MET - Metlifecare - one for the fundies?

[silu]

Yeah/Nah too dear IMO, Sum better buying at current prices but will see in a years time I guess, that price seems OTT when you consider their current build rate and that price is where Ryman was at just over a year ago and their build rate was more than double what Mets rate is currently.

You should buy MET as a turnaround story rather than based on historic figures.

[couta1]

You should buy MET as a turnaround story rather than based on historic figures.
Not if you believe Sum has the potential to exceed Mets price given time:cool:

[Harvey Specter]

You should buy MET as a turnaround story rather than based on historic figures.
I think the turn around is already factored in, at least to sum extent. Growth will be what drives the price and their build rate, compared to existing units, is the slowest.

[Joshuatree]

Very good 18 page analysis comparing with the other 2 and showing its strengths and weaknesses and continuing management improvements with 6 great reasons to include MET in ones portfolio, a lot more turnaround/ to come; (good point silu) At a cheaper multiple MET is not priced for perfection.

[Snow Leopard]

Had a look at the old pink rag - digital edition (http://www.ft.com/home/asia) and what do you? Craigs is not alone.

5 or 6 (for RYM) brokers estimates for the 3 operators and they think MET is you best bet for the year ahead.

5900

Best Wishes
Paper Tiger

[winner69]

Had a look at the old pink rag - digital edition (http://www.ft.com/home/asia) and what do you? Craigs is not alone.

5 or 6 (for RYM) brokers estimates for the 3 operators and they think MET is you best bet for the year ahead.

5900

Best Wishes
Paper Tiger

After reading Sgt Pepper on another thread who said In this case the next government will inevitably reap the whirlwind of massive defaults in the Auclkland Housing market with 10% mortgages looming menacingly on the horizon. Add to that a sustained collapse in Dairy prices, and a sharp downturn in China the fallout, both economic and political will be severe the LOW for RYM is a cert

In that case SUM will have a 2 in front of it and MET will have a 3 in front of it

[couta1]

Had a look at the old pink rag - digital edition (http://www.ft.com/home/asia) and what do you? Craigs is not alone.

5 or 6 (for RYM) brokers estimates for the 3 operators and they think MET is you best bet for the year ahead.

5900

Best Wishes
Paper Tiger
Their high estimates look about right for Rym and Sum, not commenting on met, $6.57 low for Rym yeah right:cool:

[winner69]

oh dear another disgruntled person losing out a bit from her inheritance

She should know better and realise the likes of Metlife are there to make zillions for shareholders

However best to mitigate bad PR ... and this a pretty sad state of affairs even if it is 1 percenter

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11269386

[Joshuatree]

How about we form a syndicate which rents out units? Be a real goer i reckon; have fortnightly monthly 3 monthly 6 and 12 monthly terms with rent adjusted accordingly.

[psychic]

MET has slipped to p4, so thought I should revive
Craigs have covered giving six reasons why MET is a buy over SUM & RYM

- Turnaround complete, time for growth
- Better value than peers (NTA)
- Auckland Exposure
- Strong Balance Sheet
- Improved Op perf
- Building Development capability

Target Price $5.23

Suggests Met currently at -8% Price / DCF c/f RYM 13% , SUM 12%
Price to NTA 1.2x against 4.5x and 2.7x respectively

[Joshuatree]

:) MET 31.45% Year to date is outperforming RYM 27.5% and SUM 17.06%[/QUOTE] 23/5

11/07/14 MET 37.31% RYM 23.7% SUM 6.29% Turning into a one horse race:t_up:

[couta1]

:) MET 31.45% Year to date is outperforming RYM 27.5% and SUM 17.06% 23/5

11/07/14 MET 37.31% RYM 23.7% SUM 6.29% Turning into a one horse race:t_up:[/QUOTE]
Met are yet to prove that the current share price is justified with solid sales figures IMHO and exists because of good forward guidance (unlike Sum) and the hype of infratil and the NZ super fund buying in only time will tell if the lofty price is justified:cool:

[Joshuatree]

Time will tell but the loftier valuations are in fact SUM and RYM:cool: The market is speaking atp.

[Harvey Specter]

Past performance is not an indicator of future performance.

I cant remember exact timeframes but a lot of MET performance is due to a rerating in relation to the change in ownership (removal of overhang but assumption of good management guidance etc being provided by IFT).

[percy]

Past performance is not an indicator of future performance.

I cant remember exact timeframes but a lot of MET performance is due to a rerating in relation to the change in ownership (removal of overhang but assumption of good management guidance etc being provided by IFT).

Was always a poor performer,so had a lot of catching up to do.If you compare their 5 year return with RYM you will see they have a long way to go.
MET 5 year return 151.11%
RYM 5 year return 458.17%.

[bull....]

heres a great article on why these companies are such great cash cows lol

http://www.abc.net.au/news/2014-07-1...candal/5584412 (http://www.abc.net.au/news/2014-07-10/kohler-retirement-village-rorts-the-booming-national-scandal/5584412)

[Harvey Specter]

heres a great article on why these companies are such great cash cows lol

http://www.abc.net.au/news/2014-07-1...candal/5584412 (http://www.abc.net.au/news/2014-07-10/kohler-retirement-village-rorts-the-booming-national-scandal/5584412)SUMs it up pretty well. A genius model really. I wonder what the costs would be if an alternative model was adopted. You're not going to build a $100m village unless you get a decent return on it.

[PartyPooper]

With all the posting on RYM and SUM I'm surprised MET hasn't gotten any attention today. After all it was the hardest hit today but has been the most stable for the past several months. I'm eagerly anticipating their full year results to see if the restructuring is paying off and the result the market has to the full year results as I don't think the original jump in the share price was justified.

On the NZX I've only been accumulating SUM in the low $3 mark since RYM went over 7.80. I'd be very keen to jump into MET if the right price or results came about.

In my opinion the only Retirement village operator worth putting money into currently is AOG on the ASX. JHC was hit by the Australian Goverment cuts and lost some ground which has been the cherry on top of the cake with SUM losing so much ground. Here's hoping INA or LIC on the ASX could fire in the future to light the sector up a bit.

[psychic]

Metlifecare Limited (NZX: MET; ASX: MEQ) advises that it is due to make its
full year result announcement for the twelve months ended 30 June 2014 on
Monday 25 August 2014.

Announced yesterday, price drops 12 cents. Hopefully unrelated...

(edit; there was a parcel of about 50k shares left on the board overnight at around yesterdays closing price. Withdrawn this morning, maybe just shaking the tree?)

[winner69]

Arrow investment must bea bottom drawer one.

Bit slack in noticing their shareholding had been diluted, below 5%

[psychic]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11313869

Listed retirement giant Metlifecare pushed up annual net profit after tax 18 per cent to $68.8 million after removing non-recurring items.

The result for the June 30, 2014 year just posted on the NZX showed settlement of 458 occupation right agreements, the second highest in the last six years.

[silu]

Also very much liking this announcement unless there is something I don't know about Kim.

METLIFECARE ANNOUNCES KIM ELLIS AS CHAIR

discl hold MET

[Joshuatree]

Looks pretty solid to my shallow gaze ; those who can drill down further what do you see.? Mkt likes it up 3.45%atp.
1 year return MET 38.04% :t_up:
RYM 16.4%:mellow:
SUM -5.25% oh dear:(

[silu]

Big volume today. Always nice to see volume + rising share price after a FY announcement.

[BlackPeter]

15 April 2014:

MET is a dog. I was enamoured with it for a while, but not anymore.

How times can change ... I do love dogs like this ... :t_up:

[Snow Leopard]

A totally unspectacular result but the crowd seem to like it.

Stating 200+ units pa from 2015 but that is not spectacular either

Best Wishes
Paper Tiger

Disc: hold MET, but currently not RYM or SUM

[Snow Leopard]

So, I have recently sold the last of my MET shares and am completely out of the sector.

Best Wishes
Paper Tiger

[macduffy]

Did I imagine it or was there a news item on radio this morning to the effect that MET had announced the purchase of land in Auckland for another village? Nothing in the NZX announcements so perhaps it was old news?

:confused:

[Beagle]

Was announced 13 January. New Red Beach village on the Hibiscus coast Whangaparaoa. Great area IMHO.

[macduffy]

Thanks, Roger. I agree, it should be a great success there!

[silu]

Strong HY result which could only mean that there will be a fall in share price today ;) But still a happy holder and in the words of Bonnie Tyler "Turn around".

[macduffy]

Yes, looks good to me. What do our retirement village experts think?

[Beagle]

I wouldn't hold myself out as an expert by any means but I'm impressed with this solid result. Looking ahead the company expects to match 1H earnings in the second half which implies a 2015 result of underlying earnings of $52m.
On just under 212m shares I have them on underlying EPS of 24.52 cps for a 2015 PE of 20.
Development margin is good at just under 21% and I think prospects are very good. Imbedded value per unit keeps going up.
The stock is relatively good value in a sector that's arguably very fully priced. With no questions over governance and management credibility I don't see why this stock should trade at such a large discount to RYM and is exceptional value relative to SUM IMHO.

P.S. More musings....The question in my mind about the whole sector is this, is growth starting to slow ?

We had Ryman recently reporting a half year result with underlying profit growth at 13%, slowest in years although management hastened to add they were confident of maintaining their 15% EPS growth medium term aspirations, we've had SUM come in with only 10% underlying EPS growth although talking about better growth this year, (who knows for 2016?) and now MET with annual EPS growth of 13%.

The big question in my mind is, Is MET under-priced or are RYM and more especially SUM significantly over-priced ? My money is on the latter theory holding more validity so I'll stay out of this sector who's favourable aging demographics have been well trumpeted from every mountain top for many years now. You shouldn't have to pay a PE of 30 to get growth in the low teens (percent per annum) and I for one won't. I'm tempted to buy MET but OTOH its had a good run and I suspect the stock is fair value and opposed to good value. If one must have exposure to this sector I'd say MET is best value and RYM if you want a set and completely forget stock. I wouldn't touch SUM with a barge pole.

[Harvey Specter]

The big question in my mind is, Is MET under-priced or are RYM and more especially SUM significantly over-priced ?I saw one analyists advice the other day. MET was buy, Sum hold and RYM sell which I think confirms your current ranking of the three based on metrics.

[Harvey Specter]

Latest results are a major improvement, but future growth depends critically on new build, and a target of 200 is very low for such an established network.Agree. Size wise they are close to RYM which has a build rate of 700 and SUM is much smaller yet has a build rate of 300. This is something I expected IFT to change quickly or at least indicate they would as soon as more landbanking allowed.

[kiwitrev]

Just as aside IFT holding 20% will be pleased in the result but I note no reaction to their SP as yet. Perhaps Mr Market is asleep.
Disc. not holding either stock but ift bonds

[BlackPeter]

Exactly, and its precisely the reason I sold all my MET last year and invested it into SUM.

Well, if you got the timing right (i.e. Q4 last year), than I assume this transaction rewarded you with a nice little bonus ...

[Beagle]

Well, if you got the timing right (i.e. Q4 last year), than I assume this transaction rewarded you with a nice little bonus ...

And OTOH if he didn't in the 12 months to date MET has kept up with the NZX50 up 16% whereas SUM, oh dear...only up 2% for a 14% under-performance.
There's much more to this story than the build rate. SUM makes nothing from its villages other than sales and re-sales whereas people might feel its well worth spending the time to read the analyst presentation attachement on the NZX website today regarding MET,( sorry time doesn't permit me to post a link at this stage).

[Beagle]

https://nzx.com/companies/MET/announcements/261069

Note the five different revenue streams. Click on results presentation attachment.

[Beagle]

I bought recently on the basis that this stock is very cheap for this sector with its intrinsic favourable demographics and my expectation that the new management ably supported by Infratil's expertise would drive the growth in new developments a lot harder than what's been the case in the past. They have an unleveraged balance sheet and are in excellent shape to expand their development profile, this was also an important factor for me. Looks like this is going to plan nicely.

MET
01/04/2015 13:24
ASSET
PRICE SENSITIVE
REL: 1324 HRS Metlifecare Limited

ASSET: MET: Metlifecare Acquires Another Auckland Development Site

Date: 1 April 2015
Media Release

METLIFECARE ACQUIRES ANOTHER AUCKLAND DEVELOPMENT SITE

Metlifecare confirms the conditional acquisition of a prime 5.5 hectare site
within the Manukau Golf Course, Manurewa, Auckland. This is the second site
acquired this year following the recent conditional purchase of 5 hectares in
Red Beach.

The land acquisition forms part of a proposed $175 million retirement village
project and is subject to the following material conditions: the satisfactory
completion of due diligence (including feasibility); resource consent of the
site being obtained by Metlifecare; and subdivision consent to be obtained by
the vendor. Development of the site is scheduled to commence in the calendar
year of 2017 subject to satisfaction of these conditions, completing detailed
design and undertaking earthworks on the site.

The site is on Great South Road and is part of the larger residential
re-development of the Manukau Golf Club. It is planned to be Metlifecare's
16th village in the wider-Auckland region and the 27th in the North Island.

Metlifecare CEO, Alan Edwards, commented: "We are looking forward to working
with the vendor, Fletcher Living, on this opportunity and providing more
retirement living and care options to the local area. Our vision for this
village is to see a retirement community established that complements the new
residential community to be created by Fletchers on the balance of the golf
course land. Seeking higher levels of engagement between these communities
through a public caf? and other possible shared services will form part of
our forward planning. We expect to have resource consent in the first half of
the 2016 calendar year."

The proposed village would be Metlifecare's second village in the area. The
other village is the popular Longford Park Village in Takanini. Upon
completion, the village is planned to include a wide range of one, two and
three bedroom independent living options and care beds. The planned community
facilities include a swimming pool, gym, caf? and bowling green.

Importantly, the acquisition supports growth in Metlifecare's development
pipeline. With the addition of this land, the pipeline is likely to grow by
over 400 units and care beds lifting the total pipeline in excess of 1,750
units and beds. Metlifecare continues to look for additional land development
opportunities.

Metlifecare currently has 349 units and beds under construction. The Poynton
(Takapuna), Greenwich Gardens (on Auckland's North Shore) stages 1 and 2,
Coastal Villas (Kapiti Coast) and Oakridge Villas (Kerikeri) will be
completed over the coming months. Stage 1 apartments at The Orchards
(Glenfield) are scheduled to be completed by the end of June 2015. The 36
care beds at The Orchards will be completed early in FY16 followed by the
completion of the stage 2 apartments. Stages 4 and 5 at Greenwich Gardens are
under construction with delivery split from mid-2016 until early 2017.

Metlifecare is a leading New Zealand retirement village and aged care
provider and currently owns and operates 23 retirement villages in prime
locations throughout the North Island of New Zealand. The company has two
villages currently under construction in Auckland - The Orchards and
Greenwich Gardens, together with the Red Beach site conditionally acquired in
January 2015.

ENDS

[BlackPeter]

I bought recently on the basis that this stock is very cheap for this sector with its intrinsic favourable demographics and my expectation that the new management ably supported by Infratil's expertise would drive the growth in new developments a lot harder than what's been the case in the past. They have an unleveraged balance sheet and are in excellent shape to expand their development profile, this was also an important factor for me. Looks like this is going to plan nicely.

Agreed; Good to see their increased focus on growth ... and nice to have one retirement village provider we both can agree on ... ;)

Discl: hold;

[macduffy]

An update on their investments in the sector from Infratil.

http://www.infratil.com/assets/Uploads/May-Update-2015.pdf?utm_medium=email&utm_campaign=Infratil+Update+Newsletter&utm_content=Infratil+Update+Newsletter+CID_f1cdf07 710f2fc893fe885f966e935aa&utm_source=Campaign%20Monitor&utm_term=here

[Beagle]

Thanks. Very good acquisition that Aussie one. Makes SUM and to a lesser extent RYM look significantly overpriced.

[Onion]

An update on their investments in the sector from Infratil.

http://www.infratil.com/assets/Uploads/May-Update-2015.pdf?utm_medium=email&utm_campaign=Infratil+Update+Newsletter&utm_content=Infratil+Update+Newsletter+CID_f1cdf07 710f2fc893fe885f966e935aa&utm_source=Campaign%20Monitor&utm_term=here

That is the clearest description of a financial investment, and particularly the retirement accommodation industry, that I can recall reading. Credit to Infratil for putting the effort into such communications.

[BlackPeter]

Thanks. Very good acquisition that Aussie one. Makes SUM and to a lesser extent RYM look significantly overpriced.

Hi Roger,

not sure whether I understand. Based on which data in this report would you see SUM more overpriced than RYM? I agree that the book values of both their units look expensive compared to the Retirement Australia units (at 175k per unit - though you probably need as well to compare what you get for this money - not all units are made equal).

According the the IFT report the book value of a RYM unit is at 800k and the book value of a SUM unit at 400k. This compares to MET units at 270k, but than MET has as well a significantly older housing stock than SUM and probably RYM (not sure about the latter - don't follow them that much). So - unless the RYM unit is really 2 times more worth than the SUM unit (what I doubt), SUM is less overpriced than RYM, but both are per unit more expensive than MET. Right?

BTW - I did out of curiosity the same calculation for INA (not part of the IFT report), and their book value per unit is only 114k. Now - this is cheap ;)

[Harvey Specter]

According the the IFT report the book value of a RYM unit is at 800k and the book value of a SUM unit at 400k. This compares to MET units at 270k,
Cherry picking a metric that looks good for them is a bit of an issue. Would also have been good to see other metrics as well as I am sure ath isn't the main one they looked at when deciding to buy retire Australia.

[Beagle]

Hi BP

I was referring too the acquisition IFT made which was IIRC at circa 18 times eps, a very similar forward metric MET trade on. Sorry don't have time for a fulsome debate today but I would say that one could make the case that RYM is N.Z. preeminent growth stock with a very long and distinguished track record of consistent EPS growth and therefore deserves to trade on a price multiple to the sector.

Much is made of MET's older portfolio but the last broker report I saw IIRC said the average age was 19 years, (no big deal if maintenance is being professionally done), but the key here is huge embedded value with much of their portfolio in Auckland and the Bay of Plenty...obviously arguably extremely popular retirement locations.

[BlackPeter]

A bumper result from MET: revenue: $101.5m (slightly above expectations), profit $122.6m (you just must love these rises in property values), but even underlying earnings (I know, Roger ...) up by 13,9% to $52.4m.

https://www.nzx.com/files/attachments/219358.pdf

And still better - the share was yesterday at market close still available at a Chinese worries discount, though suspect the price might change today. Make this a PE of 10 for a company with a CAGR of 9.8%. Looks like a bargain?

Discl: happy holder;

[Beagle]

Yes, first impressions looks good BP. NTA $4.29 a share means you're paying zero premium to invest in this growth company. Sound long term value.
Will leave further analysis for later. Too busy on AIR.

[percy]

A bumper result from MET: revenue: $101.5m (slightly above expectations), profit $122.6m (you just must love these rises in property values), but even underlying earnings (I know, Roger ...) up by 13,9% to $52.4m.

https://www.nzx.com/files/attachments/219358.pdf

And still better - the share was yesterday at market close still available at a Chinese worries discount, though suspect the price might change today. Make this a PE of 10 for a company with a CAGR of 9.8%. Looks like a bargain?

Discl: happy holder;

Did not look too flash to me.

[Beagle]

14% underlying EPS growth. Check the PE guys....far more realistic than some other inflated retirement companies. PE is less than 10 if you include revaluations, (I don't). DYOR...I'm too busy.

[BlackPeter]

Underwhelming growth of only 7% in sales/resales volume = the turn around is not working.

Glad I sold this and bought extra SUM....

How do they say ... the share market is a device to transfer money from the inpatient to the patient ... ;)

If you look at the growth of their development pipeline - 100% (give or take a bit) is in my view nothing to spit at ...

7557

[Bjauck]

Development margin down 4%. With a surging real estate market especially in Auckland, that surprises me. I would have expected the margin to have increased.

[limmy]

Good result. Increased final dividend too.

[Beagle]

BP - I have studied MET at length, and had $500,000 invested in them at one point. They simply are not in the same league as SUM and RYM, as this relatively mediocre result confirms.

That build rate is very low for such a large organisation. It amounts to about only 5% increase in units p.a., while SUM is closer to 15% - 20%. And, it is this growth in volume which paves the way for financial growth over the long run.

Yep, I am very comfortable with ditching this stock.

They have a good development pipeline coming in FY17 but are definitely the most established player so most of their profits come from resale's. If you can't understand a PE of well under 10 including revaluations then you don't understand the Auckland property market.

[Bjauck]

Wow, upon closer inspection, it looks like nearly all the growth in underlying earnings was simply due to changes in house/unit prices. Clearly, that is not a sustainable avenue for "growth"
I do not have any experience in the business and I am not a accountant, but the underlying profit was up by about 14%. The underlying profit removes non-cash items (including movements in property valuations). In general I thought the MET result was a steady-as-she-goes result, perhaps with the IFT investment and involvement yet to yield its best fruit.

I would be interested in what you and the other gurus think about the falling development margin.

[Beagle]

Met lifts annual profit 78%. Underlying profit up 14%. Embedded value per unit up 19.3% to $155K
289 Units and beds currently under construction.
Net cash flow up from $59.5m to $83.3m up 40% (we all know these companies are all really about cash flow)
Underlying EPS was 24.7 cps so MET on a historic PE of 18 for a company that grew underlying earnings 14% last year and 37% the year before.
Development pipeline expands considerably to over 2000 units and beds.
New appointments to development team including 8 new staff.

What you are buying here is a developing development team story...if that makes sense. Good growth in development coming but it looks like development margins will be challenging for FY16 for reasons stated in the results presentation.
My feel is the stock is a good long term hold and the clear value story in its field, a field we all know has considerable demographic tailwinds.
Interestingly their major site acquisitions are conditional (Red Beach and Manukau)..i.e. they're not so gung-ho when purchasing sites as to assume they can get the required consents.

I think the influence of Infratil will make itself felt in the years to come and some of the current small developments and lower development margins are the result of legacy decisions.

Happy holder for long term growth.

[Beagle]

NG I am a long term value investor. I use traditional valuation methodologies like Ben Graham's valuation formula. No reason why MET can't grow earnings in the low - mid teens percent per annum for the foreseeable future.
They have a large existing land / unit bank which in my view gives more sustainability to that earnings growth rather than the lumpy earnings growth you'll get with newer players.
The stock grew underlying earnings by 37% in FY14 and 14% in FY15. Its on a historic PE of 18 based on underlying earnings. Its up to people to make their own value assessment but for mine this is the best value equation in a sector with exceptionally strong demographic tailwinds.

According to Ben Graham's formula where V = last year EPS x (8.5 + 2g)
If we assume long term earnings growth is 14% this gives us 24.7 x 36.5 = $9.02

But because I'm a ham fisted old bugger I like to buy earnings growth on the cheap and as posted before substitute my own 1G for Ben Graham's 2G...that way I know I'm buying growth at a dirt cheap price.

Using my own formula I get 24.7 x 22.5 = $5.56 which coincidentally is about the fair value consensus price target of the brokers.
Use of this formula is ALL ABOUT conservatively estimating long term sustainable earnings growth for the next 7 to 10 years. With RYM you can probably use a 15% growth rate as a long term estimate...with SUM...who knows ?, you decide for yourself. Each to their own...if you like Julian Cook and Norah's way of doing business fill your boots mate.

[BlackPeter]

NBR article looking at both sides of the equation:
http://www.nbr.co.nz/article/metlifecare-lifts-profit-80-stock-price-drops-cs-p-177787

[BlackPeter]

Paywall in effect

sorry - thought they allow forwarding without paywall.

OK - in summary (after repeating the numbers we already know) they highlight

slipped development margins ... but explain that with (at current) small developments and challenging topographie (whatever this means)

strong demand and sales growth and high occupancy rate (98%)

prospects - a number of new green field sites
"due diligence completed at its Red Beach site and a resource consent application about to be filed for a $250 million, 492 unit development. It has a conditional agreement on a site at Manukau Golf Course."

Ah yes - and comparing Sum with MET, they indicate SUM's profit doubling and higher build rates and conclude:

“But you’re paying for that as well, as Summerset is trading well above its asset level. To push MetLife on, people would be looking for more certainty around build rate and development margins,” Mr Sherrock says.

Personally - I do think that both companies will grow. Sometimes one of them will lead and sometimes the other. A comparison between them does in my view not justify a "religious war" (based on different believes) ... but than in my view nothing does - and there are still lots of people out there even killing each other for not sharing the same believes - i.e. throwing pen-strikes at each other is probably still quite civilised.

Discl: Used to hold SUM (and sold out on recent peak, because I don't think that the recent (great) results will be sustainable) and accumulated some more MET.

[percy]

MET,RYM and SUM will all do well with the huge tailwinds helping them.I think it pays to hold two.Don't know whether it makes a huge difference which two.I do hold RYM and SUM.
ARV..Faces challenges.

[James108]

NG I am a long term value investor. I use traditional valuation methodologies like Ben Graham's valuation formula. No reason why MET can't grow earnings in the low - mid teens percent per annum for the foreseeable future.
They have a large existing land / unit bank which in my view gives more sustainability to that earnings growth rather than the lumpy earnings growth you'll get with newer players.
The stock grew underlying earnings by 37% in FY14 and 14% in FY15. Its on a historic PE of 18 based on underlying earnings. Its up to people to make their own value assessment but for mine this is the best value equation in a sector with exceptionally strong demographic tailwinds.

According to Ben Graham's formula where V = last year EPS x (8.5 + 2g)
If we assume long term earnings growth is 14% this gives us 24.7 x 36.5 = $9.02

But because I'm a ham fisted old bugger I like to buy earnings growth on the cheap and as posted before substitute my own 1G for Ben Graham's 2G...that way I know I'm buying growth at a dirt cheap price.

Using my own formula I get 24.7 x 22.5 = $5.56 which coincidentally is about the fair value consensus price target of the brokers.
Use of this formula is ALL ABOUT conservatively estimating long term sustainable earnings growth for the next 7 to 10 years. With RYM you can probably use a 15% growth rate as a long term estimate...with SUM...who knows ?, you decide for yourself. Each to their own...if you like Julian Cook and Norah's way of doing business fill your boots mate.

Long term earnings growth of 14% is very optimistic imo. Considering RYM have a 15% target and in my model I give RYM/SUM growth for 20 years at 13% then down to 3% for next 80 years. RYM/SUM are also the only companies I give growth to for more than 5-10 years.

[winner69]

MET,RYM and SUM will all do well with the huge tailwinds helping them.I think it pays to hold two.Don't know whether it makes a huge difference which two.I do hold RYM and SUM.
ARV..Faces challenges.

According to tj ARV is the best bet ....unlimited potential not recognised by the market

[winner69]

ahahahahaha!

Winner, you are awesome.

t_j nickname does seem to be a bit of a misnomer though. t_j strikes me as more of a fundamentalist rather than a trader.

I hear on the grapevine t_j does awesome DCF models

New Guy, bit of an enigma is our t_j

[trader_jackson]

All retirement villages will do well over time, some of course better than others, ARV will do better than others, over a long time, as the cycle changes from a "build as much as you can" focus, to a care focus, but it will take time for this focus to "hit" investors. Until then I will continue enjoying a good dividend yield, on a stock trading at a discount (by almost any measure you can throw at it). Short term ARV should go up, simply because it is on such a discount... don't remember saying it has unlimited potential, just far more potential than the market is giving it... maybe along with PEB and HNZ it to can be part of Briscoes famous 50% off sales?

Its a new company, so I know why everyone is "sceptical" (fair enough) just give it a few years...

Correct, I am not a trader, but I do like my banter.

[nextbigthing]

t_j nickname does seem to be a bit of a misnomer though. t_j strikes me as more of a fundamentalist rather than a trader.

I hear on the grapevine t_j does awesome DCF models

New Guy, bit of an enigma is our t_j

He meant to write trader_fundy but his rose tinted glasses were covered in a2 milk and misplaced under a PEB annual report.

[winner69]

He meant to write trader_fundy but his rose tinted glasses were covered in a2 milk and misplaced under a PEB annual report.

...and a diligent type is t_j

[trader_jackson]

"totally uninformed" I am not sure where you get this from, most of the statements I make are opinion based, or in the case of financial statements, then based on Forsyth Barr and/or Morning Star.

I would not call my views (or "recommendations" as you call it) "costly", nor would I recommend people listen to my views (as always do your own research)

Great historical performance (like that with SUM and RYM) doesn't always indicate great future performance... As with PEB and HNZ, time will tell if ARV is a good investment or not. I am merely "speculating" that ARV will do better than the market currently expects over the long term (5+ years), mainly because the market is treating it like a dog (yes, it may not be as "great" and "hyped up" as SUM, but it certainly, even if its just for the potential dividend growth alone, worth more than 87c a share)

I have also replied to the ARV thread... I look forward to your grilling :t_up:

[Beagle]

Guys.... MET just released its annual results and all that's been discussed is ARV...go figure ? Maybe MET's growth is too predictable and boring ?

[trader_jackson]

Sorry this is party my fault for turning it into a ARV thread... (but I had to at least attempt to defend myself)... back to MET...

By the way I have no interest in A2 Milk ;)

[Beagle]

I've had a review of my portfolio in light of what I consider to be a bear market. Stocks that don't have either a strong and sustainable dividend yield or immediate (FY16) prospects for strong earnings growth have been culled.
While I think this is a sound company on undemanding fundamentals it is disappointing that they have set their development target margin so low at 15% and then said Fy16 is likely to undershoot this target.
I think the newly appointed development team need to do some soul searching on their projected medium term development margins and get more ruthless / efficient with their product procurement strategies.
For the present time I have decided to exit recently and will watch the sector from the side-lines. RYM also got the chop.

The whole sector (excl MET) is priced far too highly on a fundamental basis for my liking and the likelihood of some meaningful PE contraction in this bear market is very high IMO. The fact that dividend yields are so incredibly low and generally unimputed means unless you are getting SP growth you're better off investing elsewhere. This is something of a call on the Auckland housing market too, to which
I am already exposed though our home ownership and in other ways. The Auckland market has got FAR too high and I expect pricing to come back towards historical norms, (about 6 times average household income), over time. $600,000 average values make sense for this attractive city, $800,000+ is silly stuff. Some retracement of these grossly inflated prices will not be good for RYM, SUM or MET.

[couta1]

Retirement stocks have certainly taken a beating of late but remain a good long term hold, I've still got Ryman albeit running at a reasonable paper loss currently, Met faces higher maintenance costs going forward than Rym and Sum and their main focus on Auckland may go against them eventually as well.

[Beagle]

Quite a bit of conversation is heard around the traps up here of people thinking of selling their $1m+ Mcmansion. / (cold old small cramped central Auckland house) and moving out of town.
Even Whangarei being mentioned lately, warmer climate and cheap as chips.

[Harvey Specter]

Quite a bit of conversation is heard around the traps up here of people thinking of selling their $1m+ Mcmansion. / (cold old small cramped central Auckland house) and moving out of town.
Even Whangarei being mentioned lately, warmer climate and cheap as chips.There is an article on that in the current issue of whatever they call the accounting magazine now.

[RTM]

Its happening already. Lots of house sales compared with recent years up around Kerikeri.
I am one of those migrants. There is a lot to like in the Far North.


Quite a bit of conversation is heard around the traps up here of people thinking of selling their $1m+ Mcmansion. / (cold old small cramped central Auckland house) and moving out of town.
Even Whangarei being mentioned lately, warmer climate and cheap as chips.

[Bjauck]

Doesn't this phenomenon happen every property cycle? Auckland has a property boom, then it spreads around the rest of the country, driven in part by Auckland folk realising their new property wealth either to return to their home area or to move or retire elsewhere with extra cash wealth. I think long term studies have been done - sorry no reference - that over the boom-bust cycles Auckland house prices increase on average annually by an extra 1% over and above the average national property price change. So, if past patterns continue, perhaps the rest of the country still has some catching up to do in this current cycle...

[Corleone]

Recently read an article regarding retirement homes in the USA having a 20% drop in the last decade due to the ease and affordability of home care. Perhaps something similar could happen here as immigration keeps flowing and automation takes its toll on lower skilled work opportunities.

[Snow Leopard]

I see that at $4.18 MET is now trading at less than NTA ($4.29) and less than what I sold out for last year.

'Mildly surprised' kind of sums it up.

Best Wishes
Paper Tiger

[BlackPeter]

It does look cheap - doesn't it? Given that the recent fall was in sync with SUM and RYM, do I not think that we have here a MET specific problem.

However - markets might assume that less foreign capital is now flowing into NZ (Chinese have less money to spend) and rumour has it that Auckland house prices just stabilized. This might mean less pressure on the housing market and probably as well less pressure (or incentive) for elderlies to sell their houses and move into a retirement home.

Not sure, whether it works that way (and certainly not that fast - in reality there would need to be many months lag time for people to make these decisions), but this could be an explanation for the dip in market sentiment.

Maybe a good time for you to come back to NZ ;)?

[Joshuatree]

Maybe holders are moving from Growth to Income shares in these volatile climes.

[troyvdh]

Josh...I have to ask the question..surely ...serious investors in the SM....do not "move" there shares ...I have to admit I detest traders....reason being that so many NZ folk consider the SM as a casino...not a worthwhile alternative to Res property....anyways....it's my belief that NZ Inc would be far better of if "we" developed an investment horizon greater than a month or so......just saying..me thinks that folk who invest in most retirement listings will probably do better than a bank deposit..

[Joshuatree]

A fellow investor changed sector ,troy seeking the 'safety" of income stocks gentailers and NZR(morphing into one).We discussed how safe they are and wondered that despite the Govt owning more then 50% of most gentailers could com com come in with a heavy stick and say "you are making too much reduce your margins"; my thinking is yes they could his was no ;anyone have definitive answer be appreciated.

I reposted the q on MEL thread.

[Bjauck]

... rumour has it that Auckland house prices just stabilized. This might mean less pressure on the housing market and probably as well less pressure (or incentive) for elderlies to sell their houses and move into a retirement home.

Not sure, whether it works that way (and certainly not that fast - in reality there would need to be many months lag time for people to make these decisions), but this could be an explanation for the dip in market sentiment... OTH..with signs that the Auckland housing market is starting to come off the boil, maybe it will incentivize those, considering selling up to move into a village, to get a move on and sell up in a vendor's market and move into a village where they may not have to carry the can if there is another global meltdown. It could be a question of Locking in the capital gain in their homes when times are still good, because when their hands are more forced by their changing circumstances, the market may have turned into a buyer's one.

[winner69]

New CEO Glen Sowry

https://www.nzx.com/files/attachments/226107.pdf

He will go a long way - first words 'Metlife Care are well positioned...."

Glen into the swing of things already

[BlackPeter]

Wow! half year results are out - and no reason for MET to hide themselves:

https://www.nzx.com/files/attachments/230542.pdf


Net Profit after Tax of $125.7m, up 217% on 1H15
Operating Cash Flows of $78m, up 137% on 1H15
Underlying Profit of $33.5m, up 29% on 1H15
Total Assets of $2.4b, up 17% on 1H15 - ah yes, and NTA ($4.85) above the current SP;
103 new sales settled, up 255% on 1H15
200 resales settled, down 1% on 1H15
Land Bank of 2,184 units and beds
Interim dividend of NZ 1.75 cents


Market seems to like it .... SP rocking up as we speak, and who wouldn't like to own a piece of this performance?

Maybe there is still life left in the retirement sector ...?

Discl: quite happy holder :t_up:

[kura]

Im confused here, was comparing NTA for MET with RYM.
NTA for MET = $4.80 (about same as share price )
NTA for RYM = $2.34 with a share price of approx $8.00
Info is from ASB share trading website
What am I missing here, when both involved in same/similar industry ??

[limmy]

It's not just RYM. Most stocks have NTA way below the share price.

[kura]

Agree with you that NTA is irrelevant for most companies.

But for property companies NTA is highly relevant. ( I consider retirement village operators as nothing more than highly specialised property companies ) As such it seemed weird that one would trade for NTA & other would trade for approx 3 times NTA ?

Disc: Have only recently started looking at retirement sector

[horus1]

Doesnt this mean that MET are undervalued.

[BlackPeter]

MET looks in my view quite undervalued compared to SUM and certainly RYM; Its not just the NTA ... it is as well the PE which looks outrageously good (forward PE of 6.8) compared to other retirement village providers. Obviously - there is a reason for everything .. and MET used to have the lowest build rate / growth under the big 3 as well as the highest regional focus (or say least diversification). As well - some of the building stock used to be somewhat run down and in not always highly desirable locations (dependant on the site).

It feels however that the company changed course for the better - Infratil as corner stone share holder and on the board starts to make a difference. Build rate is increasing - and locations (at least the new ones, difficult to move the old) seem to become more desirable.

I think that they are undervalued - and hold a sizeable package.

[Joshuatree]

Performance wise over the last two years RYM has been dismal only up re 3% after todays 11c gain.
MET from re $4.00 to $4.80 re 20% gain
SUM up re 29%

[Beagle]

Lets dig into this debate about MET because I for one find it fascinating that the SP seems so closely correlated with the asset backing and this is by no means a recent thing.

I held a while back when asset backing was circa $4.20 and at the time development margins were tracking okay, IIRC about 15% and I thought they might be headed higher but with the result last year they came out and said their target development margin was 15%. Keep in mind SUM just achieved 20% and RYM are north of that again.

So how did they do against this very modest target ? Development margin in an extremely robust time for the Auckland housing market was an incredibly modest 12%. For me this redefines the term underwhelming.

They acknowledged they need to do better but have been saying the same for a while now so what gives BP ? They've had the expertise of Infratil on board for quite some time now and development margin's appear to have gone backwards in an absolutely booming property market...how could this possibly have happened ?

Yes embedded value of just over $700m is good and supportive of future underlying profit generation and yes the PE is cheap but is the upper North Island property market, and Auckland in particular starting to come off the boil ?

When will MET start to generate half way reasonable development margins ?

The forecast this year is for underlying profit of (at the mid point) $63m. EPS underlying is approx. 29 cps so forward PE of about 16.8 which is slightly cheap for this sector In the medium term yes I think this level of underlying EPS is repeatable going forward because of the large embedded value of $700m which should generate close to $100m per annum in future underlying profits given the average occupancy time of the units. Why is it underperforming in terms of average earnings based on the level of embedded value ?

Seeing as the vast majority of the company profit is made from historical embedded value and seeing as the property market may be starting to come off the boil ?, perhaps not after Mr Wheelers kind assistance last week ? and seeing how their development team appear woefully inferior to either SUM or especially RYM until such time as they prove up their ability as developers its hard to make the case that the SP won't be inextricably tied to the NTA isn't it ? If one is to try and make the argument that they're worth more than NTA this would appear to fly in the face of the market SP for the last 2-3 years and what is one basing that assumption on ? They make very little from the actual operation of the villages, ostensibly a cost recovery exercise and their development margins and modest volumes of same are woefully inferior to either RYM or SUM so how to make a case its worth more than NTA ?

Seeing as the dividend yield is so incredibly low and playing devil's advocate here, isn't one simply better to own Auckland property outright and enjoy the same fortunes of the property market one way or the other ? Certainly one can leverage their own rental property far easier and more inexpensively than leveraging shares and the rental yield, while admittedly low now is certainly better than MET's dividend yield. Further, most of us can swing a paintbrush and a hammer so adding value often isn't difficult as has been well espoused in property T.V. renovation programmes.

If MET could prove up their development capabilities then its possible their SP could attain escape velocity from the NTA but until they can prove otherwise I see little prospect of that happening, cheap PE notwithstanding.

So..from my perspective the key question becomes when do you see their development team making genuine progress and getting real traction BP ?

[Snow Leopard]

...The forecast this half is for underlying profit of (at the mid point) $63m which translates to an annual underlying of $126m...

HY presentation Slide 7 (https://nzx.com/files/attachments/230549.pdf) - Full year underlying expected to be $62M to $64M; Half year was $33M5

Best Wishes
Paper Tiger

[Beagle]

Thanks PT, oops my bad. From underwhelming to even worse.

So let me pose this question. Seeing as they have embedded value of $700m and the average occupancy from that presentation is circa 8 years depending on unit type, why aren't they achieving at least one eighth of $700m each year i.e. $87.5m ? Where is the leakage in profit ? If all they can do is $63m underlying for the full year in a market that's best described as booming what hope for the future ? Remembering that a booming market not only helps resale profits but also development profits. What underlying profit do they make when the market isn't booming ?
Maybe they should stop all development and ensure each centre is run on the basis that it at least covers costs that way they'd make an underlying profit on average of $87.5m each year ?

My view is that there are very sound and logical reasons why this trades at close to NTA and has done for quite some time. In my view it probably will continue to do so for the foreseeable future until such time as they may be able to finally get some genuine traction from their property development team. IFRS, (International Financial Reporting Standards that include full revaluation of all properties each year as normal EPS) IMO can be a dangerous and volatile way to measure earnings and can give misleading indications of relative valuations in this sector, especially so for mature companies.

[BlackPeter]

Hi Roger & PT, sorry for my tardy response ... I plainly missed your posts - too many other things going on in my life.

Absolutely agree - the MET development margin does not look flash (though - they started at least to develop again ... and the margin appears to improve (from a low base).

I can only speculate on the reasons - but here is my view: SUM and RYM are basically cranking out small standard houses (wooden boxes) as every builder in NZ is able to deliver even when sleepy and intoxicated - and spread them across nice places with more and more limited availability (and often close to nowhere). MET seems to develop mainly larger apartment blocks in areas where space comes at a premium (close to public transport, shopping malls, etc).

NZ building industry has little experience with these larger structures and has a long history of appalling mistakes in building them (rotten balconies, lacking noise insulation, leaky buildings, lack of seismic strengthening). MET is now trying to build them in good quality with limited local expertise, which is obviously more expensive and fault prone = lower development margins. Hopefully, though they are learning.

Obviously they need to repeat all the mistakes which have been made already in the last 10 decades or so somewhere overseas ... this is New Zealand, and we can't just learn from other people's experience;);

OK - sorry to get carried away, sometimes I am not yet full in the Kiwi spirit ... but what I wanted to say is ... I don't think that it is at this stage fair to compare MET's and e.g. SUM's developments margins and draw from them the conclusion that the MET team is less capable. They just try something much harder ... which, if successful, might well pay dividends (literally).

I guess the question is - where is the future for new housing in NZ if every square meter around Auckland is occupied by a hardly accessible (other than by car) wooden box (standalone house) in a wooden box (fence line)?

Maybe that's the time when people wake up and discover that apartment blocks with good access are the way to go (hint - most parts of the world discovered that already) and than I do think that companies able to provide them in good quality will be king.

O.K. - but back to the share price: MET's PE looks currently outstanding (consistently below 10) - and yes, I do add property revaluations to the earnings - since that is what they are: A regular addition to the income stream. Will they continue? Who knows, but as long as most New Zealanders prefer to live in their own stand alone box and the population is growing do I not see how the housing bubble we clearly have can seriously deflate any time soon.

I know that the Graham formula has its limitations - and not sure, whether I believe the $28 per share it delivers if I enter the current earnings and growth rate ... but I still think that the share is more worth than it currently is traded for.

BTW: anybody noticed that the MET SP just passed the golden cross :t_up:?

[Beagle]

Some background. The long held view regarding recognition of profit going back over thousands of years is that it isn't real until its realised. This is known as underlying earnings and forms the core basis by which I endeavour to compare these companies.

The doctrine of conservatism has been well entrenched in accountants thinking going back since the profession was first established hundreds of years ago and realised means sold and money in the bank or sure beyond reasonable doubt it's coming into the bank pretty shortly. (There's lots of grey lines in regard to construction of projects and the convention based upon percentage of completion is reasonable well entrenched).

But then fancy new doctrines emerged and it became accepted practice that property companies who's main purpose was to invest in property could and should under the International Financial Reporting Standards (IFRS) report the current years revaluation as normal profit.

The problem with IFRS profits is that valuation changes from one year to another can vary widely and even in some years be negative so that makes the use of such in models like Benjamin Graham's valuation formula which relies on reasonably certain growth completely inappropriate. I do have some sympathy with this point of view as there's ample evidence that the cost of construction generally goes up each year at least as fast as inflation so some level of core revaluation on a long term basis is probably baked into each years result.

The problem with underlying profits is it gives too much of a lagging indicator in terms of the real change in value that's occurred during the year because only approximately one seventh of the units change hands each year and its generally older units that people have been in for a while.

So I came up with a hybrid model. This very recent theory of mine looks to explore the future direction of underlying earnings, (these are the real earnings...everything else is theoretical until its realised and is nothing but paper until proven otherwise).

This hybrid model looks to predict future underlying earnings based on development margin plus a theoretical one seventh of current embedded value, (the difference between what people paid for their occupation licence and what's its currently worth).

The benefit of this theoretical approach is it looks to remove the wild swings in IFRS revaluation profits that can come from dramatically changing property values from one year to another and smooth them out, (normalise them) BUT I struck a major problem when looking at MET. They have embedded value in their units of just over $700m. Based on average occupancy of approx. 7 years and assuming they did nothing else and each centre runs itself as a cost recovery centre this should theoretically generate $100m in underlying earnings every year for the next 7 years and yet in a booming market all MET is forecasting is an underlying profit of $63m ?.

So my question is, where is the leakage ? What is sucking up the $37m per annum in profit that would appear to accrue if the company did nothing at all but manage its existing facilities and fired all its apparently excessively expensive corporate team ?

It seems clear to me that some other aspects of MET's operation are anything but value adding to shareholders and until they can prove their development team can add value, regardless of how they build I'm a sceptic. Yes they had a good bounce on Friday but are still very close to their NTA.

It will please you to hear BP that I spoke with the GM of one of the major Australian owned real estate franchisees yesterday. He told me the Chinese are back in a big way in the Auckland market and immigration keeps rocking on at record level's so they all have to live somewhere. I therefore expect MET to keep going up at a rate not dissimilar to Auckland's house prices.

[macduffy]

.... and RYM are basically cranking out small standard houses (wooden boxes) as every builder in NZ is able to deliver even when sleepy and intoxicated - and spread them across nice places with more and more limited availability (and often close to nowhere).

Hi B-P. Have you seen the Bob Scott village in Petone that RYM are currently developing? No small wooden boxes there, mainly 3, 4 and 5 level buildings. Two other RYM villages that I have seen recently, the Rita Angus in Kilbirnie and Malvina Major in Johnsonville also lack any standalone apartments although the latter does still incorporate the single level motel complex from which it sprung. Wellington's topography, for one, doesn't allow the luxury of too many single level dwellings!

[BlackPeter]

Hi Roger,

Thank your for taking the time to detailing your rationale. This is a very useful and educational post - and certainly will help people to understand why there might be always more than one version of the truth, particularly when looking forward.

Happy to acknowledge as well your superior knowledge in the accounting domain ... I am engineer by trade ... and while I learned in the meantime how to read a balance sheet (and write a business case), my professional contact with accountants was mainly confined to submitting my travel expenses ;).

One thing I learned as engineer is that there are no right or wrong models, just models which are better or less suitable, depending on the chosen context (e.g. they say that custard is in some context an excellent model for the human brain) .

So - why not simply "test" your three different models? Question: if you apply them (underlying earnings, IFRS, hybrid) to the past earnings of the three retirement village operators - say over the last 10 years or so ... which of them would have described most accurate the realised earnings of somebody buying the shares in 2006 (or whenever they started) and selling them in 2016?

Why not simply using this model?

[BlackPeter]

Hi B-P. Have you seen the Bob Scott village in Petone that RYM are currently developing? No small wooden boxes there, mainly 3, 4 and 5 level buildings. Two other RYM villages that I have seen recently, the Rita Angus in Kilbirnie and Malvina Major in Johnsonville also lack any standalone apartments although the latter does still incorporate the single level motel complex from which it sprung. Wellington's topography, for one, doesn't allow the luxury of too many single level dwellings!

I intended to say "mainly"... and admittedly didn't follow Ryman too much anyway over the last couple of years (sold out when they started plateauing). However - pleased to hear that they seem to move into a more sustainable direction ...

[percy]

I intended to say "mainly"... and admittedly didn't follow Ryman too much anyway over the last couple of years (sold out when they started plateauing). However - pleased to hear that they seem to move into a more sustainable direction ...

Google Frances Hodgins retirement village.RYM built it years ago.

[Beagle]

You're welcome BP. It would take an enormous amount of research and time to go back and run a full analysis of the three over the last decade and disclosure hasn't always been the best, e.g. it is only recently that embedded value has been referred to and discussed in annual reports.

One thing is clear is that companies that have focused on growth and getting their development processes refined well and executed with high level's of profit have done extremely well, namely RYM and the total shareholder return to RYM shareholders over the last decade has been phenomenal.

I believe they have fully refined their building practices and will be operating at the same high level of efficiency as they have in recent years going forward. Further, they have clearly articulated their medium term goal of increasing underlying profit by 15% each year and have achieved that well and that's all fully baked into the SP, i.e. its priced for perfection and will probably perform perfectly and over the long run once the PE normalises shareholders should get returns commensurate with the EPS growth. This is probably the right time to remind some on here that Winner69 and I showed 2 years ago that RYM had got clearly ahead of itself in terms of its long run PE and we expected at least a couple of years of consolidation and that's exactly what's happened as the SP is ostensibly unchanged. Another year of under-performance wouldn't surprise either of us.

Turning to SUM. You know my feeling about Mrs Barlow and we don't need to go there again but now that she's going, (as a mater of principle I wouldn't invest before she agreed to step down) they were on an underlying PE of about 23 when I reinvested earlier this month at about $4. This is around the level where I see fair value for a company growing consistently at 15%..recall Ben Graham's formula is a no Pe growth of 8.5 + 2G, where G is the growth one can reliably predict over the next 7-10 years.

I use my own approach here being a accountant of Scottish ancestry and won't pay more than 1G for4 growth so I look for a retirement company on 8.5 + 15, no more than an underlying PE of 23.5 which I consider can grow earnings by at least 15% for the foreseeable future. To do this they MUST HAVE shown an ability to execute effectively on their development programme...there's no way without it property prices can go up at 15% per annum.

SUM's grew underlying earnings 10% in 2014 and 55% in 2015. This year they are growing their build rate from 300 units per annum to 400. Development margins have steadily improved each half year that's ticked by, now 20% and there's probably room for that to grow further with further refinements in their development methodologies and economies of scale. For that reason its my pick in this sector. Growing faster that RYM and MET and development margins can grow faster too.

MET have a lot of work to do to improve their development team.

[BlackPeter]

feels like the markets are waking up .... on a 2 year window is MET now outperforming SUM by 5%

7956
(hint: MET is the blue line ....)

and RYM by 30%.

7957
(hint: MET is again the blue line :t_up:)

Not bad for an old boring retirement home provider with low build rates and too low development margins ... ;)

How do they say - the markets are always right ;)

Discl: hold MET (lots) and SUM (some);

[Bjauck]

feels like the markets are waking up .... on a 2 year window is MET now outperforming SUM by 5%

7956
(hint: MET is the blue line ....)

and RYM by 30%.

7957
(hint: MET is again the blue line :t_up:)

Not bad for an old boring retirement home provider with low build rates and too low development margins ... ;)

How do they say - the markets are always right ;)

Discl: hold MET (lots) and SUM (some);

Ah, but since SUM listed which was only about 4.5 yrs ago, MET is in third place with RYM and SUM 1st=! Graph courtesy of FT.COM...
7958

[Beagle]

Ah, but since SUM listed which was only about 4.5 yrs ago, MET is in third place with RYM and SUM 1st=! Graph courtesy of FT.COM...
7958

Nice graph, thanks. RYM got too far ahead of itself about two years ago and Winner69 and I made the very bold call, (well supported by analysis), that it was set for a significant period of under-performance and that's exactly what's happened. For my money I think SUM has the best prospects at present in this sector and I believe Winner69 feels the same way.

[Bjauck]

Nice graph, thanks. RYM got too far ahead of itself about two years ago and Winner69 and I made the very bold call, (well supported by analysis), that it was set for a significant period of under-performance and that's exactly what's happened. For my money I think SUM has the best prospects at present in this sector and I believe Winner69 feels the same way. Well done for looking at SUM dispassionately after a previous "cool" period towards its directorship at the time! I have stuck with RYM and SUM throughout the 5 years...very long term horizon so hiccups along the way come with the territory. I don't think I could trust myself with timings.

[Beagle]

Thanks and it was satisfying to get them to change their insider trading policy too. The forthcoming director change was a necessary requirement for me to consider re-entry as a matter of principle.

Looking at RYM's under-performance over the last two years the question I am wrestling with is when are we due to resume the uptrend ? Winner and I hold different views on this. I don't want to put words in his mouth but I believe he sees this as some way off, perhaps another year of under-performance but I think RYM is about fair value now and close to starting to track upwards again in a manner consistent with its remarkably consistent EPS growth. How close to resuming a meaningful uptrend I can't decide and its something I have wrestled hard with for a few weeks now. Its on my watch list. It might be a bit of a cop out to use technical's but as my FA is showing RYM as broadly fair value now I'd prefer to see it break its previous high of $9 before considering re-entry. The un-imputed dividend yield at less than 2% is so low I think I can afford to be patient.

I hold no such qualms about SUM's value at present and am therefore happy to hold a singular focus in this sector at this stage.

[Bjauck]

There has been debate over whether it is a good time to invest in SUM or RYM. However last week, the Chair of MET doubled his trust's investment in MET and has added another 90,000 @ $5.30 in shares. Even for him, that is probably a sizable extra amount. https://www.nzx.com/companies/MET/announcements/280436

[couta1]

I'm struggling to see where this company is as good as an investment as RYM or Sum, especially at its current price. I've sliced and diced it many ways but have failed to come up with any reason to buy any over the other two. Due to the strong tailwinds in the sector it will do okay, but thats not enough reason for me to buy any with the other opportunities available.

[silu]

I'm struggling to see where this company is as good as an investment as RYM or Sum, especially at its current price. I've sliced and diced it many ways but have failed to come up with any reason to buy any over the other two. Due to the strong tailwinds in the sector it will do okay, but thats not enough reason for me to buy any with the other opportunities available.

The main reason why I bought into MET in 2013 was because IFT bought a stake and got some directors of theirs on the board of MET. Turnaround I think is the word I'm looking for. +32% so far.

[Bjauck]

I'm struggling to see where this company is as good as an investment as RYM or Sum, especially at its current price. I've sliced and diced it many ways but have failed to come up with any reason to buy any over the other two. Due to the strong tailwinds in the sector it will do okay, but thats not enough reason for me to buy any with the other opportunities available. I appreciate that. However, it is interesting that an insider, with access to the latest figures and developments, is prepared to more than double his trust's exposure to MET.

[BlackPeter]

I'm struggling to see where this company is as good as an investment as RYM or Sum, especially at its current price. I've sliced and diced it many ways but have failed to come up with any reason to buy any over the other two. Due to the strong tailwinds in the sector it will do okay, but thats not enough reason for me to buy any with the other opportunities available.




Ticker
forward PE
average PE
CAGR


MET
6.1
25.7
11.7


SUM
11.7
29.8
29


RYM
16.8
28.8
23.8




note: PE based on real earnings (not underlying) and average typically the last 7 years (if available), same CAGR, forward PE based on "analyst consensus";

Looking at this table ... sure SUM and RYM are faster growing (higher CAGR) - but MET have the best PE of the three. I can see reasons to invest into them ;), but agree that probably all three will do well over the next couple of decades or so (unless the political conditions change).

Discl: hold MET (large parcel) and SUM (medium sized parcel);

[couta1]

I will concede that the NTA/share has always been more impressive than the others.:cool:

[OldGuy]

BlackPeter - your table is missing the most important column (PE/CAGR). IMHO, that is the best way to compare the three.

Using that metric, SUM outperforms the others quite markedly...

[Harvey Specter]

BlackPeter - your table is missing the most important column (PE/CAGR). IMHO, that is the best way to compare the three.

Using that metric, SUM outperforms the others quite markedly...But can SUM maintain that CAGR. And can MET improve its - it has the most room for improvement one would think but it is a big beast.

[BlackPeter]

BlackPeter - your table is missing the most important column (PE/CAGR). IMHO, that is the best way to compare the three.

Using that metric, SUM outperforms the others quite markedly...

Most important? That's probably up to discussion, but agree that the PEG for SUM looks still slightly better than for MET (actually both have an amazing low PEG: MET 0.52 vs SUM 0.4 ... with 1 considered "fair" value and anything below is good). But than you need to solve Harvey's problem ... will SUM be able to maintain this CAGR and is it not likely that MET might speed it up?

Too hard for me, actually I like them both (well, at present ...). Great thing as well - I didn't had to choose - I own both of them :t_up:

[OldGuy]

Most important? That's probably up to discussion, but agree that the PEG for SUM looks still slightly better than for MET (actually both have an amazing low PEG: MET 0.52 vs SUM 0.4 ... with 1 considered "fair" value and anything below is good). But than you need to solve Harvey's problem ... will SUM be able to maintain this CAGR and is it not likely that MET might speed it up?

Too hard for me, actually I like them both (well, at present ...). Great thing as well - I didn't had to choose - I own both of them :t_up:

With the greatest of respect, the difference between 0.52 and 0.4 is actually quite significant. It means, for example, that SUM's price could increase to $5.70 and still be better value than MET according to this metric... :)

[BlackPeter]

With the greatest of respect, the difference between 0.52 and 0.4 is actually quite significant. It means, for example, that SUM's price could increase to $5.70 and still be better value than MET according to this metric... :)

Absolutely agree, if we assume that the rating of growth companies is an exact science. Unfortunately (or fortunately?) - as we all know - it is not, and if you have to live with the uncertainties of the share market, than I find that looking at orders of magnitude is often "good enough".

If I apply the Graham formula (which basically uses the same ratio), than a MET share would be worth $28 and a SUM share would be worth $18; Do I believe these numbers? Well, it probably depends, how long I wait ... but both numbers would be good enough for me to buy the stock around $5.35 (MET) or around $ 4.30 (SUM).

How do they say: "Prediction is very difficult, particular about the future" - that's one of the reasons I am happy to hold both :).

[OldGuy]

Absolutely agree, if we assume that the rating of growth companies is an exact science. Unfortunately (or fortunately?) - as we all know - it is not, and if you have to live with the uncertainties of the share market, than I find that looking at orders of magnitude is often "good enough".

If I apply the Graham formula (which basically uses the same ratio), than a MET share would be worth $28 and a SUM share would be worth $18; Do I believe these numbers? Well, it probably depends, how long I wait ... but both numbers would be good enough for me to buy the stock around $5.35 (MET) or around $ 4.30 (SUM).

How do they say: "Prediction is very difficult, particular about the future" - that's one of the reasons I am happy to hold both :).

how do you get $28 for MET with Graham's formula? I forget the details, but I know that Roger is quite enamoured with it...

[BlackPeter]

how do you get $28 for MET with Graham's formula? I forget the details, but I know that Roger is quite enamoured with it...

Ben Graham formula: Intrinsic Value = EPS * (8.5 + 2 * G);

with EPS = 88 cents (according to 4 traders, but credible, given that they had already 60 cents (incl. valuation gains) in the first 6 months).
and CAGR (i.e. G) = 11.7% (based on revenue growth from 2010 to 2018 (4 traders forecast); If you don't like to use the forecast for the CAGR, than it is 10% based on 2010 to 2015, resulting in an "intrinsic share value" of $25;

I think Roger uses (depending on the industry) different parameters ... and I don't think there is a right or wrong what you choose (as said before - no exact science ... probably no science at all). Anyway - whatever you do ... the intrinsic value appears to be (with all discussed retirement villages) ways above the current SP;

Obviously ... as with any other Retirement village provider ... if the property values stop climbing (or climb slower), than growth will be significantly lower ... i.e. anybody's guess is as good as mine, but should impact on all providers in a similar way;

Remember as well that Ben Graham said himself that these numbers are not real dollars ... just an indication of the "intrinsic value" (whatever this is).

DYOR;

[OldGuy]

Thanks for the clarification, BP. It looks like you are using NPAT, not underlying earnings, in your calcs. I would strongly advise against ever using NPAT in any kind of valuation formula for this sector (but I'm sure you already knew that) :)

[Beagle]

MET could be a good company if they can learn to run their new developments in such a manner as to add genuine value. I'm not convinced this will happen anytime soon.

[BlackPeter]

Thanks for the clarification, BP. It looks like you are using NPAT, not underlying earnings, in your calcs. I would strongly advise against ever using NPAT in any kind of valuation formula for this sector (but I'm sure you already knew that) :)

Yes I do ... and given that the retirement village providers are basically real estate companies (well, that's where their money comes from) do I think that it is quite justified to do so.

It just depends whether you see the revaluation gains as "one-off"s (even if they seem to come like clockwork) ... or (long term) as a normal part of the revenue stream. Historically it was exactly that (normal part of the revenue stream), but who knows what the future will bring, maybe after negative interest rates do we get a long term deflation of property values? Personally I see that as unlikely, but who knows?

Again - different approaches and I am sure we both can (with the benefit of hindsight) identify time windows where one approach or the other would have been more appropriate for a "real estate" company, though I suspect that it might be more difficult to find long time windows where for a real estate company the underlying value approach would have been more accurate.

Never mind - lets leave this discussion to the religious fanatics. I am happy with my approach and I assume you are happy with yours. What better outcome could we imagine?

[silu]

Management doing their bit to turn it around and I assume the market will like it.
ASSET: MET: Metlifecare - Sale of Wairarapa Village

Date: 21 April 2016
Media Release

METLIFECARE - SALE OF WAIRARAPA VILLAGE

Metlifecare has entered into a sale and purchase agreement for the sale of
its Wairarapa Village in Masterton for $6 million, payable in cash.

The agreement is subject to the following procedural conditions to be
satisfied by 31 May 2016:

1. The statutory supervisor's approval, including relating to the purchaser's
financing and security arrangements.
2. Transfer of the required Ministry of Health/DHB contracts for operation of
the care home within the village.

Subject to satisfaction of these conditions, settlement of the sale is
scheduled for 30 June 2016.

Wairarapa Village operates in a market that has lower opportunities for
growth for Metlifecare, due to local market dynamics and a less attractive
real estate environment.

This agreement presents an opportunity to reallocate the capital receipted
from this sale to continue the company's focus on greenfield and brownfield
developments in high growth areas that represent stronger future yields.

Metlifecare is proud to have been associated with this village for over 30
years.

ENDS

[winner69]

So villages and their residents are just 'resources' to enrich the rich?

Don't make enough dosh so out with the bath water it goes

Who bought it? Probably somebody with a greater social conscience rather than a capitalist mindset

[Beagle]

According to my contact, GM at one of the major Australian owned real estate agencies, that area of the country has been a very poor performer in terms of real estate values in recent years.
Whether management can make more money by reinvesting elsewhere given their recent track record in new developments remains to be seen.

Sale of an entire village for only $6m ? Surely that's a typo ?

[Bjauck]

So villages and their residents are just 'resources' to enrich the rich?

Don't make enough dosh so out with the bath water it goes

Who bought it? Probably somebody with a greater social conscience rather than a capitalist mindset

Ouch! Does the sub-optimal use of capital end up helping more people?

[Hectorplains]

According to my contact, GM at one of the major Australian owned real estate agencies, that area of the country has been a very poor performer in terms of real estate values in recent years.
Whether management can make more money by reinvesting elsewhere given their recent track record in new developments remains to be seen.

Sale of an entire village for only $6m ? Surely that's a typo ?

Yeah, no mention of what they had it valued at on their books either.

[Beagle]

Yeah, no mention of what they had it valued at on their books either.

Good point and by extension no mention of whether they made a profit on sale.

Biggest issue that I've mentioned before is the company has $700m of embedded, (difference between current value of occupation licences and what present occupiers paid for them) value in its balance sheet and given an average stay of 7 years if they stopped all development activity and streamlined all overhead costs and ran each village as a stand alone unit that broke even they could theoretically make $100m in underlying profit just from natural churn of existing units and do nothing else. This would appear to create more value for shareholders than any other strategy !

So why in a booming market are they only forecasting $65m underlying profit this year ? Where has the other $35m gone ? What value, if any are their development activities which they allege have a 12% development margin actually delivering for shareholders ? Early in my career I was an auditor and something doesn't feel right here.

History with RYM has shown us that companies that add real value through their development activities are the ones that generate fantastic long term value for shareholders. I'd imagine that MET shareholders would be very disappointed that development margins have gone backwards recently at a time when the market is absolutely booming implying pricing power for the new units constructed. One wonders what might happen to development margins in an environment when there wasn't so much pricing power :eek2:

[winner69]

Ouch! Does the sub-optimal use of capital end up helping more people?

Depends on what value you put on 'social' things instead of dollars on a balance sheet

[OldGuy]

Looks like this dog has more than just fleas.

Can't remember the last time that RYM or SUM divested a village...

[macduffy]

Yes, they're different breeds of dogs. RYM was built from scratch, MET has inherited others' business decisions to some extent.

[Bjauck]

Depends on what value you put on 'social' things instead of dollars on a balance sheet
The new owner may be more in tune with "local conditions" so it could be a win-win-win for the new owner, MET, and the villagers.

Looks like this dog has more than just fleas. Can't remember the last time that RYM or SUM divested a village...
At least it seems the tough decisions are being made. Do we see IFT's hand in this?

[percy]

The village has been sold,so what.?
It has not been closed.
An opportunity for the new owner.
May turn out they care more about their residents than MET did.
Could be a winner winner situation?

[Lewylewylewy]

Wow, some really toxic feelings towards MET

[Bjauck]

Wow, some really toxic feelings towards MET Not from me - the sale of the Wairarapa Village to another owner does not indicate any greater lack of social conscience when compared with other operators, such as SUM or RYM, some of whom currently extract greater profits from their land ownership and operations. If social goals are required then I think that is up to central government to direct and fund on behalf of all the people of NZ.

[Beagle]

Interesting article behind the pay wall at NBR. There are 80 units and 40 care beds. $6m is much less than the implied $75,000 per unit as the sale price includes the care bed facility and all common area's and common area facilities. Incoming CEO didn't know the book value of the village when approached by NBR...my goodness, confidence inspiring stuff isn't it !
You want a dirt cheap place to retire too ?..now we know where !

[mondograss]

In the Herald today:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11626949

[Bjauck]

...
You want a dirt cheap place to retire too ?..now we know where ! Dirt cheap or realistic? I do not imagine the Wairarapa Village is brand new or in a place like Auckland, where restricted land supply, immigrants, unrestricted foreign investors and local investors are bidding up land values and squeezing out first home buyers and others.

[Beagle]

Yeap that's a given mate. Just pointing out there are other ways to skin the retirement cat. Some people are reaching retirement age with very little in the way of invested funds, (hopefully nobody on here).
If they sold their average Auckland home for say $900K and bought a retirement unit in this village for say $75K that would give them some nice options for enjoying their retirement years wouldn't it !

[winner69]

Yeap that's a given mate. Just pointing out there are other ways to skin the retirement cat. Some people are reaching retirement age with very little in the way of invested funds, (hopefully nobody on here).
If they sold their average Auckland home for say $900K and bought a retirement unit in this village for say $75K that would give them some nice options for enjoying their retirement years wouldn't it !

Wairarapa a great place - martinborough vineyards and cafes, greytown arts and cafes, castlepoint for beach and fishing etc etc

QV says average house price in Masterton is $248k - going up about 3% a year lately

[Bjauck]

Yeap that's a given mate. Just pointing out there are other ways to skin the retirement cat. Some people are reaching retirement age with very little in the way of invested funds, (hopefully nobody on here).
If they sold their average Auckland home for say $900K and bought a retirement unit in this village for say $75K that would give them some nice options for enjoying their retirement years wouldn't it ! Dirt cheap in Auck is different to dirt cheap in Wairarapa. If you have always lived in Auckland, would you want to move to the Wairarapa, where you may have no family? Economic refugees tend to be younger people.

[Harvey Specter]

Interesting article behind the pay wall at NBR. There are 80 units and 40 care beds. $6m is much less than the implied $75,000 per unit as the sale price includes the care bed facility and all common area's and common area facilities. Incoming CEO didn't know the book value of the village when approached by NBR...my goodness, confidence inspiring stuff isn't it !
You want a dirt cheap place to retire too ?..now we know where !$75k each because there is the obligation to repay the occupant when they 'leave'.

[Bjauck]

Yeap that's a given mate. Just pointing out there are other ways to skin the retirement cat. Some people are reaching retirement age with very little in the way of invested funds, (hopefully nobody on here).
If they sold their average Auckland home for say $900K and bought a retirement unit in this village for say $75K that would give them some nice options for enjoying their retirement years wouldn't it ! Here's hoping that the government may introduce policies to help equalize the relative appeal of real estate investment and reduce the Auckland predicament, no doubt facing many, of pouring everything into a very expensive house leaving little for financial investments.

[Lewylewylewy]

Here's hoping the govt wait until there's a decent pension scheme / retirement investment available before reducing the appeal of property lol

[Bjauck]

Here's hoping the govt wait until there's a decent pension scheme / retirement investment available before reducing the appeal of property lol Precisely - the appeal of real estate investment has been overwhelming.

[winner69]

Share price to surge says First NZ Capital

http://www.sharechat.co.nz/article/124abae1/metlifecare-likely-to-see-share-price-surge-says-first-nz-capital.html

[Beagle]

Glen Sowry really impressed at Housing N.Z. didn't he. The whole organisation is a fiasco.

[winner69]

No doubt a surging MET share price will also be good for Summerset

Just as much upside ....and less execution risk me thinks

[winner69]

In that article appears as FNZC prefer use NTA multiples to value these companies

Yes NTA and/or price book multiples the only realistic way to assess value, esp for those who make next to nothing out of non-building activities

[troyvdh]

Too much positive stuff for me...this companies SP...trajectory to steep for me...I'm out...good luck...cheers troy

[Bjauck]

Glen Sowry really impressed at Housing N.Z. didn't he. The whole organisation is a fiasco. I would say the whole housing market and situation in Auckland and the rest of NZ is a fiasco for many local residents. Housing NZ is treated as a bit of a political football and yet is always expected to pick up the pieces. Anyway, if it does not work out for him at MET, there will probably still be a post available at TV3. NZX experience did not seem to be good fit there.

[Beagle]

No doubt a surging MET share price will also be good for Summerset

Just as much upside ....and less execution risk me thinks

Far less execution risk. As we have seen with SUM it takes many years and a good team working together, (witness the boost to development margins since they took on that obviously very good procurement manager two years ago). Suppose First N.Z. effectively mentioning it's a better bet that SUM is a great way to keep the brokerage coming in !
What I would say however is that MET's existing development team could hardly do worse if they tried so one could take the view that the only way from here is up but its a bit like the boy who cried wolf as far as I'm concerned. There's been plenty of talk before over the years that with Infratil's expert influence and new management that things would improve and yet development margins went backwards ! I'm a huge believer that the CEO sets the tone for an organisation and has a huge impact on its financial performance so people would be well advised to have a long hard look at Glen Sowry's previous track record.

[Bjauck]

...I'm a huge believer that the CEO sets the tone for an organisation and has a huge impact on its financial performance so people would be well advised to have a long hard look at Glen Sowry's previous track record. TBH I do not know much about Glen Sowry's track record and if MET may have selected the wrong person. Why do you think he has a bad track record? Were all the missed HNZ bulding targets due to Sowry? http://www.stuff.co.nz/business/industries/73393355/Housing-New-Zealand-misses-new-homes-target

Was his performance at Air NZ not up to scratch? Do you have any links to any articles?

I have seen that he was praised in Hansard http://www.parliament.nz/en-nz/pb/debates/debates/50HansD_20140304_00000016/financial-review-debate-—-in-committee (http://www.parliament.nz/en-nz/pb/debates/debates/50HansD_20140304_00000016/financial-review-debate-%E2%80%94-in-committee)

[Bjauck]

Interesting article behind the pay wall at NBR. There are 80 units and 40 care beds. $6m is much less than the implied $75,000 per unit as the sale price includes the care bed facility and all common area's and common area facilities. Incoming CEO didn't know the book value of the village when approached by NBR...my goodness, confidence inspiring stuff isn't it !
You want a dirt cheap place to retire too ?..now we know where ! I see this time around Macquarie is asking for about $A575m for Oceania which equates to about $12m for each of its 49 locations (26 of which are villages). Masterton average house prices are about 45% of the average NZ house price (Auckland is 65% greater than the NZ average). Prima facie, The $6m price MET received for the Wairarapa Vllage seems perfectly fair given its age and location.

If the CEO did not know the book value off the cuff, then isn't it better to be honest and say so rather than to state a wrong figure?

http://www.afr.com/street-talk/macquarie-sale-of-oceania-healthcare-take-three-20160503-gokwys
https://www.qv.co.nz/resources/monthly-residential-value-index

[BlackPeter]

Interesting - MET seems to have found its bottom and appears to recover from its recent fall, while SUM still seems to drop (though only slightly). Purchasers recognising quality?

[Grunter]

I'm thinking that the RYM/MET/SUM sell off is quant driven rather than discretionary. Perhaps a momentum strategy reducing their position?

[Bjauck]

Is the MET sp benefiting from the SUM slipstream with the market expecting results at the top end of expectations? Very few sellers and the sp up 3% so far today.

[silu]

Well maybe they can get the seller at $8 filled today ;) Thinking an overall good decade ahead for MET/RYM/SUM.

[Onion]

Is the MET sp benefiting from the SUM slipstream with the market expecting results at the top end of expectations? Very few sellers and the sp up 3% so far today.

If that is the case then RYM has missed the slipstream and drifted off the back of the peleton.

[silu]

RYM was getting ahead of itself there for a while. The rest were playing catch up that's why SUM and MET were a better bet over the last 3 years.

[silu]

Copied over from my SUM post (does not include dividends)

Last 2 years they returned as follows:
RYM +23.11%
MET +37.15%
SUM +86.83%

5 year comparison
MET +193.50%
RYM +264.09%
SUM +281.88%

[couta1]

Copied over from my SUM post (does not include dividends)

Last 2 years they returned as follows:
RYM +23.11%
MET +37.15%
SUM +86.83%

5 year comparison
MET +193.50%
RYM +264.09%
SUM +281.88% And once you add in the dividends, you'll find that Ryman comes out on top over 5 years plus if you used today's prices to get those percentages, Sum is in exuberant mode while Ryman is in a dip.

[silu]

And once you add in the dividends, you'll find that Ryman comes out on top over 5 years plus if you used today's prices to get those percentages, Sum is in exuberant mode while Ryman is in a dip.

I like and hold all three. But I timed my entry (after my re-entry into stocks in 2013) based on my own valuations which meant I got first into MET then into SUM and RYM finally was cheap enough to buy for me early this year.

[kizame]

Rym half yr end of sept. thats probably why the lag.

[couta1]

I like and hold all three. But I timed my entry (after my re-entry into stocks in 2013) based on my own valuations which meant I got first into MET then into SUM and RYM finally was cheap enough to buy for me early this year. Good on you, I've played around too much and missed a lot of gains but I blame that on itchy finger disorder. I think what your figures show is there's nothing much in it between Sum and Ryman over the last five years and I believe the next five will be the same,contrary to what many Sum holders are projecting.

[couta1]

Rym half yr end of sept. thats probably why the lag. No, end of November not Sept.

[kizame]

No, end of November not Sept.

Sorry meant half yr balance date not reporting time.

[Bjauck]

Good on you, I've played around too much and missed a lot of gains but I blame that on itchy finger disorder. I think what your figures show is there's nothing much in it between Sum and Ryman over the last five years and I believe the next five will be the same,contrary to what many Sum holders are projecting. Do you think that it would be realistic to expect the kind of growth rate these property+extra stocks have experienced over the past five years to continue for another five years?
Disc:Hold all three. SUM largest holding now.

[couta1]

Do you think that it would be realistic to expect the kind of growth rate these property+extra stocks have experienced over the past five years to continue for another five years?
Disc:Hold all three. SUM largest holding now. Massive tailwinds with the gap between demand and supply increasing, it's possible and if not, growth will still be impressive.

[winner69]

Amazing numbers


If MET was valued in line with RYM it's share price wold be $16/$18

Hmm - might need to lighten up on SUM and split it with MET (leave RYM out though)

What ever its all well in the sector - even though booming property prices are helping. Just look at those revaluation numbers

[silu]

Damn can't open the attachments. Gives me a non supported file error message. Can you perhaps copy and past the highlights in this thread please?

[winner69]

Damn can't open the attachments. Gives me a non supported file error message. Can you perhaps copy and past the highlights in this thread please?

Stuffed up somewhere eh

the financials open OK - for starters anyway

[Harley]

Damn can't open the attachments. Gives me a non supported file error message. Can you perhaps copy and past the highlights in this thread please?

METLIFECARE REPORTS RECORD PROFIT AND ESTABLISHES PLATFORM
FOR FUTURE GROWTH
Metlifecare Limited performance highlights for the year to 30 June 20161:
 Reported net profit after tax of $228.7 million, up 86%
 Underlying profit2 of $66.1 million, up 26%
 $130.0 million net operating cash flow, up 56%
 $50.5 million net operating cash flow excluding first time sales of occupation right
agreements3, up 47%
 568 total sales of occupation right agreements3, up 16%
 Total occupation right agreement sales of $256.4 million, up 31%
 $131.9 million invested into new and existing villages, up 56%
 Total assets of $2,586.4 million, up 16%
 Final dividend of 4 cents per share taking total to 5.75 cents per share, up 28%
Metlifecare

[trader_jackson]

What ever its all well in the sector - even though booming property prices are helping. Just look at those revaluation numbers

And we all know property, especially in Auckland, can never go down and only increase in double digits?;)

Numbers still ok, although operating revenue is a bit weak for, operating cash flows are good

[Harley]

Damn can't open the attachments. Gives me a non supported file error message. Can you perhaps copy and past the highlights in this thread please?

To open the attachments click on address bar and remove .pdf
Press enter
click on download and open with acrobat reader.

[silu]

To open the attachments click on address bar and remove .pdf
Press enter
click on download and open with acrobat reader.

Thanks. The NZX website has fixed the issue now. At first look very, very happy with the result. I always saw MET as a turnaround story after IFT bought its stake. I think there will be massive re-rate of its shareprice in the weeks to come.

[Bjauck]

...
 568 total sales of occupation right agreements3, up 16%...

Interesting to compare the increase in number of agreements sold with the recent SUM increase in numbers sold of 13% from their Half Year figures.

[benjitara]

Wondering how much the revaluations on property have on peoples thoughts for buy in/ sell out of these retirement stocks? With such massive increases in net profit due to these upgrades how do people evaluate the stock?
Just a query.
I generally put a 30-40% discount on the rise to sort out the over-reaction. even at that this stock seems a very competitive buy compared to SUM ?

[macduffy]

Watch the donut (underlying profit) - not the hole (reported NPAT)!

;)

[silu]

In the words of Bonnie Tyler - Turn around....

FORECAST: MET: Metlifecare Pursues Accelerated Growth

Date: 7 September 2016
Media Release

METLIFECARE PURSUES ACCELERATED GROWTH

o Delivery of new units/beds projected to double in FY17
o Targeting a sustained programme of 300 plus units/beds per annum from FY19
o Forecast development margin of 15%+
o Focused land acquisition strategy
o Operational improvements through greater commercial intensity
o Differentiated market offering

Metlifecare Limited is today updating investors and analysts on the company's
redefined strategic goals and delivery plan. A copy of the presentation is
available in the investor section of the company's website.
Metlifecare CEO Glen Sowry said the market update sets out how the company
will build on its strong base to enhance shareholder value through a number
of initiatives, including an accelerated development programme.
Mr Sowry said that in the five months since joining Metlifecare, he has
worked with the Executive Team and the Board to review and redefine the
company's strategic priorities.
"There are many growth opportunities in our sector. We serve New Zealand's
fastest-growing demographic, and we have a leading position in two of the
country's highest value-growth regions. Our focus is on targeted growth and
we have taken time to carefully consider where our offering currently fits in
the market, as well as where it should fit in future."
Metlifecare recently reported a record annual result, driven by a buoyant
property market and record new development sales and resales. Based primarily
in the upper North Island, the company is New Zealand's leading listed
retirement village operator in the high-growth regions of Auckland and the
Bay of Plenty.
Mr Sowry said the company would be focusing on three key areas, being
acceleration of its development programme; capturing maximum value from its
existing portfolio; and competitive differentiation.
"Our development programme has been stress-tested and revised, and we now
have an accelerated programme that we are confident of delivering." The
company is forecasting to more than double the delivery of new units and care
beds to 229 in FY17, with this number steadily increasing to a minimum of 300
new units or care beds per year by FY19.
Looking further ahead, Mr Sowry said Metlifecare had improved its land
acquisition strategy with enhanced mapping and clear investment criteria. "A
number of opportunities are currently being explored, and we expect to
complete at least one land purchase in FY17 to add to the existing pipeline
of development projects."
Development margin improvement is also a priority. The company has invested
in strengthening the development team in the past year, resulting in
significantly increased capacity and capability for project planning, design,
procurement and management. Strengthened systems, processes and supplier
partnerships are likely to drive improved cost, quality and timeframes, and
the company is consequently expecting its overall development margin to meet
or exceed the minimum level of 15% in FY17.
Along with renewed emphasis on development, Mr Sowry said Metlifecare would
continue to focus on optimising returns from its existing portfolio. "This is
the engine that drives our business. Our record result for FY16 demonstrates
the quality of our villages, which continue to deliver excellent gains from
resales. We have a first-class portfolio and we will continue to drive value
growth through increased commercial intensity.
Mr Sowry said the strategic review has enabled Metlifecare to be clear about
its competitive positioning. "Each village within our portfolio is unique and
designed to integrate with its local community. Our emphasis on self-directed
care enables greater independence and community engagement for our residents.
However, we are also mindful of the need for continuum of care, and are
planning to more than double the amount of hospital-level care accommodation
that we offer."
The company would continue to build a differentiated position, based on
comprehensive research, market segmentation and ongoing monitoring of the
evolving needs of the market. Mr Sowry said this would guide Metlifecare in
focusing on the areas most important to its existing and future residents.
"We intend to take a leadership position by significantly raising the bar on
the food and dining offering to drive increased resident satisfaction and
brand positioning. We are working with leaders in the hospitality sector to
create a new level of dining and hospitality experience."
Mr Sowry said he was excited by Metlifecare's growth prospects and believes
the foundations are now in place to grow. "We have an excellent portfolio,
strong fundamentals, and most importantly, the capability and capacity to
capture and execute our opportunities."
Further information on the company and, in particular, on the company's
strategic goals and delivery plan, can be found in the Investor Update
released with this announcement. This announcement should be read alongside
the Investor Update.

ENDS

[Bjauck]

In the words of Bonnie Tyler - Turn around....... Seems to indicate an on-track and well-focussed management approach.

[Snow Leopard]

A totally unspectacular result but the crowd seem to like it.

Stating 200+ units pa from 2015 but that is not spectacular either

Best Wishes
Paper Tiger

...

http://images6.fanpop.com/image/photos/39600000/Flash-disneys-zootopia-39620441-500-500.jpg

The term 'Sloth-like' springs to mind

Best Wishes
Paper Tiger

Disc: do not hold

[thedrunkfish]

Can anyone more learned than I shed some light on why this stock has been losing value over the last month or so? Will be looking to top up shortly if it continues.
.

[JeremyALD]

Can anyone more learned than I shed some light on why this stock has been losing value over the last month or so? Will be looking to top up shortly if it continues.
.

Retirement stocks are down overall and seems like a bit a correction alongside the NZX50 downturn which has dropped 8% in the last month. Nothing to worry about too much but they might fall a bit more on the short term

[BlackPeter]

Can anyone more learned than I shed some light on why this stock has been losing value over the last month or so? Will be looking to top up shortly if it continues.
.

I don't know whether I am "more learned" than you ;) - no data to compare.

However - REITs (Real Estate Investment Trusts) are currently going down all over the place (as well internationally) - and while MET is a "retirement stock", the value is basically just locked up in property (and maybe a bit of "brand" and "know how").

Just look at SUM, RYM - or if you want to talk "pure" property: ARG. MET is not alone.

Reason? Maybe an early indication of rising interest rates and falling property prices (shares are normally about 6 months ahead of the events). Could be as well just a correction after a quite stellar bull run. Who knows.

Discl: reduced my holding;

[trader_jackson]

Can anyone more learned than I shed some light on why this stock has been losing value over the last month or so? Will be looking to top up shortly if it continues.
.

Despite the drop MET in my view is a much better value than SUM and RYM, in fact due to ARV not really dropping alot in the past month or two, I think it is slightly better value than ARV right now ;)

I could also be tempted

[Bjauck]

Despite the drop MET in my view is a much better value than SUM and RYM, in fact due to ARV not really dropping alot in the past month or two, I think it is slightly better value than ARV right now ;)

I could also be tempted As areas outside Auckland start to catch up with house price growth, considering MET's relatively higher exposure to Auckland, will that affect MET's relative SP performance compared with SUM and RYM?

[Joshuatree]

Me "Hoop it looks to me like SUM,RYM MET are lagging but following the prop stocks down. Most on the ASX and NZX are down through the 60 and 200DMA; i guess due to the almighty dithering FED likelihood now of raising Int rates sooner.Thats how i see it simplified ,so I'm out or exiting(inaus) until the trend reverses."

Pop that local bubble guys and look at the macro; it will save you money for a great lower reentry. DYOR and look at the big picture.

[trader_jackson]

As areas outside Auckland start to catch up with house price growth, considering MET's relatively higher exposure to Auckland, will that affect MET's relative SP performance compared with SUM and RYM?

You are quite right about MET being more exposed to Auckland than RYM and ARV (both very diversified across the country), although SUM is also quite exposed... and building a fair amount more than MET (in Auckland)
MET also doesn't have the same great continuum of care that RYM and ARV have, but it is big, has experience, and it is cheap(er)... whether this outweighs the disadvantages we've discussed, this is question... I am not sure, but is it more attractive the RYM and especially SUM? at MET's current price, and their current prices (in my view), yes.

[OldGuy]

Me "Hoop it looks to me like SUM,RYM MET are lagging but following the prop stocks down. Most on the ASX and NZX are down through the 60 and 200DMA; i guess due to the almighty dithering FED likelihood now of raising Int rates sooner.Thats how i see it simplified ,so I'm out or exiting(inaus) until the trend reverses."

Pop that local bubble guys and look at the macro; it will save you money for a great lower reentry. DYOR and look at the big picture.

congrats on selling so low!

[Joshuatree]

Have never held this one OG.Watching the trend re above for a poss opp later ;overseas investors pulling their money out of NZ adds to it .Can understand your strategy of riding it out; although the old set and forget strat doesn't apply so often these days imo.

[Valuegrowth]

http://marionbusinessdaily.com/indicators-in-focus-on-metlifecare-limited-nzsemet/36128/

[Joshuatree]

The T/A speak makes my eyes glaze over:scared:

[couta1]

The T/A speak makes my eyes glaze over:scared: Just a fancy way of saying that these stocks are good buying (Especially at closing prices today) but hey we already know that don't we. Sometimes there's just no need to complicate things, just let the tailwinds push you along.

[peat]

The T/A speak makes my eyes glaze over:scared:

yes that was quite unusual TA even for me!!
Piotroski F-Score !!! - never heard of that one.

So, these retirement stocks have come back and are on very respectable PE's which means their PEGs are looking good.
Metlife PE = 5 !
Ryman = 11

[Lewylewylewy]

MET has EPS+NTA of less than SP... PE of about 5 with just 1% dividend payout... Makes me feel like something is wrong with the accounting, otherwise that's an amazing bargain. The only explanation I could think of would be that they've got the valuations involved in the EPS and people think that the property values are due to drop. Seems... Odd.

[winner69]

yes that was quite unusual TA even for me!!
Piotroski F-Score !!! - never heard of that one.

So, these retirement stocks have come back and are on very respectable PE's which means their PEGs are looking good.
Metlife PE = 5 !
Ryman = 11





That Piotroski F-score was one of Sparky's tools (or was it MACs)

They also used the The Beneish Model

[winner69]

MET has EPS+NTA of less than SP... PE of about 5 with just 1% dividend payout... Makes me feel like something is wrong with the accounting, otherwise that's an amazing bargain. The only explanation I could think of would be that they've got the valuations involved in the EPS and people think that the property values are due to drop. Seems... Odd.

NTA per share is $5.32 in last accounts - not far off todays share price

For whatever reason MET appears as if it will always be cheap relative to peers.

[Lewylewylewy]

Thanks winner, that's going on the buy list when I'm not so poor

[BlackPeter]

I guess from a TA perspective looks MET currently not too flash: SP below MA50 and MA200, close to the cross of death and it looks like a head and shoulders formation is coming on:

8504

On the other hand - if we look at the bigger picture - how is the current situation different from mid 2012, late 2013 or late 2015/early 2016? Always the same formation and it went upwards from there?

8505

I think I go in this case with trusting the fundamentals and holding on ...

DYOR;

[BlackPeter]

And here it is: We passed the cross of death a week ago ... but sure, at some stage the trend will turn again (but not sure this is now).

Personally I feel more comfortable to watch retirement villages and REIT's at the moment from the sidelines and let my money work in uptrending stocks.

[Joshuatree]

One year return for MET 19.24%
RYM 1.23%
SUM 13.35%
ARV ​ the unpopular runt 44.15%

[BlackPeter]

One year return for MET 19.24%
RYM 1.23%
SUM 13.35%
ARV ​ the unpopular runt 44.15%

How do they say: "past returns are no indication for future performance" ...;)

[stoploss]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11792292

[BlackPeter]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11792292

Ouch - leaky building issues; Cheers for the link. The way this sounds in the article this might well consume one years worth of growth (unless they find more issues, of course). They need now to focus their building efforts on fixing and re-building existing villas instead of building new ones (they could sell). Sounds like a good time to be out of this stock - and wondering whether the other big 2 have similar shonky buildings;

Might impact as well on IFT ... they hold MET.

Discl: sold out some months ago;

[Bjauck]

Ouch - leaky building issues; Cheers for the link. The way this sounds in the article this might well consume one years worth of growth (unless they find more issues, of course). They need now to focus their building efforts on fixing and re-building existing villas instead of building new ones (they could sell). Sounds like a good time to be out of this stock - and wondering whether the other big 2 have similar shonky buildings;

Might impact as well on IFT ... they hold MET.

Discl: sold out some months ago; I will have to check the age profile of the buildings owned by my Retirement sector stocks. MET is the most exposed imo. I would have thought that they should have checked by now all buildings built in the at risk era. I think MET would have the oldest stock. Would MET need to make an announcement to the NZX to the extent that new buildings have been revealed as "leaky"?

[JeremyALD]

They've disclosed this previously as a small risk. Unless there's another annoucement from MET I don't think things are too bleak.

[winner69]

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

I think MET would have the oldest stock. Would MET need to make an announcement to the NZX to the extent that new buildings have been revealed as "leaky"?

Didn't you know - man from Devon says investors knew


Chris Gaskin of Devon Funds said issues at four Metlifecare villages - three in Auckland and one north of Wellington - were well flagged and investors knew.


Nothing new here by looks of it

[Bjauck]

Didn't you know - man from Devon says investors knew
Chris Gaskin of Devon Funds said issues at four Metlifecare villages - three in Auckland and one north of Wellington - were well flagged and investors knew.
Nothing new here by looks of it
There have been several announcements re Metlifecare's leaky buildings and they have been discussed at investor days.

I was unsure if the latest article also related to a greater number of affected buildings needing more remedial work than what has already been revealed by Metlifecare. Sowry said there were continuing investigations on the buildings and what work was needed. So maybe the scale of required remedial work is not yet fully known.

[macduffy]

Solid result from MET, but should this cause concern?

"“In terms of remediation, a comprehensive review has also been completed of all at-risk villages, and we have accordingly increased the estimate of future remediation costs by $23.5 million in the financial statements. This is in addition to the $20.6 million estimated at 30 June 2016 (excludes earthquake works of $1.4 million) and will occur over a period of seven years.”

[winner69]

Solid result from MET, but should this cause concern?

"“In terms of remediation, a comprehensive review has also been completed of all at-risk villages, and we have accordingly increased the estimate of future remediation costs by $23.5 million in the financial statements. This is in addition to the $20.6 million estimated at 30 June 2016 (excludes earthquake works of $1.4 million) and will occur over a period of seven years.”

Wow $44m to fix things is a lot of dosh eh - even over 7 years

Wonder how much other operators have 'allowed' for in their valuations?

Indictment on NZ building industry - even now I doubt that things built today will last as long as they used to.

[Bjauck]

Wow $44m to fix things is a lot of dosh eh - even over 7 years

Wonder how much other operators have 'allowed' for in their valuations?

Indictment on NZ building industry - even now I doubt that things built today will last as long as they used to. You need strict standards with a strong inspectorate for the building trade. I am sure that the housing crisis that has been allowed to develop in Auckland (for example) will mean that we get a sufficient supply of well-inspected quality buildings. Where's the Tui's?

[Beagle]

Wow $44m to fix things is a lot of dosh eh - even over 7 years

Wonder how much other operators have 'allowed' for in their valuations?

Indictment on NZ building industry - even now I doubt that things built today will last as long as they used to.

It is a lot and surely I am not the only one that doubts they can accurately predict the cost of a building works program over the next 7 years. Hard enough to get a fixed price from a builder for a clearly defined and immediate job, let alone trying to estimate sometimes far less defined remedial works, (with all the grey area's and potential extra wood rot e.t.c. than can be found when you start digging under the surface), for the next seven years. I think that remediation cost can only go one way and shareholders can "look forward" to regular cost updates for the foreseeable future.
Underlying profit growth of 15% is pretty underwhelming in what has been a very buoyant property market and is especially underwhelming compared to SUM's 50%.
SUM blokes on here reckons share prices follow earnings growth :)
The average age of MET's units are some of the oldest in the industry and therefore I expect that will be a headwind on them going forward.
Still....what do I know, the market seems to like the result, go figure ?

[JeremyALD]

Market is loving the result today, more than the SUMs annoucement. Interesting consider I hold both but thought SUM had the better report

[couta1]

Market is loving the result today, more than the SUMs annoucement. Interesting consider I hold both but thought SUM had the better report Indeed SUM had the better report, 22.2% development margin compared to 17% for MET for starters etc etc. SUM has always been a slow burning stock in terms of the market waking up. I have never owned MET and have no intention of owning any, they will have more remedial work going forward for one thing.

[Beagle]

When I get some spare time later this week I'll have a good look at comparing their underlying PE's, (in less someone with more spare time right at the minute would like to do so ?).

[winner69]

When I get some spare time later this week I'll have a good look at comparing their underlying PE's, (in less someone with more spare time right at the minute would like to do so ?).

You Bly like Underlying Earnings eh

MET 17.5 / SUM 19.5 / RYM 27.3 times Underlying Earnings

Historical - SUM full year as reported (Dec16) / MET last 2 half years (Dec 16) / RYM last 2 half years (Sep 16)

Didn't do ARV - that's t_j to do

[stevevai1983]

RYM this year underlying profit is 181.7M (assume on target 15%growth) so that's 23.6PE
ARV this year underlying profit is 20.5M (assume 30% growth) PE = 22 （not cheap huh）
SUM 56.6M profit PE = 20

outlook:
RYM stable and boring 15% growth + moderate gearing
SUM highest build rate / total portfolio number + highest gearing
ARV start to sharply increase on build rate + lowest gearing

[macduffy]

The market doesn't seem to hold any doubts about MET's results or their prospects. Shareprice up 21c today.

[Bjauck]

The market doesn't seem to hold any doubts about MET's results or their prospects. Shareprice up 21c today. Perhaps there is some switching occurring from RYM and SUM into MET.

[percy]

Craigs research out today rate them a buy with a target price of $7.

[troyvdh]

I wonder if Craigs research have considered that on occasions corrective work done on leaky buildings has been found to be ..well...no better..than the original build.

[trader_jackson]

Craigs research out today rate them a buy with a target price of $7.

Forsyth also updated, $6.80, up just 10 cents.
Neutral rating

You'd think with MET's and SUM's fantastic results, both ahead of Forsyth's forecasts they'd be a bit more optimistic? In the case of SUM, their share price is up barely 4ish percent, despite lifting profit like 50 percent...

[JeremyALD]

Forsyth also updated, $6.80, up just 10 cents.
Neutral rating

You'd think with MET's and SUM's fantastic results, both ahead of Forsyth's forecasts they'd be a bit more optimistic? In the case of SUM, their share price is up barely 4ish percent, despite lifting profit like 50 percent...

There's so much in the media around slowing house prices so I'd expect gains to be slow until sales start picking up again.

[macduffy]

Interim report. Not sure why this is lodged a fortnight after the interim profit announcement?

https://www.nzx.com/files/attachments/254762.pdf

[trader_jackson]

https://hotcopper.com.au/resources/infratil-announces-disposal-of-19-91-pct-stake-in-metlifecare.52713/#.WOYh4YVOL4c

Deal is done... Infratil out, selling at 7.6% discount, which probably isn't that bad given the size of the transaction... next question: what will the opening price be tomorrow?

[kiora]

https://hotcopper.com.au/resources/infratil-announces-disposal-of-19-91-pct-stake-in-metlifecare.52713/#.WOYh4YVOL4c

Deal is done... Infratil out, selling at 7.6% discount, which probably isn't that bad given the size of the transaction... next question: what will the opening price be tomorrow?

Weird,leaving plenty of money on the table again.

[macduffy]

https://hotcopper.com.au/resources/infratil-announces-disposal-of-19-91-pct-stake-in-metlifecare.52713/#.WOYh4YVOL4c

Deal is done... Infratil out, selling at 7.6% discount, which probably isn't that bad given the size of the transaction... next question: what will the opening price be tomorrow?

I'd be surprised if someone doesn't make the market at a small margin above the placement price.

[Beagle]

I'd be surprised if someone doesn't make the market at a small margin above the placement price.

That happened. Worth noting that Z went on to do very well after Infratil sold for ~ $6. Not my most favored stock in this sector but good value at the current price.

[Bjauck]

A site in Botany purchased. A good location close to Howick, which has many potential customers for MET! Although there are two other MET villages close by.
https://www.nzx.com/companies/MET/announcements/300350

[JoeGrogan]

A site in Botany purchased. A good location close to Howick, which has many potential customers for MET! Although there are two other MET villages close by.
https://www.nzx.com/companies/MET/announcements/300350

Interesting, after all the Auckland construction talk going on in the SUM thread. Been some larger volumes on a day to day basis as of late, is it all the ift shares being sold back into the market by the firm that bought them?

Hopefully the SP continues to march back up to the $6 range.

[freebee]

MET feeling a bit unloved, a lot like SUM most of this sector seems to be in the doldrums at present.
An announcement of a new site in Botany barely registered a ripple, then down even more.
I expected it to slowly rise back up after the IFT sell off but as it has turned out IFT did well. I am holding and seems like good value to buy more, but is it?

[JeremyALD]

Retirement stocks (SUM RYM MET) are getting hammered. Probably better to wait and see what happens before buying more.

[trader_jackson]

Retirement stocks (SUM RYM MET) are getting hammered. Probably better to wait and see what happens before buying more.

SUM stocks moved no where, and one moved up to near record highs... I notice you missed out OCA and ARV?
(I know they are dogs, so I guess they still not considered part of the "elitist retirement stocks" that is [and only every will be] sum of the listed retirement companies;))

[JeremyALD]

SUM stocks moved no where, and one moved up to near record highs... I notice you missed out OCA and ARV?
(I know they are dogs, so I guess they still not considered part of the "elitist retirement stocks" that is [and only every will be] sum of the listed retirement companies;))

I specified which retirement stocks I was talking about. All three have dropped by more than 10% in the past three months so I wouldn't suggest into buying into them at the moment. Freebee asked about MET which SUM and RYM are most similar to. No need to be a smartass.

[JoeGrogan]

MET feeling a bit unloved, a lot like SUM most of this sector seems to be in the doldrums at present.
An announcement of a new site in Botany barely registered a ripple, then down even more.
I expected it to slowly rise back up after the IFT sell off but as it has turned out IFT did well. I am holding and seems like good value to buy more, but is it?

I missed timed buying this one just before the ift sale, but its part of my long term portfolio so decided not to take the loss. Looking to double down but gonna wait for a reversal. Probably won't be until the market is more positive on the property an construction sectors too.

[freebee]

Cheers I did pretty much the same and was gutted when the IFT sale was announced shortly after. Talk about timing ! Still thought it would not have dropped as far as it has and may well be more yet. Hopefully pick up some more on the way up.

[JoeGrogan]

Cheers I did pretty much the same and was gutted when the IFT sale was announced shortly after. Talk about timing ! Still thought it would not have dropped as far as it has and may well be more yet. Hopefully pick up some more on the way up.

Yeah i thought it was going to consolidate around 5.70, oh well it should be all good in the long term, hopefully finds support at $5.40.

[dela47]

Yeah i thought it was going to consolidate around 5.70, oh well it should be all good in the long term, hopefully finds support at $5.40.

Starting to see things settle? Or still a way to go we think...? Has taken a fair hit.

[JoeGrogan]

Starting to see things settle? Or still a way to go we think...? Has taken a fair hit.

Hard to say, i'm thinking it will consolidate between 5.40-5.60, a range it seemed to operate within for a couple of months before the HY announcement. Still i don't see a breakout happening unless there is some good news or the sector itself begins to reverse.

[JeremyALD]

Anyone know why MET is up 3% today? I'm not complaining!

[JoeGrogan]

From what i can see MET and SUM seem to drop around June (maybe tax selling) then have a rebound leading up to results in August. Seems to be a good time to buy both.

[macduffy]

From what i can see MET and SUM seem to drop around June (maybe tax selling) then have a rebound leading up to results in August. Seems to be a good time to buy both.

Is there any particular reason why MET - and SUM -should be singled out for tax selling? I think it more likely belated realisation that the anticipated increase in ageing retirees in NZ is a much more important driver of retirement stock fortunes than the ups and downs of the property market.

[percy]

Is there any particular reason why MET - and SUM -should be singled out for tax selling? I think it more likely belated realisation that the anticipated increase in ageing retirees in NZ is a much more important driver of retirement stock fortunes than the ups and downs of the property market.

Agree totally.

[bull....]

Is there any particular reason why MET - and SUM -should be singled out for tax selling? I think it more likely belated realisation that the anticipated increase in ageing retirees in NZ is a much more important driver of retirement stock fortunes than the ups and downs of the property market.

I would have thought property cycle is more important even though retirees are increasing if they cannot sell there property or get the required funds from selling there property they wont be going into a retirement village.

[mondograss]

I would have thought property cycle is more important even though retirees are increasing if they cannot sell there property or get the required funds from selling there property they wont be going into a retirement village.

But there's a lot more retirees looking for a place in a village than there are places in those villages. Hence the providers can command a premium. And that's not going to change. Under supply meets over demand.

[bull....]

But there's a lot more retirees looking for a place in a village than there are places in those villages. Hence the providers can command a premium. And that's not going to change. Under supply meets over demand.

correct but as property sales are declining if you cant sell at a price you might want you might not be able to pay for the village you want

[percy]

Bull.
Not being funny but look at the average prices of houses down your street.
Then figure out whether you think those people who are about 70 years old living in your street would have a mortgage.
Then ring your local retirement village and find out the price of a two bedroom unit.
Get back to me if the unit is over half the price of the oldies current home.

[mondograss]

correct but as property sales are declining if you cant sell at a price you might want you might not be able to pay for the village you want

True that the providers will have to meet the market to some extent, but during the GFC years house prices in real terms only declined 15% and so the retirees that can afford it are likely to still be able to do so (those that can only just afford it now would be the ones squeezed out of that market). So a decline is not going to make as big a dent as people think. Don't forget that even if the provider takes a haircut on the sale of a unit during a recession, they still get the resale in x years time when the property cycle will likely be at a different point. It's not like other businesses where when you sell a product it's gone and you have to make a new one to sell. Excluding the new construction (which they can choose to delay a lot of the time) they're just recycling the same product over and over again to new consumers.

[bull....]

True that the providers will have to meet the market to some extent, but during the GFC years house prices in real terms only declined 15% and so the retirees that can afford it are likely to still be able to do so (those that can only just afford it now would be the ones squeezed out of that market). So a decline is not going to make as big a dent as people think. Don't forget that even if the provider takes a haircut on the sale of a unit during a recession, they still get the resale in x years time when the property cycle will likely be at a different point. It's not like other businesses where when you sell a product it's gone and you have to make a new one to sell. Excluding the new construction (which they can choose to delay a lot of the time) they're just recycling the same product over and over again to new consumers.

Funny thing is NZ property market never had the cycles as have overseas markets , anyway selling a unit at a lesser margin hoping to gain later down the track doesnt take account of the ever higher debt profiles of the sector and the holding costs associated which means later down the track could still mean a loss.