Maybe OCA might catch up as well
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The key question is has sentiment in the sector turned? SUM is the last one holding up strong, but will it last?
ryman leading the way of the retirement stocks ? it used to be the leader in price
In answer to your questions I opine as follows. For many, many years I have been calling RYM hugely overpriced, eg just one of many posts in 2013 and 2014 #1836 from May 2014, just one exampleFor many years more recently it has been woefully underperforming the NZX50, up just 45% in the last 5 years against NZX50 up 80%. We are now starting to see the serious process, (the last 5 years has just been a warm-up) of more reality be applied to the metrics of this former market darling which long ago lost the services of arguably one of the greatest CEO's of this generation in Simon Challies. Gordon was never going to be able to fill Simon's shoes and the gloss starting coming off this story many years ago.Quote:
Ryman have had a great run, their SP is up circa 500% in the last 5 years and at $8.30, even after the recent SP correction they trade on 35.17 times last years underlying earnings of 23.6 cps. As Craig's top analyst correctly pointed out, growth slowed in the second half and their projected growth in build rates are not what they once were. A further slowing of EPS growth or an increase in interest rates could see that "market darling" PE come under considerable pressure. On a balanced perspective I see considerably more downside potential than anything else as its already priced for absolute perfection in my opinion. Share split would make no difference as a 35 PE in a stock whose prospects for growth appear to be slowing is a 35 PE no matter which way you slice and dice it. Better prospects for yeild and capital growth elsewhere.
By contrast OCA has performed in line with the NZX50 overall since it listed (which is a pretty good result considering they are in the early to mid stages of a transformation program for their business model) SUM have hugely outperformed the NZX50 index and ARV have performed in line with the NZX50 so in summary I would say that the decline in RYM is a RYM specific issue and I think it still has a fairly long way to go. I think within a month or two or perhaps as little as a week or two SUM's share price will overtake RYM and it deserves too.
P.S. Jarden lowers its price target even further to $11.60 and retains SELL rating.
Quote:
The S&P/NZX 50 Index fell 10.61 points, or 0.1%, to 12,449.00. Within the index, 14 stocks fell, 26 rose and five were unchanged. The retirement village operator fell another 5.3% to $13.15 today, bringing its decline since Friday’s weak result to 8.5%. Investors are worried about Ryman’s mounting debt which rose by $540m to $2.25 billion in the year ended March, taking gearing to 44.3%. Forsyth Barr analysts downgraded the stock, giving it an ‘underperform’ rating and slashing 11% off their target price. “Ryman is now valued at a meaningful premium to both its historical average and peers despite having the lowest annuity ebitda growth in the sector and the highest leverage,” they said. The analysts said rising debt levels will likely continue and will reduce Ryman’s ability to lift its build rate in the medium term. Jarden’s equity research team had already given the stock a ‘sell’ rating, but also trimmed their target price to $11.60 today. The stock was overvalued due to its “stretched balance sheet that acts as a natural constraint on debt funded growth” and “unappealing absolute value with 16% downside potential”.
Whilst RYM has "under performed" the NZX50 in recent years, that needs to be put in context. The performance spreadsheet that another member posted on here some years ago (thank you), shows (updated), that over 20 years RYM has had a compounded share price increase of 20.25% p.a. Sure, the last 5 years of price performance are soft (12.8% p.a.) but that could be because the previous 5 years price increase was spectacular, and ran well ahead of company performance.
The current dividend yield to market price is very low, but anyone that has been in for some years will probably be enjoying accumulated dividends that far exceed their initial capital cost of the shares. RYM pointed out that a $1billion in dividends has been paid out since 1999 but only $25m was raised upon listing.
I think the Challies positive v Macleod negative impact is overstated. Gordon has been in the role just on 4 years, and yes, during that time profit performance has lagged the magic 15% p.a. profit increase that is a stated goal of RYM. Profits made now actually have their genesis some years back when Simon was calling the shots and certainly, from my perspective, too many complicated and difficult sites with large apartment buildings have been built in succession. This has meant a much slower cash conversion at these sites v town house type developments which tie up far less capital as the build on the site progresses.
Theres no doubt that in comparison to SUM & OCA the RYM price/NTA is much higher and therefore the potential for price downside exists. As Beagle points out Jarden have a price target of $11.60. Craigs have a target of $15.52 based on $297m uNPAT FE22. (less care beds, more units sold). Certainly, the year has started well, with all-time record sales in April, and a 5% lift in pricing for units. Further covid disruption (such as in Melbourne today) cannot be ruled out which will affect RYM in particular. This year's RYM result was the first time in 19 years, they have not delivered a record profit. Neither did SUM or OCA.
I note 5 RYM directors have bought shares in the past few days. If they were selling, or indeed, not even buying, then I would be far more nervous about long-term prospects.
Disc: Holding RYM, SUM, OCA
Broken down through the 200 day MA too. From a fundamental perspective they continue to look super expensive relative to their peers and technically the chart looks quite dreadful.
I find it much easier to make money on shares in an uptrend....(as in swimming with the incoming tide rather than swimming against an outgoing tide). I think any of the listed alternatives offer alternatives that are far more compelling. Disc: Hold OCA and ARV.
One of the directors spent over $3M buying his own company shares!
$3M!!!! I think even as a RYM director, it's not a small amount of money and this guy must be extremely bullish on RYM.
Disc: Hold RYM, SUM, OCA
14 cents between SUM share price and RYM. Inevitable that SUM will overtake RYM this year in SP. 2 cents in it now. We may see it happen today…..
Well done holders. I sold out of SUM some time back just before covid crisis. Used those funds to top up OCA for about 65 cent average
Maybe not goodbye yet ..... the Couta theorem has not been disproved yet - you may recall it was a 'revert to the mean' theory - in this case the SUM share price REVERTS to 50% of the RYM share price (50% being the long term average pre 2020). It was never that on a particular day SUM would be 50% of RYM but would revert to 50% as time moved on.
So give it time - the theory could still be relevant
Interesting the rise to 100% has happened since arly last year and mainly because of a rerating up of SUM and rerating down of RYM
Financially both RYM and SUM have performed about the same - Underlying EPS for both down about 7% and Book Value for both UP about 20% (RYM sightly better than SUM)
But SUM's PE ratio has gone from 19 to 30 while RYM's PE has fallen slightly from 34 to 28
SUM's P/B Ratio has increased from 1.8 to 2.2 but RYM's P?B has fallen from 3.6 to 2,2
Spooky that RYM and SUM value about the same by the market
So its all about perception - both performing financially about the same but SUM perceived to be better (sentiment)
And we all know what can happen to sentiment - so don't discard Couta's theorem just yet
You can see the $ effect of re-rating below (in particular of RYM)
The impact of RYM's P/B ratio falling from 3.6 to 2.2 has impacted share price by $7.28 since Dec 2019 ...OUCH. If the re-rating hadn't occurred the RYM share price would be over $20 now (and bear in mind financially they have been performing in line with sector peers)
SUM's slight re-rating up from 1.8 to 2.2 added $2.25 to share price
I have stated all along that what matters is earnings and a number of times over the years I have predicted that one day SUM will overtake RYM's share price and so it has come to pass.
The theorem espoused by a former poster never had any basis in investment metrics and was predicated upon nothing more than RYM's reputation relative to SUM's, (popularity).
Forbar have SUM on a forward underlying PE in the low 20's.
In the long run the market is a weighing machine, not a voting machine, (Ben Graham), and you will seldom see a better example of that coming to pass with the way these two's price relativity has changed in recent years.
Local Chch news about their Park Tce development which is still in consenting stage. Adjustments needed to plans to receive resource consent. This development sits on sites which have been cleared post-quake.
https://www.stuff.co.nz/business/pro...hbour-backlash
Retirement giant Ryman Healthcare smacked down in Australia, state rejects $200m project
https://www.nzherald.co.nz/business/...AHUYMOJGQMVP4/
article of interest. I only hold SUM in that sector nowadays
Sales are booming at Ryman
“We’ve had a record start to the year, with cash receipts of $403 million in the first quarter, up 82% on the COVID-impacted first quarter of last year,’’ Mr MacLeod said
Last two quarters best Gordon has seen in his 15 years there
Gordy hasn't been the boss for 15 years. CFO for much of that time, not CEO. The magic left this company when Simon Challis left. They've failed to meet their 15% annual growth rate almost every year since he left.
Good market information though. SUM also seeing record new and resales, bodes well for other companies in this sector (OCA and ARV).
Apparently shareholders expressed frustration at languishing share price at the ASM
Chairman Kerr et al sort of said the market just doesn’t get it.
One even suggested Kerr should step down …I like that shareholder