Time for retirement 2 ?

Metlifecare Ltd [MET.NZ] is now an interesting little stock. It has spent many years languishing at around $2.30 due to its high ownership of shares in a small group. But now it has been released from that grip and looks like it will now florish on its own.

It all happened in July and now places the company in direct competition with Ryman Healthcare Ltd [RYM.NZX] and Summerset Group Holdings Ltd [SUM.NZX].

What do we make of the share price then ?

At $2.95 at close of business yesterday it makes this share the second cheapest and Summerset the next followed by Ryman.

Net asset backing is $3.04 for Met which makes this star, $1.10 for Summerset and $1.30 for Ryman. Clearly the leader by a long shot is Met which still hasn't reached its NTA.

As far as returns go it is only Ryman paying a paltry 2.05% that is turning over. Demand for its scrip has recently seen it shares rise to record highs.

You know me I like a bargain so if you prepared to wait a long time you might get Ryman for a steal, I think it will go down from here, but if you want get in right now you might want to consider getting in with the Met overall its the best bet.

Good luck!


Disclosure : I own RYM shares in the Share Investor Portfolio.



MET @ Share Investor

Stock of the Week: Metlifecare Ltd
Stocks on My Watchlist: Metlifecare Ltd
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Time for retirement?

Discuss Metlifecare @ Share Investor Forum - Register free


Summerset IPO @ Share Investor

Summerset IPO: A Closer Look
Summerset Prospectus

Discuss Summerset Heathcare @ Share Investor Forum - Register free


Ryman Healthcare @ Share Investor

Share Price Alert: Ryman Healthcare Ltd 2
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Time for retirement?


Discuss Ryman Healthcare @ Share Investor Forum - Register free


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Summerset IPO: A Closer Look

The coming Summerset Group Holdings Ltd [SUM.NZX] IPO (read the prospectus) will be an interesting one.

The aged care sector that this newly listed company will occupy is a fast growing and profitable one for companies that run the right business model and manage their clients well.

As well as numerous independent aged care homes and larger privately owned chains a listed Summerset will compete with two NZX listed companies. Metlifecare Ltd [MET.NZX] and Ryman Healthcare Ltd [RYM.NZX]

MET has been poorly managed and is currently undergoing a capital restructure of some kind and Ryman has had stellar revenue and profit growth since its listing almost 15 years ago.

Given the promise of the sector at large, the Summerset IPO could be one of the best IPOs the NZX has seen for some years.

Management at Summerset have put an IPO value on the company of $307 million of which approximately $120 million are the proceeds of the partial sell-down of approx 30% of the company and the balance is to be majority owned by present owners Quadrant Private Equity and various members of management. Shares will be $1.40 a piece.

Lets take a closer look at this IPO to see how it stacks up.

Summerset operate 13 villages, 1,364 retirement units, 323 care beds, have over 1,700 residents and approximately 450 staff. They have an aggressive development schedule that would close to double the size of their retirement units within five years and part of the IPO funds are to fund that expansion with the bulk of the funds raised put towards paying off debt.

All good thus far with the exception of the amount of IPO funds to be used for paying off debt - why should future shareholders pay off debt from the majority 70% shareholders?

Lets looks at some numbers.

It is not until page 64 of this 144 page prospectus that we get the prospective and historical financials for the company, albeit once again tainted by the use primarily of pro-forma figures and the usage of "underlying profit" accounting terms to smooth figures that make comparisons from year to year difficult.



Total revenue over the 5 years to 2010 (pro-forma) show it has almost doubled but so have expenses and forecast figures look even less promising. Financing costs look to have taken the bulk of any profit over the years and the IPO proceeds look to ameliorate that somewhat.

Audited figures for the 2010 year saw a loss of 1.9 million dollars so the forecast for 2011 of 9.6 million and 17.2 million in 2012 (before financing costs) look to be out of the ballpark in terms of historical performance.

I like the aged care sector very much as I have invested in Ryman Healthcare and Summerset may operate their business well but it is hard to tell this because of the use of pro-forma figures.

The large debt accrued by present management will still be a worry for the new shareholders even after a small portion is paid off.

The lack of liquidity in the market, because current shareholders will still retain 70% of the shares, will affect minority shareholders because of the veto power of the majority shareholders so don't look for management to favour the minority if they don't have to.

Metlifecare shareholders have found this out to their detriment over the years.

This IPO is one of the best the NZX has seen for years (there have only been 3 [1,2,3]over the last 2 years and none of them spectacular) but I have reservations as the whether it is a starter for the average investor like me.

Best those interested wait for some results to the NZX before plunking down the shekels and then see the fair value for the company.


Disc I own RYM shares in the Share Investor Portfolio


Summerset IPO @ Share Investor

Summerset Prospectus
Discuss SUM @ Share Investor Forum


Metlifecare @ Share Investor

Metlifecare: Its Assets could be worth more under different management
Stock of the Week: Metlifecare Ltd
Stocks on My Watchlist: Metlifecare Ltd
Time for retirement?

Discuss Metlifecare @ Share Investor Forum
Download MET Company Reports


Ryman Healthcare @ Share Investor

Share Investor's Total Returns: Ryman Healthcare Ltd
Share Price Alert: Ryman Healthcare Ltd
Ryman Healthcare Ltd: 2011 Half Year Profit Review
Gordon Macleod on Ryman Healthcare's Australian Expansion
Share Investor Q & A: Ryman Healthcare's CFO Gordon MacLeod
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Long VS Short: Ryman Healthcare Ltd
Time for retirement?

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Download RYM Company Reports





c Share Investor 2011

Metlifecare: Its Assets could be worth more under better management

It is interesting what you might find when trawling through company reports for some reason other than the one you eventually find more interesting. This is the case with Metlifecare Ltd [MET.NZ] as I was looking through their 2009 Annual Report.

As you digest the fruitless 2009 they have had, along with incentives still paid to directors who managed significant losses in 2009 and 2008 one comes across one of the most interesting things in their bloated 80 page advertisement for their directors (most NZX companies are guilty of using ten words when one would do and including unnecessary things like director bios and what they might do in the weekends in absence of hard easily understood data), the net tangible asset (NTA) backing per share - incidentally it can be found on page 75.

The NTA is roughly speaking what shareholders would get if the company were wound up and sold. With Metlifecare their assets, which are mostly in property, are difficult to assess in todays uncertain property market but NTA can be one good indication of what a company is worth if sold in part of outright.

Metlifecare's NTA was a staggering NZ$3.54 as at June 2009 while its shares traded at around $1.80 per share!

At close of trading last Thursday Metlifecare shares were trading at $2.30. Still a significant discount to its asset backing.

This tells us a number of things. Firstly the company is worth more either in part or whole being sold outright and it also tells us that management are not extracting full value for shareholders because they are running the shareholders business in a very poor manner.

It could also indicate that management and or their accountants Price Waterhouse Coopers and their valuers have grossly overvalued their properties in today's repressed property market, so beware before you jump on board the MET bus.

Ryman Healthcare [RYM.NZ] which is Metlifecare's listed successfully run rival, has an NTA of 86c per share with a $2.08 share price by comparison but has managed a record half year profit for 2009.

If asset valuations can be trusted, this company should be on anyone's watchlist as a pure play in the hope that someone decides to sniff around and pick up all or some of the company and salvage it from its mediocre management.


Disclosure : I own RYM shares in the Share Investor Portfolio.


Related Share Investor Reading

Stock of the Week: Metlifecare Ltd
Stocks on My Watchlist: Metlifecare Ltd
Stock of the Week: Ryman Healthcare Ltd
Time for retirement?


Ryman Healthcare @ Share Investor

Share Price Alert: Ryman Healthcare Ltd 2
Ryman Healthcare Ltd: 2011 Half Year Profit Review
Gordon Macleod on Ryman Healthcare's Australian Expansion
Share Investor Q & A: Ryman Healthcare's CFO Gordon MacLeod
Ryman Healthcare: Interview sneak peak
Ryman Healthcare Ltd: Australian Expansion Needs Care
Share Investor Q & A: Reader Questions to Ryman CFO Gordon Macleod
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Why did you buy that stock? [Ryman Healthcare]
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Time for retirement?

Discuss Metlifecare @ Share Investor Forum - Register free
Discuss Ryman Healthcare @ Share Investor Forum - Register free

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c Share Investor 2010