RYM - Ryman Healthcare

[winner69]

What do you know, a PE of 25 gives $6.50

I am wondering if it'll over-correct to the downside below a PE of 20. I won't be buying when its $6.50 in due course that's for sure !!
So much new stock supply (both in terms of scrip and physical buildings) coming to market in this sector on both sides of the Tasman.

And SUM might hit $2.50 soon as well

[Beagle]

And SUM might hit $2.50 soon as well

Poor old Norah with her 500,000 left in her family trust.

[winner69]

Need to keep an eye on chart to see where the downtrend will end so have one of my linear regression channel thingies. When price breaks out of this channel probably a time to think about buying again

Cant be right though vaygor. Price going down 0.6% a week when it should be going up 0.3% a week to match earnings growth

Chart starts May 1st this year - more than 5 months ago - things grind out slowly

[Vaygor1]

Bit messy from the turn of the century

Suppose you and Vaygor like the black dotted line

Thanks for the charts Winner.
They are very informative. I agree that, as nothing material has changed within RYM's growth/operation apart from their Australian business's economy-of-scale which can only improve from here-on-in, that irrespective of where the SP might eventually trend up again, that a TA analysis is the way to go at present and in the absence of any major news, squiggly lines are the order of the day. It appears to have certainly worked for you in selling around the low-mid $8 mark.

One question I have is that from 2002 until now you have used an EPS +18% per annum.
But looking at the graph below, the average actual figure from 2002 to-date is EPS +23% per annum.... slightly more than this if going to only 2012.

Attachment 6321

Attachment 6322


A graph using EPS +23% from 2002 to 2014 (No problems in using +16% looking forward in the interests of conservatism) and a PE of say 22 all the way from 2002 to the future would be of interest. Can you provide? Much appreciated if you can. Vaygor.

[Vaygor1]

Hi Winner.

I decided to create my own graphs given my post below (with tools a bit more basic than yours) using the historical EPS growth since 2000 of 23%.
I had to bring the graphs forward to 2005 as I am using a picture of the share price over time and can only go back 10 years.

Firstly I used a EPS growth of +18% since Jan 2000 with a PE of 20 right the way through so see if it looks like yours. Pretty close I think...

Attachment 6323

Then I tried it with a EPS growth of +23% since Jan 2000 up to Jan 2014 to reflect actual history and then an EPS growth of +16% thereafter. PE is still 20 ....

Attachment 6324

Lastly, is an EPS growth of +23% from Jan 2000 right through into the future. PE remains at 20. Not much diff in the short term to the one above...

Attachment 6325

Raw data (in the same order) for the 3 graphs above are below. I have highlighted in bold Jan-2015 as it is only 3 months away and Jan-2018 for comparison for about 3 years out. I think you will need to click on the data to see it properly.

Attachment 6327

Would welcome constructive critisism of this as the last two graphs almost look too good to be true. But regarding the 1st graph, unless something major changes down the track, I do struggle to imagine a RYM shareprice as low as $8.85 in Jan-2018 given the SP has peaked above that already, and that some months back the directors had no trouble at purchasing good volumes around the $8.30 mark.

[winner69]

Vaygor

Take it you using underlying earnings (per share)?

I can't quite follow your rationale about taking a 2000 figure and applying growth rates for the next 18 years.

The 'validity' of that methodology is to reconcile with reality in 2014. Underlying eps in 2014 was 23.6 cents. Your tables for 2014 have 22.83 cents for the first chart and 40.82 cents for the other charts

Whereas the first chart uses an eps close to reality)actual) there is some credence in what the chart represents going forward.

But when you use a 2014 number which is significantly higher than reality(actual) and then extrapolate that number forward aren't you really painting a false picture? Note: you have 2018 eps on the most optimistic view at 93.43 cents - that's an implied growth rate of 41% pa from actual 2014 to your assumed number. You believe that?)

I would contend (and how my charts were created) that you need to start with the latest known numbers (March 2014 eps) and then extrapolate forward using whatever assumptions you think are reasonable.

Bottom two charts look good (as you say) but I feel my lead into a false sense of security, because it essentially showing RYM as very much undervalued at the moment.

Hope constructive criticism

[Snow Leopard]

If you want a really frightening way of looking at Ryman:

For the FY2014 they made an operating NPBT of about $30m (EPS = 6c) on a NTA (property) of $1.85.

They were able to achieve this great result because apart from the $0.55 per share in bank loans they have $2.61 per share of interest free loans from granny and granddad which they refuse to repay until someone lends them a replacement (practically a PONZI scheme).

They are in the position where they can grow that operating profit & NTA at 18% pa, which in my books is worth a P/E of 20.

So in March it was either worth $0.06 * 0.72 (nominal tax paid) * 20 = $0.84 based on profits or the $1.85 based on NTA.

Maybe you could really stretch the valuation and say it was worth $1.85 plus the $2.61 robbed from the elderly for a grand total of $4.64.

Oh and because they pay a dividend greater than the operating profit they have to borrow money for that!

Best Wishes
Paper Tiger

Disc: Currently hold none of MET, RYM or SUM. Will buy again when the trend becomes friendly, but I do worry about how these things get valued.

[winner69]

If you want a really frightening way of looking at Ryman:

For the FY2014 they made an operating NPBT of about $30m (EPS = 6c) on a NTA (property) of $1.85.

They were able to achieve this great result because apart from the $0.55 per share in bank loans they have $2.61 per share of interest free loans from granny and granddad which they refuse to repay until someone lends them a replacement (practically a PONZI scheme).

They are in the position where they can grow that operating profit & NTA at 18% pa, which in my books is worth a P/E of 20.

So in March it was either worth $0.06 * 0.72 (nominal tax paid) * 20 = $0.84 based on profits or the $1.85 based on NTA.

Maybe you could really stretch the valuation and say it was worth $1.85 plus the $2.61 robbed from the elderly for a grand total of $4.64.

Oh and because they pay a dividend greater than the operating profit they have to borrow money for that!

Best Wishes
Paper Tiger

Disc: Currently hold none of MET, RYM or SUM. Will buy again when the trend becomes friendly, but I do worry about how these things get valued.

As one poster puts it not sure if you are taking the piss PT

No way will RYM be $5 (let alone $4.64) again I'm told ....the market is that irrational

[Snow Leopard]

As one poster puts it not sure if you are taking the piss PT

No way will RYM be $5 (let alone $4.64) again I'm told ....the market is that irrational

It is interesting to model a mature retirement village scenario where all growth is just the nominal 2.5% inflation figure and see how much you want to pay for that.

Best Wishes
Paper Tiger

[Vaygor1]

Vaygor

Take it you using underlying earnings (per share)?

I can't quite follow your rationale about taking a 2000 figure and applying growth rates for the next 18 years.

The 'validity' of that methodology is to reconcile with reality in 2014. Underlying eps in 2014 was 23.6 cents. Your tables for 2014 have 22.83 cents for the first chart and 40.82 cents for the other charts

Whereas the first chart uses an eps close to reality)actual) there is some credence in what the chart represents going forward.

But when you use a 2014 number which is significantly higher than reality(actual) and then extrapolate that number forward aren't you really painting a false picture? Note: you have 2018 eps on the most optimistic view at 93.43 cents - that's an implied growth rate of 41% pa from actual 2014 to your assumed number. You believe that?)

I would contend (and how my charts were created) that you need to start with the latest known numbers (March 2014 eps) and then extrapolate forward using whatever assumptions you think are reasonable.

Bottom two charts look good (as you say) but I feel my lead into a false sense of security, because it essentially showing RYM as very much undervalued at the moment.

Hope constructive criticism

Very constructive thanks Winner and much appreciated.

Yes, the basis behind using an historical growth of 23% annum is based on Underlying Profit as per my first post yesterday.
http://www.sharetrader.co.nz/showthr...l=1#post510810
Underlying Profit being non IFRS measure but a better reflection of the actual profits realised by RYM excluding one-offs etc.

1st chart in my previous post has 2014 EPS of 22.83 cents and the 2nd two charts have 2014 EPS of 40.82 cents.
According to page 19 of RYM's latest audited Annual Report, the EPS at 31-March-2014 was 39 cents/share.

Attachment 6328

So what's the best to use? Your term of underlying EPS at 23.6 cents/share (Underlying profit divided by number of shares) or the reported EPS of 39 cents/share (net income less dividends all over number of shares)?

I hear a lot of companies reporting Underlying Profit to its stakeholders but don't recall hearing any company reporting Underlying EPS.
Not trying to be smart-arse here, just trying to understand.