If they make 11.0 cps their CAGR in underlying eps is 7% in the last 5 years in an absolutely booming real estate market. People can decide for themselves if they are impressed with that.
Printable View
If they make 11.0 cps their CAGR in underlying eps is 7% in the last 5 years in an absolutely booming real estate market. People can decide for themselves if they are impressed with that.
My point is that ARV enjoyed about 7% compound average growth rates in a highly supportive real estate market. You can drill down into the nuances of varying level's of tailwinds over that five year period if you want but my comment is based upon a general overview of that timeframe.
When considering what's the right PE one needs to drill down into jhow much of that earnings growth was helped by the market tailwinds (that appear unlikely to recur in the near future) and how much of it was generated by their business model with its pretty modest development margins. Then one needs to consider the metrics in light of the sector leader who have a CAGR in underlying earnings of 33% per annum over the last decade. My thesis is that ARV and SUM should trade on very different metrics because one business model obviously works far better than the other.
Initially I thought the lift in build rate to 300 units in FY23 was a good thing, now I see it as a real challenge with their pretty mediocre track record of development margins and the massively increased constructions costs and supply chain challenges.
At current pricing I prefer OCA to this, at least with OCA its priced like the pretty ordinary company it is. I don't think this deserves a premium to NTA and neither does RYM. The only one that does based on proven high performance is SUM.
Whatever ARV 5 year EPS growth is it is at least positive ..... unlike Oceania with its negative eps growth ....but then Oceania is a 'pretty ordinary company'
I wish it was as simple as comparing underlying eps between retirement companies. With the way OCA account for gains, (outside of underlying profit) on the PPE (property plant and equipment), which if I recall correctly includes their care suites its anything but simple.
OCA accounts are an absolute dog's breakfast. I think ARV, OCA and RYM are all pretty ordinary companies.
As we all know - it just depends on your terms of reference to determine whether a trend goes up or down.
So - you wanted it to be negative. Which terms did you choose to achieve that?
Hint: Quite hard to achieve, if you take the 2022 forecast (16 cents) as reference point, but sure e.g. earnings growth from 2019 (8 cents) to 2020 (- 2 cents) was negative. And yes - 2016 (a stellar 15 cents) to 2021 (12 cents based on a 10 month FY) would be negative as well.
Bad company, really bad company. They made a loss in 2020. Oops - this was Covid, wasn't it?
Anyway - average EPS (9 years) is 7 cents. 2022 forecast is 16 cents. I call this rising, but what do I know ...
For Bars updated forecast this morning. Let the whining from you momentum/ traders begin.
OUTPERFORM
We walk away from Arvida's (ARV) 2H22 investor update with three key takeaways; (1) Arena Living is so far performing inline with expectations, which we view as a clear positive. On our estimates Arena Living will contribute with about one third
of annuity EBITDA in FY23; (2) organic resale gains appears to be growing strongly, likely driven by maturing Sanderson
villages; and (3) operating expenses are elevated due to the Omicron outbreak. ARV estimates NZ$4–5m of additional
costs in 2H22. This is broadly in-line with our estimates but we did not receive any information in relation to non-Omicron
opex, something that remains a headwind for the sector. We leave our NZ$2.50 target price unchanged as increased WACC
is offset by higher earnings and roll forward.
What's changed?
Resale gains — the good news story that delivers
Resale gains is the good news story in the sector. We estimate that the all important resale margins came in at ~28% in 2H22, up from
a run-rate of 20–25% over the last few periods. The strength will be driven by the very high resale margins from Arena Living, which
we estimate to be >40%. Arena Living was only included for three quarters of 2H22, suggesting strong support for our FY23
expectations of 28% resale margins. Pleasingly, average resale unit prices increased +18% versus FY21, also likely helped by Arena
Living related resales. We have increased confidence in our raised FY23 resale gains estimate of ~NZ$70m, +62% versus FY22 (+23%
organically) and have increased our FY22 resale gains estimates by +NZ$9m to reflect the announced 2H22 numbers.
Operating expenses — the bad news story but appears in-line with expectations
Operating expenses is the bad news story in the sector. Here we didn’t get much news, as ARV doesn't report operating expenses
within its sales release. ARV commented that it had ~NZ$4m–5m of additional COVID related costs in 2H22. We are looking for
underlying opex growth of 12% in FY22 versus FY21 in addition to Arena Living and the announced Omicron additional expenses. We
have increased our FY22 opex estimates by less than +1% and left our FY23/24 opex estimates unchanged.
ARV — one of the best risk rewards in an uninspiring NZ market
We view ARV as one of the most attractive risk rewards in an overall uninspiring NZ market. We expect strong organic and in-organic
growth in FY23, up ~+50% versus FY22, and continued double digit growth thereafter as its villages mature and repricing of the
Arena Living makes its way through to increased Deferred Management Fees (DMF). ARV is valued at ~1x book value, ~13x PE and
~18x EV/annuity EBITDA. This is an approximate 30–50% discount to Ryman (RYM) and Summerset (SUM) on a blended basis
BP, I was using Underlying Earnings PE ....my bad for not making that clear
In case people overlook it - this bit from Forbar is brilliant
We view ARV as one of the most attractive risk rewards in an overall uninspiring NZ market. We expect strong organic and in-organic
growth in FY23, up ~+50% versus FY22, and continued double digit growth thereafter
and its really undervalued by the market - 18x EV/annuity EBITDA. This is an approximate 30–50% discount to Ryman (RYM) and Summerset (SUM) on a blended basis
That's all you need to know
they must have short memories - the recent Cap Raise was at 1.97 wasn't it - some may still be wearing a bundle of
'attractive' Red Ink out of that, as things came off the boil :)
I think it comes down to how the investors view the Sector, especially in light of recent economic trends
and other factors going on - many of which look far from attractive, if not worrying for oldies living
in these sort of communal joints ;)
Maybe I'm wrong - but the Sector was most attractive on the steep climb out of the covid dip
now with that out of the way, time to stand away from a safe distance.. the same applies
to many other sectors & companies too - still overpriced for the times on perhaps potential
future performance :)
I reckon more attractive + accurate company sum ups could be written by folk on here and licenced out
for the brokers to use at a good price - and the reports would be far closer to reality ;)
Okay I will buy into this and start the howling off properly. (people would be disappointed if I didn't lol).
All predicated upon normal development margins in FY23 (yeah right) and normal resales, (yeah right). Volumes of houses available for sale are rising quickly, prices are falling and days to sell are lengthening. Were Forbar involved in the process of when investors were conned, opps sorry invited to apply for that placement ex Blackrock ? As if I even needed to ask http://nzx-prod-s7fsd7f98s.s3-websit...494/357625.pdf That absolute load of corporate creativity cost me $17K, (its been a really long time since I lost that sort of money on any share, probably have to go back to the GFC)...once bitten twice shy !
A lot of their updated research seems to be face saving from previous errors of judgement, I'm looking at you Forbar's HGH analyst !
Yep, $1.97 for some and $1.85 for others .... so UNDER WATER
So are some Oceania shareholders who donated $1.30 when they passed the begging bowl around ..... jeez down 17% since then .... more than ARV
The old hang the begging bowl out to buy more big things trick ..... and not adding any real value to the business
As I said yesterday maybe this sort of behaviour is why they remain unloved
Forsyth saying ARV worth $2.50... so $1.97 / $1.85 is going to look cheap soon enough.
I remember back in mid 2015 when ARV expanded into Auckland by buying some great villages up there - they had to raise at 84c, down 11c from IPO just 7 months earlier... 84c turned out to be virtually the lowest ARV would ever go and these days 84c would be incredibly cheap to get into ARV at... expanding into Auckland likely added a tremendous amount of value even if things didn't look rosy at the time... yes indeed, some people do have short memories!