MET - Metlifecare - one for the fundies?

[Balance]

Just another question out there for people's thoughts. They held off paying a dividend in March so if the sale completely falls through will they announce a dividend

Don’t think so myself.

I believe the focus will be on financial flexibility in the environment we are in for the next 6 months to 1 year.

[Beagle]

Gee, everyone is pumped. Kinda funny that it was at about this price last week, but because there was uncertainty (worse case would have been what we have now, best case was the take over was going ahead), people didn't want to touch it. Funny human behavior. Well I guess added to the mix is that the market thinks it's 2019 again and there was no virus. Again, funny human behavior. I don't know what to think about the markets any more. Keep sucking from the QE titty and kicking the can down the road...

Pumped for a reason. There's deep value here and MET have the strongest balance sheet with the lowest gearing in the sector and will be least affected by a slowdown in development.

There was already a widely held belief the scheme of arrangement in its current form and price would not proceed. If that was not the case the market would have adjusted the ~ $3.90 price much, much closer to $7.00 which was due next month. My view is the activation of the material adverse event clause simply triggered an irrational response from some investors and anyone who was quick enough and jumped on board in the low to mid $3's should be very happy indeed. I don't think many people think its 2019 again, I'd suggest almost nobody does.

We have common ground in feeling a sense of bewilderment that the market per se is starting to react to unprecedented quantitative easing and there appears to be a real disconnect between the market and the likely underlying performance of the economy. I am very cautious as to how this all ends so am only buying companies like MET who are not only very deep value at the current price but also have very low debt, good cash flow and their business will only be affected by Covid 19 in a moderate way. It will be easy enough for them to slow down construction to meet the new normal market conditions and they have the strongest embedded value in the sector so the natural churn of existing units will see them able to maintain underlying profits at robust level's.

SUM by comparison is much higher geared, carries approximately a 17 year land bank (all debt funded) at the current build rate, which is frankly an absurd level of land to hold in the likely new normal in which we now live and most importantly of all, SUM relies on its development activities for the majority of its underlying profit.

MET has the oldest and most established portfolio of assets and is much better situated to weather this event and yet trades at a 46% discount to NTA whereas SUM trades at a 20% premium to NTA.

I think the chances of a takeover at a significant premium to the current $3.77 price sometime in the next 24 months are very good. I doubt whether this will be at $7 in the new environment but even $6 gives a potential 59% return on yesterday's closing price. Even if that doesn't happen the value relative to the rest of the sector is very clear to me and I would expect the company to be more proactive with reinitiating their share buyback scheme, at perhaps a significantly enhanced funding level if the shares stay anywhere around their current price.

On a 12-24 month view the chances of a decent gain from here look very good indeed.

[Balance]

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[Cadalac123]

Pumped for a reason. There's deep value here and MET have the strongest balance sheet with the lowest gearing in the sector and will be least affected by a slowdown in development.

There was already a widely held belief the scheme of arrangement in its current form and price would not proceed. If that was not the case the market would have adjusted the ~ $3.90 price much, much closer to $7.00 which was due next month. My view is the activation of the material adverse event clause simply triggered an irrational response from some investors and anyone who was quick enough and jumped on board in the low to mid $3's should be very happy indeed. I don't think many people think its 2019 again, I'd suggest almost nobody does.

We have common ground in feeling a sense of bewilderment that the market per se is starting to react to unprecedented quantitative easing and there appears to be a real disconnect between the market and the likely underlying performance of the economy. I am very cautious as to how this all ends so am only buying companies like MET who are not only very deep value at the current price but also have very low debt, good cash flow and their business will only be affected by Covid 19 in a moderate way. It will be easy enough for them to slow down construction to meet the new normal market conditions and they have the strongest embedded value in the sector so the natural churn of existing units will see them able to maintain underlying profits at robust level's.

SUM by comparison is much higher geared, carries approximately a 17 year land bank (all debt funded) at the current build rate, which is frankly an absurd level of land to hold in the likely new normal in which we now live and most importantly of all, SUM relies on its development activities for the majority of its underlying profit.

MET has the oldest and most established portfolio of assets and is much better situated to weather this event and yet trades at a 46% discount to NTA whereas SUM trades at a 20% premium to NTA.

I think the chances of a takeover at a significant premium to the current $3.77 price sometime in the next 24 months are very good. I doubt whether this will be at $7 in the new environment but even $6 gives a potential 59% return on yesterday's closing price. Even if that doesn't happen the value relative to the rest of the sector is very clear to me and I would expect the company to be more proactive with reinitiating their share buyback scheme, at perhaps a significantly enhanced funding level if the shares stay anywhere around their current price.

On a 12-24 month view the chances of a decent gain from here look very good indeed.

Is the balance sheet really that much better than Ryman or ARV.. there’s no real upward trend in metrics looks like it’s going to be stagnant to downwards growth wise

That said I guess you can’t argue with NTA argument and the fact that there’s been an overreaction to the deal being rejected

[Beagle]

Its about resilience for now. RYM has close to 40% external debt. That's a lot of debt to service with development shut down. https://www.nzherald.co.nz/business/...ectid=12319294

http://nzx-prod-s7fsd7f98s.s3-websit...968/317506.pdf

[crighton100]

Just like to say as a village resident,these places are a gold mine for the owners.to give you some insight,my wife & are in the mid 70's [we moved in 11 years ago,because we have no live family & travel a lot,or we did,now cancelling heaps of trips,but now you have to be over 70 to get in]So why is that important,well you buy in & 3 years later if you move out or do the right thing & pass on . So in our case [not good for them as we have lived too long you lose 30% of what you paid to get in],we paid $300k & if we go we get back a maximum of $210k & if properties have gone up we get nothing extra,now if we pegged today,they would spend about $50k to completely upgrade the 2 bedroom unit & sell to the next mug for well over $600k on todays market.Please dont forget that all the time the unit residents are paying a fixed fee every week for the pleasure of staying & that covers all the outgoing costs for the village.So you can see the company is in a great position [running all the time of the shut down & fully financed] & as soon as its all over away they go again,selling the departeds units & so far we have lost none in our village.they really are looking after us oldies.Hope that helps you guys out a bit,have a good easter AT HOME [to look after us old buggers who probably cant fight the virus].Happy days..

[Cyclical]

Just like to say as a village resident,these places are a gold mine for the owners.to give you some insight,my wife & are in the mid 70's [we moved in 11 years ago,because we have no live family & travel a lot,or we did,now cancelling heaps of trips,but now you have to be over 70 to get in]So why is that important,well you buy in & 3 years later if you move out or do the right thing & pass on . So in our case [not good for them as we have lived too long you lose 30% of what you paid to get in],we paid $300k & if we go we get back a maximum of $210k & if properties have gone up we get nothing extra,now if we pegged today,they would spend about $50k to completely upgrade the 2 bedroom unit & sell to the next mug for well over $600k on todays market.Please dont forget that all the time the unit residents are paying a fixed fee every week for the pleasure of staying & that covers all the outgoing costs for the village.So you can see the company is in a great position [running all the time of the shut down & fully financed] & as soon as its all over away they go again,selling the departeds units & so far we have lost none in our village.they really are looking after us oldies.Hope that helps you guys out a bit,have a good easter AT HOME [to look after us old buggers who probably cant fight the virus].Happy days..

Thanks for another insightful post there, Crighton. Have a good Easter and take care.

[winner69]

Thanks crighton

I’m feeling just a little guilty that the company I own is screwing mug oldies for as much we can get away

Where your next travels taking you?

[artemis]

Thanks crighton

I’m feeling just a little guilty that the company I own is screwing mug oldies for as much we can get away

Where your next travels taking you?

Just because people are getting on in years does not mean they are stupid, ill informed or ill advised.

[fish]

Thanks crighton

I’m feeling just a little guilty that the company I own is screwing mug oldies for as much we can get away

Where your next travels taking you?

No guilt whatsoever
Providing a great lifestyle and a caring environment until the end of life.
It is easier for a camel to go through the eye of a needle than a rich man to enter the kingdom of Heaven