SUM - Summerset Group

[couta1]

I just had to buy SUM, gotta back my own theorum which hasn't failed for near 7 yrs now.Lol

[Beagle]

Its right at the bottom of the 50-60% relative to RYM, Couta1 reversion channel so you can't go wrong mate :)

[percy]

A friend of mine is buying a unit at SUM's Russley new village.
6 people were looking at the unit she is buying.
She went to the top of que as she did not need to sell her house to settle.
In fact her house is in the trust,so she had to sell her own shares to pay for it.

[Baa_Baa]

Well, I guess looking at the sales trend (below a rolling total over the last 4 years) - it is hard to identify any uptrend in the sales numbers.

10442

On the other hand - they did deliver a good number of additional units every year and the number of uncontracted units is minute - i.e. the problem can't be a lack of demand.


Looking at the new_sales & resales by themselves, without looking at the total units growth, appears to create a slightly confusing picture. Perhaps if sales were plotted as a ratio of total units, that might show a clearer picture of whether sales volumes are trending healthily or otherwise. I don't have the numbers handy to test that.

[Maverick]

Hey Winner, these particular sales figures matter a lot because SUM had a surplus 133 late deliveries from December that held back their FY18 result. If things are hunky dory then the new sales should be up a lot this quarter as it normally takes about three months to sell a new villa (at least that's the case with ARV).
so ....
A.if the new sales are not significantly up then it will be the first real sign of the property market slowing up or over supply.
B. If new sales are significantly up then SUM is continuing on its fantastic growth path and we should see a fy 19 profit of about $130 million.
It would appear that option A is now unfolding. It is too soon to panic yet but it looks like the first canary in the coal mine has fallen off his perch.
I am very disappointed and concerned after these results.
The next step for me is to find out why the unsold new stock is piling up and if it's a sistemic problem or just a timing thing. Interesting that they have low numbers of empty resale units but a truck load of empty new stuff.
Beagle, I will now definitely be seeing you in Wellies later this month at the meeting.

[winner69]

I just had to buy SUM, gotta back my own theorum which hasn't failed for near 7 yrs now.Lol

Careful mate

The average in that time has been about 50% and it has been in the low 40s on occasions (just like it’s been to 60% plus at times)

Often reversion to the mean means overshooting on the down side.

[winner69]

Its right at the bottom of the 50-60% relative to RYM, Couta1 reversion channel so you can't go wrong mate :)

Range is 40% to 60% with average about 50% ...take care

[couta1]

It would appear that option A is now unfolding. It is too soon to panic yet but it looks like the first canary in the coal mine has fallen off his perch.
I am very disappointed and concerned after these results.
The next step for me is to find out why the unsold new stock is piling up and if it's a sistemic problem or just a timing thing. Interesting that they have low numbers of empty resale units but a truck load of empty new stuff.
Beagle, I will now definitely be seeing you in Wellies later this month at the meeting.In the mean time OCA care suites still selling like hot cakes.Lol.PS-Looking forward to catching up with you in WGTN.

[minimoke]

Its just taking longer for people to sell their homes so they can move into a SUM unit. This shouldn't come as a surprise to anyone.A new opportunity for HGH - providing bridging finance so people can snap up one of the few remaining (40) SUM units

[Beagle]

It would appear that option A is now unfolding. It is too soon to panic yet but it looks like the first canary in the coal mine has fallen off his perch.
I am very disappointed and concerned after these results.
The next step for me is to find out why the unsold new stock is piling up and if it's a sistemic problem or just a timing thing. Interesting that they have low numbers of empty resale units but a truck load of empty new stuff.
Beagle, I will now definitely be seeing you in Wellies later this month at the meeting.

Look forward to it mate, I have my flights booked and Couta1 is on board so he'll be there. I think its simply a timing thing, taking longer for people to sell their homes.

[winner69]

Updated your chart Couts

Really spooky ....but not really. The market has its reasons for the relativity ...totally rationale.


But a load of old proverbial as the likes of BP et al says they should be about the same price.

[bull....]

nearly at support will it hold or crash?

[BlackPeter]

It would appear that option A is now unfolding. It is too soon to panic yet but it looks like the first canary in the coal mine has fallen off his perch.
I am very disappointed and concerned after these results.
The next step for me is to find out why the unsold new stock is piling up and if it's a sistemic problem or just a timing thing. Interesting that they have low numbers of empty resale units but a truck load of empty new stuff.
Beagle, I will now definitely be seeing you in Wellies later this month at the meeting.

Just wondering - is it really a "truck load" of new stuff which is vacant?

They did build last year 454 new units and sold from Q2 2018 to Q1 2019 342 new units. If we assume an average sell time of 90 days (I read that somewhere), than there are now 112 of these units still unsold. This is roughly 3% of all of their units. Sounds like they managed as well to reduce during this quarter the number of re-sell units available. End of last year they had 1.4% of their restock uncontracted (annual report), which would add up to 52 units, now they have only 40.

Numbers don't sound that concerning to me - new units will need longer to sell (if you throw a large bunch of product into the market it takes just a bit longer to be absorbed). Quite normal situation - and sure, the building market is a bit softer than it used to be.

Sales numbers are not a reason for exuberance, but I don't think they are a reason for undue concern either. Just an average year in a quite future proof industry. If this is like bad years looks like - who would not want to be a holder?

[Beagle]

The Beagles had to visit north shore hospital last week for Mrs Beagle's knees and her arthritis problem. I was staggered by the number of older people there and we had to wait for hours in a queue to be seen by one of the specialists. It occurred to me that the strength of the long term demographic tailwind in this industry is mind blowing and actually quite difficult to get one's head around. The forward PE is very realistic and its hard to see how anyone can go wrong in the long term at the current heavily beaten down price. The track record this company has of growing earnings since it listed is exceptionally good. I see no reason to buy RYM and pay ~ double the PE to invest in the same industry albeit with the added risk and exposure to the substantial decline in the Melbourne property market but each to their own...

[bull....]

summerset results today are not good , sales down , overhang of units developing and they confirm the market is slowing. this is not good for retirement stocks hence why all of them are getting sold off today. I have been warning for quite awhile things were not healthy in the sector and slowly it is starting to materialise.

dont worry utilities power companies have sustainable divs

[mcdongle]

Look forward to it mate, I have my flights booked and Couta1 is on board so he'll be there. I think its simply a timing thing, taking longer for people to sell their homes.

And maybe selling for less than they wanted

[Bjauck]

The Beagles had to visit north shore hospital last week for Mrs Beagle's knees and her arthritis problem. I was staggered by the number of older people there and we had to wait for hours in a queue to be seen by one of the specialists...
Hospitals do tend to have a lot of older patients anyway I guess especially for the “elective” orthopaedic procedures. Plus public hospitals have to manage a burgeoning demand within constrained budgets. At Weekends and after hours you may see a younger demographic!

[SilverBack]

summerset results today are not good , sales down , overhang of units developing and they confirm the market is slowing. this is not good for retirement stocks hence why all of them are getting sold off today. I have been warning for quite awhile things were not healthy in the sector and slowly it is starting to materialise.

dont worry utilities power companies have sustainable divs

Aged care is scarcely profitable and the Government will make sure it stays that way which leaves SUM and the other retirement outfits as real estate companies. QV reports show the housing market is cooling off nationally, with a fall-back in Auckland. I think there is worse to come yet but that it will be a trend and not a rush.

[trader_jackson]

This time is different... I don't think it is too irrational
Holding up pretty well really

Posted about 8 months ago... share price was 25% or so higher than it is today... really did hold up very well for another month and a half.

Given the 'we are slowing down big time' light has been flashing on SUM for a while now, it was mystifying to see it bounce in early Feb... the writing seemed to be on the wall for months prior, and this has just confirmed it.

Residents need a reason to go to an ever increasing number and ever flasher villages... the 'that's a nice unit in a nice place' no longer cuts it... they need the full english breakfast and sum listed operators just don't do a good job at the continuum of care side of things in all their villages, while others do (and will be far more resilient in a housing slow down)

Not even a month ago ARV was singing a near totally different tune to SUM today: both with solid pricing and settlements... at over $6, holding up pretty well really.

[bull....]

Aged care is scarcely profitable and the Government will make sure it stays that way which leaves SUM and the other retirement outfits as real estate companies. QV reports show the housing market is cooling off nationally, with a fall-back in Auckland. I think there is worse to come yet but that it will be a trend and not a rush.

totally , its refreshing to see someone else sees them as predominately property development companies and secondly aged care providers

[LAC]

this is not good for retirement stocks hence why all of them are getting sold off today.

Not good today and maybe next week, next month.....
But in 10 years I would stock up big time if I were a betting man....and I am

[minimoke]

Aged care is scarcely profitable and the Government will make sure it stays that way which leaves SUM and the other retirement outfits as real estate companies. QV reports show the housing market is cooling off nationally, with a fall-back in Auckland. I think there is worse to come yet but that it will be a trend and not a rush.
I've stolenm this off a HGH presentation

"Over 20,000 Australians turn 65every month and the number ofNew Zealanders aged 65+ isexpected to increase by 80%between 2016 - 2036" - that is a lot of demand for retirement sector housing.

[winner69]

No mention of how new units unsold.

What puzzles me that over H217, H118 and H218 (the last three half years) the number of new units delivered exceeded the number of new sales by 191. Maybe 71 of these sold in the last quarter but I also wonder how many new units were delivered in the quarter as well.

Seems to suggest that at least 120 new units (more if any delivered in the last quarter) remain in limbo and unsold.

Maybe what’s counted as new sales isn’t the same as new deliveries....I have no idea

Julian’s quarterly announcements are getting more obtuse as time marches on

[Maverick]

Just wondering - is it really a "truck load" of new stuff which is vacant?

They did build last year 454 new units and sold from Q2 2018 to Q1 2019 342 new units. If we assume an average sell time of 90 days (I read that somewhere), than there are now 112 of these units still unsold. This is roughly 3% of all of their units. Sounds like they managed as well to reduce during this quarter the number of re-sell units available. End of last year they had 1.4% of their restock uncontracted (annual report), which would add up to 52 units, now they have only 40.


Hi BP and Winner,
Check out page 23 of FY18 report;
un-contracted new builds ;stock FY16 =136, FY17=204. FY18=319.
We are told the late deliveries of a bunch of units (133) was why the apparent blowout of empty new builds, sounds very reasonable.
I was hoping for a good lot of these units to be sold this quarter but it obviously has not happened. Julian has said that its taking longer for people to sell their homes.
I`ve done a quick search on house sale times and blow me down, he`s totally right.
Average days to sell a house in Auckland, 2016=30 days, 2017=35 days, 2018= 40 days, so far this year 55 days. I live in Wanganui where house seem to be selling withing a week or 2 (its booming down here-but SUM arn`t trying to sell their new builds here- perhaps that explains why resales are doing ok , they might be more in the provinces)
So clearly the average time to sell a new unit of 3 months has changed. Plus I noted that in the first quarter of any year the "sales days required" really spike- like double. (this is reflected in the SUM sales starting slow and consistently increasing later in the year.
With this information, unloading the late delivery stock was never going to happen in just 1 quarter-especially the first one. The historical 3 months ave to sell a unit should now be pushed out to out say 4 -6 months , depending on the time of year.
Sooo.... I fully accept Julian's reason for the FY18 stock over hang and these poor sales figures. I do not think the wheels are falling off, but will be looking extremely closely at the next sales figures.

[limmy]

39c drop or 6% as of now, appears to show that they was huge prior speculation of a strong sales update, which didn't occur. I'm in SUM and the other main retirement companies for the long term, so a daily fluctuation doesn't really concern me. I believe like many others in our chat group that the tail winds will come to the industry as more and more baby boomers reach retirement.

[winner69]

Hi BP and Winner,
Check out page 23 of FY18 report;
un-contracted new builds ;stock FY16 =136, FY17=204. FY18=319.
We are told the late deliveries of a bunch of units (133) was why the apparent blowout of empty new builds, sounds very reasonable.
I was hoping for a good lot of these units to be sold this quarter but it obviously has not happened. Julian has said that its taking longer for people to sell their homes.
I`ve done a quick search on house sale times and blow me down, he`s totally right.
Average days to sell a house in Auckland, 2016=30 days, 2017=35 days, 2018= 40 days, so far this year 55 days. I live in Wanganui where house seem to be selling withing a week or 2 (its booming down here-but SUM arn`t trying to sell their new builds here- perhaps that explains why resales are doing ok , they might be more in the provinces)
So clearly the average time to sell a new unit of 3 months has changed. Plus I noted that in the first quarter of any year the "sales days required" really spike- like double. (this is reflected in the SUM sales starting slow and consistently increasing later in the year.
With this information, unloading the late delivery stock was never going to happen in just 1 quarter-especially the first one. The historical 3 months ave to sell a unit should now be pushed out to out say 4 months.
Sooo.... I fully accept Julian's reason for the FY18 stock over hang and these poor sales figures. I do not think the wheels are falling off, but will be looking extremely closely at the next sales figures.

I don’t think the numbers on page 23 provides the answer to my quandary ...but I just might be really stupid.

[winner69]

Oceania and Summerset have much different year ends (one in winter and one in summer) but both rave on about things being weighted to the second half of the year

Building and sellingbthings things obviously not afected by seasonal (as in weather) things

[Beagle]

I don’t think the numbers on page 23 provides the answer to my quandary ...but I just might be really stupid.

Come along to the annual meeting and have a chat with Julian afterwards. You'll find he's a straight shooter no B.S. kind of guy.
Good post Maverick. I have learned from experience not to get too hung up on any one quarter's sales result. I am just over 90% invested in the market which is about as high as I ever want to get, (I like having a minimum of 10% in cash), but if I had some spare cash I would be topping up on OCA and SUM today.

[winner69]

I don’t think the numbers on page 23 provides the answer to my quandary ...but I just might be really stupid.

Maverick, I think some words Summerset use, like ‘new’, have different meanings depending on what they are talking about.

[BlackPeter]

Oceania and Summerset have much different year ends (one in winter and one in summer) but both rave on about things being weighted to the second half of the year

Building and sellingbthings things obviously not afected by seasonal (as in weather) things

Interesting. I used to work in a quite large NZ company with mainly international sales - and we didn't sell retirement units but high tech stuff. Our second half was always much stronger than our first - even after shifting the end of the FY by 6 months! Put it to people being motivated by achieving agreed end of the financial year targets - I am sure there are as well in SUM SUM bonuses dependent on the Eoy figures. Positive motivation is always good ;);

[trader_jackson]

Not even a month ago ARV was singing a near totally different tune to SUM today: both with solid pricing and settlements... at over $6, holding up pretty well really.

And what a difference in reactions today - ARV down not even 1% (and still above that rock solid level of $1.30), while sum others falling over 7%... Unlike sum others, the NTA and dividend yield (both of which are relatively low) ain't enough to provide a backstop, still above that physiological important $6 mark, for now

[Beagle]

Study the past, if you would divine the future. Confucius
SUM companies have a great long term track record, others not so much. I am not so hasty to judge a company on one days share price performance or one quarters sales results.

[Blue Skies]

Since the drop in sales numbers from 143 to 137 has hit the sp, thought worth checking Barfoot's latest Property Report because the general real estate market & esp AKL feeds into the Retirement sector sales including AKL retirees moving to the provinces.
I see Auckland sales for Jan & Feb were among lowest recorded at the start of a year in the last decade. However, also says market regaining momentum in March with sales numbers nearly doubling Feb's measly sales volume, plus now have (4,865) highest level of listings since 2011. Indicates vendors needing to adjust to realistic expectations if they want to sell or avoid having property on market for a long time.
So I'm hoping sales for the later part of the year will be much higher as the gap between vendors & buyers expectations narrows & the built up pressure in the market is released, & this feeds into sales for SUM & others.

Sadly, another driver is ill health & personally I know 3 cases in last 6 months where due to the sudden & unexpected onset of chronic medical conditions of one of the partners, couples have been quite desperate to sell their homes & move to the relative sanctuary of SUM (& OCA) villages. What struck me was how I would never have expected any of them to be interested in Retirement Village living but how quickly & massively the landscape can be changed by a medical diagnosis.

[Beagle]

http://www.scoop.co.nz/stories/BU1904/S00159/auckland-on-the-cusp-of-a-buyers-market.htm
Sum's up the state of the property market. Houses taking longer to sell so SUM will have to carry more stock for a while. Not earth shatteringly bad as some people are suggesting.

[Maverick]

I don’t think the numbers on page 23 provides the answer to my quandary ...but I just might be really stupid.
hey Winner, tough day for all of us....try this . investor presentation fy18. Go to page 23

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/330947/295456.pdf

[Scrunch]

Here's an attempt to put on the negative glasses. Hopefully this is wrong but it helps explain the price fall today on what was superfically flat year-on-year sales.

At the end of 2017 SUM had 59 new builds and 63 resales under contract and then had sales (settlements) on 143 units in Q1
At the end of 2018 SUM had 101 new builds and 58 resales under contract and then had sales (settlements) on 137 units in Q1

In Q1 2018 they achieved a net +21 new sales that went under contract and settled
In Q1 2019 they achieved a net -22 new sales that went under contract and settled.
Longer sales times to settle explains a bit, but it kinda also indicates really poor new sales of new-build stock as they went backwards by 43 sales in this comparative view (not by 6). Its possible that theres a lot of the empty new-built under contract but if there had been a good increase in this, I'd have personally put that into the press release. Its absence probably means under contract hasn't improved much and may even be down.

In both 2017 and 2018 SUM built more units than they settled. This resulted in Uncontracted new-sales stock going from 67 to 145 to 218. There were 133 new units in 2018 that became available in December. I'd have expected some of this to both go under contract and settle during Q1 but that's not what the figures above indicate.

Could the market be doubting the retention of current development margins?
Could the market be wondering if the new-build rate needs to slow?
How long have some of the 218 uncontracted units at the end of FY2018 been available and not sold? If they aren't worth the selling offer price, what price are they held at in the books? Are there some negative revaluations to take through the P&L?

[value_investor]

Based on current valuation, we are now at a PE of 14 and probably due to go lower. Good point on development margin because early doors we could be looking at flat underlying profit for the year.

If you're in the industry long term then its a very good buy. The issue of an aging population hasn't really started rearing its head yet. We are just talking about it, it will be years from now where it will become a serious issue on how we house them etc.

[Lewylewylewy]

If we look at sum as a company that makes and sells houses, the figures are ok but disappointing expectations.

If we look at sum as a subscription based company, the figures are good. IOW, 71 new subscriptions with a lower attrition rate of existing subscriptions (i deduce this from the fact that there are less resales, but overall smaller stock of resellable product). Granted, subscription growth was less than last year, but they is still good growth. Revenue should be up, and they have a healthy stock ready for sale.

Personally, I'm not upset by the result, though i am upset by the sp because I'm not in a position to be able to buy more right now.

[Maverick]

Could the market be doubting the retention of current development margins?
Could the market be wondering if the new-build rate needs to slow?
excellent post Scrunch. Obviously you didn't go to the pub last night.:)
Beagles link to the property article just above yours is pretty calming that NZ property is slightly falling in Auckland but generally still strong elsewhere.
So your first question, are the units too dear? From the article that answer is -no
Second question, are we building too many? Based on well known statistics of the aging population and penetration (amount of oldies opting into villages as a percentage of their peers) compared to village build rates, then that answer is also no.

Therefore , for me , I'm very comfortable for now that this poor result is mostly, if not entirely, due to longer sale days needed.

i will endeavour to find out if there is a general region where these units are.

Once again Srunch, I appreciate your maths and thinking on this problem.

[winner69]

Summerset have to stop reporting quarterly sales

Just causes too much speculation ...as beagle says one quarters sales numbers are meaningless.

[Maverick]

Summerset have to stop reporting quarterly sales

Just causes too much speculation ...as beagle says one quarters sales numbers are meaningless.
No way.... It's problems like yesterdays when the thinking and understanding goes up another notch. Makes the journey far more interesting.

[winner69]

One thing I like about Summerset is that they haven’t been selling that many more units but have been making heaps more money (Profit)

Not like Oceania who sold heaps more units (like 52 more last year) and made no more money than the year before.

[Maverick]

One thing I like about Summerset is that they haven’t been selling that many more units but have been making heaps more money (Profit)

Not like Oceania who sold heaps more units (like 52 more last year) and made no more money than the year before. Not sure sure about those figures Winner but there are plenty to choose from.
OCA sold 77 more units FY18 than FY17 and its underlying npat was up from 34 million to 52.1 million.
It will be OCAs turn for some attention in a few months with its new numbers. At today's sp, it will be very hard for it to disappoint the market.(thanks for that SUM:p)

[winner69]

Not sure sure about those figures Winner but there are plenty to choose from.
OCA sold 77 more units FY18 than FY17 and its underlying npat was up from 34 million to 52.1 million.
It will be OCAs turn for some attention in a few months with its new numbers. At today's sp, it will be very hard for it to disappoint the market.(thanks for that SUM:p)

Was only referring to first half ...52 extra sales than pcp and very little extra underlying profit

And based on your and beagles forecasts full year underlying profit not much more than prior year ....but selling heaps more units.

[Vaygor1]

I do not accept SUM's explanation of an increase in 'Average days to settle' after construction is complete. Why aren't they selling them down before construction has even started?... let alone 1/2 way finished? Other companies sell down their entire village off the plans. I treat this part as a poor excuse and put it down to a slack sales team. I am satisfied that the housing market plays virtually no part in this.

However, looking at resales, one must remember the average tenure of residents:

10447

From page 19 of the presentation, number of villas = 1669, number of apartments = 993, number of serviced and memory care apartments = 958. I don't know how the reported figures work when say a person moves from a villa into a serviced and memory care apartment, however, numbers reported by other NZ retirement companies state the average tenure to be a little over 6 years for the vast majority of their retirees. Is it only 5 for SUM? I hope not, otherwise someones putting arsenic in the tea.

I don't do a lot of analysis on SUM as I comparatively don't hold nearly as much SUM stock-value as I do other villages, but using 6 years as an average tenure, then surely one needs to see the state-of-play from 6 years ago to determine the number of units coming up for resale today.

If the number of new-builds 6 years ago was somewhat stagnant (compared to todays new-build rate), then so will be the resales 6 years later, I would think? I am outside of NZ at present & haven't looked back 6 years on a SUM report to see if this might be true. I am sure some of the contributors here will do this and report back to the thread. I would be interested to know if there is a correlation here.

[winner69]

Vaygor1

I do not accept SUM's explanation of an increase in 'Average days to settle' after construction is complete. Why aren't they selling them down before construction has even started?... let alone 1/2 way finished? Other companies sell down their entire village off the plans. I treat this part as a poor excuse and put it down to a slack sales team. I am satisfied that the housing market plays virtually no part in this.



I tending to agree with you vaygor

The announcements aren’t as transparent as they used to be

[bull....]

I tending to agree with you vaygor

The announcements aren’t as transparent as they used to be

always must paint a rosier picture when times are getting toughier

[Blue Skies]

Surely the 'housing market' feeds into the Retirement Village sector ?
If people can't sell or are taking longer to sell (compared to 12 months ago) their own homes, they can't purchase or settle on a Retirement home.
How many people fund their Retirement Village home solely from shares or bank deposits?
However, once the gap between vendors & buyers expectations closes, normal sales levels will resume, feeding into higher levels of sales & shorter settlements for the Retirement sector.
That's the way I see it anyway.

[Beagle]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12219508

Record low interest rates might help.

[Beagle]

I do not accept SUM's explanation of an increase in 'Average days to settle' after construction is complete. Why aren't they selling them down before construction has even started?... let alone 1/2 way finished? Other companies sell down their entire village off the plans. I treat this part as a poor excuse and put it down to a slack sales team. I am satisfied that the housing market plays virtually no part in this.

However, looking at resales, one must remember the average tenure of residents:

10447

From page 19 of the presentation, number of villas = 1669, number of apartments = 993, number of serviced and memory care apartments = 958. I don't know how the reported figures work when say a person moves from a villa into a serviced and memory care apartment, however, numbers reported by other NZ retirement companies state the average tenure to be a little over 6 years for the vast majority of their retirees. Is it only 5 for SUM? I hope not, otherwise someones putting arsenic in the tea.

I don't do a lot of analysis on SUM as I comparatively don't hold nearly as much SUM stock-value as I do other villages, but using 6 years as an average tenure, then surely one needs to see the state-of-play from 6 years ago to determine the number of units coming up for resale today.

If the number of new-builds 6 years ago was somewhat stagnant (compared to todays new-build rate), then so will be the resales 6 years later, I would think? I am outside of NZ at present & haven't looked back 6 years on a SUM report to see if this might be true. I am sure some of the contributors here will do this and report back to the thread. I would be interested to know if there is a correlation here.

I can't reconcile the low current number or resales and low resale stock level with those claims of average length of occupancy for which you kindly provided a link. For example in 2014 they has 2116 units and 2013 1855, average just on 2000. If those are on average recycled every 5 years we should be seeing 400 resales a year by now ? In the current quarter we had just 66 resales and of these resales as per the announcement this reduced resale stock by 13 units, so only net 53 resales, or an annual rate of 212 which is just on half the prima facie level they should theoretically be ?
Further, it is interesting to note that way back in 2015 when the company had just 2419 units, resale level was 245 per annum.

Worth noting that there were 101 contracted units as at 31 December 2018. Yes I think they could do better selling more off the plans and they could also do better by fixing their weekly fees for life. I will raise this matter with the board again at the annual meeting.

Julian Cook is a very motivated guy and I think he's supported by some other very good management and a very well respected board. They've made a LOT of land acquisitions which point to a very strong growth path in the future and they have plans to increase their build rate to 600 units per annum over the next 2-3 years. I think the metrics are compelling and in the medium term the resale rate will double as will the new sales rate.
I look forward to the annual meeting and discussing matters with the board and senior management. This will give me more of a feel for where the company is going in the next 2 years.

Latest national real estate stat's had the national average price increasing 2.5% year on year to March 2019. This is in quite stark contrast to the rate at which Melbourne is falling which will of course affect RYM to some degree. This week saw the introduction of interest rates at low level's the likes of which I have never seen before which I think should be stimulatory as will cut(s) to the OCR this year.

I think Friday's SP reaction is overdone but acknowledge sentiment is negative and the sales number was disappointing so in the short run the naysayers might carry the day for a bit longer. Long term I remain very confident in this company, its management and the board.

[winner69]

If they had 101 ‘contracted’ new sales as at end of December and only reported 71 sales in Q1 there’s obviously a long time between becoming ‘contracted’ and settlement


Maybe i don’t understand the lingo and what ‘contracted’ and ‘uncontracted’ and other words really mean.

[Beagle]

Not far for you to come along to the annual meeting and ask...just a thought.

[couta1]

As All the retirement sector stocks are long term plays for the majority of holders,blips like this shouldn't be much of a concern considering the strong tailwinds which are set to prevail for many more years yet to come.

[winner69]

As All the retirement sector stocks are long term plays for the majority of holders blips like this shouldn't be much of a concern considering the strong tailwinds which are set to prevail for many more years yet to come.

One only needs to look at the 8 year summary — the last page of this presentation
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/330947/295456.pdf

Main metric is what the value of the company is being ‘Total Equity’ - increasing at 23% pa

To really appreciate the impact of the booming property market over the last years do a little sum like Underlying Profit divided by Total Sales — profit per sale has gone from $35k in 2011 to $154k in 2018. This is from both resales and the increasing development margin. Price increases have been the main contributor to the staggering growth in profit.

Looking forward to seeing how much Summerset’s (and others) value grows isn’t so much about the level of sales but how much they make on each sale (new and resales) — ie the state of the property market (prices) will be a key determinate over the next five years or so. I doubt we will see the same booming property prices over the next five years.

Last quarter’s sales numbers not really a blip — long term trend is still up (at least the resales trends). Nothing to worry about — just think long term ......but watch overall property price trends.

[Baa_Baa]

[snip]Price increases have been the main contributor to the staggering growth in profit.

Looking forward to seeing how much Summerset’s (and others) value grows isn’t so much about the level of sales but how much they make on each sale (new and resales) — ie the state of the property market (prices) will be a key determinate over the next five years or so. I doubt we will see the same booming property prices over the next five years.

Last quarter’s sales numbers not really a blip — long term trend is still up (at least the resales trends). Nothing to worry about — just think long term ......but watch overall property price trends.

Given the total number of units increasing year on year and the growth projections, the recent years performance in new sales, needs to be fixed. Can't rely just on property prices going up forever to sustain the "staggering growth in profit".

Spot the problem?
10449
10453
10450
10451

[Beagle]

One only needs to look at the 8 year summary — the last page of this presentation
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/330947/295456.pdf

Main metric is what the value of the company is being ‘Total Equity’ - increasing at 23% pa

To really appreciate the impact of the booming property market over the last years do a little sum like Underlying Profit divided by Total Sales — profit per sale has gone from $35k in 2011 to $154k in 2018. This is from both resales and the increasing development margin. Price increases have been the main contributor to the staggering growth in profit.

Looking forward to seeing how much Summerset’s (and others) value grows isn’t so much about the level of sales but how much they make on each sale (new and resales) — ie the state of the property market (prices) will be a key determinate over the next five years or so. I doubt we will see the same booming property prices over the next five years.

Last quarter’s sales numbers not really a blip — long term trend is still up (at least the resales trends). Nothing to worry about — just think long term ......but watch overall property price trends.

Thanks for pointing that out mate. That last page really does throw up some quite staggering stat's including 7 year CAGR in underlying profit of 43% and 70% CAGR in IFRS profit. My view is that the IFRS profit growth will underwrite underlying profit growth for many years as the current surprisingly low number of resales regains significant upward momentum. At a national level I don't see house prices increasing like they have for the last decade but neither do I see a collapse coming like what's affecting many Australian cities. Worth noting that throughout the GFC RYM continued to grow underlying profit and also worth noting that RYM never grew underlying profit over a 7 year period at a CAGR of 43% or anything remotely like that. Also RYM's forward PE is now double SUM's with the latter never been lower and not exposed to the rapidly declining property market. As a numbers man its absolutely impossible for me to make a case for myself to own RYM but SUM should fly once they can regain sales momentum.

[Beagle]

As All the retirement sector stocks are long term plays for the majority of holders,blips like this shouldn't be much of a concern considering the strong tailwinds which are set to prevail for many more years yet to come.

Agree 100%.

[percy]

Retirement village operators price their units to local house prices.
Local house prices go up,unit prices go up.
Local house prices go down,unit prices go down.
Swings and round-abouts.

[BlackPeter]

I do not accept SUM's explanation of an increase in 'Average days to settle' after construction is complete. Why aren't they selling them down before construction has even started?... let alone 1/2 way finished? Other companies sell down their entire village off the plans. I treat this part as a poor excuse and put it down to a slack sales team. I am satisfied that the housing market plays virtually no part in this.


I guess we would need to find out when they count a unit as "sold". If this is "possession date" than it would be hard to sell a unit before it is finished, wouldn't it? Most of the buyers would need to first sell their old house to have the funds to buy in, and they only can do that if & when they physically are able to move into the unit ...

Which means that average days to sell do play a significant role. Buyer can only sell their house when the unit is finished (or if they are very sure it will be finished by the sell date of their old home).

[The Rocket]

I think you Guys are looking at this with rose tinted glasses. NZ and the rest of the World are in a start of a down trend (e.g. NZ looking at lowering interest rates again and other countries are too even Trump calling for lower interest rates) House prices will drop in NZ and it will take longer to sell houses. Retirement sector will do the same and drop prices for units, villas etc. They did go up when house prices went up. It is not a Blip it is a start of a trend. I said it first SUM will be $5.00 by Christmas.

[BlackPeter]

I think you Guys are looking at this with rose tinted glasses. NZ and the rest of the World are in a start of a down trend (e.g. NZ looking at lowering interest rates again and other countries are too even Trump calling for lower interest rates) House prices will drop in NZ and it will take longer to sell houses. Retirement sector will do the same and drop prices for units, villas etc. They did go up when house prices went up. It is not a Blip it is a start of a trend. I said it first SUM will be $5.00 by Christmas.

We agree that interest rates are from here more likely to go down than they are to go up.

What I don't understand is, why you think that this means property prices will go down? Low interest rates mean that people can afford higher loans and this means demand (and with that prices) for properties will go up.

This was how it worked the last couple of hundred years anyway.

Why do you think that this time it will be different?

[King1212]

House price will not go down..will be stable for the next couple year before the run again...low interest means more people afford new mortgage

[winner69]

To highlight the impact of property prices on SUM’s underlying profit let’s see what happened between 2013 and 2018

In 2018 sales were 60% more than 2013 and 2018’s underlying profit of $98.6 was 344% higher than 2013. So 2018 underlying profit was $76.4m than 2013

Of the $76.4m higher profits $13.3m came from selling more units and the balance of $63.1m came from making more per unit sold (price in other words, might be bigger units and more favourable mix but probably is a reflection of overall price increases)

So while selling more units is one driver of growth the price (profit) per unit is critical

As beagle says whatever happens to property prices (even if they crash) SUM underlying earnings will be ok for the next few years as the embedded value is realised In 3 to 4 years might be another story

That’s how I see it anyway

[Beagle]

https://www.radionz.co.nz/news/business/386195/house-price-growth-continues-to-cool Nothing wrong with national average rising 2.5% per annum. "Affordability a key concern"
Mortgage wars broke out this week which saw 3 year fixed interest mortgages available for 3.95%, the lowest in 50 years to the best of my knowledge https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12219508
Kiwibank at 4.29% for 5 years, the lowest ever.
OCR predicted to drop heaps https://www.interest.co.nz/bonds/98955/kiwibank-economists-say-theres-40-chance-reserve-bank-might-have-continue-cutting
Immigration still growing at a fast pace. All the ingredients are there for the market to stabilise and continue to grow at a very modest rate on a nation average price basis.
Those fearmongering over some potential big correction have very little factual basis for their beliefs other that the rate of growth has slowed, but so what, its slowed from years of very high growth rates and had to do so sooner or later...

I maintain the number of units to be resold per annum will rise dramatically over the years ahead and we know the company is lifting its build rate to 600 units oer annum in the next 2-3 years.

[Ggcc]

House price will not go down..will be stable for the next couple year before the run again...low interest means more people afford new mortgage
When you say couple of years it will happen after 5 years at least as incomes need to catch up.

[winner69]

https://www.radionz.co.nz/news/business/386195/house-price-growth-continues-to-cool Nothing wrong with national average rising 2.5% per annum. "Affordability a key concern"
Mortgage wars broke out this week which saw 3 year fixed interest mortgages available for 3.95%, the lowest in 50 years to the best of my knowledge.
Kiwibank at 4.29% for 5 years, the lowest ever.
OCR predicted to drop heaps https://www.interest.co.nz/bonds/98955/kiwibank-economists-say-theres-40-chance-reserve-bank-might-have-continue-cutting
Immigration still growing at a fast pace. All the ingredients are there for the market to stabilise and continue to grow at a very modest rate on a nation average price basis.
Those fearmongering over some potential big correction have very little factual basis for their beliefs other that the rate of growth has slowed, but so what, its slowed from years of very high growth rates and had to do so sooner or later...

I maintain the number of units to be resold per annum will rise dramatically over the years ahead and we know the company is lifting its build rate to 600 units oer annum in the next 2-3 years.

Good way of assessing SUM’s underlying profit is to assess (guess) how many sales they’ll make multiplied by profit per sale

Current numbers are 604 sales times $164k profit per sale

If sales increase that’s good and if profit per sale (mainly price) goes up that’s even better

Reckon 2019 will be another good year as both numbers gomup.

[Beagle]

Agree 100%. 3-4 years out I see new and resales close to doubling and I see no reason to think the profit per sale will materially decline so underlying profit growth will continue on its merry way like it always has for SUM. Difference is this time, at this point, the forward PE has never been this cheap. What happens to the share price over the next 3-4 years if all the naysayers are wrong and the market ticks along steadily ?

[The Rocket]

King 1212 Houses prices will not go down

In Hamilton prices fell 4% and in Gisborne 14% and the West Coast 8% figures just released it was on the 6 O’clock news on TV one last night as well. If you want to sell you need to take the lower price it’s called a buyers’ market. We have seen a sellers’ market for a few years now. When people were jumping in because houses that were selling so fast and were $20k dearer a few months later.

Black Peter:
The share market goes in cycles and so does the housing market I feel both cannot keep going at this rate. Retirement villages are one of the first to get hit by the down turn in both. The result out is just the start. I spent 10 years in the retirement sector and have seen times when selling houses were holding up sales with no buyers. older people don’t like dropping their price to sell their houses so there were plenty of empty villas because of it. When the sale of houses boomed, and the prices of the retirement villages shares climbed on fast growth and on new high property values. Fast growth and property values climbing are a thing of the past. They are hardly attractive for their low dividends. This will hit the shareprice because they are a stock that will get hit by a slow down in both selling houses and retirement villas etc and the company’s slowing growth.

[James108]

Some thoughts from a Long term holder who just sold some of his holding:

1) The sales data was disappointing, especially considering the impression of a better than normal 1st quarter SUM gave last year.
2) Favorable demographic tail winds doesn't mean above average returns on capital. Every man and his dog knows about the tail winds and a lot of capital has flooded the market fighting for these returns.
3)Its possible that SUM's earnings will flat line or decrease in the near future. I don't see them being able to maintain their construction/resale margins indefinitely. It is looking more and more like they are having difficulty selling units at these high margins. Having said that the recent house price increases will take several years to flow through the accounts propping up underlying NPAT.
4) I believe the construction margins and underlying NPAT do not reflect FCF or the margin earned in constructing a new village. For starters the cost of constructing communal areas are not included, these costs are capitalized. I would have liked to see cost for communal areas portioned our to each unit.
5) I have held since 2014, I created a very detailed model for this company in 2016 but haven't updated it since 2017. However my impression is that at current SP SUM is trading around fair value.
6) Points 1 through 4 don't necessarily mean SUM is overvalued but I decided to decrease my exposure as I perceive risks have increased. Even after the sell down SUM is still my largest holding.

[winner69]

Great chart below

Yes house prices did tough 2007/2010

The boom in the early 00’s helped by low interest rates which were followed by 13 OCR hikes between 2004 and 2007 (that culminated in a recession and major housing market downturn before the financial crisis arrived in H2 2008). Just coincidence there was a Labour Government then.

Our OCR cuts will be reversed in next year or two. Maybe not 13 hikes but several and no doubt it will hurt the property market like it did in 2007/2010.

House prices collapse? Not really but will dip and eventually continue their increases.

This is SUM thread and SUM are continuing to build new units and they will continue to resell rights as residents move on. So sales numbers probably go up. For a few years they might get less for each sale but not to the extent underlying earnings will collapse. If that did happen I think we’ll be more worried about other things than the SUM share price.

[BlackPeter]

[FONT=Calibri][COLOR=#000000]Black Peter:
The share market goes in cycles and so does the housing market I feel both cannot keep going at this rate. Retirement villages are one of the first to get hit by the down turn in both. The result out is just the start. I spent 10 years in the retirement sector and have seen times when selling houses were holding up sales with no buyers. older people don’t like dropping their price to sell their houses so there were plenty of empty villas because of it. When the sale of houses boomed, and the prices of the retirement villages shares climbed on fast growth and on new high property values. Fast growth and property values climbing are a thing of the past. They are hardly attractive for their low dividends. This will hit the shareprice because they are a stock that will get hit by a slow down in both selling houses and retirement villas etc and the company’s slowing growth.

Dear Rocket ... I notice that you are a fan of dropping markets ... maybe you should think about a more suitable pen name ;); Dropping is not good for rockets :);

We absolutely agree that both stock markets as well as property markets are cyclical, however for both is the down cycle always smaller than the up cycle and - to be fair - at least in NZ was the property down cycle over the last 100 years or so typically characterised by lower or stagnating growth rates, not a sharp drop in prices.

It is easy to understand why property crashes are always softer than share market crashes. Selling a share in panic is easy. Just press a button. Haven't yet found a button to sell our house, though - and there is always the problem where my family and I would live if I panic sell the house ;p;

But back to retirement stocks. If we look at the GFC - Ryman (the only at that stage listed retirement village provider) lost during the GFC peak to bottom roughly 50% in value. This is a lot, but than - Ryman had at that stage only limited earnings - i.e. it was rated as "growth" stock.

Sum has much better earnings (and dividends) than Ryman had at that stage - it has currently already a PE which would stand up, even if there is no growth at all from here. So - even if we assume things are getting as worse as during the GFC, it would be unlikely it would drop 50% off peak - and it is anyway already 23% down, so where do you think they are going?

To top that - there are not many experts expecting a serious downturn at this stage (and certainly not another GFC). There is still a serious housing shortage in NZ and out current government would need to reign for millenia to fix that, given their prevailing build rate of some 30 houses per year. Did I forget to mention that there are still more people coming in than going out? Need more houses. Ouch.

How do I summarise that in the nicest possible terms? I think your thesis of a housing crash combined with a retirement stock crash (or vice versa) is standing on quite weak feet. But than - everybody is entitled to their opinion ... and if people would not disagree on their assessment of the market, their would not be a market.

I like it that our views disagree - let's just wait and see who is right - shall we?

Happy droppings ;);

[winner69]

BlackPeter

Sum has much better earnings (and dividends) than Ryman had at that stage - it has currently already a PE which would stand up, even if there is no growth at all from here. So - even if we assume things are getting as worse as during the GFC, it would be unlikely it would drop 50% off peak - and it is anyway already 23% down, so where do you think they are going?


so where do you think they are going? .......maybe another 27% from its peak (cycle complete)

[Baa_Baa]

so where do you think they are going? .......maybe another 27% from its peak (cycle complete)

Take it day by day, first check is support at $5.94, pretty close so follow-through sentiment could threaten that, either way steel yourself for a patient observance until the opening appears. Personally I don't think the results are so bad that the $5.40-$5.50 range will breakdown, but I'll let the chart tell me. I don't see a cycle either.

My only fundamental concern is about the ongoing poor 'new sales' performance and whether that downward trend as a % of builds and total stock continues. This started well within the property boom, so maybe SUM are asking too much for their properties? Anyway, they've shown they can make nice shareholder returns even when the new stock isn't all being sold, pretty clever really (based on rising property valuations), though it doesn't look like an accounting trick so hopefully sustainable.

Some will only be concerned with the $ numbers and underlying earnings and payouts are superb for sure, it's just how sustainable that is with sustained declining new sales against a massive development pipeline. At some stage development margins and revenue must re-surface as key drivers to sustainable financial performance. Currently there's little evidence (any?) that they have a solution to the new sales weakness.

[The Rocket]

Dear Black Peter...My pen name in 2007 was The Rocket and i was just that after the big drop in world markets there were blue skies everywhere easy to make make money.

But its not that way now with lots of stocks over valued and future trading conditions are now not good for some stocks from a year ago and the way the world markets, Global house sales down and global economies slowing we will see who is right.

Will chat again with you on this site in December. Good luck with your future investments Black Peter

[Beagle]

so where do you think they are going? .......maybe another 27% from its peak (cycle complete)

I would argue that at $8 last year the shares were fulsomely priced given the modest sales performance that year so took the appropriate action at that time but with 22% earnings growth since then if the attractive PE had of stayed the same full price in the cycle, (assuming we are actually at the end of a cycle), on a theoretical basis would be $8 + 22% = $9.76.
We are already a very long way south of there and we're not in GFC MK2 last time I checked. The current forward PE is the cheapest its ever been since the company listed so a very negative view of future real estate prices is already priced in but as we know market sentiment and momentum is a powerful force. Greed and fear...always been the two most powerful motivational forces in the market and always will be.

"Be greedy when others are fearful" Warren Buffett

[oldtech]

"Craigs Investment Partners is recommending investors sell shares in retirement village operator Summerset Group and to buy shares in utilities software provider Gentrack."

http://www.sharechat.co.nz/article/d784ce0b/craigs-sell-summerset-buy-gentrack-and-scales.html?utm_medium=email&utm_campaign=Craigs%20sell%20Summerset%20buy%20Gen track%20and%20Scales&utm_content=Craigs%20sell%20Summerset%20buy%20Gent rack%20and%20Scales+CID_69fbfd15a99c09a7e44524c43a c554bf&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticled784ce0bcraigs-sell-summerset-buy-gentrack-and-scaleshtml

[bull....]

Black Peter:
The share market goes in cycles and so does the housing market I feel both cannot keep going at this rate. Retirement villages are one of the first to get hit by the down turn in both. The result out is just the start. I spent 10 years in the retirement sector and have seen times when selling houses were holding up sales with no buyers. older people don’t like dropping their price to sell their houses so there were plenty of empty villas because of it. When the sale of houses boomed, and the prices of the retirement villages shares climbed on fast growth and on new high property values. Fast growth and property values climbing are a thing of the past. They are hardly attractive for their low dividends. This will hit the shareprice because they are a stock that will get hit by a slow down in both selling houses and retirement villas etc and the company’s slowing growth.

another person who sees logic , wonder how many remember 1987 all those property developers were the hardest hit. obviously retirement stocks are not pure play property developers but they make a large proportion of profits from building and selling property.

[Beagle]

"Craigs Investment Partners is recommending investors sell shares in retirement village operator Summerset Group and to buy shares in utilities software provider Gentrack."

http://www.sharechat.co.nz/article/d784ce0b/craigs-sell-summerset-buy-gentrack-and-scales.html?utm_medium=email&utm_campaign=Craigs%20sell%20Summerset%20buy%20Gen track%20and%20Scales&utm_content=Craigs%20sell%20Summerset%20buy%20Gent rack%20and%20Scales+CID_69fbfd15a99c09a7e44524c43a c554bf&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticled784ce0bcraigs-sell-summerset-buy-gentrack-and-scaleshtml

Craigs make no mention of the relative valuation of RYM v SUM and I note they both ostensibly operate very similar business models yet RYM trades at twice the forward PE but has been growing at well under half the rate since SUM listed more than 7 years ago. I also note RYM have significant exposure to the fast declining Melbourne market.
I think Craigs have this very wrong.

Once the sheep who can't think for themselves have finished selling I will buy more. I have backed myself many times before against bad TA and bad analyst calls and far more often than not I do handsomely well.

[bull....]

key points i agree with

For us, structural drivers including an aging population, are overridden by our cautious view of the housing market,”

Craigs says says that although margins in the retirement sector are likely to contract on the resale of units




as i said about all these stocks - totally its all about property which drives these stocks not anything else, if margins keep falling divs will decline anyway watching fast approaching big support if it fails look out.

[Beagle]

National average property price goes up 2.5% and some people think the world is ending, its becoming quite comical lol

[Maverick]

Craigs says says that although margins in the retirement sector are likely to contract on the resale of units
as i said about all these stocks - totally its all about property which drives these stocks not anything else,

Resale margins will contract in Auckland and Tauranga but will always be in keeping with general building inflation. It's just that it was so unsustainably fast paced up to 2017 in these regions.There is still truck loads of embedded value to catch up on as the units resell from prices set 6 years ago.

the word they use is "contract" it is not "collapse" ,or "petter out".
SUM resales are in top condition and will be linked closer to a new build price rather than something second hand.

Also, most importantly, the resale margins are becoming far less of their profit proportion. In 2015 SUM started making more from its DMFs than resales . Now , it's 150% more and increasing annually at 28 %. ( if anyone doesn't know what a DMF is then you need to find out because IMO this is the cornerstone of the sector, property values just keep things inflation proof)So Im so with Beagle on this, Craig's have got it wrong. Doesn't matter to them though, they'll be able to charge their clients on the selling and later on the rebuying

[bull....]

Resale margins will contract in Auckland and Tauranga but will always be in keeping with general building inflation. It's just that it was so unsustainably fast paced up to 2017 in these regions.There is still truck loads of embedded value to catch up on as the units resell from prices set 6 years ago.

the word they use is "contract" it is not "collapse" ,or "petter out".
SUM resales are in top condition and will be linked closer to a new build price rather than something second hand.

Also, most importantly, the resale margins are becoming far less of their profit proportion. In 2015 SUM started making more from its DMFs than resales . Now , it's 150% more and increasing annually at 28 %. ( if anyone doesn't know what a DMF is then you need to find out because IMO this is the cornerstone of the sector, property values just keep things inflation proof)So Im so with Beagle on this, Craig's have got it wrong. Doesn't matter to them though, they'll be able to charge their clients on the selling and later on the rebuying


property prices are forecast to fall slightly in auckland , tauranga or bop is still + and some other districts and plateau most rest of the country and a few pockets of strenght going forward. anyway soft market and rising costs equal less margin. i dont agree with you dmf will make up for loss of margins from development.

breaking below support now next support 5.50

[BlackPeter]

property prices are forecast to fall slightly in auckland , tauranga or bop is still + and some other districts and plateau most rest of the country and a few pockets of strenght going forward. anyway soft market and rising costs equal less margin. i dont agree with you dmf will make up for loss of margins from development.

breaking below support now next support 5.50

.. and 46 shares sold already for 5.90: RUN FOR THE HILLS - the bull is charging!

What a luck he can't be everywhere - OCA shows nice signs of recovery 3 cents up to $1.03 ;);

[bull....]

.. and 46 shares sold already for 5.90: RUN FOR THE HILLS - the bull is charging!

What a luck he can't be everywhere - OCA shows nice signs of recovery 3 cents up to $1.03 ;);

bp sum is still outperforming oca price wise this yr even after recent falls

[couta1]

Nothing new under the sun here, just a typical market overreaction, seen it all before and will see it again.Lol

[Ggcc]

$5.80 and dropping I wish I had some money available to buy more, but it looks like it may drop further as those in fear dump

[BlackPeter]

bp sum is still outperforming oca price wise this yr even after recent falls

I guess you find for any pair of shares a time window where one or the other wins in order to support your story. But why not take a bit more meaningful comparison - If we look at both since OCA's listing, than OCA is currently nicely ahead.

10455

Clearly - SUM has some catching up to do :p;

[couta1]

Oh my goodness Beagle the RYM/SUM ratio curve has inverted below the 50% line at 48% as we speak, it's a screaming buy for sure.

[Beagle]

Buy buy buy

[Onion]

Buy buy buy

Bids have dried up. Currently something like 10 times more for sale than have buyers!

[bull....]

might have a sniff at 5.40 - 50 for short bounce

[trader_jackson]

Posted about 8 months ago... share price was 25% or so higher than it is today... really did hold up very well for another month and a half.

Given the 'we are slowing down big time' light has been flashing on SUM for a while now, it was mystifying to see it bounce in early Feb... the writing seemed to be on the wall for months prior, and this has just confirmed it.

Residents need a reason to go to an ever increasing number and ever flasher villages... the 'that's a nice unit in a nice place' no longer cuts it... they need the full english breakfast and sum listed operators just don't do a good job at the continuum of care side of things in all their villages, while others do (and will be far more resilient in a housing slow down)

Not even a month ago ARV was singing a near totally different tune to SUM today: both with solid pricing and settlements... at over $6, holding up pretty well really.

The 'holding up pretty well really' was clearly not going to last... if it gets into the low-mid $5, I could be come sumwhat interested... most of the risks (slower sales, higher leverage, building more than can be sold, poor continuum of care, just to name a few) should then be priced in.

Then again, the experts at Forsyth still saying its all good... $7.35 buy price
Then again, the same guys say ARV is worth north of $1.60 for a couple years now so maybe not so experty

[couta1]

Average ratio is 55% which is $6.63 for SUM.Lol

[couta1]

Bids have dried up. Currently something like 10 times more for sale than have buyers! Lemmings gather in numbers before they jump off the cliff.

[Beagle]

Average ratio is 55% which is $6.63 for SUM.Lol

Ladies and Gentlemen. The Couta1 relativity theorem is THE GOLD STANDARD and has stood the test of time for well over half a decade. 55% price relativity to RYM is the average according to the author of this foolproof theory and therefore the stock has a current fair value of $6.63. Forget about TA, FA quarterly results and everything else lol

[winner69]

Ladies and Gentlemen. The Couta1 relativity theorem is THE GOLD STANDARD and has stood the test of time for well over half a decade. 55% price relativity to RYM is the average according to the author of this foolproof theory and therefore the stock has a current fair value of $6.63. Forget about TA, FA quarterly results and everything else lol

The average since listing (on monthly closes) is SUM being 50% of RYM and essentially has ranged from 40% to 60%

Has been like this for ages and probably will be like this for ages to come.

As posted the other day .....the red line has gone down a fraction eh

So versus the ‘mean’ at the moment SUM is slightly undervalued v RYM ......but significantly undervalued v OCA ....no that’s funny

[freddagg]

Since further growth is likely to be low is there any reason SUM should sell for more than its net assets ? MET is below net assets.

[couta1]

The average since listing (on monthly closes) is SUM being 50% of RYM and essentially has ranged from 40% to 60%

Has been like this for ages and probably will be like this for ages to come.

As posted the other day .....the red line has gone down a fraction eh Yep 50% is the benchmark line but over the last 2-3 yrs the average has been around 55% so using that to cheer up the discouraged.

[couta1]

Since further growth is likely to be low is there any reason SUM should sell for more than its net assets ? MET is below net assets. MET has leaky ship issues of an ongoing nature.

[Beagle]

Yep 50% is the benchmark line but over the last 2-3 yrs the average has been around 55% so using that to cheer up the discouraged.

And cheer ourselves up at the same time lol

[winner69]

Since further growth is likely to be low is there any reason SUM should sell for more than its net assets ? MET is below net assets.

Good question

SUM book value $4.35 ...ouch

But while they continue to build things at a great rate won’t that figure increase .....would take a massive drop in the value of existing units for book value to go backwards....I reckon

[winner69]

Since further growth is likely to be low is there any reason SUM should sell for more than its net assets ? MET is below net assets.

Good question

Is there any reason why OCA should sell for more than 88 cents?

[bull....]

Good question

Is there any reason why OCA should sell for more than 88 cents?

no probably over priced as well

[couta1]

no probably over priced as well At least your back to your normal vague downramping self, I was getting worried when you switched to being the power company Evangelist.

[bull....]

At least your back to your normal vague downramping self, I was getting worried when you switched to being the power company Evangelist.

preach the truth so people gain an understanding of something previously not understood lol

t/a on the hrlys is showing the bollinger expanding with the adx rising strongly( means strong trend) very bearish

[trader_jackson]

And what a difference in reactions today - ARV down not even 1% (and still above that rock solid level of $1.30), while sum others falling over 7%... Unlike sum others, the NTA and dividend yield (both of which are relatively low) ain't enough to provide a backstop, still above that physiological important $6 mark, for now

Good to see someone else bringing up NTA, when I mentioned it a few days back nobody cared... Hope SUM keeps building, borrowing and selling... it is doing the first 2 things well, just not so well (anymore) on the third part (that makes all that building and borrowing 'worth it')
Apart from MET (which we all know has a basket of other issues), ARV trades on the smallest share price v NTA premium, maybe thats why it has only gone down a mere 1 something percent despite sum others tumbling double digit percentages?

[Beagle]

preach the truth so people gain an understanding of something previously not understood lol

t/a on the hrlys is showing the bollinger expanding with the adx rising strongly( means strong trend) very bearish

TA looked dire for AIR when it was $2.23 a few weeks ago and lots of people told me the company was stuffed and was only worth $1.50-$1.80. Funny thing is those people have been very, very quiet lately lol

Anyway I hope this goes down to $5 so we can shake out all the weak hands and I can "do a Couta"

[bull....]

TA looked dire for AIR when it was $2.23 a few weeks ago and lots of people told me the company was stuffed and was only worth $1.50-$1.80. Funny thing is those people have been very, very quiet lately lol

Anyway I hope this goes down to $5 so we can shake out all the weak hands and I can "do a Couta"

the bounce back in air was very surprising even with a rising oil price

[couta1]

Two rules i adhere to. 1.Never trust the market over the short term. 2.Never trust Analysts over any term. PS-Learnt from many bad costly experiences.

[RupertBear]

Geepers what a day! Was feeling quite pleased with myself topping up on Friday....thought $6.20 was a bargain :) until today.....yikes....:eek2:

[Beagle]

Geepers what a day! Was feeling quite pleased with myself topping up on Friday....thought $6.20 was a bargain :) until today.....yikes....:eek2:

Relax mate. Craigs have done their clients a huge disservice and their recommendation is right out of whack with the rest of the brokers. Once the sheep have been shooed out of the pen its all going to be good. Summerset cranking up the lollies and incentives..it'll come right, hang in there https://www.summerset.co.nz/lakeview-apartments-at-summerset-at-heritage-park/?utm_source=dbm&utm_medium=display&utm_campaign=ellerslie-cruise-promotion&utm_content=flight-1_in-market-ret.planners Maybe they'll give shareholders with more than 10,000 shares a free cruise too :lol:
https://issuu.com/summersetgroupholdingsltd/docs/lakeside_apartments/1?ff&e=33154560/63474234

These north facing waterfront ones at Hobsonville are what you really want though https://www.summerset.co.nz/find-a-village/summerset-at-monterey-park/
I've had a look through those and they're super cool.

[dobby41]

Relax mate. Craigs have done their clients a huge disservice and their recommendation is right out of whack with the rest of the brokers. Once the sheep have been shooed out of the pen its all going to be good. Summerset cranking up the lollies and incentives..it'll come right, hang in there https://www.summerset.co.nz/lakeview-apartments-at-summerset-at-heritage-park/?utm_source=dbm&utm_medium=display&utm_campaign=ellerslie-cruise-promotion&utm_content=flight-1_in-market-ret.planners Maybe they'll give shareholders with more than 10,000 shares a free cruise too :lol:
https://issuu.com/summersetgroupholdingsltd/docs/lakeside_apartments/1?ff&e=33154560/63474234

These north facing waterfront ones at Hobsonville are what you really want though https://www.summerset.co.nz/find-a-village/summerset-at-monterey-park/
I've had a look through those and they're super cool.

Marketing rubbish.
$15k cash back - price reduced by $15k more like.
$25k of sweetener - times are getting tough.

[Balance]

Marketing rubbish.
$15k cash back - price reduced by $15k more like.
$25k of sweetener - times are getting tough.

Hard to get excited about all the retirement village players in the next 3 to 5 years.

Property prices are in retreat - big time in Auckland with more downside yet over the next 5 years.

No more Asian money to drive prices higher, CGT to kick in, some Asians unloading their properties onto a deserted buyers' market, kiwibuild taking the pressure off first home buyers and new areas being upgraded with infrastructure to support massive housing projects in 3 years' time.

[dobby41]

Hard to get excited about all the retirement village players in the next 3 to 5 years.

Property prices are in retreat - big time in Auckland with more downside yet over the next 5 years.

No more Asian money to drive prices higher, CGT to kick in, some Asians unloading their properties onto a deserted buyers' market, kiwibuild taking the pressure off first home buyers and new areas being upgraded with infrastructure to support massive housing projects in 3 years' time.
It is interesting times, especially since so many said Asian money wasn't driving anything.
Of course kiwibuild isn't building anything either.

[minimoke]

Marketing rubbish.
$15k cash back - price reduced by $15k more like.
$25k of sweetener - times are getting tough.Lots of SUM and OCA advertising over the weekend. One of them was even offering workshops on how to transition into one of their villages.

I spent the weekend on the In-laws place, doing a bit of maintenance and prevention stuff before winter comes on. Thinking Hmmmm - SUM or OCA place is looking good if it means less work around the house. Subtle hints arent working at the moment. They prefer their independence - which is fine when others are doing the work.

[Balance]

It is interesting times, especially since so many said Asian money wasn't driving anything.
Of course kiwibuild isn't building anything either.

Yup - just as Jacinda said China never took any retaliatory action against NZ over Huawei, unless you are an exporter and have your meat shipments held for 2 months in China for no reason, missing the crucial Chinese New Year market (company I know personally). Or in the case of sanford, having fresh chilled salmon held in port until they needed to be frozen.

She is a born liar.

Disc. Holds Metlife.

[dobby41]

Yup - just as Jacinda said China never took any retaliatory action against NZ over Huawei, unless you are an exporter and have your meat shipments held for 2 months in China for no reason, missing the crucial Chinese New Year market (company I know personally). Or in the case of sanford, having fresh chilled salmon held in port until they needed to be frozen.

She is a born liar.

Disc. Holds Metlife.

By the way - it was National that declared the Asians weren't driving anything house wise.
Maybe Labour was right at the time.

They all tell the truth that suits them.

[Beagle]

Hard to get excited about all the retirement village players in the next 3 to 5 years.

Property prices are in retreat - big time in Auckland with more downside yet over the next 5 years.

No more Asian money to drive prices higher, CGT to kick in, some Asians unloading their properties onto a deserted buyers' market, kiwibuild taking the pressure off first home buyers and new areas being upgraded with infrastructure to support massive housing projects in 3 years' time.

Can I hire you as a property consultant mate ?...that's quite a fancy long range crystal ball you have there...


Lots of SUM and OCA advertising over the weekend. One of them was even offering workshops on how to transition into one of their villages.

I spent the weekend on the In-laws place, doing a bit of maintenance and prevention stuff before winter comes on. Thinking Hmmmm - SUM or OCA place is looking good if it means less work around the house. Subtle hints arent working at the moment. They prefer their independence - which is fine when others are doing the work.
You're a good soul.


Marketing rubbish.
$15k cash back - price reduced by $15k more like.
$25k of sweetener - times are getting tough.
Welcome to marketing 101. Kids like free lollies, adults like bigger "lollies" they perceive as being free.

I still believe they should shift to fixed fees for life and give very special weekly rates for units sold off the plans but Julian Cook is hard of hearing despite my persistent barking on this issue.

[tuaman]

I got this p/e number from my asb securitis online site. Is this number correct with current share price? If its right, then sum must be under valued compared to other retirement companies.


met 10.82
oca 10.86
rym 16.90
sum 6.05
arv 7.26
Disc. Holds oca sum met

[bull....]

5.50 today?

[couta1]

5.50 today? I love Lemmings, they are so cute before they hit the cliff bottom.

[Blue Skies]

5.50 today?
Sentiment changes with the breeze, fundamental drivers do not.
Talk to any Public Health Specialist or Public Health analyst & there is deep concern about the numbers of a greatly increasing aging population who who will have all the chronic health conditions which come with old age & will have difficulty looking after themselves in their own homes. It is being referred to as a 'public health emergency', their words not mine.

[BlackPeter]

5.50 today?

Instead of filling the thread with a running commentary of your current most pessimistic guesses it would be more interesting to learn where you would see the SP next week, next month, next year - and why?

SUM has according to analyst consensus a forward EPS of 66 cents over the next 3 years (this year it was 97 cents, thanks to revaluation gains) ... Which turns at current SP into a forward PE of below 9 (soon below 8). Actual (this years) PE is even lower - close to 6! Any growth it might have on top of that is free.

Some people are able to recognise a bargain ... others are just following the jittery line describing the past movements of the herd. Nobody will ring for them a bell when the SP is bouncing back ;);

I don't know whether this will be tomorrow, next week, next month or next quarter ... but I am pretty sure it will happen.

Discl: hold a medium size parcel and intend to buy more when it looks like bottoming out.

[couta1]

For those thinking they can trust the market to be correct re this latest drop, think about these 4 companies(AIR/HGH/SML/HLG) who had over corrections not so long ago.

[minimoke]

Sentiment changes with the breeze, fundamental drivers do not.
Talk to any Public Health Specialist or Public Health analyst & there is deep concern about the numbers of a greatly increasing aging population who who will have all the chronic health conditions which come with old age & will have difficulty looking after themselves in their own homes. It is being referred to as a 'public health emergency', their words not mine.Oh, how some forget teh findings of a report that came out a couple of years ago.

"The total non-Māori population aged 80+ is projected to increase by 74 percent from 2010 to 2026.While the number that are independent will increase by 74 percent by 2026, the number needing long interval care is estimated to increase by 74 percent from 50,605 in 2010 to 93,161 people in 2026.
The number of non-Māori needing short interval care is likely to increase by 75 percent (an increase from 9,481 in 2010 to 16,546 in 2026). The number needing critical interval care will increase by 74 percent by 2026, corresponding to an increase of 5,728 people.
Head of Population Health, Professor Ngaire Kerse, says the findings are significant because planning for the future service provision is needed to allow people to manage at home. “It is clear from this report that the rate of change in the population is greatest for Māori, and this will present challenges for Māori society. The greatest numbers are in the older non-Māori population.”

Our health system is not being built to have an aging population in hospital. The focus is on having people as independent in their own homes for as long as possible. And then a pathway of care the keeps them from public care.

As time goes on, the aging are going to realise it is much easier to get care when you are in a community that makes it easy for Carers and support services to get to.

People are also going to start realizing, form their experiences, that living alone and isolate when you are older than your prior generations is not something to look forward to. Living longer does have draw backs.

[Beagle]

For those thinking they can trust the market to be correct re this latest drop, think about these 4 companies(AIR/HGH/SML/HLG) who had over corrections not so long ago.

SUM people told me AIR was only worth $1.50 lol. Thank God he gave me a half reasonable brain so I can think for myself.

Despite all the doom and gloom merchants telling us the real estate is broken, about to fall off a cliff, due to go in to a sustained downtrend for many years or whatever other work of future fiction they want to conjure up the facts tell us the market has moved into a state of balance between buyers and sellers and the national average price is tracking up at basically a little above the rate of inflation.

These armchair experts who think they can accurately preach this doom and gloom prophecy must have some very special fortune teller degree skills that I've never heard of before.
Obviously basic economic theory is not part of the curriculum and basic laws of supply and demand don't come into this.
Immigration continues at high level's and Kiwi build is a pathetic joke...but of course these facts are irrelevant lol

One day in the near future this will bottom out and I will double down and do handsomely well going forward from there.

[bull....]

Instead of filling the thread with a running commentary of your current most pessimistic guesses it would be more interesting to learn where you would see the SP next week, next month, next year - and why?

SUM has according to analyst consensus a forward EPS of 66 cents over the next 3 years (this year it was 97 cents, thanks to revaluation gains) ... Which turns at current SP into a forward PE of below 9 (soon below 8). Actual (this years) PE is even lower - close to 6! Any growth it might have on top of that is free.

Some people are able to recognise a bargain ... others are just following the jittery line describing the past movements of the herd. Nobody will ring for them a bell when the SP is bouncing back ;);

I don't know whether this will be tomorrow, next week, next month or next quarter ... but I am pretty sure it will happen.

Discl: hold a medium size parcel and intend to buy more when it looks like bottoming out.

isnt 5.50 my guess for where the share price is going , if i new which day of the week it would arrive there i would be richer than buffett and probably be on my island somewhere

[777]

But if you had an island then you would worry yourself stupid about rising sea levels.

[peat]

massive support at 5:50 on the LT chart.
I might even double down at that level.

But I'm not in a tearing rush after Craigs prognosis. it might take a little while for the crowd to all move out after such a large broker sell recommendation. Standing in front of freight trains not too much fun lol

[couta1]

But if you had an island then you would worry yourself stupid about rising sea levels. You mean the 1mm rise every 10 years followed by the 1mm per decade drop after 100 yrs.Lol

[Ggcc]

massive support at 5:50 on the LT chart.
I might even double down at that level.

But I'm not in a tearing rush after Craigs prognosis. it might take a little while for the crowd to all move out after such a large broker sell recommendation. Standing in front of freight trains not too much fun lol
Good advice. Wait till the panic stops and then look to buy. Don’t rush in thinking it’s a bargain. It could drop another 50 cents for all we know

[trader_jackson]

The 'holding up pretty well really' was clearly not going to last... if it gets into the low-mid $5, I could be come sumwhat interested... most of the risks (slower sales, higher leverage, building more than can be sold, poor continuum of care, just to name a few) should then be priced in.

Then again, the experts at Forsyth still saying its all good... $7.35 buy price
Then again, the same guys say ARV is worth north of $1.60 for a couple years now so maybe not so experty

Nearly in the mid $5's... I have to say I'm starting to get tempted...
Everyone on this thread makes sum seem so exciting! Rather than that other boring rock solid dog...
Or trying to laugh through the pain of SUM dropping 23% in 6 months

[tuaman]

now p/e 5.9
Is there any nz company like this p/e also paying net div %2.3 for a long time? Metro glass has p/e of 5.85.
So market values sum=mpg. Quite strange I think.

[macduffy]

Couta and others are right in that the current SP of SUM isn't important - unless one is a trader, and after all this is Sharetrader! - but there'll be some good buying here when the trend bends up again.

:)

[winner69]

now p/e 5.9
Is there any nz company like this p/e also paying net div %2.3 for a long time? Metro glass has p/e of 5.85.
So market values sum=mpg. Quite strange I think.

Future outlook for both seen as the same ...maybe a reasonable view

[Balance]

Can I hire you as a property consultant mate ?...that's quite a fancy long range crystal ball you have there...



I charge for my property development services (for real) and I can tell you this - property is a long game and a cycle typically lasts between 5 to 7 years, on the way up and on the way down.

Currently, it is on the way down - and only at the beginning!

[RTM]

BUY 14/11/2017 2,200 NZD 468

Seems like quite a short time ago I bought some for $4.68.
I wouldn’t be totally shocked should they head back there.
If they got anywhere near it....I’ll buy more.

[Scrunch]

Marketing rubbish.
$15k cash back - price reduced by $15k more like.
$25k of sweetener - times are getting tough.

I wonder whether it's driven by accounting issues. A cash back might be accounted for as a selling expense and buried in other expenses. Dropping the price would impact the development margin and impact a key operational metric. So how was the development margin calculated on finished but empty units again? Is it on the estimated value less the cost of construction?

[bull....]

Nearly in the mid $5's... I have to say I'm starting to get tempted...
Everyone on this thread makes sum seem so exciting! Rather than that other boring rock solid dog...
Or trying to laugh through the pain of SUM dropping 23% in 6 months

looks like all retirement stocks getting sold again today except arv

[winner69]

now p/e 5.9
Is there any nz company like this p/e also paying net div %2.3 for a long time? Metro glass has p/e of 5.85.
So market values sum=mpg. Quite strange I think.

If SUM properties were revalued down by a mere 5% that PE of 5.9;would blow out big time ....probably over 20

[couta1]

Craig's will be loving this double ticket clipping from all their poorly advised Lemmings. PS-They will probably put out a buy note in a month or so.

[Sideshow Bob]

Craig's will be loving this double ticket clipping from all their poorly advised Lemmings. PS-They will probably put out a buy note in a month or so.

They have good potential to move a market, with buy/sell advice. Imagine how many managed clients they would have moved out of SUM and into something else. Not picking on Craigs - others would be the same.

[Beagle]

BUY 14/11/2017 2,200 NZD 468

Seems like quite a short time ago I bought some for $4.68.
I wouldn’t be totally shocked should they head back there.
If they got anywhere near it....I’ll buy more.

Yes I was just reflecting on that low this morning mate just after Labour were gifted power by Winston Peter's when I also bought some. Back then everyone thought the end of the world was upon us and since then over the last 18 months they have grown earnings and assets considerably. Taking that into account I would think anywhere around $5.00 would be taking advantage of an exceptional long term opportunity.

No worries Balance, this time its different as the market overall is still going up...you are not the first person to make the mistake of thinking Auckland real estate is a proxy for the national average and you won't be the last. They have villages spread throughout many parts of N.Z. including 2 in the fast growing Nelson area.

I see the market has finally woken up and realised that the mighty RYM operates in ostensibly the same market as the others lol

[Balance]

Yes I was just reflecting on that low this morning mate just after Labour were gifted power by Winston Peter's when I also bought some. Back then everyone thought the end of the world was upon us and since then over the last 18 months they have grown earnings and assets considerably. Taking that into account I would think anywhere around $5.00 would be taking advantage of an exceptional long term opportunity.

No worries Balance, this time its different as the market overall is still going up...you are not the first person to make the mistake of thinking Auckland real estate is a proxy for the national average and you won't be the last. They have villages spread throughout many parts of N.Z. including 2 in the fast growing Nelson area.

I see the market has finally woken up and realised that the mighty RYM operates in ostensibly the same market as the others lol

Real estate players will tell you - Where Auckland goes, the rest of NZ follows.

Anyway, it is what it is.

[tuaman]

Real estate players will tell you - Where Auckland goes, the rest of NZ follows.

Anyway, it is what it is.

Where did you get the data regarding house prices.
Take a look at this link. Though 2 months old.

https://www.newshub.co.nz/home/new-z...time-high.html (https://www.newshub.co.nz/home/new-zealand/2019/01/average-new-zealand-house-price-reaches-all-time-high.html)

[Balance]

Where did you get the data regarding house prices.
Take a look at this link. Though 2 months old.

https://www.newshub.co.nz/home/new-z...time-high.html (https://www.newshub.co.nz/home/new-zealand/2019/01/average-new-zealand-house-price-reaches-all-time-high.html)

Asking price vs selling price - two entirely different things!

Properties prices are being sold at discounted prices in Auckland - fact.

A contact of mine recently bought a nice bungalow in Glendowie for 15% below CV. Yet another bought a rental unit near Sylvia Park for $100k below CV - $500k vs $600k. All in the last 2 months.

I should know - I was there to advise on the offer prices!

[Balance]

If SUM properties were revalued down by a mere 5% that PE of 5.9;would blow out big time ....probably over 20

Probably the most pertinent post of today!

[tuaman]

Asking price vs selling price - two entirely different things!

Properties prices are being sold at discounted prices in Auckland - fact.

A contact of mine recently bought a nice bungalow in Glendowie for 15% below CV. Yet another bought a rental unit near Sylvia Park for $100k below CV - $500k vs $600k. All in the last 2 months.

I should know - I was there to advise on the offer prices!

But, that is only one (or two) transactions while I am talking about overall data.
Everybody knows Auckland's weak market for sellers but other areas hit all time high!

[Beagle]

Real estate players will tell you - Where Auckland goes, the rest of NZ follows.

Anyway, it is what it is.

Its simply not happening Balance. Have a look at some of the regional prices like Nelson as just one example that's on fire. The national average house price in N.Z. is up 2.5% year on year March 2018 to March 2019. That is a statistical FACT. Real estate agents opinion are quite frankly in my opinion worth a dime a dozen.

[Balance]

Not at all because these companies are valued based on underlying profit not IFRS profit a subject that ahs been well discussed on this forum before.

Lets just all ignore the facts that the national average house price is still going up shall we :rolleyes:

Ignore the bell ringing from Auckland, right?

Oh well, some will be right and some will be wrong.

I am happy to be out of what I believe will be a declining property market for the next 3 to 5 years.

Not often one gets the bell being rung!

PS. Check out the Hamilton property market, the bell is also ringing - very loudly!

https://www.trademe.co.nz/Browse/CategoryAttributeSearchResults.aspx?search=1&cid=5748&sidebar=1&rsqid=3051a09ff986494b98772afb8becf74f&132=PROPERTY&134=14&135=16&216=0&216=0&217=0&217=0&153=reduced&122=0&122=0&123=0&123=0&49=0&49=0&178=0&178=0&sidebarSearch_keypresses=7&sidebarSearch_suggested=0

[mcdongle]

Its simply not happening Balance. Have a look at some of the regional prices like Nelson as just one example that's on fire. The national average house price in N.Z. is up 2.5% year on year March 2018 to March 2019. That is a statistical FACT. Real estate agents opinion are quite frankly in my opinion worth a dime a dozen.

Friend of mine just sold a house in Christchurch for $90000.00 Less than it was valued a year earlier

[freddagg]

Craigs reckon $106 mill underlying profit for 2019.
I make that a PE of 11.9

[couta1]

Lol, so much scaremongering going on on here, this is not just a property company it's a needs based business with strong tailwinds for many years to come.

[Balance]

Lol, so much scaremongering going on on here, this is not just a property company it's a needs based business with strong tailwinds for many years to come.

Opinions, Couta.

When you use the term 'scaremongering', you reveal yourself I reckon as a class A ramper then?

[Beagle]

Okay I am bored with this now Balance. You think by way of example that the dynamics of the Auckland market might be different to say Napier or Nelson or to illustrate my point even more pointedly, Invercargill ? All I will reiterate is that in the Auckland market it is incredibly easy to get myopic vision that this somehow represents an accurate proxy for the rest of the country. Normally I have a lot of respect for your posts...let's just agree to disagree regarding opinions on the future movement of the national average real estate price. The FACTS on the real estate market for the year to March have been reported in the media and this trumps anyone's future opinion at this stage anyway.

[Sideshow Bob]

But, that is only one (or two) transactions while I am talking about overall data.
Everybody knows Auckland's weak market for sellers but other areas hit all time high!

Auckland is always first area in NZ to go up. First to go down.

[couta1]

Opinions, Couta.

When you use the term 'scaremongering', you reveal yourself I reckon as a class A ramper then? Not at all, but overplaying the property card is scaremongering, okay then let's call it downramping.

[Beagle]

Friend of mine just sold a house in Christchurch for $90000.00 Less than it was valued a year earlier

I don't want to be rude but honestly I couldn't care less about individual anecdotal evidence. National average is all that's relevant and is up 2.5% year on year.


Craigs reckon $106 mill underlying profit for 2019.
I make that a PE of 11.9

That's still profit growth and they are probably the most bearish of the brokers given their recent bizarre call.

[Balance]

I don't want to be rude but honestly I couldn't care less about individual anecdotal evidence. National average is all that's relevant and is up 2.5% year on year.



That's still profit growth and they are probably the most bearish of the brokers given their recent bizarre call.

Good. That's why the sharemarket is such a wonderful place - a market where different perceptions of value and expectations differ.

Sp was $7.50+ in October 2018 when data of Auckland's struggling property market started emerging - discounted at that time by the real estate industry of course!

Those who took heed vs those who believe it's just temporary.

[minimoke]

Friend of mine just sold a house in Christchurch for $90000.00 Less than it was valued a year earlierThis may provide a broader picture from homes.co.nz

[macduffy]

Nothing to do with SUM, but it used to be said that a strong Auckland rugby team was necessary for a strong All Blacks team!

:ohmy:

Yes, I know, the Blues are on the way back.

Apologies for the interruption.

[freddagg]

That's still profit growth and they are probably the most bearish of the brokers given their recent bizarre call.

I am a Craigs client and I have not seen anything about a sell call, Maybe it was to private wealth clients or some such.
The latest recommendation I see is a Hold with a target price of $6.55

[Balance]

I am a Craigs client and I have not seen anything about a sell call, Maybe it was to private wealth clients or some such.
The latest recommendation I see is a Hold with a target price of $6.55

http://www.sharechat.co.nz/article/d784ce0b/craigs-sell-summerset-buy-gentrack-and-scales.html

“We have continued to highlight our caution on the retirement village sector, particularly in the face of slowing house price inflation,” their recommendation to clients at the end of March says.

[RupertBear]

I am a Craigs client and I have not seen anything about a sell call, Maybe it was to private wealth clients or some such.
The latest recommendation I see is a Hold with a target price of $6.55

as per link from Balance

CRAIGS: SELL SUMMERSET, BUY GENTRACK AND SCALES



Monday 8th April 2019
Text too small? (http://www.sharechat.co.nz/text-too-small.html)


Craigs Investment Partners is recommending investors sell shares in retirement village operator Summerset Group and to buy shares in utilities software provider Gentrack.

[winner69]

Couts ...I wonder if Craig’s guru Lister has heeded his firms advice and sold his mansion yet ...not going to be worth much in a few years time eh

[Beagle]

https://www.marketscreener.com/SUMMERSET-GROUP-HOLDINGS-10089438/consensus/

Let's not pretend for one minute longer that Craigs are the root of all knowledge for goodness sake. The average broker price target is $7.00 !!

[freddagg]

as per link from Balance

CRAIGS: SELL SUMMERSET, BUY GENTRACK AND SCALES



Monday 8th April 2019
Text too small? (http://www.sharechat.co.nz/text-too-small.html)


Craigs Investment Partners is recommending investors sell shares in retirement village operator Summerset Group and to buy shares in utilities software provider Gentrack.


Ok, I have found what Craigs said. It was on the 28/3/2019 and was a Strategy Report for private wealth research in the NZ equities Portfolio.

They did not say SELL SUMMERSET, BUY GENTRACK AND SCALES

they said "Removing Summerset (previously 6%) and increase Ryman weighting to 8%(from 6%)"

In another part of the report they said they were introducing both Scales and Gentrack into the portfolio

Not quite the same thing

[bull....]

craigs: Sell summerset

[Beagle]

Removing from their high conviction list probably...I think they talk in riddles like that...not that I really care much... as per post above.

[bull....]

I am a Craigs client and I have not seen anything about a sell call, Maybe it was to private wealth clients or some such.
The latest recommendation I see is a Hold with a target price of $6.55

they start with premium clients selling first then the riff raff get the call to sell , moves down the line think thats how it works so by fri craigs riff raff will be selling wont they?

[Balance]

they start with premium clients selling first then the riff raff get the call to sell , moves down the line think thats how it works so by fri craigs riff raff will be selling wont they?

Yup, that's how the industry works - fund managers & institutions & high value clients first, then premium clients and then, the riff-raffs (so to speak).

Guess, Couta has a point about down ramping - instos could be happily picking up stock off the riff-raffs at around current levels after selling out at over $7.00 just 6 months ago.

[minimoke]

craigs: Sell summerset= we need more brokerage transactions

[Beagle]

= we need more brokerage transactions

Which is precisely why I put a lot more credence on the average analyst forecast as this tends to remove the vested interests and bias (at least to some extent).
I think $7 a year hence is a fair call.

[mcdongle]

[QUOTE=Beagle;754680]I don't want to be rude but honestly I couldn't care less about individual anecdotal evidence. National average is all that's relevant and is up 2.5% year on year.



Thats ok just thought i would throw it in there

[Beagle]

Good. That's why the sharemarket is such a wonderful place - a market where different perceptions of value and expectations differ.

Sp was $7.50+ in October 2018 when data of Auckland's struggling property market started emerging - discounted at that time by the real estate industry of course!

Those who took heed vs those who believe it's just temporary.

SUM canny investors sold at just on $8 last year and with underlying profit growth since then of 22% think the current price is extremely good value for long term investors.

[winner69]

Probably a reason why resales look a bit slack

What a lovely soul she must be ....be good if average tenure could increase significantly

https://www.nzherald.co.nz/wanganui-chronicle/news/article.cfm?c_id=1503426&objectid=12219673

[Beagle]

Probably a reason why resales look a bit slack

What a lovely soul she must be ....be good if average tenure could increase significantly

https://www.nzherald.co.nz/wanganui-chronicle/news/article.cfm?c_id=1503426&objectid=12219673

Lovely to see. This thread could sure use a dose of her positivity lol
Forgotten FACT in the rush for everyone to post their apocalyptic views of the real estate market. Last year SUM added 454 units AND 52 care beds.

[RupertBear]

Ok, I have found what Craigs said. It was on the 28/3/2019 and was a Strategy Report for private wealth research in the NZ equities Portfolio.

They did not say SELL SUMMERSET, BUY GENTRACK AND SCALES

they said "Removing Summerset (previously 6%) and increase Ryman weighting to 8%(from 6%)"

In another part of the report they said they were introducing both Scales and Gentrack into the portfolio

Not quite the same thing

Fair enough, Sharechat and the Herald reporter who wrote the article have clearly misreported Craigs recomendations then

[Maverick]

Lovely to see. This thread could sure use a dose of her positivity lol
Forgotten FACT in the rush for everyone to post their apocalyptic views of the real estate market. Last year SUM added 454 units AND 52 care beds.

Salt of the earth family those Bevans. I'm proud to say they are a wanganui family and all of them are the most positive family you could ever find.

[trader_jackson]

= we need more brokerage transactions
As they say, brokers only make you broker!

Might have to jump into sumthing here tomorrow, sum has finally, after years of being overvalued, starting to look valued more reasonably (given the impressive growth - which we all know will halve this year for the first time in half a decade, but I believe this is nearly priced in)

[Baa_Baa]

Fair enough, Sharechat and the Herald reporter who wrote the article have clearly misreported Craigs recomendations then

I don't think they have misreported Craigs at all, they just turned broker speak (investment advisor they like to call it) into plain English. Craigs like other brokers have a lot of passive clients on standing instructions to maintain their portfolios to certain % levels of exposure to equities, depending on many individual factors. Nevertheless, it means 're-weighting' SUM to 0% and boosting RYM to 8% from 6% which is exactly what Sharechat and the Herald reported. Paraphrased that's sell SUM, boost RYM, sell the others if you have them. And, if your portfolio is managed by 'us', that's what we'll do (for you). They have a lot of clients as well.

This will take some time to flow through into a conclusive market response, especially with the macro economics that others have pointed out, but here we are only three days into an aggressive re-rate after a sustained SP decline (never buy a down trend?). It's not news that SUM has fallen behind expectations and the SP has clearly shown that for quite some time now, after a long sustained run up.

The big quit started 5/8 Oct 2018 (50 and 100 MA's breakdown). No amount of rationalising it will help, for example, given there are no divis anytime soon, one could have just flicked their holding at the 100DMA and sit on the sidelines again 5/4/19 patiently looking for a re-entry at much less cost and superbly better PE and ROI. But that takes real balls to bail from a long term hold, just to take advantage of what 'might' be a better capital re-entry and ROI at a lower price. The great uncertainty. Despite that, it's eventuating now.

I get it, selling a holder that's divi'ing the bank account is tough. It's gut wrenching even, as the SP grinds lower and one looks at how many years it will take for the divi to recover the capital losses, when there's no sign of the sentiment reversing that's killing our capital. It's so easy to rationalise into procrastination or doing nothing and pronounce everyone as ignorant including the market, while quietly relocating the held shares from much higher prices into the bottom drawer. Have we all got a few of these? They are the lessons, we need to keep them on the desk, front and top of mind, so we don't keep making the same stupid mistakes over and over again!

All the gnashing of teeth, spruiking, excuses and bewilderment here lately seems in denial of the plain facts, that SUM has for some years now suffered a declining % of new_sales to overall property portfolio, in the face of a staggering growth projection in new properties, so as that portfolio grows with no signs that new_sales has a recovery pathway, it's hardly a wonder that investor confidence is faltering. Their recent results make this clear and apparent. That is in addition to all the lesser inhibiting factors (imho) pointed out here recently.

[RupertBear]

I don't think they have misreported Craigs at all, they just turned broker speak (investment advisor they like to call it) into plain English. Craigs like other brokers have a lot of passive clients on standing instructions to maintain their portfolios to certain % levels of exposure to equities, depending on many individual factors. Nevertheless, it means 're-weighting' SUM to 0% and boosting RYM to 8% from 6% which is exactly what Sharechat and the Herald reported. Paraphrased that's sell SUM, boost RYM, sell the others if you have them. And, if your portfolio is managed by 'us', that's what we'll do (for you). They have a lot of clients as well.

This will take some time to flow through into a conclusive market response, especially with the macro economics that others have pointed out, but here we are only three days into an aggressive re-rate after a sustained SP decline (never buy a down trend?). It's not news that SUM has fallen behind expectations and the SP has clearly shown that for quite some time now, after a long sustained run up.

The big quit started 5/8 Oct 2018 (50 and 100 MA's breakdown). No amount of rationalising it will help, for example, given there are no divis anytime soon, one could have just flicked their holding at the 100DMA and sit on the sidelines again 5/4/19 patiently looking for a re-entry at much less cost and superbly better PE and ROI. But that takes real balls to bail from a long term hold, just to take advantage of what 'might' be a better capital re-entry and ROI at a lower price. The great uncertainty. Despite that, it's eventuating now.

I get it, selling a holder that's divi'ing the bank account is tough. It's gut wrenching even, as the SP grinds lower and one looks at how many years it will take for the divi to recover the capital losses, when there's no sign of the sentiment reversing that's killing our capital. It's so easy to rationalise into procrastination or doing nothing and pronounce everyone as ignorant including the market, while quietly relocating the held shares from much higher prices into the bottom drawer. Have we all got a few of these? They are the lessons, we need to keep them on the desk, front and top of mind, so we don't keep making the same stupid mistakes over and over again!

All the gnashing of teeth, spruiking, excuses and bewilderment here lately seems in denial of the plain facts, that SUM has for some years now suffered a declining % of new_sales to overall property portfolio, in the face of a staggering growth projection in new properties, so as that portfolio grows with no signs that new_sales has a recovery pathway, it's hardly a wonder that investor confidence is faltering. Their recent results make this clear and apparent. That is in addition to all the lesser inhibiting factors (imho) pointed out here recently.

Well said Baa Baa thank you

[peat]

Probably a reason why resales look a bit slack

What a lovely soul she must be ....be good if average tenure could increase significantly

https://www.nzherald.co.nz/wanganui-chronicle/news/article.cfm?c_id=1503426&objectid=12219673

be glad you didnt sell her an annuity. or is a license to occupy something similar? not really in that you dont have to regularly pay out but if everyone lived to 105 it would affect SUM profits.
So why do you say it would be good if average tenure increased W69?

[dobby41]

as per link from Balance

CRAIGS: SELL SUMMERSET, BUY GENTRACK AND SCALES



Monday 8th April 2019
Text too small? (http://www.sharechat.co.nz/text-too-small.html)


Craigs Investment Partners is recommending investors sell shares in retirement village operator Summerset Group and to buy shares in utilities software provider Gentrack.


Individual brokers within Craigs take those calls as information rather than a directive.
Not a peep from mine

[Balance]

Individual brokers within Craigs take those calls as information rather than a directive.
Not a peep from mine

Pass an opportunity to clip the ticket and risk censure from client, Craigs, NZX & FMA in future?

You either have a lazy, brave or asleep broker!

[winner69]

Share price fluctuations exhibit cycles that move between periods of extreme optimism and periods of profound despair. Second, the extremes of each cycle are characterized by unusually elevated or depressed valuations, and these valuations comprise the true “meaning” of the market for Summerset investors

Sounds good eh

[bull....]

Individual brokers within Craigs take those calls as information rather than a directive.
Not a peep from mine

your not on there A list?

[winner69]

be glad you didnt sell her an annuity. or is a license to occupy something similar? not really in that you dont have to regularly pay out but if everyone lived to 105 it would affect SUM profits.
So why do you say it would be good if average tenure increased W69?

Wouldn’t it be good if more and more people did enjoy much longer and happier life’s....that’s what I was saying

SUM investors might not think that is good but there’s more to life than money

After all our government well being is important ..new measures
https://www.stats.govt.nz/assets/Uploads/Indicators-Aotearoa-New-Zealand-Nga-Tutohu-Aotearoa/Downloads/suite-of-indicators-aotearoa-new-zealand-nga-tutohu-aotearoa-indicators-for-june-2019-release.xlsx

[dobby41]

Pass an opportunity to clip the ticket and risk censure from client, Craigs, NZX & FMA in future?

You either have a lazy, brave or asleep broker!

Brave and thinking.
Works well.

[bull....]

Wouldn’t it be good if more and more people did enjoy much longer and happier life’s....that’s what I was saying

SUM investors might not think that is good but there’s more to life than money

After all our government well being is important ..new measures
https://www.stats.govt.nz/assets/Uploads/Indicators-Aotearoa-New-Zealand-Nga-Tutohu-Aotearoa/Downloads/suite-of-indicators-aotearoa-new-zealand-nga-tutohu-aotearoa-indicators-for-june-2019-release.xlsx

doing away with traditional gdp measure for social and environmental measures lol , shame you cant have all these social things without an economic vibrant economy

[bull....]

finished on the lows yesterday , normally bearish see how the day progresses

[couta1]

finished on the lows yesterday , normally bearish see how the day progresses I reckon the bottom is basically in.

[Blue Skies]

I reckon the bottom is basically in.

Yes I agree, SP taken complete hammering & at close yesterday, SP dropped almost 30% from $7.90 end of August, or almost 20% from $6.90 in last 3 weeks.
Correlating those % drops with a a plateauing NZ property market seems more than a little overdone to me.

[minimoke]

I remind my self from time to time there is nothing to be gained from looking at daily share price movements in a long term investment. Retirement stocks are currently the territory of the traders and brokers looking to make a quick bob or two. (Brokers will be saying SUM oversold and time to buy back in at these prices),

[percy]

I remind my self from time to time there is nothing to be gained from looking at daily share price movements in a long term investment. Retirement stocks are currently the territory of the traders and brokers looking to make a quick bob or two. (Brokers will be saying SUM oversold and time to buy back in at these prices),

You may fool yourself,but you do not fool me.!..lol.

[minimoke]

You may fool yourself,but you do not fool me.!..lol.Its part of my addictive personality!

[couta1]

Looks like a few more residual Lemmings keen to take the cliff jump.Lol

[bull....]

Looks like a few more residual Lemmings keen to take the cliff jump.Lol

im watching supports 5.40 - 50

[peat]

Wouldn’t it be good if more and more people did enjoy much longer and happier life’s....that’s what I was saying

SUM investors might not think that is good but there’s more to life than money

After all our government well being is important ..new measures
https://www.stats.govt.nz/assets/Uploads/Indicators-Aotearoa-New-Zealand-Nga-Tutohu-Aotearoa/Downloads/suite-of-indicators-aotearoa-new-zealand-nga-tutohu-aotearoa-indicators-for-june-2019-release.xlsx

Sure thats all feel good stuff and in a spreadsheet makes it look important

What I would like to do here is begin to understand how much a sustained increase in longevity would affect profits.
One resale makes about 30% of the value of the unit as a ticket clipped doesn't it?
I'm assuming that's a lot of revenue lost if people started living heaps longer , like say if medicine just keeps getting better and better.

[BlackPeter]

Sure thats all feel good stuff and in a spreadsheet makes it look important

What I would like to do here is begin to understand how much a sustained increase in longevity would affect profits.
One resale makes about 30% of the value of the unit as a ticket clipped doesn't it?
I'm assuming that's a lot of revenue lost if people started living heaps longer , like say if medicine just keeps getting better and better.

I don't think that people living longer would be a problem for the current business model. It only would be if people stay for a longer time in the retirement home - i.e. if they move in at the same age as previously but stay longer for the same price. This is however not the case.

People are living longer these days in their own homes (average entry age moved up significantly over the last 15 years) before they move into a retirement village (remember the last anti retirement village fad ...). Average life expectancy did not move up by that much than entry age. Profitability should (all other things being equal) increase ...

[Mudfish]

Possibly the bottom yesterday. I'm a nervous in.

[Balance]

The retirement village operators have been paying huge prices (premiums in many cases) to secure suitable sites for the retirement villages to be built for the demand out there.

In that sense, they are no different from many of the developers who are now caught with expensive land and costly developments.

Meanwhile, the customers they are relying upon to buy into the more expensive units in their villages are facing declining property values which will impact on what they can pay.

The property cycle has turned and it's now in reverse gear - tough times ahead for all developers sitting on expensive land, developments and stock.

3 to 5 years of downtrend ahead.

[Joshuatree]

People dont like the message so are shooting the messenger.
I was trivialised too Balance, when i pointed out this possibility last year, with comments like" SUM or OCA is not a property company".

Really appreciate you sharing from your field of knowledge and experience with your finger on the pulse.

I dont know how to verify 3 to 5 years or how far the property cycle will drop though, but i believe drop it will.
Cant see it dropping like australia though as the housing stock is in oversupply there is my understanding plus many other metrics.
I plan to maintain my holding in OCA through this cycle atp having a low 79c entrypoint (for you know who:).

Another thing that concerns mea little is how the Govt can keep funding the care villages with this avalanche of elderly people coming, will margins drop/tighten for the care facilities for one, getting enough trained quality staff another.

[tuaman]

The retirement village operators have been paying huge prices (premiums in many cases) to secure suitable sites for the retirement villages to be built for the demand out there.

In that sense, they are no different from many of the developers who are now caught with expensive land and costly developments.

Meanwhile, the customers they are relying upon to buy into the more expensive units in their villages are facing declining property values which will impact on what they can pay.

The property cycle has turned and it's now in reverse gear - tough times ahead for all developers sitting on expensive land, developments and stock.

3 to 5 years of downtrend ahead.

well, your cyristal ball regarding mPg was pretty bad. Are you still buy mpg?
btw, nobody can predict future right? that's what i learned from this forum.
"when the price goes down everyone predict it go down further, and vice versa."

[winner69]

The retirement village operators have been paying huge prices (premiums in many cases) to secure suitable sites for the retirement villages to be built for the demand out there.

In that sense, they are no different from many of the developers who are now caught with expensive land and costly developments.

Meanwhile, the customers they are relying upon to buy into the more expensive units in their villages are facing declining property values which will impact on what they can pay.

The property cycle has turned and it's now in reverse gear - tough times ahead for all developers sitting on expensive land, developments and stock.

3 to 5 years of downtrend ahead.

So should we be worrying debt levels of these operators / developers as well ....it was the debt that was the main problem for developers in last property crash

[tuaman]

So should we be worrying debt levels of these operators / developers as well ....it was the debt that was the main problem for developers in last property crash

have you considered future rate cut?
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12216934

[BlackPeter]

So should we be worrying debt levels of these operators / developers as well ....it was the debt that was the main problem for developers in last property crash

Sometimes you are really hard to read when you are taking the p*ss; Remember - there might be less experienced readers who might panic and sell their shares when they come across nonsense like this.

You obviously know that the retirement villages have hardly any bank debts - they do finance themselves mainly through the interest free loans they get from their clients when they buy into their right to occupy.

No risk for them - the only way for these clients to get back part of their money is when they leave their nice units in droves and pay Summerset (or whomever) the 30% DMF - and hey - why would they want to leave?

So - if we can avoid it - could we keep this senseless scaremongering off the forum? I thought you can do better ...

[Brain]

Best to remind everybody of this cartoon at this point

[Beagle]

Best to remind everybody of this cartoon at this point

https://www.sharetrader.co.nz/blob:https://www.sharetrader.co.nz/aca3bf16-d1bb-4214-8298-f79bf9dc7fb8

Link doesn't work. I think everyone is in need of some comic relief on this thread. Please fix and share.

[Balance]

have you considered future rate cut?
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12216934

Believe you me - an interest rate cut is the best indication you can ever get that the property sector is in big trouble.

Banks pull the plug on developers because they cannot top up with equity to maintain acceptable leverage ratio and/or pay interest due to lack of sales.

If you want an example of how quickly things can turn in the real estate market for developers, there's a huge multi-billion dollar housing project (incorporating a massive retirement village) in South Auckland (developer has spent over $350m so far developing the infrastructure and sections for sale according to NZ Herald) - they have not been able to sell one single section since July 2018! Fortunately for the developers, there is no bank debt so they are okay and will survive. The billion dollar profit will not be there anymore however.

[minimoke]

- they have not been able to sell one single section since July 2018! Any reasons given for the lack of sales?

[Balance]

well, your cyristal ball regarding mPg was pretty bad. Are you still buy mpg?
btw, nobody can predict future right? that's what i learned from this forum.
"when the price goes down everyone predict it go down further, and vice versa."

I am very relaxed about my MPG holding (given my entry price and the story I am following through on) just as I have been with my Serko.

Nobody can predict the future - up to each person to forecast and predict, and plan their investments accordingly. Some will be right, some will be wrong - takes place everyday with some investors buying and some selling depending on their views.

[BlackPeter]

Believe you me - an interest rate cut is the best indication you can ever get that the property sector is in big trouble.

Banks pull the plug on developers because they cannot top up with equity to maintain acceptable leverage ratio and/or pay interest due to lack of sales.

If you want an example of how quickly things can turn in the real estate market for developers, there's a huge multi-billion dollar housing project (incorporating a massive retirement village) in South Auckland (developer has spent over $350m so far developing the infrastructure and sections for sale according to NZ Herald) - they have not been able to sell one single section since July 2018! Fortunately for the developers, there is no bank debt so they are okay and will survive. The billion dollar profit will not be there anymore however.

Well, it worked last time with QE and negative interest rates. Not really great for the economy, but property (as well as stock-) prices went through the roof.

You are saying - this time will be different - aren't you?

Why?

[Balance]

Any reasons given for the lack of sales?

Despite the BS about lack of supply, there's a massive oversupply of sections and new houses in some parts of Auckland - Takanini, Flatbush, Karaka, Pokeno, Papatoetoe etc etc.

So there's no appetite for developers to buy new sections.

Prices are going to have to drop some way on the existing stock before the demand kicks in.

[Balance]

Well, it worked last time with QE and negative interest rates. Not really great for the economy, but property (as well as stock-) prices went through the roof.

You are saying - this time will be different - aren't you?

Why?

Overseas buyers are not going to be around this time round.

Then, there's Kiwibuild.

[winner69]

Overseas buyers are not going to be around this time round.

Then, there's Kiwibuild.

Are Kiwibuild branching out into building affordable retirement villages

Would get thr oldies out of existing homes and free them up for younger first home buyers

[Brain]

All those places (Takanini etc )are way out in the Sticks comparatively speaking.They should be cheap to compensate for the cost of getting to work.

[Balance]

People dont like the message so are shooting the messenger.
I was trivialised too Balance, when i pointed out this possibility last year, with comments like" SUM or OCA is not a property company".

Really appreciate you sharing from your field of knowledge and experience with your finger on the pulse.

I dont know how to verify 3 to 5 years or how far the property cycle will drop though, but i believe drop it will.
Cant see it dropping like australia though as the housing stock is in oversupply there is my understanding plus many other metrics.
I plan to maintain my holding in OCA through this cycle atp having a low 79c entrypoint (for you know who:).

Another thing that concerns mea little is how the Govt can keep funding the care villages with this avalanche of elderly people coming, will margins drop/tighten for the care facilities for one, getting enough trained quality staff another.

Sadly, one cannot give one's views it seems without being branded as a scaremonger, downramper, with ulterior motives, working for the competitors etc these days.

Information is so crucial to making good decisions and I for one, always look for opinions which are out of sync with the general flow - 8 times out of 10, they will be incorrect but the 2 times they are correct, they are extremely correct!

The property cycle in NZ is typically 10 years - 5 on the up, and 5 on the down. No need to believe me - just check with any good property observers. This up cycle one has lasted a little longer than previous up cycle - 6 .5 years (by my estimate) so expect at least 3.5 years down cycle imo.

Like you with your OCA, I have Metlife which I am happy to keep - entry price $2.15. No panic here.

[Balance]

Are Kiwibuild branching out into building affordable retirement villages

Would get thr oldies out of existing homes and free them up for younger first home buyers

Now, isn't that a jolly good idea!

If Labour wins another term, you could well be prophetic!

[BlackPeter]

Overseas buyers are not going to be around this time round.

Then, there's Kiwibuild.

You sure the 30 houses Labour might be building per year will make such a big difference :confused:?

Overseas buyers - lets see. Kiwi dollar still pretty strong (which is an indication that overseas buyers are still in).

As well - what to you think is going to happen with all the Kiwisaver funds which will get a big boost with increased minimum wages et all? Are the respective managers putting these funds under their mattresses or are they going to invest them? Hmm - difficult.

10464

[bull....]

Possibly the bottom yesterday. I'm a nervous in.

yes i have a punt in now to for a bounce of support area

[Beagle]

Looks like the bottom is in, Bull has converted from being a Bear, even some people have added to their OCA holding so they can't keep skiting about their average float price anymore.

SUM property "experts" on here don't understand that over many decades now, national average housing prices when they have corrected, (assuming they even do which some people are taking as a done deal already), usually do so by flatlining in nominal dollars for several years and only reduce in real inflation adjusted terms. But this doesn't suit their cataclysmic thesis so they conveniently ignore past evidence as well as evidence that current housing is increasing at 2.5% per annum. They also fail to account for and conveniently overlook the fact that historically in times of a flat market, bare land corrects faster in inflation adjusted terms so developers are able to buy land at much cheaper prices than in a booming market and this can be earnings accretive in terms of boosting development margins both because the land is much cheaper to start with, builders and contractors are easier to find and at more attractive prices and also because by the time the development is selling down often the market has already turned up.

I think the fun is over for those that shorted SUM.

[winner69]

You sure the 30 houses Labour might be building per year will make such a big difference :confused:?

Overseas buyers - lets see. Kiwi dollar still pretty strong (which is an indication that overseas buyers are still in).

As well - what to you think is going to happen with all the Kiwisaver funds which will get a big boost with increased minimum wages et all? Are the respective managers putting these funds under their mattresses or are they going to invest them? Hmm - difficult.

10464

And don’t forget punters can even contribute more into Kiwisaver each week now and ANZ survey suggested many will

Need to find a home for extra cash like buying sum more shares eh ...no matter whether it’s a good investment or not .,.is good

[bull....]

bounce levels im watching 573 , 588 , 6 , 6 being the breakdown level from support , often when you get a breakdown it may retest the around the level to see if it was a valid level and not a fake breakdown.
also rsi is way oversold and price currently sits outside the weekly bollinger band all these and others may help bounce anyway see what happens

[winner69]

SUM property "experts" on here don't understand that over many decades now, national average housing prices when they have corrected, (assuming they even do which some people are taking as a done deal already), usually do so by flatlining in nominal dollars for several years and only reduce in real inflation adjusted terms. But this doesn't suit their cataclysmic thesis so they conveniently ignore past evidence as well as evidence that current housing is increasing at 2.5% per annum. They also fail to account for and conveniently overlook the fact that historically in times of a flat market, bare land corrects faster in inflation adjusted terms so developers are able to buy land at much cheaper prices than in a booming market and this can be earnings accretive in terms of boosting development margins both because the land is much cheaper to start with, builders and contractors are easier to find and at more attractive prices and also because by the time the development is selling down often the market has already turned up.

I think the fun is over for those that shorted SUM.


From Dec07 to Mar09 NZ property prices fell by 10% (or 9.7% which sounds better) --they then essentially 'flatlined' through to end of 2011 ... data from HPI from RBNZ


House prices praked in Dec 07 quarter and after the fall didn't recover back to that peak until Sep 12 quarter ... nearly five years


If this happened again (and if it did probably be worse this time) a 10% reduction in the value of sum investment properties would impact profit and balance sheet. SUM properties currently va;ued ay $2.5 billion.

Maybe thats what sum punters are worried about ....remember markets are forward looking

And yes prices are currently up 2.5% but this is lower than the 4% a year earlier so this next year might be flatlining before a few years of declining

But it may never happen .....

[Beagle]

You're an honest bloke so I won't ask you to post a link substantiating that...Perhaps excluding the GFC then... but you already know RYM increased their underlying earnings throughout the GFC. If we were valuing these companies based on all inclusive earnings IFRS, then they would have been substantially higher as single digit PE's is completely nonsensical for a company with a CAGR in IFRS profit of 70% per annum since it listed.

[winner69]

You're an honest bloke so I won't ask you to post a link substantiating that...Perhaps excluding the GFC then... but you already know RYM increased their underlying earnings throughout the GFC. If we were valuing these companies based on all inclusive earnings IFRS, then they would have been substantially higher as single digit PE's is completely nonsensical for a company with a CAGR in IFRS profit of 70% per annum since it listed.

The numbers are here https://www.rbnz.govt.nz/statistics/key-graphs/key-graph-house-price-values

For the data junkies there's a link to a excel file with heaps of numbers in it

[BlackPeter]

Here is a long trend chart of average NZ house prices (Auckland in red, rest of the country in grey):

10465

And yes, winner is right - looks like they dropped after a 2008 peak by roughly 10% (over 2 years).

Will the next drop be now? Will it be as bad as the GFC? Who knows ... but whatever it is - who cares?

While I notice that this forum is called "sharetrader" ... are there really no investors around with an attention span longer than that of a fruit fly?

Auckland house prices doubled according to this chart (and despite sharemarket crashes, GFC's and whatever else) every 10 years.

"Rest of NZ" house prices doubled every 12 years.

Doomsday preachers have been active since the beginning of time.

So - why should this "downcycle" be different?

Ah yes - and what is your investment horizon?

[Beagle]

10465

And yes, winner is right - looks like they dropped after a 2008 peak by roughly 10% (over 2 years).

... are there really no investors around with an attention span longer than that of a fruit fly?

Rest of NZ" house prices doubled every 12 years.

Doomsday preachers have been active since the beginning of time.

So - why should this "downcycle" be different?

Ah yes - and what is your investment horizon?

Fruitfly Comment :lol: One drop of 10% over 2 years in the middle of the Global Financial Crisis, arguably the biggest stress test since the Great Depression of 1929.

Of course it so obvious there's another GFC about to hit us directly in the face :lol:
These are rather inconvenient FACTS for some and will be ignored by those who think their opinion about the future matters far more vast periods of historical FACTS.

RYM's underlying profit went up throughout the GFC. I doubt this additional historical FACT matters to people with a myopic opinion that we're going into a property crash.

[winner69]

Fruitfly Comment :lol: One drop of 10% over 2 years in the middle of the Global Financial Crisis, arguably the biggest stress test since the Great Depression of 1929.

Of course it so obvious there's another GFC about to hit us directly in the face :lol:

RYM's underlying profit went up throughout the GFC. I doubt this FACT matters to people with a myopic vision that we're going into a property crash.

NZ didn’t do too badly through this global GFC thing ....as we were already in recession when that hit

Whatever we did have 5 years of house price ‘recession’ (duration to get back to previous peak)

But the likes of Ryman kept building things and selling things and it’s company value (book value) kept increasing in spite of lower property prices. Better measure of value than this fandangled underlying earnings thing

[winner69]

Big problem is that too many on here read the newspapers and pay homage to the bank economists who generally push the narrative that suits their employer bank’s needs. A bit of gaming the RBNZ I reckon.

I’ve just read a detailed report from an independent economist / commentator who has no such barrow to push.

The analysis has the impacts on the housing market of such things as foreign buyers, migration, interest rates, banks lending criteria, amount of lending, house sales activity, supply and demand, employment, sections, government policy and a raft of other things

The conclusion — the number of house sales will remain choppy over the next year but we’ll likely see more property sales than pcp and that the HPI could increase by 5% over the same period

No link sorry, it’s subscription based and costs money ...but at least a truly independent view of somebody who has had a pretty good track record over the years re housing things.

[Beagle]

NZ didn’t do too badly through this global GFC thing ....as we were already in recession when that hit

Whatever we did have 5 years of house price ‘recession’ (duration to get back to previous peak)

But the likes of Ryman kept building things and selling things and it’s company value (book value) kept increasing in spite of lower property prices. Better measure of value than this fandangled underlying earnings thing

Another good historical fact that those with a myopic view will rather "conveniently" overlook.

[Beagle]

Big problem is that too many on here read the newspapers and pay homage to the bank economists who generally push the narrative that suits their employer bank’s needs. A bit of gaming the RBNZ I reckon.

I’ve just read a detailed report from an independent economist / commentator who has no such barrow to push.

The analysis has the impacts on the housing market of such things as foreign buyers, migration, interest rates, banks lending criteria, amount of lending, house sales activity, supply and demand, employment, sections, government policy and a raft of other things

The conclusion — the number of house sales will remain choppy over the next year but we’ll likely see more property sales than pcp and that the HPI could increase by 5% over the same period

No link sorry, it’s subscription based and costs money ...but at least a truly independent view of somebody who has had a pretty good track record over the years re housing things.

But the experts on here tell us the property market is already crashing lol

[winner69]

But the experts on here tell us the property market is already crashing lol

They listen to the media ....never believe everything the ‘popular’ media tell you....bad for your health

Bank economists / commentators are even worse .....even suck in guru broker analysts

[minimoke]

But the experts on here tell us the property market is already crashing lol
Its time for a picture (hopefully will save some posters many words):

[winner69]

There’s an updated one coming out in next day or so

A few Rs in circles ...does that mean RECORD HIGH

but what that guy Newton say

[dobby41]

But the experts on here tell us the property market is already crashing lol

Crashing?
Re-adjusting in a few areas, slowing in some but generally robust.

[longy]

Crashing?
Re-adjusting in a few areas, slowing in some but generally robust.

Interest rate is still low and immigration's policy has not changed. Is housing shortage still in issue? So may be a little bit longer to go for some places.

[dobby41]

Interest rate is still low and immigration's policy has not changed. Is housing shortage still in issue? So may be a little bit longer to go for some places.

Exactly - not crashing

[Joshuatree]

Exactly - not crashing

Yes more like correcting , more in some areas then others. A classic signal below.

"However, Auckland saw the median number of days to sell a property increase by 8 days from 49 to 57 – the highest number of days to sell since February 2009."

[bull....]

nice trade im out now

[couta1]

nice trade im out now You'll have to start your normal pessimism again to see if you can round up a few more Lemmings for another go.Lol

[Beagle]

You'll have to start your normal pessimism again to see if you can round up a few more Lemmings for another go.Lol

Please don't encourage him, enough bull S for one week already, surely !

Well respected Tony Alexander opines on the housing market https://feedback.bnz.co.nz/mail/view/2jthn_p3n3r45h0213ccy84p_407_1szjph4l7b6rdpjkmh_11 m5rs8683ng0hcy9z_3226qrvj40yv6rjdpl?source=EDM&medium=email&campaign=TonyAlexander

[bull....]

Please don't encourage him, enough bull S for one week already, surely !

Well respected Tony Alexander opines on the housing market https://feedback.bnz.co.nz/mail/view/2jthn_p3n3r45h0213ccy84p_407_1szjph4l7b6rdpjkmh_11 m5rs8683ng0hcy9z_3226qrvj40yv6rjdpl?source=EDM&medium=email&campaign=TonyAlexander


actually the week before ( which was a way more indepth look at the property market) tony said the rest of the country will follow auckland soon

[winner69]

Just voted against the Directors getting a 12% pay rise (Chair only 9%)

Was thinking of our hard working employees slaving away at the coal face when I voted against it

Suppose a protest vote more than anything else because big shareholders never vote against these things.

[winner69]

Please don't encourage him, enough bull S for one week already, surely !

Well respected Tony Alexander opines on the housing market https://feedback.bnz.co.nz/mail/view/2jthn_p3n3r45h0213ccy84p_407_1szjph4l7b6rdpjkmh_11 m5rs8683ng0hcy9z_3226qrvj40yv6rjdpl?source=EDM&medium=email&campaign=TonyAlexander

One of his better opinion pieces .....explaining why bank economists are useless at forecasting anything was well written

[Jerry]

Reuters Analysts look cheerful enough about SUM. https://www.reuters.com/finance/stocks/analyst/SUM.NZ

[winner69]

GOODNESS GRACIOUS ME

From the REINZ on March activity


Record median house price recorded for NZ in March

Median house prices across New Zealand increased by 4.5% in March to a record $585,000, up from $560,000 in March 2018. Median price increases for New Zealand excluding Auckland were even stronger increasing by 6.7% to $491,000 up from $460,000 in March last year.

Median house prices in Auckland fell by 2.7% from the same time last year to $856,000 – down from $880,000. Despite the year-on-year fall, prices in March were the highest Auckland has seen for three months.


As most on here seem to be very distrusting of most things they read and seem to be very sensitive and proper about this I confirm I didn’t make it up. Full press release here https://www.reinz.co.nz/Media/Default/Statistic%20Documents/2019/Residential/March/REINZ%20Residential%20Press%20Release%20%20-%20March%202019.pdf

And another fuller report

https://www.reinz.co.nz/Media/Default/Statistic%20Documents/2019/Residential/March/REINZ%20Monthly%20Property%20Report%20-%20March%202019.pdf

[minimoke]

GOODNESS GRACIOUS ME

From the REINZ on March activity

.

Yup, you know what it is time for. Another picture!

[winner69]

Prices not collapsing ....

.....but number of sales are down on pcp ....

....and days to sell fell by 11 from 47 in February to 36 March ..that’s good news