Update on current Ryman site developments.
The current (Sept 2014) site-development design/engineering/construction work being undertaking by RYM is:
Attachment 6283
Source: http://www.rymanhealthcare.co.nz/ima...14_Spreads.pdf
The above is just FYI, but while on the subject, RYM's 2008 build-rate increased by over 200% compared to 2007; the biggest percentage increase this century in RYM's construction volume.
This year's Median NZ House price is up 22% from 2007
This year's Median NZ House price is up 25% from 2008
Average length of occupancy is about 7 years but bear in mind that in terms of resales 7 years down the track (ie about now), the timing of each unit's final completion and occupation together with the variability of life expectancy, this 200% increase in gets considerably ironed out.
Concerning the 3500 retirement village units and care beds occupied in or before 2007 these will be coming up for resale now. This years median NZ house price is:
42% more than in 2006
52% more than in 2005
77% more than in 2004
112% more than it was in 2003
With demand for retirement village living well outstripping supply I expect resale volumes to begin ramping up considerably between now and the next 3 years with a realised increase in the value of each unit averaging, well, …. a lot.
What would you pay for a property company that gives you a profit of $0.06 pa
If you want a really frightening way of looking at Ryman:
For the FY2014 they made an operating NPBT of about $30m (EPS = 6c) on a NTA (property) of $1.85.
They were able to achieve this great result because apart from the $0.55 per share in bank loans they have $2.61 per share of interest free loans from granny and granddad which they refuse to repay until someone lends them a replacement (practically a PONZI scheme).
They are in the position where they can grow that operating profit & NTA at 18% pa, which in my books is worth a P/E of 20.
So in March it was either worth $0.06 * 0.72 (nominal tax paid) * 20 = $0.84 based on profits or the $1.85 based on NTA.
Maybe you could really stretch the valuation and say it was worth $1.85 plus the $2.61 robbed from the elderly for a grand total of $4.64.
Oh and because they pay a dividend greater than the operating profit they have to borrow money for that!
Best Wishes
Paper Tiger
Disc: Currently hold none of MET, RYM or SUM. Will buy again when the trend becomes friendly, but I do worry about how these things get valued.
The wood is behind those trees over there
Quote:
Originally Posted by
winner69
As one poster puts it not sure if you are taking the piss PT
No way will RYM be $5 (let alone $4.64) again I'm told ....the market is that irrational
It is interesting to model a mature retirement village scenario where all growth is just the nominal 2.5% inflation figure and see how much you want to pay for that.
Best Wishes
Paper Tiger