RYM-Ryman

[lorraina]

A few months ago a friend of mine had an accident.
Damaged both legs.Could not walk or get out of bed by himself.
ACC arranged for him to go into care at Ryman's Ngaio Marsh .
I went to a RYM agm there many years ago.It was one of RYM's first village's.
My friend could be best described as being very demanding.
I went to visit him three times.
Village standard was still outstanding.His care was outstanding.
The atmosphere was friendly.Staff even offered me a cup of tea and a biscuit.
So their villages and care remain outstanding.
Just need their financials repaired.
This capital raise will do that.

My friend's accident/accidents.
He was fishing in the Tongariro river.Caught a fish but fell down the bank and hurt his left eg.Could not get out of the river.Luckily his phone still worked after being under water.He rang his two companions who contacted the police and it was a  fireman who got him out of the river.Ambulance took him to Taupo hospital.Was later discharged.Following morning he missed the step getting out of his unit,and damaged the other leg.Then off to Rotorua hospital.Flight back to ChCh and next morning to his physio.Physio said hospital.Next day surgery on both legs.
Now what we have learnt from this is if you buy a boat and go fishing at sea, each fish caught ends up costing about $1,000.
However simply fishing in/on a river means one trout can end up costing a great deal more.lol.
Six months later my friend is just about recovered.

[Shareguy]

Low take up, but not surprising given the market. Underwriters have been left with a few shares.

The effective take up rate by eligible retail shareholders was approximately 42%.
 
 The approximately 53 million of New Shares not taken up under the Retail Entitlement Offer have been allocated to the underwriters and/or to sub-underwriters procured by the underwriters including a range of existing institutional shareholders.



https://www.nzx.com/announcements/448306

[Minimoke]

A few months ago a friend of mine had an accident.
Damaged both legs.Could not walk or get out of bed by himself.
ACC arranged for him to go into care at Ryman's Ngaio Marsh .
I went to a RYM agm there many years ago.It was one of RYM's first village's.
My friend could be best described as being very demanding.
I went to visit him three times.
Village standard was still outstanding.His care was outstanding.
The atmosphere was friendly.Staff even offered me a cup of tea and a biscuit.
So their villages and care remain outstanding.
Just need their financials repaired.
This capital raise will do that.

My friend's accident/accidents.
He was fishing in the Tongariro river.Caught a fish but fell down the bank and hurt his left eg.Could not get out of the river.Luckily his phone still worked after being under water.He rang his two companions who contacted the police and it was a  fireman who got him out of the river.Ambulance took him to Taupo hospital.Was later discharged.Following morning he missed the step getting out of his unit,and damaged the other leg.Then off to Rotorua hospital.Flight back to ChCh and next morning to his physio.Physio said hospital.Next day surgery on both legs.
Now what we have learnt from this is if you buy a boat and go fishing at sea, each fish caught ends up costing about $1,000.
However simply fishing in/on a river means one trout can end up costing a great deal more.lol.
Six months later my friend is just about recovered.

Off topic I know - but I always carry a PLB.

[BlackPeter]

Low take up, but not surprising given the market. Underwriters have been left with a few shares.

The effective take up rate by eligible retail shareholders was approximately 42%.
 
 The approximately 53 million of New Shares not taken up under the Retail Entitlement Offer have been allocated to the underwriters and/or to sub-underwriters procured by the underwriters including a range of existing institutional shareholders.



https://www.nzx.com/announcements/448306

Congratulations to the new shareholders! Long may they prosper! Lets hope the exercise was worthwhile for them.

New shareprice might now slide towards
Offer price - ((total underwriters fee - underwriters cost) divided by number of shares the underwriters had to take).

[Basil]

"The Retail Entitlement Offer was well-supported in the current market climate"

42%, well supported, really? Good example of corporate B.S. there.

This capital raising will enhance Ryman's financial stability and resilience in the current market climate and provide the platform required to achieve an improved level of performance and return to growth as market conditions recover."

Gosh, growth dependent on market conditions improving.  Not really confidence inspiring is it ? RYM may be able to grow in due course but they have an enormous amount of work to do when it comes to growing earnings per share due to the vast number of extra shares on issue from the last two capital raises to fix all their management f**k-ups.  Not dissimilar situation to Heartland really, such poor management and shareholders have to keep stepping in to fix the problems management created whilst all the while the pigs at the trough keep drawing their huge salaries and bonuses.
There's no acknowledgement of fault and no genuine contrition.  Disgraceful.

[BlackPeter]

42%, well supported, really? Good example of corporate B.S. there.Gosh, growth dependent on market conditions improving.  Not really confidence inspiring is it ? RYM maybe be able to grow in due course but they have an enormous amount of work to do when it comes to growing earnings per share due to the vast number of extra shares on issue from the last two capital raises to fix all their management f**k-ups.  Not dissimilar situation to Heartland really, such poor management and shareholders have to keep stepping in to fix the problems management created whilst all the while the pigs at the trough keep drawing their huge salaries and bonuses.
There's no acknowledgement of fault and no genuine contrition.  Disgraceful.

Actually - you could say, that it was well supported.

Look at it this way - 42% of all investors paid more for the share than they had to (it was cheaper on market). This might not reflect well on their individual investment skills, but still, while the offer was not attractive, it was still supported by a material number of investors. This is good for the underwriters, and probably better than they expected.

PS: I see $2.91 is the new $3.05 - call it deflation or is it just Ryman shares getting cheaper by the day?

[Basil]

Matt Peek strikes me as a pretty smart guy.  Had a good chat with him after last year's Kingfish annual meeting and I was quite impressed with him.  I shared with him at the time I thought RYM's best years were behind it. Has some interesting things to say about RYM in his latest newsletter.  Well worth a read. https://api.nzx.com/public/announcement/448475/attachment/439714/448475-439714.pdf    He's not interested in OCA either.

[BlackPeter]

New week, new low ...

Today SP dropped below $2.90. Currently its $2.87.

Maybe an important lesson for underwriters? Perhaps not even underwriting is a one way road to becoming rich ...

[Basil]

Some people have crunched the numbers and apparently NTA is $4.95 after this capital raise.
For me, the severity of their problems is nearly as bad as OCA which is trading at a 55% discount to theoretical NTA.  Maybe a 50% discount really is warranted here now, and fair value is only ~ $2.50 ?

[Ferg]

Matt Peek strikes me as a pretty smart guy.  ...[snip]..... Has some interesting things to say about RYM in his latest newsletter.  Well worth a read.

That's a pretty brutal assessment.  So KFL have exited their RYM position.  It will take time before RYM regains the trust of Mr Market.

[Basil]

Many years, I think.  Matt Peek used to work alongside Julian Cook at UBS.

[Mos]

Today's note from Craigs on Ryman below. I think this translates as "we have ended up with a sh*t ton of unwanted underwater underwriter shares - please, please, please buy some"

Thought for the Day: Ryman – Darkest before the Dawn. Stephen Ridgewell has resumed coverage of Ryman Healthcare following a research restriction associated with RYM's recent equity raise. In a detailed note overnight Ridgewell has retained his Overweight with a reduced Target Price of $3.75 (-36%) that largely reflects 1) dilution with the additional equity needed to restore RYM's Balance Sheet and 2) tweaks to longer term assumptions, particularly a reduction in the long-term build rate from 400 to 200 units p.a.
RYM's trading update last month included guidance that it will sell 1471 total units in FY25 (March YE), which is 3% below pcp and 12% below consensus. Cash settlements held up well for most of the year but are guided to be down 33% in 4Q25, following a c.40% fall in sales contracts in 3Q25. The trading update was disappointing, and Ridgewell thinks this can chiefly be attributed to customer indigestion of the c.30% hike in weekly fees and pausing of sales incentives in 3Q25. Since January, new management have taken corrective action, including re-instating incentives, refocusing the sales team, and lowering asking prices at villages with excess stock, with the result that enquiry levels have improved. A likely next step is to (at least partially) wind-back the increase in weekly fees.
The charts below paint the picture – the short term remains tough as the housing market (and broader economy) have troughed but have yet to return to growth - albeit further interest rate cuts should see a pick-up in activity before the end of CY25. While sales velocity remains depressed (2nd chart) the industry is also awash with excess stock after a surge in supply during CY23 (3rd chart) which will take some time to work through the system.
Fortunately, the issues in the retirement village sector are temporary in nature and the path to FCF breakeven (expected late FY26) is clear under RYM's new Board, new management team and restored Balance sheet.
RYM's FY25 result in May will outline its revised NTA which is expected to be between circa $4.50-4.90. Even if you assume the lower end of this range RYM is currently trading at a 38% discount to NTA which is almost double the discount to its recent trading range when issues around debt levels were overhanging the stock.
MET & ARV were acquired for 0.83x NTA ... RYM is currently trading 0.63x NTA (CIPe). RYM is highly leveraged to an eventual upswing in the housing market – we reiterate the Overweight recommendation. See note below.

[Basil]

Today's note from Craigs on Ryman below. I think this translates as "we have ended up with a sh*t ton of unwanted underwater underwriter shares - please, please, please buy some"

Thought for the Day: Ryman – Darkest before the Dawn. Stephen Ridgewell has resumed coverage of Ryman Healthcare following a research restriction associated with RYM's recent equity raise. In a detailed note overnight Ridgewell has retained his Overweight with a reduced Target Price of $3.75 (-36%) that largely reflects 1) dilution with the additional equity needed to restore RYM's Balance Sheet and 2) tweaks to longer term assumptions, particularly a reduction in the long-term build rate from 400 to 200 units p.a.
RYM's trading update last month included guidance that it will sell 1471 total units in FY25 (March YE), which is 3% below pcp and 12% below consensus. Cash settlements held up well for most of the year but are guided to be down 33% in 4Q25, following a c.40% fall in sales contracts in 3Q25. The trading update was disappointing, and Ridgewell thinks this can chiefly be attributed to customer indigestion of the c.30% hike in weekly fees and pausing of sales incentives in 3Q25. Since January, new management have taken corrective action, including re-instating incentives, refocusing the sales team, and lowering asking prices at villages with excess stock, with the result that enquiry levels have improved. A likely next step is to (at least partially) wind-back the increase in weekly fees.
The charts below paint the picture – the short term remains tough as the housing market (and broader economy) have troughed but have yet to return to growth - albeit further interest rate cuts should see a pick-up in activity before the end of CY25. While sales velocity remains depressed (2nd chart) the industry is also awash with excess stock after a surge in supply during CY23 (3rd chart) which will take some time to work through the system.
Fortunately, the issues in the retirement village sector are temporary in nature and the path to FCF breakeven (expected late FY26) is clear under RYM's new Board, new management team and restored Balance sheet.
RYM's FY25 result in May will outline its revised NTA which is expected to be between circa $4.50-4.90. Even if you assume the lower end of this range RYM is currently trading at a 38% discount to NTA which is almost double the discount to its recent trading range when issues around debt levels were overhanging the stock.
MET & ARV were acquired for 0.83x NTA ... RYM is currently trading 0.63x NTA (CIPe). RYM is highly leveraged to an eventual upswing in the housing market – we reiterate the Overweight recommendation. See note below.

Translated perfectly.  They'll be desperate to unload huge amounts of unwanted shares.  That highlighted bit caught my eye.  Including the plethora of previously listed and unlisted companies now playing in this sector, I think the market will remain vastly oversupplied for many, many years to come.
My view is that RYM's management have made just as many and just as serious mistakes as OCA management and deserve to be trading at a 50%+ discount to NTA just like OCA are.  Comparing RYM's discount to ARV and MET and the metrics they were taken over at is disingenuous as RYM's management have proven they are grossly incompetent.   (Matt Peek made his feelings crystal clear about RYM's management and he strikes me as a very smart guy)  I actually think OCA are better buying in the low 60's than RYM at the current level and that's a big statement coming from me.  That said, I'm not sure there's really any catalyst for OCA to get out of its funk because most of the vast numbers of stock they have for sale, (care suites) is not in strong demand at this point.  They will be when the main bulge of the baby boomer population hits their late 80's but that doesn't help them now or any year soon.

Just a great sector to avoid completely for the foreseeable future.  I wouldn't even consider SUM at this point.  I'd even go further and suggest there's now so many well-funded private and public companies operating in this sector the boom days of super-normal profits for this sector are over and will never return.

[Mos]

The Ryman investment story has really unravelled and the concern around industry oversupply is not helping, although Summerset is still doing well in the same market. Eight years ago a trust I have some involvement with bought a small stake in Ryman at $8.79 and a fortunately a bigger one in Summerset at $5.38. The trust is down 69% on the Ryman investment and up 113% on the Summerset investment. At the time we thought Summerset offered better value but that both would do well through profitable growth. Sobering how wrong we were with respect to Ryman. I feel Fisher Funds and Matt Peek's pain.

It is truly shocking that Ryman has a market value of less than $2.8b having raised $1.9b of new capital from suffering shareholders in the past two years. Thankfully the trust I am involved with steered clear of both capital raises.

I am surprised that no class action suits have been taken with respect to Ryman as they have basically admitted to a multitude of questionable accounting treatments over years. Even after the last disaster, they appear to be foreshadowing another $300m write down hit to come in the near future. As noted in previous posts, I expect it will be a long and painful process to turn around the negative operating cashflows with the changes to DMF and weekly fees only applying to new residents and an average resident tenure of 9 years or so. The fixed weekly fees for current residents and the 20% DMF will be a drag for a long time to come. The indicated partial roll back on increased fees for new residents also indicates that Ryman are struggling to get new residents to sign up at rates that will cover their operating costs.     

[Mos]

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.

Your guess when you started this thread was right Shareguy. Craigs were wrong. Badly wrong! This was a few months before the first of the two monster capital raises under new broom Dean Hamilton.