ARV - Arvida Retirement Villages

[winner69]

The neighbours bowling club mates had a look around Village in the Park last year. They were really impressed what it offered.

So impressed that they bought some shares in the operator - only problem they thought it was an Oceania site.....and have regretted their error ever since.

[Beagle]

I`ve spent yesterday day going over ARV`s result and updating my spreadsheets. And magnificent spreadsheets they are too, predicting back in March (post above) that the EPS would be 9.3 cps.(maybe the broken clock thing)
Firstly, I am very impressed with the layout of the investor presentation . I have always bagged ARV for sub-par presentations but they have really got that sorted now.
Here goes.....
-They seem to be suffering the same phenomena as SUM of taking longer to sell the new stuff with only 46 of the 113 new units delivered FY19 being sold. Their new sales reduced from FY18 =79 to FY19=70. While SUM got canned for falling new sales recently we seem to be getting more accustomed now. I personally have no issue with this as it takes time for new builds to be digested by the community. The true indicator of oversupply (according to SUM CEO king Julian) is resales and ARV have good resales with only 2% being empty. SUM is 1.5% but it has gone lower to 1% at the time of their recent AGM , RYM 1%
-All their YOY figures seem healthy enough with no red flags that I can see. It is good to see their YOY DMF`s up 18 % and resales profit up 47%
-Their new build margins are way behind the others at 17% (SUM and OCA at circa 30-33%)
-To compare apples with apples I have added back the tax ARV pay as OCA, SUM and RYM seem to pay feck all tax. This increases ARV`s EPS to 10cps.
Sooo… EPS (untaxed) and PE as follows;
ARV $1.30 eps 10.0c = PE 13
OCA $1.04 eps 8.5c= PE 12.2 (this is 12 months old, FY ends this weekend- my spreadsheets are predicting eps 9.1eps =11.43)
SUM $5.55 eps 47c= PE 11.8
RYM $11.50 eps 45.4 = PE25.3

Seems to me SUM and OCA are ones offering best value with ARV a wee way behind in 3rd place. Plus I really like the OCA and SUM directors (I don`t know anything about ARV directors but probably outstanding individuals too).

Disc; hold truck loads of OCA, a van load of SUM and a lime scooter load of ARV.

Nice work mate, much appreciated. RYM stupidly overpriced and trading in a market with almost exactly the same dynamics as the others. (I say almost exactly because they have plenty of exposure to the very rapidly falling Australian market). My latest theory to explain this is RYM has a LOT of loyal shareholders who have done extremely well over the years and are "entrenched" long term shareholders. I think the management and directors at SUM are a very bright bunch. Earl a nice guy too and time will tell if he is tough enough, (you need more than an ounce of mongrel in you to be a CEO in my opinion) to be a good driver of value for shareholders.

[winner69]

Nice village ....setting the standards

https://www.stuff.co.nz/business/113...ge-at-richmond

[winner69]

Share price doing OK ...not far from all time highs ....unlike sum others

[trader_jackson]

Share price doing OK ...not far from all time highs ....unlike sum others

Yea, I get all excited when i see it inching up, but then remember this time 2 years ago the share price was higher ($1.37)
At least since then they've paid out 10c or something in dividends.

[Maverick]

Nice village ....setting the standards

https://www.stuff.co.nz/business/113...ge-at-richmond

Full respect for ARV to get that onto stuff.co for completeing a retirement unit. Must be a "slow news day". Don't know how they conjured up that free advertising but good on them.

[Beagle]

Saunders used to be SUM's sales and marketing manager. I think they lost a good guy there.

[trader_jackson]

Saunders used to be SUM's sales and marketing manager. I think they lost a good guy there.

And therefore ARV gained a good guy?
Saunders must be a smart guy - saw the writing on the wall and jumped to a much better positioned company

[Beagle]

And therefore ARV gained a good guy?
Saunders must be a smart guy - saw the writing on the wall and jumped to a much better positioned company

More likely just ambitious and ARV poached him. Stealing good staff from other incumbent companies in this industry is at epidemic level's right across all aspects of the various companies operations. I suppose ARV need all the help they can get with just having mid single digit underlying eps growth...

[trader_jackson]

Happen to have a look at the NZX website and 52 week returns for the 5 listed operators... Tough time for the listed operators these days it would seem... but I didn't think it would be as varied as it was... a staggering over 33% difference from top to bottom performer, it would seem sum villages are fearing much worse than others... and those with the strongest care offering are fearing the best (sum might say this is a ranking of what people think of each operators care offering).

ARV + 3.91%
RYM - 1.79%
OCA - 4.59%
SUM - 27.51%
MET - 29.57%

While sum operators are struggling to sell units (so much so sum are halving their build targets), other operators are just coming into their prime it would seem with new units built to double from 101 in 2018 to 200 in 2022... exciting times!
...For Arvida at least

In other news, Forsyth put out an update today... target price upped 8% to $1.64... the key driver of this increase was new build activity.

In other news still, I heard a family member of mine say "Arvida has the best care", this was pleasing to hear Arvida really does have a "gold standard" name these days, although certainly isn't priced like the famed (original) "gold standard" RYM
They did not know I owned shares in the operator (until I immediately told them right after!)