datum of $2.15 in May 2007 and using a nice constant and factual historical 16%/annum growth rate in RYM's earnings/annum (the number of shares out there has not changed in all this time) I get the following table:



Date
Share Price


May 2007
$2.15


May 2008
$2.49


May 2009
$2.89


May 2010
$3.36


May 2011
$3.89


May 2012
$4.52


May 2013
$5.23


May 2014
$6.08



So today's closing price of $4.58 in my view is an excellent buy. The above ignores all dividend payments which is the icing on the cake. And MorningStar say Sell??? Sparks is spot on. I'm still buying. The long term will prevail.

[Newman]

There is a ten year plus demographic tailwind that sends customers into the all embracing arms of Ryman. They are the undisputed leader in the sector (though I concede Summerset run a great ship too), and they have a proven model with management who have demonstrated they can execute. I've said before I favour best of breed, regardless of price. Ryman is the proof of this.

The up and down of share price reflect the balance between buyers and sellers. It is interesting that most of the postings in this thread are so positive about Ryman that any market correction is regarded wrong, and any cautious views would be critised.

[Newman]

You have neglected to mention that the positive views are backed by indepth assessment rather than one line replies, and reflect visits to villages, chats with management, and comparison with research from brokers.

The negative/cautious views tend to be one line views like "This stock is too expensive!"

There has to be one company in New Zealand which is "the best listed company on the NZX", and I firmly believe it is Ryman.


If one holds the same view as you and he has plenty of money he would make money with little risk. If so, banks should buy Ryman shares. Why the recent trading volumes were so low?

Also there is a limit on the number of seniors who can afford to live in Ryman units. In any society and at any time there are rich and poor people. Further there is a limit on governmental spending on subsidising people to live at Ryman.

[Vaygor1]

Well stated Sparky.

Yes, NZ's market size is easily big enough to accommodate RYM and all the other players. It's practically a no-brainer.

Also, in addition to affordability as demonstrated by Sparks, when the RYM tenant moves out, they (or their estate) 'sell' their unit back to RYM for what they bought it for. Then RYM 'resells' it to the next occupant at the new (increased) market rate. On their books, RYM do not recognise the extra worth that their units hold in this respect until after the 'resell'.


Not sure why the attachment in my last post has stopped working (RYM 10 year trading history). So here it is again.
4280

[POSSUM THE CAT]

Sparky The Clown You are judging others by your own thoughts I am in the age group (70plus) and I have yet to see a Ryman Village that I would consider living in. There is two Metlifecare villages I would consider if it became a necessity. I do not want to live anywhere you have to use village transport to get anywhere. Who wants to be stuck in the likes of Orewa when you have to go to the hospital twice a week.

[Vaygor1]

That is your right Possum. Different strokes for different folks.
Ryman's villages are full to the eyeballs.

No one is forced to use village transport as far as I am aware.

[CJ]

Also, in addition to affordability as demonstrated by Sparks, when the RYM tenant moves out, they (or their estate) 'sell' their unit back to RYM for what they bought it for.


They sell it back at a depreciated rate, which will be no more than 25% depreciation, if I recall correctly.
They 'purchase' it back for what they paid for it - more like returning a deposit - called the occupation advance. Note that this is only paid back once it is resold to a new occupant, presumably at a higher value (market dependant) so there is never a cashflow squeeze.

However, they withhold from the repayment the occupation advance the management fee, which in Rymans case is 5% a year capped at 20% (ie four years - I actually though it was 5 but the weblink below says 20%). Different companies use different % and years - I think Metlife is 7% capped at 21%. Average occupancy over the industry as a whole in Independent living is about 7-8 years.

On top of that, they charge for services on top of that which I assume are things like cleaning, upkeep + addons like food and alcohol.

If that doesn't make sence, then in RYM words:
http://www.rymanhealthcare.co.nz/investor-centre/our-cashflows

[Vaygor1]

They sell it back at a depreciated rate, which will be no more than 25% depreciation, if I recall correctly.

You may be right Sparky. I will check.
I do know that RYM do not claim depreciation on their occupied assets to the taxman.
I like the philosophy. Also, as a result, I do not have to worry about assuming an unknown number called recovery-on-depreciation in forward analysis of RYM.

[Vaygor1]

They 'purchase' it back for what they paid for it - more like returning a deposit - called the occupation advance. Note that this is only paid back once it is resold to a new occupant, presumably at a higher value (market dependant) so there is never a cashflow squeeze.
....(abridged)...

If that doesn't make sence, then in RYM words:
http://www.rymanhealthcare.co.nz/investor-centre/our-cashflows

Thanks CJ!
Much appreciated.
I will take a look.

[skid]

So they pocket the capital gain? Pretty sweet deal in todays market.
Just to play devils advocate ,what would happen if values fell by 40% Would they still be buying back at a loss or is there some provision for that?

[Vaygor1]

So they pocket the capital gain? Pretty sweet deal in todays market.
Just to play devils advocate ,what would happen if values fell by 40% Would they still be buying back at a loss or is there some provision for that?

Pretty sweet deal over any 7-year-average occupancy period.

The answer to your question is Yes, they would still buy it back. But look back in history and tell me if there has ever been a time when the average price of well-maintained properties in NZ/Aus is less than it was 7 years previous.

Remember, RYM never sell the tenant the property in question, they sell them only the right to occupy. So in technical terms, they cannot buy it back because they never sold it in the 1st place.

[CJ]

I do know that RYM do not claim depreciation on their occupied assets to the taxman.
I like the philosophy. Also, as a result, I do not have to worry about assuming an unknown number called recovery-on-depreciation in forward analysis of RYM.Depreciation on Buildings for tax purposes was changed to 0% a couple of years ago so no one claims deprecation on buildings any more.

I am pretty sure they did claim depn prior to this - it is one of the reasons they have tax loses (or use to anyway).

Potentially there still would be depn claw back should they sell an old property but given the property comes with a Retirement License, it is more likely they would sell the company holding the property (pretty sure each village has its own company) so no depn recovery.

For accounting purposes, they dont deprecate either as they are classed as 'investment properties' so are subject to revaluations/impairments rather than depreciation.

Happy to be proven wrong as this is all from memory from a bit of work I did years ago.

[Hoop]

Thanks for your posts hoop and ENP.

I am wondering why you both have elected to choose a datum at a point in time (2009) when the share price was so low ($1.20) for a very short period of time, and trading at low volumes. Do you think that $1.20 was a fair price at the time?........................

I chose this growth datum base point (mar2009) as it was the change of a cyclic trend (bottom).....Its easier to relate to later on......When you read the media (at your own risk) they (media) usually relate the percentage price performance of a company and compare it with the overall sharemarket performance at that same time, ie comparisons during bull market or bear market

Do you think that $1.20 was a fair price at the time?......Fundamentally no but technically yes.....technicals are objects which measures Group Investor buy/sell behaviour....investor behaviour at that time saw the GFC happening and as the property market relies heavily on the flow of finance, investors as a group "perceived" the property sector was at an enormous risk of crashing and rebalanced the risk v reward and reduced the share price accordingly. This lowering share price saw RYM as being one of several companies on the NZX that got savagely mauled by the cyclic bear.....during the capulation phase of a bear market irrational fear takes hold...I think RYM got its fair share of irrationality then as well.

4 years later with hindsight 120c is obviously considered a steal and those who took the huge risk got the huge reward......It was a steal because RYM is in NZ and did not suffer the 2008/2009 GFC related property crash that followed around the world in places such as USA, Europe.

....Vaygor1...Consider this scenario.... if RYM was in USA (or NZ suffered a similar property crash {as feared} ) ...The sellers would have felt guilty selling shares at that price (120) to buyers such as you and they then would have the qualifications to say that same phrase ..."who obviously didn't know better".

Many may see this post as an example of Fundamentals being superior to Technicals....however remember Fundamentals as well as Technicals can both be severely affected by crises....Technicals can sometime be an advanced warning system.

In RYM case the less likely scenario occurred... the fundamental crisis never happened...and the Technical crisis ended up being due to unfounded fear....Result...FA 1 v TA 0

[Vaygor1]

Thanks for you well thought out response Hoop.

What you have written certainly has a lot of merit to it.
You are right, and I have stated before, that what I think is by no means what the market thinks.

I suspect that one right answer is to try and strike a balance between the fundamentals of the company being invested in and general market sentiment regarding the business sector & country in question.

For me though, I am not a trader and I am in for the long term... a period over which market sentiment (the fear, the greed, the good & bad rumours, the speculation) irons itself out. Despite the continuous temptation to sell quickly if I hear bad news, I have never done so and use the plummeted price to buy more shares at a bargain price as other people's fears (or desires for short-term gains) drives the said stock price through the floor.

Regarding guilt, I console myself knowing that if I didn't buy then someone else would. The seller will still lose (or gain) regardless of my involvement.

I look forward to your future posts Hoop. Your methods of analysis are very different to mine, but my no means any less (or more) valid. I think anyone doing any kind of analysis will do brilliantly well in this game compared to those who don't.

Vaygor1

[POSSUM THE CAT]

Sparky The Clown I look at investments from all points of view. I see an over supply of retirement Village units in total & especially Ryman ones that are mainly well out of town & away from public facilities. If you cannot drive etc, you are stuck with long awkward haul to public facilities. Whereas some Metlifecare are within 100metres of malls railway stations and very large supermarkets, 3 large medical centres. And approximately 1/2 kilometer of a large hospital.
So as investment I think Ryman is far over rated. I have seen Ryman mini buses pull up at shopping malls & unload there passengers & tell them you must be back here at a certain time. This is not my idea of retirement. I would at least like the vagaries of public transport. But walking distance or mobility scooter distance would be a lot better. So as an investment I would say you overate the desirability of Ryman Villages & also over estimating the number of aged people that can afford to live in them. Do not just look at the number of baby boomers reaching retirement age but the number that can afford to live & desire to live in them.

[robbo24]

Whereas some Metlifecare are within 100metres of malls railway stations and very large supermarkets, 3 large medical centres. And approximately 1/2 kilometer of a large hospital.

Looks like a great opportunity for supermarkets and other commercial ventures to place newer and better supermarkets nearby to Ryman homes then...

[CJ]

Possum (I wont call you cat in fear GM will try to exterminate you)

Are you not allowed a car at the RYM/MET villages?

Robbo - you'd probably make more money if you installed pokie machines (theres no point taking it to the grave - and they know how close they are)

[winner69]

One of the future generational trends that exponents like Howe say is likely in occur is the increase in multigenerational households

Just like decades ago he reckons that granddad and grandma will be living with their children as well their grandchildren. Thinking being there will be many unable to afford and / or care for themselves. ...it will be become a family affair

[POSSUM THE CAT]

CJ you get to the stage that you cannot drive a car or you cannot afford one. The few that have vege gardens think that they are made & there is a waiting list for them others grow some veges in their window boxes. Also in some cases parking or garaging is also an extra charge.

[oldmankiwi]

"I see an over supply of retirement Village units in total & especially Ryman ones that are mainly well out of town & away from public facilities. If you cannot drive etc, you are stuck with long awkward haul to public facilities. Whereas some Metlifecare are within 100metres of malls railway stations and very large supermarkets"

Right on! The comment about veg gardens is also very true, look at Waitakere Gardens for an example of self sufficiency.

[ratkin]

As someone who has just turned 50 im findiing this thread very depressing ,all downhill from here :-)

[percy]

As someone who has just turned 50 im findiing this thread very depressing ,all downhill from here :-)

On the positive side you know when you go into a Ryman Village PTC willn't be there.!!!!!!!!!!!!!!!!!!!! lol.

[POSSUM THE CAT]

Ratkin The question is if you reach the retirement age of 70 which it will be by the time you retire. Will you be just marched into an extermination chamber?

[Slam dunk]

http://www.stuff.co.nz/business/industries/8215645/Analysts-stay-upbeat-on-Rymans-prospects

[Vaygor1]

...I look at investments from all points of view......

CJ you get to the stage that you cannot drive a car or you cannot afford one.... garaging is also an extra charge.
Perhaps you should review your strategy Possum. e.g. Any bank I have bought shares in has been the last bank I would be a customer at.

Note: This is not the case with Retirement Villages. I may well go for a Ryman village when the time comes, so long as there's plenty of straws available for me to slurp my dinner through.

[POSSUM THE CAT]

Vaygor1 If I followed your thoughts on Banks who should I bank with

[Vaygor1]

Vaygor1 If I followed your thoughts on Banks who should I bank with

I don't hold any shares in banks at present Possum, but I did have shares in Westpac Trust (WPT) back in the days before it de-listed.
Great share from a ownership perspective, but at the time from a customer viewpoint the worst by miles imho.

Regarding your question from a customer's standpoint, if you're nationalistic then SBS, Kiwibank, TSB or perhaps the Credit Union should be your preferred choice, otherwise you can take your pick from any one of the rest. They're all modern day Shylocks.

Refer http://www.interest.co.nz/news/60101/nz-owned-banks-continue-100-success-rate-monthly-roy-morgan-research-customer-satisfactio

[percy]

Banks;
Went into Westpac, Barrington at 9.20 am yesterday to pay my/and wifes Visa. Two staff on,so a long wait.Watched their TV on behind the two tellars.Ask us about this,ask us about that,ask us about the other thing.Thought to myself "there is no body here to ask anything".!
So can't recommend them.

[Vaygor1]

In a non New Zealand owned bank:

Teller "Good Afternoon Sir/Madam."
Customer "Good Afternoon."
Teller "How can I help?"
Customer "Well, you seem to have an enormous range of fees that appear in my account every day."
Teller "Well, we waive all fees if you retain more than 20 quadrillion dollars worth of business with us."
Customer "Sorry, I'm not the Sultan of Brunei.... Can you provide me a list of all your fees please?"
Teller "No problems at all. That'll be $17 thanks."

[percy]

In a non New Zealand owned bank:

Teller "Good Afternoon Sir/Madam."
Customer "Good Afternoon."
Teller "How can I help?"
Customer "Well, you seem to have an enormous range of fees that appear in my account every day."
Teller "Well, we waive all fees if you retain more than 20 quadrillion dollars worth of business with us."
Customer "Sorry, I'm not the Sultan of Brunei.... Can you provide me a list of all your fees please?"
Teller "No problems at all. That'll be $17 thanks."

lol.Too true.!!!!

[POSSUM THE CAT]

Vaygor1 which bank are you referring to above Kiwi Bank you need to make an appointment with. Westpac want to charge you for any over the counter banking Bnz got lax IMO with security so had to put another layer of security in. ANZ wrecked a very good internet banking system to pander to national bank clients. Then made the same security mistake IMHO as BNZ. TSB I know of only one branch in Auckland. I hear with ASB you need a token most of the time similar to Rabo Bank. ( I have not confirmed this) are any of the others really competitive. From adds I have seen I do not believe so.

[macduffy]

I'm having computer problems again. Thought this was the RYM thread!

Oh well..........

:mellow:

[macduffy]

Read the thread name Macduffy - "too boring to talk about" :cool:

OK. My mistake!

:)

[Zaphod]

TSB I know of only one branch in Auckland.

FYI They have branches in Central,Takapuna and Newmarket.

[oldmankiwi]

As someone who has just turned 50 im findiing this thread very depressing ,all downhill from here :-)
Ryman do not accept under 70's. So a more limited occupation time = unit turnover c/f Metlife.

[Vaygor1]

Ryman do not accept under 70's. So a more limited occupation time = unit turnover c/f Metlife.

2 things.

1. If this statement is accurate (and it looks like it is not entirely accurate) then RYM have virtually 100% occupancy without needing a large part of their potential customer base (The 65 to 70 year olds, or even younger). This would give me even more confidence in RYM's ability to maintain its growth.

2. In their annual reports, RYM do not recognise their unrealised profits. I cannot see any reason why RYM would want a faster turnover of tenants. For RYM, like any 'landlord', fast tenant turnover equals more hassle, higher un-occupancy, and an increased risk of getting a bad one.

[Vaygor1]

I would suggest a very dark sheet and a scythe. :scared:
Haha.

[CJ]

2. In their annual reports, RYM do not recognise their unrealised profits. I cannot see any reason why RYM would want a faster turnover of tenants. For RYM, like any 'landlord', fast tenant turnover equals more hassle, higher un-occupancy, and an increased risk of getting a bad one.As Sparky points out, you want them to 'move on' from the village once the deferred management fee is completely earned. If they go on to live another 20 years, then you earn no more deferred management fee.

Sure there is a hassle but on the basis you have a waiting list, and if you dont, it doesn't matter as you dont repay till you find someone, turnover isn't a major issue.

[Vaygor1]

Thanks Sparks and CJ.
I'll refresh myself on the fee mechanisims... it has been a while.

20 years+ in a village... jeez.. how many pairs of incontinence knickers does that equate to??

4298

[SCOTTY]

What type of accommodation does a retired Pope look for? What a PR coupe this would be for Ryman and NZ if something suitable was available? :) and Heartland Bank just around the corner for his banking convienience. ;)

[Microsloth]

Reap profits from retirement

Interesting article from Tim Hunter in todays Sunday Times

The profits come from the retirement village sector, the fortunes of which are closely related to the housing market. And with three retirement village companies now readily available on the listed market - Ryman Healthcare, Summerset and Metlifecare - analysts are having fun figuring out which is the best opportunity for investors at any given time...

http://www.stuff.co.nz/business/money/8304864/Reap-profits-from-retirement

ryman holder

[Vaygor1]

The article is correct that Metlifecare is the cheapest of the three stocks.

I only hold Ryman as I believe it is best of breed, I trust the management and I think they will exceed 15% growth.

I hold RYM for the same reasoning Sparks. On top of this, when a resident at one of the other two drops their guts, I get a distinct whiff of jellimeat. Trouble is I can't figure out if the primary cause is Whiskers or Burger King.

[CJ]

If you got in early on this I would definitely hold, but not at these levels if you're looking for a quick buck. Wouldn't be surprised if it ended up being like POT, just a constant slow chug upwards. A good long-term hold as it is stable and the cracker in an industry that is going to get much bigger over the next few years. "For the fundies" I guess is how you would describe it!Thats why I hold having got in a few years ago.

I also hold MET. Thought being if they can turn their business around, (just copy RYM) then they will be worth a lot more. Looking at shareprices since I bought, I should have gone SUM, which is having a cracker since IPO, but I still think MET has the biggest upside.

[POSSUM THE CAT]

Moosie900 take him to there open days and see which model he likes. I am of the right age group but prefer to stay out if I possibly can but if it becomes essential the Metlife villages lifestyle are more to my taste 70plus.

[POSSUM THE CAT]

Moosie900 I realized he was not needing one now. But you suggested investing for his old age so it would be better to invest in the model he liked & agreed with. His choice will also give you a better insight into investing in retirement care & facilities.

[percy]

Moosie900 take him to there open days and see which model he likes. I am of the right age group but prefer to stay out if I possibly can but if it becomes essential the Metlife villages lifestyle are more to my taste 70plus.

On behalf of myself and others who hold both RYM and SUM shares I think you have made a wonderful choice.lol

[Silverlight]

Yep. Just remember those fools from Aspect Huntley/Morningstar/ASB Securities who have a SELL recommendation for Ryman Healthcare.

Sparky, you seem to be a reasonable sort of person so I don't think you should call Morningstar "fools" because their approach to value, differs from yours. They had a fair value target of $3.30, in Sep 2011 and so at $2.40 they said buy. Their fair value has increased to $3.50, but the price is 30% above that so on that basis they now say sell. I think that is a sound methodology.

Now you may disagree on some of their assumptions they use to get to a $3.50 fair value price, however that is a different kettle of fish. Would you buy Ryman at today's price, if not, at what pullback price would you add more? $3.50?

[Vaygor1]

Sparky, you seem to be a reasonable sort of person so I don't think you should call Morningstar "fools" because their approach to value, differs from yours. They had a fair value target of $3.30, in Sep 2011 and so at $2.40 they said buy. Their fair value has increased to $3.50, but the price is 30% above that so on that basis they now say sell. I think that is a sound methodology.

Now you may disagree on some of their assumptions they use to get to a $3.50 fair value price, however that is a different kettle of fish. Would you buy Ryman at today's price, if not, at what pullback price would you add more? $3.50?

Looks like Moosie and I are putting in 4 cents worth.

I agree with Sparky and Moosie. In particular I think MourningStar at the very least should change there recommendation from SELL to REDUCE.
With RYM's 16%/annum growth rate (arguably higher these days) today's price of $4.50 soon becomes $5.22 if the PE ratio is to remain constant. They did trade at $4.80 not long ago.

I first bought RYM at $2.11 in Sept 2007 and with the benefit of this wonderful thing called hindsight it was a great buy. The fact is the price dropped after that for a long time and produced even greater bargain buys in RYM.

If the price dropped to $3.50 this year, I would do everything in my power to buy the entire company if that were possible.

I am hoping that the mum & dad investors (as well as some institutions for that matter) will be selling all and sundry (including RYM) in the next few months to get funds for the MRP float thus driving RYM's price down so I can buy some more at a bargain.

Dream-come-true if they go down as far as $4.00 as far as I'm concerned.

[robbo24]

...you should call Morningstar "fools"...

Reminds me of their advice to avoid the FSF IPO and buy in below the $5.50 IPO price... Their methods do seem a bit crook at times.

[POSSUM THE CAT]

Robbo 24 maybe they are right FSF has been dropping rather fast lately

[robbo24]

Robbo 24 maybe they are right FSF has been dropping rather fast lately

I don't want to hi-jack the RYM post but Morningstar's predictions were very very wrong unless their recommendations were a Ken Ring/Moon Man style, open-ended prediction that could happen at any time, for any reason, in the future: ​http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10848779

[ddrone]

When can we expect a results announcement from the Ryman camp?

[777]

All available info is provided on their site

http://www.rymanhealthcare.co.nz/investor-centre

Indicative key dates for shareholders are outlined below:

Late May Annual results release for year ending 31 March
Late June Payment of Final Dividend
Late July /
early August Annual shareholders meeting
Late November Interim results release for the six months ending 30 September
Mid December Payment of Interim Dividend

[Silverlight]

Reminds me of their advice to avoid the FSF IPO and buy in below the $5.50 IPO price... Their methods do seem a bit crook at times.

Hi Robbo, while you are entitled to your own view on Morningstar's analysis and fair value methodology, please don't misquote me to enhance your view, thanks.

[robbo24]

...misquote me to enhance your view, thanks.

As parody I included ellipsis to signify the omission of the previous words and the original source is noted, point taken though.

[Vaygor1]

...
I agree with Sparky and Moosie. In particular I think MourningStar at the very least should change there recommendation from SELL to REDUCE.
......

And that is exactly what has happened this morning.

Well done MorningStar (sincerely).
A bit more in-depth research and you can take the next step to HOLD.

[POSSUM THE CAT]

Sparky has one of their big customers have a large block they wish to sell? INMHO they all have a biased interest.

[tosspot]

does anyone know a website where you can find valuations and recommendations from various firms like Forsyth barr, and others in one place. Because I only have asb securities and there valuations are pretty bad.

[Joshuatree]

Awesome, thanks Sparky. Have they rerated summer set too? cheers

[tosspot]

Just sold out of SUM to hope into this bad boy.

[tosspot]

precisely why I bought. Thought only way from here is up by the looks of it.

[Soolaimon]

You should own both. Selling SUM to buy RYM is not necessarily going to deliver higher returns. More certain returns perhaps, but if anything SUM is cheaper.

And getting cheaper today by the minute. Ryman on aroll?????

[robbo24]

Good to see Ryman hitting new heights yesterday and today.

What's the story? People excited about an upcoming full-year report? Looking over the last few months posts one would think it's going to be a pretty good result.

[robbo24]

Should be good for 19.4cents EPS or roughly $96m NPAT normalised.

But that's just your conservative estimate - Oppa Clown-nam Style.

[Vaygor1]

LOL! About 16% increase on 2012 NPAT

Will RYM crack the 10 cents/share divvy this year? I think so.

[CJ]

Did anyone manage to read the NBR article in the print version (annoying split over three pages!!!). Morningstar tried to defend its target price and have relunctantly decided to increase it - all the way up to $4!!!!!

[Vaygor1]

13-March-2013. And that is exactly what has happened this morning.

Well done MorningStar (sincerely).
A bit more in-depth research and you can take the next step to HOLD.

MourningStar have now upped RYM's value by 28%... from $3.50 REDUCE to $4.50 REDUCE.

REDUCE ??????

Are MoaningStar the world champs of shutting the gate long after the horse has bolted?

[Vaygor1]

Did anyone manage to read the NBR article in the print version (annoying split over three pages!!!). Morningstar tried to defend its target price and have relunctantly decided to increase it - all the way up to $4!!!!!

No I missed that one CJ. It would intrigue me to see how MoronStar can defend the indefendable.

[Snow Leopard]

You should own both. Selling SUM to buy RYM is not necessarily going to deliver higher returns. More certain returns perhaps, but if anything SUM is cheaper.

I could not have put my own thoughts on these two more succinctly myself.

Best Wishes
Paper Tiger

[Snow Leopard]

A year ago you could buy RYM at $3 a shot and today you need to pull an extra $2 from your wallet for the same thing. You can probably work out that is an increase of 67% pa

Meanwhile RYM itself grows it's financials at about 15-18% pa.

So kindly explain to me how something with a steady 16% (ish) growth can be worth 67% more a year later.

Maybe it was undervalued then or is overvalued now or a combination of both.

My current (yesterday) value for Ryman is $3.951, I think the market (and thus some brokers) have got rather carried away with the continued success story of this and if the uptrend ever ends I may consider selling.

Best wishes
Paper Tiger

PawNote:
I have some RYM shares which I bought at $1.05 back in Dec 05 and thus have had yearly capital growth of nearly 24% (plus the little dividends). Difficult to beat that.

[Goldstein]

I had similar thoughts to you PT. Hold MET and SUM as I think it's a good sector to be in.

However, it's hard to put a figure on good management and I think it is clear Ryman has this in spades.

Well done to those investors that got in on the ground floor.

Cheers,
Goldstein

[scamper]

Of course, at its current price the div yield is only 1.8%...
Soooo, this is only a capital gains share. But Scamper is still a firm holder. Cheers

[percy]

Just had a phone call from a 92 year old distant relation who has lived for the past 6 months at RYM Diana Isaac retirement Village.When I asked her if she enjoyed living there she replied "the food is dreadful".Well what could I say?!!!!

[Jim]

Just had a phone call from a 92 year old distant relation who has lived for the past 6 months at RYM Diana Isaac retirement Village.When I asked her if she enjoyed living there she replied "the food is dreadful".Well what could I say?!!!!

I have a friend's mother staying in one of these rest home. One time when he was visiting her and she was having dinner and he asked her how is her dinner, her comment on the food was that it is only for dogs. My friend was thinking to himself the food was fine just that you can't satisfied an old lady aged 90+, they are always grumpy and never happy.

[macduffy]

I think we all need to have something to find fault with!

Ever noticed how when one is recovering in hospital the meals seem to progressively deteriorate?

(I'll probably regret opening that particular can of worms! No, pun not intended!)

[Under Surveillance]

PawNote:
I have some RYM shares which I bought at $1.05 back in Dec 05 and thus have had yearly capital growth of nearly 24% (plus the little dividends). Difficult to beat that.

The little dividends paid in 2012, 4.5 and 4.6 cents a share, gave a return of 8.67% on the 105 cents you outlaid. In 2013 you'll receive close to 10%. Has clearly been an excellent choice for you as an income share, never mind the incidental capital growth!

[voltage]

Even Buffett has not made these returns. Ryman is the one stop share. Interesting what weighting you all have in your portfolio

[Vaygor1]

Even Buffett has not made these returns. Ryman is the one stop share. Interesting what weighting you all have in your portfolio

I'm not going to give too much away here, suffice to say RYM as of today's close is over a third of my portfolio.

[Vaygor1]

Look at that Ryman and Summerset take off today in this morning's trading!

Summerset hit $2.79 up 5c, and Ryman hit $5.30, up 10c.

I feel pretty good swapping out A2 Milk for Summerset..... the move has been validated in quick order (though ATM may yet impress!)

I note MetlifeCare continues to hover around $3.20, dropping 3c to $3.19. That company seems to be the unwanted bridesmaid of the three listed RVOs.

... and RYM with a close today up 15c at $5:35... practically 3% on the day with high volume. I think it will go higher as RYM's announcement day looms, settling (up or down) to around $5.60 soon after.

Aside from being an avid and enthusiastic RYM fan, from an investor-comfort viewpoint and momentarily ignoring EPS, NTA, EBIT etc, I would prefer MetLifeCare to Summerset. Summerset just seem to have had too much bad press over time regarding underpayed staff, and poor care. I haven't read anything of late regarding these issues and maybe they have improved lately, however the history does currently impact my view on SUM's future.

Disc.
RYM - Hold.
SUM & MET - Do not hold.

[Snow Leopard]

I know that SparkyTheClown thinks RYM is the greatest thing since a bucket of whitewash over the head but I am continuously amazed at the strength of the Share Price which is rising on increasing traded volume.

At some point it has to settle down, surely?

Best Wishes
Paper Tiger

[Snow Leopard]

I was talking about the share price, as opposed to the company, Sparky.

I think the SP needs a rest.

bw
PT

[percy]

All depends on earnings. If their unit sales exceeds 700 for the upcoming FY, and NPAT cracks $96m, then who would doubt that they can keep the momentum in construction and sales going for the next 5-10 years?

What headwinds could Ryman face?

- Maybe regulatory costs imposed by a new govt on caregiver wages, but I suspect this would impact on smaller owner/operators more than the big guys
- cost of construction or land costs eats into margin?
- failure to launch into Australia?
- Some black swan event like a fire which, god forbid, kills residents?
- a new CEO and management team which aren't as good?

I don't see any of those events;
Regulatory costs.Any Govt needs the private sector to provide the required housing for the ageing population,so they will work with RYM,SUM,MET.
Cost of construction.Other than ChCh there is not a lot of construction going on in either Australia or NZ.
Failure to launch in Australia.Australian villages are more lifestyle.Therefore ageing Australians will welcome RYM total care model.
Some black swan event.I have been down to the bottom paddock and shot all the black swans on the pond,so no worries there.
New CEO.Simon Challis has stated he expects to be CEO of NZ's largest company [RYM] in 10 years time.

[janner]

New CEO.Simon Challis has stated he expects to be CEO of NZ's largest company [RYM] in 10 years time.

Statements like that from new CEO's have me looking for the exit..

[Vaygor1]

I know that SparkyTheClown thinks RYM is the greatest thing since a bucket of whitewash over the head but I am continuously amazed at the strength of the Share Price which is rising on increasing traded volume.

At some point it has to settle down, surely?

Best Wishes
Paper Tiger

I can't see why it will settle down anytime soon... except for the 2-month-after-posting-annual-result lull.
Historical annual growth in RYM's EBIT exceeds 16% compounding per annum and will be sustained as long as the following conditions are met:

1. The market exists to take up the new residences and beds as the empires of RYM, SUM, MET and similar-sectored capable Aussie companies expand.
2. RYM's land bank acquisition and build rate (i) has increased in the last 5 years, and (ii) will continue to increase, in both cases to match or exceed the historical growth rate.

Condition 1 will be easily met given both NZ and AUS demographics... more obvious than a slap in the face.
Condition 2(i) has been met, so the momentum is still there now, thus fulfilling the required timeframe to complete village-construction schedule and village-filling schedule.
Condition 2(ii) is likely to occur given Simon Challis' view. If it doesn't continue then all those construction costs not incurred every year become a divvy payout and RYM turns into a cash cow with a great big MOOOOOOOOOOOOOOOOOOO.

I have performed a historical analysis of RYM's share price from mid 2007 onwards (before the GFC). A shareprice of $4.80 imo was a conservative view on where RYM's shareprice should have been soon after FY End 2012 results were announced around late May/June of that year. Based in this, and looking forward...
$4.80 x 17% growth = $5.60 around late May/June 2013.
$5.60 x 17% growth = $6.55 around late May/June 2014.
$6.55 x 17% growth = $7.65 around late May/June 2015.

RYM does not include their unrealised profits in their figures, but market sentiment might (right Hoop?). Either way, I don't see the the price that the market puts on RYM shifting its perception (regarding worth reading into RYM's realised or unrealised profits) over a long term period.

Of course the divvy's will increase too, probably by the same growth rate.

Happy to have my wings clipped regarding the above.

Vaygor1 - possibly a bigger fan than Sparks???? :)

[Vaygor1]

New CEO.Simon Challis has stated he expects to be CEO of NZ's largest company [RYM] in 10 years time.

Statements like that from new CEO's have me looking for the exit..

Hi Janner.
Simon Challis is not a new CEO. Percy was responding to STC's comment on a new CEO potentially being a headwind for RYM.
I can see how you came to the conclusion you did though. Ahh the vagaries of the written language.:)

[percy]

Hi Janner.
Simon Challis is not a new CEO. Percy was responding to STC's comment on a new CEO potentially being a headwind for RYM.
I can see how you came to the conclusion you did though. Ahh the vagaries of the written language.:)

Thank you Vaygor1.
Sorry I did not get my punctuation right.

[futurist]

A couple of years ago I bought two shares based on a simple thought: the next 10 years is all about the kids and the elderly because of how the demographics are developing. PPL is not doing well, but fortunately RYM is.

I bought RYM at 2.76 and it has been a great share to hold. However, the recent shooting up actually worries me a bit; because I don't think there is anything fundamentally different to the company comparing to 2 months ago for example. On the other hand, I don't observe the details as closely as some of you guys here so I would like to hear your opinion. If you were me, would you sell them at this moment?

[Snow Leopard]

A couple of years ago I bought two shares based on a simple thought: the next 10 years is all about the kids and the elderly because of how the demographics are developing. PPL is not doing well, but fortunately RYM is.

I bought RYM at 2.76 and it has been a great share to hold. However, the recent shooting up actually worries me a bit; because I don't think there is anything fundamentally different to the company comparing to 2 months ago for example. On the other hand, I don't observe the details as closely as some of you guys here so I would like to hear your opinion. If you were me, would you sell them at this moment?

I believe they are overvalued as well.
I believe that people are coming up with fantastic valuations for this company (and now SUM) having throw sensible valuations techniques out of the window because the price is high and going up.

But the price is still going up and while it does I will not sell them.

But when I believe that the run is over, then I will sell them.

Best Wishes
Paper Tiger

[futurist]

RE: moosie_900

Thanks for that. I haven't been tempted for all the hikes before since I bought them, so I guess somehow this time I feel slightly different about it.

But do you guys feel comfortable for a retirement village corporation to be this kind of size with this kind of PE in NZ? My assumption of course is that the demand could only grow because of the aging population argument, but then that would attract competitions for sure. I like the story of POT, but do you see RYM could earn that kind of monopolistic position in their own field?

No matter what, I think RYM is a very good company. Will try my best to wait for the consolidation period and then reevaluate.

[futurist]

RE: The trend is your friend (Paper Tiger)

I think you have summarized exactly how I feel too, thank you.

[percy]

RE: moosie_900

Thanks for that. I haven't been tempted for all the hikes before since I bought them, so I guess somehow this time I feel slightly different about it.

But do you guys feel comfortable for a retirement village corporation to be this kind of size with this kind of PE in NZ? My assumption of course is that the demand could only grow because of the aging population argument, but then that would attract competitions for sure. I like the story of POT, but do you see RYM could earn that kind of monopolistic position in their own field?

No matter what, I think RYM is a very good company. Will try my best to wait for the consolidation period and then reevaluate.

POT was/is driven by a "wall of wood".It is in the right place at the right time doing the right things.
RYM.Is much the same,being driven by a " wall of aging population".It too is in the place at the right time doing the right things.
Like you and Paper Tiger I am enjoying the trend.
I have been hoping Sauce would post an update of his thoughts and valuation,as he has been right "on the button" with RYM.

[Snow Leopard]

...Obviously the next point for investors is the earnings announcement, which should be around May 16. If they knock it out of the park, eg $100m NPAT plus, then its all on like Donkey Kong. If they simply meet the expectations of brokers, eg $96-98m, then maybe it will just hover .

Ryman will be mercilessly punished on a miss though. Too many people now expecting outperformance.....

Sparky, those numbers that you are calling NPAT are, I believe, what Ryman call Underlying Profit.

2011 Underlying Profit $72M1
2011 NPAT was $100M2

2012 Underlying Profit $84M1
2012 NPAT was $120M7

Best to get these thing right.
Paper Tiger

[minimoke]

According to my Direct Broking account I have today just tipped over the 1,000% un realised profit on RYM so thats a milestone in my investments

[percy]

According to my Direct Broking account I have today just tipped over the 1,000% un realised profit on RYM so thats a milestone in my investments

Fantastic.
Well done.

[minimoke]

That gladdens my heart no end reading that. A beautiful ten bagger... It would also mean that you are getting an excellent yield as well, since they pay around 9c a share these days?

If you don't mind me asking, can you tell me what investing in Ryman was like way back when you bought? I'd be genuinely interested in hearing how you felt this company was a great choice and the things you considered at the time.
First off it was an IPO. I'm into IPO's if I get a hint of potential staging success. I have brought into pretty much every IPO there has been - except the ones I've been vocal about. Its an approach that has worked well for me with all buys except Submarines Australia which I lost the lot. (Good lesson there for my FTX buy!)

The fundamentals were right and simple. An aging population. A population which on the whole had money in cash, property or investments, and a more mobile world where the offspring were straying further from home meaning the parents were loosing their immediate community. Since humans are essentially social animals there was likely to be a herd instinct driving like minded people back together.

I also love property - RYM is not so much about looking after the oldies but about property development. So I was always going to be in - same reason for buying and keeping AIA - though that hasn't been so stella..

Align that with my view that as a rule initial demand for any relatively good company at IPO will drive demand over supply you are onto a winner from day one. (my rule doesn't work all the time - I just didn't get SNK, for example, since I have ad. blocking apps on my phone - so I didn't buy into that.)

After IPO there was a nice gain to be made but the general market sentiment seemed positive so saw no particular reason to quit. That sentiment has remained pretty much firm and consistent. It has continued with a pretty good dividend yield and share price appreciation. So much so at one point I sold a property and threw $100k into as a better bet than a short term deal with the bank. Sold a few months later after a very nice increase which meant my next mortgage was a whole lot less. Still have a good chunk in my portfolio and it has done nothing to attract my attention to sell down.

One wee benefit of RYM is HO is based in Christchurch so AGM's are held here. So not only do I get to hear directly from the company but there is also a decent morning tea which I class as a one off special dividend.

[Sauce]

According to my Direct Broking account I have today just tipped over the 1,000% un realised profit on RYM so thats a milestone in my investments

Hi Minimoke
In fact, the total return (at the current market cap, excluding dividends) has been 20 x, not 10 x.
RYMAN did a two for 1 stock split some years ago.
Market cap at listing: $135m
Market cap today: $2.675b
Regards,
Sauce

[minimoke]

Hi Minimoke
In fact, the total return (at the current market cap, excluding dividends) has been 20 x, not 10 x.
RYMAN did a two for 1 stock split some years ago.
Market cap at listing: $135m
Market cap today: $2.675b
Regards,
Sauce

I think that was 2007. My direct broking portfolio only shows back to 2003. So that's more than a ten bagger

[Sauce]

Who thought many moons ago that holding a retirement village operator would get you a ten-bagger? How the times change!

20 bagger even

[gv1]

So, invest in what we all need then? That would mean a portfolio that included RYM, RBD and JWI (scary to most!)

Eat, drink and die....scary indeed

[percy]

So, invest in what we all need then? That would mean a portfolio that included RYM, RBD and JWI (scary to most!)

I have enjoyed good health for the last few years.Don't know whether it is because I have not eaten any KFC or not.
I certainly can live without RBD.
JWI.Why pay for something that is free out of the tap?

[Lawt]

EXACTLY my mentality. I laugh at people that pay for it at corner stores and supermarkets. I only ever bought bottled water once, and that was after I had taken a wrong turn on an urban hike and did an extra 8km's and was dying of thirst. Think I kept that bottle for another 3 years after to refill for free from the tap as well!

HOWEVER, JWI stuff does taste better, and I cannot overlook the fact it has been present at my past 3 jobs, and in multiple watercoolers...

I find this sort of comment interesting. I mean, when I see someone doing something I don't, I assume they have good reason, do you laugh at their ignorance.
Are you sure it's not you that not in the know?
I worked at a water treatment plant when I was young - have you actually seen the slurry of chemicals they put in your drinking water?
Some people understand the importance of adequate hydration. You are way better off staying hydrated than being concerned about a few dollars.
Some would buy an energy drink or a coke and think nothing of the cost - yet water will be way better for them, so why would you laugh at someone who buys water and not the others?
There is a fair bit of research around many of the chemicals they put in water that indicates it's not so good for you - why take the chance if you don't have to?
Finally - I get very ill if I drink tap water, it's quite debilitating, I can prove through repeated trial and error that without a doubt it is tap water that causes it. Ok I'm a minority, but there will no doubt be others and some that haven't worked it out yet - and as I say, when you see the chemical soup that goes into your tap water you can't help but wonder what part of tap water causes this.

[percy]

I find this sort of comment interesting. I mean, when I see someone doing something I don't, I assume they have good reason, do you laugh at their ignorance.
Are you sure it's not you that not in the know?
I worked at a water treatment plant when I was young - have you actually seen the slurry of chemicals they put in your drinking water?
Some people understand the importance of adequate hydration. You are way better off staying hydrated than being concerned about a few dollars.
Some would buy an energy drink or a coke and think nothing of the cost - yet water will be way better for them, so why would you laugh at someone who buys water and not the others?
There is a fair bit of research around many of the chemicals they put in water that indicates it's not so good for you - why take the chance if you don't have to?
Finally - I get very ill if I drink tap water, it's quite debilitating, I can prove through repeated trial and error that without a doubt it is tap water that causes it. Ok I'm a minority, but there will no doubt be others and some that haven't worked it out yet - and as I say, when you see the chemical soup that goes into your tap water you can't help but wonder what part of tap water causes this.

The market must have agreed with you as the 50cent shares reached a high of about $1.00 in January 07.
Not sure what happened then,maybe someone peed in their water as the shares last sold for 12cents.

[troyvdh]

Lawt..you are right you are a minority.I believe that you have been brainwashed by some sales pitch....by the way I will always remember footage of a water bottle factory..where a hose was used to fill water bottles..an ordinary tap...no offence intended and yes this has nothing to do with Rym. Cheers

[CJ]

Labour is promising to cut the average Kiwi retirement cost by up to $330 a year if elected to government.

It plans to do so by setting up a single buyer, NZ Retire, to purchase all retirement units at a fair price.

At a joint press conference Green co-leader Russel Norman outlined a similar policy, although the Greens would introduce an element of progressive pricing.

Norman said each retiree would receive a 1 week per month on which they paid only linen and food costs.

After that they would pay higher prices for accommodation. ;)

Pick another industry that Labour/Greens could have fun with

[Lawt]

Lawt..you are right you are a minority.I believe that you have been brainwashed by some sales pitch....by the way I will always remember footage of a water bottle factory..where a hose was used to fill water bottles..an ordinary tap...no offence intended and yes this has nothing to do with Rym. Cheers

Yeah, you're right I've been brainwashed, what was I thinking? Of course Coke is better for me than (even tap) water. It makes you slim, healthy, hot and happy - all the time right.
Offended? No I love it. As per my first 2 lines the post was about keeping an open mind and the ability to understand others.

[gv1]

I am in a Dilemma, with all the mayham in US, to hold on to cash or invest.

[skid]

Yeah, you're right I've been brainwashed, what was I thinking? Of course Coke is better for me than (even tap) water. It makes you slim, healthy, hot and happy - all the time right.
Offended? No I love it. As per my first 2 lines the post was about keeping an open mind and the ability to understand others.

I agree with both of you--tap water is probably not as great as it used to be--and..bottled water is the biggest marketing rip off ever created--I think the solution is a good quality water filter.--but that doesnt mean bottled water wont continue to sell..

[gv1]

Thanks moosie900

[Lawt]

Hold on to it right now! :ohmy:

I'd be interested to hear your rationale here Moosie. Not suggesting you are wrong at all, just interested is all.

[futurist]

Just my opinion, but I posted a few days ago, after the first day of equity market declines, that I expect the next couple of weeks to be a bit rocky. However, I think in the medium term markets still have a good year or two or solid growth left in them.

Have a look at the IMF's recent April 2013 flagship publications; "World Economic Outook" and "Global Financial Stability Report", you only need to read the Foreward and Executive summary to get the general idea. The outlook is generally good for the next couple of years. You can look to the RBNZ's monetary policy statements to get an idea of activity and forecasts closer to home but the general consensus for domestic growth is roughly the same as the IMF's outlook for world economies.

In the Medium term QE will prop up equity markets for some time, and the timing of QE windback will coincide with improved economic growth which should negate any adverse effect on markets. It will be around this time when I will start to llok at realising equity market gains made over the last 3 years or so.

Good luck with your decisions.

Nice day again for RYM huh?

Interesting. I am worried that the windback will happen sooner than we expect. Yes all reports say the States would not have inflationary pressure or an unemployment rate under 6.5 until 2015; but these reports assume the world is pretty much static when they do the estimation. The best scenario is what you describe, and exactly what the Feds is selling: everything will balance out. But recently if you look at oil, metal, and the economic data from the States, plus the global financial development, everything is hinting a return of strong dollar!

I hope I am over-worried, but looking at the crazy shoot up of RYM ... and yes I like this company a lot too, I do wonder if this is also a sign.

[futurist]

Only time will tell. All sorts of things could happen to change any current outlook.

Re your point about static estimation, that is why I suggested IMF and RBNZ analysis as opposed to what I would consider lesser quality analysis. The RBNZ and IMF I suspect will be doing a lot of their forecasting using dynamic general equilibrium models (DGE) so you should find no issue there.

IMF was pretty clear in thier feelings of how careful the US will need to be in pulling out of QE, i.e. it will need to be a very drawn out process. What is more concerning to me is how the US is conducting its fiscal consolidation. Hopefuly they can work things out a bit there and set in place a more prudent strategy for tightening up their budget.

Point taken for the DGE, and thanks for sharing that actually.

But my worry on the dynamic aspect of this issue is more straight-forward than a complex model. I don't think the Feds could be run based on transparency and honesty; because that attracts too much speculative activities when they become too predictable, which would impact on the effectiveness of their policies.

So I won't be surprised if they stop the open-ended bond purchase earlier than they say this year, or even raise the interest rate in 2014, when we all have built our expectations for 2015. As long as all these actions align with the best interest of the States ... well if they get their economy running again I bet they won't care if the reverse of QE will negatively impact everybody else as much as they claim they do.

Back to RYM, seems like strong demand at 5.70. Who would have thought about that a week ago?

[futurist]

P.S. Sold at 5.70!

A bit earlier than "sell in May and walk away", but whatever. I still hope I am over-worried since I still have other shares in the market.

[Snow Leopard]

Despite having a never sell in an uptrend rule :t_up: - I have reduced my holding in RYM a bit :ohmy:.

Sheer lunacy :eek2: - but whether it is me or the buyers only time will tell :) .

Best Wishes
Paper Tiger

[futurist]

I understand the sentiment that the shares may have gotten ahead of themselves based on known earnings.

I am confident that Ryman will continue to perform over the next five years though, and I don't believe the story has changed at all. I am still happy to hold.

The next earnings announce should be due around May 16, less than one month away.

Absolutely, I don't think the aging population will change according to the highs and lows of the share market, so the demand for Ryman's service will only go up assuming they keep themselves ahead of the game. There is really no reason to change that view at all.

When I am less worried (meaning a lot of people panicking maybe), I will definitely come back in. I like this company and the nature of the business!

[futurist]

Despite having a never sell in an uptrend rule :t_up: - I have reduced my holding in RYM a bit :ohmy:.

Sheer lunacy :eek2: - but whether it is me or the buyers only time will tell :) .

Best Wishes
Paper Tiger

Thanks, it is good to know I am not alone ...

[percy]

P.S. Sold at 5.70!

A bit earlier than "sell in May and walk away", but whatever. I still hope I am over-worried since I still have other shares in the market.

Saw the 400,000 shares go through at $5.70.
Well timed.

[troyvdh]

Dear PT....totally understand...but look at the amount of dollars going in....if this SP trajectory was happening on thin dollar values...fair enough.....I suspect that in a couple of years the SP will again be about $2-4....that is of course after another 5-1 split....cheers troy

[Beagle]

Havn't been here for ages but had to have a look today. Closing at $5.71 on volume of over 6 million shares, seems this is the market darling everyone wants a piece of.

You'd think it would track sideways from here for a while, surely ?

Where are the brokers currently valuing this stock ?

[percy]

Havn't been here for ages but had to have a look today. Closing at $5.71 on volume of over 6 million shares, seems this is the market darling everyone wants a piece of.

You'd think it would track sideways from here for a while, surely ?

Where are the brokers currently valuing this stock ?

Great to have you back.I have missed your input.

[winner69]

Saw the 400,000 shares go through at $5.70.
Well timed.

Might have been the 500 trade percy

Anyway well timed and well done

[percy]

Might have been the 500 trade percy

Anyway well timed and well done

Could have been,but as he/she did not bite I am left wondering.!!!????? lol.
I am watching out for your EBO trade.??

[winner69]

seen the spread today and that only one little seller

I fear disposing might take some time as would take out the depth as it stands and share price down to 880 or something. Have to have faith in broker when time comes

[Goldstein]

So $34m or 4% of market cap changes hands today at VWAP $5.687

I wonder how much RYM benefited today from the energy exodus.

[Beagle]

Great to have you back.I have missed your input.

Thanks Percy.

A little confession, I sold out of these a while ago and really regretted it, but thankfully relaised the error of my ways and got back in last September at $3.99. Thank God I came to my senses and realised there's still heaps of value in the long term fundamentals supporting this sector.

I'm thinking the fact that people have started to realise that money in the bank is not the guilt edged security they thought it was may be supporting the market for the forseeable future.

But the advance in Ryman and Summerset is breath-taking... I'd like to see a bit of sideways movement for a while so I can save some money and get some more :) Demanding fundamentals now for both these stocks with huge PE ratio's but with an on-going booming housing market making it relativly easy for prospective new village entrants to sell their houses and forecast low interest rates for as far as the eye can possibly see, with the well reported favourable tailwinds for this sector, as long as one has a long term time horizon I still see value in these stocks especially given the paucity of other alternatives in terms of reputable growth companies in the N.Z. market.

Ride the uptrend for all its worth I reckon:t_up:
This stock is a true buy and stick in your bottom draw till you retire investment, how many other stocks can you say that about ?

Recent volume suggests this company could be a take-over target, I personally hope it isn't I'd rather own it indefinitly and pass the shares on to my kids.

[JohnnyTheHorse]

Ryman is a fantastic company, but a $6.90 pricetag would be getting a bit silly imo. This market is starting to make me feel uneasy, it's setting itself up for another collapse in my view. I'm seeing a bit of irrational exuberance in a few stocks, so I suspect that this old bull will be getting a very large bullet right between the eyes sometime within the next year. Anyone else concerned?

[percy]

Ryman has just been re-rated by First NZ Capital on the basis of their likely success in Australia and a highly likely dual list on the ASX to help boost credibility in Australia.

The target price is now........

Drumroll please

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

$6.90 (from $5.85)

Futurist, if you are lucky, you might be able to buy your shares back for what you roughly paid for them.....

Sparky.
Again thank you for sharing this with us.
Although I am shocked at $6.90 First Capital NZ are our country's leading broker, and have a great deal of influence, so I look forward to them being right.

[Snow Leopard]

Apparently First NZ have developed a sophisticated new technique:

Taken the current price;
Add 15% for next year;
and a bit more as a safety measure because it always goes up a bit more than you expect;
make up the reasons later.

The worry is that they could well be right. :eek2:

Yours in disbelief
Paper Tiger

[troyvdh]

I wonder how many of these folk individually ....how many actually bought and paid for of RYM shares.
Do they actually disclose this...when they bought...how many....not in trusts ...but individual brokers....cheers....

[winner69]

Apparently First NZ have developed a sophisticated new technique:

Taken the current price;
Add 15% for next year;
and a bit more as a safety measure because it always goes up a bit more than you expect;
make up the reasons later.

The worry is that they could well be right. :eek2:

Yours in disbelief
Paper Tiger

You on to it tiger ....sad thing people believe them

Big rort eh .....but watch share price go up this week

[CJ]

Sparky- would an ASX be to raise new capital or just a notional 1 share like XRO did? If no new shares issued ( they have never needed more capital unless they want to expand into Oz a lot quicker than they are in NZ), increased demand will see the price rocket in the short term, just like XRO.

[percy]

Apparently First NZ have developed a sophisticated new technique:

Taken the current price;
Add 15% for next year;
and a bit more as a safety measure because it always goes up a bit more than you expect;
make up the reasons later.

The worry is that they could well be right. :eek2:

Yours in disbelief
Paper Tiger

The reality is that First NZ Capital have a history of being right as they do the best research.

[winner69]

I can understand the cynicism, but have you guys (winner69 and Paper Tiger) actually read the First NZ report?

As I mentioned, they significantly outlined the impact of Australian retirement villages for RYM and a likely ASX listing. You might want to digest those two possibilities further impacting positively on what is arguably NZs best company already.

It stands to reason that an ASX float would be very beneficial to Ryman. I personally had discounted this happening in 2013 or early 2014 based on discussions I've had with management in late 2012, but maybe they've brought these plans forward?

I think tigers and my 'cynicsm' is all around the price target they come up more so than the commentary that comes with it.

I've seen zillions of broker reports over the years and the number parts are just that. Take a P&L, Balance Sheet and Cash Flow - normalise it - make some assumptions and apply those to the current situation - and hey presto you always get better figures than the current - and of course whether valuation are done on multiples or DCF of course the share price target is going to be way ahead of the current. If theys don't pan out as assumed you just go back to the new 'norm' and so the exercise again.

I do agree with you that at times the commentary can be quite illuminating ... but the norm is collecting market fundamentals and overviews and all that of stuff and writing a report on the company on its position in the market and its prospects etc. That is there job - doign that for the punters who need that sort of help so they can make some sort of informed decisions. And most do that quite well

The 'cynic' is really saying putting all these numbers together together and coming up with a 'taget' or 'value' is mainly to get punters buyin g and selling .... brokerage and more fees yippee.

Whats the churn of RYM shares? and the average over the NZX or even world markets?

The cy

[CJ]

I have a some doubt its for new capital. They have no long term debt, although they might construct a case that once Wheelers Hill is finished in Melbourne they want to aggressively open new villages and need capital for that.That was my though - no historical need for capital but if their first Australia forey is successful, they may request some extra capital to start building up a landbank, otherwise, growth from a low base will be slow. Pop that question in next time you have having a cup of tea (or is it a dram of Whiskey) with the CFO.

[winner69]

Listing on ASX would be good for RYM ... even if no other reason Aussies usually have higher valuations than NZ companies.

If punters in AU can see RYM being successful over there a bigger pool of punters wanting to buy share as well.

If capital was needed having AU presence makes it easier as well

[percy]

Listing on ASX would be good for RYM ... even if no other reason Aussies usually have higher valuations than NZ companies.

If punters in AU can see RYM being successful over there a bigger pool of punters wanting to buy share as well.

If capital was needed having AU presence makes it easier as well

Maybe nice to have a placement to our Aussie friends at NZ $6.90.

[Queenstfarmer]

Its looking more and more like a pyramid scheme this year. Its going to be sometime before the yield will get anywhere respectable...and maybe even more time before it gets anywhere near what the banks will pay for your your money. Many have creamed it over the past few years...but is it really a wise investment for people getting into it now and over the next year that it may approach $7.00 a share. Currently 500mil ordinary shares out there...what are the chances of an offering...increasing it to 750mil or more?

[CJ]

Its looking more and more like a pyramid scheme this year. Its going to be sometime before the yield will get anywhere respectable...and maybe even more time before it gets anywhere near what the banks will pay for your your money. Many have creamed it over the past few years...but is it really a wise investment for people getting into it now and over the next year that it may approach $7.00 a share. Currently 500mil ordinary shares out there...what are the chances of an offering...increasing it to 750mil or more?In a way it is a pyramid scheme, using the money of the residents in existing villages to build the next village. The share is asset and cashflow backed so is not a pyramid scheme in the sense you are suggesting.

[NZSilver]

Great Company, great growth prospects, great management, great sector, still plenty of value at current share price, in 5 years I will be looking back thinking I wish I had more money to buy more ryman at $5.75, if I had put all my eggs into the ryman basket (the first share I ever bought on the 26/5/2011) I would be a lot better off. Currently the biggest portion of my portfolio by far, and wish I could buy more.

[Queenstfarmer]

Not a pyramid scheme...looking like one. I feel there will be a point where investors have paid too much too soon going on dividend yield. Its great to make capital gain as many have over the past few years. The investors that get in now and over the next few years (whom decide to hold) will be waiting along time to get a decent return.

[NZSilver]

Not a pyramid scheme...looking like one. I feel there will be a point where investors have paid too much too soon going on dividend yield. Its great to make capital gain as many have over the past few years. The investors that get in now and over the next few years (whom decide to hold) will be waiting along time to get a decent return.

Queenstfarmer - interesting thoughts,

for the record - price $5.79, div < 2%, P/E 22 I will remind you of your comments in 2 years time, however you might remind me, you never know what the future will throw in your path. But I think RYM has a bright future, with good returns (mainly capital) over the next several year. Im sure they will keep plenty of funds to use for growth - returning 15% on the money they hold instead of giving out bigger DIVs.

[Queenstfarmer]

If I paid the current share price and decided to hold as a dividend yield investor and perhaps even bought in as the sp increased....id be for their return hoping for something north of 30c per share dividend in the not too distant future. Yes great if I sell next year at $6.90 but whomever takes my shares is going to be needing 30-40c per share dividend. How far a Ryman away from being able to pay out 150-200-250 million in dividends each year.

[Queenstfarmer]

Hiya NZsilver. I'm not disputing that there isn't money to be made through capital gain in this Company and also the fact that Ryman is a well run company. Not everyone is going to benefit from this sky rocketing sp. Many will be relying on something north of 5% yield and I feel that could be some time off yet.

[CJ]

Hiya NZsilver. I'm not disputing that there isn't money to be made through capital gain in this Company and also the fact that Ryman is a well run company. Not everyone is going to benefit from this sky rocketing sp. Many will be relying on something north of 5% yield and I feel that could be some time off yet.Dividend yeild is only one part of investor return. If you want a bond like return, why not buy bonds.

Their earnings growth is greater than their funding cost so it makes sense to keep growing rather than distribute those profits.