SUM - Summerset Group

[couta1]

Hoop, I think you will find that anyone in the Business of share trading such as yourself would continue to pay tax at your marginal tax rate (Or company tax rate) rather than the lower, say 15% CGT rate. Only investors would pay the lower rate upon sale of their shares. Your losses would continue to be claimed against your income whereas any losses an investor occurs would more than likely only be able to be offset against future capital gains.

[Beagle]

Direct Impact
Purely speculative but here's how I see it.
The taxation of retirement villages falls under the financial arrangements provisions of the Income Tax Act.
Incoming residents buy an Occupation right agreement and never own the unit itself.
The thrust of the ruling that retirement villages have is that the incoming resident outlays a sum of money which is loaned interest free to the retirement company and they get about 75% of that back when they vacate the unit.
The retirement company pays tax on the portion on the ~ 25% they keep, less any allowable deductions.
The retirement company although involved in extensive development activities is not classified as a developer as it never actually sells the units. Sometimes a village in its entirety is owned in one title, usually by a subsidiary company of the main holding company, in this case Summerset Holdings Limited.
As a result of the retirement never selling the units, i.e. the right to occupy is simply a financial arrangement between the occupier and the retirement company its is highly unlikely that general capital gains tax would have any impact on a retirement company unless an entire village was sold.

Okay so that's how I see it at present however one cannot rule out the possibility of Taxcinda Marx ordering a re-write of the financial arrangements section of the income tax act to include specific provision for these types of arrangements to fall within a new CGT regime.

If this were to happen one needs to consider a couple of further things.
1. The likely duration of this new tax, would a future National Govt reverse it ?
2. The impact on the forward PE currently at 12.2 based on my estimate of $85m. My estimate is this moves the forward PE up to 12.2 / (1-0.28) = 16.9

In a worst case scenario the question I asked myself yesterday was can I find any other company on the NZX which has a 5 year compound average growth rate of 48% in underlying earnings trading on a forward PE of less than 17. I cannot think of one in any industry let alone an industry which has strong demographic tailwinds for the next 20-25 years.

Indirect Effect
Effect on house prices and sale ability. Behind the paywall article on NBR suggested that there is no credible evidence in any overseas country where a CGT was implemented that it had any material impact on house prices. I'm going to accept that at face value as I simply don't have the time to research this thoroughly.

Conclusions:
1. I'm assuming the chances of a Labor government is pretty high.
2. I'm also assuming the chances of a specific CGT as being very high.
3. We cannot know the odds that Taxcinda's "stacked left leaning working group of tax professionals", does anyone really imagine these people will be objective, (please excuse my cynicism) will target the retirement sector specifically as a supplement to a specific capital gains tax, but I would rate this chance as moderate
4. We cannot estimate the chances of a future National Government overturning Taxcinda's CGT or its possible provisions in regard to the financial arrangements section fo the Income Tax Act but I am anticipating her new tax if implemented to be extremely unpopular and the chances of it being durable as being only quite moderate.
5. In a worst case scenario where Retirement companies have to pay full tax permanently I still consider SUM shares to be outstanding value on a forward PE of 17 fully taxed relative to the market overall at a forward PE of 20.
6. Given 5 and that a permanent full tax on retirement companies on the balance of probabilities is probably unlikely does the present Taxinda Marx hysteria present a buying opportunity ?
I think you all know what I think the answer to question 6 is.

The above is simply a hound chewing the fat and should not be considered to be professional advice.

[janner]

I must say that I was unable to follow the weeks and weeks of expectations from so many .. When all the signals were showing a negative..
Don't believe me ???

Long term ... Maybe... I think too many climbed aboard looking for a rapid rise..

Question 6. ????.. Do your own research..

[percy]

Direct Impact
Purely speculative but here's how I see it.
The taxation of retirement villages falls under the financial arrangements provisions of the Income Tax Act.
Incoming residents buy an Occupation right agreement and never own the unit itself.
The thrust of the ruling that retirement villages have is that the incoming resident outlays a sum of money which is loaned interest free to the retirement company and they get about 75% of that back when they vacate the unit.
The retirement company pays tax on the portion on the ~ 25% they keep, less any allowable deductions.
The retirement company although involved in extensive development activities is not classified as a developer as it never actually sells the units. Sometimes a village in its entirety is owned in one title, usually by a subsidiary company of the main holding company, in this case Summerset Holdings Limited.
As a result of the retirement never selling the units, i.e. the right to occupy is simply a financial arrangement between the occupier and the retirement company its is highly unlikely that general capital gains tax would have any impact on a retirement company unless an entire village was sold.

Okay so that's how I see it at present however one cannot rule out the possibility of Taxcinda Marx ordering a re-write of the financial arrangements section of the income tax act to include specific provision for these types of arrangements to fall within a new CGT regime.

If this were to happen one needs to consider a couple of further things.
1. The likely duration of this new tax, would a future National Govt reverse it ?
2. The impact on the forward PE currently at 12.2 based on my estimate of $85m. My estimate is this moves the forward PE up to 12.2 / (1-0.28) = 16.9

In a worst case scenario the question I asked myself yesterday was can I find any other company on the NZX which has a 5 year compound average growth rate of 48% in underlying earnings trading on a forward PE of less than 17. I cannot think of one in any industry let alone an industry which has strong demographic tailwinds for the next 20-25 years.

Indirect Effect
Effect on house prices and sale ability. Behind the paywall article on NBR suggested that there is no credible evidence in any overseas country where a CGT was implemented that it had any material impact on house prices. I'm going to accept that at face value as I simply don't have the time to research this thoroughly.

Conclusions:
1. I'm assuming the chances of a Labor government is pretty high.
2. I'm also assuming the chances of a specific CGT as being very high.
3. We cannot know the odds that Taxcinda's "stacked left leaning working group of tax professionals", does anyone really imagine these people will be objective, (please excuse my cynicism) will target the retirement sector specifically as a supplement to a specific capital gains tax, but I would rate this chance as moderate
4. We cannot estimate the chances of a future National Government overturning Taxcinda's CGT or its possible provisions in regard to the financial arrangements section fo the Income Tax Act but I am anticipating her new tax if implemented to be extremely unpopular and the chances of it being durable as being only quite moderate.
5. In a worst case scenario where Retirement companies have to pay full tax permanently I still consider SUM shares to be outstanding value on a forward PE of 17 fully taxed relative to the market overall at a forward PE of 20.
6. Given 5 and that a permanent full tax on retirement companies on the balance of probabilities is probably unlikely does the present Taxinda Marx hysteria present a buying opportunity ?
I think you all know what I think the answer to question 6 is.

The above is simply a hound chewing the fat and should not be considered to be professional advice.

Thanks for sharing your thoughts.

[Jay]

Yes thanks Mr Beagle
Generally successive governments don't reverse things - especially taxes, so I wouldn't be holding my breath, may tinker but not reverse.

[allfromacell]

I imagine a land tax is just as likely as a capital gains tax. My thinking is a land tax would have a greater negative affect on retirement villages?

[Beagle]

I imagine a land tax is just as likely as a capital gains tax. My thinking is a land tax would have a greater negative affect on retirement villages?

No I don't think so as the land is intensively developed. One cannot rule out a reintroduction of death duties or a national superannuation surtax either. Anything that favors the young and penalizes the establishment is on the cards for a leader so young who is making up policy "on the fly"

[percy]

Young and "on the fly"?
Received a Labour mailer today with very much the "old pro" old fashioned bribe.
Labour will provide support for keeping warm in winter.
If Labour are elected to government those receiving superannuation or a main benefit will receive a Winter Energy Payment,which will be $700 for couples and $450 for single people.I know that many older Kiwis simply do not heat homes in winter because of a lack of money,this payment will help those people keep warm during the winter months.
Warm Regards.'Megan Woods.MP for Wigram.

Maybe Steven Joyce's figures are correct.?

[fish]

Young and "on the fly"?
Received a Labour mailer today with very much the "old pro" old fashioned bribe.
Labour will provide support for keeping warm in winter.
If Labour are elected to government those receiving superannuation or a main benefit will receive a Winter Energy Payment,which will be $700 for couples and $450 for single people.I know that many older Kiwis simply do not heat homes in winter because of a lack of money,this payment will help those people keep warm during the winter months.
Warm Regards.'Megan Woods.MP for Wigram.

Maybe Steven Joyce's figures are correct.?

Clearly a bribe for votes without much thought or costing.
Superannuation will not be sustainable at present levels in the future without even adding $700 to couples.
I would be receiving this next year but hope to be spending the worst of the winter overseas in a warmer climate.
Why pay me?
Why pay couples more-its the singles who are cold!
So easy to give away taxpayers money under labour/green

[Joshuatree]

Shame you've bought politics into this thread. Oh well rebuttal time.National are being more left right and all over the place throwing so many tainted carrots around; so i think you're being a bit blinkered there fish Stephen Joyce has been proved to be an out and out liar and he has dragged his party down the gurgles this week including his leader and bennett as well.

"The National Government was handed a strong economic foundation by the prior Labour government. Helen Clark produced nine budget surpluses" then bill raised tax 18 times!!!!
.

[Joshuatree]

No I don't think so as the land is intensively developed. One cannot rule out a reintroduction of death duties or a national superannuation surtax either. Anything that favors the young and penalizes the establishment is on the cards for a leader so young who is making up policy "on the fly"

More typical scaremongering; try something fresh please!
Labour intend to be in Govt for more then 3 years Roger; think about that.

[fish]

Shame you've bought politics into this thread. Oh well rebuttal time.National are being more left right and all over the place throwing so many tainted carrots around; so i think you're being a bit blinkered there fish Stephen Joyce has been proved to be an out and out liar and he has dragged his party down the gurgles this week including his leader and bennett as well.

"The National Government was handed a strong economic foundation by the prior Labour government. Helen Clark produced nine budget surpluses" then bill raised tax 18 times!!!!
.

I am sorry if you thought that was my intention-it was just to show that the current labour policies are made on the fly without giving consideration to the impact.I have actually voted labour,green,national and united future in the past.
I hate shallow thinking and bribery wherever I see it-no matter what party.
Current labour policy includes this and i have no illusions that any other party wont employ the same tactics.
We dont know what policies a labour party will actually introduce that might affect Summerset hence I feel this could drag the sp down.If you bribe all superanuants with a $700 winter bonus that will mean they have to find the money through tax.

[Joshuatree]

Fair enough fish. I think the retirement villages are pretty safe with the wall of oldies needing somewhere to go. At worst a small clip of the ticket maybe. A little winter warmer bribe it does seem like but good health means a temp of between 18 and 21 degrees keeps a lot of health issues away.

[Bjauck]

....If you bribe all superanuants with a $700 winter bonus that will mean they have to find the money through tax. Swings and roundabouts. Perhaps a targeted heating discount for example would be more effective but more difficult and expensive to administer.

As JT posted there could be benefits. Extra money spent on a winter bonus, could mean some recipients can leave the heater and dehumidifier on for a bit longer. Maybe fewer cases of Winter chest infections/pneumonia needing treatment and hospitalisation - so government medical funding savings. Likewise $700 spent on goods and services will result in the government getting some back in the way of gst, tax on business profits and employees PAYE. It could end up being tax neutral.

[percy]

Swings and roundabouts. Perhaps a targeted heating discount for example would be more effective but more difficult and expensive to administer.

As JT posted there could be benefits. Extra money spent on a winter bonus, could mean some recipients can leave the heater and dehumidifier on for a bit longer. Maybe fewer cases of Winter chest infections/pneumonia needing treatment and hospitalisation - so government medical funding savings. Likewise $700 spent on goods and services will result in the government getting some back in the way of gst, tax on business profits and employees PAYE. It could end up being tax neutral.

Should the money be spent on power, the government will get half back by owning 50% [plus] of the power companies.

[BlackPeter]

...

As JT posted there could be benefits. Extra money spent on a winter bonus, could mean some recipients can leave the heater and dehumidifier on for a bit longer. Maybe fewer cases of Winter chest infections/pneumonia needing treatment and hospitalisation - so government medical funding savings. Likewise $700 spent on goods and services will result in the government getting some back in the way of gst, tax on business profits and employees PAYE. It could end up being tax neutral.

Tax neutral? Only if you believe in the "perpetuum mobile" - and physicists proved ages ago that this concept does not work. Unfortunately in any system there is friction ... and a bureaucracy is actually quite inefficient in that regard. Pity we can't use the friction energy lost by our bureaucracy and neither the hot air produced by our left wingers to heat our houses - hey, this would be amazing, wouldn't it?

The state has first to take a higher amount to pay the $700 ... lots of public servants need to be paid to just administer this additional bribe. This money is lost. And they won't get the $700 back in full either. Sure, there will be some GST and some other taxes on wages and services which are paid with these $700).

Say they first need $1000 to pay the $700 - and they might get back half of the $700 (50% is roughly our overall tax rate if you consider GST and all).

Pay $1000 to get $350. You call this "tax neutral"?

And paying every beneficiary and superannuitant pair every year $700 to reduce the winter tsunami on our hospitals does not sound very efficient either. Lets face it - many Kiwis just dress inappropriately in winter - and I don't think this is because they don't own long trousers, socks and jerseys. Sure -
there might be exceptions, but you can't fix them with another blanket subsidy. Unfortunately too many Kiwis just don't bother and prefer to catch another cold or flu which they then generously spread onto others. Have a look into our schools.

Teach them to dress appropriately, teach them the basics of hygiene (and how not to infect others), teach them how to properly heat and ventilate a house (saves the money for the dehumidifier), help them to insulate houses and to install proper heating systems (yes, this might require some one off help instead of an endless drag on the tax money).

Labour's policy is just another badly thought out bribe.

[Bjauck]

This is probably way off-topic now - but it is an election year with plenty of hot air from Left, right and centre!


Tax neutral? Only if you believe in the "perpetuum mobile" - and physicists proved ages ago that this concept does not work. Unfortunately in any system there is friction ... and a bureaucracy is actually quite inefficient in that regard.... Of course every action or benefit has associated cost. We need to decide if the benefit is worth the cost.


The state has first to take a higher amount to pay the $700 ... lots of public servants need to be paid to just administer this additional bribe. This money is lost. And they won't get the $700 back in full either. Sure, there will be some GST and some other taxes on wages and services which are paid with these $700). There is a administative cost. (Public servants buy services and pay tax and gst too.)


Say they first need $1000 to pay the $700 - and they might get back half of the $700 (50% is roughly our overall tax rate if you consider GST and all).

Pay $1000 to get $350. You call this "tax neutral"? Some of your estimated $300 (is that over-estimated anyway?) in administration will come back in tax too.

What about the hospital and other medical cost savings from healthier people in better insulated and warmer houses? There will be less tax needed to fund the hospital & primary healthcare system. So that could free up a fair chunk of tax money that could be applied for other things. So with tax receipts and the reduced need for health funding from tax receipts, I stand by my claim it could be neutral for tax.

Maybe the benefits will outweigh the cost. Also, the above does not take into account any additional intangible benfits such as quality of life for those who receive the Winter allowance. It would be interesting to see a potential cost/benefit analysis of the policy.


And paying every beneficiary and superannuitant pair every year $700 to reduce the winter tsunami on our hospitals does not sound very efficient either. Lets face it - many Kiwis just dress inappropriately in winter - and I don't think this is because they don't own long trousers, socks and jerseys. Sure -
there might be exceptions, but you can't fix them with another blanket subsidy. Unfortunately too many Kiwis just don't bother and prefer to catch another cold or flu which they then generously spread onto others. Have a look into our schools. ...no comment...

[Zaphod]

This is probably way off-topic now - but it is an election year with plenty of hot air from Left, right and centre!

Of course every action or benefit has associated cost. We need to decide if the benefit is worth the cost.

There is a administative cost. (Public servants buy services and pay tax and gst too.)

Some of your estimated $300 (is that over-estimated anyway?) in administration will come back in tax too.

What about the hospital and other medical cost savings from healthier people in better insulated and warmer houses? There will be less tax needed to fund the hospital & primary healthcare system. So that could free up a fair chunk of tax money that could be applied for other things. So with tax receipts and the reduced need for health funding from tax receipts, I stand by my claim it could be neutral for tax.

Maybe the benefits will outweigh the cost. Also, the above does not take into account any additional intangible benfits such as quality of life for those who receive the Winter allowance. It would be interesting to see a potential cost/benefit analysis of the policy.

...no comment...

Where is the formal costing of this policy? Surely it would have been an easier sell to the constituency, and harder for the opposition to rebut if this had already been produced.

If the policy was implemented I think a voucher or direct payment to the power provider would be more appropriate, as a cash payment is likely to be spent elsewhere.

[Zaphod]

No I don't think so as the land is intensively developed. One cannot rule out a reintroduction of death duties or a national superannuation surtax either. Anything that favors the young and penalizes the establishment is on the cards for a leader so young who is making up policy "on the fly"

This could be moderated by the pro-retirement party's policies, that will spray very large cash subsidies at their constituency.

Land-banking for retirement unit development could be hit under a land tax, but again we don't have any details of Labour's policies mostly because they don't yet exist.

[winner69]

Where is the formal costing of this policy? Surely it would have been an easier sell to the constituency, and harder for the opposition to rebut if this had already been produced.

If the policy was implemented I think a voucher or direct payment to the power provider would be more appropriate, as a cash payment is likely to be spent elsewhere.

Of course it will be spent somewhere (else) - haven't decided what to do with ours yet but a nice little bonus to do something (worthwhile) with.

[Zaphod]

Of course it will be spent somewhere (else) - haven't decided what to do with ours yet but a nice little bonus to do something (worthwhile) with.

Haha yes exactly - Just like what would have happened to that saving of GST on fresh fruit & vegetables. 15% more to spend at KFC, BK, McD's etc.

[Bjauck]

Haha yes exactly - Just like what would have happened to that saving of GST on fresh fruit & vegetables. 15% more to spend at KFC, BK, McD's etc. A broad indiscriminate brush.
Maybe you could say that Tax cuts for the wealthy would be spent on inflating the cost of land even further?

[Bjauck]

Where is the formal costing of this policy? Surely it would have been an easier sell to the constituency, and harder for the opposition to rebut if this had already been produced. I agree. I said it could be tax neutral...that depends on policy details and implementation. However they are trying to address a symptom.


If the policy was implemented I think a voucher or direct payment to the power provider would be more appropriate, as a cash payment is likely to be spent elsewhere.
I agree. As far as I can see it is thin in details. " Labour says this could be on heating or investing in draught-stopping and insulation." How they would achieve that I do not know.
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11888608

[Joshuatree]

No I don't think so as the land is intensively developed. One cannot rule out a reintroduction of death duties or a national superannuation surtax either. Anything that favors the young and penalizes the establishment is on the cards for a leader so young who is making up policy "on the fly"

To address any fears and possible misinformation,Jacinda Ardern has this morning confirmed death duties and inheritance tax are OFF the table.
Have great day out there:)

[Zaphod]

A broad indiscriminate brush.
Maybe you could say that Tax cuts for the wealthy would be spent on inflating the cost of land even further?

The difference lies in the intent of the policy. The stated purpose of removing GST on fresh fruit & vegetables is to increase consumption, while the purpose of tax cuts is simply to leave taxpayer money back in their pockets where they are free to spend it as they wish.

If consumption has not increased by a statistically significant margin subsequent to implementation of the policy, then it has failed to achieve its goal. I like many others, are very unlikely to increase consumption of Brussel sprouts when I can buy something much tastier.

[Zaphod]

To address any fears and possible misinformation,Jacinda Ardern has this morning confirmed death duties and inheritance tax are OFF the table.
Have great day out there:)

Labour have absolutely no strategy at all when it comes to tax. From the perspective of an investor that's very concerning.

Who knows what could be around the corner for Summerset and the other listed retirement sector companies?

[Beagle]

Labour have absolutely no strategy at all when it comes to tax. From the perspective of an investor that's very concerning.

Who knows what could be around the corner for Summerset and the other listed retirement sector companies?

Or...it could be nothing whatsoever. Fundamental uncertainty often offers up fundamental value. Nice bounce off 100 and 180 day moving average of $4.93 yesterday.

[Bjauck]

The difference lies in the intent of the policy. The stated purpose of removing GST on fresh fruit & vegetables is to increase consumption, while the purpose of tax cuts is simply to leave taxpayer money back in their pockets where they are free to spend it as they wish.... But why did you assume that the tax saving from fresh vegetables would be spent on fast food instead of increasing the consumption of fresh vegies?

Isn't a major intent behind income tax cuts/ flat taxes for the wealthy to facilitate a boost in the desire to produce more and earn more income, (with a consequent trickle-down effect to lower-income earners?) That is somewhat defeated if a major part of the tax cuts just end up boosting the price of land.

[Hoop]

Or...it could be nothing whatsoever. Fundamental uncertainty often offers up fundamental value. Nice bounce off 100 and 180 day moving average of $4.93 yesterday.
Lots of that Fundamental uncertainty around..Lots of negative issues in play too.
The focus is around NZ elections..but some issues of concern are from abroad especially in Ozzie..The whole retirement village sector in Australia has been under public/media attack for a while now and it is not going away, if anything it is intensifying with the State Governments now becoming involved by creating inquiries and looking to review their Retirement Village Act...It doesn't directly affect SUM but since the Retirement Village concept is similar in both Countries, the OZ issues could have a potential to spread thereby creating more uncertainty in NZ..The Ozzie media know they are on a winner too..guaranteeing Public support when mentioning evidence of the big operators' diminishing the family inheritances by perceived screwing of Granny and Grandpops..

https://www.theweeklysource.com.au/fairfax-adele-ferguson-launch-another-confused-attack-retirement-villages/
https://www.theweeklysource.com.au/vic-govt-set-review-retirement-villages-act/
https://www.theweeklysource.com.au/sa-village-resident-survey-23-received-no-advice-signing-contract/

Having a look at RYM which has Ozzie exposure, their chart shows they have performed the worst out of the NZ retirement village companies...

And there are many competitors coming into this lucrative market from all slightly different property/village sector angles..Of conceptual interest..I am seeing an increasing number of gated communities being built in Hamilton (up-market residential)..with some developers being the operators.. The gated community I see often is very nice.. the gates are entry/exit keypaded as they are closed after 6pm..The owners pay a fortnightly maintenance fee.. They have extensively well maintained communal gardens with gardeners/maintainance people..There is a communal hall for various functions meetings and social gatherings and an office/nurse centre..Most of the owner/occupiers of the stand alone bugalows/townhouses are the 60+ people....

I assume these various types of competitors operate with less Government/local regulations..

[percy]

As Ryman shareholders are aware, from Ryman newsletters and announcements, they are finding their reputation has gone ahead of them,and their developments are selling like hot cakes.
They have also stated their "total care" instead of "lifestyle" is very different than the Aussie retirement village sector model,and has been readily accepted by Australian retirees.
They have also clearly stated they have nothing to fear from Australian regulators.
The proof of this is the number of development villages Ryman are developing in and around Melbourne.

[Beagle]

Summerset are experiencing very strong demand for their villages. Stock unsold was at a record low as a percentage of overall stock as at the half year just passed.
Not much to add to post #5505 other than they have a very high resident satisfaction at 94%.
As expressed in that post I am happy to hold through the uncertainty and believe the market is presently pricing in a worst case scenario of full tax for all future profits and a dramatically slowing real estate market. I don't foresee either of these events happening and believe SUM taking into account its historic compound growth rate average of 48%, its currents year's projected growth rate, its land bank, caliber of its management and directors and a 2017 PE of just 12.2 represents an outstanding opportunity. The last time we saw a company of this caliber in this sector on a forward PE of 12 was RYM in the midst of the GFC. Their stock price more than tripled in the following 5 years.
Its not just talk either Hoop. This by FAR my #1 investment position which I am very happy to hold long term despite apparent headwinds.
Actually another example of more recent outperformance was the tide of negativism against AIR this time last year when they were $1.75.
Its always darkest before the dawn. Be Greedy when others are fearful - Warren Buffett

[Hoop]

..........
Actually another example of more recent outperformance was the tide of negativism against AIR this time last year when they were $1.75.
Its always darkest before the dawn. Be Greedy when others are fearful - Warren Buffett

Sure its all to do with negative sentiment...shareprice may catch up with excellent future income..At the moment the negative sentiment has lowered the PE..and looking at other stocks in history a lower than average PE for that stock (or sector) can last a long time..In the meantime the bull runs on without you...
I have no doubt SUM is an excellent long term stock...and I will back into SUM when this sentiment changes for the better...When I sold out of SUM late last year my money stayed in cash apart from PPH while the market looked worrying bad then went into ATM PPH(more) MEL (for the divvy) AIR a bit later..I ran with the bulls (MEL excepted) ...not sitting around waiting for SUM & AIR to come right..
Yes AIR's investor sentiment was bad too and those holding went underwater for a long time (missing out on the equity bull run) ...Why hold when you can stay away and enjoy the bull run on other stocks... TA will tell you when that negative sentiment disappears and then buy back into that loved stock for a price only a fraction more than now..

Be Greedy when others are fearful - Warren Buffett ....Warren got greedy and jumped into something he said could never understand, but did now (Airlines)..Fast wind to Sept 17 he is on a hiding next to nothing..I guess he wished he never learned to understand...eh..

[Beagle]

U.S. airlines up strongly overnight Hoop. He'll come right on that bet. You as a TA specialist should appreciate that its back tested the 100 and 180 day MA for a few days now, (both at $4.93) and showed good resilience so far. Regarding the bull running on without me, well not at all Hoop. The market index is almost exactly where it was last September.
In that time AIR has doubled, (holding) ATM has more than trebled, (holding) HBL has done very nicely indeed, (holding) as have some of my other portfolio picks and SUM is down about 10% and is looking fundamentally extremely cheap.
I don't require instant gratification from all my stocks mate and I am sure Warren Buffet doesn't either :) When a stock is growing profit at circa 50% per annum and the shares are going sideways and offer more and more compelling value, history shows me, (with the performance of RYM at the depths of the GFC), that substantial profits are just over the horizon. Its not a question of if you'll make a lot of money, just a question of timing. I am happy to be patient with SUM and trust their management who I know are highly motivated.

[Hoop]

.............. just a question of timing.............

Thats exactly what I've been trying to tell people on ST for years now...including today...a mistimed buy using buy & hold investment strategy and you have to wait, months maybe years..3.5 years and still counting with retirement village growth stock RYM

[Beagle]

Thats exactly what I've been trying to tell people on ST for years now...including today...a mistimed buy using buy & hold investment strategy and you have to wait, months maybe years..3.5 years and still counting with retirement village growth stock RYM

Yes absolutely Hoop I hear exactly where you are coming from. Both Winner69 and I made our feelings crystal clear 3.5 years ago about RYM's lofty 35 + underlying earnings PE valuation at that time and have done well staying out. Big difference between a forward underlying PE of ~ 36 at the time for RYM and ~12 now for SUM that's for sure !
Very hard to go wrong buying a stock on an underlying PE of 12 when the underlying earnings are growing at ~ 50% per annum.
Some naysayers will point to emerging headwinds and conveniently overlook over $400m of embedded value. (nearly 3,000 units at $140K embedded value each as at 30 June 2017). Fact is there is a LOT of fear and uncertainty around retirement stocks at present exactly like there was a LOT of fear and uncertainty around AIR shares this time last year at $1.75 as ten new entrants announced new services to N.Z.
Honestly mate I am highly appreciative of your excellent TA posts and you know I usually look for stocks where FA and TA line up. This is still holding above the MA indicators mentioned earlier today and the FA screams to me "deep value". I am happy to be patient with this one just like I was with AIR last year at $1.75 when all the sheep were jumping off the cliff in fear. They're both very well managed companies and I really rate Julian Cook, he's a bright guy and so is the CFO Scott Scoullar. The Board are ably lead by Rob Campbell.

[Snow Leopard]

Thats exactly what I've been trying to tell people on ST for years now...including today...a mistimed buy using buy & hold investment strategy and you have to wait, months maybe years..3.5 years and still counting with retirement village growth stock RYM

Hoop, this is the SUM thread.

Best Wishes
Paper Tiger

[Beagle]

https://www.nzx.com/files/attachments/263382.pdf
The secret to understanding SUM's future profitability is contained therein. I will give readers a hint. Look at page 20 and how embedded value of existing units has grown very strongly in the last six months in particular and the last year. Multiply that by 2,999 units, gives just on $420m of embedded value waiting to be unlocked as residents exit their units and then have a good look at the average age of residents moving in and the latest tenure stat's.
Wrap you head around that and you'll understand that this company is headed rapidly towards making well in excess of $100m per annum by FY18, my estimate this year $85-90m, official company estimate $72-75m this year.

The hounds long range nose is picking up some extremely juicy capital gains coming with this one but shareholders will have to wait for a while as all pervasive uncertainty reigns supreme right at the minute.

But wait there's more. Maybe, just maybe, Taxcinda Marx won't be biting chunks out of our portfolio value with her huge teeth ?
http://www.msn.com/en-nz/news/national/national-could-govern-alone-in-latest-newshub-poll/ar-AArNNM1?ocid=spartandhp

[Lewylewylewy]

I hold sum.

I am concerned about labour government damaging the property market. Minor concerns about staffing.

I am holding and may but more if labour get in and the price drops, or if national get in and it doesn't.

I will probably decide whether or not to sell in 2023.

[Hoop]

Hoop, this is the SUM thread.

Best Wishes
Paper Tiger
You are not understanding my posts (but maybe I'm not understanding your post)..my feline friend..
Let me expand so these FA people see my TA reasoning....

Late September 2016 SUM falls from 5.60 to 5.20 support...It looked like a real buy of "cheap" shares (remember the shareprice fell even though the results announced were very good Total sales for the quarter the highest ever)..Hell it even trapped me at the time thinking bullish and writing the 5.20 bounce could be a bottom..but TA caution was very much evident..and had me referring to the other thread on 30th September 2016 post#266 SUM Status....HOLD, DON"T ACCUMULATE YET
(https://www.sharetrader.co.nz/showthread.php?9176-Using-TA-to-time-entries-and-exits/page18)
Buying in/accumulating after the 5.20 bounce would have a mistimed buy ( TA told everyone not yet.. wait!!) ..Judging from ST thread from August to Late September many B&H investors would've have done mistimed buy/accumulations...interesting to read back on this thread (starting Mid August 2016)..(Kudo's to Black Peter) (https://www.sharetrader.co.nz/showthread.php?5009-Summerset-Group-IPO/page249)


That mistimed buy in late September 2016 sees SUM investors still underwater (-6%) a year later...Could have been worse as many investors have a knack at buying at the top..that mistimed buy back in early September 2016 sees SUM investors underwater by -12% a year later

[Hoop]

A good day for the retirement sector SUM up 4 to 5.01 ..the first day in trading after a new poll out yesterday seeing National back in front...It seems this market sector has negative sentiment towards Labour..more political effect than I thought...
SUM still not a TA buy yet but looking better..Support testing buyers could be "in" early (more risk)

[Snow Leopard]

Hoop.

With regard to this post of yours (https://www.sharetrader.co.nz/showthread.php?5009-Summerset-Group-IPO&p=683849&viewfull=1#post683849) which crashes my browser if I try and quote & reply to it.

One of the great things about making a real time call on the market price and the future movement thereof is that the market will then do it's own thing and sometimes lets us look like geniuses and sometimes it makes us look like complete idiots.

If you want to dig back a year or more and cherry pick an occasion when you were the genius and others who have a different methodology, in your eyes were not, well that is up to you.

That near 5 year uptrend looks good to me, even on a log chart.

As for those who bought at the 'wrong time', whether they actually think it was a wrong decision, if so what they did about it and what they learnt from it is entirely up to them.

BTW your two links to two particular pages are only good if we have the same posts per page and direction set as you.
What you see depends upon your view point.

Best Wishes
Paper Tiger

[James108]

Taxcinda's back flip on timing of implementation of taxes looks like a desperate measure to me. Exactly what she WILL actually do when in power is quite frankly anyone's guess. Will there be another back-flip ? In any event it looks like on the balance of probability that its clear sailing ahead for the retirement sector for the foreseeable future and with another nice land acquisition today SUM companies look extremely well positioned.
Good to see SUM bounce nicely off its 100 day and 180 day MA, a technical analysis FACT that for some strange reason the TA experts on here are reluctant to acknowledge, go figure ? Add in the deep fundamental value here and I think its clear patient shareholders will be well rewarded.
Continues to be my #1 investment position.

It is also my #1 holding, but unlike you I prefer to see the SP fall.

[Joshuatree]

Taxcinda's back flip on timing of implementation of taxes looks like a desperate measure to me. Exactly what she WILL actually do when in power is quite frankly anyone's guess. Will there be another back-flip ? In any event it looks like on the balance of probability that its clear sailing ahead for the retirement sector for the foreseeable future and with another nice land acquisition today SUM companies look extremely well positioned.
Good to see SUM bounce nicely off its 100 day and 180 day MA, a technical analysis FACT that for some strange reason the TA experts on here are reluctant to acknowledge, go figure ? Add in the deep fundamental value here and I think its clear patient shareholders will be well rewarded.
Continues to be my #1 investment position.

Rogertaxtaxi; are you ducking great steaming piles of lies and deceit and fear mongering?. Well stop doing the same ;it will come back on you like sweet violets(tui).You don't have to be dirty like national or lower the bar and stand on it too. Shame.

[Hoop]

Hoop.

With regard to this post of yours (https://www.sharetrader.co.nz/showthread.php?5009-Summerset-Group-IPO&p=683849&viewfull=1#post683849) which crashes my browser if I try and quote & reply to it.

One of the great things about making a real time call on the market price and the future movement thereof is that the market will then do it's own thing and sometimes lets us look like geniuses and sometimes it makes us look like complete idiots.

If you want to dig back a year or more and cherry pick an occasion when you were the genius and others who have a different methodology, in your eyes were not, well that is up to you.

That near 5 year uptrend looks good to me, even on a log chart.

As for those who bought at the 'wrong time', whether they actually think it was a wrong decision, if so what they did about it and what they learnt from it is entirely up to them.

BTW your two links to two particular pages are only good if we have the same posts per page and direction set as you.
What you see depends upon your view point.

Best Wishes
Paper Tiger

A rather caustic post PT..I'm disappointed...

Beagle post..."..Good to see SUM bounce nicely off its 100 day and 180 day MA, a technical analysis FACT that for some strange reason the TA experts on here are reluctant to acknowledge, go figure ?..." TA is only the messenger or barometer..I don't know why SUM is misbehaving TA-wise for so long either Beagle....I too personally think SUM is a great company (on my watchlist) and I have no doubt I will be a future shareholder..Good TA news today SUM did fire the odd buy signal..and as you said it has bounced of mass supports (a good sign)..maybe this is the start/catch up of returning to higher highs (resumed up trend)...I hope so for the many shareholders...

Anyway this is my last post here for a while maybe longer..I have very limited time in my life and I'm always super busy...Some of my posts take up to an hour to prepare.. Donating time to ST is my choice in trying to help investors..nothing more (contrary to PT's comments) ..It's time to donate some of that time back to me..

Bye for now

[Baa_Baa]

Rogertaxtaxi; are you ducking great steaming piles of lies and deceit and fear mongering?. Well stop doing the same ;it will come back on you like sweet violets(tui).You don't have to be dirty like national or lower the bar and stand on it too. Shame.

Whatever you're drinking, smoking or taking, I don't want any of it.

Give up with the political interjections Josh, it's damaging only to your reputation, and not at all to the informed and generous posters sharing their views on all of these threads, regardless of whether anyone agrees with them or not.

Plot lost? Get a grip.

[Joshuatree]

Sorry but i get tired of the same old fear mongering national party line stuff. keep politics off the company threads imo.

[BlackPeter]

Sorry but i get tired of the same old fear mongering national party line stuff. keep politics off the company threads imo.

Depends on the context. I guess the recent play of the Left showed clearly that the Left is quite capable of creating havoc on our stock markets - they did it last time by slashing the SP of gentailers with their stupid ideas and they did it this time by suppressing the SP of age care providers. This political posturing hits however not so the "evil rich" (everybody with more than average income), but it damages everybody with a Kiwisaver account.

It was the uncertainty about tax changes created by Labour which suppressed the SUM share price. Just imagine what would happen if these gals ever get into government?

A highly relevant discussion for the SUM thread I would think.

[winner69]

Julian was on radio this morning

Building things in Auckland (capacity) a bit challenging but they coping well and 450 new nuts this year seems a given ........and te perceived property market collapse having no impact

No worries

[777]

From the Herald Business today.

Jacinda effect?
The share prices of all the major listed retirement village companies have tailed off in recent weeks.

Since late August, market leader Ryman has fallen by 38c from $9.48.

The real estate market has a direct impact on how these companies fare, so weakening house prices may be making their presence felt. It's also possible that they could be reacting to the Labour Party's improved - albeit brief - showing in the opinion polls, thanks to Jacinda Ardern's elevation to the top job.

Shane Solly, portfolio manager and research analyst at Harbour Asset Management, says retirement village operator Arvida's plan to raise $77 million in a discounted rights issue to help pay for three new villages could be acting to divert interest from the others, hence the weakness in their share prices.

In the big picture, Solly says the outlook for the sector remained favourable.

"The structural trend, the demographic of a massive wave of baby boomers hitting their mid seventies, will happen regardless of policy change or a slowdown in the residential property market."

[Ggcc]

I know one thing about how increase the share price that has nothing to do with politics. I just need to sell my shares.... the power I have got!!!

[winner69]

Julian was on radio this morning

Building things in Auckland (capacity) a bit challenging but they coping well and 450 new nuts this year seems a given ........and te perceived property market collapse having no impact

No worries

Julian sounded so happy you would have to think that Summerset are going to exceed guidance by a long way this year

What was that guidance again?

[cyclist]

I know one thing about how increase the share price that has nothing to do with politics. I just need to sell my shares.... the power I have got!!! Many of us are "blessed" with the same power. And vice-versa. And now hoop won't be around to help us make better decisions.

[Beagle]

Julian sounded so happy you would have to think that Summerset are going to exceed guidance by a long way this year

What was that guidance again?

Yes absolutely mate and he was brimming with confidence in his interview with the NBR journalist recently too. Their official forecast is $73 - $75m underlying profit but the hounds nose for excessive conservatism is giving a reading that's off the charts ! $100m wouldn't surprise me but I will stick with $85 - $90m for now.

[Beagle]

A rather caustic post PT..I'm disappointed...

Beagle post..."..Good to see SUM bounce nicely off its 100 day and 180 day MA, a technical analysis FACT that for some strange reason the TA experts on here are reluctant to acknowledge, go figure ?..." TA is only the messenger or barometer..I don't know why SUM is misbehaving TA-wise for so long either Beagle....I too personally think SUM is a great company (on my watchlist) and I have no doubt I will be a future shareholder..Good TA news today SUM did fire the odd buy signal..and as you said it has bounced of mass supports (a good sign)..maybe this is the start/catch up of returning to higher highs (resumed up trend)...I hope so for the many shareholders...

Anyway this is my last post here for a while maybe longer..I have very limited time in my life and I'm always super busy...Some of my posts take up to an hour to prepare.. Donating time to ST is my choice in trying to help investors..nothing more (contrary to PT's comments) ..It's time to donate some of that time back to me..

Bye for now


Honestly mate I am highly appreciative of your excellent TA posts and you know I usually look for stocks where FA and TA line up. Extract from post #5538. I meant that and appreciate your input. By all means enjoy your break mate and I am sure many on here, myself included, will welcome you back when and if you choose to post again.

[winner69]

House prices still going up - even Auckland was higher in August than July (REINZ)

So Summerset potential residents getting more for their property ....and paying more for the nice Summerset unit they buy

Heck that forecast of yours Beagle might be a bit light

People read the papers too much - media and reality are poles apart

[fiasco]

House prices still going up - even Auckland was higher in August than July (REINZ)

So Summerset potential residents getting more for their property ....and paying more for the nice Summerset unit they buy

Heck that forecast of yours Beagle might be a bit light

People read the papers too much - media and reality are poles apart


Auckland medianprices decreased by 1.2% year-on-year. Month-on-month basis, Auckland’s median price increased by 1.2% or by $10,000. Interesting to see South and East Auckland experienced decreased prices. West bringing the median price up.

[moka]

Anyway this is my last post here for a while maybe longer..I have very limited time in my life and I'm always super busy...Some of my posts take up to an hour to prepare.. Donating time to ST is my choice in trying to help investors..nothing more (contrary to PT's comments) ..It's time to donate some of that time back to me..

Bye for now

I’m very disappointed to see Hoop has chosen to take a break for a while. His post on the “Which To Buy” thread recently was amazing. So much knowledge and wisdom and yes posts like that can take an hour to write. I can understand that he feels discouraged after putting so much work into his posts. https://www.sharetrader.co.nz/showthread.php?11050-Which-to-buy-AIA-FPH-MFT-THL
Sharetrader is an amazing resource because so many people are willing to share their knowledge.
While it is easy to say do your own research it’s even better if research is shared.

[Ggcc]

Big purchasing at the end of trading...... any ideas?

[BlackPeter]

Big purchasing at the end of trading...... any ideas?

Just looking at the market depth myself. Amazing rollercoaster today - starting with 506, going down to 497 and ending up with 516 - and quite significant volume as well - but now no bidders left for quite a long stretch.

Looks like only one big buyer going in at the end of the day. Some institution exploiting the fact that SUM shares are currently on sale?

[777]

RTM kicked up at the end of day as well.

[Beagle]

NZX50 index rebalancing, normal pre-election trading will recommence on Monday.

This is what I have to say about the pending elections impact on my portfolio value this week. https://www.youtube.com/watch?v=esjec0JWEXU

[percy]

I’m very disappointed to see Hoop has chosen to take a break for a while. His post on the “Which To Buy” thread recently was amazing. So much knowledge and wisdom and yes posts like that can take an hour to write. I can understand that he feels discouraged after putting so much work into his posts. https://www.sharetrader.co.nz/showthread.php?11050-Which-to-buy-AIA-FPH-MFT-THL
Sharetrader is an amazing resource because so many people are willing to share their knowledge.
While it is easy to say do your own research it’s even better if research is shared.
Hoop,Phaedrus,KW,Belgarion,Steve Fleming,Mark 100,Lizard,Noodles,Sparky The Clown,Moosie......all gone....So much knowledge,so much sound advice,so much wisdom,so much humour,so many friendship,so many fresh ideas,all gone.???

[BlackPeter]

NZX50 index rebalancing, normal pre-election trading will recommence on Monday.

This is what I have to say about the pending elections impact on my portfolio value this week. https://www.youtube.com/watch?v=esjec0JWEXU

hmm - does not sound like a happy beagle. Take it easy - another week and it is over ...

[Baa_Baa]

This is what I have to say about the pending elections impact on my portfolio value this week. https://www.youtube.com/watch?v=esjec0JWEXU

You posted a video link to a dead Beagle, died over 5 years ago. What's your message? Actually I'm disappointed in myself that I took the bait and clicked on the link ;)

[percy]

You posted a video link to a dead Beagle, died over 5 years ago. What's your message? Actually I'm disappointed in myself that I took the bait and clicked on the link ;)

I must not have wicked thoughts.
I must not post my wicked thoughts.
I must keep my wicked thoughts to myself.

ps.I enjoy my wicked thoughts.

[Beagle]

hmm - does not sound like a happy beagle. Take it easy - another week and it is over ...

Yeap, can't wait for it to be over to be honest. Will not update my portfolio spreadsheet until 30 September at the earliest !

[Joshuatree]

I must not have wicked thoughts.
I must not post my wicked thoughts.
I must keep my wicked thoughts to myself.

ps.I enjoy my wicked thoughts.

Laugh of the week, thanks:t_up:

[JeremyALD]

NZX50 index rebalancing, normal pre-election trading will recommence on Monday.

This is what I have to say about the pending elections impact on my portfolio value this week. https://www.youtube.com/watch?v=esjec0JWEXU

I'm sorry to say this Beagle but that makes me feel a bit better!! I've had an awful few months with seemingly everything I own dropping in value including ARV, SUM, MPG, TWR, ZEL and TNR so at least yours is just a week! I've never had such a bad run across a wide range of my stocks :p just a few months ago I did not have one red in my portfolio!

[Beagle]

I'm sorry to say this Beagle but that makes me feel a bit better!! I've had an awful few months with seemingly everything I own dropping in value including ARV, SUM, MPG, TWR, ZEL and TNR so at least yours is just a week! I've never had such a bad run across a wide range of my stocks :p just a few months ago I did not have one red in my portfolio!

Sorry to hear its been a tough few months for you mate. For what its worth if I had any shares in TNR they'd get the flick. SUM times it pays to have a good review of your portfolio to identify which stocks really have outstanding long term potential and weed out those have only modest potential.

[percy]

Sorry to hear its been a tough few months for you mate. For what its worth if I had any shares in TNR they'd get the flick. SUM times it pays to have a good review of your portfolio to identify which stocks really have outstanding long term potential and weed out those have only modest potential.

A howl from the grave.?......................lol.

[Beagle]

...you been down at the free booze evening they hold at SUM villages on Friday Percy ?

[fish]

I'm sorry to say this Beagle but that makes me feel a bit better!! I've had an awful few months with seemingly everything I own dropping in value including ARV, SUM, MPG, TWR, ZEL and TNR so at least yours is just a week! I've never had such a bad run across a wide range of my stocks :p just a few months ago I did not have one red in my portfolio!

I am sure you are not alone-most of us will have experienced bad runs and learnt from it so that we can be more successful in the future.I dont know most of your stocks but have learnt to invest in stocks which have good fundamentals and promising futures.The lower the risk the better for the peace of my mind.Portfolios need the right balance.Listen to everyones opinion-particularly on sharetrader as topics are debated and no poster is always right

Summerset is a good stock to hold longterm and you should have around a 10 year timeframe for this stock and ignore short-term fluctuations in price.
I get a dividend whilst they are investing in the future and growing.I only look at the price to see if its timely to invest more.

They know how to market(even advertising in the latest doctor magazine-patients often discuss retirement homes with us)

[couta1]

I'm sorry to say this Beagle but that makes me feel a bit better!! I've had an awful few months with seemingly everything I own dropping in value including ARV, SUM, MPG, TWR, ZEL and TNR so at least yours is just a week! I've never had such a bad run across a wide range of my stocks :p just a few months ago I did not have one red in my portfolio! Have been in that position many times and bar one stock, are currently totally in the red. Due to my modus operandi I've learnt to relax and not worry about it too much, so the main thing I've learned is not to panic. Apart from this stock I'm primarily a divvy chaser and take large positions to obtain large divvies, this often means large red arrows on the post divvy drop which seems to be worse than normal currently due to election jitters.

[percy]

I'm sorry to say this Beagle but that makes me feel a bit better!! I've had an awful few months with seemingly everything I own dropping in value including ARV, SUM, MPG, TWR, ZEL and TNR so at least yours is just a week! I've never had such a bad run across a wide range of my stocks :p just a few months ago I did not have one red in my portfolio!

Your post made me do some checking.
I had a portfolio update from Craigs on 14/9/2017 and compared it with the last update on 7/6/2017.
My portfolio is up 12.6% while the wife's is up 7.45% .
The big winners have been OIC up from $1.00 to $1.88,ALF up from .065 to .087,HBL up from $1.71 to $1.84 with divie to come,OCA up from .82 to .95,and in Aussie AQZ up from .90 to $1,17 and LOV up from $3.60 to $4.98.
Pleasantly surprised,and looking forward to the flood of divies hitting my bank a/c soon..

[Beagle]

Hoop,Phaedrus,KW,Belgarion,Steve Fleming,Mark 100,Lizard,Noodles,Sparky The Clown,Moosie......all gone....So much knowledge,so much sound advice,so much wisdom,so much humour,so many friendship,so many fresh ideas,all gone.???

I visited the Hobsonville Summerset on the park village a while back. Beautiful tranquil waterfront setting, it was a perfect sunny day, we'd just won the America's cup that morning, there wasn't a cloud in the sky, even the tide played ball and was fully in. People seem happy there in that tranquil environment and I chatted to the village manager and head sales lady I realized this place was in extremely capable hands, well managed and a place of harmony where residents where treated with respect and dignity. Its definitely quieter than some other environments but there's a quiet satisfaction in the peace and camaraderie one has with fellow residents living in a supportive caring environment...and you wonder why some people migrate elsewhere...

[Food4Thought]

Hoop,Phaedrus,KW,Belgarion,Steve Fleming,Mark 100,Lizard,Noodles,Sparky The Clown,Moosie......all gone....So much knowledge,so much sound advice,so much wisdom,so much humour,so many friendship,so many fresh ideas,all gone.???

Only gone from the SUM thread or in whole?
Probably looking into the future and watching from the sideline. Perhaps their SUM winnings took them to greener pastures. Very green in Eketahuna... passig through. Wonder if SUM or other retirement operators are considering rural NZ for lower land prices and a very kiwi setting with peace, farming and green as far as the eye can see. Riverton is where I'd operate a retirement villa. The beautiful South, plenty of space too.

[percy]

Only gone from the SUM thread or in whole?
Probably looking into the future and watching from the sideline. Perhaps their SUM winnings took them to greener pastures. Very green in Eketahuna... passig through. Wonder if SUM or other retirement operators are considering rural NZ for lower land prices and a very kiwi setting with peace, farming and green as far as the eye can see. Riverton is where I'd operate a retirement villa. The beautiful South, plenty of space too.

Left Share Trader.
All still very serious investors.

[Beagle]

Left Share Trader.
All still very serious investors.

I reckon SUM should reflect on why they left...
Suppose I better post SUM thing so as I can technically be on topic.
Wonder what the development margin will be for the full year after such a stunning jump in the first half ? 30% ?
Winner, maybe my estimate of $85-90m is a bit conservative. Wonder when the one that is smiling like a Cheshire cat will let the cat out of the bag with a forecast upgrade ? Contemporaneously with Q3 sales metrics in early October perhaps ?

[Ggcc]

Up and down like a yo yo...... Traders will be making the most on this stock with current market conditions with SUM

[couta1]

Up and down like a yo yo...... Traders will be making the most on this stock with current market conditions with SUM Most stocks are pretty unproductive at the moment due to the election, even the good divvy stocks have dropped around double the value of the divvy or more. Traders probably doing better than most.

[bull....]

on monday im thinking it be up good or down big time

[percy]

on monday im thinking it be up good or down big time

Somehow I think you could be right.!

[Beagle]

Put my paws up for a small top-up at $4.97 at the close. Brilliant value at that price I reckon.

[huxley]

on monday im thinking it be up good or down big time



Hopefully will be able to scoop them up at a discount!

[James108]

Topped up at $4.95. Based on build rate plateauing at 550 units/year and development margin falling to around 18% I think fair value is between $4.80 and $5.50.

Happy to pay a (lower bound) fair price for a good company.

[couta1]

Unfortunately I am unable to comment further on the SUM thread due to being privy to inside information of an ongoing nature, so I think it's best to abstain.

[percy]

QUOTE=couta1;685226]Unfortunately I am unable to comment further on the SUM thread due to being privy to inside information of an ongoing nature, so I think it's best to abstain.[/QUOTE]

Interesting?.
I take it PMs are out too....!!....lol.
Will miss your well informed SUM posts.

[Beagle]

Unfortunately I am unable to comment further on the SUM thread due to being privy to inside information of an ongoing nature, so I think it's best to abstain.

I think that's very wise in the circumstances mate.

[Harley]

Unfortunately I am unable to comment further on the SUM thread due to being privy to inside information of an ongoing nature, so I think it's best to abstain.

That is most unfortunate.

[Xerof]

Unfortunately I am unable to comment further on the SUM thread due to being privy to inside information of an ongoing nature, so I think it's best to abstain. You can always comment on the Ryman thread .......

:D

[Beagle]

Yes...the hound has been fortunate enough to consult with one or two publically listed companies on the odd infrequent occasion. Its a difficult thing to manage but in my view as long as you don't bark about anything confidential or anything about the nature of the client professional relationship or in the case of employees anything that you learned as an employee its okay to talk about the company in a general sense or to disclose that its one's #1 investment position :D (Actions and holding size speak louder than words anyway in my opinion)

[percy]

You can always comment on the Ryman thread .......

:D

Absolute classic....lol.

[Baa_Baa]

Unfortunately I am unable to comment further on the SUM thread due to being privy to inside information of an ongoing nature, so I think it's best to abstain.

Does that also mean you can't trade SUM with insider info? Will miss your insights.

[Xerof]

From SUMones recently invoked (thanks to roger?) Securities Trading Policy and Guidelines

2.2 Insider Trading Laws
2.2.2 If you have any material information, it is illegal for you to:
• trade Summerset’s Listed Securities;
• advise or encourage another person to trade or hold Summerset’s Listed Securities;
• advise or encourage a person to advise or encourage another person to trade or hold Summerset’s Listed Securities; or
• pass on the material information to anyone else – including colleagues, family
or friends – knowing (or where you ought to have known) that the other person will use that information to trade or advise or encourage someone else to trade, or hold, Summerset’s Listed Securities.

[Beagle]

Can't take credit for that but I did quite a bit of work and so did the New Zealand Shareholders association around the black out restricted trading period for insiders prior to the release of quarterly sales information which absolutely is price sensitive information. Fait to say the NZSA probably did their work slightly more diplomatically rather than dogmatically lol...sometimes the hound is prone to taking a dogmatic approach :)

P.S. I hounded up a few more this morning at $5.00, couldn't resist. Bargain buying with National set to be winning the election tomorrow. All good, no tax worries, in fact no worries at all. SUM management will have to come clean on how excessively conservative their official guidance is for FY17 Sumtime soon :)

[aajm1490]

Hi all,


Posting one last time in case anyone missed it.


Colmar Brunton is conducting some research on behalf of the Financial Markets Authority (FMA) about what information investors find most helpful to make informed decisions about particular investments. This will help the FMA improve product disclosure documents to make them more useful for investors. We're looking for people to take part in paid research interviews at our Auckland and Wellington offices over the next few weeks.


We'd like to talk with you if you have recently invested, or seriously considered investing, in the Summerset fixed rate 6 year bond offer.


Your contact details and the feedback you provide in interviews will be completely annonymised and will not be used for any other purpose. If you are interested in taking part, please email ali.ajmal@colmarbrunton.co.nz with your contact details including a phone number.


Thanks


PS: If you're interested, please get in touch via the email above.
PPS: This message was cleared with an ST Admin before being posted.

[Beagle]

SUM will continue to make decent profits through thick and thin. Talk of a property crash and its impact on SUM is just that

The issue is what multiples are punters prepared to pay for SUM's profits ....not SUM's actual performance. Sentiment could still see SUM share price fall further or stagnate.

I'll leave it to others to comment on whether the current 'level of sentiment' is warranted or not.

Whatever SUM will still continue to build heaps of units and make heaps of money.

This is a great post and SUM's up the situation nicely in the current uncertain political environment. Talking with a client at the moment about selling her little farm and she's looked at SUM's village in Karaka and reckons its first class. That's the second client that's mentioned Karaka's village as being a really first rate village.

[Xerof]

Smart move by Julian and co

https://www.tvnz.co.nz/one-news/new-zealand/retirement-home-boosts-support-benefits-caregivers

I hadn't heard the latest regarding the 'uneven' allocation of the Aged Care workers settlement with the Crown being highly advantageous to the 'big' outfits (read those listed on NZX)

[Lewylewylewy]

...... good

[Beagle]

He's a smart cookie that Julian.

[iceman]

Smart move by Julian and co

https://www.tvnz.co.nz/one-news/new-zealand/retirement-home-boosts-support-benefits-caregivers

I hadn't heard the latest regarding the 'uneven' allocation of the Aged Care workers settlement with the Crown being highly advantageous to the 'big' outfits (read those listed on NZX)

Smart indeed. Well done SUM

[Food4Thought]

Good to hear. I believe this adds value to their organisation and I am for this type benefits to the workers. I'd personally like their yearly share package potential to be double that of $780 yearly option. If they bought in and after say 5 years of employment that'd at least give them a potential to cash out and have a nice bonus or a small long term hold. I also believe workplaces could help further educate the staff to see the benefit of being a share holder. In turn this will foster ownership and long term growth. Well done SUM

[Beagle]

Just need to encourage them to have their annual meetings rotating around some of their fine villages and this will enable shareholders to see the caliber of the facilities they're investing in and build shareholder loyalty. Might have a word to Julian suggesting this at the appropriate time closer to 2018 annual meeting.

[Joshuatree]

Winners , the larger providers
Rest homes at risk of job cuts, closures (http://www.radionz.co.nz/national/programmes/ninetonoon/audio/201860765/rest-homes-at-risk-of-job-cuts-closures)

[Xerof]

Don't know why this has suddenly appeared as news - its months since the beauraucrats poked their noses into how to distribute the 2 billion, and clearly cocked it up. Smart man that Julian......looks like a few are only just starting to 'get it'

[Yoda]

Retirement stocks or looking positive today. Are we looking at a leg up over the next few months?

[winner69]

Retirement stocks or looking positive today. Are we looking at a leg up over the next few months?

Any day now SUM will be the bearer of good news

[Beagle]

Q4 will be a LOT better than Q3.

[bull....]

looks not that good report , cant see them beating last years performance on sales , one good spot was churn is up on last yr ( more people selling existing units or dying? ) so there doing a good job there.

[winner69]

looks not that good report , cant see them beating last years performance on sales , one good spot was churn is up on last yr ( more people selling existing units or dying? ) so there doing a good job there.

More people dying in the summer than winter (or is there a lag to when the units are resold) ...

[hardt]

Not a great quarter and not a bad quarter, hopefully they deliver in Q4.

"The group is on track to deliver 450 retirement units for the year. A large number of retirement unit deliveries have been late in the third quarter which will reflect in settlement volumes in the fourth quarter”.



SUMMERSET GROUP HOLDINGS

FY16A

FY17F

FY18F









Average number of retirement properties

2624

3053

3500









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

82,640

90,250

95,500









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

10,686

11,000

11,300









Sales of Occupation Rights - Units

658

638+

?

[winner69]

Numbers are pretty awful

In spite of reiterating the 450 new sales for the year (Q4 is going to be a real boomer) might push the share price down to 450/470

That be good ...as long as it stays in the bounds of the long up trending regression channel

[bull....]

More people dying in the summer than winter (or is there a lag to when the units are resold) ...

hard to see any trend in seasonals, it would be good if the company could split resales up into categories

people dying
resales into other units
resales of people who outright left

then we could make better assumptions on a number of factors

[Beagle]

No worries, Q4 is going to be an absolute boomer with unprecedented numbers of settlements. The key statement is we're on track to deliver 450 new sales.

[hardt]

No worries, Q4 is going to be an absolute boomer with unprecedented numbers of settlements. The key statement is we're on track to deliver 450 new sales.

I thought it said new units*
which means units available for sale.

[trader_jackson]

What's going on? I thought the 2nd half was meant to be much better than the first half? Going to have to be a yuge quarter 4.

[Beagle]

I thought it said new units*
which means units available for sale.


"The group is on track to deliver 450 retirement units for the year. A large number of retirement unit deliveries have been late in the third quarter which will reflect in settlement volumes in the fourth quarter”.

I believe Julian is referring to new units. He's confirming yet again their target of 450 new units will be met. One thing I have learned the hard way with this stock that I will pass on. Whatever you do, do not let a single quarters sales metrics unduly influence your view of this stock. Keep you eye on the annual total and the even longer game than that.

[winner69]

I believe Julian is referring to new units. He's confirming yet again their target of 450 new units will be met.

Yep - 450 brand new units recently completed is what it means

Add resales to that number

Latest property data suggests they will getting pretty good prices for them as well

Will be making heaps more than last year

[Beagle]

Yep - 450 brand new units recently completed is what it means

Add resales to that number

Latest property data suggests they will getting pretty good prices for them as well

Will be making heaps more than last year

Yeap all good, no worries. I see no reason to change my full year forecast of $85-90m underlying profit. My core expectations for 2017 house prices built into that model were zero house price growth for Auckland and 3% for the rest of the country. Rest of the country where SUM has the vast bulk of its villages is tracking well ahead of my expectations.

P.S. Yes there is a lag. As residents succumb to winter flu's and other illnesses exacerbated by winter its take a little while to refurbish their units before resale over spring and summer.

P.P.S. You know that share price relativity thing with RYM that Couta1 used to reefer too, well we are pushing the outer limits of that with RYM SP 1.85 times SUM SP.
Expecting that to tighten into 1.5 next year. SUM $7 sometime in FY18.

[BlackPeter]

P.P.S. You know that share price relativity thing with RYM that Couta1 used to reefer too, well we are pushing the outer limits of that with RYM SP 1.85 times SUM SP.
Expecting that to tighten into 1.5 next year. SUM $7 sometime in FY18.

Magic ... we are well positioned - aren't we?

[macduffy]

Magic ... we are well positioned - aren't we?

Yes, indeed! As others have mentioned, SUM is a longterm investment and shouldn't be judged on quarterly numbers.

[trader_jackson]

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

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11929773

Winner, the headline is now even more dramatic than when you posted this last quarter (7 July, share price: $4.69)

And the press release was very short compared to last quarter or the first quarter... I noticed a bit of a change in language to:
2nd quarter contained: "We continue to see strong demand for our retirement units, and presales levels and settlement rates both continue to track positively."
3rd quarter contained: “We are continuing to see good sales and steady settlements across our villages throughout New Zealand, including Auckland."

Doesn't sound quite as 'strong' as previous quarters, and weird that they didn't mentioned in the 2nd quarter update that they weren't expecting things to really go well till 4th quarter..

No worries.... Lets forget about the previous (and most recent) 6 months... the headlines (and the facts supporting those headlines) are all going to turn around for these last 3 months and we'll see a big beefy 4th quarter press release with lots of wonderful words to push the share price towards the $6 mark and finally get off the 0 point something percent 52 week return the NZX website currently mentions.

Hard to believe that old Dog (you know the one) that has been listed for nearly 3 years now is still 'leading the pack' in 52 week returns

[winner69]

t_j me old mate - you left this bit out - A large number of retirement unit deliveries have been late in the third
quarter which will reflect in settlement volumes in the fourth quarter.

Deliveries late is code for things like council being slack in issuing Completion Certificates (or whatever they are called) so SUM couldn't make sales unconditional before Sept 30th. Maybe it was something else but you get the gist eh. I would hazard a guess there are many sales being finalised this week.....or next if the solicitor is back from sick leave (speculation)

Good eh - getting to 450 isnt such a yuge step after all

[Food4Thought]

Yes, indeed! As others have mentioned, SUM is a longterm investment and shouldn't be judged on quarterly numbers.

Long term, to be sure. A pre Christmas buying opportunity presented here. Consequencial impact of election uncertainty. Deferred buying. The sun will come up and the show must go on. Let's see if some big buyers jump in if there is temporary drop back in share price, small holder uncertainty helps with a bit of a sell out. Good work SUM. Tracking along nicely IMO.

[Beagle]

Long term, to be sure. A pre Christmas buying opportunity presented here. Consequencial impact of election uncertainty. Deferred buying. The sun will come up and the show must go on. Let's see if some big buyers jump in if there is temporary drop back in share price, small holder uncertainty helps with a bit of a sell out. Good work SUM. Tracking along nicely IMO.

Quite right mate. All I want for Christmas is SUM more shares...you reading this Mrs Beagle ?

[winner69]

t_j

When ARV floated at $0.95 in December 2014 SUM was $2.70 odd

I know which one I'd prefer to have had over the last 3 years

And SUM haven't asked for more dose either ... how many times for ARV

[JeremyALD]

Yeap all good, no worries. I see no reason to change my full year forecast of $85-90m underlying profit. My core expectations for 2017 house prices built into that model were zero house price growth for Auckland and 3% for the rest of the country. Rest of the country where SUM has the vast bulk of its villages is tracking well ahead of my expectations.

P.S. Yes there is a lag. As residents succumb to winter flu's and other illnesses exacerbated by winter its take a little while to refurbish their units before resale over spring and summer.

P.P.S. You know that share price relativity thing with RYM that Couta1 used to reefer too, well we are pushing the outer limits of that with RYM SP 1.85 times SUM SP.
Expecting that to tighten into 1.5 next year. SUM $7 sometime in FY18.

I think your forecast is very optimist Beagle. That is significantly above their forecasts and there has been no update to it after 3 quarters.

I agree with you that they might exceed - but i was thinking more like 75 - 80 million. Time will tell!

[trader_jackson]

t_j

When ARV floated at $0.95 in December 2014 SUM was $2.70 odd

I know which one I'd prefer to have had over the last 3 years

And SUM haven't asked for more dose either ... how many times for ARV

I love giving money to ARV (just wish they had a DRP!), because every time it has "only been good"... ARV have proven they can select positive opportunities for holders, from the first one at $0.84 (SPP) to the most recent on, being the $1.15 offer (while the share price is $1.24).

You'd think SUM, with the higher debt and higher build targets etc would have smashed ARV out of the park but I know which one I'd rather own over the past 2 years, and it's not SUM.

But lets not let this turn into an ARV thread - SUM finished up today - great stuff.

[hardt]

Hard to lose when you have good positions in ARV SUM + RYM

Nonetheless, these retirement stocks are boring as hell and that is a good thing.

[Beagle]

http://www.sharechat.co.nz/article/67ec0728/first-nz-capital-makes-case-for-summerset-metlifecare-merger.html?utm_medium=email&utm_campaign=First%20NZ%20Capital%20makes%20case%2 0for%20Summerset%20Metlifecare%20merger&utm_content=First%20NZ%20Capital%20makes%20case%20 for%20Summerset%20Metlifecare%20merger+CID_c409a4a f8ffc45cb8e4ffb23fa6b28e7&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle67ec0728first-nz-capital-makes-case-for-summerset-metlifecare-mergerhtml

My view.
Summerset is N.Z.'s fastest growing retirement company with a five year track record of CAGR of 48% in underlying EPS a track record that is soon to extend to six years and I expect the current years growth to be very similar to its historical average.

The current discount to RYM in terms of underlying PE is completely unwarranted given their vastly higher growth rate and proven in-house development capabilities.

SUM has an outstanding land bank of over 6 years of developments, quite considerable financial reserves and banking facilities are extremely well positioned to continue their outstanding record of high growth

MET by comparison is in its infancy with its developement activities and has serious legacy issues with the weather tightness of some of its older villages.
Its track record of EPS growth has been far less spectacular that SUM's.

I would be fundamentally opposed to a merger. If I wanted to invest in MET I would. The fact that I don't hold any shares in MET speaks for itself in terms of what I think of their business model and prospects for profit growth. The fact that Infratil who had representation on the board recently sold down speaks for itself in terms of what they think of MET's medium term prospects.

[BlackPeter]

http://www.sharechat.co.nz/article/67ec0728/first-nz-capital-makes-case-for-summerset-metlifecare-merger.html?utm_medium=email&utm_campaign=First%20NZ%20Capital%20makes%20case%2 0for%20Summerset%20Metlifecare%20merger&utm_content=First%20NZ%20Capital%20makes%20case%20 for%20Summerset%20Metlifecare%20merger+CID_c409a4a f8ffc45cb8e4ffb23fa6b28e7&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle67ec0728first-nz-capital-makes-case-for-summerset-metlifecare-mergerhtml

My view.
Summerset is N.Z.'s fastest growing retirement company with a five year track record of CAGR of 48% in underlying EPS a track record that is soon to extend to six years and I expect the current years growth to be very similar to its historical average.

The current discount to RYM in terms of underlying PE is completely unwarranted given their vastly higher growth rate and proven in-house development capabilities.

SUM has an outstanding land bank of over 6 years of developments, quite considerable financial reserves and banking facilities are extremely well positioned to continue their outstanding record of high growth

MET by comparison is in its infancy with its developement activities and has serious legacy issues with the weather tightness of some of its older villages.
Its track record of EPS growth has been far less spectacular that SUM's.

I would be fundamentally opposed to a merger. If I wanted to invest in MET I would. The fact that I don't hold any shares in MET speaks for itself in terms of what I think of their business model and prospects for profit growth. The fact that Infratil who had representation on the board recently sold down speaks for itself in terms of what they think of MET's medium term prospects.

Sort of in the same position (holding SUM but not MET), and yes, there must be a reason for that. On the other hand could I see that a well performed merger between these companies could benefit both of them ... MET could benefit immensely from SUM's internal development capabilities and overall (I think) better management - and a larger size would be good for both.

The important questions are: How would we make sure that the merged organisation inherits SUMs development capabilities and good management instead of METs tardiness and reluctance to deal with its legacy issues? As well - what would be a fair value of both for the merger if we assume that SUM is currently undervalued by the markets and MET closer to fair price. So yes, there are risks ... and I am not sure either, whether it is for SUM shareholders worthwhile to take them.

[Zaphod]

I'm not sure the efficiencies of scale would outweigh the consequences of taking on MET's relatively inefficient processes and their much older building assets. We'd need to see some very detailed plans on how a merger would be beneficial before I'd vote for a merger to proceed.

Colour me sceptical on that merger proposal concept.

[winner69]

P.P.S. You know that share price relativity thing with RYM that Couta1 used to reefer too, well we are pushing the outer limits of that with RYM SP 1.85 times SUM SP.
Expecting that to tighten into 1.5 next year. SUM $7 sometime in FY18.

Couts keep saying his rule of thumb was SUM share price be 50% of RYM

Getting close to that again as the dotted line on the chart approaches the 50% line - spooky eh

So SUM might be fairly valued now .......not fair eh but you can't fight market perceptions no matter how good the SUM story is

If SUM was cheapon this basis a few years ago its been expensive the last few years

[Beagle]

Couts keep saying his rule of thumb was SUM share price be 50% of RYM

Getting close to that again as the dotted line on the chart approaches the 50% line - spooky eh

So SUM might be fairly valued now .......not fair eh but you can't fight market perceptions no matter how good the SUM story is

If SUM was cheapon this basis a few years ago its been expensive the last few years

My calculations show underlying EPS for both companies at ~ 40 cps for the current financial year. If people want to pay close to two times the fundamental value for RYM I can't stop them BUT I won't be one of them and it opens up an interesting long - short risk mitigation investment strategy in my opinion. P.S. I was just talking with Coutta1 and he reckoned a normal range is about 60-70% and agreed the current price difference is right at the extreme end of normal parameters.
SUM is growing much quicker than RYM but even if we assume they both grow at the same rate going forward there is no logic to RYM trading at close to 1.9 times SUM's SP. SUMming up, SUM a young fast growing company that's learning fast and growing strongly whereas RYM a mature company who's systems were well refined years ago and has less potential to grow as strongly in the future. If SUM keep learning and growing fast their underlying EPS will exceed RYM's next financial year and then...

[winner69]

That chart a few posts ago shows that SUM share price over many years has averaged about 50% of the RYM share price.(the red dotted line)

For a short period earlier this year the ratio went over 60% .....but has been reverting to that long time average again.

What's happening might be stupid and some would say it's crazy and others might say it just doesn't make sense .......but at the end of the day the 'market' only sees SUM share price worth half of RYMs share price. Totally illogical but is spooky eh possums.

It was Couts' hypothesis that 50% was the ratio between the day. I showed him that that hypothesis had some credence (the red dotted line).

Not saying it's right or wrong - just interested in updating something that's fascinating ...and spooky.


maybe just as illogical as AIR's PE ratio is generally about half the market PE

[Beagle]

https://www.odt.co.nz/business/summerset-track-deliver-450-units

[winner69]

Share price only 5% off all time high

No worries

[Beagle]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11932091

SUM's business model is robust and underpinned by very strong needs based demographics. I'm expecting long term enduring growth. Forward PE of 13.5 compared to a market average of just over 20. Opportunity knocks while the political uncertainty remains ?

[Xerof]

should be $6 by xmas and still only on PE~16, if I'm to believe your 38cps, which of course I do :cool:

[Beagle]

Cheers mate. REINZ medium price data the most accurate and appropriate yardstick in my opinion because it encapsulates all sales data from all agencies transacted through REINZ agents and of course the medium price is the most accurate measure by which the average customer is enabled to transact into their priced retirement unit. Considering the shockingly wet winter, political uncertainty and lending restrictions the underlying strength of the property market gives strong cause for encouragement in the ongoing profitability of companies in the retirement sector especially the one growing at the fastest pace. Do pockets of real value remain in the NZX despite it trading at all time high's ? Is the Pope a Catholic !

[winner69]

a day in the life of a retirement home tenant

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11934562

not a summerset village

[BlackPeter]

a day in the life of a retirement home tenant

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11934562

not a summerset village

Well, this is an outstanding example why people should go with one of the larger retirement home providers instead rather than picking a private investor with his private agenda running the show.

Good retirement homes like SUM are trying to solve the problems of their residents instead of abusing them!

But maybe the owner just wants to find out whether the old saying "there is no such thing like bad publicity" is true? I guess I could imagine some people who I would want to live under such a landlord ... it's just not the people I like ;);

[Zaphod]

Not really representative of the industry, or of the attitude of those who occupy the vast bulk of the retirement home units though, is it?

[BlackPeter]

Not really representative of the industry, or of the attitude of those who occupy the vast bulk of the retirement home units though, is it?

No idea ... however this particular provider has quite a collection of retirement villages:

https://goldenhealthcare.co.nz/lady-wigram/

But to be fair - they promise on their webpage "central location" and "easy access", nobody talks about tranquility or respect for the rights of the tenants ...

So it is probably just another case of buyer beware ...

Back to SUM ... it is good to know that there are alternatives in Christchurch for people looking for a nice and friendly rest home place:

https://www.agedadvisor.nz/search/retirement-village/Summerset-At-Wigram-Wigram-Christchurch
https://www.summerset.co.nz/wigram-christchurch/about-out-village/

Interesting to note: The close by Summerset retirement village gets 5 stars on age advisor for "caring staff", while the village of the landlord in question got only 3 stars. Maybe it is not just the boss?

Mental note - check independant surveys before booking a rest home place ...

[trader_jackson]

What is SUM's price to book again and debt ratios again? (particularly relative to others in the sector)

Some say those with the highest in these two departments could be in the firing line tomorrow/coming days and something tells me SUM is "leading the pack" in both (which is not a good thing for these ratios)

[BlackPeter]

What is SUM's price to book again and debt ratios again? (particularly relative to others in the sector)

Some say those with the highest in these two departments could be in the firing line tomorrow/coming days and something tells me SUM is "leading the pack" in both (which is not a good thing for these ratios)

INA: NTA $2.50; SP $2.68; SP/NTA 1.07
MET: NTA $5.32; SP $5.88; SP/NTA 1.11
OCA: NTA $0.92; SP $1.04; SP/NTA 1.13
SUM: NTA $2.86; SP $5.08; SP/NTA 1.78
RYM: NTA $3.29; SP $9.58; SP/NTA 3.29

Hmm - according to your theory should Ryman take the brunt of the carnage, and they did lose some cents in the opening. You selling?

Obviously - short term the market might go wherever fear and greed is driving it. Long term I'd expect that fundamental values (including growth, consistency, asset quality, market size = future growth potential, service level and quality) will prevail.

[winner69]

INA: NTA $2.50; SP $2.68; SP/NTA 1.07
MET: NTA $5.32; SP $5.88; SP/NTA 1.11
OCA: NTA $0.92; SP $1.04; SP/NTA 1.13
SUM: NTA $2.86; SP $5.08; SP/NTA 1.78
RYM: NTA $3.29; SP $9.58; SP/NTA 3.29

Hmm - according to your theory should Ryman take the brunt of the carnage, and they did lose some cents in the opening. You selling?

Obviously - short term the market might go wherever fear and greed is driving it. Long term I'd expect that fundamental values (including growth, consistency, asset quality, market size = future growth potential, service level and quality) will prevail.

You left ARV off your list ...on purpose I presume?

[trader_jackson]

You left ARV off your list ...on purpose I presume?

I think ARV is about 1.2, crazy that OCA is now the cheapest at 1.06, after falling to its current 98 cents (market must be worried about immigration)
And yes, I would have thought RYM would have been hardest hit, followed by SUM - I suppose RYM's exposure to aussie is helping it.

[BlackPeter]

You left ARV off your list ...on purpose I presume?

Probably for another thread ... but yes, ARV does not happen to be on my shortlist and yes, I guess there must be a reason for that ;).

[winner69]

I think ARV is about 1.2, crazy that OCA is now the cheapest at 1.06, after falling to its current 98 cents (market must be worried about immigration)
And yes, I would have thought RYM would have been hardest hit, followed by SUM - I suppose RYM's exposure to aussie is helping it.


I told Vaygor yesterday that RYM probably still be around $9.60 in 2019 when he reckoned $15 odd

What happens when valuations normalise.

[Beagle]

Well the world hasn't ended, life goes on and needs based business's will keep meeting those needs which are growing rapidly due to the extremely favourable population demographics. A more profitable exercise might be to compare the underlying PE of all the operators and calculate the PEG rate.
I am sure Jascinda will ban foreign buyers from buying existing homes but lets think about that for a minute...it doesn't seem to have had any impact in Australia so why should it be any different here...
Happy to hold for long term growth and currently trading on very compelling fundamental's.

[Bjauck]

...
I am sure Jascinda will ban foreign buyers from buying existing homes but lets think about that for a minute...it doesn't seem to have had any impact in Australia so why should it be any different here... Introduction of curbs to negative gearing is the hot topic in Australia. So perhaps a restriction of sales of existing homes to NZ residents combined with phased in negative gearing restrictions could have an impact. However these reforms should have been intrcodued years or decade ago and not now, when the market is showing signs of cooling anyway. Perhaps introducing those reforms now could risk a more precipitous fall in prices - although the lack of supply of affordable new dwellings (in Auckland) may reduce the risk of that.

[Beagle]

I can remember when you weren't allowed to offset losses from rental properties and could only carry them forward to offset against depreciation recovered.
Now days we don't even have depreciation on buildings, which is clearly nonsense as they do indeed wear out, building code means they're designed to last 50 years, so 2% depreciation makes sense. I can also remember national superannuation surtax but I am sure Winston won't have a bar of that.
Forward PE for SUM has retrenched already to half its historic rate of the late 20's so I think a worst case scenario is pretty much already priced in.
SP has declined around 10% from a year ago despite earnings increasing over 50%. Long term the outstanding growth of this sector and SUM's demonstrated ability to grow earnings at a fast pace augers extremely well for patient long term holders as does the current very low PE, pretty much priced on a PE basis at the same level as RYM was in the depths of the GFC. I don't think that makes sense in the long term so provided Jascinda's new regime takes a pragmatic common sense approach to managing the economy the current price presents as quite an opportunity in my opinion.
Disc: Topped up with SUM more :)

[trader_jackson]

I think ARV is about 1.2, crazy that OCA is now the cheapest at 1.06, after falling to its current 98 cents (market must be worried about immigration)
And yes, I would have thought RYM would have been hardest hit, followed by SUM - I suppose RYM's exposure to aussie is helping it.

Interesting: so RYM did fall the most today after all - bit weird that ARV was hit as hard as it was, must be on (potentially overblown) concerns regarding immigration

ARV
$1.180 (3.3%)

MET
$5.880 (2.5%)

OCA
$1.010 (2.9%)

RYM
$9.190 (4.1%)

SUM
$4.960 (2.4%)

[Lewylewylewy]

I think SUMs bargain price is just because people want to see a full year's activity in the current property climate before they feel confident again. All going well, next year SUMs SP will boom.

[King1212]

Interesting: so RYM did fall the most today after all - bit weird that ARV was hit as hard as it was, must be on (potentially overblown) concerns regarding immigration

ARV
$1.180 (3.3%)

MET
$5.880 (2.5%)

OCA
$1.010 (2.9%)

RYM
$9.190 (4.1%)

SUM
$4.960 (2.4%)

why immigration got to do with the retirement sector? I can understand property sector but....I don't think immigration will have any effects on retirement sector.

aging kiwis are increasing...no matter what people will get old n need to retire. Regarding the staff, most of staff...already got PR due to booming nursing and healthcare sector couple years ago.

most oldies have assets....n money...

[ratkin]

Difficult to see much short term upside. Headwinds instead of tailwinds.

[troyvdh]

Dear King...Thankyou for that post...why some folk go on about property prices baffles me...like you say ...folk need to retire.
There are sadly some seasoned posters here who still continue to state that the property mkt ....blah blah...will effect ....as you say "no matter what"...thanks again troy

[Beagle]

Difficult to see much short term upside. Headwinds instead of tailwinds.

Lots of people felt the same way in the depths of the GFC when RYM's PE was about 12-13 where SUM's forward PE is now.

[bull....]

big surprise next week on min wage levels..... wow people be happy maybe not retirement co,s

[trader_jackson]

big surprise next week on min wage levels..... wow people be happy maybe not retirement co,s

Big surprise on minimum wage levels? I don't think this will impact retirement villages much as most of them are now well above minimum wage - and labour's proposal is just 25c higher than what national would likely have done - this will not impact any retirement village operator that much, if any at all.

Those in retail on the other hand...

[bull....]

Big surprise on minimum wage levels? I don't think this will impact retirement villages much as most of them are now well above minimum wage - and labour's proposal is just 25c higher than what national would likely have done - this will not impact any retirement village operator that much, if any at all.

Those in retail on the other hand...

retirement village operators are already making plans to circumvent the announcement awhile ago in regard to that landmark payrate deal. there plans involve renaming job descriptions duties etc to get staff back to min wage... the announcement next week will be a shock remember winston policy was for $20 min wage.

[King1212]

My wife told me all care assistants at retirement sector are already at $20 an hour...it is all in the account....

i guess, the wage increase with labour will impacted on retail, hospitality, food industry

[trader_jackson]

retirement village operators are already making plans to circumvent the announcement awhile ago in regard to that landmark payrate deal. there plans involve renaming job descriptions duties etc to get staff back to min wage... the announcement next week will be a shock remember winston policy was for $20 min wage.

would you care to to detail this "announcement" you speak of? I am not sure if you are trying to scaremonger (if so, you and winston would get along very well), but I can almost guarantee they won't hike the minimum wage to $20 an hour come 1 April next year, given Labour campaigned on $16.50 and the greens on $18 something.

And I'm sure they are trying to minimize wage costs... but at the end of the day these costs, like any other costs (eg property construction) are just passed onto end consumers in some way or another - something everyone likes to forget it would seem. Those who cannot pass high costs, whether it be wages or other costs or become more efficient, will struggle under any government arrangement - and I believe all the retirement operators will easily be able to pass on higher costs, due to their strong brands and other offerings which make retiring in a listed village 'better' than some others (eg ones run down and facing closure)

And thank you King1212 for your comment straight from 'the boots on the ground' (and not just looking at what one party with 7% of the vote said they would do in a campaign, because we all know politicians do exactly as they say, especially those that have a last name of Winston lol) - also reiterating what I had assumed.

[moka]

why immigration got to do with the retirement sector? I can understand property sector but....I don't think immigration will have any effects on retirement sector.

aging kiwis are increasing...no matter what people will get old n need to retire. Regarding the staff, most of staff...already got PR due to booming nursing and healthcare sector couple years ago.

most oldies have assets....n money...

Many oldies don’t have assets and money, at least not when they go into rest home care as 72% were receiving residential care in 2013.
I couldn’t find a more recent figure although I seem to remember seeing around 66%. As house prices rise more people who own houses are over the asset threshold of $224,654. Some people would not have been eligible for residential care subsidy when they first entered care but if they are there for several years their assets would decrease by about $40,000 a year when paying the full fees, and they may then be eligible
This article is four years old.

http://www.stuff.co.nz/business/9185733/The-high-cost-of-being-old Sep 22 2013
Aged care is largely funded by the Government, with 72 per cent of aged-care residents receiving a residential care subsidy, adding up to more than $900 million a year, though residents pay around $730m a year more as a result of income and asset-testing on subsidies.

[King1212]

That is because they lied...to get the funding. They sold their assets n changed or gave it to their children...

Once done..their children neglected them in the rest home. Some smart oldies, they paid using their money...n only access part of funding. Their children are visiting them..n caring about them. Their old retirement life are happy n quality

Some are really sad n broke oldies....no savings at all.access to full funding...they still being looked after but their life are miserable ...can not do things...n what they want. Families neglected them...

So guys...be smart with your retirement fund..pay the fees...enjoyed quality care

[King1212]

Oldies that have money n assets will mostly cash in n go to retirement units...

Those needs care will go to unit care...

Funding will be available..therefore ARV OCA will be less impacted during the property market downturn. Because revenue stream from OCA n ARV are keep flowing from the government funding ..

[troyvdh]

Just curious how many folk here believe that folk retiring and seeking an retirement entity will defer there decision because the value of there home has not changed recently...or perhaps the value has changed 5-10 percent.....Like from what was say 800k to 750 k...when ....I'm guessing the entry price to,a retirement entity...is between 150-400 k....cheers...

[bull....]

Just curious how many folk here believe that folk retiring and seeking an retirement entity will defer there decision because the value of there home has not changed recently...or perhaps the value has changed 5-10 percent.....Like from what was say 800k to 750 k...when ....I'm guessing the entry price to,a retirement entity...is between 150-400 k....cheers...

if property fall wont have as much money to purchase retirement unit, so you buy cheaper lower quality unit or you defer purchase of unit waiting for property price to recover. either way falling property bad for retirement less demand for units or less margin as they have to build cheaper unit and then you get 2 tier market rich peoples units and everyone else.

[JeremyALD]

Just curious how many folk here believe that folk retiring and seeking an retirement entity will defer there decision because the value of there home has not changed recently...or perhaps the value has changed 5-10 percent.....Like from what was say 800k to 750 k...when ....I'm guessing the entry price to,a retirement entity...is between 150-400 k....cheers...

Sum have said that their business performance / sales in previous housing downturns has not been impacted so take from that what you will

[dobby41]

because we all know politicians do exactly as they say, especially those that have a last name of Winston lol) - also reiterating what I had assumed.

LAST name of Winston?
Who are you talking about?

[Beagle]

Just curious how many folk here believe that folk retiring and seeking an retirement entity will defer there decision because the value of there home has not changed recently...or perhaps the value has changed 5-10 percent.....Like from what was say 800k to 750 k...when ....I'm guessing the entry price to,a retirement entity...is between 150-400 k....cheers...

I have a client currently looking at retirement villages based on her needs and the perception that she will be much happier in a well supported caring retirement community.
I have suggested she visit a wide range of villages and the feedback she has provided is that the Karaka village of Summerset is very nice but probably a little far away from her friends and relatives. There's a wide range of choices and price options out there and she will have no difficulty whatsoever selling her $1m plus Auckland home and finding something perfectly suitable that leaves her with several hundred thousand dollars in capital that's released through the changeover process. She has plans for a new car and yet another world trip. She used to work for Qantas so has already travelled extensively. Just as an aside she has extensive cruising experience too but was extremely comp0limentary about the new Ovation of the Seas and very highly recommends it https://www.royalcaribbean.com/cruise-ships/ovation-of-the-seas

[trader_jackson]

LAST name of Winston?
Who are you talking about?

Meant to say first name! My mistake.

You also know NZ First's policy is to cut corporate tax rate to 25%? (I am pretty sure) - that's why they have a $20 minimum wage, on the basis the cut on corporate tax will help allow a $20 minimum. Seeing some are getting carried away with one of NZ Firsts policies, might as well look at the others! Anyone on here think Labour will allow them to cut the coportate tax rate?

[Beagle]

Anyone on here think Labour will allow them to cut the coportate tax rate?

Very unlikely.

[bull....]

Meant to say first name! My mistake.

You also know NZ First's policy is to cut corporate tax rate to 25%? (I am pretty sure) - that's why they have a $20 minimum wage, on the basis the cut on corporate tax will help allow a $20 minimum. Seeing some are getting carried away with one of NZ Firsts policies, might as well look at the others! Anyone on here think Labour will allow them to cut the coportate tax rate?

nz first wanted a cut in exporter tax so summerset gets nothing only an increase in costs ratched up over the next few years and if there lucky labour will go after them on there tax free property gains

[trader_jackson]

nz first wanted a cut in exporter tax so summerset gets nothing only an increase in costs ratched up over the next few years and if there lucky labour will go after them on there tax free property gains

Yes but labour ruled this out, in theory... do you know who those costs are passed onto? (indirectly or directly)?
Hint: good companies are able to pass on costs to customers very, very sucessfully

[bull....]

Yes but labour ruled this out, in theory... do you know who those costs are passed onto? (indirectly or directly)?
Hint: good companies are able to pass on costs to customers very, very sucessfully

those increasing costs only mean higher unit costs if thats what you mean against falling house price or stagnated house prices and looks like over time less sales of units i reckon or the 2 tier market in retirement unit ones for poor folk ones for rich folk

[winner69]

Share price still within the 5 year uptrending channel

A weekly close below 470 would be ominious and 455 would be a disaster and break below the lower line.


No doubt activity levels will remain high in this sector (plenty of nw builds and sales) but that 'embedded' value could shrink pretty fast if there is a collapse in property prices (ie lower underlying profit on resales which might not offset the margin on new builds but I don't really know as I don't really believe in this underlying thing)

[trader_jackson]

those increasing costs only mean higher unit costs if thats what you mean against falling house price or stagnated house prices and looks like over time less sales of units i reckon or the 2 tier market in retirement unit ones for poor folk ones for rich folk

You know retirement units are cheaper than houses right? (generally)
ie the old folk who own there houses with little or no debt can easily afford a unit, even if the unit goes up in price and their house price goes down

[mondograss]

You know retirement units are cheaper than houses right? (generally)
ie the old folk who own there houses with little or no debt can easily afford a unit, even if the unit goes up in price and their house price goes down

Depends on where you live. If you're in the middle\working class sleeper suburbs of Auckland, i.e. Glenfield etc then you're likely to be out of luck.

[Beagle]

You know retirement units are cheaper than houses right? (generally)
ie the old folk who own there houses with little or no debt can easily afford a unit, even if the unit goes up in price and their house price goes down

In the VAST majority of cases that's true. Retirement village operators generally try and price the units at an average of about 75% of the price in the prevailing suburb in which they're based BUT its well worth noting that most villages offer quite a variety of options with prices from as low as 50% of the surrounding area prices to over 100% depending upon what people want. Most people free up a significant amount of capital as part of the natural downsizing process and that's part of the joy of the experience, having some more capital to either spend and enjoy life or invest and enjoy life from the investment proceeds !
I reckon its a great thing that some people who have made no significant provision for retirement can enjoy a much better lifestyle in terms of both enjoying a supportive community and having some spare money to spend than they otherwise would have potentially lonely and more isolated in the suburbs somewhere remaining in their own home.

[King1212]

very nasty articles around NZ herald regarding slow down of property market as labour intended to build cheap housing..this will certainly negatively affect property sector and retirement sector.

[Beagle]

very nasty articles around NZ herald regarding slow down of property market as labour intended to build cheap housing..this will certainly negatively affect property sector and retirement sector.

Good luck with finding the builders and other tradies to complete the building jobs "cheaply"

[trader_jackson]

Good luck with finding the builders and other tradies to complete the building jobs "cheaply"

They are going to get it from immigration I thought? oh wait thats right...
(nearly 1 week into this shambles)

[Beagle]

They are going to get it from immigration I thought? oh wait thats right...
(nearly 1 week into this shambles)

Yeah lol...here's what Mike Hosking thinks. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11936036

[dobby41]

very nasty articles around NZ herald regarding slow down of property market as labour intended to build cheap housing..this will certainly negatively affect property sector and retirement sector.

Saner minds have suggested that 100000 houses over 10 years won't make a significant difference to the price of the existing stock.
Have a read of this - usually quite a sane commentary
https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/New_Zealand/2017/October-2017/24.10.2017_NZWC.pdf

[dobby41]

Yeah lol...here's what Mike Hosking thinks. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11936036

Mike is always good for a laugh.
Take anything he raves about with a grain of salt - remember he is a commentator not a journo.

[Beagle]

Mike is always good for a laugh.
Take anything he raves about with a grain of salt - remember he is a commentator not a journo.

Agreed. I don't think Labour's plan's to build 100,000 affordable homes, (even if they somehow manage to achieve this election promise and even if those homes really are affordable) will have any material affect on the price of existing stock. Remember that, (sticking with the saner minds) according to well respected BNZ economist Tony Alexander there are over 1,000,000 Kiwi's presently living overseas and no amount of immigration fiddling can stop those who want too from coming back home and I think with all the unrest in the world that's ever increasing many will do exactly that in the years to come ! Where are they going to live...

The other thing is nothing will stop the huge tsunami of baby boomers approaching 70+ from wanting to enjoy their retirement years in a comfortable supportive caring community. SUM's units differentiate themselves from RYM by being quite a bit larger in general. I am sure if there's some compression between the price of houses and those of retirement units so they become slightly less affordable smart operators like SUM will quickly adapt their business model to suit.

[trader_jackson]

Agreed. I don't think Labour's plan's to build 100,000 affordable homes, (even if they somehow manage to achieve this election promise and even if those homes really are affordable) will have any material affect on the price of existing stock. Remember that, (sticking with the saner minds) according to well respected BNZ economist Tony Alexander there are over 1,000,000 Kiwi's presently living overseas and no amount of immigration fiddling can stop those who want too from coming back home and I think with all the unrest in the world that's ever increasing many will do exactly that in the years to come ! Where are they going to live...

The other thing is nothing will stop the huge tsunami of baby boomers approaching 70+ from wanting to enjoy their retirement years in a comfortable supportive caring community. SUM's units differentiate themselves from RYM by being quite a bit larger in general. I am sure if there's some compression between the price of houses and those of retirement units so they become slightly less affordable smart operators like SUM will quickly adapt their business model to suit.

You reckon this government, who also promised to hold the retirement age at 65 (which is positive for the industry), is going to change the fundamental laws of time and stop people getting old??

(along with the lofty $20 an hour target, cutting corporate tax to 25%, building 100,000 homes in 10 years, free uni for first years, and Winston himself walking down the pike river shaft - I look forward to seeing all these happening starting 1 Jan next year!)

[Lewylewylewy]

Personally, I don't think that SUM's income from operations will suffer from a drop in property prices. They'll keep trucking. I say this because I think it's a "needs" based product / service, rather than a "want".

I do however, think that it would effect the value of the business. Obviously a business owning a lot of property will be worth less if the value of property drops. Therefore the SP will be effected. Also, growth could be effected, because [a] they're a business that grows their property portfolio, which is easier to do if property values keep going up (think leveraging gains) and [b] if property values are growing, they can grow the rates they charge. I think they can still grow the business through increased demand (the figures from Stats NZ show an increase in demand should happen for decades to come), but without property prices increasing, they perhaps can't grow their pricing.

I'm not saying that SUM is a golden purchase with no risks, we now have a govt with a less clear agenda, power struggle risks and they also seem to be more focused on making policy based on feelings, so I'm worried things won't be carefully thought through - they've already flip flopped on the water tax (thank god!).

That said, if I had spare cash, I would definitely top up at these prices. I am also waiting for next year's report to ensure that they can be profitable with flat pricing, because for me the annual reports were difficult to separate out confidently to work out where the money was definitely coming from.

[Ggcc]

I do understand this property value stuff, but it is only worth that when they sell the properties. I don’t see dividends dropping in a hurry, they will only go upward I think. My only two cents added 😊

[Beagle]

You reckon this government, who also promised to hold the retirement age at 65 (which is positive for the industry), is going to change the fundamental laws of time and stop people getting old??

(along with the lofty $20 an hour target, cutting corporate tax to 25%, building 100,000 homes in 10 years, free uni for first years, and Winston himself walking down the pike river shaft - I look forward to seeing all these happening starting 1 Jan next year!)

lol good post. I'm all for sending Winston down the pike river mine shaft especially as he's sent all of us down one !

[IAK]

Mike is always good for a laugh.
Take anything he raves about with a grain of salt - remember he is a commentator not a journo.

I don't find him funny at all. Approx. 2,000 migrants were related to building/construction in 2016. Out of what, 72,000 net?

[bull....]

$20 min wage just announced , now all those people on 20 now will want more ...... who was it saying on here? costs already factored in ... really

[Beagle]

$20 min wage just announced , now all those people on 20 now will want more ...... who was it saying on here? costs already factored in ... really
$20 from when ?

[Zaphod]

$20 from when ?

$20 minimum wage by 2020

[Beagle]

$20 minimum wage by 2020

Thanks. I remain confident SUM will adapt their business model.

[ratkin]

Thanks. I remain confident SUM will adapt their business model.

Hopefully they will be paying that already. Who wants their elderly parents looked after
by discontented underpaid workers?

[Ggcc]

$20 minimum wage by 2020

Little old New Zealand setting the trend for the one of the highest minimum wages in the world...... I wonder where the money is going to come from?

[Beagle]

Most of them are paid over $19 an hour already under the caregiver wage accord that started from July 1 this year.

Extract from sharechat article just released

The minimum wage will rise progressively to $20 per hour over the next four years, starting with a move to $16.50 in April 2018, but with the track for further increases yet to be determined and the final increase to that level occurring in April 2021.



Of course we all know that all new governments stick to their original wish lists right down to dotting the last I and crossing the last T, don't we...just saying.

[dabsman]

This government wont last 3 years... just saying...

[Beagle]

This government wont last 3 years... just saying...

https://www.msn.com/en-nz/news/national/greens-chose-not-to-be-in-coalition-shaw/ar-AAtXY6o?ocid=spartandhp SUM might say that's a bit of a mickey mouse look :)

[Zaphod]

Little old New Zealand setting the trend for the one of the highest minimum wages in the world...... I wonder where the money is going to come from?

Through magic, much like the rest of their policies.

"We are a low wage economy... New Zealanders deserve a wage they can live on... it is no longer acceptable to try and expect families to survive on the minimum wage as it currently is."

And legislating a high wage is what effect JA?

From SUM's perspective, the feeds to residents will just have to increase. I'm sure they'll be very pleased with that.

[bull....]

retirement stocks set to be the biggest losers

https://www.nbr.co.nz/article/market-close-nz-shares-extend-gain-a2-hits-new-record-ryman-metlifecare-summerset-drop-b

[Ggcc]

Through magic, much like the rest of their policies.

"We are a low wage economy... New Zealanders deserve a wage they can live on... it is no longer acceptable to try and expect families to survive on the minimum wage as it currently is."

And legislating a high wage is what effect JA?

From SUM's perspective, the feeds to residents will just have to increase. I'm sure they'll be very pleased with that.

And we will be paying that amount to kids 16 years and over. I fully want adults to earn a decent wage. Of course savings are not based on what you earn but what you spend your money on. Some people live frugal lives while others drench it against a wall and no matter how much they get paid they will never have enough.

[Zaphod]

You reckon this government, who also promised to hold the retirement age at 65 (which is positive for the industry), is going to change the fundamental laws of time and stop people getting old??

Will holding the retirement age at 65 have a marked positive effect given the age band of residents entering the villages being 55-70? Super payments obviously will be a net positive, but I'm not entirely convinced yet. Interested in your thoughts.



(along with the lofty $20 an hour target, cutting corporate tax to 25%, building 100,000 homes in 10 years, free uni for first years, and Winston himself walking down the pike river shaft - I look forward to seeing all these happening starting 1 Jan next year!)

No talk of the corporate tax cut... I suspect that's goneburger.

[Baa_Baa]

Has anyone mentioned the 200 DMA? Not just for SUM either. The whole sector reversed gear very quickly with the new Government announcement. It's the quick and nimble that preserve their capital gains, the rest may be left hoping for the next election, notwithstanding the promise of ongoing dividends. Just saying.

[Snow Leopard]

Has anyone mentioned the 200 DMA? ...

No. Why? Is it supposed to have some importance?

[Baa_Baa]

No. Why? Is it supposed to have some importance?

Typically quixotic, unless you know this isn't going lower. Do you ... know? Apart from 'it all'. Far be it from me to elaborate on the importance of a stock or a sector that succumbs to its 200 DMA, So quickly.

[Beagle]

Still working on 40 cps underlying earnings in my model for Dec 17 so shares are trading on a current year PE of just 12 and given the strong long term prevailing demographic tailwinds I think all the bearish news is priced in. Didn't notice any radical plan to dramatically reduce immigration so I'm expecting business as usual for this well managed growth company over the years ahead.

Amazing to think you can buy a well managed company with an average five year, (soon to be six year) growth rate of 48% on a PE of just 12 !! That's a PEG ratio of just 0.25 !
I think talk of a major decline in house prices is just that, "Talk". Change of Govt, wage rate increases and slower house price growth all now surely fully priced in with that super low PE for this sector, onward and upward from here, no worries :)

[trader_jackson]

Still working on 40 cps underlying earnings in my model for Dec 17 so shares are trading on a current year PE of just 12 and given the strong long term prevailing demographic tailwinds I think all the bearish news is priced in. Didn't notice any radical plan to dramatically reduce immigration so I'm expecting business as usual for this well managed growth company over the years ahead.

Amazing to think you can buy a well managed company with an average five year, (soon to be six year) growth rate of 48% on a PE of just 12 !! That's a PEG ratio of just 0.25 !
I think talk of a major decline in house prices is just that, "Talk". Change of Govt, wage rate increases and slower house price growth all now surely fully priced in with that super low PE for this sector, onward and upward from here, no worries :)

I think you might be a tad optimistic, but I do agree that this whole "Talk" of huge sweeping changes that are really going to kill retirement village operators - isn't going to have the bigly negative impacts people thought (I remember everyone saying how the dow was going to drop 10% if Trump got in, and brexit would immediately throw UK economy into recession - both are much, much bigger changes than what has happened in NZ, well brexit at least, and yet neither of them have proved to be right, not even remotely right actually - they were fake news folks! so DYOR)

On another note, interesting to see RYM fell the most again, for the 2nd day in a row - sort of fulfilling my view that those with the highest book value to price would get hit the hardest (although I admit this hasn't been quite perfect, nor has it been a long period of time to fairly measure!)

[Xerof]

Didn't notice any radical plan to dramatically reduce immigration

Nor did I. Overseas students enrolling in pathetically impracticable tuition on the promise of residency isn't going to worry SUM of us. Mind you I gave this the kiss of death a few weeks ago, calling $6 by Xmas. Luckily I didn't say which Xmas :t_up:

[JeremyALD]

Nor did I. Overseas students enrolling in pathetically impracticable tuition on the promise of residency isn't going to worry SUM of us. Mind you I gave this the kiss of death a few weeks ago, calling $6 by Xmas. Luckily I didn't say which Xmas :t_up:

This share seems to bounce up to $5.50ish then drop back to $4.50ish every three months or so. Back into the cycle we go.

[Snow Leopard]

Typically quixotic, unless you know this isn't going lower. Do you ... know? Apart from 'it all'. Far be it from me to elaborate on the importance of a stock or a sector that succumbs to its 200 DMA, So quickly.

I dislike DMA and much prefer EMA, like the linear price axis they are a remnant of the days before modern calculating machines and there is no excuse for using them now that we are in the Century of the Anchovy (http://discworld.wikia.com/wiki/Century_of_the_Anchovy).

But the 200 DMA has now been crossed & recrossed 23 times (I counted them) in the last year, which is because the SP is going up and down like a gooseberry in a lift (https://www.youtube.com/watch?v=jIXfIVR9iOk) (1:55 onwards) setting lower highs and higher lows in the process, a condition known by the chartists (http://www.parliament.uk/about/living-heritage/transformingsociety/electionsvoting/chartists/overview/chartistmovement/), apparently, as a wedgie.

As, so far, we do not have a break from tradition with either a lower low or crossing the underside boundary of the wedgie thing then all I fail to see the significance of the crossing of one particular inappropriately chosen squiggly line.

Best Wishes
Paper Tiger

[Lewylewylewy]

I'm curious if anyone on ST is buying at these prices?

[oldtech]

I would like to, but alas my bank balance is looking rather sad at the moment after a bit of a spending spree on ATM and OCA.

[Jantar]

I bought a few at $4.86 on opening yesterday just to watch it plummet to $4.82 within a very short period.

[King1212]

I would avoid all property and retirement stocks at the moment. I believe the property market is cooling off and will go down. With today news on herald, couple thousand apartments will be available next couple years and Kiwibuild program.

That is me....I bought in SML...with revenue around 756M and market cap of less than 1.4B....plenty of room to grow.

[LAC]

I'm curious if anyone on ST is buying at these prices?
Dont think they its hit the bottom yet, but I will def be buying more this week or next. I plan to hold for 20+ years though so the property cooling off isnt a major concern for me. There will be a number of oldies wanting a nice retirement home in the years to come:)

[Brain]

I dislike DMA and much prefer EMA, like the linear price axis they are a remnant of the days before modern calculating machines and there is no excuse for using them now that we are in the Century of the Anchovy (http://discworld.wikia.com/wiki/Century_of_the_Anchovy).

But the 200 DMA has now been crossed & recrossed 23 times (I counted them) in the last year, which is because the SP is going up and down like a gooseberry in a lift (https://www.youtube.com/watch?v=jIXfIVR9iOk) (1:55 onwards) setting lower highs and higher lows in the process, a condition known by the chartists (http://www.parliament.uk/about/living-heritage/transformingsociety/electionsvoting/chartists/overview/chartistmovement/), apparently, as a wedgie.

As, so far, we do not have a break from tradition with either a lower low or crossing the underside boundary of the wedgie thing then all I fail to see the significance of the crossing of one particular inappropriately chosen squiggly line.

Best Wishes
Paper Tiger

I understand that Pythagoras preferred to use SQRT(DMA^2 +EMA ^2) for predicting the price of grain and olive oil. I am sure it worked well for him.

[sb9]

I would avoid all property and retirement stocks at the moment. I believe the property market is cooling off and will go down. With today news on herald, couple thousand apartments will be available next couple years and Kiwibuild program.


Second that, better to stay away from these sectors in the short to medium term. However, if you're a long term holder you'll ride out fine.

[JeremyALD]

Second that, better to stay away from these sectors in the short to medium term. However, if you're a long term holder you'll ride out fine.

Personally I'm going to hold on RYM and SUM expecting they may drop some more, however in for the long haul.

I've topped up on Arv. It's got a good dividend yield and seems a very good buy near the rights issue price.

[jg8512]

I don't get the sell-off in retirement stocks. It seems to be due to 2 factors, IIUC. One, fears of a slowing or reduction in house prices; and two, fears of an increase in minimum wage / carer fees, etc. (New govt may also increase rate of house building (presumably state-sponsored/financed since the surging house market would already have encouraged plenty of people to consider building their own, rather than buying existing). But more house building ends up in slower rises, or reductions, in house prices - ie, back to point number one on house prices.)

re: the first point - house prices. IMO, the desire to live in retirement homes is driven fundamentally by retired people not able (or unwilling) to continue to live in their own home, and cashing up the equity in their existing home to do what is right for them when they reach that point in their life. Retirement village living is a slow-burning social change - with numerous benefits to residents - not an opportunity created by the recent high house prices. And with a still increasing ageing population (over 75s remain the fastest growing demographic, IIRC) , and not that much new retirement housing being built (outside the few listed majors), demand for retirement homes will continue to grow (and likely will exceed supply). So more residents to come, and the retirement home gets the DMF from each resident.

Put another way, yes house prices have risen sizeably in some significant markets - not all - and the demand for retirement housing is strong nationwide (arguably globally), independent of the state of the local housing market. Even if the rate of house prices rises slows (or goes negative, and prices fall), does that really affect: 1. demand from elderly citizens for assisted/easy/secure/more care living. 2. the ability of SUM etc to charge their DMF. I get that resale gains may be smaller in future - but that is not new news, IMHO, as House prices can't keep increasing at recent rates in perpetuity. Did analysts (and the market) ever factor in a long-term continuation of the high recent resale gains into DCFs? v. much doubt it!

Second, higher wages / carer fees (and maybe a smaller pool of migrants who can be tapped as potential care-workers). Labour is a significant cost, and likely to increase for every player in the industry. The competitive dynamics are unaffected. So the industry will need to charge more (to cover costs) and consumers/government will need to pay more. There's a no free lunch here.

While these factors may crimp near term profits a little, none of this changes the long-term investment thesis for SUM, RYM et al, does it?
recall too that Govt already has more than enough calls on its budget to fund healthcare for NZers, esp. the growing demands and number of elder NZers, and I can't see that it would want to add to its burden by discouraging the private provision of retirement healthcare. SO I don't think any govt would do anything precipitate to impact the retirement village operators.

[Beagle]

May I extend a very warm welcome to the forum mate. I agree 100% with the views you've so eloquently articulated.
The shares trading on a FY17 underlying PE of ~ 12-13 depending on one's forecast represent a real opportunity for long term forward thinking investors in my opinion.

[dobby41]

You are thinking of a rational market jg8512.
Not everything that happens is rational.

[winner69]

You are thinking of a rational market jg8512.
Not everything that happens is rational.

Maybe punters are thinking that if property valuations fell by say 10% that’s $160m hit to Summerset $1,6 billion property portfolio.

Would upset a few valuation ratios


key though is whether the margins on new builds (will be positive) offset any reduction in margins in resale’s if prices do collapse

[Beagle]

You are thinking of a rational market jg8512.
Not everything that happens is rational.

Correct but what does Warren Buffet say..."Be greedy when others are fearful"

[mondograss]

Maybe punters are thinking that if property valuations fell by say 10% that’s $160m hit to Summerset $1,6 billion property portfolio.

Would upset a few valuation ratios


key though is whether the margins on new builds (will be positive) offset any reduction in margins in resale’s if prices do collapse

But only temporarily, you'd be unlikely to see that effect last more than one or two years unless there's some more fundamental economic collapse. 15% was the average hit on house prices in the GFC, so 10% is probably at the upper end of what's possible due to the change in govt.

[winner69]

But only temporarily, you'd be unlikely to see that effect last more than one or two years unless there's some more fundamental economic collapse. 15% was the average hit on house prices in the GFC, so 10% is probably at the upper end of what's possible due to the change in govt.

Just shows punters worry about today and the future is no further out then next week

Politics and other things are just noise - fundamentals win out in the end.

[jg8512]

You are thinking of a rational market jg8512.
Not everything that happens is rational.

As long as my decisions are (mostly) rational Dobby, the market can do whatever it likes!.

[dobby41]

As long as my decisions are (mostly) rational Dobby, the market can do whatever it likes!.

The dips are there for you to take advantage of if you think they aren't rational.

[winner69]

The dips are there for you to take advantage of if you think they aren't rational.

so true ....but sentiment reigns supreme and often it doesn't change for the better

[Beagle]

so true ....but sentiment reigns supreme and often it doesn't change for the better

Yes...No...maybe...no hellfire and brimstone changes to immigration like some were predicting https://www.msn.com/en-nz/news/national/nz-first-loses-battle-on-migrant-numbers/ar-AAu0rN1?li=AAaUOAg&ocid=spartandhp

[bull....]

I dislike DMA and much prefer EMA, like the linear price axis they are a remnant of the days before modern calculating machines and there is no excuse for using them now that we are in the Century of the Anchovy (http://discworld.wikia.com/wiki/Century_of_the_Anchovy).

But the 200 DMA has now been crossed & recrossed 23 times (I counted them) in the last year, which is because the SP is going up and down like a gooseberry in a lift (https://www.youtube.com/watch?v=jIXfIVR9iOk) (1:55 onwards) setting lower highs and higher lows in the process, a condition known by the chartists (http://www.parliament.uk/about/living-heritage/transformingsociety/electionsvoting/chartists/overview/chartistmovement/), apparently, as a wedgie.

As, so far, we do not have a break from tradition with either a lower low or crossing the underside boundary of the wedgie thing then all I fail to see the significance of the crossing of one particular inappropriately chosen squiggly line.

Best Wishes
Paper Tiger

its in a symetrical wedge will decide direction when it gets near the apex , 5.25 looks like top of it to me and 4.80 bottom so could bounce around more before you know the breakout direction.

[winner69]

Maybe punters are thinking that if property valuations fell by say 10% that’s $160m hit to Summerset $1,6 billion property portfolio.

Would upset a few valuation ratios


key though is whether the margins on new builds (will be positive) offset any reduction in margins in resale’s if prices do collapse

A $160m hit on property valuations would wipe out a fair chunk of shareholders equity .....seeing SUM highly leveraged eh t_j

[winner69]

its in a symetrical wedge will decide direction when it gets near the apex , 5.25 looks like top of it to me and 4.80 bottom so could bounce around more before you know the breakout direction.

The 5 year upward trending channel would suggest a upward break out .....hope here

Interestingly 470 / 480 is also a critical point from a channel perspective. A weekly close below that is pretty oninious.

[bull....]

The 5 year upward trending channel would suggest a upward break out .....hope here

Interestingly 470 / 480 is also a critical point from a channel perspective. A weekly close below that is pretty oninious.

yea that upward channel is still intact

[Beagle]

A $160m hit on property valuations would wipe out a fair chunk of shareholders equity .....seeing SUM highly leveraged eh t_j

SUM have $430m in embedded value in their units as at 30/6/2017 which is up significantly on 31/12/2016. The Auckland market according to REINZ official median price data has still been increasing this winter despite record rainfall, much tighter lending policies applied by the banks and political uncertainty.
Now that political uncertai9nty is out of the way and there's no major sea change to immigration AKA what Winston Peter's wanted, its business as usual and I expect on a national basis, (remember SUM only has 6 retirement villages in Auckland) to see that Embedded value continuing to increase.

[RRR]

NZ superannuation fund now a 5% shareholder, average buy price 5.08.

[winner69]

NZ superannuation fund now a 5% shareholder, average buy price 5.08.

That average buy price is only for the last 1 million shares .....they probably have a much lower price for all them

The Queen loves bargains eh

[Beagle]

NZ superannuation fund now a 5% shareholder, average buy price 5.08.

Good to see some major institutional support coming for SUM.

[winner69]

Good to see some major institutional support coming for SUM.

They own heaps more FBU than SUM ......what does that mean

[percy]

They own heaps more FBU than SUM ......what does that mean

They have their balance wrong.
FBU's share price is the same today as it was 10 years ago.[or near enough].
What is known as a serial under performer.
And if you read the history of Fletchers, you will see they have gone from one disaster to another.Its in their DNA.

[bull....]

does the superfund own any shares in other retirement village?

[winner69]

does the superfund own any shares in other retirement village?

Chances are they do ......have some of nearly everything on NZX ..except maybe Arvida

[winner69]

does the superfund own any shares in other retirement village?

Have $244m of MET and $64m of RYM as listed in their top 10 nz investments

[Antipodean]

https://www.nzsuperfund.co.nz/publications/annual-equity-listings

Arvida & Summerset appear to be on there.

[winner69]

https://www.nzsuperfund.co.nz/publications/annual-equity-listings

Arvida & Summerset appear to be on there.

...and Oceania

Apologies for implying that the Super Fund wouldn’t have any Arvida because tj said it was a dog.

[winner69]

Obviously think ‘highly’ of SUM as have more there than RYM but MET their biggest by far.

[Beagle]

FNZ flying a kite for SUM and MET merger, maybe superfund think there's great synergies with SUM's development skills and MET's asset base and massive head office cost synergies.