SUM - Summerset Group

[skid]

Just a quick check and Auckland house prices rose by a small amount from dec-2015 to dec 2016 (dont know where that -10% came from

[winner69]

Just a quick check and Auckland house prices rose by a small amount from dec-2015 to dec 2016 (dont know where that -10% came from

That was steves number .....what the price of houses he was interested in had fallen by over the last few months.

[winner69]

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

REINZ Median Price Auckland Region

Dec15 770k
Sep16 825k
Oct16 868k
Nov16 852k
Dec16 840k

So down 3.2% since Oct16 (2 months) ....still up 9.1% from a year ago

Crash under way as some think ....or just a consolidation at elevated levels ...or just a little lull before it heads to a milion.

[stevevai1983]

That was steves number .....what the price of houses he was interested in had fallen by over the last few months. It definitely decreased by about 10% for me. But that doesnt mean the house price has fallen 10%. Because I am looking at the "listing price" not the actually settlement price. Maybe sellers are putting more "reasonable" price now because it's under pressure and volume decreased so much. In the peak time, in terms of value and volume, i think sellers put really high price and hope they could sell it.

[macduffy]

SUM 2016 results to be released pre-market on Thursday, 23 February.

[troyvdh]

again ..again...why do folk continue to focus on house prices...on a post relating to a retirement entity...honestly ..do you think that folk will worry a rats a....... THEY will continue to occupy same.....give me breath...

[peat]

again ..again...why do folk continue to focus on house prices...on a post relating to a retirement entity...honestly ..do you think that folk will worry a rats a....... THEY will continue to occupy same.....give me breath...
its all part of a massive land boom troy, just like 1880's and 1980's , so, while it isn't specifically relevant to Summerset it is all part of the same rising tide.
And just so I have something positive to say, today my aunty told me she is in a Summerset village and loves it.

My analysis of Summerset says its a bit overpriced but cheaper than Ryman , and if my aunty likes it then it must be a winner.

[Toasty]

its all part of a massive land boom troy, just like 1880's and 1980's , so, while it isn't specifically relevant to Summerset it is all part of the same rising tide.
And just so I have something positive to say, today my aunty told me she is in a Summerset village and loves it.

My analysis of Summerset says its a bit overpriced but cheaper than Ryman , and if my aunty likes it then it must be a winner.

Just to jump on the endorsement band wagon... A family friend with terminal cancer has just moved into a Summerset village and she is over the moon. Great support and nice surroundings. She researched this a lot before making the jump and so far it has exceeded her expectations.

[winner69]

Macquaries bullish on retirement sector and even raised their target for SUM (finally seeing the light of day). Even $6 is cheap

http://www.sharechat.co.nz/article/94c3da46/macquarie-still-upbeat-on-retirement-village-sector-consents-up-in-november.html?utm_medium=email&utm_campaign=Macquarie%20still%20upbeat%20on%20ret irement%20village%20sector%20consents%20up%20in%20 November&utm_content=Macquarie%20still%20upbeat%20on%20reti rement%20village%20sector%20consents%20up%20in%20N ovember+CID_9e4c97d93a0b28aa9a72b2cb86d9119c&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle94c3da46macqua rie-still-upbeat-on-retirement-village-sector-consents-up-in-novemberhtml

Extract -


While Macquarie was less upbeat on house prices, it continued to rate all three companies at 'outperform' and said it is "still positive" on the sector. Its target price for Metlifecare remains unchanged at $7.25 as the impact of lower house price inflation is offset by a reduction in the risk free rate and an increase in historical unit price inflation. Metlifecare is currently trading unchanged at $5.50.

Macquarie lowered its Ryman target price to $10 from $11 and the stock is trading at $8.40. It increased the target price on Summerset to $6 from $5.60, again as the increase in forecast resales volumes and increase in historic unit price inflation outweighed the reduction in its house price inflation assumption. Summerset is currently trading at $4.71, down 0.2 percent.

[Snow Leopard]

I am down 3% on my belief that they are right and that SUM is a good bet.

And up 17% in the same time frame on my belief in ARV.

Not so keen on RYM and MET at the moment.

Best Wishes
Paper Tiger

[Bjauck]

Macquaries bullish on retirement sector and even raised their target for SUM (finally seeing the light of day). Even $6 is cheap...
Interesting to see they thought MET was at a higher discount to their target price - despite MET being invested more heavily in Auckland.

[stevevai1983]

I am very bullish about retirement sector after the recent SP significant drop for sector leaders. That's why i bought RYM SUM ARV at the same time.
People talk about house price too much, but in fact the real no.1 important measurement is occupancy rate. As long as they can maintain 90%+ occupancy rate they will be fine and make lots of money.
Their unrealized profit used some conservative assumptions: household price increase 1~3% only. This is very realistic. Also their discount rate is 11%, it's pretty high.

If the household price decline slowly for some years, they will still make lots of money. Their "revaluation gain" will still be positive although increase slower than recent years (recent years are abnormal anyway)
For SP, I don't know about short term or even mid term, but in long term they will go a lot higher.

[Lewylewylewy]

Lots of people saying that house prices don't matter. Seems like the equivalent of saying that dividend payout is the only thing that matters with shares.

Sorry, don't mean to pick holes, but I don't want someone who's learning the industry to overlook the effect of house prices.

[Vaygor1]

Lots of people saying that house prices don't matter. Seems like the equivalent of saying that dividend payout is the only thing that matters with shares.

Sorry, don't mean to pick holes, but I don't want someone who's learning the industry to overlook the effect of house prices.

If I may offer a slightly different angle LLL... The vast majority of those that entering into a retirement village no longer need a home. They need at-hand support, assistance and care. Having a house becomes secondary, which is why some (a lot?) of people sell up to enable the retirement-unit move in.

The price one pays to move in to a retirement village is a function of supply and demand, and the demand is becoming so much that competition to enter is getting fierce. So if it gets to the point where selling ones house doesn't provide enough capital to get in, then those people will simply miss out.

Even so, the above scenario is unlikely to occur in the short term at least, because the current difference between the average house price and the average retirement-unit occupancy advance is substantial. Average house prices would need to drop by over 20% before the break even point and a 20% drop has not occurred in NZ history as far as I recall. Here is a graph I have on hand that goes back over 35 years to 1981. I can go back further if you like, but will need to search for it.

8622

[Bjauck]

RYM's underlying profits went up during the last cooling off period in house prices.

[Vaygor1]

RYM's underlying profits went up during the last cooling off period in house prices.
As far as I am aware, that is indeed true.

[Beagle]

If I may offer a slightly different angle LLL... The vast majority of those that entering into a retirement village no longer need a home. They need at-hand support, assistance and care. Having a house becomes secondary, which is why some (a lot?) of people sell up to enable the retirement-unit move in.

The price one pays to move in to a retirement village is a function of supply and demand, and the demand is becoming so much that competition to enter is getting fierce. So if it gets to the point where selling ones house doesn't provide enough capital to get in, then those people will simply miss out.

Even so, the above scenario is unlikely to occur in the short term at least, because the current difference between the average house price and the average retirement-unit occupancy advance is substantial. Average house prices would need to drop by over 20% before the break even point and a 20% drop has not occurred in NZ history as far as I recall. Here is a graph I have on hand that goes back over 35 years to 1981. I can go back further if you like, but will need to search for it.

8622

Good post but there's these factors to consider.
1. House prices have already declined in both November and December 2016 according to REINZ data. This at a time when we have record immigration level's. Its looking increasingly likely that Winston Peters will have a major say in the forthcoming election this year and his views on immigration are well known. A major change in immigration policy could easily of itself have a dramatic effect on the demand side of the equation.
2. Its clear that interest rates have hit the bottom and we are now heading up. Many consumers are very highly geared and have become used too ~ 4.5% interest rates and ~ 6% interest rates could have a dramatic effect on the supply side of the equation.
3. There is major new housing supply coming to the market in Auckland over the next two years, only some of which is in the public domain in terms of known developments, (I'm certainly aware of two very large developments in the early stages of process at present).
4. All the above will at the very least probably have a material effect on the premium pricing the retirement sector developers have been able to achieve in a booming market as the margin between what people can sell their home for and what they pay for a new unit contracts. In my view most people expect to free up material capital as part of the downsizing exercise...world trip and a new car are par for the course for many people going through this process, (got to tick those things off their bucket list otherwise the process becomes somewhat less attractive). I maintain there is a consumer expectation that significant capital will be released from downsizing and without this the attractiveness of the process will be somewhat diminished for some. (Acknowledge most move in for lifestyle and support reasons). Less ability to sell at premium pricing obviously crimps their development margin and we know that's where these retirement companies really make their money.

I maintain the tailwind of rising house prices has been a material factor in the past but may not be in the future. That still leaves baby boomer population demographics and the resultant healthcare needs as strong prevailing tailwinds the sector will enjoy for at least the next twenty years. In my view the sector is presently about fair value taking into account the above mentioned factors. SUM probably a little underpriced. Last time I looked at this SUM was trading in the very late teens, about 19 forward PE based on underlying earnings and RYM early 20's forward PE.
Seems about right to me but SUM possibly worth almost the same as RYM's PE with their growth rate in recent years, (acknowledge RYM's stellar long term track record deserves true blue chip status so possibly should still command a one or two PE premium over SUM)

Finally as I am sure you recall but its well worth highlighting for newer investors, the last time we did have a significant decline in housing prices towards the latter part of the GFC RYM's share price got absolutely smashed, (despite underlying profit continuing to grow each year), evidence that fundamentals are almost useless in terms of being a SP driver if housing sentiment is extremely bearish.

There's enough risk to the housing prices in my view to remain cautious towards this sector until the new Governments immigration policy is known later this year and a wait and see approach with interest rates and the effect they'll have is also warranted in my view. Disc: I have no current position in the sector but may consider one later this year as risk factors become clearer.

[percy]

A question.
Has any poster, who has organised a parent,relation or friend, going into a retirement village ,or care, had to take the price of selling that person's house into the equation.?

[winner69]

RYM's underlying profits went up during the last cooling off period in house prices.

House prices down 7.8% in year to March 2009

Ryman underlying profit up 6% (on of their worst years ever)

Fair value adjustments were negative so NPBT was down 6%

A fall in houses ha some impact on Ryman financials

[Bjauck]

A question.
Has any poster, who has organised a parent,relation or friend, going into a retirement village ,or care, had to take the price of selling that person's house into the equation.?

Not quite yet. But my two pen'orth:
However whether the person is going into a licence to occupy unit or "into care" with the appropriate assessments vis a vis nursing home or rest home are different questions. "Into care" also involves different considerations if there is an independent spouse. Similarly it also depends if there is a family trust involved and how old and well established that trust is.

If there is no spouse involved, no family trust, and few other assets aside from the equity in the family home and perhaps a private annuity or private pension, then the price achievable for the family home would be very relevant when considering a licence to occupy. If the value of the family home is near or below the median value in the same area as the village, then there will be unlikely to be very much excess between SP and cost of the licence. Likewise the price achievable for the family home may effect how you plan to pay rest home fees and your eligibility for rest home subsidies.

For most Kiwis of retirement age their largest asset by far is the family home.

[Bjauck]

...

Finally as I am sure you recall but its well worth highlighting for newer investors, the last time we did have a significant decline in housing prices towards the latter part of the GFC RYM's share price got absolutely smashed, (despite underlying profit continuing to grow each year), evidence that fundamentals are almost useless in terms of being a SP driver if housing sentiment is extremely bearish.... Agreed. Sentiment toward housing and the stock exchange in general definitely affects the SP.

[Lewylewylewy]

Agree with all of the above, but I think it's naive to say that house price doesn't effect retirement homes.

[winner69]

Quote Roger - House prices have already declined in both November and December 2016 according to REINZ data

Actually November was an up month while December was a down month

Interesting in 2016 there were 6 down months and 6 up months but during that time the national median house price rose from $465,000 to $516,000. The up months were 'stronger' than the 'weaker' down months. Source: https://www.reinz.co.nz/Media/Default/Statistic%20Documents/2017/Residential/December%202016/Market%20Facts/R100%20-%20New%20Zealand%20-%20December%202016.pdf

Some would say that there is some randomness in the monthly numbers - underlying trend remains positive ....and I reckon will remain positive in 2017

[Beagle]

A question.
Has any poster, who has organised a parent,relation or friend, going into a retirement village ,or care, had to take the price of selling that person's house into the equation.?

Yes I have first hand experience of this. My parents wanted to buy a north facing independent living townhouse at the RYM facility in Orewa but were short by an estimated $40,000 from the estimated net sale proceeds of their modest home in Red Beach Whangaparaoa. In effect they had to compromise their choice because they simply could not afford what they really wanted. Likewise I would imagine with some of the premium waterfront units at SUM's Hobsonville point development going for ~ $1.2m many would have had to chose a lesser unit or another village.

[Vaygor1]

Good post but there's these factors to consider.
1. House prices have already declined in both November and December 2016 according to REINZ data..... A major change in immigration policy could easily of itself have a dramatic effect on the demand side of the equation.

2. Its clear that interest rates have hit the bottom and we are now heading up...

3. There is major new housing supply coming to the market in Auckland over the next two years...

4. All the above will at the very least probably have a material effect on the premium pricing the retirement sector developers have been able to achieve in a booming market as the margin between what people can sell their home for and what they pay for a new unit contracts. .... Less ability to sell at premium pricing obviously crimps their development margin and we know that's where these retirement companies really make their money.

I maintain the tailwind of rising house prices has been a material factor in the past but may not be in the future....

Finally [there is] evidence that fundamentals are almost useless in terms of being a SP driver if housing sentiment is extremely bearish.
...

All good points Roger and all factors that will have some level of impact on the share price.

Only 1 in 9 of the over-75 NZ population moves into a retirement village (according to the Oct 2014 article below), and their popularity is increasing.

I think this increasing-popularity factor along with NZ's ageing demographics would likely counteract the factors you highlight (should they occur ie. a substantial change in Immigration policy and interest rates).

In my view, if there is any single factor that should have suppressed development margins and resales figures it is the tsunami of new retirement developments in recent years, but the record profits have kept rolling in.

Excerpt from The Listener (October 2014). Source http://www.noted.co.nz/currently/social-issues/the-new-wave/

The retirement village population is still only a small proportion of the over-75 age group, at about 10.5% nationwide – although in the Bay of Plenty the so-called “penetration rate” is more than 16%. But a combination of gradually rising penetration rates and New Zealand’s ageing demographic profile has pushed the total number of retirement village residents to around 30,000 – similar to the population of Timaru.

And there’s much more to come, with the number of people aged over 75 projected to double in the next two decades to more than 500,000. Based on conservative estimates, valuation company Jones Lang LaSalle says the number of over-75s living in retirement villages will reach at least 64,000 by 2036, with 170 new villages needing to be built. But if the sector continues to increase in popularity – that is, if penetration rates rise to around 13% of over-75s – the number choosing to live in retirement villages will hit 83,000 by the mid-2030s.


Sentiment will always be a driver for all shares on all stock exchanges, with the capability to drive any Share Price wildly up and down. Your, Bjauck's, and LewyLewyLewy's viewpoint on sentiment regarding this matter re NZ retirement Sector are certainly valid. And it is this perceived worth (or lack of worth) that causes the highs and lows that patient and well-informed investors/traders capitalise on.

Disc: Hold RYM and SUM (Substantially more RYM than SUM). Not overly interested in the Share Price for these two companies any more unless the Share price presents a bargain buy. Only really interested in dividends and have no intention to sell out of this sector in the foreseeable future.

[Beagle]

Thanks for the info on penetration rates Vaygor1, very interesting.

I think you're absolutely spot on that penetration rates will rise over time. From a financial viewpoint they're a poor investment but the lifestyle and support residents enjoy from a well run facility makes them a highly attractive option in my view and one who's popularity will in all likelihood grow over time.

My Mum has been at this one for many years now and finds the lifestyle and facilities extremely good and I see she is not alone in her opinion. https://www.agedadvisor.nz/search/retirement-village/Peninsula-Club-Retirement-Village-Stanmore-Bay-Whangaparaoa

You've obviously worked yourself into a very comfortable position and congrats again on that and I'm sure you're dividends as a rate of return on your average cost price represent a rewarding income but to those looking at SUM, RYM and MET now the stocks don't make a compelling dividend yield story and any dividends I've received have been an extremely modest yield and unimputed to boot.

Short story for me, long term yes, risks this year appear to outweigh the possibility of a meaningful rerating...but as always predicting the future is fraught with risk !

[winner69]

Agree with all of the above, but I think it's naive to say that house price doesn't effect retirement homes.


I won't argue with this -


"The level of house price appreciation is a key determinant of the level of retirement village profitability," Macquarie said in a note.

That's why some of us talk about it

[percy]

I won't argue with this -


"The level of house price appreciation is a key determinant of the level of retirement village profitability," Macquarie said in a note.

That's why some of us talk about it
And that's one of the reasons I doubt it.
Better to listen to RYM's CEO Simon Challis,who has "skin in the game."

[Lewylewylewy]

Property value makes up part of the NTA, which effects the share price. IMO it's important for the business and the SP from a markets perspective.

[stevevai1983]

Property value makes up part of the NTA, which effects the share price. IMO it's important for the business and the SP from a markets perspective.it's important. but it's not that important unless we have a major big crash in household price and don't recover for many years. Their assumptions in unrealised profit is very conservative. The most important measurement is occupancy rate. If they can maintain 90%+ then they will be fine and survive in the bad years. Of course SP will drop and create very good entry point. In the end, it's a very good business model.

[Beagle]

Disc: Long term I love the retirement story and SUM the best value in my opinion but as noted earlier there are risks and I am fairly cautious. That said the technical signals are looking much stronger for SUM in recent days so I am watching closely. Looks highly likely to break up through the 100 day moving average any day now.

[Lewylewylewy]

I think that's the key: Long term is great, short term there are different elements to consider :)

Personally, I'm still developing my strategy, but one thing I have cemented my thinking on, is that even if shares are good long term no matter what, I always consider them as a short term buy, because that way I can make hay on other short term stocks to get more money for long term ones, and also so I can best time my entry into long term ones to get the best results.

[percy]

I think that's the key: Long term is great, short term there are different elements to consider :)

Personally, I'm still developing my strategy, but one thing I have cemented my thinking on, is that even if shares are good long term no matter what, I always consider them as a short term buy, because that way I can make hay on other short term stocks to get more money for long term ones, and also so I can best time my entry into long term ones to get the best results.

I am sure as a young raver you had a wise father, uncle ,mother, or aunty,who advised you to take care,as you may have to marry that person.
Shares are the same.Take your time looking over the field, and choose wisely.,.....
With the ageing population you will find SUM a wise choice,for a long happy life together.!!....lol.

[Beagle]

Disc: Long term I love the retirement story and SUM the best value in my opinion but as noted earlier there are risks and I am fairly cautious. That said the technical signals are looking much stronger for SUM in recent days so I am watching closely. Looks highly likely to break up through the 100 day moving average any day now.

And there she goes.... strongly up through the 100 day MA on a very weak day on the NZX. The above post was "code speak" for I bought some, in case anyone was wondering :D

[couta1]

And there she goes.... strongly up through the 100 day MA on a very weak day on the NZX. The above post was "code speak" for I bought some, in case anyone was wondering :D You must have bought SUM of mine then, I'm only interested in 2 stocks currently and they both begin with an A, I'm sure you can guess what they are.

[Beagle]

You must have bought SUM of mine then, I'm only interested in 2 stocks currently and they both begin with an A, I'm sure you can guess what they are.

I have changed my view on the future level of immigration since Trump went feral. I believe people will want to come to safe, clean and green, uncorrupt little ol N.Z. in their droves. Hundreds of thousands of them over the next few years, desperate to escape the madness that exists in much of the rest of the world. Hugely supportive of medium term future house prices and development margins although we might see a slight housing correction this year I no longer think it will be deep or meaningful.

[Jinx]

I have changed my view on the future level of immigration since Trump went feral. I believe people will want to come to safe, clean and green, uncorrupt little ol N.Z. in their droves. Hundreds of thousands of them over the next few years, desperate to escape the madness that exists in much of the rest of the world. Hugely supportive of medium term future house prices and development margins although we might see a slight housing correction this year I no longer think it will be deep or meaningful.

+1 to this opinion, hope you're holding THL too for this exact reason ;)

[couta1]

I have changed my view on the future level of immigration since Trump went feral. I believe people will want to come to safe, clean and green, uncorrupt little ol N.Z. in their droves. Hundreds of thousands of them over the next few years, desperate to escape the madness that exists in much of the rest of the world. Hugely supportive of medium term future house prices and development margins although we might see a slight housing correction this year I no longer think it will be deep or meaningful. Sum and RYM are both great companies and stocks to own but my attention has turned to frying other fish at this point in time.

[percy]

You must have bought SUM of mine then, I'm only interested in 2 stocks currently and they both begin with an A, I'm sure you can guess what they are.

Since when has 'artland been spelt without an H.!????

[winner69]

I have changed my view on the future level of immigration since Trump went feral. I believe people will want to come to safe, clean and green, uncorrupt little ol N.Z. in their droves. Hundreds of thousands of them over the next few years, desperate to escape the madness that exists in much of the rest of the world. Hugely supportive of medium term future house prices and development margins although we might see a slight housing correction this year I no longer think it will be deep or meaningful.


Extract: The average value of a New Zealand home rose 13.5 percent to $631,302 in January versus the same month a year earlier, data from state-owned valuer Quotable Value showed.

http://www.sharechat.co.nz/article/c5a46992/strong-house-price-gains-to-continue-in-2017-says-qv.html?utm_medium=email&utm_campaign=Strong%20house%20price%20gains%20to%2 0continue%20in%202017%20says%20QV&utm_content=Strong%20house%20price%20gains%20to%20 continue%20in%202017%20says%20QV+CID_34b7f9dc79430 14ba6d6beb9cae48394&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlec5a46992strong-house-price-gains-to-continue-in-2017-says-qvhtml

No worries

[Bjauck]

I have changed my view on the future level of immigration since Trump went feral. I believe people will want to come to safe, clean and green, uncorrupt little ol N.Z. in their droves. Hundreds of thousands of them over the next few years, desperate to escape the madness that exists in much of the rest of the world.
(PDF file link) http://www.civitas.org.uk/content/files/crime_stats_oecdjan2012.pdf
NZ Homicide rate is below that of the USA but is above that of Australia, England, Scandianvia and most of Europe. The incidence of (reported) Rape in NZ is above that of the USA, UK and Europe


https://en.wikipedia.org/wiki/List_of_countries_by_traffic-related_death_rate
Road deaths/100,000 population: USA 10.6, NZ 6.0, UK 2.9, Australia 5.4, Germany 4.3


Clean and green: Maybe - Population density helps but NZ's policies are not cleaner or greener than those in many other countries.


Hugely supportive of medium term future house prices and development margins although we might see a slight housing correction this year I no longer think it will be deep or meaningful. So far, it seems to be heading to a consolidating period rather than a deep correction.

[Beagle]

Bjauck, I tried clicking on your first link to have a look but it came up page not found. Looking at the link it appears to be a January 2012 report. The world has changed a LOT in the last five years but I agree the N.Z. police need to take a far harder stance against gangs, methamphetamine and policing needs to be seriously enhanced in Kaitaia, (the murder capital of N.Z.), which is somewhere I would never consider living.

Road deaths, more needs to be done regarding educating overseas tourists, more medium barriers and roading enhancements but some of the issue relates to N.Z. difficult and mountainous terrain and there will be no changing that.

Yes N.Z's low population density is a major attraction.

My contention remains however. According to BNZ economists there are presently approx. one million Kiwi's living overseas. Many parts of the world are now losing their relative attractiveness, in my opinion.
Augers well for continuing immigration and high level's of demand for housing stock which is broadly supportive of the real estate market and supportive of retirement companies obtaining premium pricing on their developments, i.e. development margins.
I also believe long term the penetration rate that Vaygor1 was referring too a while back will significantly expand as I believe there is increasing awareness amongst retiree's of the significant lifestyle benefits which village life confers.

Long term I think the retirement sector is a wonderful growth story and to exclude if entirely from one's portfolio you have to be of the view that real estate prices are in for a meaningful correction which will impact medium term development margins or feel that the stocks in the sector are all overpriced, (or both). I don't hold either view any more.
To me RYM seem fair value based on a underlying forward PE in the low 20's and SUM appear slightly underpriced based on a slightly lower underlying PE so I will hold SUM now for long term growth and wouldn't rule out doubling down if the result on 23 February and outlook comments are good. I don't have sufficient confidence in MET's track record to invest there.

[LAC]

Read through some of their reports couple of nights ago, SUM looks better value at this stage than RYM. Looking fwd to 23 Feb:) Both great to have though IMO.

[Raz]

I have changed my view on the future level of immigration since Trump went feral. I believe people will want to come to safe, clean and green, uncorrupt little ol N.Z. in their droves. Hundreds of thousands of them over the next few years, desperate to escape the madness that exists in much of the rest of the world. Hugely supportive of medium term future house prices and development margins although we might see a slight housing correction this year I no longer think it will be deep or meaningful.

I understand your point of view Roger however have you considered the overriding factor will be government policy and in turn will be effected by political sway of the population not just demand to come here. I sense this is changing in little old NZ as well. Note the PR pieces promoting migration and its benefits just this week in the herald which suggest to me there is a perceived need to lobby the population to continue as is.

I think most expats come back at semi retirement age, they may wish to come back earlier however unless the careers opportunities are available/comparable in nature they tend to stay where they are.

Long term still a great strategy this sector however not so sure its "a sure thing" on the immigration policy, medium term as a rational for this.

[Beagle]

Thanks for your post RAZ. Yes absolutely as posted previously I think if Winston Peters is influential in any new possible alliance later this year some immigration changes could be forthcoming but I don't think it'll be anything like Donald Trumps bombshell. As you suggest, the long term tailwinds are very attractive in this sector. Technically she's just popped up through the 100 day MA so looking good as we head towards the annual report in three weeks time.

[Bjauck]

Bjauck, I tried clicking on your first link to have a look but it came up page not found. Looking at the link it appears to be a January 2012 report. The world has changed a LOT in the last five years but I agree the N.Z. police need to take a far harder stance against gangs, methamphetamine and policing needs to be seriously enhanced in Kaitaia, (the murder capital of N.Z.), which is somewhere I would never consider living. Fixed http://www.civitas.org.uk/content/files/crime_stats_oecdjan2012.pdf
The World is always changing, I would not necessarily expect changes since 2012 to be in NZ's favour. However I cannot (quickly) find more recent comparative statistics. Tax cuts, population increases, housing pressures etc all have an effect on the incidence of crime and the ability to cope with crime.


Road deaths, more needs to be done regarding educating overseas tourists, more medium barriers and roading enhancements but some of the issue relates to N.Z. difficult and mountainous terrain and there will be no changing that. Some countries and regions are naturally unsafe. Educating NZ drivers, road quality, age of cars, enforcement etc are all important too.


Yes N.Z's low population density is a major attraction. Depends on interests....if you like wide access to cultural activities, cultural variety, city life, etc.


My contention remains however. According to BNZ economists there are presently approx. one million Kiwi's living overseas. Many parts of the world are now losing their relative attractiveness, in my opinion. Fair enough - no room for complacency imo and in some spheres NZ may be deteriorating but less rapidly than other countries :o.... Comparative economic performance plays a big part especially for returning NZers. NZ has to ensure its health system, infrastructure and housing can cope with an increasing population and minimise any populist backlash.


Augers well for continuing immigration and high level's of demand for housing stock which is broadly supportive of the real estate market and supportive of retirement companies obtaining premium pricing on their developments, i.e. development margins.
I also believe long term the penetration rate that Vaygor1 was referring too a while back will significantly expand as I believe there is increasing awareness amongst retiree's of the significant lifestyle benefits which village life confers.

Long term I think the retirement sector is a wonderful growth story and to exclude if entirely from one's portfolio you have to be of the view that real estate prices are in for a meaningful correction which will impact medium term development margins or feel that the stocks in the sector are all overpriced, (or both). I don't hold either view any more.
To me RYM seem fair value based on a underlying forward PE in the low 20's and SUM appear slightly underpriced based on a slightly lower underlying PE so I will hold SUM now for long term growth and wouldn't rule out doubling down if the result on 23 February and outlook comments are good. I don't have sufficient confidence in MET's track record to invest there. Agree except in respect to MET, as I have a shareholding.

[Beagle]

https://www.nbr.co.nz/article/auckland-average-house-price-firms-january-breaking-tradition-b-199094

The average sale price in January of $913,938 edged up from $913,709 in December last year, and was 13% ahead of January last year, Barfoot said in a statement. The median price of $846,500 advanced 0.8% from December and was 11% higher than January last year.

No worries.

[couta1]

https://www.nbr.co.nz/article/auckland-average-house-price-firms-january-breaking-tradition-b-199094

The average sale price in January of $913,938 edged up from $913,709 in December last year, and was 13% ahead of January last year, Barfoot said in a statement. The median price of $846,500 advanced 0.8% from December and was 11% higher than January last year.

No worries. Shares look cheap at todays price when measured against the expected upcoming result ,which will be solid. Must be due for a run up soon I'd say.

[Beagle]

Shares look cheap at todays price when measured against the expected upcoming result ,which will be solid. Must be due for a run up soon I'd say.

I think so mate. Am thinking about doubling down on this one in the lead up to the result...and one starting with A :D.... I have a fairly modest position in both at this point to be honest.

[winner69]

I think so mate. Am thinking about doubling down on this one in the lead up to the result...and one starting with A :D.... I have a fairly modest position in both at this point to be honest.

Hey t_j - no Arvida share price on a roll seeing couts and rogie have been buying

[Food4Thought]

I think so mate. Am thinking about doubling down on this one in the lead up to the result...and one starting with A :D.... I have a fairly modest position in both at this point to be honest.

Doubling down?

Loving it. ... Dr Andrew Wong on board. Perception. Let's see where that takes SUM. Some Wealthy foreigners are more likely to hook into this share with a more diverse representation on board with skilled individuals. All in the Chinese Spring Festival period... good change.

[LAC]

SUM seems to be ticking a lot of my boxes at this price. Announcement just 2 weeks away.

[couta1]

SUM seems to be ticking a lot of my boxes at this price. Announcement just 2 weeks away. It's an interesting stock to follow both pre and post announcement. The market has been asleep on this one on various occasions until the last minute, even after a great result it doesn't always rise a lot initially but gathers steam a week or so later as it did on its last run up. Ryman has risen around 50c over the last couple of weeks, yet their results don't come out till June, I reckon it's all down to the fact that Ryman has more exposure to big international index funds than Sum and has more volatility.

[Beagle]

SUM seems to be ticking a lot of my boxes at this price. Announcement just 2 weeks away.

Definitely SUM grounds to be optimistic going forward.

[James108]

I see fair value as 4.60 for this share, based on a discounted cashflow model and a lot of assumptions, but hey got to put a value on it somehow..

Either way I am happy to pay a fair price for a good company.

[Food4Thought]

I doubled down.... it's too hot to not jump on the upswing. See you at $5.20 in 2 weeks.

P.s. holding and in major favour of this beauty. ...

Chinese New years resolution roosters

[Food4Thought]

Anyone else sitting excitingly on the edge waiting for SUM results tomorrow? :)

[Beagle]

SUMthings gotta give. SUM is very cheap on a fundamental basis based on underlying earnings for this sector. Growing earnings at ~ 40% and an underlying PE of about 20 aren't usually numbers that go together.

[couta1]

SUMthings gotta give. SUM is very cheap on a fundamental basis based on underlying earnings for this sector. Growing earnings at ~ 40% and an underlying PE of about 20 aren't usually numbers that go together. As discussed, she's behaving like a dormant volcano of late, let's see if it's awakened tomorrow.

[LAC]

SUMthings gotta give. SUM is very cheap on a fundamental basis based on underlying earnings for this sector. Growing earnings at ~ 40% and an underlying PE of about 20 aren't usually numbers that go together.
I really hope so as well as I put a chunk of my eggs in this basket last couple weeks. Not something I usually do but really hope it pays off.

[couta1]

What a great result, development margin up to 22.2%, build rate increased to 450 units, plus all the other goodies in the result.

[Ggcc]

Very good result in my eyes. Let's just see how mr market likes it......

[winner69]

Jeez - NPAT $145m and eps 66 cents.i was woefully pessimistic with my $120m eh

Book value now $2.58

Surely share price has to be over 7 bucks sometime soon ......on Ryman multiples couch higher

[percy]

An absolute cracker.!

[trader_jackson]

https://www.nzx.com/companies/SUM/announcements/297239
Solid results really, slightly ahead of their forecast provided on 28th October, Achieved their target of around 400 units built in FY16, with 409 being built. Operating cash flows are strong as well.
However underlying profit growth slowing from 54.9% (FY14 to FY15) to a still impressive 49.6% (FY15 to FY16) and total sales growth halved from 26.2% (FY14 to FY15) to 13.8% (FY15 to FY16).
At least, with rising interest rates on the horizon, it is pleasing to see interest bearing loans only up 10%.
Just preliminary thoughts.

[silu]

What's not to like. No seriously, what's not to like?

[macduffy]

What's not to like. No seriously, what's not to like?

The short answer, silu, is, "Nothing"!

But the real question is "Did it meet, or exceed, expectations?" The market will tell us, soon enough.

[Beagle]

Stunning result. Build rate ahead of guidance, development margin well ahead of expectations, (note second half development margin was 23.6% provides momentum into FY17 as they continue to refine their development methodologies and business model), increased build rate forecast of 450 which I was not expecting given the dramatic ramp up last year from a target of 300 in 2015 to 400 in 2016.
They have consistently beat their build rate target over many years now. 6 years land bank supply at the new higher build rate. Dementia units going into all new developments going forward.
Embedded value of existing units up very dramatically on last year, refreshed board, strong balance sheet with external debt lower than I anticipated, very strong cash flow...seriously....what is not to love about this result !
48% compound average growth rate in the five years since listing...in anyone's language this is a highly successful growth company.
Tailwinds remain very strong for this sector for at least the next twenty years.
Underlying EPS 25.57 cps. Chose what PE you think is appropriate for a company growing at a CAGR of 48% per annum.

[LAC]

Yay!!!!
Really enjoyed reading today's report:) Was getting worried when the SP wasnt really moving the last few weeks but I am sure the market will like today's results.

[couta1]

Yay!!!!
Really enjoyed reading today's report:) Was getting worried when the SP wasnt really moving the last few weeks but I am sure the market will like today's results. As posted previous, the market has been historically very slow with digesting SUMs great results, otherwise this should be opening at $5.20 ish.

[trader_jackson]

As posted previous, the market has been historically very slow with digesting SUMs great results, otherwise this should be opening at $5.20 ish.

Not as bad as it was with Arvida... they were about 6 months too slow digesting it ;)

But the market is the market, I would like to think the share price is up in the high single digits today, otherwise the market clearly has some concerns

[Food4Thought]

As posted previous, the market has been historically very slow with digesting SUMs great results, otherwise this should be opening at $5.20 ish.

I can't find my original reply.

Over the moon to wake up to these results and perhaps my estimate for a $5.20SP was a week off.

How great is the increase in dividend and also their performance. The over all scene frim management and staff is a company moving forward smoothly and consistently.

A good start to the day when you are up 5% on a large holding and the outlook is much better.

Happy days investors

[Beagle]

Jeez - NPAT $145m and eps 66 cents.i was woefully pessimistic with my $120m eh

Book value now $2.58

Surely share price has to be over 7 bucks sometime soon ......on Ryman multiples couch higher

Underlying EPS 25.5 cps for FY16. What multiple is appropriate for a company with a CAGR in underlying EPS for the last five years of 48% when RYM are growing at approx. 15% ?

Even if we use RYM's multiple which I'd argue is conservative, RYM have traditionally been seen as good value when they've been trading on a forward underlying PE of 23 so lets use that forward PE, although to be quite honest I think there's a very good case to be made for a higher PE considering the vastly higher compound growth rate of RYM but nonetheless the hound will be conservative and use the good value for the sector RYM multiple.

So 23 times FY17 EPS which is what ?

Looking at 2016 we saw development margins grow very nicely in the second half from the first half which proves an underlying improvement in the efficiency of their development model, 23.6% IIRC in the second half.
This augers well for FY17 as does the increase in build rate to 450 from 400, a growth in build rate of 12.5%.

Turning to embedded value, we saw a very strong growth in embedded value of existing units this year which is indicative of very strong realized profits on resales in future years.

All up I would be expecting profit growth this year of 20-30% and that's being conservative I feel. Say 25% growth this year gives FY 17 underlying EPS of 25.5 x 1.25 = 31.88 cps.

31.88 cps using a forward multiple of 23 suggests a target price late 2017 of ~ $7.33. Conclusion - A great stock to hold long term.

[winner69]

Just for interest sakes here comparison of SUM and RYM multiples

SUM is at least 30% or so 'cheaper' than RYM at todays prices

Even allowing for RYM deserving a premium for best in class one would think that SUM share price should be 25% higher - somewhere about $6.50

Methinks heaps more returns from SUM than RYM over the next few years - both from company performance and in particular a significant market re-rating

My preferred valuation multiple is the Price / Book one

[Beagle]

I for one in terms of the PE accorded a growth stock "get it" that people still look to RYM as one of the greatest shareholder wealth generators on the NZX of the twenty first century and a lot of investors are "emotionally attached" to that stock for the warm and smug feel it gives them because of the huge consistent wealth generator its been over the years but SUM realize there's a new kid on the block its what's going forward from here that really counts.

Fact is Winner, as you and I quite correctly called it three years ago RYM has done nothing but basically tread water and its SP oscillate within a fairly tight range around the price it was three years ago. Its probably still fully and fairly priced even now whereas on the other hand...I would suggest it shouldn't be too hard for intelligent investors to join the dots going forward.

[stevevai1983]

excellent result.. happy shareholder

[Beagle]

Might be safe for me to go to the annual shareholders meeting this year :D...goes without saying that would be flying AIR !

[peat]

My preferred valuation multiple is the Price / Book one
yes , bearing in mind the variability of 'valuations'

we actually found Aravida and MET better on this measure.

[winner69]

yes , bearing in mind the variability of 'valuations'

we actually found Aravida and MET better on this measure.

I know but I don't think either 'deserve' such a multiple

I think 3 times book value for Ryman is outrageous but if the market wants to be outrageous maybe SUM can be valued at 3 times as well.

[Snow Leopard]

After careful analysis of the full year accounts the best word for the result is:

'ludicrous'.

At some point this is all going to have to slow down.

Best Wishes
Paper Tiger

Disc: hold

[Beagle]

After careful analysis of the full year accounts the best word for the result is:

'ludicrous'.

At some point this is all going to have to slow down.

Best Wishes
Paper Tiger


Disc: hold
Not for a long while yet. Strong demographic tailwinds for the next 20 years ! Shareholders have a tiger by the tail :p with this one and are hanging on for the ride of their life !
Lets the good times roll..oh gosh wasn't that a Cars song :) https://www.youtube.com/watch?v=7BDBzgHXf64

[troyvdh]

I agree Tiger..usually I look at the SP trajectory...SUM hasn't reached previous highs has it,,?

[winner69]

After careful analysis of the full year accounts the best word for the result is:

'ludicrous'.

At some point this is all going to have to slow down.

Best Wishes
Paper Tiger

Disc: hold

Total revaluations are ~11% of the portfolio - suppose in line with property price increases we have seen

Even more than I expected with my $120m npat forecast

Property market has to cool sometime eh - maybe punters are still a bit wary

[winner69]

I agree Tiger..usually I look at the SP trajectory...SUM hasn't reached previous highs has it,,?

So true mate

Was $5.60 in September so still a bit below that

Just shows you how much sentiment has turned against the retirement and property sectors

No worries though

[kizame]

8706

Monthly chart trajectory

[winner69]

I see fair value as 4.60 for this share, based on a discounted cashflow model and a lot of assumptions, but hey got to put a value on it somehow..

Either way I am happy to pay a fair price for a good company.

Consider redoing your sums after this announcement?

You were probably a bit light for F16 .... but then again the future is more important eh

[James108]

Consider redoing your sums after this announcement?

You were probably a bit light for F16 .... but then again the future is more important eh

Yes, without looking in depth yet there are atleast two things in this announcement that should increase my models fair value:

1. build rate increased to 450 (I assumed 425). However the long term build rate is by far more important (build rate can't grow forever) and given aggressive ramp up it may be appropriate to revise upwards (I assumed long term build rate 500/year).
2. Development margin much higher than expected, however may be due to housing boom, at this stage I am reluctant to change assumed long term average of 17%

[Lewylewylewy]

...Property market has to cool sometime eh - maybe punters are still a bit wary

Exactly correct. I see these stumbling along upwards, carefully. They're posed to become a bargain, but at risk of dropping if the housing market falls. I'll be riding these as close as possible to that fall (if it happens - it may just stagnate, which will mean only a bit of a drop).

Their story will be an interesting one over the next 20 years, but won't be a buy and hold for gains every single year.

Disc: Hold a modest portion, which sit in my long term hold category. I may dip in and out of these over the years.

[stevevai1983]

Yes, without looking in depth yet there are atleast two things in this announcement that should increase my models fair value:

1. build rate increased to 450 (I assumed 425). However the long term build rate is by far more important (build rate can't grow forever) and given aggressive ramp up it may be appropriate to revise upwards (I assumed long term build rate 500/year).
2. Development margin much higher than expected, however may be due to housing boom, at this stage I am reluctant to change assumed long term average of 17%
This year's exceptional results are mainly due to increase build rate + increase in development margin. especially development margin, if next year margin reduce to 20% and build 450units, the growth will be small.

[Beagle]

http://www.stuff.co.nz/business/89767795/summersets-scene-for-continued-rollout-of-villages?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Saturday+25 +February+2017

Must say Julian Cook is looking young, fit and very healthy...just like Summerset :)

[Lewylewylewy]

Shooting the breeze:

I really like the business / sector, but does anyone else feel like there are better gains to be had elsewhere now that the heat has somewhat disipated from the property market? I think short, medium and long term, no matter what happens to the property market, SUM is positioned better and better each year as long as more and more people are coming into the country... But while the property market is cooled, I suspect that having money sitting in SUM might not be a great way to earn from it. I would be happy if, while the property market is cooler, more money was returned as a divie so I could justify having my cash sitting there (vs the bank). That said, I suppose the time to be investing in property (via SUM) is while the market is cool... I just can't help feeling that having my money in SUM during a cooled property market offers little benefit vs only investing when the market starts to heat up.

What are other peoples views?

[percy]

Don't want to restart the war,but if you have had a good run,take your capital out and recycle it.
Hang onto the SUM shares you have left, that I call "free ones". I did this with both SUM and RYM.
In the meantime the tailwinds in this sector remain very strong.

[Food4Thought]

Don't want to restart the war,but if you have had a good run,take your capital out and recycle it.
Hang onto the SUM shares you have left, that I call "free ones". I did this with both SUM and RYM.
In the meantime the tailwinds in this sector remain very strong.

It is a good sector to be in. No doubts about it. I have this funny feeling we haven't seen half the demand for these shares... secure, medium to low risk investment in my opinion. Property prices in NZ are here to stay, even with potential for a reduction for a short while. I don't think the economy current mindsets as a whole is going to shift quickly. The tailwind is strong

[Lewylewylewy]

I kind of feel the same way. Short term I feel like these could do a little boom this week and go up another 10c at least. Medium term I think they could drop. Long term I think they'll be a win.

However, I feel like Trump noise tomorrow might wind the market until Janet starts a Yellin' on Friday. Might take Percy's advice... Money in the hand is worth more than on paper, and selling would give me my 1% increase from trading activity for the week. Hmmm, think I'll wait till the end of the day to decide :)

Thanks for the mind food, guys.

[Lewylewylewy]

Called it: $5.19 -> $5.27

[troyvdh]

Dear Lewy...I would appreciate an explaination as to why you thinks a property correction will have significant impact on retirement entites..like do you believe that an owner of a property worth say $1m...becomes say $900k...will not continue to purchase a retirement unit for say $400k...I just dont get it honestly mate.

[fiasco]

It is a good sector to be in. No doubts about it. I have this funny feeling we haven't seen half the demand for these shares... secure, medium to low risk investment in my opinion. Property prices in NZ are here to stay, even with potential for a reduction for a short while. I don't think the economy current mindsets as a whole is going to shift quickly. The tailwind is strong

Agree, SUM I feel is probably at this point the better one to hold. RYM and MET both up 3% won't take long before SUM is testing new highs. Great management who are on top of ongoing growth.

[777]

Dear Lewy...I would appreciate an explaination as to why you thinks a property correction will have significant impact on retirement entites..like do you believe that an owner of a property worth say $1m...becomes say $900k...will not continue to purchase a retirement unit for say $400k...I just dont get it honestly mate.

The owner will only want to pay $360,000 for the unit. SUM will have written down the values to reflect the drop in the market so the shares will be worth less accordingly. Well that is how I see it.

[777]

Agree, SUM I feel is probably at this point the better one to hold. RYM and MET both up 3% won't take long before SUM is testing new highs. Great management who are on top of ongoing growth.

RYM is hardly up 3%. It is simply recovering what it lost yesterday

[fiasco]

RYM is hardly up 3%. It is simply recovering what it lost yesterday

What kind of logic is that, it's UP 3% today, it's irrelevant it lost that yesterday. It could have continued heading south, but reverted back up, as it has for the last few weeks from when it was 8.2x

[Beagle]

New immigration stat's out yesterday, some sort of record...now a whopping 71,000 something and reported today that those looking to migrate overseas has hit a some multi year low, sorry forgot how many years.

The BNZ estimate there's approx. one million Kiwi's currently living overseas. The world has got more and more crazy with every passing month. I see no let up whatsoever in the number of Kiwi's wanting to come home somewhere safe and insatiable demand from new immigrants wanting someone safe to reside.

I think the market demand dynamics are hugely supportive of real estate prices for the foreseeable future. Other tailwinds in this sector are very strong for at least the next 20 years.
Underlying PE is cheap for this sector. CEO is starting to hit his straps. I expect SUM to be one of the best long term growth stories on the NZX over the short, medium and long term.

[Lewylewylewy]

Dear Lewy...I would appreciate an explaination as to why you thinks a property correction will have significant impact on retirement entites..like do you believe that an owner of a property worth say $1m...becomes say $900k...will not continue to purchase a retirement unit for say $400k...I just dont get it honestly mate.

lol Dear Lewy :)

To answer your question: Excluding any mechanics of the business, if property prices go up, so does the value of the assets SUM owns (NTA) and therefore one may choose to value the SP higher :)

In terms of the mechanics of the business, there's a lot of discussion on this thread regarding this, everyone seems to have their own ideas. I will try not to dredge up the argument for everyone's sanity, but I will skirt the fringe by saying that if property prices go up, SUMs customers will have greater disposable income, which must be a good thing :)

[jmsnz]

lol Dear Lewy :)

To answer your question: Excluding any mechanics of the business, if property prices go up, so does the value of the assets SUM owns (NTA) and therefore one may choose to value the SP higher :)

In terms of the mechanics of the business, there's a lot of discussion on this thread regarding this, everyone seems to have their own ideas. I will try not to dredge up the argument for everyone's sanity, but I will skirt the fringe by saying that if property prices go up, SUMs customers will have greater disposable income, which must be a good thing :)

Well, yes they will have more disposable income, but that is only party of the issue and doesn't take account of:
a) SUM/RYM etc are selling a licence to occupy, they aren't selling the unit they will recycle that capital cost of the unit many times so what they get for that licence is still very profitable for them
b) An aging population means that there is growing not reducing demand for old age care so demand will hold the price up
c) A reduction in house prices really only affects the people at the margin of affordability of moving into one of these units, there is still enough demand to fill them
d) When the time has arrived for Mum/Dad to move then they have to move and whether or not their house is worth less than was last year of not won't be the top consideration for Mum/Dad or the family

I think where it might get interesting is if house prices got so high that they became generational assets but then families would be faced with the capital funding of Mum/Dad's retirement unit in return for tenure in the generational home. Ok for single child families not good for larger families.

Another interesting point for me is that through the GFC RYM share price fell significantly but their profitability and performance didn't. That to me suggests a disconnect between how the market thinks of these types of businesses and what actually happens. Yes they did less development, but the churned as many units as usual, which is (sadly) the nature of their business.

[Lewylewylewy]

...Another interesting point for me is that through the GFC RYM share price fell significantly but their profitability and performance didn't. That to me suggests a disconnect between how the market thinks of these types of businesses and what actually happens. Yes they did less development, but the churned as many units as usual, which is (sadly) the nature of their business.

Which is exactly why I mentioned that I think that medium term the price will go down, but short term and long term is up. At some point there will be a catastrophe, and SUM will become cheap to buy :)

Population grows, land is a finite resource. So as long as population keeps increasing and people keep getting older, SUM (and other shares with business based on land) will continue to be a good bet. This is why half of my top 10 favourite shares are property based.

[winner69]

quote jmsnz

Another interesting point for me is that through the GFC RYM share price fell significantly but their profitability and performance didn't. That to me suggests a disconnect between how the market thinks of these types of businesses and what actually happens. Yes they did less development, but the churned as many units as usual, which is (sadly) the nature of their business.

The 'disconnect' was general market sentiment - most things went down. even the best stocks were rerated downwards, irrespective of company performance.

If there is another 'catastrophe' as lewy describes won't just see the likes of SUM and RYM fall in price and become 'cheap' again - most things will be 'cheap' with very few places to hide.

[James108]

Dear Lewy...I would appreciate an explaination as to why you thinks a property correction will have significant impact on retirement entites..like do you believe that an owner of a property worth say $1m...becomes say $900k...will not continue to purchase a retirement unit for say $400k...I just dont get it honestly mate.

It seems reasonable to me that the price the retirement operators can achieve for their units correlate strongly with house prices. I would say it is likely more of a pricing thing than a demand thing.

[Lewylewylewy]

Another factor is that without growth in property values, SUM can't revalue their assets and borrow (leverage) against them to buy more. This equates to their future growth prospects dropping and therefore the PE will drop (IOW SP).

[Beagle]

http://www.stuff.co.nz/business/property/89872437/summerset-overcomes-major-hurdle-to-120-million-boulcott-retirement-village

Thanks to Couta1 for e.mailing me the article.

[winner69]

Some days the SUM share price goes up and other days it goes down ....

.....but at the end of the no matter what the share price keeps trending up ...up ...up (about 30% a year)

For those with a short time frame attention there have been times when SUM has been a good buy and times when the panic button needs to be hit ......but medium/long term no worries

Revaluations might not be as high for the next year but sales will keep happening (eh Troy) .... and SUM share price will still keep rising from these levels. Same factors affect RYM but as they are over valued the part that the sahre price will keep rising might night entirely apply to them.

For baabaa - the red line is only drawn on and not calculated but if I bothered calculate it I don't think it would be too much different

[Beagle]

Some days the SUM share price goes up and other days it goes down ....

.....but at the end of the no matter what the share price keeps trending up ...up ...up (about 30% a year)

For those with a short time frame attention there have been times when SUM has been a good buy and times when the panic button needs to be hit ......but medium/long term no worries

Revaluations might not be as high for the next year but sales will keep happening (eh Troy) .... and SUM share price will still keep rising from these levels. Same factors affect RYM but as they are over valued the part that the sahre price will keep rising might night entirely apply to them.

For baabaa - the red line is only drawn on and not calculated but if I bothered calculate it I don't think it would be too much different

Beautiful image mate...picture says a thousand words...

[Food4Thought]

http://www.stuff.co.nz/business/property/89872437/summerset-overcomes-major-hurdle-to-120-million-boulcott-retirement-village

Thanks to Couta1 for e.mailing me the article.

Wow... nice to read. Know the Hutt reasonably well. ... suits a retirement village well... I'd prefer a retirement village nearby than a Westfield or shopping complex. Wonder how that Lower Hutt earthquake damaged mall is going. . . Hope they make easy access for people a little less mobile

[Food4Thought]

Very good news and look at that .... it's schwinging onwards and upwards. Jaaaaa :) .... lazy +9% the last 4 weeks.... also think it is early days...

[Lewylewylewy]

So glad I decided not to profit take on these. Decided that I would allow myself to keep holding as they are in my "long term hold - growth" category, and also on some advice (I think it was Percy gave a while ago), which was to "let your profits run".

I would not be surprised to see these go even further, but need to take some time to do the maths to see how far I would estimate they will go (short term).

[Beagle]

Stunning result. Build rate ahead of guidance, development margin well ahead of expectations, (note second half development margin was 23.6% provides momentum into FY17 as they continue to refine their development methodologies and business model), increased build rate forecast of 450 which I was not expecting given the dramatic ramp up last year from a target of 300 in 2015 to 400 in 2016.
They have consistently beat their build rate target over many years now. 6 years land bank supply at the new higher build rate. Dementia units going into all new developments going forward.
Embedded value of existing units up very dramatically on last year, refreshed board, strong balance sheet with external debt lower than I anticipated, very strong cash flow...seriously....what is not to love about this result !
48% compound average growth rate in the five years since listing...in anyone's language this is a highly successful growth company.
Tailwinds remain very strong for this sector for at least the next twenty years.
Underlying EPS 25.57 cps. Chose what PE you think is appropriate for a company growing at a CAGR of 48% per annum.

Nobody seems to want to call it so I will. I think this stock deserves to be on a trailing PE of at least 23....really deserves a forward PE of 23, same as when RYM are cheap. A forward PE for FY17 assuming 30% growth this year 25.57 x 1.3 = 33.24 x 23 = $7.65, that's my hoped for share price as at reporting time late February 2018. There's a strong argument for a higher PE than RYM because of the companies vastly superior CAGR over the last five years and demonstrated ability to systematically improve their development model. I see potential for further development margin gains whereas RYM's systems have been very long established. If we see three or four more years of super normal growth 30-40% as this company starts to mature nicely we could easily see the share price double in the next three years, potentially even more. In my opinion SUM is worth AT LEAST $5.88 now, my target for the end of the year $7.00. Disc: Been busy buying more since the annual result.
This post should be a good conversation starter for Saturday's Auckland sharetrader meeting. SUM has much better medium term prospects than RYM, what do you think Vaygor1 ?

[Food4Thought]

Nobody seems to want to call it so I will. I think this stock deserves to be on a trailing PE of at least 23....really deserves a forward PE of 23, same as when RYM are cheap. A forward PE for FY17 assuming 30% growth this year 25.57 x 1.3 = 33.24 x 23 = $7.65, that's my hoped for share price as at reporting time late February 2018. There's a strong argument for a higher PE than RYM because of the companies vastly superior CAGR over the last five years and demonstrated ability to systematically improve their development model. I see potential for further development margin gains whereas RYM's systems have been very long established. If we see three or four more years of super normal growth 30-40% as this company starts to mature nicely we could easily see the share price double in the next three years, potentially even more. In my opinion SUM is worth AT LEAST $5.88 now, my target for the end of the year $7.00. Disc: Been busy buying more since the annual result.
This post should be a good conversation starter for Saturday's Auckland sharetrader meeting. SUM has much better medium term prospects than RYM, what do you think Vaygor1 ?

I like the 7 at the front. I also wonder about share splits, and dangling the carrot for additional investors. So far, the special tricks and insentives from SUM have been pretty average. I believe they are keeping a few tricks up their sleeves and playing a safe game. Which I love. Very happy with this outcome and where the share price is going. Was expecting a bit more overall banter from the ST participants.... perhaps waiting before they count their chickens

[macduffy]

I'm enthusiastic about SUM's prospects too, but I note Roger's caveat, beginning "If.....".

I think we've canvassed the pros and cons of share splits in other threads but as far as SUM is concerned I wouldn't see any point in one. Let's wait until they're up with RYM's SP before getting into that!

:cool:

[h2so4]

I like the 7 at the front. I also wonder about share splits, and dangling the carrot for additional investors. So far, the special tricks and insentives from SUM have been pretty average. I believe they are keeping a few tricks up their sleeves and playing a safe game. Which I love. Very happy with this outcome and where the share price is going. Was expecting a bit more overall banter from the ST participants.... perhaps waiting before they count their chickens

I think 7 is too cheap.
Even on a cash return basis SUM is currently returning over12%.

[Beagle]

I like the 7 at the front. I also wonder about share splits, and dangling the carrot for additional investors. So far, the special tricks and insentives from SUM have been pretty average. I believe they are keeping a few tricks up their sleeves and playing a safe game. Which I love. Very happy with this outcome and where the share price is going. Was expecting a bit more overall banter from the ST participants.... perhaps waiting before they count their chickens Julian Cook coming from an investment banking background probably has a whole deck of cards to play in terms of financial engineering and such like. Probably wait till 2019 when the SP is ten dollars something and then do a share split :)

[ratkin]

Julian Cook coming from an investment banking background probably has a whole deck of cards to play in terms of financial engineering and such like. Probably wait till 2019 when the SP is ten dollars something and then do a share split :)

Roger Rampjet is on board, looking forward to a barrage of pro summerset postings

[Beagle]

Roger Rampjet is on board, looking forward to a barrage of pro summerset postings

Good stuff then, settle back in your finest armchair and enjoy the show.

How's this for starters. What possible share price in five years time using actual results for the last five years of a compound average growth rate of 48% per annum assuming SUM stay at the same current modest PE for such a strong growth company. EPS 25.5 cps x 1.48 x 1.48 x 1.48 x 1.48 x 1.48 = $1.81 EPS in 2022. Impossible you might say, perhaps not, they have after all grown EPS at exactly that average rate compounding for the last 5 years.
Stock currently trades at $5.40 on 25.5 cps underlying = PE of 21 times.

21 times $1.81 = $38 share price in 2022. Potentially SUM could increase in value by as much as seven times in the next five years. Could SUM become the next greatest wealth creator on the NZX and follow in the footsteps of RYM ?

Of course my modelling suggests growth will slow to more normal rates similar to RYM at some stage in the next few years but you never know. Pays to invest in stocks with heaps of potential.

How are you enjoying the show so far ?

[winner69]

Jeez Roger Rampjet - $38 in 2022 has a good ring to it

I'd be happy with $9 by Christmas - where it should be - and $20 by 2020 (that sounds like a slogan)

Love that Rampjet tag - but not really applicable to you.

[Food4Thought]

Good stuff then, settle back in your finest armchair and enjoy the show.

How's this for starters. What possible share price in five years time using actual results for the last five years of a compound average growth rate of 48% per annum assuming SUM stay at the same current modest PE for such a strong growth company. EPS 25.5 cps x 1.48 x 1.48 x 1.48 x 1.48 x 1.48 = $1.81 EPS in 2022. Impossible you might say, perhaps not, they have after all grown EPS at exactly that average rate compounding for the last 5 years.
Stock currently trades at $5.40 on 25.5 cps underlying = PE of 21 times.

21 times $1.81 = $38 share price in 2022. Potentially SUM could increase in value by as much as seven times in the next five years. Could SUM become the next greatest wealth creator on the NZX and follow in the footsteps of RYM ?

Of course my modelling suggests growth will slow to more normal rates similar to RYM at some stage in the next few years but you never know. Pays to invest in stocks with heaps of potential.

How are you enjoying the show so far ?

This is my entertainment. (well one form as well as some exercise and work etc etc)

So excited as in the past other shares I invested in went 2-6+ times their buy price, easy ( SEK, BGR, KMD, AIR, RYM, THL, AIA, 42Below, GXH, some others) (don't worry, I also made some expensive lessons with others that did the reverse... yet was good to painfully study their pro's and cons once I burnt myself nicely (PPL, RAK, NZO, RUB).

If only I held a lot of them for more time and as my non technical pictures showed them to swing. I would be able to buy a house outright, no questions asked. A small modest one in a small town somewhere where the prices haven't gone fruit loop. Time is a valueable lesson and hold onto your gut feelings. Currently in a amazing situation with SUM and the horizon looks rosey

Ilovethisshow.

[Snow Leopard]

I reckon $6 by next New Years would be a fair price for this.

Best Wishes
Paper Tiger

PS: I dug out the model I did in 2013 and I find that actual performance has exceeded expectations over the last three years.

[troyvdh]

Sorry guys...the 87 crash..I lost 30k...The above posts I seen the before....before the 87 crash...i.e..."prices should be"... blah blah.
This to me is a warning sign....
In 86 I remember going to see R Jones in Methven...folk were asking questions like..."my son needs this amount of money for this"...or "my son wants a new MTB..should I sell now or hold o. for a higher price".
Paper tiger..im actually surprised that you are partaking in the exercise of predicting where a share price will be.troy

[allfromacell]

Sorry guys...the 87 crash..I lost 30k...The above posts I seen the before....before the 87 crash...i.e..."prices should be"... blah blah.
This to me is a warning sign....
In 86 I remember going to see R Jones in Methven...folk were asking questions like..."my son needs this amount of money for this"...or "my son wants a new MTB..should I sell now or hold o. for a higher price".
Paper tiger..im actually surprised that you are partaking in the exercise of predicting where a share price will be.troy

I love the quote by Warren B "Price Is What You Pay, Value Is What You Get”. There is nothing wrong with looking at a business and assigning a value to it, then taking that model and trying to predict its future value... This is after all, what good investing is about.

[Snow Leopard]

...Paper tiger..im actually surprised that you are partaking in the exercise of predicting where a share price will be.troy

and I am very surprised that you interpret that as a prediction of future share price when it is obviously a statement of expected value for a definite future time.

It reads, for the hard of reading, if the share price is $6 at 1-Jan-17 then the price will inline with my valuation for that same time. Implicit in that statement is that the further away from that $6 at that time will define the degree by which the price under or overvalues the share.

Strange, as it may seem I do not believe that anyone is actually really predicting the share price.

I guess you see what you want to see eh!

Best Wishes
Paper Tiger

[troyvdh]

Ok ...I have 4 k shares in RYM and SUM.....what about you guys

[allfromacell]

Ok ...I have 4 k shares in RYM and SUM.....what about you guys

The amount is not so relevant... I prefer to use a % of total portfolio, SUM is currently 25% of my portfolio. I'm much younger therefore don't mind having a much higher risk tolerance.

[JoeGrogan]

The amount is not so relevant... I prefer to use a % of total portfolio, SUM is currently 25% of my portfolio. I'm much younger therefore don't mind having a much higher risk tolerance.

Yeah i'm in the same boat, SUM is currently about 22% of my portfolio.

[LAC]

SUM about 33% of mine, RYM has been brought down to under 10% atm. Will offset this when the time is right. I would like to have +-40% in the retirement sector. These are the only 2 I plan to invest in though.

[Snow Leopard]

Ok ...I have 4 k shares in RYM and SUM.....what about you guys

So, if the Tiger's holding in SUM is larger than your combined holding in RYM & SUM by approximately a quarter and his holding in ARV is larger again and his combined holdings in Retirement Home shares is about half the total portfolio percentage of allfromacells SUM weighting...

What does any of this have to do with the share price?

Best Wishes
Paper Tiger

All numbers are purely to make the puzzle more interesting.

[troyvdh]

..what does any of this have to with share price"..... You have absolutely no idea what I'm getting at do you...Troy.......I guess your young yes.....go well mate...

[winner69]

Roger - not quite $38 but even a modest 20% per year gain would give you $14

And 20% pa is a lot less than the 30% pa the shareprice has been going up since it floated


Then of course SUM could get re-rated by the market with higher multiples

[Beagle]

Roger - not quite $38 but even a modest 20% per year gain would give you $14

And 20% pa is a lot less than the 30% pa the shareprice has been going up since it floated


Then of course SUM could get re-rated by the market with higher multiples

Ironic you bring that up mate. This morning I was thinking given their average annual compound growth rate in underlying EPS has been 48% for the five years since they listed, and if the multiple stayed the same, (which is less than RYM) but they grew at half their historic average rate for the next three years as this young company continues to mature and refine its development model and then for the next two years they revert to the long term sector average RYM appears to be able to enjoy (15% per annum) where's the share price five years from now ? (this sort of vision casting
five years out is what serious investors like Warren Buffet do :) ? $5.40 x 1.24 x 1.24 x 1.24 x 1.15 x 1.15 = $13.61.

Roughly the same $14 you came up with mate. 2.59 times your money over five years. All that's required is the vision to see what's possible and a healthy dose of patience.

Of course if they can demonstrate they can continue to grow at the above rate, (which is extremely conservative compared to how they have grown so far), I do suspect, as you obviously do, that we'll also see an increase to at least RYM's multiple of 23 so a further re-rating of 10% (PE 21 to a PE of 23) on top of that to give a resulting SP of ~ $15.

Since listing 5 1/4 years ago they've more than tripled in price. I think the most likely thing is we'll see that repeated.

On another theme, as predicted a while ago, massive demand due to ever increasing immigration will continue to see the N.Z. housing market extremely well supported.
http://www.sharechat.co.nz/article/673fb150/auckland-house-prices-reach-fresh-high-in-february-competition-strong-around-1m.html?utm_medium=email&utm_campaign=Auckland%20house%20prices%20reach%20f resh%20high%20in%20February%20competition%20strong %20around%201m&utm_content=Auckland%20house%20prices%20reach%20fr esh%20high%20in%20February%20competition%20strong% 20around%201m+CID_08dac25e18a821f9f00135588d2b1acc&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle673fb150auckla nd-house-prices-reach-fresh-high-in-february-competition-strong-around-1mhtml NO worries regarding housing prices for SUM shareholders.

[Beagle]

Enough of looking forward, (as much fun as that is), how does its relative value compare to the past ?

Looking at my 31 March 2016 balance sheet I see they're recorded at $4.43 and they've grown underlying earnings for the year at 50% so that suggests a SP of ~ $4.43 x 1.5 = $6.65 is fair value on 31 March 2017.

Looking back to 31 March 2015, (I didn't hold at that stage as Norah Barlow was still on the board), is even more interesting. The SP looks like it was $3.40 and they grew underlying earnings in the calendar / financial year ended 31 December 2015 by 55%.
On a relative PE basis comparing the price today $5.40 to two years ago we should be $3.40 x 1.55 x 1.5 = $7.91 as at 31 March 2017 !

My conclusion. Looking back historically, SUM today are extremely cheap relative to the underlying PE they have generally traded at in recent years.

Maybe Mr Market thinks they don't have any more super normal growth left in them ? I suspect the market may be a little conservative on that front...or maybe I am a little bullish but I don't think an assumption of underlying growth averaging 24% per annum for the next three years, (half their compound annual average for the last 5 years), is too bullish.

[Snow Leopard]

It is alright, and can even be fun, to take the raw numbers of past performance and multiply them up and invoke the name of the great Warren B. but...

If you get down to the fundamentals of how it all really works and why what has happened in the past did happen in the past and what is likely (aka your best guess) to happen in the future based on those same fundamentals and past happenings then and only then can you really come up with a reliable valuation for the assumptions your make.

Of course the future likes to get a copy of your tip sheet and rip-it to tiny little pieces and scatter them on the four winds to the twelve corners of the world.

However with a benign future and a windless year or two then SUM is very definitely a 18% pa growth stock with a current value of $5.37 rising to $6.15 at years end.

For the benefit of everybody, and especially somebody, these are not predictions of the actual share price that I expect to be attained on said dates.

Best Wishes
Paper Tiger

[brend]

to late to buy some today and clip the dividend ticket? forgotten how this works :P

goes ex divy on wednesday.

[Beagle]

SUM 2016 underlying earnings to 31 December 2016 25.5 cps at $5.40 = historic PE of 21.2
RYM underlying earnings to 31 March 2016 31.6 cps at $8.90 = historic PE of 28.1
Their balance dates are clearly different but even aligning them as closely as possible and using projected earnings for RYM for the year ended 31 March 2017, (giving them the benefit of the doubt and assuming they can achieve their stated target of 15% underlying earnings growth), we get eps of 36.34 cps which puts them on a 2017 PE 24.5

Conclusion even giving RYM the benefit of one quarter and assuming they hit their target for 31 March 2017 they are trading at a PE premium of 3.3 to SUM and yet SUM has been growing since it listed at roughly three times the rate.

If SUM were trading on the same PE as RYM and I think there's a strong argument for at least that PE if not higher considering the vastly higher current growth rate a fair price for SUM would be 24.5 x 25.5 = $6.25.

I still think RYM are expensive, picked it three years ago at around the current level to do nothing and have been right, now going on record and saying we've got at least one more year of RYM treading water before they're good value, and that assumes they can achieve their 15% underlying earnings growth for FY18...some people myself included think that might be a tough ask for them.

Worth noting that SUM now have a five year track record of consistently meeting or beating their build rate guidance. Build rate target going up 12.5% this year from 400 to 450.
Development margin was up in the mid 23's % in 2H FY16 from mid 21's% 1H Fy16...fairly obviously they continue to refine and improve their development model and as the company continues to grow they get ever increasing economies of scale and efficiencies.

Join the dots folks, we should see earnings growth this year comfortably exceed RYM's earnings growth yet again.

[Joshuatree]

Thanks Roger. Have you got the comparison figs with new kid Arvida which has been out performing all others?

[winner69]

Thanks Roger. Have you got the comparison figs with new kid Arvida which has been out performing all others?

Assuming $21m (+31%) underlying profit for F17 that's 6.3 cents a share and PE of 21/22 (not historical)

Seems like ARV is liked by the market already - even more so than SUM - good effort by the NE boy on the block

t_j will be pleased

[Beagle]

Their respective balance dates couldn't be further apart, MET June, SUM December.

In this comparison to alleviate this considerable difference I have used the half year earnings of MET to 31 December which showed a 15% increase in underlying earnings as a proxy for their full year.

2 x $38.6m = $77.2m which would give them underlying earnings growth of just on 17% for the year to 30 June 2017, (last year was $66.1m).
There are 213 m shares on issue so the eps = 36.24 and on a SP of $6.06 this gives them a comparative PE of 16.72 v 21.2 for SUM. Met look cheap but I think there are very good reasons for that.
Very poor development track record and major remedial issues with their existing buildings to name just two factors.

Agree with Winner's analysis above regarding ARV, forward PE approx. 21. The new kid on the block appears very expensive on a relative basis to SUM considering it much shorter track record and inferior earnings growth. Quite a few people holding for the dividend yield with that one.

Might compare all their development land banks to see who has the most scope to keep growing at some stage soon when I have spare time.

[Joshuatree]

Great stuff thanks guys; ARV certainly had a great run earlier and looks to out of puff.

[Fox]

Adding to what others have said recently, my opinion is that this pup is very undervalued due to its sustained growth rate (48% CAGR) proven with consistent delivery of strong results. This is mostly down to the sector growing at tremendous rates.

Using some old figures from the 2013 Cencus:
- 29.4% increase in people aged 85+ since 2006
- ~30% increase in people aged between 60-74 since 2006

Its clear the median population age is only going one way and this sector is the fundamental core that the older folks rely on. IMO any retirement stock should do well in the next 15-20 years due to these changing demographics, however it comes down to which company will outperform the others on a growth perspective.

SUM historically has a 47.58% CAGR since 2011 and a PE that is hovering around the low 20's (current trailing PE of 21.02). This gives it a PEG ratio of 21.02/47.58 = 0.44 :ohmy:. For a comparison, CVT was at 0.41 whilst it was growing, and RYM is sitting on a PE of 24.5 (Roger's calc) with a CAGR of ~15%, giving us a PEGR of 1.63. I'll let the numbers talk for this part.

It's often very difficult for a large company to consistently grow at a high level due to increased pressure on it's surroundings and diminishing abilities of management to manage (think turning the big ship analogy). Personally, I believe SUM has entered the market at the perfect time - still small enough to control growth and change with market movements, yet large enough to deploy enough capital and develop units at an astonishing rate. By 2020, the retirement sector will face the largest growth in demand which will continue for 10 years thereafter, and SUM is in the best position to take advantage of this.

I see true fair value around a PE of 24, providing a current fair value, using FY16 results, of $6.13.

[Carpenterjoe]

http://www.theage.com.au/victoria/vacant-property-tax-expected-to-raise-80m-in-push-to-increase-housing-affordability-20170305-gur4zn.html

Might effect Rym more than NZ based retirement villages or it might be just residential properties. Interesting approach.

[Joshuatree]

Int thanks CJ; great idea tax empty properties (over 24000 empty houses in melbourne). lLke the new 3 b/r houses for $400,000 !!

[winner69]

Int thanks CJ; great idea tax empty properties (over 24000 empty houses in melbourne). lLke the new 3 b/r houses for $400,000 !!

Apparently more than 30,000 empty properties in Auckland

[Carpenterjoe]

Sydney sitting around 200,000. Alot of apartment land banking from Sydney's building boom. Some owners have circa 150 empty dwellings i first heard of this style of investment about a decade ago.


https://www.google.co.nz/amp/www.dailymail.co.uk/news/article-4270282/amp/Sydney-200-000-homes-foreign-investors-blamed.html

[Brain]

That's a lot of vacant properties. Anybody know how this data is gathered?

[Beagle]

Adding to what others have said recently, my opinion is that this pup is very undervalued due to its sustained growth rate (48% CAGR) proven with consistent delivery of strong results. This is mostly down to the sector growing at tremendous rates.

Using some old figures from the 2013 Cencus:
- 29.4% increase in people aged 85+ since 2006
- ~30% increase in people aged between 60-74 since 2006

Its clear the median population age is only going one way and this sector is the fundamental core that the older folks rely on. IMO any retirement stock should do well in the next 15-20 years due to these changing demographics, however it comes down to which company will outperform the others on a growth perspective.

SUM historically has a 47.58% CAGR since 2011 and a PE that is hovering around the low 20's (current trailing PE of 21.02). This gives it a PEG ratio of 21.02/47.58 = 0.44 :ohmy:. For a comparison, CVT was at 0.41 whilst it was growing, and RYM is sitting on a PE of 24.5 (Roger's calc) with a CAGR of ~15%, giving us a PEGR of 1.63. I'll let the numbers talk for this part.

It's often very difficult for a large company to consistently grow at a high level due to increased pressure on it's surroundings and diminishing abilities of management to manage (think turning the big ship analogy). Personally, I believe SUM has entered the market at the perfect time - still small enough to control growth and change with market movements, yet large enough to deploy enough capital and develop units at an astonishing rate. By 2020, the retirement sector will face the largest growth in demand which will continue for 10 years thereafter, and SUM is in the best position to take advantage of this.

I see true fair value around a PE of 24, providing a current fair value, using FY16 results, of $6.13.

Great post and I think you've hit the nail sweetly on the head. SUM have six years land banked even at their new increased build rate of 450 units per annum. Haven't had time to look into this properly yet but I very much doubt any of the other retirement companies are as well positioned for further growth.

[mondograss]

That's a lot of vacant properties. Anybody know how this data is gathered?

I think the councils collect that information by data matching against water consumption as that utility is usually under their control.

[Onion]

I think the councils collect that information by data matching against water consumption as that utility is usually under their control.

That might be possible where there are water meters. It wouldn't be possible here in unmetered Wellington.

[Vaygor1]

For our friendly wager Roger.
I am pretty sure ALF was at $0.07, but unsure what RYM and SUM share price was over the weekend. Can you find out? :cool:

[Beagle]

I believe SUM was $5.40 and RYM $8.86 ?
You'll be able to afford the taxi home easily if RYM beats SUM over the next year :)
Actually just expanding on Roger's Yearly Moan :) the more I think about the more I don't see any legitimate reason for RYM to trade at a PE premium to the sector.
Fact is many of the smaller companies are in the process of copying their systems, (fixed fee for life but one example) and are learning the ropes swiftly so have the ability to improve their development, management and care systems and thereby drive abnormal sector growth whereas on the other hand RYM have already perfected all their systems and apart from expanding into Australia which may or may not turn out to be to their competitive advantage don't appear in a position to drive EPS outperformance.
P.S. Behind the paywall article in NBR today about mounting opposition to their "prison" style development in Devonport. Their earlier developments such as the one at Remuera Auckland are very nice indeed, lately though the sort of facilities they are building are not what' I'd retire into. Moan complete :D

[mondograss]

That might be possible where there are water meters. It wouldn't be possible here in unmetered Wellington.

Interesting, do you not have meters at all? Or do they just not charge you based on usage? Some parts of Auckland were (until the super city) so heavily subsidised I often wondered why they bothered reading the meters.

[winner69]

http://transportblog.co.nz/2016/06/13/are-vacant-homes-adding-to-the-housing-shortage-in-our-leafy-suburbs/

about empty houses in auckland -- all 33,000 of them

[macduffy]

Interesting, do you not have meters at all? Or do they just not charge you based on usage? Some parts of Auckland were (until the super city) so heavily subsidised I often wondered why they bothered reading the meters.

Meters were "introduced" some years ago in Wellington on an optional basis. The deal included a lower base water charge for those who were metered and charged according to usage, ie it suited lower consumption but not heavy users of water. I don't know how successful this proved to be.

[Beagle]

Their respective balance dates couldn't be further apart, MET June, SUM December.

In this comparison to alleviate this considerable difference I have used the half year earnings of MET to 31 December which showed a 15% increase in underlying earnings as a proxy for their full year.

2 x $38.6m = $77.2m which would give them underlying earnings growth of just on 17% for the year to 30 June 2017, (last year was $66.1m).
There are 213 m shares on issue so the eps = 36.24 and on a SP of $6.06 this gives them a comparative PE of 16.72 v 21.2 for SUM. Met look cheap but I think there are very good reasons for that.
Very poor development track record and major remedial issues with their existing buildings to name just two factors.

Agree with Winner's analysis above regarding ARV, forward PE approx. 21. The new kid on the block appears very expensive on a relative basis to SUM considering it much shorter track record and inferior earnings growth. Quite a few people holding for the dividend yield with that one.

Might compare all their development land banks to see who has the most scope to keep growing at some stage soon when I have spare time.

https://www.nzx.com/files/attachments/253843.pdf

To be fair MET's latest result and outlook doesn't look too bad. Heaps of embedded value that's for sure ! When you're the trailing horse of the field in terms of value and past development performance you've got plenty of room for improvement whereas how RYM provide outperformance from here given their perfected systems I have no idea whatsoever.

[brend]

http://transportblog.co.nz/2016/06/13/are-vacant-homes-adding-to-the-housing-shortage-in-our-leafy-suburbs/

about empty houses in auckland -- all 33,000 of them

data is quite old.

[winner69]

B
data is quite old.

Yep last census .....but some pundits say the number is higher now (with investor activity and all that)

[Bjauck]

B

Yep last census .....but some pundits say the number is higher now (with investor activity and all that)

As NZ allows it, if you are a wealthy foreign investor looking for diversification and/or capital appreciation and/ or a potential safe haven, why wold you want the risk and hassle of tenants.

[Bjauck]

https://www.nzx.com/files/attachments/253843.pdf

To be fair MET's latest result and outlook doesn't look too bad. Heaps of embedded value that's for sure ! When you're the trailing horse of the field in terms of value and past development performance you've got plenty of room for improvement whereas how RYM provide outperformance from here given their perfected systems I have no idea whatsoever. I still hold MET in part as a recovery shareholding.

[silu]

As NZ allows it, if you are a wealthy foreign investor looking for diversification and/or capital appreciation and/ or a potential safe haven, why wold you want the risk and hassle of tenants.

And in this quote is everything I hate about property and government (both major parties are responsible) in NZ. Makes me mad just thinking about it.

[Joshuatree]

We have a great prop manager who deals to everything for 7% of weekly Rental charge. ; real easy, top quality sevice;and great value.

[Onion]

Meters were "introduced" some years ago in Wellington on an optional basis. The deal included a lower base water charge for those who were metered and charged according to usage, ie it suited lower consumption but not heavy users of water. I don't know how successful this proved to be.

The council web site says that about 1200 properties have installed a water meter (so not very successful!).

I pay about $460 annually for water -- and additionally for both sewerage ($400) and stormwater ($240). For that I am allowed to drink, pee and storm as much as I like (sometimes I am told to hold the hose and not sprinkle).

[Beagle]

We have a great prop manager who deals to everything for 7% of weekly Rental charge. ; real easy, top quality sevice;and great value.

Definitely worth the money if you have a proactive good one...an awful lot of mediocre and worse performers in that industry in my experience.

Bjauck, yeah I picked up a few MET today just as a diversification strategy rather than getting too big in any one share in the sector. (Can't see any value in the other two).

I think the whole sector will do extremely well for the foreseeable future.

[Bjauck]

...
Bjauck, yeah I picked up a few MET today just as a diversification strategy rather than getting too big in any one share in the sector. (Can't see any value in the other two).
I think the whole sector will do extremely well for the foreseeable future. So that explains the slight drop in SUM and the 3% increase in MET SP for the day!

[macduffy]

The council web site says that about 1200 properties have installed a water meter (so not very successful!).

I pay about $460 annually for water -- and additionally for both sewerage ($400) and stormwater ($240). For that I am allowed to drink, pee and storm as much as I like (sometimes I am told to hold the hose and not sprinkle).

Always good practice to hold the hose and not sprinkle.

[Beagle]

So that explains the slight drop in SUM and the 3% increase in MET SP for the day!

LOL I didn't sell any SUM. Ex divvy today...keep my snout close to the ground for any opportunity.

[trader_jackson]

Assuming $21m (+31%) underlying profit for F17 that's 6.3 cents a share and PE of 21/22 (not historical)

Seems like ARV is liked by the market already - even more so than SUM - good effort by the NE boy on the block

t_j will be pleased

Pleased for all the SUM holders, and very pleased with ARV, not only with their share price performance, but also that people are actually talking and comparing "the dog" ARV. Looking forward to Oceania Healthcare.

[Beagle]

Pleased for all the SUM holders, and very pleased with ARV, not only with their share price performance, but also that people are actually talking and comparing "the dog" ARV. Looking forward to Oceania Healthcare.

Article behind the paywall on NBR a few days ago about the owners looking for a trade sale or float. Owners and investment bankers have been talking about this behind the scenes for a very, very, very long time now. We'll see if it happens. Development book isn't great and that's where the real money is.

[allfromacell]

Nice to see the SP recover the dividend so quickly. Regarding the reinvestment plan, does anyone know from which day is the buy price calculated? Ex-divi or on the payable date?

"The dividend reinvestment plan will apply to the dividend, with a discount of 2% applicable to those shareholders participating in the plan."

[macduffy]

Based on average sale price of all trades in the five trading days from the Record Date.

[Food4Thought]

Nice to see the SP recover the dividend so quickly. Regarding the reinvestment plan, does anyone know from which day is the buy price calculated? Ex-divi or on the payable date?

"The dividend reinvestment plan will apply to the dividend, with a discount of 2% applicable to those shareholders participating in the plan."


Also don't get caught out buying on day of EX divi. As a few days prior (3) it takes for ownership to change (that's what I remember anyway). Not sure if you are aware.

Have a feeling there has been a wait on buying up due to keeping price low for more shares return from Div reinvestment scheme. ... I hope so anyway

[Snow Leopard]

Also don't get caught out buying on day of EX divi. As a few days prior (3) it takes for ownership to change (that's what I remember anyway). Not sure if you are aware....

The ex-div/ex-whatever date being ahead of the record date takes care of all those hassles.

So straight forward to buy today/tomorrow/friday and not get the dividend.

Best Wishes
Paper Tiger

[777]

Also don't get caught out buying on day of EX divi. As a few days prior (3) it takes for ownership to change (that's what I remember anyway). Not sure if you are aware.

Have a feeling there has been a wait on buying up due to keeping price low for more shares return from Div reinvestment scheme. ... I hope so anyway

Historic. As PT says the T+2 takes care of all that.

[Food4Thought]

Historic. As PT says the T+2 takes care of all that.

Thanks for better explanation than me. I have a question regarding current interest rates with banks. If this is off topic for SUM, please direct me to where I can go and post about this. With interest rates being fairly low, I imagine a lot of people are looking for better returns. I have noticed that my ASB account has pretty much scrapped the interest on an account I previously got 3+ % in. I'm not impressed and unsure where I missed that boat. I already moved ships for the majority.

One thing I believe the more senior and wise generations are aware of as an instrument of income is interest bearing bank accounts and consistent returns. I think a portion of interest earners will be opting for shares to supplement income further as interest rates lower.

SUM with their low, yet increasing dividend is one of the reasons why I bought up and will continue to follow them, along with SUM's capital growth.

I always appreciate reading posts from people I would consider much more experienced, knowledgeable on analysis, well traveled and aware of historical events. Hope that makes sense. I see a really bright future for New Zealand if New Zealanders and NZ companies keep the majority of profits at home. New Zealanders taking ownership of New Zealand based businesses resulting in the country being more agile and able to say no to big foreign business dominance.

Another reason why I chose to invest in New Zealand, which I class as home. The desire for people to live in New Zealand won't perish and long term the beast (population/country) is only at the early phases of fast development and population expansion (in my view). Hence the love for the retirement sector and following their growth and looking at potential within this industry.

My personal opinion is that SUM will come to a settled long term return of around 7-10% per annum (over 15+ years). One way or another.

If anyone can steer me in a general direction to find out about interest rate discussions that would be muchly appreciated.

Another good day for SUM even though SUMmer is over.

Cheers

[Beagle]

https://www.heartland.co.nz/investments Heartland still paying 3% per annum on call mate and they're another solid Kiwi company..."Keeping profits Kiwi" its got a good ring to it don't you think ?

[Lewylewylewy]

NZ is definitely not keeping it local. These "NZ owned" companies can have shareholders all over the world, sending profits wherever. Also NZ is basically being sold to the Chinese (property and its businesses).

Of course, wise Kiwi investors are profiting along the way, or selling out, depending on your viewpoint.

[Snow Leopard]

Discovered that SUM run a DRP today, so on a whim, I signed up for it.

Adds a share or two to the total.

Best Wishes
Paper Tiger

[macduffy]

NZ is definitely not keeping it local. These "NZ owned" companies can have shareholders all over the world, sending profits wherever. Also NZ is basically being sold to the Chinese (property and its businesses).

Of course, wise Kiwi investors are profiting along the way, or selling out, depending on your viewpoint.

.... and have owned bits of other countries' companies since at least the 1980's when exchange controls were abolished and the NZD floated!

:cool:

[Zaphod]

.... and have owned bits of other countries' companies since at least the 1980's when exchange controls were abolished and the NZD floated!

:cool:

Yes, and any clampdown on foreign ownership would work both ways, probably to our overall detriment.

[brend]

Discovered that SUM run a DRP today, so on a whim, I signed up for it.

Adds a share or two to the total.

Best Wishes
Paper Tiger

Will the DRP apply to the recent divy if you signed up yesterday?

[Snow Leopard]

Will the DRP apply to the recent divy if you signed up yesterday?

I believe that you have until 5pm today to change your DRP options for this dividend.

Best Wishes
Paper Tiger

[Food4Thought]

https://www.heartland.co.nz/investments Heartland still paying 3% per annum on call mate and they're another solid Kiwi company..."Keeping profits Kiwi" its got a good ring to it don't you think ?

Thank you. I had a read and look and like what I have seen. Didn't have money to part take in HBL 2 years ago... still love their concept and position. Perhaps they can link up with the retirement sector and push that keep your money local campaign. I am dreaming up a concept as I write...

[Bjauck]

NZ is definitely not keeping it local. These "NZ owned" companies can have shareholders all over the world, sending profits wherever. Also NZ is basically being sold to the Chinese (property and its businesses).

Of course, wise Kiwi investors are profiting along the way, or selling out, depending on your viewpoint. The Kiwi way...sell the tax paying investments in companies to foreign interests so that more can be invested into our homes and other real estate!

[Beagle]

After the HBL free lunch surely there isn't another one to be had on the same day...but there was ! SUMone wanted out of ~ 20,000 at close and tossed them out for a song at well below the VWAP of the day.
Not one to look at gift horse in the mouth the hound put his snout on the line for a modest top-up :)

[Food4Thought]

After the HBL free lunch surely there isn't another one to be had on the same day...but there was ! SUMone wanted out of ~ 20,000 at close and tossed them out for a song at well below the VWAP of the day.
Not one to look at gift horse in the mouth the hound put his snout on the line for a modest top-up :)

That is very good sniffing Roger... great effort

[Beagle]

That is very good sniffing Roger... great effort

Thanks mate. I only spotted the anomalous match price at 4.57 p.m. and quickly worked out the right quantity to bid for without affecting the match price and didn't place the order till 4.58 p.m. so well done to ANZ securities for super quick entry into the system. Usually get shut out with orders that late but you've gotta ride your luck when you can :) Funnily enough I have been looking for an opportunity for a small top-up so its really nice when things line up like that.

[JeremyALD]

Thanks mate. I only spotted the anomalous match price at 4.57 p.m. and quickly worked out the right quantity to bid for without affecting the match price and didn't place the order till 4.58 p.m. so well done to ANZ securities for super quick entry into the system. Usually get shut out with orders that late but you've gotta ride your luck when you can :) Funnily enough I have been looking for an opportunity for a small top-up so its really nice when things line up like that.

I just missed out Roger as noticed shortly after 5 so kudos to you!!

[Baa_Baa]

Last week indicated a short term top in the SP, or the start of a down trend, today's price action followed through on that. Where to from here, who knows. Indictors are still crossing up and positive, it's just the SP which is suggesting otherwise.

[Snow Leopard]

Last week indicated a short term top in the SP, or the start of a down trend, today's price action followed through on that. Where to from here, who knows. Indictors are still crossing up and positive, it's just the SP which is suggesting otherwise.

It is one of:
Brownian Motion;
A Random Walk;
Chaos Theory (including Fractals);
or
Something Else.

Best Wishes
Paper Tiger

[Vaygor1]

.... Brownian Motion...

Also known as a nice hot cup of tea.. at least when the logic circuits of a Bambleweeny 57 Submeson Brain are connected to an atomic vector plotter while suspended in it.

[Hoop]

Last week indicated a short term top in the SP, or the start of a down trend, today's price action followed through on that. Where to from here, who knows. Indicators are still crossing up and positive, it's just the SP which is suggesting otherwise.

Hmmmm..after your post Baa_Baa + a bit of PT banter I had a closer look at SUM...Yeah there is a bit of TA foul air there.. TA Investing-wise there is a good argument to say that nothing much is lost by taking a wait and see action rather than jumping in at a free lunch opportunity..However the share price has corrected itself so Roger's opportunity has paid off in the short term..good on ya mate:D.

The hint of TA foul air could just be a breather after a quick (2 month) 20% rally

The 7c rise today doesn't remove that foul air...Has to get above ~$5.40

SUM has been a terrific long term hold stock (great Superannuation type Stock) and a must have stock in anyone's Portfolio (continuous up-trending stock)

SUM has had 2 secondary down trends (both lasting 4 months) within the current (since IPO) primary uptrend..the first down trend quickly rallied 25% then took a breather for 4 months..

Will this previous down trend result the same way?..we have just witnessed the 20% quick rally.. Are we witnessing the start of the breather stage??? The hint of TA foul air suggests maybe so.....We don't know how long or form the breather will take..We only have one historical experience to work from the previous event.. that breather began with a 7% throwback (back to ~$3.25) followed by 4 months of resistance hugging plateau at ~$3.50..

[James108]

Would be quite happy if some 'technical' sell signal was triggered and forced everyone that follows that sort of thing to get out at once.

[Beagle]

Got a free lesson today in not counting your chickens until they hatch...suppose it could have been worse and speaking of chickens bought Tegal shares instead :eek2:

Anyway as Hoop quite rightly says, this is a terrific long term hold stock and that's exactly the reason I topped up so short term price aberrations (random walk theory) don't phase me too much.

[percy]

[QUOTE=Roger;659051]Got a free lesson today in not counting your chickens until they hatch...suppose it could have been worse and speaking of chickens bought Tegal shares instead :eek2:

Expect a "please explain notice" from KW.

[winner69]

Got a free lesson today in not counting your chickens until they hatch...suppose it could have been worse and speaking of chickens bought Tegal shares instead :eek2:



You bought TGL today ......you losing your senses or something mate!!!!

[winner69]

Got a free lesson today in not counting your chickens until they hatch...suppose it could have been worse and speaking of chickens bought Tegal shares instead :eek2:

Expect a "please explain notice" from KW.

He's gone nuts eh percy

[trader_jackson]

I just missed out Roger as noticed shortly after 5 so kudos to you!!

If you had your order in, you probably would have got it today... today's finish wasn't any higher than yesterdays 'absolute bargain last few minutes'... hmm

[percy]

[QUOTE=percy;659053]

He's gone nuts eh percy

No surprises there.!!
Too much rain has wetted the brain.......lol.
ps.TGH.

[Snow Leopard]

Got a free lesson today in not counting your chickens until they hatch...suppose it could have been worse and speaking of chickens bought Tegal shares instead :eek2:

Anyway as Hoop quite rightly says, this is a terrific long term hold stock and that's exactly the reason I topped up so short term price aberrations (random walk theory) don't phase me too much.

I think what my learned colleague is trying to say is not that he abandoned all reason and bought shares in Tegel per se, but that his action in buying shares yesterday in Summerset whilst not of immediate financial benefit to himself could have been of a more destructive nature, viz a viz, by a purely hypothetical purchase of shares in Tegel.

Best Wishes
Paper Tiger

[percy]

Lets hope for his sanity sake you are right PT.

[kura]

I apologise in advance for my ignorance, but was looking at the recent result presentation & it left me confused.
I saw NPAT was $145m, which included fair value gains of $143m How can you get excited about an organisation that only makes $2m from normal earnings ?

[percy]

I apologise in advance for my ignorance, but was looking at the recent result presentation & it left me confused.
I saw NPAT was $145m, which included fair value gains of $143m How can you get excited about an organisation that only makes $2m from normal earnings ?

Think Ponzi schemes.
Retirement company puts up capital for one village.
Sells occupancy rights,taking developement margin.In profit already.
Then uses that capital to build another village.Another profit.
And so on, until it has a good number of villages, without having to front up with more capital.
So towards the end of the day, the retirement company owns a great number of villages, all generating operating fees and more profits from resale of occupancy rights.
And it is legal..

[Snow Leopard]

I apologise in advance for my ignorance, but was looking at the recent result presentation & it left me confused.
I saw NPAT was $145m, which included fair value gains of $143m How can you get excited about an organisation that only makes $2m from normal earnings ?

If I may be so bold your 'ignorance' comes from not reading further into the accounts.

When you get to the Statement of Cash Flows you should at that point have a 'light bulb' moment.

[Note: This what percy said, but I said it differently]

Best Wishes
Paper Tiger

[Hoop]

Would be quite happy if some 'technical' sell signal was triggered and forced everyone that follows that sort of thing to get out at once.

TA works the other way around James...TA is a discipline which indicates the mood of the people who buy and sell on the market...so... if mass 'technical' sell signal was triggered it would be due to many more investors wanting out than wanting in..... then those who follow that sort of thing (TAers including me) follow the herd out (Couta's Nervous Nellies Sheeples Brigade:cool:)

[James108]

TA works the other way around James...TA is a discipline which indicates the mood of the people who buy and sell on the market...so... if mass 'technical' sell signal was triggered it would be due to many more investors wanting out than wanting in..... then those who follow that sort of thing (TAers including me) follow the herd out (Couta's Nervous Nellies Sheeples Brigade:cool:)

Right.. so so in a perfect world (for me) some people sell -> signals triggered -> more people sell -> ????? -> profit

[JeremyALD]

If you had your order in, you probably would have got it today... today's finish wasn't any higher than yesterdays 'absolute bargain last few minutes'... hmm

Lol it did go through. We'll see. I'm pretty happy with this share as I think long term you can't really go wrong. I'm happy to buy up around $5.

[Xerof]

The old Trout purchased a not-insignificant personal holding yesterday too

https://www.nzx.com/companies/SUM/announcements/298268


I did too, but I won't be advising NZX

[Onion]

Think Ponzi schemes.
Retirement company puts up capital for one village.
Sells occupancy rights,taking developement margin.In profit already.
Then uses that capital to build another village.Another profit.
And so on, until it has a good number of villages, without having to front up with more capital.
So towards the end of the day, the retirement company owns a great number of villages, all generating operating fees and more profits from resale of occupancy rights.
And it is legal..

This is also why we should not expect high dividend payments from companies like SUM. Shareholders benefit more from the self-reinforcing cycle of cash left in the "scheme".

[Beagle]

The old Trout purchased a not-insignificant personal holding yesterday too

https://www.nzx.com/companies/SUM/announcements/298268


I did too, but I won't be advising NZX

25,000 at an average price of $5.2982. Good to see I'm not the only one barking up this tree :)

[stevevai1983]

omg I didnt realize SUM had DRP.
I just updated to participate DRP. Is that too late already?

[stevevai1983]

Think Ponzi schemes.
Retirement company puts up capital for one village.
Sells occupancy rights,taking developement margin.In profit already.
Then uses that capital to build another village.Another profit.
And so on, until it has a good number of villages, without having to front up with more capital.
So towards the end of the day, the retirement company owns a great number of villages, all generating operating fees and more profits from resale of occupancy rights.
And it is legal..
Exactly, that's why I always say the no.1 measurement is occupancy rate. As long as they can maintain high occupancy rate ,they can play this game forever.

[Snow Leopard]

Discovered that SUM run a DRP today, so on a whim, I signed up for it.

Adds a share or two to the total.

Best Wishes
Paper Tiger


I believe that you have until 5pm today to change your DRP options for this dividend.

Best Wishes
Paper Tiger

As in 5pm Friday 10th March


omg I didnt realize SUM had DRP.
I just updated to participate DRP. Is that too late already?

Yes :(

Best Wishes
Paper Tiger

[Food4Thought]

Some good last minute sales going through? Roger did you catch that one too?!

[Beagle]

Some good last minute sales going through? Roger did you catch that one too?!

The slightly grumpy hound can't think of any reason why the SP would drop 30 cents in a few days. Long term who cares but nonetheless it is somewhat perplexing but I shan't lose any sleep over it. I have reached my self imposed maximum allowable level for any one share with SUM already.

[couta1]

The slightly grumpy hound can't think of any reason why the SP would drop 30 cents in a few days. Long term who cares but nonetheless it is somewhat perplexing but I shan't lose any sleep over it. I have reached my self imposed maximum allowable level for any one share with SUM already. Sum is one of five stocks on the NZX I would be happy to have at least 50% of my portfolio total in.

[Beagle]

Stunning result. Build rate ahead of guidance, development margin well ahead of expectations, (note second half development margin was 23.6% provides momentum into FY17 as they continue to refine their development methodologies and business model), increased build rate forecast of 450 which I was not expecting given the dramatic ramp up last year from a target of 300 in 2015 to 400 in 2016.
They have consistently beat their build rate target over many years now. 6 years land bank supply at the new higher build rate. Dementia units going into all new developments going forward.
Embedded value of existing units up very dramatically on last year, refreshed board, strong balance sheet with external debt lower than I anticipated, very strong cash flow...seriously....what is not to love about this result !
48% compound average growth rate in the five years since listing...in anyone's language this is a highly successful growth company.
Tailwinds remain very strong for this sector for at least the next twenty years.
Underlying EPS 25.57 cps. Chose what PE you think is appropriate for a company growing at a CAGR of 48% per annum ?.

From 23 February 2017. Might be time to have another look at this question. Compound growth rate has averaged 48% since listing 5 year ago. Underlying earnings grew 55% for FY15 and 50% for FY16.
At $5.20 trades on a multi year low PE of 20.3 times last year earnings. Build rate increasing again this year. Opportunity knocks with the recent correction ?

[iceman]

From 23 February 2017. Might be time to have another look at this question. Compound growth rate has averaged 48% since listing 5 year ago. Underlying earnings grew 55% for FY15 and 50% for FY16.
At $5.20 trades on a multi year low PE of 20.3 times last year earnings. Build rate increasing again this year. Opportunity knocks with the recent correction ?

In my view yes Roger, this is one of not too many opportunities on the NZX, looking long term. So the money Jeff/Heartland didn't want from me has gone to SUM.

[Snow Leopard]

Sum is one of five stocks on the NZX I would be happy to have at least 50% of my portfolio total in.

But five stocks at 50% plus is like more than 250% :confused:


Best Wishes
Paper Tiger

[percy]

But five stocks at 50% plus is like more than 250% :confused:


Best Wishes
Paper Tiger
I guess there are only three stocks he would be happy to have 100%.........= 300%.....lol.

[couta1]

But five stocks at 50% plus is like more than 250% :confused:


Best Wishes
Paper Tiger Nah, I mean at various stages I have, and would have again, 50% or more in any one of those five stocks at any given point in time, my max ever percentage in one stock to date is 85% of total funds. PS-Dont try any of this at home. PPS-As you can see I'm not a believer in over diversification anymore.

[Beagle]

In my view yes Roger, this is one of not too many opportunities on the NZX, looking long term. So the money Jeff/Heartland didn't want from me has gone to SUM.

Good on ya mate. I would go more but I have set a self imposed 12.5% maximum allocation to any one share for 2017 and beyond for a few reasons.
1. No person can predict the future with 100% chance of being right.
2. I honestly believe, (with all due respect to my very good friend Couta1 who is a top bloke and a real gentleman), that a well diversified portfolio of good quality stocks makes for an optimum risk / reward investment methodology.
3. I like to sleep at night
4. I have enough grey hairs already :)

[skid]

Nah, I mean at various stages I have, and would have again, 50% or more in any one of those five stocks at any given point in time, my max ever percentage in one stock to date is 85% of total funds. PS-Dont try any of this at home. PPS-As you can see I'm not a believer in over diversification anymore.

Who was the 85% ?

[couta1]

Who was the 85% ? You mean who is the 85%, that is Spark.(XOS divvy strip)

[LAC]

You mean who is the 85%, that is Spark.(XOS divvy strip)

Would have never has guessed that... how long ago did you gather that 85%

[couta1]

Would have never has guessed that... how long ago did you gather that 85% Over the last fortnight.

[winner69]

They have best bean counters / finance people as well

https://www.nzx.com/companies/SUM/announcements/298356

[RupertBear]

You mean who is the 85%, that is Spark.(XOS divvy strip)

Gee I would have guessed AirNZ! :D

[RupertBear]

Over the last fortnight.

Ya one in a million Couta! :t_up:

[Food4Thought]

They have best bean counters / finance people as well

https://www.nzx.com/companies/SUM/announcements/298356

Kudos to them. Delightful

[couta1]

Gee I would have guessed AirNZ! :D No mate, that was a smaller sized 55% of portfolio jobbie, but I'm sure we can beat that % leading into the next Air divvy. Oh and just to keep things relevant to this thread, in 2013, Sum made up 55% of my portfolio total.:D

[winner69]

As per a request on the FBU thread

Chart showing SUM shareprice and if it was trading at a PE of 25 (underlying earnings). Average has actually been 27 so a bit conservative

Market has not recognised how good F16 really was it looks like

[Beagle]

As per a request on the FBU thread

Chart showing SUM shareprice and if it was trading at a PE of 25 (underlying earnings). Average has actually been 27 so a bit conservative

Market has not recognised how good F16 really was it looks like

Super image mate, if a picture says a 1000 words this image says 2000 ! Even being conservative for this very high growth rate company growing at a compound average rate of 48% per annum since listing, the current share price looks like a real opportunity. Interesting that a director bought a significant parcel recently just before the restricted persons close out date commences.

P.S. And another director bought more shares on 16 March, just announced to the market today which must have been on one of the the very last days before restricted persons close out period commences in the lead up to 31 March 2017 sales metrics data release in early April. Join the dots folks...

[winner69]

Scary thing is though Roger lets assume that SUM is fairly valued by the market then RYM is due for a up to 20% correction to even things out

No way will RYM fall by 20% from current levels will it?

All this is saying is SUM is cheap as relative to RYM ....or RYM is very very expensive at current price

How's your EMH working out

[silu]

Robert Campbell also bought another 10k shares on market. Makes me want to buy another parcel before next Sales Metric Data will be released.

[Ggcc]

I bought some more today. Great long term gains to be made

[Beagle]

Scary thing is though Roger lets assume that SUM is fairly valued by the market then RYM is due for a up to 20% correction to even things out

No way will RYM fall by 20% from current levels will it?

All this is saying is SUM is cheap as relative to RYM ....or RYM is very very expensive at current price

How's your EMH working out

RYM will most probably range trade for another two years in addition to the three years we predicted three years ago. Won't worry Vaygor1 and some other RYM shareholders because they're sitting on such huge unrealised profits they don't care. SUM quite significantly undervalued in my opinion. Market hasn't really got it that as SUM continues to grow they enjoy ever increasing economies of scale and operating efficiencies. Rob Campbell has done a great job with THL and is doing a fine job with SUM. Market is asleep on this one.


Robert Campbell also bought another 10k shares on market. Makes me want to buy another parcel before next Sales Metric Data will be released.
Funny you say that I was just thinking that myself.

[winner69]

Shareprice might be 4xx before the next update early April at the rate it's going down

Better be a boomer number or else there might be a bit more of a market over reaction

[Jinx]

Two directors buying within a week of one another, certainly paints a nice picture for holders.
Depending on where the sp goes over the next week or so i might have to pick a few more up.

[Beagle]

Shareprice might be 4xx before the next update early April at the rate it's going down

Better be a boomer number or else there might be a bit more of a market over reaction

No worries mate, possibly Mrs Barlow selling down her remaining family trust shares so she can invest more in "market darling" EVO.

[silu]

Shareprice might be 4xx before the next update early April at the rate it's going down

Better be a boomer number or else there might be a bit more of a market over reaction

Given that I've sold a 1/3 at $5.50 to fund another share purchase I would take anything under $5 immediately.

[Beagle]

A friendly invitation to attend and enjoy a beverage or two and lively discussion afterwards.

Couta1 and I will be there and thought this might be a good opportunity after the meeting for a sharetrader get-together for Wellington people to enjoy a chat afterwards.

All welcome.

[Ggcc]

I would join you if I could, but unfortunately not this time. Thanks. This is my long long term hold stock. At what stage will this become a $10 share..... Maybe 5 years???

[JayRiggs]

I'd like to think SUM will be $10 in 3 years.

Underlying profit CAGR the past 5yrs has been 48%.

So assuming a conservative 25% on today's share price:
5.16 x 1.25 x 1.25 x 1.25 = $10.07 :t_up:

[Beagle]

I would join you if I could, but unfortunately not this time. Thanks. This is my long long term hold stock. At what stage will this become a $10 share..... Maybe 5 years???


I'd like to think SUM will be $10 in 3 years.

Underlying profit CAGR the past 5yrs has been 48%.

So assuming a conservative 25% on today's share price:
5.16 x 1.25 x 1.25 x 1.25 = $10.07 :t_up:

^^^^ This or possibly earlier. Two more years of high growth would see than at $5.16 x 1.48 x 1.48 = $11.30.

[couta1]

^^^^ This or possibly earlier. Two more years of high growth would see than at $5.16 x 1.48 x 1.48 = $11.30. That would make it equal to the Ryman SP in 2 years ($11-$12 dollars is what I would predict for Rym in a couple of years) Too bullish mate, Sum price equalling Rym in that timeframe ain't going to happen.

[QOH]

A friendly invitation to attend and enjoy a beverage or two and lively discussion afterwards.

Couta1 and I will be there and thought this might be a good opportunity after the meeting for a sharetrader get-together for Wellington people to enjoy a chat afterwards.

All welcome.

I might join you if I figure out where the meeting is.

[winner69]

I might join you if I figure out where the meeting is.

If you coming in by chopper just up from the Queens Wharf helipad past the kids playground and just before the St Johns Bar

[Beagle]

That would make it equal to the Ryman SP in 2 years ($11-$12 dollars is what I would predict for Rym in a couple of years) Too bullish mate, Sum price equalling Rym in that timeframe ain't going to happen.

5 year average compound growth rate is 48%. Not beyond the bounds of possibility that they could enjoy another couple / few years of relative outperformance as they continue to lift their build rate, make ongoing improvements to their development model and continue to enjoy increasing efficieineces from greater critical mass. Just saying it could possibly happen mate, not that it WILL definitly happen.


I might join you if I figure out where the meeting is.

Suggest you PM Couta1, he knows Wellington way better than me !