RYM - Ryman Healthcare

[NZSilver]

Good discussion on the RYM thread

thanks for your comments Queensstfarmer

[percy]

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.

On this subject there is a wonderful thread here on sharetrader.;Owner Earnings vs Free Cash Flow.
Sauce and Snoopy have a great discussion.A must read.

[Queenstfarmer]

Cheers NZsilver. Perhaps the "too boring to talk about" needs to be updated?

[macduffy]

RYM is a great stock - I think that most of us agree that it's one of NZ's best - but Queenstfarmer makes a valid point in cautioning that the SP may have run a little ahead of itself. Come to that, perhaps the whole NZ market is running a bit hard, weight of money/low interest rates and all that. I think I'll watch from the sidelines for awhile.

[Queenstfarmer]

No just putting a view out there. Yes I am looking at it from a dividend angle. The pyramid analogy is based on all the investors whom get in now that its sky rocketing to wherever it may head. Unlike a pyramid scheme they won't lose their money because they get in later...however I don't see them making the huge capital gains previous investors have over the past 5 years. I see them relying on a generous dividend policy from Ryman....which in my view, is quite some time off.

[CJ]

No just putting a view out there. Yes I am looking at it from a dividend angle. The pyramid analogy is based on all the investors whom get in now that its sky rocketing to wherever it may head. Unlike a pyramid scheme they won't lose their money because they get in later...however I don't see them making the huge capital gains previous investors have over the past 5 years. I see them relying on a generous dividend policy from Ryman....which in my view, is quite some time off.If you want a dividend stock, buy Telecom. Great yield, shame about the share price.

There are plenty of yeild stocks out there, RYM is not one and I assume no one is buying or holding RYM for its yeild so why bring it up (just trying to understand). Seems as pointless as talking about XRO and profit ;)

[Queenstfarmer]

Thank you macduffy...I did say earlier...too much...too soon.

[gv1]

M think will run to 9.90.

[Snow Leopard]

I presumed that the $6.90 figure was a 12month target. However the market appears to assuming it needs to get there by tea-time.

Best Wishes
Paper Tiger

[Lawt]

EDIT: What I'm interested in is what people value this stock at now?

Isn't that what the stock exchange is for?

[Lawt]

I presumed that the $6.90 figure was a 12month target. However the market appears to assuming it needs to get there by tea-time.



I must admit, been waiting for this day for 30yrs. Always knew it would come again - same s#&t, different decade.
Last time I was out about 2 months prior to the crash, now just got to time this one right.

[NZSilver]

I've just seen reference to "some greater fool theory" with regards to what is happening to Ryman's price.

It is hard to disagree with people who think Ryman's price is higher than intrinsic value.

I have already pointed out that if Ryman's earnings are less than superb (eg, just very good), the share price could get hammered.

My concern is therefore what I should do:

1. Sell some or all of my holding at its inflated price levels now or some point in the next few weeks, and then hope to buy in cheaper?

or

2. Hold on, knowing it is becoming overpriced and that it may just plateau for months or even a year until value catches up with the price, or that it might dip a bit or a lot on bad news, and I simply hold on knowing my holding cost me a little over $3.00 per share. Even if it drops to $4.50 (which now looks crazy cheap) I'm still winning. But if there's a big dip, I would surely regret not taking some off the top.

One of these options will make me a greater clown (eg, a richer one). The other might make me a little foolish. Trouble is, I'm not sure which one!

Much to think about over the next week. I might go riding in taxis this week to see if any of them are proffering share tips, in which case it's time to GTFO.

Sparky what did you do with SUM and what happened there?

[kizame]

I've just seen reference to "some greater fool theory" with regards to what is happening to Ryman's price.

It is hard to disagree with people who think Ryman's price is higher than intrinsic value.

I have already pointed out that if Ryman's earnings are less than superb (eg, just very good), the share price could get hammered.

My concern is therefore what I should do:

1. Sell some or all of my holding at its inflated price levels now or some point in the next few weeks, and then hope to buy in cheaper?

or

2. Hold on, knowing it is becoming overpriced and that it may just plateau for months or even a year until value catches up with the price, or that it might dip a bit or a lot on bad news, and I simply hold on knowing my holding cost me a little over $3.00 per share. Even if it drops to $4.50 (which now looks crazy cheap) I'm still winning. But if there's a big dip, I would surely regret not taking some off the top.

One of these options will make me a greater clown (eg, a richer one). The other might make me a little foolish. Trouble is, I'm not sure which one!

Much to think about over the next week. I might go riding in taxis this week to see if any of them are proffering share tips, in which case it's time to GTFO.


If you look at the markets and in particular a rising stock such as RYM,knowing that it has risen so steeply and that the market is jumping on anything looking good,AND you gaze at charts,you will know that they always correct(except with the case of DIL and XRO)but they are special cases.You Never lose money taking a profit,so I would lock in those gains and be pretty chuffed,cos there is a darn good chance the market will correct. The Risk: that ryman have something up their sleeve that you don't know about.

[troyvdh]

Can I suggest Sparky that this is the same dilemma that folk like my self who have quite significant dosh tied up in res prop's are facing ..given that these as well as have/are increasingly gaining in value....
As we know those folk moving into Ryman facilities have to sell there houses first.......so for me at least I see RYM both as sharemarket beast but also a res property play cheers troy...

[Toasty]

Yep, I always saw Ryman as a property play mixed with healthcare. appreciate the thoughts.

Why isn't VHP going ballistic then? Its property mixed with Healthcare and delivers a good return. Probably not as well run and this is probably the wrong thread and once again I haven't researched anything...etc. Just a random thought

[NZSilver]

http://www.sharetrader.co.nz/images/misc/quote_icon.png Originally Posted by NZSilverhttp://www.sharetrader.co.nz/images/buttons/viewpost-right.png (http://www.sharetrader.co.nz/showthread.php?p=404041#post404041)Sparky what did you do with SUM and what happened there?


Bought in at $1.40 in the IPO. Sold out at $1.79 as there was another stock I was interested in. Regretted it, should have sold something else. Bought back at $1.87, sold out at $2.15. Can't remember why. Regretted it. Bought back at $2.42 in the placement, holding, and this time, not intending to sell down unless there is a really good reason......

That was a Rhetorical Question Sparky...

But great to see your honesty, I think RYM is a hold.

[winner69]

Sparks

- your homework says RYM is a solid long term 'hold', you and nobody else knows what it may be worth one day
- you and some others think it has got ahead of itself pricewise. It probably has been ahead of itself for sometime
- some (even you seem to agree) the market might fall quite a lot - if so when, we don't know
- you seem keen to protect the profits you have already made, or most of them

The adages let profits run / never try to time the market / and as Mr P said the market giveth but the market taketh away just as quick

For stocks that keep rising I have for a long time used a thing called Average True Range (ATR) as a sort of trailing loss'. Google it and see what it means as investapedia or something will explain it better than me

Essentially when a stock is consistently rising over so does the ATR. I use the ATR as the price to sell if the price starts falling. You can have tight 'stops' by using a ATR of 2 or loosen it up a bit by using a factor of 3 or 4. Nothing worse than selling and seeing the price go up again eh. To me a tried and true method that suits me. Like I I like holding stocks for years if they keep rising but I am ready to sell if indicators look like its going to down.. You'll never sell at the top but collect most of the gains.

Here is a chart of RYM with the ATR at 4 (4 times Average True Range) shown. You can see it works well for RYM and would have kept you in for the last few years (my data was a bit wonky prior to 2011 so didn't go back any further). I confess that I don't sell the exact time it hits the ATR but wait a day or two - invariably the price seems to recover. Eventually you will leave a percent or 2 on the table but have made more than that in the times the price has recovered. Would have avoided selling in that recent slight dip.

On this chart the red line is at 5.51 after todays action. I wouldn't sell until it gets back to that price (or higher if the ATR goes up). I don't have any RYM so don't need to decide but sure you will do the right thing

[troyvdh]

mmm..appreciate the post....how much do you attribute the health of the residential housing market to the SP of RYM....thus far I can only assume that it aint much...cheers...

[percy]

Thats a scary chart friends

agree, dont sell yet

but get ready !!

Still holding yourself at the ready?Footsie posted that on 02/02/2007.
Funny the more things change the more they stay the same.

[percy]

ENP. from craigs investment partners.
Since listing in june 1999 RYM has delivered it's shareholders a total return,which includes shareprice appreciate and divdends of 1,043% or 24.3%pa.
Our population is ageing,proportion of over 65s is expected to double from 12% today to 26% by 2041.The number of over 85s is set to increase 4 fold from 1.4% to 4.8% by 2041.
The aged care operations generate care as management fees that represent 35% of RYM's total revenue.The sale of new units acconts for 27% of revenues,and the resale of units 38% of revenue.
RYM is exposed to change in value of its units when these are resold,which happens on average of every 7 years.However,the company earns management fees which equates to 20% of the
0riginal price {over a five year period},providing the company with a buffer against any fall in value.
The market perceives RYM fortunes to be closely linked to the housing market.RYM proved the market wrong.Not only did it maintain profitability over 2008 and 2009,but it was one of the very few companies that delivered earnings growth.EPS have grown by 18% pa since 2001 and dividends by 22%pa.An investor who purchased shares in the IPO has seen their dividend yield rise from 4.4% in 1999 to 19.6% today.

Posted 17/04/2010.
Find it still interesting.Not linked to the property market.
When Nana needs to go into care,doesn't really matter what the property market is doing,

[Beagle]

A listing in Australia makes sense as does a placement over there to supercharge Australian growth.

I think Ryman should be really fair to our Aussie brothers and do this at $A6.90 :D

People thinking this stock represents something akin to a paramid scheme are on the wrong thread. Pop on over to the XRO thread and fill ya boots...

[Queenstfarmer]

Do you mean pyramid Roger? I was merely making a parallel...I feel investors getting in this late on a sky rocketing sp may find they've hit the peak. Just a view.

[Beagle]

Yes thanks, too many wines for dinner.:) As long as someone coming fresh to the table has a long term view they should be fine. It would appear with almost unlimited growth in Australia this company can grow at 15% indefinitly. Its underpinned by compelling demographics, a shortage of housing in New Zealand and a growing demand for healthcare services, aided in no small way by the best management in the business. Take a five year view and you can't go wrong. What other company has shown such consistent growth all the way through from prior to the GFC and all the way through it ? Imagine if we ever got back to good economic growth conditions again...

I'd really like the stock to track sideways for a while so I can accumulate some more, ironically I'm quite disappointed to see it up 20 cents today, just means I have to pay more next time.

This company has a huge reputation and is widely regarded as N.Z's premier growth stock with its proven and highly profitable business model....which is chalk and cheese compared to one of the other stocks skyrocketing at the moment on nothing more than a wing and a prayer. There's your pyramid scheme, in nothing more than my humble opinion of course:)

[Queenstfarmer]

Hope it was a good wine! Agree re a long term view and as investor that chases the dividends...I thought I'd put a view things out there to get others opinions. Yes it may be some time before Ryman can afford to pay out decent dividends and they may be fine with you. I'm still of the opinion that the current sp is a number of years too early.

[Beagle]

Yeap, not worried about dividends. Its no bargain based on known public information that's a given but its a big call to say its years ahead of where it should be. Next months annual result will give further insights but I suspect they've been going absolute gangbusters this summer.

High qulaity stocks are thin on the ground on the NZX and we have interest rates at 50 year lows which always has an expanding effect on market Price Earnings ratio's and money in the bank will shortly be subject to potential percentage confiscation..not the safe haven everyone thought it was..arguably fuelling the rush to equities ???

[troyvdh]

Does anyone else see a correlation between the on going SP appreciation of RYM...and Res prop....valuations....

[Pumice]

mmm..appreciate the post....how much do you attribute the health of the residential housing market to the SP of RYM....thus far I can only assume that it aint much...cheers...

That’s a good Q Troyvdh, I wouldn’t mind knowing the answer to that as well.
Hopefully some of the property gurus can offer us some input.

I'm hoping its not strongly correlated.

[Vaygor1]

It almost crossed my mind to sell a few RYM at $5.70 the other day ... the trouble was that if I did, I coudn't think of anything better to do with the money than use it to buy RYM.

Reflecting on this, I decided that a sell and re-buy amounted to nothing more than a gamble on share price, and I am not into gambling.

Whatever price RYM settles out at a month after announcing this May, the sp will grow by at least 2 cents a week on average every week for the next year or two and will only accelerate from there.

If you are happy turning $6 into at least $7 tax free in 12 months plus 3 dividend payouts , then buy.

PS. Ryman announced something ages ago about listing on the ASX didn't they?

[winner69]

Taking house prices and RYM shareprice on a monthly basis since Jan 2005 there is a 82% correlation between the day. This is very high and says (in theory) movements in house prices accounts for 82% of the movements in RYM shareprice

The annual changes in both makes an interesting chart - both lines the 5 change from a year earlier. Spooky eh

That's what the numbers say anyway ..... what you have to believe it

Jeez amazing what you can do waiting for a plane

[Beagle]

It almost crossed my mind to sell a few RYM at $5.70 the other day ... the trouble was that if I did, I coudn't think of anything better to do with the money than use it to buy RYM.

Hits the nail on the head perfectly, in my opinion.

[CJ]

Watch out when the OCR rises then and all those high and mighty people who bought in at the peak start having panic attacks in the middle of the night because they're near to foreclosure!OCR rise would actually be good for RYM target demographic - typically they would have paid off their mortgage (so no impact there) and have money in the bank so an OCR rise would actually make them feel wealthy.

[skid]

Makes Sense-They are basically a very well run property rental company.
Their greatest asset is property,along with the buildings and expertise.
They make very good use of it in terms of cash flow.
If property values decrease,they would still get cash flow ,but would certainly lose some asset worth.
Not sure how that would affect further purchases,but as long as their equity is good ,I would imagine they would be able to weather the storm,even if the share price suffered a bit.
As a landlord myself,Im hoping this scenario doesn't eventuate.

[CJ]

Winner - another thing. you have correlated it with share price, not profit. That just means that RYM was a steal at the point when the property market, and I assume the share market were at a low. If you compared to the NZX50, is there a similar correlation? Don't the finance guys call it the beta as apposed to the alpha?

[NZSilver]

Winner - another thing. you have correlated it with share price, not profit. That just means that RYM was a steal at the point when the property market, and I assume the share market were at a low. If you compared to the NZX50, is there a similar correlation? Don't the finance guys call it the beta as apposed to the alpha?

Possibly a lurking varible in there!

[Beagle]

$6.00:t_up:

[Snow Leopard]

This announcement is good for another $1.50 by teatime eh?

RYM
30/04/2013 12:00
GENERAL

REL: 1200 HRS Ryman Healthcare Limited

GENERAL: RYM: Ryman Healthcare 2013 Full Year Results Release Date

Ryman Healthcare Limited (RYM) advises that it will make its result
announcement for the year ending 31 March 2013 to the market on Thursday 16
May 2013.
End CA:00235662 For:RYM Type:GENERAL Time:2013-04-30 12:00:31

Careful there young moosie, you are straying in to Tiger territory.

Best Wishes
Paper Tiger

[winner69]

At least somebody asking whether there was a relationship between house prices and RYM share price sparked a bit of debate.

Somebody asked so I dis the sums and since 2005 the correlation is 82% - and because I wasn't really thinking I should have said that the variances in one set of data (either one) explains 67% of the variability in the other set of data(not 82% as I said because I forgot to square it)

I made no mention of the causality or anything but that could be an interesting discussion

Haven't got the full numbers of people in different cohorts on me but it would appear that the house price / shareprice correlation is far stronger than than number of people over 60 and the shareprice ... but i leave that to another day.

Sparks ... do you have any numbers around the number of people who live in retirement villages?

[macduffy]

OCR rise would actually be good for RYM target demographic - typically they would have paid off their mortgage (so no impact there) and have money in the bank so an OCR rise would actually make them feel wealthy.

No poetry here - nice one, Moosie! - but if an OCR increase has a negative effect on the property market it would affect potential RYM customers, either by making it more difficult to sell an existing home or by reducing the price, whether sold on the open market or via RYM's sale facility. Overall, probably a neutral effect?

[winner69]

or whether theycan afford anything after student loan repayments come out of the pension

[troyvdh]

Thanks Winner.I would have thought the co-relation would be about what you said.Not only house prices but over all confidence to invest.It all adds up.Cheers

[Lawt]

This announcement is good for another $1.50 by teatime eh?



I feel the exchange should issue a please explain notice to Ryman - to find out why the price has only gone up 7c so far today.

[Beagle]

I feel the exchange should issue a please explain notice to Ryman - to find out why the price has only gone up 7c so far today.
:lol: Gotta give you some rep for that good humour :)

[percy]

From the mouth of local retirement village manager;"It is care and future care that motivates people to move into a retirement village."
Does the property market affect their decission I asked."No,it is their concern of care and future care."

[percy]

Sounds like a reply you would expect from a retirement village manager though right?
I mean clearly the property market has to come into play when people are making decisions to go into villages. For most people in NZ, property is where the majority of their $ are tied up in, so if the poperty market is bad, not only does a wealth effect come into play, but also for many there is hightened budget constraint too.

I have only two experiences to form an opinion from.
My mother who lived in Maroochydore could no longer properly look after herself.My brother,who lives in Hobart,while visiting our mother rang me and told me the situation, and he moved quickly to get her into a retirement village.Our concern was her safety and care.NO consideration was giving to the property market.
The other experience is with my mother in law who needed to get care as she was suffering dementia.Again NO consideration was given to the property market.
The retirement village manager just happens to be a friend of my wifes who had called in for a cup of tea.
Confirms to me what I felt was the case.

[percy]

turmeric;
The village property manager was telling me about a couple who want to purchase a unit in her village.Main consideration is, should one of them die the other will be safe and receive care.She does not have a unit avaliable at present,so they will have to look elsewhere.
So no need for care at present.
They have sold their house with a long settlement date,to give them plenty of time to acquire a retirement unit.
So in this case I would think it is the property market playing a major/big part in their decission.
Whether that is more important to them than their peace of mind I don't know.

[Beagle]

There is undoubtably some linkage between the real estate market and the ability of elderly people to move into retirement villages but in my opinion nine times out of ten the potential resident is selling a bigger house to move into a smaller retirement unit in a village that they perceive will look after their needs well.

Becuase the transition almost invariably involves moving into a smaller unit that's more manageable, there's effectivly a trading down in size and value, hence from the vast majority of retirement village uinits I've seen there was a high level of affordability for the average potential resident in that area.

I visited all the retirement villages in the Hibiscus Coast before helping my parents to make the decision that best suited their needs. In their case they sold a very, very modest 2 bedroom home in Red Beach Whangaparaoa and ended up with a lovely sunny 100sq metre unit, money for a new car and $100,000 left over as well. My mum really enjoys living there and is extremly well supported now that Dad has passed on. Ryman in Orewa did a reasonable job of looking after my Dad during his advanced dementia stages.

Discussing the state of the Auckland housing market yesterday with the N.Z. general manager of one of the major Aussie owned franchise chains, he told me that Auckland homes that are watertight and in reasonable condition are in exceptionally strong demand. No doubt these sort of boyant conditions makes selling retirement village units incredibly easy, hence why I'm expecting a bumper result of the annual result next month.

I personally believe the stockmarket in ramping up Ryman's price in such a manner is saying that these boyant conditions will continue for the forseeable future and effectivly means that revaluations are perhaps baked into normal operating earnings too. I also believe as posted recently that money in the bank is no longer viewed as a guilt edge security it once was due to the new banking regulations and there's a rush to find high quality high growth and very safe stocks.

[glasszon]

The share price seems to have went down instead today on high turnover while SUM is going up, did I miss something or just a small correction due to its recent rise?

[Beagle]

Bail on SUM as RYM will takeover tomorrow up another 4% lol. They trade places, day-on, day-off (gets me slightly suspicious)...

Nice prediction on Ryman:)
The new Australian director has very strong credentials. Nice addition to the board.

[winner69]

The number of people over 75 has increased by 2.3% pa over the last 10 years. Projected growth rate is 3.5% pa over the next 20 years. Similar rates apply to over 65 year olds

Everybody talks 30% pa plus growth for the likes of RYM and SUM

Obviously got to come from more than the increase in the number of potential customers (old people) because that is going to be only 3.5% pa

Maybe the %age of old people going into homes is going to increase (so we get population growth PLUS a greater % of potential punters) - they call this increased PENETRATION in the trade. What are the drivers of having more people wanting to move into homes? There is a multiplier effect here - if the % says the same customer growth remains at 3.5% but each 1% point increase adds more than 1% point to the growth rate. (say 10% in homes now and that goes to 11% demand (number of units needed) increases by 10% for instance)

Suppose another drive of growth is market share - are RYM and SUM for instance expecting to grow share of punters going to their villages?

Outside of the demand side is a lot of the profit then coming from the fianancial impacts of valuations, customer churn (poor sods dying) and other factors

Looks like all are important - because if nothing changes demand (ie number of customers) is only 3.5% pa (in spite of the headlines like doubling the numbers of old people etc)

Interesting. Maybe financial engineering in some form or another is the real profit growth engine?

Sparks - have you found out for me yet the number of people living in retirement villages at the moment (even better if you had a number for 5 or 10 years ago as well). Might build a model to see how many units are needed in the future under different scenarios to see what a likely 'demand' growth rate might be

[Beagle]

Everybody talks 30% pa plus growth for the likes of RYM and SUM

Obviously got to come from more than the increase in the number of potential customers (old people) because that is going to be only 3.5% pa


The number of New Zealanders living in retirement villages continues to increase rapidly. Among over 75 year olds, the number of people who call a retirement unit 'home' has grown from 5% in 1998 to 9% in 2011. If that growth rate continues New Zealand will need more than 21,000 extra retirement units and 20,000 aged care beds by 2031. Extract from Summerset CEO's AGM presentation on 30 April.

Ryman's stated objective is to achieve 15% growth per annum. I believe Summerset's profit growth will be higher than that for the next few years as it seems to me they've only recently hit the critical mass necessary for rapid profit growth. I'd be surprised if it wasn't quite a bit more than 30% for the next few of years in particular as they've only recently brought building development in-house and have stated they're looking to achieve substaintially higher development margins, (Ryman's development has been handled in-house for quuite a considerable time now).

In the States I understand retirement villages account for 15% of the aged population, sorry can't post a link as I can't remember where I read that. In my view the treand will continue based on a growing recognition of the quality of life a high quality retirement village can bring to one's retirement years.

I don't think a 15% penetration of the aged population within 15 years is unreasonable, feel free to extrapolate that trend into your models :)

[winner69]

Sparks

- your homework says RYM is a solid long term 'hold', you and nobody else knows what it may be worth one day
- you and some others think it has got ahead of itself pricewise. It probably has been ahead of itself for sometime
- some (even you seem to agree) the market might fall quite a lot - if so when, we don't know
- you seem keen to protect the profits you have already made, or most of them

The adages let profits run / never try to time the market / and as Mr P said the market giveth but the market taketh away just as quick

For stocks that keep rising I have for a long time used a thing called Average True Range (ATR) as a sort of trailing loss'. Google it and see what it means as investapedia or something will explain it better than me

Essentially when a stock is consistently rising over so does the ATR. I use the ATR as the price to sell if the price starts falling. You can have tight 'stops' by using a ATR of 2 or loosen it up a bit by using a factor of 3 or 4. Nothing worse than selling and seeing the price go up again eh. To me a tried and true method that suits me. Like I I like holding stocks for years if they keep rising but I am ready to sell if indicators look like its going to down.. You'll never sell at the top but collect most of the gains.

Here is a chart of RYM with the ATR at 4 (4 times Average True Range) shown. You can see it works well for RYM and would have kept you in for the last few years (my data was a bit wonky prior to 2011 so didn't go back any further). I confess that I don't sell the exact time it hits the ATR but wait a day or two - invariably the price seems to recover. Eventually you will leave a percent or 2 on the table but have made more than that in the times the price has recovered. Would have avoided selling in that recent slight dip.

On this chart the red line is at 5.51 after todays action. I wouldn't sell until it gets back to that price (or higher if the ATR goes up). I don't have any RYM so don't need to decide but sure you will do the right thing

Still having doubts sparks .....the 551 is now 578

Don't sell any yet

[winner69]

Winner69 - not selling yet. May not sell ever!

why ever sell if the black line is going up

[percy]

Good for another 25 cents on the SP! :p


RYM
01/05/2013 09:54
DIRECTOR

REL: 0954 HRS Ryman Healthcare Limited

DIRECTOR: RYM: Ryman Appoints First Australian Director

Ryman Appoints First Australian Director

Ryman Healthcare announced today the appointment of George Savvides as its
first Australian director.

Mr Savvides is Managing Director of Medibank, Australia's largest health
insurer. He is also Chair of World Vision Australia and is a member of the
Australian Institute for Population Ageing Research.

"We are delighted that George has accepted our invitation," said Ryman
chairman Dr David Kerr.

"George brings to the Board over 20 years of healthcare experience, in both
the commercial and the public sectors. His local expertise will be
invaluable as we seek to establish ourselves in the Australian market."

Under George's leadership, Medibank has enjoyed record membership growth and
strong financial performance. Medibank's revenue has grown to over AU$5
billion per annum, with a customer base of 3.7 million people.

George joins the Board as a non-executive independent director.

Construction is underway on Ryman's first Australian village in the Melbourne
suburb of Wheelers Hill.

Last year the company lifted its build rate in New Zealand to 700 retirement
units and aged care beds.

Statistics NZ estimates the number of New Zealanders aged 75 plus will more
than double to 538,000 over the next twenty years. In Australia the outlook
is similar, with the number set to double to 2.8 million.

Established in 1984 Ryman has become one of NZ's largest listed companies.
The company currently owns 25 villages in New Zealand and serves over 7,000
residents. Each village offers a combination of retirement living and aged
care.

Ends

Media advisory: For further information, photos, interviews or comment
please contact Ryman chairman Dr David Kerr on 021 362 403, or Ryman managing
director Simon Challies on 03 3664069 or 0274 968 762
End CA:00235715 For:RYM Type:DIRECTOR Time:2013-05-01 09:54:46

An important and signifciant announcement.
As always, RYM just do it right first time.

[Lawt]

Well, one year, $6.50 target is about to be hit in little over two weeks after being announced. This is RYM's new theme song I'd say...


Quick Moosie - send over more coffee.

[Beagle]

A few weeks ago I added aggressivly at $5.41 on the basis that this is the best long term growth stock in the market and as I have a super long term viewpoint now the hghish PE doesn't matter. It never entered my mind that a few weeks later they'd be up a $1 to $6.41, I thought they'd be about $6.50 by the end of the year or maybe by April 2014.

Wish I'd gone even harder now.

[Beagle]

Yeah wouldn't it be great if you could have 20/20 vision of the future :)

[777]

And 100,000 go through at 6.47 after close.

[troyvdh]

777...you beat me to it...probably it was an insto...and probably want a return on that...I often reflect on when I last saw a SP curve like whats occurring here...sure DIL and Xero are there....when I reflect on the 80's.....many companies had similar trajectories in SP...but at the end of the day..it was all waffle and hot air....me thinks that the same could not be said at present times.
I at times "flirt" with a founder of RYM....its my belief that in a few years ...after another 1/5 split....this outfit continue to perform....cheers all.

[Beagle]

wow...

Look, I adore this company. I think management are fantastic, the product is excellent, the growth plans believable and deliverable.

But I can't rationalise the price at $6.45 based on my intrinsic value analysis using the trailing twelve months EPS of 16.8cps. It suggests Ryman is around 20% overvalued (the same model told me Ryman was the It is still slightly overpriced when I use next years earnings estimate of 19.6cps.

Either Ryman's earnings growth rate spikes to 18% plus over the next few years, and we get a serious bout of optimistic forecasting from management when they announce their results in two weeks, or this stock is getting ahead of itself.

People are baking in annual revaluations as part of normalised earnings IMO. To some extent with the ever escalating cost of construction, (in no small way affected by almost monopolistic product pricing by the major building suppliers), I feel this sort of approach isn't entirely unwarranted.

I also feel the market is saying that ultra low interest rates are here for the forseeable future and considerable expansion of historical PE's is therefore justifable and at the risk of sounding like a broken record, due to the new banking regulations money in the bank isn't safe anymore so smart money is looking for somewhere where it really is safe. In effect one faces an equity risk in the bank, (they could confiscate 20% or dramatically more of your money in a crisis), for a pathetic return of 4% on term deposit before tax, what a great deal, (NOT) !!

Ever since that change the Ryman price has become supercharged. Coincidence ? or a flight to arguably New Zealand premier growth and wealth creating stock that it could be argued is in fact safer than money in the bank ? You guys decide but I won't be selling, this stock is a winner.
Peope investing now are thinking of 2014 earnings and beyond incl revaluation gains not 2012 earnings without reval gains.

[troyvdh]

dear Moosie its hard to argue against your predictions ...,.however may I say a few things may be against you...BHP for example has been truly dreadfull...same for Rio...so goes NZ wealth...as both MKTS are connected....the building costs increasing in CHCH are obscene and in all likely hood false and embarrassing to most of us...many of of us (here in CHCH) are bewildered as to the new "construction world"....

re interest rates...I do not agree with you...

[Beagle]

The OBR is not in effect yet, it is still in consultation phase.
http://www.rbnz.govt.nz/finstab/banking/4430900.html
Your money is still safe.

Its only a matter of time. I've heard what John Key has had to say on the matter and my money is on this coming in very soon. Its effectivly a done deal, you mark my words.

Sparky - Its only natural to want to whip some cream off the top when you're sitting on such fantastic gains..., just relax and enjoy some of it...after all if you can't enjoy some of the cream from time to time what's the point of it all :)

Moosie - The way I see it, due to the systemic banking issues thrown up by the GFC the developed world as a whole is locked into a low interest low growth, low inflation path for many, many years to come.

[Beagle]

Only time will tell moosie.

Here's a view on Ryman's EPS. If one assumes revaluation gains are baked into normalised earnings due to the natural churn of retrement village units and the ever escalating construction costs then :-
Reported earnings per share for 2011 were 20.1 c.p.s.
Reported earnings per share for 2012 were 24.3 c.p.s.
Estimated earnings per share for 2013 - est 29.2 c.p.s. (Simple extrapolation of last years percentage growth)
Estimated earnings per share for 2014 - est 35.0 c.p.s. ( As above)

Forward PE for 2014 at today's closing price of $6.47 = 18.48, which for a company with a fantastic growth record and great prospects in Australia doesn't look too expensive to me.

Note also this company's cash flow increased 27% last year and no matter how you slice and dice the EPS and valuation theory...we all know its really all about cash flow.

[Beagle]

Yes, got a bit forward looking with earlier comments, my mistake. I guess some people will wait for the legislation to be enacted and then look for other alternative investments, (I suspect the vast majority won't even realise the new risk they've inadvertently exposed themselves too), whereas those that realise the game is basically up for low risk term deposits are already doing something about it, hence the rush to high quality growth stocks like Ryman by forward looking investors.

The market is clearly looking for a very strong result from Ryman next week.

P.S. I think we need to change the title of this thread, Ryman is anything but boring:t_up:

[777]

Of course it's boring. All it does is go up.

[Snow Leopard]

I reserve the right to change my tune when the results come out and they reveal their evil plan for world domination but at this moment I see no justification for this share price.

I believe that Ryman will be worth this much in almost exactly 3 years time, 2016.

Just because it has a good model which gives the best certainty of consistent future growth does not mean you should pay any price for it.

We have a Ryman bubble, there is a much speculating in this as in certain other stocks on the exchange.

I sold some of these less than two weeks ago at $5.70, successfully rode ATM from 60c to 74c and have not made significantly more than I would have done not selling.

Two months ago you could buy for $4.59, unbelievable.

Best Wishes
Paper Tiger

Disc: Still own lots.

[Beagle]

Well First N.Z. Capital who some on here claim are N.Z.'s leading broker that do the best reasearch came out the other day and valued them at $6.95, (one would presume after recently meeting with company exec's and having some in depth discussions about current trading conditions and future plans...). Next weeks annual result is eagerly awaited.

P.S. A lot of stocks appear fully valued at present, only a very few of which have outstanding long term growth prospects.

[tosspot]

If you dont mind me asking sparky how much of RYM do you own. over $100,000?

[Arbroath]

Great company and well managed but now well overpriced. Agree with Sparky that it's probably c. 20% overvalued. Thought it looked fair value at $4.50-4.75 area but as often happens the market gets carried away with stocks that it loves.

[hilskin]

A question for the experienced investors on here.
How do you think RYM will hold up if there is a correction in the market. I am a small time investor and I hold a small amount of shares in RYM (1000 shares purchased at $5.00 ) which if i sold tomorrow would give me a tidy little profit. I wish i brought more at the time and then I would have no problems selling some to realize the profit and still be in a good position to sit through a correction of the market if it happens, but I don't.
Do I sell now and look to come back in at a lower price point or do you believe RYM will hold up through a market correction so I should just hold as it is such a great company with huge potential. At the end of the day it is crystal ball stuff but I am just interested in your opinions on this company if there is a big correction in the market.
Cheers

[janner]

P.S. A lot of stocks appear fully valued at present, only a very few of which have outstanding long term growth prospects.

And they are ??? :-))

[iceman]

I agree First NZ are great brokers with an excellent research arm. But that doesn't mean I follow them blindly. (I was the one who first posted the $6.95 valuation on this website when it came through to me)

I have sold another 7% of my holding at $6.47. Roughly 14% of my holding now sold these last two days. That's enough for now though.

My own spreadsheet (which has served me well when identifying RYM as a screaming buy), now tells me that RYM is 25% overvalued on its 2012 earnings, and 15% overvalued on the expected EPS of around 19.6cps. (That is based on underlying earnings, rather than NPAT, which is how the company reports)

Now, if Ryman were to uprate their earnings growth rate to around 25% per annum (from a consistent 15-16%) for the next five years, I would consider the current price a good entry price.

However, I see that as hugely unlikely. It is possible an ASX launch may boost the price, but that is relying on "some greater fool" rather than earnings fundamentals.

I therefore agree with Paper Tiger above that people buying today are paying for an earnings capability that is at least two years down the line.

That being said, I still hold 85% of the holding I had as of Friday last week. It's hardly that I hate the stock, just that I think it prudent to take some profits after what I consider an absolutely stellar run since 2011. I wish those buying in in 2013 all the best, because it's still in my interest to see Ryman do well!

Sparky, may I just say that I have followed your very thorough and well considered comments on this stock (SUM & PGW as well) for quite a while now. I appreciate them enormously because you have both knowledge and time that I don't have to research these companies in much greater detail than I possibly can. Along with other great posters here that have taught and helped me a lot, I would like to share a little story to say thanks to all of you.

Early last year my 2 teenage daughters had to sell (other party wanted out) a half share in a bach in a highly priced North Island beach holiday area, that they got from their mother and I when we divorced many years ago.
We decided to put 30% of their money in the NZX. Of that we put 50% in RYM, 35% in HNZ and 15% in CEN.

Today we sold half the RYM shares and have sold all the CEN shares since Norman-geddon. We are currently looking at using the receipt of those sales to buy back the half share in the bach, although my daughters who did not really want to invest on the NZX last year, now question whether we should move so much cash into property again :)
They suggest (not overly influenced by Dad) they should put it into SUM, PGW, AIA and SAN so we probably will !

My 17 & 15 year old daughters are pretty happy and would like to say thanks to you STC and all the other posters on here that so freely share their great knowledge. I second that without hesitation !

[janner]

You are not alone with those thoughts iceman..

We all learn from this site.. From the many contributors.. Sparky ( bless his cotton socks ) just learnt about Coppocks..

The more we all give,..

Well you know the rest of that statement..

[iceman]

I would be completely amiss if I wrote such a complementary post on RYM like I did above and thanking the influential posters for my daughters, without formally mentioning Sauce. He/She more than anyone got my focus on RYM originally (my own shareholding goes back much further than my daughters investment). My apologies for not including Sauce in my thank you message above but that's the risk I ran with even thanking/naming anyone :(

[troyvdh]

I do not believe (I could be wrong) that any major holders have sold. That would be a game changer....true ?

[Beagle]

And they are ??? :-))

Summerset is another one worth taking a long term position in, in my opinion.

[enzed staffy]

Has anyone seen the ryman result due out today?

[enzed staffy]

oh apologies its tomorrow

[Pakiri]

Underlying profit just over $100.2 million. Final dividend 5.4cps

[Beagle]

Not highlighted in their announcement but i did the comparison with last years profit announcement and last year operating cashflows improved 27% to $169m and this year they increased 31.4% to $222m !!

Acqusition of new property at Birkenhead Auckland. I am very pleased to see them adding to their Auckland development programme.

Very happy with the result which is at the top end of my expectations.:t_up:

[skid]

Iceman, that's the coolest thing I've read in a long time. Thank you for sharing the story with us, which serves to show an important lesson - Shares exist to serve us.

Buying back your share in the bach is in my opinion the BEST thing you can do because it will deliver you and your girls much joy. I can't think of a better outcome than using profits to boost your lifestyle with an asset which will also gain over time. Not that you should listen to an anonymous clown on the Internet....

Be careful what new equities you buy now, it's pretty expensive out there.

Sound advice-Ive heard that holiday batches have pulled back a bit .If thats the case you may get some change out of your purchase back in.
In terms of shares -things have surged so much that it seems logical that the market is becoming overbought-if thats the case,buying back in after the correction would be good buying[or simply avoid the loss]

[CJ]

TESTIFY!!!!! RESPECT!!!!

Edit: apparently if your whole post is in capitals, it is automatically changed to lowercase so I have recapitalised

[CJ]

Acqusition of new property at Birkenhead Auckland. Do they list where their undeveloped sites are anywhere. I would be interested to know what site they have bought in Birkenhead.

[Beagle]

Do they list where their undeveloped sites are anywhere. I would be interested to know what site they have bought in Birkenhead.
I'm sure it will be detailed in their forthcoming annual report. Brief review of financials looks good. No concerns.
https://www.nzx.com/companies/RYM/announcements/236273
Average sale price of units is ~$350,000 so affordability as compared to national average sale price of people's homes is still very good indeed.
Shares look fair value to me at present price of $6.25 and a great long term hold.

[Beagle]

Market seems impressed with the result.

[Snow Leopard]

Absolutely positively completely normal Ryman result.

The upped build rate now fully flowing through the operating cashflow.

Best Wishes
Paper Tiger

[tosspot]

Harimau yang terunggul= Leading Tigers in Spanish

You learn something new everyday.

Anyone have a new price target on RYM now?

I reckon the market has already priced in the results. there will probably be a run over the next few days to 6.60 then band between that and 6.30 for a while

[Snow Leopard]

Harimau yang terunggul= Leading Tigers in Spanish

You learn something new everyday....

Actually it is Indonesian, and singular.

Best Wishes
Paper Tiger

[Slam dunk]

I'm encouraged by Challies' comments that they want to build in Victoria at the same rate as NZ within 5 years.

"The aim is to get a mandate this time next year to roll out in Victoria at the same rate as we do in New Zealand."

[Beagle]

I'm encouraged by Challies' comments that they want to build in Victoria at the same rate as NZ within 5 years.

"The aim is to get a mandate this time next year to roll out in Victoria at the same rate as we do in New Zealand."

Yeap, here's the article for those that missed it this morning
http://www.stuff.co.nz/business/industries/8683105/Ryman-Healthcare-expansion-depends-on-Melbourne

[Vaygor1]

28-March-2013
Will RYM crack the 10 cents/share divvy this year? I think so.

Ta-darrrrrrr.

[Vaygor1]

And MorningStar still have RYM at $4.50 with a recommendation to REDUCE.
Can you believe these guys?

[Beagle]

[
QUOTE=SparkyTheClown;407420]Was just thinking that this morning. Moaningstar - the most negative of all analysts in NZ. They are predicting 12% growth for Ryman.

Ryman = village builders
Moaningstar = village idiots.[/QUOTE]Classic :laugh:

[CJ]

Was just thinking that this morning. Moaningstar - the most negative of all analysts in NZ. Behind the NBR paywall so haven't read the article but I see Carmal Fisher has taken a swipe at Moaningstar.

[Joshuatree]

Craigs for what its worth.

Downgrade to hold
Price Increase of price target from $4 to $6
Revised med term build rate forecast from 600RV units/ 325 care beds pa to 750RV units/ 420 care beds

Upgraded price inflation forecast to 6% (was 3%) from FY14-16

[ENP]

Wouldn't disagree with Craig's research. $6 "feels right" to me. Certainly more so than the almost $7 and over $7 valuations by FNZC and Forbarr.

As for the folks at Moaningstar, well, they remain at $4.50 and reduce.

Hi Sparky,

What return per year do you hope to make if you purchased RYM shares now if you buy and hold?

Considering a P/E ratio of 23 is quite high. If after 5 years it was valued at only 17-18 times earnings then you would only be making somewhere between 8-9% per year based on growth of EPS hovering around 15%

Why not wait until they become a bit cheaper, more in line with 17-18 PE then you could potentially earn in excess of 17% per year which is almost double what you would be making per year if you bought now.

Because at the end of the day, your annual return is based quite considerably on the price you pay for the stock.

[CJ]

Why not wait until they become a bit cheaper, YOur lucky your young as you may be waiting a while. Buyers would enter the market well before the annual return got to 17%!

What is the annual return on property companies? about a 8-10% yield so a 8-9% return for Ryman sounds reasonable. The risk is they don't grow at 17% a year and as a result their P?E ration gets hammered, resulting in a double hit on the shareprice.

[ENP]

When they were priced at 12 PE about 3 years ago the potential returns were well above 17% p/a

History repeats. It doesn't take a genius to figure this out

Where is the margin of safety buying at 23 times earnings?

[CJ]

When they were priced at 12 PE about 3 years ago the potential returns were well above 17% p/a

History repeats. It doesn't take a genius to figure this out

Where is the margin of safety buying at 23 times earnings?They were young and unproven back then. They have now proved that they can deliver yoy results of 15%+.

Agree there is no safety margin which is why this is a hold, not a accumulate/buy in my opinion.

[Beagle]

Plenty of people buying Summerset on a historic PE of over 40 believing that the company will continue to grow quickly, on the other hand as you can see from the link I provided late last week, Ryman have plans to grow their operation in Australia quickly and have recently taken on board a highly talented new Australian director. When you consider that Ryman has grown the company significantly both before and throughout all the years of the GFC they command the respect to deserve a premium rating based on proven performance and a thoroughly proven growth stratagy.

Anyone looking for a material correction in the share price shouldn't hold their breath, in my opinion. This stock is best of breed by a substaintial margin compared to its other unproven competitors, yet one of which trades on nearly twice the multiple, go figure ?

I respectfully disagree with you Sparky, this company is growing its cash flow at a remarkable rate circa 30% for the last two years and its this cash flow that will drive the profit and build rate going forward.
Fact is cash returns almost nothing so if you're not investing in a blue chip proven growth stock like this, where do you put your money to get better proven results, surely not Summerset with its incredible PE ratio and unproven record ??? or are you in the "I'm waiting for a significant pull-back camp" ?

If Ryman can grow their Australian operation and build momentum and brand credibility over there... the stock could easily be double its current price in 5-6years in fact if they can maintain 15% compound growth and the PE stays the same that's exactly where they'll be.

[Joshuatree]

I have no research to verify but have heard a number of times that returns in Aus in this sector are alot less then NZ for whattever reason (subsidies, tax interpretations, structure , margins etc) so is it maybe wrong to suggest return rates will be the same as NZ?

[Snow Leopard]

Plenty of people buying Summerset on a historic PE of over 40 believing that the company will continue to grow quickly, on the other hand as you can see from the link I provided late last week, Ryman have plans to grow their operation in Australia quickly and have recently taken on board a highly talented new Australian director. When you consider that Ryman has grown the company significantly both before and throughout all the years of the GFC they command the respect to deserve a premium rating based on proven performance and a thoroughly proven growth stratagy.

Anyone looking for a material correction in the share price shouldn't hold their breath, in my opinion. This stock is best of breed by a substaintial margin compared to its other unproven competitors, yet one of which trades on nearly twice the multiple, go figure ?

I respectfully disagree with you Sparky, this company is growing its cash flow at a remarkable rate circa 30% for the last two years and its this cash flow that will drive the profit and build rate going forward.
Fact is cash returns almost nothing so if you're not investing in a blue chip proven growth stock like this, where do you put your money to get better proven results, surely not Summerset with its incredible PE ratio and unproven record ??? or are you in the "I'm waiting for a significant pull-back camp" ?

If Ryman can grow their Australian operation and build momentum and brand credibility over there... the stock could easily be double its current price in 5-6years in fact if they can maintain 15% compound growth and the PE stays the same that's exactly where they'll be.

Operational Cash Flow is a lumpy thing and the 5 to 1 year average annual growth rates are:
12.0%, 18.1%, 14.1%, 29.2%, 31.3%
the last two years have benefited from the last step up in build rate to 700 pa. It is the great chicken and egg thing (or perhaps a virtuous circle) the cash flow funds the new building which produces a lot of the operational cash flow.

Now if we accept that at $6.38 Ryman is priced correctly given it future, then we can could quickly price Summerset on the assumption that it has achieved the same capability. Depending upon which particular metrics you want to use out pops a price range from $4.07 to $4.90.
Given that the market thinks it only worth $3.07 then despite the high historical PE you mention it is obviously not regarded as another Ryman yet.
But on the other paw if you believe SUM will get there in a few years then perhaps it's bargain, or maybe not.

Of course if the new improved Metlifecare every gets it act together then there's some serious share price appreciation, so wait and see how that if looks come Full Year.

But at the end of the day markets are irrational swinging between deep gloom and high exuberance and on the way between the two occasionally hits sensibility:

Over the last four years the Ryman share priced has averaged about 30% growth per year, over the last 3 months it has increased by 38%, where was the point of sensibility?

Best Wishes
Paper Tiger

I hope that all makes sense to someone

[Queenstfarmer]

My point made right there!

[Beagle]

Some intersting erspectives and a good healthy debate.

Is Ryman as THE BLUE CHIP growth stock with a proven track record expensive ?... here's some perspective relative to other stocks:-
1. Ryman Reported EPS 27.35 cps At $6.38 PE is 23
2. Summerset Reported EPS 6.9 cps At $3.08 PE is 45
No point talking about Metlifecare, they're losing money so here's some other Blue Chip Comparitives, not that either of them have an established consistent record of growth.
3. Sky City Reported EPS 21.9 At $4.41 PE is 20
4. Fletchers Reported EPS 27.39 At $8.30 PE is 30

Fletchers is a cylical stock and SKC has anything but a consistent proven record of growth.

Ryman in my opinion, is the best value of those four by a comfortable margin....then there's the fact that you can sleep well at night knowing they have a proven 15 year history of excellent management and strong growth.
Can anyone dirrect me to another N.Z. stock that has such a proven business model ?

My point is that the market has finally woken up over the last two years to the merits of Ryman as a company.
Sure the major re-rating cannot continue at such pace but if one is investing for the next five years then of these four i'd back Ryman to provide the best return even from its current share price.

Brokers cash flow models don't mean much to me, I look at the history of proven growth Ryman has and the other companies that just make excuses why they arn't growing.

Apoligies if the rose tinted glasses are too shiny :)

[CJ]

Have you adjusted Fletchers for its annual 'one off' restructuring expenses.

I note CEN and TPW who have stead cashflows like Ryman have a PE between 17 - 19 (MRP is 27)

A PE of around 20 sounds right and would be a buy below this unless there were factors that caused it to drop below this level.

[ENP]

Buying Ryman shares just because they are better value compared to Mighty River, Contact Energy, Telecom makes no sense.

What if all 4 are overvalued?

It would be like going to the grocery store and bananas are $5/kg, oranges are $7/kg apples are $6/kg. They are all a rip off, so why not wait until something comes in season when you know you can buy them all for $2-3/kg

[Beagle]

There could be a correction coming Sparky and I certainly value your comments and perspective but my point is if you want to be invested in the N.Z. market now as opposed to owning bonds, cash Gold or something else, show me a better company with compelling funadamentals...there's your challange my friend.

Note Summersets PE of 45 is based on earnings that included their realsied revaluation gains, without which they would have struggled to make a profit at all. Yeap its twice as expensive as the proven performer Ryman on a relative PE basis and Summerset is more dependant on revaluation gains, a good model that commands a PE of 45....I'm not convinced.

We have long term bonds at 4%...is a PE of a strongly growing company at 23 on a historical basis expensive, no not really in my view.

And no I havn't adjusted Fletchers for their "one-off" restucturing those a simple reported EPS numbers. Whether people buy into the Chch rebuild story or whether these are truly one-off restructuring costs, you decide but its another that leaves me unimpressed as far as I'm concerned.

[Beagle]

Fair enough Sparky and you are very fortunate to have been investing when it was $2.50 AND have had the patience to hold all this time. I have to work on my skills in terms of patience. I'll have a look at Chorus, that's slipped under my radar, thanks.

Regarding the buying shares like fruit when its in season comment posted above, well Gold stocks are dirt cheap, for example RSG Resolute Mining in Australia is on a PE of only 3, help yourself if that's not in season i don't know what is.... but then again I can't help but wonder if Gold keeps going down whether the fruit ends up being spoiled.

I hear on CNBC this morning that many of the leading private wealth fund managers are sitting with circa 30% cash holdings at present...food for thought indeed.

[ENP]

Now is the time to be taking profits off the top, in my opinion, rather than deploying more capital.

I have been taking small amounts off some of my shares.

Hi Sparky,

When you sell your shares are you just keeping in cash (savings account, term deposits) or are you investing elsewhere?

[Beagle]

Fair enough..the latter part of my last post, just for the sake of clarity was in response to ENP's comment #1295 above, sorry I should have used the multiquote button to make my post more transparent.
For what its worth RSG does seem to have issues and quite specific risks, quite apart from the collapsing gold price and they're 100% un-hedged....anyway sorry to digress.

Back to Retirement villages, yes SUM does seem to have some great locations, an excellent land bank in Auckland, amoung other areas, a growing development margin that they're forecasting to grow to 18% but I think all of that is already in the price. I think all of Ryman's recent result is built into the price too but I've got a five year minimum investment view and think they're a great one to stick in the bottom drawer, so to speak.

[Beagle]

Leaving cash with the broker on call, after retiring all debt.

I now have an increasing war chest, plus fully available revolving credit facility primed for when I need it. No margin facilities in place, but wouldn't rule out temporary use of margin for buying opportunities.

I see there's a new model Mercedes-benz S Class that's just been released, you can't take it with you:D

[winner69]

Do you guys have a chaffeur or do you do the driving yourself

[ENP]

The dilemma that the individual investor faces is whether to retain the stock for the long term or sell it when the price exceeds it current intrinsic value. Fisher maintained that most investors who sell a high quality stock in hopes of buying it back after it recedes sufficiently in price, generally fail in their attempt. Thus even if the growth company becomes significantly overvalued in the short term it generally behooves an investor to hold for the long term so long as they are invested in an extremely high quality company.
Sparky,

Just out of interest, why do you prefer the "sell when overvalued" approach rather than "buy and hold" approach?

[Beagle]

Do you guys have a chaffeur or do you do the driving yourself

I hear the S Class is too nice to let someone else drive it... anyway...back to Ryman.

[Billy Boy]

tThose who hold are the one who generally bought at top or near too. And hate to take as hit.
So they wait for the SP to get there again and then sell. Thats OK if they are divvy shares but
not so good otherwise
BB

[Billy Boy]

Not sure I agree with that...I'm holding RYM, and whilst I didn't get in early, I definately did not get in at or near the top (ave price is $4.70). In fact I hold a lot of stocks which I got in relatively early....
Thats my point
You got in at 4.70 so your div is 2.3% or there abouts
those who are buying now will have ab out a 1.69% div.
I hold at about $4.00, sold half recently as the sp profit was more than the div.
BB

[Beagle]

Have you adjusted Fletchers for its annual 'one off' restructuring expenses.

I note CEN and TPW who have stead cashflows like Ryman have a PE between 17 - 19 (MRP is 27)

A PE of around 20 sounds right and would be a buy below this unless there were factors that caused it to drop below this level.

Contact, Trustpower and not so Mighty River Power are companies that are invested in an environment of absolutly zero growth demand for their product. Electricity due to real price increases of circa 70% over the last decade has reached a point where there's demand destruction because of the price and many families struggle to pay their power bills, especialy over winter.

You simply cannot compare zero growth companies PE's with those who have a demonstrated long term growth record of ~15% per annum, and are operating in an environment with such favourable dynamics (unless you are the Govt trying to sell shares LOL). Either Ryman is inexpensive compared to those companies and Summerset and the others I mentioned yesterday...or those power companies and the other shares previously mentioned are over-priced. My contention is the latter and for that reason I don't own any of them. I put it to you folks that Ryman has earned its premium PE rating whereas others are trading on similar ratio's on a wing and a prayer with little or no prospect on any meaningful growth and there will be tears.

[Beagle]

Expensive/inexpensive on what basis though?

On the basis that the current RFR last traded for 10 Year Govt Stock is 3.4% and that traditional broker models attribute a risk pemium for equities that's too high for a stock like Ryman, (typical equity risk premium is 3%).
It could be argued that Ryman are a safer bet than the Government, (tongue in cheek).

As far as the eye can possibly see my perception is that central governments around the world have no option but to continue an extremly low interest rate environment which is highly supportive for equities, but of course if we ever get into a position where Government stock in N.Z. is back at 6% as you've suggested then all equities would face a re-adjustment especially the ones that just make excuses rather than making growth.

[stoploss]

I think FNZ just upgraded RYM fyg.....

[stoploss]

link or quote?

Moosie I am not a customer was talking to a mate , who was asking me about them . He told me he had just been sent some research from them upgraded today ....

[CJ]

Moosie I am not a customer was talking to a mate , who was asking me about them . As long as it wasn't your friendly Coop taxi driver - Sparky would have a fit.

[stoploss]

As long as it wasn't your friendly Coop taxi driver - Sparky would have a fit.


hahah, I won't come on here and put any crap up . I stand by my comment

[Beagle]

http://moneychimp.com/articles/valuation/buffett_calc.htm

I don't put a lot of stock in intrinsic valuation model calculations because they require you to assume a certain % growth for a certain number of years followed by growth levelling off at another much lower percentage, (referred to by brokers as terminal growth rate), that has to be lower than the RFR in the model.

Doesn't suit Ryman well due to the intrinsic inflation growth built into their business model, i.e. selling units at today's prices and booking profits in due course on all future inflation gains due to the natural unit churn, but when I plugged in the following variables into Buffett's intrisic valuation model:-
Reported EPS of 27.5
Earnings Growth 15% for the next ten years (before levelling out at 3.3% thereafter), this is the truly stupid part of the model in my opinion as I had to use a rate that was lower than the RFR), and with a present 10 year RFR of 3.4% that gave a valuation of $7.58. If one assumes they can keep growing the company's EPS at 15% for the next 15 yearsbefore grwoth levelling out at the aforementioned rate this gives a value of $12.93.

If you use higher RFR's then in my opinion, one should use a higher terminal growth rate as the business model effectivly captures all embedded inflation as part of its growth.

The bottom line for me, (regardless of what valuation methodology or model is used), is Ryman is good value relative to other N.Z. stocks many of whom show little or no growth.

Ther's a reason Ryman has been the biggest wealth creator on the N.Z. market, its the extremly favourable business model.

[Beagle]

That's fine Sparky, I feel you're looking in the rear view mirror too much but you've got the runs on the board which speaks for itself and are still a significant holder. If there's nothing better to do I hear BMW are coming out with a facelifted 5 series in a few months :) or probably a much wiser investment buy the BMW shares themselves on a forward PE of only 9 http://uk.finance.yahoo.com/q/ks?s=BMW.DE, sorry I digress again, but for others looking for investment returns coming to the market now, all that's really relevant is what's on offer now.... they're faced with cash returns of 3%, short term quality bonds of circa 4-5%, long bonds like Infratil's latest offer at 6.85% that will fall badly if interest rates increase, (in effect almost a de-facto equity risk), Gold or Silver only for the brave, N.Z. or overseas equities, lets not get into art or classic cars or any other dubious investments like coastal property.

Looking at N.Z. equities as we stand right here today, Ryman is the pick of them in my opinion, in a N.Z. market that lets be honest, has an absolute paucity of high quality growth stocks. Anyway I've done too much talking and not enough buying...

[Beagle]

Still not feeling brave enough to try SNK, XRO or DIL? AMM.ASX is looking good across the ditch to me...

I've reached a point in my life where i'm only interested in investing in blue chip stocks with a clearly defined and well proven business model, either on modest undemanding fundamentals or somewhat higher but realstic fundamentals where there's proven long term growth as is the case with Ryman.

Speculative stocks like XRO and the others you've mentioned don't fit my investment criteria but all the best with them.
SKC holds some interest for me but its fully priced at present.
People are fine buying Ryman where they are now provided they have a long term investment view.

[Anonymous]

IF it's another price upgrade (no confirmation as yet but a pretty strong buying pressure so looks likely) then based on the previous upgrades over the last few months I'm not sure it will retract much. Could be wrong though but "this time it's different" works both ways doesnt it?

Yep, First NZ have raised their target Price from $6.90 to $7.65 today.

[Beagle]

Yep, First NZ have raised their target Price from $6.90 to $7.65 today.

Interestingly pretty much lines up with my post # 1325 this morning using Buffett's intrinsic valuation model and my own conservative base case assumptions. Plenty of merit in holding this highly attractive puppy long term.

[scamper]

I was intrigued to learn recently that Ryman's minimum entry age had risen to 70.
Not sure, but I think it was 55 when the company started.
This must be good for the turnover. cheers.

[Snow Leopard]

Yep, First NZ have raised their target Price from $6.90 to $7.65 today.

Where will this insanity end?

[CJ]

Where will this insanity end?The politically correct term is dementia and looking at the shareprice, people are picking a lot more dementia to come!

[Beagle]

There are extremly favourable demographics for this sector for at least 20 years and yes Dementia is one aspect of that with ~30% of those over 90 expected to suffer from this cruel disease.

[troyvdh]

Off topic...resource shares in OZ are/have been falling....despite Iron ore prices are maintaining sort of stable.....and it could be argued that the "China" story aint over yet...for at least 15-50 years...yet SP performance is largely negative...????.....illogical.....

In NZ retirement/property shares are booming as is the demand from "the market" ...number of old folk will continue blah blah....logical....me thinks that should RYM MET SUM fall away...then it is illogical....

...but is that not just the "MKT"......

[steve fleming]

A village model with investment appeal


Roger Montgomery (http://www.eurekareport.com.au/contributor/roger-montgomery)22 May 2013


Read more at Eureka Report: http://www.eurekareport.com.au/article/2013/5/22/value-investing/village-model-investment-appeal#ixzz2U55pSzHG

It is estimated that the number of people over the age of 75 will double in Australia over the next 20 years. The “grey market” will fundamentally shape the landscape of the Australian economy. Living for longer, and used to comfort, they will expect to see out their days in the quality of life to which they are accustomed.There are a number of quality Australian health care companies that are perfectly positioned for this growing market. Cochlear is at the forefront of hearing-aid devices, Ramsay Health Care is a leading private hospital operator, and CSL is at the cutting edge of biological advances. But there is one sector in which Australian companies have been unable to successfully achieve scale.Traditionally, retirement villages have been modelled on a typical residential community - a number of units surrounding a communal centre. But practicality and functionality doesn’t address the emotional issues. Age does not change one’s desire for comfort, community or independence.Everyone values their independence. That is why incarceration is punishment – it involves the absence of independence. And everyone values community. For these reasons, as well as a sense of ownership and achievement, people have a deep attachment to their own home.The major step to a retirement village is therefore often borne of need, such as that for additional support.Evidently, and yes I am acutely aware of the fact that I have only vicarious experience here, retirees rank reputation and affordability as the two highest priorities when assessing retirement villages. Developers must also consider ‘high care’ facilities that will cater to the broad needs of residents, and the best should also be able to offer different levels of care to accommodate both partners. Many developers, however, will only address basic needs, as health care costs can quickly grow out of control if not managed effectively.But where Australian retirement villages have lagged, New Zealand retirement villages have forged ahead. Our neighbours have developed a sustainable model that profitably caters to retirees’ needs – both physically and socially. Indeed, there is one New Zealand company that not only leads the way in terms of its services and offering, but it has also produced stellar returns for the past decade. If you can indulge me for a moment, these returns show no signs of fading into the sunset.Ryman Healthcare (RYM.NZ) floated on the New Zealand Stock Exchange in 1999, raising $25 million. Since then, it has invested another $1.1 billion into the business without raising a single cent from investors. What’s more, the company has paid $265 million in dividends over its lifetime – a stunning performance indeed.


Ryman Healthcare understands that residents should not feel forced to move – as such, it has developed a community that fosters a deep level of care throughout every stage of life. Management has been able to leverage this reputation into a business model that produces multiple revenue streams from its residents.Upon entering a village, residents pay an “Occupancy Advance”, which entitles them to reside within a unit. During their residence, Ryman caps the management fees at 20% of the Occupancy Advance to ensure that the residents have certainty with their financial future. The fees are collected when the resident vacates the unit, at which point Ryman generates further returns from reselling the accommodation.But the key to Ryman’s business model is offering the full continuum of care at its villages - from independent living through to assisted living and specialist dementia care. Care fees provide a high margin of return, and are collected on a weekly basis.You may consider that a business that has been operating for three decades would have achieved maturity, but this is far from the case. Ryman Healthcare only has a 10% share of the retirement village market in New Zealand. The number of beds and units is now almost double that built five years ago, and management is aiming to add 700 beds per annum. Part of this strategy is expansion into the Australian market. Management purchased a block of land in Melbourne in 2011, and has plans for the site to be fully operational by early next year.While risks will always be inherent with any overseas expansion, Ryman’s competent management should be able to implement the business model in accordance with targets. With that being, said the current share price, which has nearly doubled in the past 12 months, appears to have accounted for the potential upside of the company’s growth plans.I will be watching this company closely. Ryman appears to be a fantastic company, providing an exceptional standard of care for a growing number of residents – a reputation that will hold it in good stead as its somewhat fragmented Australian competitors develop equally fragmented offerings.

[Beagle]

Thanks Steve. That gives us an insight into how fractured the industry is in Australia and it looks like those investment guys have a big following which might explain yesterdays share price leap.

[winner69]

Updated RYM chart with an Average True Range (ATR) shown, ATR is a robust measure of volatility and is useful is setting stop losses on stocks that steadily increase, with the purpose of capturing most of the gains and not selling too soon after a pull back to see the price rise again. The ATR on this RYM chart is set at 4, a pretty loose setting ideal for something that has increased for so long

Follow this methodology and one wouldn't sell RYM until it falls to 611 ,,,, but then tomorrow the number might be higher. Rememebr it was only 570 odd a few weeks ago

That's my system and I going to stick to it

[Beagle]

Updated RYM chart with an Average True Range (ATR) shown, ATR is a robust measure of volatility and is useful is setting stop losses on stocks that steadily increase, with the purpose of capturing most of the gains and not selling too soon after a pull back to see the price rise again. The ATR on this RYM chart is set at 4, a pretty loose setting ideal for something that has increased for so long

Follow this methodology and one wouldn't sell RYM until it falls to 611 ,,,, but then tomorrow the number might be higher. Rememebr it was only 570 odd a few weeks ago

That's my system and I going to stick to it

Interesting one but I note it would appear from your chart that your system would have given you a sell signal in early March 2013, (price did nothing from 1 January 2013 at $4.60 through to early March whereas a simple 100 day moving average line was nearly (but not quite breeched). In this instance it would appear a simple 100 day moving average, (brown line in this chart) non-breech would have given a better result. Even if one used the 30 day moving average with its tighter implied stops as long as one was waiting for a really clear breech of the 30 day line they could still he holding with a presnt indicative sell if the price dipped to about $6.00.
http://i.imgur.com/TLP1hk5l.gif

The analysts with their models can pontificate all they like as to whether this is a buy, accumulate, hold or reduce but until I get some clear technical signals that's contrary to my assessment of it being fiundamentally a good growth stock to own even at today's prices, I won't be selling.

[Vaygor1]

From this morning's Stock Take column in the Herald:

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10885788

I read this article with interest Sparky.
In it they say "We estimate the current price assumes 18 years of future development at the current build rate."

Good grief. The market as a whole is way, way too greedy (and fearful) to even begin to contemplate an 18 year window when deciding on a buy/sell decision today for any stock.

...and why on earth would anyone think that RYM is suddenly going to merely maintain its current build rate from now on (well, for the next 18 years) when every single indiction of what RYM do and what RYM say runs contrary to this? This from a company which has consistently delivered and walked the talk since its inception.

Their current build rate is completion of 2 beds or units every single day of the year.... no reason why they can't lift it to 4 per day and I for one believe that over a relatively short time frame, they will do just that.

[Vaygor1]

You and me both Moosie. However you, me, Sparky, Roger, Sauce and a few others here don't represent the market as a whole..... unless maybe...if our combined shareholding was enough to command the market............. :rolleyes:

[Slam dunk]

I read this article with interest Sparky.
In it they say "We estimate the current price assumes 18 years of future development at the current build rate."

Good grief. The market as a whole is way, way too greedy (and fearful) to even begin to contemplate an 18 year window when deciding on a buy/sell decision today for any stock.

...and why on earth would anyone think that RYM is suddenly going to merely maintain its current build rate from now on (well, for the next 18 years) when every single indiction of what RYM do and what RYM say runs contrary to this? This from a company which has consistently delivered and walked the talk since its inception.

Their current build rate is completion of 2 beds or units every single day of the year.... no reason why they can't lift it to 4 per day and I for one believe that over a relatively short time frame, they will do just that.

The company has said themselves they want to replicate their NZ build rate in Aus within 5 years so that's more than 'maintaining' http://www.stuff.co.nz/business/industries/8683105/Ryman-Healthcare-expansion-depends-on-Melbourne

[Vaygor1]

The company has said themselves they want to replicate their NZ build rate in Aus within 5 years so that's more than 'maintaining' http://www.stuff.co.nz/business/industries/8683105/Ryman-Healthcare-expansion-depends-on-Melbourne

Correctamundo my man... correctamundo.

And this from the NZ side in RYM's latest announcement "You can expect to see more land acquisitions in the year ahead as we lift our New Zealand landbank from three to four year's stock."
If their NZ build rate continues to accelerate as it has been, their current four years of stock will shrink to three or less. I expect, as such, they will be increasing their land-purchasing rate by a significant margin.

[Beagle]

$7.50-$7.75 is where I see them in 12 months time after confirming good progress in Australia.
I see this stock at $12-$13 in five years time after establishing a good beach-head in Australia.
Have the analysts really factored in the 20 year tailwind this company will enjoy and its stellar management and growth record...I don't think so. When some far less compelling stocks are selling on the N.Z. market for similar price earnings ratio's you've got to wonder a bit. Not cheap at current prices but for some stange reason this old consumer adage spings to mind, "the bitter taste of poor quality lingers long after the thrill of a bargain is forgotten"...you get what you pay for.

[Vaygor1]

$7.50-$7.75 is where I see them in 12 months time after confirming good progress in Australia.

One aspect of RYM'S Australian operation that gives me a slight feeling of unease is that of the Australian Unions. Not so concerned about unions on the construction side of the business (assuming, like NZ, that Ryman's Australian village construction is performed in-house), but more the operating side once the village(s) are complete.

Further to this, I wouldn't really expect any major union activity (if any) on the operating side of the business until RYM reaches some kind of critical mass... say 5 to 10 villages where they begin to attract more attention. Australian unions are ruthless and this is a potential risk that RYM will need to carefully address in my view. I know plenty of Asian businesses that keep well away from Australia solely due to its archaic laws regarding the powers and rights that the unions have.

I am interested in what others on this thread think regarding (perceived) risks that are peculiar to Australia re Ryman's activities there. Thoughts anyone?

[Sauce]

One aspect of RYM'S Australian operation that gives me a slight feeling of unease is that of the Australian Unions. Not so concerned about unions on the construction side of the business (assuming, like NZ, that Ryman's Australian village construction is performed in-house), but more the operating side once the village(s) are complete.

Further to this, I wouldn't really expect any major union activity (if any) on the operating side of the business until RYM reaches some kind of critical mass... say 5 to 10 villages where they begin to attract more attention. Australian unions are ruthless and this is a potential risk that RYM will need to carefully address in my view. I know plenty of Asian businesses that keep well away from Australia solely due to its archaic laws regarding the powers and rights that the unions have.

I am interested in what others on this thread think regarding (perceived) risks that are peculiar to Australia re Ryman's activities there. Thoughts anyone?

Yes, probably the biggest obstacle in Aussie is the unions. They are well aware of it of course. No insights except to say that management are very conscious of it and aim to navigate carefully.

Cheers
Sauce

[Winston001]

Whilst I too am a cheerleader for Ryman, venturing into Australia makes me slightly nervous.

Why? Simply because for 25 years I've watched other NZ companies stride confidently into Australia only to be humbled and lose what they have spent.

Why would a NZ retirement home business know more than the myriad Ozzie businesses which already exist over there? Is there some sort of magic? Pretty unlikely.

I respect Ryman. Just hope they tread carefully.

[percy]

[QUOTE=Winston001;408976].

Why would a NZ retirement home business know more than the myriad Ozzie businesses which already exist over there? Is there some sort of magic? Pretty unlikely.

Australian retirement village model is more "lifestyle" compared to Ryman's "total care."
Ryman are starting in Australia with one village.Should they have it wrong, very little will be lost.
Should they have it right they are positioning themselves to move quickly to expand in Australia.
Ryman's reputation goes ahead of them.Ryman residents in NZ will have friends and relations in Australia, who will be well aware of Ryman's good name.

[MAC]

I hope you will welcome me to this forum having returned to NZ last year to become a full time investor.

I too am closely watching the performance of RYM in Australia albeit from the sidelines as I declare I only hold SUM in this sector. RYM is a fantastic company with strong management but unfortunately I do consider the SP to be 20% overbought at this time.

I’ve spent most of my recent career managing construction in QLD, NSW, VIC and NZ and I have to admit I have a quiet admiration of RYM management in aggressively committing to a build programme in Victoria. It’s absolutely commendable that a NZ company should seek to expand in this way.

There are risks in both construction and operations management in Australia that we are often not frequently cognisant of here in NZ, and my feel is that if RYM can manage these risks adequately on their first village in Victoria I believe they will go on to do very well indeed.

Of all the Australian states Victoria is by far the most unionised and I’ve first hand experience of some of the pitfalls that RYM will encounter. The closest analogy I have, for those of us long enough in the tooth, is a comparison to the industrial relations we had here in NZ in the 1980’s. They don’t have compulsory unionism like we did here in NZ, but in Victoria they may as well have.

The two largest infrastructure projects in Victoria last year were both at least 50% over budget and 50% over schedule due to low unionised productivity. My own working estimate is that Victorian productivity can be as low as 30% of the Australian national average.

If anyone is going to the Ryman AGM in July here are four questions which I feel will allow you to assess risk for yourself;

1. Does RYM hold the site EBA (Employment Bargaining Agreement) directly or has, as is allowed under the legislation, this been delegated to their principal contractor ?.

2. Is the Victorian village on budget and on schedule ?.

3. Are there any additional costs of working capital associated with EBA renegotiations ?.

4. How confident is RYM that the site construction EBA will terminate at the opening of the village and will not carry over into the on going operation of the village ?.

This is probably the largest risk that RYM face if they are to continue to operate retirement villages in Victoria on a labour dependent aged care service model. It is common for the unions to force an EBA to carry over into the operational business and once they are in they most probably will be in for the forward villages.

Mac

[percy]

I hope you will welcome me to this forum having returned to NZ last year to become a full time investor.

I too am closely watching the performance of RYM in Australia albeit from the sidelines as I declare I only hold SUM in this sector. RYM is a fantastic company with strong management but unfortunately I do consider the SP to be 20% overbought at this time.

I’ve spent most of my recent career managing construction in QLD, NSW, VIC and NZ and I have to admit I have a quiet admiration of RYM management in aggressively committing to a build programme in Victoria. It’s absolutely commendable that a NZ company should seek to expand in this way.

There are risks in both construction and operations management in Australia that we are often not frequently cognisant of here in NZ, and my feel is that if RYM can manage these risks adequately on their first village in Victoria I believe they will go on to do very well indeed.

Of all the Australian states Victoria is by far the most unionised and I’ve first hand experience of some of the pitfalls that RYM will encounter. The closest analogy I have, for those of us long enough in the tooth, is a comparison to the industrial relations we had here in NZ in the 1980’s. They don’t have compulsory unionism like we did here in NZ, but in Victoria they may as well have.

The two largest infrastructure projects in Victoria last year were both at least 50% over budget and 50% over schedule due to low unionised productivity. My own working estimate is that Victorian productivity can be as low as 30% of the Australian national average.

If anyone is going to the Ryman AGM in July here are four questions which I feel will allow you to assess risk for yourself;

1. Does RYM hold the site EBA (Employment Bargaining Agreement) directly or has, as is allowed under the legislation, this been delegated to their principal contractor ?.

2. Is the Victorian village on budget and on schedule ?.

3. Are there any additional costs of working capital associated with EBA renegotiations ?.

4. How confident is RYM that the site construction EBA will terminate at the opening of the village and will not carry over into the on going operation of the village ?.

This is probably the largest risk that RYM face if they are to continue to operate retirement villages in Victoria on a labour dependent aged care service model. It is common for the unions to force an EBA to carry over into the operational business and once they are in they most probably will be in for the forward villages.

Mac

First of all welcome to sharetrader.
As far as I know Ryman will do everything "in house" as they do in NZ.Design it,and build it with staff/builders employed directly by Ryman.

[MAC]

An 'in house' construction ethos is proven to work in NZ partly because of our excellent and balanced employment law, but this approach is not as applicable elsewhere.

An 'in house' build model requires an Australian developer, Ryman, by legislation to be deemed the "principal contractor". The unions will always seek to negotiate and establish an agreement directly with the principal contractor.

Many developers, alternatively and consciously, aim to contract in a ‘principal contractor’ and to fund them to hold the union agreements specifically such that at the end of the construction phase the contractor will depart along with the union agreements. This can add a little to construction cost but provides a much greater chance of retaining a non unionised operational site.

If 'in house' means the direct hiring of construction staff, and I don’t know if it does for RYM, then this opens up an additional set of risks, productivity is often lower and militancy is often higher with a direct hire workforce than with a subcontracted workforce.

Heres a link for a recent direct hire build in Vic - not suggesting all builds perform this badly but it offers an insight.

http://www.theage.com.au/victoria/electrical-workers-blamed-for-desal-sabotage-20110822-1j6oc.html

[winner69]

http://www.theage.com.au/victoria/electrical-workers-blamed-for-desal-sabotage-20110822-1j6oc.html

Holy Molly - the workers screwed that job good and proper eh

Last time I was Melbourne construction workers / builders brought the CBS to a standstill because of some dispute

[slimwin]

Wow. That's just staggering. Have to say that attitude isn't only on Australian work places though.

[Vaygor1]

Thankfully the scale and complexity of a retirement village isn't in the same ballpark as a desalination plant regarding both construction and operation.

Heavy industry such as mining, hydrocarbons, road&rail, power stations, pulp&paper, and water&wastewater treatment plants (including desal) also tend to attract heavy hitters and Ryman falls well outside this sector.

I really wouldn't expect this 1st village to attract any more union attention than the construction and operation of say a school or council building imho.

Very valid points though thanks Mac and well worth considering. I am always one to believe that a problem envisaged is a problem normally (for the most part) avoided, because a risk identified is a risk managed & it sounds like Ryman are well aware of the union issues in Australia.

As always, time will tell.

[skid]

MAC thanks for the wealth of info.
It reminds me of my wifes inlaws in Canada who got out of the residential building game when things like that got to crazy.
He once told me when they build a house,if the owner decided to do the painting himself,under law ,the painting is still covered on the guarantee!
It will be interesting to see how Ryman handles this next potential test .

[ENP]

Holy Molly - the workers screwed that job good and proper eh

Last time I was Melbourne construction workers / builders brought the CBS to a standstill because of some dispute

Very concerning.

Australia has one of the highest minimum and average wages worldwide and the unions still want more.

No wonder Buffett tries to stay clear of companies with well formed union labour.

[Beagle]

Announcement to the exchange this morning David Kerr, Director purchases shares on market, invests ~ $100K at last Friday's price. Good to see.

[NZSilver]

Was he the chap who bought 100k at around 3.60 before it started firing after they toured investors in china. What's the story with rym listing on the asx? Or was that sum who mentioned it Maybe this is happening soon. Cheers

[CJ]

Was he the chap who bought 100k at around 3.60 before it started firing after they toured investors in china. What's the story with rym listing on the asx? Or was that sum who mentioned it Maybe this is happening soon. CheersSUM and MET have said they are doing it - though they both have australian shareholders who are trying to sell down. RYM have said they will do it at some stage I think - less committed should the Melbourne trial not work?

[Beagle]

less committed should the Melbourne trial not work?

No, just showing good common sense practice of keeping overheads sensible until its proved an Aussie listing would be benificial to all shareholders. Ryman don't need to waste money pandering to the interests of private equity owners like some others.

[CJ]

No, just showing good common sense practice of keeping overheads sensible until its proved an Aussie listing would be benificial to all shareholders. Ryman don't need to waste money pandering to the interests of private equity owners like some others.That is what I meant - there is no 'need' for an Australian listing if they dont have a big business over there - they have plenty of support in NZ from being a superstar company.

[CJ]

My guess is at the earliest, they will list a couple of months before they market units in earnest at Wheelers Hill, potentially more likely half way through once they are happy with Australian sales and adoption of the Ryman model.My guess is they will wait to ensure they will go ahead with the full Australian rollout. If they decide to exit the Australian investment, the ASX listing would be superfluous, given the support they have in NZ>

[ENP]

Wow. Well, that suggests selling RYM at todays levels would be an error. I see this clearly a hold now, with buys on the dips.... Maybe even more optimistic than that

Why do you put such a BIG emphasis on director buying?

I understand that you think by this happening you see it as faith in the company, they see it good value, have skin in the game, etc.

Why why such a big emphasis as opposed to other measures?

[Beagle]

Good to see my kiwisaver fund is making sales averaging above their slight buying of the dips in RYM. Hope they have somewhere good to put that money now!

https://www.nzx.com/files/attachments/176563.pdf

That's the problem isn't it !! The market isn't exactly awash with quality growth stocks trading at fair multiples is it !! Managed to snap up a few SKC late last week at $4.16 which is really only fair value at that price but I'm really struggling to find any value in this market to be honest.

[troyvdh]

dear moosie..I like your exuberance....but in all likelihood the SP will be 1.30...after repeated 1 for 5 share exercises....remember that RYM has only 500000 shares on issue ....a few years ago they had only 100000....cheers...you must be a young fella

the share price in my opinion is often quite irrelavent

[troyvdh]

Oh dear...people hate paying too much....we all do...folk will be happy..to buy something (seemingly) at a good bargain...price....yeehaa...but in my experience ....most folk (if they were to ever)...enticed to buy a share...the SP is actually quite irrelevant...most folk will see a SP of 1.30...more attractive than a share at 1300 dollars...

look I got 13 % in maths....but gee I was great at arithmetic....

DEAR MOOSIE this is Sharemarket 101...cheers mate

re the share split...it will occur when the SP goes over say $12.....

anyone wishing to bet against me ?

[troyvdh]

Dear Sparky...I believe that you are actually factually wrong...no intent to be negative here....I may be wrong but its my belief that any share price/company (at least in NZ)...above $10....suffers....

Please ask a few brokers....cheers troy

[Winston001]

In fairness to you Troy, shares which are at top of the heap and attract bullish buyers, do well in the short term but longer...fall back to average. Nothing wrong with that provided you put stop-loss prices in play.

The point is, shares which are flavour of the month/year seldom produce the anticipated rewards over the long term. Buying at high PEs is a fools game.

[janner]

If people don't want to pay more than a certain amount even if earnings and growth suggest its worth a lot more, then that's someone elses good fortune.

Fully agree with that statement Sparky..

[kizame]

I personally think NZ investors have matured a wee bit,I think a few years ago now Nz Refining split their shares because of that very same feeling that they were becoming too expensive,on a dollar basis,but not on an earnings basis.
Now with the likes of XRO the market seems to have matured,why wouldn't you pay say $12 for a share if the company had good growth and and a PE of say 16.

[Winston001]

Why do you put such a BIG emphasis on director buying?

I understand that you think by this happening you see it as faith in the company, they see it good value, have skin in the game, etc.

Why why such a big emphasis as opposed to other measures?

Ok, if the directors of a company buy shares at the market price that is an indication they believe the company is going well. In fact they may even know of a potential takeover or other reasons why the current price is a good buy.

Or...or...as with Feltex, they are buying to protect themselves from being sued because the company is in trouble. It's rare but it has happened.

[ENP]

Why all the talk about stock splitting?

The only people benefiting out of a stock split is share brokers.

The investor or the company have no benefit in splitting the price of the share. Bank stocks in NZ sell for much higher prices per share as do many other companies. Berkshire Hathaway trades at over $100,000 per share. I don't think the shareholders are complaining about it.

[ENP]

I just think RYM is a little fully priced right now, but if the chairman is buying, it must mean he sees the company rising at a fair clip in years to come. $100k of buying is nothing to sneeze at, in my opinion.

So your reason for buying is because someone else is buying too?

You don't make money investing in something that is popular or the flavour of the month.

[Merc]

I am a semi-novice investor who has spent the last month or so paying some serious attention to the share market. I did start paying attention back in Dec 2006 - when I bought some Ryman shares - but then other things happened. Those Ryman shares went through a 5 for 1 share split in Jan 2007 when, at that time, they were worth around $10 each. As they are now over $6 each they have tripled in value.

[iceman]

I am a semi-novice investor who has spent the last month or so paying some serious attention to the share market. I did start paying attention back in Dec 2006 - when I bought some Ryman shares - but then other things happened. Those Ryman shares went through a 5 for 1 share split in Jan 2007 when, at that time, they were worth around $10 each. As they are now over $6 each they have tripled in value.

Welcome Merc. Ryman is without a doubt one of the most successful and interesting companies on the NZX. I have been lucky enough to be invested for quite awhile now. Reduced a little recently to diversify as Ryman had become bigger part of my portfolio than anticipated (due to their successes). Time will tell if that was smart or not. But I have no doubt that this is a company to be invested in and if you are not in already, get in without further thought. As long as you are looking for either medium or long term. Good luck with your endeavours but believe you me, it is fun :)

[ENP]

I think you have completely misunderstood the way I invest.

My investment research in Ryman has involved careful study of their balance sheet, talking to analysts and my broker, multiple site visits at various Ryman villages, meeting with senior officers, attending AGMs and crunching various metrics in my spreadsheet to determine a margin of safety.

The insider buying is what I call a "cherry on the top". It sends a further signal that on top of the superior earnings growth, quality product, excellent business model, useful information and investment margin of safety, the people who know the company best think that the current price is cheap enough for them to buy on market in good numbers. Rather than a reason to invest, it helps to validate everything which I had already come to believe about this great company.

I would invite you to look back over this thread since April 2012 to see how I have posted a number of times about the things I have learned about this company and the reasons (note plural) why I think Ryman is one of the best, if not the best listed company in New Zealand.

But only 1-2 weeks ago you were saying you were selling RYM because all that info you have just mentioned told you that they were over-valued.

Now one director buys shares and you do a complete 180 degree and start buying again.

There is no doubt this is a great company but even great companies can turn into poor or mediocre investments if you pay too higher price with a cherry conscience that everyone else is buying along with you.

[ENP]

I took a small amount of profits because RYM had a great run, I was nervous about a pullback

my shares serve me, not the other way around.

I operate on a margin of safety deducted from intrinsic value


From this angle it seems the price going up and down is dictating your value on the company. Calculating the value of the company itself should be completely seperate from the price of the company on the stock market.

How exactly do you determine your "margin of safety" because RYM trading at 23 times earnings doesn't leave much margin on the table.

Don't feel as if I'm having a dig at you personally, I'm just trying to understand a bit more on how you operate so I take comments you post with a better understanding.

[ENP]

I apply a 30% margin of safety for blue chip shares I consider RYM a blue


RYM 23.4 P/E today.
Add 30% margin of safety= 33.42 P/E fully valued.

Wow.... really?

[CJ]

So how does management buying in effect your calcs (since they dont enter your calculations)? I think this is the bit that ENP (and me) is missing

Do you take then as a suggesting that your EPS forecasts might be too conservative? and therefore losen up your 30% margin of safety?

Otherwise, you target buy price is still 5.26 regardless of who is buying.

[ENP]

So how does management buying in effect your calcs (since they dont enter your calculations)? I think this is the bit that ENP (and me) is missing

Do you take then as a suggesting that your EPS forecasts might be too conservative? and therefore losen up your 30% margin of safety?

Otherwise, you target buy price is still 5.26 regardless of who is buying.

Exactly what I was trying to get across.

Sparky, you do all these calculations and have "intrinsic value" "margin of safety" etc but then you throw them all out the window and look to buy at any price just because a director bought some stock. If I was a director of a large company such as RYM, it will look very bad if I put half a million of my savings into another company. I doubt the directors of the company are sitting there every day calculating their fair value of the shares based on formulas.

[CJ]

Exactly what I was trying to get across.

Sparky, you do all these calculations and have "intrinsic value" "margin of safety" etc but then you throw them all out the window and look to buy at any price just because a director bought some stock. If I was a director of a large company such as RYM, it will look very bad if I put half a million of my savings into another company. I doubt the directors of the company are sitting there every day calculating their fair value of the shares based on formulas.Based on Sparky's comment at post 1370, the director buying in is a signal not to sell at the current price, not a buy signal. Given he was selling down prior to this signal, that seems validated.

For him to buy, he needs the price to drop by 30% or for forecast EPS to grow.

[Snow Leopard]

Exactly what I was trying to get across.

Sparky, you do all these calculations and have "intrinsic value" "margin of safety" etc but then you throw them all out the window and look to buy at any price just because a director bought some stock. If I was a director of a large company such as RYM, it will look very bad if I put half a million of my savings into another company. I doubt the directors of the company are sitting there every day calculating their fair value of the shares based on formulas.

I think ENP and Sparky need to swap avatars

Best Wishes
Paper Tiger

[Merc]

According to the government statistics site:
New Zealand’s population is ageingNew Zealand is experiencing a significant change in the structure of its
population. The number of people aged 65 and over (65+) has doubled since 1980,
and is likely to double again by 2036 (Figure 1). The largest growth will occur
between 2011 and 2036, as the baby boomers (those born from 1946 to 1965) move
into the 65+ age group.
http://www.stats.govt.nz/browse_for_stats/population/estimates_and_projections/ageing-population-property-market.aspx#ageing

Another little statistic is from the census. Each census there are more people aged over 100 than there was 3 years earlier.

My personal view is that whilst many cannot afford to move to villages of this nature there is a percentage of the population who can and will. This indicates that if Ryman continue to do what they do well they will increase their supply over the next decade to meet the demand. After that???

The share market of course has a mind of its own so whether shares are currently overpriced or not at this particular moment in time remains to be seen.

Disc: Eat lunch one a week in a Ryman village and have done so for the last 7 years. Also own a few shares.

[JayRiggs]

Yeah looking good. Hope it drops to $6.
If $6.40 is good enough for Mr David Kerr, then $6 will be great for me :) :) :)

[Vaygor1]

Disc: Eat lunch one a week in a Ryman village...

Do they serve Meatloaf?

[Joshuatree]

Dont eat the meatloaf!!! Why do you think the dementia wards levels 1 thru 5 are filling up 300% faster then were projected to.

[Merc]

Do they serve Meatloaf?

Fish on Fridays, don't know about other days.

[Joshuatree]

A friend of mine spend the best part of a day finding out why an elderly chap was unhappy at Ryman. It turned out it was simply because so many of the staff had english as not their first language and he couldnt understand what they were saying.

[Merc]

Rymans have 4 or 5 levels of care in their villages

- Independent apartments
- Serviced apartments
- Rest Home
- Hospital
- Dementia units (the newer villages)

My parents have used 3. Started with an independent unit, moved into a serviced apartment and Dad spent his last 10 months in the hospital.

Independent units are just that - independent living.
- There is no external maintenance (gardens, lawns, windows washed, building maintenance done)
- Internally residents live their own lives. If you need a towel rail installed - ask and maintenance will do it and bill you; if you want a cleaner - you hire one. You cook for yourself but can always book a meal in the dining room if you wish. Other village facilities - e.g. the pool, library, bowling green... are there for your use
- All units have emergency bells - if pushed staff will come
- If you have a short term health need staff will attend to it IF YOU ASK

For a few weeks in the transition stage from independent unit to studio apartment the nurse did attend to Dad's insulin shots (at that point he was losing it thanks to mini strokes and my mother couldn't cope) but the level of care he was needing meant a move. And then it only took a couple of months from studio apartment to hospital.

The reality is that if someone living in an independent unit is outgoing, talks to their neighbours and is involved in community life their absence will be noticed quickly. If someone is far more private and reclusive - it will take a while for people to realize they aren't around.

[Merc]

Also note that unlike in a private house those within the Village are not left entirely to their own devices.

Nursing Managers do keep a weather eye on those who live independently by visiting them. But it may be a 2 monthly or quarterly visit (or longer if the resident appears in good health) rather than a daily or weekly visit. If there are concerns the visits would be more frequent.

[QOH]

No wonder Ryman are making so much money, if they charge $6 for a daily phone call to check on residents welfare. I'd call that usury. I'd be happy to do it for one dollar, hmm maybe there could be a market for this.
I reckon I could make 60 calls an hour, providing it didn't take them too long to shuffle to the phone.

[percy]

No wonder Ryman are making so much money, if they charge $6 for a daily phone call to check on residents welfare. I'd call that usury. I'd be happy to do it for one dollar, hmm maybe there could be a market for this.
I reckon I could make 60 calls an hour, providing it didn't take them too long to shuffle to the phone.

You would be lucky to do 6 an hour,by the time they answer the phone ,on third or fourth call,find their hearing aid ,so they can hear you, and then you would have to wait for them to find their teeth so they can talk to you.! Then you would never be able to get them off the phone!!!!
ps.Forgot about them finding their glasses,so they could see, to find the hearing aids.!!!
Maybe 3 an hour?

[garfy]

The Rita Angus complex is very big, perhaps 5 wings, each 3 stories. When I first visited my Aunt I was staggered at the distance one had to walk, from the Office area to the furthest wing, along corridors that had corners to negotiate, totally enclosed..... an elderly resident with some memory loss.....? The complex seemed so impersonal. Doors with names on both sides of a corridor, all shut.... A death of a resident who didn't have lights on, or play a flute - who would notice? I felt it was a most oppressive/depressive environment. Sure, it had the glitz in the entry, Office, swimming pool, etc....
For the money charged for the use of the facility, a $6 phone call is prohibitive (how many residents are there, 100++), and indeed impracticable. But it wouldn't cost Ryman a great amount to have 1/2 of the staff to daily call on their clients simply to say "Hullo, how are you today", if there was no contact one day, a note made, and a check made the next day.
It begs the question - What are these facilities there for - basically commercial reasons, client care, or as it should be, a melding of both - which is what Ryman, Summerset, and Metlifecare would like to be recognised for.

[Merc]

A long distance to walk is actually a good thing as it is good for the health.

My mother's studio apartment corridor has around 10, usually closed, doors in it but the occupants of that corridor all know and keep a friendly eye on each other and staff regularly pop in and out. After 7 years of weekly visits I can assure you that it is a real and valid community

The independent units are quite a different ball game to the studios and some of the residents are actually quite young and fit. Reasons for moving in are wide and varied and can include settling in whilst still active and mobile with an eye to a less mobile future.
.

[QOH]

You would be lucky to do 6 an hour,by the time they answer the phone ,on third or fourth call,find their hearing aid ,so they can hear you, and then you would have to wait for them to find their teeth so they can talk to you.! Then you would never be able to get them off the phone!!!!
ps.Forgot about them finding their glasses,so they could see, to find the hearing aids.!!!
Maybe 3 an hour?
Percy I'll set it up like the scammers do
and mass dial them all, first to pick up gets my call, eventually those alive will pick up, for a dollar I'll be able to hang up as soon as I get the pick up.
I do wonder though how carefully they watch their residents/patients though, my neighbour was put into the one in Johnsonville, when her husband died, she was not very mobile so must have been in semi hospital part at least, she was able to call a taxi and after a $100 taxi journey turned up on the doorstep of her newly sold home,without the hospital knowing.

[Vaygor1]

I would wager that the $6/day (assuming this is fact) includes going to knock on the door of, and check up on each resident who doesn't answer their daily phone call.... and I would say that, every day, there would be a lot that fall into this category.

[CJ]

Just add a motion detector in the toilet and wire it in to the monitored alarm. If they don't trigger multiple times a day, there is something wrong.

Could probably be done over a wifi mesh for very cheap.

[QOH]

Just add a motion detector in the toilet and wire it in to the monitored alarm. If they don't trigger multiple times a day, there is something wrong.

Could probably be done over a wifi mesh for very cheap.
You could be on to a winner there.
Seriously though I do think it's appalling that it happened in a retirement village, I could understand if it was a WCC block of apartments.

[Merc]

Just add a motion detector in the toilet and wire it in to the monitored alarm. If they don't trigger multiple times a day, there is something wrong.

Could probably be done over a wifi mesh for very cheap.

They mentioned something similar in the article.

The problem is of course that you are confusing rest home level care with Independent living. The early retired are fit, healthy, go shopping, take holidays and are under no obligation to "clock in" with anyone. Whilst some would as a matter of course, others would be highly offended at the suggestion.

[Joshuatree]

The Rita Angus complex is very big, perhaps 5 wings, each 3 stories. When I first visited my Aunt I was staggered at the distance one had to walk, from the Office area to the furthest wing, along corridors that had corners to negotiate, totally enclosed..... an elderly resident with some memory loss.....? The complex seemed so impersonal. Doors with names on both sides of a corridor, all shut.... A death of a resident who didn't have lights on, or play a flute - who would notice? I felt it was a most oppressive/depressive environment. Sure, it had the glitz in the entry, Office, swimming pool, etc....
For the money charged for the use of the facility, a $6 phone call is prohibitive (how many residents are there, 100++), and indeed impracticable. But it wouldn't cost Ryman a great amount to have 1/2 of the staff to daily call on their clients simply to say "Hullo, how are you today", if there was no contact one day, a note made, and a check made the next day.
It begs the question - What are these facilities there for - basically commercial reasons, client care, or as it should be, a melding of both - which is what Ryman, Summerset, and Metlifecare would like to be recognised for.

Agree with you garfy re environment etc, i didnt like it either and i went a number of times; plus the language difficulties. RYM maybe the best stock on the NZX but i think all the operators could up their game ; it looks impressive but if i have to go somewhere later on i hope they will have learnt and improved the experience for the Retiree and that it operates more like a real inclusive sharing and caring village.

[enzed staffy]

rushing toward the magical $6

[Newman]

rushing toward the magical $6

A real test would be in August when the annual results of Metlifecare come out. If Metlifecare is doing well Ryman would have to prove its value for its current share price.

[percy]

Not a technician, but I like technicals to help inform my fundamental view of life.

http://finance.yahoo.com/echarts?s=RYM.NZ+Interactive#symbol=rym.nz;range=3 m;compare=;indicator=bollinger+volume;charttype=ar ea;crosshair=on;ohlcvalues=0;logscale=off;source=u ndefined;

Look at those Bollinger bands get squeezed and now starting to head out..... my understanding is that this suggests a new short term trend is in play - I think Ryman is in for a rocky ride these next few weeks.....

I still think its a wonderful company - I'm very happy to hold, and at the right price, would be happy to buy some more.....

I don't think RYM are alone! SUM and MET don't look too good either.!!

[Beagle]

You would be lucky to do 6 an hour,by the time they answer the phone ,on third or fourth call,find their hearing aid ,so they can hear you, and then you would have to wait for them to find their teeth so they can talk to you.! Then you would never be able to get them off the phone!!!!
ps.Forgot about them finding their glasses,so they could see, to find the hearing aids.!!!
Maybe 3 an hour?

Yeap I think you've hit the nail on the head. Those of us who have spent a bit of time around these retirement villages know that the reality is many older people are reasonably isolated with often very few people to talk too on a daily basis, (even more likely if they have opted into this service), so I am certain most of them would want a really good natter for their money. Wouldn't surprise me if Ryman were making only a modest commercial return from this service and they're in business to make profit so I can't see what the issue is.
Maybe if people with their parents in those facilities wern't so self centered their parents wouldn't need to pay someone to check on them ?

[percy]

Well, I guess I shouldn't be unhappy I sold a small amount of RYM at $6.45 and SUM at $3.05. Might buy them all back within the month! I'm not much of a trader, but sometimes there are happy coincidences in investing....

Feel very happy about giving yourself "a bonus" issue.
Good work.!!
Enjoy it.

[NZSilver]

On sale today, retirement stocks; SUM, RYM, 10-15% discount, sale may be on tomorrow, however it may not be, one thing is for sure, long term prices will go up!

[Bjauck]

Yeap I think you've hit the nail on the head. Those of us who have spent a bit of time around these retirement villages know that the reality is many older people are reasonably isolated with often very few people to talk too on a daily basis, (even more likely if they have opted into this service), so I am certain most of them would want a really good natter for their money. Wouldn't surprise me if Ryman were making only a modest commercial return from this service and they're in business to make profit so I can't see what the issue is.
Maybe if people with their parents in those facilities wern't so self centered their parents wouldn't need to pay someone to check on them ?

Perhaps some of the Ryman residents have never married and/or never had children. NZ is also a country with a diaspora - with many grandparents having their children and grandchildren seeking their fortunes in far-flung outposts of the anglosphere. If NZ were a traditional society with a high proportion of inter-generational households then there would be less of a need for companies like Ryman anyway. The rest-home benefit and tax system generally encourages the elderly to keep hold of their large houses and this has a knock on affect of keeping house values high. This in turn encourages young families to turn to Australia to earn more money so that they can afford a house, either in Australia or back in NZ when they return! If elderly family members need help whilst they are away...

[Snow Leopard]

So here is a nice simple chart of the last two years closing prices.

4607

The chart 'suggests' that it is has recently gone down a bit (8% from $6.65) after going up a lot.

Bollinger bands, MACD and even the Parabolic are all derived from the price and actually tell you nothing you don't already know.

Best Wishes
Paper Tiger

[lowrolling]

Downward trend probably related to having it's weighting in the NZX50 reduced

[troyvdh]

Dear Bjauck....I agree for some reason many folk in NZ believe that a 300 sq meter home is the norm...ensuites triple garages....Frankly it drives me nuts....I know folk who with a young family strive to attain a castle.....nothing less will do....here in CHCH....its beyond belief....its a frenzy....re Australia ..they are heading quite surely to a economic turmoil....I have money in RYM and acknowledge that a vibrant res mkt is beneficail.....but man this fascination with kiwis attaining bigger and brighter homes .in my belief is bordering on the obscene

[Bjauck]

Agree troyvdh to a point. Here in Aucks many young families with two average incomes will be lucky to find a small older house in a cheaper suburb affordable...Granny and Grampa will be more likely to have the multiple bedrooms, ensuites and garages! Unfortunately Granny and Grampa would be stupid to trade down as one's main residence (even worth millions) is exempt from asset testing if one partner needs care...whereas the financial asset limit for a couple is only about $200,000! So wealthy and not so wealthy couples in NZ who wish to preserve their wealth set up trusts when young and work their way to live in palaces.

[percy]

Paul Glass did not say whether Devon Funds Management had ever owned Ryman shares.

[Beagle]

I attribute some of yesterday's fall to that article. Looking at Ryman from a technical point of view its clear that the stock has got ahead of itself in terms of its long term upward trend and was well north, (as far north as its ever been) of the 100 day moving average when it recently hit of a high of $6.67.

I think the stock will churn in the (low point reached yeserday) $6.00 - $6.67 for at least the next several months and I don't see it breaking on the upside, (and would perhaps suggest it isn't warranted), until there's clear evidence provided by Ryman that the business model is working well in Australia. In my opinion the spectacular gains of recent months won't be repeated unless there's a takeover attempt and its far more likely we're in for a slow burn upwards with considerable choppiness, (especially for the next few months) to that trend. The 100 day moving average is currently just over $5.20, in the unlikely event it corrected down close to that level, I'd load up properly this time.

Glass makes the point that shares per se arn't bad value compared to bonds and then singles out 3 stocks he sees as over-valued, only one of which has a demonstrated history of long term growth both before and during the GFC.
His position is at a considerable divergance to both the market and the country's leading brokers but I will go on record and say he's quite right about one of those stocks, its wildly over-valued in my opinion and will flop when the market realises that there's nothing all that special about online accounting programmes. Where's the moat for goodness sake, sorry I digress.

[percy]

You are allowed to digress here,you are amongst friends.!!!

[Goldstein]

Fundamentals of RYM, SUM and MET haven't changed. But the market has as a result of the NZD/USD moving south. Offshore investors just don't like battling an exchange rate headwind.

[Beagle]

Fundamentals of RYM, SUM and MET haven't changed. But the market has as a result of the NZD/USD moving south. Offshore investors just don't like battling an exchange rate headwind.

While I love Ryman this is definitly a fair comment and as bond yields rise world-wide the recent strong PE expansion of this stock makes it somewhat less attractive. Stock price doubled in the last year while EPS only increased 13%. That's a fair bit of PE expansion in an ultra low interest rate environment...an environment that looks like its slowly coming to an end.
(Just playing the Devil's advocate for once for the sake of some balance after all my positive posts on Ryman).

After having a good read of the annual report today and all things taken into account I think the stock is fairly priced at the current level on a prospective PE of about 19.5 times earnings based on reported EPS inclusive of systemic revaluation gains, (I argue revaluation gains are recurring because of the ever increasing cost of construction).

[CJ]

My question is what happens (in the unlikely event) that the shareprice goes down. Not sure of the exact terms but 'limited recourse' normally means there is little that can be done to force repayment (ie. it is a one way bet).

[Beagle]

Have a close look at the link Sparky provided. Employee puts in $10,000, Ryman will adance a maximum of 50% further.i.e. $5,000 interest free and the shares are held on account by one of the directors for 3 years.

The chances of Ryman's shares with earnings growth over the next 3 years being worth only one third of what they are now in 3 years time..well frankly I think that's extremly unlikely to the point where In my opinion, its almost irrelevant. You'd have to be talking about a major world-wide sharemarket crash.

Needless to say I don't have an issue with this minor incentive scheme in the context of this being a company capitalised at over $3 billion as the staff invloved have plenty of skin in the game, and these people are after all are helping us make money.... unlike some of the other often completly outrageous schemes i've seen from other companies this one seems completly reasonable. (Yet another example of this company offering pragmatic common-sense systems that are fair and equitable to staff and other parties concerned).

[CJ]

Have a close look at the link Sparky provided. Employee puts in $10,000, Ryman will adance a maximum of 50% further.i.e. $5,000 interest free and the shares are held on account by one of the directors for 3 years.

The chances of Ryman's shares with earnings growth over the next 3 years being worth only one third of what they are now in 3 years time..well frankly I think that's extremly unlikely to the point where In my opinion, its almost irrelevant. You'd have to be talking about a major world-wide sharemarket crash.My reading was the management loans were for 100% of the purchase. The employee loan was for 33%.

I dont really have an issue with it as it is no different to issuing options (one way bet). I just think it is misleading to say a limited recourse loan will be repaid when the employee leaves the company as it will only be repaid to the extent the value of the shares covers the loan.

[Snow Leopard]

Some of us who read the document will have actually noticed that there are two separate schemes. :p

Notably the management do not to front up any of their own money, whilst those general paid less have to find most of the necessary dollars themselves. (There are other differences)

Looks like Ryman is going down the slippery slope.

Best Wishes
Paper Tiger

[Beagle]

Yes, yes...I was time poor yesterday LOL.

I hardly think a scheme of a few million in a company with a market Cap of over $3 billion is the start of the slippery slope.

[thishastowork]

hey all, long time watcher, infrequent poster!

For me (my opinion), it seems plainly obvious that ryman will be successful in the long term in its operations in Australia. There will no doubt be a few hiccups along the way as they adjust to a new market but long term I see success for operations in oz.

I would be interested however, in hearing everyones thoughts on whether the development of an Australian market will result in accelerated growth for the company or whether it will result in a continuation of growth on the current trajectory of 15%.

disc. have held rym since the end of uni in 2008.

[Jim]

They are growing at more than 15%. They managed 19% in FY2012. I would expect a 5 year growth rate of around 17.5%.

If their model works in Victoria, then they will be going hard there. It will dramatically boost profits, with the following caveats:

1. Margin won't be quite as high as it is in NZ. This is because of the lack of scale and efficiencies they have in NZ, union labour, etc

2. They will be sticking to Victoria, not rolling out across Australia in the medium term. But Victoria has a population of 5.6m people, compared to NZ's 4.4m, so they are more than doubling the addressable market. Allegedly, Victoria has optimal demographics for Ryman's purposes anyway.

3. If they do stick to Victoria and rollout a number of villages in the next 5 years, then they will improve their margins as they move their team from one site to the next.

If the model works, then the bottom line will grow..... Imagine if they were completing one village in Australia every year while they keep on delivering what they are doing in NZ!

The headline for the Ryman annual earnings announcement was "Preparing the company for something bigger". I'm no expert in spin or language, but I think they mean this in a positive way... :-)

http://www.rymanhealthcare.co.nz/images/pdfs/Annual_Results_Briefing_2013.pdf

Very encouraging reading. Thank you, time to pick up some when it in sub $6 levels ??

[MAC]

I'm inclined to agree KW, it can even be fortuitous for Australian companies to expand interstate. Lets hope RYM have hired in local senior management to develop and establish a new operating model for Vic.

[troyvdh]

No doubt folk have mentioned this in the past .Rymans business model has been based upon building a bare piece of land into a money making machine.
The state of Victoria appears to be that state in Oz most diseased by unions.
Its my belief that RYM employ their own construction crew.

Lets hope for the best...no doubt RYM have done there homework.

If they have ..and if its successful they/we are truly in blue sky territory.....

[thishastowork]

Sadly, in my experience, every time a NZ company attempts to cross the Tasman, its been the kiss of death. Telecom, Air New Zealand, Baycorp, I'm sure you can all think of a few more. I'd really rather they did not - perhaps I'm being overly superstitious?

The one that I remember the most clearly is the warehouse (as I was working there at the time when I was studying). They seemed to jump straight into the deep end with it and ultimately backed out. What I like about rymans strategy is that they are taking it one village at a time. This should allow for more organic, allowing them to learn from any mistakes to develop a long term position in the market.

[troyvdh]

Me thinks ...overall (a perfect example is the post above) that folk (at least here in NZ) do not appreciate the difference in work place enviornments between NZ and Australia....This issue is crucial and should not be understated......

[winner69]

They are entering the most over valued property market in the world. The costs of purchasing land in Melbourne is ridiculous, unless you go about 60km out of town to the urban fringe, but who wants to move out there when you've spent your life in the inner suburbs? Building costs are extremely high, due to union corruption, govt taxes, infrastructure costs, etc. Add to that Melbourne property prices are falling due to recession, which is just getting worse and worse as major companies lay off staff or close down (eg. Target, Ford, Telstra).

Do I slit my throat now ....or die by a thousand cuts

[macduffy]

Do I slit my throat now ....or die by a thousand cuts

No, don't do that just yet! While it is true that there have been some spectacular failures of NZ companies expanding across the Tasman, the better ones have made a success of it and in some cases Aussie is now the biggest chunk of their business. MHI, NPX, FBU, Kathmandu are examples - Infratil says its Australian Energy business is thriving. So it depends on the individual company. Ryman are taking the cautious first step and if they run true to form will prove the viability of their business model for Victoria before they expand further.

[Beagle]

WELL...I see late this afternoon in an announcement to the exchange the group sales manager Debbie Versey just sold $1.5m worth of stock...right at a time that I understand they're swinging into full bat-er-up mode with their sales program at Wheelers Hill. Interesting timing, coincidence or has the initial sales push met with a muted response ? Anyone's guess I suppose but the best you could say is the timing is an unfortunate coincidence. Puts Mr Kerr's recent $100K purchase into its proper perspective doesn't it !

[Snow Leopard]

I had not paid attention to the address for this first Australian retirement village before but it seems that they have bought [the site of] a former hotel in what is primarily a residential area out in the South East.

Best Wishes
Paper Tiger

[MAC]

Very nice website, friendly, didn’t take too long to find a Ryman site as invited.

Although ....... when I Google street viewed 242 Jells Rd, Wheelers Hill, this is what I got ????

4626

[MAC]

Looks like a nice large site, good street frontage, try spinning around in Google, nice area too !

[Snow Leopard]

I had not paid attention to the address for this first Australian retirement village before but it seems that they have bought [the site of] a former hotel in what is primarily a residential area out in the South East.

Best Wishes
Paper Tiger

I wondered about the vacant lot (218 Jells Road) adjoining 242 to the north and they have bought that and also 1 GrandView Road bordering the South East for the village.

Follow this link (http://www.monash.vic.gov.au/reports/papers180.htm) and you find will interesting stuff including site plans.

Best Wishes
Paper Tiger

[Snow Leopard]

Wheelers Hill, its about 28 km from the city, its in the middle of a lot of big industrial areas around there, moderated by a big green belt. Close to Dandenong, which is very industrial. Not a particularly wealthy area, big immigrant populations. I used to work out there. No public transport, but close to the motorways.

Wheelers Hill is acknowledged to be 22km from the city and is surrounded by industrial areas in much the same way as a lot of Melbourne is, this is moderated by a green belt to the East.
Situated in the City of Monash the southern border of which abuts the City of Greater Dandenong ("City of Opportunity"). Dandening South is very industrial but this area is about 8km from Jells Road.

Probably above the Melbourne average wealth with the population being slightly older than average, with a higher proportion of professional and skilled than average and house prices being above the median, the area does have a slightly higher immigrant population than Melbourne as a whole.

Public transport: no trains or trams in the immediate area, but a reasonable number of bus routes , some that connect to the trains. The nearest bus stop to the Ryman village is directly outside the entrance but residents will need to cross Jells Road when alighting or catchng a North bound bus.
Handy for the motorway.

Disc: I have worked in several areas around Wheelers Hill, including Dandenong South. :eek2:

Best Wishes
Paper Tiger

[macduffy]

We've all no doubt seen the photo on pp 4-5 of the recently released Ryman's annual report, showing the development as a big hole in the ground, at that stage.

I lived in Glen Waverley, an adjoining suburb, when Wheelers Hill was first being developed ( mid 70's), It was then considered to be a rather up-market, though outer suburb. A selling point was that it was within a few kms of Glen Waverley train station, the last station on that line, which made it reasonably well served transport-wise so far as outer Melbourne suburbs was concerned. Of course, subsequent freeway developments have changed the scene considerably since then!

[shambles]

Ryman trading at all time highs.. good bounce this week!

[shambles]

Took advantage and sold out at $6.57 and $6.64..
Entered at just over $2. Thank you Ryman for a stella performance.
Now to use the proceeds towards another rental..

[Vaygor1]

What drivel. In their latest report on 20 May, they said Ryman was "in perfect health", but investors should reduce. $5 is their price target, and they have consistently undervalued RYM

Moaningstar are wealth destroyers with this appalling commentary. I wonder if the analyst, who I think is called Nachi Moghe, should be replaced with someone who understands the business better.

Not the Morningstar report - "the journal" referred to is the newspaper talking about the report and their journalists view on Rym. This is a dedicated aged care industry newspaper, its writers should know what they are talking about.

I assume "The Journal" is an Australian publication. So pleasing to see another journalist thinking they know more about retirement villages and continuous care than an industry leader like Ryman.

This is nothing short of the dirty tactics employed by the same psyche of bread-stealers touting that NZ cannot import its apples into Australia and typifies what any foreign company is up against when doing business in Aussie. Smear tactics, scare tactics, self-serving opinionated guesswork stated as facts, truth bending, cherry picking the bad bits, campaigns designed to besmirch, contentious & subjective news articles etc etc.

The journalist who wrote the article wouldn't know s**t from dirty pudding.

Only a company as useless as Morningdump would take on board such a view from such an untrustworthy source.

Disc. I have never been into the horticulture business.

[Vaygor1]

Not the Morningstar report - "the journal" referred to is the newspaper talking about the report and their journalists view on Rym. This is a dedicated aged care industry newspaper, its writers should know what they are talking about.

I think there is some correction needed here KW.

The article you mention is not from an entity called The Journal at all. it is from a publication called Housing Care Aged Weekly and as I thought it is Australian based and includes news about NZ. Refer http://www.seniors-housing.net/ They market themselves as "Reuters level service" and this is their "Australian Edition". Sample can be found at http://www.seniors-housing.net/core/achw/ACHW-Sample.pdf

There are using MorningDumps analysis to justify their negative view and go so far as to call Ryman's entrance into Australia as a "Foray". Further digging suggests they have an undisclosed tie up with New Zealand's Summerset.

Anyone want to stump up with the AUD 299 for a 3 year subscription?

My previous post stands except I take back my comment on MorningDump taking on board the Housing Care Aged Weekly's view... but, given their (Morning Dump's) track record, I wouldn't be surprise if they did just that.

[shambles]

Thanks Sparky, I remember you saying.. then I spent a few weeks regretting I hadn't followed suit!
It will be very interesting to see how it tracks over the next month or so. I may buy back in if we see another decent dip as I too think this company has further great potential, it just feels to be a bit ahead of it's price currently.

[shambles]

Well, that was a nice little move up by Ryman today. Finished at $6.74, just shy of the $6.78 record high that was hit today in day-trading.

Yes indeed! Looks like Ryman may be on it's way to putting in another solid week.. just when it looks like it can't go much higher it consistently surprises me.

[NZSilver]

Seriously - when does this stock ever give up!

[ratkin]

Seriously - when does this stock ever give up!

When the property market implodes

[Vaygor1]

MorningDump just updated RYM recommendation from 'Reduce' to 'Sell' and maintains its valuation at $5.00 ... I think they should give up this valuation game and get involved in something they might succeed in... like chasing parked cars.

[Snow Leopard]

...and has no long term debt.

2013 Annual Report:

12. Borrowings
Less Than 1yr: $26M
1yr - 3yr: $200M

Of course I will not mention the occupancy advances of $1,114M

Best Wishes
Paper Tiger

[JayRiggs]

While I disagree about Morningstar's SELL rating, what rating and valuation do you guys think is more appropriate?
Personally, I think it's looking like a HOLD with a $6 valuation.

Morningstar had a REDUCE recommendation back when it was around $4.60 earlier this year and I still went ahead and bought a small holding. So far it's worked out OK.
I did think about accumulating some more when it dropped to the low $6s a few weeks ago, but held off in case it went back to the $5s.
Now that it's nearing $7, I'm wondering when it's ever going to pullback!

[CJ]

The occupancy advances are not, strictly speaking "debt" as they don't pay interest and are a reflection of the superior business model Ryman have.And, in one sense, is not repayable either, as it is only repaid when the unit is sold, therefore being replace by (assumeing property always goes up) an equal or larger occupancy advanced. Superior Business model? I think so but that is factored into the price.

[Jasemc]

$7 must be some news expected at ATMATM



And, in one sense, is not repayable either, as it is only repaid when the unit is sold, therefore being replace by (assumeing property always goes up) an equal or larger occupancy advanced. Superior Business model? I think so but that is factored into the price.

[Jasemc]

Whoops agoago

[Jasemc]

Agm that spell check!!

[troyvdh]

Rym shares on issue are now 497 578 707....whenever Ive looked before its always been 5000000...I should know why but I don't ....Sum 21500000 and Met 20700000....cheers...troy

[CJ]

Companies office still says 500m shares

[CJ]

Meh. NZX Glitch.kind off. The was 2.467m of treasury stock per 2012 stats so you should adjust your eps calc (i think) as they don't earn divs