RYM - Ryman Healthcare

**winner69** · 11-10-2014, 04:36 PM

RYM, SUM et al prefer to use Underlying Profit as a means of measuring financial operational performance of the company. The Report Profit is IFRS (what you posted)and includes the unrealised fair value adjustments. From your past comments I get the impression that you use the underlying profit figure.

As new guy posted on sum thread - Underlying profit differs from NZ IF RS net profit after tax. The directors have provided an underlying profit measure to assist readers in determining the realised and non-realised components of fair value movement of investment property and tax expense in the Group’s income statement. The measure is used internally in conjunction with other measures to monitor performance and make investment decisions. Underlying profit is an industry-wide measure which the Group uses consistently across reporting periods.

I use both but preference is for the IFRS figure. The charts yesterday were on underlying numbers because most readers of this thread think this is best.

Use what suits you best. But take into account IFRS number is a lot higher than underlying so assumptions around multiples are different ( PE from 2002 to 2012 using underlying profit is about 20 but reported IFRS profit it is 17)

For reference below is the data I have used over the years (all care no responsibility for accuracy)

**couta1** · 11-10-2014, 06:12 PM

For those worried about the effect the possible listing of Hercules and Oceania will have on the current big three go and have a read of Taking Stock 25th Sept on the Chris Lee website, a very good article which I completely agree with and why I'm not worried if these two listings take place.

**Vaygor1** · 11-10-2014, 07:02 PM

Originally Posted by winner69

… Use what suits you best. But take into account IFRS number is a lot higher than underlying so assumptions around multiples are different ( PE from 2002 to 2012 using underlying profit is about 20 but reported IFRS profit it is 17)…

Thanks again.

Makes sense to use lower PE if using IFRS EPS.

So using historical underlying profit growth rate of 22.6% per annum (up to 2014) and then 16% thereafter, but using a PE of 17 right the way through I get the following chart. The reason for adjusting EPS multiplier slightly to 22.6% (from 23% as per last post) is so that the EPS for Jan 2014 comes out at 39 as per RYM's March 2014 report.

Attachment 6334

Raw Data as follows:

Attachment 6333

As much as I don't want to be, I know I am biased being a holder but this graph 'feels' more realistic to me anyway. I know… each to their own and there's always more than one way to skin a cat.

Interesting that the 2018 figure hits $12.00 exactly. If using a growth of 22.6% instead of 16% all the way through to 2018, this number becomes $14.98

**winner69** · 11-10-2014, 07:11 PM

vaygor, when your table says Jan-14 $6.63 when in 2014 does that suggest the price could be $6.63? Assuming that Jan-14 is xls for 2014

I hope $12 plus sometime in 3 to 4 years - esp if it overshoots historical trends, My immediate interest is how it gets there and whether my returns are from $5 or $6 or $7 only time will tell

And this is all dependent on ever increasing property prices eh, earnings did go backwards one year didn't they

**Vaygor1** · 11-10-2014, 07:33 PM

Originally Posted by winner69

vaygor, when your table says Jan-14 $6.63 when in 2014 does that suggest the price could be $6.63? Assuming that Jan-14 is xls for 2014 ….

Yes it does.
It also says Share Price in Jan-2015 three months from now (assuming a rational market) should be $7.69 but if EPS growth remains at the historical average of 22.6% for the year (instead of the projected 16%), this would be $8.13
I'd have to check back on the earnings history to see if they went backwards in one year. Will take a look.

**winner69** · 11-10-2014, 07:39 PM

Originally Posted by Vaygor1

Yes it does.
It also says Share Price in Jan-2015 three months from now (assuming a rational market) should be $8.13
I'd have to check back on the earnings history to see if they went backwards in one year. Will take a look.

the year you topped up I think when you were down the gurgler but held strong

**Vaygor1** · 11-10-2014, 08:02 PM

Originally Posted by winner69

the year you topped up I think when you were down the gurgler but held strong

Hi. Sorry, just amended my last post, the Jan-2015 figure, which I read off the wrong chart version. Corrected now.

My drawn-out holding period at a large paper loss was from Jan-2008 till April-2010 as per my super disclosure post...
http://www.sharetrader.co.nz/showthr...l=1#post482295

Have not purchased anymore RYM since Mar-2013 as I have enough. Have never sold any to-date either.

Note in the link (posted in late May this year) that I consider at the time that $8.40 was still a good price. Not so sure now, but how much is a share worth with a reliable and ongoing expanding rate-of-return of 15%-25% per annum? If everyone knew 100% that such a growth rate was going to be sustained in the medium to long term (and I think it will) then I am sure the SP would be quite a lot higher than it is at the minute.

**winner69** · 11-10-2014, 08:16 PM

Originally Posted by Vaygor1

Hi. Sorry, just amended my last post, the Jan-2015 figure, which I read off the wrong chart version. Corrected now.

My drawn-out holding period at a large paper loss was from Jan-2008 till April-2010 as per my super disclosure post...
http://www.sharetrader.co.nz/showthr...l=1#post482295

Have not purchased anymore RYM since Mar-2013 as I have enough. Have never sold any to-date either.

Note in the link (posted in late May this year) that I consider at the time that $8.40 was still a good price. Not so sure now, but how much is a share worth with a reliable and ongoing expanding rate-of-return of 15%-25% per annum? If everyone knew 100% that such a growth rate was going to be sustained in the medium to long term (and I think it will) then I am sure the SP would be quite a lot higher than it is at the minute.

2009 was the year profits went backwards

**Vaygor1** · 11-10-2014, 08:20 PM

Originally Posted by winner69

2009 was the year profits went backwards

Underlying profits or IFRS (GAAP?) profits? Underlying profit looks like it stagnated (even went up slightly) from 2008 to 2009.

UPDATE:
From 2007 to 2008 RYM took a huge leap in underlying profits. Maybe RYM got ahead of itself in that year as I think SUM might have done last year.

One thing i do know, is when any share performs poorly against expectations, then the market hammers the price through the floor. Great time to buy if the fundamentals remain intact.