RYM - Ryman Healthcare

[winner69]

Not long to go as predicted by some old mutt on here a few years ago, (met with widespread disbelief at the time).

Maybe OCA might catch up as well

[Ggcc]

Not long to go as predicted by some old mutt on here a few years ago, (met with widespread disbelief at the time).

Hey I agreed, but backed out of a bet that had 12 months to go for me to prove my theory. It was mentioned it would not happen ever………..

[JohnnyTheHorse]

The key question is has sentiment in the sector turned? SUM is the last one holding up strong, but will it last?

[bull....]

ryman leading the way of the retirement stocks ? it used to be the leader in price

[Beagle]

In answer to your questions I opine as follows. For many, many years I have been calling RYM hugely overpriced, eg just one of many posts in 2013 and 2014 #1836 from May 2014, just one example

Ryman have had a great run, their SP is up circa 500% in the last 5 years and at $8.30, even after the recent SP correction they trade on 35.17 times last years underlying earnings of 23.6 cps. As Craig's top analyst correctly pointed out, growth slowed in the second half and their projected growth in build rates are not what they once were. A further slowing of EPS growth or an increase in interest rates could see that "market darling" PE come under considerable pressure. On a balanced perspective I see considerably more downside potential than anything else as its already priced for absolute perfection in my opinion. Share split would make no difference as a 35 PE in a stock whose prospects for growth appear to be slowing is a 35 PE no matter which way you slice and dice it. Better prospects for yeild and capital growth elsewhere.

For many years more recently it has been woefully underperforming the NZX50, up just 45% in the last 5 years against NZX50 up 80%. We are now starting to see the serious process, (the last 5 years has just been a warm-up) of more reality be applied to the metrics of this former market darling which long ago lost the services of arguably one of the greatest CEO's of this generation in Simon Challies. Gordon was never going to be able to fill Simon's shoes and the gloss starting coming off this story many years ago.

By contrast OCA has performed in line with the NZX50 overall since it listed (which is a pretty good result considering they are in the early to mid stages of a transformation program for their business model) SUM have hugely outperformed the NZX50 index and ARV have performed in line with the NZX50 so in summary I would say that the decline in RYM is a RYM specific issue and I think it still has a fairly long way to go. I think within a month or two or perhaps as little as a week or two SUM's share price will overtake RYM and it deserves too.

P.S. Jarden lowers its price target even further to $11.60 and retains SELL rating.

The S&P/NZX 50 Index fell 10.61 points, or 0.1%, to 12,449.00. Within the index, 14 stocks fell, 26 rose and five were unchanged. The retirement village operator fell another 5.3% to $13.15 today, bringing its decline since Friday’s weak result to 8.5%. Investors are worried about Ryman’s mounting debt which rose by $540m to $2.25 billion in the year ended March, taking gearing to 44.3%. Forsyth Barr analysts downgraded the stock, giving it an ‘underperform’ rating and slashing 11% off their target price. “Ryman is now valued at a meaningful premium to both its historical average and peers despite having the lowest annuity ebitda growth in the sector and the highest leverage,” they said. The analysts said rising debt levels will likely continue and will reduce Ryman’s ability to lift its build rate in the medium term. Jarden’s equity research team had already given the stock a ‘sell’ rating, but also trimmed their target price to $11.60 today. The stock was overvalued due to its “stretched balance sheet that acts as a natural constraint on debt funded growth” and “unappealing absolute value with 16% downside potential”.

[Gerard]

Whilst RYM has "under performed" the NZX50 in recent years, that needs to be put in context. The performance spreadsheet that another member posted on here some years ago (thank you), shows (updated), that over 20 years RYM has had a compounded share price increase of 20.25% p.a. Sure, the last 5 years of price performance are soft (12.8% p.a.) but that could be because the previous 5 years price increase was spectacular, and ran well ahead of company performance.

The current dividend yield to market price is very low, but anyone that has been in for some years will probably be enjoying accumulated dividends that far exceed their initial capital cost of the shares. RYM pointed out that a $1billion in dividends has been paid out since 1999 but only $25m was raised upon listing.

I think the Challies positive v Macleod negative impact is overstated. Gordon has been in the role just on 4 years, and yes, during that time profit performance has lagged the magic 15% p.a. profit increase that is a stated goal of RYM. Profits made now actually have their genesis some years back when Simon was calling the shots and certainly, from my perspective, too many complicated and difficult sites with large apartment buildings have been built in succession. This has meant a much slower cash conversion at these sites v town house type developments which tie up far less capital as the build on the site progresses.

Theres no doubt that in comparison to SUM & OCA the RYM price/NTA is much higher and therefore the potential for price downside exists. As Beagle points out Jarden have a price target of $11.60. Craigs have a target of $15.52 based on $297m uNPAT FE22. (less care beds, more units sold). Certainly, the year has started well, with all-time record sales in April, and a 5% lift in pricing for units. Further covid disruption (such as in Melbourne today) cannot be ruled out which will affect RYM in particular. This year's RYM result was the first time in 19 years, they have not delivered a record profit. Neither did SUM or OCA.

I note 5 RYM directors have bought shares in the past few days. If they were selling, or indeed, not even buying, then I would be far more nervous about long-term prospects.

Disc: Holding RYM, SUM, OCA

[Beagle]

Broken down through the 200 day MA too. From a fundamental perspective they continue to look super expensive relative to their peers and technically the chart looks quite dreadful.
I find it much easier to make money on shares in an uptrend....(as in swimming with the incoming tide rather than swimming against an outgoing tide). I think any of the listed alternatives offer alternatives that are far more compelling. Disc: Hold OCA and ARV.

[Lease]

One of the directors spent over $3M buying his own company shares!

$3M!!!! I think even as a RYM director, it's not a small amount of money and this guy must be extremely bullish on RYM.

Disc: Hold RYM, SUM, OCA

[Ggcc]

14 cents between SUM share price and RYM. Inevitable that SUM will overtake RYM this year in SP. 2 cents in it now. We may see it happen today…..

[jg8512]

14 cents between SUM share price and RYM. Inevitable that SUM will overtake RYM this year in SP. 2 cents in it now. We may see it happen today…..

yes this year; in fact, today.