SUM - Summerset Group

[Beagle]

His luck / charisma or whatever is fading fast

The Campbell Index made up of SUM, SKC, THL and Precinct probably underperformed the NZX big time.

Needs to retire I reckon and bask in past glories.

Yeah, he's had his day, the magic is gone.

[winner69]

Today’s prices these are what Rob’s babies are off their 52 week highs

SUM 33%
SKC 49%
THL 73%
PCT 19%

Some effort eh, esp seeing there’s been a decent recovery from the lows for a couple of them.

[macduffy]

Isn't it a bit hard to blame him for THL and SKC's woes in today's circumstances?

[winner69]

SUM share price still recovering well from that irrational sell off a month or so ago.

Some 90% up from rhe lows and more to go I reckon

Share price over $7 beckons in next month.

[Beagle]

SUM share price still recovering well from that irrational sell off a month or so ago.

Some 90% up from rhe lows and more to go I reckon

Share price over $7 beckons in next month.

Can I have a Tui with that ?

[Lease]

SUM share price still recovering well from that irrational sell off a month or so ago.

Some 90% up from rhe lows and more to go I reckon

Share price over $7 beckons in next month.

Agree. As long as market won't have second sell-off which can go lower than 23 March.

[troyvdh]

Winner..you have been around...so you reckon blue skys ahead eh..ok...If.. as many are heralding..that we are heading into a depression..you would be a certain buyer at say $2.10 eh..cheers

[winner69]

Hope Julian doesn’t mention mystery shoppers at the ASM today

Don’t think I could handle that during lockdown.

[Beagle]

Are you going to listen in Winner ? Shall I leave you on guard dog duties this year ?
Bark up a storm about their directors fees increase please and don't forget to ask them what their revised build rate is, (was only because SUM dog barked about this at last year's annual meeting that the market was any the wiser).
If you've still got any bark left you could ask them why their unsold units go up year after year after year....
Oh and don't forget to ask them if they are ever going to pull their head out of the sand and finally wake up and smell the coffee and realise that fixed fees for life would help them sell their units.

[winner69]

Are you going to listen in Winner ? Shall I leave you on guard dog duties this year ?
Bark up a storm about their directors fees increase please and don't forget to ask them what their revised build rate is, (was only because SUM dog barked about this at last year's annual meeting that the market was any the wiser).
If you've still got any bark left you could ask them why their unsold units go up year after year after year....
Oh and don't forget to ask them if they are ever going to pull their head out of the sand and finally wake up and smell the coffee and realise that fixed fees for life would help them sell their units.

You know me ....my attention span only lasts until I’m told where the toilets are and what to do in an emergency.

Suppose with a virtual meetings that’s not necessary :t_up:

Will I then get past the roll call of the Board ....doubt it so I’ll probably go for a walk in the sun after a quick look through the presentation.

Hope they don’t announce any bad news

[Slim_Pikins]

Anyone having issues with the sound? Intermittent

[Beagle]

You know me ....my attention span only lasts until I’m told where the toilets are and what to do in an emergency.

Suppose with a virtual meetings that’s not necessary :t_up:

Will I then get past the roll call of the Board ....doubt it so I’ll probably go for a walk in the sun after a quick look through the presentation.

Hope they don’t announce any bad news

Rob Campbell mentioned a significant impact on their business at least twice. Julian does too. http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/352315/321512.pdf
No forecast but EQT expected MET to forecast FY20, FY21 and FY22. Doubt any other company ion this sector will try and forecast current year profit either but I will have a go for SUM.
I think they will do about $65m this year down about $40m on last year.

[winner69]

Good timing. ...clashes with Jacinda and Ashley

I know which one is more exciting.

Julian seems slightly more animated but switched channels again.

[winner69]

Rob Campbell mentioned a significant impact on their business at least twice. Julian does too. http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/352315/321512.pdf
No forecast but EQT expected MET to forecast FY20, FY21 and FY22. Doubt any other company ion this sector will try and forecast current year profit either but I will have a go for SUM.
I think they will do about $65m this year down about $40m on last year.

If SUM down $40m on 2019 then MET down $20m this year to June 2020 and then $30m down to June 2021

There we have it ...updated both at same time.

[winner69]

Don’t like the backdrop Julian has ...are they curtains at home?

[Beagle]

If SUM down $40m on 2019 then MET down $20m this year to June 2020 and then $30m down to June 2021

There we have it ...updated both at same time.

Back to $7+ any minute now eh mate :p

[Sir Ten]

Quite a significant amount of votes against Rob Campbell's re-election... what do people make of this?

For: 87.3%
Against: 12.7%

All other resolutions (including increase to director's rem) passed with at least 97.8%

[Beagle]

A lot of people think he has to much on his plate and is getting too old. I note its his last year of tenure. Probably a good idea he stays on this year and helps steer the ship through the one in one hundred year storm. Frankly he's made it crystal clear they will be badly affected by this virus so I see no reason for this to trade at a premium to NTA, especially when you start thinking about what Covid 19 adjusted NTA might be, ($4 anyone ?). Talk of no dividend tells you this is going to have a significant impact, and he must be talking substantial impact because he mentions it twice and then there's talk of a prolonged downturn.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/352315/321512.pdf

MET must be absolute genius's to only be looking at a 4-5% underlying profit impact this year eh Winner. Sounds like Rob and Julian softening people up for a substantial, maybe 40% drop in profit :eek2:

[winner69]

Beagle ....MET earnings will be below $80m ...maybe well below.

If by some miracle they report $83m bottom of guidance range it will have been managed to that level and whatever was managed will fall out in 2021

Keep saying all that bad stuff on SUM .....I know you are itching to get back on.

[Beagle]

Beagle ....MET earnings will be below $80m ...maybe well below.

If by some miracle they report $83m bottom of guidance range it will have been managed to that level and whatever was managed will fall out in 2021

Keep saying all that bad stuff on SUM .....I know you are itching to get back on.

Not interested. Rob's best days are behind him. I do like their quarterly Summerset Scene magazine though. Occasionally you get good articles like this one in the current issue
https://issuu.com/summersetgroupholdingsltd/docs/summerset_scene_autumn_2020_a4_19.0_web_pages/50?fr=sM2ExYjEyMTc1NDM He's pretty cute that Rodger...Beagle's are cuter though :) Some good puzzles to relieve boredom in lockdown on the previous pages too.
Jude doesn't seem to be working any magic for them though...maybe people see her as all fluff and aren't conned and really want what the smart operators offer being fixed fees for life https://www.summerset.co.nz/about-us/summerset-ambassador/

Bare undeveloped blocks of land "get hit for a six" in a deep recession. SUM carry way to much bare land using too much debt. Was a good strategy when the market was going up but its going to come back and bite them really hard in this deep recession. NTA-V = ~ $4.

[Baa_Baa]

A lot of people think he has to much on his plate and is getting too old. I note its his last year of tenure. Probably a good idea he stays on this year and helps steer the ship through the one in one hundred year storm. Frankly he's made it crystal clear they will be badly affected by this virus so I see no reason for this to trade at a premium to NTA, especially when you start thinking about what Covid 19 adjusted NTA might be, ($4 anyone ?). Talk of no dividend tells you this is going to have a significant impact, and he must be talking substantial impact because he mentions it twice and then there's talk of a prolonged downturn.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/352315/321512.pdf

MET must be absolute genius's to only be looking at a 4-5% underlying profit impact this year eh Winner. Sounds like Rob and Julian softening people up for a substantial, maybe 40% drop in profit :eek2:

Your hyperbole against SUM, after being a strong and vocal advocate, and cross promotion of MET is tiresome imo. I know this won’t stop you doing it and it’s likely to prompt a comprehensive rebuttal, but I do want to say that it is imo not adding to your reputation as a reliable source of independent thinking, it is reinforcing your reputation as a flip flop momentum trader who leverages these forums only to talk your own book. Step back a bit, open your mind and look at how your messaging might be perceived. Just saying.

[Beagle]

The situation and narrative from SUM has changed dramatically in the last two months. SUM were well positioned with a really extensive land bank before Covid 19 and the exact things (high gearing and a vast land bank) that were working so well for them before Covid 19 are now working against them. Bare undeveloped land values get smashed in a deep recession and then there's the holding costs. Many people on here were profoundly shocked by Julian Cook's no growth comment when they announced their FY19 result in late February 2020.

Now they've withdrawn guidance, talking about substantial effects and a protracted period of difficult trading and are even talking about cancelling the dividend and even Rob Campbell is retiring after this current term...welcome to a completely new reality mate....but you imply that there has not been a seismic shift in their outlook. What next, you'll tell me the situation hasn't changed at AIR either :p Welcome to our new reality, there's pre Covid 19 and post Covid 19.

[Leftfield]

Your hyperbole against SUM, after being a strong and vocal advocate, and cross promotion of MET is tiresome imo. .... it is reinforcing your reputation as a flip flop momentum trader who leverages these forums only to talk your own book. Step back a bit, open your mind and look at how your messaging might be perceived. Just saying.

Hear. Hear.

[Blue Skies]

Your hyperbole against SUM, after being a strong and vocal advocate, and cross promotion of MET is tiresome imo. I know this won’t stop you doing it and it’s likely to prompt a comprehensive rebuttal, but I do want to say that it is imo not adding to your reputation as a reliable source of independent thinking, it is reinforcing your reputation as a flip flop momentum trader who leverages these forums only to talk your own book. Step back a bit, open your mind and look at how your messaging might be perceived. Just saying.


Much as I respect Beagles so it disappoints me to say this, think it's what many were thinking & someone needed to say it.

[bull....]

Your hyperbole against SUM, after being a strong and vocal advocate, and cross promotion of MET is tiresome imo. I know this won’t stop you doing it and it’s likely to prompt a comprehensive rebuttal, but I do want to say that it is imo not adding to your reputation as a reliable source of independent thinking, it is reinforcing your reputation as a flip flop momentum trader who leverages these forums only to talk your own book. Step back a bit, open your mind and look at how your messaging might be perceived. Just saying.

well said , might i add gets very upset when someone has an opposing view lol. should just admit like i do that your a trader

[Beagle]

Whatever...if you can't see the fundamental shift in SUM I can't help you so I'll leave you in peace to enjoy their future "growth".

I have been a shareholder for many years so its saddens me to see the company stop growing. For the record, I don't have a short position in SUM and never have held one.

I can see why Coutta1 and other regular posters are taking a long sabbatical from posting on here.

[peat]

Beagle, I think you do need to try to understand that people are emotionally attached to shares and are unable to perform lightning volte-faces as you are.
Hence your strong advocacy or negativity comes across as pumping , or dumping, (P+D) and it has been demonstrated that your dumping can happen pretty quickly after a pumping. Certainly your statements regarding any long term ownership of any company can now no longer be accepted at face value and hence the accusations of being a momentum trader.

Of course these descriptions of investment style don't ultimately matter to any of us here - or shouldn't - and your relationship with the taxman is your own and given this is a share trading website it is all perfectly reasonable that you buy and sell within any timeframe. However your declaration of position in a stock needs to be made more frequently or even on every post so as to more clearly reject any accusations of said P+D.

Baa baa and others , you could start to accept Beagles undoubted prescience more gracefully and not hold him to what he said last week or even yesterday. He is clearly maximising the use of his capital with no concerns about divesting when the wind changes. Examine why you are a holder and feel less inertia about your position with of course regard to your own investment style.

The forum is a lot stronger because of Beagles perceptive analysis and I would certainly buy units in his mutual fund

[Balance]

Beagle, I think you do need to try to understand that people are emotionally attached to shares and are unable to perform lightning volte-faces as you are.
Hence your strong advocacy or negativity comes across as pumping , or dumping, (P+D) and it has been demonstrated that your dumping can happen pretty quickly after a pumping. Certainly your statements regarding any long term ownership of any company can now no longer be accepted at face value and hence the accusations of being a momentum trader.

Of course these descriptions of investment style don't ultimately matter to any of us here - or shouldn't - and your relationship with the taxman is your own and given this is a share trading website it is all perfectly reasonable that you buy and sell within any timeframe. However your declaration of position in a stock needs to be made more frequently or even on every post so as to more clearly reject any accusations of said P+D.

Baa baa and others , you could start to accept Beagles undoubted prescience more gracefully and not hold him to what he said last week or even yesterday. He is clearly maximising the use of his capital with no concerns about divesting when the wind changes. Examine why you are a holder and feel less inertia about your position with of course regard to your own investment style.

The forum is a lot stronger because of Beagles perceptive analysis and I would certainly buy units in his mutual fund

Good post, peat to put things in perspective.

For those who view Beagle as a trader, then treat his comments in that context.

And NEVER EVER FALL IN LOVE WITH A STOCK AND STAY IN LOVE! Clouds your judgement.

[Beagle]

Beagle, I think you do need to try to understand that people are emotionally attached to shares and are unable to perform lightning volte-faces as you are.
Hence your strong advocacy or negativity comes across as pumping , or dumping, (P+D) and it has been demonstrated that your dumping can happen pretty quickly after a pumping. Certainly your statements regarding any long term ownership of any company can now no longer be accepted at face value and hence the accusations of being a momentum trader.

Of course these descriptions of investment style don't ultimately matter to any of us here - or shouldn't - and your relationship with the taxman is your own and given this is a share trading website it is all perfectly reasonable that you buy and sell within any timeframe. However your declaration of position in a stock needs to be made more frequently or even on every post so as to more clearly reject any accusations of said P+D.

Baa baa and others , you could start to accept Beagles undoubted prescience more gracefully and not hold him to what he said last week or even yesterday. He is clearly maximising the use of his capital with no concerns about divesting when the wind changes. Examine why you are a holder and feel less inertia about your position with of course regard to your own investment style.

The forum is a lot stronger because of Beagles perceptive analysis and I would certainly buy units in his mutual fund


Good post, peat to put things in perspective.

For those who view Beagle as a trader, then treat his comments in that context.

And NEVER EVER FALL IN LOVE WITH A STOCK AND STAY IN LOVE! Clouds your judgement.

Thanks Peat and Balance.


To be clear, I have owned SUM for a very long time and I am gutted at the fundamental breakdown in their long term growth path.

The whole market was profoundly shocked by Julian Cook's comment of no growth for FY20, (and should be concerned that this was issued pre Covid 19) and this for a company that has been growing very strongly ever since it listed in 2011.

Despite long term attraction to SUM's fundamental's I have learned that there is no point getting emotional about stocks. They're a business and when there's a fundamental sea change in the business like there has been with Covid 19 you need to reassess how your company will perform going ahead when such a fundamental change occurs. This is why I recently sold SUM.

I find it incredibly hard to find value in this market the way its bounced so strongly off its March 23 low so if I was running an investment fund, (thanks for your support Peat) it would be sitting with a LOT of cash at present.

The odd time I have taken a short position I have declared that and for the record I am not interested in trying to talk this down as its at least $2 above where I see fair value and there's no way in the world I am anywhere near arrogant enough to think expressing my opinion on here or anywhere else would move the stock any thing like that, if at all, so my recently updated post Covid 19 opinion of SUM is completely unbiased, unlike some of the other recent comments on here.

[Snow Leopard]

...And NEVER EVER FALL IN LOVE WITH A STOCK AND STAY IN LOVE! Clouds your judgement.

But Beagle gets more emotionally involved than most!

[peat]

But Beagle gets more emotionally involved than most!

but he kicks them to the kerb unless they look like Mick Jagger.

(which for those who don't know is a line from a song called Tik Tok
by Ke$ha.)

https://youtu.be/iP6XpLQM2Cs

11453

[Snow Leopard]

but he kicks them to the kerb unless they look like Mick Jagger.

(which for those who don't know is a line from a song called Tik Tok
by Ke$ha.)



Thats not music !

But this is:


https://www.youtube.com/watch?v=0N9NOEindHc

[Balance]

Just finished reading a recently issued report by one of the major broking houses in Australasia on NZ's Retirement Village sector.

Nothing really new which have not been discussed and debated ad nauseam here in the Meet, Sum & Oca threads.

Nevertheless, a few key points to note from the report (report goes to their institutional & international client base so bound to have some influence) :

1. Demographics trend continue to provide strong tailwind for long term performance of the sector, population of 75+ to double over next 10 years (250,000 more), and

2. Short term headwinds of increased costs and lower unit resales to adversely impact on profits in 2020/21.

Sensitivities:

1. Increased costs in order of biggest impact - OCA, ARV, RYM, SUM & MET

2. Devaluation of asset values when gearing hits 50% (trigger point for debt concerns) - RYM (14%), SUM (15%), OCA (25%), ARV (26%) & MET (38%).

3. Most highly geared so likely to require capital raising - RYM (40%), SUM (33%), OCA (31%), ARV (27%) & MET (16%).

[Baa_Baa]

Heard on the radio today, Kenepuru stage 1 sold out, taking preorders for stage 2. Development continues.

[dameofdiv]

I value your barking very very much, Beagle. imo, you have been very transparent with your holdings and always give substantial analysis to back your opinions.

p.s. just a newbie showing support :t_up: I'm very clear that I'm still fully responsible for my investing decisions

[Cyclical]

The forum is a lot stronger because of Beagles perceptive analysis and I would certainly buy units in his mutual fund


I value your barking very very much, Beagle. imo, you have been very transparent with your holdings and always give substantial analysis to back your opinions.

p.s. just a newbie showing support :t_up: I'm very clear that I'm still fully responsible for my investing decisions

Hear, hear! Where is he? It's too quiet around here without the odd dog fight to stir things up.

[macduffy]

Hear, hear! Where is he? It's too quiet around here without the odd dog fight to stir things up.

Probably doing his homework on a few depressed stocks prior to making a re-entry into the market at some point. Remember, Beagle sold up recently, apart from his small flutter on the outcome of the MET takeover tussle. Expect to hear more in due course!

:cool:

[macduffy]

Milford Funds' buying now takes their holding over the 5% mark.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/352758/322087.pdf

[winner69]

Reversion to the mean more often wins out over emotion etc

Whatever 18% pa share price gains for each over 10 years is pretty good

[Beagle]

I wish the legend who came up with that gold standard 50% relativity theory would come back. I miss him :(

[Baa_Baa]

I wish the legend who came up with that gold standard 50% relativity theory would come back. I miss him :(

Me too, he’s wasted spending his time knocking the down rampers on HC, a full time job with no end. I reckon he has bragging rights here as sum reverted to 50% rym.

Sadly OCA is breaking the rule falling to historic ratio lows, maybe a signal of the upside potential where as winner says ‘reversion to the mean’.

[RupertBear]

I wish the legend who came up with that gold standard 50% relativity theory would come back. I miss him :(

Yes The Bear misses him as well :( tell him to come back :cool:

[Beagle]

Please come back Couta1, we miss you and your experience in this sector in particular is extremely valuable to people on this forum.

[dameofdiv]

Yes Couta, please come back. I missed reading your posts very much too :(

[trader_jackson]

https://www.nzx.com/announcements/355983

So FY20 underlying profit of say $80m (down 25% on last year) and yet this company has a market cap over $1.5 billion... so SUM is on a FY20 PE of nearly 20x and it is going backwards and building far less than stated in previous years... sum crazy valuation in my view for a company heavily reliant on villa sales/re-sales.

[King1212]

That made Met looks cheap eh TJ....

[winner69]

https://www.nzx.com/announcements/355983

So FY20 underlying profit of say $80m (down 25% on last year) and yet this company has a market cap over $1.5 billion... so SUM is on a FY20 PE of nearly 20x and it is going backwards and building far less than stated in previous years... sum crazy valuation in my view for a company heavily reliant on villa sales/re-sales.

You making numbers up again tj

[trader_jackson]

You making numbers up again tj

Guesstimating... I reckon $80m is a bit ambitious...

[James108]

Quarterly sales and profit guidance about what one would expect i think.

[winner69]

Guesstimating... I reckon $80m is a bit ambitious...

Only need beagle to come out with $65m and a tirade as to how useless sum are and everybody will be happy .......might be why Harbour have lightened their holding :eek2:

I thought 6% down on ly for a half year is a better performance than the 6% MET likely to be down

I’m not looking forward to OCA’s dismal numbers

[Lease]

Nowadays a company that can make profit is good enough.:)

[Beagle]

Better forecast than I expected, (in no small way assisted by the Govt grant). If they can do $90m underlying for the year that's 39.5 cps...choose your PE.
$85m underlying would be 37.3 cps. Maybe its a fair value hold at the current price but Harbour are usually pretty astute so if I was a holder I'd be worried about them letting more go and effectively putting some sort of temporary soft ceiling on the share price.

They have such a massive land bank and are expanding into Melbourne...what could possibly go wrong...

[winner69]

Over the long term a pretty solid looking chart ...recent quarters could look better but heck this is a long term story

Cant have too much spare land .... it'l still be there when they want it

[winner69]

In Feb (pre-virus) Julian said 'Looking ahead, Mr Cook said the business was not expecting underlying profit growth in 2020, largely due to the investment in care wages and development margins returning to the medium-term guidance of 20% to 25%'

Many were aghast --- the screeches of horror are still echoing around the world

So today Julian saying H1 is going to be 6% down on last year - 6% down with added virus impacts is bloody amazing stuff

Could go the old 'look through covid jmpacts' trick way and say underlying growth is probably UP on last year (H!20 only $3m down on H119)

And the market seems to like it today ....maybe the screeches have stopped echoing

[winner69]

checking up on Harbour Asset commentary in case they said something about Summerset couldn't help but notice this chart

VALUE HASN'T BEEN THE WAY TO GO LATELY (if you want to beat the market) .... and not likely to improve

[winner69]

SUM still one of Harbour's biggest holdings ..... selling some I think is probably just a bit of reweighting (or maybe they have had a few investors bail from their funds)

[Beagle]

Over the long term a pretty solid looking chart ...recent quarters could look better but heck this is a long term story

Cant have too much spare land .... it'l still be there when they want it

That black line heading down for the last 3 years has to be an ongoing worry. Despite shutting down construction for 6 weeks the company "delivered" 139 units, (code speak for completed) but sold only 128 new units despite having record level's of unsold new stock as at 31 December 2019. What is wrong with some of their stock of hundreds of new units that they appear unable to sell from the last few years of over-building ?
The pattern of the last 4 years continues...unable to sell as many units as they are building (even when building is interrupted for 6 weeks).

But no worries... at the annual meeting in April 2019 they told us in a couple of years they plan to be building 600 units a year. That's bound to fix the problem of unsold new units :eek2:

Don't worry about buying land in the deepest recession since the GFC at depressed prices as they have about 15 years supply at the current build rate bought when land prices were booming. Talk about an opportunity squandered ! But no worries, lets raise even more debt and buy even more land especially in Melbourne....what could possibly go wrong ?

I'd like to like SUM again...if I could find SUM thing about their operations that was likeable !

[macduffy]

Look on the bright side, Beagle. People are getting older every day.

:)

[King1212]

Yesterday is history, tomorrow is a mystery, but today is a gift. That is why it is called present

[winner69]

I see Kingfish Fund still got plenty of Summerset shares

They seem to be picking heaps more winners than losers these days

I see Alistair Ryan is Chair of Kingfish --probably told his people that MET was really a dog and SUM a better long term bet in the sector:t_up::scared:;):confused::p

[macduffy]

I see Kingfish Fund still got plenty of Summerset shares

They seem to be picking heaps more winners than losers these days

Yes, it's been that kind of market lately!

:)

[davflaws]

Yesterday is history, tomorrow is a mystery, but today is a gift. That is why it is called present

Thank you. In fifty years in the Human Potential Movement I have never come across the whole quote. "That is why it is called present" is just perfect.

[Maverick]

https://www.nzx.com/announcements/355983

So FY20 underlying profit of say $80m (down 25% on last year) and yet this company has a market cap over $1.5 billion... so SUM is on a FY20 PE of nearly 20x and it is going backwards and building far less than stated in previous years... sum crazy valuation in my view for a company heavily reliant on villa sales/re-sales.
I disagree with you TJ on your projected FY underlying profit ( I presume you just doubled the HY1). For the last 3 years they have earnt 29%, 18% and 26%,respectively more in HY2 than HY1.
If they make between 40-45m this HY then we multiply that by, say 22% for HY2, (the result equates to what they earnt last HY2-as it roughly should) then they will make FY result $100-$105m this year .
That`s only 3-8% down on last year. They have already warned us there will be a no growth this year anyway - even before covid existed.
I think this is actually a very commendable result for the company given this encapsulates the whole of the covid disruption/expense. I think this underpins how solid the retirement industry is as a whole.

All that being said....if they achieve ( as I expect they will) a FY result of $100-$105m then that`s an earnings per share of about 45-48 cents per share.
Knowing there is no growth for at least one but most likely a few more years to come then I would afford this company a PE of only 14.
So... that makes the share price fair value to me of about $6.30-$6.70

I personally view SUM`s model of growth by "building even more than we did last year" has run to the end of the NZ rainbow. Therefore I don`t hold any SUM these days but this result is a clear demonstration that this company and the retirement village sector has endured the pandemic extremely well.

[Beagle]

I disagree with you TJ on your projected FY underlying profit ( I presume you just doubled the HY1). For the last 3 years they have earnt 29%, 18% and 26%,respectively more in HY2 than HY1.
If they make between 40-45m this HY then we multiply that by, say 22% for HY2, (the result equates to what they earnt last HY2-as it roughly should) then they will make FY result $100-$105m this year .
That`s only 3-8% down on last year. They have already warned us there will be a no growth this year anyway - even before covid existed.
I think this is actually a very commendable result for the company given this encapsulates the whole of the covid disruption/expense. I think this underpins how solid the retirement industry is as a whole.

All that being said....if they achieve ( as I expect they will) a FY result of $100-$105m then that`s an earnings per share of about 45-48 cents per share.
Knowing there is no growth for at least one but most likely a few more years to come then I would afford this company a PE of only 14.
So... that makes the share price fair value to me of about $6.30-$6.70

I personally view SUM`s model of growth by "building even more than we did last year" has run to the end of the NZ rainbow. Therefore I don`t hold any SUM these days but this result is a clear demonstration that this company the retirement village sector has endured the pandemic extremely well.

Thank you Maverick. That SUM's the situation up extremely well. I couldn't agree more.

[Baa_Baa]

SUM technical challenges, been a good run but slamming into a confluence of technical resistance. 61.8 of the retrace from the COVID low. 200MA. Short term double top. RSI entering over bought. Might have to wait for the golden cross if this resistance doesn’t break.

[tango]

Better forecast than I expected, (in no small way assisted by the Govt grant). If they can do $90m underlying for the year that's 39.5 cps...choose your PE.
$85m underlying would be 37.3 cps. Maybe its a fair value hold at the current price but Harbour are usually pretty astute so if I was a holder I'd be worried about them letting more go and effectively putting some sort of temporary soft ceiling on the share price.

They have such a massive land bank and are expanding into Melbourne...what could possibly go wrong...

As far as I can tell Harbour are letting holdings go because they are loading up on PEB. I could be wrong on that but that’s the way it looks to me

[Beagle]

SUM technical challenges, been a good run but slamming into a confluence of technical resistance. 61.8 of the retrace from the COVID low. 200MA. Short term double top. RSI entering over bought. Might have to wait for the golden cross if this resistance doesn’t break.

Thanks for the good TA. On a FA basis I foresee its going to be hard for this one to make further progress north unless they can start proving they can sell the same number of new units they're building, or better still, make some decent inroads into reducing their significant stockpile of unsold units. Why are they year, on year, on year struggling to sell as many units as they build ?

Could the answer simply be what Coutts has suggested to me privately, (that notwithstanding their resident satisfaction survey's which appear to show high level's of customer satisfaction), the care services SUM provide really are second rate ?...or could it be that SUM directors as I have stated repeatedly over the years, really do not understand that there is pushback against their position which is almost now unique in the industry of being the one to stand out for the very wrong reason like a sore thumb and NOT guarantee fixed weekly fees for life ?

Whatever the reason is, they need to turn this situation around and really start putting some serious sales numbers on the board if they are ever to consider trying to meet their stated medium term objective of building 600 units per annum. Some people have told me privately that SUM has a culture problem. Money comes before people. You'd be very easily forgiven for thinking this is an outrageous claim from reading all their very politically correct reports...but insider talk is more often right then you would think...

Disc No position and not looking to down-ramp and buy at a cheaper price.

[macduffy]

Thanks, Beagle. Appreciate the time and effort put into researching and commenting on stocks, including those that you're not holding.

:)

[Beagle]

You're welcome mate.

Talking with the legendary Couta1 this morning he reckons this one is overpriced. Half of RYM's $13.40 = $6.70.
I think he's bang on the money and around $6.70 is full and fair value.

[winner69]

You're welcome mate.

Talking with the legendary Couta1 this morning he reckons this one is overpriced. Half of RYM's $13.40 = $6.70.
I think he's bang on the money and around $6.70 is full and fair value.

That's strange ....talking to couts he mentioned maybe RYM a bit underpriced -- will catch up and we'll see RYM over $15 soon

[stoploss]

That's strange ....talking to couts he mentioned maybe RYM a bit underpriced -- will catch up and we'll see RYM over $15 soon
Mt Eliza project turned down by the council .... so could be a long process building in Australia , so they might stay underpriced a bit longer ....

[Zaphod]

Mt Eliza project turned down by the council .... so could be a long process building in Australia , so they might stay underpriced a bit longer ....

Residents appear to believe this should remain as what is effectively a privately owned park. Good luck with that. The decision will be appealed. Same old story the world over.

[Beagle]

That's strange ....talking to couts he mentioned maybe RYM a bit underpriced -- will catch up and we'll see RYM over $15 soon

NAH. RYM losing their Midas touch https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12349802...catching the SUM virus of not getting planning consent. Isn't there another company on the NZX that has 86% of all its future development plans already consented ? ;)

[macduffy]

Mt Eliza was always going to be a difficult "sell"; historical significance; high value etc. A bit like wanting to build a retirement village in Toorak or Double Bay. RYM have several other projects in less glamorous parts of Melbourne; some will progress, others probably not.

Disc: Hold RYM - and a few others.

[Beagle]

Man this pup is flying at 777 today. If they can do $90m underlying this year that's 39.5 cps and she's on a forward PE of 19.7.

Crikey Winner...that's pretty rich for a company with negative eps growth, what do you make of that ?

Even if OCA do $43m (mid point of my forecast) that's 7 cps. 7 x 19.7 = $1.38. Hmmm

[winner69]

Man this pup is flying at 777 today. If they can do $90m underlying this year that's 39.5 cps and she's on a forward PE of 19.7.

Crikey Winner...that's pretty rich for a company with negative eps growth, what do you make of that ?

Even if OCA do $43m (mid point of my forecast) that's 7 cps. 7 x 19.7 = $1.38. Hmmm


Good eh -- even if its just a sign that the sector is seen more favourably again

Maybe a sum reward for making much better use of the funds they have to play with (ROIC)

And on your numbers OCA going backwards faster than SUM

[peat]

shows there was never a need to sell anything due to Covid huh ? :p


would ve been a hairy six months tho!

[Beagle]

Good eh -- even if its just a sign that the sector is seen more favourably again

Maybe a sum reward for making much better use of the funds they have to play with (ROIC)

And on your numbers OCA going backwards faster than SUM

More care = more covid cost effect.

[Panda-NZ-]

More interested in this sector now and wonder which has the most value. OCA is my pick for now from MET. :)

[winner69]

More care = more covid cost effect.

..if ongoing lower relative multiples

[winner69]

Property market on fire

No wonder Kimgfish increased their holding

All good

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12356469

[Beagle]

"Annually, national median prices rose 15 per cent from $575,000 last July to $660,000 last month".

Must admit, that is VERY STRONG.

[Baa_Baa]

"Annually, national median prices rose 15 per cent from $575,000 last July to $660,000 last month".

Must admit, that is VERY STRONG.

Interesting with OCA they revised their valuation model conservatively which hit the balance sheet and contributed to an average result (not sure what sum did), so stands to reason there’s a nascent upside now that property is going ballistic?

[winner69]

Apparently SUM half year out today ...should be close to guidance

If they don’t report it I’ll work out what the RR-NUPPCA is

I reckon that profitability number will support a share price in the $8.00 to $8.50 range (esp seeing it be better than what OCA achieved)

[trader_jackson]

From underlying profits, to development margins... alot of metrics things lower or the lowest even in 3 years... and possibly the first time in sum time that SUM's equity is down... although one thing that is noticeably up is the debt ratio now nearing 36%.
Not exactly a growth company these days it would appear...
https://www.nzx.com/announcements/358066

[winner69]

Underlying profit the lowest in 3 years... and alot of other metrics down... not exactly a growth company these days it would appear... possibly the first time in sum time that SUM's equity is down...
https://www.nzx.com/announcements/358066

At least they made a profit - even if it was only $1.0m

[winner69]

Julian got to get the facts right in his releases

Summerset CEO Julian Cook said the result was at the top end of market guidance provided in
early July which forecast underlying profit between NZ$40 million and NZ$45 million.

Surely $45.1 million BEAT guidance

[bull....]

Coronavirus has influenced valuations of one retirement giant's properties to such an extent that last year's gains in its national property portfolio have been turned into falls and the bottom-line profit has been reduced to nearly zero.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12356985

[allfromacell]

Nice chart showing the resilience of the sector
11856

[winner69]

Coronavirus has influenced valuations of one retirement giant's properties to such an extent that last year's gains in its national property portfolio have been turned into falls and the bottom-line profit has been reduced to nearly zero.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12356985

Bad eh -- others to follow (esp that Arvida

For those who have bull on Ignore here's what he posted from the NZ Herald

Coronavirus has influenced valuations of one retirement giant's properties to such an extent that last year's gains in its national property portfolio have been turned into falls and the bottom-line profit has been reduced to nearly zero.

[winner69]

Nice chart showing the resilience of the sector
11856

Yes indeed ....that's why RR-NUPPCA will look pretty healthy

[trader_jackson]

Bad eh -- others to follow (esp that Arvida

For those who have bull on Ignore here's what he posted from the NZ Herald

Coronavirus has influenced valuations of one retirement giant's properties to such an extent that last year's gains in its national property portfolio have been turned into falls and the bottom-line profit has been reduced to nearly zero.

ARV CEO hovering up ARV shares it has been disclosed... dropped nearly a quarter of a million bucks buying more...
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ARV/358076/328495.pdf
Maybe ARV isn't quite as badly impacted as sum others? A vote of confidence in ARV at the very least... meanwhile I think the CEO of sum other listed operators was cashing out big time a few months back...? Anyhow, I'll stop banging on about ARV!

[Beagle]

From underlying profits, to development margins... alot of metrics things lower or the lowest even in 3 years... and possibly the first time in sum time that SUM's equity is down... although one thing that is noticeably up is the debt ratio now nearing 36%.
Not exactly a growth company these days it would appear...
https://www.nzx.com/announcements/358066

I dispute that...there is strong growth in one part of the business, went from $500m to $655m, can you guess what it is ? ;)...yes you guess it Debt ! Just keep borrowing more...what could possible go wrong :eek2:
Development margins and IFRS profit under serious pressure when just last week the REINZ said medium house prices in N.Z. were up 15% year on year to July 2020 ? Go figure ? Just as well they took substantial support from the Govt's wage subsidy program. Disc: No position.

[winner69]

I dispute that...there is strong growth in one part of the business, went from $500m to $655m, can you guess what it is ? ;)
Development margins and IFRS profit under serious pressure when just last week the REINZ said medium house prices in N.Z. were up 15% year on year to July 2020. Go figure. Just as well they took substantial support from the Govt's wage subsidy program.
Disc: No position.



And Oceania has strong debt growth as well ....did I get that answer right?

[Beagle]

And Oceania has strong debt growth as well ....did I get that answer right?

True that but OCA's cash flow was up 11.3% and SUM's was down. From memory OCA's development margin was about 33% and SUM's now 22% and yet SUM is on nearly double OCA's forward underlying earnings multiple despite not being able to sell what they "deliver", (a euphemistic term if ever there was one), each year for several years now. Hmmm On a relative basis none of this makes any sense to me which is why I remain out.
But...the market clearly loves the result so obviously there is something I am not seeing...but then again SUM is presently priced at $7.76 which is right on the very upper limit on the very well established 40-60% price relativity of RYM which is currently $12.80.

Coutta would argue his GOLD STANDARD suggests SUM is not worth more than half a RYM share and would argue fair value using this benchmark is $12.80 / 2 = $6.40 and I would agree. I therefore think SUM is a SELL at the current price.

[Getty]

Do your SUMs'
SUMmer may be over.

Dr JPG

Terms of trade for elderly.
Payment MUST be made before EXPIRY.

[macduffy]

Do your SUMs'
SUMmer may be over.

Dr JPG

Terms of trade for elderly.
Payment MUST be made before EXPIRY.

I don't know what that is all about...… but, bear in mind when looking at SUM's result that the property valuation is just one valuer's conservative opinion. As we look through annual increases in these values to underlying profit, so we should do likewise here. Unless, of course, we take the view that these are permanent falls, in which case - rush for the exits!

Disc: Continuing to hold.

[Baa_Baa]

I don't know what that is all about...… but, bear in mind when looking at SUM's result that the property valuation is just one valuer's conservative opinion. As we look through annual increases in these values to underlying profit, so we should do likewise here. Unless, of course, we take the view that these are permanent falls, in which case - rush for the exits!

Disc: Continuing to hold.

Agree, it's good company and like the others have taken a conservative valuation on property which hits the books but is not really real as it's not realised. People go on about how important 'underlying earnings' are, the company also stresses that (and they beat their upper end projection) and then people ignore it and focus on IFRS when it suits them. I reckon a lot of punters will see only that underlying profit is a 'beat forecast' and there's a dividend and be happy holding. Enough for me anyway, happy holder.

[Getty]

History is with you.
Kiwi's have done very well from property, hence it being a favourite choice.
I also think the listed rest home sector will receive investment from those who have managed their own rentals, but feel they are getting on a bit, and will sell out to transfer into this sector, for ready liquidity should they, or family need it.
How long that trend continues, is anyone's guess.

[Beagle]

NTA is $4.91. Does it deserve to be trading at a 58% premium to NTA ?, that as they say is the $64,000 question.

[Onion]

But...the market clearly loves the result so obviously there is something I am not seeing...but then again SUM is presently priced at $7.76 which is right on the very upper limit on the very well established 40-60% price relativity of RYM which is currently $12.80.

Coutta would argue his GOLD STANDARD suggests SUM is not worth more than half a RYM share and would argue fair value using this benchmark is $12.80 / 2 = $6.40 and I would agree. I therefore think SUM is a SELL at the current price.

As I hold both RYM and SUM I prefer the conclusion that RYM is due for a SP rise. $15+ anyone?

:t_up:

[Waltzing]

will be fascination if indeed the market move to 6.40 but are we seeing a turbo charge version of the GFC as the money supply around the world ramps up much faster then in 2009. SUM might never make it down that far. Im expecting the likes of GMT, PCT , ARG ect to move up next year. If you missed the graphic card plays in the US its that not being in the states prehaps we just dont ZOOOOOM enough. But we might see that effect from the money supply on stock later next year.

[value_investor]

Its quiet a meh result really and I'm not really sure the price bump up justifies the result. A reduction in development margin being lamented by a slowdown in sales in Auckland. I think that part of it might not really be Covid related but more of a saturation issue of units in the general market. Its a tricky scenario to spend the money upfront like they have and have about 250 units unsold.

Interesting to see more debt on the balance sheet being taken on but not really mentioned by anyone in the report. The debt is being used to fund cashflow and pay a dividend. When you have net proceeds of borrowing $42m, pay a $11m dividend and end the 6 month period $8m down in cash its not a good look. Yes you can borrow a lot more in the current environment but interest payments are up to $7.6m and won't be long until it swallows the dividend.

A full year result of $90-95m puts the stock at current levels at a PE of 18-20. Its not a value play, like it used to be. At this point, I would probably sell my position if it got back up to its heights again. I'd be a buyer in the low 6s but I don't see it happening. I think we might see some sideways results for the next couple FYs.

[Zaphod]

I think the SP increase denotes investors surmising that the results would have been a bit worse.

The good news is of course that New Zealanders are very busy ratcheting up the prices of property again, which will help the retirement sector stocks. I wonder who will be blamed for the ratcheting this time.

[Snoopy]

The good news is of course that New Zealanders are very busy ratcheting up the prices of property again, which will help the retirement sector stocks. I wonder who will be blamed for the ratcheting this time.


A mixture of shock and Orr?

SNOOPY

[Zaphod]

A mixture of shock and Orr?

SNOOPY

Very well done! You've brightened my day. Thank you.

[Bjauck]

I think the SP increase denotes investors surmising that the results would have been a bit worse.

The good news is of course that New Zealanders are very busy ratcheting up the prices of property again, which will help the retirement sector stocks. I wonder who will be blamed for the ratcheting this time.
It is a systemic issue: The taxation efficiency of investing in your own home and investor real estate, willingness to lend with real estate as security, Investing more into kiwisaver brings no tax efficiency or advantage, baby boomers traditionally preferring real estate as a result of being burnt by previous share market failures and finance company collapses.

[Beagle]

Its quiet a meh result really and I'm not really sure the price bump up justifies the result. A reduction in development margin being lamented by a slowdown in sales in Auckland. I think that part of it might not really be Covid related but more of a saturation issue of units in the general market. Its a tricky scenario to spend the money upfront like they have and have about 250 units unsold.

Interesting to see more debt on the balance sheet being taken on but not really mentioned by anyone in the report. The debt is being used to fund cashflow and pay a dividend. When you have net proceeds of borrowing $42m, pay a $11m dividend and end the 6 month period $8m down in cash its not a good look. Yes you can borrow a lot more in the current environment but interest payments are up to $7.6m and won't be long until it swallows the dividend.

A full year result of $90-95m puts the stock at current levels at a PE of 18-20. Its not a value play, like it used to be. At this point, I would probably sell my position if it got back up to its heights again. I'd be a buyer in the low 6s but I don't see it happening. I think we might see some sideways results for the next couple FYs.

Warning...morning frustration rant coming...
Nicely summed up and pretty much how I see it too.
In the current Covid (lockdown rinse and repeat environment) the current share price does not correctly reflect the risk in my view. The plain fact of the matter is despite a lot of soothing talk by Cindy and Dr Bloomfield and repeated assurances the military is in control and we have a rigorous testing system for front line border staff, Kiwi's have been exposed to extreme level's of gross incompetence and gross recklessness by ministry health so called "professionals" with a woefully pathetic effort at testing front line border staff most at risk of transmitting this virus into the wider community and I believe this is something that poses a clear and very present danger going forward, despite assurances this testing is now under way.

The naked truth is we have been mislead and lied too and like many others I am angry about it. https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12357416

I would like to think lessons have been learned but I think the level of organizational ability within the ministry of health is simply not up to the task.
Sadly I think the likelihood of further Covid outbreaks in N.Z. going forward, (assuming we can get the Auckland one under control), is very, very high.
This risk appears to be reflected in some shares but definitely not in SUM others. end of rant.

[Entrep]

From Craigs, quite a different view to most here.


Summerset – Passes the Stress Test – up to Overweight. Yesterday’s interim result from SUM sent the shares up c5% but the run has only just begun with Stephen Ridgewell upgrading SUM from Neutral to Overweight overnight with a revised TP of $8.85 (+21%). SUM delivered 1H20 uNPAT of -6%, at the top of the -6 to-16% guidance range, a particularly strong result given the sector headwinds from the pandemic – SUM have enjoyed a V-shaped recovery post the first lockdown and look set to deliver a broadly flat bottom line result for FY20, consistent with pre-COVID expectations. The recovery in SUM’s sales reflects a range of factors including 1) broader housing recovery underway 2) enhanced reputation following SUM’s pandemic response 3) diversified nature of the SUM portfolio across a wide range of locations. In the note, Ridgewell & White have provided some detailed proprietary analysis (1st Chart, p.g. 11) of demand and supply in each region SUM operates – it indicates that SUM will face only limited competition at its current locations with c20% of its villages in “oversupplied” locations. SUM have experienced relatively flat NPAT over the past few years whilst they have; repositioned their portfolio, increased the size of their land-bank and tilted towards more geographically diverse and less intensive broad-acre sites. SUM now looks well positioned to regain earnings momentum as it lifts its build rate from c350 units in FY20 to a (sustainable) c500 units from FY21 whilst at the same time delivering its first Village in Victoria later next year. With SUM shares trading at 1.6x P/Book (c16% discount to 5 year historical average) and a DCF derived TP factoring in 1% unit price growth in FY20/21 (+3% long term) Ridgewell moves to Overweight – time to get ahead of the story with SUM the top pick in the Retirement Village merit order followed by RYM, OCA and MET.

[Enrix]

and another major broker.. DYOR please

Solid 1H result despite challenging operating conditions - underlying NPAT NZ$45.1m (-6% YoY) ahead of guidance of NZ$40m-45m. The company received a net benefit of NZ$5.4m from wage subsidies in excess of higher COVID-19 related operating expenses. However, even if this one-off gain is excluded, underlying NPAT exclu development margin still increased 7% vs 1H19. While SUM’s new sale and resale volumes were both down year-on year due to lockdown, the company noted a strong bounce back in sales activities with recent new sales +50% YoY and resales +30%. This should help unwind the spike in resales inventory which increased to 4.8% of total units (typically ~3%). NTA declined by -2.2% to NZ$4.91/share. The company noted current unit pricing outcomes are broadly flat YoY and in-line with recent CBRE assumptions. Target price $8.05 (prev $7.30) - reflects 7-16% earnings upgrades due to better realised resale gains and lower operating costs. Downgrade to Neutral. While SUM remains our preferred retirement operator, following recent share price strength (+21% since start of July), upside and diversity of the company’s growth profile is offset by our caution on the broader macro / housing outlook.

[Beagle]

Thanks folks for sharing. Both analysts appear to take a very benign view of the risks of Covid to SUM's operations. The Govt can't keep printing money forever, (to bail out business) if we have one lockdown after another after another... Serious risk remains of future outbreaks, a good example here https://www.msn.com/en-nz/news/national/isolation-nz-based-air-crew-still-go-home/ar-BB184law?ocid=msedgdhp Fact is SUM's shares are priced on a higher forward underlying PE than before Covid which makes no sense whatsoever to me.

Talk of delivering 500 units next year looks to be predicated upon the assumption Covid 19 will be well and truly under control and an effective vaccine being widely available at some stage in 2021 so SUM can continue that build rate going forward from there. While I would love that prediction to be right, such thinking looks very optimistic to me.

In any event the current share price is now very close to the 12 month price targets of those analysts. I think the risks are clearly to the downside in the next 12 months at least from here.

[bull....]

just goes to prove sum is a better investment than oca ( the runt of the pack)

[winner69]

Hey beagle ....as I said yesterday SUM’s RR-NUPPCA supports a share price $8.00 to $8.50

RR-NUPPCA Is Run Rate Normalised Underlying Profit Pre-Covid Adjusted

Seems to be how you look at things anyway ....and SUM seems to perform better than OCA on this measure.

No wonder market liking SUM today

[Beagle]

Hey Winner - Are any professional analysts using this measurement methodology or is this some new thing some of your neighbor's mates at the bowling club came up with ?

What would I know...I sold SUM at $9 earlier this year and bought OCA @ 70 cents. I'm obviously a dumb dog and have no idea what I'm doing.

[winner69]

Hey Winner - Are any professional analysts using this measurement methodology or is this some new thing some of your neighbor's mates at the bowling club came up with ?

What would I know...I sold SUM at $9 earlier this year and bought OCA @ 70 cents. I'm obviously a dumb dog and have no idea what I'm doing.

Good trading there mate ...well done

[winner69]

Best part of results this bit


▪ Net operating business cash flow of $16.5m, up $12.3m on 1H19 highlighting strong growth in our core business functions

[Beagle]

Good trading there mate ...well done

Not trading mate. Held that investment for quite SUM years, most of which was when there really was growth. My understanding is that investors are entitled to sell if they are protecting the capital value of their portfolio but I welcome any tax case law to be shared with me by PM to the contrary.

Cash flow was down, underlying profit was down, (especially if one backs out the Govt's wage subsidy), IFRS profit was absolutely smashed to bits, developments margin's came under serious pressure despite real estate medium prices in N.Z. rising 15% in July 2020 compared to last year, (go figure that one), new sales were down, resales were down...I've probably missed a few other things that were down. There was very strong growth in one area of their business though, Debt !

If they can make $100m underlying in FY20 that's 43.8 cps and at $8.10 they're on a forward PE of 18.5 and we have all the remaining risk of Covid still to come. They're priced higher on a forward earnings basis than to the best of my knowledge at any time in the last three years before Covid. I'll just leave it at that, if people can't see the risk to the share price in what I've said in this post with all my knowledge of the company over the years, there's nothing more I can add to help so I am wasting my time.

[winner69]

Hey Winner - Are any professional analysts using this measurement methodology or is this some new thing some of your neighbor's mates at the bowling club came up with ?

What would I know...I sold SUM at $9 earlier this year and bought OCA @ 70 cents. I'm obviously a dumb dog and have no idea what I'm doing.

It’s really the same as your look through covid underlying earnings

[Beagle]

It’s really the same as your look through covid underlying earnings

So I'll just stick to what I've been doing then because it seems to work quite well. If OCA can do $60m annualized in the ten months to 31/3/21 that's 9.7 cps and they're on a forward PE of just 10.2. Enough said.

[Lease]

NTA is $4.91. Does it deserve to be trading at a 58% premium to NTA ?, that as they say is the $64,000 question.

In calculating NTA, we all know the biggest part of liabilities is residents' loans which SUM don't need to repay until they sign a new ORA and receive a new lump sum payment. Therefore I normally exclude this one when I work out NTA. By excluding residents' loans, SUM's NTA is nearly $11 thus its SP is trading at discount of NTA.

Surely using this measurement OCA is still a lot cheaper. But OCA revenue and underlying profit have been down in two consecutive years. Portfolio(Total units and beds) has been shrinking year by year(from 4093 in 2017 down to 3846 in 2020).

Compare these metrics, SUM is much better thus deserve better valuation.

Also compare to RYM, you said "SUM is presently priced at $7.76 which is right on the very upper limit on the very well established 40-60% price relativity of RYM which is currently $12.80." Well, I think only SP comparison is pointless as SUM market cap is still only about 27% of RYM.

[Beagle]

In calculating NTA, we all know the biggest part of liabilities is residents' loans which SUM don't need to repay until they sign a new ORA and receive a new lump sum payment. Therefore I normally exclude this one when I work out NTA. By excluding residents' loans, SUM's NTA is nearly $11 thus its SP is trading at discount of NTA. I see where you're going with that. Because its never repayable without another interest free advance the liability never materializes and therefore there's an argument for saying its an interest free loan in perpetuity. You could go on to say because of this in theory the liability doesn't exist which is quite a creative way of looking at it and you could actually get away with such a creative approach if the asset upon which the liability is attached had an infinite lifetime. Unfortunately buildings don't last forever and therefore the liability to keep providing units of an acceptable standard to consecutive residents indefinitely means the liability is actually still on the company but just in a different way.

Surely using this measurement OCA is still a lot cheaper. But OCA revenue and underlying profit have been down in two consecutive years. Portfolio(Total units and beds) has been shrinking year by year(from 4093 in 2017 down to 3846 in 2020).OCA are in a transformation process as has been discussed at great length in the OCA thread. I firmly believe they would have done close to $60m underlying profit in the year to 31/05/2020 if it were not for Covid

Compare these metrics, SUM is much better thus deserve better valuation. I will stick with what works for me, comparing underlying profitability metrics and whether companies can actually sell what they're building.

Also compare to RYM, you said "SUM is presently priced at $7.76 which is right on the very upper limit on the very well established 40-60% price relativity of RYM which is currently $12.80." Well, I think only SP comparison is pointless as SUM market cap is still only about 27% of RYM.
You're certainly entitled to your opinion mate. I've been investing for 38 years now and see OCA as having the best potential in this sector in the foreseeable future and I'm pretty content with my track record, see post #9114.
Ultimately assets are only worth what they can earn for their owners and its a question of which company has the best growth outlook relative to its underlying earnings PE Last time I looked OCA at about 10-10.5 times forward underlying earnings are the cheapest of this sector by miles, (SUM about 19 times, ARV about 17, RYM over 25 times and MET is almost being given away by hapless directors. I think OCA's forward growth outlook is at least as good as any other in the sector, probably best of class.

[winner69]

From OCA thread but more relevant for SUMs prospects

No wonder some fundies topping up and overweight

So good I’ll put on Summerset thread as well ...good news for them



https://www.interest.co.nz/property/...ing-two-thirds

well if this keeps up....

[winner69]

Close at 840 today

Almost back to highs of February

Seems SUM best performer in sector of late ...but then I am biased.

DB say 156% up on recent lows ....that’s some effort

[Baa_Baa]

Close at 840 today

Almost back to highs of February

Seems SUM best performer in sector of late ...but then I am biased.

DB say 156% up on recent lows ....that’s some effort

It’s certainly a proven performer and underpins my portfolio, doing very nicely in this environment of chasing yield. Eyes on the chart now though, I’m not giving away the gains if the market turned to custard.

[Beagle]

101 / 38 for OCA = 2.66 times your money...just saying.

[winner69]

101 / 38 for OCA = 2.66 times your money...just saying.


.?????????? Bit slow this morning

[RTM]

.?????????? Bit slow this morning

Did they drop to 38c in recent meltdown ? You’d have had to be pretty quick to get that I suspect.
I was out fishing.....

[winner69]

Did they drop to 38c in recent meltdown ? You’d have had to be pretty quick to get that I suspect.
I was out fishing.....

ah so --- so OCA performed heaps better than SUM (from recent lows) ..... the law of large numbers helps OCA when doing these sums

But must say that SUM is a lot closer to its highs than OCA is ..... 101/139 pretty bad I reckon .....just saying

[couta1]

ah so --- so OCA performed heaps better than SUM (from recent lows) ..... the law of large numbers helps OCA when doing these sums

But must say that SUM is a lot closer to its highs than OCA is ..... 101/139 pretty bad I reckon .....just saying SUM would be my last choice if there was any care component needed, hungry for money and far too much of an Ivory Tower attitude from the top for my liking, OCA and RYM far better choices(Cant comment on ARV)

[Lease]

Did they drop to 38c in recent meltdown ? You’d have had to be pretty quick to get that I suspect.
I was out fishing.....

Indeed OCA dropped to 38c in March. Very few people dare to buy at that point. I did buy SUM at $4.2, but not brave enough to buy at $3.36:scared:

[James108]

I bought some at 42.5. This was after level 4 was announced which de-risked things a lot and OCA screamed value in my view (but not the markets). I wasn’t brave though and only bought a very small parcel. Still a missed opportunity for me and there is a lesson there somewhere.

[Baa_Baa]

Indeed OCA dropped to 38c in March. Very few people dare to buy at that point.

I'm not sure where you get that idea, OCA volume during the SP decline into .38 was massive compared to the usual daily average. SUM not so.

1188011881

[Lease]

I'm not sure where you get that idea, OCA volume during the SP decline into .38 was massive compared to the usual daily average. SUM not so.

1188011881

Well, I suppose larger players, like ANZ, was buying that time. Small retail investors were selling. I really don't think individual investors are so brave to take the falling knife, and take substantial amount.

[Enrix]

Thoughts on current share price? Tempted to cash out as I struggle to see continued upside at the current valuation.

'While SUM remains our preferred retirement operator, we believe that following recent share price strength (+21% since the start of July) the shares now offer a more evenly balanced risk/reward, with the upside and diversity of the company's growth profile tempered by our caution on the broader macro/housing outlook'

DYOR

[Lease]

Thoughts on current share price? Tempted to cash out as I struggle to see continued upside at the current valuation.

'While SUM remains our preferred retirement operator, we believe that following recent share price strength (+21% since the start of July) the shares now offer a more evenly balanced risk/reward, with the upside and diversity of the company's growth profile tempered by our caution on the broader macro/housing outlook'

DYOR

Unless you are a short-term trader, SUM will still have substantial capital appreciation in the long-run.

[Zaphod]

Unless you are a short-term trader, SUM will still have substantial capital appreciation in the long-run.

Agreed - buy in with a long term horizon. Would also pay to read the arguments around which provider represents the best opportunity at this point for buy in, but definitely DYOR.

[Cyclical]

ah so --- so OCA performed heaps better than SUM (from recent lows) ..... the law of large numbers helps OCA when doing these sums

But must say that SUM is a lot closer to its highs than OCA is ..... 101/139 pretty bad I reckon .....just saying

All I see there is potential upside for OCA...just saying.

[Cyclical]

I bought some at 42.5. This was after level 4 was announced which de-risked things a lot and OCA screamed value in my view (but not the markets). I wasn’t brave though and only bought a very small parcel. Still a missed opportunity for me and there is a lesson there somewhere.

There's no shortage of us in that boat mate...still wish I'd listened to you more about HLG too.

[Cyclical]

Thoughts on current share price? Tempted to cash out as I struggle to see continued upside at the current valuation.

'While SUM remains our preferred retirement operator, we believe that following recent share price strength (+21% since the start of July) the shares now offer a more evenly balanced risk/reward, with the upside and diversity of the company's growth profile tempered by our caution on the broader macro/housing outlook'

DYOR

I've said it elsewhere...expecting a rising tide at OCA...but hey, I cashed out of SUM not too long ago in the low $6 range, so don't listen to me ;-)

[winner69]

Lockdown blues and loneliness motivating oldies who are living alone to look at village life

Huge demand said Julian on TV tonight .....numbers like 25% and 40% increase mentioned

[Beagle]

Lockdown blues and loneliness motivating oldies who are living alone to look at village life

Huge demand said Julian on TV tonight .....numbers like 25% and 40% increase mentioned

Doesn't resonate with the tone of part of ARV's dividend announcement today, excerpt below

The level of applications in June to August 2020 were in-line with
the level of applications made in the prior corresponding period. The number
of resale settlements in July and August 2020 were the same as the monthly
average from the prior financial year. Operating costs also substantially
returned to normalised levels during this period.

If demand and sales are up so much why do they need to keep borrowing so much money ? https://www.nzx.com/announcements/358937

Julian's claim and the statement by ARV are incongruent. Given SUM's recent recorded sales I am inclined towards believing ARV's state of affairs are a more accurate representation of the average state of play across N.Z.

[winner69]

Didn’t look like he was telling porkies

Spose we’ll know early October

[Beagle]

Agree he's not an outright liar so...drilling down into the nuances of what was said and the difference between the two statements, what can we observe ?

Lockdown blues and loneliness motivating oldies who are living alone to look at village life.
ARV are reporting actual applications to reside and actual resales of units, (past tense), not those currently "looking".

Therein probably lies most of the difference.

I would think Julian's statement is a forward indicator of a lift in sales going ahead, (maybe an average of 6-9 months lead time from first look to unconditional unit sale) and augers well for the entire industry as he's quite rightly observed that this Covid thing has really made people think about and start looking at the lifestyle benefits and camaraderie of village life.

[winner69]

I thought I heard Julian say sales were up

Good sign

Summetset Retirement Villages says they've seen a 25 per cent increase in inquiries since this time last year, with sales up 30 to 50 per cent around the country
https://www.tvnz.co.nz/one-news/new-zealand/lockdown-loneliness-sees-surge-in-sign-ups-retirement-villages

[Baa_Baa]

I thought I heard Julian say sales were up

Good sign

Summetset Retirement Villages says they've seen a 25 per cent increase in inquiries since this time last year, with sales up 30 to 50 per cent around the country
https://www.tvnz.co.nz/one-news/new-zealand/lockdown-loneliness-sees-surge-in-sign-ups-retirement-villages

That’s good, might explain the slower return to relativity with OCA, both are about neck and neck now where as OCA rebounded much faster from the COVID lows, then flatlined while SUM caught up. Neither are back at their highs. It will require improved sales, regardless of strategy, to get either of these back to ATH imo. That or a flood of loose money in the economy looking for a safe return ... oh wait, is that a flood I see?

Bring up the SP comparison chart from the COVID lows and you’ll see what I mean about relativity,

[winner69]

That’s good, might explain the slower return to relativity with OCA, both are about neck and neck now where as OCA rebounded much faster from the COVID lows, then flatlined while SUM caught up. Neither are back at their highs. It will require improved sales, regardless of strategy, to get either of these back to ATH imo. That or a flood of loose money in the economy looking for a safe return ... oh wait, is that a flood I see?

Bring up the SP comparison chart from the COVID lows and you’ll see what I mean about relativity,

Would have to say that SUM has 'rebounded' from Covid lows much better than than the other 3 in the sector

Only 7% from ath while others still 20%/25%

[Bjauck]

I think the epidemic will actually provide a boost for those operators who offer retirement villages. Perhaps investors (and potential residents) will understand that the retirement villages will offer a safer haven than the rest of the community.

The differences between rest homes and villages when facing an epidemic are becoming more widely understood. Perhaps that explains to an extent SUM's faster rebound?

[Beagle]

I thought I heard Julian say sales were up

Good sign

Summetset Retirement Villages says they've seen a 25 per cent increase in inquiries since this time last year, with sales up 30 to 50 per cent around the country
https://www.tvnz.co.nz/one-news/new-zealand/lockdown-loneliness-sees-surge-in-sign-ups-retirement-villages

Got to be a little bit careful with our mate Julian. Its what he doesn't say that's often more than a little interesting. Good example was at the April 2019 annual meeting when he assured us unsold stock level's would not increase in 2019. My Beagle nose for creative speak registered a pretty solid reading so my follow up question, (note that at no time during the meeting did Julian Cook, Rob Campbell or anyone else there voluntarily advise the meeting they were dramatically pulling back their build rate in 2019) was what is your target build rate for 2019 ? Then of course the answer came back of about 350. (Note, this was right towards the end of the meeting). If I hadn't of asked that question nobody would have been any the wiser. I was less than impressed this information which is definitely market relevant wasn't volunteered much earlier in the meeting and they seem to be in a state of semi-denial about their unsold stock problem.

The fact is history records that their unsold stock levels did increase in 2019 so the company is not doing what it says it would do in that regard and 2019 was an abysmal year for sales despite record level's of stock so my radar nose for creative speak was working perfectly.

I don't want to come across as a sour puss but the plain fact of the matter is its very easy to get good comparative data when you have record ever brand new stock just sitting there and last years figures were so bad.

I do however agree that loneliness is a really HUGE thing (and not just for the elderly) and many people have been doing it REALLY tough in 2020. I do agree that retirement villages will get a boost from this Covid thing as I have seen first hand how very happy and well supported my own mother is in her retirement village over the last decade and the support over lockdown was awesome.

As I said yesterday, if sales were really soaring why do they need to borrow another $150m ?
About 17 years bare land stock at the current build rate is an "interesting" strategy.

Julian's quick comment of sales up that much registers again on my creative speak radar. What's the bet that there's an element of talking up their own game in that statement and the numbers when they come out don't match the perhaps somewhat creative marketing speak.
Call me a cynic but I suspect there a lot of pretty "doggy" stock in their portfolio in villages that are less than premier that they're still struggling to shift.
I'll believe it when I see the actual sales numbers and will remain a sceptic until then.

As you've pointed out SUM have recovered better than the others so the risk here is that the share price has overshot the degree to which the underlying business is performing. Forward PE looks to me to be about 18.5 at $8.60 which is certainly not cheap.

Others will have a different view and that's fine but for my capital if one has missed the recent recovery in SUM then jumping in at this level one must be taking the view that SUM is not going to be materially affected by any further possible Covid outbreak or if they are Grant Robertson will be there with more generous stimulus and I am not so sure that's the case. Bottom line I see no Covid risk built into the price at the moment and I think its still the biggest risk to profitability going forward.

[winner69]

That bit on 1News the other night a great advertisement for the sector. Should create a bit of extra demand. Well done the Retirement Village Association guys.

Summerset sales up 30% to 50% — no wonder the likes of Kingfish been buying more.

[couta1]

I don't care what their sales spin turns out like cause I wouldn't invest in them under their current modus operandi.

[Sideshow Bob]

Summerset Launches Fixed Rate Retail Bond Offer7/9/2020, 8:31 am OFFERNZX & ASX RELEASE
7 September 2020
SUMMERSET LAUNCHES FIXED RATE RETAIL BOND OFFER
Summerset Group Holdings Limited (Summerset) announced today that it is offering up to NZ$100 million (with the ability to accept up to NZ$50 million of oversubscriptions at Summerset’s discretion) of seven year fixed rate bonds maturing on 21 September 2027 to New Zealand institutional and retail investors.
The interest rate will be the sum of the issue margin plus the seven year base rate, but in any case will be no less than the minimum interest rate of 2.30% per annum. The actual issue margin may be above or below the indicative issue margin range. The indicative issue margin range for the bonds is 2.00% to 2.20% per annum. The issue margin and interest rate will be set following a book-build process on 11 September 2020 and will be announced by Summerset via NZX shortly thereafter.
The offer will close on 11 September 2020 following the book-build process, with the bonds expected to be issued on 21 September 2020.
Full details of the bond offer are contained in the Indicative Terms Sheet, available through www.summerset.co.nz/bondoffer or by contacting the Joint Lead Managers, the Co-Manager, or your usual financial adviser, and must be obtained by investors before they decide to acquire any bonds.
Summerset has applied for the bonds to be quoted on the NZX Debt Market.
There is no public pool for the bonds, which will be reserved for the Joint Lead Managers, the Co-Manager, institutional investors and other primary market participants invited to participate in the book-build.
Joint Lead Managers
ANZ 0800 269 476
Craigs Investment Partners 0800 226 263
Forsyth Barr 0800 367 227
Jarden 0800 005 678
Co-Manager
Hobson Wealth Partners 0800 742 737
ENDS

[winner69]

Bob ...they’ll probably get the $150m

[Beagle]

Good move by the investment banker. Just keep borrowing more and more money...what could possibly go wrong ?

[Sideshow Bob]

Bob ...they’ll probably get the $150m

That will be a $0.00 from me....

[Beagle]

That will be a $0.00 from me....

2.30% less tax, (assumed at 33% for serious investors on here) = 1.54% net. If the Reserve bank achieves its mandated mid point of the inflation target of 2% on average, investors in real terms will get a negative return of 0.46% per annum for the next 7 years. Great deal for SUM and the Govt but investors...oh dear...

[winner69]

Good move by the investment banker. Just keep borrowing more and more money...what could possibly go wrong ?

Betcha Oceania will try the same trick soon

[Beagle]

That's a pretty safe bet as they're on record as mulling that over for some time now.

[winner69]

That's a pretty safe bet as they're on record as mulling that over for some time now.

Good move if Oceania do a bond issue

Just keep borrowing more and more money...what could possibly go wrong ?

[peat]

kinda surprised its not an equity issue given the heights of the share price.

7 years seems a popular term these days, quite a few of them out there recently. wow imagine what the markets will be like in 7 years.
No one has a clue.

Will just over 2% p.a. be a useful return on your savings for this lengthy time frame?

[Beagle]

kinda surprised its not an equity issue given the heights of the share price.

7 years seems a popular term these days, quite a few of them out there recently. wow imagine what the markets will be like in 7 years.
No one has a clue.

Will just over 2% p.a. be a useful return on your savings for this lengthy time frame?

Crazy world we live in now isn't. SUM already have two bond issues in the market and their 2025 bonds are bid fairly strongly at 1.8% with no sellers, go figure ?

[BlackPeter]

2.30% less tax, (assumed at 33% for serious investors on here) = 1.54% net. If the Reserve bank achieves its mandated mid point of the inflation target of 2% on average, investors in real terms will get a negative return of 0.46% per annum for the next 7 years. Great deal for SUM and the Govt but investors...oh dear...

Just wait until they ask the investors to pay interest instead of receiving interest payments. Quite normal situation for a number of AAA rated state bonds these days ...

[peat]

Just wait until they ask the investors to pay interest instead of receiving interest payments. Quite normal situation for a number of AAA rated state bonds these days ...

but it will be ok because they will pay us simply to exist and oil will be negative so they will pay us to fill our tanks and give us money to make aluminium from their electricity. /s /sorry /offtopic

[Mr Slothbear]

Bond issue is a very smart move IMO. The judgement and decision making of the people buying the bonds is extremely questionable however.

[Beagle]

Just wait until they ask the investors to pay interest instead of receiving interest payments. Quite normal situation for a number of AAA rated state bonds these days ...

People will then start looking at alternatives like precious metal or art or better still metal that's been formed into art on wheels that you can enjoy. I think collectable high performance cars will really take off in more ways than one :) I am fortunate to have a decent sum on term deposit with the BNZ until February 21 at 2.9%, reinvestment terms by then are lucky to be 0.9% :eek2:

[winner69]

Got a few hundred more shares courtesy of the DRP

One thing the tax man is happy taking his share out

Players in this sector should not be paying dividends full stop ....totally inefficient and a waste of time and effort.

[Mr Slothbear]

Got a few hundred more shares courtesy of the DRP

One thing the tax man is happy taking his share out

Players in this sector should not be paying dividends full stop ....totally inefficient and a waste of time and effort.


agree with you winner. I think a couple, SUM and RYM might be paying token dividends to keep any accusations of low tax bills at bay. Gives them something to point to when tax free ORAs bought up

even though its inefficient in the long run it might be ‘more efficient’ if you know what I mean

[winner69]

agree with you winner. I think a couple, SUM and RYM might be paying token dividends to keep any accusations of low tax bills at bay. Gives them something to point to when tax free ORAs bought up

even though its inefficient in the long run it might be ‘more efficient’ if you know what I mean

Spose government don’t mind sharehokders giving them nearly $4m

[winner69]

Well that was easy peasy way to get $150m in cash

Probably could have got $200m if they wanted

Well done the sum team.

[Beagle]

Well that was easy peasy way to get $150m in cash

Probably could have got $200m if they wanted

Good they raised the full amount so they can afford to pay that dividend. Borrowing so shareholders can pay tax to the IRD is a good thing isn't it :D

Actually got thinking about what our mate Bindi said yesterday...with real estate absolutely booming both in price and numbers sold SUM might finally break their multi year pattern of not being able to sell what they build and might even make a small inroad into the hundreds of units they haven't been able to sell for years ?

If they only build 300 new units that might give them an even better chance. (128 new sales in the first half despite "delivering" 139 new units and having hundreds on brand new empty ones at the start of the year so stock level's keep climbing). I concede at least this time they had a plausible excuse (unlike previous reporting periods going back years) Covid.

Still its a good thing that real estate keep rocketing up...makes their units which are staying the same price more attractive on a relative basis. 2 Brm unit in Ellerslie starting from $650K June Dobson keeps telling me about over and over again on the radio not starting to look too bad value...unless its a middle unit in a block that gets light from only one direction (south) and gets no sun... Gotta watch that term "from"...always the very worst unit nobody wants and the real price for a north facing one with a bit of a view of the pond is priced something completely different.

Pretty cunning marketing though eh. Call a bunch of apartments the "Lakeview apartments", market them as being from $650,000 but don't tell people you really don't get a lake view for $650K. Some apartments have to be south facing and not have a view of the pond. https://www.summerset.co.nz/find-a-village/summerset-at-heritage-park/

[Zaphod]

Sounds like standard real-estate marketing techniques to me. My spouse worked for a real-estate agent, who kept asking her to photoshop out powerlines and other detritus from the photos to make them more visually pleasing.

[winner69]

https://www.nzx.com/companies/SUM/announcements/302543
Congrats to the team at SUM. Makes compelling sense to diversify the funding source and lock in some of their funding costs for six years at close to a fifty year low in interest rates. Nearly $400m in headroom in their main funding facility now gives them ample headroom to pursue growth opportunities.

Back in 2017 this was

Expensive money now eh ...but compelling back then

[sampson]

Don't even think about quoting his posts before the results announcement earlier in the year winner :)

[dabsman]

Nearly back at $9. Wait till these revaluations hit!

[Baa_Baa]

Nearly back at $9. Wait till these revaluations hit!

Market is forward looking, I think we're seeing the revaluations being priced in across the sector.

[Beagle]

Market is forward looking, I think we're seeing the revaluations being priced in across the sector.

Yes we are. Looks like closing at $9.00 or slightly above. Congrats to holders, everyone in this sector is a Winner !

[Cyclical]

Yes we are. Looks like closing at $9.00 or slightly above. Congrats to holders, everyone in this sector is a Winner !

$4.4M trade just went through at the end of the day @$9 :eek2:

[winner69]

Back in 2017 this was

Expensive money now eh ...but compelling back then

And the heaps at 2.3% raised the other day pretty compelling these days

[Blue Skies]

SUM mentioned in last night's debates as one of the companies taking the wage subsidy while making huge profits & morally obliged to pay it back.

[winner69]

Suppose SUM will produce another shocking sales report this week ....confirming their inability to move surplus stock

Probably see shareprice fall as well

Hopefully won’t still over to the others in the sector with all prices going down ...top up opportunities

[Beagle]

I am sure that they will present a very good sales result for the last quarter as Julian has already been in the media saying sales were much stronger than last year.
One other thing I am sure of is this is already fully built into the current price.
One final thing, I am sure that some of the MET funds will find their way into SUM so that will probably move the price north towards $10.
Whether the shares are really worth that is another matter...

[Maverick]

The quarter sale results soon will be VERY interesting and telling. All here will know I've gone ballistic on analyzing a certain other retirement company but I've also got sheets on this one too. The macro metrics are the same to all in the sector.


I'm expecting a total sales volume (new and resales total) in this update of 205 (PCP was 165). This large leap will be impressive if delivered.
But this figure is only in keeping with normal sales then adjusted up for the gang buster monthly sales published by REINZ. Then its fine tuned for SUMs 28 % stock in Auckland , the rest ex Auckland. Sales growth in the last 3 months were almost double in Auckland than the rest of NZ- go MET (that should set Beagle off;)) and OCA with loads more %stock in Auckland.

IMO;
If the actual figure is lower than 205 then SUM has a worsening overstocking problem.
If it's about 205 then they are simply riding the market in keeping with everyone else and their overstocking remains.
If it is above 205 then SUM will be de-stocking it's excessive empty units at last .

No point getting too clever before the result but I'm just saying what will surely appear as a fantastic result won't necessarily mean it's all roses ahead.

I have said before, my opinion is SUM has had a build up of too much empty stock due to its growth plan of “ build even more than last year” which seems to have reached a NZ saturation point ( hence them spreading to Aussy).

Ironically , it's that very weakness of excessive unsold stock and empty paddocks that is now a strength as houses and land skyrocket.( Perhaps temporary , perhaps not...you make your own mind up on that one.)

Disc ,not holding but used to.. I'm neutral on SUM at $9.00, short term it is now becoming more dependent on property values for growth and looking further ahead their Aussy soiree makes me nervous. I believe it will still grow but nothing like it's fabulous CAGR of the past.

[bull....]

resales well up on last year , covid stress?

[winner69]

Maverick said -

If it is above 205 then SUM will be de-stocking it's excessive empty units at last .....and .....what will surely appear as a fantastic result won't necessarily mean it's all roses ahead

IT WAS 225

That's pretty good .... and methinks it will be 'all roses ahead'

[Maverick]

Maverick said -

If it is above 205 then SUM will be de-stocking it's excessive empty units at last .....and .....what will surely appear as a fantastic result won't necessarily mean it's all roses ahead

IT WAS 225

That's pretty good .... and methinks it will be 'all roses ahead'

That's a stunning result Winner. I'm very impressed considering their sales where 165 pcp. The whole sector will be smelling Rose's today.

[winner69]

That's a stunning result Winner. I'm very impressed considering their sales where 165 pcp. The whole sector will be smelling Rose's today.

Hopefully everybody is getting good prices as well

Add back the negative value adjustments = boomer profits

Bit of a hint still about extra covid related costs though

[trader_jackson]

You'd think they'd pay back the wage subsidy given the big boom times?

[dabsman]

A very good land purchase announced - a very pretty place to retire I'd say and you can walk down to your boat berthed at the marina and go fishing...

[couta1]

You'd think they'd pay back the wage subsidy given the big boom times? Agree with u on this one.

[bull....]

can a 75+ yr old still reel in a big kingfish?

[dobby41]

can a 75+ yr old still reel in a big kingfish?

Take the grandkids - they can help.

[bull....]

Take the grandkids - they can help.

lol yea im heaps younger than 75 and a big kingi is still hardwork

[Beagle]

Very solid sales results. Augers very well for the sector.
New land site looks like a good acquisition too. Handy to ferry services which are free for gold card holders. Regular free trips to Waiheke anyone ?
Good to see SUM appear to be starting to turn the corner with sales.

[winner69]

Seems the $9.39 earlier today was a RECORD HIGH

Incredible eh

[BlackPeter]

Seems the $9.39 earlier today was a RECORD HIGH

Incredible eh

It is. Which puts Ryman according to the trustworthy and infallible Couta Theorem just shy of $19, doesn't it?

Oops - Yahoo gives me only $14.80 for RYM and dropping, my internet connection must be broken?

Or is it that SUM is too dear and the market didn't realise?

Couta, please advise ....

[winner69]

Thanks mate. I really do think its a $10 stock in 2020, (am strongly inclined to believe my own B.S, especially after a very good and likely to be very successful MET foray).......

AND

.......Pretty sure I am not done yet.

AND

..... I know $15 sounds "whacky" talking about it now...a 76% potential gain in the next 2-3 years is highly likely in my opinion as the value is there.

AND

~ $15 in 2022.



Shouldn't really only quote parts of peoples (long) posts but Beagle seems pretty much on the ball ...and it was only Christmas Eve last year he said all this. I was sure that the predictions would probably be on the ball so kept a note.

Legend indeed

[Ggcc]

can a 75+ yr old still reel in a big kingfish?
Yes through KFL lol

[Bjauck]

Shouldn't really only quote parts of peoples (long) posts but Beagle seems pretty much on the ball ...and it was only Christmas Eve last year he said all this. I was sure that the predictions would probably be on the ball so kept a note.

Legend indeed

Perhaps even a bit conservative with Corona-affected interest rates dropping the way they have? Although I won't be adding to my holding.

[couta1]

It is. Which puts Ryman according to the trustworthy and infallible Couta Theorem just shy of $19, doesn't it?

Oops - Yahoo gives me only $14.80 for RYM and dropping, my internet connection must be broken?

Or is it that SUM is too dear and the market didn't realise?

Couta, please advise .... Reversion to the mean takes time like good cheese making, SUM way too dear and has a SELL rating on it from the Couta Group. PS-Couta Group not keen on the stock for other reasons as you will know.

[Ggcc]

$9.80 now....... Wow!!!! Getting ready for an alignment with RYM dollar for dollar??? Anyway don’t own these other than through KFL. Sold just after what I thought were bad results and bought OCA well below 70 cents

[Beagle]

Very pleased indeed for me ol mate Winner and other holders. $10 seems like just a matter of time, maybe even next week ?
Holding heaps of development land has paid off big time for SUM with housing and land prices absolutely booming all around the country.

[Bjauck]

$9.80 now....... Wow!!!! Getting ready for an alignment with RYM dollar for dollar??? Anyway don’t own these other than through KFL. Sold just after what I thought were bad results and bought OCA well below 70 cents
Perhaps a bit of switch from RYM into SUM?
I lightened my SUM some months ago and added more OCA, so probably even to date.

[macduffy]

Perhaps a bit of switch from RYM into SUM?
I lightened my SUM some months ago and added more OCA, so probably even to date.

It's just the weight of money thing. Any bit of encouraging news from a company is enough to set its shareprice alight at present!

[winner69]

It's just the weight of money thing. Any bit of encouraging news from a company is enough to set its shareprice alight at present!

RYM half year in a month or so ...then be it their turn to have a run

Reversion theory would imply a run up to $20 or so :)

[Baa_Baa]

It's just the weight of money thing. Any bit of encouraging news from a company is enough to set its shareprice alight at present!

Cracking the sales backlog for SUM is a big deal, not just any bit of news imo, it’s SUM’s own inflection point, something we’ve been looking forward to for quite awhile.

Good to see the market reward this excellent news. Hard to believe this was under $4 during COVID, what a gift. A lesson for me to always have a decent chunk of cash at the ready for unprecedented high conviction opportunities.

[Beagle]

$10.00 !!!! New All time high. Congrats to shareholders.

[dabsman]

$10.00 !!!! New All time high. Congrats to shareholders.

My biggest holding now - just keeping OCA at bay. Congrats to all

[bull....]

$10 close? wow sum is diffentely the best of the bunch in the retirement space

[BlackPeter]

$10 close? wow sum is diffentely the best of the bunch in the retirement space

... which however might be a quite temporary situation :):

[dabsman]

Touched $10.50. I'm up 150% on last purchase in March and even the DRP is up 23% in a month! Really has a rocket up it currently

[BlackPeter]

Touched $10.50. I'm up 150% on last purchase in March and even the DRP is up 23% in a month! Really has a rocket up it currently

Just make sure to dance next to the exit. Rockets not good when the fuel runs out :):

[Waltzing]

feeling sick from missing this one... so much for snoopy view.. great on banks... not so hot on auckland and asian pacific city...

amazing...OCA should follow in a year or 2 or is it moving already.

[couta1]

feeling sick from missing this one... so much for snoopy view.. great on banks... not so hot on auckland and asian pacific city...

amazing...OCA should follow in a year or 2 or is it moving already. I actually feel good about missing this one, I dont like the culture at the top so its a no from me, OCA and RYM on the other hand.

[Beagle]

Reversion to the mean more often wins out over emotion etc

Whatever 18% pa share price gains for each over 10 years is pretty good

https://www.sharetrader.co.nz/attachment.php?attachmentid=11733&d=1593474174

Hey Coutts me ol mate. What's going on here ? SUM now more than 74% of RYM...never been that high before. Coutta theorem no longer applies ?

Winner mate, you need to update your chart.

[couta1]

https://www.sharetrader.co.nz/attachment.php?attachmentid=11733&d=1593474174

Hey Coutts me ol mate. What's going on here ? SUM now more than 74% of RYM...never been that high before. Coutta theorem no longer applies ?

Winner mate, you need to update your chart. SUM way overvalued and RYM result coming up will see that ratio massaged back to reality, good things take time. PS-RYM looking like a good buy currently in contrast to SUM which is overbought.

[Beagle]

RYM growth in underlying profit in the last 4 years has been 13.0%, 14.2%, 11.5% and 6.6%.
Its been 5 long years since they last slightly exceeded their goal of average annual underlying earnings growth of 15% per annum. RYM shares have actually underperformed the NZX50 in the last 5 years. Not really setting the world on fire with growth lately. Maybe when Simon Challis left the magic left with him ?
Maybe Earl Gasparich is the new Simon Challis ?
Anyway back to SUM. Wonder if Julian will pull another rabbit out of the hat with Q4 sales ?

[Baa_Baa]

SUM way overvalued and RYM result coming up will see that ratio massaged back to reality, good things take time. PS-RYM looking like a good buy currently in contrast to SUM which is overbought.

Won’t just be a rerate of RYM that restores the balance, it will be an OMG SUM it’s overdone and rerate down as well, imo. 75%, ridiculous, both sides will move soon. Wild card is the loose money from MET looking for a home, could upset the CRT for a bit longer before reality restores the balance. Interesting times in This sector.

[Beagle]

The dog is calling it. R.I.P Coutts relativity theorem. In my opinion it will soon be relegated to the dustbin of history as the best sticking theory on price relativity that never had any factual basis behind it. In the long run the market is a weighing machine, not a voting machine and earnings do matter.

[couta1]

The dog is calling it. R.I.P Coutts relativity theorem. In my opinion it will soon be relegated to the dustbin of history as the best sticking theory on price relativity that never had any factual basis behind it. In the long run the market is a weighing machine, not a voting machine and earnings do matter. You've been barking that tune for years now yet to date have found yourself barking up the wrong tree. PS-Im sure your last sentence is a message for A2 holders.

[Beagle]

You've been barking that tune for years now yet to date have found yourself barking up the wrong tree. PS-Im sure your last sentence is a message for A2 holders.

I'm right at this point in time though :p...and no there was nothing intended for ATM shareholders in that post either explicitly or implied. Actually I'm really enjoying my break from that thread and I'd wager you and a few others are really enjoying me taking a break from it too lol

[couta1]

I'm right at this point in time though :p...and no there was nothing intended for ATM shareholders in that post either explicitly or implied. Actually I'm really enjoying my break from that thread and I'd wager you and a few others are really enjoying me taking a break from it too lol Haha I actually took it as a positive as us holders are waiting patiently for that weighing machine to kick back into action, the counting machine can be like a torture chamber.

[winner69]

The dog is calling it. R.I.P Coutts relativity theorem. In my opinion it will soon be relegated to the dustbin of history as the best sticking theory on price relativity that never had any factual basis behind it. In the long run the market is a weighing machine, not a voting machine and earnings do matter.

That saying In the long run the market is a weighing machine, not a voting machine may have meant something last century but this century it’s just a hackneyed meaningless saying.

Insofar as ‘value investing’ goes the last decade has been devastating, and even value investing legends have lost their mojo.

These days the weighing machine / voting machine thing is only used by those (generally the mature old fashioned types) who want to justify their not so good investments and and use it as an excuse to hang in there in the hope that things will come right ....one day

[Beagle]

Earnings matter mate. The dot.com bubble taught us that 20 years ago. Every generation along come a new bunch of investors who think earnings don't matter...quite a few of them in the US think they have all new and more correct ways to value tech companies now, many of whom weren't around to learn the lesson of 2000 - 2001 when the Nasdaq lost 90% of its value...this new generation...they'll get their lesson soon enough.

[winner69]

Back on thread topic then

Summerset’s earnings are pretty good ....and if you believe that voting / weighing hogwash probably its weight is about right at the moment .....but maybe should watch it’s diet

[Beagle]

Yeah I think it is about right at the moment for a booming real estate market. Forward underlying earnings of about 21 seems to be a fair weight to me.
I don't like paying fair value for stocks though...always hunting for GARP stocks. (Growth at a reasonable price) I suppose you could make the case SUM is a GARP stock though seeing as the average PE of the market must be at least 30.

[macduffy]

Yeah I think it is about right at the moment for a booming real estate market. Forward underlying earnings of about 21 seems to be a fair weight to me.
I don't like paying fair value for stocks though...always hunting for GARP stocks. (Growth at a reasonable price) I suppose you could make the case SUM is a GARP stock though seeing as the average PE of the market must be at least 30.

"Growth at a reasonable price" sounds like "paying fair value" - for certain stocks, to me. All in the stock selection?

[peat]

Cook going

well done, leaving on a high.

[winner69]

Julian the $2.1 billion man retiring

Well deserved

Summerset will still be in good hands though with Scott in control

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/362826/334521.pdf

[couta1]

Cook going

well done, leaving on a high. I'm feeling so sad, not.

[Beagle]

Julian Cook ran a very tight ship when it came to costs that's for sure. I thought he was a likeable rogue and if I become a shareholder again I will miss chatting to him at the annual meeting. I wish him well for the future. If I remember correctly Rob Campbell is not standing for reelection at the next annual meeting so its a real changing of the guard at Summerset.

Scott strikes me as a very good strategic thinker. I think the company is in good hands with him.

[winner69]

Cook going

well done, leaving on a high.

Leaving on a high ........no, just after the first stage of Summerset becoming great

[Beagle]

Leaving on a high ........no, just after the first stage of Summerset becoming great

I think with the benefit of hindsight, (with the real estate market going gangbusters all around the country), having such a massive landbank will prove to be a great legacy Julian's foresight has left the company with. I remember him telling me after one meeting that he could buy six decent blocks of land in the regions for the price of one in Auckland.

If they can get their sales cranking, (and you would think they could in this market), and keep development margins at least in the mid 20% range the company has a bright future...but I think that's already baked into the share price, then again with this real estate market set to continue going ballistic for years, who knows ?

[macduffy]

Just for winner!

Boulcott village gets go-ahead!

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/363463/335346.pdf

:)

[bull....]

good to see summerset stepping up.

Flurry of job offers and recruitment support for Covid returnee seeking aged and disabled care work

One organisation that got in touch with Smith was New Zealand stock exchange listed retirement village operator Summerset.
“We would be interested in hearing from her to see if we have anything she may be interested in,” a spokeswoman for the company said.

https://www.stuff.co.nz/business/industries/123521175/flurry-of-job-offers-and-recruitment-support-for-covid-returnee-seeking-aged-and-disabled-
care-work (https://www.stuff.co.nz/business/industries/123521175/flurry-of-job-offers-and-recruitment-support-for-covid-returnee-seeking-aged-and-disabled-care-work)

pretty hard case a lot of these type places thought she was too over qualified

[artemis]

.... pretty hard case a lot of these type places thought she was too over qualified
Usually code for we can get the same cheaper, or person is not seen to be a good fit. Both good business decisions.

[dreamcatcher]

Certainly a good time to leave as Cook realized this property bubble cannot last..............

https://www.interest.co.nz/property/108206/we-may-be-looking-beginning-end-current-housing-boom

[bull....]

$10 close? wow sum is diffentely the best of the bunch in the retirement space

$11 wow summerset is still the best of the bunch

[winner69]

$11 wow summerset is still the best of the bunch

Good to see that things still progressing well

Interestingly the trend of SUM share price relative to OCA remains intact. The only real time recenlty this relativity has gone askew was early 2019 and saw OCA shareprice be 20% of SUM - wow in July 19 SUM was $5.05 and OCA was $1,04 - since the OCA up 24% and SUM up 107% - good effort by SUM I reckon

[BlackPeter]

Good to see that things still progressing well

Interestingly the trend of SUM share price relative to OCA remains intact. The only real time recenlty this relativity has gone askew was early 2019 and saw OCA shareprice be 20% of SUM - wow in July 19 SUM was $5.05 and OCA was $1,04 - since the OCA up 24% and SUM up 107% - good effort by SUM I reckon

Talking about relativity - what happened to the couta theorem?

[winner69]

Talking about relativity - what happened to the couta theorem?

Have to ask the much aligned couta I reckon

If he ever feels inclined to come back to sharetrader after what happened to him we may have seen it has all reverted back to the mean anyway

Maybe SUM is the new RYM in this sector and leading the way - always has to be one winner

[Beagle]

Talking about relativity - what happened to the couta theorem?

It was always a foolish notion that just because there had been some pattern of price relativity, (revolving around 50%) it would always be that way. This sort of theory has as its core central pillar the notion that one company is superior to another based on reputation and history and the clear inference is that the relative earnings per share of each company are completely irrelevant. In the long run the market is a weighing machine and not a voting machine.

[winner69]

“ In the long run the market is a weighing machine and not a voting machine.” Is an old wives tale (ok it was said by one guy who got lucky)

Just a foolish notion based on expectations that things will ‘even out’ over time and often the basis of ‘value investors’ hoping that things will one day come right.

Well past it’s use by date that saying

[Beagle]

That saying In the long run the market is a weighing machine, not a voting machine may have meant something last century but this century it’s just a .

Insofar as ‘value investing’ goes the last decade has been devastating, and even value investing legends have lost their mojo.

These days the weighing machine / voting machine thing is only used by those (generally the mature old fashioned types) who want to justify their not so good investments and and use it as an excuse to hang in there in the hope that things will come right ....one day

Really ? How then have I managed to consistently outperform the market so comprehensively by adopting a value / GARP (Growth at a reasonable price) approach ?
Maybe I have just been consistently lucky...year after year after year after year ?...or is such a random consecutive yearly series of luck a plausible explanation for consistent market outperformance ?

Maybe its just a "hackneyed meaningless saying" in your opinion and earnings really do matter ? Whatever your theory mate, I will stick with mine because I know it works so well I'm not changing it !

[winner69]

Really. How then have I managed to consistently outperform the market so comprehensively by adopting a GARP (Growth at a reasonable price) approach ?

Because I see you as a guru trader ..one who in the main pick winners but also knows when to discard losers (before too much damage was done) when the weighing machine doesn’t do its job ....and not a value investor

[Beagle]

Because I see you as a guru trader ..one who picks some winners but also knows when to discard losers when the weighing machine doesn’t do its job ....and not a value investor

I held summerset for years and sold at ~ $9 very early in 2020 because of looming Covid risks. Doesn't make me a trader, makes me a prudent investor who is fully cognisant of macro economic risk brought on by an impending pandemic at the time. OCA were better value buying in the low 70 cent range after Covid risks started to abate.

I continue to hold OCA because they are the standout value stock in this sector. Fancy high PE's and slowing growth rates are not for me, (RYM and ATM good examples of stock's I won't touch for that reason). You're right about me ditching losers very quickly though. Went over my history the other day....very few losers...and the very occasional one that was such, was a very small loss.

[winner69]

Some of my trades last for many years before I close them out. Still haven’t closed my RBD trade that started over 10 years ago.

Suppose your and mine definitions of ‘investing’ and ‘trading’ are poles apart eh

Anyway let’s stay on track and do what we think is the best way to make heaps ...no matter what it’s called.

[Beagle]

Some of my trades last for many years before I close them out. Still haven’t closed my RBD trade that started over 10 years ago.

Suppose your and mine definitions of ‘investing’ and ‘trading’ are poles apart eh

Anyway let’s stay on track and do what we think is the best way to make heaps ...no matter what it’s called.

Brightline test for real estate was 2 years but is now 5 years. Gives some sort of benchmark to this grey area and this recent change is consistent with their need to expand the tax base so they can keep paying billions per annum in superannuation to wealthy retired multi millionaire's who don't need it, :p but I digress and agree, lets move on and concentrate on what matters.

[winner69]

Truly astounding latest prop stats

HPI at NOVEMBER up 3% from October and 9% in last 3 months

https://reinz.co.nz/Media/Default/Statistic%20Documents/2020/November/REINZ%20Residential%20Press%20Release%20-%20November%202020.docx

[Greekwatchdog]

Nice update for holders....https://www.nzx.com/announcements/365087

[bull....]

yes good update and there paying back the wage subsidy. put more pressure on other companies that have not.

[winner69]

Well done Summerset in repaying the wage subsidy

After all Summerset was in a stable financial position and the business outlook was positive......so didn't really need it