MET - Metlifecare - one for the fundies?

[winner69]

Are MET another one of these operators who make no money from looking after oldies, ie it’s just a development company

[winner69]

MET underlying EPS about the same as SUM

But share price about 30% lower

WOW that’s some gap

[Beagle]

Its Friday afternoon and I am a tired dog. See what you think http://nzx-prod-s7fsd7f98s.s3-websit...382/306999.pdf

[winner69]

Its Friday afternoon and I am a tired dog. See what you think http://nzx-prod-s7fsd7f98s.s3-websit...382/306999.pdf

Jeez 110 pages ...no wonder you tired dog

And 110 pages and search on ‘dogs’ gives a NIL result

[Beagle]

Jeez 110 pages ...no wonder you tired dog

And 110 pages and search on ‘dogs’ gives a NIL result

Looking back over the last 5 years is always a good way to get a reasonable handle on how a companies business model has worked.
As I mentioned yesterday, despite a lengthy period of Auckland underperforming the rest of New Zealand in terms of house price gains and despite most of MET's villages being in the Auckland region and being independent living only they have grown underlying earnings on average 15% per year in the last 5 years (97% in 5 years)...(the long established RYM benchmark target) and yet RYM have not achieved their own target (92% underlying earnings growth in 5 years) despite having the benefit of a much wider geographical spread of villages on both sides of the Tasman and a much more comprehensive continuum of care model.

Despite this outperformance MET shares have not moved much from their share price of $4.37, five years ago and we see the relative share price performance here
RYM v MET.jpg

What happens when Auckland real estate starts moving more in line with the rest of the country ?
What happens when MET increases their new build and starts selling more units with embedded value of over $280,000 each ?
What happens as MET moves towards a more inclusive care model ?

MET are smarter than SUM because they have moved a little while back to fixed fees for life which is something I am sure incoming residents want.

We know RYM has been on a forward underlying PE in the mid 20's so lets have a look at MET fundamental's seeing as they are growing faster
If they grow underlying earnings by 15% per annum over the next few years and that looks like a pretty reasonable assumption seeing as they have achieved that in more difficult real estate conditions, then underlying earnings this year will be $90.5m + 15% = $104m / 213.3m shares = 48.76 cps and at $5.22 they are on a forward PE of just 10.70.

NTA is just on $7. Is it reasonable that the shares should trade at such a large discount to NTA given the more positive outlook for real estate now ?
Is it reasonable that MET having grown underlying EPS faster than RYM and well within the normal scope for this sector should trade at such a large discount to the sector average forward PE ?

Given construction costs seem to escalate at a very rapid rate perhaps the discount to NTA and cheapest metrics really is a pretty cunning value play.
RYM trades at 3.3 times book value and has a PEG ratio of nearly 2.
MET trades at 0.75 times book value and has a PEG ratio of just 0.71

MET still look very very cheap to me and from a technical perspective, (thanks and yes I will keep a close eye on the chart), things also look great.

I think they have a lot of room to improve their business model too whereas RYM do not and are already more than fully priced for perfection.

MET looks like a really overlooked and completely unloved growth opportunity to me. Forward PE of just 10.7 is pricing the company like its a zero growth company when quite obviously their record says that's clearly not the case.

[winner69]

Looking back over the last 5 years is always a good way to get a reasonable handle on how a companies business model has worked.
As I mentioned yesterday, despite a lengthy period of Auckland underperforming the rest of New Zealand in terms of house price gains and despite most of MET's villages being in the Auckland region and being independent living only they have grown underlying earnings on average 15% per year in the last 5 years (97% in 5 years)...(the long established RYM benchmark target) and yet RYM have not achieved their own target (92% underlying earnings growth in 5 years) despite having the benefit of a much wider geographical spread of villages on both sides of the Tasman and a much more comprehensive continuum of care model.

Despite this outperformance MET shares have not moved much from their share price of $4.37, five years ago and we see the relative share price performance here
RYM v MET.jpg

What happens when Auckland real estate starts moving more in line with the rest of the country ?
What happens when MET increases their new build and starts selling more units with embedded value of over $280,000 each ?
What happens as MET moves towards a more inclusive care model ?

MET are smarter than SUM because they have moved a little while back to fixed fees for life which is something I am sure incoming residents want.

We know RYM has been on a forward underlying PE in the mid 20's so lets have a look at MET fundamental's seeing as they are growing faster
If they grow underlying earnings by 15% per annum over the next few years and that looks like a pretty reasonable assumption seeing as they have achieved that in more difficult real estate conditions, then underlying earnings this year will be $90.5m + 15% = $104m / 213.3m shares = 48.76 cps and at $5.22 they are on a forward PE of just 10.70.

NTA is just on $7. Is it reasonable that the shares should trade at such a large discount to NTA given the more positive outlook for real estate now ?
Is it reasonable that MET having grown underlying EPS faster than RYM and well within the normal scope for this sector should trade at such a large discount to the sector average forward PE ?

Given construction costs seem to escalate at a very rapid rate perhaps the discount to NTA and cheapest metrics really is a pretty cunning value play.
RYM trades at 3.3 times book value and has a PEG ratio of nearly 2.
MET trades at 0.75 times book value and has a PEG ratio of just 0.71

MET still look very very cheap to me and from a technical perspective, (thanks and yes I will keep a close eye on the chart), things also look great.

I think they have a lot of room to improve their business model too whereas RYM do not and are already more than fully priced for perfection.

MET looks like a really overlooked and completely unloved growth opportunity to me. Forward PE of just 10.7 is pricing the company like its a zero growth company when quite obviously their record says that's clearly not the case.

The vagaries of a market where valuations are very subjective

The ‘subjectivity’ especially highlighted in the retirement sector - to many things just don’t make sense and things should not be like this

I doubt whether this will ever change

Life would be boring if the market obeyed the rules and said MET, SUM, RYM et all shall trade a 1.3 times BV and shall trade a PEG of 1

[Beagle]

Getting harder to find real value on the NZX but if you look hard enough in an unloved place, its definitely there !
Thankfully Coutts doesn't have a share price relativity theory for this one so I am perfectly safe expecting relative share price outperformance going forward

[winner69]

Getting harder to find real value on the NZX but if you look hard enough in an unloved place, its definitely there !
Thankfully Coutts doesn't have a share price relativity theory for this one so I am perfectly safe expecting relative share price outperformance going forward

That chart you put up earlier MET was keeping up with RYM until early last year then it turned to custard for them

Maybe it’s bit of a catch up time

[Beagle]

That chart you put up earlier MET was keeping up with RYM until early last year then it turned to custard for them

Maybe it’s bit of a catch up time

I think so. MET used to trade at book value 5 years ago. Maybe it might go back to book value which might be about $7.50 mid 2020 ?
Pretty good delta of ~ 44% to estimated book value as at 30/6/2020. Its very hard to go wrong buying deep value shares like this.

[winner69]

I think so. MET used to trade at book value 5 years ago. Maybe it might go back to book value which might be about $7.50 mid 2020 ?
Pretty good delta of ~ 44% to estimated book value as at 30/6/2020. Its very hard to go wrong buying deep value shares like this.

Looks like a sure thing .....you’ve got besotted with it and convinced me ...i’ll be in next week

Winner Analytics Limited just had a call from a Mr Couta seeking advice as to the relatively of the MET shareprice to the RYM share price

Confidentiality says I can’t tell you what it looks like but I’m into MET next week.