MET - Metlifecare - one for the fundies?

[Bjauck]

"...
You all could be forgiven for deducing that Rogerthebeagle is a sales rep for 'the HERALD' I look at many share sites and when links are posted behind 'paywalls' I believe that the poster should pay for us all to read the content. . ..

Why? If you read an article that refers to other publications either in the body of the text or in footnotes you do not automatically get a copy of the publication to which reference is made. You should expect to pay for it. In your scenario if someone refers to a book, play, movie or game, then they have to buy you a copy or a ticket, or the original author should provide it gratis. You should be grateful that Beagle posted a link to where the information could be bought.

[bull....]

I would like to know how many MET residents have been tested for SARS-COV-2 .
The company has stated no one else has tested positive
.In general we are not testing people unless they have been in direct contact AND have symptoms.
It looks as if most people with Covid-19 infections may not have symptoms
As Jacinda says(I think) absence of proof is not proof of absence

you word it so much better than me

[Beagle]

NZME need all the help they can get!

Disclosure: I subscribe to support where I can

Exactly. If we don't support them we'll lose them. As I understand it they are currently running a 4 week trial subscription for just $1 a week !

[Beagle]

Hey Beagle me old mate.
Disc: taking a punt essentially because the share price sunk really low and there’s still a chance the takeover might happen or another offer might be made ...but I have no faith whatsoever in the current Board and management extracting any ‘great value’ out of this dog

Hey Winner me ol mate, you reckon $1 a week is a good deal for a trail 4 subscription to get access behind the paywall (Sorry mate, I couldn't resist)

MET, (despite management's occasional fumbling), is actually a very good business that has grown underlying earnings at an average of 15% per annum for the last 5 years, (faster than RYM) and just 1% slower than ARV. The vast predominance of their business model is independent living and we all know that the churn of property and clipping the ticket over and over again is where the real money is made in this sector.

Huge Embedded Value Underwrites Underlying Profit going forward http://nzx-prod-s7fsd7f98s.s3-websit...968/317506.pdf

MET have some other very important points of difference (apart from their dirt cheap price). They are the most established operator and have $1,155m in embedded value on their balance sheet, see page 24. Put an average churn of 9.1 years on that, see page 19 (average age of all residents across their portfolio of villages is now 82 years old, see page 32), and they can make $127m underlying gross profit per annum going forward just from churn of existing units. With the lifting of the entry age to 70 years some years back, (it used to be as low as 55 years at one stage), we will see very good churn level's going forward. For example the average age of new entrants to their new Gulf Rise village is 77 years, see page 32.

Operating expenses are better controlled than most in this sector, up just 3.7%, see page 18, reflecting the nature of their business model. Going forward I think the human resource cost of care is going to be a major drag for others in this sector, much less so for MET.

They're doing what amounts to a strategic review of their development model and have made some new hires in this area. One would hope this will lead to a considerable improvement in development margins down the track.

There's also the company's share buy-back which from memory was paused fairly early through the process. Might we see the scope of this expanded when it kicks off again given the huge current discount to NTA ?

Growing at very close to the same speed as RYM and ARV they do not deserve to be trading at such a deep discount to NTA and as you know there were three potential suitors looking to acquire the company.

I have been very happy to take a substantial long term position in MET. Whether it gets taken over or not I don't really care to be honest. Its the only company to offer really deep value in this sector and long term I think the sector has tremendous tail winds. The difference with MET is you are paying nothing for their growth and nothing for the sector tailwinds.

At least MET are smart enough to know that they need to offer fixed weekly fees for life unlike SUM other company's executives who still have their head in the sand and are wondering why they are struggling to sell their units.

The numbers and growth rate do not support your contention that this is a dog...I would reiterate, for the last 5 years they have grown average annual underlying profit at 15% per annum which is a little faster than the sector benchmark RYM. MET are trading at just 0.57 times NTA, RYM at 2.7 times NTA. At their core the real money is made from property.

[crighton100]

I reside in one of their villages.No one has been tested at our village [no one leaves the village except for doctor appointments & staff do all the shopping]We have a team of nurses 24 hours a day,they phone every resident twice a week to see if they are fine,besides looking after any resident with any ailment.They do not use any masks etc & so far no problems.One of MET villages had a case [the person had been overseas] & all residents & staff were fine with no symptoms according to our CEO Mr Sowry [who sends us regular updates on everything to do with Covid19 & any govt announcements].Just as a matter of interest all residents were given the current FLU vaccine just over 2 weeks ago,so they should now be active in us.Hope that helps you,good luck with investments.

[crighton100]

Yes the churn rate [very profitable for MET] has really picked up since they put entrance age up to 70.We were lucky to get in 11 years ago at 64 [we will live too long for their liking]Most of the current intake have been in their 80's.Must also point out that since MET took over our village they have spent heaps to keep the standard of the village really high so that we have a waiting list to get in.

[BlackPeter]

...

My understanding is that under lockdown 3 protocol's Real Estate Agents can return to work with some limitations, (can't operate from a shop) and can't have open homes or physical auctions). Translation (as I understand it) is sales people can show people units in a village in much the same way as they always have, meet at the village entrance and go from there so MET is back in the business of selling units as soon as we go to level 3 which should hopefully be next Thursday.

...

I still would hope that no retirement village allows non essential business in level 3 unless it is absolutely safe.

I would doubt that showing a bunch of interested buyers through an operating retirement village with vulnerable residents would be considered safe.

[winner69]

Great post there Beagle ..but you didn’t answer by question (important one from a risk perspective)

What’s the trigger for you to fall out of love with MET and kick them out of the kennel

[Beagle]

I still would hope that no retirement village allows non essential business in level 3 unless it is absolutely safe.

I would doubt that showing a bunch of interested buyers through an operating retirement village with vulnerable residents would be considered safe.

So interested couple (IC) meet the real estate agent at the village entrance. They walk down the street in the open air, (agent keeping at least 2 metres away from IC and ensuring IC keep at least 2 metres away from any other resident walking around the village) and have a look at a stand alone unit while the agent waits outside. Seems pretty reasonable to me.

My local village used to be a golf course and I remember playing there a fair bit. https://www.metlifecare.co.nz/our-re...cNcw&gclsrc=ds

[Ace]

So interested couple (IC) meet the real estate agent at the village entrance. They walk down the street in the open air, (agent keeping at least 2 metres away from IC and ensuring IC keep at least 2 metres away from any other resident walking around the village) and have a look at a stand alone unit while the agent waits outside. Seems pretty reasonable to me.

My local village used to be a golf course and I remember playing there a fair bit. https://www.metlifecare.co.nz/our-re...cNcw&gclsrc=ds

Reasonable yes, although I do doubt it given that the IC will most likely be 70+ of age due to entry requirements, and this demographic tends to be classed as 'vulnerable people' given that many have complicated medical histories or compromised immune systems. From memory, even at old level 2 and 3 alert levels vulnerable people were instructed to stay at home. I think it's unlikely for that to change. Maybe a possibility through video calling and viewing through a virtual tour?