best sales record on retirement units

What a bummer that we have the GFC cloud over our heads which distracts us from looking at the underlying business performance.

When it comes to retirement villages, one of the key performance indicators (KPI's) is the sale rollover rate and frankly, I believe that in this area Becton are second to none.

I’ve compared them against Prime Trust who put out an announcement last week and this is how they stack up.

Prime Trust (PTN)

Here’s a direct quote from their announcement of 14 July:

“We estimate that our sale rollover rates are about 4.5% of total units as opposed to an expected rate of between 7% and 8%. Therefore cash flow from sales of new units and rollover sales of existing units are below normal expected levels and this has created stock build-up and funding constraints.”

Now, understand this: PTN are in a diabolical cash flow position and the reason is in the statement above.

Put simply...they’re not selling units so as to generate CASH!

In fact, out of a portfolio of 3,530 units they managed to sell 159 or 4.5%

Yes, there is a thing called GFC...and it has impacted on sales.

In contrast...let’s have a look at the mighty Becton result...and I think they should be congratulated for this...because I don’t think anyone is doing the level of sales they are...at 12 to 13 a month!

Yep in FY09 Becton did 158 sales (just 1 short of PTN)...but their pool of units is just 920.

That’s a brilliant 17% rollover rate compared to PTN at 4.5%!

Same industry – same GFC!

Now, my take on why BEC is nearly four times better than PTN comes down to a number of good old fashioned management smarts including:

1. Smart management who have a plan
2. A good sales team
3. A proactive marketing plan that works!

I reckon it’s refreshing to know that BEC are getting the fundamentals of business right because that’s what we all bought...a small slice of a business.

As Warren Buffett says “the business performance creates the value – the price creates the opportunity”.

Final Comment: Let’s hope that the management and sales team at PTN don’t ever apply for a job at Becton.

Well done Becton!

Oh yeah...just so you know I don’t deliberately butter up companies unless they are worth it...have a look at my posts on PTN! I’m sure the CEO over there doesn’t like me!