Blackpeter, for interest sakes only RYM average PE on total earnings ( reported earnings) since 2002 has been 16 (range 11 to 25)
Maybe that is what a consistently growing aged care company is worth (on the average)
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For me positives are better than expected build rate, if we assume the demand is there (which is the underlying assumption for this sector) then everything else will hopefully come out in the wash.
See post #2263 That is last year's PE, 29, based on the only real measure of earnings, underlying earnings, on a SP of $2.95 at that time. People need to make their own 2014 year growth assumptions to work out forward PE.
The old adage of looking after your customers and profits will look after themselves is a good one when you're talking about repeat customers, but that's not the case here is it ? Besides that, there's no shortage of demand at all. Looking after customers and contemporaneously looking to maximise shareholder returns are not mutually exclusive....but if directors continue to take an extremely cautious approach you could be forgiven for wondering if the Directors are too customer focused ? All I'm suggesting is that its evident Ryman take a more commercial approach and it hasn't hurt their operation has it !!
Well ... technically speaking you are right - repeat customers not very likely (well, obviously depending on your religious believes, but lets set that for a moment aside). However - I trust that most seniors don't go blind into a quite expensive adventure, but will do their research. Checking with existing clients, reading comparisons and reports, checking for awards ... and that's where looking after existing customers pays out for SUM. And hey, even if demand might overall outstrip supply - the supplier who looks better after their clients might be able to command a premium.
No, they're not repeat customers but their friends and family, potentially, are. Poor "customer" experiences will quickly translate into a poor business.
Not suggesting that's the case here but don't underestimate the power of a good name and customer satisfaction.
Now I've got that off my chest, thanks, Roger, for your contributions to this thread!
:)
Fair comments gents and the power of word of mouth recommendation is something that's never to be underestimated especially in the context of older folks recommending to their friends they come and join in the fun living at their local village.
My concern centres on the company being a little too cautious. This is evidenced in their reluctance to build dementia units and their reluctance to shift from their present operational model to a fixed fee for life like their competitors Ryman and Metlifecare are doing and comments at the AGM about not wanting to grow too fast in case the wheels fall off and this 2014 year being a year of consolidation e.t.c.. Add in that the company is reluctant to give forward build guidance beyond 300 for 2015, (I pressed Julian Cook hard on this after the AGM) and met with a brick wall in terms of any elaboration on further growth ambitions in terms of build rate beyond 2015 and I see in the commentary to today's result they talk in terms of a build rate of 300 units for 2015 and beyond. Surely they have a five year plan to grow the build rate beyond 300 units per annum or do they ?
Anyway....I guess time will tell...I'd better do some real work instead of unpaid blogging this afternoon :)
At least there is another set of smiling people throughout the presentation (different from last years that is)
Suppose you need to do this in case residents pass on
If you buy one of the licences to occupy it does not guarantee you a place in the nursing or dementia units. You may be given preference if you have your name down for the hospital, but as the need for a hospital bed is likely to be an urgent need you will have the risk of needing to find a bed before a vacancy may open in the village where you have your licence to occupy. So my feeling is that whether a village has hospital/dementia care should be quite low down in your priorities when deciding where to move. Whether it has a rest home maybe more important as you will more likely have the ability to wait it out for a vacancy to open up. Obviously if villages have greater capacity they may have more spaces available...but a greater cost blow-out.
Roger, I must admit I invested in SUM over RYM based on the name. RYM seem to have a bad rep up here in Orewa. They are indeed ruthless and there are all sorts of stoires about charging an arm and a leg for sticking plaster etc. These are the stories doing the rounds at the Orewa Bridge club where my mother plays. I can't validate the stories.
I'm feeling better about my stop-loss being triggered at $3.11. I thought about getting back in today, but that sure is an ugly looking chart.