SUM - Summerset Group

[sb9]

If it got to $4.21 - I would do sum serious buying :)

And it'll fill quite a few pages on this thread along the way ;)

[winner69]

$4.21 the 52 week low - if it got to this I will do sum thinking... even more interesting because OCA has never looked stronger?

SUM once was 9% above it's IPO price, where OCA is today ..... a few years ago though

Now it's 230% above it's IPO price

OCA might do the same - when OCA gets to 262 wonder what SUM will be

[Beagle]

SUM once was 9% above it's IPO price, where OCA is today ..... a few years ago though

Now it's 230% above it's IPO price

OCA might do the same - when OCA gets to 262 wonder what SUM will be

Where are we in your up trending channel now mate ? Must be right at the bottom surely ?

[winner69]

Where are we in your up trending channel now mate ? Must be right at the bottom surely ?

At 0.7 STDEV from regression line from when SUM started trading its $4.37

[Hoop]

At 0.7 STDEV from regression line from when SUM started trading its $4.37

Hmmm...$4.37 That's interesting Winner...That's my H&S pattern Target price..$4.37 See Chart link at bottom of my post#4952 15th June (http://www.sharetrader.co.nz/showthread.php?5009-Summerset-Group-IPO/page331) ..Back then SUM closed at $4.72 today it closed at $4.64..getting closer..

Channel lines are S&R lines...TP is not a support point

[winner69]

Hmmm...$4.37 That's interesting Winner...That's my H&S pattern Target price..$4.37 See Chart link at bottom of my post#4952 15th June (http://www.sharetrader.co.nz/showthread.php?5009-Summerset-Group-IPO/page331) ..Back then SUM closed at $4.72 today it closed at $4.64..getting closer..

Channel lines are S&R lines...TP is not a support point

Bit spooky eh

But don't forget that $4.37 is where the bottom of the channel is this week .....as SUM is long term up trending the $4.37 is a bit higher next week ......and so. (Calcs were done on weekly numbers)

[couta1]

Looks like the Teddy bears are setting up camp on planet SUM, could be a long winter of hibernation, or is that occupation.

[Hoop]

Occupation..nah, sounds too hash.....Picnic sounds good, cute furry and cuddly:cool:

Winner...If SUM stays within its channel, that rising channel will come up to 4.44 a major support (bull/bear line)... TA charting says If the channel goes higher above 4.44 SUM becomes somewhat derisked (a buy with stops [set just below the second support]) as the bottom channel line is also a support line..further up another support at 4.57..

Sentiment still sucks ..eh

[JeremyALD]

I remind myself that SUM and MET dropped exactly the same as this last year then climbed back up. A good report / update from SUM will get things heading back in the right direction. I just hope there's no unexpected delays / costs from Auckland construction projects because that could hammer SP some more.

[Entrep]

As a comment on the above
There is a hammer candle on the 9th June..... these sometimes indicate a bottom
8909
Traders could use the low on that as a stop loss to minimize risk.

This was breached yesterday but now back about it...

[winner69]

SUM now same price as it was 52 weeks ago - $4.65

A year ago SUM was on a PE of 11.7 (trailing NPAT) - if it was still on this PE its price today would be $7.83

So the rerating / negative sentiment / unloved things has negatively impacted shareprice by $3.27

Huge rerating downwards eh - impacted things by 40% odd - planet SUM (couts phrase) must be going to self destruct or something

[couta1]

SUM now same price as it was 52 weeks ago - $4.65

A year ago SUM was on a PE of 11.7 (trailing NPAT) - if it was still on this PE its price today would be $7.83

So the rerating / negative sentiment / unloved things has negatively impacted shareprice by $3.27

Huge rerating downwards eh - impacted things by 40% odd - planet SUM (couts phrase) must be going to self destruct or something Hey winner, remember that Ryman hit $9.05 in 2014, today's close $8.32, after 3 years the price is 73c cheaper than it's top in 2014.:eek2:

[winner69]

Hey winner, remember that Ryman hit $9.05 in 2013, today's close $8.32, after 4 years the price is 73c cheaper than it's top in 2013.:eek2:

Three years ago RYM share price was $9.00 with a PE of 23.2 (trailing NPAT) - if it was still on this PE its price today would be $16.45

So the rerating / negative sentiment / unloved things has negatively impacted shareprice by $8.13 (about 50%)

Rerating impact of RYM is 50% over 3 years and SUM is 40% over 1 year

Probably says that RYM was outrageously/ridiculously over priced in 2014 ....but SUM has been ridiculously rerated down by so much

[couta1]

Whoops, I should have put 2014, not 2013, corrected now(All this work with dementia patients is wearing off on me)

[Elles]

Whoops, I should have put 2014, not 2013, corrected now.
That makes it three years ago...:p

[couta1]

That makes it three years ago...:p Your right, dementia definitely the problem.:scared:

[fish]

Your right, dementia definitely the problem.:scared:

I am please to diagnose you as cognitively intact.
You will be surprised how the years go past and one year out is not bad

[Beagle]

Three years ago RYM share price was $9.00 with a PE of 23.2 (trailing NPAT) - if it was still on this PE its price today would be $16.45

So the rerating / negative sentiment / unloved things has negatively impacted shareprice by $8.13 (about 50%)

Rerating impact of RYM is 50% over 3 years and SUM is 40% over 1 year

Probably says that RYM was outrageously/ridiculously over priced in 2014 ....but SUM has been ridiculously rerated down by so much

I think so but sentiment is a funny thing mate and often the correction goes on deeper and longer than one would like.

I really do believe some people are letting this potential housing correction and extra cost of construction thing in Auckland get the better of them.
Barfoot and Thompson provide monthly price stat's by suburb in Auckland. People should DYOR and have a look at how prices have moved in Ellerslie, Hobsonsille, Warkworth, Karaka and the new proposed village area's of Parnell and St John's over the last three years. By looking into that people might gain an understanding of the degree of latitude the company has regarding setting its pricing and the degree of accommodation there is with those vastly increased prices to accommodate increased construction costs.

Consider also the fact that there's no let-up whatsoever in immigration, (another record this week at just on 72,000), and then consider Labour's shocking poll result last week, (what chance have they really got of getting into power in September), maybe, just maybe, people who take the time to do their own research and thinking might get a few very valuable insights.

[sb9]

Article in NBR behind paywall on retirement sector....

Hunter's Corner: A reality check for a boom sector

[winner69]

I think so but sentiment is a funny thing mate and often the correction goes on deeper and longer than one would like.

I really do believe some people are letting this potential housing correction and extra cost of construction thing in Auckland get the better of them.
Barfoot and Thompson provide monthly price stat's by suburb in Auckland. People should DYOR and have a look at how prices have moved in Ellerslie, Hobsonsille, Warkworth, Karaka and the new proposed village area's of Parnell and St John's over the last three years. By looking into that people might gain an understanding of the degree of latitude the company has regarding setting its pricing and the degree of accommodation there is with those vastly increased prices to accommodate increased construction costs.

Consider also the fact that there's no let-up whatsoever in immigration, (another record this week at just on 72,000), and then consider Labour's shocking poll result last week, (what chance have they really got of getting into power in September), maybe, just maybe, people who take the time to do their own research and thinking might get a few very valuable insights.

While the rerating of (lowering of PE) RYM has been gradual over 3 years (and likely to continue) SUMs rerating has been like a shock out of the blue (rerated by as much as RYM but over 1 year)

But thats the way of the market eh. Maybe the market is right and the things are settling towards more realistic multiples for all in this sector - are the good days over?

[Beagle]

Perhaps people would do well to ponder in this very low interest rate environment what is a fair underlying earnings multiple for this sector with excellent tailwinds from population demographics given the market average multiple is about 18 ? 22-23 based on forward earnings seems perfectly fair and reasonable to me given strong prevailing tailwinds for this sector for the next 20-25 years.
On a stock specific selection basis people might then want to consider which stock has the best growth rate in the last five years. Directors were buying before the annual meeting in the low $5 range...good enough for them, good enough for others ?

[Lewylewylewy]

Some analysis on property trends - Hamilton prices seem about the same / ever so slightly up. Wellington prices are up nicely. Nearly 50% gain in one year on my last purchase, based on comparibles. I don't monitor markets in other parts, well.... not actively enough to make comment on change since the start of the year.

[couta1]

House sales in Auckland down in May, but the average and median prices remain rock solid, thats the important bit for an elderly person selling up to move into a retirement unit.

[winner69]

House sales in Auckland down in May, but the average and median prices remain rock solid, thats the important bit for an elderly person selling up to move into a retirement unit.

Suppose even if property prices crashed thst elderly person will get less for their house ..but the retirement unit will probably be a bit cheaper as well. Equilibrium

[Carpenterjoe]

House sales in Auckland down in May, but the average and median prices remain rock solid, thats the important bit for an elderly person selling up to move into a retirement unit.

I've found this old document interesting to refer back to, im sure everyone one has already read it.

http://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Bulletins/2016/2016jan79-1.pdf

helps with understanding the importance of Auckland's market with rest of NZ.

[Gonzo]

shocking article in SMH today on 'the retirement racket'
http://www.smh.com.au/interactive/2017/retirement-racket/the-price-of-freedom/index.html

[percy]

shocking article in SMH today on 'the retirement racket'
http://www.smh.com.au/interactive/2017/retirement-racket/the-price-of-freedom/index.html

No wonder the Australians are welcoming Ryman with open arms [and cheque books].
I expect they would love to have SUM there too.
Bring it on,as we are "well positioned.".

[Joshuatree]

I hope our companies are way better than this; they will come under scrutiny too. I feel ashamed about owning Aveo previously. 120 pages of dense legalistic contracts which most of us wouldn't understand.

[percy]

I hope our companies are way better than this; they will come under scrutiny too. I feel ashamed about owning Aveo previously. 120 pages of dense legalistic contracts which most of us wouldn't understand.

Maybe EHE welcomed Norah Barlow as a director, and then as CEO, so she could oversee "the New Zealand" way. ?
Simon Challies told me years ago when I asked him about Aveum, that Australian retirement villages were "lifestyle" while their model was "total care".
Interesting enough Aveum's CEO,Simon Owen, went on to run INA,which is a very different model altogether.buying a lot of holiday parks, and then leasing out land for retirees to put relocatable homes on.

[Ggcc]

Nice article in The Sunday Star Times. (If someone can add it to thread please)It states workers wanting employment rather than six months of a pay increase before smaller operators are forced to close unless they can attract more people. The Governments contribution would mean employers would still have to come up with remaining $245 million.

I love How Sam Jones of one of the unions said "that they pushed hard for the appropriate funding in the settlement and there should be no excuse for cut ours or closure". Also saying " if the rest times are facing closure, then a shortfall must have already been there,as wages should have no real impact " where do these guys come from to believe that?

Not just me but Simon Wallace the New Zealand age care Associations Chief executive disagree with Sam.

I really feel sorry for the smaller operators that are genuinely struggling.

[artemis]

Here is the link to the article.

http://www.stuff.co.nz/the-press/national/94040140/Cuts-to-Waikato-rest-home-workforce-looms

[BlackPeter]

Nice article in The Sunday Star Times. (If someone can add it to thread please)It states workers wanting employment rather than six months of a pay increase before smaller operators are forced to close unless they can attract more people. The Governments contribution would mean employers would still have to come up with remaining $245 million.

I love How Sam Jones of one of the unions said "that they pushed hard for the appropriate funding in the settlement and there should be no excuse for cut ours or closure". Also saying " if the rest times are facing closure, then a shortfall must have already been there,as wages should have no real impact " where do these guys come from to believe that?

Not just me but Simon Wallace the New Zealand age care Associations Chief executive disagree with Sam.

I really feel sorry for the smaller operators that are genuinely struggling.

Feel sorry for the residents - the operators won't have a problem. Residents have little options but pay up if rest homes are forced by the unions to increase their fees. What else are they supposed to do? Move out and live under the bridge? Last time I checked we didn't had an over capacity on rest home places in New Zealand (or anywhere else), meaning competition is hardly an issue (particularly for the "cheaper" rest home places).

Rest homes will increase their fees and residents will pay. If they can't pay than the state will chip in, not too many politicians will want to see residents in need for care thrown out of their home. Makes bad headlines. However - expect contributions from the residents who still have some remaining capital to rise. The whole exercise is just transferring money for the next generation (inheritance) to the care staff. However: maybe fair enough - care for your parents or lose your inheritance.

[bull....]

Aveo is focused on churning customers for profit (given that it is entitled to large exit fees of up to 35%-40% of the property value when residents leave)


Despite units being freehold, Aveo imposes draconian clauses and restrictions on residents with overly legalistic and imposing contracts


The company is effectively converting its freehold properties to leasehold ‘by stealth’ and is confusing customers about what they are actually purchasing


The company is engaged in ‘asset stripping’ via charging very high fees including real estate agent fees (the company is its own agent) and exit fees when a resident leaves

http://www.fool.com.au/2017/06/26/why-the-aveo-group-share-price-is-set-to-plunge-today/

Might start getting hot over here soon too.

[couta1]

Aveo is focused on churning customers for profit (given that it is entitled to large exit fees of up to 35%-40% of the property value when residents leave)


Despite units being freehold, Aveo imposes draconian clauses and restrictions on residents with overly legalistic and imposing contracts


The company is effectively converting its freehold properties to leasehold ‘by stealth’ and is confusing customers about what they are actually purchasing


The company is engaged in ‘asset stripping’ via charging very high fees including real estate agent fees (the company is its own agent) and exit fees when a resident leaves

http://www.fool.com.au/2017/06/26/why-the-aveo-group-share-price-is-set-to-plunge-today/

Might start getting hot over here soon too. SUM units are not freehold, exit fees are nothing like the above, we don't bowl underarm over here. PS-Eyes of buyers are wide open upon purchase, they purchase a great lifestyle.

[fish]

SUM units are not freehold, exit fees are nothing like the above, we don't bowl underarm over here. PS-Eyes of buyers are wide open upon purchase, they purchase a great lifestyle.

?average occupancy 7 years
?no capital gains
??20% capital loss
?management fees

[winner69]

So $56.6m profit last year ......and $75m expected this year

Jeez, that's more than 30% growth

SUM say things are humming along

And still priced as if going broke (sort of)

Announcement


SUMMERSET PROVIDES EARNINGS GUIDANCE FOR THE 2017 YEAR

Summerset Group advises that its underlying profit for the year ended 31 December 2017 is forecast to be between NZ$72 million and NZ$75 million. This reflects positive trading conditions across all of our villages.

We are continuing to see strong development margins from new sales of occupation rights, a key driver of the underlying profit forecast.

[see weed]

So $56.6m profit last year ......and $75m expected this year

Jeez, that's more than 30% growth

SUM say things are humming along

And still priced as if going broke (sort of)

Announcement


SUMMERSET PROVIDES EARNINGS GUIDANCE FOR THE 2017 YEAR

Summerset Group advises that its underlying profit for the year ended 31 December 2017 is forecast to be between NZ$72 million and NZ$75 million. This reflects positive trading conditions across all of our villages.

We are continuing to see strong development margins from new sales of occupation rights, a key driver of the underlying profit forecast.
They will need a holiday after that.......Better book AIR tickets right away:D.

[winner69]

You never know, the SUM share price might even go up today

Maybe even GAP up - I like that

But then impending property crash and the huge increase in the wage bill from next week could see it decline further. Not a good sector to be in at the moment I'm told.

[couta1]

You never know, the SUM share price might even go up today

Maybe even GAP up - I like that

But then impending property crash and the huge increase in the wage bill from next week could see it decline further. Not a good sector to be in at the moment I'm told. As often is the case winner, the SP is complete nonsense and can not be used as a guide to how a company is performing or the true value of a company, especially with the likes of SUM aye. PS-Remember when the market thought Air was only worth $1.70, less than a year ago.

[Beagle]

So $56.6m profit last year ......and $75m expected this year

Jeez, that's more than 30% growth

SUM say things are humming along

And still priced as if going broke (sort of)

Announcement


SUMMERSET PROVIDES EARNINGS GUIDANCE FOR THE 2017 YEAR

Summerset Group advises that its underlying profit for the year ended 31 December 2017 is forecast to be between NZ$72 million and NZ$75 million. This reflects positive trading conditions across all of our villages.

We are continuing to see strong development margins from new sales of occupation rights, a key driver of the underlying profit forecast.

Nice touch coming out and issuing strong guidance so early in the year. They must be super confident of meeting that target to issue guidance so early, last year guidance wasn't till October if I remember correctly. I have been conservatively modelling up $70m for FY17 so this is higher than my model which underscores the robustness and veracity of their business model. $75m would equate to underlying earnings of 33.74 cps...chose what PE you think is appropriate for this fast growing company with an compound average growth rate of 48% in underlying earnings since listing, with strong long term demographic tailwinds.

Even if you use just a NZX50 market average forward PE of 18 that's $6.07

[bull....]

make hay while the sun shines:) as they say as the heat on the sector in AUS heats up , in todays paper

"Elderly people have no status. Everybody knows that once you get old and you retire, you don't have any rights as elderly people."

Opposition Leader Bill Shorten went on the front foot and condemned the exploitation of vulnerable people.

"A nation that treats its old people in the manner in which we saw on television [ABC's Four Corners] last night should be ashamed of itself," Mr Shorten said

Yes once public opinion swings the politicians get on the bandwagon and the unregulated get regulated - the ball is rolling - make hay why the sun shines:)

http://www.canberratimes.com.au/business/comment-and-analysis/time-for-turnbull-to-put-politics-asidereform-retirement-villages-20170627-gwzncg.html

[King1212]

You never know, the SUM share price might even go up today

Maybe even GAP up - I like that

But then impending property crash and the huge increase in the wage bill from next week could see it decline further. Not a good sector to be in at the moment I'm told.

yes..a sector to wait and see at the moment until the property market show a direction.

[Beagle]

Summerset has a fantastic 94% satisfaction rate amongst its residents. Whenever I've been in a Summerset village the staff seem very professional and friendly and residents seem very contented.

[couta1]

make hay while the sun shines:) as they say as the heat on the sector in AUS heats up , in todays paper

"Elderly people have no status. Everybody knows that once you get old and you retire, you don't have any rights as elderly people."

Opposition Leader Bill Shorten went on the front foot and condemned the exploitation of vulnerable people.

"A nation that treats its old people in the manner in which we saw on television [ABC's Four Corners] last night should be ashamed of itself," Mr Shorten said

Yes once public opinion swings the politicians get on the bandwagon and the unregulated get regulated - the ball is rolling - make hay why the sun shines:)

http://www.canberratimes.com.au/business/comment-and-analysis/time-for-turnbull-to-put-politics-asidereform-retirement-villages-20170627-gwzncg.html You can't compare Apples with Oranges, NZ have a completely different model to the Aussie companies ie It's called Continuum of Care. PS-We don't like following the Aussies now do we, eg Think CGT.

[bull....]

Summerset has a fantastic 94% satisfaction rate amongst its residents. Whenever I've been in a Summerset village the staff seem very professional and friendly and residents seem very contented.

its easy to be confused by residents appearance - most docile people look content

[janner]

its easy to be confused by residents appearance - most docile people look content

Just look at the average NZ resident...

[Joshuatree]

To be fair; i think some of the 4 corners programme may be unbalanced, worth reading AOG's right to reply Aveo's response to Fairfax/Four Corners (https://hotcopper.com.au/threads/3506511/) but yes some things need sorting out for sure. I do wonder if the retirement/care/prop industry won't be as rosy an investment going forward but still think its a good investment and better for it after being scrutinised and improved esp for elderly folks rights and self respect.

With the NZX having 5 such companies listed we had better get the model sorted!

[bull....]

You can't compare Apples with Oranges, NZ have a completely different model to the Aussie companies ie It's called Continuum of Care. PS-We don't like following the Aussies now do we, eg Think CGT.

Pay day comes to these operators when a resident moves out or dies.

[Mickey]

Boom! 480 on opening....:)

[Beagle]

its easy to be confused by residents appearance - most docile people look content

Ask Couta1. He has the most experience on here interacting with residents at SUM villages and I am sure he will confirm that by and large they're satisfied customers.

[h2so4]

Here is a shocking statistic from Aussie. In the last 5 years preventable deaths in rest homes has increased 10 fold. No I do not have a link to it. Hearsay from a doctor referring to some medical report.

[Joshuatree]

There are lots of investor biases. One, confirmation or myside bias is seeing only what you want to see to support your position. I hope a rigourish review and scrutiny makes our 5 companies better at what they do with our elders or else big trouble ahead. The 4 corners programme is a great opp to test our own models against and make any necessary improvements.And they will be tested.

[BlackPeter]

Here is a shocking statistic from Aussie. In the last 5 years Unpreventable deaths in rest homes has increased 10 fold. No I do not have a link to it. Hearsay from a doctor referring to some medical report.

And most of these people died lying in their beds. Incredible how stupid people are - in the middle ages they managed this risk by sitting in their beds (didn't help, though ...). The world is a dangerous place ... and life always ends with death.

[Jay]

Could numbers in rest homes have also increased by X % !

[h2so4]

No mate its people that don't receive their medication or have a fall that sort of preventable death.

[Joshuatree]

If you can find a link would be helpful h2so4.You mean "preventable" deaths don't you? I do suspect stuff like that happens. A less mortal example. This elderly lady at a care centre lost her lower denture; 6 days later a family member looked under the head of her bed and there it was 15cm in.!!!? No one bothered to look ,or to clean.

[couta1]

Ask Couta1. He has the most experience on here interacting with residents at SUM villages and I am sure he will confirm that by and large they're satisfied customers. Spot on, people on here need to stop comparing us with Aussies (Except that Ryman are kiwi trailblazers over there, offering a different model to their current one) NZ Audit standards are incredibly robust in this industry and care standards are by and large incredibly high.

[h2so4]

If he sends me the link I'll post it. Yes I meant preventable. You guys. Ha!

[BlackPeter]

No mate its people that don't receive their medication or have a fall that sort of preventable death.

You talked about unpreventable deaths, though ... make up your mind :p

[Beagle]

SUM people are missing the main point today. 2017 PE based on $75m underlying is only 14.2 for a company proving they can grow at 30% in a flat-ish real estate market.
Cheep, Cheep...said the budgie :) That's a PEG ratio of less than 0.5 based on 2017 growth and a PEG ratio of less than 0.33 based on average underlying profit growth of 48% since listing. Complete this sentence...you can lead a horse to water...

[trader_jackson]

Nice guidance, clearly saw the share price consistentlydropping and felt they had to say something. You could also say that they are clearly confident of achieving it(hence the very early indication), although I note, at best this is 33% growth,which is well down on 50% growth, and well below their several year average of47% (I think?)... maybe this will drop down further to be 16% growth for FY18? – 33% or 16% is still not bad growth of course, just not exactly the much hyped 47% “consistentaverage growth year after year”.

Share price reaction was to be expected and would be nice to see a small upward trend rebegin... I imagine some on here probably own aquarter or so of the company given all the “doubling down” done every time it wentdown (which has occurred a lot in the past 6 months).:t_up:

At the end of the day, it is just a forecast, and 6 months is still a long time for things to change, particularly in the ‘booming’ construction industry, which those with heavy development, such as SUM, are ultimately exposed to (took fletchers only weeks to write off a hundred millionor something from their original forecast/outlook).

If we believed OCA’s forecast, even after asmall recent rise (also now at a record high), they’d be trading on a single digit PE for FY 18 - the cheapest by far - but they're a dog like Arvida so don't believe them ;).

[bull....]

make hay while the sun shines - once supply meets demand some easy profits are gone and with 5 big players rapidly expanding how long is this going to take.

[h2so4]

You talked about unpreventable deaths, though ... make up your mind :p

Am I under cross examination? I thought I covered that.

[couta1]

make hay while the sun shines - once supply meets demand some easy profits are gone and with 5 big players rapidly expanding how long is this going to take. Around 20 yrs.:D

[winner69]

t_j, have you ever heard of growth rate decay?

Even the likes of Arvida/Oceania will suffer that fate in due course

[fish]

Am I under cross examination? I thought I covered that.

Yes and no.
You did initially fire off a loose round so you have to expect questions

[trader_jackson]

t_j, have you ever heard of growth rate decay?

Even the likes of Arvida/Oceania will suffer that fate in due course

Of course, it just seemed like sum people on here thought sum companies could keep it up year after year (well at least not see a big drop in the next couple of years)... maybe I interpreted some posts wrong.

On another note, I agree that today sum people are missing the point (at the end of the day this is still a solid update)

[Beagle]

maybe this will drop down further to be 16% growth for FY18? T.J. Nothing more that a complete speculative guess on your part. The facts about their profit growth to date are in no way whatsoever supportive of your guess.

[h2so4]

Yes and no.
You did initially fire off a loose round so you have to expect questions

Crazy. what do you want?

[Oliver Mander]

Wouldn't todays SUM announcement be good for the sector as a whole...indicates a bit of strength in property resale when perhaps the market expects this to not be the case...? I understand why SUM shares would be rising on the back of an earnings update, but surprised to see RYM dropping on the back of this...

[JeremyALD]

Good update overall. Nice to get some guidance and theres not a huge spread in forcast so they must be pretty confident.

[JeremyALD]

Has SUM ever missed guidance?

[winner69]

If SUM had same profit multiples as RYM it's share price would be $6.75

I'd be happy with 6 bucks .....soon that is

the other way round is RYM at $5.00 if priced at SUM multiples ...no way

[winner69]

Has SUM ever missed guidance?

Not that I can remember ...never disappointed

They did better than guidance for F16

[BlackPeter]

Here is a shocking statistic from Aussie. In the last 5 years preventable deaths in rest homes has increased 10 fold. No I do not have a link to it. Hearsay from a doctor referring to some medical report.


Am I under cross examination? I thought I covered that.

OK - good we established that you meant "preventable" instead of "unpreventable" despite saying the latter. When I read your original post I just thought you had a dry sense of humour, but it looks like the problem lies deeper. You throw quite concerning numbers around without any base ... this is how malicious rumours are started.

So let us see:

How many "preventable" deaths did occur last year in Aussie rest homes?
How many did occur five years ago?
How has the rest home population changed during that time (i suppose it grew)?
How many preventable deaths occurred in Aussie 5 years ago outside of rest homes?
How has this number changed over the last 5 years?

You don't know? So, what is the meaning of the rumour you are spreading? Even if the numbers are correct, they are absolutely meaningless without context.

Maybe the number of preventable deaths increased from 1 to 10 but there are 100 less preventable deaths due to more old people moving into a rest home instead of struggling for themselves?

Lets help you: I found a potential source for your rumour:

https://www.theguardian.com/australia-news/2017/may/26/preventable-deaths-in-australian-nursing-homes-quadrupled-in-10-years

So - it was not 10 folding in 5 years but 4 folding in 11 years. As well - the authors note that the reporting base significantly changed during the last decade, making the numbers not really comparable. 10 years ago it was still considered much more normal that old people might die at some stage ... while today basically any external cause of death (including fall and suicide) is considered "preventable".

So, yes - maybe there is something the rest homes can learn from the report, and I am sure that there are things which can be improved. However - is it really the report which is shocking - or more the rumours spread based on it?

While I realise that sulfuric acid is quite corrosive - lets try to use this property in future a bit more constructive - shall we?

[winner69]

Can we please get back on topic

This is SUM thread on the SUM share price - not a thread to discuss the morbid ins and outs of Aussie retirement villages.


Today SUM announced they are going to have a boomer of a year ......and the SUM share priced gapped up today - that's good

[Bjauck]

...

Lets help you: I found a potential source for your rumour:

https://www.theguardian.com/australia-news/2017/may/26/preventable-deaths-in-australian-nursing-homes-quadrupled-in-10-years

So - it was not 10 folding in 5 years but 4 folding in 11 years. As well - the authors note that the reporting base significantly changed during the last decade, making the numbers not really comparable. 10 years ago it was still considered much more normal that old people might die at some stage ... while today basically any external cause of death (including fall and suicide) is considered "preventable".

So, yes - maybe there is something the rest homes can learn from the report, and I am sure that there are things which can be improved. However - is it really the report which is shocking - or more the rumours spread based on it? Good research and examination of the validity of a sensational headline. When mud is thrown, it goes everywhere and ends up with collateral damage.

[couta1]

Good research and examination of the validity of a sensational headline. When mud is thrown, it goes everywhere and ends up with collateral damage. Yes good work BP, let's leave the Aussies to their own model and problems and focus on our superior continuum of care model.

[Beagle]

If SUM had same profit multiples as RYM it's share price would be $6.75

I'd be happy with 6 bucks .....soon that is

the other way round is RYM at $5.00 if priced at SUM multiples ...no way
...and that's before we consider the fact that RYM is growing at 13% and SUM at 31% and not just based on latest data, consider the divergence of their respective growth rate averages over the last 5 years, (RYM 15% SUM 48%) Something tells me the PE divergence should be the other way around !


Can we please get back on topic

This is SUM thread on the SUM share price - not a thread to discuss the morbid ins and outs of Aussie retirement villages.


Today SUM announced they are going to have a boomer of a year ......and the SUM share priced gapped up today - that's good
Agree 100%


Yes good work BP, let's leave the Aussies to their own model and problems and focus on our superior continuum of care model.
Amen to that mate.

[Joshuatree]

Pretty strong response . 2nd highest vol of the year; almost at the 30DMA. Still in a bear mkt though if you follow T/A. Hoops post on investment strategies thread.

[JeremyALD]

Pretty strong response . 2nd highest vol of the year; almost at the 30DMA. Still in a bear mkt though if you follow T/A. Hoops post on investment strategies thread.

If you're a long term holder things are looking pretty good. Why not hold on and enjoy the ride :)

[Joshuatree]

I can understand that if you're holding on but I've never been on SUM to be bucked off it. Quite a lot going on atm; scrutiny wise, cost wise, property wise,chartwise etc so will watch for some conflict reconciliations, smoother waters. Just in OCA in the sector atpit; sold RYM a few years back.

[percy]

All the time the Tsunami of ageing grows.
At present time 50 aged a week, are making a retirement village their home.
So next milestone 100 a week,and then 200 a week.
Pity the sector's build rate will steadily fall behind demand.

[James108]

In my DCF model I had $70.5M for underlying profit in FY17. Quite pleased with the guidance.

I think current SP is approximately fair value, even slightly under fair value. Having said that I don't mind paying fair value for a good company, as they will probably suprise on the upside.

[Joshuatree]

Has no-one else read the NBR article by Tim Hunter "pop goes the bubble" June 23rd issue. Seems some subscribers are being selective in their reading, confirmation bias; most of us do it; its a human failing , i have to pull myself up regularly. Will post snippets later as off to visit someone in a care facility.

[couta1]

Has no-one else read the NBR article by Tim Hunter "pop goes the bubble" June 23rd issue. Seems some subscribers are being selective in their reading, confirmation bias; most of us do it; its a human failing , i have to pull myself up regularly. Will post snippets later as off to visit someone in a care facility. Don't get the NBR, never have, so no selective reading here. Listening to the opinion of one or SUM can cost you huge gains. PS-Forecast for the next 20 yrs, is for strong tailwinds to continue blowing.

[King1212]

Don't get the NBR, never have, so no selective reading here. Listening to the opinion of one or SUM can cost you huge gains. PS-Forecast for the next 20 yrs, is for strong tailwinds to continue blowing.


Yes...certainly. However, till the auckland property market shows a stability and direction...I think it a bit risky now?

[James108]

I believe the biggest risk is an oversupply of retirement units in the Auckland region in the short to medium term. This is well documented.

The proportion of retirees going into villages will need to increase a fair amount to balance the supply/demand, which may happen but the risk is there.

[Mickey]

I was wondering the same thing recently about oversupply - some big build-outs going on in Wellington from RYM and SUM. But then - there seems to be a fairly steady supply of residents and potential residents as well so hopefully there'll be a good balance of supply & demand.

[Beagle]

Summerset is flat out building as fast as it can across a wide range of sites and believe me, they have no trouble selling them often well before they're built !

[fish]

Summerset is flat out building as fast as it can across a wide range of sites and believe me, they have no trouble selling them often well before they're built !
Absolutely
What counts is what you can see is happening
How can the market be oversupplied when this is happening and the retirement population is increasing.
Additionally we have the Americas cup and this will increase housing demand

[winner69]

I was going to reply to a good post from hardt (I think it was) but it has been deleted. Shame as it must have taken a while to write.

Always good to hear the quant's view

[James108]

Absolutely
What counts is what you can see is happening
How can the market be oversupplied when this is happening and the retirement population is increasing.
Additionally we have the Americas cup and this will increase housing demand

Allow me to explain to you. The proportion of retirees entering villages is increasing. For one thing this can't occur forever. Is this offset by the rate of eligible retirees coming "online" increasing (note I said rate not number) or are we on the steep part of the curve already?

Secondly all operators seem to be increasing their build rate. Requiring more retirees to come "online" than the last year.

As for the Americas cup, can't see that raising the number of people looking to live in a village.

Let me know if you need further explanation regarding the above.

[Beagle]

All the time the Tsunami of ageing grows.
At present time 50 aged a week, are making a retirement village their home.
So next milestone 100 a week,and then 200 a week.
Pity the sector's build rate will steadily fall behind demand.

Current penetration rate is just over 12%. This could easily grow into the mid-late teens as a percentage of retiree's wanting to live in a caring supportive community.
I agree with you 100%. There could be a real shortage.

[percy]

Current penetration rate is just over 12%. This could easily grow into the mid-late teens as a percentage of retiree's wanting to live in a caring supportive community.
I agree with you 100%. There could be a real shortage.

Yes a real shortage unless the build rate is substantially increased.
The size of the ageing population Tsunami is expected to peak in twenty five to thirty years
time.
ps I wonder whether we will see Australian retirees, deciding to move to NZ,so as they may enjoy their golden years in a SUM village?

[Hoop]

I read this thread and all I see is the positives,,, and one large positive is increasing numbers of weathy (thanks to the 40year property boom cycle) baby boomers entering their retirement years and one negative (possible property crash)...

There is a "perception" that the retirement village sector will see good times like it is now for the next 30 years so we all will use this sector as our very long term (superannuation type) investment....But..is this perception valid?..Is this created perception based around the current environment?



There are many other important factors which lie in the shadows....

I think it was Halebop (Halebop can you add comment) a few years back on ST that said the demographic factor will be the biggest factor that will affect the property market starting in the near future, when the baby boomer generation bubble reach retirement and start downsizing ....As they move into smaller dwellings their last big 3 -4 bedroom home that once housed them and their children will be sold off into an ever decreasing market as there isn't the replacement numbers of Gen Y and Millennial couples...also .. the wealthy Generation is the exiting Baby boomers not the entering Millenials.
Here lies the problem...The property market could become fractionated...and the mobility to move from house to retirement village may become more restrictive due to financial contraints rather than willingness..

Also there are the usual other potential problems.. Politicians and their Party's housing policies (upcoming election), Competition and large dictating Competitors entering and diluting an affluent market...NZ's ever changing Fiscal Policies.... tightening migration restrictions (upcoming election) ...

[JeremyALD]

Well Balance whilst I agree with you the property market is not crashing and if there is a property market crash it will impact more than just retirement sectors. I can't see a property market crash in the near future and that is common opinion of those in the know. A 5% YOY drop is probably a good thing. Its not sustainable for price to keep going up.

I agree the elections are a risk but National is sitting pretty at the moment. At $4.80 with 30% growth this year predicted I think the risks you outlined are factored into the SP.

As for a glut of houses in the future I guess this could happen, however New Zealand remains an attractive country to live so high levels of migration might offset some of that risk.

[macduffy]

Fair point, Hoop. But if the current housing shortage persists, perhaps those big 3-4 bedroom homes will be bought up and converted into flats - or, maybe boarding houses will see a resurgence in popularity!

:cool:

[James108]

Current penetration rate is just over 12%. This could easily grow into the mid-late teens as a percentage of retiree's wanting to live in a caring supportive community.
I agree with you 100%. There could be a real shortage.

What if I told you penetration rate in Auckland had increased from 14.8% in 2015 to 15.1% in 2016.

How long can a 0.3% increase in penetration per year be maintained?

What is the increase in penetration required for this year when SUM has increased build rate by 12.5%, keep in mind all the other operators are also increasing build rate.

What if I told you that based on the current development pipeline Auckland needs to have a penetration rate of 19.2% by 2023 to avoid an oversupply. Either that or reduce buildrate.

[macduffy]

What if I told you that based on the current development pipeline Auckland needs to have a penetration rate of 19.2% by 2023 to avoid an oversupply. Either that or reduce buildrate.

Why would you expect the current buildrate to continue unabated for another six years? Are retirement companies not aware of this risk?

[James108]

Why would you expect the current buildrate to continue unabated for another six years? Are retirement companies not aware of this risk?

That raises another question, what do you expect SUMs build rate to be in six years? If their buildrate decreases (and likely leads to a decrease in underlying profit) what value do you assign their shares?

[percy]

I read this thread and all I see is the positives,,, and one large positive is increasing numbers of weathy (thanks to the 40year property boom cycle) baby boomers entering their retirement years and one negative (possible property crash)...

There is a "perception" that the retirement village sector will see good times like it is now for the next 30 years so we all will use this sector as our very long term (superannuation type) investment....But..is this perception valid?..Is this created perception based around the current environment?



There are many other important factors which lie in the shadows....

I think it was Halebop (Halebop can you add comment) a few years back on ST that said the demographic factor will be the biggest factor that will affect the property market starting in the near future, when the baby boomer generation bubble reach retirement and start downsizing ....As they move into smaller dwellings their last big 3 -4 bedroom home that once housed them and their children will be sold off into an ever decreasing market as there isn't the replacement numbers of Gen Y and Millennial couples...also .. the wealthy Generation is the exiting Baby boomers not the entering Millenials.
Here lies the problem...The property market could become fractionated...and the mobility to move from house to retirement village may become more restrictive due to financial contraints rather than willingness..

Also there are the usual other potential problems.. Politicians and their Party's housing policies (upcoming election), Competition and large dictating Competitors entering and diluting an affluent market...NZ's ever changing Fiscal Policies.... tightening migration restrictions (upcoming election) ...

I guess a lot depends on where you live.
My wife and I will decide next year, whether we sell our four bedroom house ,and move into a two bedroom unit,or move straight into a retirement village.
We live in Spreydon,ChCh,not far from Barrington Mall,and are in Cashmere High School zone. With people getting sick of traffic, commuting from Rolleston/Rangiora etc I would expect our house to sell quickly.
Any one noticed I have not mentioned house prices,unit prices or retirement unit prices.?
It will be a lifestyle decision.
And there are thousands in our situation.

[fish]

I find more and more young elderly-around 70 are moving into retirement villages.
Initially I thought many would regret it-but so far not one.
I was talking to a couple yesterday who loved the stress-free social aspects.
Similar people and lots of activities.Heated pool and swims everyday.
Personally I know its not for me-or any of my friends.
One of my wifes friends is already there and no regrets.
As percy states its a lifestyle decision and finances don't come into it.Cost of living is about the same-management fees are similar to council rates.
Just a smaller inheritance for the kids-and for most that might not be a bad thing

[h2so4]

I guess a lot depends on where you live.
My wife and I will decide next year, whether we sell our four bedroom house ,and move into a two bedroom unit,or move straight into a retirement village.
We live in Spreydon,ChCh,not far from Barrington Mall,and are in Cashmere High School zone. With people getting sick of traffic, commuting from Rolleston/Rangiora etc I would expect our house to sell quickly.
Any one noticed I have not mentioned house prices,unit prices or retirement unit prices.?
It will be a lifestyle decision.
And there are thousands in our situation.
And the attraction of a brand new unit adds to the attraction.No matter where the property cycle is at.

[percy]

Couple slightly different reasons for looking at a retirement village.
The past ten years my wife has lost her social life looking after relations.First an uncle and an aunt,then her mother,then a brother.Two of her brothers have died in the past 9 months, and an old school friend of her's died yesterday. So moving into a retirement life should give her more friendships,and activities.
The second reason would be so we can have more holidays,without leaving our house unattended.
Both daughters have already received a fair chunk of their inheritance.

[Beagle]

What if I told you penetration rate in Auckland had increased from 14.8% in 2015 to 15.1% in 2016.

How long can a 0.3% increase in penetration per year be maintained?

What is the increase in penetration required for this year when SUM has increased build rate by 12.5%, keep in mind all the other operators are also increasing build rate.

What if I told you that based on the current development pipeline Auckland needs to have a penetration rate of 19.2% by 2023 to avoid an oversupply. Either that or reduce buildrate.

What if I asked you to substantiate those claims ? What if I told you and could substantiate it that average real estate prices in ST John's and Parnell had increased in the last two years and a half years by circa 60% ? You think that might underwrite their development margins for years to come as they build out new villages there at around an average price of 75% of the respective suburb ?

What of I told you average Parnell prices are now an average of $2m and many of those are poorly insulated old design weather board villa's. You think people in their late seventies might like a supportive living environment in a nice new well insulated unit that means they can free up circa $500,000 in capital ?

I added SUM more to my portfolio today. I have full confidence that management are highly motivated to continue to grow this company at a very strong rate and full confidence in the compelling long term population demographics.

[James108]

What if I asked you to substantiate those claims ? What if I told you and could substantiate it that average real estate prices in ST John's and Parnell had increased in the last two years and a half years by circa 60% ? You think that might underwrite their development margins for years to come as they build out new villages there at around an average price of 75% of the respective suburb ?

What of I told you average Parnell prices are now an average of $2m and many of those are poorly insulated old design weather board villa's. You think people in their late seventies might like a supportive living environment in a nice new well insulated unit that means they can free up circa $500,000 in capital ?

I added SUM more to my portfolio today. I have full confidence that management are highly motivated to continue to grow this company at a very strong rate and full confidence in the compelling long term population demographics.

Look up JLL retirement village white papers 2017.

Do you have any comments about the oversupply issue I raised? Is it a concern? Maybe you believe sum will be least affected due to quality of units and brand?

I'm not interested in talking about short term development margins at the moment unless there is concrete figures, at the moment my model has 21% for fy17.

[hardt]

I was going to reply to a good post from hardt (I think it was) but it has been deleted. Shame as it must have taken a while to write.

Always good to hear the quant's view

Ah yes, it was in response to someone questioning why SUM has a PE below most of its peers.

SUM = 140M Operating Revenue FY16
75% came from the sale/resale of occupancy rights
15% came from medical/aged care services.

RYM = 429M Operating Revenue FY17
33% came from the sale/resale of occupancy rights
53% came from medical/aged care services.

OCA = 192M Operating Revenue FY16
10% came from the sale/resale of occupancy rights
81% came from medical/aged care services.

In my opinion, the biggest tailwinds are providing care and medical services to the growing ageing population.

Sum is still going to do very well over the next decade or two, but it won't be afforded the "price to everything" of its peers.

[trader_jackson]

What if I told you penetration rate in Auckland had increased from 14.8% in 2015 to 15.1% in 2016.

How long can a 0.3% increase in penetration per year be maintained?

What is the increase in penetration required for this year when SUM has increased build rate by 12.5%, keep in mind all the other operators are also increasing build rate.

What if I told you that based on the current development pipeline Auckland needs to have a penetration rate of 19.2% by 2023 to avoid an oversupply. Either that or reduce buildrate.

"JLL expects to record continued growth in New Zealand’s 75 plus penetration rate over the next 15 years, assuming adequate retirement village unit supply reaches the market in order to fulfil demand."
You'd think the way they talk here they are worried there isn't enough being built?

Not all other operators are increasing their build rate - some are converting, some are building care facilities (not the same as units), some are doing a bit of everything, some are even struggling big time and likely to shut... so no, not all other operators are increasing their build rate year after year (the 5 companies listed aren't the only ones in the retirement business... although they probably represent some of the best)

"If we look ahead to 2043, Statistics New Zealand’s population forecasts suggest the number of people in this age bracket will grow by 164 percent. In Auckland, that growth rate is expected to be 205 percent."
Even if penetration doesn't increase (which I doubt), these stats are likely to keep a 'floor' under things.

There is a possibility, which is unique to Auckland, that there may (not for certain) be an over supply of retirement units in the medium term - this has been discussed a while back I believe... in which case the worse will not be filled - sum companies will be more than fine



In my opinion, the biggest tailwinds are providing care and medical services to the growing ageing population.

Sum is still going to do very well over the next decade or two, but it won't be afforded the "price to everything" of its peers.

- correct, and this is why ARV is trading a bit higher, they are a premium offering, with a unique culture and extremely good continuum of care - not trying to develop shoe box units for all. As for Oceania, well that is still trading on a much lower PE than anything else listed, but like arvida ("the dog") was when it was trading some 41% cheaper than it was today only 2 ish short years ago, hopefully the market will 'adjust' this over time (speaking of which, FY17 results shouldn't be to far away). Ryman, well they have their australian offering, and also a impressive continuum of care... funny how while house prices (which relate to unit prices I think) might stall a bit in some areas, those "doggy low margin" care beds will likely become increasingly important as time goes on, and a consideration on the minds of folk moving into villages (and unlike [possibly] retirement units in Auckland, there is a looming nation wide shortage of these by the way...)

[Bjauck]

...
Do you have any comments about the oversupply issue I raised? Is it a concern? Maybe you believe sum will be least affected due to quality of units and brand?.. Although perhaps some time off, if sometime in the future the current model appeasr to be reaching market saturation, perhaps different markets could be tapped - such as a pensioner rental units and a slightly different scheme for the 50-70 yo market.

[Joshuatree]

Has no-one else read the NBR article by Tim Hunter "pop goes the bubble" June 23rd issue. Seems some subscribers are being selective in their reading, confirmation bias; most of us do it; its a human failing , i have to pull myself up regularly. Will post snippets later as off to visit someone in a care facility.

A few snippets from NBR re week ago 23rd june.Worth grabbing a copy if any left? Or going to library.

Retirement villages have had a charmed life for more than a decade, aided by a tax free business model tacitly endorsed by a grateful Govt....Tim Hunter

Confidence in the sectors use of underlying profit as a performance measure could fall, he said,"with it increasingly clear that the measure can be managed from period to period" Tim Hunter " Arie Dekker" FNZC

The contrast between the sectors high valn's and low free cashflow is "both a valuation and financial risk- particularly where alot of forward value is priced in"

"there is a limited capacity to rely on the cashflow statement for the retirement village operators either"

... An important feature of the retirement prop industry is that its biggest cashflows don't count as revenues.

... key phrase "if the mkt momentum turns"

The new bond will be used to pay down some of summer sets bank debt of about $280 million.

..."its frustrating for us.... that the offer does not provide us with insight into the key covenant of interest we have in the sector- the banks ebit/ interest coverage"

"the gap between disclosure in the listed property vehicle and the retirement village sector at results time is large...."

The criticism of disclosure standards may have already made its mark but its mere existence suggests the mkt is contemplating the end of the property boom. Or is that a bubble? Tim Hunter

[winner69]

Interesting that if building consents are anything to go by there hasn't been an ever increasing number of retirement village units being built over the last 3 years

Annual numbers to March - 2015 there were 1,992 consents - 2016 there were 1,929 and to March 2017 there were 1,915 units.

[Beagle]

Thank you James108, I'll look into that paper when I get time, can anyone help me save some time by proving a link please ?

Regarding Tim Hunter's attempt to besmirch the veracity of the entire industry's accounting standards in terms of his remarks regarding underlying profit unless he's going to substantiate that with evidence I think that's extremely unprofessional journalism.

It is worth noting on that subject that SUM won some industry award for their integrity of their financial systems very recently. I understand better than most of here the balance date cut-off issues in terms of measuring IFRS profit on partly completed villages but for Tim Hunter to make such a denigrating comment one must wonder what his professional qualifications are. Does he really understand the accounting issues involved ? Perhaps he's be better directing his enquiries as to how some banks "manage" their bad, doubtful and delinquent debtors..now that's an area where things really are "managed" Disc both a SUM and HBL shareholder.

[Joshuatree]

Pretty defensive attack there Roger; i was hoping for a more objective opinions; unusual coming from someone who's encouraged folks to take up subs in NBR ; a very good quality financial paper.

[Beagle]

They're usually good, not always. Some industries manage their balance date issues a lot more than others... Sorry you're disappointed with my post Joshuatree...very limited time at present. Trading on a forward PE of 14.2 around half its average since listing I am more than confident all known and perceived risks are more than fully priced in....like AIR's risks were fully priced in at $1.73 late last year.

Fact is many people don't realise that accounting for construction is a complex subject, fill your boots if you wish https://www.accountingtools.com/construction-accounting-book but some journalists find it easier and more importantly more sensational to simply throw mud.

[Joshuatree]

Thanks mate; you're right re accounting complexity; you're coming from the source there; my eyes for one glaze over very quickly clicking on that link .Fair comment; have a great weekend.

[peat]

We worked out that 99% of last years profit was property revaluations.
Which was a shock.
However further workings indicated that about half (forgive there gross approximations) of that was realised property valuations.
Realised propery valuation gains are cash banked. The other obviously not.
So I was surprised by hardt's post that 15% came from came from care based earnings....

Disclaimer, not a holder anymore - sold out y'day. dont read anything into that...

[Lewylewylewy]

A jounralist reporting on something that they don't really understand?! Shocking!

[Beagle]

Thanks mate; you're right re accounting complexity; you're coming from the source there; my eyes for one glaze over very quickly clicking on that link .Fair comment; have a great weekend.

No worries mate. You're not the only one who's eyes glaze over looking at that subject matter ! I guess the fact that Summerset's finance team won an award for the veracity of their reporting system means we can take some comfort that according to the experts they have their reporting systems well established. No sailing this weekend...might have to make do with watching the Lions get another hiding :)

Really shocking LLL, like that's never happened before :)

[couta1]

Bollinger Bands coming together, a move upwards is on the cards, IMO.

[Beagle]

Lets hope so mate as its been a pretty disappointing quarter with SUM down nearly 9% despite giving guidance of profit growth anticipated for FY17 at 30%, some 5% more than I was expecting.
Maybe a little bit of tax loss selling by Australian institutions at their year end 30 June ?

[Jonboyz]

Short term dips equals SUM excellent buying opportunities for long term growth.

[Joshuatree]

Peat "We worked out that 99% of last years profit was property revaluations.
Which was a shock.
However further workings indicated that about half (forgive there gross approximations) of that was realised property valuations.
Realised propery valuation gains are cash banked. The other obviously not.
So I was surprised by hardt's post that 15% came from came from care based earnings....

Disclaimer, not a holder anymore - sold out y'day. dont read anything into that"


Good post peat; i find it interesting the posts that are ignored when they have some very int but uncomfortable facts; confirmation bias? Curious why you sold . Was it due to a perception of increasing risk or you just wanted the money for something else. SUM are using the bonds to reduce their bank loans. one has to consider if the banks have had a quiet word to SUM so SUM have shifted the risk that the bank doesn't want so much anymore(due to prop valn concerns ahead etc) onto the bondholders.

[Beagle]

SUM's bankers have NOT reduced their $600m credit line as a result of the bond issue. Julian Cook has already appraised the market of the reasons for the issue....time for some homework JT ?
Peat nearly 100% of SUM's profit comes from developing new units and capital gains on the resale of the existing units. That's been the basis of their business model since they listed so why would that be a surprise to anyone now ? They make hardly anything from the operation of their villages but that might change to a degree or ten in the future...

[Joshuatree]

The bonds are to reduce bank debt no?

“The proceeds from the bond will be used to reduce existing bank debt to NZ$211 million, leaving significant headroom within the NZ$600 million facility,” said Mr Campbell.

[JeremyALD]

I'm a bit confused JT. SUM has just given guidance of 72 - 75 million underlying profit. Given their track record I'd say they have a very good chance of hitting that milestone. Their bond issue was also oversubscribed and successful. MET, SUM, RYM are all struggling to gain traction on the share markets at the moment but all are solid businesses IMO. YOY SUM is also up and it's improved from Jan 17s position. There's no reason to scare monger at the moment and we're just waiting for when retirement stocks come back in favour. There's nothing for me to think SUM is badly exposed to the property sector. Remember SUM have stated that their underlying business has improved in two property market downturns. Construction costs / delays are the bigger threat but obviously they have some confidence by issuing gudiance so early.

[Joshuatree]

Hi Jeremy Im being contrariwise for sure but not attempting to scaremonger anyone. We need balance on the threads otherwise its just full of cheerleaders ,not so good.Why do you think they are out of favour Jeremy, theres the rub!?

[BlackPeter]

The bonds are to reduce bank debt no?

“The proceeds from the bond will be used to reduce existing bank debt to NZ$211 million, leaving significant headroom within the NZ$600 million facility,” said Mr Campbell.

Read the comment about having significant headroom in the (unchanged) finance facility)? In my view the only thing SUM is doing is creating financial leverage to allow them to buy land if & when it is cheap.

The bonds have been a masterstroke to allow them to exploit any potential weakness in the property cycle to have a "re-fill" on their land bank. This might be the last opportunity for some time to buy land that cheap :p - and they will need lots of land to house the tsunami of old people wanting to move into good retirement care.

[JeremyALD]

Hi Jeremy Im being contrariwise for sure but not attempting to scaremonger anyone. We need balance on the threads otherwise its just full of cheerleaders ,not so good.Why do you think they are out of favour Jeremy, theres the rub!?

I think part of the reason is all three (SUM, RYM and MET) pay small dividends. A lot of the attraction to NZ at the moment is high dividend stocks, for example SPK, electricity companies and even ARV to a degree. Given the uncertainly in the property market and construction industires there's not particularly strong sentiment in retirement stocks (there's is obviously some correlation between the property market rightly or wrongly). Added to this an election is coming up soon and people are uncertain about changes in inmigration. Given the low dividend yields in SUM ect investors are being cautious. So I think it has little to do with the businesses themselves, more about the political and economic environment. Personally I think national will win the election and I can't see a property market crash. Even if there was SUM remains a good business and I can't see a huge change to their underlying fundamentals. So at this stage I'm not buying anymore but more than happy to hold. Ignoring outside factors they remain in a better position than they've ever been IMO.

[percy]

Read the comment about having significant headroom in the (unchanged) finance facility)? In my view the only thing SUM is doing is creating financial leverage to allow them to buy land if & when it is cheap.

The bonds have been a masterstroke to allow them to exploit any potential weakness in the property cycle to have a "re-fill" on their land bank. This might be the last opportunity for some time to buy land that cheap :p - and they will need lots of land to house the tsunami of old people wanting to move into good retirement care.

Agree.
It is also very prudent business having another secure source of funding.

[bull....]

http://www.theage.com.au/business/time-for-retirement-living-to-meet-the-fairness-test-20170704-gx45xs.html

the debate continues

[Joshuatree]

Thanks Bull good article ; worth bothering to click and read full article. 2 snippets here

"The inquiry also recommended better regulation of fees and a review of retirement village legislation. This is very welcome, but a key problem in reforming the retirement sector is the power of the big corporates and property developers that dominate the sector.

Among the 15 recommendations for reform was one that stated there should be a new alternative low-cost forum that provides timely and binding resolution of disputes. A forum such as an ombudsman for retirement living disputes, done well, would help retirees get on with what should be the best years of their lives."

[peat]

Their bond issue was also oversubscribed and successful.

I'm curious to know on what basis you make this statement.

[Bjauck]

http://www.theage.com.au/business/time-for-retirement-living-to-meet-the-fairness-test-20170704-gx45xs.html

the debate continues Some good issues. However it is not specific to SUM and it is an Australian article.

[bull....]

Some good issues. However as it is not specific to SUM and it is an Australian article, why is it posted on the SUM thread?

As NZ tends to be a follower rather than a leader what happens in Australian law and politics has a lot of relevance to NZ at some stage so if the retirement sector becomes regulated in AUS then I would guess NZ would follow at some stage.

and yes sum or rym or what ever thread dont really matter its the theme which may or may not have relevance depending on your opinion

[trader_jackson]

Back into the $4.60's so soon after what was a pretty good, arguably unexpectedly good, profit guidance announcement.

Mr Market works in mysterious ways.

[BlackPeter]

Back into the $4.60's so soon after what was a pretty good, arguably unexpectedly good, profit guidance announcement.

Mr Market works in mysterious ways.

The eternal battle between fundamentalists (looking at the underlying value) and TA-followers (just looking at the trend). You will need to wait until all TA purists sold their holdings. Only then the SP will rise again ... soon to be supported by a flood of TA supporters buying back into the new uptrend ;)

Discl: using myself both FA and TA (depending on the circumstances) ... and in this case holding.

[kiwiwim]

http://www.theage.com.au/business/time-for-retirement-living-to-meet-the-fairness-test-20170704-gx45xs.html

the debate continues

Interesting to note who the author of this article is:Consumer Action Law Centre chief executive Gerard Brody, we all must earn a living.

[Beagle]

I think we can't rule out the possibility of some M&A activity at this sort of price level. Its unprecedented, (at least since the depths of the GFC in 2009 when RYM got belted down to a slightly lower multiple) to the best of my knowledge on the NZX for a company growing at the rate of SUM to be trading on a current year PE of 14. Then again RYM was never growing at a 5 year CAGR of 48% so this is arguably cheaper than when RYM bottomed out on a growth adjusted basis. Wasn't that long ago Infratil bought that much slower growing retirement company in Australia for a PE of 18.5 going from memory and everyone thought they got a real bargain.
Once the TA guys get tired or run out of scrip from belting this with the sell stick...

[trader_jackson]

I think we can't rule out the possibility of some M&A activity at this sort of price level. Its unprecedented, (at least since the depths of the GFC in 2009 when RYM got belted down to a slightly lower multiple) to the best of my knowledge on the NZX for a company growing at the rate of SUM to be trading on a current year PE of 14. Then again RYM was never growing at a 5 year CAGR of 48% so this is arguably cheaper than when RYM bottomed out on a growth adjusted basis. Wasn't that long ago Infratil bought that much slower growing retirement company in Australia for a PE of 18.5 going from memory and everyone thought they got a real bargain.
Once the TA guys get tired or run out of scrip from belting this with the sell stick...

Is it right that the recent profit guidance would indicate they are now growing much slower than their 5 year CAGR of 48%? (would have thought it would make the 48% number a bit less relevant... then again my abacus has played up in the past...)

(oh and also, OCA is currently trading at a much lower, single digit, FY18 PE... but I suppoe like ARV it is a dog so doesn't really compare to the big boys, only expect a 15% CAGR from FY16 to FY18, well down from 32.9% they achieved FY14 to FY16)

[Beagle]

Growing at ~ 30% in a flat housing market isn't too shabby T.J. after the aforementioned 5 year CAGR in a booming market.

[trader_jackson]

Growing at ~ 30% in a flat housing market isn't too shabby T.J. after the aforementioned 5 year CAGR in a booming market.

No of course not, but not quite 48% either.

At least we are back in the 4.70's now... no worries.

[Beagle]

If growing at 48% CAGR for years was easy Ryman, arguably best of breed would have been doing it. The hound didn't / won't bite regarding ARV being an alleged dog.

[King1212]

The way I look at is people are cashing thier retirement stocks...n get in Oceania. Pretty strong force lately. Due to property uncertainty, people are de risk. Even Arvida got hammered because it has gained around 40% since IPO. So I think people are looking at OCA...with 50 facilities and less than $600cap market. Sure, people think it is undervalued at the current sp.

Should listen to u Tj..should bought in when OCA was still .82c.:(

[trader_jackson]

The way I look at is people are cashing thier retirement stocks...n get in Oceania. Pretty strong force lately. Due to property uncertainty, people are de risk. Even Arvida got hammered because it has gained around 40% since IPO. So I think people are looking at OCA...with 50 facilities and less than $600cap market. Sure, people think it is undervalued at the current sp.

Should listen to u Tj..should bought in when OCA was still .82c.:(

"Ya can't win em' all!" ;)

[hardt]

Growing at ~ 30% in a flat housing market isn't too shabby T.J. after the aforementioned 5 year CAGR in a booming market.

When you say flat, you forget to mention it is now perched on the roof of an extremely HIGH SKYSCRAPER that is the housing market, while others offer aged care services generating substantial monthly revenues and cash flows with less downside risk than SUM.

[King1212]

Look at the last trading of Sum...off market then straight to OCA...I believe so...the trading out and in are almost the same value...so surely people are looking for new listed OCA as a new horse in the retirement sector...

[percy]

When you say flat, you forget to mention it is now perched on the roof of an extremely HIGH SKYSCRAPER that is the housing market, while others offer aged care services generating substantial monthly revenues and cash flows with less downside risk than SUM.

I really do not understand what you are talking about.
In Christchurch baby boomers brought their house for between $11,000 and $20,000 with a mortgage.[1968 to 1974.]
Most would have paid off their mortgage years ago, and may have brought a better property, or a rental property.
The $11,000 house is most probably worth today between $350,000 and $450,000,while the $20,000 house would be worth between $700,000 and $800,000.Some may also have had a successful business and a holiday home.Some may have invested in shares.
There are a huge number of "modest" people who are worth between $2mil and $5mil,and "successful" people who are worth between $5mil and $10mil.Just go to a broker's evening.You will note the brokers only talk to those who are worth between $5mil and $10 mil.If you see them laughing at a joke, you can bet the person who told it is worth over $12mil.
My point is do you really think any of the above care about the property market.They will make a lifestyle decision,and will "meet the market" when it comes to selling their home.

[winner69]

When you say flat, you forget to mention it is now perched on the roof of an extremely HIGH SKYSCRAPER that is the housing market, while others offer aged care services generating substantial monthly revenues and cash flows with less downside risk than SUM.

Read your last few posts on retirement sector and remain slightly confused about what you trying to say.

[Beagle]

When you say flat, you forget to mention it is now perched on the roof of an extremely HIGH SKYSCRAPER that is the housing market, while others offer aged care services generating substantial monthly revenues and cash flows with less downside risk than SUM.

I am talking facts, you are talking about your "perception". Fact is immigration is continuing at over 70,000 per annum. RBNZ in their recent annual budget expects national house prices to increase ~ 7% over the coming year. SUM makes most of its money from its development margin which they just confirmed is tracking well. the rest they make from resales and as I have pointed out before the embedded value in existing units is extremely high. Meanwhile those operators who ostensibly make most of their money from care services face some very very serious cost pressures with wage relativity claims going forward.

[hardt]

I am talking facts, you are talking about your "perception". Fact is immigration is continuing at over 70,000 per annum. RBNZ in their recent annual budget expects national house prices to increase ~ 7% over the coming year. SUM makes most of its money from its development margin which they just confirmed is tracking well. the rest they make from resales and as I have pointed out before the embedded value in existing units is extremely high. Meanwhile those operators who ostensibly make most of their money from care services face some very very serious cost pressures with wage relativity claims going forward.

I post enough about the quants on here, all I gather from your demeanour is an emotional attachment to your holding.

[King1212]

Oh no..people lose big money on SUM:eek2:

[hardt]

I really do not understand what you are talking about.
In Christchurch baby boomers brought their house for between $11,000 and $20,000 with a mortgage.[1968 to 1974.]
Most would have paid off their mortgage years ago, and may have brought a better property, or a rental property.
The $11,000 house is most probably worth today between $350,000 and $450,000,while the $20,000 house would be worth between $700,000 and $800,000.Some may also have had a successful business and a holiday home.Some may have invested in shares.
There are a huge number of "modest" people who are worth between $2mil and $5mil,and "successful" people who are worth between $5mil and $10mil.Just go to a broker's evening.You will note the brokers only talk to those who are worth between $5mil and $10 mil.If you see them laughing at a joke, you can bet the person who told it is worth over $12mil.
My point is do you really think any of the above care about the property market.They will make a lifestyle decision,and will "meet the market" when it comes to selling their home.

I am not saying Summerset will suffer at all... I keep seeing the same comparison of SUM to the rest of the sector - followed by a volition towards the markets valuation.





FY12A

FY13A

FY14A

FY15A

FY16A

FY17F












OPERATING EBITDA ($m)

21.5

28.5

34.3

49.4

69.1

87.5












ADJUSTED NPAT ($m)

15.6

24.6

25.1

39.3

56.4

73.5




Will continue growing at a rate the market will love to reward, but the sentiment is not favourable at this current point in time, things change.

SUM is a good pick moving forward - unfortunately it will not be allowed the multiples of AGED CARE providers as I have said before.

[King1212]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11886193

[allfromacell]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11886193

I notice he quotes the average but the medium is a much better measurement for house prices. Down $60,000 (6.66%) from its peak in March and now flat for the past 12 months.

This has been discussed to death but it's worth noting as I believe it's the main reason for the SP slump in this sector.

Long term holder.

[troyvdh]

Percy....Many many thanks for saying that.Like entry into a retirement entity is ..I believe..anywhere between (in ChCh) 175k and 400k....Despite what occurs in the property mkt folk will continue to move to a retirement home..Like ....They have no choice.Cheers.

[percy]

Percy....Many many thanks for saying that.Like entry into a retirement entity is ..I believe..anywhere between (in ChCh) 175k and 400k....Despite what occurs in the property mkt folk will continue to move to a retirement home..Like ....They have no choice.Cheers.

As per usual, you are exactly right.

[co0p]

Its certainly going to be an interesting couple of years for this sector.

I do feel the development and resale margins will be squeezed once this once-in-a-lifetime housing bubble bursts.

I also suspect many baby boomers will end up living with their children during their last years - more like Asian families.

Its going to be interesting and I'm glad I'm watching from the sidelines.

[hardt]

The past marginal expansion has been a huge tailwind behind Summersets revenue growth and that expansion was the result of the housing market boom...

Summerset are more than capable of succeeding at intensive development projects to continue growth... but over the forthcoming decade the AGR will not be maintained anywhere near the past years CAGR.




SUMMERSET GROUP HOLDINGS

FY13A

FY14A

FY15A

FY16A

FY17F

FY18F

FY19F













Average number of retirement properties


1751

1986

2268

2624

3053

3500

4000













* Average resale margin on new and existing properties ($)

50,052

54,124

66,580

82,640

90,250

95,500

100,000













* Average management and membership fees generated per retirement property ($)


8,154

8,323

9,604

10,686

11,000

11,300

11,500













Operating revenues generated ($m)

65.1

78.8

106.7

140.2

171.5

200.5

230.5

[couta1]

Its certainly going to be an interesting couple of years for this sector.

I do feel the development and resale margins will be squeezed once this once-in-a-lifetime housing bubble bursts.

I also suspect many baby boomers will end up living with their children during their last years - more like Asian families.

Its going to be interesting and I'm glad I'm watching from the sidelines. Wrong, there has been a significant increase in the number of residents from Asian families entering these facilities over the last few years. Children don't have time or the inclination to have their parents living with them in the main, most of the elderly I talk to don't want to be a burden on their children, and understand they live busy modern lifestyles.

[couta1]

As NZ tends to be a follower rather than a leader what happens in Australian law and politics has a lot of relevance to NZ at some stage so if the retirement sector becomes regulated in AUS then I would guess NZ would follow at some stage.

and yes sum or rym or what ever thread dont really matter its the theme which may or may not have relevance depending on your opinion We are the leader when it comes to the continuum of care model, that's why Ryman are trailblazers in Aussie(And by all accounts, the Aussies love our model) Just like we haven't followed Aussie with a CGT, we don't need to follow their inferior aged care model.

[co0p]

Wrong, there has been a significant increase in the number of residents from Asian families entering these facilities over the last few years. Children don't have time or the inclination to have their parents living with them in the main, most of the elderly I talk to don't want to be a burden on their children, and understand they live busy modern lifestyles.

Perhaps, but I suspect that significant increase would be off a tiny base. The fact is kids from Asian families tend to live with their parents for longer, and in return are expected to look after their parents when required.

The other issue is many younger adults do not own their own home. Their best chance is to inherit the family home. If that means looking after the elderly parents then so be it.

[Beagle]

My standard approach to valuing no growth cyclical companies is to use a PE of 10. Benjamin Graham argued 8.5 when the risk free interest rate was just over 4%. Obviously we're lower than that at present. Using his 2g formula, (I use a 1g more conservative formula) to value growth the current market PE of 14 is suggesting that over the medium term SUM can only grow earnings at 4%, (Ben Graham 2%).

Using RYM as a test Guinea pig and using the period of the GFC (Arguably the worst financial event since the great depression of 1929-1936) as a proxy, its clear that RYM grew underlying earnings a lot quicker than 4% throughout the GFC. Strong demographic tailwinds for at least the next 20 years and RYM's example of sustained profit growth even during the GFC and SUM's faster growth than RYM suggest SUM's current PE is well short of realistic pricing. The old saying "the market can stay irrational longer than one can remain solvent" doesn't apply as I have no debt or gearing. I remain very confident of the veracity of their business model and am sure the Directors and Management are working extremely hard to meet any current and perceived challenges that lie ahead.

I'm not emotionally attached, I just like to make a lot of money long term on a very sound investment thesis.

[Xerof]

Gee, the tone of this thread is sounding like AIR at $1.80

It's a very nice gauge - bearish at the bottom, bullish at the top.

lovely

[Bjauck]

Its certainly going to be an interesting couple of years for this sector.

I do feel the development and resale margins will be squeezed once this once-in-a-lifetime housing bubble bursts.

I also suspect many baby boomers will end up living with their children during their last years - more like Asian families.

Its going to be interesting and I'm glad I'm watching from the sidelines. Boomers perhaps inviting their adult kids, who cannot afford their own houses, and families to live in the family home? As home ownership rates are dropping, maybe more in the generations after the boomers will end up living in multi-generational households. It depends for how long housing remains unaffordable for first home buyers...

[Beagle]

Gee, the tone of this thread is sounding like AIR at $1.80

It's a very nice gauge - bearish at the bottom, bullish at the top.

lovely

Agreed. An awful lot of people were giving AIR a real beat-up when they were down around $1.80 late last year and those same people have missed a tremendous opportunity. Always darkest before the dawn :)

[Lewylewylewy]

For me, it's all about ensuring that they can make money during a flat market. If they can, it's good buying.

I can't see how they wouldn't make money in a flat market, otherwise the industry would fold every time the market went flat for a year or more.

This is my justification for holding through. Though I wish I sold earlier on my initial concerns (largely because I'm over exposed to NZ property), but I won't sell at this price. This price is entering buying territory.

Disc: probably won't buy more as I'm over exposed and suspect further falls in SP.

[winner69]

Don't often agree wuth Hosking but this morning he was right on - the property market in the media is not the property market in reality.

Too many have been sucked in by the media (some on here)

This has resulted in adverse market reaction to the retirement sector - but presented a great investment opportunity for those not sucked in. Reality will win out in end

[King1212]

Don't often agree wuth Hosking but this morning he was right on - the property market in the media is not the property market in reality.

Too many have been sucked in by the media (some on here)

This has resulted in adverse market reaction to the retirement sector - but presented a great investment opportunity for those not sucked in. Reality will win out in end


Not yet winner...this is just the beginning of the down trend....so expect the retirement sector a bit down for the next couple months till election n akl property shows stability n direction.

[JeremyALD]

For me, it's all about ensuring that they can make money during a flat market. If they can, it's good buying.

I can't see how they wouldn't make money in a flat market, otherwise the industry would fold every time the market went flat for a year or more.

This is my justification for holding through. Though I wish I sold earlier on my initial concerns (largely because I'm over exposed to NZ property), but I won't sell at this price. This price is entering buying territory.

Disc: probably won't buy more as I'm over exposed and suspect further falls in SP.

I think the fact that they've already released guidance so early indicates their not that worried about the property market and can still make money in a flat market (on an underlying basis)

[co0p]

Don't often agree wuth Hosking but this morning he was right on - the property market in the media is not the property market in reality.

Too many have been sucked in by the media (some on here)

This has resulted in adverse market reaction to the retirement sector - but presented a great investment opportunity for those not sucked in. Reality will win out in end

The reality is:



Tightening of monetary policy globally
Downgraded credit ratings for Australian banks
Easing of capital outflows from China
An upcoming election with immigration set to be a key focus


I'm not saying there is going to be a correction, but I do feel the property market in NZ has probably peaked.

[Carpenterjoe]

Theres more than one property market in nz. Dependent on location, population density and population growth. Corrections are shorter when you over lap these markets. Remember spring/summer is when property sells and sets the tone for the rest of the year.

[Joshuatree]

Anyone listening Hosking is being sucked in by the media; he is an opinionated national party populist stooge imo.He frequently comes up on Media Watch for all the wrong reasons.Just like the coverup he is doing all he can for the National Party and it stinks. This is a typical example ;trivialising things about the property mkt and should not be here on the SUM thread.All just imo.So fire away:mellow:

Listenduration 6′ :46″ (http://www.radionz.co.nz/national/programmes/mediawatch/audio/201821524/controversial-comments-cleared-but-condemned)

[percy]

Anyone listening Hosking is being sucked in by the media; he is an opinionated national party populist stooge imo.He frequently comes up on Media Watch for all the wrong reasons.Just like the coverup he is doing all he can for the National Party and it stinks. This is a typical example ;trivialising things about the property mkt and should not be here on the SUM thread.All just imo.So fire away:mellow:

Listenduration 6′ :46″ (http://www.radionz.co.nz/national/programmes/mediawatch/audio/201821524/controversial-comments-cleared-but-condemned)
Agree,
agree,
and agree..

[winner69]

I think the fact that they've already released guidance so early indicates their not that worried about the property market and can still make money in a flat market (on an underlying basis)

Agree,
Agree,
And agree.

The more punters worry about this perceived / media driven property crash and sell their SUM shares the long term investment opportunity gets even more compelling

[percy]

Agree,
Agree,
And agree.

The more punters worry about this perceived / media driven property crash and sell their SUM shares the long term investment opportunity gets even more compelling

Totally agree.........................

[bull....]

[QUOTE=couta1;672654]We are the leader when it comes to the continuum of care model, that's why Ryman are trailblazers in Aussie(And by all accounts, the Aussies love our model) Just like we haven't followed Aussie with a CGT, we don't need to follow their inferior aged care model.[/QUOTE

My understanding is the retirement sector model is pretty much the same as AUS = fee's are fee's are they not maybe nz use different terminology in there contracts you know it can be very confusing.

http://www.stuff.co.nz/business/money/65858484/retirement-living-comes-at-a-high-price

http://www.stuff.co.nz/business/money/69112545/Rest-home-stay-can-cost-over-80-000

[Joshuatree]

I'm well positioned not holding atpit :) .

[winner69]

When you say flat, you forget to mention it is now perched on the roof of an extremely HIGH SKYSCRAPER that is the housing market, while others offer aged care services generating substantial monthly revenues and cash flows with less downside risk than SUM.

How much of these 'generating substantial monthly revenues and cash flows' actually end up on the bottom line?

I would hazard a guess that SUM, RYM, OCA, MET and ARV would not be valued anywhere where they are now if that was the basis of how punters value them ....even if punters gave them a PE of 15 on those earnings.

It's the property development model that drives the real value

[winner69]

Look at the last trading of Sum...off market then straight to OCA...I believe so...the trading out and in are almost the same value...so surely people are looking for new listed OCA as a new horse in the retirement sector...

I just buying OCA .....new horse on the block in this sector always gets punters excited and usually a good punt for the first year or so.

Charts will tell you when it's run out of steam .......I'm hoping for 160/200 sometime in the future.

[bull....]

We are the leader when it comes to the continuum of care model, that's why Ryman are trailblazers in Aussie(And by all accounts, the Aussies love our model) Just like we haven't followed Aussie with a CGT, we don't need to follow their inferior aged care model.

https://www.summerset.co.nz/faqs/costs/

http://www.fool.com.au/2017/06/26/why-the-aveo-group-share-price-is-set-to-plunge-today/

check out the comparisons very similar operation model but you are correct we are the leaders in this field as summerset have only leasehold and aveo have freehold but as motley point out

aveo is stealthly moving people to leasehold model like superior summerset model.

[King1212]

I just buying OCA .....new horse on the block in this sector always gets punters excited and usually a good punt for the first year or so.

Charts will tell you when it's run out of steam .......I'm hoping for 160/200 sometime in the future.

not yet winner...retirement sector is under hammered!! look at ARV......

[winner69]

not yet winner...retirement sector is under hammered!! look at ARV......

Yes that ARV is looking like a real dog eh

I think they have taken hardt views on board and valuing it more as a care provider (profits ~$10m) than a property developer.

[Beagle]

Goes without saying I have no inside knowledge whatsoever but it occurred to me today that its quite likely that the market could have been / is a little concerned leading up to the release of Q2 sales metrics. Company is on record saying the development completion workload is loaded towards the second half this year so it won't surprise me to see Q2 sales metrics due imminently softer than Q1 which were very robust. Just putting it out there (for what its worth) that I have pretty modest expectations around the quarterly numbers due any day now.

[troyvdh]

Re Hosking...I'm amazed that any poster on ST would actually admit to listening to him.Cheers

[winner69]

Re Hosking...I'm amazed that any poster on ST would actually admit to listening to him.Cheers

C'mon troy me old mate - no need to be cruel.

You need to take in angles that the media presents eh otherwise your views are rather myopic.

It's only for 5 minutes at 6 am an then onto the National Program.

Suppose you watch 'Breakfast' and an avid listener to 'Campbell Live' - but I wouldn't castigate you for that.

[percy]

Re Hosking...I'm amazed that any poster on ST would actually admit to listening to him.Cheers

As always I totally agree with you.

[troyvdh]

Cruel you say ...angles are indeed an essential requirement blah blah....like this tosser went to Linwood High and lived in my beloved Edgeware....But hey he defended Hotchin....so in my book he is frankly scum...re Breakfast...nah...Campbell...absolutely YES....a real human being...cheers

[hardt]

Cruel you say ...angles are indeed an essential requirement blah blah....like this tosser went to Linwood High and lived in my beloved Edgeware....But hey he defended Hotchin....so in my book he is frankly scum...re Breakfast...nah...Campbell...absolutely YES....a real human being...cheers

You are clearly morally superior to the "scum" of the world who don't share your views...

NB - Scum often rises to the top.

[Lewylewylewy]

Argh bad news today. SP should drop to adjust to a new pe to reflect less growth.

It is worth noting that the announcement could be read another way, which is to say that the company is still in a massive growth phase, just not a super massive growth phase.

Still going strong so far. I just really hope they can do well if the market flattens.

[winner69]

Jeez Q2 sales LESS than last year .....and only 6% up for H1

Another round of selling no doubt

Some posters are right after all - the bubble has burst in this sector

Panic - rush to the exits?

https://www.nzx.com/files/attachments/261257.pdf

[sb9]

Jeez Q2 sales LESS than last year .....and only 6% up for H1

Another round of selling no doubt

Some posters are right after all - the bubble has burst in this sector

Panic - rush to the exits?

https://www.nzx.com/files/attachments/261257.pdf

That puts last week's upgrade announcement in perspective then, isn't it? Sounds bit desperate to release that last week before release of today's not so great report....hmmm...

[couta1]

Jeez Q2 sales LESS than last year .....and only 6% up for H1

Another round of selling no doubt

Some posters are right after all - the bubble has burst in this sector

Panic - rush to the exits?

https://www.nzx.com/files/attachments/261257.pdf Stop being a drama Queen winner, sales were always slanted toward the 2nd half of the year, nothing new here. The main point is they are on target for 450 new units.

[LAC]

I thought it was reasonable, the assurance that they are on track is good enough for me...hoping that the selling is on this morning so I can grab me a few more.

[bull....]

On the bright side of things it looks like resales are up - which means churn is good from people dying quicker or leaving?

[macduffy]

Panic? On one quarter's numbers? Surely, these are expected to be "lumpy", depending largely on building completions. A better indicator would be how SUM's vacancy rate moves over time.

[Ggcc]

"We are on track to deliver approximately 450 retirement units across our


villages in 2017, with the development pipeline weighted towards the second


half of the year". I tend to focus on the bigger picture rather than six months news. Each to their own opinion I say. $72-$75 million operating profit as a guidance. Maybe some good buying today, or maybe not..... Who knows with this mr market.

happy holder

[Beagle]

Goes without saying I have no inside knowledge whatsoever but it occurred to me today that its quite likely that the market could have been / is a little concerned leading up to the release of Q2 sales metrics. Company is on record saying the development completion workload is loaded towards the second half this year so it won't surprise me to see Q2 sales metrics due imminently softer than Q1 which were very robust. Just putting it out there (for what its worth) that I have pretty modest expectations around the quarterly numbers due any day now.
Posted yesterday at 5.13 p.m.


Stop being a drama Queen winner, sales were always slanted toward the 2nd half of the year, nothing new here. The main point is they are on target for 450 new units.
Hits the nail squarely on the head. Fact is Summerset have already clearly telegraphed that development completion is skewed towards the second half so this result will not be a surprise to anyone who follows this company closely. We're at the half way point of the year and the company has confirmed they are on track to meet the increased build rate guidance of 450, (up from 400 last year) and the company is so confident of their current year prospects they have already come out and guided to a ~ 30% increase in underlying profit for FY17.
Trades on a current year PE of just 14 and a PEG ratio of just 0.47.

I am pleased with the result. Resales for the first half are tracking in line with my model and they are clearly tracking well with their increased development workload. Further, the company recently confirmed developement margins are tracking well. If people cannot see value here I recommend a quick trip to an independent investment advisor and / or a trip to an optometrist.

[trader_jackson]

Is SUM always skewed to the 2nd half (eg this time last year)?

[BlackPeter]

Jeez Q2 sales LESS than last year .....and only 6% up for H1

Another round of selling no doubt

Some posters are right after all - the bubble has burst in this sector

Panic - rush to the exits?

https://www.nzx.com/files/attachments/261257.pdf

Yes, please - I'd love to pick up some more around $4.50 .... RUN!

However - I expect that the somewhat softer Q2 is already fully priced in - punters expected worse after the somewhat unfortunate AGM remarks. They are on track, their units are fully utilized and the industry is growing.

Discl: Hold (XL) and quite content ...

[Entrep]

So much for the rush to the exits

[LAC]

So much for the rush to the exits
I know, I been eagerly awaiting the first few minutes and realised its not going to happen:(

[winner69]

Down day on the NZX today

But all retirement sector stocks up

Realisation that listening to the media about the impending property collapse is far away from reality?

Bugger no great panic this morning.

[King1212]

God...retirement sector under pressure from now on....

[percy]

God...retirement sector under pressure from now on....

Agree, they will certainly have trouble meeting the demand.
But, at least we know the likes of the listed retirement sector companies will be doing their level best to meet that demand.

[BlackPeter]

God...retirement sector under pressure from now on....

Hmm ...

Is this a prayer?
In this case you should start with "Dear"

Is this a fact based prediction?
In this case you shouldn't call god as your witness, it is unclear whether she exists and if yes than she seems to be pretty unreliable in that regard.
Just offer some earthly facts instead.

Or are you talking with her (open letter principle)? - I didn't realise that ST offers a hot wire to the all mighty ....

[couta1]

Hmm ...

Is this a prayer?
In this case you should start with "Dear"

Is this a fact based prediction?
In this case you shouldn't call god as your witness, it is unclear whether she exists and if yes than she seems to be pretty unreliable in that regard.
Just offer some earthly facts instead.

Or are you talking with her (open letter principle)? - I didn't realise that ST offers a hot wire to the all mighty .... Hey BP, tone the mockery down, some of us find it offensive.

[King1212]

Hmm ...

Is this a prayer?
In this case you should start with "Dear"

Is this a fact based prediction?
In this case you shouldn't call god as your witness, it is unclear whether she exists and if yes than she seems to be pretty unreliable in that regard.
Just offer some earthly facts instead.

Or are you talking with her (open letter principle)? - I didn't realise that ST offers a hot wire to the all mighty ....


:DIs it personal thing because I proof u wrong on Til? hahah...it is okay .....it is not to late when u want to accept him....

[BlackPeter]

:DIs it personal thing because I proof u wrong on Til? hahah...it is okay .....it is not to late when u want to accept him....

Might be too late for you, though - remember: "Thou shalt not take the name of the Lord thy God in vain"

When did you proof me wrong on TIL?

But more importantly - what point did you try to make when you called the one we shall not call?

[King1212]

Might be too late for you, though - remember: "Thou shalt not take the name of the Lord thy God in vain"

When did you proof me wrong on TIL?

But more importantly - what point did you try to make when you called the one we shall not call?


Oh no...here go..another jenovah witness volunteer try to preach people....:D

[Beagle]

Can we please lift the tone on this thread.

[whome]

Take a deep breath people. SUM, and some other retirement stocks, may be frustrating but keep it seemly.

[King1212]

Take a deep breath people. SUM, and some other retirement stocks, may be frustrating but keep it seemly.


Yes it it will be frustrating. I think all listed retirement companies Share price, will stagnant till the property market shows a direction. The only new horse that I bet on is OCA..which I believe still under valued? Consider to get in OCA...

[Bjauck]

Don't often agree wuth Hosking but this morning he was right on - the property market in the media is not the property market in reality.

Too many have been sucked in by the media (some on here)

This has resulted in adverse market reaction to the retirement sector - but presented a great investment opportunity for those not sucked in. Reality will win out in end

The media including Hosking like a sensational beat-up. The sector has tail winds but if Auckland-level high prices keep out first home buyers, resulting in fewer owner-occupiers, then wouldn't that be a long-term negative for the likes of SUM?

[couta1]

The Herald put their little sensation article up on SUM just before 1pm, that's sure to drop the price a bit and flush out a few more weak hands. They must be getting desperate to put an article up on quarter metrics.

[winner69]

The Herald put their little sensation article up on SUM just before 1pm, that's sure to drop the price a bit and flush out a few more weak hands. They must be getting desperate to put an article up on quarter metrics.

Yep - headlines with 18% drop in it is pretty dramatic eh

[Bjauck]

The Herald put their little sensation article up on SUM just before 1pm, that's sure to drop the price a bit and flush out a few more weak hands. They must be getting desperate to put an article up on quarter metrics. Haven't they reported metrics in the past? They had reported the guidance earlier:Summerset earnings may rise 33pc
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11883014
So why not report on the metrics as well. Maybe I have become inured to sensationalism, but the NZH seemed to report the facts.

[couta1]

Haven't they reported metrics in the past? They had reported the guidance earlier:Summerset earnings may rise 33pc
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11883014
So why not report on the metrics as well. Maybe I have become inured to sensationalism, but the NZH seemed to report the facts. They could have titled the article, Summerset on track to build 450 units this year, as if, far too factual aye. PS-Im pretty sure this the first time that I can remember that they have bothered reporting on quarter metrics.

[Bjauck]

They could have titled the article, Summerset on track to build 450 units this year, as if, far too factual aye. The news was the metrics and their headline was factual. The headline was in the same tabloid style as their previous report on the update at the end of June. The NZH is primarily infotainment, imho.

[Bjauck]

... PS-Im pretty sure this the first time that I can remember that they have bothered reporting on quarter metrics. Ok. Maybe they deemed these metrics newsworthy coming so close to their report that "Summerset earnings may rise 33pc"

[couta1]

The tale of two cities, SUM down 0.2%, RYM up 1.5% currently, RYM not silly, they know quarter metrics are nonsense and don't report them.

[Bjauck]

A quick search reveals Previous reporting of metrics....

Apr 2017 (sales rise) http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11832291

July 2016 (sales booming) http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11670604

However I agree that the negative headlines are more grating...they should look for the happy positive angle :)

[winner69]

A quick search reveals Previous reporting of metrics....

Apr 2017 (sales rise) http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11832291

July 2016 (sales booming) http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11670604

However I agree that the negative headlines are more grating...they should look for the happy positive angle :)

They got a beaut headline today

'It's too late': Seven signs Australia can't avoid economic apocalypse

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11887313

[King1212]

They got a beaut headline today

'It's too late': Seven signs Australia can't avoid economic apocalypse

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11887313


Yeahh..just read...pretty scary alright

[Bjauck]

Yeahh..just read...pretty scary alright However, mushrooming household debt helping to fuel house price rises has created happy baby boomer voters.

[couta1]

Bollinger Bands coming together, a move upwards is on the cards, IMO. Anticipating the widening of the bands but could be a while ,and hopefully it's a break upwards, meanwhile low volume with low volatility is the name of the game while we wait for that widening to occur.

[Carpenterjoe]

They got a beaut headline today

'It's too late': Seven signs Australia can't avoid economic apocalypse

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11887313


Not sure the clip covered

growing population, via rich new comers.

Massive Resource reserves.

Management of land release and management of land zoning.

High wages

26 years recession free

[troyvdh]

Just curious...how many of previous posters view this company as an investment....like decades as opposed to a day by day by flick....the word retirement entity may be a clue...here....just saying

[trader_jackson]

They got a beaut headline today

'It's too late': Seven signs Australia can't avoid economic apocalypse

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11887313

Wasn't Australia meant to go into recession about 3 years ago?
(I know it is the wrong thread to be discussing)


Is SUM always skewed to the 2nd half (eg this time last year)?

Although this question went ignored... Maybe the NZ herald saw it realised SUM was growing much stronger this time last year (no drop in quarterly sales).

7 July 2016:
"Our combined new sales and resales for Q2 were the most we have everachieved in a quarter, which has contributed to a record number of first half total sales," said Mr Cook. Sales in the second quarter were 28% higher than the same period last year"
(Summerset Group achieved 185 sales for the quarter ending 30 June 2017,comprising 108 new sales and 77 resales)

7 July 2017:
"New sales were driven by delivery timings for newly constructed retirement units, with 171 built over the first half of 2017 compared to new sales of 179. Resales continue to track well with available homes being sold quickly."
(Summerset Group achieved 152 sales for the quarter ending 30 June 2017,comprising 82 new sales and 70 resales)

No mention of records being broken this time, no mention of the drop either... but no worries, the hugest 2nd half is coming, you know it, we know it... everybody knows it folks. Back above $4.70 in no time.

[Beagle]

I added a few more this week. In the years to come I know I'll look back and be very glad I did. Ideal retirement stock in more ways than one :)

[King1212]

Believe whatever u want to believe...but the media plays the role here....panic sellers

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11886193

[BlackPeter]

Believe whatever u want to believe...but the media plays the role here....panic sellers

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11886193

Lots of emotional tripe in the article, but at least does the author refer towards the end of the article to some facts:


Still the basics of supply and demand suggests there must be a natural floor in this property slump.

Immigration is still at record highs and house building isn't keeping up.

Still not sure why this discussion belongs into the SUM thread, but o.k. - if you are a day trader than yes, this might be relevant for any REIT, not just for SUM.

However - if you are an investor with a multi year horizon (for some of us it is multi decades), than really - who cares about a somewhat emotional article designed to give the Herold some more clicks?

[Bjauck]

I added a few more this week. In the years to come I know I'll look back and be very glad I did. Ideal retirement stock in more ways than one :) I have been considering doing so as well.


Just curious...how many of previous posters view this company as an investment....like decades as opposed to a day by day by flick....the word retirement entity may be a clue...here....just saying I am a long term holder. I have been accumulating my holding over the last few years. My accumulating timing has been hit and miss...

I have visited several villages. Should (in the unlikely situation from today's vantage point) the number of retirement units grow to saturate the market, I feel that the villages are great assets that could be deployed in different target market segments.

[winner69]

Hosking was right - media and reality are poles apart

[Joshuatree]

I don't think so. Happy to sit and watch this one on W69's fence:)

[Beagle]

I have been considering doing so as well.

I am a long term holder. I have been accumulating my holding over the last few years. My accumulating timing has been hit and miss...

I have visited several villages. Should (in the unlikely situation from today's vantage point) the number of retirement units grow to saturate the market, I feel that the villages are great assets that could be deployed in different target market segments.

Have you seen the new Hobsonville Village ? I had a look through the other day and came away extremely impressed with the staff, quality of the development, the facilities and what an absolutely stunning waterfront location ! Some people would be very surprised to learn that the size of their bigger waterfront single level north facing units are as large as 200 sq meters complete with double garage and expansive north facing deck looking straight onto the water ! Retirement living at its absolute finest ! For a couple of hours there I was wishing I was 70 and could move in already :)

[stoploss]

Have you seen the new Hobsonville Village ? I had a look through the other day and came away extremely impressed with the staff, quality of the development, the facilities and what an absolutely stunning waterfront location ! Some people would be very surprised to learn that the size of their bigger waterfront single level north facing units are as large as 200 sq meters complete with double garage and expansive north facing deck looking straight onto the water ! Retirement living at its absolute finest ! For a couple of hours there I was wishing I was 70 and could move in already :)
What's the going rate for one of those ? Can just see the Beagle on the deck watching his master coming in on the boat ......

[Beagle]

I know but that could be considered commercially sensitive information so my lips are sealed, but you are of course free to go along yourself and ask.
I will be looking to get my paws on one of those units in due course.

[Thor]

I see Salt Funds is short retirement villages. From their latest June fact sheet:



The Fund remains slightly net short the retirement village sector but did cover its mid-sized Summerset short near its lows as share prices fell sharply during the month as the long-awaited housing slowdown began to be priced in. We now have a large long in Metlifecare, a large short in Ryman, a tiny short in Arvida and a modest short in Summerset which we put back on after it bounced on a (last??) earnings upgrade late in the month.

We have waxed lyrical (or cacophonous) on many occasions about how retirement village investors are facing potentially significant balance sheet risk when housing and thence retirement unit sales slow. While we model each name out fully, we think very simply about
relative positioning in the sector. Who would want to own a property developer after the market has peaked? Who would pay multiples of a developer’s NTA for developments not just on the land that they currently own but on future land purchases that are merely a glint in their eye? That is the situation with Ryman and Summerset. Our issue is not their management capability but their balance sheets and valuation now that the housing market has turned.

Conversely, Metlifecare is at a 10-15% discount to NTA, with this being largely locked in and it will be progressively realised as current occupants gradually pass away. Moreover, their balance sheet is far less geared, making them less vulnerable in the event that the current stagnation in house prices and sharp contraction in house sales morphs into something nastier.


https://static1.squarespace.com/static/53e333eee4b08ed4322ef199/t/595ed8ce20099e247c9f8a7c/1499388114888/Salt+Long+Short+Fund+Fact+Sheet+-+30+June+2017.pdf

[Beagle]

I see Salt Funds is short retirement villages. From their latest June fact sheet:

https://static1.squarespace.com/static/53e333eee4b08ed4322ef199/t/595ed8ce20099e247c9f8a7c/1499388114888/Salt+Long+Short+Fund+Fact+Sheet+-+30+June+2017.pdf

Not surprised, as to me it feels like some parties have been putting some serious short positions on going off the tone of some of the comments on here which very much reminds me of the tone on the AIR thread when it was rumored some parties had short positions of them at under $2, (extensive numbers of negative comments which basically almost completely dried up when the AIR SP started going up again). How's that working for SALT though ? Fund return for the six months ended 30 June 2017 2.6% whereas by comparison the NZX 50 is up 10.6% or if one reads the 2017 stocktastic competition they see any number of hounds doing better than the benchmark NZX50 index without using shorts. That said if it was easy to offset my long position in SUM on a forward PE of 14 with a short position on RYM on a 21 PE and eliminate sector risk I'd bark up that tree keenly ! No justification whatsoever based on their respective growth rates for RYM to be trading at that sort of premium even given their longstanding track record, reputation and all.

I think there's a warning here for retail investors. Just like some people ramp shares, (and hey, I'm guilty as charged sometimes), some others down-ramp aggressively based on their own vested interest too. Best advice I ever got from an old retiring accountant early in my career, "Love many, Trust few and always paddle your own canoe !"

[hardt]

I see Salt Funds is short retirement villages. From their latest June fact sheet:



https://static1.squarespace.com/static/53e333eee4b08ed4322ef199/t/595ed8ce20099e247c9f8a7c/1499388114888/Salt+Long+Short+Fund+Fact+Sheet+-+30+June+2017.pdf

Queue sad trombone for that 2.7% return this year for Salt Funds.

[winner69]

Love this bit of advice in that newsletter -

For those chasing unsustainable NZ dividend yields you are at major risk. It is easy to get lured into the lobster pot but it is a lot more difficult to get out again.

[Beagle]

Honestly mate, with performance like they're "achieving" I didn't even bother to read their commentary, why would Top Dog or the Hound bother to listen to their advice !

[percy]

Is it possible to short Salt.?

[Joshuatree]

Which one lol:t_up:

[trader_jackson]

I see Salt Funds is short retirement villages. From their latest June fact sheet:



https://static1.squarespace.com/static/53e333eee4b08ed4322ef199/t/595ed8ce20099e247c9f8a7c/1499388114888/Salt+Long+Short+Fund+Fact+Sheet+-+30+June+2017.pdf

Isn't Metlifecare one of their largest longs??

[Bjauck]

Have you seen the new Hobsonville Village ?...
... For a couple of hours there I was wishing I was 70 and could move in already :) No...not yet. It is good that they are providing a range of residence sizes and locations. Those waterfront units could tempt existing residents by the sounds of them...I am not certain but I think licencees can move between villages without incurring deferred management fees a second time*.

I think I was born a senior...I would have loved the security and relative tranquility of a village from my 20's onwards.

* We have an excellent transfer policy, and the Deferred Management Fee is only ever paid once, even if you move to another home within a Summerset village. However for people who move into a Summerset care suite that provides dementia care (currently planned for our Levin village), the Deferred Management Fee will be payable again.
https://www.summerset.co.nz/why- -5cs/certainty/ (https://www.summerset.co.nz/why-summerset/summerset-5cs/certainty/)

Can I transfer to another village? (https://www.summerset.co.nz/karaka/faqs/show/costs#)

Yes, Summerset has one of the best transfer policies in the country. Conditions apply.
https://www.summerset.co.nz/karaka/faqs/show/costs

Disc: Long term holder

[James108]

Honestly mate, with performance like they're "achieving" I didn't even bother to read their commentary, why would Top Dog or the Hound bother to listen to their advice !

They have outperformed the NZX50/ASX200 over the last 3 years (since their inception). Looks like they are achieving fine so far..

[Joshuatree]

Thanks Thor. Looking at this Salt snippet from the outside ;an investor who wants to get in at some point I concur with this snippet from Salt. Different if you're still in; ride it out maybe?.All about managing risk.

"The Fund remains slightly net short the retirement village sector butdid cover its mid-sized Summerset short near its lows as share pricesfell sharply during the month as the long-awaited housing slowdownbegan to be priced in. We now have a large long in Metlifecare, a largeshort in Ryman, a tiny short in Arvida and a modest short inSummerset which we put back on after it bounced on a (last??)earnings upgrade late in the month.
We have waxed lyrical (or cacophonous) on many occasions abouthow retirement village investors are facing potentially significantbalance sheet risk when housing and thence retirement unit salesslow. While we model each name out fully, we think very simply about



relative positioning in the sector.

Who would want to own a propertydeveloper after the market has peaked?

Who would pay multiples of adeveloper’s NTA for developments not just on the land that theycurrently own but on future land purchases that are merely a glint intheir eye?

That is the situation with Ryman and Summerset. Our issueis not their management capability but their balance sheets andvaluation now that the housing market has turned.


Conversely, Metlifecare is at a 10-15% discount to NTA, with this beinglargely locked in and it will be progressively realised as currentoccupants gradually pass away. Moreover, their balance sheet is farless geared, making them less vulnerable in the event that the currentstagnation in house prices and sharp contraction in house salesmorphs into something nastier."

[winner69]

From Salt -


Who would pay multiples of adeveloper’s NTA for developments not just on the land that they currently own but on future land purchases that are merely a glint in their eye?

When I said something similar a few weeks ago I got told things like 'you can do better' etc and generally lambasted. Apparently Saying or even thinking such things means one 'just doesn't get it (the model that is)

Maybe Salt don't 'get it' either and could do better.

Note 1: SUM NTA is about $2.50.
Note 2: is there really going to be a property market collapse anyway?