ARV - Arvida Group

[Basil]

Interesting report from Forbar, thanks gwd for sharing.  Seems like a reasonable amount of creativity went into generating a very poor underlying result.  Sobering stuff.

 

[BlackPeter]

So when Arvida say 'underlying profit is a financial measure to monitor financial performance and reference dividend distribution' they are talking meaningless shit.

I take it you 'methodology' is along the lines of 'value is in the story being told'

Look - I notice that you changed the context for the post you are referring to. I was responding to your comment "Some in sector have increased Underlying Profit since 2021", which clearly uses a not standardized measurement to compare different companies. Now you put excrements into my language to describe what Arvida might do as internal measure to better understand their own operation. Different things.

Underlying profit is not standardized - i.e. every CFO can make a judgement call whatever they wish to put in and what they wish to leave out. For that reason is a quite meaningless to compare underlying profits across different organisations as well as underlying profits in the same organisation whenever the criteria (which may or may not be documented) changed. This is what I meant.

But I am sure, you know all that - probably much better than I do, and I am sure you can describe all this as well without referrring to excrements. Sorry, though if I pressed a button .... no harm intended ;

[winner (n)]

ARV rightful place in the pecking order / order of merit

NZX losers ar moment ....seems to say it all re ARV

Sorry for pointing out the illustrious company they keep ...but it seemed appropriate

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[winner (n)]

ARV trying hard to be top of losers board ......in good company

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[winner (n)]

RYM recognised markets concern about cash burn and to their credit said something about it

RYM: Negative free cash flow of $158.4 million, an improvement of $138.5 million on the same period last year

If OCA said the same it would be ... Negative free cash flow of $55 million, an improvement of $52 million on the same period last year

And ARV would have said ... Negative free cash flow of $121 million, $40m  worse than the same period last year

So 2 of the 3 who've reported burnt less cash than pcp but 1 seem to burn heaps more

No mention of underlying profit but just plain old cash flow statements to do a bit of comparing sector performance.

[Basil]

Big test coming tomorrow with MSCI small companies exit.  Now reached 50% off the NTA and some might see this as a can't lose situation.  I still see it as a Briscoes 50% off sale, i.e. there's better value and prospects elsewhere.

[Waltzing]

oh like shopping at BRIS... nicer than warehouse ...

dont want to buy any retirement except if a chance to get some SUM...

local gardening expert has just sold her house and is moving into a local SUM village.

[Basil]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ARV/423195/409229.pdf

My money is on him being pushed to resign.  As mentioned before, over the years ARV have consistently had the lowest development margins in the sector and it's a real weakness in their business model.  My opinion is they need to have a very hard look at their procurement costs, appoint a specialist procurement manager and drive bulk efficiencies with their buying power, not that they will have as much going forward as they wind back their development program a bit.

Frankly on the procurement efficiencies side of things, this is where RYM and SUM have an advantage with their buying power with building 600+ units a year, (not sure if that will apply as much to RYM going forward as they also wind back their build rate).

[winner (n)]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ARV/423195/409229.pdf

My money is on him being pushed to resign.  As mentioned before, over the years ARV have consistently had the lowest development margins in the sector and it's a real weakness in their business model.  My opinion is they need to have a very hard look at their procurement costs, appoint a specialist procurement manager and drive bulk efficiencies with their buying power, not that they will have as much going forward as they wind back their development program a bit.

Frankly on the procurement efficiencies side of things, this is where RYM and SUM have an advantage with their buying power with building 600+ units a year, (not sure if that will apply as much to RYM going forward as they also wind back their build rate).

The Oceania Development guy got the boot 2 years ago .......the ex KPG guy who took over doesn't seem to made any difference

Endangered species these guys

[BlackPeter]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ARV/423195/409229.pdf

My money is on him being pushed to resign.  As mentioned before, over the years ARV have consistently had the lowest development margins in the sector and it's a real weakness in their business model.  My opinion is they need to have a very hard look at their procurement costs, appoint a specialist procurement manager and drive bulk efficiencies with their buying power, not that they will have as much going forward as they wind back their development program a bit.

Frankly on the procurement efficiencies side of things, this is where RYM and SUM have an advantage with their buying power with building 600+ units a year, (not sure if that will apply as much to RYM going forward as they also wind back their build rate).

Possible - and you have a good point on volumes (assuming all units are equal, what they probably aren't).

When I still was in the industry (no, not that industry, but I think the ratios are similar everywhere) they said if you produce one order of magnitude higher volume (i.e. 10 times more), you have only half the cost (per piece).

Which means, if you produce 600 units a year, you could produce one unit at half the price of somebody producing only 60 units a year (note - this is obviously only looking at scalable cost, i. e. excluding the price of the land). Somebody producing 120 units a year must be cost wise somewhere in between (say squareroot of 2 - i.e. 1.4 times more expensive than the organisation producing 600 units).

So, yes - all things being equal, smaller companies naturally produce dearer units. On the other hand, they can be more flexible and responsive and might find it easier to produce whatever the customer really wants.

[winner (n)]

DRP at .9277

That'll please you guys ...more shares than you thought

[Basil]

Trading at less than half NTA, deepest value in the sector if you think NTA is relevant.

[lorraina]

Do you think replacement value would be higher or lower than current NTA.?
And by what %.

[Basil]

Share prices follow earnings which is why many in the sector are in the dog box.   

[BlackPeter]

Share prices follow earnings which is why many in the sector are in the dog box.   

True, but earnings follow demand - and unless you tell us that people won't need in the future places in retirement villages anymore, because they prefer to sleep rough under the next bridge, they will in the end need to pay for companies building the facilities they need. This is the reason why replacement value matters.

The issue is not that share prices follow earnings, but that investors mood follows earnings and too many investors only think linear (instead of cyclical), which, for a cyclical business, always makes people to sell and buy in the wrong time.

Arvida and any other REIT are currently in a cyclical low, so just lets all keep whinging and wait for the prices to go up again. As soon as investors mood recovers and SP's are up we will all be happy to buy the than much more expensive shares we could have got now at a bargain price.

That's the typical investment cycle: Sell cheap and buy high for whomever this strategy works. I prefer to be a contrarian investor.