RYM - Ryman Healthcare

[Snow Leopard]

The new location appears to be called Notting Hill.

Any one who has lived in Melbourne will have had a few copies of the Melway book in their time and so if we go to map 71 square C9 we can clearly see that the new site is also in Wheelers Hill. Notting Hill is a little further west.

I did work at a couple of customer sites in this part of Melbourne and my then employer moved offices to Notting Hill... But I never went there!

Best Wishes
Paper Tiger

http://online.melway.com.au/melway/

[percy]

I wish you guys would stop knocking Rolf Harris. When I was 8, he arranged a game for my classmates to milk a cow blindfolded.

Learning to grope at an early age?? !!! lol.

[percy]

One one proper Mercedes mate...we're talking S Class 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. Correction is already having an effect on SUM with perhaps more of that to come..buckle up, turbulence ahead ?

Sorry if I don't know Mercedes prices.!!
I totally agree with your post.

[Vaygor1]

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.

I don't see any slowdown in growth-rate at all. Not a single graph from RYM's 2014 results point to any slowdown, and neither does NZ median house price indications (refer graph below) which only impact's RYM 5-7 years later when each unit comes up for resale.

Concerns re Australian economy are unfounded for the retirement sector there. Aussy is currently only a very small part of RYM's business, and entrance costs into Australia can only reduce now along with increasing economies of scale.

In the recent presentation to shareholders, even if RYM continue to grow at their existing rates they will only be servicing 18% of New Zealand's market well into the 2040's so there is loads of room there.

The big bad news about sales dropping is a red herring. Sales haven't dropped as such, they only adjusted for a blinder of a year last year. Referring to the graph below, if 2013 Sales had been around 850 instead of nigh on 1000 then both last years and this years results would be perfectly acceptable to the market.

Attachment 5839 Attachment 5840

[winner69]

Vayoger - when you say neither does NZ median house price indications (refer graph below) which only impact's RYM 5-7 years later when each unit comes up for resale.

Is this good or bad....don't quite follow what you mean with this statement

[Vaygor1]

Vayoger - when you say neither does NZ median house price indications (refer graph below) which only impact's RYM 5-7 years later when each unit comes up for resale.

Is this good or bad....don't quite follow what you mean with this statement

Hi Winner.

Gains in the underlying profit for the results just released were up 18% but the IFRS profit is up 42%.
This is because the underlying profit does not recognise the increase in RYM'S property values worth until it is actually realised. ie when the oldie moves on and the unit has its occupancy right signed up & resold at the value on the day. So RYM's profit is up 42% due in part to their independently valued assets gaining in value, but only up 18% due to actual realised gains.

The average length of tenure for a resident is 5-7 years, so the impact of the gain in NZ's housing economy is not reflected into RYM's underlying profit until say 7 years later.

Referring to the graph below, I can't see any time where the value of property is less than it was 7 years prior. ie Any 7 year period where the area between the red line and the zero line is greater on the negative side of zero than the positive side. Based on the graph and what I have just said, recent times have been historically the worst for RYM regarding capital gain on its assets.

So I think it is good. The 42% will get realised eventually, or pretty much immediately if RYM chose to liquidate over the next few months.

Attachment 5841

[Beagle]

I don't see any slowdown in growth-rate at all. Not a single graph from RYM's 2014 results point to any slowdown, and neither does NZ median house price indications (refer graph below) which only impact's RYM 5-7 years later when each unit comes up for resale.

Concerns re Australian economy are unfounded for the retirement sector there. Aussy is currently only a very small part of RYM's business, and entrance costs into Australia can only reduce now along with increasing economies of scale.

In the recent presentation to shareholders, even if RYM continue to grow at their existing rates they will only be servicing 18% of New Zealand's market well into the 2040's so there is loads of room there.

The big bad news about sales dropping is a red herring. Sales haven't dropped as such, they only adjusted for a blinder of a year last year. Referring to the graph below, if 2013 Sales had been around 850 instead of nigh on 1000 then both last years and this years results would be perfectly acceptable to the market.

Attachment 5839 Attachment 5840

With respect, I think you've missed the point. On an annual basis, yes their undelying profit growth is up 18% but as Craig's top analyst pointed out that's on the back of 22% profit growth in the first half and only 14% profit growth in the second half compared to the pcp.

N.Z. has the third most expensive housing in the world on a per capita basis and Australia is right up there too from memory.
Australia raising the superannuation benifet age to 70 will have some impact on the retirement sector over there, likewise the other factors I recently mentioned.

The N.Z. Reserve bank's recent increase in interest rates of 2 x 25 bps here is having quite an effect on the real estate market according to people I speak too so even if they relax their recently introduced low equity loan restrictions at some stage in the future its quite likely this will be offset by further interest rate increases.

Even if Ryman do manage to meet their own publicly stated medium term objective of 15% increases in underlying profit I'd argue a PE of 35 isn't warranted and argue that their SP outperformance in the last two years in particular has lead to a situation where the SP has run ahead of its true intrinsic value.

The average 2015 PE of the S&P 500 stocks is currently 18, (source CNBC), many of these stocks are growing strongly too.
I'm with W69, and am expecting a period of SP underperformance, possibly quite protracted.

[winner69]

With respect, I think you've missed the point. On an annual basis, yes there undelying profit growth is up 18% but as Craig's top analyst pointed out that's on the back of 22% profit growth in the first half and only 14% profit growth in the second half compared to the pcp.

N.Z. has the third most expensive housing in the world on a per capita basis and Australia is right up there too from memory.
Australia raising the superannuation benifet age to 70 will have some impact on the retirement sector over there, likewise the other factors I recently mentioned.

The Reserve bank's recent increase in interest rates of 2 x 25 bps here is having quite an effect on the real estate market according to people I speak too so even if they relax their recently introduced low equity loan restrictions at some stage in the future its quite likely this will be offset by further interest rate increases.

Even if Ryman do manage to meet their own publicly stated medium term objective of 15% increases in underlying profit I'd argue a PE of 35 isn't warranted and argue that their SP outperformance in the last two years in particular has lead to a situation where the SP has run ahead of its true intrinsic value.

There is a phrase some analysts/commentators use - in private that is

THE FUTURE IS NOW

[Vaygor1]

With respect, I think you've missed the point. On an annual basis, yes their undelying profit growth is up 18% but as Craig's top analyst pointed out that's on the back of 22% profit growth in the first half and only 14% profit growth in the second half compared to the pcp.

N.Z. has the third most expensive housing in the world on a per capita basis and Australia is right up there too from memory.
Australia raising the superannuation benifet age to 70 will have some impact on the retirement sector over there, likewise the other factors I recently mentioned.

The N.Z. Reserve bank's recent increase in interest rates of 2 x 25 bps here is having quite an effect on the real estate market according to people I speak too so even if they relax their recently introduced low equity loan restrictions at some stage in the future its quite likely this will be offset by further interest rate increases.

Even if Ryman do manage to meet their own publicly stated medium term objective of 15% increases in underlying profit I'd argue a PE of 35 isn't warranted and argue that their SP outperformance in the last two years in particular has lead to a situation where the SP has run ahead of its true intrinsic value.

The average 2015 PE of the S&P 500 stocks is currently 18, (source CNBC), many of these stocks are growing strongly too.
I'm with W69, and am expecting a period of SP underperformance, possibly quite protracted.

With sincere respect too Roger, we will have to agree to disagree I think.

I have received the most terrible advice from Craig's in the past… actually, all the brokers at different times. Their role in this game is by its nature a conflict of interest. They need to convince people (through fear and greed) to buy and sell otherwise they don't make any money.

Only today, RYM's new whizz bang director George Savvides just put his money where RYM's mouth is. Purchased over NZ$100 Grand and bought at $8.42/share. https://www.nzx.com/companies/RYM/announcements/250763 . I think George has a better idea about RYM's business than any broker out there.

The measure of cost-of-housing is subjective as there are many ways of measuring it. The graphs I have posted tell the story there. Not once, ever, has it been cheaper to buy a house than it was 7 years earlier, either here or across the ditch.

RYM doesn't sign up with customers under 70 year olds (Actually, I think 75 might be the number) except under special circumstances so there won't be an impact due to Aussies retirement age. Also in Oz, many retiree's have retirement bonds thus aiding affordability for them. Committed interest in Wheelers Hill was more than double the requirement in RYM's business model to enter Australia.

RYM's PE is higher than others because its EPS growth rate is far more predictable and it has the history to prove it. I bought in 2007 when PE was historically high (over 22 but don't have the exact figures on me). Dividends alone will give me a pre-tax cash payback in under 14 years. And with earnings more than double dividend payouts (I recall), that makes an actual PE of 7. ie. My shares have already earned me more than they cost me to buy. I think the same ratios will apply now... Buy at a PE of 35 today. Actual PE will be about 10 or 11.

Here is NZ's population growth. The trend is the same for Victoria, Australia. There will not be a shortage of tenants.

Attachment 5843

You will not find a sweeter graph in all of the NZX (and probably the ASX too) than this one:

Attachment 5842

All said and done. You may be right Roger. Market sentiment is the great unknown lurking at all times. As SparkyTheClown stated 'The market giveth, and the market taketh away'. Never a truer word said.

[blocker3]

With sincere respect too Roger, we will have to agree to disagree I think.

I have received the most terrible advice from Craig's in the past… actually, all the brokers at different times. Their role in this game is by its nature a conflict of interest. They need to convince people (through fear and greed) to buy and sell otherwise they don't make any money.

Only today, RYM's new whizz bang director George Savvides just put his money where RYM's mouth is. Purchased over NZ$100 Grand and bought at $8.42/share. https://www.nzx.com/companies/RYM/announcements/250763 . I think George has a better idea about RYM's business than any broker out there.

The measure of cost-of-housing is subjective as there are many ways of measuring it. The graphs I have posted tell the story there. Not once, ever, has it been cheaper to buy a house than it was 7 years earlier, either here or across the ditch.

RYM doesn't sign up with customers under 70 year olds (Actually, I think 75 might be the number) except under special circumstances so there won't be an impact due to Aussies retirement age. Also in Oz, many retiree's have retirement bonds thus aiding affordability for them. Committed interest in Wheelers Hill was more than double the requirement in RYM's business model to enter Australia.

RYM's PE is higher than others because its EPS growth rate is far more predictable and it has the history to prove it. I bought in 2007 when PE was historically high (over 22 but don't have the exact figures on me). Dividends alone will give me a pre-tax cash payback in under 14 years. And with earnings more than double dividend payouts (I recall), that makes an actual PE of 7. ie. My shares have already earned me more than they cost me to buy. I think the same ratios will apply now... Buy at a PE of 35 today. Actual PE will be about 10 or 11.

Here is NZ's population growth. The trend is the same for Victoria, Australia. There will not be a shortage of tenants.

Attachment 5843

You will not find a sweeter graph in all of the NZX (and probably the ASX too) than this one:

Attachment 5842

All said and done. You may be right Roger. Market sentiment is the great unknown lurking at all times. As SparkyTheClown stated 'The market giveth, and the market taketh away'. Never a truer word said.

Wow ....great information Vaygor1. Thank you.

As the saying goes " do what the directors do and not what they say"

Cheers Blocker