Guidance please, I remember seeing this somewhere and tried to search but came up with no avail.
With off market trades, what is generally the causation to the SP? Do they trade below the current listed price at a discount?
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Guidance please, I remember seeing this somewhere and tried to search but came up with no avail.
With off market trades, what is generally the causation to the SP? Do they trade below the current listed price at a discount?
As usual, it depends.
If the share is much sought after - and difficult to buy in large blocks - then it wouldn't be unusual to see an off-market go through at a premium to the last sale price. And the opposite effect if the market for the stock is liquid and trading freely in reasonable numbers. Depends also on what is perceived to be the motive for the sale - and who the seller and buyer are.
looking for facts
Correct me if Im wrong but I would have thought you could let us in on your thorough study of the different continuum of care models and still remain relatively anonymous--just put ''my research shows'' and give us the same sort of quality information that you have so often received from others.
You have to admit couts--just taking your word for it is a bit of a stretch-a bit more info would be extremely helpful.
Yes i seem to remember you promising us this Retirement nous, knowledge way back when you arrived here couta?. Unfort i don't know how to find that thread.
excitement of the half year all over and everything back to normality again
SUM down and RYM up today
Thanks ratkin,yes good old social media beat up ,says a lot really,anyway I need to focus on other areas of my portfolio now which aren't looking too flash and make some tough decisions,if anyone has a genuine specific question on the likes of the continuum of care model please pm me,cheers
Re RYM the cream always comes to the top ay:p
Yes reasonable questions ratkin and no; 3 strangers who have their own querys
What a long day so many half yearly reports out on the ASX today am stuffed, g nite
Thanks Ratkin : My thoughts exactly .I wonder how many on sharetrader let fear & greed tear themselves apart on a daily/hourly basis !If they where honest with themselves and equated in their time they spend looking at every bit of information they would have a piss poor quality of life and piss poor return IMHO ;)
Agree, as Roger's analogies go, I shall go fishing while sailing around the sea!
Just like Taleb's fictional dentist in Fooled by Randomness suffers - (extract)
This hypothetical investor is guaranteed to earn 15% per annum from his portfolio with an associated volatility of 10%. These statistics are not open to dispute.
But if our investor friend monitors his portfolio in real time, however, the random price oscillations of his portfolio are likely to trigger extreme anxiety. Depending on the frequency with which he observes his portfolio, our dentist will experience varying degrees of heartache and distress. The frequency of portfolio observation versus probability of a pleasurable shown below:
1 second 50.02%
1 minute 50.17%
1 hour 51.30%
1 day 54%
1 month 67%
1 quarter 77%
1 year 93%
(Source: „Fooled by Randomness‟, by Nassim Nicholas Taleb
The message is clear. Too much observation can be bad for you. If Taleb‟s dentist simply restricts the frequency with which he checks his portfolio – a fundamentally sound portfolio – he will boost his chances of incurring a positive emotional outcome from his monitoring. Note that nothing changes about the composition of his portfolio – only the frequency with which he checks it. Investors determined to watch the pot may end up being scalded
I agree with the sentiments expressed above regarding volatility and time. Investment returns in a solid steady growth company like this will be a function of capital invested and time in the market.
Not sure how many of you have had a good look through the full results presentation that was attached to the full year announcement on the stock exchange website so I have posted a link here for your convienience. You can learn a lot about the company by studing this presentation in great detail.
https://www.nzx.com/files/attachments/189890.pdf
Well constructed post there.(winner) Have to confess I check mine multiple times a day even though it's very rare to take any action.
Would rather fill my empty computer moments with sharetrader than looking at pictures of funny cats on Facebook
I also agree.
But,
it would be easier if we were in a slightly different part of the cycle. I think most peoples nerves are up anyway, coz we know at some point in the not too distant future things are going to dramatically change, and we're all trying to protect our capital...
Just taken Rogers advice and actually bothered to look at the result.
I wonder if they will be so keen to include one off losses in future results, as they were to include the 8m brownfield gain in this one.
EVer since Ryman and summerset have been around, property and land prices have pretty much risen every year (correct me if I'm wrong)
should that situation change then results are going to look very different.
Question. What proportion of these companies success is a result of
A) Increasing numbers of oldies
B) years of rising property prices
It seems to be a frequent presumption by some that there is some magical correlation between the property market and the aged care retirement market.
Sure elderly people sell property to buy aged care and security, but that aged care and security is a different service based market.
We don’t value SKL on the property value of their factories, nor AIA on the property value of their runways. Sure swings and round abouts in property valuation will alter book values, but not necessarily the market cap significantly. This is the reason why aged care retirement stocks are listed by the NZX in the ‘service sector’ and not in the ‘property sector’.
The respectful oldies will still require aged care and/or will still require security in knowing they have access to aged care if the property market takes a dip. The demand doesn’t evaporate and the surplus between the average house price and the cost of an aged care contract is quite large.
If an elderly person gets a lower price for their property it is much more likely they would continue their care and security plan, and then perhaps reallocate the surplus accordingly. Health, wellbeing and security in knowing they are going to be cared for is always going to be the top priority for the elderly.
Thats all correct, however supposing brownfield values had fallen by 20m rather than risen by 8m
There would then have been an underlying profit of zero. Might not matter too much in the long run but
there would be a big shift in sentiment which would knock chunks of the large p/e multiples we have now
MAC If you own alot of property(even if its service orientated) then theres nothing magic about the correlation with the property market.
If property crashed 30% dont you think an elderly person (who got 30% less for their property)would balk at paying the same price as before for their serviced unit --The service would be just as good ,but the value of the unit itself would be less.
I think it is naive to think that the service part of the equation completely outweighs the value of the property it is sitting on.
I dont know if they own all their units freehold but if there is any debt,then that also has to be taken into consideration in terms of interest rates.
I think that the retirement sector is less likely to be as affected by economic problems ,but to discount them altogether is shortsighted IMO.
These are uncertain times economically and alot of recent posters have not lived through some of the ''blood on the floor'' situations some years back.
You only have the security in knowing you have access to aged care if you have the dosh to pay for it.
Ratkin--Do you think that trying to get a bit more information from Couts is ganging up on him?
If he posted it, there would certainly be some ''added value'' IMO
There are some signs which shows the housing market is cooling off, but not too show if this is a temporary setback, a few more months we would get a clearer picture. Volume being sold have been dropping in the past couple months, last month was 17% less, average price have gone down a tinny bit, but if volume keeps declining in the upcoming months then definitely price would go down with it. The question is how much...
Target markets and demographics are all important Skid. It's unlikely that a 75 year old non freehold mortgaged candidate would fall within Summersets target market demographic unless they had alternate equity. And, the pool of within market candidates is set to grow at a higher rate than villages are being built in NZ over the next several years perhaps even a decade.
Markets are about supply and demand. If demand dips in the residential property market, any correlation with a dip in Summersets target 75 year old plus aged care market does seem a bit tenuous given the forward demand.
Consider the rest of the healthcare market by example also, the market cap of a southern cross inc hospitals is unlikely to decrease just because the residential property sector takes a brief dip.
@1371
What a brilliant post and one I can absolutely relate to :/
So we are speculating about the value of the investment properties and where the price will go and the correlation with everyday house prices.
All of SUM, MET & RYM not only now (re)value their properties using very similar assumptions but they detail what those assumptions are in their reports.
So why not scuttle off, make a nice cup of tea, read the facts and then come here and discuss with a bit more knowledge behind your posts.
Best Wishes
Paper Tiger
Disc: I could just tell you but I think a lot (but not all) of posters need to actually read company reports a bit more thoroughly.
Cant seem to find a balance sheet for SUM--trying to find amount of debt(if any) in relation to income
It is on their website for the previous half year. The annual report will be their on the 24/3/14.
http://www.summerset.co.nz/assets/In...RT-2013-v4.pdf
If summerset were to sell a village;
If a prospective buyer was to purchase a village and start a business on similar aged care residential contract terms then their valuation would be based on the net present value of forward aged care residential free cashflows, plus revaluations of assets (structures) within the sector market.
If a prospective buyer was going to convert the village into residential property apartments, then the valuation to them would be the sum residential property market valuation of the apartments. But, this is why their bid would fail, it’s not a value added competitive offer.
How then to value a village;
What is not entirely provided to us, and yes I read the reports too, is absolutely all the criteria the valuer's apply in assessing fair value movements.
The valuer's criteria must surely apply the supply and demand expectations of prospective village purchasers.
Let’s face it, Mum, Dad and the kids or others in the residential property market are never going to buy an aged care retirement village are they.
It’s the prospective pool of potential village owner operators that determine supply and demand and therefore village valuation.
And, it would seem there will probably be quite good demand for a few years ahead.
You need to have another read of the report my friend.
Underlying profit, or another name for it is core operating profit already strips out revaluation gains either up or down. i.e a $20m brownfields reduction in capital value would still leave an underlying profit exactly the same as the underlying profit that was reported on Tuesday. In that report you'll see that realised development margins are set to improve in the 2014 calendar year with all developments now being managed in house and that with 250 units being built this year, an increase of just on 25% that will be a major driver behind profit growth in 2014 and will the realised development margin on 300 units in 2015 :)
Mac's point about being a service provider is bang on the money in my opinion.
I have some experience of residential valuations from my time investing in property and can say with some certainty that valuing property is at best an imprecise science. Assuming commercial is similar, I wouldn't read too much into the RE valuations even if done by the same company YOY.
I tend to agree, it's more about supply and demand.
Am I missing something? Not just this forum (eg post 1389) but just about every online and other media discussion mentioning 'supply and demand' seems to focus almost exclusively on demand, and to overlook cost of supply. Not totally sure my distant memories of stage one economics are correct, but doesn't a fall in the marginal cost of supply move the supply curve, and therefore the price? So in the case of retirement villages, assuming a truly competitive market, wouldn't a fall in land prices make it cheaper to supply new ones and therefore reduce their market price?
Did you know that Judge Judy was convicted of insider trading and sent to jail?---oh no wait ,that was Martha Stewart----It always amazes me how these posts can stray:)
Can you imagine being the one to have to care for her? OMG
I'm just chucking it out there but there may be a possibility that the share price is being suppressed by the anticipation of interest rate increases and the uncertainty of how much these may be?
Ryman has also been down from a high of $8.39,today's is its first day above $8 for a while,as I've observed many times the price is driven up at the end of the day by buyers on the international index on good volume(Have a look at the intraday chart)perhaps tomorrow will be a better day for Sum?
Couta - prob good news for if i have erred
I have thrown SUM out and and added to RYM with the dosh.
SUM been a great ride for a couple of years but it seemed a dumb idea to have both, esp when price movements are pretty highly correlated.
My rationale was i believe that the worst RYM can do is match SUM but over time RYM has more upside potential. From a market sentiment perspective RYM is the sector leader and because of its size will remain so. A well performing SUM helps maintain the high profile of the sector, a sector certain to rise.
But if the world turns to custard in the next week or so an the market starts to collapse RYM will be sold off ....an then waiting for the next recovery
Sector traders just follow squiggly lines, can't be much of a life really, sitting behind a screen glued to a squiggle for 40 hours a week. What we are seeing is them playing catch up with Ryman following that exceptional report and boost for Summerset.
Oh well, if Ryman has to tag along too on Summersets coat tails then that's got to be good for the NZ50 and the sector and investors in general. Onward and upward for all.
When you consider the price is basically the same now as it was in early November 2013 and since then we've seen the 4th consequetive best retirement company award, exceptional sales for the 4Q 2013 and the annual result with underlying profit up 46% I think we have seen some price earnings contraction already, consistent with anticipated increases in interest rates this year.
On another subject, the world as we all know is a crazy place at present but none of what's going on in Crimea or possible expansion into or incursions into the Ukraine has any effect on elderly folks desire to live in a safe caring environment in N.Z.
On the other subject of the relative merits of RYM and SUM, with the growth rate of SUM being clearly superior to RYM and with SUM's laser focus on N.Z., to coin the phrase so often used by Percy, we're well positioned :) Settle in for the long haul and enjoy the prevailing tailwinds highly supportive of an enjoyable cruise.
SUM is currently trading on a PEG ratio of less than 1, i.e. price earnings is circa 33 times, (based on underlying profit, excluding revaluations, which in many ways in my opinion understates true earnings seeing as property has a long history of gradually increasing in value) and the growth rate is 46%. PEG = 0.72 = exceptional value. History tells us that it is extremly rare to find growth stocks trading on a PEG of less than 1 and when you do there is a lot of money to be made. History has a way of repeating itself.
Agree Roger, Summerset is due for an outperform phase now Quadrant are gone.
I find the views of some concerned about interest rates a little quizzical;
Excluding non interest bearing occupancy advances which have no external interest rate exposure, Summersets debt/equity ratio becomes 19%, quite a low exposure really for any company, Ryman’s figure is a little higher at 29%.
Higher interest rates may influence the small market of village owner operators who would be interested in buying a Summerset village, but then Summerset are not selling, have no intention of doing so, and thus it becomes a moot market matter.
Also, it is entirely unlikely that the respectful target market of 75 year old plus freehold home owners are going to be at all influenced by interest rates in deciding when or if they will require aged care.
They typically have no mortgage or debt and will generally gain from a higher interest rate environment as the surplus cash from their house sale will actually earn them interest.
Higher interest rates, no problem.
They are probably not concerned with a war in Crimea either. What keeps them up at night is whether they remembered to turn the light of in the lounge and what is the name of the person lying in the bed next to them that they have been married to for the past 60 years.
What is the wait period for buying one of these units. If it is short then it will lengthen slightly if oldies are slowed in selling the family home. The build rate can also be adjusted to allow for this. So is there really in great affect in the medium term?
Bought another 20,000 last week and looking at more.
Not sure MAC has COMPLETELY missed the point, snapiti, in fact ALL the points he made are highly relevant.
I take your point onboard also, but come on, the selling time for residential fluctuates between low 20 days in the good times and about 90 days at the nadir, a variance that is immaterial in the selling cycle of retirement units.
Interesting debate.
The argument might hold a bit of water if there was a glut of residential care. But the heat coming out of the housing market may only marginally affect demand for units when the fact is they are well over-subscribed for all the major players.
If in the event interest rates did start affecting demand for units SUM could look at buying the prospective occupants' real state. Difficult, but another service SUM could provide.
tumeric, given all the RBNZ is attempting to do is slow the price escalation, not reverse it, I still feel a mountain is being made of a molehill.
Does anyone recall how the last cooling of the property market affected Ryman's:
1) Profits
2) Share Price
Best Wishes
Paper Tiger
There is the consideration of how reported profit, which mainly (for SUM) comes from
a) annual revaluations of existing property
b) the difference between the initial market value of new properties and their total cost of build.
To what extent do short-term factors influence those revaluations?
Underlying profit may be a little different of course!
Best Wishes
Paper Tiger
http://www.rymanhealthcare.co.nz/ima...erformance.jpg
http://www.rymanhealthcare.co.nz/ima...ing_profit.jpg
Property last peaked ~ July 2007
GFC was proximal....
Interest rate collapse was also proximal
good luck trying to work out the true influencers
Interesting debate above but its seems theoretical at best and certainly not represented by current indicators.
House asking prices at record high.
http://www.stuff.co.nz/business/mone...day:dailybrief
The main reason I originally brought up these issues(playing devils advocate) was after reading an article about how some retirement villages took a hammering in the USA when the property market went Kaput.
Im not saying it will get that bad here,but simply showing that it is a possible scenario that should at least be considered.
''People will always get old'' will not cut it in a hostile market like they had.
Its the scare mongers who make money in the hostile market not the faint hearted.
That's what makes a two way market in shares doesn't it, you sell, i'll keep buying.
Fact is average house prices in the high demand Auckland area (circa mid $600K) are vastly higher than the average cost of a retirement unit SUM are looking to supply in the mid-late $300K range. SUM have a concentration of supply planned for the Auckland market, unlike Ryman. Average folks can have a new SUM retirement unit, a new Jaguar, a world trip and still have money left over to invest at higher interest rates to generate a return to pay their monthly opex fees, which are probably less than the cost of rates and repairs on their own home.
Having had a close look at all this over the last few weeks I'm increasingly seeing less if any linkage between the residential housing market and the aged care retirement service market.
I think a lot of people get hung up on the word 'retirement' and consider the prospect of a nice house in Tauranga or a retirement crib (batch for you Northerners), it's not like that.
The aged care retirement market provides a service, and for those in the eligible 75 year old and over target market who have just sold their house will obviously want to prioritise security, care and obtain some relief in knowing they will be looked after.
If the residential housing market dips and they get 10% less for that house, sorry Snapiti you won't get to buy a porsche with the inherited balance you'll probably just get a nice holden.
Your post PT got me wondering about the revaluation techniques used by SUM and others. I haven't got time to look into it, perhaps somebody else can enlighten us.
The point is that the annual revaluations might be linked to stock-standard real estate indicators. However if the general real estate sector cools, while demand remains steady or even increases for residential care then the current revaluation techniques may not represent fair value.
I do understand, I just think that if someone develops dementia to a certain point or can no longer be secure in looking after themselves for whatever reason, if they had a fall like my Grandmother did, they won't care much if their kids get a lower sale price for their house because they sold when they had too.
I'd be appalled, as I think you would be too, if your kids kept you in discomfort for a better longer term sale price and inheritance.
When you become older and wiser, so they tell me, and you are closer to god, money seems to matter less.
I think the graphs illustrates the point very well.
For a well-run retirement company (I presume we all think that SUM is well run and have learnt from the way RYM does things):
They can keep increasing their profits through the normal swings in the economy;
Despite that the share price goes up and down (but with an up bias).
Best Wishes
Paper Tiger
It is hard to know what the valuer's are thinking, would be nice to see one of the valuer's reports as Summerset or the others really don't provide all that much in their HY or FY.
There are three markets to consider;
a) Residential property (mum, dad the kids and renters)
b) Commercial property
c) Aged care retirement village market, as a sub sector of commercial (service)
It maybe a coincidence that aged care village valuations have been increasing along with the residential property market, or it could be that both markets have been on the rise. I propose the latter is probably right.
Given the demographic trends there is every probability that aged care village market valuations would continue to rise even if the residential market were to take a dip. The small market of prospective village owner operators is very small, and even if SUM or RYM were selling demand would be good and valuations enduring.
Also, we are not far away from the boomer bell curve, it’s probable the boomers will all want out of the residential market and will all want to secure aged care. The bell curve starts about now as the oldest boomer is 69 and will end in around 25 year’s time when they have flushed through the system.
It's even possible, in just a few years time, that we could see an end to the secular residential bull market and the start of a secular bear, but the aged care market however should be booming.
The valuer’s will get it right provided they are actually valuing the right market, but Summerset management are smart enough to ensure they do.
People pointing to the historical pattern of RYM's SP declining in the context of the housing market cooling from 2007 onward might like to consider the following.
1. Nearly all share prices declined with the effects of the global financial crisis from 2007 to early 2009.
2. Nearly all asset classes were affected by the GFC so the extent to which RYM's SP decline can be attributed to a cooling in the housing market as the primary reason is highly debateable.
3. Last but certainly not least, RYM's underlying profit increased year after year after year notwithstanding the effects of the global finacial crisis or housing slowdown, (unlike the vast majority of other companies).
Yip - the share price fall was in relation to investors being more conservative in general due to the GFC, not because the underlying business was effected. THose who follow Buffet would have seen it as a perfect time to buy a great business at a discounted price. The only issue with this is having spare cash to invest.
Totally agree. A great time to buy, even better if you have parents who in the future need care. I also wouldn't be surprised if a foreign business tries to buy out some of these care firms as they are a consistent earner. Not glamorous, but neither is waste management.
I assume SUM is similar to RYM in this respect, but is anyone able to tell me if SUM sell their initial occupancy rights of new units at a discounted price and what this discount is? My understanding is the discount is made because prospective occupants are buying off plans rather than being able to see and move into a finished unit straight away.
I dont think there is a discount. Unlike a normal apartment building where the developer needs a certain amount of pre-commitments before the bank allows him to start, SUM has its funding lines sorted in advance. 'Pre-sales' only start once the development has actually started, not before like apartment buildings. Therefore the resident has very little risk regarding the complex being built, or the move in date, whereas with a normal apartment, you dont even know if it will get built, let alone a move int date, even your deposit is locked up in the trust account indefinitely.
big volumes, somethings up.
I wish winner69. Just highlighting to investors big volumes, one 200000 went through earlier on. I have noticed with few stocks, funds buy large and then something good is announced.
Nice run up to divvy with good volumes.
I wonder whether the change in dividend yield will have an impact on the share prices of MET and SUM
Currently we have:
MET 0.72%
SUM 0.72%
RYM 1.33%
with SUM changing to 0.94% (with the divvy going from 2.5 to 3.25cps) at today's share price.
If anybody has the data it would be good to see a hitstorical plot of RYM's dividend yield.
Waste of time looking at it. RYM and SUM are growth stocks at this stage of the game. Dividends are only being made to stop shareholders complaining. I imagine when deciding on the div they work out what is the lowest they can get away with. Two or three years from now divs will start meaning something.
I think this is the first day in a very long time that the SP has closed for the day on its high. Perhaps those institution(s) that are profit taking from their Quadrant buy-in last year at $3.10 and responsible for selling, have finally got sellers fatigue or better still have run out of stock :)
On another note I see Barfoot's reported today that Auckland house sales volumes were only down 12% on last February, ( Reserve's bank's policies appear to be having only a modest effect).
I agree with comments directly above. Nobody buys this sector with their main focus being on dividends.
Just trying to understand the recent increase in share price.
Let's go with the conspricay theory then. I.e., Something's up.
Looking for a breach of $3.50.
Why's everyone looking for an announcement, what could possibly happen? I wasn't expecting anything except maybe some funds buying sum?
Just an observation. There were no bids or asks this morning just after 9am. One bid for 1000 shares turned up about 4 minutes after 9am but that's it so far. Seems a bit strange. I haven't seen that before. Even NTL had a little crop of offers etc after open.
See article in Dom Post re Trentham site extension update,to start April
Cheers Couta1.
Here's the article:
http://www.stuff.co.nz/business/indu...iven-by-demand
I quite like the way they have cafes, bowling greens etc. They seem to concentrate on lifestyle and build facilities that the residents actually want. Good on them.
I like the concept of expanding existing villages, building on local reputation and controlling the village build rate to match, or more probably to control and maintain a healthy demand.
“The homes would range in price from about $320,000 to $500,000”
The historic average list price for a Summerset independent living unit is $335,599. So, we may be starting to see some demand driven margin expansion starting here.
Looks good. I like the way they continue to evolve their business plan and methodology.
Another week passes and again RYM outperforms SUM
One day you guys will get it right
Have a look back at the link I recently posted. They're targeting 250 new units this year, a growth rate of 25% over 2013, they're bringing all development in house this year and aiming to increase their development margin significantly and looking at procurement benifets for materials. As they continue to grow their leverage with suppliers grows, (economies of scale). Looking further ahead they plan on 300 new units in 2015 and they are extremly well positioned with their seven year land bank for further growth ahead after that as they continue to refine and develop their business model. I don't know what you're basing your assumption that growth will slow from 46% all the way down to 20% on, but I couldn't disagree with you more.
There's a lot of money to be made when you buy a company with exceptionally good long term growth prospects on a PEG ratio of less than 1. You only need to find a couple of these sort of stocks in your lifetime to retire very comfortably indeed, I can't put it any more plainly than that.
There must be an added incentive to near retirees, especially in Auckland, when deciding whether to soldier on stubbornly in their own home defying the realities associated with old age, or to "give in" and enter a retirement home - that the home they have in so many cases owned for years has appreciated greatly in value. That a potential capital gain should be taken. Auckland is very much a special case in this respect for several reasons.