RYM - Ryman Healthcare

[Bjauck]

I have started to look at RYM and SUM in the last few weeks and it looks to me that they rely heavily on property appreciation to generate profits.
I am very interested in peoples thoughts on how RYM and SUM would fare if residential property had several years of reducing values.

Some prefer to look at underlying profits. In which case, it is possible that during a period of land value appreciation, there could be a drop in underlying profit(stripping out the unrealised movement in property value). See SUM in 2014: http://m.nzherald.co.nz/business/new...ectid=11307671

I guess the corollary could happen...whereby underlying profit could actually increase even though land values could be declining.

[Vaygor1]

Vaygor, have a read of my post #3386 over on the Sum thread, its easy to see where that 15% plus growth is going to come from and that $9 share price. PS-Petone village is up and running and Pukekohe village already has some residents living in it, so there's your 2 new villages with the other 2 mentioned in my post to open this year also.

I have been giving this some more thought and it is possible they may not make the 15% plus underlying profit growth based solely on the new villages coming on tap (As at the end of March balance date only a small number of sales from these will be included in the result) However what we don't know is how many resales they have had over the last 6 months(Could have been a bumper period) so the 15% may be acheived. ….

Thanks Couta.

I just scanned back at the last 5 years of RYM announcements. Unless I missed something, I can't find one instance where RYM announce to the market that they have opened a new village. Announcements in this respect seem to be limited to announcing land acquisitions, where they will be building a village, and occasionally the naming of a village.

If a village is open and operating then the completed or practically-complete pre-sold units within it, even if not occupied, would likely (or should) become part of the groups realised profit.

This being the case, and based upon your comment that residents have moved into Petone and Pukekohe, together with RYM's reputation, and their solid commitment to the market of 15% growth in Underlying Profit per annum with no news to the contrary, I think a YE profit lift of 15% is highly likely. A potential boost in resales adding further weight.

[macduffy]

Just for the record, the first Petone apartments were occupied last December. It's an extensive complex with much construction work still to be done. My guess, as a mere observor, is that RYM will be progressively completing and selling units in this village for the next couple of years.

[couta1]

Just for the record, the first Petone apartments were occupied last December. It's an extensive complex with much construction work still to be done. My guess, as a mere observor, is that RYM will be progressively completing and selling units in this village for the next couple of years.

A lot of the units are sold off the plans so the village can be almost totally sold out long before final completion.

[OldGuy]

Thanks Couta.

I just scanned back at the last 5 years of RYM announcements. Unless I missed something, I can't find one instance where RYM announce to the market that they have opened a new village. Announcements in this respect seem to be limited to announcing land acquisitions, where they will be building a village, and occasionally the naming of a village.

If that's the case, aren't you slightly suspicious why they are suddenly announcing the opening of new villages???

[Beagle]

A lot of the units are sold off the plans so the village can be almost totally sold out long before final completion.

As you probably already know mate the accounting rules preclude companies recognising the profit from the sale until settlement has actually occurred, normally as I am sure you will appreciate this happens just before occupation. All other things being equal, and I'm not suggesting they are exactly, (as there's no denying RYM's superb track record), the rate at which RYM or SYM can grow their build rate, (SUM 33% this year) is a strong pointer to underlying profit growth ahead.

[couta1]

As you probably already know mate the accounting rules preclude companies recognising the profit from the sale until settlement has actually occurred, normally as I am sure you will appreciate this happens just before occupation.

Yeah, I was just trying to highlight the fact that you can't tell how the village sales are progressing just by viewing construction progress, the two don't often line up in this business.

[couta1]

If that's the case, aren't you slightly suspicious why they are suddenly announcing the opening of new villages???

They haven't announced it publically, only progress reports in the Ryman Times mags as always OG.

[couta1]

Roger I'm not as bullish as you regarding Sums build rate this year, if they don't show any progress at Q2 sales metrics(Which is the half year report period) then regardless of their 400 unit build projection the market will thump the share price and according to your thinking on Rymans upcoming result then so the market should.

[Beagle]

Fair enough mate. You're much closer to the coal face than I am so I totally respect what you have to say BUT perhaps worth noting that Julian Cook did look supremely confident of his new 400 build rate target in that video the other day (plus 100 care beds) and they've never missed a build rate target before. I guess you could say the same about RYM's 15% underlying profit growth target, they're certainly the company with the longer track record and its a superb one, more than happy to concede that.