RYM-Ryman

[Basil]

Those still left on the board that were involved in the massive value destruction need to do the decent thing and resign.

Agree 100%.

[anotherday]

I am holding similar view with him. I bought at $2.41 and $2.06. RYM is very likely having a turnaround point at present.

[Basil]

The elephant in the room that's going to be hanging around we'll into next decade is the enormous amount of cash being burned through at a village operational level. All those residents on dirt cheap fixed weekly fees for life and the cost to service their needs has been rising MUCH faster than inflation every year. Sure they will gradually pass away but losses per remiaing resident get worse every year.

SUM don't have that problem and have a huge and enduring competitive advantage going forward.
Disc: Small holding in SUM.

[Shareguy]

Craigs added to Kiwi conviction Portfolio

We have been cautious in adding too much domestic cycle exposure to the Kiwi conviction Portfolio up to this point given still softening conditions and earnings downside risk. Portfolio already includes Sum and FRW as preferred exposure to a cyclical housing and subsequently consumer recovery in New Zealand this addition we are adding Ryman with a 5% weight. Ryman offer exposure to a cyclical recovery in the Victoria and New Zealand housing markets with the former improving sharply in recent weeks. Ryman recently delivered June quarter of sales update a head of guidance and with lead indicators starting to train positive we believe the companies recovery is looking more certain.

[Dolcile]

Thanks SG.   Can I ask, what is the Kiwi conviction portfolio? Ty

[winner (n)]

Jeez, with that guy Kingston raving on about Ryman and taking a 'meaningful stake', Craigs putting it back on their conviction list and shareguy touting it at every opportunity Ryman has to be a STRONG BUY

My target share price $3.00 by end of August and over $4.00 after half year results in November

Pretty cool eh

[BlackPeter]

Opinions are of course subjective but to my eyes some of RYM's villages are very nice and others bear quite a startling resemblance to a modern type of prison, especially some of their Australia village's e.g. https://www.rymanhealthcare.com.au/retirement-villages/melbourne/bert-newton  That's absolutely terrible. Not only would I not pay to live there, they couldn't pay me to live there either lol !  No wonder they are having real problems with sales at some of their villages.

Interesting. Just come back from a (actually longer than expected) trip through Singapore, Germany and Southern Australia.

One of the things I learned is that different people do like different places. Maybe its just that some of the retirement villages need to learn how to find the communities who want to live there.

Maybe they just need to replace their marketing manager?

[Basil]

Jeez, with that guy Kingston raving on about Ryman and taking a 'meaningful stake', Craigs putting it back on their conviction list and shareguy touting it at every opportunity Ryman has to be a STRONG BUY

My target share price $3.00 by end of August and over $4.00 after half year results in November

Pretty cool eh

To my mind there's FAR too much emphasis in this sector placed by value investors chasing a discount to NTA as though that assures them of deep value with all the implications that you can't lose long term.  How's that worked out for OCA shareholders in more than 8 years since it listed or RYM in the last few years.  Its been an absolute bloody disaster.

Share prices follow earnings per share and for RYM the share price has collapsed under a crisis of no earnings, very poor management and truly woeful governance.  Whilst the DMF and weekly fee inflation adjustment changes made will improve things over the long run, a flat property market and strong headwinds from operational losses at a village level and much lower development profits going forward, combined, are going to be VERY difficult headwinds to overcome as is getting an acceptable return on care assets which is a much larger part of their model than it is for SUM.

The fact that RYM have dispensed with underlying earnings as their measurement basis means we haven't even got that yardstick to use for comparative purposes anymore !  So its a case of "trust us we know what we are doing" from RYM's board and management and know how to better measure earnings going forward. How can anyone trust them after all the debacles of recent years ? 

My contention is that an investment in RYM now amounts to little more than a blind faith experiment in believing the share price will close the gap to NTA over time...but how's that working for OCA shareholders ?   Remember too, many of the board responsible from the woeful fiasco's of recent years are still there !

The very clear alternative is a well proven company that has come through all the Covid, recession and house price contraction and slow real estate market headwinds over the last 5 years and still grown underlying eps at more than 13% CAGR for 5 years on a forward PE of just 11.5.  Sure the discount to NTA at SUM is nothing like as good as at RYM or OCA but why would they trade at a discount at all with a stellar track record of earnings growth like they have had over the last 14 years since they listed ?  Share prices follow earnings not NTA.

RYM's reputation is in tatters and they have an enormous amount of work to do ahead over many years to try and rebuild trust and the respect of the investment community.  Furthermore, I am most underwhelmed with their very modest target of freeing up just $500m of capital by radically scaling back development over the next 3 years.  That very modest target gives investors a valuable insight into the truly woeful extent of the village operational cash burn in the years ahead that I've been talking about earlier.

You can't sell new units if you're hardly building any and OCA and RYM's radical contraction in their build rates in the years ahead is SUM's opportunity to gain more market share.  The way I see it, RYM's share price fully deserves to trade in the doldrums with OCA at about a 50% discount to NTA until they can prove they deserve a rerating.  I don't do blind faith experiments with directors and management that don't deserve my trust.

$4 by November when they report.  Mate, you have missed your calling as a comedian lol  I think the November 2025 report will be very disappointing.

[ValueNZ]

Share prices follow earnings not NTA.

Share prices follow discounted cash flows, not earnings. The distinction doesnt really matter for most businesses but it certainly does here.

The NTA is essentially an ultra conservative discounted cash flow analysis so for it to be trading for half of that is absurd.

[KW]

Reminds me of that old adage "How do you lose 95% of your share investment?  You lose 90%, and then the share price halves again".

[ValueNZ]

Reminds me of that old adage "How do you lose 95% of your share investment?  You lose 90%, and then the share price halves again".

Have you lost half your house because the neighbour next to you sells their house for half of what it's worth?

[Basil]

My understanding is that valuers are valuing the future cash flow expected from the units themselves.  They are not placing a value on the head office costs, (RYM ~ $150m per annum.  Most valuers would put a multiple of about 9 on that and say that's negative $1.35 Billion) or the negative cash burn of the villages at an operational level and therein lies the conundrum.  While you can have a whole bunch of retirement units with future expected cash flows worth a net present value of just over $4 per share if it costs you ~ $200m in head office costs and village operational losses to run those assets, you can take $200m x 9 = $1.8 Billion off their value, for the cost to operate them.  That's why the headline NTA figure the property valuers generate is deceptive and that's why the share price for RYM is where it is.  Ditto for OCA with its extremely bloated corporate costs and village operational losses.
This is an overview of why your strategy isn't working.    Just my opinion and I accept others will see it quite differently.  Always worth checking the consensus of how analysts see it.

Average broker target price one year hence for RYM is $2.87, a 14.8% potential uplift from the current price
https://www.marketscreener.com/quote/stock/RYMAN-HEALTHCARE-LIMITED-6492072/consensus/

For SUM brokers are far more positive with an average price target of $14.38, a potential 26.5% uplift from Friday
s closing price and they pay dividends too ! https://www.marketscreener.com/quote/stock/SUMMERSET-GROUP-HOLDINGS--10089438/consensus/

For OCA brokers expect a 30% uplift https://www.marketscreener.com/quote/stock/OCEANIA-HEALTHCARE-LIMITE-103506268/consensus/

RYM is the least preferred by the professional analysts !!

[ValueNZ]

My understanding is that valuers are valuing the future cash flow expected from the units themselves.  They are not placing a value on the head office costs, (RYM ~ $150m per annum.  Most valuers would put a multiple of about 9 on that and say that's negative $1.35 Billion) or the negative cash burn of the villages at an operational level and therein lies the conundrum.  While you can have a whole bunch of retirement units with future expected cash flows worth a net present value of just over $4 per share if it costs you ~ $200m in head office costs and village operational losses to run those assets, you can take $200m x 9 = $1.8 Billion off their value, for the cost to operate them.  That's why the headline NTA figure the property valuers generate is deceptive and that's why the share price for RYM is where it is.  Ditto for OCA with its extremely bloated corporate costs and village operational losses.
This is an overview of why your strategy isn't working.    Just my opinion and I accept others will see it quite differently.  Always worth checking the consensus of how analysts see it.

Average broker target price one year hence for RYM is $2.87, a 14.8% potential uplift from the current price
https://www.marketscreener.com/quote/stock/RYMAN-HEALTHCARE-LIMITED-6492072/consensus/

For SUM brokers are far more positive with an average price target of $14.38, a potential 26.5% uplift from Friday
s closing price and they pay dividends too ! https://www.marketscreener.com/quote/stock/SUMMERSET-GROUP-HOLDINGS--10089438/consensus/

For OCA brokers expect a 30% uplift https://www.marketscreener.com/quote/stock/OCEANIA-HEALTHCARE-LIMITE-103506268/consensus/

RYM is the least preferred by the professional analysts !!

What page of the annual report do you get the 150m head office costs from. Genuinely cannot find a figure close to that.

[Shareguy]

Thanks SG.   Can I ask, what is the Kiwi conviction portfolio? Ty

It's  Craig's pick of the current shares that they think will out perform the market with high conviction. Currently up 18 percent PA since inception. Ryman has just been added with 5 percent weighting.

[Shareguy]

Jeez, with that guy Kingston raving on about Ryman and taking a 'meaningful stake', Craigs putting it back on their conviction list and shareguy touting it at every opportunity Ryman has to be a STRONG BUY

My target share price $3.00 by end of August and over $4.00 after half year results in November

Pretty cool eh

Only time will tell if a strong buy or not currently. Every report I have seen says that we are going to have a big shortage in the future. The property market will recover, it always does. Once the current overhang has been soaked up we will see growth.  I see this as a long term play with a business that has taken the medicine and will be lean and mean for when that happens.