MET - Metlifecare - one for the fundies?

[Beagle]

14% v 15%. You're not splitting hairs there, are you, Beagle?

Agree there's not much in it so why would I illustrate how close their growth rates are?

The point I am trying to illustrate is how well MET have actually performed over the last 5 years, relative to the sector benchmark widely regarded as RYM, (slightly better).
Why is this point so important ?
With RYM you pay a very handsome premium for their growth, despite growing slower than the average for this sector. 2.6 times asset backing and based on last years underlying profit of $227m and 500m shares underlying eps of 45.4 cps gives a historical underlying PE of 26.3. i.e. One is paying a hefty premium for that below average sector growth.

On the other hand with MET one is paying only 55% of NTA and based on last years annual underlying profit of $90.5m http://nzx-prod-s7fsd7f98s.s3-websit...727/306132.pdf underlying eps is 42.4 cps and the historical PE is just 9.3. i.e. one is paying nothing for the growth.

Historically a PE of 8.5 is considered to be the benchmark for a no growth company but that's with 10 year Govt stock at 4%. Where its is now a no growth company should have a PE of 11.

No matter whether you look at MET from an NTA perspective, an embedded value perspective or an earnings perspective, its dirt cheap.

Unless something is dirt cheap I am happy to keep my powder dry and will not participate in this market that is completely divorced from the economic reality of what the economy is starting to go through.

Actually when you really look into it, there's very little difference between the underlying eps of RYM SUM and MET. I believe ultimately the share market is a weighing machine, not a voting machine so from here MET's share price is highly likely to outperform its peers.

[macduffy]

Fair enough, Beagle. Seems the market is prepared to put a premium on a long track record of success.

I hold 'em all.

[Cyclical]

Agree there's not much in it so why would I illustrate how close their growth rates are?

The point I am trying to illustrate is how well MET have actually performed over the last 5 years, relative to the sector benchmark widely regarded as RYM, (slightly better).
Why is this point so important ?
With RYM you pay a very handsome premium for their growth, despite growing slower than the average for this sector. 2.6 times asset backing and based on last years underlying profit of $227m and 500m shares underlying eps of 45.4 cps gives a historical underlying PE of 26.3. i.e. One is paying a hefty premium for that below average sector growth.

On the other hand with MET one is paying only 55% of NTA and based on last years annual underlying profit of $90.5m http://nzx-prod-s7fsd7f98s.s3-websit...727/306132.pdf underlying eps is 42.4 cps and the historical PE is just 9.3. i.e. one is paying nothing for the growth.

Historically a PE of 8.5 is considered to be the benchmark for a no growth company but that's with 10 year Govt stock at 4%. Where its is now a no growth company should have a PE of 11.

No matter whether you look at MET from an NTA perspective, an embedded value perspective or an earnings perspective, its dirt cheap.

Unless something is dirt cheap I am happy to keep my powder dry and will not participate in this market that is completely divorced from the economic reality of what the economy is starting to go through.

Actually when you really look into it, there's very little difference between the underlying eps of RYM SUM and MET. I believe ultimately the share market is a weighing machine, not a voting machine so from here MET's share price is highly likely to outperform its peers.

Thanks for that breakdown, Beagle.

And as for this bit:

Unless something is dirt cheap I am happy to keep my powder dry and will not participate in this market that is completely divorced from the economic reality of what the economy is starting to go through.

I couldn't agree more. It stresses me out just looking at what the market is doing...completely whacko.

[King1212]

Thanks Master Beagle...gave another stab again!

[Balance]

Thanks for that breakdown, Beagle.

And as for this bit:

I couldn't agree more. It stresses me out just looking at what the market is doing...completely whacko.

https://www.livewiremarkets.com/wire...y-harry-moment

Who wants to bet against the Federal Reserve with it’s unlimited monetary arsenal?

Like the bear hedge funds who are licking their wounds after last week record rise on the US market?

Excerpt : The Fed is now arguably the biggest asset manager in the world (with over US$6 trillion in AUM) with one ace up its sleeve: it has never-ending capital through its unlimited ability to print money and can never, therefore, really lose.

If the market wants to try and bet against the Fed, the Fed will simply buy it--and I mean all of it.

Hence the aphorism, "Don't fight the Fed!"

[Cyclical]

https://www.livewiremarkets.com/wire...y-harry-moment

Who wants to bet against the Federal Reserve with it’s unlimited monetary arsenal?

Like the bear hedge funds who are licking their wounds after last week record rise on the US market?

Excerpt : The Fed is now arguably the biggest asset manager in the world (with over US$6 trillion in AUM) with one ace up its sleeve: it has never-ending capital through its unlimited ability to print money and can never, therefore, really lose.

If the market wants to try and bet against the Fed, the Fed will simply buy it--and I mean all of it.

Hence the aphorism, "Don't fight the Fed!"

Balance, that's a nice lead in to this one that I've been wondering were to post for a couple of days...

When Cindy and Grant had that press conference first announcing the impending lock down and associated ~$12b stimulus, one of the reporters asked where is the money coming from...I couldn't wait to hear the answer and to my disappointment, Grant just scoffed and said we'll borrow it, like there was no other option. I was thinking, why not just do what the big boys do and create it?

https://www.nzherald.co.nz/business/...ectid=12323748

"In today's deflationary setting, there is no need for Government to kill off the short-term monetary effects of its increased spending. In severely recessionary circumstances such as the present, creating money, which neither firms nor households can do, is a valid and viable way to finance Government spending.
The political taboo on money creation is a political construct, not an economic one. A money-financed fiscal deficit in a non-inflationary setting leaves no necessary burden on future generations – just the benefits of an avoided recession and so a stronger economy."

[Arbroath]

In case you hadn't noticed the RBNZ has started $30b of QE so Grant is borrowing all the money from effectively new digital entries from the RBNZ.

[ynot]

Can anyone fill me in on the met dividend. It appears lower than others in the retirement sector.

[Balance]

In case you hadn't noticed the RBNZ has started $30b of QE so Grant is borrowing all the money from effectively new digital entries from the RBNZ.

That's principally to free up banks' balance sheets so they can lend more - which banks will not do as we saw during the GFC due to heightened credit risks. Hence, the government's decision to guarantee 80% of new loans of up to $500k for SME.

Governments need to borrow to fund expenditure - this could come from bond issues (underwritten of course by their central banks).

[Balance]

Just received a comprehensive report on the retirement village/age care sector done by one of the major Australasian brokers.

Should make for interesting reading this morning!