MET - Metlifecare - one for the fundies?

[Beagle]

You're welcome BP. It would take an enormous amount of research and time to go back and run a full analysis of the three over the last decade and disclosure hasn't always been the best, e.g. it is only recently that embedded value has been referred to and discussed in annual reports.

One thing is clear is that companies that have focused on growth and getting their development processes refined well and executed with high level's of profit have done extremely well, namely RYM and the total shareholder return to RYM shareholders over the last decade has been phenomenal.

I believe they have fully refined their building practices and will be operating at the same high level of efficiency as they have in recent years going forward. Further, they have clearly articulated their medium term goal of increasing underlying profit by 15% each year and have achieved that well and that's all fully baked into the SP, i.e. its priced for perfection and will probably perform perfectly and over the long run once the PE normalises shareholders should get returns commensurate with the EPS growth. This is probably the right time to remind some on here that Winner69 and I showed 2 years ago that RYM had got clearly ahead of itself in terms of its long run PE and we expected at least a couple of years of consolidation and that's exactly what's happened as the SP is ostensibly unchanged. Another year of under-performance wouldn't surprise either of us.

Turning to SUM. You know my feeling about Mrs Barlow and we don't need to go there again but now that she's going, (as a mater of principle I wouldn't invest before she agreed to step down) they were on an underlying PE of about 23 when I reinvested earlier this month at about $4. This is around the level where I see fair value for a company growing consistently at 15%..recall Ben Graham's formula is a no Pe growth of 8.5 + 2G, where G is the growth one can reliably predict over the next 7-10 years.

I use my own approach here being a accountant of Scottish ancestry and won't pay more than 1G for4 growth so I look for a retirement company on 8.5 + 15, no more than an underlying PE of 23.5 which I consider can grow earnings by at least 15% for the foreseeable future. To do this they MUST HAVE shown an ability to execute effectively on their development programme...there's no way without it property prices can go up at 15% per annum.

SUM's grew underlying earnings 10% in 2014 and 55% in 2015. This year they are growing their build rate from 300 units per annum to 400. Development margins have steadily improved each half year that's ticked by, now 20% and there's probably room for that to grow further with further refinements in their development methodologies and economies of scale. For that reason its my pick in this sector. Growing faster that RYM and MET and development margins can grow faster too.

MET have a lot of work to do to improve their development team.

[BlackPeter]

feels like the markets are waking up .... on a 2 year window is MET now outperforming SUM by 5%

Attachment 7956
(hint: MET is the blue line ....)

and RYM by 30%.

Attachment 7957
(hint: MET is again the blue line )

Not bad for an old boring retirement home provider with low build rates and too low development margins ...

How do they say - the markets are always right

Discl: hold MET (lots) and SUM (some);

[Bjauck]

feels like the markets are waking up .... on a 2 year window is MET now outperforming SUM by 5%

Attachment 7956
(hint: MET is the blue line ....)

and RYM by 30%.

Attachment 7957
(hint: MET is again the blue line )

Not bad for an old boring retirement home provider with low build rates and too low development margins ...

How do they say - the markets are always right

Discl: hold MET (lots) and SUM (some);

Ah, but since SUM listed which was only about 4.5 yrs ago, MET is in third place with RYM and SUM 1st=! Graph courtesy of FT.COM...
Attachment 7958

[Beagle]

Ah, but since SUM listed which was only about 4.5 yrs ago, MET is in third place with RYM and SUM 1st=! Graph courtesy of FT.COM...
Attachment 7958

Nice graph, thanks. RYM got too far ahead of itself about two years ago and Winner69 and I made the very bold call, (well supported by analysis), that it was set for a significant period of under-performance and that's exactly what's happened. For my money I think SUM has the best prospects at present in this sector and I believe Winner69 feels the same way.

[Bjauck]

Nice graph, thanks. RYM got too far ahead of itself about two years ago and Winner69 and I made the very bold call, (well supported by analysis), that it was set for a significant period of under-performance and that's exactly what's happened. For my money I think SUM has the best prospects at present in this sector and I believe Winner69 feels the same way.

Well done for looking at SUM dispassionately after a previous "cool" period towards its directorship at the time! I have stuck with RYM and SUM throughout the 5 years...very long term horizon so hiccups along the way come with the territory. I don't think I could trust myself with timings.

[Beagle]

Thanks and it was satisfying to get them to change their insider trading policy too. The forthcoming director change was a necessary requirement for me to consider re-entry as a matter of principle.

Looking at RYM's under-performance over the last two years the question I am wrestling with is when are we due to resume the uptrend ? Winner and I hold different views on this. I don't want to put words in his mouth but I believe he sees this as some way off, perhaps another year of under-performance but I think RYM is about fair value now and close to starting to track upwards again in a manner consistent with its remarkably consistent EPS growth. How close to resuming a meaningful uptrend I can't decide and its something I have wrestled hard with for a few weeks now. Its on my watch list. It might be a bit of a cop out to use technical's but as my FA is showing RYM as broadly fair value now I'd prefer to see it break its previous high of $9 before considering re-entry. The un-imputed dividend yield at less than 2% is so low I think I can afford to be patient.

I hold no such qualms about SUM's value at present and am therefore happy to hold a singular focus in this sector at this stage.

[Bjauck]

There has been debate over whether it is a good time to invest in SUM or RYM. However last week, the Chair of MET doubled his trust's investment in MET and has added another 90,000 @ $5.30 in shares. Even for him, that is probably a sizable extra amount. https://www.nzx.com/companies/MET/announcements/280436

[couta1]

I'm struggling to see where this company is as good as an investment as RYM or Sum, especially at its current price. I've sliced and diced it many ways but have failed to come up with any reason to buy any over the other two. Due to the strong tailwinds in the sector it will do okay, but thats not enough reason for me to buy any with the other opportunities available.

[silu]

I'm struggling to see where this company is as good as an investment as RYM or Sum, especially at its current price. I've sliced and diced it many ways but have failed to come up with any reason to buy any over the other two. Due to the strong tailwinds in the sector it will do okay, but thats not enough reason for me to buy any with the other opportunities available.

The main reason why I bought into MET in 2013 was because IFT bought a stake and got some directors of theirs on the board of MET. Turnaround I think is the word I'm looking for. +32% so far.

[Bjauck]

I'm struggling to see where this company is as good as an investment as RYM or Sum, especially at its current price. I've sliced and diced it many ways but have failed to come up with any reason to buy any over the other two. Due to the strong tailwinds in the sector it will do okay, but thats not enough reason for me to buy any with the other opportunities available.

I appreciate that. However, it is interesting that an insider, with access to the latest figures and developments, is prepared to more than double his trust's exposure to MET.