I have sold down all now. Sold the last part last week and put into HGH. Hold 50% of my portfolio in SUM and OCA now so don't need more exposure in this sector. ARV returned me 19.64% pa over 4 years so ok with that
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I have sold down all now. Sold the last part last week and put into HGH. Hold 50% of my portfolio in SUM and OCA now so don't need more exposure in this sector. ARV returned me 19.64% pa over 4 years so ok with that
For what its worth I think ARV will probably continue to approximately match the NZX50 performance going forward. My problem, (of sorts), is I am trying to beat the index.
SUM perplexes me at present. I can't quite make the Sum's work on that one so I am out.
Very healthy monthly consolidation looks to have completed after bouncing from the primary trendline. A weekly higher low would be an excellent entry point. Most likely scenario is for the monthly uptrend to continue, testing previous monthly high of 184 and then all time high of 200.
Disc: hold.
Weekly chart attached.
Attachment 12158
Yes good to see uptrend pleased I added a few more at 1.62
Milford been topping up lately ...now over 5%
Milford back under the 5%.
They are wasting a lot of time filling in the paperwork as the keep recrossing the border.
Best they buy a couple more percent and sit peacefully on the right side
Hey t_j .....your mate at Forbar better pull finger and put out a rave report on Arvida
They seem in love with the sector at the moment.
Just be patient, waiting for its new bond issue announcement.
Good sales numbers from Arvida
And bond issue details coming soon
https://www.nzx.com/announcements/366806
Milford with a SSH showing back over 5%. Wonder if it’ll be for longer than a week this time.
MET issued $100m bonds in 2019 and we saw an almost immediate significant run up in their price.
OCA issued $125m bonds in late 2020 and we saw an almost immediate significant run up in their price.
Now its ARV's turn and i expect it is highly likely we will see a significant run up in their price.
I can't explain this phenomenon but it seems when the spotlight of a bond issue goes on a company I have heard is a common thing that the shares do well.
Quite aside from that I think its now clear the whole sector is going to do very well for the foreseeable future and Forbar have a FY22 forecast PE of 14 for ARV which i think is very cheap for this sector with strong tailwinds.
I bought some last week and am on the bid for more @ $1.78
Attachment 12265
ARV
PE = 24.59
PB= 1.356
DIV YIELD = 3.017%
CAGR = 25%-30%
Undervalued.
it looks very much as if the 30 ma will cross the 100 which could be one of those slingshots!!
Attachment 12271
Hi Winner69, I price ARV above $7 per share. The half year profit is 8% down, Q3 is 17% higher and Q4 prob 25% higher than 2020. For the long term perspectives, ARV is one of the most exciting companies in the sector. Relative Small market cap with fast growth rate, it will become RYM and SUM size within 5-7 years.
The industry average PE is 28.20 now. If ARV backs to industry average PE, SP should be placed at $2.05/$2.06. If ARV backs to industry average PB, SP should be placed at $2.85.
time to worry? "Some contracts risk breaching consumer law says chief executive."
https://www.nzherald.co.nz/business/...VT7KFMUFHYU6Q/
Changes and regulation review in the industry are good. Let those operators to pay for the maintenance and repairs. They could simply pass those expenses to the occupants, top up with a 7-10% management fee by lifting their weekly service fee. Some money from the this pool could be saved and improve operating cash flow. Less disputes betw operators and occupants.
Bond issue presentation http://nzx-prod-s7fsd7f98s.s3-websit...818/339444.pdf
Smart presentation. Feeling good about ARV alongside OCA, both forming a large portion of our portfolio going forward. I maintain the view that Ryman, Summerset & even MET were once $1.60ish and I believe these two (ARV & OCA) have a better plan and potential than the others did at the same stage of their journey.
I don't think any of the others had anywhere near 95% of their future development pipeline already consented ?, that's really impressive as is OCA's mid 80% level.
Interesting to note that 84% of ARV's care facilities are the 4 year ministry of health "Gold Standard". Obviously MOH think their care facilities are first class ! (Gives me the feel good factor that residents are being really looked after). Large future development pipeline at the prestigious Bethlehem Tauranga and Queenstown facilities are also notable and these very high end villages will make an excellent template to roll out in future Greenfields developments.
Frankly I think the whole sector will do extremely well in the years ahead but this and OCA have the potential for the market to accord them a PE commensurate with SUM and RYM so theoretically these have more potential to outperform although matching RYM's PE is probably a tall order given their reputation. (But...food for thought... is RYM's reputation now a bit besmirched with years of sub par underlying profit growth ?) The key to unlocking a higher PE is years of consistent underlying eps growth and that means maintaining decent development margins over time. That's going to require developments skills and careful cost discipline.
Maintaining cost discipline with staff costs broadly in line with MOH care fee increases is also going to be a key factor.
The wetlands regeneration at Bethlehem Shores really cool effort
Once the tracks and viewing platforms are up I see many sitting out there admiring the wildlife
Yes I think I could imagine myself sitting there in the sun (with my recycled straw hat) in my chair with a cider in hand thinking such a regeneration project was very cool. Very cool village that Bethlehem shores.
https://www.arvida.co.nz/living-with...thlehem-shores
Did anyone have an opinion on the retail bond offer interest rate? It is not much over 4 months since OCAs and it seems higher than I would have expected.
Nice bull flag forming on the daily. If we get that break then we should see $2.
Good! $125m bond. Dual listing in ASX next year?
Latest Arvida news from down my way.
https://www.stuff.co.nz/timaru-heral...-and-wellbeing
Huge backwards step which will have a major impact on both staff and the residents they care for. If this is a sign of things to come for residential aged care, we should all be very concerned - and not just as shareholders.
im not a shareholder but i imagine S/H they will be very happy from a financial point of view , getting rid of all those higher paying jobs and re-training the lower paid care givers to do it all.
who cares if they are over worked eh plenty more slaves out there .... i dont know if thats the management view but i guess you would know better than me.
personally i dont like the retirement model. profits before people , it should be a govt mandated well being model only before profits
Not the first in the retirement sector to restructure jobs following the pay equity changes. Some were reported as changing job descriptions away from personal contact roles to non contact roles like meal prep. Some facilities have closed down completely.
There are always changes when a business model shifts. Can't blame the Nurses Organisation for looking out for its members jobs, but those members are well placed to move on if they don't agree with a restructure. Or the NO could coordinate crowd or other funding and open up a facility that delivers exactly what the members want in terms of functions and pay.
Most people have no understanding or appreciation of what being a caregiver entails. They think we spend our days wiping chins and changing adult diapers. I don’t have the energy to explain the realities to you, but man I wish some of you could walk in my shoes for a day, or at the very least, spend a day observing what I do.
None of these places can provide quality care without sufficient staff, and most places already have insufficient staff to properly meet their residents needs.
I don’t hold ARV, but if I did, I would be out. Sometimes holding true to one’s,own philosophies and principles is more important than money.
I note the vast majority of ARV's care facilities are on the "gold standard" 4 year ministry of health audit cycle. I'm happy to hold and keep an eye on how this might change going forward as one of many metrics I take an interest in monitoring. I have no desire to comment on internal staffing matters and am happy to let ARV manage the business as they see fit. I think their care standards have always been close to the top of the industry and inline with the standards OCA and RYM provide.
If people want to attribute blame then do so at the Govt's door. Their miserable annual increase in funding (3% last year) has undershot the rate at which costs have been increasing for many years. No wonder care service providers have to be innovative....there's very little, if any, money in care as it is.
I see where you are coming from. Not sure though, that a shareholders forum is the right place to discuss this issue.
There are at least two perspectives to this problem.
1) Most people will want to pay as little as they can for their care if they need to pay for it by themselves. Not necessarily nothing, but if they can get a similar care standard cheaper, they will take it.
2) Most people will want as much care and attention as any possible ... and obviously, it they can get more time (they don't need to pay for themselves) from the nice lady / gent to do something with them, they will take it.
The normal method to align these two things is to ask whoever gets the care to pay for it. Given however that an increase of the residents fees does not seem to be an option, we do have a problem.
I honestly think that we need to allow Arvida and ultimately their staff as well as their customers to sort out this thing.
If Arvida cuts too many hours their care standards will go down and at some stage customers will stay away.
However - if they just cut some fat, they will provide the same care standards but be able to offer a better price for their services.
Probably it will be something in between, and we need to see whether customers like it ...
I don't think that the old adage of just throwing more money (somebody else will pay for) at this problem will solve it ...
We are talking about a reduction in staffing, not an increase. But believe me, you are wrong. In hands on jobs like caregiving more staff makes a huge difference. Quality care does not simply mean practical care such as showering, serving meals, giving medication. It also means spending time with your residents - building relationships, providing emotional support, and having meaningful interactions with them. These are things that staff already struggle to find time to do. A reduction in hours will make it damned near impossible.
Sometimes shareholders have to take a back step for sake of the staff. Win win situation.. As a shareholders this makes me unhappy as compromising health and safety goes against what these businesses promote and stand for
My Mum is in care with CHT Halldene and finds the care standard first class. She gets the things you mentioned that I highlighted from her abundance of friends and family who are all hugely supportive including myself and my wife. She tells me the staff are very friendly and attentive but go about their duties in a highly professional way whilst being mindful to be very efficient with their time. Many in the facility are envious of the number of visitors my Mum gets and the amount of support she gets from us. Its the lonely old souls in there that I feel sorry for. In an ideal world the staff would have time to spend extra time with them to comfort and befriend them. Unfortunately my friend, we do not live in an ideal world and there is very, very little money in providing care services. Even for a charitable trust like CHT they have to be efficient with their allocation of staff and resources. I think something like half the residents in there are not "cognos mentis". How much time do you spend with someone who sits in their chair all day and says "help me" over and over and over again ?
My Mum has earned the nickname of Padre in there because she is happy at meal times to sit with the ones who's mind has gone and talk to them nicely as though they are still there mentally. Sometimes she talks to them about Christian things, other times she recalls happy memories from her nursing days or her times as a pastor's wife. She will be going to be with God soon and I am doing my best to come to terms with that.
One time I was in there at dinner time in the lounge and the staff offered me dinner. I wondered with my grey hair whether they had mistaken me for a resident lol
Not sure about you, but if you think Arvida is only around to collect donations and do good things , than they should at least give tax credits as e.g. St. Johns, the Cancer Society or my local church do. As long as they are in the investment business, they better perform and provide an appropriate return.
But again - this is not the right forum to discuss. I understand that you think it is not possible to cut hours without reducing the service level and I understand as well that you think that the current service level is exactly (or less) what residents need. It always is - and you clearly have an interest.
This needs to be a discussion between the people who pay for the service (i.e. government and residents) and the people who deliver it (the staff). In an ideal world residents would pay the full bill and in this case they would have full control over the service. Unfortunately - they often don't ... but still try to get the best service they can paid for by somebody else.
Who do you propose is paying the widening gap between salary bills and resident fees?
If this was the number one thing my residents said about me, I would go find a different job. Yes, I have many “tasks” to do, but that is not why I am a caregiver and it is not what I want my residents to remember for. I want them to remember me as the caregiver who sat with them and held their hand from time to time, in their last days on this earth. I want them to remember that I took the time to check in on them, and stop for a chat, if they were holed up in their room having a “down day.” I want the 92 year hard case lady I adore, to remember the night I sat in her room and almost peed my pants laughing, while she screeched with excitement watching “Naked Attraction” on TV.
Our elderly are human beings. They are important. They should be valued. Yes, these places are in the business of making money, but the people they care for, and the staff that are the foundations of their business, should come first. I don’t know the answers, but they chose to operate in this sector. It’s their job to figure out how to make it work - not mine.
Quote:
the staff are very friendly and attentive but go about their duties in a highly professional way whilst being mindful to be very efficient with their time.
I think the on the ground info and opinions from justakiwi are a factor in deciding what to do with my investment in Arvida. If trust is lost in the company due to falling standards it will be hard to earn back and could materially influence the share returns. This is exactly the right forum to highlight potential issues.
Absolutely agree, so helpful to have inside insights into elder care and the challenges. It's hard to imagine that cutting staff hours so severely in a single home, that care standards can possibly be mitigated by consolidating responsibilities into fewer people who on the surface of it look less qualified than the replaced carer.
Question also is whether this gains traction and is put in place across all the ARV homes. Would be interesting to see whether or how they are monitoring the level or standards of care, to see whether it is a good decision or not. Cynically, it looks motivated purely by cutting costs, as opposed to a better care delivery model.
You sound like a wonderful caring person and in a perfect world there would be plenty of staff like you and resources so that everyone feels they were extremely well cared for. Unfortunately year after year after year the Govt's annual increase in the weekly care fee has not matched the much higher annual increase in providing quality care services. Winner calculated that OCA lost $9m on care services in their most recent report.
The reality is the capital gain model of most villages is subsidizing the care side of their operations which make little if anything and often run at a loss, (which is why a lot of smaller rest homes without scale or income from occupation right agreement models are closing down). If ARV are making changes then I would suggest there's a very high probability its forced upon them because of insufficient Govt funding.
An increased quarterly dividend of 1.45cps was announced after market close. They could certainly work on their timing of announcements for maximum impact.
Technicals are still looking strong for a test of the all time high. We did break the previous resistance of $1.84 on reasonable volume but didn't get much follow through. I don't like to see this, however zooming out on the chart shows we are just making a weekly higher lower with the support that has come in at $1.80 (so we are in weekly and month uptrends). Need to break that resistance on the next attempt though.
well winner(n) are the retirement stocks commercial property or rather residential? 17% increase predicted by westpac for this year in residential.
ARV close today 168 lowest this year
Mind you whole sector not doing that well this year
Maybe this talk of rising bond rates spooking some
Traded ex divvy today but nonetheless I agree, its been a tough gig this last couple of months. Mind you the whole market has had a couple of tough months.
ARV tends to be quite volatile and choppy as liquidity can just disappear (both when going up and down). Whilst the technicals are being tested, the sector as a whole are holding supports and I think the economic tailwinds of rising house prices is too strong of a catalyst for prices to decrease.
http://nzx-prod-s7fsd7f98s.s3-websit...569/341702.pdf
Looks very good to me. Interesting seeing what they've done with pricing, see last paragraph of Tristan Saunders report on page 2. Smart man that chap, I think he has his finger on the pulse. Hope oCA marketing department are taking notes.
Latest Sector For Bar update.
Oeania Healthcare OCA 1.32 1.80 13.4 20.0 OUTPERFORM
Arvida ARV 1.70 2.15 13.9 21.4 OUTPERFORM
Ryman Healthcare RYM 15.00 14.10 24.6 44.7 NEUTRAL
Summerset SUM 12.05 13.25 18.5 35.2 NEUTRAL
Oeania Healthcare OCA 1.32 1.80 13.4 20.0 OUTPERFORM
Arvida ARV 1.70 2.15 13.9 21.4 OUTPERFORM
Ryman Healthcare RYM 15.00 14.10 24.6 44.7 NEUTRAL
Summerset SUM 12.05 13.25 18.5 35.2 NEUTRAL
Orderly exit/entry.....another CFO into the big swively chair.
Arvida CEO Announces Retirement, New CEO Appointed - NZX, New Zealand’s Exchange
I wonder if some of the money Arvida is saving is going into the new "Wellness Centre" at 'Arvida Park Lane' in Addington, Christchurch? There was an open day on the weekend so I decided to attend and see what all the fuss was about.
According to the staff I spoke to there, this is a new concept in NZ retirement villages, modelled on a successful centre in Brisbane. The new "Wellness Centre" is a combination of a gym (it also has a hydrotherapy pool, for aquarobics) and a medical follow up centre. A physiotherapist operates out of there as does a podiatrist and a dietician and a hairdresser(and maybe others). There are no doctors on site. But the idea is to have a one stop shop for improving your 'wellness'. You don't have to be part of the Arvida village to join either, but you do have to be over 60. Unless that is you want to stop in for lunch at the cafe which is open to all. A very superior cafe it was too with reasonable prices. There were also a couple of meeting rooms that could be used for talks and seminars
Part of the reason to have it 'open to the public' is to to try and give residents the opportunity to interact with the public more. It is very easy once you go into a retirement village to suffer from a silo mentality where you don't really get out and visitors don't come and see you. Obviously the use of the Wellness Centre to alleviate this is more applicable to independent living residents. I quizzed the medical staff about whether they interacted with residents who required more care, and they said no. In fact all of the medical practitioners at the open day had their own practices as well. But they seemed to be quite buoyed by the 'integrated approach' that the "Wellness Centre" offered.
I wondered about the economics of what is a seriously expensive experiment. But apparently utilisation will be boosted by 'bussing in' residents from the eight other Arvida villages around Christchurch. I thought it was an interesting idea and it will be worth keeping tabs on to see how it works out.
SNOOPY
It smells so good, when is annual report announcement date? Next week?
Arvida Reports Record Profit on Revaluation Gains - NZX, New Zealand’s Exchange
Arvida Reports Record Profit on Revaluation Gains
25/5/2021, 8:50 amFLLYRFY21 Highlights:
• IFRS Net profit after tax for FY21 of $131.1 million, up 207% on FY20
• Underlying profit* of $51.9 million, in line with FY20
• Total assets of $2.2 billion, up $275 million on FY20
• 404 total sales of occupation rights, in line with FY20
• 247 new units and beds delivered, up from 210 in FY20
• Land bank total of 1,324 units and beds
• Gearing ratio maintained at 30% and inaugural $125 million bond issue
• 4Q dividend of 1.50 cents per share declared, brings FY21 dividend to 5.35 cents per share
25 May 2021 – NZX listed retirement village and aged care operator Arvida Group Limited today reported a record full year IFRS net profit for the year ending 31 March 2021 up 207% on the prior year at $131.1 million. Results included the impact of unrealised movements in the fair value of investment property.
Arvida Chief Executive Bill McDonald said performance had been strong this year despite disruptions from New Zealand’s response to the Covid-19 pandemic impacting first half results.
Underlying profit* for the year at $51.9 million was in line with the prior year. Second half performance for the Group was significantly improved, 53% higher than the first half.
“Additional expenditure was incurred in the first half to ensure resident safety and staff wellbeing was the priority and we were able to keep Covid out of our communities.”
Mr McDonald said Arvida maintained strong operating cash flows and resilience in care revenues throughout the year.
“While we continued to operate throughout the pandemic as an essential business, care admissions, sales and construction activities were significantly disrupted in lockdown periods,” said McDonald.
Sales activity
Total gross proceeds from new sale and resale unit settlements increased to $227.4 million, up 13% on the prior year. Settlements in the second half were up 87% when compared to the first half.
“This was a very strong result reflecting a significant effort by our sales teams and reflects a positive trending sentiment towards retirement village living,” said Bill McDonald.
Construction activity
Arvida built 247 new homes in the year across ten sites despite the closure of construction sites for the Covid-19 lockdown. Construction activity exceeded guidance provided at the start of the year.
Milestones celebrated included the completion of the first of Arvida’s purpose-built care suite product. These multi-storey buildings at Aria Bay in Auckland and Copper Crest in Tauranga delivered 114 new care suites and 29 apartments. The care suite model allows the desired premium care accommodation outcome, with a higher level of investment.
“The provision of care is core to strategy,” CEO Bill McDonald said. “Providing residents with the confidence that care services are available as they age is essential. Care suites will lead the New Zealand retirement industry into a new standard for aged care.”
Arvida announced plans to introduce care suites across a number of its other retirement communities.
The latest Arvida retirement community Te Puna Waiora in Kerikeri was launched during the year. Arvida now has 33 retirement communities completed or in development across New Zealand. It has a large future development pipeline of 1,324 units and beds.
Stated strategy
Arvida announced it had conditionally agreed to sell one of its smaller Christchurch retirement and aged care villages as it continued to rebalance its portfolio in line with strategic priorities.
Also announced are conditional agreements to acquire two parcels of bare land to provide the opportunity to develop broad acre retirement communities in the future. In Kerikeri an adjoining site has been acquired with settlement in June 2021.
“Adding to our land bank will support future greenfield development as we look to lift our build rate,” commented Mr McDonald.
“We are building differentiated product for the future that will be relevant to ongoing generations of New Zealanders. Combining community connection is central to building multi-generational assets.”
As a key part to its community engagement strategy Arvida launched Arvida Good Friends earlier this year after a successful Christchurch pilot. The service combines the provision of care and services into the home with member transport and a wellness centre where people can socialise, feel connected, and receive centralised healthcare support if needed.
Planning is underway to introduce Arvida Good Friends into other Arvida retirement communities.
Sound balance sheet
Total assets grew to $2.2 billion, up from $1.9 billion at the start of the financial year with development activity completed and an increase in the value of investment property.
The annual revaluations of investment property undertaken by CBRE and Jones Lang LaSalle delivered a revaluation movement of $123.5 million. The increase was driven by higher unit prices, the delivery of new units and the reversal of the material uncertainty that existed at 31 March 2020 in relation to Covid-19.
During the year, Arvida listed a $125 million retail bond applying the proceeds to repay bank debt. The bond provided extended tenor to Arvida’s debt profile and improved diversification in debt funders. Balance sheet gearing including the bond remained at 30% and within the target gearing band.
Dividend and outlook
Arvida Chair Mr Peter Wilson said Arvida’s shareholders will receive an increased unimputed dividend of 1.50 cents per share for the final quarter. The dividend is to be paid on 10 June 2021 with a record date of 2 June 2021.
Mr Wilson said, “We are pleased to return a total of $29 million to our shareholders in dividends during this year. The dividend is evidence of the strong momentum in the business even in a pandemic-impacted year.”
The Arvida board also announced the intention to move the target distribution band to 40-60% of underlying profit*. A dividend reinvestment plan would be implemented at the next dividend payment with payments becoming six monthly. Mr Wilson said the dividend reinvestment plan would help support Arvida’s capital base as it looks to recycle capital into growth opportunities including greenfield development activity.
“Both our care operations and retirement villages continue to perform strongly, and our development activities continue to grow,” said Mr Wilson.
The current level of dividend is expected to be sustainable for FY22. However, Mr Wilson noted that Covid-19 would be a factor globally for some time yet with the outcomes unknown on the business and domestic economy as New Zealand opens its border. The Government’s move to dampen residential house prices and possible review of the sector’s regulatory framework are factors that could impact the sector and performance of Arvida.
– ENDS –
good result i note there warning
The Government’s move to dampen residential house prices and possible review of the sector’s regulatory framework are factors that could impact the sector and performance of Arvida.
https://www.nzx.com/announcements/372755
Underlying earnings flat on on per share basis down 6% on pcp (more shares this year)
Book Value up 14% which is pretty good
Beagle says look at increase in NTA / Book Value rather than this fandangled thing called Underlying Profit
Trading at 1.2 times book value (fraction more than OCA)
As guru Mark from Caigs said yesterday the sector includes Ryman and Summerset ...and a couple of other players (like he was struggling to remember who they were). Maybe that's why most think both Arvida and Oceania as way undervalued - they just tell their story loud enough.
I notice metlifecare is still in the NZX50, haven't they been delisted
Good to see a DRP has finally been implemented - I've been calling for this for years.
Certainly a solid result for ARV given the various challenges - I'd say the result is better than that over at OCA and RYM, yet valued similar to OCA and far less than RYM.
Guess some funds may shift part of their RYM holding to ARV soon.
I thought it was a sound result in what was a difficult year for all retirement companies and ARV has a decent outlook. Happy to continue to hold a very modest stake as part of a well diversified portfolio.
First skim of the accounts says that this is a reasonable result under the circumstances.
Not going to rush out and buy any more.
But then again neither I am going to sell any.
For those who are interested, For Bars update.
OUTPERFORM
Arvida (ARV) reported a solid FY21 result with annuity EBITDA of NZ$48.3m, in-line with our estimates and up +5% on
FY20 despite c. 2 months of lockdowns. The recently (FY20) acquired Sanderson villages were a major contributing factor
to the strong result. Going forward, we expect the maturing of the six major villages acquired since listing to be a key driver
behind our strong annuity EBITDA and organic growth forecasts. ARV is now valued on the lowest underlying earnings and
annuity EBITDA multiple in the sector and we continue to see it as an attractive risk reward proposition.
What's changed?
Pivoting towards greenfield development; scrutiny of cash generation will increase
ARV made its intentions to pivot towards greenfield development, away from brownfield and bolt on acquisitions, clear. In order to
fund this increased focus on greenfield ARV has reduced its dividend pay-out ratio to 40–60% of underlying earnings and will
introduce a dividend reinvestment plan (DRP). If successful a focus on greenfield is likely to be rewarded by the market in the form of
higher multiples, in-line with its larger peers Summerset (SUM) and Ryman (RYM). However, we believe scrutiny of cash generation
and recovery of capex will increase. Management commentary suggests it is likely that ARV will announce one or two land
acquisitions in the near future. We expect ARV to target broad acre sites, more akin to the SUM model than to RYM's model, reducing
the time to recycle cash. However, FY22 and FY23 are likely to see increased spend on capex as ARV is building out its landbank,
resulting in increased net debt.
Maturing acquired villages underpinning our view of accelerating organic growth
In our report "Ageing Well; Upgrade to OUTPERFORM", published 14 April 2021, we laid out our expectations that the maturing of
ARV's six large villages acquired since listing should drive organic growth from mid single digits up towards +15%, in-line with larger
peers SUM and RYM. ARV's FY21 result indicates that this is well underway, with the Sanderson villages alone contributing an
additional NZ$6.2m to underlying earnings despite only having four additional months of contribution.
Operating expenses vs care funding; both likely to grow meaningfully in FY22
The cost squeeze within care is intensifying. ARV commented that additional holidays, sick leave and hourly rates were all going to
contribute to meaningful wage cost inflation in FY22. However, management is confident that this will be largely offset by "non
negotiable" funding increases. The outcome of negotiations with District Health Boards (DHBs) will be crucial to help preserve care
profitability in both the near and medium term
It seems despite ARV having the best result in FY21, it is (once again) the cheapest listed retirement stock (so Forsyth reckon)... no wonder their target price is a decent chunk above the current share price ($2.20)
Code / Share price / FY22E / FY23E
ARV / $1.83 / 14.8x / 12.1x
RYM / $13.15 / 22.6x / 21.2x
SUM / $12.55 / 19.7x / 17.0x
OCA / $1.33 / 15.2x / 12.6x
Thinking outside the square. This is a great initiative. Makes good business sense too, as many of the clients they service in the community will no doubt choose to stick with Arvida if they require residential care down the track.
https://i.stuff.co.nz/business/12546...y+18+June+2021
That's a smart move. A lot of people have to be dragged kicking and screaming into villages or care but welcome support in their own home. I would.
There is certainly demand, but hard to make money with that given huge demands on nursing time in community care, additional (normally unpaid) travel time for the nurses and little payment for services through the government.
Took GXH a long time to get their community care at least cash flow positive, and in part they did this by simply stopping to bid for unprofitable contracts.
Maybe that's the contracts Arvida is now taking over?
That is not exactly positive thinking BP. Maybe they have seen opportunity to utilize existing assets and really, you don't have to be a nurse to provide assistance in the home.
https://www.goodfriends.co.nz/plans
Great move! Get more present value cash flow before business model changes. Brand improvement.
The plans show they can help with light garden, house cleaning and social activities.
They are using their own facilities, such as Gym and Pool, company cars and etc. I assume that they are using the majority of existing administration team.
Interesting.
Yet there are a good number of free services available.
My apologies, I didn't realize that this is a "positive thinking" thread. Personally I prefer to diversify my investments as well as my thoughts ... and think as appropriate :):
Just tried to point out that not every business extension must be good ... and yes, community care is tough - all over the world, well - at least if you need to make money with it.
Don't forget either that basically all retirement villages so far lose money with care - or if they are really lucky they break even. The money is in the deferred management fee.
Community care does come with higher costs than residential care as well as with lower payments and no deferred management fee at all. Well, not yet, but maybe they can develop a creative plan around the payment of a deferred management (or service) fee from the home of the cared for person? Maybe Heartland would be happy to help, who knows? Now - this would be creative thinking!
I don’t think they are doing this to make money. I think they understand that as long as they can cover their costs, this is a clever strategy to bring people living at home, in the area, into the Arvida “community.” They will get to see the on-site facilities, will socialise/mix with current residents, will make friendships and will (hopefully) decide that Arvida is where they want to be if they need residential care in the future. Benefits exisiting residents too as it brings the two communities internal and external) together in a very positive way. Whether Arvida will be looking to pick up the local community care contract or not, remains to be seen, but I think they will do it regardless, at the lowest cost possible.
A very clever move.
It is a marketing strategy to touch potential customers if I have to put some commercial words here.
Bit concerning if they don't do this to make money ... are you saying Arvida is a charity or non for profit organisation? I'd see the plan just as a marketing exercise.
And to be honest - the standard plan ($5 per week) does not seem to offer a lot apart from a monthly phone call and some discounts in cafés and other businesses which may or may not be of interest for the individual.
If they get however into the work intensive home care we will see how they go - and while I agree that this might have a nice charity touch - only time will tell whether they are able to afford to pay the "marketing fees" and whether there is a positive return on them.
Is this a clever move? I doubt it. Spending more money than you earn is normally just a recipe for disaster ...
BP, $5/week is only for membership fee, the plan Help at home is $30/week with $36 hourly rate, Care at Home is $50/week at Home with $43 hourly rate, Moving well (Gym and Pool) is $20/week, Good friends go is $20/week.
It will be interesting to see whether ARV can make a dent on the strangle-hold the big four or so 'care provider' companies who have the lions share of the DHB contract spend in this area of care services.
Do people know that this 'sector' of care services is government funded via long term contracts with DHB's? Check out https://www.healthcarenz.co.nz for example. So ARV is essentially a new startup competitor in their space.
A quick look at the numbers and I'm not convinced yet that ARV's pricing for the services can do this profitably or breakeven without tapping into the government spend. A distraction from core business as well.
PE = 8.1
PB = 1.4
DIVIDEND YIELD = 2.73%
What I say