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27-11-2018, 11:29 AM
#641
Originally Posted by trader_jackson
I thought this would happen... share price going nowhere fast anytime soon... typically typical... best ever half year by miles and share price still below where it was nearly 2 years ago
PE contraction is a bitter pill to swallow isn't it. Seeing it right across this sector. Explains why SUM other companies are also under the pump including even some people's market darling RYM. http://nzx-prod-s7fsd7f98s.s3-websit...432/291294.pdf
Profit reporting sounds great especially the headline IFRS report doubling and underlying profit growth also sounds impressive at 45% but underlying eps is only up 17%, (ouch a sad and inconvenient truth) and its not the supercheap opportunity some thing at a forward underlying PE of 15.3.
Last edited by Beagle; 27-11-2018 at 03:14 PM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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27-11-2018, 12:05 PM
#642
Originally Posted by Beagle
PE contraction is a bitter pill to swallow isn't it. Seeing it right across this sector. Explains why SUM other companies are also under the pump including even some people's market darling RYM. http://nzx-prod-s7fsd7f98s.s3-websit...432/291294.pdf
Profit reporting sounds great especially the headline IFRS report and underlying profit growth also sounds impressive at 45% but underlying eps is only up 17% and forward underlying pe is 15.3.
PE of 15 odd ...that’s expensive, especially when quite of lot of earnings are care related rather than developing stuff.
A lot of H1 growth came from acquired villages ...eps accretive good ...but what does say about the villages they had.
”When investors are euphoric, they are incapable of recognising euphoria itself “
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27-11-2018, 01:43 PM
#643
Originally Posted by winner69
PE of 15 odd ...that’s expensive, especially when quite of lot of earnings are care related rather than developing stuff.
A lot of H1 growth came from acquired villages ...eps accretive good ...but what does say about the villages they had.
I have OCA on a forward underlying PE of about 11 and don't think ARV's premium is warranted. Heck SUM other companies with a much longer track record of strong growth are on a forward PE of just 14 now. The problem with headlines is everyone gets excited about doubling of profit but underlying eps growth of 17% really isn't that flash compared to the growth rate at last report point for OCA and SUM. Development margin of only 16% is also the laggard of the entire sector so nothing to write home about there either. Not a mutt or a dog but a very ordinary company with ordinary growth trading at a fulsome valuation is my assessment.
Last edited by Beagle; 27-11-2018 at 01:44 PM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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27-11-2018, 03:12 PM
#644
Reading bits of the 2018 AR suggests that the acquisitions made H2 last year ( not included in H1 results) could have contributed more than $10m npat this half
That’s a fair chunk of the 116% increased profit eh
That’s one reason market not that excited I reckon.
”When investors are euphoric, they are incapable of recognising euphoria itself “
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27-11-2018, 03:18 PM
#645
The metrics, high-ish underlying PE, modest partially imputed dividend yield, slight premium to NTA, underlying eps growth of only 17% and development margin of just 16% all point as this to being an "also ran" in this sector. Nothing to get excited about. Disc: Not holding and not intending to hold.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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27-11-2018, 03:28 PM
#646
Originally Posted by Beagle
The metrics, high-ish underlying PE, modest partially imputed dividend yield, slight premium to NTA, underlying eps growth of only 17% and development margin of just 16% all point as this to being an "also ran" in this sector. Nothing to get excited about. Disc: Not holding and not intending to hold.
I reckon they’ll struggle to sustain eps growth of 17% in H2 ...ie full year likely to be less than 10%
Forbar will disagree of course ...what’s their latest outlook tj
”When investors are euphoric, they are incapable of recognising euphoria itself “
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27-11-2018, 03:32 PM
#647
Interesting we are talking about high PE for ARV (we won't bother looking at other metrics like highest dividend yield or cheapest price to book) - some say SUM is on 14.2x 2019 forward PE, OCA on 14.3x 2019 foward PE, and... ARV on a 13.9x 2019 forward PE (that was before todays bigly results were released - probably lower now after the impending concensus upgrade around full year profits)... RYM on 25.3 and MET on 13.1 but nobody cares about that - one has always been wildy overvalued while the other has unknown remedial costs and all sorts of not so great stuff
Looking at FY20, well the three horses above, sorry, 2 stallions and a dog, are pretty close (all in the mid 12's)... wow 4 years ago if anybody had tried to remotely see ARV in the same light as others listed at the time, it would have been meet with nothing but laughter
2H likely to be softer than previous years (relative the first half) but probably a record and FY19 ARV on track to beat the famed ryman in terms of underlying EPS growth, maybe even come dangerously close to sum others (how embarrassing that could/would/might be!)
After RYM, the market leader as we all know, posted a NPAT drop, I got a bit worried (market didn't really care) ARV would do the same (it did a year back), but no... quite the opposite... and NPAT is the thing that counts the most isn't it?
Tomorrow I reckon Forsyth gonna say $1.75, a record 12 month price target from them for ARV... but we all know it'll probably struggle to stay above $1.30, too much attention going to OCA for anybody to notice ARV
Last edited by trader_jackson; 27-11-2018 at 03:37 PM.
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27-11-2018, 03:47 PM
#648
Originally Posted by trader_jackson
Interesting we are talking about high PE for ARV (we won't bother looking at other metrics like highest dividend yield or cheapest price to book) - some say SUM is on 14.2x 2019 forward PE, OCA on 14.3x 2019 foward PE, and... ARV on a 13.9x 2019 forward PE (that was before todays bigly results were released - probably lower now after the impending concensus upgrade around full year profits)... RYM on 25.3 and MET on 13.1 but nobody cares about that - one has always been wildy overvalued while the other has unknown remedial costs and all sorts of not so great stuff
Looking at FY20, well the three horses above, sorry, 2 stallions and a dog, are pretty close (all in the mid 12's)... wow 4 years ago if anybody had tried to remotely see ARV in the same light as others listed at the time, it would have been meet with nothing but laughter
2H likely to be softer than previous years (relative the first half) but probably a record and FY19 ARV on track to beat the famed ryman in terms of underlying EPS growth, maybe even come dangerously close to sum others (how embarrassing that could/would/might be!)
After RYM, the market leader as we all know, posted a NPAT drop, I got a bit worried (market didn't really care) ARV would do the same (it did a year back), but no... quite the opposite... and NPAT is the thing that counts the most isn't it?
Tomorrow I reckon Forsyth gonna say $1.75, a record 12 month price target from them for ARV... but we all know it'll probably struggle to stay above $1.30, too much attention going to OCA for anybody to notice ARV
Sometimes slow and steady wins the game... Isn't being 'boring' one of the secrets to market success?
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27-11-2018, 03:47 PM
#649
Originally Posted by winner69
I reckon they’ll struggle to sustain eps growth of 17% in H2 ...ie full year likely to be less than 10%
Forbar will disagree of course ...what’s their latest outlook tj
Ouch...that's not going to look too flash compared to OCA and SUM others. Happy with my own analysis T.J.. Forward PE for full year FY19 ARV ~ 15, OCA ~ 11.
ARV is the "also ran" of the industry in my view.
Last edited by Beagle; 27-11-2018 at 03:50 PM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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27-11-2018, 10:39 PM
#650
After spending the evening on this one I reckon ARV is doing a very good job.
The tricky thing about this industry's reporting is that there is just so much interpretation of retirement village profits.
Personally , I'm only interested in full 28% after tax ,"underlying earnings".
By using the "underlying earnings" it essentially strips out the distorting property valuations which helps to compare a retirement village profit with a more simple company such as MVN (which basically makes plumbing stuff, no offence MVN holders, it's just an example)
That being said, I do greatly desire the property revaluations essentially because it keeps the investment asset,(the retirement unit) therefore the rent of it, up with the cost of living / inflation. This is really important when today's nest egg has to pay for a plumber thirty years from now...$600/hr?
So based on "underlying earnings" and adjusting for 28% tax .. ARV makes a 5.1% profit after tax at a share price of $1.32.
To me , that's a darn good return on something that keeps up with inflation and is constantly expanding with unimpeded growth for at least 15 years.(while using the clients money)
BUT..... while ARV is a VERY fine investment at this price it is clear the market is out of love with these stocks so only awards rather low PE multiples. So I reckon $1.30 ish is going to be it for a while.
Also, I do maintain that SUM and certainly OCA are even better options.
Last edited by Maverick; 28-11-2018 at 08:45 AM.
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