RYM-Ryman

[snapiti]

Hi winner could you please explain......or anyone else why RYM would have a broker underwright a dividend......does not make sense to me.....appears to be a sneaky DRP dilutionary cap raise which tells me RYM board know they could not really afford to pay the last divi

[Crackity]

Hi winner could you please explain......or anyone else why RYM would have a broker underwright a dividend......does not make sense to me.....appears to be a sneaky DRP dilutionary cap raise which tells me RYM board know they could not really afford to pay the last divi

Absolutely - the reason is so there is no cash drain on the already stretched Balance Sheet.

Had a relook at the FuBar analyst note from mid Oct 2021 - how things change in 14 months.....here it is - interesting the first paragraph and last paragraph 


Ryman (RYM), for instance, targets unit prices of ~70% of the median house price with the idea that the owners of a median house
should release some equity if they sell their house and buy a unit. The implicit target market is thus owners of median or higher priced
houses. Pricing units lower relative to the local market increases the group of house owners that can afford to buy a unit. Secondly,
over the next few years the aged care operators can tap into this "HPI buffer" as and when prices start to flatline or decline. This
provides a high degree of visibility into medium term growth.
Embedded value already represents 30% of market cap and is likely to increase further
The aged care companies report total Embedded Value (EV) in their units. EV represents the build up of future re-sale gains and
deferred management fees and is primarily based off recent transactions, i.e. not factoring in the increase in HPI that has not
translated to higher unit pricing (yet). We estimate that current EV represents c. 30% of market cap for the aged care operators,
maybe more telling; the EV of re-sale gains represents >5 years of annuity EBITDA and ~10 years of re-sale gains.
We like the aged care sector overall and prefer the smaller cap names
Overall we remain positively biased towards the aged care sector. It benefits from a combination of; (1) high visibility growth over the
near term driven by historical HPI increases; (2) long term favourable trends, particularly with regards to the need for more care beds;
and (3) in comparison to other growth names, valuations that are not too detached from history. We prefer the smaller cap names
Oceania (OCA) and Arvida (ARV) due to similar growth, only modestly higher risk (in our view) but substantially lower valuations. We
prefer SUM over RYM as SUM is growing faster, has higher EV, and is valued below RYM.


Figure 1. Summary of sector ratings and valuation

Company Ticker Current price (NZ$) Target price (NZ$) 24m fwd PE 24m fwd EV/Annuity EBITDA Rating
Oceania Healthcare OCA 1.44 1.90 12.0 17.2 OUTPERFORM
Arvida ARV 2.10 2.50 12.9 20.6 OUTPERFORM
Summerset SUM 15.05 13.85 17.4 34.0 NEUTRAL
Ryman Healthcare RYM 14.70 12.60 22.5 40.7 UNDERPERFORM

[snapiti]

 most of the sector commentary from management indicates they are busy trying to convince punters that things are moving along nicely whilst in the background the reality is the macro environment is about to run them with a knife, So RYM are just trying to sweep this under the carpet, for now, by having the DRP underwritten rather than telling the market they are not in a position to pay a divi. Would cut to close to the bone to tell the markets no divi so the use of smoke and mirrors by way of underwritten DRP would be much easier for the markets to swallow.

[snapiti]

Absolutely - the reason is so there is no cash drain on the already stretched Balance Sheet.

Had a relook at the FuBar analyst note from mid Oct 2021 - how things change in 14 months.....here it is - interesting the first paragraph and last paragraph 


Ryman (RYM), for instance, targets unit prices of ~70% of the median house price with the idea that the owners of a median house
should release some equity if they sell their house and buy a unit. The implicit target market is thus owners of median or higher priced
houses. Pricing units lower relative to the local market increases the group of house owners that can afford to buy a unit. Secondly,
over the next few years the aged care operators can tap into this "HPI buffer" as and when prices start to flatline or decline. This
provides a high degree of visibility into medium term growth.
Embedded value already represents 30% of market cap and is likely to increase further
The aged care companies report total Embedded Value (EV) in their units. EV represents the build up of future re-sale gains and
deferred management fees and is primarily based off recent transactions, i.e. not factoring in the increase in HPI that has not
translated to higher unit pricing (yet). We estimate that current EV represents c. 30% of market cap for the aged care operators,
maybe more telling; the EV of re-sale gains represents >5 years of annuity EBITDA and ~10 years of re-sale gains.
We like the aged care sector overall and prefer the smaller cap names
Overall we remain positively biased towards the aged care sector. It benefits from a combination of; (1) high visibility growth over the
near term driven by historical HPI increases; (2) long term favourable trends, particularly with regards to the need for more care beds;
and (3) in comparison to other growth names, valuations that are not too detached from history. We prefer the smaller cap names
Oceania (OCA) and Arvida (ARV) due to similar growth, only modestly higher risk (in our view) but substantially lower valuations. We
prefer SUM over RYM as SUM is growing faster, has higher EV, and is valued below RYM.


Figure 1. Summary of sector ratings and valuation

Company Ticker Current price (NZ$) Target price (NZ$) 24m fwd PE 24m fwd EV/Annuity EBITDA Rating
Oceania Healthcare OCA 1.44 1.90 12.0 17.2 OUTPERFORM
Arvida ARV 2.10 2.50 12.9 20.6 OUTPERFORM
Summerset SUM 15.05 13.85 17.4 34.0 NEUTRAL
Ryman Healthcare RYM 14.70 12.60 22.5 40.7 UNDERPERFORM

crickey crackity look at those SP from just over a year ago
Would it not be best for current Shers for RYM to do a cap raise now as there are a number of macro ingredience to say this could get really nasty for the leverage developers

[Crackity]

crickey crackity look at those SP from just over a year ago

Yeah - 2 options - punters can take their pick of

1. Sector share prices are currently on special - grab a bargain now

2. Macro forces are going to continue to be a headwind. Sell or avoid the sector.

The only objective fact is the current market price is the sum of these factors.

  

[snapiti]

Yeah - 2 options - punters can take their pick of

1. Sector share prices are currently on special - grab a bargain now

2. Macro forces are going to continue to be a headwind. Sell or avoid the sector.

The only objective fact is the current market price is the sum of these factors.

  

I think I will take a fall back position of " don't catch a falling knife"
Hard to see any light at the end of this tunnel when in the background you have Adrian determined to raise interest rate to wreck the broader economy, unfortunately this will have a much more severe consequence on leverage property developers

[winner (n)]

Underwriting DRPs not that an unusual practice. Mercury last DRP was also underwritten by Craig's.

The company view is often saying it's an efficient (and cheaper) way to raise capital.


Betcha none would admit to it being a way of paying a dividend when they can't really afford to ,,,, must keep the shareholders happy eh.

[Stockgathering]

If I understand this right than this mean; the higher the declared underwritten dividend the larger the capital raise is.
Sad how RYM is not more honest about their desperatate financial position.

[KW]

I'm off to see one of the new Ryman villages on Friday with my Dad.  Any questions you want me to ask them?  Like I'm thinking "what happens to my father if you go bankrupt?"    Anything specific you would want to me to look out for?  

I believe the new apartments that they are building are $800k+  which makes a mockery of the claim to be priced at 70% of the local average price, which in Christchurch is $757k. 

The other village (not Ryman) I looked at has virtually no availability - what happened to Covid killing all the oldies?  

[BlackPeter]

I'm off to see one of the new Ryman villages on Friday with my Dad.  Any questions you want me to ask them?  Like I'm thinking "what happens to my father if you go bankrupt?"    Anything specific you would want to me to look out for? 

I believe the new apartments that they are building are $800k+  which makes a mockery of the claim to be priced at 70% of the local average price, which in Christchurch is $757k.

The other village (not Ryman) I looked at has virtually no availability - what happened to Covid killing all the oldies? 

NZ did in that regard quite well (compared to many other countries) - and particularly the retirement villages did help to increase the lifespan of their residents during Covid. Depending on your position, you might see that as a reason to buy in ;

Re your other quesitons - not sure I'd see them going bankrupt ... but I definitely would check what the conditions are if your dad needs care. Will he get a guaranteed care place in the village? If not, and if he needs to move on in this situation, how much of his capital will they return, and when? Are there conditions attached to the return of the capital or will it be returned unconditionally after a guaranteed time (suitable to his and your needs)?

As well, it is not unheard off that retirement villages sell some of their assets. What would this mean for the residents?

Obviously - your dad needs to find out whether he likes the village and the villa (or unit) - but what are the rules if he changes later on his mind? Make sure, he can afford to do so.

[KW]

Obviously - your dad needs to find out whether he likes the village and the villa (or unit) - but what are the rules if he changes later on his mind? Make sure, he can afford to do so.

Nah, we don't want him to be able to change his mind. That might mean he decides he wants to move in with me 

[lorraina]

If it is The Kevin Hickman village,listen for traffic noise.

[Basil]

I'm off to see one of the new Ryman villages on Friday with my Dad.  Any questions you want me to ask them?  Like I'm thinking "what happens to my father if you go bankrupt?"    Anything specific you would want to me to look out for? 

I believe the new apartments that they are building are $800k+  which makes a mockery of the claim to be priced at 70% of the local average price, which in Christchurch is $757k.

The other village (not Ryman) I looked at has virtually no availability - what happened to Covid killing all the oldies? 

Not sure how old your Dad is or what he's looking for but these seem very reasonably priced.
https://www.summerset.co.nz/flexiblepricing/
Disc: Very small shareholding in ARV, no stake in SUM, RYM or OCA.

[KW]

If it is The Kevin Hickman village,listen for traffic noise.

Yes it is that one. He can just take his hearing aids out 

[KW]

Not sure how old your Dad is or what he's looking for but these seem very reasonably priced.
https://www.summerset.co.nz/flexiblepricing/
Disc: Very small shareholding in ARV, no stake in SUM, RYM or OCA.

He's not that old and is still fully functional so only looking at a decent sized independent living unit.  He would prefer something with a garden.  His friends have bought a $1M+ 3 bedroom apartment in KH and they are the ones who have talked him into it, so he's off for a look see this week.  I think he wants to be with people he knows, so that is the Ryman KH or The Russley one which has nothing suitable available.  The location of the Ryman one is quite good, close to Yaldhurst which is where he was looking previously to buy a house, because I told him if he moved further out I wouldnt be visiting 

I might suggest he at least has a look through the Summerset one at Avonhead.