RYM-Ryman

[Shareguy]

Craig's latest views say

Ryman Healthcare is a core holding in the New Zealand market, meeting much of the criteria we look for in a company. It has a high-quality portfolio of assets and is the market leader in the retirement living and aged care sector across Australasia. Its portfolio is diversified across New Zealand and Victoria, and all villages are in well-established areas where people have lived and worked, and wish to retire.
• There are limitations to using some traditional valuation metrics, although on all these Ryman Healthcare is trading at a discount to its long-term averages. While rising interest rates and a soft housing market are impacting sentiment, we don't believe the current share price fails accounts for the needs-based nature of the services it provides, or the discount at which units and apartments are priced relative to the median house price.

Craig's must be wrong I guess.

[Left Field]

Latest results out..... I guess holders be happy? ( I don't hold.)  Pressure now on OCA to measure up.

https://www.nzx.com/announcements/402597

• Unaudited underlying profit of $138.8 million, up 44.8% on the same period last year, driven by strong resale margins
• Unaudited reported (IFRS) profit decreased 31.1% to $194.0 million due to lower unrealised revaluation gains of investment property
• Interim dividend of 8.8 cents per share (unchanged from last year), representing 31.7% of underlying profit, and eligible for the dividend reinvestment plan
• Total assets of $12.03 billion, up 9.7% from $10.97 billion as at 31 March 2022
• Cash receipts from residents of $714.7 million, up 5.0% on the first half last year
• Booked sales of occupation rights up 9.8% driven by strong growth in Australia
• Resales stock remains low at 1.7% despite softening housing market conditions
• Resilient aged care occupancy of 94% for our mature villages, notwithstanding the re-emergence of COVID through the winter months

[Onemootpoint]

At first glance not a total train smash, but the market may know better. Price down a bit this morning.

[Basil]

Market seems concerned by the cash flow which wasn't that good and the company talking about headwinds and the slowdown in the property market slowing their ability to sell units.  On the face of it a solid result but as mentioned many times already, when the tide goes out all boats go lower.
Highest level of debt in this sector.

[winner (n)]

Ryman have never raised any new capital since they listed (last century)

the DRP may be the first sign that the Ponzi scheme the sector is is about to unravel

[Basil]

Ouch, I'm not liking on this sector at all with the tide going out so fast but "Ponzi scheme" maybe a little bit harsh mate.
They recently lowered their dividend guidance from their traditional 50% of underlying profit to 30-50%.  This was surprising considering they're a mature company with a history going back more than 25 years.  Interestingly not only did they introduce the DRIP for the first time ever, the payout ratio is right at the very bottom of the new range at ~ 31% with the current unchanged dividend despite underlying profit being up 44%.  Hmmm
If RYM are trying to warn there's serious challenges ahead they did a very good job of that with their dividend signals.
Jarden analysts seem to have had the best foresight.  "We expect favourable demand dynamics to show through but expect cost pressures and challenges in care in particular to dampen the result," they wrote in an outlook issued last week.
Noting high care costs one has to wonder about OCA next week who have a significant majority of their business as care in one form or another...
https://www.nzherald.co.nz/business/ryman-healthcare-interim-result-bottom-line-profit-falls-31-revaluations-down/GBRMQ7ITEJGLDPWL3TK5T5C6QM/

[Whacc]

Ryman have never raised any new capital since they listed (last century)

the DRP may be the first sign that the Ponzi scheme the sector is is about to unravel

The fact is their sacred cow of not raising was a dumb irrational one.

They're a growing business, they should be raising capital (and not paying bl**dy* dividends, but that's another story) and there is nothing shameful in doing so.
People were screaming at them to raise when they were trading between $14-$16 but they were too arrogant.

The DRP shows that they're finally coming to their senses, albiet at the wrong time in the cycle.

[Basil]

Updated NTA is now $7.135.  You'd be VERY brave to think that number won't get tested by the share price in this down cycle.

[winner (n)]

The fact is their sacred cow of not raising was a dumb irrational one.

They're a growing business, they should be raising capital (and not paying bl**dy* dividends, but that's another story) and there is nothing shameful in doing so.
People were screaming at them to raise when they were trading between $14-$16 but they were too arrogant.

The DRP shows that they're finally coming to their senses, albiet at the wrong time in the cycle.

Paid about $1 billion dividends last 10 years ..... that would have kept debt down ....and not stopped them growing

[winner (n)]

RYM total assets $12.0 billion

They owe banks / lenders $3.0 billion

Residents are owed $4.6 billion

Equity is $3.6 billion

Pretty high leverage eh

No wonder some guru analysts and commentators are getting a bit worried

[lorraina]

I think it very much depends on how you classify the amount owed to Residents.
In the way that works resales will more than cover it.
I very much doubt all their residents are going to die within a month of each over.
The Ponzi will continue while the numbers of oldies approaching their market continues to grow in ever increasing numbers daily. 

[Basil]

RYM a bellwether for this sector and it's fair to say despite underlying profit being up 44% on PCP the market really disliked this result with a whopping 37 cent decline, (4.6%), on the day. ARV and OCA are the next cabs off the rank to report next week on Tuesday and Wednesday respectively.
I hope shareholders have their seat belts firmly fixed, tray tables folded away and sick bags in hand.  Anyone who's built a model thinking these next two can swim against this rip-roaring outgoing tide and have loaded up accordingly, better have their life jackets on as well.

[winner (n)]

Impressive chart in Ryman preso .....selling prices this century.

No doubt type/geographical mix has a bit to do with it but the last year hasn't seen the downturn that the REINZ HPI chart shows.

Maybe that's still to come for Ryman ......delayed settlements etc.

You cannot view this attachment.

[Teitei]

Chart tells the story - Ryman is highly leveraged to the sector so the drop in property prices is going to have an eqaully pronounced effect on the way down as it did on the way up.

[KW]

Its fine selling units for $1M when their customers are selling houses for $1M+.  What happens when customers are selling houses for $750k?  Bridging that gap is difficult for elderly people - my father is in that situation now.  He has decided that he does now want to live in a retirement village, but he cant afford to buy in because his house is worth less than the village unit.