SUM - Summerset Group

[James108]

No as the majority of their profits are made in developement and resales.

And the majority of their losses are made in day to day operations...???

[percy]

And the majority of their losses are made in day to day operations...???

What losses.?

[Beagle]

That lower high put in a top that set a new down trend line. I had to delete all my trend lines and channels which were previously pretty reliable, and reset them, currently the long term up trend (log scale) is around about 4.80 so todays close is nearby though that's still below all the major MA/EMA's. Interesting for the TA's, the recent low was smack on the 38.2% fib retrace.

I wonder whether SUM is doing the RYM thing, that Roger and Winner talked about for a few years and has played out pretty much as they described ... that SUM in this case, might have got hyped to perfection and is now trying to find fair value again. The market may be forward looking but it's not stupid enough to ignore the ST ramping effect when there's plenty profits to be scalped.

Anyway, there's a ton of support at those MA/EMA's below here and the longer term rising trend line. If it naffed all of those then that would be a source of concern, otherwise as they say a 'healthy correction' (gag).

Interesting that $4.80 baseline support. I calculate at that point SUM would be trading on a 2017 PE of only 15 times my forecast underlying earnings of 32 cps. At that price I would be very seriously tempted to "bet the ranch" because long term that is a ludicrous PE for a stock with SUM's track record given demographic tailwinds for this sector.

By the way...RYM still substantially overvalued compared to SUM and SUM can't do a RYM like I predicted 3 years ago for RYM because its been growing earnings at an average rate of 48% not ~ 15% like RYM.

When I made that call on RYM three years ago their forward PE was well over 30 so over twice the valuation of SUM cuurently. I got that call bang on the money. Lets see how I go in three years with SUM as a long call. This stock is a genuine bargain at the current price and I am not in this for any short term ramp gain, I can assure you I'm in this stock as a serious long term value play in this high growth sector.

[BlackPeter]

Interesting that $4.80 baseline support. I calculate at that point SUM would be trading on a 2017 PE of only 15 times my forecast underlying earnings of 32 cps. At that price I would be very seriously tempted to "bet the ranch" because long term that is a ludicrous PE for a stock with SUM's track record given demographic tailwinds for this sector.

By the way...RYM still substantially overvalued compared to SUM and SUM can't do a RYM like I predicted 3 years ago for RYM because its been growing earnings at an average rate of 48% not ~ 15% like RYM.

When I made that call on RYM three years ago their forward PE was well over 30 so over twice the valuation of SUM cuurently. I got that call bang on the money. Lets see how I go in three years with SUM as a long call. This stock is a genuine bargain at the current price and I am not in this for any short term ramp gain, I can assure you I'm in this stock as a serious long term value play in this high growth sector.

Frightening ... it looks like couta, you and myself seem to agree on a stock ... just bought some more at 500.

Sure - they might go down to the MA100 (485) or even to the bottom of the current channel (470) but than - they might not ... and at this stage I am quite happy with buying into a quality company at a forward PE (averaging forecasts for the next 3 years) of 11.3 and a forward CAGR of above 17!

I do see SUM at this stage as one of the best value long term holds on the NZX.

Of course ... DYOR!

[Beagle]

Just for the benefit of others and especially newer investors. Most analysts and professional investors seem to prefer to compare companies in this sector based on underlying earnings which excludes the annual property revaluation that is required under international financial reporting standards. Its easier to compare the companies using this approach because it strips out current year revaluations which can differ quite markedly from one company to another. Some people prefer to use the full earnings metric (IFRS) based on the fact that in the vast majority of cases the annual revaluation figure is positive. There is certainly a fair degree of validity to this approach in my opinion as historically the cost of construction at least matches the inflation rate so some annual revaluation over the long run is justified but this approach tends to give significant swings in annual profit depending upon the state of the property market as at balance date from one year to another. This is the basis upon which the company is required by accounting convention to disclose its EPS which is shown in the financial statements at 66.93 cps compared to 38.94 cps last year.

The matter of which is the more relevant figure has previously been debated on here at very great length, (it is not my intention to reignite that debate), simply to point out that some posters will post quite different metrics to others. I remain of the view that underlying earnings is the best comparative metric to use.

The whole thing is a bit of a minefield though really because by not recognizing the full revaluation metric and using underlying earnings one then needs to make an assessment of expected future underlying earnings based on the sum total of previous revaluations not recognized already as profit. This is referred to in this sector as embedded value, a subject I briefly touched on yesterday in post #4267
Basically the higher the embedded value per unit multiplied by the expected average churn rate gives you some forward visibility on the following years expected underlying earnings from resales.

[BlackPeter]

Roger, good in pointing this out ... and I think both assessments have their merits.

Using underlying earnings are a good way to compare competitors in the same industry. However - IIFRS earnings (over a longer timeframe) are in my view the only method to capture and compare the real (past and potential) income gains from investments ... and that's what I need to decide e.g. whether I want to buy more SUM vs e.g. more THL vs more TNR in order to optimise the growth of my funds. Comparing underlying earnings wouldn't help me with this decision, given that money made through revaluations (as long as they are kosher) is real money as well.

[winner69]

Frightening ... it looks like couta, you and myself seem to agree on a stock ... just bought some more at 500.

!

Truly frightening - BP, Roger, couta, percy and others piling into Summerset big time.

Rarely do we such consensus amongst the ST luminaries ....along with backing the words up with real money shows real commitment

Must be the best thing since sliced bread

Maybe time to sell down to feed the frenzy


...and put it all into Pushpay

[Food4Thought]

24 Little Hours... passed and the price is up again.
Missed that opportunity.

[winner69]

24 Little Hours... passed and the price is up again.
Missed that opportunity.

Good eh

Still a good time to buy ...just not as good as Monday ...or yesterday

[Beagle]

24 Little Hours... passed and the price is up again.
Missed that opportunity.

The hound did bark pretty loudly.... in fact I felt I nearly went "horse"
Not too late mate, still great long term value at $5.15.