SUM - Summerset Group

[winner69]

i was hoping it might go to previous highs early in the yr , couldnt stay above that 5.25 resistance oh well time to wait for the lows again in the range

Quite intriguing share price action ......530 odd seems top dollar the market is prepared to pay

Seems so so long ago the share price reached 560

As of now less than 50% of the RYM share price .....must be some rational reason for that relationship

[couta1]

Quite intriguing share price action ......530 odd seems top dollar the market is prepared to pay

Seems so so long ago the share price reached 560

As of now less than 50% of the RYM share price .....must be some rational reason for that relationship

It's called the" Couta Reversion Theorum Effect".

[Snow Leopard]

It's called the" Couta Reversion Theorum Effect".

I always assumed it was the
Couta Over/Under Typical Averaging (version 1).

Best Wishes
Paper Tiger

[BlackPeter]

Quite intriguing share price action ......530 odd seems top dollar the market is prepared to pay

Seems so so long ago the share price reached 560

As of now less than 50% of the RYM share price .....must be some rational reason for that relationship

Well, yes - but what would be the problem with that?

SUM has a forward PE of 11 and a forward CAGR of 17.5.

RYM has a forward PE of 17.7 and a forward CAGR of 14.3

Just says that SUM shareholders are already now (in terms of underlying value) much better off and will gain every year another roughly 10% (depending how you value growth) on top of what RYM shareholders gain.

Market is always right (in the sense of the law of the jungle), but it does not always make sense.

Unless you want to sell soon I can't see a problem with SUM shares being traded at a discount ...

And if you want to explain market logic -

why was $3 a year ago a fair price for a SML share and why is it now $7?
Why was a year ago $1000 a fair price for a Bitcoin, and now it is $18000 (or whatever)?

Market pricing does not need to make sense and good investing is exploiting these differences.

[Beagle]

Finding nonsensical situations is where you unlock value going forward. SUM CAGR in underlying earnings is actually 48% over the last five years, RYM ~ 15%.
I have RYM on a forward underlying PE of 26 at $200m and SUM at just a forward PE of 14.8 at $80m, very shortly to be a trailing PE. The old cliché that the market can stay irrational longer than one can stay solvent does not apply to me as I don't carry any debt. I am more than happy to exploit this situation going forward to generate alpha returns.
The Rolls Royce of anything isn't necessarily always a good thing as we've seen this week with their Trent 1000 engine. When something works like a well oiled Swiss watch and is priced like one there is no chance of market outperformance, all you'll get is market performance (assuming the watch doesn't break down or in any way whatsoever stop keeping time perfectly).
On the other hand there's plenty of opportunity for SUM other companies to improve and refine their systems by copying others.

Market pricing does not need to make sense and good investing is exploiting these differences.

I could not possibly agree more. One day we will see extreme market outperformance with the SP of SUM and I will be there to enjoy that, just don't ask me when that is lol.

Just unpacking this a bit more to remove confirmation bias here's how the analysts see it.
RYM closing price, forgive me its Saturday and I can't be bothered looking it up but from memory around $10.50 but average analyst value is well south of there at $9.24 so RYM trading at a 13.6% premium to average analyst fair value.
http://www.4-traders.com/RYMAN-HEALT...072/consensus/
On the other hand SUM closed at $5.18 but average analyst valuation is north of there by 7.3% at $5.56
http://www.4-traders.com/SUMMERSET-G...438/consensus/
On average analyst views RYM therefore is overvalued on a relative basis to SUM by 20.9%.

[Beagle]

https://www.interest.co.nz/property/...pared-year-ago

My forecast model at the start of this year assumed flat house prices in Auckland and 3% growth on average in the rest of N.Z.
Actual results are substantially better. Worth noting that the vast majority of SUM's villages are located outside of Auckland.

House sale volumes now recovering nicely too http://www.sharechat.co.nz/article/3...e-aucklandhtml

[winner69]

House sale volumes now recovering nicely too http://www.sharechat.co.nz/article/3...e-aucklandhtml

Westpac say ‘another quiet month for the NZ housing market with prices flat and sales still slow’. At best one could say it’s not getting worse.

Jeez the REINZ made it sound so fantastic in their releases ....almost as good as some of the bulln**** you see in NZX announcements.

[Beagle]

Westpac say ‘another quiet month for the NZ housing market with prices flat and sales still slow’. At best one could say it’s not getting worse.

Jeez the REINZ made it sound so fantastic in their releases ....almost as good as some of the bulln**** you see in NZX announcements.

Much tougher to get finance from the banks now mate. Completely different than this time last year and in that context and taking into account the recent elections I think the sales result for November was quite solid and gives some grounds for optimism.

[winner69]

Much tougher to get finance from the banks now mate. Completely different than this time last year and in that context and taking into account the recent elections I think the sales result for November was quite solid and gives some grounds for optimism.

Won’t get easier to borrow to buy a house so activity (number of sales) will continue to decline over the next few months and possibly bottom out at about 70,000 annual sales (average is over 80,000).

Good thing from a Summerset perspective is prices still increasing. I think it was 7 regions reached a new record.

So Summerset will continue to make exorbitant profits for a while ....might even do better than your forecast.

That declining activity not a good sign for outfits like Metro though ....tighter lending affects new builds as well.

[Beagle]

Weren't the Reserve Bank slightly loosening their chocker hold a little on deposit requirements the other day mate ? Immigration still tracking strongly, supply unable to meet demand...market overall in N.Z. looks well supported to me. Independent living homes and apartments are some of the best you'll find and satisfaction level's are very high.