RYM - Ryman Healthcare

[Vaygor1]

Apoligies, my mistake. Its clear the 39 cents per share this year is calculated on the full revaluation profit, .39 x 500m = $195M which is inclusive of all revaluations, realised and unrealised i.e. IFRS and 27.3 c.p.s. is last years figure inclusive of all revaluations.

Underlying earnings were $100m last year on 500m shares = 20 c.p.s. and this year are $118m on 500m shares = 23.6 c.p.s.
$8.70 /23.6 cps = a PE of 37 times last years earnings or assumming another 18% profit growth for 2015 a forward PE of 31 times earnings. ….

Thanks Roger. Much appreciated.

[Vaygor1]

Newguy, you only have to read this thread (and many others) to see how quickly the tone of peoples posts on any given stock change as soon as they sell out, particularly when it is in order to buy into a rival stock! It's so blatant its not funny.

Up to you to conclude why people do that.

DISC: Finally sold out of RYM completely the other day - @ $8.99 to be exact. Has been a great investment (and IMO still is) but time for me to exit for various reasons.

Agreed Turmeric. My sentiment echo's yours on the issue.

Regarding selling out of RYM, for me I think its too late. Have waited 7 years now to get a current annual dividend payment of approx 5.5% on my initial investment. Next year at 18% company growth I except 6.6% return, and 7.9% the year after that. ie The dividend as a long-term income stream that just keeps expanding has taken over the temptation to take the substantial capital gain. Imagine the dividend RYM could pay out if they stopped spending all that money on new capital.

[Beagle]

NewGuy is raising some good points that should be considered. If you own Ryman and don't need to worry about fluctuations until you might want to sell in 20 years, then holding is a great option. If you actively manage your portfolio then it can be argued that Ryman is near the top of one of its surges and may or may not be quite flat over the next few years.

I am in the second camp, and sold out a couple of weeks ago. I believe i can get better mid-term SP appreciation elsewhere (next 1-3 years). I love the company and will definitely own it again in the future.

It all depends on your investment philosophy. As long as you understand what you want out of Ryman for the next year or 20 years then your desired position in the stock should be obvious.

If you expect another huge growth year I would hope you have thought very carefully about it

High quality post that one, well said. Like you I think there's better prospects elsewhere taking a medium term 1-3 year viewpoint but for those that just want to own this passivly until they retire eventually, this is arguably "the premier" growth stock on the N.Z. exchange. They have the long term proven track record and the market appears willing to price this at a premium at this stage. If the PE drops back to mid 20's where I see fair value I'll be back in without any hesitation.

Its very interesting to note that SUM are trading on a historic underlying PE of 35 times.
I think they can grow EPS faster than RYM over the medium term for a range of reasons i've outlined in that thread but I would be the first to acknowledge that RYM are the ones to have the very long term track record of earnings growth, whereas SUM are a fairly new company and need more runs on the board to be able to prove a consistent ability to grow profits at a rate higher than 20% per annum to enjoy meaningful SP appreciation from their current level. Only time will tell which company can grow its underlying earnings at the faster rate going forward from here.

[winner69]

. Imagine the dividend RYM could pay out if they stopped spending all that money on new capital.

Would mean they don't need to borrow to pay the dividend They did reinvest every penny of cash flow generated but shareholders want their piece of the cake as well so off to the bank we go

From their cash flow statement

[winner69]

Updating all my Ryman financial models the first impression I get is that such a stellar result (both underlying and reported NPAT) is a result of the rising property prices we have seen over the last 12 months

The other thing I noticed is that NPBT after taking out revaluations appears to be down

[Onion]

Imagine the dividend RYM could pay out if they stopped spending all that money on new capital.

Ryman is a growth company. Shareholders own RYM because of its growth prospects. It borrows extensively to fund the growth. It needs to pay market interest rates. Any dividend it pays effectively increases the level of borrowing.

The "market" expects NZ companies to pay dividends. This is at odds with a pure growth strategy, as we should expect a growth company like RYM to generate more wealth from reinvesting any profit than from paying out as dividend.

Read "A Great Company at a Fair Price" by Brian McNiven, he is a strong advocate for [growth companies] reinvesting instead of paying dividends.

I don't own RYM so haven't studied their dividend policies, but I do have some SUM and believe they try to pay a minimal dividend to keep the "market" happy while retaining most earnings for reinvestment.

[macduffy]

Agreed Turmeric. My sentiment echo's yours on the issue.

Regarding selling out of RYM, for me I think its too late. Have waited 7 years now to get a current annual dividend payment of approx 5.5% on my initial investment. Next year at 18% company growth I except 6.6% return, and 7.9% the year after that. ie The dividend as a long-term income stream that just keeps expanding has taken over the temptation to take the substantial capital gain. Imagine the dividend RYM could pay out if they stopped spending all that money on new capital.

Never "too late" to sell, Vaygor, if the cash can be deployed better somewhere else. Don't be excessively blindsided by yield on original investment - what can be earned on current "value" is what's important. Having said that, I'm a longterm holder of RYM - and SUM - and I don't always follow my own advice!

Cheers

[macduffy]

Thanks, Harvey.

Fancy, it took seven years for me to find that out!



A note of caution from yesterday's announcement as reported by the DomPost.

"The company was still learning about operating in Australia, including overcoming challenges within the construction, regulatory and industrial relations areas."

Doesn't seem to have deterred RYM from pressing ahead with a second Melbourne village, however.

[Harvey Specter]

Thanks, Harvey.

Fancy, it took seven years for me to find that out!

Always best to hide your errors

A note of caution from yesterday's announcement as reported by the DomPost.

"The company was still learning about operating in Australia, including overcoming challenges within the construction, regulatory and industrial relations areas."

Doesn't seem to have deterred RYM from pressing ahead with a second Melbourne village, however.

But if they can overcome them, then those challenges become a moat.

[Beagle]

Ouch...have to say that's pretty much how I see it too.

Shares in Ryman Healthcare weakened for a second day on the expectation New Zealand's largest listed retirement village operator will post slower earnings growth in coming years as its costs increase.

Christchurch-based Ryman yesterday posted an 18 percent rise in underlying earnings to $118.2 million for the year ended March 31. Increased costs from adding staff and boosting wages for its aged care workers meant annual earnings growth slowed to a 14 percent pace in the second half, from a 22 percent rate in the first half, brokerage Craigs Investment Partners said in a note.

Shares in Ryman fell as much as 1.2 percent to a four-day low of $8.60. At midday, the stock was down 0.9 percent at $8.62, adding to yesterday's 2 percent decline.

Ryman's costs will probably accelerate in coming years as the company is likely to have exhausted its accumulated tax losses, meaning it will have to start paying tax on its assessable earnings which will grow over time, Craigs said. In addition, Ryman's operating costs at its aged care facilities will step up as it raises wages to caregivers and invests in additional staff and training.

"In FY15, we expect earnings per share growth will remain robust but slow back towards trend of about 15 percent per annum following several years of growing above trend, as Ryman pays tax for the first time and as increased costs in its aged care business roll through," Craigs research analyst Stephen Ridgewell said in the note.

Ryman's earnings per share growth slowed to 17.9 percent in 2014, from 19.2 percent in 2013, Craigs said. EPS growth is likely to weaken further to a 13.9 percent in 2015 and 11.9 percent in 2016 before picking up again to a 15.9 percent pace in 2017, the brokerage estimates.

Ridgewell maintained his 'sell' recommendation on Ryman shares, saying the company's strong growth outlook is already priced into the stock.

http://www.sharechat.co.nz/article/8...e-earningshtml