RYM - Ryman Healthcare

[Biscuit]

Yes RYM shareprice did take a hit during the last GFC but it wasn't because of declining earnings. They were still selling plenty of units and were booking favourable fair value adjustments and all that sort of stuff.

The share price fell because market sentiment drove the PE down from just under 30 to about 15. Again negative returns for a few years when Ryman has a lofty PE. Happens with a lot of stocks (and even markets). Reversion to the mean and that sort of stuff.

Methinks the same process is underway at the moment.

And while the PE falls (a measure of market sentiment) Ryman keep on making heaps of money.

PE is under 15 now, although it is about 25 on underlying profit. It doesn't just keep making heaps of money, but it makes more and more money consistently and the big question mark over whether they could take this model to the Australian market has now been answered. Of course that does not mean that this is exactly the best time to buy, who knows when that is.

[couta1]

The best time to buy Ryman is basically anytime you have the money to do so if you have a long term outlook, my current parcel was purchased a couple of years ago in the mid $8 range and I am not concerned about the current lag phase. Prior to that I held parcels bought in the $5 range.

[Biscuit]

Ryman CEO Simon Challis has often pointed out Ryman is not collated to NZ property prices.

The reason for that is that fair value movements in Ryman's properties are calculated using a valuation method that includes the long term house price inflation which ranges from 1-3% nominal, so not directly affected by short term fluctuations in the property market. So, not only would unrealised profits continue regardless of a burst in the Auckland property bubble, but you could probably make the case that they have been understated in recent years.

[NZSilver]

Interesting Satan, thanks for that. just found it in the AR

The carrying value of completed investment property is the fair value as determined by an independent valuation reportprepared by registered valuers CBRE Limited, as at 31 March 2015. This report combines discounted future cash fl ows andoccupancy advances received from residents in respect of practically complete retirement village units for which there isan unconditional occupation agreement. Signifi cant assumptions used by the valuer include long term house price infl ation(which ranges from 1% to 3% nominal) and discount rate (which ranges from 13% to 16%). Principal assumptions areunchanged from the prior year. Investment property includes investment property work in progress of $40.8 million (2014:$64.9 million), which has been fair valued at cost by CBRE Limited.The signifi cant unobservable inputs used in the fair value measurement of the Group’s investment property portfolio are thediscount rate, the long term nominal house price infl ation rate and the occupancy period. A signifi cant decrease (increase)in the discount rate or the unit occupancy period would result in a signifi cantly higher (lower) fair value measurement. Asignifi cant increase (decrease) in the average age of entry of residents or the long-term nominal house price infl ation ratewould result in a signifi cantly higher (lower) fair value measurement.

[Vaygor1]

Using my whizz-bang formula from posts long ago, based on a 31 March 2016 Full Year Underlying Profit of $160 million, I get a fair price for a RYM share today (assuming a rational market) of $7.97

Anything under that is likely a reasonably good buy, anything over is likely a reasonably good sell.

I think their H1 result, about a month away from being announced, will be an underlying profit of circa $74 million.

As an aside, RYM's big debt for Melbourne's Brandon Park purchase was required to be paid off during the soon-to-be-announced H1 period, if I recall correctly.

I haven't disclosed for a long time now so, yes, I'm still holding… have acquired a few more lately at $7.30 and never sold any yet, and with no intention to do so.

[Biscuit]

What difference does it make buying at $7.65 compared with $7.15.Well on 1,000 shares it is the cost of our Xmas luncheon.!!!! lol.

Its $7.65 now Percy, I can sell my $7.27 parcel and buy a few Xmas luncheons on the profit now! But I think I'll hold on till after the November announcement at any rate.

[skid]

Thats a pretty big SP hit even after making up for the last scare--Overvalued before?

Its kind of hard to quantify the last rise as many shares have done the same as the general market has improved from the last glitch(jury is still out on that i suppose though)

[LAC]

Is there some news today that I'v missed? $7.75

[couta1]

Is there some news today that I'v missed? $7.75

No, the stock has just been heavily oversold of late and is moving back toward a more realistic value IMO plus maybe just a little leak in the ship with the upcoming results in November.

[axe]

The best time to buy Ryman is basically anytime you have the money to do so if you have a long term outlook, my current parcel was purchased a couple of years ago in the mid $8 range and I am not concerned about the current lag phase. Prior to that I held parcels bought in the $5 range.

This was/is a great call IMO.

Anyways chart wise things might be starting to look OK. Through the 50MA and looking to breach to 200MA. There are a few stocks that fell out of their uptrend in the september correction that have breached the 50 and close to cutting through the 200MA.

AIR, HNZ and TME already through 200MA. RYM close.