RYM - Ryman Healthcare

[Vaygor1]

$7 must be some news expected at ATMATM

Maybe, but not necessarily. Pesonally I doubt there will be any overly amazing news that we don't already expect.

If I recall correctly, RYM was about $6.40 after announcing End-Of-Finacial-Year for 2013 & going CD to XD.

Now I'm not saying that $6.40 is overpriced or not... maybe a bit...say 10-15% ?...but maybe not. Rymans beautiful growth curves over the last 11 years including Revenue, Profit, Number of Village Units, etc together with the massively increasing size of its customer base (ie the retired), scream out that the future worth if this company is PREDICTABLE... least of all RYM's growth rate at around 17%

You can analyse this to death using fundamentals, technicals, market sentiment etc... and many have...but the bottom line is that $6.40 is not that far above what a less predictable share would be all else being equal.

Now $6.40 x 1.17 = $7.49 around May 2014 plus about 12cps in dividends by then...
...or $7.49 x 1.17 = $8.76 around May 2015 plus 27cps in divvys by then.

Sure, the share price will bounce around here and there but at the end if the day $7.00 now does not overly surprise me in the slightest. The growth wont stop. For investors in Ryman, it is almost a sure bet.

[troyvdh]

Just heard word back....the SP when 1/5 was $11.60 ish ($2.32) in 2007...cheers troy

just thinking ...should RYM repeat this exercise i.e 1/5 split...that would mean 2.5 B shares

Its my belief that TEL is 1.8 B
AIA KIP is 1 B
GPg is 1.2 B

Is this a good/bad thing ...as I said just thinking.....cheers troy

[Vaygor1]

Just heard word back....the SP when 1/5 was $11.60 ish ($2.32) in 2007...cheers troy

Yeah, miles undervalued back then. And it dropped further back then, right down to about $1.30 (when I bought a load). :-) ... Unbelievable buy... felt sorry, almost guilty, for the sellers at the time.

[Vaygor1]

just thinking ...should RYM repeat this exercise i.e 1/5 split...that would mean 2.5 B shares

Its my belief that TEL is 1.8 B
AIA KIP is 1 B
GPg is 1.2 B

Is this a good/bad thing ...as I said just thinking.....cheers troy

Neither here nor there really.
I have found that a share split of a similar ratio you state where the pre-split price is around the $10 mark normally adds about 10% to the market cap.
ie Using your example... 0.5B shares at $10/share becomes 2.5B shares at $2.20/share. I think this occurs because the shares are somehow (perceived to be) more liquid even though technically they are not.

[winner69]

You might enjoy this sparky ....seems a bit like you in some respects

http://www.davidmcwilliams.ie/2013/07/15/slow-down-the-money

[percy]

Anyone going to the AGM on the 30th at their newly finished Diana Isaac village?

Yes, I have it in my diary 3pm.

[forest]

Yes I will be there.
I am wondering if anybody is keen to meet up before the meeting. Maybe Percy want to talk about Heartland Bank over a coffee? :)

[percy]

Yes I will be there.
I am wondering if anybody is keen to meet up before the meeting. Maybe Percy want to talk about Heartland Bank over a coffee? :)

So you are thinking of a 9am start???!!! lol.
Should anyone from out of town want to be collected at the airport,taken to the meeting,and either delivered back to the airport or a motel let me know and I will oblige.I ran charity taxis.Free service for daughters,granddaughter and other family members.!! lol.

[777]

http://www.stuff.co.nz/national/8978501/Woman-found-covered-in-faeces

This does not show Ryman up in good light. Sounds like a big shake up is needed.

[QOH]

http://www.stuff.co.nz/national/8978501/Woman-found-covered-in-faeces

This does not show Ryman up in good light. Sounds like a big shake up is needed.
This is the same home my ex neighbour was able to escape from and incur a huge taxi fare to take her to her old house, which had since been sold.

[percy]

Flight to Chch very delayed due to fog and technical issues (a plane stuck on runway). Leaving Koru Lounge now and heading back to the office. Hope the AGM goes well for investors

You will be missed.!

[percy]

Very positive well attended meeting.Out look is for continued 15% growth.
Very pleased with the sites they have secured.Looking for more.Sales at Howich are strong.
Melbourne village is very much getting the first one right,before expanding.Victorian market is larger than all NZ.
I think they have done well to attract George Savvides as a director.He spoke well, and I think he will make a great contribution to RYM.
Nice to run into Forest and his wife.

[percy]

Appreciate the update. Any commentary over recent bad PR in their Wgtn villages like the event in this mornings DomPost?

They spoke of the person who died,and was not noticed for a few days.Simon Challis denied charging for are you dead phone calls.said virtually everything was free.Always trying to improve care and systems.Trouble was independant people living in indenpedant units. Said if any family member/friend had concerns,just phone the village and they will check up on them.Always looking to provide better care,and trying to reach those who are already in the village,who have not asked for more care.
As the meeting was held in a RYM village a good number lived in the village and are RYM shareholders.
Toilets in care units will be higher.Was raised by a resident,but had already been agreed at management level.The huge area where the agm was held,was said by a resident not to be big enough for the whole village when they had dancing.!!!! Residents appeared to be very happy shareholders.In answer to another resident's question ATMs will be installed over the next year or so to all RYM villages.[Now no excuse not to visit Nanna.!]
I was surprised at just how big the village was.

[percy]

ATMs going into the villages? Now that's a sign of villages reaching a bigger size!

Forgot to ask if Heartland are supplying them?! lol.
Howick sales going well.

[winner69]

ATMs going into the villages? Now that's a sign of villages reaching a bigger size!

Prime spot for a HEARTLAND BANK branch

Sorry Percy ....another 100 trees to plant I suppose

[percy]

Prime spot for a HEARTLAND BANK branch

Sorry Percy ....another 100 trees to plant I suppose

As we both posted at the same time looks as though I will be helping you with the planting.! lol.

[percy]

To improve care Ryman are paying higher wages and more pay to those who pass age care courses.

[winner69]

After that story emblazoned across the front page of the Dom Post yesterday another story in todays edition,

Full of emotion again

But then again shareholders 'demand' increasing returns so there will always be issues eh. The balance between needs of shareholders and customers (cynically a consumable item) will always be tilted to the shareholder. On the other hand the not for profits have the same issues as well though it could be said that their customers are on the poorer side.

Besides what you read in the paper friends who have relatives there tell me that that Malvina Major place is out of control - local management is blamed but HO seems to turn a blind eye to the troubles there as nothing has changed for a while

[percy]

I think the not for profit model sounds great,but it is the for profit model that works supplying a service.
Ryman model is,and has always been resident/customer/client first.

[Zaphod]

In my experience 'not for profit' and 'publicly owned' business models give the NZ public the warm fuzzies, regardless of their actual merit.

[percy]

In my experience 'not for profit' and 'publicly owned' business models give the NZ public the warm fuzzies, regardless of their actual merit.

I must admit I get my warm fuzzies from the great puffer jacket I brought from Hallensteins.lol

[Vaygor1]

Posted on this thread on 24-May-2015:

.... (abridged).... 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.

I love it when a plan comes together!...... :D

[Jay]

Sounds like you have been talking to a little birdie Sparky!
From what I understand/read/heard about the Management of Ryman, they will be on to it.

[Trigger]

Tuesday’s events were bitter sweet for me. Two ends of the news spectrum for RYM – the bad followed by the good. As a long time holder of RYM, I was both embarrassed and distressed by the article in the Dom Post, and it took some of the gloss off the afternoon’s proceedings and watching the stock push to a new 52wk high.

The caveats and context to my concern are the (thankfully) infrequent nature of such events and the old saying that bad news sells more newspapers. The driving force of the oft quoted demographic tailwind, the superior elements of the business model, and the quality of Governance/Senior Management all still make RYM a more than compelling case for investment for me. That said, RYM will be keen not to build up a track record of this sort of episode. RYM are in aged care, and not widget manufacture where errors are measured in over/under production of widgets, or out of spec widgets. RYM’s core business is aged care with a particular strength in those with mental incapacity. Which means that when it goes wrong, it can go horribly wrong. As the article quite graphically demonstrates, even those with mental incapacity still have more than adequate moving parts and can do a lot of damage to themselves and their immediate environment very quickly.

If I thought about how my own employer would address an event of equivalent magnitude in my sector then:



The appropriate authority would be notified, which would trigger a state led investigation.
Secondly we would instigate a separate independent audit, led by a respected industry auditor/consultant. They exist, and presume they also exist in the aged care sector. We do this as a matter of policy. Internal audits don’t work when backsides are on the line. Nor are they perceived as impartial.
Thirdly we would scrutinise the management of the particular operation (in this case Malvina Major Village) at the centre of the episode to determine if there was a gap between target company culture and actual company culture.
Finally, we would be looking across our operations (in this case all villages) to determine whether we had a systematic failure in Policy and Procedure which might give rise to a repeat episode. In other words, do we have blindspots.

All of this culminates in learnings which are ultimately reflected in a tightening of existing, or developing of new, policy and standard operating procedures.

I have no concern whatsoever about RYM’s ability to deal with this issue. The Board will be focusing Management’s mind on this matter as a priority as it nibbles away at the very fabric of the brand they have worked hard to establish. They will also be keen that this sort of publicity is not used as fodder by those who stand to gain the least by RYM’s entry into the Australian aged care sector.

Finally, once the dust settles, it would be great to see the Board reassure shareholders with feedback about the incident and what steps have been taken to either prevent a recurrence or further reduce the frequency of such incidents. Aged care is, after all, the business.

Trigger

DISC: Overweight RYM
DISC2: First time poster, marvelous to be here, homage to those great posters who have gone before, etc, etc.

[777]

I understand things are going well at "The Big E" in Wheelers Hill. I am reliably informed that chief sales manager is their top gun Debbie Versey, who has relocated to Australia. She is the one who sold some Ryman shares not long ago. If she has indeed moved over to Australia, then it would make sense that she sold Ryman shares to buy a home over there.

Also to take a profit before liable to CGT as an Australian tax payer.

[sausage]

Trigger's debut post a welcome addition to the thread (is he an Aussie - 'state-led investigation'??) - easy to focus on the bricks and mortar, but the recent headline a reminder that it's actually about getting the people stuff right. Put him on the Board.

Sausage

Disc: hold SUM and look a little enviously over this way

[troyvdh]

Having been a nurse for some 35 years...(Psychiatric)...and now employed at one of the acute care units of Hillmorton (20 years)...My experience in the care of the elderly...is that well....if you have a shift ...there are a mix of individuals who I believe are responsible for "their patients"...now im not sure about the private sector ....in recent times it has to be said that overseas staff...particularly from the Phillipines are quite a dominate perentage of the work force (in my particular case my father is a resident at Bupa) and for me they are particularly attentive and professional.

Now (Im just trying to add some balance to this debate)...in no way would I or anyone I know sanction what occurred ...no way at all...but at times (like in any industry) there are folk who do not perform how they should.
Dealing with the elderly can be very very challenging....ie...you speak to any elderly care nurse about how hard they punch and abuse staff.

What makes it worse is that most folk (like my father) have an inherent dislike /hatred for any one resembling Asian....there is no right or wrong here.

What am I saying....the circumstances previously highlighted where an individual was left in appalling circumstances...was indeed abysmal and should not have occurred.

For the person responsible to not be aware of the basics..like an immobile individual bed bound...totally reliant on others to require .Like I mean....even the smell alone should have alerted others !!!!!....

Hopefully it was only one individual and that has been sorted.....but like I say...looking after the elderly aint easy nor well paid.

Of Biking through Mongolia tomorrow. cheers troy

[Joshuatree]

Its tough for the staff and the patients at times. IMO one of the biggest probs is when a nurse/ staff does not treat the the patient with respect but bosses/orders/ bullies the patient into having a shower for example. Dementia /alzheimer patients in particular need a different set of skillsets such as diversion therapy/ techniques which empower the patient which keeps their self respect and maybe the trappings of independence. My research so far shows few staff have this technique and because they are over worked and understaffed they can take the short route to getting a task done or overlook it altogether, a lose/lose scenario.

[Joshuatree]

"Of Biking through Mongolia tomorrow. cheers troy[/QUOTE]
Have a great adventure Troy, maybe you can send us a travelog if you can get to a website ,occasionally and if you get welcomed into Yurts and fed etc you have something to give in return to incredibly poor but generous people.

[troyvdh]

Indeed you are not wrong....the issues involved here are complicated....very complicated....you often have staff who are often task orientated.....like "shower those 3"....yet each of those folk may prefer a particular time/manner/person ...such staff employed has/have no time/inclination to reflect on a particular individuals preference...

Indeed it is a huge issue...and will be increasingly so....nursing requires empathy engagement et al....so many things....its just a sad fact of life that the nursing shortage/reliance on over seas caregivers is occurring when NZ 's population ageing population (including myself) is increasing...cheers...

[troyvdh]

Cheers for that Josh...the pain is the 20 hours of travel to get there...and yes I will appreciate the company of local folk...very generous and happy they often are (Bolivia/Peru/Tibet/Kashmir/Nepal/Tanzania/Vietnam....we often reflect when returning....."we aint got the message...these folk have nothing....how many on anti depressants...blah blah...they all live for today.....I know it sounds wet....but aint it the truth.....cheers...troy...

[percy]

Cheers for that Josh...the pain is the 20 hours of travel to get there...and yes I will appreciate the company of local folk...very generous and happy they often are (Bolivia/Peru/Tibet/Kashmir/Nepal/Tanzania/Vietnam....we often reflect when returning....."we aint got the message...these folk have nothing....how many on anti depressants...blah blah...they all live for today.....I know it sounds wet....but aint it the truth.....cheers...troy...

Have a great trip.
Thank you for sharing you knowledge of nursing with us.
Not an easy vocation.

[winner69]

Ryman model is,and has always been resident/customer/client first.

Good words Percy but obviously not always the culture based on Malvina Major incidents eh .... maybe keeping shareholders comes first

We were going to put elderly relative in that place for a few weeks recuperation .... yep all fine and dandy but they never came back to confirm details so missed out. He happy he didn't end up in hell he told me yesterday

Same people in charge there says friend who have relatives in that place ... hopeless as he says

So where is the Ryman culture - you would at least expect the person in charge at each site to at least live the promise wouldn't you. So where are the management controls in Ryman?

Suppose with 7000 resident/customer/clients all can't be happy and there will be always be a few unfortunate cases. However with any brand controlling the bad is the imperative else strong brands die. Are Ryman doing that well at the moment ... in the eyes of shareholders maybe .... in the eyes of the public no ... and importantly in the eyes of potential customers/influencers no.

[percy]

Ryman aim is for the very best care for all their residents.
From design to total care.

[winner69]

Letter to The Editor in Dom Post calling for Dame Malvina to withdraw the naming rights of that Ryan home because as the writer says "withdrar her name from this facility which doesn't respect the values of care and concern I'm sure she would uphold"

Just one of a few letters re this ...all emotional and bad for the brand ryman.

Another comment " I wonder why it was necessary for that home's management to hold an inquiry when they should have known what was gng on in their home" and went on "maybe they spend more time in checking on their residents than on checking the bottom line". At least worrying about you Percy.

Ryman seem pretty silent ...maybe property companies aren't that caring after all.

As long as the shareprice keeps going up it will be all ok

Just reporting things in the paper version of the paper

[winner69]

http://www.stuff.co.nz/dominion-post/comment/letters-to-the-editor/8993819/Letter-Dame-Malvina-should-withdraw

http://www.stuff.co.nz/dominion-post/comment/letters-to-the-editor/8993820/Letter-Always-one-who-doesn-t-care

http://www.stuff.co.nz/dominion-post/comment/letters-to-the-editor/8993810/Letter-Maybe-Shields-spoke-through-his-grief

[percy]

Thanks winner69.
The chairman put his mother in a Ryman Village.
The CFO became involved with Ryman through having his mother in a Ryman Village.
When the time comes I would love to go into a Ryman Village.

[CJ]

When the time comes I would love to go into a Ryman Village.I think this is getting blown a bit out of proportion. Clearly policies aren't being followed which is much harder to fix than to implement better policies. The best businesses are those that dont rely on staff!

[winner69]

Residential villages for the healthy and fit are less problematic. Age care for the sick is another issue


Number of over 75 year olds to triple or something in coming years. The opposite of that there is going to be less younger people to look after and support them.

Care of the aged a big problem for the country (and the world). Taxpayers can't afford to pay/subsidise care the level it needed and the way th world is going the 75 year olds in 20 years will probably be less wealthier/poor than the 75 year olds of today

Percy ....lets hope we both stay fit and sound of mind we will always be able to live where we want

[percy]

Residential villages for the healthy and fit are less problematic. Age care for the sick is another issue


Number of over 75 year olds to triple or something in coming years. The opposite of that there is going to be less younger people to look after and support them.

Care of the aged a big problem for the country (and the world). Taxpayers can't afford to pay/subsidise care the level it needed and the way th world is going the 75 year olds in 20 years will probably be less wealthier/poor than the 75 year olds of today

Percy ....lets hope we both stay fit and sound of mind we will always be able to live where we want

My wife's mother has demetia.She is in a local home. [not Ryman] The care is both excellent and hopeless.The attraction of full care retirement villages is that if either you, or your wife needs to go into full care,it is part of your village.The honest truth is full care is a terrible place to end up. As winner69 points out more of us are going to end up there.My wife's mum is a wonderful woman,yet she punches staff and is more than a handful.She asked her son this morning "what am I doing here,sitting with nothing to do all day?""Why are they filling me up with pills all the time?"
When do you move from independent living to partical care, to full care.In our case [same for everybody] you leave or put off the hard decisions for too long.
At Ryman agm CEO Simon Challis was at pains to point out "if you have any concerns about any one in any of our villages,ring us so we can check on them." I have meet him an other Ryman staff and directors to know they mean what they say.So again if it works out I have to go into a retirement village or into care I hope it is Ryman operated .

[Joshuatree]

Ryman say that Dementia / Alzheimer is a sector they are increasing exposure to. Well they will have to improve their care , staffing levels and skillsets to deal with these folk who lash out i believe because they are treated incorrectly by staff and disrespected with minimal activities. There can be a blanket mindset that the patient can't remember anything; not true. Talk is cheap.Your wifes mum is a wonderful woman who feels humiliated and deserves better, my mother is too. One way we accomodate her is take her out to organized activities 3 days a week and out to family activities sat and sun for a couple of hours. Many of her fellow patients have no or minimal visitors and are on medication. It is complex yet simple with different motivations and agendas from families; some are just too busy with everyday life to put time in to their elders. This is a general rave not aimed at anyone.

[percy]

Not a rave.Just so true.Thank you.

[winner69]

Good to see the rym pr machine in full swing with a story full of warm fuzzies about challis in the Dom Post today ....keep shareholders happy

[percy]

Good to see the rym pr machine in full swing with a story full of warm fuzzies about challis in the Dom Post today ....keep shareholders happy

Think the residents and staff will read it with a sense of pride.

[winner69]

Think the residents and staff will read it with a sense of pride.

Question or statement?

[percy]

Question or statement?

To focus your attention,you need to think of planting more native trees.! STATEMENT.! lol.

[winner69]

Sorry Percy et al about some of my comments re Ryman of late.

Where I went wrong is that I thought Ryman were in the social service space. Of course that is flawed thinking. Of course Ryman essentially exist to create superior shareholder value - that is their being. They do provide a service and do meet an ever increasing number of people's needs. However Challis and is teams main priority is to balance great service and shareholders right to ever increasing wealth. ensuring that in the process the Ryman brand is not damaged. It is what the Ryman brand stands for (those nice words you keep quoting Percy)
because without that there is not a sustainable future.

So in simple terms shareholders are really asking Challis to make as much money as he can from each of his clients/customers/residents without damaging the Ryman brand. Ever increasing is an imperative because of Ryman being proud of their 11 year history of doing fabulous things (the investor section of their website mentions this a lot and not much about customer satisfaction in that section except a couple of the obligatory photos of happy residents).

Last report says they have a portfolio of 6.191 economic making things things (aged care beds and village units). They make an underlying profit of $16,185 from each. And Challis and his team have done well over the last 4 years because in 2009 they were only making $14,010 per thing.

No doubt there is an internal measure that has a target of $17,000 per thing and then $18,000 per thing to meet the objective of extracting as much as we can from each thing, be they a client/customer/resident. Failure to do this will not make shareholders happy.

I shall never forget that Ryman is not in the social service game. That is for churches and other charities and the government. I forgot the underlying premise in investing - that is make as much money as possible. I forgot that Ryman's main priority should be this, balancing superior returns against maintaining brand integrity.

Shareholders should have no qualms about this approach. if they do and extracting as much as possible from every customer pricks their conscience they should not be invested in Ryman

Challis and his team have done well. Long may it continue

Chart shows what Ryman extract from each economic unit over the last few years. Great story eh

[percy]

Sorry Percy et al about some of my comments re Ryman of late.

Where I went wrong is that I thought Ryman were in the social service space. Of course that is flawed thinking. Of course Ryman essentially exist to create superior shareholder value - that is their being. They do provide a service and do meet an ever increasing number of people's needs. However Challis and is teams main priority is to balance great service and shareholders right to ever increasing wealth. ensuring that in the process the Ryman brand is not damaged. It is what the Ryman brand stands for (those nice words you keep quoting Percy)
because without that there is not a sustainable future.

So in simple terms shareholders are really asking Challis to make as much money as he can from each of his clients/customers/residents without damaging the Ryman brand. Ever increasing is an imperative because of Ryman being proud of their 11 year history of doing fabulous things (the investor section of their website mentions this a lot and not much about customer satisfaction in that section except a couple of the obligatory photos of happy residents).

Last report says they have a portfolio of 6.191 economic making things things (aged care beds and village units). They make an underlying profit of $16,185 from each. And Challis and his team have done well over the last 4 years because in 2009 they were only making $14,010 per thing.

No doubt there is an internal measure that has a target of $17,000 per thing and then $18,000 per thing to meet the objective of extracting as much as we can from each thing, be they a client/customer/resident. Failure to do this will not make shareholders happy.

I shall never forget that Ryman is not in the social service game. That is for churches and other charities and the government. I forgot the underlying premise in investing - that is make as much money as possible. I forgot that Ryman's main priority should be this, balancing superior returns against maintaining brand integrity.

Shareholders should have no qualms about this approach. if they do and extracting as much as possible from every customer pricks their conscience they should not be invested in Ryman

Challis and his team have done well. Long may it continue

Chart shows what Ryman extract from each economic unit over the last few years. Great story eh

Simple facts to remember;if you give people what they want you will get what you want.Ryman have done so for years by placing their residents first.
The not for profit organization have a poor record for supplying care.Most are giving up,or have given up.

[yabster]

that BS Percy- I work for a Not For Profit who use to have Homes and I work closely with others that still do- they have one of the best reps in the industry and have far higher staffing ratios and pay higher than the listed companies- after all they are in it not to make a profit- so less mass generalisations please.

[percy]

that BS Percy- I work for a Not For Profit who use to have Homes and I work closely with others that still do- they have one of the best reps in the industry and have far higher staffing ratios and pay higher than the listed companies- after all they are in it not to make a profit- so less mass generalisations please.

The comment was made as I had shares in Aveum [Australian] who brought a lot retirement villages from not for profit organisations.We have also seen The Salvation Army in NZ sell off/quit retirement villages.I believe the comment is correct. I also believe more not for profit organizations will leave the industry.

[yabster]

Hi Percy - it is true that many Not For Profits have left the industry as more private players get invovled. I work for Presbyterian Support in Christchurch and we sold 5 homes probably 10 years ago - mainly for two reasons - Capital costs and the huge losses we were making were not sustainable- that was largely due to our staffing ratios. At the time we had one of the best reputations as a Rest Home provider and still do in regions like Central (Wellington - who have retained their Homes). So the comment stating NFP have a poor record supplying care does not stand with me at all. If fact I would say privately owned - "profit" motivated Homes have a far worse record.

That is not a jibe at Ryman- they seem to have a moral compass as well as an eye on the bottom line (I know Simon) and he is a genuine type of man.

Lets face it we will or do have elderly parents and want the best care for them when that time comes.

[percy]

Hi Percy - it is true that many Not For Profits have left the industry as more private players get invovled. I work for Presbyterian Support in Christchurch and we sold 5 homes probably 10 years ago - mainly for two reasons - Capital costs and the huge losses we were making were not sustainable- that was largely due to our staffing ratios. At the time we had one of the best reputations as a Rest Home provider and still do in regions like Central (Wellington - who have retained their Homes). So the comment stating NFP have a poor record supplying care does not stand with me at all. If fact I would say privately owned - "profit" motivated Homes have a far worse record.

That is not a jibe at Ryman- they seem to have a moral compass as well as an eye on the bottom line (I know Simon) and he is a genuine type of man.

Lets face it we will or do have elderly parents and want the best care for them when that time comes.

Thank you for your comments.I may have miss read why I lot of not for profit organizations were getting out of the business.
Would appear from your post that the not for profit people were not making a profit.!!!!!! lol.
I think I may have mis understood that their level of care had not gone down.I apologise.
We agree that we want the best care for the elderly.

[winner69]

Challis fronts up at Malvina
http://www.stuff.co.nz/dominion-post/news/wellington/9016290/Rest-home-operator-apologises

[percy]

Challis fronts up at Malvina
http://www.stuff.co.nz/dominion-post/news/wellington/9016290/Rest-home-operator-apologises

No surprises there.Thanks for the link.

[winner69]

Sounds like they have dispensed with the people meant to be running the place ..heads have rolled

But where were the internal controls? What the hack was this regional manager doing ...the regional manager now in charge at Malvina

Great story for ryman ...and they see to have an inordinate number of big ads I the paper over the last week

Have they handled the potential damage to the ryman brand better than fonterra?

[CJ]

Other families at the hour-long meeting said they had also complained about care at the rest home and action had been taken only after the issue was publicised in The Dominion Post.My question is who did they complain to? Was it only to the village? Or did the go to Ryman Head Office or the Retirement Village commissioner before they went to the papers.

[gv1]

High time, things are turning out to be third world grade in this country.

[CJ]

High time, things are turning out to be third world grade in this country.Go to a Third world country, then pull you F head in.

Your as bad as the Chinese complaining about NZ's food and building standards.

[gv1]

Go to a Third world country, then pull you F head in.

Your as bad as the Chinese complaining about NZ's food and building standards.

Don't need that kind of language! It's not all about making money that you forget about the basics.

[gv1]

Third world? Really?

Have you been to a third world country?

I have. It doesn't look like a Ryman village.

Yes I have and lived for few years as well. At least in third world countries they action it on their first request, and doesn't let it go on before it becomes a media case.

[Joshuatree]

I dont think RYM is dropping just on the negative publicity; big shareholder taking profits maybe? Any chartists have any views on where to from here before a base is formed/ cheers JT

[CJ]

I dont think RYM is dropping just on the negative publicity; big shareholder taking profits maybe? Any chartists have any views on where to from here before a base is formed/ cheers JTNot a chartist but it has dropped below the 50 day moving average. taking a bit of profits is my guess.

[bobxia]

might be due to fund managers raise cash for Z IPO.

[Joshuatree]

Selloff maybe finished, last day for most to get the cash together for Z.

[winner69]

Joshuatree, you are probably right, but I have say, who would sell up Ryman for Z.....? Is Z really that good a company that its better than Ryman?

That's what I was thinking sparky .... if I had anything in a fund whose manager was doing this I would have something to say

[bobxia]

Passive fund managers whose mandate is to follow nzx50 weightings will have no choice but to sell stocks to fund Z.

[iceman]

Passive fund managers whose mandate is to follow nzx50 weightings will have no choice but to sell stocks to fund Z.

But not Ryman !

[bobxia]

In general strong performers like RYM tend to overweight (comparing to NZX50 weightings), and these passive guys will sell overweights, and buy underweights as part of their rebalance process. The idea is to generate a market return, rather than stock picking to beat the market.

[blakecb]

There are some warning signs appearing with Ryman that would be good to keep an eye on (see the attached chart).

It is testing a number of things right now - the 50ma (pink), support level (orange), neckline of the head and shoulders reversal pattern (black). It is also in bear mode on the RSI and DMS. It may yet bounce off all these things and be okay, but if it starts breaching them all, it would be a good indication that it is time to exit.
4739

[blakecb]

I clearly said if it breaches those lines then it is not okay, but hasn't done so at this point. I thought it was better to put up the chart now than put it up after the event and say, "Look the chart predicted it." Kind of the way seismoloists go about their work (I've never understood the point of that profession). And someone above actually asked for a chart.

I agree Ryman is a good company but the market, as always, is trying to decide the right price for it. There has been a lot of activity pushing it higher, but perhaps it has gone 'too high' in the eyes of the market. I didn't even mention the shooting star candle at the peak, in which bulls tried to push price up but met with resistance. Or the market may consolidate and then decide, in fact, that it is worth more, and so it will push higher.

I note that various (fundamental) analysts value RYM in a range between $5.10-$7.17 - so no wonder there is some indecision in the market as it is at the top end of that range. (Yes I know it has beaten expectations before, but that's not what the chart is currently showing.)

[kizame]

So it's ok unless it's in trouble?

I really don't want to start a flame war on technicals vs fundamentals, but a company like Ryman has absolutely superb fundamentals. Most people would agree the Ryman business is absolutely superb in most regards (note most, because they have slipped up recently regarding the Malvina Major village dramas a couple of months ag

My own view is that if a great company like Ryman dips 5%, it's because shares do that sometimes. I don't pay attention to RSI, MACD and 50EMA for a company that has a ten year record of success with another ten years of demographic tailwinds it is ready to conquer.

Edit: Hasten to add that the overall market has been poor over the last few weeks, which would certainly account for negative movement in a large cap NZX stock like Ryman.

It pays to head what is said regarding the chart,unless you would like to sit there on a great company with great fundamentals i.e DIL,
it doesn't stop the shareprice from heading south.

[Joshuatree]

That's what I was thinking sparky .... if I had anything in a fund whose manager was doing this I would have something to say

Well its certainly paid off selling some RYM and buying Z ,at this point in time.I fortuously sold some RYM @$6.93. Surprised RYM still dropping tho.Thanks blakecb for the T/A and chart helps with the overall picture.

thanks blake

[Snow Leopard]

There are some warning signs appearing with Ryman that would be good to keep an eye on (see the attached chart).

It is testing a number of things right now - the 50ma (pink), support level (orange), neckline of the head and shoulders reversal pattern (black). It is also in bear mode on the RSI and DMS. It may yet bounce off all these things and be okay, but if it starts breaching them all, it would be a good indication that it is time to exit.
4739

Go find a 5+ year chart with a log price axis, it provides a wonderful perspective.

Best Wishes
Paper Tiger

[bobxia]

technicals short, fundamentals long, that explains a lot about the volatility.

[macduffy]

The distressing Malvina Major Village issue continues to get publicity. Expect further weakness in the stock today.

http://www.stuff.co.nz/national/9117432/Rest-home-failed-all-its-residents-ministry-says

[CJ]

The stock dropped 10c this morning, but back up to $6.90. Same happened yesterday. Was underwater all morning but put on gains in the afternoon. Will be interesting to see if that is repeated.

Is there more coverage or are you bringing up the past ;)

[macduffy]

An interview with Simon Challis on National Radio - or whatever it's called these days - and later some pretty negative emails to the station read out by Kathryn Ryan. Will take a lot of "putting right" but just how much long term harm to the company's reputation, and investment value, is difficult to gauge.

[winner69]

Flyer fell out of the Dom Post today inviting me to an open day at their new place up on the kapiti coast .....charles Fleming or something .....looks lie Steve Fleming missed out on the gaming rights

[777]

An interesting read.

http://www.trademe.co.nz/Community/MessageBoard/Messages.aspx?id=1317252&topic=5

[Beagle]

Ryman was making changes nationwide to incorporate more feedback from relatives and their residents.
Not before time. Reflecting back on it now, 10 months after his passing, (although at times I didn't want to accept it because I am a shareholder), the level of care of my father, a multiple stoke patient and dementia sufferrer received at their Orewa dementia unit was pretty unsatisfactory at times and was only brought up to just acceptable because of the extremly regular visiting of my Mum.

The main issue is with multiple shifts of mainly Phillipino staff they really didn't seem to have a handle on my fathers care needs.
Thankfully Dad, a Presbyterian minister of 50 years serrvice is in a better place now. In my opinion he deserved better care when he was at Ryman. That said, I would be the first to acknowledge that I'm not an impartial observer in this matter and its quite probable that the extremly tough process of watching your father gradually deteriorate to the point where he doesn't know who you are and is not in control of his bodily functions could have impacted on my objectivity.
I suppose they do try and being a nurse at one of their dementia units is something I could never do.

I suppose I should comment on the share price not having done so for quite some time. Seems fair value and a sensible long term hold after all what else grows at ~15% per annum year in year out, global GFC or no global GFC....

[Joshuatree]

After alot of checking out we have chosen a Modern low level Dementia unit for our Mother. Ryman was never a frontrunner for various reasons. Thanks for sharing Roger. Its a horrible thing to see a loved ones self respect and dignity going and .even harder seeing and hearing about them being disrespected. An d does one really think the patient is a priority when some of their caregivers can't speak english clearly to a confused octogenarian.? Its a hard job for any caregiver too, its great when one finds people who really want to work in this situ; being their calling.

On a side issue. An interesting snippet today. "Adult diapers are now outselling baby diapers in Japan"

[percy]

I have three friends who have had a parent in dementia units.
My wife's mother is in one a present time.
None have been Ryman.
All caregivers have done their very best for their patients.
We have all had most distressing incidents;teeth down the loo,hearing aids lost,clothing lost,patient wearing another patients clothing,attacking other patients,fowl language,food thrown,and the list keeps going on.
My wife's mum thinks my wife is her sister,when she recongises her.

[TimmyTP]

On a side issue. An interesting snippet today. "Adult diapers are now outselling baby diapers in Japan"
and most of those are sold by Nigerian dudes just down from Roppongi Crossing

[Joshuatree]

Dont get you Timmy, please clarify thanks.

[percy]

I have three friends who have had a parent in dementia units.
My wife's mother is in one a present time.
None have been Ryman.
All caregivers have done their very best for their patients.
We have all had most distressing incidents;teeth down the loo,hearing aids lost,clothing lost,patient wearing another patients clothing,attacking other patients,fowl language,food thrown,and the list keeps going on.
My wife's mum thinks my wife is her sister,when she recongises her.

The best care in the world is still not good enough.
You are left with a feeling of hopelessness ,that you have failed your parent.After every visit a feeling of guilt.
So back to Ryman and other homes.Yes they can all do better,but dementia care is always going to have big problems.

[winner69]

On this forum you are allowed to say it is all about maximising shareholder returns while providing appropriate levels of care.

And in this respect RYM are doing very well

[Bjauck]

With all of these care facilities surely a lot has to do with cost. Most patients (except those without assets tucked up in well established trusts) are fully subsidised with the government providing the funding and setting the maximum rates for the hospital/rest home. The facilities must then work within budgets to provide the care. The qualified nurse/patient ratio is fully stretched, newly arrived nurses with minimal English tend to be cheaper to employ. Carers are on minimum wage and have high turnover rates. (There are exceptions with some carers being dedicated people).

The flip side for better standards is that if more money were pumped in to providing the care then taxes would need to go up and/or private insurance schemes established. You get what you (or rather the government in most cases) are prepared to pay for. Period.

[stoploss]

I have three friends who have had a parent in dementia units.
My wife's mother is in one a present time.
None have been Ryman.
All caregivers have done their very best for their patients.
We have all had most distressing incidents;teeth down the loo,hearing aids lost,clothing lost,patient wearing another patients clothing,attacking other patients,fowl language,food thrown,and the list keeps going on.
My wife's mum thinks my wife is her sister,when she recongises her.

Percy, not wanting to make light of a sad situation - I have personal experience with this and agree with the above...
Just wondering is that chicken talk ?? :)

[TimmyTP]

Dont get you Timmy, please clarify thanks.
Roppongi Crossing in Tokyo at night is a fascinating and lively place, where 'anything goes'. Lots of Nigerian (why Nigerian I don't know) touts hang around offering 'whatever you want' and that almost certainly includes the opportunity to be dressed up as a baby and whipped with celery.

There is a very minor serious side to this flippant comment - some seriously unfathomable (to outsiders) stuff goes on in Japan, so treat stats from that great nation with some caution.

[percy]

With all of these care facilities surely a lot has to do with cost. Most patients (except those without assets tucked up in well established trusts) are fully subsidised with the government providing the funding and setting the maximum rates for the hospital/rest home. The facilities must then work within budgets to provide the care. The qualified nurse/patient ratio is fully stretched, newly arrived nurses with minimal English tend to be cheaper to employ. Carers are on minimum wage and have high turnover rates. (There are exceptions with some carers being dedicated people).

The flip side for better standards is that if more money were pumped in to providing the care then taxes would need to go up and/or private insurance schemes established. You get what you (or rather the government in most cases) are prepared to pay for. Period.

No I don't really think more money or more staffing will alter the level of care given.
Dementia patients are extremely difficult people to help.
No one wants to see them drugged up like Zombies.
Sparky The Clowns post No.1641 sums up how I feel.

[Beagle]

With all of these care facilities surely a lot has to do with cost. Most patients (except those without assets tucked up in well established trusts) are fully subsidised with the government providing the funding and setting the maximum rates for the hospital/rest home. The facilities must then work within budgets to provide the care. The qualified nurse/patient ratio is fully stretched, newly arrived nurses with minimal English tend to be cheaper to employ. Carers are on minimum wage and have high turnover rates. (There are exceptions with some carers being dedicated people).

The flip side for better standards is that if more money were pumped in to providing the care then taxes would need to go up and/or private insurance schemes established. You get what you (or rather the government in most cases) are prepared to pay for. Period.

You Sir, have hit the nail on the head. In what I refer to as the "house of horrors" I saw exactly this scenario play itself out.
When Dad first moved in we knew the manager there and she knew my father well from days gone by and made sure he was looked after.
Unfortunatly good staff are often head-hunted by other retirement villages and that's exactly what happenned to the manager we knew and after that Dad was more advanced and it was cheaper for them to drug him up like a Zombie and employ a vast majority of Phillipino workers with hugely stretched qualified care-givers to patient ratio's, massive turnover of staff, hearings aids lost, glasses lost, not dressed properly I mean really I could write pages but what's the point.

Better I just give some of you poor buggers some advice that are still going through this nightmare...when you arrive and give your parent a hug, tell them your name and who you are, e.g Hi its Roger your youngest son, its great to see you Dad...that way for a few minutes or maybe longer if they're not that advanced they'll know who you are and perhaps more importantly you can kid yourself they know who you are for all the time you're there visiting them. ( I only learned this coping mechanism a long way into the process, I wish someone had given me this advice early on).

Everyone who is going through this nightmare or has a parent / loved one going through this nightmare has my deepest sympathy...its a long, profoundly sad and truly grueling process.

[skid]

Having been through it we found its about acceptance and educating yourself about it.
I dont think my sister ever accepted it--when my dad would call at 9pm and say that he had decided to move back home (which was sold) she would stress and tell him dont you remember dad the house is sold(more stress all around)..instead of ok dad we'll talk more about it tomorrow...so hows things going etc etc (fortunately he never got to the point of not recognizing me and my sister.)

compassionate staff is an interesting topic on a bottom line shareholding discussion--I believe you can satisfy both sides of the equation--as in where would you put your dad--which facility would you choose

[Joshuatree]

Diversion therapist essential.

[bobxia]

it's very quiet here recently. "Ryman - Too boring to talk about?"

[Jay]

Just keeps on chugging along. Not a lot more to say really

[Slam dunk]

I'm looking forward to an update on sales in Melbourne

[bobxia]

big turnover today, maybe sign of news around Wheeler Hill coming out soon...

[Vaygor1]

big turnover today, maybe sign of news around Wheeler Hill coming out soon...

I am not sure if news on Wheeler's Hill in itself will have a major impact on the share price this financial year.
Although I expect the news regarding Wheeler's Hill sales to be very positive, I also think the cost-of-entry into Australia (if the 1/2 year financials due out in early December go into that much detail) will negate much of the positive news in the minds of the short-term-thinking everyday-man-and-his-dog investor.

Any news regarding Australia that will positively impact the share market imho will be announcements concerning Ryman's expansion plans within Australia whereby they clearly signify their intent to attain economy-of-scale and reach critical mass such that their Australian operation can independently look after itself.

[Vaygor1]

FORBARR has chucked a $7.50 price target on RYM because of its Australia operations. Will see if it starts seeing some action soon eh?

I have maintained for a long time (written earlier in this thread somewhere) that RYM will be $7.50 by mid-May 2014... and the average willing-buyer price can be worked out at any time before this date with the knowledge that RYM will climb by 2c per week. i.e. If it is 20 weeks before mid-May then deduct 20x2c = 40c off $7.50 and the willing-buyer price should be about $7.10.

To date it looks like I have been a bit conservative. Could easily surpass $7.50 by mid-may (or very soon after) and by quite a margin. Disc. Hold.

[Vaygor1]

I have maintained for a long time (written earlier in this thread somewhere) that RYM will be $7.50 by mid-May 2014... and the average willing-buyer price can be worked out at any time before this date with the knowledge that RYM will climb by 2c per week. i.e. If it is 20 weeks before mid-May then deduct 20x2c = 40c off $7.50 and the willing-buyer price should be about $7.10.

To date it looks like I have been a bit conservative. Could easily surpass $7.50 by mid-may (or very soon after) and by quite a margin. Disc. Hold.

... and MorningDump still have a SELL recommendation with a valuation of $5.00..... they a bunch of Richard-Craniums.

[macduffy]

My guess is that the market has "re-discovered" RYM due to the corporate moves by others in the retirement sector , ie MET and SUM.

And it's a strong market overall, today.

[troyvdh]

Lets not forget folks....the "property market"....man I hate that phrase....like can folk (who live in provincial NZ....ie. Waimate et al ) appreciate reading the major newspapers like the Herald and the Press...about the explosion in residential house prices....when it totally does NOT apply to them.However I digress.....

Rising house prices mean more and more folk can afford to buy into retirement homes....simple really.

Cheers

[born2invest]

Anyone know what's up with RYM today? +2.9% @ $7.2

Hi,

The valuation of the company has blown out of context compared to it's discounted cashflows.

It is therefore in pure speculation territory.

My guess is speculators don't want to miss the boat and are buying at even higher prices because they fear missing out.

That's whats up with RYM today.

[troyvdh]

I disagree....can we communicate in say 12 months.....cheers troy.

[clip]

I disagree....can we communicate in say 12 months.....cheers troy.

Agree.. will be checking back here in a year :)

[Jim]

Closes at $7.27 (up 3.9% on the day).

Maybe the Australian investment is bearing fruits

[troyvdh]

Come on ...he (born) is probably half right.....gee factor in foot and mouth...bank scandle....another earthquake...we are all taking for granted a certain future outcome...

[CJ]

Come on ...he (born) is probably half right.....gee factor in foot and mouth...bank scandle....another earthquake...we are all taking for granted a certain future outcome...they actually did well out of the last earthquake. They accelerated the build on their new chch property.

[Vaygor1]

Last year Ryman posted their half year result release date on 31-Oct, and then posted their half year result on the 15-Nov. Given this timing and because I am a conspiracy theorist, I think that someone's aunty, cousin, colleague, friend already knows the result. How many times is this 3-to-4-week pre-announcement spike (or dip if it is bad news) going to repeat itself, not just with RYM but with a multitude of shares out there.

Given this spike, expect good news.... which I don't think will really involve Wheeler's Hill. Far too early on in the piece for the Australian in-road to have any real impact yet in my view.

[born2invest]

Apologies if my post came across as a bit abrasive. I'm just keen to see the numbers to back up peoples views that a stock is overvalued. Yesterday PEB was claimed as being overvalued, yet when pressed it became apparent the poster had not actually crunched the key numbers one would need to, to make such a claim. I have not crunched the numbers on RYM lately, so I'm keen to see what born's numbers are...

Here is my 7 year dividend discount model. I value RYM at $4.37 P/E of 15.98. I aim to make 15% after tax, so valuation reflects this. I forecast EPS growth over the 7 years of 10.5% per year and valuation of 19 P/E in year 7. I forecast the current dividend payout ratio of 37% to continue along the 7 years.









19





1.15










1.105









year
eps
div
price+div
price
sum div
compounding



0
27.35
10.12
529.77
519.65
10.12
437.00
1
15.98


1
30.22
11.18
595.51
574.21
21.30
502.55
1



2
33.40
12.36
668.16
634.51
33.66
577.93
1



3
36.90
13.65
748.44
701.13
47.31
664.62
1



4
40.78
15.09
837.15
774.75
62.40
764.32
1



5
45.06
16.67
935.17
856.10
79.07
878.96
1



6
49.79
18.42
1043.48
945.99
97.49
1010.81
1



7
55.02
20.36
1163.16
1045.31
117.85
1162.43
1



8
60.79
22.49
1285.29
1155.07
130.22
1336.79
FALSE



9
67.18
24.86
1420.25
1276.35
143.90
1537.31
FALSE



10
74.23
27.47
1569.38
1410.37
159.00
1767.91
FALSE















Buy below









$4.37










15.98 PE

[born2invest]

Sorry, but this answer just sounds like someone feeling a bit down about not capitalising on the returns RYM has offered over the years... If not Feel free to correct me ;) It's just that you don't provide any numbers to back up your opinion. How are you valuing RYM? Care to share your numbers??

I bought in at $2.05 a few years ago. I sold them a few months ago around $6.90 so I haven't missed out. In fact, I more than tripled my investment in 3 years.

[born2invest]

I find it funny that as soon as someone says the market darling RYM is overvalued, you all get defensive and aggresive and attack the person who is looking at the situation rationally. It seems to me that a lot of you are letting your emotions and heard behaviour rule your investment decisions.

[CJ]

I forecast EPS growth over the 7 years of 10.5% per year Why have you choosen this amount. I thought their growth was ~20% per annum historically.

[Beagle]

Thier cash flow is actually growing at ~30% per annum. Anyone can construct any valuation they like using disingenious numbers that simply don't reflect reality. Morningstar are good at that too :)

The blue sky thread is over @ XRO.
Simply calling it as I see it, no offence intended.

[winner69]

Thier cash flow is actually growing at ~30% per annum. Anyone can construct any valuation they like using disingenious numbers that simply don't reflect reality. Morningstar are good at that too :)

The blue sky thread is over @ XRO.
Simply calling it as I see it, no offence intended.

Jeez roger .....cash flows growing faster than DIL ......you can't be right!!!!!

[Vaygor1]

Why have you choosen this amount. I thought their growth was ~20% per annum historically.

I agree with Roger. Born2Invests numbers are off the mark. Why select 10.4% growth? In reality it is (and has been for a long time) 17% growth per annum, and this in a company whose growth is truly about the most predicable on the planet. Also to value RYM at less than what MorningDump does beggars belief.

$100 after 7 years compounding at 10.4% = $200
$100 after 7 years compounding at 17.0% = $300

So Born needs to add 50% to his/her figures. $4.37 x 1.5 = $6.55. If RYM drops down to $6.55 (let alone $4.37) in the foreseeable future I will eat the laptop on which I type.

[born2invest]

Why have you choosen this amount. I thought their growth was ~20% per annum historically.

Growth in EPS over the past few years has averaged around 14%

I've therefore factored in another 2 years at growth of 14.5% and then down to 9% for the following 5 years.

Will it grow like this? Who knows? It's my best guess and that's really all forecasts are. I don't claim to know the future, certainly not 7 years into the future, but it is a best guess which allows me to work out some sort of valuation.

[born2invest]

I agree with Roger. Born2Invests numbers are off the mark. Why select 10.4% growth? In reality it is (and has been for a long time) 17% growth per annum, and this in a company whose growth is truly about the most predicable on the planet. Also to value RYM at less than what MorningDump does beggars belief.

$100 after 7 years compounding at 10.4% = $200
$100 after 7 years compounding at 17.0% = $300

So Born needs to add 50% to his/her figures. $4.37 x 1.5 = $6.55. If RYM drops down to $6.55 (let alone $4.37) in the foreseeable future I will eat the laptop on which I type.

Ok so your method of valuation is different to mine.

All that proves is that I'm only willing to buy the company at a lower price than you.

The fact that you say their "growth is the most predictable on the planet" is concerning.

[born2invest]

Thier cash flow is actually growing at ~30% per annum.

Operational cashflow has grown roughly 30% over the last 3 years, yes this is correct. If you look over:

4 years is 17%
5 years is 20%
6 years is 15%

However, I'm more concerned about free cashflow. This has only averaged 14 million per year for the last 9 years, most recently 6 million. I'm aware that they have large CAPEX on new buildings, upgrades, etc but free cashflow is the final figure.

I will admit that my valuation figures and the growth I predict may be conservative. All I know is that I ran the same valuation method back in 2010 and RYM was a buy. Now it is not. My method uncovered it was undervalued back then but not now. It stops me from buying anything that looks likely not to make me 15% p/a after tax.

[Vaygor1]

The fact that you say their "growth is the most predictable on the planet" is concerning.

Really? You should read their annual reports.

RYM Annual report 2012:
A Decade of Record Results.
The result is a significant milestone, as it marks ten years in succession of record profit results for the company.
This is no mean feat, as many companies talk about double digit growth but only a tiny percentage of large companies reliably grow their bottom line year after year. In fact, a recent report in the Harvard Business Review highlighted that only 5 out of 2,350 large companies surveyed from around the world grew both their revenues and profits by 5% or more every year over the last 10 years.

... and RYM outstripped 5%

You misquote me. I stated "...whose growth is truly about the most predictable on the planet."

[Vaygor1]

Growth in EPS over the past few years has averaged around 14%

I've therefore factored in another 2 years at growth of 14.5% and then down to 9% for the following 5 years.

Will it grow like this? Who knows? It's my best guess and that's really all forecasts are. I don't claim to know the future, certainly not 7 years into the future, but it is a best guess which allows me to work out some sort of valuation.

EPS per annum is not constant. Work out how much it is accelerating and re-calc.
Your 9% is arbitrary. You need a rationale before applying a number like this.
Hint: take a look at the growth of RYM's build rate, and the growth rate of NZ/Aussie citizens entering retirement.

[CJ]

Hint: take a look at the growth of RYM's build rateThis is also impacting the free cashflows. Their build rate has increased significantly to be over 700 per year ( think) which is more than SUM and MET combined (which are 300 and 200 from memory)

[Vaygor1]

This is also impacting the free cashflows. Their build rate has increased significantly to be over 700 per year ( think) which is more than SUM and MET combined (which are 300 and 200 from memory)

Correct on the free-cashflow statement CJ
700 per year is a target, last year they achieved 743. That is over 2 per day, every day (including weekends). Pretty amazing really.

[macduffy]

Apropos the discussion on forecasting, the following is from a recent interview with the Australian manager of an $80b US fund.

"You have talked about the importance of acknowledging that you cannot forecast the future when investing. What did you mean by that?

When you realise that you cannot predict the future it totally changes the way you invest, because it makes you hunt for a margin of safety in your investments rather than trying to leverage yourself to one specific view or another. And that is kinda of what defines us here: having the humility to say, “You know what, the future we face is unknowable”. And we really believe that.

The essence of this view is accepting that we are dealing with complex systems, which are being amplified today. First, we don’t currently have normal unfettered economic forces at work. We have a distorted financial architecture. Second, there is a complex and polarising geopolitical equilibrium that you need to layer on top of that. If I had to look at a historical parallel, 2013 is probably closer to 1913 than other periods in time.

Finally, few people understand or recognise that a lot of the change that happens in the world is attributable to marginal productivity and innovation — that is, new ways of doing things – which by definition is very hard to anticipate in advance of it happening. And that process of innovation and productivity compounds out in a very diffuse fashion.

Q: If you cannot forecast the future how do you then value a company’s a future stream of cash flows to discount them back to the present day?

That’s a very good point. We never think we can predict which one of our stocks is going to work best. It is kind of like cooking popcorn — you know most are going to pop, but not when. And a few will burn out.

So we’ve never been a believer in these very concentrated, high conviction portfolios because it presumes that ability to divine an individual company’s future.

What we do try to do is buy businesses that have “persistence” to them, or what we call franchise duration. We love businesses that have been around for a long time. We like businesses that have things that ought to make them persist--relative scale advantages, customer captivity and so forth.

We are mindful of the fact that a business that can take market share quickly can lose it quickly. So we look for evidence of historic durability in a company’s market position. And we like to pay low multiples for cash-flow around the single digit multiples of earnings before interest and tax.

So when we invest we are not paying for growth – we’re ideally getting that growth for free and have put in place an error-tolerant investment system that can participate in the upside of human enterprise."

Sounds much like Warren Buffett! The full interview can be found on winner96' post in the Aussie banks' thread. Well worth the read.

[born2invest]

Hi Vaygor1,

What do you think Ryman Healthcare is worth?

What is your required return per year?

What is a reasonable expected growth rate for the next 7 years?

Do you think growing 17% per year is sustainable longer term? (This would mean a 10.44 billion market cap in 7 years if the same P/E ratio applies)

[Beagle]

Ryman themselves have stated that they're targeting 15% growth for the forseeable future.

The Govt are flogging off a power company in an absolute zero growth industry on a PE of mid 20's with the threat of a Labour Govt undermining its future viability and their biggest customer, (the smelter which takes 41% of generation capacity more than likely to be shutting up shop in 2017 depressing the wholesale cost of electricity thoughout N.Z.)

Nobody can tell me Ryman on a similar PE in a far more dynamic industry with serious tailwinds for the forseeable future is over valued.
People hunting for genuine growth stocks on a PE of 15 on the N.Z Market....good luck to you, maybe in America with Apple but is that a growth stock anymore ?? Ryman will be $7.50 well before next May, possibly even today LOL and $8.50 well before May 2015, in my opinion. Brand value and reputation is something people seem to be overlooking. Retired people trust Ryman. When Ryman say their weekly operating contributions will never go up and they'll be looked after for the rest of their lives, Ryman have the runs on the board to back it up and people believe them. That's why their operation will continue to grow from strength to strength.

[troyvdh]

Roger ...very well said...whats more those retired folk (particularly should they be residing in either CHCH or Auck)...are fair salivating over the prospect of selling there humble home and purchasing a really nice place in any of the major retirement facilities !!!!!!....and keep the batch and buy another Suzuki car to boot .

[born2invest]

Ryman themselves have stated that they're targeting 15% growth for the forseeable future.

The Govt are flogging off a power company in an absolute zero growth industry on a PE of mid 20's with the threat of a Labour Govt undermining its future viability and their biggest customer, (the smelter which takes 41% of generation capacity more than likely to be shutting up shop in 2017 depressing the wholesale cost of electricity thoughout N.Z.)

Nobody can tell me Ryman on a similar PE in a far more dynamic industry with serious tailwinds for the forseeable future is over valued.
People hunting for genuine growth stocks on a PE of 15 on the N.Z Market....good luck to you, maybe in America with Apple but is that a growth stock anymore ?? Ryman will be $7.50 well before next May, possibly even today LOL and $8.50 well before May 2015, in my opinion. Brand value and reputation is something people seem to be overlooking. Retired people trust Ryman. When Ryman say their weekly operating contributions will never go up and they'll be looked after for the rest of their lives, Ryman have the runs on the board to back it up and people believe them. That's why their operation will continue to grow from strength to strength.

Great,

So how much is the company worth?

[Beagle]

Roger ...very well said...whats more those retired folk (particularly should they be residing in either CHCH or Auck)...are fair salivating over the prospect of selling there humble home and purchasing a really nice place in any of the major retirement facilities !!!!!!....and keep the batch and buy another Suzuki car to boot .

Thanks. I went through and looked over a number of facilties when i was searching for my parents and was especially impressed with Ryman's facility at Remuera. Anyone looking to sell up in Auckland's eastern suburbs and buy in there wouldn't be disappointed and would have plenty left over for the mandatory world cruise.


Great,

So how much is the company worth?

I think the brokers have it about right at $7.50.

[muss1]

Forgetting rymans reputation because that adds a premium - what do people think is a fair P/E for a company in this sector with an assumed 15% growth? Considering Rogers argument about zero growth risk infested power companies could we hit 30? I wouldn't want to buy there, but it doesn't sound ridiculous next to the power companies

[muss1]

P/E of 20ish for a 15% p.a. growth spunds good, but in this environment of risk on and bullishness, lord knows!

Exactly.. There's no margin of safety that's for sure

[born2invest]

Exactly.. There's no margin of safety that's for sure

So if we all agree a P/E of 20 is about right, then we want a margin of safety of say 20% so we are buying RYM at a P/E of 16?

It is now a P/E of 27.

So I don't understand why you are against my argument because you have just told me 20 is about right and therefore RYM at a P/E of 27 is 35% over valued?

Yes?

[muss1]

I don't think we are getting a margin of safety with such a darling stock, so maybe we are buying at p/e of 20. I doubt we are even going to get that in the current market. Unless of course it finds some resistance and cools down when this rally is over. We could be waiting a while to buy/top up if we aren't prepared to go above p/e of 20. I personally think your valuation is overly conservative even before you add a margin of safety

[winner69]

jeez born2invest you have pissed off the masses - like a personal insult to each of them individually

Good on you for having a method to assessing what is value - as you have found out value does come to those who wait.

Keeping your assumptions about dividend payout ratio and the ongoing PE this table shows the price you would be buying to achieve your 15% pa return at differenbt growth rates

Spooky that the analyst gurus out there have a value of about 750 ..... about the 20% pa growth rate. Maybe these geniuses that the followers love just do simple DDM models but write pages and pages to convince the punters thet are indeed clever

Or maybe the market is very efficient and know RYM growth rate is going to be 20% pa and priced it accordingly

But don't be swayed mate .... take what these guys have said and think about it - might change your assumptions .... but if they have not convinced you and you believe that your reducing growth rates from a few years out is valid stick with it ... after all your cash at stake and you know what you want in the way of returns eh

[born2invest]

jeez born2invest you have pissed off the masses - like a personal insult to each of them individually


Herd Instinct-

A mentality characterized by a lack of individual decision-making or thoughtfulness, causing people to think and act in the same way as the majority of those around them. In finance, a herd instinct would relate to instances in which individuals gravitate to the same or similar investments, based almost solely on the fact that many others are investing in those stocks. The fear of regret of missing out on a good investment is often a driving force behind herd instinct.

There are a couple of reasons why herd behavior happens. The first is the social pressure of conformity. You probably know from experience that this can be a powerful force. This is because most people are very sociable and have a natural desire to be accepted by a group, rather than be branded as an outcast. Therefore, following the group is an ideal way of becoming a member.

The second reason is the common rationale that it's unlikely that such a large group could be wrong. After all, even if you are convinced that a particular idea or course or action is irrational or incorrect, you might still follow the herd, believing they know something that you don't. This is especially prevalent in situations in which an individual has very little experience

[macduffy]

I love it!

Freud said something very similar to me at our last session!

;)

[Beagle]

So if we all agree a P/E of 20 is about right, then we want a margin of safety of say 20% so we are buying RYM at a P/E of 16?

It is now a P/E of 27.

So I don't understand why you are against my argument because you have just told me 20 is about right and therefore RYM at a P/E of 27 is 35% over valued?

Yes?

I don't agree a PE of 20 is about right and believe the current late 20's PE of Ryman is justified, (unlike the late 20's PE rating of many other companies on the N.Z. market), based on Ryman's proven business model, their proven growth record in good times and bad, (how many other companies do you know that have consistently grown their profits both in the years before the global financial crisis and during it ), that's right, Ryman's track record is truly exceptional !! Its N.Z. premier growth stock and unlike the real bubble that readily springs to mind, (Xero) actually grown profits, not grows losses !!

Summerset are on a PE of just over 30 without the many years of proven performance of Ryman.

Referencing back Ryman's PE to Meridian was my tongue in cheek way of suggesting people should think about which of these two companies is incorrectly priced. Its not hard to figure that one out !!
Disclosure - own Ryman, Summerset and definitly didn't get duped with slick marketing into the Gov't energy pup's.

[Beagle]

Herd Instinct-

A mentality characterized by a lack of individual decision-making or thoughtfulness, causing people to think and act in the same way as the majority of those around them. In finance, a herd instinct would relate to instances in which individuals gravitate to the same or similar investments, based almost solely on the fact that many others are investing in those stocks. The fear of regret of missing out on a good investment is often a driving force behind herd instinct.

There are a couple of reasons why herd behavior happens. The first is the social pressure of conformity. You probably know from experience that this can be a powerful force. This is because most people are very sociable and have a natural desire to be accepted by a group, rather than be branded as an outcast. Therefore, following the group is an ideal way of becoming a member.

The second reason is the common rationale that it's unlikely that such a large group could be wrong. After all, even if you are convinced that a particular idea or course or action is irrational or incorrect, you might still follow the herd, believing they know something that you don't. This is especially prevalent in situations in which an individual has very little experience

Great post but honestly mate your talents are truly wasted in this thread. Head on over to the Xero thread you might save some people really losing their shirt !! All that's driving that stock is what you've suggested, momentum, slick marketing and large doses of ultra ambitions plans AKA Corporate B.S.

[born2invest]

Great post but honestly mate your talents are truly wasted in this thread. Head on over to the Xero thread you might save some people really losing their shirt !! All that's driving that stock is what you've suggested, momentum, slick marketing and large doses of ultra ambitions plans AKA Corporate B.S.

The Xero thread!

No way!!

[Vaygor1]

Hi Vaygor1,

What do you think Ryman Healthcare is worth?

What is your required return per year?

What is a reasonable expected growth rate for the next 7 years?

Do you think growing 17% per year is sustainable longer term? (This would mean a 10.44 billion market cap in 7 years if the same P/E ratio applies)

In response to your 4 questions:

There are plenty of my previous posts on this thread that will tell you that. Recent RYM shareprice movement strongly suggests I am overly conservative.

Probably less than yours as it appears you wish to buy a lot lower than me. However your same rationale in buying also causes you to sell too early imho. I look for after tax return per annum, absolute minimum of 20% which I have achieved every year for the last 16 years.

17% to 19% on average.

Yes I do. I haven't checked your figures but assuming your maths is okay and given RYM's performance so far since listing, the data on future retirement figures for the next 20 years, the tangibility of RYM's assets, and long term property price growth, I don't see why a market cap of NZ$10 Billion in 7 years is not achievable.

[born2invest]

I never pay attention to macro economics.

"We will continue to ignore political and economic forecasts which are an expensive distraction for many investors and businessmen. Thirty years ago, no one could have foreseen the huge expansion of the Vietnam War, wage and price controls, two oil shocks, the resignation of a president, the dissolution of the Soviet Union, a one-day drop in the Dow of 508 points, or treasury bill yields fluctuating between 2.8% and 17.4%. But surprise: None of these blockbuster events made even the slightest dent in Ben Graham's investment principles. Nor did they render unsound the negotiated purchases of fine businesses at sensible prices. Imagine the cost to us, if we had let a fear of unknowns cause us to defer or alter the deployment of capital. Indeed, we have usually made our best purchases when apprehensions about some macro event were at a peak. Fear is the foe of the faddist, but the friend of the fundamentalist"

[born2invest]

Certainly not saying forecasting macro trends is easy, quite the opposite. HOWEVER, QE, it's duration, and it's effects on equity markets has been pretty clear cut. Jumping on that bandwagon has been a no brainer!!

So are you refering to the share prices going up or the underlying business benefiting?

Because the short term direction of the share price frequently bears no resemblance on how the business itself is doing.

[muss1]

Just to clear up my view:

Ryman is a great company and I think they can achieve their quoted NPAT growth of 15%. I think it looks expensive at the moment and am trying to work out whether it is justified and able to be supported due to market conditions etc. I am a long term holder and am looking for an opportunity to top up. I don't think this is justified until there is a decent sized correction. Haven't come up with an SP for that opportunity yet..

[born2invest]

I'm referring to the SPs and I agree with what you are saying.

Maybe Ryman is due a correction at some point, who knows (clearly there is disagreement on this thread). All else equal though, I don't think it will happen so long as QE continues. I've based (in part) the timing of my equity investments based on the bigger macro picture, but of course I have then tried to pick quality companies as well. It's worked for me so far, so I'm going to stick with it. I will likely start selling off some of my holdings early next year.

So do you try to time your share purchases with NZ interest rates, exchange rates, etc?

[born2invest]

Haven't come up with an SP for that opportunity yet..

Then how do you know when the opportunity comes along?

[muss1]

Then how do you know when the opportunity comes along?

Note the "yet".. When I get a minute. Just interested in people's overall view

[born2invest]

Note the "yet".. When I get a minute. Just interested in people's overall view

So you follow other peoples ideas rather than doing your own independent research and reaching your own conclusions?

[muss1]

So you follow other peoples ideas rather than doing your own independent research and reaching your own conclusions?

Haha. You can't honestly believe what you just said? More of a troll surely.

I've already told you why I think, but I haven't put a value on it YET. My opinion hasn't changed from what I've read over the last few days in this thread. I will work out where I want to have another bite at Ryman.

If you don't agree with people discussing ideas then why are you even here?

[born2invest]

Haha. You can't honestly believe what you just said? More of a troll surely.

I've already told you why I think, but I haven't put a value on it YET. My opinion hasn't changed from what I've read over the last few days in this thread. I will work out where I want to have another bite at Ryman.

If you don't agree with people discussing ideas then why are you even here?

I agree with others discussing ideas.

I just come up with my own valuations rather than following others.

[Snow Leopard]

Ryman has a current (well 23-Oct-2013) value of $5.049 (note the 3 decimal places there, it is precise and accurate).

Any valuations above or below this are plain wrong. End of story.

So currently it is drastically overpriced and the only reason I have not sold any is that the price keeps going up.

Best Wishes
Paper Tiger

[Snoopy]

Here is my 7 year dividend discount model. I value RYM at $4.37 P/E of 15.98. I aim to make 15% after tax, so valuation reflects this. I forecast EPS growth over the 7 years of 10.5% per year and valuation of 19 P/E in year 7. I forecast the current dividend payout ratio of 37% to continue along the 7 years.









19





1.15










1.105









year
eps
div
price+div
price
sum div
compounding



0
27.35
10.12
529.77
519.65
10.12
437.00
1
15.98


1
30.22
11.18
595.51
574.21
21.30
502.55
1



2
33.40
12.36
668.16
634.51
33.66
577.93
1



3
36.90
13.65
748.44
701.13
47.31
664.62
1



4
40.78
15.09
837.15
774.75
62.40
764.32
1



5
45.06
16.67
935.17
856.10
79.07
878.96
1



6
49.79
18.42
1043.48
945.99
97.49
1010.81
1



7
55.02
20.36
1163.16
1045.31
117.85
1162.43
1



8
60.79
22.49
1285.29
1155.07
130.22
1336.79
FALSE



9
67.18
24.86
1420.25
1276.35
143.90
1537.31
FALSE



10
74.23
27.47
1569.38
1410.37
159.00
1767.91
FALSE















Buy below









$4.37










15.98 PE










B2E, good on you for having a go at valuing Ryman. I tried myself a few years ago, then decided it was too hard and went onto other pastures. I was following the axiom, do not invest in what you do not fully understand. A couple of things have stuck in my mind from that time though.

1/ PROJECTED RATE OF RETURN: You say you are after a 15% compounding return to fulfill your margin of investment safety. I put it to you that having one figure like that for all of your investments may not be the way to go. IMO some investments are naturally 'safer' than others. I tend to invest quite a bit in quasi utilities and frankly if I struck rigidly to a 15% rate of return criterion, I would probably never invest. Take something like power generation and power retailing for example. Everybody needs the stuff, so you know the demand will never collapse or be completely outmoded by technology. So to me a 15% total ROI is just very unlikely for such a 'stable' industry. I put stable in quotation marks because of the labour/green single buyer energy policy which is currently putting pressure on this sector, but which I see as an investment opportunity. Ryman likewise has such a well developed business model, that I would regard that too as 12% ROI target.

2/ CAPTURING THE PROPERTY RETURNS: IIRC, Ryman captures all of the occupier's unit capital gains for shareholders. These do not flow through to profits in the usual way, but nevertheless add to the company's balance sheet. That in turn provides more equity that can be used to develop more villages over and above any new equity gained via retained earnings. I think you need to find some way to capture that effect in your valuation model.

SNOOPY

[muss1]

I agree with others discussing ideas.

I just come up with my own valuations rather than following others.

Let's forget this because it isn't achieving anything. I am not following others valuations, I am gauging sentiment towards the inputs.

Ryman is and will most likely be priced at a premium. Even in a correction it'll probably still be at a premium (though I hope I'm wrong).

Do people like Ryman enough to accept this risk (at its least during a correction)? This question stands no matter what you value Ryman at.

[bobxia]

Hi born2invest, I just wonder if you factor the probability of Ryman replicating its success story in OZ into your model, how much it’s the share price worth?
Starting from Melbourne, there are over 4 million people there. In fact, the aging population in the city is almost the same as the whole New Zealand, and also the forecasted growth of aging population is pretty much the same as New Zealand. If Ryman’s model works in OZ, just Melbourne itself is good enough to double the share price, don’t you agree?
Given the tracking record of Ryman, don’t you have the confidence that there’s a good chance they will crack the OZ market?
If Wheelers Hill really works, Ryman will not just build another one RV, they will start building another 10 or 20. The beauty of their model is that all the RVs are self-funded. Plus, Ryman is generating $100mio profit, which can be used to pre-fund any project.
There’s a very high correlation between the share price and the building rate. So as long as Ryman keep building RVs, it’s hard to see why the share price should stop raising.

[Vaygor1]

...There’s a very high correlation between the share price and the building rate. So as long as Ryman keep building RVs, it’s hard to see why the share price should stop raising...... and if they did stop building, imagine the dividend stream.... all that annual construction and land acquisition money paid out on top of what they currently distribute.

[Vaygor1]

Ryman themselves have stated that they're targeting 15% growth for the forseeable future.

..... Ryman will be $7.50 well before next May, possibly even today LOL and $8.50 well before May 2015, in my opinion.

Correct so far there Roger. Closed yesterday at $7.57 and $7.55 the day before that. 6 monthly result out in 2 weeks. It will be another record 1/2 year result I am sure.

[Vaygor1]

Well, seeing as I'm the only one left commenting on this totally boring share, it closed up 17 cents at $7.77 today.

Many years ago, a friend of mine dreamed he saw a huge number 7 over a racecourse. The next morning he realised that it was the 7th day of July, ,the 7th month and the horse races were on that afternoon, so he put $77 on horse No 7 in race 7... sure enough, it came 7th.

But anyway... why has MorningDump still got a SELL recommendation for Ryman with a valuation at $5.00? You'd think they would have at least altered it to a REDUCE by now, especially with another record-breaking half year result announcement due out in just over 2 weeks.

[percy]

I can not speak for Morningstar,however I think maybe the SP has already built in two or three years of success in Australia,when we have not been updated on their first Australian village's sales/success.Maybe Morningstar are warning that the SP looks to have got ahead of its self?.
Trying to work out fair value for Ryman is very difficult.Fantastic company in the right sector means a lot of people are buying into the successful story.

[gv1]

Great stock T but in the mean time something else will be sky rocketing and long term another.

[percy]

How long have they had that "sell" recommendation though? I thought it had been quite a while. From memory they have had a target price which has been consistently low relative the actual SP of RYM. You might be right Percy in terms of risks associated with OZ and how much future is priced into the current SP but for me I don't feel Morningstar has a very good track record with RYM and therefore maybe not the most credible when it comes to RYM. Stand to be corrected though, anyone else got a better recollection than me as to how good Morningstar's research has been on RYM? I don't take a heap of notice of them to be honest.

I agree with you, Morningstar's track record with Ryman has always,as far as I can remember has been wrong.
The only person/analyst who has been right has been Sauce here on sharetrader,and he has not posted his up to date valuation for a long time.
I myself do not have a clue what is fair value for Ryman at present,and that concerns me.

[gv1]

I meant Sum and met- possibly long term

[Merc]

I bought 190 shares in RYM in Dec 2006 for $10.20 each. A total outlay of $1,938.

In January 2007 they announced a 5 for one share split (reason being smaller value shares are easier to trade than higher value ones) so I ended up with 950 shares worth around $2 each.

Then, of course, the recession hit and they showed a slight loss for a few years.
Today I still have the 950 shares and the portfolio shows they are now worth 288.88% more than I paid for them.

My mother bought RYM in Nov 2011 and currently shows an increase of 282.76%.

Just goes to show that timing is everything - and a further share split may well be on the cards.

[Beagle]

Ryman is indeed a great company that I feel the market has finally valued correctly and fully. If people continue to hold they should continue to enjoy SP appreciation in line with the company's growth in earnings per share and they will be well rewarded over time.
Their EPS growth rate is however considerably slower than SUM and this is as much about the problem of growing a large company as anything else and not without risk in terms of their Australian expansion.
SUM have a superior profile in the lucrative Auckland market (5 good sites) and when you consider RYM has ~5.25 times the market capitalisation for RYM to have a similar profile in the Auckland market they'd need 26 sites, which is clearly not the case. Why is Auckland so lucrative you might ask ? Well the average house price is now well north of $500,000 and the average entry price to a retirement unit is circa $350,000 so affordability is not usually the barrier to retirement home entry it can possibly be in other parts of the country.

There are other reasons why I have decided to focus my investment in SUM which are detailed in that thread with more to come in due course. If I had unlimited capital and in a perfect world I'd continue to hold my Ryman shares... I wish you all well but consider it perhaps timely to comment that Ryman share price has tripled in the last 2 1/2 years, whereas of course thier EPS growth has been nothing like that. PE expansion cannot go on forever, especially in a higher interest rate environment that's widely expected in the forseeable future.
Simply put, I think they're fully priced now. In due course I expect the market to fully recognise SUM's attractions.

[Bjauck]

... the average entry price to a retirement unit is circa $350,000 so affordability is not usually the barrier to retirement home entry it can possibly be in other parts of the country.
I would be interested to find out more about the average entry price and on-going costs for a retirement unit.

When I last checked on the eldernet site a few months ago even small one bedroom flats in Ryman and Summerset Auckland villages were between 350-400k. In addition, $6500+ pa village fees are required. My guess is that at these levels perhaps up to 50% of Aucks retirees may not be able to afford Ryman and Summerset entry. If they want more than a one-bedroom flat the capital outlay goes up. As time goes by, with falling home ownership rates, my guess is that a greater percent of retirees will not be able to afford the capital outlay.
Disc. Shareholdings in Rym, Sum, Met

[Vaygor1]

Some odd price movements on RYM huh. Someone briefly sent it up 20c on a single trade... a novice maybe? back down now though....

... and now up to $7.95 on comparatively steady trading.

[CJ]

... and now up to $7.95 on comparatively steady trading.Catch up by RYM and MET after SUM performed well yesterday?

[Bjauck]

Some big trades at $8 - looks like some insto is keen to buy at a high price before the half-year results - maybe expecting a bumper result?

[JayRiggs]

Blasted through $8 with pretty big volume.
Who can be buying?

[percy]

Blasted through $8 with pretty big volume.
Who can be buying?

I wonder if it is Morningstar?! lol.

[Beagle]

I would be interested to find out more about the average entry price and on-going costs for a retirement unit.

When I last checked on the eldernet site a few months ago even small one bedroom flats in Ryman and Summerset Auckland villages were between 350-400k. In addition, $6500+ pa village fees are required. My guess is that at these levels perhaps up to 50% of Aucks retirees may not be able to afford Ryman and Summerset entry. If they want more than a one-bedroom flat the capital outlay goes up. As time goes by, with falling home ownership rates, my guess is that a greater percent of retirees will not be able to afford the capital outlay.
Disc. Shareholdings in Rym, Sum, Met

Must admitt I mistakenly quoted $350K as the average cost of a retirement unit in Ryman calculated from their most recent annual report, which is the average cost across their entire portfolio, not just Auckland.
That said when i looked entensivly at retirement options for my parents 3 years ago a large circa 120 sq metre independent toenhouse with good views at Orewa was $430K, I guess its gone up in line with inflation since then.
Regarding the annual fees they're paying just on $500 a month but you have to keep in mind that includes rates and building insurance and maintenance as well as the use of all the village's amenities. I'm paying around that on my Auckland home just for rates and insurance, (circa $1m value in Titirangi)...and that's before maintenance.
You also have to keep in mind that people put a value on the community that these villages provide as well as a value on the communal facilities. Some of the better villages offer a very wide range of facilities and activities and arguably residents get plenty of bang for their buck, especially if they need the back up and support of panic button's in their units and on call nursing e.t.c. e.t.c.


I wonder if it is Morningstar?! lol.

That's priceless :)

[Snow Leopard]

Firstly: I congratulate you on giving it a go and posting your thoughts for all to see.
A couple of things that I feel need addressing and re-working.

Now:
1. Calculating Free Cash Flow.

For Y2014 you have $36M340
so for Y2013 you picked $31M878 which I assume you arrived at by subtracting Net Investing Cash Flows of $190M340 from Net operating cash flows of $222M218

Now that same sum for Y2012 will give you -$13M005
and for Y2011 you get $19M957.

So is that $36M a good starting point? It may be an extreme value.

2. Continuing Free Cash Flow

Consider this:
If half of your incoming operating cash flow comes from selling new units then if you suddenly stop selling new units your incoming operating cash flow suddenly halves as well.
This may well cancel out the equally sudden reduction in investing cash flow and your free cash flow is unchanged.

I would suggest that your assumptions here are seriously flawed and that you need to do a more detailed analysis of cash flows, particularly in a no growth situation.


This will hopefully give you a lower current value for your scenario.
I am sure that the market is assuming that Ryman will continue to grow beyond six years and thus should have a higher value than you.

Once you have cracked that you can have more fun splitting out the aged care from the retirement units for an even better understanding.

Best Wishes
Paper Tiger

[Snow Leopard]

Anyone else spotted that despite the line in the income statement 'Income tax expense' that Ryman actually do not hand over any cash to the IRD?

This may be related to the the fact that they have 'available tax losses'. However it looks likely that these will be completely used up this year.

What happens then, heh?
Real money to the IRD and imputation credits with your dividend, perhaps?

Best Wishes
Paper Tiger

[winner69]

couta -- linear regression channels are nice eh

No need to worry about ryman ..... the punters are happy and don't see much downside and irrespective of any valuations punters might want to come up the money people are still prepared to buy .... see, net +ve sentiment , not like CNU

The time to consider selling is if the red line falls below the bottom channel line

[Frankenstein]

Firstly: I congratulate you on giving it a go and posting your thoughts for all to see.
A couple of things that I feel need addressing and re-working.

Now:
1. Calculating Free Cash Flow.

For Y2014 you have $36M340
so for Y2013 you picked $31M878 which I assume you arrived at by subtracting Net Investing Cash Flows of $190M340 from Net operating cash flows of $222M218

Now that same sum for Y2012 will give you -$13M005
and for Y2011 you get $19M957.

So is that $36M a good starting point? It may be an extreme value.

2. Continuing Free Cash Flow

Consider this:
If half of your incoming operating cash flow comes from selling new units then if you suddenly stop selling new units your incoming operating cash flow suddenly halves as well.
This may well cancel out the equally sudden reduction in investing cash flow and your free cash flow is unchanged.

I would suggest that your assumptions here are seriously flawed and that you need to do a more detailed analysis of cash flows, particularly in a no growth situation.


This will hopefully give you a lower current value for your scenario.
I am sure that the market is assuming that Ryman will continue to grow beyond six years and thus should have a higher value than you.

Once you have cracked that you can have more fun splitting out the aged care from the retirement units for an even better understanding.

Best Wishes
Paper Tiger

Thanks for the reply PT - very much appreciated.

You're right! More work to be done before I fully understand this company and its cash flows. I think I see where I went wrong...

[Snow Leopard]

Sp = 8xx
?

Bw
pt

[Harvey Specter]

Sp = 8xx
?

Bw
ptNo reason I know of. Seems to be at SUM expense but then it seemed to fall a bit when SUM rose earlier this week so swings and roundabouts. Long term trend for all three is booming baby (or should that be baby booming?)

[winner69]

Good stuff eh PT

Don't need to win awards to get the shareprice to go up .....sorry MAC for that comment

Coutla must have all nay losses back by now

[Bobcat.]

I would not be buying RYM at these prices. Yes, it's broken through last week's resistance at 7.90 which is bullish, but significant resistance not far above $8 will IMO become obvious through next week. This stock is very sensitive to the DJIA and S&P500 movements, especially into negative territory. Lots of mom n' pop investors loading up on RYM shares with their life savings tend to get very nervous when Equity markets drop away.

I'm guessing its end of January price could be well under $7. Watch out.

BC

[winner69]

Pretty high volumes pushed it up to 8 bucks

Some insto topping up

[Harvey Specter]

Pretty high volumes pushed it up to 8 bucks

Some insto topping upWell it got put in its place at close. Big volume to push it down to $7.9 up just 1c for the day even though it hit 8.10.

[peat]

Well it got put in its place at close. Big volume to push it down to $7.9 up just 1c for the day even though it hit 8.10.


You're not kidding
5020

The real big boys

although in this case the Findata news grab is automated and got the wrong Ryman lol

[Vaygor1]

Pretty high volumes pushed it up to 8 bucks

Some insto topping up

The sudden spurt from the $7 mark occurred about 3 weeks ago when the friends and relatives of those privy to the results and plans of Ryman hear the news. Happens all the time to virtually any share in any market.

On the Friday just traded, they did close at $7.90 but trading for the day was high at over NZ$25million worth, a peak of $8.12 with a Volume Weighted Average Price of just over $8.00

As such I expect the official news will be good and should include a fair amount of the following in no particular order:



Record Profit.
Record Revenue.
Record NZ Cashflow.
Purchase of a second site in Melbourne.
Listing on the ASX.
Strong interest and pre-sales in Wheelers Hill.
Construction completion of Wheelers Hill on budget and on time or ahead of forecast.
Growth in realised profits by around (exceeding?) 20%
Location announcement of at least 2 out of the 4 sites that they bought in July 2013 (I am going to guess Auckland, Wellington, Tauranga, and Hastings).
Increase in build rate.
Bonus issue dividend (Who knows? I think they have had at least one in the past).
Share split (might be a year or two early for this one).
Opening of Bruce McClaren village in Howick.
Commencement of construction in Petone.


My guesses anyway. 6 days until us minions find out.

[Snow Leopard]

...Opening of Bruce McClaren village in Howick...

As a McLaren fan, who will be waking up at 2am local time on Monday to watch the US Grand Prix (which McLaren will not win :(, not a good season) I would like to point out you have spelt the name wrong.

From Dec 1998 to Nov 2006 I used to live nearby, the site was a motel with a big pond and grass outback if I remember correctly.

Best Wishes
Paper Tiger

[Vaygor1]

As a McLaren fan, who will be waking up at 2am local time on Monday to watch the US Grand Prix (which McLaren will not win :(, not a good season) I would like to point out you have spelt the name wrong.

From Dec 1998 to Nov 2006 I used to live nearby, the site was a motel with a big pond and grass outback if I remember correctly.

Best Wishes
Paper Tiger

A travesty of a typo... used to do it with McLean and McClean, surname of a good friend of mine.
Re US Grand Prix, NZ Monday 2am = Thailand Sunday 8pm so I will be watching.

[Dentie]

The sudden spurt from the $7 mark occurred about 3 weeks ago when the friends and relatives of those privy to the results and plans of Ryman hear the news. Happens all the time to virtually any share in any market.

On the Friday just traded, they did close at $7.90 but trading for the day was high at over NZ$25million worth, a peak of $8.12 with a Volume Weighted Average Price of just over $8.00

As such I expect the official news will be good and should include a fair amount of the following in no particular order:



Record Profit.
Record Revenue.
Record NZ Cashflow.
Purchase of a second site in Melbourne.
Listing on the ASX.
Strong interest and pre-sales in Wheelers Hill.
Construction completion of Wheelers Hill on budget and on time or ahead of forecast.
Growth in realised profits by around (exceeding?) 20%
Location announcement of at least 2 out of the 4 sites that they bought in July 2013 (I am going to guess Auckland, Wellington, Tauranga, and Hastings).
Increase in build rate.
Bonus issue dividend (Who knows? I think they have had at least one in the past).
Share split (might be a year or two early for this one).
Opening of Bruce McClaren village in Howick.
Commencement of construction in Petone.


My guesses anyway. 6 days until us minions find out.

I agree with you Vaygor, the amount of times I see a decent volume spike just prior to an announcement happens too regularly to be coincidental. It is very easy to become cynical as a minion sharemarket participant. I wonder if those trades ever get audited by those that matter?

The Ryman story is a perfect business though ...recurring revenues backed by NTA's, need big money to replicate, little debt, funded by retained profits, decent dividends, great management etc etc .... neato!!

[Snow Leopard]

A travesty of a typo... used to do it with McLean and McClean, surname of a good friend of mine.
Re US Grand Prix, NZ Monday 2am = Thailand Sunday 8pm so I will be watching.

Paper Tiger Local Time (Java, Indonesia) is the same as Thai Time.

Best Wishes
Paper Tiger

[percy]

Paper Tiger Local Time (Java, Indonesia) is the same as Thai Time.

Best Wishes
Paper Tiger

I will be watching it eating my breakfast at 7.55am.
McLaren will be exciting next year with young flyer Kevin Magnusson on board.
Getting the push has been the right motivation for Checo.!

[winner69]

Long breakfast then percy ....or do yo just watch the first few laps in case there is carnage .....gets a bit boring after that

[percy]

Long breakfast then percy ....or do yo just watch the first few laps in case there is carnage .....gets a bit boring after that

Some races this year have been boring,yet others have been fantastic.
Vettel is just so good,and is always exciting to watch.
Had to record the races,as I sometimes feel asleep,and missed the finish.!!

[Vaygor1]

I agree with you Vaygor, the amount of times I see a decent volume spike just prior to an announcement happens too regularly to be coincidental. It is very easy to become cynical as a minion sharemarket participant. I wonder if those trades ever get audited by those that matter?

The Ryman story is a perfect business though ...recurring revenues backed by NTA's, need big money to replicate, little debt, funded by retained profits, decent dividends, great management etc etc .... neato!!

The other anomaly that occurs is a sudden dip in the share price if the forthcoming news is going to be bad.

I doubt many of the trades get audited. Who's got the time or the budget to look up family trees and facebook friends of all those trades and see if each 'entity' trading (if that can easily be established) has a relationship with an employee of the company or the company's auditor, board, publisher etc? Proving anything is time consuming and lengthy with no guarantee of success.

The only way to hit the limelight with the authorities is to be directly involved with the business in question and trade in high volumes over a short timeframe just before a big announcement. Everything else goes under the radar I believe. How can it not?

I wrote a bit of a rant about this when NPX blipped.
http://www.sharetrader.co.nz/showthread.php?2979-NPX-Chart&p=392317&highlight=#post392317

Probably more of a topic in the off-market discussions forum. 12 hours 20 minutes (plus race time) before McLaren pulls off a win for Ryman!

[winner69]

The other anomaly that occurs is a sudden dip in the share price if the forthcoming news is going to be bad.

I doubt many of the trades get audited. Who's got the time or the budget to look up family trees and facebook friends of all those trades and see if each 'entity' trading (if that can easily be established) has a relationship with an employee of the company or the company's auditor, board, publisher etc? Proving anything is time consuming and lengthy with no guarantee of success.

The only way to hit the limelight with the authorities is to be directly involved with the business in question and trade in high volumes over a short timeframe just before a big announcement. Everything else goes under the radar I believe. How can it not?

I wrote a bit of a rant about this when NPX blipped.
http://www.sharetrader.co.nz/showthread.php?2979-NPX-Chart&p=392317&highlight=#post392317

Probably more of a topic in the off-market discussions forum. 12 hours 20 minutes (plus race time) before McLaren pulls off a win for Ryman!

I make it 19 hours plus race time (from the time you posted)

Percy having brekkie in NZ at 8am to watch the start

[Vaygor1]

I make it 19 hours plus race time (from the time you posted)

Percy having brekkie in NZ at 8am to watch the start


Paper Tiger Local Time (Java, Indonesia) is the same as Thai Time.

Best Wishes
Paper Tiger

I will have to learn to count. I assumed PT was having a dig at those in NZ having to get up at 2am. Now I am enlightened, I will struggle to stay awake for that, especially if the commentary contains too much yankee southern drawl.


I wrote a bit of a rant about this when NPX blipped.
http://www.sharetrader.co.nz/showthread.php?2979-NPX-Chart&p=392317&highlight=#post392317


I just checked. The blip down that NPX encountered before their announcement turned out to be another valid example reinforcing my belief.

[Vaygor1]

Some races this year have been boring,yet others have been fantastic.
Vettel is just so good,and is always exciting to watch.
Had to record the races,as I sometimes feel asleep,and missed the finish.!!

Who wins? The F1 franchise? Vettel? The US? All irrelevant. At the end of the day the winner will be Ryman.:eek2:

[AndyLP]

Apologies if this is a repost -
http://www.3news.co.nz/MSCI-changes-boost-NZ-sharemarket/tabid/421/articleID/320628/Default.aspx#.UoruXhcW0hg

Will be interesting to see what happens on the 26th

[Vaygor1]

More Ryman magnificence. Up 22% for the 1st half. Actively looking for a second site in Melbourne. Dividend increase.

https://www.nzx.com/companies/RYM/announcements/244078
Trust you to get in first on the announcement STC!
Yes, Dividend up 22% too.
Market opens in 1 hour. RYM close at $8:12 today?

[Beagle]

More Ryman magnificence. Up 22% for the 1st half. Actively looking for a second site in Melbourne. Dividend increase.

https://www.nzx.com/companies/RYM/announcements/244078

Sparky, you're back !!!

Great to see Ryman doing well in Australia.

[Microsloth]

All good news, Good to see they are sharing the benefits with the employees,

"Ryman has increased caregiver pay rates by 5% for the second year in a row - a move which makes them one of the top payers in the sector."

Australia news good and the future even better ?

happy holder

[Vaygor1]

1st 10 min of trading and RYM up 11c to $7.95

Should be an interesting day's trading after lunchtime when the Insto workers have finished standing around drinking their morning lattes and scratching their balls.

[blockhead]

All good news, Good to see they are sharing the benefits with the employees,

"Ryman has increased caregiver pay rates by 5% for the second year in a row - a move which makes them one of the top payers in the sector."

Australia news good and the future even better ?

happy holder

Yes Mr Sloth, looking after the staff is more important now than recent years, Blocky has been doing a bit of part time work of late for agricultural related companies in Canterbury and the biggest issue I see looming is the retention of staff, pay is a good start and in the case of a lot of workers hours are also important, 60 hours or more gets tiring after a while even when well paid.

Good on ya Ryman

[Slam dunk]

Thrilled with this result. The question of how Ryman is going in Aus has been answered.
- 48 apartments already signed up - well ahead of the company's presales targets and 6 months ahead of the village opening. This already represents almost 10% of last financial year's NZ apartment sales (517) and there's still 6 months until opening. Does anyone know the capacity of the Melbourne village?
- they're now in position to commit to second stage of village
- they've decided to commence search for second site

There's been a lot of talk on this thread about the potential issues strong Australian unions could cause Ryman - I'm glad to see Ryman has proven yet again that they're well and truly up to the task.

Also very impressed by the profit growth each half and dividend growth.

[couta1]

Slam Dunk and others the true operational profit of the Aussie operation won't be known for a couple of years the union stuff etc hasn't even started yet, not in the bag yet but here's hoping

[Bobcat.]

Buy on rumour - sell on actual.

Technically, price is still finding resistance everytime it lifts to $8. Their chart is still giving me a sell signal, even today.

[couta1]

Yeah Bobcat,Let's see if it gets a lift after lunch or not?

[percy]

More Ryman magnificence. Up 22% for the 1st half. Actively looking for a second site in Melbourne. Dividend increase.

https://www.nzx.com/companies/RYM/announcements/244078

Melbourne sales being ahead of target,committing to stage two ,and looking for another site are very positive.

[Vaygor1]

Buy on rumour - sell on actual.

Technically, price is still finding resistance everytime it lifts to $8. Their chart is still giving me a sell signal, even today.

What you state about resistance is true at present. A few things though:


Share Price probably already reflected an expectation of an announcement verifying at least 17% growth.
Many insto's (especially overseas ones) won't get around to analysing and reacting for days or weeks.
Price will easily be over $10/share within the next 24 months. Buying under $8 now reflects min 25% return over 2 years plus dividends.


Hence I will not be selling.

It will be an interesting afternoon session though, as will tomorrow's session, and Monday's after people have spent the weekend absorbing the media-generated news.

[troyvdh]

Dear Blockhead my sentiments exactly.
Its also my belief that after the Quake all folk got $200.

[Snow Leopard]

Buy on rumour - sell on actual.

Technically, price is still finding resistance everytime it lifts to $8. Their chart is still giving me a sell signal, even today.

Pretty aggressive TA that you are applying there.
What you are basing your call on - apart from the $8 resistance.

Meanwhile back at the results I notice that they are talking 15% full year growth.

Best Wishes
Paper Tiger

[scamper]

Why is there such variability in the price during the day this week?
Even today, it has been all over the place, and while there seem large jumps to the holder, they are not enough for traders.

[Vaygor1]

... Meanwhile back at the results I notice that they are talking 15% full year growth.

"For the full year, the company is on track to achieve its medium term target of growing underlying profit by 15% per annum." - RYM announcement today.

Sounds to me like 15% is their medium-term target (over say the next 5-7 years?). Not a very stretched target if they beat it year on year and by nearly 50% in the first half of this one.

Like other good companies, perhaps they set what they believe to be conservative expectations, and then exceed them.

[macduffy]

I'll be happy if they can achieve 15%pa profit growth for the next 5-7 years. Now, what does that compound to ..........?

:cool:

[robbo24]

I'll be happy if they can achieve 15%pa profit growth for the next 5-7 years. Now, what does that compound to ..........?

:cool:

305% over 7 years?

[Snow Leopard]

305% over 7 years?





1



Y1
1.15
1.15
15%


Y2
1.15
1.3225
32%


Y3
1.15
1.520875
52%


Y4
1.15
1.749006
75%


Y5
1.15
2.011357
101%


Y6
1.15
2.313061
131%


Y7
1.15
2.66002
166%




Best Wishes
Paper Tiger

[robbo24]

I know what I did wrong - I started with 1.15*1.15... LOL

[winner69]

305% over 7 years?


Surely not

Does 166% increase sound better?

What ever pretty good though eh

[winner69]

The tiger beat me to it ...ha ha

[robbo24]

The tiger beat me to it ...ha ha

I give up - I am no mathmagician.

[macduffy]

NCEA accreditations on their way!

;)

[troyvdh]

I hate to say it again...if residential house prices (at least in the most populated cities...which in itself is virtually a given ) continue there upward trajectory ...then this "freight train'' aint going to stop.

[Bobcat.]

If this month's fairly solid support level of $7.60 is cracked then the bears are in control, and the sp could easily drop to $7 before Christmas.

If I was holding, which I know longer am, I'd be getting out soon after the next bounce off 7.60 (I'm guessing that this time it won't go higher than about 7.85 before falling away again - that's how I'm reading the chart...but like I say it's just a guess).

BC

[Harvey Specter]

If this month's fairly solid support level of $7.60 is cracked then the bears are in control, and the sp could easily drop to $7 before Christmas.Looks like it dipped down to 7.5 as someone dumped over half a mil. Back up to $7.60 now.

Yesterdays report was pretty good - were people really expecting more than that?

[Vaygor1]

Looks like it dipped down to 7.5 as someone dumped over half a mil. Back up to $7.60 now.

Yesterdays report was pretty good - were people really expecting more than that?

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

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

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

[Harvey Specter]

It owners don't want the dividend, surely someone in NZ offers a B&B service - common in the UK.

[Xerof]

Looks like it dipped down to 7.5 as someone dumped over half a mil. Back up to $7.60 now.

Yesterdays report was pretty good - were people really expecting more than that?

Don't you think the market had already priced in this good result over 3 weeks ago, when it moved from 7 to 8 on "no news"?

[Harvey Specter]

Don't you think the market had already priced in this good result over 3 weeks ago, when it moved from 7 to 8 on "no news"?That would explain no upward action, not a downward action.

It was a little better than I though it would be (2nd Melbourne location) so expected it to hold or drift up, not to drop.

[macduffy]

Just a typical example of profit-taking. Bought the rumour (expected good result) when the SP rose from $7 about a month ago - now selling the fact (the expected good result).

But I'm holding.

[Vaygor1]

Why is the price down today? I would have thought the answer was obvious.

Morningstar has a sell recommendation and a price target of $5.00 (dated 2 September). This has clearly influenced the sellers out there.

:-)

Back to reality....

Thanks for your thoughts/viewpoint on this Sparky. Always appreciated and always valued.

MorningDump have just revised their recommendation from $5 to $6 and gone from SELL to REDUCE.

Since I started buying RYM in Sept 2007 for $2.11 MorningDump have never recommended a BUY as far as I can recall.
Even when RYM went all the way down to about $1.30 in Nov 2008 I don't think MorningDump ever said BUY, or even ACCUMULATE.

You cannot possibly imagine (or maybe you can) the amount of money I would have lost if I had followed their advice.

God forbid they ever come out with a BUY. I will be very worried and sell all I've got at any price out of pure fear and total irrationality. :blink:

[Vaygor1]

Oh, I can well imagine. They had a SELL at $3.50 in March of this year. If Nachi Moghe (the Morningstar analyst covering RYM) is reading this website, per chance, then I hope he shaves his head as an act of humility, and commits to wearing sackcloth for the next year.

Come to think of it, this explains it all.

MorningStar have increased their value in RYM. Given MorningStars reputation, the market has looked at this and come to the rapid conclusion that "This stock is going down!!".

How's this for piffle. Straight out of MorningStars newly revised analysis... "We think the market has been enamoured by the firm's growth prospects.."

RYM has delivered results. XRO is a growth prospect currently being enamoured, so I checked out MorningStars recommendation for them. Result.. there is none. At least they can say they haven't got that one wrong.

[Snow Leopard]

Not many pages, or numbers, or detail, in the half year so it does not take to long to wander through it.

Apart from that headline Underlying Profit growth the numbers look more on track for the more 'Ryman normal' growth rate.

The interesting oddity is the average sales price per new occupation right which appears to have jumped from approx $350K to $396K, (+13%) whether this is the the new normal (I doubt it) or what I have yet to decide.

Anyway the clown thinks that Ryman is now worth lots more but then clowns always make me laugh.

Best Wishes
Paper Tiger

[Harvey Specter]

The interesting oddity is the average sales price per new occupation right which appears to have jumped from approx $350K to $396K, (+13%) whether this is the the new normal (I doubt it) or what I have yet to decide.Surely this is just a function of where the new villages are. They adjust the entry price (and I assume quality/spec/size) to match the surrounding area such that the entry price is lower than the average house price. This is so the oldies can sell their current (hopefully) mortgage free house and not need to raise any more cash.

Since they are currenlty selling Melbourne, and Melbourne is even more expensive than Auckland, this may be the cause. If they start selling a village in the south island outside of chch, nelson, queenstown etc, the price may go down. I note they are currently looking for a new SI site.

[robbo24]

Why is the price down today? I would have thought the answer was obvious.

The price began to drop on 21 Nov 2013 NZ time - around the same time discussions from the Fed about quantitative easing may begin earlier than first thought.

Most stock markets took a drop, right?

From what I read, if employment rates go up then it is an indication that the US economy is improving which means quantitative easing can commence and interest rates will go up.

Which means stocks are less of a viable investment...

Are you sure it's just MorningDump?

[robbo24]

Ryman spend as little as $5k on the unit to refurbish (because its only 4-6 years old and just needs a coat of paint, carpet and curtain steam-clean), and is then sold for $360,000.

The real cost is removing the old person smell - it takes hours of labour and thousands of dollars of chemical solvents.

The de-odourisation process also increases the value because it is a factor that the families take into account when deciding where to send their loved one (because the family has to visit).

[Harvey Specter]

Agree - my point was they maybe selling at a higher price as they are selling higher priced apartments. The beauty of their model, which you partly allude to is that the resident full funds the property once developed, yet it is the village owner that gets the capital gain. Add to this a perpetual tax loss position (maybe different now that there is no building depreciation), and you have a pretty good model - note their dividends are always unimputed.

[Bjauck]

Surely this is just a function of where the new villages are. They adjust the entry price (and I assume quality/spec/size) to match the surrounding area such that the entry price is lower than the average house price. This is so the oldies can sell their current (hopefully) mortgage free house and not need to raise any more cash..

I think I read that they offer the units at a median price 100k less than the median price in the surrounding catchment zone. The median price in an area can be substantially lower than the average price. You are getting something worth less than the equivalent freehold unit on the outside anyway.

With the property market perhaps near its peak there is a perhaps a 50/50 chance that property prices may be at the same sort of prices in five years time. Those contemplating entering occupational right agreements may become more concerned about clauses which involve being responsible for capital losses on resale when "moving out". Correct me if I am wrong, but the agreements may put the onus for the losses on the resident but allows the company to keep the gains.

Disc. Hold RYM MET and SUM

[stoploss]

[QUOTE=robbo24;443967]The price began to drop on 21 Nov 2013 NZ time - around the same time discussions from the Fed about quantitative easing may begin earlier than first thought.

Most stock markets took a drop, right?

From what I read, if employment rates go up then it is an indication that the US economy is improving which means quantitative easing can commence and interest rates will go up.

Which means stocks are less of a viable investment...

Are you sure it's just MorningDump?[/QUOTE

Think you mean QE might start a taper in your first line ?
And if unemployment goes down / employment up , QE can cease ......😊

[Harvey Specter]

Bjauck- The repayment to the resident is fixed so they do not suffer capital loses (atleast not with RYM, sum,met). Some operators charge the refurb cost to the exiting resident (RYM definitely doesn't though they may reserve the right if the place is trashed)

Edit: by fixed, I mean it is a set % per year with a cap. Each operator is different but for example, one uses 5% with a maximum of 25%. Average residency is about 7 years I think.

[Bjauck]

The real cost is removing the old person smell - it takes hours of labour and thousands of dollars of chemical solvents.

The de-odourisation process also increases the value because it is a factor that the families take into account when deciding where to send their loved one (because the family has to visit).

There was a study done with a group of various ages to see what smell was more offensive. They had dirty t shirts worn by people of varying ages and asked people which ones smelt most offensive. 40-55 yo men and teenagers had the shirts which were considered to have the most offensive smells. I have no link but you try an internet search to find the tests.

[Bjauck]

Bjauck- The repayment to the resident is fixed so they do not suffer capital loses (atleast not with RYM, sum,met). Some operators charge the refurb cost to the exiting resident (RYM definitely doesn't though they may reserve the right if the place is trashed)

Edit: by fixed, I mean it is a set % per year with a cap. Each operator is different but for example, one uses 5% with a maximum of 25%. Average residency is about 7 years I think. Ok thanks.

Eldernet had an example of a licence to occupy In addition to the amortisation there was some liability on the resident for any drop in the actual resale price achieved for the unit. For example unit bought for $300k...resold for $280k. The "owner" would be liable for the amortisation 25% of 300k=75k plus the loss on resale 300k-280k=20k.

I must get copies of the licence agreements to check the clauses.

[Cricketfan]

There was a study done with a group of various ages to see what smell was more offensive. They had dirty t shirts worn by people of varying ages and asked people which ones smelt most offensive. 40-55 yo men and teenagers had the shirts which were considered to have the most offensive smells. I have no link but you try an internet search to find the tests.

Here's one article: http://www.scientificamerican.com/article.cfm?id=old-person-smell

[Snow Leopard]

Don't focus exclusively on new village sales. The real money is in the villages which were built around 4-6 years ago, and are now experiencing churn of their residents as they shuffle off their mortal coil, or move from independent care to managed care within the same village.

Unit sold for $310,000 in 2007 is sold back to Ryman for $250. Ryman spend as little as $5k on the unit to refurbish (because its only 4-6 years old and just needs a coat of paint, carpet and curtain steam-clean), and is then sold for $360,000.

Figures are hypothetical, but you get the idea. This is the real reason why RYM and SUM are winners, and if MET gets its act together, will also be a winner.

Hypothetical but actually pretty close to my guestimates (based on FY2013), which I have dug up from the dusty back shelves of my hard drive:

The average re-sale of occupation rights : $358K
The average previous sale or resale of same occupation rights: $309K
Average return of monies associated with previous sale: (above less fees) $256K.

Basically each existing unit is currently worth about $10K per year in net inflow of occupation loans: total $37M

New sales are actually very important as they represent $358K per new unit of cash and represent the bulk of net cash inflow: total $179M.

And of course it is the influx of new 'borrowed' money that creates the virtuous circle:
Build new units (and buy other plant & property) with borrowed money;
Sell new units and get more borrowed money;
repeat and rinse.
This is made all the merrier in the asset ledger by the difference between the cost of building the unit and the market value of that same unit (revaluations).
Ryman are very good at this.

Best Wishes
Paper Tiger

Disc: All figures are approximate and may be totally wrong.

[Harvey Specter]

While a new build brings on more cash, it does cost a lot of capex. A resale requires no capex at all (just a little maintenance) so is very high margin.

[Snow Leopard]

While a new build brings on more cash, it does cost a lot of capex. A resale requires no capex at all (just a little maintenance) so is very high margin.

But you do not want them to stop building.
An EPS of $0.15 with 3% growth does not support a share price of $7.55 for long.

Best Wishes
Paper Tiger

[Bjauck]

Bjauck- The repayment to the resident is fixed so they do not suffer capital loses (atleast not with RYM, sum,met). Some operators charge the refurb cost to the exiting resident (RYM definitely doesn't though they may reserve the right if the place is trashed)
Consumer in Feb 2013 produced a comparison of retirement villages charges which can be found here http://www.consumer.org.nz/reports/retirement-villages/market-growth . In their table it claims that any capital loss on resale is paid by MET residents in addition to the up to 30% amortisation of original purchase price. RYM and SUM residents are not liable for capital loss (according to this table). In the table, the only other provider to charge for capital losses is BUPA.

I still have not seen current licence agreements. I imagine they can change at any time. In a static or declining property market, whether an operator has an additional charge for decline in value could have a material bearing on a prospective resident's choice of operator.

[skid]

Hypothetical but actually pretty close to my guestimates (based on FY2013), which I have dug up from the dusty back shelves of my hard drive:

The average re-sale of occupation rights : $358K
The average previous sale or resale of same occupation rights: $309K
Average return of monies associated with previous sale: (above less fees) $256K.

Basically each existing unit is currently worth about $10K per year in net inflow of occupation loans: total $37M

New sales are actually very important as they represent $358K per new unit of cash and represent the bulk of net cash inflow: total $179M.

And of course it is the influx of new 'borrowed' money that creates the virtuous circle:
Build new units (and buy other plant & property) with borrowed money;
Sell new units and get more borrowed money;
repeat and rinse.
This is made all the merrier in the asset ledger by the difference between the cost of building the unit and the market value of that same unit (revaluations).
Ryman are very good at this.

Best Wishes
Paper Tiger

Disc: All figures are approximate and may be totally wrong.

Thats all good in a rising property market--but not so good in a falling market.
The world share markets and NZ property (and OZ to a lesser extent) are the 2 main outside forces
Best not to disregard them IMHO

[Vaygor1]

Oh, I can well imagine. They had a SELL at $3.50 in March of this year. If Nachi Moghe (the Morningstar analyst covering RYM) is reading this website, per chance, then I hope he shaves his head as an act of humility, and commits to wearing sackcloth for the next year.

Is that why Nachi Moghe is an anagram for "Him. Can he go?".

[Harvey Specter]

The retirement home beat up in the Hearld has started. The first articles were pretty weak so dont expect they will have any impact on the shareprice of the listed trio.

[Slam dunk]

Report out from First NZC today...they're expecting RYM to increase their build rate in Aus over the next 5 years to be equal to NZ build rate. That is, an increase in total build rate from 700 to 1400 units in c5 years. Nice!!

[Vaygor1]

The retirement home beat up in the Hearld has started. The first articles were pretty weak so dont expect they will have any impact on the shareprice of the listed trio.

I was looking up the web over the weekend to review any news involving SUM,RYM, and MET (in particular RYM due to its recent announcement) and didn't find much at all. I did find though, on various forums on ShareTrader that a number of shares unexpectedly dropped over the last few trading days despite positive announcements, the most notable being FPH. As such, with little more info from RYM forthcoming for a while, I don't expect to see any major rebound this week, or even before about Feb 2014 due to the general lack-of-stock-market-interest over the Christmas and holiday period... even a further drop from an increase in sell volumes from the mum-and-dad investors needing some extra cash over the festive season?

Notwithstanding the above, regarding RYM's short-term share price, as per the lyrics from kiwi band The Clean, anything could happen and it could be right now.

[winner69]

RYM price still trending upwards in the linear regression channel - at about 1% per week .... good eh

No worries vaygor - just the regular ebb and flows of the market

[troyvdh]

dear winner...you have to admit...whats occurring...re sp....does not happen that often....like I mean...how many sp trajectories...remain so...get my drift.....

I hasten to add of course that I am not complaining...hell no

Hold only 5000 bought a while back

[winner69]

dear winner...you have to admit...whats occurring...re sp....does not happen that often....like I mean...how many sp trajectories...remain so...get my drift.....

I hasten to add of course that I am not complaining...hell no

Hold only 5000 bought a while back

Is it overvalued? Who cares, must have been overvalued for a long time

Do 40 to 50 cents fall matter? Not really, just what happens when buyers and sellers meet in the market.

Can it continue going up forever? Probably not forever but who knows. All I do is keep an eye on th chart. So I build rates are going to be same as nz in 5 years the line will probably keep going up, up and up

[troyvdh]

cheers winner...as an aside if have asked RYM if they are aware of ST and its posts blah blah...given that a few have been quite critical...so we shall soon have a reply.