MET - Metlifecare - one for the fundies?

[percy]

Goldman Sachs / JB Were have just released a research document saying Ryman is fully priced and Metlife is cheap. They base their report mostly on house price inflation comparisons. Their report is quite weak on healthcare analysis though, nowhere is the concept of dementia care mentioned, a real strength of Ryman over other RV operators.

I agree MET is cheaper than RYM, but does that make it a better company to invest in long term?

Sauce has always been right on the money with his Ryman valuations on the Ryman thread, and has shared his thoughts on both SUM and MET.

[percy]

Thanks for the trouble you have gone to Sparky.
I can't comment on MET,however I think their view of Ryman is spot on.

[NZSilver]

Hi Sparky,

Cheers for the article above - very useful.

I never thought twice about MET as have preferred to hold RYM, but since the latest merger, sale and change in control I believe there is reduced risk and good potential for a turn around. Hence I bought a small holding.

Obviously a good industry to be in and MET is cheap relative to NTA with management hopefully using the assets now to generate some profit. If there is a Div it would really egt thing moving in terms of share price.

I still havn't invested in SUM as I increased my holding in RYM, and in my view it SUM similar but not as good as RYM.

However I may buy some SUM if RYM keeps moving upwards. Will also be interesting to see how RYM goes in Aussie.

Matt.T

[Sauce]

The one thing that the Goldman Sachs report doesn't mention is the word "dementia".

I note this because I know that Ryman consider it a huge advantage that they are building in their villages purpose built dementia care units with scale.

The other operators are not building specialist dementia care, and only a couple are offering aged care. The Ryman management I've spoken with are convinced this is a major benefit to being in a Ryman unit - you never have to leave if your care needs change.

I've had the chance to recently walk around two Ryman villages, the Evelyn Page village in Orewa, and the Diana Isaac Village in Shirley CHCH, andhave to say I was utterly blown away at the scale of the operations, including the attention to detail in the dementia care wings.

I've also toured Metlife Villages (the Remuera St Vincents) and the Summerset Villages in Manukau and Warkworth, and have to say Ryman are superior complexes (though the others are not to be sneezed at as markedly inferior, just not the same level of complete facilities as the Ryman ones.)

Word.
Sauce

[777]

No dividend for this year.

http://www.stuff.co.nz/business/indu...om-Metlifecare

[Joshuatree]

Folks listen up. In the AFR 1/2/13 "The $553 million Retirement Village Group RVG is in breach of its loan covenants, triggering a dramatic recent jump in its borrowing costs...... RVG holds a 43% slice of Metlife Care NZ and its investors hope the sale of that stake may cover the outstanding debt......Financial sources argue RVG may have to stomach a deep discount on the Metlife share trade"

[Joshuatree]

Yes . Icant cut and paste atm so selective v slow 2 fingered typing. Looking good for FKP(i hold from $1.40) and int re Metlife. Maybe a cheap entry coming up.

[Snow Leopard]

So in addition to owning Ryman and Summerset I have now added Metlifecare to my portfolio.

Currently still trading just under NTA and trading well under NTA+Resident Loans, if they can get their act together and up the rate at which they build, and more importantly, sell new units then I dare say the market in general will decide to push the price up.

The accounts say to me that they could borrow a bit of money (that was recently paid back) to develop their build capability and kick start some decent growth.

So then they would not be 'too cold' anymore.

Best Wishes
Paper Tiger

PS: 'too hot' and 'just right' ? try working them out.

[BIRMANBOY]

Hedging your bets? One of them is bound to let you buy a unit.

So in addition to owning Ryman and Summerset I have now added Metlifecare to my portfolio.

Currently still trading just under NTA and trading well under NTA+Resident Loans, if they can get their act together and up the rate at which they build, and more importantly, sell new units then I dare say the market in general will decide to push the price up.

The accounts say to me that they could borrow a bit of money (that was recently paid back) to develop their build capability and kick start some decent growth.

So then they would not be 'too cold' anymore.

Best Wishes
Paper Tiger

PS: 'too hot' and 'just right' ? try working them out.

[CJ]

Could the growth rate in earnings look more like 20% over five years, eg more heroic than Ryman?.

I guess that's the question. In theory, RYM model is quite simple so why shouldn't it's growth rate increase. There is plenty of room in the market for all three to have high growth rates.

So are MET's management up to it?

[macduffy]

I'm happily invested in all three listed companies in the sector, most happily in RYM!

I wonder though if a limiting factor in their growth will turn out to be the availability of suitable building sites in areas in which prospective clients will want to live. Has anyone researched this question?

[macduffy]

Golf courses and Race courses seem to be the best avenues for finding land. Many of these clubs are struggling with lower membership. They can carve off parcels of land, or consolidate with neighbouring clubs to free up land.

.
......As Summerset are planning at Hutt/Boulcott Farm. But failing such opportunities, I'm not sure that greenfields sites away from established residential areas will have much appeal. Still, if that's the only option.......

[CJ]

However, I note that Metlife have a philosophy of building in developed centres. They may mix this now with the merger with Vision.

Different strategies. It meas the cost of land is more but it also means the holding costs while undeveloped are less.

I think a combo of the two is probably right - buy land to develop immediately where there is a need, but also land bank so that you have a constant stream of property to develop. Ryman couldn't have developed its good inhouse resource if it had a lumpy development schedule.

I invested in MET in the hope it can start to mirror some of RYM core strengths. No doubt they are looking at that and hopefully the shareprice will respond in due to. However, the bulk of my money is in RYM. In hindsight by diversification in the sector should have been into SUM but I think MET has the biggest opportunity to turn a corner. Time will tell.

[percy]

If they can reach Ryman levels of earnings growth consistently, they should be good for $4.00. I am interested in doing more homework on this one, but its not a priority.

Just take your time,none of us are in a hurry.Quality research is always worth waiting for.In the meantime RYM and SUM continue their upwards trejactory.

[Snow Leopard]

Average volume day but it has not closed this high since it last closed this high (8th-Jan-2013).

Has the slow but relentless upward pressure over the last three months finally overcome the resistance?

Will this be the break-out we have been waiting for and is it "$8 here we come"?

Climb aboard the afternoon tea trolley before all the Lamingtons are gone.

Best wishes
Paper Tiger