RYM - Ryman Healthcare

[Vaygor1]

... 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.

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.

Not disputing the above. My view is that whatever RYM borrows could be deemed to be spent on any given part of the business be it dividend payments, land purchases, construction, operations etc. In Ryman's own words though ( http://www.rymanhealthcare.co.nz/inv...tive-advantage ), they say that all borrowing is due to getting new villages completed.

'Access to capital - We only borrow to fund the work in progress for new villages, and therefore we have a low level of gearing. Debt is repaid in full for each village, including our care facilities, once all Occupancy Advances for retirement village units have been collected on village completion. This means we have no debt across a portfolio worth over $2.4 billion today; and therefore can comfortably access capital for future planned developments.'

One could argue that they aren't borrowing enough, and that if RYM can borrow at 7% per annum and make 18% per annum out of it then maybe their gearing should be higher than it currently is. For me though, I am comfortable with around 30% Debt to Equity. Don't want it too high in case of a Black Swan event.

Attachment 5825

[winner69]

At least the old guard who ran this place have been sacked

Next time when the inevitable outbreak occurs they will do the right things

http://www.stuff.co.nz/dominion-post...ark-over-virus

[blocker3]

$8.44 at the close today.Support must be close.(My ASB charts do not show Support/Rersistance)

[Beagle]

Ryman to spend more than $100 million on second Melbourne village
Wednesday 21st May 2014
Ryman Healthcare, which last week reported a 43 percent boost in annual profit, has secured a site for its second retirement village in Melbourne, which it expects to spend more than $100 million to build.

The Christchurch-based company purchased a 5.5 hectare property in Melbourne's eastern suburbs from the Victorian government as part of the state's surplus land programme, it said in a statement. The former Brandon Park Secondary College site will be redeveloped into a retirement village for 400 residents, including residential aged care amenities and dementia care.

"It's a site we've had our eye on for a number of years," managing director Simon Challies said. "We're delighted to have secured it."

The company had cash and equivalents of $1.8 million as at March 31, with undrawn bank facilities of $222.4 million.

Ryman expanded into Australia with the first residents moving into its Wheelers Hill village earlier this month, and signalled the latest acquisition when reporting its annual earnings last week.

Like other retirement village developers and operators, Ryman is looking to latch on to an ageing demographic, and it increased its annual building target to 850 beds and units a year in New Zealand by 2017, from a rate of 700 a year.

Ryman owns and operates 27 retirement villages housing 7,500 residents.

The shares dropped 3 percent to $8.44 yesterday, and have gained 7.5 percent this year. The stock is rated an average 'hold' based on five analyst recommendations compiled by Reuters, with a median target price of $8.25.

Interesting that 5 analysts have a median price target for the stock at $8.25 in 12 months time....and you get what, a 1% dividend yeild in the meantime...

[winner69]

$8.44 at the close today.Support must be close.(My ASB charts do not show Support/Rersistance)

My Chanel chart has support at 825 today

100MA is 822

No need to panic yet

[Beagle]

That is assuming you trust the analysts though right Roger? My understanding (in hind sight) is that analysts have generally been pretty average with respect to 12 month targets.

That being said, the SP is now a 7.5% discount to what I sold at not more than 2 weeks ago. Seriously considering getting back in now for a short term trade off the 100MA.

The signs are all there that growth is slowing in my opinion. Second half growth was well short of first half and many of their best staff have been sent to Australia. Their build rate is short of the 700 target last year and the Australian economy is in real trouble at the same time Ryman are expanding there. PE is still too high for my perception of average future year's growth. I expect a breech of the 100 day MA very soon.

[winner69]

The signs are all there that growth is slowing in my opinion. Second half growth was well short of first half and many of their best staff have been sent to Australia. Their build rate is short of the 700 target last year and the Australian economy is in real trouble at the same time Ryman are expanding there. PE is still too high for my perception of average future year's growth. I expect a breech of the 100 day MA very soon.

Roger, that woll probaby happen

My little chart of a few weeks ago says it all. When RYM PE goes over 30 the 3 to 5 year returns are likely to be disappointing, even negative.

Even though earnings will grow at 15%-20% pa but that PE will shrink

Hold for a very long time you will be OK though

[Beagle]

Roger, that woll probaby happen

My little chart of a few weeks ago says it all. When RYM PE goes over 30 the 3 to 5 year returns are likely to be disappointing, even negative.

Even though earnings will grow at 15%-20% pa but that PE will shrink

Hold for a very long time you will be OK though

Agreed, although honestly I doubt they'll be able to meet their own target of 15% growth in the medium term. The collapse of the Australian motor vehicle industry and all the related component manufacturers and the downstream effect of that on the south Australian economy and Melbourne in particular is something I believe many people including Ryman are underestimating. Add in the slowdown in China and the effect on Australia's mining industry and the Australian $50 billion dollar deficit and you have the perfect storm. That said if one is inclined too try and expand in Australia it almost beggars belief why they didn't choose a warmer state...I would have thought it would be completly obvious that people want to retire somewhere warm and that Queensland would have been the obvious choice. While they're trying to expand over there and using all their best staff to do so are they losing focus in N.Z. ?
My concern is the effect a declinig SP will have on SUM, who although having a far more focused approach may get tarred with the same brush if the sector is perceived too no longer be flavour of the decade.
Incredible as it may seem, there's growth stocks on a 2015 PE of less than 10, HNZ and AIR are two that spring to mind.

[troyvdh]

giday I accept all the arguments above..re the likely future SP performance.....however I cannot help thinking...could it be that perhaps folk think the SP is now to "high"....should RYM have another share split (the last being ..about 11.34 approx. several years ago)...would folk view RYM as "better value"..I acknowledge that this rationale is totally absurd..but would it work ????

[Joshuatree]

As a comparison AOG has jus bought two sites' one in sanctuary cove in aus , 15 plus hectares that will accommodate 1000 people including care/ dementia patients.