ARV - Arvida Group

[Left Field]

https://www.nzx.com/announcements/431824

• IFRS net profit after tax of $139m, up 69%
• Underlying profit[1] of $85 million, down 3%
• Gross value sales of $427 million, up 13%
• 201 new units delivered, including 144 villas
• Total assets of $4.2 billion, up 12%
• Gearing at 33.9%
• NTA at $2.05 per share

Dividends suspended....... say no more.

[Basil]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ARV/431824/419581.pdf

Presentation and their strategy makes good common sense to me. 
I think this is far more attractive than RYM and for people going bottom fishing in the 50% off NTA zone, this looks far more attractive to me than OCA.

I actually got the impression reading the presentation they know what they are doing and have a real strategy to turn around the business.  That's refreshing after reading RYM and especially OCA's presentations.

Disc: Signififcant holding in ARV bonds.

[winner (n)]

Arvida said ' With the assistance of advisors, Arvida is also considering a range of alternative options to accelerate value recognition that includes engaging with other market participants on various capital partnerships, restructuring options and strategic alternatives for the Company.

Is this code for Oceania to merge with Arvida ...that'll be fun

[Left Field]

Arvida said ' With the assistance of advisors, Arvida is also considering a range of alternative options to accelerate value recognition that includes engaging with other market participants on various capital partnerships, restructuring options and strategic alternatives for the Company.
Is this code for Oceania to merge with Arvida ...that'll be fun

IMO this industry is crying out for 'rationalisation'..... trading at hefty discounts to NTA etc..... interesting times.

[Greekwatchdog]

Arvida said ' With the assistance of advisors, Arvida is also considering a range of alternative options to accelerate value recognition that includes engaging with other market participants on various capital partnerships, restructuring options and strategic alternatives for the Company.

Is this code for Oceania to merge with Arvida ...that'll be fun

Oh the irony of that statement after they turned their noses @ $1.70 offer and didn't table it to shareholders...
They will be easy target at ASM

[Basil]

Oh the irony of that statement after they turned their noses @ $1.70 offer and didn't table it to shareholders...
They will be easy target at ASM

ASM will be a lot of fun this year, that's for sure   BYO popcorn.

[Stockgathering]

Arvida said ' With the assistance of advisors, Arvida is also considering a range of alternative options to accelerate value recognition that includes engaging with other market participants on various capital partnerships, restructuring options and strategic alternatives for the Company.

Is this code for Oceania to merge with Arvida ...that'll be fun

This morning we also had the results and webcast from CDI, one of the questions was about the direction and possible diversification of revenue for CDI. Answer was something along the line, we are exploring different projects, one with the retirement industry however nothing as far as CDI is concerned has been cemented in.
This together with CDI stressing that the profit margins are in land development and not the buildings makes me think that CDI and ARV have been talking to each other.
CDI is a successful land developer and could finance and develop (roading, footpaths, water, electricity, storm water etc.) the land up to a stage ready for building. Only after the infrastructure has been put in place ARV could purchase the site from CDI.
This would greatly reduce the time frame ARV would have to finance their greenfield developments or in ARV words would accelerate value recognition.
 

[winner (n)]

This morning we also had the results and webcast from CDI, one of the questions was about the direction and possible diversification of revenue for CDI. Answer was something along the line, we are exploring different projects, one with the retirement industry however nothing as far as CDI is concerned has been cemented in.
This together with CDI stressing that the profit margins are in land development and not the buildings makes me think that CDI and ARV have been talking to each other.
CDI is a successful land developer and could finance and develop (roading, footpaths, water, electricity, storm water etc.) the land up to a stage ready for building. Only after the infrastructure has been put in place ARV could purchase the site from CDI.
This would greatly reduce the time frame ARV would have to finance their greenfield developments or in ARV words would accelerate value recognition.
 

Could well be the case

Like this from NBR -

Under a capital partnership scenario, Arvida could sell majority positions in "grouped villages" where it pertained to management rights, he said.

That could be a similar deal to that announced this week between Australian listed property group Stockland, which has formed a partnership with US-based funds manager Invesco Real Estate, to develop 1200 homes in the "over-50s" market. 

[Mos]

Interesting. Arvida have excess land at Warkworth which may be of interest to CDI.

[Greekwatchdog]

For Bars take..

After the kerfuffle of Ryman Healthcare's (RYM) result, Arvida Group's (ARV) result provided only incremental news and mostly good news. ARV set out an ambition to close what it considers a major gap between the market's perception of its value (~0.5x net tangible assets) and its own view. The strategy consists of: (1) leave no stone unturned to reduce core debt, (2) look for potential capital partners and other strategic options, and (3) review pricing and reduce costs. All sensible steps, and we walk away encouraged that ARV is through the worst. The result itself was slightly below our expectations, driven by higher costs and slightly lower care revenues, but announced cost savings and robust resale margins drive minor increases in our estimates over the medium term. Like the rest of the sector, ARV has built substantial debt over the last few years. In a similar vein to Oceania Healthcare (OCA) and RYM, ARV gave a clear signal that the direction of travel for net debt from here is down. ARV has identified initiatives to reduce core debt to the tune of ~NZ$200m, the majority of it to occur in FY25. We reiterate our NEUTRAL rating with an unchanged target price of NZ$1.30.

What's changed?
Earnings: Annuity EBITDA +2% across FY25–27, underlying earnings increased more in FY25/FY26 on higher new sale gains.
Exploring strategic alternatives with a focus to reduce net debt
ARV's management and board has taken the widening discount to NTA (~-50%) as a call to arms and outlined a plethora of options to close it. The common theme was to reduce debt in general and core debt (not directly used for development) in particular. We believe the focus to reduce debt is the right one. In the short term, ARV guided to a combination of collecting deferred settlements, the prior announced sale of a village, insurance proceeds, and land sales, to make a meaningful dent in its debt. ARV also outlined numerous strategic options, the most tangible (and in our view interesting) was to sell a majority stake in a group of villages to a capital partner and continue to manage the villages (for a fee) as a minority share holder. Given ARV's and OCA's experience of selling non-core aged care assets at or around book value in the current environment, we believe this idea has potential.

The aged care sector appears to have turned the corner; less debt, improving care profitability and stable resales margins
For the first time in three years we have upgraded our like-for-like earnings on all three aged care companies (with March year ends). For RYM this was clouded by the multiple accounting changes and revelations, but for OCA, ARV and RYM we have increased our annuity EBITDA estimates on a like-for-like basis. The upgrades primarily relate to resales and care revenues, both of which have come in strong. Slightly offset by higher costs. The debt build up has also slowed materially. That is not good enough, but we now forecast all three of these companies to reduce debt in FY25.

[winner (n)]

Basil asked for this ...Arvida Underlying Earnings per share over the years

Arena acquisition / cap raise occurred during F22. Going to be EPS accretive they said and based on the forecast they were happy with F22 EPS should have been 13.6 cents ....ended up a bit short eh and flat since



You cannot view this attachment.

[Basil]

Thanks mate, much appreciated.    Makes an interesting comparison to OCA though.  This has nearly doubled underlying eps over the same timeframe the OCA dog has gone nowhere.  Also interesting that IFRS profit grew strongly.  IFRS profits as we know feed directly into embedded value which gets released over time to underlying profit.

[winner (n)]

Thanks mate, much appreciated.    Makes an interesting comparison to OCA though.  This has nearly doubled underlying eps over the same timeframe the OCA dog has gone nowhere.  Also interesting that IFRS profit grew strongly.  IFRS profits as we know feed directly into embedded value which gets released over time to underlying profit.

Raised nearly $600m of new capital over recent years ...seems growth by acquisitions is sort of working

[winner (n)]

Picket line at Village at the Park

Job cuts coming and people not happy

Shareholders should be pleased


https://wellington.scoop.co.nz/?p=162467

[Untamed]

Picket line at Village at the Park

Job cuts coming and people not happy

Shareholders should be pleased


https://wellington.scoop.co.nz/?p=162467

This makes absolutely no sense, and it makes me wonder what is going on with this company. They sold their Timaru village to Presbyterian Support recently, and now they are cutting hours for on the ground staff.

This resident summed it up, and he is spot on:

""We recognise there are financial challenges. We do not believe the solution to this problem lies in cutting the numbers of staff, who are the lowest paid and most vital to resident well-being."

I don't hold, but I smell a rat.