And he also got high
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Hi Gerard and thanks for your post.
I have been tracking the Brandon Park issue closely and until now have withheld commenting on the situation surrounding this development.
I have come to the conclusion that there is a major stoush between the Monash City Council (the Local Authority for the Brandon Park site), and Victorian Parliament who introduced (imposed onto Monash City Council) a Development Plan Overlay (DPO) into 5 vacant school sites within Monash's jurisdiction. 1 of the 5 sites is Brandon Park.
Ryman are caught in the middle.
The DPO is a broad high level plan that sets out the general parameters of how a site will be developed. The theory is once the DPO is approved by Monash, Ryman can then submit detailed planning permit applications and providing these applications are 'generally in accordance' with the DPO, the Monash City Council is legally required to approve these applications without further community consultation or comment. Further, under the DPO process, residents do not have the right to appeal against the proposed development.
The reality is that the Monash City Council has some serious and fundamental principles at stake here regarding all 5 school sites and looking ahead will see this DPO process as the thin end of a very wide wedge.
So despite the relationship between Monash City Council and Ryman (which is probably very good), Monash has much bigger fish to fry. From what I can gather looking at Ryman's Brandon Park submissions, drawings, engineering reports, construction methodologies etc surrounding the development, Ryman has been required to provide very detailed plans (almost extreme detail in fact) prior to Monash even entering into the public consultation phase, which may prove to be a lengthy process in itself.
Public submissions regarding Brandon Park have only recently been called for. Community Information Sessions were held yesterday and the day before. Feedback is sought by the 26 September 2016.
On the upside, a huge amount of facts and evidence to appease those opposing the development has been assembled, and once approval is obtained, a very significant amount of work that would normally be the next step regarding Authority Submissions is already 99% complete.
You can see the impact on Ryman's build programme for 2017 here:
Attachment 8299
Here is the primary two links to back up all the above. Happy digesting.
http://www.monash.vic.gov.au/About-U...y-College-site
http://www.monash.vic.gov.au/About-U...y/School-Sites (within this 2nd link, click on the tabs labelled Community Feedback and Council Advocacy for more interesting reading).
52 week high 7.05- 9.86
Valuation has stretched. It is trading above the implied price now.
However still it can maintain its uptrend provided we see strong market.
If there's a crash in nz house prices, how much would it effect the profit and viability of RYM for the duration of the crash?
it would affect the capital gains on resale, and also the development margin on new units, but wouldn't affect the third key plank of revenues - DMF. Overall, the impact would be significant. However, having said that, RYM has made a higher profit every year (even through the worst financial times in 80 years)
Stock price volatility and Portfolio risk management is an interesting study but one which most investors don't think about until after a bad event occurs...
Most people assume RYM as being a continuous up trender (a portfolio buy and hold must have) a buy and forget share ....and therefore as the ST thread implies, a boring share...
So I was rather surprised when I dug deeper to find RYM shareprice has underperformed the NZX50 these last 2.5 years it nearly went Bear with a 20% fall after reaching a high pointback in May 2014...
Maybe part of the reason for the lackluster ~10% price gain in these last 2.5 years can be put down to the X8 (8 bagger) rise from the crash low of~114c to ~890c in 5 years (2009 -2014)....This is where Portfolio risk management comes into play..The assessment of risk after a huge price growth..
A part of Portfolio risk management is the analysis of share price volatility...We assume volatility as large sharp up/down movements...RYM has the large up/down movements but with slow oscillations...so not being spectacular it is less noticeable..Therefore it would come as a surprise to most people that RYM was one of the companies that got whacked the hardest during the 2008 GFC...The GFC Great Recession effect was less felt in NZ.. Most NZ people suffered worse effects from 1991 and the 2001 recessions...however 2008 GFC had the spector of a bank crisis contagion hanging over an global overvalued property market..NZ and Australia escaped the Global property crash due to Good management from the Aussi banks..however the property stocks prices were severely downgraded due to risk discount..
During 2008 GFC RYM price dropped ~-57% from ~266c to ~114c in comparison to the NZX50 dropping by ~-44%
I've highlighted the two red figures as many investors who haven't experienced a Bear market would casually glance over -57 and -44 and think there isn't much difference...but there is!!
Lets put the 2 figures in a better perspective...
To reach breakeven from a -44% NZX50 index fall it needed a +78% rise..the fall took 16 months to happen and the breakeven took another 49 months (this included shareprice + dividends)..
RYM became a growth darling after the 2003 recession (when it dropped ~-25%) it's share price topped in June 2007 (~10 bagger) then the 20 month decline (dropped ~-57%) and to reach breakeven needed a +133% rise took 26 months (compared 49 months for NZX50 index which had a smaller breakeven to reach).
So RYM is not boring and its share price seems to be more extreme (but not "sharply" volatile) than the overall NZX50 index..
Therefore Lewy....based on limited history it seems RYM would be more effected from financial events....Property / financial events (chicken or the egg scenario)
There was some very good debate in March / April / May 2014 in which Winner69 and I outlined our thoughts on the dim prospects for RYM share price in the medium term future. At the time the SP was oscillating between $8-$9 and we made the case that the dramatic expansion in PE was overdone and several years of earnings growth was required to normalise this.
As Hoop as pointed out above, RYM was far from immune to the ravages of the GFC. I had thought earlier this year we might to see some sort of break out but in the current climate I no longer see that possibility. In may 2014 the SP was $9 so the SP has shown no growth since then but the NZX50 is up by circa 40%.
Winner69 is probably right, we might see the SP continue to disappoint for another year or two yet. It will be a good long term buy at some stage...I think we're not quite there yet and from a technical perspective RYM also looks very weak at present. The other relevant thing as far as I'm concerned is the woeful umimputed dividend yield. Shareholders are not being paid to be patient so unless there's genuine prospects for SP appreciation and the stock is cheap relative to its growth rate, (A PEG of under 1), I don't see any valid reason to hold.
Long term I still rate Ryman the number one retirement stock to own due to their proven track record,excellent management and the compounding factor from the Aussie expansion but at this point I am not holding.
I agree that RYM have arguably the best track record, excellent management and Australian exposure (which I believe is potentially a big positive).
However, on an underlying basis, it is still trading a fair bit more expensive than the rest of the sector (proportionately more expensive that I am comfortable with). The bigger the expansion (and the more countries they're in) the more chance there is to stuff it up (although RYM's ttrack record would lead me to believe they can successfully expand in both NZ and Australia)... or at least this is my view.
None the less, execution risk remains, although more so for say SUM who are alot smaller, but trying to build at similar rates (I think)... the fact the housing market is seemingly at its peak (in my view), and with interest rates more likely to rise than fall (in my view), those who plan to continue borrowing heavily could be facing a rare issue: increasing interest costs (albeit off a low base) with decreasing or stabilizing selling prices... what will sell RYM's units (or at least make more attractive over say SUM's) is the fact that they have a much better continuum of care (ARV also does).
Lots of "my views" ;)... and I don't currently hold RYM although I did select it in stockpicks this year