RYM-Ryman

[Shareguy]

https://www.stuff.co.nz/nz-news/350348659/land-sat-empty-14-years-and-not-boutique-retirement-village-sight

[Shareguy]

Normally with such a large gain so quickly I would sell some down.  Not with Ryman, even with todays gain I still think a LOT more to come.

[Shareguy]

Ryman AGM on Thursday. Will hopefully get a sales update and progress on CEO. I'm expecting continued buying with ARV proceeds helping but agree that the SP has shot up fast.

[Basil]

By the numbers just for the heck of it.
RYM got down to ~ 55% of NTA at one point, now 75%, 20% improvement.
OCA got down as low as 35% of NTA at the low and is now 55%, very interestingly, also a 20% improvement but in percentage terms 55/35 = 57% share price gain for OCA and 75/55 = 36% gain for RYM for anyone brave and clever enough to pick the absolute lowest point for either of these shares.  Frankly, I don't believe anyone here was holding nothing and, in this sector, somehow magically managed to pick the exact bottom for either of these and all holders will have materially higher average entry prices for these than the very lowest point and many holders will still be a long way underwater.
Interestingly, OCA being 55% of NTA is 20% less than RYM's 75%, gosh there's that 20% again, this is getting spooky.

You would think on the balance of probabilities a company still trading at close to half NTA (55%), could in theory lift that to trade at 75% of NTA, a further 20% improvement, a lot easier than a company trading at 75% of NTA improving it to 95% of NTA.  Even if that's not the case and if both companies close the NTA discount by 20% in the year ahead, and assuming NTA stays flat, RYM's share price gain will be 95/75 = 26.7% and OCA's gain going from 55 to 75% of will be 75/55 = 36% leading to possible further share price outperformance for OCA on a relative basis.
Just throwing numbers around and crunching them for the heck of it.  Who knows what's really going to happen in the year ahead.
One thing I think we all agree on is both OCA and RYM have a LOT of work to do to restore investor confidence and grow earnings and that's going to be a lot easier said than done.

Conclusion: The low hanging fruit in this sector have already been picked.   I managed to get a few OCA at exactly half NTA but am wide awake to the fact that lots and lots of patience will be required from here.

[Shareguy]

By the numbers just for the heck of it.
RYM got down to ~ 55% of NTA at one point, now 75%, 20% improvement.
OCA got down as low as 35% of NTA at the low and is now 55%, very interestingly, also a 20% improvement but in percentage terms 55/35 = 57% share price gain for OCA and 75/55 = 36% gain for RYM for anyone brave and clever enough to pick the absolute lowest point for either of these shares.  Frankly, I don't believe anyone here was holding nothing and, in this sector, somehow magically managed to pick the exact bottom for either of these and all holders will have materially higher average entry prices for these than the very lowest point and many holders will still be a long way underwater.
Interestingly, OCA being 55% of NTA is 20% less than RYM's 75%, gosh there's that 20% again, this is getting spooky.

You would think on the balance of probabilities a company still trading at close to half NTA (55%), could in theory lift that to trade at 75% of NTA, a further 20% improvement, a lot easier than a company trading at 75% of NTA improving it to 95% of NTA.  Even if that's not the case and if both companies close the NTA discount by 20% in the year ahead, and assuming NTA stays flat, RYM's share price gain will be 95/75 = 26.7% and OCA's gain going from 55 to 75% of will be 75/55 = 36% leading to possible further share price outperformance for OCA on a relative basis.
Just throwing numbers around and crunching them for the heck of it.  Who knows what's really going to happen in the year ahead.

Interesting Basil, I'm holding both, but have Ryman as the largest. Im banking that all the bad stuff is all out in the open and it's only up from here.  They are still the market leader and with a good ceo we should see 🙏 the share recover. The Arvida take over has put a fire under the other stocks which are still beaten down. There is plenty of money still to trickle into Rym and OCA by default.

Broker says customer wants diversification and still wants a retirement stock and what should I buy with my proceeds from Arv.. Plus interest rate cuts are coming down...

[Basil]

I am sure the new CEO will find some more skeletons in the closet and "kitchen sink" those to try and make him / herself look really brilliant going forward.  Same risk for OCA being frank about it.  My concern with RYM, (as an accounting professional) is they are going to completely reinvent the wheel with reporting standards and try and come up with some new reporting benchmarks.  In my opinion its totally inappropriate that this very inexperienced bunch of directors and management, try and reset accounting standards and benchmarks that have been established for centuries by accounting standards boards and decades in regard to underlying earnings by the likes of the legend Simon Challis.  Frankly, who the heck do they think they are?

My opinion is that the only conclusion any reasonable professional in this field can draw, is that they don't want to continue with existing accounting standards, (either underlying profit, or IFRS16  which is comprehensive profit which includes all revaluations of properties using independent valuers, not numbers made up by the board to suit their own purposes), because it will show future results in the very bad light and actually complying with existing standards, rather than brazenly fudging them in the past makes them look even worse going forward.
I've thought about it a lot. 

The only plausible reason for them to try and invent brand new profit measurement processes now, is what I have alluded to above.  In effect creating new reporting standards is an attempt to continue the deceptive practices of the past, on another more round about convoluted way.   A continued disinformation campaign and further obfuscation of the facts is how I very dimly see this.  A contrite board having so brazenly played fast and loose with reporting requirements in the past should not only come clean but pull their head in and comply properly going forward.  The fact that they're not tells me there is little if any real contrition for past disingenuous behavior and indeed a very blatant attempt to continue same in another form.

I know many will roll their eyes at talk of professional standards talk so let me put this in nautical terms. RYM want to not only completely recast the GPS map by which they operate, but also want to change "chart datum" and where all the rocks are marked as well.  We're in dangerous, murky and unchartered waters when that happens.  I prefer to navigate my ship by well-established and proven GPS maps as you're much less likely to hit a rock and capsize that way.   

Trust will take a VERY long time for RYM to earn back, especially if they persist with inventing brand-new unproven reporting standards to suit their own purposes.  For mine, I will never trust any company in this sector that won't report underling, (realized) earnings per share.   If that forever rules me out as a future RYM shareholder, so be it.   I don;t think the board and management have learned much if anything from their past deliberate misreporting.
I'd be very surprised and disappointed if any other listed company in this sector follows RYM down the Alice in Wonderland reporting "rabbit hole".

[Shareguy]

I am sure the new CEO will find some more skeletons in the closet and "kitchen sink" those to try and make him / herself look really brilliant going forward.  Same risk for OCA too.
My professional concern with RYM is they are going to reinvest the wheel with reporting standards and try and come up with some new reporting benchmark.  In my opinion its totally inappropriate that this very inexperienced bunch of directors and management, try and rest benchmarks that have been established for centuries by accounting standards boards and decades in regard to underlying earnings by the likes of the legend Simon Challis.  Frankly, who the heck do they think they are?

My opinion is that the only conclusion any reasonable professional in this field can draw, is that they don't want to continue with existing accounting standards, (underlying profit, or IFRS16 (comprehensive profit which includes all revaluations of properties using independent valuers, not numbers made up by the board to suit their own purposes), because it will show future results in the very bad light.
I've thought about it a lot.  The only plausible reason for them to try and reinvent new profit measurement processes now, is what I have alluded to above.  In effect, RYM want to reinvent the GPS map by which they operate.  We're in dangerous unchartered waters when that happens.  I prefer to navigate my ship by well-established and proven GPS maps as you're much less likely to hit a rock and capsize that way.  Food for thought for you mate.

Yes your points are bang on and food for thought. The directors valuation especially was just so wrong. With all that aside the valuation looks attractive to me. Thursday will be interesting and hopefully positive.

Your comments re the incoming ceo are valid. I like the talk from the chair and can only hope that all the skeletons are out on display. If they can remain the leader and hold market share then with the changes they are planning should result in EPS going up again. 

Well that's what I'm banking on. Time will tell. $5 here we come

[Shareguy]

Director spending a few bob just before AGM.

https://www.nzx.com/announcements/435304

[Basil]

https://www.nzherald.co.nz/business/ryman-healthcare-bombshell-reviewing-fixed-weekly-fees-dmf-for-new-residents/DWZWI6RXWVDEXKSFLYUZJEQHCE/  Paywalled

Noting, trading for the first 4 months of FY25 is "more challenging"
Fixed weekly fees for life really hurting us.
Bombshell:   Fixed fees for life and 20% DMF are under review.
My comment.  What's taking so long?  Just change fees to the CPI adjustment every year and the DMF level to 25%  Simple as. Not rocket science.

[Buzz]

Here are the key points from the Herald article on Ryman Healthcare:

Financial Challenges:
- Ryman Healthcare has faced financial difficulties due to its grow-at-all-costs strategy, leading to significant debt.
- Fixed weekly fees on occupation rights agreements, unlike other operators who adjust fees based on the Consumer Price Index (CPI), have negatively impacted the company.
- The company reported a disappointing net profit after tax of $4.8m for the year ending March 31, 2024, down from $257.8m in 2023.

Board Actions and Future Plans:
- The board is examining the viability of maintaining deferred management fees at 20%.
- Future new residents might have variable fee structures.
- Ryman is focused on improving performance in existing villages, enhancing efficiency in new developments, and creating a sustainable overhead structure.

Development and Staffing:
- Ryman has ten ongoing development projects but has put others, like the Park Terrace site in Christchurch and the Wellington's ex-Teachers' College site, on hold due to economic and regulatory challenges.
Staffing concerns, particularly from the pandemic, have been alleviated, with new hospitals being fully staffed.

Debt and Cashflow:
- The company's debt stands at $2.51 billion, with a gearing ratio of 36.2%.
- The sale of occupation rights agreements is expected to help repay bank debt.

Industry and Government Relations:
- The company criticized the insufficient funding increase from Health New Zealand Te Whata Ora, highlighting the potential broader impact on healthcare if aged care funding isn't addressed.
- Ryman has participated in the Aged Care Task Force and is hopeful for bipartisan support for better funding models.

Other Information:
- Shares are trading at around $4.56, giving the company a market cap of $3.1 billion.
- Deloitte, the long-time auditor, has been replaced by PwC.

[Mos]

https://www.nzherald.co.nz/business/ryman-healthcare-bombshell-reviewing-fixed-weekly-fees-dmf-for-new-residents/DWZWI6RXWVDEXKSFLYUZJEQHCE/  Paywalled

Noting, trading for the first 4 months of FY25 is "more challenging"
Fixed weekly fees for life really hurting us.
Bombshell:   Fixed fees for life and 20% DMF are under review.
My comment.  What's taking so long?  Just change fees to the CPI adjustment every year and the DMF level to 25%  Simple as. Not rocket science.

Agree. Oil tanker to turn around though. Will take a long time for changes to new residents contracts to solve cost recovery challenge. Need to make the changes and tough out the next 5+ years. Right move though when they make it.

[Shareguy]

https://www.nzherald.co.nz/business/ryman-healthcare-bombshell-reviewing-fixed-weekly-fees-dmf-for-new-residents/DWZWI6RXWVDEXKSFLYUZJEQHCE/  Paywalled

Noting, trading for the first 4 months of FY25 is "more challenging"
Fixed weekly fees for life really hurting us.
Bombshell:   Fixed fees for life and 20% DMF are under review.
My comment.  What's taking so long?  Just change fees to the CPI adjustment every year and the DMF level to 25%  Simple as. Not rocket science.

Yes why is it taking so long. Just make the decisions. Waiting for new ceo perhaps. The share price has come up quickly but I'm picking $5 won't be far off. All that Arvida money alone is going to make a difference. Interest rates on the way down and they have a market leading product.

[Basil]

I think two of the most attractive things, (there are others and some of their villages are superb, (others look less attractive), about moving into a RYM village has been their market leading 20% DMF fee and the fixed weekly fees for life.  Take those two things away and RYM's premium unit pricing compared to others might come into stark contrast.  Good luck to holders.

[Shareguy]

I think two of the most attractive things, (there are others and some of their villages are superb, (others look less attractive), about moving into a RYM village has been their market leading 20% DMF fee and the fixed weekly fees for life.  Take those two things away and RYM's premium unit pricing compared to others might come into stark contrast.  Good luck to holders.

If their product is so good then they should be at a price premium to the others. They have a great opportunity to increase fixed fees and DMF and still retain the best product for residents.  That's why I think share holders will be rewarded.

[BlackPeter]

I think two of the most attractive things, (there are others and some of their villages are superb, (others look less attractive), about moving into a RYM village has been their market leading 20% DMF fee and the fixed weekly fees for life.  Take those two things away and RYM's premium unit pricing compared to others might come into stark contrast.  Good luck to holders.

Hmm - not quite sure I understand the problem?

If you offer customers the cruise experience of their life for the rest of their life, than what difference would it make to these customers whether their heirs get 80% back of their ORA or just 75%? While I am at this stage not sure, whether a retirement home will be at some stage the right place for us, I can assure you that the size of the DMF which would go out of our estate would be the least important decision criterium of all.

Important would be for us the location, the quality of the service, safety, good company, the ability to rely on the company, flexibility when some of the inevitabilities of life occur (like care), within reason the size of the ORA (it doesn't need to be cheap, but it should be sensible) and the predictability of all other costs (i.e. no surprises, though I would not mind some inflation indexing).

Whether they take at the end however 20, 25 or 30% DMF out of the ORA would be clearly the least significant decision criterium for us. I guess its one of these things, it might matter to some, but not to anybody of significance ;

I just hope Ryman does not make the mistake to cut their income in an area where it hardly matters to their client base.