ARV - Arvida Group

[winner (n)]

Closed at $1.13🙈

Reading between the lines of that announcement todays share price action not surprising

That $130m increase in debt since March is pretty bad

[Waltzing]

Interesting to compare the price of GOLD  to many stocks on the NZX since 2004...

[Shareguy]

FB say today

Higher debt versus consensus forecasts. The higher than expected debt is likely predominantly driven by higher development capex, but also worse than expected cash collection from new sales and resales.

Good to see that FB still view the aged care sector as attractive in the context of NZ

[Teitei]

Interesting to compare the price of GOLD  to many stocks on the NZX since 2004...

Why 2004?

Could try 2013 for a 10 year comparison?

[Waltzing]

Now Off Topic... probably should be a thread on one of those general ones...

2001...

Feb policy

money supply..

global risks

nothing much happened in 2010.... except you might say it was the start of the global rebuild in eco after the GFC but the troubles were brewing by the time of the DOT COM bubble and the trouble building in the mortage bond markets that took 40 years to expand into the GFC. That started with Lewis Renieri and his bond traders at Soloman brothers.

https://en.wikipedia.org/wiki/Lewis_Ranieri

and really is NZ just its own little version of that? 

Wealth in property of a huge over valued bubble... valued at a junk currency.

So much for wealth taxs based on valued property prices of a junk currency.

How does the reserve bank hold this gaint property ponzi scheme together...

Inside Job...

https://www.youtube.com/watch?v=tJQTzuv6SS4

now really everyone should watch this and bookmark it and  rewatch every year ... just to remind your self  of what markets really look like in the modern world of transactional finance at the speed of fibre. 

Want to see how complex the network is in the states; study the way the markets are linked by the communications networks...

Flash crashes are just result of the outages .. its all going stratospheric...

 

[winner (n)]

Arvida seduced punters into forking out zillions to acquire Arena by saying eps accretive and implied that FY22 earnings without Arena were going to be 13.4 cents per share

So base eps before acquisition 12.4 cents

FY22 eps turned out to be 12.0 cents ...not accretive

FY23 eps was 12.2 cents ......better than F22 but still less than what they said F22 was going to be pre-acquisition

H1FY24 underlying earnings going be less that last year and on a rolling 12 months basis I reckon eps is going to be about 11 cents

So over 2 years from forecasting 12.4 cents and then acquiring Arena eps has fallen to 11 cents.

And Jeremy seems pretty excited about that.

[Waltzing]

what thats winner() ?

did you say something about closing down the NZX?

[winner (n)]

Shareprice down to $1.09 today ...probably Forbar the cause with their downgrade

[winner (n)]

Jeez, ARV closes at 106 today .......back to prices seen 6 months ago

IMO it surprising as last two announcements from company have not been good ..... wonder how much H1 underlying earnings will be down on last year

ARV always seems to fail to live up to punters expectations

[Basil]

ARV and OCA make a perfect pair with their high level's of care as long as you are investing for altruistic reasons and don't care about a decent return on your capital and not worried about the loss of it 

[Buzz]

If you think the next 20+ years tailwind demographics suggest an investment opportunity around about now, then short term thinking might orientate towards when is a good time to load up on the RV's. All the chatter about 'care' profits is imo irrelevant, the listed RV's are all property development companies, care revenue/profit is a loss leader for some, more than others. There's no better time to get a slice of the action, than when the capital sensitive have freaked out and left the room. Now's not the time, imo to delve into the weighing room of the respective RV's, one's better than the other etc, it's time to consider the lifetime DCF and whether now or soon is a good time to get some, or even a lot of some, whichever you choose. The whole sector has been beaten to a pulp by the market, soon enough the opportunity to buy low will be gone. The tide will turn, it always does.

[Basil]

I disagree and think it's helpful to study population demographics to understand one of the reasons why SUM have outperformed.  Its widely acknowledged that the baby boomer population generation kicked off after the second world war ended in 1946.  This huge population wave won't really start hitting the premium care industry with its widely available care suites until approx the start of next decade.  1946 + 85 years = 2031.
This is one of the reasons care suites are presently slow sellers and likely to stay that way for many, many years to come.

On the other hand many of this group are already eligible to move into retirement villages 1946 + 70 years = 2016 and these sorts of retirees are predominantly looking for retirement villages with a comprehensive set of amenities and facilities.

Also worth noting that 1961 was a good year, more people were born in that year than any other in N.Z. and unless people my age have a serious health condition, they're not looking for a care suite for another 2 decades.  There's no money in care and the more you have in your portfolio the lower profits you make, its really that simple and that's the reason ARV and OCA are both trading at multi year low's and huge discounts to their theoretical asset backing.  With 44% of their units being care in nature (ARV) and ~ 60% OCA, they are highly likely to continue to underperform SUM in the years ahead.

Its too early to get back into the sector in my opinion and MUCH too early to buy ARV or OCA.  RYM also set to underperform the market in my opinion.  Sure the tide will turn eventually, maybe we're two thirds of the way towards low tide now, or thereabouts.  Lot of rocks will come to the surface as the tide continues its journey out.  My objective is to stay in safe harbour and safe harbour type stocks and not let my boat get grounded on one or more of those rocks.

[BlackPeter]

I disagree and think it's helpful to study population demographics to understand one of the reasons why SUM have outperformed.  Its widely acknowledged that the baby boomer population generation kicked off after the second world war ended in 1946.  This huge population wave won't really start hitting the premium care industry with its widely available care suites until approx the start of next decade.  1946 + 85 years = 2031.
This is one of the reasons care suites are presently slow sellers and likely to stay that way for many, many years to come.

On the other hand many of this group are already eligible to move into retirement villages 1946 + 70 years = 2016 and these sorts of retirees are predominantly looking for retirement villages with a comprehensive set of amenities and facilities.

Also worth noting that 1961 was a good year, more people were born in that year than any other in N.Z. and unless people my age have a serious health condition, they're not looking for a care suite for another 2 decades.  There's no money in care and the more you have in your portfolio the lower profits you make, its really that simple and that's the reason ARV and OCA are both trading at multi year low's and huge discounts to their theoretical asset backing.  With 44% of their units being care in nature (ARV) and ~ 60% OCA, they are highly likely to continue to underperform SUM in the years ahead.

Its too early to get back into the sector in my opinion and MUCH too early to buy ARV or OCA.  RYM also set to underperform the market in my opinion.  Sure the tide will turn eventually, maybe we're two thirds of the way towards low tide now, or thereabouts.  Lot of rocks will come to the surface as the tide continues its journey out.  My objective is to stay in safe harbour and safe harbour type stocks and not let my boat get grounded on one or more of those rocks.

I think you make a good point related to when we should expect the key demand for care suites - and yes, the time the baby boomer peek turns 85 is certainly an interesting milestone in that regard.

Coincidentally - my father was 85 when he needed care (and lived on until 90).

I am however not sure, whether this is the full story. As others correctly said, retirement villages are basically property plays, and I am sure winner could easily draw up a chart showing the correlation of the property market with ANY of the retirement village providers.

In a year things will already look rosier.

I am not sure either, whether e.g. OCA's The Helier or the Sands are targeting clients who already need care for every move. They are targeting clients who want to enjoy the good life as long as they can and want to have the safety to stay in their acommodation if and when they need care.

Going back to my father - something like the Helier would have been ideal for him when he reached age 80 (and my mother died). Actually - a place like the Helier probably would have prevented him from needing care with age 85 (more social interactions and all these things), but unfortunately, there was his stubbornness. We had at that stage a place for him in an upmarket retirement village, he just didn't wanted to move.

BTW - WW 2 ended in 1945. Only two years to go until the people born in that year turn 80. Might be a good time to have enough attractive space for them on offer.

[Poet]

I disagree and think it's helpful to study population demographics to understand one of the reasons why SUM have outperformed.  Its widely acknowledged that the baby boomer population generation kicked off after the second world war ended in 1946.  This huge population wave won't really start hitting the premium care industry with its widely available care suites until approx the start of next decade.  1946 + 85 years = 2031.
This is one of the reasons care suites are presently slow sellers and likely to stay that way for many, many years to come.

On the other hand many of this group are already eligible to move into retirement villages 1946 + 70 years = 2016 and these sorts of retirees are predominantly looking for retirement villages with a comprehensive set of amenities and facilities.

Also worth noting that 1961 was a good year, more people were born in that year than any other in N.Z. and unless people my age have a serious health condition, they're not looking for a care suite for another 2 decades.  There's no money in care and the more you have in your portfolio the lower profits you make, its really that simple and that's the reason ARV and OCA are both trading at multi year low's and huge discounts to their theoretical asset backing.  With 44% of their units being care in nature (ARV) and ~ 60% OCA, they are highly likely to continue to underperform SUM in the years ahead.

Its too early to get back into the sector in my opinion and MUCH too early to buy ARV or OCA.  RYM also set to underperform the market in my opinion.  Sure the tide will turn eventually, maybe we're two thirds of the way towards low tide now, or thereabouts.  Lot of rocks will come to the surface as the tide continues its journey out.  My objective is to stay in safe harbour and safe harbour type stocks and not let my boat get grounded on one or more of those rocks.

Some good points there Basil, but I think the demographic situation is a little more complicated that you are portraying. You are only considering one of the factors that contribute to the population age profile - ie Birth Rate.

There are other factors

Immigration, and in the NZ context, particularly the boom in immigration after WWII. Many people from Europe and predominantly born pre 1940s. They will be adding significantly to the over 80s in NZ right now.

Also, life expectancy rose significantly during the 20th century so on a population level we are seeing a larger percentage of children born, surviving to become octogenarians.

Mix of ethnicity in the population will also play a role.

You might find this [albeit 2003] treasury report interesting, particularly figure 12 which shows the largest growth in octogenarians was (at that time) expected to start in around 2016 and to peak by 2031.

https://www.treasury.govt.nz/sites/default/files/2007-09/twp03-27.pdf

[Basil]

Thanks Poet, interesting.  I guess the other thing to think about is there seems to be quite a variation in the penetration rate of retirement villages in terms of their acceptability as a place to retire between the various ethnicities.

Think I might leave the commentary at that for now as we have three of the companies in this sector reporting later this month and there will be plenty more evidence to assimilate in terms of which business model is working the best.