MET - Metlifecare - one for the fundies?

[bull....]

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.

sounds like a ponsi scheme to me percy once all your buddies down the street are gone who gonna be left

[percy]

sounds like a ponsi scheme to me percy once all your buddies down the street are gone who gonna be left

Better check the price of the retirement village unit you want to move into,before your neighbours beat you to it.!
Totally agree with you about the Ponzi scheme.RYM have not been back to their shareholders for more cash since they listed.

[bull....]

also the fact that birth rates in NZ are declining and every politician wants to slow migration down - who gonna be left once baby boomers gone

[bull....]

Better check the price of the retirement village unit you want to move into,before your neighbours beat you to it.!
Totally agree with you about the Ponzi scheme.RYM have not been back to their shareholders for more cash since they listed.

I hope I will be able to stay in my own place as long as possible leave money for my kids instead of giving 30%+ to a retirement village , anyway im quite young so when i reach that age as per my comments above im sure there will be plenty of dis counted units if i do decide to go into a retirement unit.

[percy]

I hope I will be able to stay in my own place as long as possible leave money for my kids instead of giving 30%+ to a retirement village , anyway im quite young so when i reach that age as per my comments above im sure there will be plenty of dis counted units if i do decide to go into a retirement unit.

Yes should happen in about 30+ years time.

ps.At that time the analysts will all be saying "we warned everyone this would happen 55 years ago.".....lol.

[JoeGrogan]

After taking some profits from ATM last week i decided to finally double down on this one making my average a bit more bearable. I figure if there is any time this share will bounce back it is around results season, especially if the company has managed to grow NTA even further then it already is. Forecasted 15% growth on underlying profit for the year is not as great as SUM others but it is good enough for me considering it is trading at a discount to NTA.

Wish me Luck lol :D

[dabsman]

MET receiving no love in this sector the last few weeks. RYM, OCA and SUM are all on good bounces. Not sure why MET isn't enjoying the same sector sentiments?

[huxley]

MET is more exposed to Auckland than the other more diversified agecare providers. It's also not really building on the same scale either.
MET also doesn't have the same great continuum of care that the others have. Customers turning up at their villages with their tennis rackets, with less care needs than the others- OCA in particular.

Result = MET is more of a property business rather than an aged care business, so it lacks the premium valuation.

[tipsy]

MET receiving no love in this sector the last few weeks. RYM, OCA and SUM are all on good bounces. Not sure why MET isn't enjoying the same sector sentiments?

Wondered this myself, low PE, reasonable growth/profits and good cash flow. Looks like all the volume is with OCA at the moment though. Actually been thinking about flicking my ARV and topping up OCA.

Edit: Cheers Huxley, makes sense.

[dabsman]

I'm cycling thru the sector and buying weekly not worrying too much about price thou I do try and buy more when I think one is oversold. Margin account is great to have as my limit grows weekly and gives me capital to jump on something if I don't have cash that week. Buying exclusively retirement sector at present - might win or lose on a weekly price but I don't care

[BlackPeter]

I'm cycling thru the sector and buying weekly not worrying too much about price thou I do try and buy more when I think one is oversold. Margin account is great to have as my limit grows weekly and gives me capital to jump on something if I don't have cash that week. Buying exclusively retirement sector at present - might win or lose on a weekly price but I don't care

Hmm - I obviously assume you know what you are doing.

And yes, I agree, I think as well that retirement stocks in NZ are still a great long term investment (hold some myself).

However during times when share prices world wide appear to be quite dear it might be a good idea to be careful with buying on margin account. If & when the next crash happens will the banks or brokers be quick to get their money back ... and nobody likes to be in a position where they need to realise losses because the banks force them to sell.

While I think that it is likely for retirement stocks to go up mid or long term - nobody can predict what is around the next corner - and if they happen to dip temporarily (like Ryman did after the GFC by more than 40%) - would your bank still be happy to extend your credit?

It is a dangerous world out there - and one of the things which caught recently my attention (there is somewhere a great post from Hoop) is that margin accounts are at peak values similar like short prior to previous crashes.

Anyway - all the best .... just take care with buying on margin account, particularly towards the end of a long bull cycle ...

[dabsman]

I've never over 30% geared and interest is more than covered by dividend so all good. My margin limit is nearly topped out now and I wont apply for more. 40% drop for me is a dream and I'd just keep on buying - don't need the money for 20 years so not really concerned. Do I know what I'm doing? Of course not!

[forest]

MET receiving no love in this sector the last few weeks. RYM, OCA and SUM are all on good bounces. Not sure why MET isn't enjoying the same sector sentiments?

MET has some leaky building issues, I am not sure if the full scale of this has been exposed. But for the mean time one might want to be cautious.
I believe IFT has greatly reduced or maybe totally sold out of MET.

[Beagle]

MET has some leaky building issues, I am not sure if the full scale of this has been exposed. But for the mean time one might want to be cautious.
I believe IFT has greatly reduced or maybe totally sold out of MET.

Good advice there...wood rot has a strange habit of going deeper and further than originally estimated and restoration costs also have a strange habit of significantly exceeding initial estimations. A classic case of "where there's smoke there's fire" I would have thought.

[BlackPeter]

MET has some leaky building issues, I am not sure if the full scale of this has been exposed. But for the mean time one might want to be cautious.
I believe IFT has greatly reduced or maybe totally sold out of MET.

Correct - IFT sold out (with a nice profit). I am however not sure, whether this was a reflection on MET, they just realised that they are (even with 20%) not in a position to direct the company where they want to steer it, they prefer to be in a majority shareholder position.

And yes, you might have a point re the leaky building issue not fully understood ... things like that take time to investigate - and often you need to do quite destructive investigations before you understand the full extend of the issue.

[forest]

Good advice there...wood rot has a strange habit of going deeper and further than originally estimated and restoration costs also have a strange habit of significantly exceeding initial estimations. A classic case of "where there's smoke there's fire" I would have thought.

And it is not just the cost of recladding, fixing wood rot etc. The oldies who live in those places sometimes need to be rehoused for the duration of the repairs.
Its easy to upset those oldies they just don't except any temporary accomodation they can be quite particular. This comes at a cost.

[tipsy]

I'm cycling thru the sector and buying weekly not worrying too much about price thou I do try and buy more when I think one is oversold. Margin account is great to have as my limit grows weekly and gives me capital to jump on something if I don't have cash that week. Buying exclusively retirement sector at present - might win or lose on a weekly price but I don't care

Yeah I'm retirement heavy as well. Holding OCA, SUM, ARV, LIC all solid gains. Was wanting to load up on OCA earlier in the week but have been a bit slow transferring cash.

Who do you have your margin account with?

[dabsman]

ASB. i applied for 100k which I think may be the lowest you can have? Was also nice to see they have OCA at 60% so my limit is rocketing at present ahha

[Beagle]

And it is not just the cost of recladding, fixing wood rot etc. The oldies who live in those places sometimes need to be rehoused for the duration of the repairs.
Its easy to upset those oldies they just don't except any temporary accomodation they can be quite particular. This comes at a cost.

Yes agreed, you and I might be pretty fussy about our surroundings in our late eighties too :) Really the estimate that MET issued a while back, (forget was it about $40 million ?), can only go one way and perhaps quite dramatically too ! Try getting house renovations or additions done in Auckland and see if you can get them done anywhere near budget, nobody does ! Pure speculation on my part but I wouldn't be surprised if the final bill was double or even more :eek2: than the original estimate.

[dabsman]

ASB. i applied for 100k which I think may be the lowest you can have? Was also nice to see they have OCA at 60% so my limit is rocketing at present ahha

Sorry there are 20k and 50k options right up to 1M

[JoeGrogan]

Well comparing to the charts with MET and SUM seems to show that MET is on a better bounce than SUM currently. MET currently at 5.79 appears to have broken above the 90 & 180 MA, whereas, SUM is currently trading at 4.93 is below the 90 MA and level/below the 180 MA.

Appears the sentiment towards SUM is no better than MET. Disc: Holding both.

[BlackPeter]

A one year comparison between SUM (blue) and MET (yellowish) seems to show a different picture ... SUM is nicely ahead ...

But, yes - I agree this comparison is as inconclusive as yours. The difference is disappearing in the noise.

9073

Personally I would at see at this stage less risks with SUM (better building stock, more geographic diversification), but who am I trying to predict the future?

[JoeGrogan]

A 6 month comparison seems to show a different picture... MET is nicely ahead.

I would agree that SUM is in a better position for growth, however, with a higher amount of liabilities to Assets i would think the risk lies there if the economy took a hammering.

[silu]

Pretty happy with the result. Not a stormer like others but trucking along. Should get a nice little bump today.

 Reported net profit after tax of $251.5 million, up 10%
 Underlying profit2 of $82.1 million, up 24%
 Net Tangible Assets (NTA) per share of $6.43, up 21%
 Underlying operating cash flows3 of $51.3 million, up 2%
 235 development units and care beds delivered, up 124%
 Realised development margin of 23%, up from 13%
 Embedded Value4 of $269k per unit, up 29%
 Loan to Value Ratio5 of 4.8%, improved from 6.3%
 Acquisition of new Botany village site in East Auckland
 Final dividend of 5.8 cents per share; total dividend 8.05 cents per share, up 40%.

[dabsman]

I'm pretty happy with it. Happy the divvy increased as it was like pissing with prostate problems previously. I'm only disappointed I didn't double up. I've never understood how this share could trade under NTA

[JoeGrogan]

Pretty happy with the result. Not a stormer like others but trucking along. Should get a nice little bump today.

 Reported net profit after tax of $251.5 million, up 10%
 Underlying profit2 of $82.1 million, up 24%
 Net Tangible Assets (NTA) per share of $6.43, up 21%
 Underlying operating cash flows3 of $51.3 million, up 2%
 235 development units and care beds delivered, up 124%
 Realised development margin of 23%, up from 13%
 Embedded Value4 of $269k per unit, up 29%
 Loan to Value Ratio5 of 4.8%, improved from 6.3%
 Acquisition of new Botany village site in East Auckland
 Final dividend of 5.8 cents per share; total dividend 8.05 cents per share, up 40%.

Pretty happy with Underlying profit up 24%, nice surprise i was only expecting 15%, and NTA now 6.43. Also glad i topped up a few weeks ago.

[Bjauck]

I'm pretty happy with it. Happy the divvy increased as it was like pissing with prostate problems previously. I'm only disappointed I didn't double up. I've never understood how this share could trade under NTA Trying to put that imagery to one side...For some time, it had been comparatively unloved (oversold?) what with IFT selling its stake, having a big presence in Auckland in a consolidating property market, and its leaky buildings issue. So the result is a bit of a relief. I continue to hold.

I bought shares in MET 4-5 years ago, and the dividend yield (on the purchase price) is now equivalent to just over the one-year term deposit rate at a big aussie bank.

[dabsman]

Maybe a bit of upside from some of the brokers picking MET as a good performer this year? Think I saw a Herald article sometime this week?

[JoeGrogan]

Looking forward to results tomorrow, expecting something solid. Hopefully we can get a nice lift to the share price like SUM on Friday.

Was a nice close on Friday (perhaps off the back of SUM results). Good to see the share price bounce back above the 50 day MA could be the start of a nice uptrend if the results are good tomorrow.

[winner69]

Still making heaps of money ...but less than what they made in same period prior.

Real profit (npat) down $109m but Underlying only down $2m ....that’s why people love this Underlying Profit game.

Main reflection of worth / value is Book Value up $44m from June last year

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/314697/275122.pdf

[hardt]

Pretty weak set of results to be honest.

I don't want to sound the Beagle horn... but SUM others leave more to be desired ( also trading on lower multiples )

[Ggcc]

Ouch report for me.... but then hey I’m not invested. Not a bad company but not the same league as Summerset results

[percy]

Ouch report for me.... but then hey I’m not invested. Not a bad company but not the same league as Summerset results

Yet it has been FNZC and Craig's pick of the bunch.?

disc.hold OCA,RYM and SUM.

[Beagle]

Ouch report for me.... but then hey I’m not invested. Not a bad company but not the same league as Summerset results

That SUM's it up perfectly for me.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/314697/275122.pdf
My thoughts. Underlying profit down from $38.6m to $36.2m, ouch !
Looks more like a 2H story to me with new unit delivery skewed very much towards the second half but this bit in the Outlook commentary for FY18 in light of the strong expected 2H is the real disappointment
" Underlying profit is expected to be in line with FY17 for the full year".
Don't know about you folks but I do not invest in low yield companies unless they deliver meaningful growth.
Disc: Own SUM, OCA (RYM PE is too rich for my liking but a great company nonetheless) Don't cover or own ARV.

[JoeGrogan]

Pretty average result to be fair only bright spot really is nta increasing. Glad I hold more SUM than MET.

Was thinking of selling some oca to get some more MET but that won’t be happening I don’t think.

[macduffy]

Market concurs. MET down 22c, SUM up 14c.

[silu]

Yeah I've sold all of mine bar 200 shares. Money needed elsewhere.

[Oliver Mander]

That SUM's it up perfectly for me.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/314697/275122.pdf
My thoughts. Underlying profit down from $38.6m to $36.2m, ouch !
Looks more like a 2H story to me with new unit delivery skewed very much towards the second half but this bit in the Outlook commentary for FY18 in light of the strong expected 2H is the real disappointment
" Underlying profit is expected to be in line with FY17 for the full year".
Don't know about you folks but I do not invest in low yield companies unless they deliver meaningful growth.
Disc: Own SUM, OCA (RYM PE is too rich for my liking but a great company nonetheless) Don't cover or own ARV.

Defo not a great result.

I am invested in ARV, Mr Beagle, but no meaningful update from them until May...although there is normally a 3Q dividend that gets paid during March, which might come with a trading update.
ARV gets more upside from actual care than property, which was one of the 'hooks' for me. Struck me at the time that MET was a little too reliant on its legacy assets (run down) to generate property income, seems to have been borne out by this result.

[Ggcc]

Yet it has been FNZC and Craig's pick of the bunch.?

disc.hold OCA,RYM and SUM.

They will always do well in the long run. Summerset went though this some time back. Right now I think Craig’s and FNZC is wrong

[Beagle]

Defo not a great result.

I am invested in ARV, Mr Beagle, but no meaningful update from them until May...although there is normally a 3Q dividend that gets paid during March, which might come with a trading update.
ARV gets more upside from actual care than property, which was one of the 'hooks' for me. Struck me at the time that MET was a little too reliant on its legacy assets (run down) to generate property income, seems to have been borne out by this result.

Market agrees with our prognosis mate. Met down 30 cents, SUM up 34 cents as of two minutes ago.

Thanks for the heads-up on ARV. I guess the question is how much money is there in the future in caring for the elderly with the new pay equity settlement adding substantially to costs ? The fact that OCA are moving significantly towards an occupation right agreement model for late stage care suggests to get a commercial return in this segment of the market, companies might need to adapt their business model.

Leaky buildings hurt them - http://www.sharechat.co.nz/article/de98a4dc/metlifecare-posts-drop-in-1h-profit-forecasts-fy-earnings-in-line-with-last-year.html?utm_medium=email&utm_campaign=Metlifecare%20posts%20drop%20in%201H% 20profit%20forecasts%20FY%20earnings%20in%20line%2 0with%20last%20year&utm_content=Metlifecare%20posts%20drop%20in%201H%2 0profit%20forecasts%20FY%20earnings%20in%20line%20 with%20last%20year+CID_5d6de7b447addb8b35da7896cb1 5c5df&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlede98a4dcmetlif ecare-posts-drop-in-1h-profit-forecasts-fy-earnings-in-line-with-last-yearhtml

[Bjauck]

44% increase in the interim dividend! A silver lining? Maybe they think the extra costs associated with the leaky buildings fiasco will be a one-off...and income streams will increase.

Auckland and NZ Property prices being at such high multiples of NZ incomes in a low interest rate environment are on sandy foundations?

I’m Still a holder although having made a reduction over the holidays.

[Ggcc]

I am a little surprised that the share price is not lower following their released figures. Maybe people are seeing things I just can’t in comparison to others in this sector

[hardt]

I am a little surprised that the share price is not lower following their released figures. Maybe people are seeing things I just can’t in comparison to others in this sector

Pipeline and a PBV of 0.87 9566

[winner69]

Pipeline and a PBV of 0.87 9566

Maybe it’s Glen sowry’s presence holding back the MET share price these days

Chart since floating not that bad ...and every sector needs an unloved laggard and MET is that in the retirement sector. Just not sexy enough

[hardt]

Maybe it’s Glen sowry’s presence holding back the MET share price these days

Chart since floating not that bad ...and every sector needs an unloved laggard and MET is that in the retirement sector. Just not sexy enough

I would agree, not too sexy, but everyone's idea of *sexy* is vastly different from the rest...

Still plenty of value left to come out of MET... I find that a little bit sexy.

[Scrunch]

I would agree, not too sexy, but everyone's idea of *sexy* is vastly different from the rest...

Still plenty of value left to come out of MET... I find that a little bit sexy.

I recently bought a few after comparing the alternatives. My take on it was that most of the sector profitability comes from three sources - development margins on new build, and margins achieved on resale of units and upwards revaluations of the portfolio. Compared to SUM others, MET has similar development margins and is doing well on unit resales. Revaluation gains should also be broadly similar. What MET doesn't have is scale on its development activities. If this is developed, there's a lot of upside in the share price. As per the build chart from Hardt, they are increasing activity in this area, but still not to the extent of SUM others. You are buying into essentially a property company at a small discount to NTA, not a near double multiple. If profitable development activities step up over the next 3-5 years there's potential for the share price to increase a lot. SUM others need a strong development pipeline just to support the current share price.

[Ggcc]

Can someone set up a thread to discuss all the retirement villages and to where they see them being valued at in 5 years time. Which do people value as cheaper or more expensive

[Investor]

Can someone set up a thread to discuss all the retirement villages and to where they see them being valued at in 5 years time. Which do people value as cheaper or more expensive

You are welcome to create a thread

[Ggcc]

You are welcome to create a thread
Absolutely if I knew how

[peat]

Absolutely if I knew how

Click on NZX as shown

9568

Then click on Post New Thread as shown
9569

I hope this helps

[Ggcc]

Jeez this share has taken a dive over the last few weeks. Maybe it’s getting closer to true value?

[macduffy]

Jeez this share has taken a dive over the last few weeks. Maybe it’s getting closer to true value?

Ah, now! True Value, a bit like beauty, in the eyes of the beholder!

Or do you have a specific number in mind for MET?

[kiora]

Ah, now! True Value, a bit like beauty, in the eyes of the beholder!

Or do you have a specific number in mind for MET?

Chart doesn't look good.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11833814
I wondered at the time why so much appeared to be left on the table

[Ggcc]

Ah, now! True Value, a bit like beauty, in the eyes of the beholder!

Or do you have a specific number in mind for MET?
I would be more inclined to feel better at around $5.30. I don’t see this company as a bad company, just slightly overpriced for the % growth it is doing per annum. SUM are growing a lot faster.......

[trader_jackson]

wow NPAT down 50%
makes sum others who have had NPAT drops look pretty good

[winner69]

Met every target they set and record underlying profit

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/322809/285401.pdf

[winner69]

wow NPAT down 50%
makes sum others who have had NPAT drops look pretty good

That’s what happens as property prices soften

OCA only increased NPAT a bit when adjusted for interest ....next year could see a fall in npat

[trader_jackson]

Met every target they set and record underlying profit

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/322809/285401.pdf

But but, NPAT down 50% winner?
I thought NPAT was the one you looked at most? Nevermind about other records
Although sum others like to, arguably, change the goal posts when it comes to reporting deliveries, in sum cases to beat IPO prospectus, they all pretty much set records every time they announce results... even that dog of a company that listed in late 2014

[King1212]

But but, NPAT down 50% winner?
I thought NPAT was the one you looked at most? Nevermind about other records
Although sum others like to, arguably, change the goal posts when it comes to reporting deliveries, in sum cases to beat IPO prospectus, they all pretty much set records every time they announce results... even that dog of a company that listed in late 2014

classic!:D

[winner69]

But but, NPAT down 50% winner?
I thought NPAT was the one you looked at most? Nevermind about other records
Although sum others like to, arguably, change the goal posts when it comes to reporting deliveries, in sum cases to beat IPO prospectus, they all pretty much set records every time they announce results... even that dog of a company that listed in late 2014

Still made a decent profit

Value of company (book value) up 8% from a year ago

[percy]

Still madeca decent profit

Value of company (book value) up 8% from a year ago

They appear to be "on course" ,so like all in this sector,a sound future .

[kiora]

Sound future?
"leaky building bills, Sowry said repairs were expected to cost $46.1m"

[Beagle]

Interesting point of difference between this and the others. A really substantial number of their villages by value are in Auckland unlike SUM others that are spread throughout N.Z. The net result is that if Auckland property is flat their NPAT (for those that like to use this metric) is hit harder than retirement companies with a much better geographic spread. The average age of their units is also significantly older which is an other interesting point of difference as is their leaky building repair bill. All that said I think its a pretty solid result.

[Joshuatree]

NZ’s second-largest village operator Metlifecare flags possible Australian expansion (https://www.theweeklysource.com.au/nzs-second-largest-village-operator-metlifecare-flags-possible-australian-expansion/)

[limmy]

This could be good news for MET, as it might cause the investing public to view MET more favourably than they have done so.

[winner69]

This could be good news for MET, as it might cause the investing public to view MET more favourably than they have done so.

I doubt it limmy. If anything it might be negative for them .....you know going to Australia is risky etc etc.

MET as a stock has found its place in the sector pecking order and that’s unlikely to change.

[macduffy]

Whichever way it goes I expect that the NZ Super fund will have a big say in the final decision. Can't ignore a 20% shareholder entirely!

[winner69]

Craig’s interview MetLife CEO

https://craigsip.com/insights/overview/2018/09/ceo-interview-metlifecare?utm_source=insights-enews-210918&utm_medium=enewsletter&utm_campaign=insights-enews-210918&utm_content=metlifecare-video&_cldee=cHhtMjk5QHlhaG9vLmNvbS5hdQ%3d%3d&recipientid=lead-2fc7192e098fe7119408005056a36616-9bd4af60468949acb9f60512313a3bb3&esid=ae113d81-19bd-e811-940f-005056a36616

[winner69]

Bit sad MET Board thinking of a share buy back to generate a bit more excitment.

Obviously a bit peeved more punters don’t think MET is the bee’s knees of retirement companies.

Maybe it’s the 61 shareholders owning 90% that puts them off.

Will it make much difference?

http://www.sharechat.co.nz/article/ebf12fe4/metlifecare-considering-buyback-to-lift-share-price.html

[Beagle]

Bit sad MET Board thinking of a share buy back to generate a bit more excitment.

Obviously a bit peeved more punters don’t think MET is the bee’s knees of retirement companies.

Maybe it’s the 61 shareholders owning 90% that puts them off.

Will it make much difference?

http://www.sharechat.co.nz/article/ebf12fe4/metlifecare-considering-buyback-to-lift-share-price.html
My Thoughts.
Remediation work for MET old units with moisture ingress and other issues is almost certain to cost substantially more than MET have already provided in their accounts.

The average age of MET's units is the oldest in the industry so there is probably imbedded deep cycle maintenance issues elsewhere.

The concentration of their villages in the Auckland area is I believe the highest in the industry.

The vast majority of their villages do not offer much other than independent living. They are the diametric opposite of RYM's full continuum of care model which is the security of continuum of care that older folks are really looking for.
You are right Winner that it is sad they are looking at a buyback because its sad that they don't realise that the market is trying to tell them that the product they're offering is substandard to what people really want.

The market is not as stupid as MET directors think it is.

[silu]

fwiw I did a trip around Auckland looking at retirement villages from the outside just to get an overlook of things. As Beagle noted I have noticed the MET's units did look more in need of maintenance as others. After that I have sold almost all of my holdings in MET. Sometimes numbers can't give someone a clear enough picture.

[WAIKEN]

I think the buy back is to defend a potential takeover. Only a few instos need to be appraoched by a suitor to get over 50% support

[Maverick]

My Thoughts.
Remediation work for MET old units with moisture ingress and other issues is almost certain to cost substantially more than MET have already provided in their accounts.

The average age of MET's units is the oldest in the industry so there is probably imbedded deep cycle maintenance issues elsewhere.

The concentration of their villages in the Auckland area is I believe the highest in the industry.

The vast majority of their villages do not offer much other than independent living. They are the diametric opposite of RYM's full continuum of care model which is the security of continuum of care that older folks are really looking for.
You are right Winner that it is sad they are looking at a buyback because its sad that they don't realise that the market is trying to tell them that the product they're offering is substandard to what people really want.

The market is not as stupid as MET directors think it is.

I wonder if there will be any rationalisation/takeovers in the retirement sector, surely there will be at some stage.(whs-Noel lemmings, db-tuatara,Westpac-trusbank,thl-apollo?)
While it's been a while since I've personally done any billion dollar deals I reckon MET should make a pass at OCA. Get on the phone to Maquarie to see if there willing to trade.
Now , to be upfront I've made llittle personal effort in finding out properly about MET , but if Beagles post above is a fair representation (I'm sure it would be) then I see the two dovetailing nicely to leap frog up the ladder;
Oca is more spread over the country than Auckland to spread risk for MET.
Oca is largely 'late stage care" focused and Met could feed into them from their villa's where locations allow,
Met has very low debt and large enough to swallow up Oca while it's selling for virtually asset backing, with a couple of consents thrown in to boot.
The combined experience of the two making over units could work nicely together.
buying oca would be cash acreditive.
And lastly.......if you get on the phone right now,more than a third of OCA up for sale.

well , I tried to look out there for other opportunities other than OCA on snow leopards suggestion , and end up back at square one.

[Bjauck]

Given the negativity surrounding it and the underperformance of MET's SP compared with other NZ retirement/property stocks over the past 2 to 3 years much of its bad news may have been well factored in. MET itself may be a more likely takeover target as opposed to being an acquirer.

However as NZ exchange listed companies have either been decamping for overseas exchanges or being bought up by overseas investors, it could be that any acquisitions of NZ based companies will be by foreign concerns. Given the expensive land values in NZ, it could well be that even foreign investors may keep clear of making acquisitions of NZ companies with substantial investments in NZ real estate?

[Beagle]

Not a good idea to mix bad wine with good wine Maverick. The directors of MET simply don't "get it" that what their villages offer is not what retiring people want.
They need to modernise their existing villages to offer at least a reasonable continuum of care model.

[Bjauck]

Not a good idea to mix bad wine with good wine Maverick. The directors of MET simply don't "get it" that what their villages offer is not what retiring people want.
They need to modernise their existing villages to offer at least a reasonable continuum of care model.
I am not sure what the benefit is of "continuum of care". My only experience is of my parents' friend who was resident of a village with a full range of rest home and hospital level care facilities. She had an OCA for a serviced apartment but When she required hospital level care she had to move out of her village and into another facility with a hospital vacancy.

As far as I can see "continuum of care" is of benefit if you are in a position to be able to wait until a vacancy opens up in the hospital or rest home facilities in your village. However what proportion of people needing care are able to wait it out?

disc: oca and met holder

[Beagle]

I am not sure what the benefit is of "continuum of care". My only experience is of my parents' friend who was resident of a village with a full range of rest home and hospital level care facilities. She had an OCA for a serviced apartment but When she required hospital level care she had to move out of her village and into another facility with a hospital vacancy.

As far as I can see "continuum of care" is of benefit if you are in a position to be able to wait until a vacancy opens up in the hospital or rest home facilities in your village. However what proportion of people needing care are able to wait it out?

disc: oca and met holder

Possibly best to ask a Ryman shareholder mate but I believe that whilst there's no guarantees that one can shift when they need to as their needs change, I understand existing residents within a village generally get first dibs on more advanced care spaces as compared to outsiders coming from say a MET village hoping to get a space.
I know for some Ryman villages a couple might move from an independent living 2-3 bedroom townhouse down to a non serviced or serviced apartment and then one or other as needs arise to hospital or dementia level care. Ryman don't charge commissions on downsizing like SUM other companies do. I think it just gives extra peace of mind but as you suggest there possibly are no guarantees or timing but I presume one's condition generally changes somewhat gradually. On the other side of the ledger someone coming from a wholly independent living village at MET is possibly like a beggar trying to beg to get into a new care suite and may have to shift well out of the area to get one, (which can be tough on the remaining partner still living independently especially if they can't drive to visit their partner)

[Bjauck]

The ability to downsize without incurring extra commissions and also to switch to a different village within the same company could be planned ahead with the gradual degeneration that often comes with advancing years.

However when it comes to the care facilities, the final deterioration/accident requiring full care at rest home or hospital level seems less predictable. Also government subsidies available in such situations can only be made available when the need actually arises. A person is less likely to want put their name on a waiting list to move into a high level of care before it is necessary - and when it is necessary, it is an urgent situation especially where the need is for hospital-level care.

[Beagle]

Thing is MET aren't really providing much assurance with late stage care...the vast majority of their villages are independent living with some assistance only.
Retired folk want peace of mind (which is a valuable commodity) that care facilities are going to be there when they need them. MET simply isn't perceived to be meeting their needs and the directors seem slow to understand that peace of mind is what elderly people want.

This is one of the reasons the shares are trading at a fairly significant discount to NTA now which I calculated at 25% yesterday. Is that a big enough discount to get me interested in owning MET ?. Not really because I don't really believe in their business model but 35-40% discount to NTA might be more interesting.

[dobby41]

Possibly best to ask a Ryman shareholder mate but I believe that whilst there's no guarantees that one can shift when they need to as their needs change, I understand existing residents within a village generally get first dibs on more advanced care spaces as compared to outsiders coming from say a MET village hoping to get a space.
I know for some Ryman villages a couple might move from an independent living 2-3 bedroom townhouse down to a non serviced or serviced apartment and then one or other as needs arise to hospital or dementia level care.
There is also the possible need to have a few days or weeks in care which Ryman allow for - move from villa to hospital for a wee bit then back. Your partner is then able to visit more easily as you are still in the village.
A more holistic care model.

[Bjauck]

There is also the possible need to have a few days or weeks in care which Ryman allow for - move from villa to hospital for a wee bit then back. Your partner is then able to visit more easily as you are still in the village.
A more holistic care model.

As long as there are vacancies in the on-site hospital when you need to take a break that sounds great.

If not part of arranged respite care, I presume you would have to pay for your stay in the hospital unless you have been appropriately needs assessed and a rest home subsidy provided and the extra hospital level care funded by the Health Board?

i get the continuum of care model up to the level of serviced apartments but beyond that seems more like a lottery as to whether a care bed will be available on site at the time when the need for one presents itself.

[Beagle]

As long as there are vacancies in the on-site hospital when you need to take a break that sounds great.

If not part of arranged respite care, I presume you would have to pay for your stay in the hospital unless you have been appropriately needs assessed and a rest home subsidy provided and the extra hospital level care funded by the Health Board?

i get the continuum of care model up to the level of serviced apartments but beyond that seems more like a lottery as to whether a care bed will be available on site at the time when the need for one presents itself.

I understand your concerns regarding late stage care and also believe a real shortage is coming in the years ahead which is one of the reasons why I have focused my investment in this sector on OCA who of course specialise in that area. With OCA's very cheap metrics, compelling business model, excellent management and care reputation I don't see the merit in having a differentiated holding within this sector any more.

[mondograss]

An interesting read:
https://www.stuff.co.nz/business/109675195/inside-new-zealands-retirement-villages-when-the-resort-promised-isnt-reality
I had heard anecdotally that the Poynton was terribly snobby with the original cohort of residents being a very strong clique that made life rather difficult for anyone new coming in. So I suspect there's a few grains of salt required to be taken with this story.

[dobby41]

An interesting read:
https://www.stuff.co.nz/business/109675195/inside-new-zealands-retirement-villages-when-the-resort-promised-isnt-reality
I had heard anecdotally that the Poynton was terribly snobby with the original cohort of residents being a very strong clique that made life rather difficult for anyone new coming in. So I suspect there's a few grains of salt required to be taken with this story.

A very interesting read!
I learnt something new
"Should residents' physical or mental health deteriorate to the point where they can no longer pass the medical test, their agreement can be terminated."

[Beagle]

A very interesting read!
I learnt something new
"Should residents' physical or mental health deteriorate to the point where they can no longer pass the medical test, their agreement can be terminated."

That should cause some considerable concern as there is a major vested interest and financial incentive for the company to declare someone unfit for living in an independent unit especially if there is a waiting list of new entrants for the village in question. Can you can trust their independence and objectivity in the circumstances ?

[Raz]

That should cause some considerable concern as there is a major vested interest and financial incentive for the company to declare someone unfit for living in an independent unit especially if there is a waiting list of new entrants for the village in question. Can you can trust their independence and objectivity in the circumstances ?

Its a very large issue, the overall sector has some also other real gaps, the hospital units are limited and the real shortage in the system is specialist dementia care.

[Bjauck]

Its a very large issue, the overall sector has some also other real gaps, the hospital units are limited and the real shortage in the system is specialist dementia care.
It would be an issue especially for an independent spouse with an ORA in a particular village but whose partner needs to move elsewhere to get appropriate care.

Do all retirement companies have the requirement to pass a medical test to continue to be able to live in an independent unit?

[Joshuatree]

https://www.stuff.co.nz/business/109...d-isnt-reality (https://www.stuff.co.nz/business/109675195/inside-new-zealands-retirement-villages-when-the-resort-promised-isnt-reality)
"The vibrant mixed age community they had bought into began to feel like a rest home, the very thing that the Joneses chose The Poynton to avoid. The four had chosen a lifestyle village for active retirees, not a facility for people unable to look after themselves independently."

Minimum age raised from 55 to 70, that would stink for folks who bought in for an active lifestyle community.

[percy]

We looked at retirement villages in our area earlier this year,before buying our new house.The wife and I are both 69.
Two things put us off.One was the residents looked a lot older than us.
The other was lack of private space,ie you could not sit outside without being on view.As we often look after one of the daughters' small dog, we needed a courtyard.

[Beagle]

Its a very large issue, the overall sector has some also other real gaps, the hospital units are limited and the real shortage in the system is specialist dementia care.

Which is why I prefer to invest in OCA which specializes in and has arguably the best reputation for late stage care. Couta1 knows the sector, OCA and its dementia capabilities very well and likes OCA a lot.

[winner69]

Metlifecare today reported “a strong financial result”

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/330988/295528.pdf


All honky dory in the retirement sector

[winner69]

Incident in one of their villages

http://wellington.scoop.co.nz/?p=116765

[Onion]

Yay - one of the NZX top performers today - up 3.8%.

Just don't remind me that it is down over 16% this FY! What do they say about hindsight?

[dreamcatcher]

Yay - one of the NZX top performers today - up 3.8%.

Just don't remind me that it is down over 16% this FY! What do they say about hindsight?

Took a small position this week and looks like I got the bottom but time will tell........:t_up:

[macduffy]

MET's underperformance has analysts scratching their heads.

http://www.sharechat.co.nz/article/8d8fce5e/the-conundrum-of-metlifecare-s-discount-while-peers-trade-at-a-premium.html

[SilverBack]

My Mother went into a Metlifecare villa. Talk about a sharp-arsed manager - all she could think of was money. My Mother lived OK but the screws came on when she got sick and most particularly after after she left. I was tempted to order a load of dung to be dumped on her driveway - tempted but not followed through on.

[Elles]

A link to this popped up in my direct broking account - bit of (paid?) advertisement targeting some more investors!

https://www.directbroking.co.nz/directtrade/secure/videocontent.aspx?VideoID=1 (https://www.directbroking.co.nz/directtrade/secure/videocontent.aspx?VideoID=1)

[psychic]

Must be good value here at $4.35, surely? I sold at this year's ago. Buying.

[mondograss]

Must be good value here at $4.35, surely? I sold at this year's ago. Buying.

You might want to wait until the chart pulls out of its present nosedive first perhaps. How are they getting on with all their leaky buildings?

[psychic]

Sage advice there Mondo. But I'm thinking the thing is way oversold, at a ridiculous discount to NAV (leaky buildings priced in after all this time surely? ), resales exceeding valuations, high occupancy rates, beaut forward build program and at a terrific p/e. What could go wrong...

[mondograss]

Sage advice there Mondo. But I'm thinking the thing is way oversold, at a ridiculous discount to NAV (leaky buildings priced in after all this time surely? ), resales exceeding valuations, high occupancy rates, beaut forward build program and at a terrific p/e. What could go wrong...

It probably is oversold, but at present it looks like it could continue to be oversold (or even more so) for a while yet so I wouldn't rush to buy. I expect the leaky building issues are priced in unless they go over budget on repairs or find more, which is always possible. Also probably some of the market uncertainty is weighing on them a little (as it is with most of the sector) so I wouldn't actually expect that downtrend to perk up again until we see some more signs of life in the overall real estate market.

[winner69]

Sage advice there Mondo. But I'm thinking the thing is way oversold, at a ridiculous discount to NAV (leaky buildings priced in after all this time surely? ), resales exceeding valuations, high occupancy rates, beaut forward build program and at a terrific p/e. What could go wrong...

It’s been like that for years ....a few say the same things about SUM being so ‘cheap’ v RYM

So what’s going to change the market sentiment?

[BlackPeter]

It’s been like that for years ....a few say the same things about SUM being so ‘cheap’ v RYM

So what’s going to change the market sentiment?

Isn't the old saying that SP follows EPS? The underdogs just need to continue their good earnings for a long enough time ;);

[winner69]

Isn't the old saying that SP follows EPS? The underdogs just need to continue their good earnings for a long enough time ;);

Maybe that’s an old wife’s tale ;);)

MET share price possibly will follow earnings .......but possibly will still be trading below NTA etc etc in years to come, just like it has for years

[noodles]

For those interested in MET, Glen Sowry will be presenting next week
https://www.sharetrader.co.nz/showthread.php?10844-NZSA-Auckland-Meetings-and-Events&p=763895#post763895

[winner69]

Reasonably solid result from MET

Notice how fair value adjustments (revaluations) these days aren’t as great as the past few years — an indication of where Underlying Earnings May be heading in the next few years

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/339727/306132.pdf

[bull....]

Reported net profit after tax was $39 million, below last year largely due to lower unrealised fair value gainsin a slower real estate market

sums it up

[Beagle]

Reasonably solid result from MET

Notice how fair value adjustments (revaluations) these days aren’t as great as the past few years — an indication of where Underlying Earnings May be heading in the next few years

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/339727/306132.pdf

Very different result than SUM. What we see with MET is much higher expense growth and much lower revaluation growth driven by their concentration of units in Auckland.
I don't see any reason to hold these apart from the deep discount to NTA. But what are they going to do about that, if anything ?

[winner69]

Very different result than SUM. What we see with MET is much higher expense growth and much lower revaluation growth driven by their concentration of units in Auckland.
I don't see any reason to hold these apart from the deep discount to NTA. But what are they going to do about that, if anything ?

They (MET) can’t do much about that discount ....the market per se decides .....just like the relative prices of RYM and SUM

[Beagle]

They (MET) can’t do much about that discount ....the market per se decides .....just like the relative prices of RYM and SUM

What about an on market share buyback ? I think the huge drop in Net Profit after tax is a real heads-up about future underlying profit which hasn't be growing at a flash rate at all before this so the outloo0k appears to be quite muted.

[Beagle]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12261839
Only $18m spent so far to 30 June 2019 on fixing past weathertightness issues of a total planned now to be $64m
Last time I looked at this the total remediation works were estimated in the mid $40m range. I would thus expect this to rise into the $80-90m range as time goes on.
Wood rot a horrible thing, the deeper you dig the more you find and lets face it, its impossible to accurately forecast remediation work costs for one house let alone a substantial number of different units spread across a number of different villages.
Head of development has left. Deep discount to NTA is not a new thing by any means. Underlying earnings $90.5m on 213.3m shares gives 42.42 cps which on $4.38 gives an underlying PE of just 10.3 so its cheap but I think its cheap for good reasons and with a massive drop in reported net profit after tax, a potender for reduced underlying profits in future years this is one free forward warning sign of a possible value trap...
I don't see where the catalyst is for a share price rerating, does anyone else ?

[Beagle]

http://www.sharechat.co.nz/article/318538c5/metlifecare-eschews-a-share-buyback-for-investing-in-growth.html?utm_medium=email&utm_campaign=Metlifecare%20eschews%20a%20share%20b uyback%20for%20investing%20in%20growth&utm_content=Metlifecare%20eschews%20a%20share%20bu yback%20for%20investing%20in%20growth+CID_53cbee34 086b238cde858b14c5df63be&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle318538c5metlif ecare-eschews-a-share-buyback-for-investing-in-growthhtml

What am I missing ? They think they've just reported a strong result, what's strong about it ?
The CEO and directors think its better to invest in building new units and make say approx. 25% development gains going forward than buying shares at $4.36 and make a 50%+ gain if they can get the shares back to NTA. Buy-back means less shares on issue and is quite obviously more eps accretive than building new units, surely this is perfectly obvious to anyone capable of putting numbers into a calculator ?. I think the board are in denial about the seriousness of the discount to NTA issue.
Expenses have also grown at quite an alarming rate too. I think those two things mean this is a very good stock to avoid in this sector.

[macduffy]

Fair enough, Beagle. But the board's main concern isn't the shareprice, but building a sustainable, profitable business.

[forest]

http://www.sharechat.co.nz/article/318538c5/metlifecare-eschews-a-share-buyback-for-investing-in-growth.html?utm_medium=email&utm_campaign=Metlifecare%20eschews%20a%20share%20b uyback%20for%20investing%20in%20growth&utm_content=Metlifecare%20eschews%20a%20share%20bu yback%20for%20investing%20in%20growth+CID_53cbee34 086b238cde858b14c5df63be&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle318538c5metlif ecare-eschews-a-share-buyback-for-investing-in-growthhtml

What am I missing ? They think they've just reported a strong result, what's strong about it ?
The CEO and directors think its better to invest in building new units and make say approx. 25% development gains going forward than buying shares at $4.36 and make a 50%+ gain if they can get the shares back to NTA. Buy-back means less shares on issue and is quite obviously more eps accretive than building new units, surely this is perfectly obvious to anyone capable of putting numbers into a calculator ?. I think the board are in denial about the seriousness of the discount to NTA issue.
Expenses have also grown at quite an alarming rate too. I think those two things mean this is a very good stock to avoid in this sector.

Agree with you Beagle, look at the impairments on page 20 of the annual report, MET seem to have a few problems with their core business model.

[Beagle]

Thanks for that forest and I agree that those construction cost overruns on page 20 are very serious and indicative of possible systemic problems within the companies development model. In addition their head of development is leaving and getting a replacement that's really good is by no means a simple process...no point in hiring any former Fletcher manager lol. Plenty of unsold stock on the books and a lot of it is in Auckland.

[Beagle]

Had a good read of the annual report yesterday and tried to like these because on a TA basis it looks like they might be building a base around the current level.
Discount to NTA, Its cheap for sure at around $4.40 and I tried to like it because on a forward PE basis they might be on only 10 which is dirt cheap on an earnings basis but until they can get their development model working properly and make a top hire for their head of development, I don't see the catalyst from the breakout of this malaise they're in.

SUM have a vastly superior track record and although priced at a premium to NTA and around 13 times 2019 earnings are well and truly worth the PE premium.
I really tried to like this one...but I can't bring myself to invest in something just because its cheap.

[dabsman]

I reckon a takeover target - like it better now Beagle?

[Beagle]

LOL... I think FCNZ tried to fly that kite a while back.

[dabsman]

Under NTA. Brilliant locations and plenty of brownfield potential. Redevelop sites to include continuum of care and sit back and watch the money roll

[Beagle]

Looking at the chart, it definitely looks like its built a fairly solid base over the last 3-4 months around the mid $4 level and has now broken up through the 100 day MA.
NTA is just on $7 so it is very cheap and I have a lot of SUM already so I have taken a small nursery position in this one as the forward PE is only ~ 10 and the discount to NTA is so big. Probably regret it, (stop loss set at $4.35), but its just a small punt, lets see how we go.

PS I bought some more SUM today as well :)

[winner69]

Looking at the chart, it definitely looks like its built a fairly solid base over the last 3-4 months around the mid $4 level and has now broken up through the 100 day MA.
NTA is just on $7 so it is very cheap and I have a lot of SUM already so I have taken a small nursery position in this one as the forward PE is only ~ 10 and the discount to NTA is so big. Probably regret it, (stop loss set at $4.35), but its just a small punt, lets see how we go.

PS I bought some more SUM today as well :)

Nursery and old folks home - good combo

I knew you couldn't resist the temptation - its been burning a hole in your pocket for so long

Get BlackPeter on board -that'll confirm MET as a real value play

[couta1]

Come on Beagle show SUM balls and go Coutaish.

[winner69]

MET shareprice turned down when SUM collapsed from its highs

SUM share price has turned up - MET hasn't as yet ...but no doubt will

Good timing Beagle - guru you are but may regret not doing the coutaish thing

[Beagle]

Nah, We've got a truckload of money in the Auckland property market already and MET's properties are mostly in Auckland. Makes no sense to go too much bigger but might double down on the original small punt if the emerging share price uptrend continues... Lets see what they have to say at next weeks annual meeting on 24th.

You guys know what they say about a rising tide lifting all boats, heck even OCA up today !

[winner69]

Shareprice gone gangbusters today ..up 4%

Beagle once again looks like he’s picked the bottom ...and he told us as well.

[Beagle]

$30 million buy-back announced today. $500m of developments over the next 3 years. NTA just on $7.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/343191/310478.pdf
"Hounded" up a few more today.

[winner69]

MET is going to be the star of the retirement sector stocks over the next year

Could be a good move reducing SUM and RYM and going overweight MET

Maybe thats happening going by today’s movements in these stocks.

Instos love getting their way

[Beagle]

Was too cheap eh. Even though I didn't want too my nose for a feed was screaming at me to buy. Chart provides quite a bit of encouragement now as does the buy-back.
Not selling my SUM though. My sense here is a patient dog should get a good feed. http://www.sharechat.co.nz/article/e2415235/metlifecare-changes-tack-on-share-buyback-after-robust-feedback.html

Wonder if this is some of the robust feedback they are referring too ? Posted 27 August 2019

What am I missing ? They think they've just reported a strong result, what's strong about it ?
The CEO and directors think its better to invest in building new units and make say approx. 25% development gains going forward than buying shares at $4.36 and make a 50%+ gain if they can get the shares back to NTA. Buy-back means less shares on issue and is quite obviously more eps accretive than building new units, surely this is perfectly obvious to anyone capable of putting numbers into a calculator ? I think the board are in denial about the seriousness of the discount to NTA issue..
Expenses have also grown at quite an alarming rate too. I think those two things mean this is a very good stock to avoid in this sector. Beagle

I didn't hold back lol

[Beagle]

MET is going to be the star of the retirement sector stocks over the next year..
I think you're probably right. Looking to add even more...should have "done a Couta" in the first instance
https://www.tvnz.co.nz/one-news/new-zealand/has-aucklands-property-bounce-already-started?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Friday+25+O ctober+2019

[couta1]

I think you're probably right. Looking to add even more...should have "done a Couta" in the first instance
https://www.tvnz.co.nz/one-news/new-zealand/has-aucklands-property-bounce-already-started?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Friday+25+O ctober+2019 Well I was encouraging you that way a couple of weeks back, you spotted the opportunity so should have backed yourself.

[dabsman]

I've been buying a lot (well for me) in the 4's. I really didn't care to much about anything except the deep discount to NTA. I assumed that it could become a takeover target. Anyway share price movement is share price movement in the end

[winner69]

Well I was encouraging you that way a couple of weeks back, you spotted the opportunity so should have backed yourself.

Couts, I think beagle was really worried about the leaky buildings problem and that put him off

Obviously not a worry anymore

[Beagle]

Well I was encouraging you that way a couple of weeks back, you spotted the opportunity so should have backed yourself.

I've known for weeks that I'm doing a real Couta on Barramundi warrant exercise today, I can't do a Couta everywhere mate or I'll turn into one :p
Leaky buildings still a problem, of course, but the discount to NTA already encapsulates that issue they're steadily working through, many times over...

[sb9]

Couts, I think beagle was really worried about the leaky buildings problem and that put him off

Obviously not a worry anymore

Well, there was big crossing earlier of 1.3ml share at $4.76 each. Buy back might help, but still systemic issues lie there.

[winner69]

When is Oceania going to do a buyback ....seems the thing that laggards do these days

[Beagle]

They have there 4-5 year program they're steadily working their way through on remediation issues and they're certainly not the only retirement village operator with problem buildings to fix. Discount to NTA in my opinion is because a lot of people took a very negative view on Auckland property prices and where they were headed and thought we would follow Sydney and Melbourne. Emerging evidence all round including in Sydney and Melbourne that the bottom is in and we're on the up and up.
More details on buy-back next month. In the meantime, no worries :t_up:

[couta1]

When is Oceania going to do a buyback ....seems the thing that laggards do these days Macca dont want to eat any more peanuts, he wants to spit them out.

[Beagle]

When is Oceania going to do a buyback ....seems the thing that laggards do these days

Maybe SUM other company might do one seeing as they're still more than a dollar less than this time last year despite growing earnings heaps.

[winner69]

At least MET are getting the cash for the buyback from selling something ...better than borrowing even though they say they have a ‘robust’ balance sheet

No doubt most punters believe buybacks are the bees knees

[winner69]

Auckland house prices to boom

Auckland's next house price boom could be on the verge of taking off, leading to warnings to first-home buyers to buy now or risk being locked out of the market forever.



https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12280515

It’s a Westpac economist report so take it with a grain of salt but whatever it’s the sort of news MET Shareholders love

[Balance]

Auckland house prices to boom

Auckland's next house price boom could be on the verge of taking off, leading to warnings to first-home buyers to buy now or risk being locked out of the market forever.



https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12280515

It’s a Westpac economist report so take it with a grain of salt but whatever it’s the sort of news MET Shareholders love

Irresponsible recommendation imo.

So says the bank economists who are anxious about their jobs due to the disproportionate exposure their banks have lent to the housing sector.

Wonder why the banks are putting the squeeze then on developers and land bankers (who have borrowed money from them) to sell down developments and land to pay down debts.

Surely the market taking off will take care of the problem?

Interesting, isn't it?

[Bjauck]

Irresponsible recommendation imo.

So says the bank economists who are anxious about their jobs due to the disproportionate exposure their banks have lent to the housing sector.

Wonder why the banks are putting the squeeze then on developers and land bankers (who have borrowed money from them) to sell down developments and land to pay down debts.

Surely the market taking off will take care of the problem?

Interesting, isn't it?

Capital Gains Tax risk has gone or been reduced considerably.
Interest rates are lower and likely to stay low.
kiwisaver is taxed.
NZ Sharemarket has been hollowed out - many big companies have relocated overseas.

So Tax free capital gains from residential housing is still the main avenue for household savings?

[Balance]

Capital Gains Tax risk has gone or been reduced considerably.
Interest rates are lower and likely to stay low.
kiwisaver is taxed.
NZ Sharemarket has been hollowed out - many big companies have relocated overseas.

So Tax free capital gains from investor residential housing is still the main avenue for household savings?

No overseas money coming into real estate due to the overseas buyers' ban - acknowledged by all real estate participants as the biggest driver of ever rising property prices in NZ until the ban kicked in.

Example of land/sections for Africa begging for buyers :

https://www.auranga.co.nz/masterplan/

https://www.trademe.co.nz/Browse/CategoryAttributeSearchResults.aspx?search=1&cid=5748&sidebar=1&rsqid=10bd1155971845229f9a046ade163693-001&132=PROPERTY&selected135=10&134=1&135=9&136=2509&216=0&216=0&217=0&217=0&153=&122=0&122=0&123=0&123=0&49=0&49=0&sidebarSearch_keypresses=0&sidebarSearch_suggested=0

Where once there were green fields kissed by the sun, once there were valleys where rivers used to run - now there are sections!

Anyway, as a property owner, I kinda hope the bank economists are right but I certainly will not be putting more money into properties!

[Bjauck]

No overseas money coming into real estate due to the ban - acknowledged by all real estate participants as the biggest driver of ever rising property prices in NZ.

Anyway, as a property owner, I kinda hope the bank economists are right but I certainly will not be putting more money into properties!

And they had previously said overseas buyers had a small influence!

Nor would I.

However NZers have perhaps limited scope for alternatives to investing in real estate. Kiwisaver is fully taxed so perhaps a comparative disincentive to build up a good balance. Sharemarket is small (with an historically bad reputation from the 1980's amongst baby boomers.) Real estate is capital gains orientated and with no CGT is still the place to build up the Household nest egg.

[Balance]

And they had previously said overseas buyers had a small influence!

Nor would I.

However NZers have perhaps limited scope for alternatives to investing in real estate. Kiwisaver is fully taxed so perhaps a comparative disincentive to build up a good balance. Sharemarket is small (with an historically bad reputation from the 1980's amongst baby boomers.) Real estate is capital gains orientated and with no CGT is still the place to build up the Household nest egg.

I harbour a simplistic view that CGT will come in - matter of time.

Timing will be when consideration of revamping of National super has to be undertaken - either age, amount or means testing.

[Bjauck]

I harbour a simplistic view that CGT will come in - matter of time.

Timing will be when consideration of revamping of National super has to be undertaken - either age, amount or means testing.
NZ real estate features so highly amongst the assets held by NZers, that it will remain for many years a kamikaze mission for any political party that seeks to levy a general CGT if they want to attain the treasury benches.

[CatO'Tonic]

Some good movement today on solid volumes. looks like it will get through the $5 :)

[winner69]

Some good movement today on solid volumes. looks like it will get through the $5 :)

Yep, a continuation of the recent strength in the share price

Will be over 5 bucks soon and as it closes that huge gap to NAV it’ll be 6 bucks some time after Xmas......and then maybe 7 bucks before we realise it.

[penn]

A very nice ride when a days capital gain is as big as the annual divvy.

[psychic]

Sage advice there Mondo. But I'm thinking the thing is way oversold, at a ridiculous discount to NAV (leaky buildings priced in after all this time surely? ), resales exceeding valuations, high occupancy rates, beaut forward build program and at a terrific p/e. What could go wrong...
Called it. Me. Lol. Hahaha.. Me. Ffs. Nice

[dabsman]

Called it. Me. Lol. Hahaha.. Me. Ffs. Nice

The question that begs to be asked then is did you back the truck up?

[King1212]

The buyback $30m share announcement will come soon..this will push the so up?

[WAIKEN]

We are underway today
I predict 6.00 in a few months

[Beagle]

The buyback $30m share announcement will come soon..this will push the so up?

Far more often than not. Very early days but I am happy with how the journey is going with this one so far.

[CatO'Tonic]

Interesting story in the depth at the moment. It seems strange to see both a low offer and a high bid at the same time...10839

[CatO'Tonic]

Interesting story in the depth at the moment. It seems strange to see both a low offer and a high bid at the same time...

[CatO'Tonic]

And the same thing happening at SUM and RYM

[BlackPeter]

And the same thing happening at SUM and RYM


Interesting story in the depth at the moment. It seems strange to see both a low offer and a high bid at the same time...10839

If you enjoy this picture - you can see that every morning (9 to 10) and every evening (4.45 to 5) for nearly every stock (with meaningful liquidity).

Just the usual opening and closing auctions:

https://www.nzx.com/investing/nzx-trading-hours/anatomy-of-a-trading-day

[CatO'Tonic]

Cheers BP, I never noticed this before.

[Beagle]

Far more often than not. Very early days but I am happy with how the journey is going with this one so far....so added more today.

[winner69]

So buyback to start next week. The $30m ‘buys’ them about 2.7% of the company

A admission of failure from a Board that lacks drive and ambition

But if it gives instos and other shareholders the warm fuzzies it must be good

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/344124/311607.pdf

[Beagle]

So buyback to start next week. The $30m ‘buys’ them about 2.7% of the company

A admission of failure from a Board that lacks drive and ambition

But if it gives instos and other shareholders the warm fuzzies it must be good

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/344124/311607.pdf

I think that's more than a little harsh as they have already announced that this buy-back does not compromise their ~ $500 development program over the next 3 years and they are gradually moving to change their business model with a higher level of care.
The buy-back will quite clearly be eps accretive and their gearing level is very low.
I think its good to see the board finally being proactive about the discount to NTA. It would have been better if it was at the maximum allowable 5% of shares but something is better than nothing.

[winner69]

The buy-back will quite clearly be eps accretive and their gearing level is very low.
I think its good to see the board finally being proactive about the discount to NTA. It would have been better if it was at the maximum allowable 5% of shares but something is better than nothing.

The good old eps accretive trick eh

Starting the buyback now mean theyve sold that Auckland site which is going to fund it?

[Beagle]

The good old eps accretive trick eh

Starting the buyback now mean theyve sold that Auckland site which is going to fund it?

Not really a trick though is it mate. Sold and settles in February, from memory. They have oodles of cash having just raised $100m a bond placement at just 3.00%
Getting investors to loan you money for 7 years at just 3.00% fixed, now that's a trick !

[Beagle]

Well regarded Devon Funds management adding more http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/344177/311673.pdf
I continue to add to my position too with more added yesterday and today. Plenty of value here still, and with the support of the $30m buy-back to come...

[WAIKEN]

We are in agreement Beagle.
Devon have seen the potential to increase the performance of one or more of their funds. A rise from 5.00 to 6.00 plus a 2.2% dividend yield would give a gain of 22.2% over the next year. I predict MET will continue with a policy of annual dividend increases as well.
A majority of property analysts are now predicting a rise of 3-7% in Auckland property prices over the next year. A 5% increase will roughly boost the MET portfolio value by that amount as sellers of Auck property will have that extra bit to buy their licences to occupy.
I calculate an increase of 5% plus development margins on the 500mill in train plus the reduction in share capital from the buy back should produce an NTA of at least 7.50 by 30.9.20.
We are vulnerable to a takeover. Lets hope our major shareholders take a long view and hold until we exceed 8.00.

[Beagle]

I'd be okay with a takeover at $ 7.50 now :)

[Beagle]

https://www.reinz.co.nz/Media/Default/Statistic%20Documents/2019/Residential/October/REINZ%20Monthly%20Property%20Report%20-%20October%202019.pdf
Bay of Plenty where MET have a number of villages doing very well and Auckland doing okay too !
Buyback starts next week and holders appear to be very well positioned ! My rating BUY.

[percy]

Have they fixed the leaky buildings you used to bark [very loudly] on about.?

[Beagle]

They have there 4-5 year program they're steadily working their way through on remediation issues and they're certainly not the only retirement village operator with problem buildings to fix. Discount to NTA in my opinion is because a lot of people took a very negative view on Auckland property prices and where they were headed and thought we would follow Sydney and Melbourne. Emerging evidence all round including in Sydney and Melbourne that the bottom is in and we're on the up and up.
More details on buy-back next month. In the meantime, no worries :t_up:

Posted 25 October 2019 when the SP was $4.81
I think they'll be somewhere around half way through that program by the end of this financial year Percy. Emphasis added.
Current market cap at $5.20 = $1.1billion
Market cap at NTA of $6.96 per share $1.48 billion.
Difference $380m
I think they'll have about (from memory) somewhere around $40m to spend on that program by year end.
Market presently marking them down from NTA by about 10 times the expected remediation costs and those costs have already been factored into the NTA of $6.96.

I'll let people decide for themselves if that's a logical situation or not.

[Aaron]

So buyback to start next week. The $30m ‘buys’ them about 2.7% of the company

A admission of failure from a Board that lacks drive and ambition

But if it gives instos and other shareholders the warm fuzzies it must be good

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/344124/311607.pdf

Were share buy backs even legal in NZ prior to the Companies Act 1993? Weren't buybacks recognised as a tool for share price manipulation in the good old days. Unfortunately too young to know. 1980s onwards would have seen buybacks as legitimate along with targeted inflation and trickle down economics but we might soon come back round to the old ways of thinking.

Sorry not Metlifecare specific so feel free to ignore.

[winner69]

Were share buy backs even legal in NZ prior to the Companies Act 1993? Weren't buybacks recognised as a tool for share price manipulation in the good old days. Unfortunately too young to know. 1980s onwards would have seen buybacks as legitimate along with targeted inflation and trickle down economics but we might soon come back round to the old ways of thinking.

Sorry not Metlifecare specific so feel free to ignore.

Buybacks a bit of a rort really. In Us last 15 years $7 trillion of buy backs and companybdebt is up $7 trillion ...hmmm

But while number of shares on issue (supply) has dwindled about 1% annually the passive money (index funds etc) have had to put their money somewhere (demand) so US markets keep going up....even though per share fundamentals aren’t that great....hmmmm

Aaron - you’ll get your big opportunity one day

[winner69]

Way share price is going no doubt all these free shares will be ‘vested’

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/344321/311876.pdf

[Beagle]

There are a lot of checks and balances surrounding buybacks. Can't be over 5% of issued capital in any one year and has to be executed in a manner that doesn't influence the share price. As I understand it (and I am certainly not putting myself out as an expert on the subject), they cannot be a market maker, (set new share price high's).

I don't have any issues with it and in this case its clearly going to be eps accretive as the share price is still trading at a substantial discount to NTA and the forward PE is very cheap. This is ostensibly a property company trading at a very deep discount to a relatively easy measure of value to objectively quantify, (its net tangible asset backing that's valued every year by independent valuers).

Where buy-backs for some other companies get a bit murky is where the value of a company is not so easily and objectively quantifiable, i.e. where the majority of the value is made up of intangible assets.

Anyway...back to real estate...looks like the sleeping giant that is Auckland real estate is waking up which is great for MET as they have most of their villages there
https://www.landlords.co.nz/article/976515906/record-prices-round-nz?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Friday+15+N ovember+2019

[winner69]

Beagle, you know that in the long run this buyback won’t make one iota of difference to MET’s fundamentals

But in the short term the directors saying its good, share price doesn’t recognise the value in the company, it’s eps accretive blah blah blah the market get excited

Good stuff for short to medium term punters who’ll take a punt ..and hope for the best.

I can’t see you being a long term holder of MET so good on you having a go to make a buck while verybody is so excited ...but watch that chart

[allfromacell]

There are a lot of checks and balances surrounding buybacks. Can't be over 5% of issued capital in any one year and has to be executed in a manner that doesn't influence the share price. As I understand it (and I am certainly not putting myself out as an expert on the subject), they cannot be a market maker, (set new share price high's).

I don't have any issues with it and in this case its clearly going to be eps accretive as the share price is still trading at a substantial discount to NTA and the forward PE is very cheap. This is ostensibly a property company trading at a very deep discount to a relatively easy measure of value to objectively quantify, (its net tangible asset backing that's valued every year by independent valuers).

Where buy-backs for some other companies get a bit murky is where the value of a company is not so easily and objectively quantifiable, i.e. where the majority of the value is made up of intangible assets.

Anyway...back to real estate...looks like the sleeping giant that is Auckland real estate is waking up which is great for MET as they have most of their villages there
https://www.landlords.co.nz/article/976515906/record-prices-round-nz?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Friday+15+N ovember+2019

Hi Beagle,

I know you prefer the medium which is looking positive and that's great but I think it's worth pointing out the HPI chart still looks very flat for Auckland, prices in the city have only increased 6.7% over the past 5 years. Rest of the country marching on relentlessly though.

https://www.interest.co.nz/property/102594/hutt-valley-dunedin-and-invercargill-have-shown-strongest-house-price-growth-last-12

[winner69]

Hi Beagle,

I know you prefer the medium which is looking positive and that's great but I think it's worth pointing out the HPI chart still looks very flat for Auckland, prices in the city have only increased 6.7% over the past 5 years. Rest of the country marching on relentlessly though.

https://www.interest.co.nz/property/102594/hutt-valley-dunedin-and-invercargill-have-shown-strongest-house-price-growth-last-12

The 6.7% is compounding growth rate ...ie 6.7% per year ...not too shabby

[allfromacell]

The 6.7% is compounding growth rate ...ie 6.7% per year ...not too shabby

Yes that's actually still very good! Didn't see the *

[winner69]

Yes that's actually still very good! Didn't see the *

I think the author of the article didn’t notice it either

[Beagle]

Hi Beagle,

I know you prefer the medium which is looking positive and that's great but I think it's worth pointing out the HPI chart still looks very flat for Auckland, prices in the city have only increased 6.7% over the past 5 years. Rest of the country marching on relentlessly though.

https://www.interest.co.nz/property/102594/hutt-valley-dunedin-and-invercargill-have-shown-strongest-house-price-growth-last-12

Worth noting that despite that underlying profit has basically doubled in the last 5 years from $46.0m to $90.5m, (average compound growth rate of 15% per annum), as to and embedded value at FY19 balance date is up to a whopping $281,000 per unit which gives a big clue as to future profit growth.

[winner69]

Are MET another one of these operators who make no money from looking after oldies, ie it’s just a development company

[winner69]

MET underlying EPS about the same as SUM

But share price about 30% lower

WOW that’s some gap

[Beagle]

Its Friday afternoon and I am a tired dog. See what you think http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/340382/306999.pdf

[winner69]

Its Friday afternoon and I am a tired dog. See what you think http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/340382/306999.pdf

Jeez 110 pages ...no wonder you tired dog

And 110 pages and search on ‘dogs’ gives a NIL result

[Beagle]

Jeez 110 pages ...no wonder you tired dog

And 110 pages and search on ‘dogs’ gives a NIL result

Looking back over the last 5 years is always a good way to get a reasonable handle on how a companies business model has worked.
As I mentioned yesterday, despite a lengthy period of Auckland underperforming the rest of New Zealand in terms of house price gains and despite most of MET's villages being in the Auckland region and being independent living only they have grown underlying earnings on average 15% per year in the last 5 years (97% in 5 years)...(the long established RYM benchmark target) and yet RYM have not achieved their own target (92% underlying earnings growth in 5 years) despite having the benefit of a much wider geographical spread of villages on both sides of the Tasman and a much more comprehensive continuum of care model.

Despite this outperformance MET shares have not moved much from their share price of $4.37, five years ago and we see the relative share price performance here
10844

What happens when Auckland real estate starts moving more in line with the rest of the country ?
What happens when MET increases their new build and starts selling more units with embedded value of over $280,000 each ?
What happens as MET moves towards a more inclusive care model ?

MET are smarter than SUM because they have moved a little while back to fixed fees for life which is something I am sure incoming residents want.

We know RYM has been on a forward underlying PE in the mid 20's so lets have a look at MET fundamental's seeing as they are growing faster
If they grow underlying earnings by 15% per annum over the next few years and that looks like a pretty reasonable assumption seeing as they have achieved that in more difficult real estate conditions, then underlying earnings this year will be $90.5m + 15% = $104m / 213.3m shares = 48.76 cps and at $5.22 they are on a forward PE of just 10.70.

NTA is just on $7. Is it reasonable that the shares should trade at such a large discount to NTA given the more positive outlook for real estate now ?
Is it reasonable that MET having grown underlying EPS faster than RYM and well within the normal scope for this sector should trade at such a large discount to the sector average forward PE ?

Given construction costs seem to escalate at a very rapid rate perhaps the discount to NTA and cheapest metrics really is a pretty cunning value play.
RYM trades at 3.3 times book value and has a PEG ratio of nearly 2.
MET trades at 0.75 times book value and has a PEG ratio of just 0.71

MET still look very very cheap to me and from a technical perspective, (thanks and yes I will keep a close eye on the chart), things also look great.

I think they have a lot of room to improve their business model too whereas RYM do not and are already more than fully priced for perfection.

MET looks like a really overlooked and completely unloved growth opportunity to me. Forward PE of just 10.7 is pricing the company like its a zero growth company when quite obviously their record says that's clearly not the case.

[winner69]

Looking back over the last 5 years is always a good way to get a reasonable handle on how a companies business model has worked.
As I mentioned yesterday, despite a lengthy period of Auckland underperforming the rest of New Zealand in terms of house price gains and despite most of MET's villages being in the Auckland region and being independent living only they have grown underlying earnings on average 15% per year in the last 5 years (97% in 5 years)...(the long established RYM benchmark target) and yet RYM have not achieved their own target (92% underlying earnings growth in 5 years) despite having the benefit of a much wider geographical spread of villages on both sides of the Tasman and a much more comprehensive continuum of care model.

Despite this outperformance MET shares have not moved much from their share price of $4.37, five years ago and we see the relative share price performance here
10844

What happens when Auckland real estate starts moving more in line with the rest of the country ?
What happens when MET increases their new build and starts selling more units with embedded value of over $280,000 each ?
What happens as MET moves towards a more inclusive care model ?

MET are smarter than SUM because they have moved a little while back to fixed fees for life which is something I am sure incoming residents want.

We know RYM has been on a forward underlying PE in the mid 20's so lets have a look at MET fundamental's seeing as they are growing faster
If they grow underlying earnings by 15% per annum over the next few years and that looks like a pretty reasonable assumption seeing as they have achieved that in more difficult real estate conditions, then underlying earnings this year will be $90.5m + 15% = $104m / 213.3m shares = 48.76 cps and at $5.22 they are on a forward PE of just 10.70.

NTA is just on $7. Is it reasonable that the shares should trade at such a large discount to NTA given the more positive outlook for real estate now ?
Is it reasonable that MET having grown underlying EPS faster than RYM and well within the normal scope for this sector should trade at such a large discount to the sector average forward PE ?

Given construction costs seem to escalate at a very rapid rate perhaps the discount to NTA and cheapest metrics really is a pretty cunning value play.
RYM trades at 3.3 times book value and has a PEG ratio of nearly 2.
MET trades at 0.75 times book value and has a PEG ratio of just 0.71

MET still look very very cheap to me and from a technical perspective, (thanks and yes I will keep a close eye on the chart), things also look great.

I think they have a lot of room to improve their business model too whereas RYM do not and are already more than fully priced for perfection.

MET looks like a really overlooked and completely unloved growth opportunity to me. Forward PE of just 10.7 is pricing the company like its a zero growth company when quite obviously their record says that's clearly not the case.


The vagaries of a market where valuations are very subjective

The ‘subjectivity’ especially highlighted in the retirement sector - to many things just don’t make sense and things should not be like this

I doubt whether this will ever change

Life would be boring if the market obeyed the rules and said MET, SUM, RYM et all shall trade a 1.3 times BV and shall trade a PEG of 1

[Beagle]

Getting harder to find real value on the NZX but if you look hard enough in an unloved place, its definitely there !
Thankfully Coutts doesn't have a share price relativity theory for this one so I am perfectly safe expecting relative share price outperformance going forward :)

[winner69]

Getting harder to find real value on the NZX but if you look hard enough in an unloved place, its definitely there !
Thankfully Coutts doesn't have a share price relativity theory for this one so I am perfectly safe expecting relative share price outperformance going forward :)

That chart you put up earlier MET was keeping up with RYM until early last year then it turned to custard for them

Maybe it’s bit of a catch up time

[Beagle]

That chart you put up earlier MET was keeping up with RYM until early last year then it turned to custard for them

Maybe it’s bit of a catch up time

I think so. MET used to trade at book value 5 years ago. Maybe it might go back to book value which might be about $7.50 mid 2020 ?
Pretty good delta of ~ 44% to estimated book value as at 30/6/2020. Its very hard to go wrong buying deep value shares like this.

[winner69]

I think so. MET used to trade at book value 5 years ago. Maybe it might go back to book value which might be about $7.50 mid 2020 ?
Pretty good delta of ~ 44% to estimated book value as at 30/6/2020. Its very hard to go wrong buying deep value shares like this.

Looks like a sure thing .....you’ve got besotted with it and convinced me ...i’ll be in next week

Winner Analytics Limited just had a call from a Mr Couta seeking advice as to the relatively of the MET shareprice to the RYM share price

Confidentiality says I can’t tell you what it looks like but I’m into MET next week.

[Beagle]

Looks like a sure thing .....you’ve got besotted with it and convinced me ...i’ll be in next week

Winner Analytics Limited just had a call from a Mr Couta seeking advice as to the relativitynofvthe MET shareprice to the RYM share price

Confidentiality says I can’t tell you what it looks like but I’m into MET next week.

LOL - I don't want to know !!!!
Not besotted but the more I look the more my nose for a feed tells me to keep buying because there's compelling value and a giant sized feed coming here.
The value here is like an all you can eat buffet at Fortuna restaurant @ $25.95 for lunch. You simply cannot go wrong, unless of course you overeat and do a Couta1 :D

[winner69]

One guesses one has to pay more if they get ‘premium’ ...homes got to make a profit somehow.

https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12285790

No idea what it’s about or who but this thread seems most popular

[Snow Leopard]

I was keen on MET once but despite having everything in place to get their act together and lift their game - they did not.
I seem to recall IFT getting involved and then getting un-involved at some point.

Interestingly, for me at least, my records show that on the 10th Oct 2014 I finally sold out at $4.40 a share and could have bought in at exactly the same price exactly five years later. Although I would have forgone a net 35.5 cents in dividends* over the five years I am not crying over split milk.

But it is nice to see that in the long month since the 5 year anniversary it has put on an extra 80c and it does in theory look like it should have a few more cents of gain left in it, my enthusiasm for MET is tempered by the facts that:

a/ they are historically the real serial under-performer of the listed retirement village sector, having the knack of having snatched mediocrity from the jaws of success on numerous occasions, :( and

b/ Beagle is ramping them like mad.
https://i.ytimg.com/vi/W1tXxiCo2bk/hqdefault.jpg

Disc: may or may not have some, but if I do I paid more than $4.40.

Disc: thanks to Beagle for this amusing collections of pictures (https://www.sogoodly.com/its-a-myth-these-dogs-break-the-stereotype-about-dogs-hating-cats/?utm_source=taboola&utm_medium=cpc&utm_term=msn-edgedefaulthomepage-newzealand&utm_campaign=3235466&utm_content=2850701919&utm_campaign_widget=3235466-msn-edgedefaulthomepage-newzealand)

*I pay a flat 15% tax on NZ dividends

[winner69]

MET currently is extremely cheap

One good thing about being that is that there’s at least 30% upside from here even if it was only going to get to cheap.

Was $6.50 just over a year ago ....heading back to at least that in the short term ....and seeing theyhave made another $100m or so even at $7 it would be cheap (but not extremely cheap)

[couta1]

Looks like a sure thing .....you’ve got besotted with it and convinced me ...i’ll be in next week

Winner Analytics Limited just had a call from a Mr Couta seeking advice as to the relativitynofvthe MET shareprice to the RYM share price

Confidentiality says I can’t tell you what it looks like but I’m into MET next week. Beagle can stop crunching numbers now and wasting time, the Gold standard Couta ratio Theorum says that MET and SUM are both worth 50% of the RYM sp so there you have it, it's currently quite undervalued relative to both SUM and RYM. PS-Winner you had better hurry up and buy now the cats been let out of the bag

[Beagle]

a/ they are historically the real serial under-performer of the listed retirement village sector, having the knack of having snatched mediocrity from the jaws of success on numerous occasions, :( and

b/ Beagle is ramping them like mad.
https://i.ytimg.com/vi/W1tXxiCo2bk/hqdefault.jpg

Disc: thanks to Beagle for this amusing collections of pictures (https://www.sogoodly.com/its-a-myth-these-dogs-break-the-stereotype-about-dogs-hating-cats/?utm_source=taboola&utm_medium=cpc&utm_term=msn-edgedefaulthomepage-newzealand&utm_campaign=3235466&utm_content=2850701919&utm_campaign_widget=3235466-msn-edgedefaulthomepage-newzealand)



As Couta1 has eluded too its true that RYM are the benchmark in this sector so my snout started to give off unusually strong indications of a forthcoming feed when I realised that MET have actually outperformed RYM 97% v 92% underlying earnings growth in the last five years and this at a time where Auckland real estate has been unusually flat, (where most of MET's villages are located).

I don't think the serial underperformer tag fits any more and wonder why MET has done quite satisfactorily against a background of such tame Auckland house price increases in the last 5 years ?
Could it be that RYM and for that matter OCA's care heavy model is less profitable that MET's business model which is primarily independent living ?
This sheds some light on the subject, (with thanks to Couta1 for sharing ) https://www.stuff.co.nz/national/health/117450013/underfunding-of-rest-homes-shows-government-ageist

MET's SP has seriously underperformed the sector in the last 5 years as has Auckland house prices underperformed N.Z. real estate and yet their underlying earnings haven't.
This suggests to me that sentiment against MET has been incredibly strong in recent years and only some of that is justified.

What you miss my furry friend is the local knowledge. The other day I opened the 2-3 times weekly Western Leader rag and couldn't help noticing the number of affordable opportunities MET were advertising in the greater West Auckland region. I really am talking affordable living for Auckland with a lot of options starting with a first digit of 3, 4 or 5. (Six figures not seven of course).

I think this differentiates them from the likes of RYM and to some extent SUM.

Not ramping, just pointing the opportunity out. I am happy to hold for some time as to be frank, its very difficult to find real value on the NZX anymore and there's no money in bonds or cash. Forward PE of just 10.7 does not normally go together with a company with a proven track record of growing underlying earnings at an average of 15% in the last 5 years.
My sense is that the funk the Auckland market has been in for years is coming to an end. Over the last 5 years MET's NTA has grown from $4.29, (yes they used to trade at 100% of NTA) to $6.96, total growth of 62%. I think the current discount to NTA is too big for the outlook looking forward for the next 5 years so having badly underperformed the sector over the last 5 years I expect MET's share price to outperform the sector looking ahead.

[peat]

MET had been one that was top of our list back at the brokers coz of the high book value.

eps down significantly as shown here. whats that all about
10848
NPAT shown here
10849

I guess I've missed something coz to me this looks bad.
Is this proving what someone else said recently (W69?) that its all in the property gains rather than caring for the old folk.

[Beagle]

Beagle can stop crunching numbers now and wasting time, the Gold standard Couta ratio Theorum says that MET and SUM are both worth 50% of the RYM sp so there you have it, it's currently quite undervalued relative to both SUM and RYM. PS-Winner you had better hurry up and buy now the cats been let out of the bag

Okay, so I'd better buy SUM more MET then :) That particular theory suits me nicely in regard to MET and the day SUM breaks though 60% of RYM's share price you'll hear all about it, I can assure you :D

[Beagle]

MET had been one that was top of our list back at the brokers coz of the high book value.

eps down significantly as shown here. whats that all about
10848
NPAT shown here
10849

I guess I've missed something coz to me this looks bad.
Is this proving what someone else said recently (W69?) that its all in the property gains rather than caring for the old folk.

International financial reporting standards (IFRS) require all property owning companies to report full revaluation inclusive profit each year. Poor year in Auckland last year saw IFRS profit drop substantially. All professional analysts use underlying earnings as the measure by which they compare companies in this sector.

[winner69]

Peat - that EPS is calculated on IFRS profit and was less in F19 v F18 because fair value adjustments fell from $133m in F18 to $54m in F19 because of slowdown in property market.

Most of these are unrealised gains ....will become realised and form part of underlying earnings one day

Everybody in the sector have this ‘problem’

[macduffy]

My sense is that the funk the Auckland market has been in for years is coming to an end.

Has it really been in a funk - or has the ability to pay Auckland prices been reached, at least until incomes catch up?

[peat]

thank you Beagle and w69

[BlackPeter]

MET currently is extremely cheap

One good thing about being that is that there’s at least 30% upside from here even if it was only going to get to cheap.

Was $6.50 just over a year ago ....heading back to at least that in the short term ....and seeing theyhave made another $100m or so even at $7 it would be cheap (but not extremely cheap)

Not sure I share all the enthusiasm about MET, but I agree it looks somewhat undervalued at the present time.

Just one observation - if I look at the chart, than the SP currently looks a bit overbought (RSI around 80 and volume dropped a lot over the last couple of days). This typically results into a dip before it goes up again. Obviously - nobody knows the bottom of this dip (well, I don't) but something between MA 200 ($4.75) and $5 (the magic of round numbers ;)) might offer themselves as volunteers.

10850

Might be a good idea to monitor the SP a bit before backing up the truck.

Anyway - just my 2 cents ...

[winner69]

Forget about your RSIs Peter

The Rainbow Moving Averages are a thing of beauty

No worries here

[Beagle]

Has it really been in a funk - or has the ability to pay Auckland prices been reached, at least until incomes catch up?

Not so much an income story mate but over the last 3 years Auckland real estate has hardly moved against a background where mortgage interest rates have dropped dramatically making debt servicing substantially cheaper.

[Lewylewylewy]

Do met still have the leaky homes?

[macduffy]

Not so much an income story mate but over the last 3 years Auckland real estate has hardly moved against a background where mortgage interest rates have dropped dramatically making debt servicing substantially cheaper.

Nevertheless, banks will only lend where the ability to service the debt can be shown. Modest income rises don't support ever-increasing property prices.

[Beagle]

Nevertheless, banks will only lend where the ability to service the debt can be shown. Modest income rises don't support ever-increasing property prices.

Debt servicing a lot easier at 3.5% than 5.5%.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/343191/310478.pdf

lll - I've commented on remediation issues already. If you focus on the negative you'll not see the positives, (I have fallen into that trap before). 420 homes refurbished last year and the communal living area's of 10 villages upgraded.
Care an increasing focus of their operations. Something trader Jackson would be impressed by: 75% of their care facilities have the gold standard 4 year accreditation and 96% occupancy rate in their care facilities which puts some other companies to shame. http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/340382/306999.pdf

Plenty of info in there for people to DYOR.

[King1212]

Takeover game on..

[CatO'Tonic]

A bit thin on details but it should be a good day for holders...
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/344571/312210.pdf

[dabsman]

I've been saying this for over a year. Amazing and as they say even a broken watch is right twice a day haha. NTA was so far from share price someone with big pockets will have noticed and they did finally act.

[Beagle]

Hmmmm
Last historical reported NTA was $6.96.
Wonder who the credible party is ?
Doubt the board would be engaging if they weren't highly credible.

Let play a guessing game.
OCA - Unlikely, too small, market cap $609m and they have a very fulsome development program.
ARV - Highly unlikely, already have enough debt from their recent acquisition of various villages
RYM - Have been on record many times before saying they're not acquisitive and they do things the Ryman way and don't want a clash of cultures...BUT they are trading at about 3.5 times book value and surely have noticed MET are trading well below book value. They also, quite clearly have the financial wherewithal to do a deal and there would be substantial synergies.
SUM - Julian Cook's investment banking background might come to the fore here. I also think they have the grunt to do a deal, perhaps a scrip based offer of 1:1 and there would be substantial synergies.

Who else ?
Could they take it over at less than NTA ? I doubt it .

[bull....]

below what they want and highly conditional and no offer price. sounds pretty opportunistic

[trader_jackson]

Hmmmm
Last historical reported NTA was $6.96.
Wonder who the credible party is ?
Doubt the board would be engaging if they weren't highly credible.

Let play a guessing game.
OCA - Unlikely, too small, market cap $609m and they have a very fulsome development program.
ARV - Highly unlikely, already have enough debt from their recent acquisition of various villages
RYM - Have been on record many times before saying they're not acquisitive and they do things the Ryman way and don't want a clash of cultures...BUT they are trading at about 3.5 times book value and surely have noticed MET are trading well below book value. They also, quite clearly have the financial wherewithal to do a deal and there would be substantial synergies.
SUM - Julian Cook's investment banking background might come to the fore here. I also think they have the grunt to do a deal, perhaps a scrip based offer of 1:1 and there would be substantial synergies.

Who else ?
Could they take it over at less than NTA ? I doubt it .

What was Aveo taken over at (relative to NTA)?

I hope this is one acquisition ARV is NOT doing.

[bull....]

What was Aveo taken over at (relative to NTA)?

I hope this is one acquisition ARV is NOT doing.

aveo was taken over well under NTA

[King1212]

AOG is damaged to to the ground...its brand.. management..poorly managed...and corrupted Malaysia company which their main holder

[winner69]

Whoever was looking at Retire Australia (Infratil) had a look around and found something better

Just speculation

[Beagle]

Okay I am going to call it, I think its Summerset. I know FCNZ, (Jarden now) tried to fly that kite a while back and talked up all the synergies.
Julian Cook is a very motivated man and a very smart guy and definitely has the right investment banking background to pull this off.

[winner69]

Good timing re Bring up Couts theorem and Winner Analytics Limited reporting back to him.

Reversion to mean ..MET at 7 bucks odd ....good one

At least I had 2 days to get a few ..not many but enough

Hope Beagle took Couts advice and is all in XXXXL

[winner69]

A few short words from MET and the whole sector is going gangbusters ....even Oceania

Nice

[penn]

Surely MET should be in a trading halt? Management have price sensitive information that we do not.

[couta1]

Good timing re Bring up Couts theorem and Winner Analytics Limited reporting back to him.

Reversion to mean ..MET at 7 bucks odd ....good one

At least I had 2 days to get a few ..not many but enough

Hope Beagle took Couts advice and is all in XXXXL Beagle in the money today but he needed to really grow a pair to scoop in the big coin.

[King1212]

They are in discussion..no certainty will happen..if not go through will drop to 5.20 again

[macduffy]

Whoever was looking at Retire Australia (Infratil) had a look around and found something better

Just speculation

That's more likely, IMO. Either IFT or one of the big overseas pension funds.

[Beagle]

Good timing re Bring up Couts theorem and Winner Analytics Limited reporting back to him.

Reversion to mean ..MET at 7 bucks odd ....good one

At least I had 2 days to get a few ..not many but enough

Hope Beagle took Couts advice and is all in XXXXL

I am happy you got on board mate :)

[Beagle]

Beagle in the money today but he needed to really grow a pair to scoop in the big coin.

I'm happy with my investment methodology mate. You know how many BRM I have and on exercise of the warrants on 1 November 2019 I am up 14.7% on them in less than 3 weeks as well as buying 4 times in this. Its been a very good month :t_up:

[couta1]

I'm happy with my investment methodology mate. You know how many BRM I have and on exercise of the warrants on 1 November 2019 I am up 13%+ on them in less than 3 weeks as well as buying 4 times in this. Its been a very good month :t_up: All good mate, were both doing well currently with our completely different methods even though they are Bipolar.

[macduffy]

They are in discussion..no certainty will happen..if not go through will drop to 5.20 again

I doubt that it would drop all the way to $5.20. Once interest is drawn to MET and its "status" in the sector the stock will get a lot more attention.

Disc: Holding - along with most of the others.

[Beagle]

All good mate, were both doing well currently with our completely different methods even though they are Bipolar.

More than one way to skin a cat isn't there ! (with apologies to snow leopard who thought the barking was too intense).
Turns out this Beagle was leading the charge...just for you Snowy seeing as you weren't listening the first time https://www.youtube.com/watch?v=v0a6jM7PALg
Its not too late, takeover @ $7 is coming, I barked it first :D

[silu]

Sold out at $6.25 last year. Interested to get back in albeit it on a much smaller scale if the takeover interest comes to nothing.

[Beagle]

Interestingly as the plot thickens, (apart from MET itself), ARV is up the most in percentage terms this morning followed by SUM.
RYM hasn't moved much and even OCA is up nicely. Edit: Now reversed and SUM is up the most in percentage terms. I really think it is SUM.

The other day I worked out the forward PE at 10.7 assuming 15% earnings growth this year and that was, (if my memory serves me correctly at $5.20)
To get up to a similar forward PE to ARV and SUM (14-15) 14.5 / 10.7 x 5.20 = $7.05. This is probably very close to its current NTA.

I would think $7 is the minimum bid for this deal to happen.

[winner69]

I am happy you got on board mate :)

As Ibsaid over the weekend if you saw the chart (still subject confidentiality :p) you’d agree it was a SCREAMING BUY ...not just cheap but exceptionally cheap.

Suppose RSI still saying it’s over bought.

[Bjauck]

A highly conditional expression of interest - I wonder if one of those conditions relates to a successful outcome of the $40m leaky building products claim against Hardie's. I am not sure how that claim is progressing.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12250271

[WAIKEN]

The coy considers the offer is too cheap. This is essentially a property play as well as a revenue play from its increasing care business. An offer of at least NTA would be fair. NTA at 30.6.19 was 6.95. I would estimate it will be above 7.15 by 31.12.19.
The price was around 6.50 only 13 months ago with far less good news, no share buy back and no bid in the wings. The current price is far to pessimistic. Another retirement village operator will also be able to achieve considerable economies of scale.
7.00 would be too cheap to buy MET. I think the price could retrace if the bid is withdrawn but MET is now in the limelight and it has great potential for steady growth in earnings, NTA and dividend yield over the next decade.

[Beagle]

A highly conditional expression of interest - I wonder if one of those conditions relates to a successful outcome of the $40m leaky building products claim against Hardie's. I am not sure how that claim is progressing.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12250271

I think the key bit of info there is that MET have already provisioned for the repair costs in their balance sheet and still we have a net $6.96 net tangible asset backing as at 30/6/2019. Any successful action against James Hardie or anyone else would obviously be value accretive.

Market cap MET ~ $1.2b
Market cap ARV ~ $0.5b
Market cap SUM ~ $1.7b
Market cap OCA ~ $0.6b
Market Cap RYM ~ $7.2b

Logically, only RYM or SUM could pull this deal off but could there be interest from an overseas institution / retirement fund ?

[winner69]

I think the key bit of info there is that MET have already provisioned for the repair costs in their balance sheet and still we have a net $6.96 net tangible asset backing as at 30/6/2019. Any successful action against James Hardie or anyone else would obviously be value accretive.

Market cap MET ~ $1.2b
Market cap ARV ~ $0.5b
Market cap SUM ~ $1.7b
Market cap OCA ~ $0.6b
Market Cap RYM ~ $7.2b

Logically, only RYM or SUM could pull this deal off but could there be interest from an overseas institution / retirement fund ?

Be an overseas financier / fund for sure

No problems with OIO ...they don’t seem to mind the country being sold off.

[Snow Leopard]

Nice that all my retirement operators are up because one gets a cheeky offer.
Should have thought of it before :huh:

[Maverick]

Well done and contragulations Beagle and Winner, (and Couta yesterday on ATM) I'm thrilled you all were rewarded for your strategies.

[mfd]

IFT have a market cap of 3.2 billion, can be opportunistic when they smell a good deal, and have history of dragging in other partners to share the costs. Seems unlikely though after recently buying Vodafone and not seeming too keen on their existing Australian retirement home operator.

[winner69]

IFT have a market cap of 3.2 billion, can be opportunistic when they smell a good deal, and have history of dragging in other partners to share the costs. Seems unlikely though after recently buying Vodafone and not seeming too keen on their existing Australian retirement home operator.

Infratil did OK with Metlifecare a few years ago before they sold out

[mfd]

Infratil did OK with Metlifecare a few years ago before they sold out

Sold at a good time too by the looks of things, this excitement has only just pushed the SP higher than IFT sold their stake at two and a half years ago (5.61)

[winner69]

I think the Queen still owns just under 20% of MET

If any deal goes through she’ll probably reinvest most back into the sector ....that would be good

[Beagle]

Well done and contragulations Beagle and Winner, (and Couta yesterday on ATM) I'm thrilled you all were rewarded for your strategies.

Thanks mate. Great to see OCA up as well. The thing about this potential deal is it shines the spotlight on how cheap the whole sector, (perhaps with the exception of RYM) is relative to expected future growth rates.

[Beagle]

Added more today. Reason is that at $5.70 that's probably still ~ $1.50 under my estimated NTA as at 31 December 2019 of $7.20.
At $5.70 I am still happy to hold long term even if this deal doesn't happen, forward PE at that price is 11.7 by my calculations, still the cheapest in the sector by a fairly wide margin. I like how they are transforming their business model to a more care centric one and I think sooner or later they will trade at or about their asset backing even if this deal doesn't happen.

Its only really jumped 50 cents from the ~ $5.20 it was last week, so there's only one quarter of the potential upside to as much as $7.20 been baked into the price so far.

I think the key word here is the buyer is "credible" and the key action here is that they are "talking" and there must be some realistic chance of this deal happening as otherwise they wouldn't have stopped the buy-back.

[Beagle]

NBR reporting discussions are "open ended". That sounds like a "we're interested but come back with a better price" type of situation to me.
https://www.nbr.co.nz/story/metlifecare-receives-takeover-bid

[winner69]

They say ‘... the price proposed is below the board’s expectations on value’

Hope the MET Board not as delusional as the ABA and the STU Boards were.

Beagle give me a really good telling off the other day when I said the Board lacked drive and ambition (at least I didn’t say delusional)

So we’re lucky having a top notch experienced Board making sure we get a good deal.

But if it gives instos and ot

[Beagle]

Overseas private equity being talked about https://www.goodreturns.co.nz/article/976515939/nz-shares-rise-metlife-jumps-on-takeover-talk.html?utm_source=GR&utm_medium=email&utm_campaign=GoodReturns+Market+Report+for+20+Nov+ 2019

[Beagle]

LOL - I don't want to know !!!!
Not besotted but the more I look the more my nose for a feed tells me to keep buying because there's compelling value and a giant sized feed coming here.
The value here is like an all you can eat buffet at Fortuna restaurant @ $25.95 for lunch. You simply cannot go wrong, unless of course you overeat and do a Couta1 :D
Posted on 16 November 2019. You can't bark clearer than that !

[couta1]

Posted on 16 November 2019. You can't bark clearer than that ! And if you had over eaten and done a Couta 1 you would be even better off but I notice you didnt highlight that bit.

[Beagle]

I expect these talks to go on for a week or two (as a minimum), so there is still time to take a position if you feel the undemanding metrics of this company are good value irrespective of the outcome of such discussions. I think its possibly worth noting that MET is the only stock in this sector to trade at a discount to NTA (which I have estimated at $7.20 as at 31 December 2019).

Happy to leave it to you and those others who want to to take very concentrated investment positions Couta1. I am happy with my investment methodology and very happy with the results I'm achieving.