RYM vs. SUM

[gonzo56]

I am in desperate need of a safe stock to hold.

I don't want to go into details, but my decisions have been far too risky in the past. Time to be conservative. ;)


RYM.NZX - Ryman Healthcare Limited Ordinary Shares

Total Issue: 500,000,000
Market Capitalisation: $1,740,000,000 (@348)
Earnings/Share: 24.15 cents
Price/Earnings Ratio: 14.41
NTA/Share: 130.09 cents
Dividend/Share: NZD 8.4 cents
Dividend Yield: 2.41%


SUM.NZX - Summerset Group Holdings Limited Ordinary Shares

Total Issue: 214,819,360
Market Capitalisation: $356,600,138 (@166)
Earnings/Share: 2.01 cents
Price/Earnings Ratio: 82.59
NTA/Share: 108.41 cents
Dividend/Share: 0 cents
Dividend Yield: 0%

Which is the safer bet?

Would it be fair to say that SUM will travel the same road RYM has...hence will see the same sort of gains that RYM did?

No opinions please, just logic ;)

Thanks.

[percy]

Hi Gonzo56.We are very lucky to have a brilliant 'analysis' on sharetrader who has a record of being right on the money.Offcourse, I am referring to Sauce's posts on Ryman thread.He has given his views on RYM,SUM and MET.Just go through and read his RYM posts,no need to read any one else's, and you will find the answer you are looking for.

[CJ]

SUM has a PE of 82 and a zero dividend yield. Not exactly what I would call a conservative stock based on just the info you have provided.

[777]

Can't have a dividend yield until they actually pay a dividend. I don't know what their policy is here but suspect they will pay something even if small at the beginning.

[Zaphod]

+1 to Percy.

RYM has perform consistently well across the board, and has an excellent land-bank for future development. Their formula works. RYM without a doubt.

[Snow Leopard]

I am in desperate need of a safe stock to hold.

I don't want to go into details, but my decisions have been far too risky in the past. Time to be conservative. ;)
...

That is the worrying bit.
I don't want to go into details, but perhaps you should leave your money as cash (earning a reasonable interest rate at a sound financial institution).

As for the Ryman vs Summerset debate well.

One is a good as the other in my opinion, equally likely to make (or lose) money on either (I hold both, but have more in RYM).

If you do decide to buy one of them (and what is wrong with the rest of the market?) under what conditions do you sell?

best wishes
Paper Tiger

Disclaimers:
Hold RYM & SUM;
Have not had my membership of the Sauce Appreciation Society approved yet.

[BIRMANBOY]

How can you be a Gonzo and want "safe"...I think you must be making poor old Hunter S. Thompson spin in his grave. His "fear and loathing" will be hovering over your head. I did hear he was scheduled for a berth at RYM though.
I am in desperate need of a safe stock to hold.

I don't want to go into details, but my decisions have been far too risky in the past. Time to be conservative. ;)





Which is the safer bet?

Would it be fair to say that SUM will travel the same road RYM has...hence will see the same sort of gains that RYM did?

No opinions please, just logic ;)

Thanks.

[gonzo56]

Cheers Percy, and everyone else. Yes, Paper Tiger it is worrying!

[ENP]

I like to think of RYM as Richie McCaw and SUM as Sam Cane.

If you don't follow rugby, McCaw has been in and around the All Blacks for many many years. Sam Cane has played 2 games.

So if you were the All Blacks selectors (or a stock picker) who would you choose to run out on the field for you (or be in your portfolio). Someone with many years experience and someone who has shown performance through tough games (recessions) or someone fresh and new on the scene? Although the new fresh face has lots of talent and growth potential, if you are looking for a "safe bet" who would you rather choose?

For me it's an obvious choice.

If you fancy a try over the Tasman, Woolworths or Coca Cola Amatil are similar.

[ratkin]

I like to think of RYM as Richie McCaw and SUM as Sam Cane.

If you don't follow rugby, McCaw has been in and around the All Blacks for many many years. Sam Cane has played 2 games.

So if you were the All Blacks selectors (or a stock picker) who would you choose to run out on the field for you (or be in your portfolio). Someone with many years experience and someone who has shown performance through tough games (recessions) or someone fresh and new on the scene? Although the new fresh face has lots of talent and growth potential, if you are looking for a "safe bet" who would you rather choose?

For me it's an obvious choice.

If you fancy a try over the Tasman, Woolworths or Coca Cola Amatil are similar.

Cane , he open to far more improvement , with many years left , While Mcaw has done really well , but everyone knows what he can do .

Yes Ryman is great but every man and his dog is already holding it , will likely continue to give steady safe returns , Somerset more of a gamble but arguably could provide quicker returns as it scales up. (Hold both)

[Hoop]

I like to think of RYM as Richie McCaw and SUM as Sam Cane.

If you don't follow rugby, McCaw has been in and around the All Blacks for many many years. Sam Cane has played 2 games.

So if you were the All Blacks selectors (or a stock picker) who would you choose to run out on the field for you (or be in your portfolio). Someone with many years experience and someone who has shown performance through tough games (recessions) or someone fresh and new on the scene? Although the new fresh face has lots of talent and growth potential, if you are looking for a "safe bet" who would you rather choose?

For me it's an obvious choice.

If you fancy a try over the Tasman, Woolworths or Coca Cola Amatil are similar.

Why choose??...do a Steve Hansen play both.
Disc: hold SUM

[buns]

Ha, probably not the best Analogy ENP.

Summerset have been around for a while (15 +years), but are only new to the NZX.

But you could carry on with the analogy in a different sense, which actually makes SUM and new entrants more attractive..

Richie has paved the way (probably more Josh Kronfeld if you want to get exact) and shown new entrants how to dominate in that game. These entrants have come in with similar methods and done well (Pocock).

The improvement (ROE) is much steeper and easier for the new entrants compared to the mature/larger players who find it harder and harder to add strings to their bow. Enough of the analogies - If a new entrant could adopt a model quite similar to RYM and execute it, they could possibly make ROE's equal/larger than RYM who is going to have to try a lot harder (heading to Aus) in the future to keep up with its current growth.

RYM is an amazing company, and I think they have certain competitive advantages right now, but nothing purely unbeatable. They are operating very well in a great market, whilst their competitors seem to be operating average in a great market. I carefully used the term 'new entrant' above instead of Summerset because I don't know if they operate very well either from what I have read. RYM is kind of lucky in a way all of these chumps around them are filling up the market (raising the barrier to entry), as a good new entrant could actually do quite well.

[Sauce]

Hello Gonzo

Good to see a discussion of the "Too boring to talk about" Stocks :)

In the retirement village game "coming off a lower base" doesn't actually hold - as extraordinary profits are entirely reliant on reaching a large scale. It would be incredibly difficult for a brand new operator to make the same "return on shareholders funds" (which is a better measure than ROE for these businesses) as RYMAN.

Also, because of the "growth on growth" effect that you get as the villages mature, there is a tail wind of increasing cashflows in future years, yet no additional capital is required. This elevates return/profitability measures in any given year for larger villages that have been around longer.

Some of the more obvious examples of the scale/operational advantages RYM have over SUM that show up in the figures are:



RYM had a development margin of 23% vs a measly 6% for Summerset in 2011. And thats from almost identical average unit prices (although the mix of type makes it a bit hard to quantify how close the average actually is, but they won't be far off).
RYM make an operational profit margin from care/village fees and Summerset made a loss on care/village fees over non-development operational costs: in 2012 RYM enjoyed 126m fees vs 112m costs. In 2011 Summerset had care/village fees of 24.8m vs 28.7m of expenses – a $4m shortfall.
Simon Challies states in the latest RYM Annual Report that to make satisfactory returns off the care bed side of the business they have to build 100+ bed units (well over double the size of Summersets largest care-bed facility).


Clearly the market is placing a lot of weight on Summersets ability to increase their cashflows and margins through increased scale and village maturity going forward, but RYM is simply leaps and bounds ahead at this stage – and will be much better positioned when the real wave of demand hits.

Will Rymans increased huge size will limit their ability to grow? perhaps SUM will grow their footprint at a faster rate?



Summersets current build rate ads 8% per annum to their Total Unit count
Rymans current build rate ads 13% per annum to their Total Unit count


So Summerset are not growing their volume faster due to a starting from a lower base. RYM are in fact aided greatly by their size, not hindered by it. Their larger scale makes them more profitable and their more integrated and efficient build program is allowing them to build faster.

What about future growth in NZ and saturation points? Is Australia necessary for RYM to grow at the current rate far into the future?

Simon Challies puts best:

"At our new build rate the number of Ryman
residents in New Zealand is expected to reach
10,000 five years from now, at a time when the
first of the baby boomers will be celebrating their
70th birthdays.

Ironically the growth the company has experienced
over the past five years has come at a time when
the older population has not grown dramatically.
Over the past 15 years the 75 plus population has
grown at the rate of 5,000 per annum. In contrast
over the next five years we will see this growth rate

double to 10,000 per annum – a reflection of the
mini baby boom which took place between 1937
and 1945. And lift again to 16,000 per annum when
the baby boomers start turning 75 in 2021.

The company is well posiioned to serve this rapidly
growing segment of our society. We are often
asked whether we will reach saturation point in
the New Zealand market if we keep building at the
current rate. The answer is no – Ryman currently
represents 9.5% of the aged care and retirement

village market, and if the market expands in line
with the 75 plus population then in 2031 Ryman
will be only 17.0% of the market. At which time the
market is likely to be entering its strongest growth
phase as the first baby boomers reach the ripe old
age of 85.

Add to the mix our planned expansion into Australia
and you will appreciate that the opportunities for
the company are immense."

So Ryman are no where near saturation point and have multi-decade opportunities here in NZ. The Australian operation does not need to be successful for Rymans continued expansion but, if they are successful, it will add certainly impetus to the build rate in the future. It is very clear that this is going to be a very important industry. The flood of baby boomers that will require ever growing amounts of care is a real problem that isn’t even upon us yet, and RYM cannot meet the current demand for their villages.

I think having a bet on RYM & SUM is a perfectly fine strategy if you just wish to have a bet on the macro trend, without too much effort, as they both stand to benefit greatly over the long term and are by far the best options of the three listed operators. However, if you have the time and energy to do a bit of analysis, I think you will find RYM are a clear winner in this space and will continue to outperform the others over the long term.

Cheers

Sauce

[gonzo56]

Brilliant, thank you very much Sauce for taking the time to outline some very telling facts. Excellent post :)

[Hoop]

Thxs Sauce.... A much appreciated post.

[POSSUM THE CAT]

David B are there going to be enough people with enough money to meet there fees. Especially if they keep expanding at the rate they are. I am close to 70 and reasonably well heeled. Their fees would put quite a dent in my life style if I joined a village. Also there distance from good shopping means you have to use village transport to do anything. And unless you are groupies your life would be a hell hole. The only retirement village I have seen that I would consider is the one in Henderson which is roughly 100 metres from the mall, the railway station. and a bus stop at the gate. Not much further from bowling greens, RSA & other facilities. The posters raving over these villages are only looking at their financials & the aging baby boomers. But not looking at their ability to afford them.

[percy]

Sauce,
Thank you for sharing your anlysis and recomendations with us.Your clear thoughts are most helpfull.

[ratkin]

Great post, Sauce, thanks for taking the time to put it together. I was wondering if you had any thoughts about what potential risks there are for both companies going forward that could possibly upset their growth plans and business model?

The cost and availability of staff could become an issue , the pay in the sector is disgracefully low and there could be political pressure to change it. Property coming off its bubble could also be an issue . Sauce talks a lot of sense, however his glasses appear a little rose tinted in regards to Ryman.

Dont get me wrong i like the company (I was the one who started the "too boring to talk about" thread about eight years ago) but the sector not without risk, but then what is?

Possum the cat also made an interesting point about affordability. There could come a time when increasing competition in the sector forces margins to be cut , the impending increase in the retirement age could alo be a factor , people may have less money as they will finish work in their early 60s but not be paid any pensions until they are 67 or 70

There is also shareprice risk. Had a fairly stellar run since 2009 , and everyone seems to now be aboard , its certainly not " too boring to talk about " anymore . Who else is left to buy the stock? Nobody has a bad word to say about it , which strangely could be a worry

[ratkin]

Ratkin, regarding industrial relations, it should be noted that Ryman have next to no union presence, and pay their staff an above average wage for the industry. In that regard, I would consider them to be in a less riskier IR position compared to other players in the industry.
True, but we are only talking 50c an hour more

[macduffy]

A bit of a stretch to say that "everybody" owns RYM stock. Besides, there are over 7,500 shareholders with less than 5,001 shares, according to the recently released 2012 Annual Report. I'm one of those and looking to add "on the dips".

Just about the best stock on the NZX, IMO - just a pity that it plays such a minor role in my overly diversified portfolio!

:mellow:

[percy]

The cost of a unit in a Ryman retirement village is well under the average NZ house price.

[CJ]

The cost of a unit in a Ryman retirement village is well under the average NZ house price.Yip. ANd the target demographic are those taht will sell their mortgage free house and by a unit.

It will be interesting to see if anyone gets into the smaller, lower cost demographic. I am not sure how big Rymans units are but some of Metlifes are 3 bedroom. A cheaper option would be 1 beddies with a kitchenette on the basis most will used the shared facilities.

[POSSUM THE CAT]

Percy The Ryman village units would need to be a lot less than the average NZ house price. Take the there new village in Orewa what does this provide other than the views. The shopping is very poor and getting to hospitals other than the one the village mistakenly call a hospital. Once you really need this village because you are not very mobile. It becomes an absolute white elephant. The one in Gisborne is probably the best of a bad bunch, very close to the Hospital, but that is about it. The shopping they rave about is not much. Go & visit some of these villages. Take a good look at what is there bar for the supposed social life. That may not what is wanted, I myself do not want to live in somebody elses pocket & only go out on village excursions. They may look good but they are definitely not God's gift to retirees

[percy]

Well,I must admit I would love to retire at Orewa village . I have looked at Aidanfield {Halswell} and Nagio Marsh {Papanui} retirement villages in Christchurch and again both would suit me.I have driven past their two villages in Dunedin,their village in Nelson,and would be happy in those too.

[Hoop]

The cost of a unit in a Ryman retirement village is well under the average NZ house price.

and there lies a potential problem for RYM SUM MET ..etc.

We are debating RYM and SUM on this thread under not the best environmental scenario but a still very good scenario at present. We have low interest rates, stable house prices,,etc..so theses shares look very attractive.

OK ...This is a scenario which may not happen (we hope not)....but when commencing investing you have to look at all the possibilities...eh?... you do your FA and look at the best possible scenarios then balance it with the worst possible scenarios...so you have to ask yourself the looking forward questions ..Can the Govt interfere in this market sector...Can the Govt indirectly have positive and negative influences. Is the market sector sensitive to the Country's economic status..Is a property correction possible in NZ? What chance do you give it as likely to happen in NZ? To what degree is this sector vunerable to property Market correections???...etc.

We have been watching a procession of House price crashes country by country around the world for the last 4 years..Spain the latest and probably seen as the least likely to need a bailout a couple of years ago when there GDP debt was around 20%..until its property crash....Was Spains property correction from a much overvalued position???..In hindsight Yes
Can a property correction happen in NZ??....theoretically yes?

I hear people debating that these Euro countries caused their own problems with Sovereign debt around 120% -140%..how could they let their debt reach that high??...Economic morons, they should be shot!!! I hear them say..

Economic Morons???
Note The NZ household debt.. Chart below

http://i458.photobucket.com/albums/qq306/Hoop_1/ChartHouseholdDebt.jpg


Ahhh I hear you say its self correcting and is now coming down,,and...it is still a comfortable a seviceable debt... Hmmm as Spain this question 2 years ago and you would have got the same answer...remember Spain's GDP was 20% then.

A drop in Credit rating, rising unemployment rate or inflation rises see interest rates go up and service rate go up as well...are we at rock bottom re: interest rates?
Are housing prices correcting fast enough...answer: from the chart below it seems there hasn't been enough downside yet ..so technically NO...(Note though:. markets can stay technically overvalued for years)
Are we still inside this "seemingly forever" housing price bubble???? ....you decide:mellow:

Chart (modified by me)

http://i458.photobucket.com/albums/qq306/Hoop_1/ChartHouseprices.jpg

Disc Hold SUM

[percy]

Gee Wiz Hoop.Is it safe to have money in the bank? Will NZ survive an outbreak of Foot and Mouth?.
The biggest tailwind the retirement industry has is an aging population,and the fact that old people will need to go into care.I can't see any government being able to house these people.Government will need to work with/alongside the likes of RYM,SUM and MET.EBO has shown us how they work with governments to provide medical supplies,so I see a strong retirement sector working with government.The small players/single village owners will not survive,however the likes of RYM,SUM,and MET will do well.
Lets us not forget;when Nanna needs to go into a home she needs to go now.

[macduffy]

Take the there new village in Orewa what does this provide other than the views.

Hi Possum.

I reckon that one of the reasons for moving into a retirement village, for a lot of people, is the shedding of worry and responsibility for house and garden maintenance. OK, the cost will be built in to the purchase/occupancy cost and the monthly charge - whatever that is called - but the peace of mind that comes with not having to call the plumber, gardener, lawn man, electrician etc counts for a lot at some stage. At least, that's what some of my older friends tell me!

[percy]

Hi Possum.

I reckon that one of the reasons for moving into a retirement village, for a lot of people, is the shedding of worry and responsibility for house and garden maintenance. OK, the cost will be built in to the purchase/occupancy cost and the monthly charge - whatever that is called - but the peace of mind that comes with not having to call the plumber, gardener, lawn man, electrician etc counts for a lot at some stage. At least, that's what some of my older friends tell me!

Exactly.Also security,safety,and knowing help is at hand.

[macduffy]

Well it's a qualified 'everybody'. It's the kind of people who own shares. What happens when all of them own Ryman?

OK, I take your point about "everybody", David.

But I don't see the managed funds - and the Kiwisaver providers in particular - running out of demand for well-performing equities unless their funds inflow dries up. So it gets back to how the likes of RYM continue to perform as a business.

[POSSUM THE CAT]

MacDuffy I know it has some advantages in that maintenance is done for you. But this cat has lived in apartments & duplexes. Where one bad neighbor can make life hell. And even worse when you go into a retirement village where you basically have to use village transport for any movement. That was why I mentioned Waitakere Gardens in Henderson where you can either walk or use a mobility scooter to everything including the hospital. Some elderly people like that sort of lifestyle where you spend most of your time in community facilities. Others like this Cat would absolutely hate it, especially if the only easy means of transport was the village bus. I have a modern low maintenance house where everything from shopping malls, hospital, doctors, parks, Rsa, train station, bus stops and bowling greens within very little walking distance, and a mobility scooter if or when I need it would cope with everything. So do not think that retirement villages are the answer to a retirees dreams. We do not all want to hibernate in retirement villages. That a lot of you younger posters seem to think we do. Also those homes that offer full care at later stages most could not afford the increased fees for this sort of care.

[Hoop]

Gee Wiz Hoop.Is it safe to have money in the bank? Will NZ survive an outbreak of Foot and Mouth?.
The biggest tailwind the retirement industry has is an aging population,and the fact that old people will need to go into care.I can't see any government being able to house these people.Government will need to work with/alongside the likes of RYM,SUM and MET.EBO has shown us how they work with governments to provide medical supplies,so I see a strong retirement sector working with government.The small players/single village owners will not survive,however the likes of RYM,SUM,and MET will do well.
Lets us not forget;when Nanna needs to go into a home she needs to go now.

Percy...did I mention about that incoming Asteroid :(...just kidding :)

I feeling gloomy... probably due to the DOW theory ingrained in me....The stock gets bearish when "everyone" has bought in, when "everyone" is enthusiastic, when "everyone" talks about it, when media hears about it and spins "how marvelous the business is" and "it will stay this way for a long time to come".

This share should be in "everyone's" portfolio if it isn't should I buy in now?...averaging up in a bull market cycle is always a good strategy....but caution... it could be due for a bull market correction (a breather from running upwards too fast).

I try to keep an open mind on things..I do think the retirement sector is a good bet atm... ...but I tried to get a discussion going by mentioning the possible negative side of the equation because it seems that RYM (and probably MET SUM) is very sensitive to economic upheavals ...remember this golden goose laid rotten eggs from a period June 2007 (price 2.65) to March 2009 (price 1.16) RYM actually performed much worse than the NZX50 index during that Bear Market Cycle.

RYM and the Retirement Industry Sector still very positive in the long term I'm not so sure....the Govt has yet to get their greedy fingers into this prosperous sector. This increasing amount of money flowing back to the shareholders has to come from somewhere ...we assume mostly from the retired population..lets hope this increasing mass of people can stay cash rich in the future. (remember most elderly assets are in the property sector)

[percy]

Percy...did I mention about that incoming Asteroid :(...just kidding :)

I feeling gloomy... probably due to the DOW theory ingrained in me....The stock gets bearish when "everyone" has bought in, when "everyone" is enthusiastic, when "everyone" talks about it, when media hears about it and spins "how marvelous the business is" and "it will stay this way for a long time to come".

This share should be in "everyone's" portfolio if it isn't should I buy in now?...averaging up in a bull market cycle is always a good strategy....but caution... it could be due for a bull market correction (a breather from running upwards too fast).

I try to keep an open mind on things..I do think the retirement sector is a good bet atm... ...but I tried to get a discussion going by mentioning the possible negative side of the equation because it seems that RYM (and probably MET SUM) is very sensitive to economic upheavals ...remember this golden goose laid rotten eggs from a period June 2007 (price 2.65) to March 2009 (price 1.16) RYM actually performed much worse than the NZX50 index during that Bear Market Cycle.

RYM and the Retirement Industry Sector still very positive in the long term I'm not so sure....the Govt has yet to get their greedy fingers into this prosperous sector. This increasing amount of money flowing back to the shareholders has to come from somewhere ...we assume mostly from the retired population..lets hope this increasing mass of people can stay cash rich in the future. (remember most elderly assets are in the property sector)

Fair comment.However,we have an ageing population,that the retirement"'industry"and goverment are under prepared for.RYM have done well in the ups and downs of the property market.They have done well because they have provided a goods/service people want.
Possum The Cat,my brother is a valuer in hobart;he told me a few years ago that the property area that would show the greatest growth was two bedroom flats with in easy walking distance to malls and services,so I can see where you are coming from.I also appeiciate your views and congratulate you on getting yourself so well set up for your retirement.Wealth;On recent trips to Northland and the Coromandel I am overcome with wealth.Hokianga with houses with boats in the backyard,marina after marina full of expensive boats,holiday batches worth twice to five times the value of my house,auckland property prices,there is a lotand I mean a lot of people who are very wealthy in this country.

[troyvdh]

Percy..with all due respect...re the impression of wealth ...your probably right in a good number of cases...however its been my experience with some of these folk that "there aint much else"...I seem to recall a stat that some 80% of cars being driven over the Auckland harbour bridge aint owned by the driver.I am probably quite cynical but I for one have never been much impressed by blatant expressions of wealth.
Having said that I do have a boat and a batch !!!!!!!! but Ive had same for nigh on 20 years (in humble little Akaroa).
Cheers

[POSSUM THE CAT]

Percy do some research on Vision Senior Living & the location of their Villages (waitakere gardens is one) & this could be the reason of Metlifecare's move it is an entirely different model to my eyes Focusing on location to facilities rather than vista.

[karen1]

True, but we are only talking 50c an hour more

Minimum adult wage = 13.50/hr.

Housekeeper in dementia wing $14.00/hr

[percy]

Percy do some research on Vision Senior Living & the location of their Villages (waitakere gardens is one) & this could be the reason of Metlifecare's move it is an entirely different model to my eyes Focusing on location to facilities rather than vista.

The proof of the pudding is in the eating;RYM residents have chosen to go to the retirement village that suits all of their requirements.
Same as any business;give people what they want, and you will get what you want.

[Hoop]

.........................................Are we still inside this "seemingly forever" housing price bubble???? ....you decide:mellow:.................................... ........................


Hmmmm..that's interesting ..near perfect timing
http://www.landlords.co.nz/read-article.php?article_id=4351

[ratkin]

Somerset looking good today.
Up more than 5% on some reasonably good news

This shows one advantage that Sumerset has over Ryman , there is more room for quick shareprice appreciation , while Ryman already has good news factored into its price, expectations for Somerset not so high

[Hoop]

Somerset looking good today



Yep up another 1c since your post now retreated from 172 to 171 up 7c. That update announcement was good news indeed, it ended the small 2 month correction (breather?)..

[ratkin]

So the prospectus planned for 134 sales and 124 reslaes for the whole year

In six months they did 83 and 88

So to meet prospectus forecast they just need to sell 51 more units and 36 more resales. Looks like they will smash it Nice change for a company to obliterate its prospectus forecast, should do much to improve sentiment towards the company

[percy]

So the prospectus planned for 134 sales and 124 reslaes for the whole year

In six months they did 83 and 88

So to meet prospectus forecast they just need to sell 51 more units and 36 more resales. Looks like they will smash it Nice change for a company to obliterate its prospectus forecast, should do much to improve sentiment towards the company

Well I think this result sets the tone for this very well company in the "healthy" retirement sector.

[CJ]

Sparky - dont forget Rym has had a div since start of the year, two Div since SUM IPO'ed. Has SUM had a div yet?

[percy]

Well with my purchase of some SUM this morning I am pleased to have a foot in both camps.
Not being greedy I will leave MET to others.

[ratkin]

Here is a simple chart showing that the performance thus far has been almost identical between the two , although i havent factored in Rymans dividend


4053

[ratkin]

Does the chart show up ok? When i view not logged in , cant see it , not sure if i post i upload correctly

[percy]

Does the chart show up ok? When i view not logged in , cant see it , not sure if i post i upload correctly

Just perfect,thank you.

[ratkin]

Just perfect,thank you.

Thats good, wont be able to post anymore charts for a while , am in Cambrils on the costa dorada in Spain, having a holiday , been here three days and weather perfect , cant say i have seen many signs of a recession, quite a few appartments for sale but they not exactly cheap by NZ standards. Even have a Billibong shop down the road, seem to be doing a roaring trade in shorts
If any of you looking for a winter holiday you could do worse than singapore airlines chch to Barcelona , worth it just to oggle the women

[percy]

Thats good, wont be able to post anymore charts for a while , am in Cambrils on the costa dorada in Spain, having a holiday , been here three days and weather perfect , cant say i have seen many signs of a recession, quite a few appartments for sale but they not exactly cheap by NZ standards. Even have a Billibong shop down the road, seem to be doing a roaring trade in shorts
If any of you looking for a winter holiday you could do worse than singapore airlines chch to Barcelona , worth it just to oggle the women

Pity about the charts.
Would it be possible to post photos of the women?
Have a good holiday.

[Toulouse - Luzern]

Thats good, wont be able to post anymore charts for a while , am in Cambrils on the costa dorada in Spain, having a holiday , been here three days and weather perfect , cant say i have seen many signs of a recession, quite a few appartments for sale but they not exactly cheap by NZ standards. Even have a Billibong shop down the road, seem to be doing a roaring trade in shorts
If any of you looking for a winter holiday you could do worse than singapore airlines chch to Barcelona , worth it just to oggle the women

Will be there in a few days via Singapore Airlines to Barcelona. Looking forward to it.

[MAC]

Over the last six months I’ve heard RYM described as ”fully valued”, I’ve also heard and used the term “over valued” myself, but I’ve come to a position where I think the term “fully banked” is entirely more appropriate.

The residential healthcare sector is driven by such a significant enduring demographic that many expect growth to continue for a decade or more as the wealthiest generation in history, the baby boomers, work through the process of requiring aged care.

If you are a fund or institutional manager you will have a proportion of your portfolio in shares and in cash.

If as such a manager you see a sector such as this with apparently a decade of consistent forward growth, why would you not wish to compare returns on cash holdings with the residential healthcare sector. Sure, the risks are still higher owning stock than cash, and therefore returns should reflect that risk.

But, with such consistent forward earnings prospects I believe that fund managers are prepared to pay right now what RYM will be fundamentally worth in 2 to 3 years’ time. If they are investing with a long term horizon than any SP price that will provide cash equivalent returns plus a risk margin may well be perceived as a bargain.

The question then becomes thus, how many ‘valuation years’ ahead are institutions prepared to look in assessing the share price they will presently pay right now for RYM shares. It would seem to me, IMHO, that RYM at $6.81 is now valued between 2 and 3 years into the future.

A lot can happen in 3 years and I would be surprised if this trend continues too much further, therefore I’m prepared to describe RYM as now being “fully banked”. From this point forward RYM may continue to remain perpetually fully banked with SP growth more consistent with NPAT growth, ie: with a forward PEG of around 1.0.

When I look at SUM I don’t yet see this effect. The present SP of $3.07 appears to be fairly valued as at HY13, maybe slightly undervalued. This may be for a number of reasons, a prospective Quadrant sell down, the fact that fewer analysts cover SUM, and although SUM is the company awarded by the industry it is RYM that is the market darling.

My expectation is that SUM will though become fully banked just like RYM at some point in the future. Thus, this may potentially make SUM a better investment for the next couple of years.

Interested in the thoughts of other investors.

[benjitara]

agree with you Mac. I haven't really looked into RYM but SUM certainly looks undervalued in the market. Their land bank alone ensures unit growth of 15-20% a year if they continue to hit their projections and the half yearly hasn't really been responded to as quickly as I thought it would. While I'm not sure about the $4 dollar mark I'm confident about a push to mid $3's in pretty quick time. The margins involved with the business are top notch and If i'm right a increasing amount of the construction is in-house over the next 18 months.

[lissica]

Over the last six months I’ve heard RYM described as ”fully valued”, I’ve also heard and used the term “over valued” myself, but I’ve come to a position where I think the term “fully banked” is entirely more appropriate.

The residential healthcare sector is driven by such a significant enduring demographic that many expect growth to continue for a decade or more as the wealthiest generation in history, the baby boomers, work through the process of requiring aged care.

If you are a fund or institutional manager you will have a proportion of your portfolio in shares and in cash.

If as such a manager you see a sector such as this with apparently a decade of consistent forward growth, why would you not wish to compare returns on cash holdings with the residential healthcare sector. Sure, the risks are still higher owning stock than cash, and therefore returns should reflect that risk.

But, with such consistent forward earnings prospects I believe that fund managers are prepared to pay right now what RYM will be fundamentally worth in 2 to 3 years’ time. If they are investing with a long term horizon than any SP price that will provide cash equivalent returns plus a risk margin may well be perceived as a bargain.

The question then becomes thus, how many ‘valuation years’ ahead are institutions prepared to look in assessing the share price they will presently pay right now for RYM shares. It would seem to me, IMHO, that RYM at $6.81 is now valued between 2 and 3 years into the future.

A lot can happen in 3 years and I would be surprised if this trend continues too much further, therefore I’m prepared to describe RYM as now being “fully banked”. From this point forward RYM may continue to remain perpetually fully banked with SP growth more consistent with NPAT growth, ie: with a forward PEG of around 1.0.

When I look at SUM I don’t yet see this effect. The present SP of $3.07 appears to be fairly valued as at HY13, maybe slightly undervalued. This may be for a number of reasons, a prospective Quadrant sell down, the fact that fewer analysts cover SUM, and although SUM is the company awarded by the industry it is RYM that is the market darling.

My expectation is that SUM will though become fully banked just like RYM at some point in the future. Thus, this may potentially make SUM a better investment for the next couple of years.

Interested in the thoughts of other investors.

Is this another way to describe a 'new paradigm'?

I'm holding, nervously, at these levels, especially when other investors propose new ways of valuing a company.

[benjitara]

Just to add a little to my post. When I said 15-20% per unit increase. I meant physical units (brick and mortar) rather than price per share (unit). Their land bank, in theory accelerates (in essence doubling) what has happened in the companies future to date, to the next 6 years production. It's interesting to see the p/eps lying around 33 as opposed to see ryman a little lower. If you were to dynamically compare the current situations of both companies you could argue that SUM is actually very competitive at that ratio but that's something that i'm comfortable with because I can see the p/eps being low 20's in a acceptable time with some projections I've made. Macros are solid enough...