SUM - Summerset Group

[Bjauck]

One thing that chart highlights is that since listing SUM share price has increased by ~35% pa ....with dividends not a bad return for the buy and hold punters

But over 50% pa from late 2014 - that's what short/medium term traders aim for As a long-term holder SUM currently has a dividend yield of about 3% pa on my cost of purchase. Equivalent to the interest yield of a term deposit.

[Jim]

As a long-term holder SUM currently has a dividend yield of about 3% pa on my cost of purchase. Equivalent to the interest yield of a term deposit.
SUM close at $5.51 that means those investors like me on the drp will be hard hit getting less and less shares

[troyvdh]

,,,ah sorry guys...this aint sustainable...the curve SP is to steep...just saying

[macduffy]

SUM close at $5.51 that means those investors like me on the drp will be hard hit getting less and less shares

You still have time to suspend your DRP election and take a cash dividend this time if you consider the shareprice to be over-valued.

:mellow:

[silu]

You still have time to suspend your DRP election and take a cash dividend this time if you consider the shareprice to be over-valued.

:mellow:

I don't have enough shares to make a cash dividend worthwhile :(

[winner69]

SUM close at $5.51 that means those investors like me on the drp will be hard hit getting less and less shares

......but the divie is 43% higher than last year

And whatever you get from DRP this year they will be worth heaps more this time next year

[Snow Leopard]

According to 4-traders after updated broker valuations it is worth a mean $4.88 with a really wide spread from $3.71 to $5.80.


https://www.youtube.com/watch?v=AFa1-kciCb4

Best Wishes
Paper Tiger

[Onion]

SUM close at $5.51 that means those investors like me on the drp will be hard hit getting less and less shares

Things are tough for sure. In addition to that all my gold jewelry is really heavy to carry around and the long numbers on my bank balance are really hard to read. :p

[trader_jackson]

According to 4-traders after updated broker valuations it is worth a mean $4.88 with a really wide spread from $3.71 to $5.80.

Best Wishes
Paper Tiger

The one that is $5.60 is Forsyth, has a neutral rating on it due to strong earnings growth etc etc being fully reflected in market expectations

[Beagle]

I doubt that all analysts updated views are showing on 4 traders yet.

[jim9358]

One to be relaxed about ?

[Beagle]

One to be relaxed about ?

Yes one of the more relaxing holdings on the NZX for sure. Just sit back and let it grow. All that new Kiwisaver money coming into the market every month has to go somewhere.

Average valuation $5.02 http://www.4-traders.com/SUMMERSET-GROUP-HOLDINGS-10089438/consensus/

I think some of the analysts are well off the mark with this one.

[couta1]

Yes one of the more relaxing holdings on the NZX for sure. Just sit back and let it grow. All that new Kiwisaver money coming into the market every month has to go somewhere.

Average valuation $5.02 http://www.4-traders.com/SUMMERSET-GROUP-HOLDINGS-10089438/consensus/

I think some of the analysts are well off the mark with this one. This thread should really be renamed "Summerset too boring to talk about" like the Ryman thread as the company has matured to a new level now. Can't see it going below $5 again but might be able to pick some up in the low $5 range over the next few months on a dip.

[Food4Thought]

This thread should really be renamed "Summerset too boring to talk about" like the Ryman thread as the company has matured to a new level now. Can't see it going below $5 again but might be able to pick some up in the low $5 range over the next few months on a dip.


I agree Couta. It's worth talking about, how ever it was getting a bit repetitive. There will be a dip, a matter of when. Are you looking at buying in again Couta? Still see SUM heading forward in share price, as a slow but steady pace.

[Beagle]

This thread should really be renamed "Summerset too boring to talk about" like the Ryman thread as the company has matured to a new level now. Can't see it going below $5 again but might be able to pick some up in the low $5 range over the next few months on a dip.

http://www.msn.com/en-nz/news/other/alzheimers-new-drug-that-halts-mental-decline-is-best-news-for-dementia-in-25-years/ar-AAinLpE?li=AA59FU&ocid=spartandhp

Interested in your thoughts mate working in the sector. Should SUM slow down the roll-out of proposed dementia units or does the demand in the sector already significantly exceed capacity ?

[couta1]

I agree Couta. It's worth talking about, how ever it was getting a bit repetitive. There will be a dip, a matter of when. Are you looking at buying in again Couta? Still see SUM heading forward in share price, as a slow but steady pace. Yep will buy in again,sold my large holding too soon a year ago, sometimes being privvy to inside market information can work against you if the negative stuff doesn't eventuate.

[couta1]

http://www.msn.com/en-nz/news/other/alzheimers-new-drug-that-halts-mental-decline-is-best-news-for-dementia-in-25-years/ar-AAinLpE?li=AA59FU&ocid=spartandhp

Interested in your thoughts mate working in the sector. Should SUM slow down the roll-out of proposed dementia units or does the demand in the sector already significantly exceed capacity ? No they should press ahead full steam as demand outweighs supply, these new wonder drug discoveries normally take around 10 years to become available to the general public if ever, think of all the cancer cure discoveries that have been discovered over the last decade and see how many have become available to the public, a tiny percentage.

[Beagle]

No they should press ahead full steam as demand outweighs supply, these new wonder drug discoveries normally take around 10 years to become available to the general public if ever, think of all the cancer cure discoveries that have been discovered over the last decade and see how many have become available to the public, a tiny percentage.

Sad really isn't it...Lost my Dad to dementia about 4 years ago now, not a nice way to go. I guess there's also the issue of what price if it ever gets released commercially and will Pharmac fund it ?

[Grunter]

The one that is $5.60 is Forsyth, has a neutral rating on it due to strong earnings growth etc etc being fully reflected in market expectations

From what I've gathered, the DCF models used by the brokers assume house price appreciation of 4% per annum. The sensitivity is +1% = +$1.50, so that's a huge effect. I can't see house price appreciation dropping below 5% for the next few years, so at $5.60, this is still undervalued, and I think $6.50 - $7 is fair value.

[jim9358]

Any advice on why the SP keeps rising while the dividend is locked in at value 5.37 (advising disc.of 2%)?
Expecting SP to drop on issue of div. being a time I want to take more! Am I presuming wrong?

[macduffy]

Any advice on why the SP keeps rising while the dividend is locked in at value 5.37 (advising disc.of 2%)?
Expecting SP to drop on issue of div. being a time I want to take more! Am I presuming wrong?

There's a lot more influencing the shareprice than just the divvy. Market sentiment towards retirement villages is strong at present with MET's optimistic outlook; RYM's proposed new Mt Roskill development just the latest in the news.

[jim9358]

There's a lot more influencing the shareprice than just the divvy. Market sentiment towards retirement villages is strong at present with MET's optimistic outlook; RYM's proposed new Mt Roskill development just the latest in the news.

Cheers, and true. Been into them several years. However, They had a good steady healthy incline since March, then August it ran-away, spiking, which looked really suss, (risky), to then flatten out around 5.50. The company says their value is 5.37 ! Is this about people jumping on to collect the div. ...but is it not too late for current new buyers to be in for div? If passed the time their buys can collect div. then why is it going up at present? Will there not be a sell-off, drop in SP, after people have collected their div's as frequently happens? I wonder that the spike points to a bit of splattering on the pavement to come soon?

8288

[winner69]

Cheers, and true. Been into them several years. However, They had a good steady healthy incline since March, then August it ran-away, spiking, which looked really suss, (risky), to then flatten out around 5.50. The company says their value is 5.37 ! Is this about people jumping on to collect the div. ...but is it not too late for current new buyers to be in for div? If passed the time their buys can collect div. then why is it going up at present? Will there not be a sell-off, drop in SP, after people have collected their div's as frequently happens? I wonder that the spike points to a bit of splattering on the pavement to come soon?

8288

No splattering on the footpath mate

Just have a look at a longer term chart ....give you comfort about the future.

SUM be over $6 by xmas / early next year

[Food4Thought]

Cheers, and true. Been into them several years. However, They had a good steady healthy incline since March, then August it ran-away, spiking, which looked really suss, (risky), to then flatten out around 5.50. The company says their value is 5.37 ! Is this about people jumping on to collect the div. ...but is it not too late for current new buyers to be in for div? If passed the time their buys can collect div. then why is it going up at present? Will there not be a sell-off, drop in SP, after people have collected their div's as frequently happens? I wonder that the spike points to a bit of splattering on the pavement to come soon?

8288

I think the risk with this sector is less than the likely reward. Looking forward they will be even bigger and more refined operations. It sure isn't attractive to stick money into a bank term deposit or for most, investing in the housing market is not possible at all without some steady increases in another asset. Still not over valued from a long term perspective. I have bought additional on the uptrend and it has been good returns so far. I agree with Winner69, Christmas this year looks nice and jolly.

[trader_jackson]

No splattering on the footpath mate

Just have a look at a longer term chart ....give you comfort about the future.

SUM be over $6 by xmas / early next year

Yes, whole market is moving up, SUM is being carried along... good news for those looking for better value: ARV getting proportionally cheaper by the day while SUM and RYM continue competing in what seems to be a never ending running race to an unkown finish line (not a bad thing!)

[Grunter]

Any advice on why the SP keeps rising while the dividend is locked in at value 5.37 (advising disc.of 2%)?
Expecting SP to drop on issue of div. being a time I want to take more! Am I presuming wrong?

Technically this should only drop the price by the amount of the dividend (3 cents?). But when the share price is undervalued, the share going ex dividend isn't going to stop upward pressure when theres lots of buyers there still buying.

There are strong fundamental drivers for this stock as highlighted in my post above.

[Beagle]

From what I've gathered, the DCF models used by the brokers assume house price appreciation of 4% per annum. The sensitivity is +1% = +$1.50, so that's a huge effect. I can't see house price appreciation dropping below 5% for the next few years, so at $5.60, this is still undervalued, and I think $6.50 - $7 is fair value.

Agree, massive house price increases right around the country in all popular locations. ~70,000 migrants a year means house prices only go one way from here.
Huge embedded value in SUM and build rate going up. Has 7 years land supply to fuel further growth...have the other retirement sector companies got 7 years land supply locked in ?

[Raz]

Agree, massive house price increases right around the country in all popular locations. ~70,000 migrants a year means house prices only go one way from here.
Huge embedded value in SUM and build rate going up. Has 7 years land supply to fuel further growth...have the other retirement sector companies got 7 years land supply locked in ?

Not far off a dollar up in a month...

[Beagle]

Not far off a dollar up in a month...

Doesn't surprise me in the slightest. Company has geared up to take advantage of an extremely buoyant market and dramatically increase their build rate. Embedded value is going through the roof with rampant house price increseses in Auckland and other popular retirement locations. Plenty more legs in this one.

[silu]

I always look at this graph from Statistics NZ on why I am quite overweight in the aged care sector.

[777]

I wonder if the above graph includes all the immigrants arriving in the country over the last few years.

[silu]

I wonder if the above graph includes all the immigrants arriving in the country over the last few years.

Of interest to me are the "Baby Boomers" who will start to retire and have their own property in high percentages. The challenge for the sector is to provide them with solutions to get their equity invested into one of their units. Immigrantants mostly just add to the working pool.

[winner69]

I wonder if the above graph includes all the immigrants arriving in the country over the last few years.

Probably does - as well as the high numbers in 2003 and the negative numbers in 2012

Net migration numbers are rather cyclical and often just 'noise' in the big long term picture

No doubt we will one day have another period of net outflows

[Food4Thought]

Hi Winner69. Do you know if there is any mention of share splits and when/why this may happen for SUM? The idea of one provider merging with another is a scenario that also plays on my mind. This sector growing rapidly can create a opportunity for this to happen as the top dogs like to keep it that way.

[macduffy]

SUM's proposed Boulcott village clears one hurdle, more to come?

http://www.stuff.co.nz/dominion-post/news/84639815/summerset-wins-early-scrap-over-boulcott-retirement-village

[BlackPeter]

Wow - can't remember many situations with the RSI going that low (scratching the ZERO).

8335

Either this is the end of SUM as we know it ... or the RSI is signalling what it is meant to do ... a case of clear "oversold". Might be time to watch for the end of the dip and prepare to accumulate?

Discl: hold;

As usual - DYOR;

Looks like some other retirement stocks are somewhat oversold as well (but not that extreme)

[winner69]

Wow - can't remember many situations with the RSI going that low (scratching the ZERO).

8335

Either this is the end of SUM as we know it ... or the RSI is signalling what it is meant to do ... a case of clear "oversold". Might be time to watch for the end of the dip and prepare to accumulate?

Discl: hold;

As usual - DYOR;

Looks like some other retirement stocks are somewhat oversold as well (but not that extreme)

Yep ...what happens after a run of down days eh

SUM still ridiculously cheap at the moment - esp when real earnings likely to be 55 cents / share this year

[Jay]

Something a bit wrong with the RSI at ANZ
RSI at close 29th is 37.4 via Metastock/Reuters and Big Charts.com agrees with me - so not quite oversold as you may think

[BlackPeter]

Something a bit wrong with the RSI at ANZ
RSI at close 29th is 37.4 via Metastock/Reuters and Big Charts.com agrees with me - so not quite oversold as you may think

Interesting - and yes, you are right both big charts as well as ANZ Securities claim to use RSI 14, but the values differ significantly. I assume as well that they are both based on daily sampling (if not, than this could explain the difference).

How do you know though that it is ANZ Securities (or whoever provides the data for them) is wrong? I didn't bother to recalculate the value by hand, but just looking a the definition of the RSI and the SUM trend chart over the last 14 trading days, a value very close to Zero does make sense.

Anyway - so far the ANZ Securities RSI did work for me. Why fix it, if it is not broken?

[BlackPeter]

RSI = 100 - 100 / (1 + Average Gain / Average Loss)

If you look at the chart, there have been basically no "average gains" during the last 14 day period - i.e. average gain is very close to Zero, which turns RSI to 100 - 100 / (1 + 0 / something) = 100 - 100 = Zero;

How are your providers calculating RSI?

[Hoop]

RSI = 100 - 100 / (1 + Average Gain / Average Loss)

If you look at the chart, there have been basically no "average gains" during the last 14 day period - i.e. average gain is very close to Zero, which turns RSI to 100 - 100 / (1 + 0 / something) = 100 - 100 = Zero;

How are your providers calculating RSI?

BlackPeter....Even IC charts using crappy Yahoo data shows the RSI around 35.5

I'm looking at ANZ securities supercharts now and I see the RSI oscillator is far too volatile to be the standard RSI (Wilder) type..Wilder designed RSI to smooth out the often false over-reaction of oscillating signals. I've checked the Momentum oscillator which is a more volatile form of oscillator but it doesn't match up either..so I have no idea what type of oscillator the ANZ securities is using...

Personally I don't use ANZ securities supercharts as it's too limiting, the Adjusted tick box doesn't seem to work at all for me since NZX data went to S&P..I have told them about their supercharts being too basic to be of much use..but they don't seem to treat charts seriously..brokers and squiggly lines don't mix well...eh:D

BlackPeter ..your equation has not factored in the exponential moving averages of the up closing prices with the exponential moving averages of the down closing prices ...using those smoothing factors makes it nearly impossible to get down to a zero result..Ive seen a few 5's over the decade but that is unusual, normally a low RSI gets to about 20 ..when it does get to say 5 its a result of a sharp price drop losing about 30% within an continuous falling price trend period (without a sucker rally) ... As an example IQE at the end of Nov 2015 with a sharp fall from $1.30 to $0.40 resulting in a RSI falling to 9.5... this RSI was flattering (high) because the fall came after a sucker rally...The latest IQE disaster saw the RSI reach 13.5...

Many investors misuse oscillators of which RSI is one..Just thinking and interpreting overbought oversold could land one into mistiming a trade..
When interpreting and using RSI TA investors have to first determine which RSI interpretation method to use...by asking these 2 questions...
1...is SUM in a trend and how strong is the trend?
or
2...is SUM showing a ranging behaviour?,,(trendless)

Answer:..Currently SUM is trending so use the trending interpretation method as outlined below from IC

.................................................. .................................................. .................................................. .................................................. .........................
From Incredible Chart education webpage (http://www.incrediblecharts.com/indicators/rsi_relative_strength_index.php?clientID=20155&app_productcode=100&ic_a_id=1_25_25_0)

Trending Markets (http://www.incrediblecharts.com/indicators/rsi_relative_strength_index.php?clientID=20155&app_productcode=100&ic_a_id=1_25_25_0#trending_markets)

Only take signals in the direction of the trend.


Go long, in an up-trend, when RSI falls below 40 and rises back above it.
Go short, in a down-trend, when RSI rises above 60 and falls back below it.

Exit using a trend indicator.
Take profits on divergences (http://www.incrediblecharts.com/indicators/indicator_basics.php#divergence). Unless confirmed by a trend indicator, Relative Strength Index divergences are not strong enough signals to trade in a trending market.
.................................................. .................................................. .................................................. .................................................. ........................

RSI is useful in Stocks that are behaving in a rectangle pattern (trading range/range bound/trendless) Most indicators become unreliable during trendless periods and could send false signals..Oscillators (RSI is an Oscillator) are more reliable indicators during trendless periods and these should be used in charting at these times..

During trending times (SUM is trending) there are other indicators better suited to use than RSI

SUM has been and still is a great buy and hold stock thanks to its long term bull cycle status...It has and is a must have stock in one's portfolio...If investors just forgot about getting into "cheap" market unfriendly stocks and blaming everyone except themselves when those stocks misbehave and instead invested long term on the steady friendly risers they would be so much better off....Hint: invest in stocks that have long term charts with the price starting at the bottom left hand corner and ending at the top right hand corner.....simple!!! .......see my today's SUM Chart post here (http://www.sharetrader.co.nz/showthread.php?9176-Using-TA-to-time-entries-and-exits/page18)

[Zouga]

Great post, thanks Hoop

[BlackPeter]

BlackPeter....Even IC charts using crappy Yahoo data shows the RSI around 35.5

I'm looking at ANZ securities supercharts now and I see the RSI oscillator is far too volatile to be the standard RSI (Wilder) type..Wilder designed RSI to smooth out the often false over-reaction of oscillating signals. I've checked the Momentum oscillator which is a more volatile form of oscillator but it doesn't match up either..so I have no idea what type of oscillator the ANZ securities is using...

Personally I don't use ANZ securities supercharts as it's too limiting, the Adjusted tick box doesn't seem to work at all for me since NZX data went to S&P..I have told them about their supercharts being too basic to be of much use..but they don't seem to treat charts seriously..brokers and squiggly lines don't mix well...eh:D

BlackPeter ..your equation has not factored in the exponential moving averages of the up closing prices with the exponential moving averages of the down closing prices ...using those smoothing factors makes it nearly impossible to get down to a zero result..Ive seen a few 5's over the decade but that is unusual, normally a low RSI gets to about 20 ..when it does get to say 5 its a result of a sharp price drop losing about 30% within an continuous falling price trend period (without a sucker rally) ... As an example IQE at the end of Nov 2015 with a sharp fall from $1.30 to $0.40 resulting in a RSI falling to 9.5... this RSI was flattering (high) because the fall came after a sucker rally...The latest IQE disaster saw the RSI reach 13.5...

Many investors misuse oscillators of which RSI is one..Just thinking and interpreting overbought oversold could land one into mistiming a trade..
When interpreting and using RSI TA investors have to first determine which RSI interpretation method to use...by asking these 2 questions...
1...is SUM in a trend and how strong is the trend?
or
2...is SUM showing a ranging behaviour?,,(trendless)

Answer:..Currently SUM is trending so use the trending interpretation method as outlined below from IC

.................................................. .................................................. .................................................. .................................................. .........................
From Incredible Chart education webpage (http://www.incrediblecharts.com/indicators/rsi_relative_strength_index.php?clientID=20155&app_productcode=100&ic_a_id=1_25_25_0)

Trending Markets (http://www.incrediblecharts.com/indicators/rsi_relative_strength_index.php?clientID=20155&app_productcode=100&ic_a_id=1_25_25_0#trending_markets)

Only take signals in the direction of the trend.


Go long, in an up-trend, when RSI falls below 40 and rises back above it.
Go short, in a down-trend, when RSI rises above 60 and falls back below it.

Exit using a trend indicator.
Take profits on divergences (http://www.incrediblecharts.com/indicators/indicator_basics.php#divergence). Unless confirmed by a trend indicator, Relative Strength Index divergences are not strong enough signals to trade in a trending market.
.................................................. .................................................. .................................................. .................................................. ........................

RSI is useful in Stocks that are behaving in a rectangle pattern (trading range/range bound/trendless) Most indicators become unreliable during trendless periods and could send false signals..Oscillators (RSI is an Oscillator) are more reliable indicators during trendless periods and these should be used in charting at these times..

During trending times (SUM is trending) there are other indicators better suited to use than RSI

SUM has been and still is a great buy and hold stock thanks to its long term bull cycle status...It has and is a must have stock in one's portfolio...If investors just forgot about getting into "cheap" market unfriendly stocks and blaming everyone except themselves when those stocks misbehave and instead invested long term on the steady friendly risers they would be so much better off....Hint: invest in stocks that have long term charts with the price starting at the bottom left hand corner and ending at the top right hand corner.....simple!!! .......see my today's SUM Chart post here (http://www.sharetrader.co.nz/showthread.php?9176-Using-TA-to-time-entries-and-exits/page18)

Hi Hoop, Thanks for taking the time to write this post ... very educational. Good on you to point out as well the context in which the RSI should be used (up/down-trend vs channel); I am in no doubt that you are the expert in TA ... I just happen to use some basic TA to time my buying and selling decisions, which are based on FA - and it looks like, some of these decisions even might be based on "wrong" indicator / oscillator values (though they still often seem to work). However - I don't think that the RSI as provided by ANZ is "wrong", it is just calculated based on a different formula (see below).

The good news is - despite the fact that I seem to use a "different" RSI ... we both seem to agree in our assessment of SUM - i.e. no newbies hurt. Market seems to agree a well ... SP went up since my first post about RSI indicating oversold (not that I think my post did that ...).

Re the different values for RSI ... I might have discovered the solution. The formula I put into my previous post is the original formula (according to Wilder) - and I think this is what ANZSecurities are using. Definition as well here: http://www.investopedia.com/terms/r/rsi.asp

However - other data provider seem to use a "smoothed" RS (check as well here: http://cns.bu.edu/~gsc/CN710/fincast/Technical%20_indicators/Relative%20Strength%20Index%20(RSI).htm) - which is basically using 13/14th of the previous RS and 1/14th of the new RS to calculate the next value. This method gives the RSI a "memory" longer than 14 days .... however - it makes it as well dependent on the date on which the calculation of the index started (i.e. different data sources are likely to use (slightly) different values for e.g. RSI 14, and they might all be correct, if they started the index on a different day in the past.;). Over time however these values will merge into each other.


Calculation
RSI=(100-(100/(1+RS)), Average Gain=(Total Gains/n), Average Loss=(Total Losses/n), First RS=(Average Gain/Average Loss), Smoothed RS=(((previous Average Gain X 13 + Current Gain)/14)/(previous Average Loss X 13 + Current Loss)/14)), n=number of RSI periods


In summary - I don't think that the ANZ RSI is "wrong", it is just different. They are not "smoothing" the index. A discussion whether it is "correct" to use their RSI or somebody else's "smoothened" RSI 14 is probably as sensible as a generic discussion whether the MA 50 or the MA 200 are the more correct MA to make buying / selling decisions. As always ... I think the correct answer is "it depends".

PS: No exponents or logarithms hurt by the calculation of the RSI ... well not in any of the formulas I have seen;)

[winner69]

Hi Hoop, Thanks for taking the time to write this post ... very educational. Good on you to point out as well the context in which the RSI should be used (up/down-trend vs channel); I am in no doubt that you are the expert in TA ... I just happen to use some basic TA to time my buying and selling decisions, which are based on FA - and it looks like, some of these decisions even might be based on "wrong" indicator / oscillator values (though they still often seem to work). However - I don't think that the RSI as provided by ANZ is "wrong", it is just calculated based on a different formula (see below).

The good news is - despite the fact that I seem to use a "different" RSI ... we both seem to agree in our assessment of SUM - i.e. no newbies hurt. Market seems to agree a well ... SP went up since my first post about RSI indicating oversold (not that I think my post did that ...).

Re the different values for RSI ... I might have discovered the solution. The formula I put into my previous post is the original formula (according to Wilder) - and I think this is what ANZSecurities are using. Definition as well here: http://www.investopedia.com/terms/r/rsi.asp

However - other data provider seem to use a "smoothed" RS (check as well here: http://cns.bu.edu/~gsc/CN710/fincast/Technical%20_indicators/Relative%20Strength%20Index%20(RSI).htm) - which is basically using 13/14th of the previous RS and 1/14th of the new RS to calculate the next value. This method gives the RSI a "memory" longer than 14 days .... however - it makes it as well dependent on the date on which the calculation of the index started (i.e. different data sources are likely to use (slightly) different values for e.g. RSI 14, and they might all be correct, if they started the index on a different day in the past.;). Over time however these values will merge into each other.



In summary - I don't think that the ANZ RSI is "wrong", it is just different. They are not "smoothing" the index. A discussion whether it is "correct" to use their RSI or somebody else's "smoothened" RSI 14 is probably as sensible as a generic discussion whether the MA 50 or the MA 200 are the more correct MA to make buying / selling decisions. As always ... I think the correct answer is "it depends".

PS: No exponents or logarithms hurt by the calculation of the RSI ... well not in any of the formulas I have seen;)

Whatever way it's done the 6 cent gain on Friday has seen the RSI head north again

[Hoop]

"..........................In summary - I don't think that the ANZ RSI is "wrong", it is just different. They are not "smoothing" the index. A discussion whether it is "correct" to use their RSI or somebody else's "smoothened" RSI 14 is probably as sensible as a generic discussion whether the MA 50 or the MA 200 are the more correct MA to make buying / selling decisions. As always ... I think the correct answer is "it depends".............................."

;)

Yep BP you summed it up pretty well...
and as Winner said whatever RSI is used its heading up again..
6c rise = investors back in accumulating
Friday gains have triggered short term buy signals by bouncing off the MA50... Some investors more happy with risk use slow stochastics and that would got them excited and buy in on the ground floor (5.20)...

[Zouga]

Yes I did see that hoop and took the plunge to top up.

[winner69]

Goodness gracious me - 196 sales in Q3

Summerset CEO Julian Cook said total sales for the quarter were the highest ever achieved across the group.

At this rate 700 sales for year on cards

Maybe real profits - real profits $120m maybe a bit on light side

[winner69]

Market hasn't liked these record sales

They say the market per se is the best judge of value - so bet it SUM worth just over $5 bucks and quite a lot less than a few weeks ago.

Never mind - still reckon $6 by Xmas on back of $120m real profits.

[Grunter]

I don't think the decrease in share price is firm specific.

I think it's more in the environment of expectations for interest rates to increase (Fed reserve indicates December), and if anything the expectation of a housing market slow down as a result to a more sedate long term growth rate?

Ryman and Metlife are also exhibiting similar price decreases, hence the reasoning that it is not firm-specific.

[Zaphod]

I'm not overly concerned. SUM is in my LT portfolio so I'm no considering selling at this point. Given the fundamentals, once the SP weakness subsides I'll be back buying again.

[winner69]

Goodness gracious me - SUM share price continues to tumble ..... now below $5

If a sector thing probably pointing to an impending market collapse - even my old mate Jarrod mentioned a 30% correction for the S&P5000 this morning

[trader_jackson]

Market hasn't liked these record sales

I am not surprised... cracks appear to be showing in resales which were nearly 10% lower than this quarter last year (and yet they had more stock to sell compared to this time last year I would have thought?)

Also, do they usually break out how much resale stock is unsold? (21/(71+21) = 22.8%) It would seem nearly 1 in 5 units up for resale is sitting empty... I don't think this is to flash (or efficient)...

(am I reading reading the resales wrong? YTD16 figure, which is just 5, or around 2.5% more, than the YTD15 figure, also seems extremely poor for a 'growth company')

It would seem SUM is increasingly reliant on 'ever increasing' building activities, and the sales (and debt) this incurs.

Look forward to any discussion/clarification

[sb9]

Goodness gracious me - SUM share price continues to tumble ..... now below $5

If a sector thing probably pointing to an impending market collapse - even my old mate Jarrod mentioned a 30% correction for the S&P5000 this morning

Not just SUM, also RYM and MET...looks like retirement sector is getting hit hard today along with utilities (AIA) and Gentailers..

[trader_jackson]

Not just SUM, also RYM and MET...looks like retirement sector is getting hit hard today along with utilities (AIA) and Gentailers..

Lets take a look at Retirement Sector Performance since SUM hit its all time high on September 9 2016:
Retirement Village / September 9 Prices / Current Price (time) / Change

SUM / 5.60 / 4.97 (2:30) / - 11.25%
RYM / 9.68 / 9.18 (2:29) / - 5.17%
MET / 6.40 / 5.98 (2:30) / - 6.56%
ARV / 1.19 / 1.15 (2:29) / - 3.34%

hmm... you're right, it is certainly not SUM... but it is leading the losses by a considerable margin... (due to disappointing 3Q16 metrics?)

[winner69]

t_j - you having one of beat up SUM days to makr ARV look good?

SUM can only resell units when people move out (generally dying I think). So resales always limited by this factor.

SUM have 2,600 units and if resales this year are say 260 that's only 10% turnover. Bugger, to achieve 'growth' as you put it we need to up that mortality rate somehow.

Having only 21 units for resale seems pretty good to me. Less than a months 'stock' (suggests less than 30 days to sell) seems efficient, considering they probably do a bit of redecorating during the changeover period

Above all don't forget that even the 2,350 units that remain occupied over the year have all gone up in value (possibly 10% plus this year). Book Value up = SUM worth more = increased share price

[winner69]

Lets take a look at Retirement Sector Performance since SUM hit its all time high on September 9 2016:
Retirement Village / September 9 Prices / Current Price (time) / Change

SUM / 5.60 / 4.97 (2:30) / - 11.25%
RYM / 9.68 / 9.18 (2:29) / - 5.17%
MET / 6.40 / 5.98 (2:30) / - 6.56%
ARV / 1.19 / 1.15 (2:29) / - 3.34%

hmm... you're right, it is certainly not SUM... but it is leading the losses by a considerable margin... (due to disappointing 3Q16 metrics?)

Convenient start date to prove whatever you trying to highlight here.

Did you consider that SUM had a 20% odd increase in the weeks leading up to that high

Go back to say july 6th (3 months) and your table would look much different (i think)

[trader_jackson]

Convenient start date to prove whatever you trying to highlight here.

Did you consider that SUM had a 20% odd increase in the weeks leading up to that high

Go back to say july 6th (3 months) and your table would look much different (i think)

You have a good point that the date may not have been 'ideal', but I believe this was around where MET and RYM were trading at or near their high's as well so I thought it was a reasonable comparison, but clearly other dates can be used.

You raise some good points further above which has helped my understanding, thank you.

Would it be possible to come up with some sort of idea when a 'new' unit, eventually becomes a 'resale' unit? (like the average time this would take)
I think it would be interesting to see if the stock available for resale is increasing faster than resales...not just for SUM

Also, do you know if they usually break out how much stock they haven't sold (like they did recently)?

[winner69]

t_j. Every now and again they throw in the number of units awaiting resales

This time last year it was 37

This year bloody low eh

[trader_jackson]

t_j. Every now and again they throw in the number of units awaiting resales

This time last year it was 37

This year bloody low eh

Very low! Efficiency is indeed increasing. I look forward to seeing just 11 or 12 units being available for resale this time next year ;)

[winner69]

t_j

Annual turnover of around 10% for independent living units seeems about the industry norm

Resale margins make for an interesting study. Tenure times (esp for new units) has a large bearing on outcomes.

Why don't you get your mates down at Forbar to give you a ope of their reports on SUM or RYM. Have a look at the assumptions they make about such things

You need to understand all this so IF that Arvida ever gets momentum you will be well prepared.

[winner69]

Very low! Efficiency is indeed increasing. I look forward to seeing just 11 or 12 units being available for resale this time next year ;)

Such low numbers (less than 1 months stock) would suggest they have a waiting list at some villages

Good eh

[JeremyALD]

Goodness me. Down to $4.90.

Retirement stocks are certainly going through a bit of a correction.

[BlackPeter]

Goodness me. Down to $4.90.

Retirement stocks are certainly going through a bit of a correction.

Markets down ... and hey - they just are touching the MA100. Not too worried yet.

[James108]

Multiples on "growth" and "defensive" (i.e. sum, AIA) stocks got away from themselves imo and we are seeing a bit of a correction.

Sum still got a while to fall before I would consider topping up again.

[winner69]

So 13% down from recent highs

Looks like a long drawn out market correction underway. Bad when market sentiment changes

Time to lock in profits methinks - might get them cheaper next year

Then again could do some sums and sell just enough to say the rest are free .....but thats just being stupid

[Beagle]

Breeched the 100 day MA...market feels to me like it wants to have a decent 10-15% correction. Good quality stocks like SUM with a great outlook getting beaten up...oh my goodness..what to do ! Maybe interest rate increase concerns a little overblown but the momentum is there and while that momentum remains there's probably more pain to come. I sold half at close. (Can only be half wrong or half right going forward from here) SUM would say a sum-what more measured approach.

[percy]

So 13% down from recent highs

Looks like a long drawn out market correction underway. Bad when market sentiment changes

Time to lock in profits methinks - might get them cheaper next year

Then again could do some sums and sell just enough to say the rest are free .....but thats just being stupid
Stupid R Us.
Very happy and profitable being stupid.
I just love "free" shares.
It has become an enjoyable habit.
Fun too.

[sb9]

Multiples on "growth" and "defensive" (i.e. sum, AIA) stocks got away from themselves imo and we are seeing a bit of a correction.

Sum still got a while to fall before I would consider topping up again.

Keen on both those ones mentioned, but not at current level if they (ever) get some silly price level, watching intensely.

[troyvdh]

I always remember a statement from someone wise....If you are achieving a compound return of 7 %...PA...be happy.That by the way has been the average (I believe) return from residential houses for the past 100 years....Some of these retirement entities have returned ..what 350 %....in 5/6/7 years...

[Beagle]

So your remaining ones are 'free' (or very cheap) .......

Yes very cheap but to be honest I can't even be bothered working out how cheap. As far as I'm concerned I'd rather just take a pragmatic risk management approach in a soft market rather than creatively engineering a specific outcome so I'm happy to leave the creative accounting approach to others.

[couta1]

I always remember a statement from someone wise....If you are achieving a compound return of 7 %...PA...be happy.That by the way has been the average (I believe) return from residential houses for the past 100 years....Some of these retirement entities have returned ..what 350 %....in 5/6/7 years... Yep Sum listed at $1.41 in 2011 so close enough to 350% return at todays close for those that have held since then.

[Lewylewylewy]

I too am a fan of free shares. If you have to be prepared to lose money in the stock market as a prerequisite to investing, then the idea of having free ones make me OK with losses.

Is it the best approach? No. Does it make me happy and make me money? Yus!

I stepped out of SUM a few days ago, left the free shares for skin in the game and dividend income. I believe that the housing market will start ramping up again for at least another 6 months, so I'll be looking for another entry point to SUM with a view to making more free shares, if for no other reason than to wind up winner69. ;)

[silu]

Very interesting reading all your guys replies. The question for me is whether the market will go down, sideways or just goes through a temporary adjustment. One thing I've learned is that despite how great a company is but if it treads amongst a muddy market it will inevitably get dragged down.

I'd be very tempted to sell off profits from SUM, MEL & GNE but I just don't know where the alternative for a investment in NZ is? Where are the options on a small market as ours to diversify?

Video of interest: Mike Taylor from PIE funds talks to Liam Dann http://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=11727423

[silu]

That said I took some profits this morning. Buyers side looks thin and next support at $4.70. Still holding a large chunk but currently better bets available overseas.

[Beagle]

Very interesting reading all your guys replies. The question for me is whether the market will go down, sideways or just goes through a temporary adjustment. One thing I've learned is that despite how great a company is but if it treads amongst a muddy market it will inevitably get dragged down.

I'd be very tempted to sell off profits from SUM, MEL & GNE but I just don't know where the alternative for a investment in NZ is? Where are the options on a small market as ours to diversify?

Video of interest: Mike Taylor from PIE funds talks to Liam Dann http://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=11727423

Great question...One very astute investor recently had the following signature or something to this effect "Cash is the option to buy things cheaper in the future". Its hard to see the market making headway before the U.S. election is done and dusted. Putin calling all his foreign nationals back to the fatherland urgently..one wonders what that's all about...then there's 101 other worries in the market to worry about, choose your poison...
Surely housing has reached some sort of peak...I guess that's what's worrying SUM shareholders. Disc I still hold 50% and have no idea what my net cost is after locking in SUM nice profits.

[ratkin]

Yes one of the more relaxing holdings on the NZX for sure. Just sit back and let it grow. All that new Kiwisaver money coming into the market every month has to go somewhere.

Average valuation $5.02 http://www.4-traders.com/SUMMERSET-GROUP-HOLDINGS-10089438/consensus/

I think some of the analysts are well off the mark with this one.

Yet yesterday you sold some for around 4.80? So you did not sit back and relax for long

[Beagle]

Yet yesterday you sold some for around 4.80? So you did not sit back and relax for long

You ought to date stamp that post to be fair. Sold half at $4.84 Crossed the 100 day MA line...gotta stay nimble in this market. The quick or the dead, its all about risk management.

[Hoop]

I too am a fan of free shares. If you have to be prepared to lose money in the stock market as a prerequisite to investing, then the idea of having free ones make me OK with losses.

Is it the best approach? No. Does it make me happy and make me money? Yus!

I stepped out of SUM a few days ago, left the free shares for skin in the game and dividend income. I believe that the housing market will start ramping up again for at least another 6 months, so I'll be looking for another entry point to SUM with a view to making more free shares, if for no other reason than to wind up winner69. ;)

Free shares....:D ..wrong thinking Guys
I pull my profits out of shares and realise my Capital gain...Your thinking says.. if I reinvested my realised capital gains back into those same shares whether it is tomorrow, next month, or next year, they will be free...Also your thinking says your portfolio should show those retained shares as nought value...Makes one look like a investor whizz kid seeing blue ink with +infinity % :cool:..

The only reason I hang on it residual shares is either..1.. not sure to sell so sell half or 2.. to keep focus on that stock (we have watchlists for that very reason, but watchlists can be forgotten about)


Very interesting reading all your guys replies. The question for me is whether the market will go down, sideways or just goes through a temporary adjustment. One thing I've learned is that despite how great a company is but if it treads amongst a muddy market it will inevitably get dragged down.

I'd be very tempted to sell off profits from SUM, MEL & GNE but I just don't know where the alternative for a investment in NZ is? Where are the options on a small market as ours to diversify?

Video of interest: Mike Taylor from PIE funds talks to Liam Dann http://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=11727423

Yes the saying goes "a rising tide raises all boats"
Although SUM is correcting it is still a Bull...which means it is still in a primary rising tide...and ...until confirmed otherwise we can still say the correction is a bull market correction and therefore hold onto shares and await TA buy signals to accumulate..
Chartwise $4.80 shows daily support...$4.70 shows weekly support....the adjusted primary trend (upward) and MA200 both come into play at $4.60 which indicate Bull or Bear....
So perhaps this correction could be termed "healthy" by taking the heat out of last months exhuberant unjustified rally...
Falling below $4.60 may create a slight worry...but SUM is not there yet so there is no justification to be pessimistic at the moment......

Medium term (Default) TA indicators triggered sell signals at $5.20..so these people will be out awaiting re-entry.
The longer termers will be watching the primary trend line and the MA200 currently both at $4.60
The Long termers will be waiting until the MA200 slope (trend) to swing down at $???
..and the purists (breaking of the orginal primary trend) have a long way to go before they sell out at below $3.60

In the meantime high risk takers will be starting to buy in now...Slow Stochastics showing oversold meaning the current price falling should level off for now..todays bounce away from $4.80 support is a postive sign..and buy near support / sell near resistance strategy indicates buy is near with tight stops....All the requirements are there so just have to wait for short term signals to start firing buy signals...and they have just started to..

Price $4.88 up 4c

Disc: Have no SUM

[Leftfield]

Constructive and informative post, thank you Hoop.

[Joshuatree]

Hoop it looks to me like SUM,RYM MET are lagging but following the prop stocks down. Most on the ASX and NZX are down through the 60 and 200DMA; i guess due to the almighty dithering FED likelihood now of raising Int rates sooner.Thats how i see it simplified ,so I'm out or exiting(inaus) until the trend reverses.

[Beagle]

Funnily enough I sort of get the whole free carry thing and I don't at the same time. Long term investors getting well advanced in years often have held shares long term and for stocks like Ryman Ebos and others that have shown significant capital growth over the long run...in a well balanced portfolio its clear that portfolio positions would have to be trimmed down from time to time to keep them in the right proportion.

I get the whole psychological comfort zone that a free carry brings. If this arises out of a natural well disciplined portfolio management approach, (i.e. not letting certain high growth shares get out of kilter in terms of their portfolio allocation) then I can see that one would feel quite content for a so called free carry.

I guess tied in inextricably with this whole thing though is this important question, is it appropriate to regularly highlight to other people the fact that your remaining shares are free ? How does this make the young and new investors on here fell ?...some food for thought offered without bias, angst or malice...

In regard to SUM, I think the long term is extremely favourable so regardless of what investment approach one takes gains will be there but the short term I am not so sure which is why I'm having a bob each way.

I guess some people like to carry free shares and others like to hedge their bets. Whatever makes you happy and helps you sleep well at night I reckon.

[Cricketfan]

It's the term 'free' that's misleading. If people called them 'profit shares' or something then that would be more accurate.

[macduffy]

...in a well balanced portfolio its clear that portfolio positions would have to be trimmed down from time to time to keep them in the right proportion.

I've never seen the logic in trimming down one's best performing shares in the interests of having a "well balanced portfolio". Most of my best gains have come from letting those holdings run. Untidy perhaps, but profitable!

:cool:

[Lewylewylewy]

I guess the trimming or rebalancing of a portfolio is about having a strategy and sticking to it. For example, saying I will have 50% of my money in healthcare (say EBO) and 50% in retail (say BRG). Rebalancing means that you return to your original position of risk investment in each sector, share, or whatever your reason for the split.

Totally agree though, I don't rebalance. These days, I don't sell my winning shares to get the free shares. If I like the company / sector, and it looks like it's going to drop, I will convert my holding to 100% free (lol) :) It's mainly just because I don't feel like I've lost anything, gives me skin in the game and makes me happy.

Totally agree that leaving the "free" shares doesn't make sense. After all, that's my money right there. I earned it. But I just like to view it that way, and I don't mind risking money on shares that I got from share investing that I wouldn't have otherwise got :)

I will probably change my view in months or years to come, as I've only been investing in shares for a very short while (like... a year or so). similarly, if my free shares were in the tens of thousands, I also might think differently!

[winner69]

Back on topic

SUM having a better day today - must look at that RSI to see whether still oversold

[Beagle]

and I can rename this thread "Free Shares - Myth or Not" and move it to Investment Strategies

I've started a thread of that name in that section, worthwhile debate in my opinion.

[percy]

Nice to see Craigs have added SUM to their "conviction " list with a buy recommendation.

[winner69]

Close at $4.66 is really really bad

But the market is inevitably right - so must be telling us something about the property market ....and it's all bad

Surely the share price wont have a 3 in front of it in the new year

[winner69]

And its nearly 20% down from the $5.62 high just over a month ago

That's more than a (healthy?) correction - thats a CRASH

[JayRiggs]

No worries winner, $6 by Christmas.... next year that is.
I'm not selling.

[winner69]

Nice to see Craigs have added SUM to their "conviction " list with a buy recommendation.

OH NO

Last time this high conviction list was mentioned on ST when they put AIR on it close to $3

SUM doomed now being on this exclusive list?

[ratkin]

And its nearly 20% down from the $5.62 high just over a month ago

That's more than a (healthy?) correction - thats a CRASH

You can double team with Roger and maybe push it down a bit further, might become interesting soon

[percy]

OH NO

Last time this high conviction list was mentioned on ST when they put AIR on it close to $3

SUM doomed now being on this exclusive list?

Craigs are not alone.
Saw a broker's research today that has AIR as an "out perform".
I am comfortable holding my self given "bonus " shares in both RYM and SUM.
Boomed or doomed they retain their place in my diversified "well positioned" portfolio.

[winner69]

Least it didn't stay under 460 for long - huge sigh of relief

[Beagle]

OH NO

Last time this high conviction list was mentioned on ST when they put AIR on it close to $3

SUM doomed now being on this exclusive list?

It would appear so.

[couta1]

Least it didn't stay under 460 for long - huge sigh of relief In the current market conditions, I wouldn't count your chickens just yet, volatile is the name of the game atm and with no clear direction anything could happen, still if your long then why worry aye, just cast your mind 5 yrs from now and relax.

[ratkin]

In the current market conditions, I wouldn't count your chickens just yet, volatile is the name of the game atm and with no clear direction anything could happen, still if your long then why worry aye, just cast your mind 5 yrs from now and relax.

That is the thing though Couta, they are not in for the long term, when it suits they will post on the companies glowing long term prospects (after they have just bought) Then when they are out they will fill the board with negativity.

[Beagle]

That is the thing though Couta, they are not in for the long term, when it suits they will post on the companies glowing long term prospects (after they have just bought) Then when they are out they will fill the board with negativity.

So much cynicism...I still hold half :rolleyes: Its a great long term hold but the short term correction probably still has some sting in its tail so its immediate short term price direction is as clear as mud, hence why a prudent risk averse investor hedges his bets !

Perhaps you'd like to update us on your opinion of the stock, its future earnings, whether we should be valuing it based on realised profit of IFRS profit and why and how you think this stock compares to RYM and MET.

[OldGuy]

New profit guidance signals underlying earnings growth between 40% and 46% this year!

https://www.nzx.com/companies/SUM/announcements/291639

[winner69]

New profit guidance signals underlying earnings growth between 40% and 46% this year!

https://www.nzx.com/companies/SUM/announcements/291639

About time they came clean

Guidance as I expected

On track to NPAT of $120m - the number I have been touting since early in the year

Thats an eps of 55 cents a share - deserves a share price in excess of $6

[winner69]

For those who prefer underlying profit (measures operational effectiveness only) the $55m is 25 cents a share

On Ryman multiples that's worth well over $7 a share

[OldGuy]

such a high growth rate surely justifies/support a higher multiple (of, say, 30). On that basis, fair value is $7.50!

[Beagle]

They are indeed growing faster than RYM for the least few years. They also have a land bank of seven years supply, something the others would struggle to match I believe.

They are very good long term value but overall the market is soft so I remain cautious regarding the short term.

[OldGuy]

And...back to $5 on open!

[couta1]

They are indeed growing faster than RYM for the least few years. They also have a land bank of seven years supply, something the others would struggle to match I believe.

They are very good long term value but overall the market is soft so I remain cautious regarding the short term. Yep any short term gain could easily be erased in this current extremely volatile market but this is a wet and forget kinda share for the long term investor with patience(I could do with more of this) This and the other listed retirement companies are no brainers for any investor who wants to watch their money tree grow with no intervention necessary.

[Beagle]

Yep any short term gain could easily be erased in this current extremely volatile market but this is a wet and forget kinda share for the long term investor with patience(I could do with more of this) This and the other listed retirement companies are no brainers for any investor who wants to watch their money tree grow with no intervention necessary.

Agreed 100% mate, (pretty sure you meant set and forget)...w being close to s on the keyboard and all :)

That said I am a little surprised that today's bounce wasn't more sustained. $4.91 appears to be the 100 day moving average...it will be interesting to see if they can get above that at close today and stay above it for a few more days. If that happened, I'd be keen to move back to a more fulsome position but otherwise I remain cautious in the short term due to the overall tone of the market. Still holding half my original position, hedging my bets so to speak :)

[Joshuatree]

Im always suspicious when that term is used so i looked it up. "No Brainer. Something that requires little mental effort or intelligence to perform or understand. The term is often applied to decisions which are straightforward or sometimes to people who appear to lack intelligence."

Im still watching property stock trends in Aus and NZ. Still dropping and Healthcare property companies are lagging but following them down. may be a while yet before the macro turns.
NZX is very close to correction territory atm.Am sitting watching the storm clouds building.Alot of money being taken off the table and out of the country.

[Beagle]

I agree with you JT in the short term, there is every reason to remain cautious. I know what Couta1 is referring too is the outstanding long term tailwinds this sector will enjoy for the next 10-20 years.
The population trends are undeniable, SUM most well positioned in a tightening land market in terms of years of land banking and the whole sector enjoys a very favourable binding ruling from the IRD meaning that occupation licence resale's are tax free. Very hard to lose in the long run with those macro economic factors which means Couta1 is quite right about it being a long term no brainer.

[couta1]

I agree with you JT in the short term, there is every reason to remain cautious. I know what Couta1 is referring too is the outstanding long term tailwinds this sector will enjoy for the next 10-20 years.
The population trends are undeniable, SUM most well positioned in a tightening land market in terms of years of land banking and the whole sector enjoys a very favourable binding ruling from the IRD meaning that occupation licence resale's are tax free. Very hard to lose in the long run with those macro economic factors which means Couta1 is quite right about it being a long term no brainer. You interpreted my post perfectly mate, to me no brainer has nothing to do with lack of intelligence but rather lack of mental effort required. As an aside Met up 3.2% today, Rym up 2.6% with Sum running 3rd at 2.3%, strange thing the market aye.

[Beagle]

You interpreted my post perfectly mate, to me no brainer has nothing to do with lack of intelligence but rather lack of mental effort required. As an aside Met up 3.2% today, Rym up 2.6% with Sum running 3rd at 2.3%, strange thing the market aye.

The market sure is a strange and fickle beast at present that's for sure. Anyone would be forgiven for thinking the other two retirement companies were the ones making the extremely positive forecast, go figure ?

[Grunter]

The market sure is a strange and fickle beast at present that's for sure. Anyone would be forgiven for thinking the other two retirement companies were the ones making the extremely positive forecast, go figure ?

Indicates theres a fund or funds deploying a quant strategy in the sector.

[Joshuatree]

Yep any short term gain could easily be erased in this current extremely volatile market but this is a wet and forget kinda share for the long term investor with patience(I could do with more of this) This and the other listed retirement companies are no brainers for any investor who wants to watch their money tree grow with no intervention necessary.

You are sounding like an investment adviser again; telling us investors what the future is for certain with investment bias in full flow.Do you have any qualifications that gives you that sort of authority? One thing i have learnt in investing; one thinks simply like a "no brainer" at their peril and loss lies ahead with this"strategy".

Anything can happen and the aged care sector as an example is not bullet proof and things can change in a day re your net worth. Anything that has Govt subsidy, involvement can come undone. look at the Aged care companies in Aus ;EHE, JHC,,REG.Overnight the s/p plummeted because the Govt started making regulatory noises about who can charge how much for what. Folks thought there was a bullet proof moat around the sector and that the Govt would not reduce its regulated payments to the sector because after all the Govt needs the private sector to fill the supply void and to the voters; the population its a sacred cow , right; wrong.
As for theproperty stock component well we've had a wonderful run alright; lots of things that can deal to that bubble..

Buy and Hold ; Wet and Forget spin,can be Long and Wrong in these fast changing times.

[couta1]

You are sounding like an investment adviser again; telling us investors what the future is for certain with investment bias in full flow.Do you have any qualifications that gives you that sort of authority? One thing i have learnt in investing; one thinks simply like a "no brainer" at their peril and loss lies ahead with this"strategy".

Anything can happen and the aged care sector as an example is not bullet proof and things can change in a day re your net worth. Anything that has Govt subsidy, involvement can come undone. look at the Aged care companies in Aus ;EHE, JHC,,REG.Overnight the s/p plummeted because the Govt started making regulatory noises about who can charge how much for what. Folks thought there was a bullet proof moat around the sector and that the Govt would not reduce its regulated payments to the sector because after all the Govt needs the private sector to fill the supply void and to the voters; the population its a sacred cow , right; wrong.
As for theproperty stock component well we've had a wonderful run alright; lots of things that can deal to that bubble..

Buy and Hold ; Wet and Forget spin,can be Long and Wrong in these fast changing times. I wont be drawn into game playing. My wife and I have a combined total of 52 years experience in this industry at the coal face so yes we have some authority so to speak, thats all ive got to say. PS-The future is unknowable, we can only work with where we have come from to where we are now.

[Joshuatree]

Serious ly not into games; too much at stake in the investing world.52 years in your industry does not give you the right to advise people financially on Investing, in shares like AIR or Summerset. Opinions are the norm. When i share about a stock i have learnt to think"What if one naive, or newbie , elderly etc person follows what i do and they lose money on what i have advised or stated as a "no brainer"certainty". More fool them but also me for coming across as an authoritative influential do as i do leader . All I ask is that can you can see the huge difference between an everyday ordinary Investor(the S/T community) sharing opinions and info and stock ideas ;...or sounding like a qualified investment adviser who says invest in this this, and doesn't haven't to take any responsibility if that advice turns sour and loses money for other folks let alone admitting it or apologising.. First rule in investing; don't lose money. 2nd rule; don't lose other peoples money.

[Snow Leopard]

....My wife and I have a combined total of 52 years experience in this industry at the coal face so yes we have some authority so to speak....

No you don't.

We do have the evidence of your many posts on this forum as to your investment 'acumen'.

The only true 'no brainer' is that there are NO 'no brainers' (Except for never investing in airlines ;)).

Best Wishes
Paper Tiger

[couta1]

No you don't.

We do have the evidence of your many posts on this forum as to your investment 'acumen'.

The only true 'no brainer' is that there are NO 'no brainers' (Except for never investing in airlines ;)).

Best Wishes
Paper Tiger I wont be drawn into games with cats either, investment acumen and experience in an industry are two separate topics, my wife and I know this industry inside out and upside down so from a knowledge of the industry viewpoint, yes we can speak with authority.PS-Made good money out of both Sum and Ryman as investments.

[trader_jackson]

Well I see this has turned from a Summerset thread to a Experience & who has 'authority' to speak thread ;)
I don't have that much experience (being young ;)) but all those finance companies were a no brainier as well, right?

My view (if it is worth anything) is that any NZ retirement stocks should do well long term, the key word being should... far from 'no brainier' status.

[RupertBear]

Yep any short term gain could easily be erased in this current extremely volatile market but this is a wet and forget kinda share for the long term investor with patience(I could do with more of this) This and the other listed retirement companies are no brainers for any investor who wants to watch their money tree grow with no intervention necessary.

Personally I think Couta was just stating his opinion and I certainly didn't take it as investment advice. I think you are being a bit harsh on him. I alway enjoy his posts.

[winner69]

Whatever SUM heading to underlying profit of $55m and npat of $120m in F16

Next year f17 should see pretty strong growth again

That sort of performance warrants a share price well in excess of $6 in the current market

Under $5 at the moment - great investment with minimal downside risk at these prices and with the potential to make heaps

No brainer really

[Beagle]

Whatever SUM heading to underlying profit of $55m and npat of $120m in F16

Next year f17 should see pretty strong growth again

That sort of performance warrants a share price well in excess of $6 in the current market

Under $5 at the moment - great investment with minimal downside risk at these prices and with the potential to make heaps

No brainer really

^^^^ Agree 100% mate.

No question Couta1 and his wife's vast experience in this sector gives them extremely valuable insights into this industry which I for one am extremely pleased he shares.

SUM have been growing faster than RYM since they listed and SUM have the best land bank...long term investors are extremely well positioned.

[Bjauck]

You are sounding like an investment adviser again; telling us investors what the future is for certain with investment bias in full flow.Do you have any qualifications that gives you that sort of authority? Am I correct in my understanding that no posts on this forum are investment advice as the forums are for friendly banter and discussion? If someone erroneously is tempted to treat a post as "investment advice" they should consider how much the "advice" has cost and how well they know the poster's identity and their qualifications.


Buy and Hold ; Wet and Forget spin,can be Long and Wrong in these fast changing times. Agree. Each investment and sector has various risks; some more than others. The government and qangos (eg ComCom) can decide to regulate, increase regulation and change regulation and its interpretation in every sphere. IMO, The current government is more likely to want to decrease taxation rather than to increase spending on social services. As always DYOR.

[Vaygor1]

Whatever SUM heading to underlying profit of $55m and npat of $120m in F16
Next year f17 should see pretty strong growth again
That sort of performance warrants a share price well in excess of $6 in the current market
Under $5 at the moment - great investment with minimal downside risk at these prices and with the potential to make heaps
No brainer really

Initially I agree with you Winner...

SUM's Underlying Profit at say $54 million equates to an Underlying Profit of 24.5 cents/share.
When Ryman's underlying profit was 24.5 cents per share, a non-bull non-bear market valued them at over $7.60
Now the market's perception of SUM's potential growth rate might not be as high as it was when RYM's underlying profit was 24.5 cents/share and historically SUM's share price has been less predictable than RYM's, but SUM's closing price of $4.86 on Friday just gone initially appears to be a great deal to me.

But the above also assumes that SUM's method of determining Underlying Profit is substantially the same as RYM's, and I can't see why there should be any substantial difference.

However, having a look at this summary....

8416

... I am a bit cautious.

Is Summerset acheiving the same Underlyng EPS/share with around 1/2 the asset base and 1/2 the number units that RYM was capable of achieving at the equivalent time in their growth?
Was RYM that inefficient?.... or is SUM very efficient?.... or is there some kind of short term sector growth that will reflect in RYM's results too?

Disc. Long term holder of RYM. Not a holder of SUM yet.

[BlackPeter]

Is Summerset acheiving the same Underlyng EPS/share with around 1/2 the asset base and 1/2 the number units that RYM was capable of achieving at the equivalent time in their growth?
Was RYM that inefficient?.... or is SUM very efficient?.... or is there some kind of short term sector growth that will reflect in RYM's results too?

Disc. Long term holder of RYM. Not a holder of SUM yet.

... great analysis, however you provide already in your table the answer to your question. Yes, SUM achieves (roughly) the same EPS with only half of the assets. However - it is only half the number of shares either. This means, that the companies should be absolutely comparable (on a per share base - nota bene) and yes, SUM appears to be undervalued compared to RYM.

Discl: hold SUM and bought some more at 4.86 ;); Intended to buy as well some RYM, but for some reason nobody wanted to fill my offer.

[Vaygor1]

... great analysis, however you provide already in your table the answer to your question. Yes, SUM achieves (roughly) the same EPS with only half of the assets. However - it is only half the number of shares either. This means, that the companies should be absolutely comparable (on a per share base - nota bene) and yes, SUM appears to be undervalued compared to RYM.

Discl: hold SUM and bought some more at 4.86 ;); Intended to buy as well some RYM, but for some reason nobody wanted to fill my offer.
Hi BlackPeter.
Thanks. Correct you are. Lost the plot on my questions there.
Definitely worth a bit more analysis on SUM for me now I think.

[percy]

Hi BlackPeter.
Thanks. Correct you are. Lost the plot on my questions there.
Definitely worth a bit more analysis on SUM for me now I think.

"No brainer" to me.
Hold both.
You could say I am "well positioned".lol.

[Beagle]

Hi BlackPeter.
Thanks. Correct you are. Lost the plot on my questions there.
Definitely worth a bit more analysis on SUM for me now I think.

44% of the shares on issue to be precise mate. Also a huge factor here is a average growth rate of SUM over the last few years. They're growing faster than RYM was when their underlying profit was 24.5 cps and as mentioned above they also have the capacity to grow faster going forward with 7 years of banked land supply. Land supply shaping up as a key constraint for these companies going forward.
I hold and awaiting a re-confirmation of upward SP trend, (sustained three day break up through the 100 day MA) before taking a more fulsome position again.
Long term absolutely it is a no brainer but in the short term there are definitely institutions taking some money off the table at present as was readily apparent on Friday afternoon so I remain cautious for the short term.

[Baa_Baa]

The bounce Fri 21st off the 200MA was very positive, which is also the two year rising trend line, then the earnings upgrade boosted the SP through the 100MA and 50EMA, but leaked back down below both to close. Nevertheless, SUM is still in an impressive uptrend. The faithful may see this as good accumulation opportunities, one can't fault the FA and the TA is OK. This share seems closely aligned to the de-rigour moving averages, especially the 200MA providing consistent support. A solid multi-day breakdown through the 200MA would therefore signal trouble and a trend line breakdown, but at the moment that doesn't look as likely as the earnings upgrade sets the scene for some SP upside, one would think.

[Vaygor1]

Discl: hold SUM and bought some more at 4.86 ;); Intended to buy as well some RYM, but for some reason nobody wanted to fill my offer.

44% of the shares on issue to be precise mate. Also a huge factor here is a average growth rate of SUM over the last few years. They're growing faster than RYM was when their underlying profit was 24.5 cps and as mentioned above they also have the capacity to grow faster going forward with 7 years of banked land supply. Land supply shaping up as a key constraint for these companies going forward.
I hold and awaiting a re-confirmation of upward SP trend, (sustained three day break up through the 100 day MA) before taking a more fulsome position again.
Long term absolutely it is a no brainer but in the short term there are definitely institutions taking some money off the table at present as was readily apparent on Friday afternoon so I remain cautious for the short term.

..... so I dipped my toe in the water and bought a small holding in SUM today at $4.75

Be interesting so see where the share price goes in the next few months from a TA viewpoint, but I'm very happy with the FA side of it.. insofar as I can now begin to trust SUM's figures now Nora Beluga (or what ever her name was) has been out of the picture for a measure of time.

In the event the SP drops further below $4.75 and in the absence of any official news, I will likely accumulate.... however I am still very conscious and wary of the residual culture left behind by the Snorlax. I wish SUM would drop her 'Four-time winner of Retirement Village of the Year' legacy... which was mentioned in SUM's recent guidance announcement. At the time they were dished out I could have purchased all those four awards myself with 1/2 a dozen hamster droppings stirred into a glass of Havelock North water.

[percy]

..... so I dipped my toe in the water and bought a small holding in SUM today at $4.75

Be interesting so see where the share price goes in the next few months from a TA viewpoint, but I'm very happy with the FA side of it.. insofar as I can now begin to trust SUM's figures now Nora Beluga (or what ever her name was) has been out of the picture for a measure of time.

In the event the SP drops further below $4.75 and in the absence of any official news, I will likely accumulate.... however I am still very conscious and wary of the residual culture left behind by the Snorlax. I wish SUM would drop her 'Four-time winner of Retirement Village of the Year' legacy... which was mentioned in SUM's recent guidance announcement. At the time they were dished out I could have purchased all those four awards myself with 1/2 a dozen hamster droppings stirred into a glass of Havelock North water.


Forget knocking "our Nora" and look at the strength of the board and management.
Like Ryman they have a very capable board and management.

[Joshuatree]

^^^^ Agree 100% mate.

No question Couta1 and his wife's vast experience in this sector gives them extremely valuable insights into this industry which I for one am extremely pleased he shares.

SUM have been growing faster than RYM since they listed and SUM have the best land bank...long term investors are extremely well positioned.

I have no idea what his experience is Roger other than that he is a care giver; maybe you can fill us in via your private emails channel as he never has made it clear and seems unlikely to ever do so. Be nice to be wrong there and for Couta to disclose his actual experience himself.

[Ggcc]

I don't think that people need to tell where and how they work in private on a public forum. Just take everything you read here and do what you like with it. Sometimes the workers who have an inside knowledge don't see everything that management see. Just do your own research 😊

[Beagle]

I have no idea what his experience is Roger other than that he is a care giver; maybe you can fill us in via your private emails channel as he never has made it clear and seems unlikely to ever do so. Be nice to be wrong there and for Couta to disclose his actual experience himself.

It's definitely not my place to disclose other people's personal information but I can say this. I have had the genuine pleasure of meeting Couta1 twice in Wellington, once during and after the SUM annual meeting in 2014 and another time when I was in Wellington with my daughter late last year. Being an accountant with 35 years experience as you can imagine I meet people from all walks of life. Its very rare to meet a more humble and genuine nice guy. I have no doubts whatsoever about his honesty or integrity. Just a very nice pleasant unpretentious guy in his mid 50's. He strikes me as the sort of guy who would give you the shirt off his own back if you were in trouble. I think Couta1's reputation on here for being honest speaks for itself. I suggest we move on and get back to talking about SUM.

Why do you think the fundamental's and growth outlook aren't being reflected in the SP ? Is it the substantial weight of money being sucked out of the NZX by overseas insto's ? When do you think that might stop, after the RBNZ cuts for the final time and the outcome of the U.S. election is known or later ?

[Joshuatree]

Thanks for sharing that Roger.Its the claim that he has the authority to recommend and advise i have an issue with.Different to opinions and general sharing which i value.

I think its just simply that Roger; money being withdrawn from NZ.Whats the overseas holdings in NZ equities ; 40 to 50%? Sorry repeating myself but Aus & Nz props stocks been going down under 200DMA and our healthcare prop stocks following ;for some time. Sharp turnaround last few days though and can understand that as a buy signal for investors and traders.. Im being more cautious and watching atp.NZX still hovering very close to that 10% correction zone although metrics for our economy overall are good .USA election results may help when a result is clear and unchallenged hopefully. Aside;My best returns for a while have been with environmental stocks.
4 Traders have this one covered 1 buy 1 outperform 1 hold 1 underperform1 sell lol. I like craigs very good research note and buy recco but have whats happened to care giving stocks in aus in the back of my mind as well as the property bubble we are currently in.

[dobby41]

Sometimes the workers who have an inside knowledge don't see everything that management see. Just do your own research ��

All a companies woes are always 'fixed' in the smoko room - management no nothing about how to run the company!

[dobby41]

If you believe what everyone says you will become muddled at best.
I take it all with a grain of salt and add it to the info mix as 'just another bit'.

[Yoda]

http://www.4-traders.com/SUMMERSET-GROUP-HOLDINGS-10089438/financials/

is there a concern here that they have borrowed more . Last was 262 mil , and if interest rates go up , there will be less profit? Forecast here is by 2018 the EPS will be down ...?
Any thoughts ?

[BlackPeter]

http://www.4-traders.com/SUMMERSET-GROUP-HOLDINGS-10089438/financials/

is there a concern here that they have borrowed more . Last was 262 mil , and if interest rates go up , there will be less profit? Forecast here is by 2018 the EPS will be down ...?
Any thoughts ?

Does not work that way with retirement villages. The overwhelming majority of their loans are given by their customers ... and they accrue no interest at all.

People need to buy in their way into retirement homes ... and what they pay is treated as loan on the balance sheet. If people then later move on (one way or another), than first the "deferred management fees" will be deducted from these loans, and the rest of the money will be returned (without interest) to the "lender" (or more typically the estate).

In my view no need to worry about about Summerset's (or any other retirement village operators) balance sheet ...

[Yoda]

Thanks BP , that makes it much clearer, So why would they predict a drop in EPS in 2018 ? I would like to think the EPS would go up, to increase SP.

[BlackPeter]

Don't forget that a fair share of their EPS comes from appreciation of their assets (due to rising property prices). I can't really speak for the analysts 4trader are using, but I could imagine that they assume at this stage that the current strong house price appreciation will slow down around 2017 (well, a number of property analysts do) and property prices will plateau or grow slower afterwards. This obviously will reduce the future EPS of not just SUM, but all retirement village providers.

[Bjauck]

The earthquake may mean even lower interest rates for longer. Will that create more upward pressure on property prices, especially in the absence of further government intervention on the demand side?

[BlackPeter]

The earthquake may mean even lower interest rates for longer. Will that create more upward pressure on property prices, especially in the absence of further government intervention on the demand side?

Probably a bit early to say. The big Christchurch earthquake certainly pushed Canterbury property prices for some time, and yes, reserve bank might want to keep in the current situation interest rates down for a bit longer.

One of the big unknown is - is NZ's attraction and the BREXIT and Trump fear bigger than people's fear of earthquakes? I think the number of immigrants over the next 12 to 24 months might be one of the more significant parameters to determine where property prices will go.

On the bright side: It certainly looks like we just found another use for all these immigrants who did help with the Christchurch re-build;)

[stevevai1983]

Thanks BP , that makes it much clearer, So why would they predict a drop in EPS in 2018 ? I would like to think the EPS would go up, to increase SP.

NZ retirement companies have 3 sources of income.
1: care fee. it's generally break even with management fee. they don't earn money here
2: DMF (deferred management fees) i think for SUM it's 3% per year(cant remember the number, i might be wrong here) so let's say a resident pay 100k to move in, after 5years he moves out, then SUM will return him 75k. that 25k will be SUM's profit.
3: house price is increasing in long term. so when that guy moves out 5 years later, the apartment will be rented out for a new resident, it's probably 150k already.. SUM will take that 150k and use 75k to pay back the previous resident.

also for the "EPS" there are actually 2 kind of eps.
1: reported eps. This includes realised profit from 2,3 and unrealised profit for current resident(they dont move out yet, so no DMF fee and resale profit)
for the unrealised part. they used some assumptions to estimate the profit. In RYM they assume house price goes up on average 1~3% per year, and they used a 11% discount rate. i think for SUM it's similar. so if house price go down big time then it will affect SUM resale price and unrealised profit part. you can see the unrealised profit as "future profit potential" if everything goes right, and it's even underestimating the future profit if house price keeps go up at fast rate...

2: realised profit. this one excludes unrealised part. We normally use this to calculate the real PE value...

[James108]

FYI I think underling earnings contains an ammortised DMF figure which is substantially more than the realised DMF, i.e. even "underlying earnings" over represent cashflows. Happy to be corrected but that is how I remember it.

[Ggcc]

http://www.asx.com.au/asxpdf/20161115/pdf/43cx922r03mhxt.pdf

Is she looking at coming back

[percy]

http://www.asx.com.au/asxpdf/20161115/pdf/43cx922r03mhxt.pdf

Is she looking at coming back
No she has hands full will her new job as CEO of Estia Health Ltd.
I would expect she will also resign as chair of EVO.

[Snow Leopard]

Been buying a few SUM shares over the last week or so and now have as many as I want to own at this stage.

Despite already being in the green by several percent it is the smallest in value of the 10 NZX shares I currently own.

For the sake of completeness here is the full list, largest first:

HBL, SCL, EBO, PGW, CBL, MCY, HLG, MVN, SKL & SUM

Best Wishes
Paper Tiger

Discs:
Absolute and relative holdings sizes subject to change without notice;
Colours may vary depending upon viewing conditions;
Always do your own research.

[winner69]

SUM back to 5 bucks

Still cheap as - when punters see NPAT of ~$120m in February they'll say heck EPS of 55 cents and worth at least $6

RYM share price not doing too well since H1 announcement, maybe market seen the growth that's happening in Summerset

[LAC]

SUM back to 5 bucks

Still cheap as - when punters see NPAT of ~$120m in February they'll say heck EPS of 55 cents and worth at least $6

RYM share price not doing too well since H1 announcement, maybe market seen the growth that's happening in Summerset

Which would you like to be holding in 2036?

[winner69]

Which would you like to be holding in 2036?

Maybe Arvida!!!!!

[OldGuy]

Maybe Arvida!!!!!

For the big dividends?

[trader_jackson]

Maybe Arvida!!!!!

Becareful what you wish for ;)

Besides, as I always like to say "why not both" ;)

I like to get dividends + growth, and not 'pin' all my hopes and dreams on near capital growth 'only'

[couta1]

Back on board with a couta sized medium holding, still quite a few keen sellers around but my Gutometer tells me this stock will touch $6 or close to it by the end of March 17. Don't worry about an ideal TA entry on this stock, just follow the big blue FA arrow to get to your destination.

[Beagle]

Back on board with a couta sized medium holding, still quite a few keen sellers around but my Gutometer tells me this stock will touch $6 or close to it by the end of March 17. Don't worry about an ideal TA entry on this stock, just follow the big blue FA arrow to get to your destination.

Looks like a good move to me as long as you are patient mate. From a fundamental perspective with a 2016 PE of 20 based on their forecast that does seem very reasonable taking into account their growth record and the extremely favourable long term demographic tailwinds this sector enjoys. No question in my mind it will get to $6 in due course. FWIW I'm waiting for a confirmed 3 day break above the 100 day MA which currently looks like $5.03.

[BlackPeter]

Looks like Roger your caution is more than justified. While SUM looks good from a fundamental perspective - the SP completed today a beautiful "head and shoulders" - and kept dropping.

I am sure they will come back again one day, but this might take a wee while in a time of rising interest rates (and "consolidating" house prices).

Out for the near future - well, until the SP is clearly turning.

[James108]

Still has a little bit to fall until it reaches fair value imo, that is assuming soft landing and 3% avg house price inflation. However a few variables could make a large impact i.e house price inflation and build rate

[couta1]

Looks like Roger your caution is more than justified. While SUM looks good from a fundamental perspective - the SP completed today a beautiful "head and shoulders" - and kept dropping.

I am sure they will come back again one day, but this might take a wee while in a time of rising interest rates (and "consolidating" house prices).

Out for the near future - well, until the SP is clearly turning. I take it you have also sold your Ryman holding which you considered cheap at around $8.60? Typical pre Christmas sell down on this stock and many others, the fair winds of January will push the price up as we head toward their Feb result, which will be very solid.

[Bjauck]

I take it you have also sold your Ryman holding which you considered cheap at around $8.60? Typical pre Christmas sell down on this stock and many others, the fair winds of January will push the price up as we head toward their Feb result, which will be very solid. I think RYM profits and divs increased through the GFC and the aftermath despite land value consolidation. I think I will try to ride any storm out.

[percy]

I think RYM profits and divs increased through the GFC and the aftermath despite land value consolidation. I think I will try to ride any storm out.

From NZ Shareholders Asssn December news letter, page 43.
Fiona Gray;"Personally we have seen several lots of friends move into retirement villages,and we've observed that with the people we know,the situation has been needs based and their decisions have been made independent of the state of the housing market."

[Food4Thought]

Anyone like to gauge the bottom... I sure would like to buy some more. Long term, far better outcome here than many other options I've looked into. Short term, a bit of a beating, yet that's been observed many times over with very successful companies. Once it gets low enough outside money will start buying in again too... Thank you cycles.

[percy]

Anyone like to gauge the bottom... I sure would like to buy some more. Long term, far better outcome here than many other options I've looked into. Short term, a bit of a beating, yet that's been observed many times over with very successful companies. Once it gets low enough outside money will start buying in again too... Thank you cycles.

Keep your powder dry.!!
The share price has gone down through the 200 day EMA.
At present time the sp is $4.50.
The 100 day EMA is $4.87,while the 200 day EMA is $4.72.
Wait until the trend turns.The trend is your friend.A lot of poor people have found they are even poorer after buying in a down trend.
Wait.!

[Beagle]

Looks like Roger your caution is more than justified. While SUM looks good from a fundamental perspective - the SP completed today a beautiful "head and shoulders" - and kept dropping.

I am sure they will come back again one day, but this might take a wee while in a time of rising interest rates (and "consolidating" house prices).

Out for the near future - well, until the SP is clearly turning.

Agreed.


From NZ Shareholders Asssn December news letter, page 43.
Fiona Gray;"Personally we have seen several lots of friends move into retirement villages,and we've observed that with the people we know,the situation has been needs based and their decisions have been made independent of the state of the housing market."
Yes but whatever their needs are they have to be able to sell their houses first, something that's getting harder for people in Auckland.


Keep your powder dry.!!
The share price has gone down through the 200 day EMA.
At present time the sp is $4.50.
The 100 day EMA is $4.87,while the 200 day EMA is $4.72.
Wait until the trend turns.The trend is your friend.A lot of poor people have found they are even poorer after buying in a down trend.
Wait.!

Agreed 100%. I wish KW would come back...

[James108]

I believe house price inflation is THE most important outside factor for Summerset, they can at least control build rate. House price inflation affects, development margin, resale margin and deferred management fees.

If you have taken the time to create a crude model (I have), you will see the huge affects.

[Robomo]

I believe house price inflation is THE most important outside factor for Summerset, they can at least control build rate. House price inflation affects, development margin, resale margin and deferred management fees.

If you have taken the time to create a crude model (I have), you will see the huge affects.

Care to share?

[skid]

I believe house price inflation is THE most important outside factor for Summerset, they can at least control build rate. House price inflation affects, development margin, resale margin and deferred management fees.

If you have taken the time to create a crude model (I have), you will see the huge affects.

There is no doubt that public perception at least, is that property in this area (Auck)is at best, leveling off--capital gain may not be the money maker it once was. If so ,they will have to rely on other factors.

[Beagle]

There is no doubt that public perception at least, is that property in this area (Auck)is at best, leveling off--capital gain may not be the money maker it once was. If so ,they will have to rely on other factors.

I agree. That said I think their development model has matured quite nicely over the last couple of years. The extent to which a possible major correction in housing would impact development margins and the extent to which it would affect resale gains on existing units is what the market is currently grappling with. Who knows what new policies Bill English and his new team will have around housing and immigration and what effect rising interest rates will have on housing ?

A lot of unknowns at present and the market hates uncertainty. I am taking the approach that its best to play the technical factors and ignore what appears to be a solid supporting valuation (for this sector) from a fundamental valuation perspective for the foreseeable future. I'll buy three trading days after a confirmed break up through the 100 day MA and am quite happy to bide my time till then.

[BlackPeter]

I take it you have also sold your Ryman holding which you considered cheap at around $8.60? Typical pre Christmas sell down on this stock and many others, the fair winds of January will push the price up as we head toward their Feb result, which will be very solid.

... and you well might be right couta with your prediction ... or you might be not. If I am buying below the MA200 I have typically quite tight stops ... and they have been triggered.

You are right - the fundamentals (for all retirement villages) look still rather healthy, but one of the reasons for the nice growth we enjoyed so far might be now gone: interest rates are now rising (thanks as well to the outcome of the US elections). Markets expect the housing market to stagnate or go down (at least in Auckland) and valuation gains might be for some time a thing of the past. As well home sellers might not have unlimited funds anymore to buy themselves into these quite expensive units.

Not sure either that the SP will increase following a fantastic EoY result - just look at what happened with the SP after Sums earnings announcement end of October.

But again - you might well be right - I can't see the future, but it feels that the odds are pointing to a bit more caution.

[Snow Leopard]

I believe house price inflation is THE most important outside factor for Summerset, they can at least control build rate. House price inflation affects, development margin, resale margin and deferred management fees.

If you have taken the time to create a crude model (I have), you will see the huge affects.

Is that historical or assumed future house price inflation or a bit of both?

I presume you have done the sums on the percent increase in the value of existing stock that they have applied.

Best Wishes
Paper Tiger

[winner69]

No need to worry yet

For medium to long term holders all within normal limits

Sometimes people get too clever thinking about the future and guessing what a new government might do and all that sort of stuff

[Beagle]

No need to worry yet

For medium to long term holders all within normal limits

Sometimes people get too clever thinking about the future and guessing what a new government might do and all that sort of stuff

About to break out of that range though mate and technically it looks plain UGLY ! (Disc - Lost enough money this year fighting technical factors on AIR to learn not to try and swim against the tide)

[Baa_Baa]

No need to worry yet

For medium to long term holders all within normal limits

If the Linear Regression Channel (LRC) is plotted from the Low to the High, the SP has already broken down through the lower channel boundary, which also happens to be around the 200DMA and the rising support trend line.

8528

[skid]

About to break out of that range though mate and technically it looks plain UGLY ! (Disc - Lost enough money this year fighting technical factors on AIR to learn not to try and swim against the tide)

Its Coutas fault--he bought and the price went down--And he's not worried, and that throws off the whole celestial astral plane and affects the biorhythms of the markets and flings us into a collision with the parallel universe sucking out the dark forces to replace the good...thats why Trump got in as well :):):)...Cmon Coutts start worrying and save us...Otherwise we will be floating in this purgatory like state for who knows how long..(and there are rumblings in the distant dark mordor across the sea)

[winner69]

If the Linear Regression Channel (LRC) is plotted from the Low to the High, the SP has already broken down through the lower channel boundary, which also happens to be around the 200DMA and the rising support trend line.

8528

I like my chart better

Your bottom line looks closer to the middle line than the top line does

Move the bottom line down a bit (to same distance top line is away) and the squiggly line will be OK

[Beagle]

Its Coutas fault--he bought and the price went down--And he's not worried, and that throws off the whole celestial astral plane and affects the biorhythms of the markets and flings us into a collision with the parallel universe sucking out the dark forces to replace the good...thats why Trump got in as well :):):)...Cmon Coutts start worrying and save us...Otherwise we will be floating in this purgatory like state for who knows how long..(and there are rumblings in the distant dark mordor across the sea)

:lol: :lol:

[Baa_Baa]

I like my chart better

Your bottom line looks closer to the middle line than the top line does

Move the bottom line down a bit (to same distance top line is away) and the squiggly line will be OK

That would be a RAFF Regression Channel, in which case the SP is sitting on the bottom of the channel now.

[winner69]

That would be a RAFF Regression Channel, in which case the SP is sitting on the bottom of the channel now.

Aren't they conceptually the same?

The channel I have shown is +/- 1 STDEV

Yours from a charting package?

[Snow Leopard]

Just make the channel wider - you can come with a plausible reason and "eh - no worries !"

But sensibly you should pop up your log chart of the time since listing and you can see that it is going to saunter down a few more cents, kiss that long term trend line to confirm it then:

Up, Up and Away.

So really - no worries!

Best Wishes
Paper Tiger

Disc: Just starting to panic.

[winner69]

Just make the channel wider - you can come with a plausible reason and "eh - no worries !"

But sensibly you should pop up your log chart of the time since listing and you can see that it is going to saunter down a few more cents, kiss that long term trend line to confirm it then:

Up, Up and Away.

So really - no worries!

Best Wishes
Paper Tiger

Disc: Just starting to panic.

Yes the log chart looks cool

Up, Up and Away it is

Looks like 6 bucks next year

No worries

[couta1]

Nice one skid, but nah I'm not worried after all my portfolio is only down 221k as we speak, was 330k a couple of months ago but yes it has dropped down over the last week or so. I cannot take responsibility for Lemmings, Sheeple or those who want to fund extravagant lifestyles over the holiday season by selling shares aye. If I had spare cash I'd be like a pig in a trough snapping up all these bargins on the NZX currently, I'm feeling dizzy just thinking about such lost opportunity.

[winner69]

Is that historical or assumed future house price inflation or a bit of both?

I presume you have done the sums on the percent increase in the value of existing stock that they have applied.

Best Wishes
Paper Tiger

Interesting the answer to you 2nd point eh

Gives me a lot of confidence

[Food4Thought]

Keep your powder dry.!!
The share price has gone down through the 200 day EMA.
At present time the sp is $4.50.
The 100 day EMA is $4.87,while the 200 day EMA is $4.72.
Wait until the trend turns.The trend is your friend.A lot of poor people have found they are even poorer after buying in a down trend.
Wait.!

Thank you Percy - The trend is my friend... I will wait patiently. I do know this pattern prior to Christmas of selling to fund holidays. I can't wait for next results season and the trend to reverse in the up swing. Some may need a reminder - Long term.

In the short term - wishing everyone on Sharetrader a safe and merry festive season.

[percy]

Thank you Percy - The trend is my friend... I will wait patiently. I do know this pattern prior to Christmas of selling to fund holidays. I can't wait for next results season and the trend to reverse in the up swing. Some may need a reminder - Long term.

In the short term - wishing everyone on Sharetrader a safe and merry festive season.

SUM is sound ,it is well managed and it is in a sector with huge tail winds.
So the share price goes up and it is a market darling.Then the tide turns, and people want out.All the time the business just continues to get on with it,and it grows.
That is the share market.
So just wait for the trend change.It will happen,but when ? We will just have to wait for the right signals from the charts.
SUM is so well followed on Sharetrader, I am sure posters will advise us when the trend has reversed.
Then we will all be onboard, and then the chart will signal the uptrend is confirmed.!!,,lol.

[skid]

Nice one skid, but nah I'm not worried after all my portfolio is only down 221k as we speak, was 330k a couple of months ago but yes it has dropped down over the last week or so. I cannot take responsibility for Lemmings, Sheeple or those who want to fund extravagant lifestyles over the holiday season by selling shares aye. If I had spare cash I'd be like a pig in a trough snapping up all these bargins on the NZX currently, I'm feeling dizzy just thinking about such lost opportunity.

Just a Christmas Dig--:):)--It would take more than the Dark Knight to get you worried (whats a couple hundred K among friends anyway):)

[couta1]

Just a Christmas Dig--:):)--It would take more than the Dark Knight to get you worried (whats a couple hundred K among friends anyway):) Exactly, and as long as your wife and dog still love you and you can go fishing, then there's not much to worry about.:cool:

[Hoop]

On the 30th of September I posted (post #268) (http://www.sharetrader.co.nz/showthread.php?9176-Using-TA-to-time-entries-and-exits/page18) a Sum chart together with KW's methodologies (She uses TA with long(er) term investment bias)...
I use a medium term TA methodology (TA indicator default settings are medium term)..which would have seen me exit SUM a few days after I wrote the post..The longer term investors hang around until the MA200 break..

I will update the SUM chart when I get time as a lot has happened since 29th September..

However, in brief the upward sloping H&S pattern has seen its neck broken, that's bad news..and it looks like SUM is entering into a primary down trend.. For the optimists a bottoming is still possible but hopes are fading..

But it's no worries......especially so for the TA investors as they are cashed up and lurking like a vulture awaiting re-enty....

[percy]

While you are "lurking",others are "loitering" with intent,!...lol.

[winner69]

The selling is relentless ....and the down trend continues

About 20% off it's recent highs

At this rate something with a 3 in front beckons

[couta1]

The selling is relentless ....and the down trend continues

About 20% off it's recent highs

At this rate something with a 3 in front beckons But that's only half price winner, doubt very much you'll see a 3 in front, not many trading days left now before sellers minds are drawn to other activities and then of course we have Q4 sales metrics due before Jan 10th coupled with the start of the fair winds of January starting to blow, no worries.

[winner69]

But that's only half price winner, doubt very much you'll see a 3 in front, not many trading days left now before sellers minds are drawn to other activities and then of course we have Q4 sales metrics due before Jan 10th coupled with the start of the fair winds of January starting to blow, no worries.

And hopefully some brokers will now put SUM in as one of their picks for 2017

That always boosts the shareprice over Christmas / New Year period

[James108]

Is that historical or assumed future house price inflation or a bit of both?

I presume you have done the sums on the percent increase in the value of existing stock that they have applied.

Best Wishes
Paper Tiger

You are quite right in that historic house price inflation has essentially locked in (unless there is a large reversal) increases in gain on resale and deferred management fees in the medium term, and development margin in the short term. I have not done the sums on any increase in value of existing stock, however my estimates of future cash flow certainly takes this into account.

The thing with Summerset is that things like increasing the build rate and increase in value of property make a positive impact on cash flows for quite a few years after the event.

In regards to house price inflation, to illustrate, according to my model (which is at best a slightly educated guess) going from 3% house and building cost inflation to 4% has a valuation impact of 15%.

Having said all that I am not comfortable buying Sum at this price. Don't give a monkeys what the so called technical analysis is doing however.

[Grunter]

Interesting - I think the sell off has been triggered by concerns about house price inflation - which bar Auckland is still reporting in as being very very strong.

Also the downtrend is on low volumes. Days where the shareprice recovers are characterised by large volumes. Conclusion: retail investors cashing out for xmas, institutions snapping them up?

[BlackPeter]

Interesting - I think the sell off has been triggered by concerns about house price inflation - which bar Auckland is still reporting in as being very very strong.

Also the downtrend is on low volumes. Days where the shareprice recovers are characterised by large volumes. Conclusion: retail investors cashing out for xmas, institutions snapping them up?

Not quite sure whether the volume chart of the last 3 months confirms your theory ... always dangerous to draw conclusions on the basis of one or two data points.

This looks to me clearly like a down trending (though potentially at current somewhat oversold) stock:

8534

graph courtesy to ANZ Securities :)

[winner69]

SUM having a good day

Sanity prevails

Punters need to stop reading too much into things and over 'analysing' and possibly jumping to the wrong conclusions - the end of the world is not nigh - the sky isn't falling in on the retirement sector.

[Robomo]

SUM having a good day

Sanity prevails

Punters need to stop reading too much into things and over 'analysing' and possibly jumping to the wrong conclusions - the end of the world is not nigh - the sky isn't falling in on the retirement sector.

Ah yes, but the sun is setting on the retirees

[dobby41]

Ah yes, but the sun is setting on the retirees

And a new bunch are on the horizon

[troyvdh]

And those folk will continue to move into retirement homes largely irrespective of what the housing market is doing.

[Beagle]

And those folk will continue to move into retirement homes largely irrespective of what the housing market is doing.

Totally agree its often a lifestyle or needs based choice and more often than not people are really happy with their decision but at the risk of overstating the obvious most people have to be able to sell their house first so if the housing market gets really weak it will have some effect.

[winner69]

hey couts - you theory/observation that SUM share price generally is about half the RYM share price is still working. The number is creeping up a bit though has been just over 50% for the last few months.

Updated that chart from a few months ago - below

Interesting and probably doesn't mean much .....however it does shows that RYM was way overvalued a few years ago and/or SUM was a real bargain a couple of years ago

[Joshuatree]

(NZX) 1 year s/p return SUM 13.35%
RYM 1.23%
MET 19.24%
the high odds upstarter ARV 44.15%

[Lewylewylewy]

I have met down to perform best next, ARV I can't get my head around.

[macduffy]

I have met down to perform best next, ARV I can't get my head around.

Investing 101. Don't invest in anything that you don't understand.

:mellow:

[winner69]

Not as strong as I hoped but still very solid numbers

https://www.nzx.com/files/attachments/251222.pdf

Summerset keep on doing better what they say they will do - that's good

[trader_jackson]

https://nzx.com/companies/SUM/announcements/295299

It would seem there is SUM growth, but it is certainly slowing... while borrowing likely continues to skyrocket (and interest rates are moving upward :confused:... will be interesting times that is for sure)

[couta1]

https://nzx.com/companies/SUM/announcements/295299

It would seem there is SUM growth, but it is certainly slowing... while borrowing likely continues to skyrocket (and interest rates are moving upward :confused:... will be interesting times that is for sure) They have hit all their targets and then Sum, good enough for me, you should have worked out by now tj that quarter metrics vary and Q4 is traditionally a subdued one.

[percy]

They have hit all their targets and then Sum, good enough for me, you should have worked out by now tj that quarter metrics vary and Q4 is traditionally a subdued one.

Good commentary.
I too thought it was good.

[BlackPeter]

They have hit all their targets and then Sum, good enough for me, you should have worked out by now tj that quarter metrics vary and Q4 is traditionally a subdued one.

market seems to be stunned ... or - more likely - take the results as non-event.

Still - SUM (as the other two) is in my view a good company and probably a good long term investment. However - in the short and medium term I'd expect them to move more in a sidewards channel (and potentially further drop) until after the next bear and the interest rates come down again :);

As well - for REIT's would be a change of the immigration policy after the next election a real thread. While I don't expect too many immigrants to get immediately into a retirement home - less pressure on the housing market reduces the flexibility of old people (owning a home) who want to.

[couta1]

Market still in holiday mode BP, not a lot of volume moving anywhere atm, will be over $5 before the end of year results come out late Feb.

[Beagle]

Somewhat underwhelmed. Low resale's didn't help and new units undershot my expectations too in what is traditionally a good quarter for SUM.
SUM have gone on record with their forecast and its already widely understood by the market and fully priced in. I think Q4 results probably puts it at the bottom end of their guidance.
Some think there's risk to this sector long term from rising interest rates, and a new much lower immigration policy going forward potentially together having a material medium term effect of housing values leading to some compression of development margins as they struggle to achieve premium pricing for units because real estate values overall are under pressure and I have some sympathy with this point of view. Also the companies own growing debt burden put them under sum more pressure in terms of costs going forward.

FA looks okay and long term its soundly managed in a growth sector with strong long term tailwinds but TA doesn't line up so until they can break through the 100 day MA to the upside I'll remain on the sidelines.
I find it curious that the market almost anticipated this lack luster result with the SP performance being most underwhelming in recent months. Its almost like the big institutions that have been regularly offering up large chunks of the sell side, usually towards the close of business on the day had a heads-up that this quarters sales would be somewhat underwhelming.

[BlackPeter]

Roger, great SUM-mary ;)

[iceman]

Somewhat underwhelmed. Low resale's didn't help and new units undershot my expectations too in what is traditionally a good quarter for SUM.
SUM have gone on record with their forecast and its already widely understood by the market and fully priced in. I think Q4 results probably puts it at the bottom end of their guidance.
Some think there's risk to this sector long term from rising interest rates, and a new much lower immigration policy going forward potentially together having a material medium term effect of housing values leading to some compression of development margins as they struggle to achieve premium pricing for units because real estate values overall are under pressure and I have some sympathy with this point of view. Also the companies own growing debt burden put them under sum more pressure in terms of costs going forward.

FA looks okay and long term its soundly managed in a growth sector with strong long term tailwinds but TA doesn't line up so until they can break through the 100 day MA to the upside I'll remain on the sidelines.
I find it curious that the market almost anticipated this lack luster result with the SP performance being most underwhelming in recent months. Its almost like the big institutions that have been regularly offering up large chunks of the sell side, usually towards the close of business on the day had a heads-up that this quarters sales would be somewhat underwhelming.

Good summary Roger. I however am pleased with the announcement and believe this is a good long term investment, but accept it may go sideways for awhile now. There has been a lot of discussion of the effect of slowing of house prices or as some expect, a reduction is prices although I think that will be mainly contained in Auckland. But couldn' t it also be argued that if people considering moving into a retirement unit start believing there is little upside potential for the price of their homes, that they may be more interested in selling up and make the move into retirement villages ? I think many are currently holding onto their homes and delaying moving while they enjoy the huge growth in property values. Remember most retirees are downsizing when they move.

[Beagle]

SUM more heat coming out of the Auckland market :) Down two months in a row now. http://www.sharechat.co.nz/article/7abca1b7/auckland-house-sales-prices-fall-in-december-on-glut-of-available-properties.html Is this the start of a new trend or simply a short term aberration ?

Hi Iceman, absolutely mate there's quite a gap between the average value of retiree's home sales and the cost of the average occupation license because of the downsizing. I think Vaygor1 posted some good info on that in the RYM threads a while back and there's a price difference of circa 30-35% so absolutely there is plenty of cushion there which I think many use to update their vehicle and have a nice world trip as well as investing the net proceeds to have a more comfortable retirement. I guess the risk is more long term if we see a sustained downward movement in real estate prices we could see a material erosion in the amount of capital retiree's free-up through the process making the prospects of community retirement living slightly less attractive for retiree's. (freely acknowledge most retiree's move into these center's for reasons not usually to do with money, (lifestyle, community spirit e.t.c. are more common reasons by far). How this play's out in terms of possible development margin compression its hard to say but fair to say the prospect of a material housing correction is a headwind the company could face in the foreseeable future. Maybe its started already ?

[winner69]

Roger, great SUM-mary ;)

Not a great summary imo because it's too pessimistic. He concentrates to much on the negatives,

BO - suppose degree of 'great' depends on whether you agree or not eh

[BlackPeter]

Not a great summary imo because it's too pessimistic. He concentrates to much on the negatives,

BO - suppose degree of 'great' depends on whether you agree or not eh

Never judge the quality of an assessment based on whether you like the outcome! Great method to get biased (i.e. useless) data.

But not sure what your issue is anyway - if it is too conservative, than this can only be better buying for you ... unless you believe in it yourself, but want to sell your shares at a better price :p

[winner69]

A 24% increase in new sales for the year is fantastic - and likely to continue into 2017. Jeez H2 new sales were up 34%, much better than the 14% in H1.

The 414 new sales is better than the guidance given (on track to 400)

Obviously not enough residents dying when they expected to has affected the resales

One thing - all 2,700 units will have substantially increased in value in 2016. Summerset is worth heaps more than a year ago.

[winner69]

Never judge the quality of an assessment based on whether you like the outcome! Great method to get biased (i.e. useless) data.


Exactly the point I was making

[Beagle]

Fair enough to SUM extent winner. I did concentrate too much on long term macro economic factors, always trying to see around corner must be an occupational hazard for some bean counters :)
To be fair, they achieved a very sound result, did what they said they would do, build 400 new units this year and sell just over 400, up dramatically from last year's 300 build and they have a great land bank for further development and possibly expanding that development rate to 500 units per year at some stage in the future, (doubt this will be FY17 as they bed in their 400 run rate target so recently set).
Fundamentally based on underlying profit they're probably the cheapest in terms of PE they've been for quite a long time. I just think some of the institutions are concentrating on the long term macro drivers at the moment and don't think that's likely to change in the near future. With the woeful unimputed dividend level nobody is being paid to be patient are they !
Let's not forget that Mrs Barlow left last year. SUM people see that as a milestone event too :D
Now we're all nicely balanced up mate :) The beauty of TA is I can let the market, (read far bigger investors and institutions that I), tell me when its ready to get back on board this ship again.
100 day MA is $5.00, happy to wait and see if Insto's are prepared to bid it above that level or not in the near future. I doubt it.

[couta1]

A 24% increase in new sales for the year is fantastic - and likely to continue into 2017. Jeez H2 new sales were up 34%, much better than the 14% in H1.

The 414 new sales is better than the guidance given (on track to 400)

Obviously not enough residents dying when they expected to has affected the resales

One thing - all 2,700 units will have substantially increased in value in 2016. Summerset is worth heaps more than a year ago. Nice Sum-mary, resales are seasonal like mortality.

[silu]

"resales are seasonal like mortality" perfect Couta :)

[Beagle]

Nice Sum-mary, resales are seasonal like mortality.

Nice transparency on this thread mate, you can easily tell who's holding and who isn't :)

[winner69]

SUM more heat coming out of the Auckland market :) Down two months in a row now. http://www.sharechat.co.nz/article/7abca1b7/auckland-house-sales-prices-fall-in-december-on-glut-of-available-properties.html Is this the start of a new trend or simply a short aberration....... p


“While prices definitely eased there was certainly no suggestion that current prices are under any great downward pressure and normal sales numbers are being achieved,” Barfoots’ managing director Peter Thompson says.


But then he has a biased view

[Beagle]

Certainly abundant supply now on the market. Personally speaking my wife and I feel relieved to have sold 3 Auckland properties last year at the height of the market. I guess the big question if Winston Peter's is going to be kingmaker in the election later this year which I think is looking increasingly likely, what will be his non negotiable points of any political deal. Will we see a dramatic change to the current immigration policy which is bringing in 70,000 people a year at a record rate. What effect on the market with current abundant supply and perhaps as much as a halving of immigration. Throw in higher interest rates and we have a potentially interesting situation.

Speaking with one of my clients who's the GM for one of the major Aussie owned real estate chains and one of Auckland's top auctioneers, he told me people are leaving Auckland in droves, its simply too dear. He thinks a dramatic change to the immigration policy would have a dramatic effect on the finely balanced demand supply equilibrium the market currently enjoys. Genuine potential for a genuine correction in my view.
If that happens, and acknowledging that's by no means certain, what medium term effect do we see in terms of development margin compression, that's the key question in my mind. Certainly those that measure the companies worth by the total measure of profits including revaluations will see much lower profits going forward but I also see underlying profits per unit potentially crimped a little over the medium term. Remember they've been getting premium development margins of just over 20% in a really bullish market where people can sell their homes easily and SUM can ask premium dollars for their new units. Summer / high tide doesn't last forever. That said, all that needs to be balanced with the potential of the company to grow its development profile from 400 units per annum to some larger annual target at some stage. All things considered I suspect this could do a RYM and track sideways for a while and investors will "enjoy" their unimputed <2% dividend yield and little else.

[winner69]

Auckland always out if sync with rest of the country. Auckland boom (if you want to cal it that) rest of country relatively a bit sluggish and vice versa (and Auckland busts seem to be deeper than Rest of NZ)

Auckland one of the most unproductive regions in the country and over time doesn't really perform economically any better than the rest of NZ in spite of it's booming population. Too self-centred and too much time wasted sitting in traffic jams.

Hope SUM building villages in Hamilton and Tauranga

[Beagle]

Good debate today mate...the market verdict is in and its a big YAWN, (up 2 cents, slightly less in percentage terms than the market overall).

[macduffy]

You're right, winner, Auckland has often been an economic underperformer - some might say a drag on the rest of the economy ;) - but the fact remains that commerce continues to gravitate there from other parts - the cluster effect maybe or the fear of missing out! While that pertains, the jobs go there too, even if it largely comprises the service industry jobs as we all cut each other's hair and fix each other's plumbing. And jobs are what determines where people live to a great extent. So, Roger, those who can might leave the big smoke - maybe the retired and the unemployed - but the majority are shackled to the wage packet and that's largely in Auckland these days.

Sorry to sign off today on such a downbeat note.

[couta1]

Good debate today mate...the market verdict is in and its a big YAWN, (up 2 cents, slightly less in percentage terms than the market overall). Now come on Roger, one day doesn't make a market, on a volume of 60k shares I would hardly call that any sort of a verdict mate.

[Beagle]

Now come on Roger, one day doesn't make a market, on a volume of 60k shares I would hardly call that any sort of a verdict mate.

https://www.nzx.com/files/attachments/251222.pdf Perhaps but I guess one of the issues is that the last two quarters are 185 and 196 respectively so a 156 quarter was never going to set the market on fire was it mate. Still... they did what they said they would for the year, all credit to them for that.

Interesting to note in the table contained in this link that resales in the first and fourth quarter are lower than usual for both Fy15 and Fy16. Coincidence or something of a pattern in the industry ?

[Raz]

Certainly abundant supply now on the market. Personally speaking my wife and I feel relieved to have sold 3 Auckland properties last year at the height of the market. I guess the big question if Winston Peter's is going to be kingmaker in the election later this year which I think is looking increasingly likely, what will be his non negotiable points of any political deal. Will we see a dramatic change to the current immigration policy which is bringing in 70,000 people a year at a record rate. What effect on the market with current abundant supply and perhaps as much as a halving of immigration. Throw in higher interest rates and we have a potentially interesting situation.

Speaking with one of my clients who's the GM for one of the major Aussie owned real estate chains and one of Auckland's top auctioneers, he told me people are leaving Auckland in droves, its simply too dear. He thinks a dramatic change to the immigration policy would have a dramatic effect on the finely balanced demand supply equilibrium the market currently enjoys. Genuine potential for a genuine correction in my view.
If that happens, and acknowledging that's by no means certain, what medium term effect do we see in terms of development margin compression, that's the key question in my mind. Certainly those that measure the companies worth by the total measure of profits including revaluations will see much lower profits going forward but I also see underlying profits per unit potentially crimped a little over the medium term. Remember they've been getting premium development margins of just over 20% in a really bullish market where people can sell their homes easily and SUM can ask premium dollars for their new units. Summer / high tide doesn't last forever. That said, all that needs to be balanced with the potential of the company to grow its development profile from 400 units per annum to some larger annual target at some stage. All things considered I suspect this could do a RYM and track sideways for a while and investors will "enjoy" their unimputed <2% dividend yield and little else.

A couple of points, have heard all that and tend to agree however understand from around Wellington plan B would be to move some of government functions to Auckland to hold up Auckland naturally under the guise of risk management given Wellington increased seismics activity, have heard this from a few political sources now so starting to consider it may be serious.

SUM and others having pressure in the SI especially. Would be interested to know what percentage the market is Auckland given its younger demographic.

[Raz]

You're right, winner, Auckland has often been an economic underperformer - some might say a drag on the rest of the economy ;) - but the fact remains that commerce continues to gravitate there from other parts - the cluster effect maybe or the fear of missing out! While that pertains, the jobs go there too, even if it largely comprises the service industry jobs as we all cut each other's hair and fix each other's plumbing. And jobs are what determines where people live to a great extent. So, Roger, those who can might leave the big smoke - maybe the retired and the unemployed - but the majority are shackled to the wage packet and that's largely in Auckland these days.

Sorry to sign off today on such a downbeat note.

Yes a pay packet that does not go far enough...a major policy mistake focusing on the short term on Auckland being so big compared to the whole country.

[winner69]

?...........

SUM and others having pressure in the SI especially. Would be interested to know what percentage the market is Auckland given its younger demographic.

Don't know whether this answers your query or not but ...

Auckland has 34.4% of NZ population but only 27.3% of those 65+

Only 11.8% of Auckland population 65+ v national average 14.9%

Regions like Northland, waikato, BOP, Nelson are some of the regions with highest proportion of 65+

Do we assume regional spread of oldies is a reasonable guide for the spread of retirement units?

[Raz]

Don't know whether this answers your query or not but ...

Auckland has 34.4% of NZ population but only 27.3% of those 65+

Only 11.8% of Auckland population 65+ v national average 14.9%

Regions like Northland, waikato, BOP, Nelson are some of the regions with highest proportion of 65+

Do we assume regional spread of oldies is a reasonable guide for the spread of retirement units?

Thanks Winner..I would assume we would need to so if you want to forecast development squeeze/risk - look at what is happening is the specific concentrations of 65 + areas rather than just population.

My parents are looking at the option currently and interesting that all their group perceived RYM a most cost effective deal than SUM on comparison.

[Beagle]

RYM get them fixated on the fixed weekly fee for life thing...and they all know their super is inflation adjusted every year so they think they're on too a winner. MET are now on to this cunning psychological marketing ploy so its time for SUM to join the party and get with the program or suffer the consequences.
SUM more dog friendly though, even have a picture of a cute dog on the cover of their half year report, that ought to be good for a few cents on the SP right :)) ...just make sure its a pup when they move in as replacement is discouraged.

[dobby41]

RYM get them fixated on the fixed weekly fee for life thing...and they all know their super is inflation adjusted every year so they think they're on too a winner.

My parents are in a non-aligned village and have a rising fee.
Everytime the super goes up their fee goes up a % also.
No justification for the increase needed.
They accept it as a necessary evil but an evil nonetheless

[Bjauck]

My parents are in a non-aligned village and have a rising fee.
Everytime the super goes up their fee goes up a % also.
No justification for the increase needed.
They accept it as a necessary evil but an evil nonetheless My parents' friend has a cottage at a village. She was complaining about the fee going up until I told her by how much rates and house insurance were increasing & estimated how much she would be paying for a cottage of similar size if she owned its freehold!

[Beagle]

My parents are in a non-aligned village and have a rising fee.
Everytime the super goes up their fee goes up a % also.
No justification for the increase needed.
They accept it as a necessary evil but an evil nonetheless

My mum is in one with rising fees as well but the fee increases seem reasonable considering the point that Bjauck made. The other thing is getting reliable tradesmen to fix things isn't cheap either especially with the current building boom going on around the country and there's all the other lifestyle aspects to her village which made it the right choice for her, (and Dad when he was alive). Now that Dad has passed away I know my mum would like a little dog for company so I don't really get this whole thing that Retirement villages have against dogs ?

[Ghost Monkey]

so I don't really get this whole thing that Retirement villages have against dogs ?


Didn't you once own a beagle?? Imagine them in a retirement village!!

Looking for food, scooting all over carpet, howling for more food, shedding, constantly trying to sneak out and 'go walkabouts', usually without you............. more howling, snatching your roast chicken off your plate when you turn your back for an instant........ slinks away when told off...... but back within 2 minutes looking for more food!

Woof.

[percy]

Maybe Roger and Snoopy could make the best of "the window of opportunity" to open their own retirement village, where dog ownership is mandatory,"Houndsville"....lol.

[Beagle]

Didn't you once own a beagle?? Imagine them in a retirement village!!

Looking for food, scooting all over carpet, howling for more food, shedding, constantly trying to sneak out and 'go walkabouts', usually without you............. more howling, snatching your roast chicken off your plate when you turn your back for an instant........ slinks away when told off...... but back within 2 minutes looking for more food!

Woof.

Kelly was a wonderful beagle and our whole family adored her. Beagle's love company and are prone to misbehavior if they're lonely. Not easy to train and love their food, (mind you they don't have that on their own, this hound does too !) I hear what you're saying and there are concerns but here's the thing, most retirement villages will allow you in if you already own a dog, (otherwise they know they will lose the sale as most people think of their dog as a member of their family) but will not allow you to replace it when it dies and will not allow a lonely old person to acquire a dog if their partner dies. Quite obviously most retirement villages are taking a profit driven and disingenuous approach with dog ownership within villages. If its in their financial interests they allow it, if its in the retiree's interests and there's no money in it for them they disallow it... I find this approach which seems to be widespread throughout the retirement industry morally bankrupt and reprehensible.


Maybe Roger and Snoopy could make the best of "the window of opportunity" to open their own retirement village, where dog ownership is mandatory,"Houndsville"....lol.

Not the silliest business idea I've ever heard by any means. This is very interesting reading. http://www.nytimes.com/1982/08/11/garden/owning-a-pet-can-have-therapeutic-value.html?pagewanted=all (Forwarded to me by former poster Crackity)...wouldn't it be great if that bright chap was allowed back...
The first retirement village that takes a proactive approach in this area and actively encourages retiree's to have pets throughout their stay will not only gain a real marketing and competitive advantage but will also be doing their residents a tremendous favor. Perhaps the notion of a "Houndsville" perhaps a division of one of the retirement companies and special villages with special appropriate rules are not such a silly idea after all ?

[winner69]

House prices to continue to rise in the foreseeable future

http://www.sharechat.co.nz/article/8abecd42/update-2017-uncertain-for-house-prices-with-mixed-expert-views.html?utm_medium=email&utm_campaign=UPDATE%202017%20uncertain%20for%20hou se%20prices%20with%20mixed%20expert%20views&utm_content=UPDATE%202017%20uncertain%20for%20hous e%20prices%20with%20mixed%20expert%20views+CID_d0f 163623749df62f2547e8f5bfef88c&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle8abecd42update-2017-uncertain-for-house-prices-with-mixed-expert-viewshtml


Yah, all SUM properties get revalued up - higher profits (for the forseeable future)

[BlackPeter]

House prices to continue to rise in the foreseeable future

http://www.sharechat.co.nz/article/8abecd42/update-2017-uncertain-for-house-prices-with-mixed-expert-views.html?utm_medium=email&utm_campaign=UPDATE%202017%20uncertain%20for%20hou se%20prices%20with%20mixed%20expert%20views&utm_content=UPDATE%202017%20uncertain%20for%20hous e%20prices%20with%20mixed%20expert%20views+CID_d0f 163623749df62f2547e8f5bfef88c&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle8abecd42update-2017-uncertain-for-house-prices-with-mixed-expert-viewshtml


Yah, all SUM properties get revalued up - higher profits (for the forseeable future)

Hmmm - funny, but this is not what I read in the article ... they said the experts are not sure.

Regarding the REITS (including SUM) - I think what will hurt them more are the rising interest rates (or the expectations thereof).

[Beagle]

Just had a brief discussion with GM of one of the major Aussie owned franchises who phoned me with best wishes for 2017. Was very brief but he did mention in passing they're getting more listings in Auckland than sales and its the other way around in the provinces. 2017 to be a game of two halves for real estate with Auckland under the pump but everywhere else doing just fine ? SUM have a fair few villages around the country so I suppose this thing balances out for them. Speaking of things being under the pump, I think its fair to say the SP reaction to 4Q 2016 sales is in by now and its no real surprise that with the sales number being well below the previous two quarters the SP reaction has been lackluster. It seems to me that there's very few resales in spring, was the same last year, I guess old folks hang on in there if they make it through winter and look forward to summer just like everyone else !

[winner69]

Hmmm - funny, but this is not what I read in the article ... they said the experts are not sure.

Regarding the REITS (including SUM) - I think what will hurt them more are the rising interest rates (or the expectations thereof).

Only views -

Property Institute - The continuing gap between demand and supply means that further price inflation is inevitable for the foreseeable future. The institute says that while price inflation will likely run into double digits, it will still be lower than the highs seen in the last couple of years.


ASB ... expect the housing market to glide into a soft landing. While we expect the housing market to cool, housing prices should still have a floor on them


I feel the Property Institute guy is more of an 'expert' ....though both pushing their own barrow

Again BP - we read different things into the same info - seems we are both biased eh and only see what we want to to support our views

[troyvdh]

Giday ..Im a little confused..Why this preoccupation with house prices...Ive been around a while..I thought it was a given that folk will continue to by rest home facilities...largely irrespective of house prices ...am I wrong ?

[percy]

Giday ..Im a little confused..Why this preoccupation with house prices...Ive been around a while..I thought it was a given that folk will continue to by rest home facilities...largely irrespective of house prices ...am I wrong ?

As always you are exactly right.!

[James108]

Giday ..Im a little confused..Why this preoccupation with house prices...Ive been around a while..I thought it was a given that folk will continue to by rest home facilities...largely irrespective of house prices ...am I wrong ?

Because there is some correlation between house prices and how much they can sell/resell units for.

This impacts development margin, gain on resale and deferred management fees. These are 3 of the 4 ways that summerset make money (the other being care fees paid weekly).

Therefore the price they can sell units at is imo THE most important factor outside of Summersets direct control. By extension average house price is extremely important.

[JeremyALD]

Because there is some correlation between house prices and how much they can sell/resell units for.

This impacts development margin, gain on resale and deferred management fees. These are 3 of the 4 ways that summerset make money (the other being care fees paid weekly).

Therefore the price they can sell units at is imo THE most important factor outside of Summersets direct control. By extension average house price is extremely important.

Personally I see SUM as a long term investment. With population of 65+ more than doubling over the next 30 years I'm not sure how you can go wrong. House prices may slow significantly for a while, but they'll be worth more in 10 years than they are now I assure you.

[winner69]

House prices rise. ....so says the headline on December REINZ data

https://www.reinz.co.nz/Media/Default/Statistic%20Documents/2017/Residential/December%202016/Press%20Release/REINZ%20Residential%20Press%20Release%20-%20December%202016-1.pdf

[BlackPeter]

Well, yes ... paper is patient ...

If you look at the latest QV report (I assume the base for REINZ data as well), than you see that house prices did raise on an annual basis, but dropped in most areas on a monthly basis. This - and the fact that volume is dropping seems to indicate that we sort of reached the peak (or are already over it).

Not sure whether I expect a steep drop from here (for that demand is just too high and supply too little), but I think we will be in for some years of sidewards moving house prices (and potentially a slight drop in many areas and a potential crash in hyped up areas like Queenstown).

No crisis for SUM and the other retirement village operators, but their earnings over the next handful of years might lack the friendly support of valuation gains ...

[skid]

Well, yes ... paper is patient ...

If you look at the latest QV report (I assume the base for REINZ data as well), than you see that house prices did raise on an annual basis, but dropped in most areas on a monthly basis. This - and the fact that volume is dropping seems to indicate that we sort of reached the peak (or are already over it).

Not sure whether I expect a steep drop from here (for that demand is just too high and supply too little), but I think we will be in for some years of sidewards moving house prices (and potentially a slight drop in many areas and a potential crash in hyped up areas like Queenstown).

No crisis for SUM and the other retirement village operators, but their earnings over the next handful of years might lack the friendly support of valuation gains ...

IMO outside markets will have the most affect on both property prices and shares

[stevevai1983]

it's true. i am looking to buy a house in the future. so i am consistently monitor the Auckland house price.
at the peak (about Aug2016) any households that are acceptable for me are over 880k
now it's became around 780k.

[winner69]

it's true. i am looking to buy a house in the future. so i am consistently monitor the Auckland house price.
at the peak (about Aug2016) any households that are acceptable for me are over 880k
now it's became around 780k.

Jeez - >10% down

House prices collapsing (in Auckland)?

[skid]

Jeez - >10% down

House prices collapsing (in Auckland)?

Id be surprised if that was indicative of the Auckland market in general..guess its worth checking