SUM - Summerset Group

[percy]

Fantastic work Maverick, our should I say "Scott Scoullar" ;-)

SNOOPY

No Scott is only achieving what Maverick expected of him...................lol.

[Beagle]

Excellent result, congrats to holders. Well done Mav, hope you are right about OCA's forecast.

If we see this break out of its downtrend...

[Cyclical]

Well done Maverick! Kinda looks like the market was in agreement with your prediction too, not exactly racing away here...

[alokdhir]

SUM finally having its day today ...instead of yesterday ....Shud recapture $ 12 soon ...

[dabsman]

I was hoping $11 so more DRP in next 2 weeks 🤪

[winner69]

From the SUM presentation -

Underlying profit has seen an annual compounded increase of 33% since listing on the NZX in 2011

33% pa is pretty good

[alokdhir]

From the SUM presentation -

Underlying profit has seen an annual compounded increase of 33% since listing on the NZX in 2011

33% pa is pretty good

Wow ...NZ's obsession with property also helps here ...But this is the stock to have ...my no 1 pick for RV ....KFL chose this right ...RYM also on return path soon

[winner69]

Scott says ……this was the company’s second highest quarter on record and highest ever Q1

That’s pretty good new year started well

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/390369/368486.pdf

[winner69]

Record Q1 but only 4 more sales than last year

But heaps more new sales and less resales ……so profits should be up nice v last year

[Maverick]

Record Q1 but only 4 more sales than last year

But heaps more new sales and less resales ……so profits should be up nice v last year
Yes , a very solid result today Winner in what was supposed to be unfriendly real estate circumstances. The takeaway from this "steady as she goes" update for me is that it was all achieved amongst a difficult backdrop.
We are told daily about reversing property prices and steeply dropping auction clearance rates. Also the NZ outbreak of omicron/ home isolations but none of these have had any material impact on this result. SUM is simply a juggernaut.

We all can clearly see the market has rerated all RV share prices down by roughly 30% from mid last year while the evidence (ARV last week now SUM today ) says everything is "hunky dory.. ..what slow down???".
The market is either looking for further ahead trouble that has not materialized in any form yet ...or... has just overreacted with its fear.

[James108]

Long time Sum holder, very happy with the result. Market is pricing in reduced sales/profitability going forward which I think makes sense, but it is not here yet.

[Waltzing]

Will it ever to get to MR B's 9.

Doesnt look like it and they are busy little builders knocking up many more.

The big motorway in the wakatoo has its big signs being installed.

Mid Wakatoo to become a retirement village centre? All that fog or will global warming change it climate to become a warmer zone?

"Blenheim" can be pretty cold in winter.


"Summerset starts construction at three new sites in 2022, Blenheim
(Marlborough), Cambridge (Waikato) and Waikanae (Kapiti Coast) and will
continue construction at 13 other sites around New Zealand. Construction
began last year at Summerset's first Australian site, Cranbourne North in
Melbourne."

[winner69]

Market not too impressed with solid sales numbers .... but at least share price hasn't collapsed

I see an analyst has come out with a target price of $15.85 for Ryman ..... on same multiples that would put SUM on a share price of $21.00

That sounds good

[Waltzing]

analyst...

the market hasnt fallen for them yet... and in the case of AIR they believe the marketing on the wings.

a lone voice in the wilderness.

[Entrep]

Anyone have an opinion on a good entry price for a new SUM holder? Personally I'd love to see it test low $9 again.

[Beagle]

If you bring up a chart for 1 year on direct broking you'll see they've been in a downtrend from about $15.60 since September last year but have been trying to build a base in the low to mid $11's for a couple of months now.

The 100 day moving average (dark line) is about $12.30.

Rather than trying to pick the low my plan is to wait as long as it takes for a new uptrend to emerge as evidenced by SUM breaking up through its declining 100 day trendline.

One thing to be cautious about this year is the Govt are yet to release the results of their review of the retirement sector and any legislative changes from that could have a meaningful impact.

I think SUM is a fabulous stock in the long term but in the short term the sentiment in this sector is very weak with rapidly declining house prices and the pending sector review.

I'd love to see this with a 9 handle again and then back up the truck but I think a 10 handle might be as cheap as its gets, time will tell.

[winner69]

If SUM share price falls below $11.16 the downtrend which started last August will still be place

Needs a close above $11.80 to sort of say the downtrend is over

Trend theory says there's got to be something really positive (for downtrends) for the trend to end ---- but we won't be hearing much detail from SUM until July and August so it could be down trending for a while yet. There is a AGM coming up but SUM meetings are the most boring ones there are.

[Beagle]

I nearly fell asleep during the last AGM I attended with SUM lol
Wasn't really their fault, I had to get up early to get across Auckland's nightmare traffic to get an early flight down there.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/391097/369352.pdf
Great company but its difficult to see what the catalyst is for a breakout one way or the other. Probably good buying at the current price but I suspect the share price is simply front running quite a substantial fall in the real estate market over the next 12-24 months.

Back in the day I used to really enjoy a good chat with Julian Cook every annual meeting.
Scott's a very bright guy too but Julian was an especially likeable rogue, in my opinion.

Might go to the next annual meeting if Covid has died down enough to be safe and come down and have a beer with you Winner. Its been far too long since we caught up. Be good to give Scott a pat on the back too. I think he's doing a very good job.

I suspect seeing as SUM is a real favorite with the institutions that the share price may continue to remain under pressure as significant numbers of people switch their Kiwisaver fund to a conservative one during the current market volatility.

[winner69]

Today SUM had its ASM ….seem to have passed without anybody noticing …..even me lol

[winner69]

looks like 1100 is holding today

Down trend still in play ....lower low etc

break below that and sub 1000 beckons

[alokdhir]

looks like 1100 is holding today

Down trend still in play ....lower low etc

break below that and sub 1000 beckons

We dont know where it will stop ...but we know it will go over this sooner then latter ...so time to step up and start adding to already good position in this great company ...:p

[SailorRob]

Looking at the 2012 Annual report they did 6.96 cents per share and last year 238.18 for a CAGR of over 42% for 10 years.

Using total comprehensive income for both periods comes out to 44%

Using the 2011 numbers and a 11 year CAGR comes out over 50%

If these are accurate numbers and comparisons then this is truly world class.

[Beagle]

Looking at the 2012 Annual report they did 6.96 cents per share and last year 238.18 for a CAGR of over 42% for 10 years.

Using total comprehensive income for both periods comes out to 44%

Using the 2011 numbers and a 11 year CAGR comes out over 50%

If these are accurate numbers and comparisons then this is truly world class.

I think the 33% CAGR SUM stated was based on realised underlying earnings but no matter which way you measure earnings there's no question about the class of this company. If you had to pick one company in this sector and were compelled to own it for 10 years choosing this one is an absolute no brainer.

In the short run however the trend in the whole sector is sharply down and that trend may have quite some time to run. I believe that some people may be switching from Kiwisaver growth funds to conservative or cash funds in these uncertain times and as this one is a favorite with institutions chasing growth you may see them being forced to keep selling this as people keep switching kiwisaver funds.

Maybe wait until there's a break back up through the 100 day moving average in due course and consider that as a good time to initiate a new position.

[bull....]

summerset breaking down from its consolidation which has been in play since feb ..... timber

[bull....]

crushed today at the moment

[Waltzing]

only down 2 and something, OCA (pronounced OKA) down 1.9 ..

crushed would be more like an 8 handle?

8.50 being MR B target buy price...

come to think of it where is the Beagle....:cool:

[winner69]

Should hear what Q2 sales are this week

Hopefully a number over 300 and a pick up in resale numbers which have been down v pcp the last 3 quarters

If not just another sign sector under pressure ..... and no doubt the market will send out another message not a good sector to be in for a year or so

[winner69]

June quarter sales number a bit of a disaster - down 3% on last year

Won't bring love to the sector ..... the multi year secular bear will continue with share prices remaining under pressure

[BlackPeter]

Well, yes - but then - this quarter is still one of the 5 best sales quarters SUM ever had ... hey, this must count for something, doesn't it :) ;

[Charlie]

Also seem to have a lot of building going on. I thought it was quite good considering the turbulent times. Sp opens up a bit ...

[Rawz]

Market sending out a message... ;)

[winner69]

Looking ahead to a full year result this bit from announcement is really positive

Summerset is on track to deliver approximately 600 homes in FY22. Demand remains strong, with our resale villages maintaining low levels of uncontracted stock and presales continue to track at high levels.

So it seems likely that full year Underlying Earnings will be well in excess of last years $141m - maybe even over $160m

We'll know more come August when half year is announced

suppose that's what the market saw in the update

[alokdhir]

Looking ahead to a full year result this bit from announcement is really positive

Summerset is on track to deliver approximately 600 homes in FY22. Demand remains strong, with our resale villages maintaining low levels of uncontracted stock and presales continue to track at high levels.

So it seems likely that full year Underlying Earnings will be well in excess of last years $141m - maybe even over $160m

We'll know more come August when half year is announced

suppose that's what the market saw in the update

Normally W69 sees soon what market will see ...today 9am it was disaster and at close it looking better ...lol :p

[winner69]

Normally W69 sees soon what market will see ...today 9am it was disaster and at close it looking better ...lol :p

Got it wrong first time around eh ..... need to concentrate more on what words mean rather than one number

[alokdhir]

Got it wrong first time around eh ..... need to concentrate more on what words mean rather than one number

Still we all value your judgement mate ...:t_up:

[winner69]

Fisher Funds ASM has a little quiz thing today as per question below

At the end of the presentation they gave the answer

Go Summerset ..... yes .... SUM.NZX

[winner69]

Summerset reported 289 new unit sales and 222 resales for first half F22

I reckon / estimate that should produce $90m in realised gains - add another $5m profit from caring for people and running villages and Underlying Profit is estimated to be $95m

Yep, I reckon $95m - about 30% higher than H121

No wonder there's been a bit of interest in the share price of late

[alokdhir]

Summerset reported 289 new unit sales and 222 resales for first half F22

I reckon / estimate that should produce $90m in realised gains - add another $5m profit from caring for people and running villages and Underlying Profit is estimated to be $95m

Yep, I reckon $95m - about 30% higher than H121

No wonder there's been a bit of interest in the share price of late

$ 12 or more u reckon on cards ?

[alokdhir]

SUM results are exciting punters more then HGH results ...hopefully it will not disappoint ...$ 95m + as per our expert W69

[Maverick]

SUM results are exciting punters more then HGH results ...hopefully it will not disappoint ...$ 95m + as per our expert W69

Its nice to see Winners optimism even in the face of a very difficult period. The company and entire sector has continued to date on its juggernaut path despite staff shortages, staff costs, Omicron, supply shortages and now a cooling housing market. Despite all these well thrashed out headwinds we are yet to see any material dipping of results ( outside of the temporary direct covid costs and disruptions when covid was at its CY2020 peak).

Tomorrows result will be an important waypoint for the "post covid" RV industry and in particular any commentary on current pricing and sales trends.
My expectations of SUM are also very high ( why wouldn't they be after their track record, they are an incredible company) but is a tad short on Winners.

My maths says a result of somewhere around underlying $87m, I would be delighted for Winner to be right.

[alokdhir]

Its nice to see Winners optimism even in the face of a very difficult period. The company and entire sector has continued to date on its juggernaut path despite staff shortages, staff costs, Omicron, supply shortages and now a cooling housing market. Despite all these well thrashed out headwinds we are yet to see any material dipping of results ( outside of the temporary direct covid costs and disruptions when covid was at its CY2020 peak).

Tomorrows result will be an important waypoint for the "post covid" RV industry and in particular any commentary on current pricing and sales trends.
My expectations of SUM are also very high ( why wouldn't they be after their track record, they are an incredible company) but is a tad short on Winners.

My maths says a result of somewhere around underlying $87m, I would be delighted for Winner to be right.

Thanks Mav for your precise and deep insights ....always appreciated .

For me if it comes in between 87 -95 ie say 91 M then it will be perfect ....:p

[alokdhir]

82.5 M seems below both estimates ...but overall its a good result ...under the circumstances ...:D

[Maverick]

82.5 M seems below both estimates ...but overall its a good result ...under the circumstances ...:D
Not to worry, that’s still an excellent result considering all the difficulties in the period.
The commentary is the key , waiting lists, empty stock levels , sales and prices holding up nicley. The other big takeaway is the comment “demand doesn’t appear to be teathered to the property market.”
In fact the commentary is borderline outstanding.

Seems all the doom and gloom priced in by Mr Market has well and truly been over done. If I wasn’t so certain of another particular RV companies prospects I’d be very comfortable loading up on these at these prices.

[alokdhir]

Not to worry, that’s still an excellent result considering all the difficulties in the period.
The commentary is the key , waiting lists, empty stock levels , sales and prices holding up nicley. The other big takeaway is the comment “demand doesn’t appear to be teathered to the property market.”
In fact the commentary is borderline outstanding.

Seems all the doom and gloom priced in by Mr Market has well and truly been over done. If I wasn’t so certain of a certain other RV companies prospects in this sector I’d be very comfortable loading up on these.

Fully agree and endorse ...as me not big on any other RV so I am big here ....:t_up:

[justakiwi]

Just saw this on my Facebook feed. Why would they be offering a "special" given their decent result?

Link won't paste for some reason. Reduced entry fees for serviced apartments in Christchurch, for limited time.

[Baa_Baa]

Just saw this on my Facebook feed. Why would they be offering a "special" given their decent result?

Link won't paste for some reason. Reduced entry fees for serviced apartments in Christchurch, for limited time.

They're advertising it here https://www.summerset.co.nz/flexiblepricing/ read the T&C's.

[bull....]

They're advertising it here https://www.summerset.co.nz/flexiblepricing/ read the T&C's.

makes sense when you consider they said the market was flat to declining in the mths ahead

[winner69]

Interesting in the presentation they break Operating Cash Flow into two components - being “Net operating business cash flow” and “Receipts for residents' loans - new sales”

And good to see the “Net operating business cash flow” is positive, although not as high as pcp

Means they are actually generating cash from actually caring and looking after people and running villages - not all in sector can show this to be positive.


I’ve looked at this way for years ….wonder what made them change their approach (I think) …good on them

[Maverick]

I'm kind of Surprised that after the result there hasn't been more chit-chat here. I guess there's a lot of other company news going on. This result is noteworthy that seems to have gone under the radar. The significance is the steadiness of the result within peak omicron, building shortages, significant cost increases , labour shortages , falling public confidence and falling prices of the housing market and all done with an increasing supply ( which should, but isn`t, result in growing unsold stock.)

Basically my half year expected result was $4.5m too high because I just lazily halved the full year expected result which I'd previously carefully worked out a few months ago.
My workings with SUM are always done in full years without breaking down into half years.
I don't own any so aren't willing to go through the chore of all that extra work.

So it turns out I should have tilted more of the profit towards the HY2 based on sales figures already known and with the higher deliveries due in HY2 ( in fact 60% more new deliveries of which will have many pre-sales). Essentially the excess $4.5m I was expecting in HY1 will simply show up in HY2.

Obviously with SUM giving us a quantity of sales updates so the final figure can easily be fine tuned before the FY22 result.( last FY I forecast $141m here and the actual result was 141.1m - just demonstrating this company , outside of covid, is predictable)

I have put more effort in since the result to see where I went wrong and reworked things now using the previously known sales /supply specifics tailored to both half years. I'm still happy my full year is still correct enough.
That's a profit of $174m or up 23% YOY.
Putting it on an anticipated PE of 15.3 on today's SP.
To me that's great value for a company with such a strong track record and strong pipeline.

There were concerns about SUM noted here pre-covid as it was amassing a lot of unsold stock. It looked like it was oversupplying and Winner rightly posted many sad looking graphs on this at the time. I even visited Rototuna- Hamilton to get an insight as to why. The sales lady said the villas don't really sell well until the core community facilities are up and running ( which they weren't at the time). Turned out she “speaketh the truth” because SUM are having no trouble selling their product now even as they produce them in greater numbers than ever.

It will be well known here that I'm probably OCAs biggest fan and I still claim they have a tidal wave of value about to wash through over the next few years and beyond. Plus I love their expertise in the high end market and their point of difference. That's enough of that on this SUM thread.…

So while I'm still not personally going to switch to SUM, IMO it clearly offers high value. This company has a ton of history, plenty of pipeline and can be understood without too much work. ( no new share issues, or acquisitions to worry about). I can't see any reason SUM can't keep doing these high 15-20% CAGRs for at least a few years yet. Apart from a big rise in new build rate , they also have clearly increased their existing pricing looking at the jump in embedded value. That will flow through for many years yet

Just saying that SUM continues to be an outstanding company at very good value.
Their margins remain surprisingly high considering the conditions and their sales are unfaltering. The beauty of this company is its ever increasing profit is smooth and predictable. Got to love just doing green field developments for that.

[winner69]

I'm kind of Surprised that after the result there hasn't been more chit-chat here. I guess there's a lot of other company news going on. This result is noteworthy that seems to have gone under the radar. The significance is the steadiness of the result within peak omicron, building shortages, significant cost increases , labour shortages , falling public confidence and falling prices of the housing market and all done with an increasing supply ( which should, but isn`t, result in growing unsold stock.)

Basically my half year expected result was $4.5m too high because I just lazily halved the full year expected result which I'd previously carefully worked out a few months ago.
My workings with SUM are always done in full years without breaking down into half years.
I don't own any so aren't willing to go through the chore of all that extra work.

So it turns out I should have tilted more of the profit towards the HY2 based on sales figures already known and with the higher deliveries due in HY2 ( in fact 60% more new deliveries of which will have many pre-sales). Essentially the excess $4.5m I was expecting in HY1 will simply show up in HY2.

Obviously with SUM giving us a quantity of sales updates so the final figure can easily be fine tuned before the FY22 result.( last FY I forecast $141m here and the actual result was 141.1m - just demonstrating this company , outside of covid, is predictable)

I have put more effort in since the result to see where I went wrong and reworked things now using the previously known sales /supply specifics tailored to both half years. I'm still happy my full year is still correct enough.
That's a profit of $174m or up 23% YOY.
Putting it on an anticipated PE of 15.3 on today's SP.
To me that's great value for a company with such a strong track record and strong pipeline.

There were concerns about SUM noted here pre-covid as it was amassing a lot of unsold stock. It looked like it was oversupplying and Winner rightly posted many sad looking graphs on this at the time. I even visited Rototuna- Hamilton to get an insight as to why. The sales lady said the villas don't really sell well until the core community facilities are up and running ( which they weren't at the time). Turned out she “speaketh the truth” because SUM are having no trouble selling their product now even as they produce them in greater numbers than ever.

It will be well known here that I'm probably OCAs biggest fan and I still claim they have a tidal wave of value about to wash through over the next few years and beyond. Plus I love their expertise in the high end market and their point of difference. That's enough of that on this SUM thread.…

So while I'm still not personally going to switch to SUM, IMO it clearly offers high value. This company has a ton of history, plenty of pipeline and can be understood without too much work. ( no new share issues, or acquisitions to worry about). I can't see any reason SUM can't keep doing these high 15-20% CAGRs for at least a few years yet. Apart from a big rise in new build rate , they also have clearly increased their existing pricing looking at the jump in embedded value. That will flow through for many years yet

Just saying that SUM continues to be an outstanding company at very good value.
Their margins remain surprisingly high considering the conditions and their sales are unfaltering. The beauty of this company is its ever increasing profit is smooth and predictable. Got to love just doing green field developments for that.



Mav said ‘I'm kind of Surprised that after the result there hasn't been more chit-chat here’

A good post that sums up all the good things about SUM …nothing much to add I suppose ….and that’s possibly a reason why not much chit chat on this thread

[Baa_Baa]

Not often you see the CEO unload 150,000 shares, must know something we don't, or has a very large new deck to build. $1,643,564 is quite a payout. I remember when he was second fiddle finance guy at IRD, probably on less than $200k. What a successful career he has had and stlll enjoys, all well deserved.

[RTM]

https://www.newshub.co.nz/home/new-zealand/2022/09/calls-for-urgent-law-change-to-protect-pensioners-from-unfair-retirement-village-agreements.html

A risk for the sector

[Ferg]

https://www.newshub.co.nz/home/new-zealand/2022/09/calls-for-urgent-law-change-to-protect-pensioners-from-unfair-retirement-village-agreements.html

A risk for the sector
Paying outgoing residents in a more timely manner would be simply good business practice. Whilst it doesn't help the RV cashflow it would have minimal impact upon profitability. The current policies could be described as mean spirited, and IMO such complaints are warranted.

[Baa_Baa]

Paying outgoing residents in a more timely manner would be simply good business practice. Whilst it doesn't help the RV cashflow it would have minimal impact upon profitability. The current policies could be described as mean spirited, and IMO such complaints are warranted.

And while it would have an as yet undetermined impact on cash flow or profit, it is still very unclear whether any/all of the listed RV's are implicated or if they are, to what extent they are implicated. I would think they are not, or if they were they would voluntarily revise their contracts, as only a very very small percentage of exiting residents are affected given their prolific turnover of property. In any event the listed RV's are all so large that this is a sideshow imo, it's far more serious for the smaller private RV's and charities that run on the skin of their bones and engineer contracts that claw back any small financial advantage they can get away with.

[Maverick]

Very well said both of you. ( great to see you posting here again Ferg, your insights are always classy)

Totally agree that this will be just a sideshow to the " big 6" who surely will already be doing things ethically anyway. For example RYM , SUM, and OCA voluntarily paid their covid subsidies back, even though they were certainly entitled to them. Dont think ARV though did they Trader.J- I'm not sure?

I suspect with all this RV chat in the mainstream news, that it will just further spruik interest and cement the new normality of the retirement village lifestyle to Joe public.
It will also be softly educating them about ORAs and that they are the industry standard now.
Thirdly, any anxiety that prospective clients get from all this will drive them to the perceived safety of large national operators.

Can only see this free coverage and the overhaul as good for the industry.

[percy]

Paying outgoing residents in a more timely manner would be simply good business practice. Whilst it doesn't help the RV cashflow it would have minimal impact upon profitability. The current policies could be described as mean spirited, and IMO such complaints are warranted.

Agree...........................
The sector talks about care,safety,security,yet they remain mean spirited.
Tying up deceased estates causes a lot of stress and expenses.
The sector is funded interest free by residents buying rights to occupy.
Ryman has never raised further capital from shareholders since listing..

[justakiwi]

As per this article posted elsewhere recently, providers are already voluntarily working on this.
retirement-village-sector-unveils-voluntary-reforms (https://www.rnz.co.nz/news/business/474157/retirement-village-sector-unveils-voluntary-reforms)

I think this is a good start and a far preferable option than doing nothing which will force the government (of the day) to legislate. This is a 12 month trial so let's see how it goes. I am guessing the "measures being trialled" probably include additional changes, not just the few mentioned in the article.

Time will tell but it's a positive step in the right direction and one I support as a shareholder.

[alokdhir]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/399217/379502.pdf

Fisher Funds doing what they say ...They really find SUM very attractive at these prices

[bull....]

looks like sum finally heading in the right direction ... back too lows
playing catch up as it was lagging the field

[winner69]

Pretty reasonable sales update today

September quarter sales more than a year ago

Sales for 2022 weighted to the Q4 means annual sales over 1,000 for the first time and underlying earnings a solid improvement on last

Chart could look a bit healthier though - but these are turbulent times they say .... and they are selling heaps more than before covid hit. Current sales level 964 compared to 652 as at December 2019 - that's nearly 50% more
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/400202/380740.pdf

[James108]

Pretty reasonable sales update today

September quarter sales more than a year ago

Sales for 2022 weighted to the Q4 means annual sales over 1,000 for the first time and underlying earnings a solid improvement on last

Chart could look a bit healthier though - but these are turbulent times they say .... and they are selling heaps more than before covid hit. Current sales level 964 compared to 652 as at December 2019 - that's nearly 50% more
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/400202/380740.pdf

Quarterly sales definitely beat my expectations.

[alokdhir]

SUM is the best stock to accumulate in this downtrend ...the moment market pivots this will touch the sky ...imho

[BlackPeter]

Pretty reasonable sales update today

September quarter sales more than a year ago

Sales for 2022 weighted to the Q4 means annual sales over 1,000 for the first time and underlying earnings a solid improvement on last

Chart could look a bit healthier though - but these are turbulent times they say .... and they are selling heaps more than before covid hit. Current sales level 964 compared to 652 as at December 2019 - that's nearly 50% more
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/400202/380740.pdf

Agree - solid numbers, and likely to get up this quarter ... given that spring is good for house sales :) ;

On the other hand - The say they are finishing more than 600 units this year but sold over the last 12 months only 519 new units. Beagle would be concerned, wouldn't he? ... at least if this would happen to OCA, but I am sure with SUM this is completely fine ... they just need to up their selling act a bit. All good.

Personally - while I do see SUM as a good and solid company, I see them as fully priced ... quite different to some others in the industry.

This is what my spreadsheet (at todays SP) shows:

SUM forward PE (3 yrs avg): 10.5; Earnings CAGR (forward, 3 yrs avg): 2.1; Div yield: 2.2 %
RYM forward PE (3 yrs avg): 7.7; Earnings CAGR (forward, 3 yrs avg): 8.2; Div yield: 2.6 %
OCA forward PE (3 yrs avg): 7.5; Earnings CAGR (forward, 3 yrs avg): 8.3; Div yield: 5.4 %

Sure - forward numbers always rely on forecasts, which may or may not be right ... however - given its the same bunch of analysts and the same industry do I not see how they would get it with some of the villages so wrong and with others so right?

Anyway, the numbers above clearly indicate that SUM is basically at growth saturation (with a PE which is ok, but not incredible cheap), while both Ryman and OCA both feature cheaper PE's (which is good) and seem to have as well still more growing "puff" left in them.

Discl: holding both OCA and RYM;

[bull....]

new sales tracking down looks evident from there latest results

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/400202/380740.pdf

no wonder they were saying ( hopefully ) sales skewed to q4.

[Baa_Baa]

Gosh, another death at the St John's construction site. Sad, somethings not right.

https://www.stuff.co.nz/auckland/auckland-top-stories/300731299/one-person-dead-in-workplace-incident-in-east-auckland

And only last week, this one.

https://www.nzx.com/announcements/401827

[Rawz]

Gosh, another death at the St John's construction site. Sad, somethings not right.

https://www.stuff.co.nz/auckland/auckland-top-stories/300731299/one-person-dead-in-workplace-incident-in-east-auckland

And only last week, this one.

https://www.nzx.com/announcements/401827

Its the same BB

[Baa_Baa]

Its the same BB

Oh, you're right. Still sad though.

[BlackPeter]

Oh, you're right. Still sad though.

True, but it sounds there is something wrong with our (NZ) health and safety regulations - NZ's construction industry has ways too high accident rates, this has nothing to do with SUM or this specific site.


Santos warned that there were high rates of death in New Zealand’s construction industry.

“There’s been an average of two deaths per month in the construction sector. It’s not only appallingly high, but it seems to be increasing.

[percy]

I notice IFT announce Anne Irlwin has joined their board,while today SUM announce she has retired from their board.

[RTM]

I notice IFT announce Anne Irlwin has joined their board,while today SUM announce she has retired from their board.

"We're sorry to see Anne leave the board but we appreciate that she is taking
on a new board position with Infratil and she wishes to manage both her
workload and any potential conflicts that may come with her new role."

So Infratil and Summerset may have conflicts ?
Are Infratil perhaps going to take over Summerset ?
Or perhaps there are more attractive targets in the Retirement industry ?

[percy]

"We're sorry to see Anne leave the board but we appreciate that she is taking
on a new board position with Infratil and she wishes to manage both her
workload and any potential conflicts that may come with her new role."

So Infratil and Summerset may have conflicts ?
Are Infratil perhaps going to take over Summerset ?
Or perhaps there are more attractive targets in the Retirement industry ?
This may help to explain the whys.
https://www.nzx.com/announcements/403202

[bull....]

summerset putting on hold there building of retirement village in parnell

say rising building costs and falling property market make the project not viable

https://www.nzherald.co.nz/business/300m-auckland-retirement-village-plans-stall-falling-house-values-rising-building-costs/HBEB5FENAVCFBI6JBCEPNZUZDI/

[nztx]

summerset putting on hold there building of retirement village in parnell

say rising building costs and falling property market make the project not viable

https://www.nzherald.co.nz/business/300m-auckland-retirement-village-plans-stall-falling-house-values-rising-building-costs/HBEB5FENAVCFBI6JBCEPNZUZDI/


Ooops . as you say hammertime' .. coming for the sector on that

-31% approx slump for SUM SP in past year, possibly further to come

[bull....]

major event next year add's big risk to sector

Review of Retirement Villages Act begins in 2023

At a high level, the review is set to consider whether the current Act and all its parts remain fit for purpose

https://www.hud.govt.nz/news/review-of-retirement-villages-act-begins-in-2023/

[BlackPeter]

major event next year add's big risk to sector

Review of Retirement Villages Act begins in 2023

At a high level, the review is set to consider whether the current Act and all its parts remain fit for purpose

https://www.hud.govt.nz/news/review-of-retirement-villages-act-begins-in-2023/

Well, given the time of the year is it even more funny you see everything just with black tinted glasses. Hey, wake up - its the time of joy and friendly colours!

I see huge opportunities for the retirement villages with clarification of the rules and responsibilities for residents as well as operators. I expect rules and regulations to become more standardized, which is good for the residents and for the operators. Less public outcries over alleged "unfairness".

Banking industry is heavily regulated and actually earns a fair income, don't they? So will retirement village operators. Nothing to worry for the good operators, and government might be able to cull any cowboys which damage the reputation of an essential industry.

Government needs retirement villages - so I am sure the review will be balanced and fair.

Merry Christmas :) ;

[bottomfeeder]

Well, given the time of the year is it even more funny you see everything just with black tinted glasses. Hey, wake up - its the time of joy and friendly colours!

I see huge opportunities for the retirement villages with clarification of the rules and responsibilities for residents as well as operators. I expect rules and regulations to become more standardized, which is good for the residents and for the operators. Less public outcries over alleged "unfairness".

Banking industry is heavily regulated and actually earns a fair income, don't they? So will retirement village operators. Nothing to worry for the good operators, and government might be able to cull any cowboys which damage the reputation of an essential industry.

Government needs retirement villages - so I am sure the review will be balanced and fair.

Merry Christmas :) ;

Yeah, not going to panic until the results of this review are set in stone. Dont anticipate major changes, and if there are any changes there will always be a work around under a different model. After all its not like we are making money hand over fist. Also they need to encourage investment in this sector.

Merfy Christmas

[alokdhir]

https://www.nzx.com/announcements/405120

277 and first time over 1000 ...W69 shud be happy .

SUM proving again its best of the lot

[winner69]

Great sales update from Summerset

This is the highest Q4 resale settlements we’ve ever seen and the second highest Q4 new sales,” says Mr Scoullar

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/405120/386777.pdf

[trader_jackson]

Great sales update from Summerset

This is the highest Q4 resale settlements we’ve ever seen and the second highest Q4 new sales,” says Mr Scoullar

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/405120/386777.pdf

Good news is bad news in the sector right now if ARV's share movement post record results is anything to go by... share price should be down several percent in the next few weeks.
I agree it is a great sales update, shame great news doesn't seem to mean much for sum other listed companies

[alokdhir]

As long the selling is doing well that will keep cash flows going thus they can easily pass over this lull period of property cycle ...so it does matter if the companies are doing well sales wise or not for their future .

SUM doing even better then ever will mean they will have much lesser problem dealing with this phase unlike some others who will have trouble servicing their cash outgo requirements

[percy]

Mr Scoullar said that the motivation to move into a retirement village is often driven by life events, not the property market.

“Our residents are driven by factors like community, security or health, which lead them to look at an offering like ours. These influences don’t change significantly even in a difficult property market. As a result, we continue to see good levels of demand across our portfolio.”


I take SUM's Mr.Schoullar's comments are applicable to ARV,OCA and RYM too.

[MauroNZ]

Mr Scoullar said that the motivation to move into a retirement village is often driven by life events, not the property market.

“Our residents are driven by factors like community, security or health, which lead them to look at an offering like ours. These influences don’t change significantly even in a difficult property market. As a result, we continue to see good levels of demand across our portfolio.”


I take SUM's Mr.Schoullar's comments are applicable to ARV,OCA and RYM too.

I can tell one close example, my across the road neighbour could not keep looking after his wife after her dementia moved to an upward level.

Before that, I knew an 80+ lady living on her own without any close family and often falling at home and able to stand up again on her own.

[bull....]

there announcement today confirms the slowdown has started

[winner69]

there announcement today confirms the slowdown has started

And market reacting …….down across the sector

And that’s the last piece of real news until May

Wonder how much more the share prices will fall

[alokdhir]

And market reacting …….down across the sector

And that’s the last piece of real news until May

Wonder how much more the share prices will fall

As most are already of the view that this is going to be the most telegraphed recession of all times ...thus most likely market has already overcooked the steak ...

Still some will try to play it on the downside thus falling into someone's trap ...as they already looking value buys then otherwise ...only what stops immediate rebound or fast recovery is the fact that property down cycle lasts longer then simple recession ...normally 2-4 years ...thus we can have long accumulation period giving all enough time to get in ...how much lower may eventually depend on market sentiment as they are already down on their knees !!!

[Greekwatchdog]

For Bars review out this morning.

OUTPERFORM

Summerset (SUM) released its 4Q22 sales metrics with some brief comments on the current environment. In the fourth quarter SUM had 139 new sales and 138 resales. SUM acknowledged the “tough market conditions” in the last few months of the year, with increased settlement times but also reiterated that demand remains robust and its customers are not focussed on the property market as a reason to move (or not to move) into a retirement village. The released 4Q22 unit sales numbers were below our estimates, but we believe this should not surprise the market given commentary at SUM's investor day, 8 December 2022, of expanding settlement times. Total 4Q22 sales were up +18% versus a COVID-19 impacted 4Q21, but the second half was down -3% sequentially on the first half, respectable numbers given the very challenging backdrop. We reiterate our OUTPERFORM rating with a reduced target price of NZ$11.10 from NZ$11.95. ​​​​​​
link


NZX Code
SUM


Share price
NZ$9.22


Target price
NZ$11.10 (from 11.95)


Risk rating
Medium


CESG rating
A-


Market cap
NZ$2,079m


Avg daily turnover
189.6k (NZ$2,032k)






link


Financials: Dec/
21A
22E
23E
24E


NPAT* (NZ$m)
141.2
155.6
158.6
179.2


EPS* (NZc)
62.1
67.8
69.1
78.1


EPS growth* (%)
41.5
9.3
1.9
13.0


DPS (NZc)
18.5
20.5
21.0
23.5


Imputation (%)
0
0
0
0




*Based on normalised profits







link


Valuation (x)
21A
22E
23E
24E


PE
14.9
13.6
13.3
11.8


EV/EBIT
18.3
16.9
16.6
14.6


EV/EBITDA
17.0
15.6
15.3
13.5


Price / NTA
1.1
1.0
0.9
0.9


Cash div yld (%)
2.0
2.2
2.3
2.5


Gross div yld (%)
2.0
2.2
2.3
2.5











What's changed?


Earnings: FY22/FY23/FY24 underlying EPS down -13%/-14%/-14%. Annuity EBITDA down -9%/-7%/-8%.
Target price: Reduced to NZ$11.10 (from NZ$11.95).


Slowing, yes, but not grinding to a halt
Q4 resales and new sales were up +22% and +15% versus 4Q last year, respectively. However, 4Q21 still had a meaningful lockdown/COVID impact in Auckland in particular. 2H22 sales declined by -3% versus 1H22, a decent outcome given the dramatic slowdown in the housing market overall. The glass half empty takeaway is that sales are taking longer to settle and that unit prices have plateaued while the glass half full approach notes that demand is still strong and prices are holding up despite the largest nominal decline in NZ residential house prices for >40 years.

Forecasts down ~-7–14% driven primarily by lower new sales but earnings are still growing
We have reduced our forecasts relatively meaningfully to reflect; (1) lower than expected Q4 sales; (2) slightly reduced new sales pricing given continued weakness in the NZ housing market; and (3) lower deliveries and therefore new sales units over the next 24 months. SUM signalled at its investor day in December 2022 that it would not grow deliveries as much as previously suggested in FY23, but that it had the ability to flex up should the market improve. This is a sensible decision, in our view. While our downgrades are meaningful, we note that; (1) we still expect SUM to grow underlying earnings by ~+10% and annuity EBITDA by ~+4% in FY22 versus FY21, in a year that has arguably been the most difficult in the sectors history bar the initial COVID-19 uncertainty; (2) for the three year period from FY22–FY25 we forecast an annuity EBITDA CAGR of +16%, largely driven by the maturing of existing villages; and (3) on our revised numbers SUM is valued at 13x 12 month forward PE and around 1x NTA, both close to all time lows.

[Manukatana]

Newbee here.. knowing that we will have a larger population with more elderlies in the future, am I wrong to think that investing in retirement village sector like SUM is a good idea?

[limmy]

It's a good sector to invest in. It's currently not favoured by many because of falling property prices.

[winner69]

From BusinessDesk

Cyclone Gabrielle has forced aged-care provider Summerset Holdings to evacuate its Te Awa village in Napier twice in the past 24 hours.

Summerset Holdings said residents from Summerset Palms had to evacuate the village in Te Awa last night and this morning on the advice of Civil Defence.

“While it appears their homes are safe and dry, currently the flooding around the village has meant it’s not safe to stay there,” head of communications Logan Mudge said.

Residents are either going to evacuation centres or staying with family and friends.

“All our residents and staff are doing OK in the circumstances but undoubtedly many are very tired and stressed,” Mudge said.

“Things continue to be very difficult in the Hawke's Bay but we’ve had managed to receive intermittent updates from our team on the ground.

The Summerset village in the bay of Napier still remains on generator power in the main building – although residents are “doing well” under the circumstances.

“For those residents without power, the team at the village are assisting with provision of food and drinking needs where we can,” Mudge said.

Across Summerset’s other cyclone-affected villages, its Havelock residence currently has power but due to the situation in the region being “really fluid”, the aged-provider was trying to get a generator to the village in case the power went out again.

The Hastings village had only a small generator for essential power needs and was also trying to access a bigger generator.

Summerset was tracking Cyclone Gabrielle’s progress and listening to advice from local authorities, Mudge said.

Summerset had also provided extra support for its village teams in the most affected regions across the North Island.

At Warkworth's Summerset Falls, the care facility has been without power since Monday, and used a generator to continue operating. Today power was restored to the care centre, but power was still out for some of the independent living residents.

“We have an Emergency Response Team in place monitoring our villages around the country and our village teams are working hard caring for residents and checking in on them,” Mudge said.

“The worst appears to be over for the village at this point, but we are on alert in case things change.”

Ryman Healthcare told BusinessDesk this morning that Ryman had “offered help to our competitors” which also included Summerset.

In response, Summerset said aged-care providers in NZ were “collaborating” and pulling resources together to help each other.

[Bjauck]

Thanks for BD article, W69. It underlines a benefit of village life in a weather emergency - the access to generators and village management looking after residents. I can attest to different villages looking after one another too. I rang a SUM village to see if they had emergency accommodation if needed for my elderly relative, who has been assessed as eligible for respite care. They said that they could only provide emergency accommodation for residents from other villages in the area.

Let’s hope that SUM villages are not located on flood plains in the first place though.

[Filthy]

https://www.nzx.com/announcements/407279

24/2/2023, 8:30 am FLLYRNZX & ASX RELEASE
24 February 2023
SUMMERSET POSTS $171.4M FULL YEAR UNDERLYING PROFIT
• Underlying profit for FY22 of NZ$171.4 million, up 21.5% on FY21
• Net profit after tax of NZ$269.1 million, down 50.5% on FY21
• Total assets of NZ$5.8 billion, up 18.6% on FY21
• Four new sites acquired this year across New Zealand and Australia
• 1,007 total sales of occupation rights, up 3% on FY21
• 625 new units under occupation right agreement (ORA) delivered
• Land bank total of 5,985 retirement units and 1,379 care units across NZ and Australia
• Gearing ratio remains low at 32.5%
• Development margin of 29.7%
• Final dividend of NZ11.6 cents per share
Retirement village operator Summerset Group Holdings Limited today announced a record full year underlying profit for the year ending 31 December 2022 of NZ$171.4 million, up 21.5% on FY21, driven by strong development returns and growth in deferred management fees.
Net profit after tax (IFRS) was NZ$269.1 million for the year ended 31 December 2022, this reflects a level of fair value movement more consistent with historical trends, FY21 was influenced by the very strong property conditions at that time.
Summerset Chief Executive Scott Scoullar said demand for Summerset’s offering, which is driven by factors like community, security and life events, continued to be strong in 2022 with 1,007 ORA sales, the first time the company has had over 1,000 total settlements, which reflects a strong resale portfolio.
“The average age of our residents is 81 – they move into a Summerset village for a number of reasons that are often distinct from how the property market is performing. A sense of security and community is valuable, and we believe these will continue to drive demand regardless of the wider economic landscape.”
Mr Scoullar said 2022 had also been a record year of construction with the delivery of 625 units under ORA. Summerset reported a development margin of 29.7% up from 23.1%, for the same period last year. The company expects that development margins will return to be within the 20-25% range over the medium term.
At the end of 2022 Summerset completed the build of its newest care centre (including its state-of-the-art memory care centre) at its Kenepuru (Porirua) village with residents moving in this month. Similar offerings are set to be completed at Te Awa (Napier), Papamoa (Tauranga), and Bell Block (New Plymouth) later in 2023.
Mr Scoullar said investing in care and the experience of residents remains a key focus for the business.

“Our continuum-of-care model is a key consideration for people looking at our villages. We continue to focus on providing excellent care and we’ve begun the process of refurbishing some of our older care facilities to ensure they meet the expectations of our residents.
“We’ve also introduced new technology to make the lives of residents easier including Lumin screens, PainChek, and virtual reality activities including our MultiBall interactive exerplay.”
Summerset grew its development pipeline announcing the purchase of four new sites in 2022 – Rotorua and Masterton in New Zealand, and Mernda and Drysdale in Victoria, Australia.
The company now owns seven Australian properties, with earthworks having started at its first Australian retirement village in Melbourne’s Cranbourne North in late 2021. The first retirement units there are under construction with pre-sales beginning in the first half of this year. Chirnside Park property gained consent in late 2022.
Mr Scoullar said the company was saddened by the large scale of devastation that has occurred around New Zealand last week, and particularly in the Gisborne and Hawke’s Bay regions, due to Cyclone Gabrielle.
“We were extremely relieved that all our residents and staff were safe and unharmed. Our impacted villages were our four Hawke’s Bay villages (Napier, Te Awa, Hastings and Havelock North) which all lost power and communications, while our Warkworth and Whangārei villages also suffered power outages due to the cyclone.
“Our buildings are undamaged and we were able to continue to care for our residents throughout, thanks to our very dedicated staff. We ran essential services on generator power and we were fully supplied with food and medication throughout the outages. Staff from Wellington and Christchurch flew into Napier to assist their colleagues and to provide all our residents with support and hot meals while the power was off. We also reached out to smaller not-for-profit aged care providers to offer assistance during the cyclone.
“Now that the cyclone has passed we’re focused on recovery. Our villages are now running in a normal manner but there are some hard times ahead for some of our staff who lost their homes or had property severely damaged. We’ve set up a $250,000 disaster relief fund to help them through this difficult time and we’ll continue to offer support as they, and the Hawke’s Bay region, recover.”
Looking ahead Mr Scoullar said that Summerset was well prepared for the year ahead.
“We remain focused on growing our land bank, development of new villages, providing an excellent retirement experience for our residents and delivering value for our shareholders,” said Mr Scoullar.
Shareholders will receive a final dividend of NZ11.6 cents per share, bringing the total dividend payable for FY22 to NZ22.3 cents per share, up 20.5% on FY21.

[winner69]

Very solid result

And a great presentation ……clear, concise and no attempt to ‘hide’ / ‘forget’ things

Well done

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/407279/389355.pdf

[percy]

The forums are full of doom for the sector,yet SUM have not hit "The Pause Button",on the contrary they continue their land banking.
Unwise or clever.?

“We remain focused on growing our land bank, development of new villages, providing an excellent retirement experience for our residents and delivering value for our shareholders,” said Mr Scoullar.

[Greekwatchdog]

The forums are full of doom for the sector,yet SUM have not hit "The Pause Button",on the contrary they continue their land banking.
Unwise or clever.?

“We remain focused on growing our land bank, development of new villages, providing an excellent retirement experience for our residents and delivering value for our shareholders,” said Mr Scoullar.

Also found this quite interesting as well "Mr Scoullar said investing in care and the experience of residents remains a key focus for the business"

[bull....]

The forums are full of doom for the sector,yet SUM have not hit "The Pause Button",on the contrary they continue their land banking.
Unwise or clever.?

“We remain focused on growing our land bank, development of new villages, providing an excellent retirement experience for our residents and delivering value for our shareholders,” said Mr Scoullar.

exactly there gearing is increasing into a down cycle :scared: if property market keeps going down they might have problems esp since there op cashflows are declining and there exp are increasing at the same time.

so reliant on developmeent margins and re-sales gains these companies at the moment . if they dont happen the worst comes to mind

anyway i dont rate it as a wonderful report more a report to warrant caution on the sector still

[X-men]

Everything is negative for u bull. Go n stick with your tower share

[bull....]

Everything is negative for u bull. Go n stick with your tower share

obviously your an idiot who understands nothing. so explain to us why its so wonderful ? then we can see if you truely are

[Muse]

The forums are full of doom for the sector,yet SUM have not hit "The Pause Button",on the contrary they continue their land banking.
Unwise or clever.?

“We remain focused on growing our land bank, development of new villages, providing an excellent retirement experience for our residents and delivering value for our shareholders,” said Mr Scoullar.


very true. at 32.4% gearing (up 4.8% from 27.8% in FY21) its reasonably highly geared and likely to get higher in the coming years.

that said, I thought it was a very good report. Will take advantage of the DRP - help the company out.

[justakiwi]

Not sure why this surprises you. It should be a key focus of every aged care/RV provider. But remember that "care" is all encompassing, and does not only refer to highest level care.


Also found this quite interesting as well "Mr Scoullar said investing in care and the experience of residents remains a key focus for the business"

[silu]

Report does enough for me to keep holding and happy to continue to be in the DRP. Happy to have SUM as one of my cornerstone investments.

[Greekwatchdog]

Not sure why this surprises you. It should be a key focus of every aged care/RV provider. But remember that "care" is all encompassing, and does not only refer to highest level care.


It doesn't JAK. But it my surprise the sceptics with increasing costs in the sector. Give them something else to whine about.

[Rawz]

exactly there gearing is increasing into a down cycle :scared: if property market keeps going down they might have problems esp since there op cashflows are declining and there exp are increasing at the same time.

so reliant on developmeent margins and re-sales gains these companies at the moment . if they dont happen the worst comes to mind

anyway i dont rate it as a wonderful report more a report to warrant caution on the sector still

would have thought you would want to gear up in the downturn. i.e. buy up cheap land. build villages when the construction industry has excess supply.
Then pay down debt at the top of the cycle.

Like pretty much what RYM has done in the last cycle but the complete opposite

[justakiwi]

Ah, yes .... on that front, you are most probably right ;)


It doesn't JAK. But it my surprise the sceptics with increasing costs in the sector. Give them something else to whine about.

[Baa_Baa]

Let's see what the market thinks about it. This:

• Net profit after tax of NZ$269.1 million, down 50.5% on FY21

[bull....]

would have thought you would want to gear up in the downturn. i.e. buy up cheap land. build villages when the construction industry has excess supply.
Then pay down debt at the top of the cycle.

Like pretty much what RYM has done in the last cycle but the complete opposite

all the retirement stocks will be buying up land still to some extent as there models rely on development profits
ryman will still buy land but they have said they will reprioritize buying and development , which means they are being prudent going forward
yes some companies might consider it an competitive advantage buying cheaper land in a down cycle to land bank but in effect it is a risky strategy as no - one knows with certainty when the down cycle will end and prices rise again
summerset sounds like they are hoping the age maturity of there residents will provide a stronger stronger cashflow when they die over the short term but again this is hope strategy as no one knows for sure when someone will die hence they are guessing on these cashflows to save the day why landbanking at the same time. sounds risky to me if it all does not pan out esp heading into a nbigger downturn

you can see the two different strategies being employed now between ryman and summerset be interesting one day in hindsight who is right

[Leemsip]

Just getting started on the property down turn as well. Good time for SUM to be cautious IMO.

[winner69]

Realised gains (profit / development margin) on new sales increasing nicely over recent prior periods

Average gain last few periods have been H220 $112K / H121 $135k / H221 $159k / H122 $181k / H222 $212k

Mix has some impact but that trend looks pretty healthy to me during a period of declining house prices.

Sum must be doing something right

[winner69]

This a good slide SUM put in their presentation ….steady state cash flow big +ve number should allay punters worry about perceived high debt levels.

[bull....]

This a good slide SUM put in their presentation ….steady state cash flow big +ve number should allay punters worry about perceived high debt levels.

operating cash flow declined , debt increased , stock for sale increased. not that good a report as i thought but probably just a reflection of the trend in the whole sector.
looks like the market agree's after yesterdays rout in the stock price.

[bull....]

market has had time to digest last result

pretty obvious not impressed with stock hitting new lows

[Sideshow Bob]

https://www.nzx.com/announcements/409655

1Q23 METRICS – SALES OF OCCUPATION RIGHTS

Summerset Group reported 210 sales for the quarter ending 31 March 2023, comprising 115 new sales and 95 resales.

Summerset CEO Scott Scoullar said this was a credible result, given the tough market conditions and the phasing of Summerset’s new home construction delivery programme.

“While new sales are lower than the first quarter of 2022, we only delivered 57 new homes in the first quarter of 2023.

“We continue to be on track for delivering 625 to 675 new homes in 2023. Over 75 percent of our new homes will be delivered in the second half of the year, which includes three new main buildings at Summerset Palms (Napier), Summerset at Pohutukawa Place (New Plymouth) and Summerset by the Dunes (Papamoa)."

Mr Scoullar said that 95 resales in the first quarter is lower than expected and was primarily related to timings associated with residents settling and moving in.
“We have 41 more contracted resales homes when compared to contracted resale stock at the end of 2022. We’re pleased to see a high number of contracted homes, this puts us in a good position moving into Q2 and Q3."

Summerset’s growth continues with two major village openings in the first quarter.

“We were very pleased to open our new village centre at our Summerset on the Landing (Kenepuru) village in February. The new building has 123 new units, including Serviced Apartments, Care and Memory Care suites, over 40 percent of which have already been contracted or settled.

“Our fourth Waikato village, Summerset Cambridge, also opened this quarter and welcomed its first new residents,” said Mr Scoullar. Once complete, the village will have approximately 260 homes with a mix of villas, apartments and serviced apartments.

“Our first Australian village at Cranbourne North, Victoria, is progressing well with earth works and civil works substantially progressed, and construction is due to commence immediately after Easter on our first homes within the village.

“Looking ahead we are committed to working with our prospective residents across New Zealand to enable them to move into our villages easily and confidently while they complete the settlement of their homes.”

ENDS

[Rawz]

Have they always called them homes or is this a new thing?

[BlackPeter]

Not too bad considering all the bad vibes currently going around ... doubt however that it on itself will be enough to turn the trend ...

14533

But Scott promises a better second half, which would nicely fit into the analyst expectations related to the turn of real estate prices later this year. I guess time will tell whether its just a nice fairy tale or reality.

Probably still too early to buy into SUM, given its much higher priced than its peers.

[winner69]

BP is right - Probably still too early to buy into SUM, given its much higher priced than its peers.

Yep SUM at $8.79 is higher priced than RYM at $5.30 and ARV at $0.98 and poor old OCA at $0.72

Sorry Peter .... had to say it

[BlackPeter]

BP is right - Probably still too early to buy into SUM, given its much higher priced than its peers.

Yep SUM at $8.79 is higher priced than RYM at $5.30 and ARV at $0.98 and poor old OCA at $0.72

Sorry Peter .... had to say it

Never mind - we all know that you have sometimes a quite funny sense of humour.

I am sure it occurred to you that I might have been referring to PE (forwards, backwards or whatever) or potentially SP/NTA, didn't it? No need to repeat these numbers here, they are easy to find in the retirement threads of both forums.

[Greekwatchdog]

For Bars review..

Summerset Group (SUM) reported weak 1Q23 sales, with combined new sales and resales down -25% versus 1Q22. We find this disappointing, but (so far) not concerning. The turnover in the New Zealand housing market is at record lows and days to sell at record highs. Expansion of lead times is to be expected. Contracted sales, a strong indicator of forward sales and end demand, was up strongly versus an admittedly likely weak 1Q22. Overall, we walk away with the impression that SUM is not immune to the current well publicised slowdown in the housing market, but that the weakness is primarily coming through in the form of extended lead times rather than lower prices or reduced end-demand. That said, the bears on aged care stocks are currently getting more support for their view than the bulls. Over the next 12 months demonstrating an ability to generate cash will be key to share price performance. We retain our OUTPERFORM rating and reduce our price target -NZ55c to NZ$10.55.

What's changed?


Earnings: FY23/FY24/FY25 underlying EPS down -10%/-6%/-4%. Annuity EBITDA down -3%/-4%/-3% driven primarily by reduced newsales gains but also slightly lower resales gains.
Target price: Down -NZ55c to NZ$10.55 driven by lower earnings and slightly higher net debt.


1Q23 sales shows the signs of a slowing housing market
SUM reported new sales of 115 and resales of 95 for 1Q23, both ~17% of our prior FY23 forecasts. Pre-COVID ~22% of sales were completed in Q1. Resales were down -15% on 1Q22, and -4% on a rolling 12 month basis, and lower than expected due to settlement timing delays. Contracted resales rose +41 from the end of FY22, indicating strong growth in resales contracts. New sales were down -31% on a strong 1Q22. The main reason for the decline given was the low delivery of new homes; only 57 were delivered in 1Q23. SUM stated it remains on track to deliver between 625 and 675 new homes in FY23, with >75% coming in 2H23.

Conversion from contracted sales to completed sales declined materially — most likely explanation is expanding lead times
Our understanding is that a contracted sale primarily represents the payment of a fully refundable deposit of a few thousand dollars. The conversion tends to be very high and when a contracted sale is not completed, the primary reason is a change to a different unit within the village or a change of health circumstances. Over the last five years SUM has converted well over 100% of period end contracted sales to completed sales the following quarter. At FY22 (December 2022), SUM had 279 contracted sales (163 new sales and 116 resales) and converted only 75% (210) during 1Q23. The reduced conversion can either be explained by a relatively dramatic reduction in conversions from contract to completed sales (a clear negative) or lead times have expanded well above historic levels (more transitory). Both REINZ days to sell data (up almost +50% ) and management commentary at FY22 suggests the latter.

[Maverick]

Thanks Greek WD for that Forbar summary.
Initially I was rather concerned about the resales dropping away. This is the real barometer as to the health of the industry. Julian Cook once said that it takes a long time for a community to digest a new village and that resales is actually the key number to be looking at.
So with resales now falling and Craig's seeing price cutting the next strategy, that raises some important red flags.

I track SUM closely, although don`t own any.

Here's a graph which helps put things into a visual perspective. We can see from the graph that out of the blue sales shot up and stayed up after the first covid lockdown ended and also the 3 months before this quarter resales was at a record high. To my eye, yesterdays result actually doesn't look too bad after looking through the sales surge they got pre Christmas.

With the high number of contracted- but unsettled- stock Forbar are suggesting that all we are witnessing is the increased lag time to settle a new client in. It is my thinking this material effect on current profit is a one off adjustment as the sales which are indeed still happening ( but taking longer) simply fall into the next period. Once this lag effect has stopped increasing and settles to a new normal then sales volumes will resume into their historical reported quantities. I disagree with Craig's that SUM now need to cut prices at this stage- sales are still happening, just taking longer to settle, how's cutting prices going to help?

If we see this result in context of years rather than just compared to last quarter then this result doesn't concern me nearly as much. I certainly dont think it says the sky is falling on the industry. To me this is all looking pretty robust given how quiet the real estate industry is right now.
yellow = total sales. Blue = new sales Red = Resales
https://lh5.googleusercontent.com/7rTi69_zPcfTUbqp9q2xSuBfAkHJBT1usnggrXpLxmD_mU8ppv GENnNnm1HnMX-ZI5TwhtVka79WsdV9y15cj6Vqu5mFqfS-vT3jntVgDAwV_g2P4y23ts7Qy6Qdp-J-KqE450yKwAV6kPRHFnxZn0E

[Maverick]

OMG...just saw Susan Paul hawking Summerset units during prime time TV news.....What the hell are you thinking SUM!

[winner69]

OMG...just saw Susan Paul hawking Summerset units during prime time TV news.....What the hell are you thinking SUM!

Some of the residents loved being part of it

Anyway Suzanne not as twrrible as that Tina

https://www.summerset.co.nz/about-us/news/retire-like-a-king/

[winner69]

All part of a campaign in a lead up the Coronation …hopefully not enduring :sleep:

Suzanne overload

https://thespinoff.co.nz/pop-culture/04-05-2023/why-is-suzanne-paul-suddenly-the-face-of-everything

[Maverick]

All part of a campaign in a lead up the Coronation …hopefully not enduring :sleep:

Suzanne overload

https://thespinoff.co.nz/pop-culture/04-05-2023/why-is-suzanne-paul-suddenly-the-face-of-everything
Damn you're good Winner...well observed as ever.
I was not aware of this " campaign " for the coronation until right now. ...but seriously? Susan Paul sells fish harvesters, and massage thingies ...and now your last occupancy till death??? that is a jump too far.
SUM have really mucked this up.

[winner69]

Week close over $10 …haven’t seen that for best part of a year

2nd quarter sales update early next week should be interesting

[Greekwatchdog]

Week close over $10 …haven’t seen that for best part of a year

2nd quarter sales update early next week should be interesting

Here you go W69. Pretty Good in my books.

2Q23 METRICS – SALES OF OCCUPATION RIGHTS

Summerset Group is pleased to report 273 sales for the quarter ending 30 June 2023, comprising 126 new sales and 147 resales, the highest number of resale settlements in a quarter the company has ever seen. Summerset has achieved 483 settlements for 1H23.
Summerset CEO Scott Scoullar said the result is pleasing and indicative that demand for the company’s retirement living offering remains strong, despite a period of tough property market conditions, which now appear to be easing.
Uncontracted new sale stock decreased by 17% from 308 as at 31 December 2022, to 256 units, with 152 new homes delivered in the period.
The company has construction in progress at 17 sites around New Zealand and continues to be on track to deliver approximately 625-675 homes in FY23. While that range provides for flexibility, it expects it will deliver closer to the lower end as the company actively and prudently manages deliveries to property market conditions.
“Our deliveries are heavily weighted to the second half of the year, which includes main building deliveries at Summerset Pohutukawa Place in Bell Block, New Plymouth, and Summerset Palms in Te Awa, Napier, with both already having strong levels of presales for Serviced Apartments”.
In Australia, construction at Summerset’s Cranbourne North village is well underway with presales commencing next month and the first homes expected to be finished by the end of the year.

[BlackPeter]

Here you go W69. Pretty Good in my books.

2Q23 METRICS – SALES OF OCCUPATION RIGHTS

Summerset Group is pleased to report 273 sales for the quarter ending 30 June 2023, comprising 126 new sales and 147 resales, the highest number of resale settlements in a quarter the company has ever seen. Summerset has achieved 483 settlements for 1H23.
Summerset CEO Scott Scoullar said the result is pleasing and indicative that demand for the company’s retirement living offering remains strong, despite a period of tough property market conditions, which now appear to be easing.
Uncontracted new sale stock decreased by 17% from 308 as at 31 December 2022, to 256 units, with 152 new homes delivered in the period.
The company has construction in progress at 17 sites around New Zealand and continues to be on track to deliver approximately 625-675 homes in FY23. While that range provides for flexibility, it expects it will deliver closer to the lower end as the company actively and prudently manages deliveries to property market conditions.
“Our deliveries are heavily weighted to the second half of the year, which includes main building deliveries at Summerset Pohutukawa Place in Bell Block, New Plymouth, and Summerset Palms in Te Awa, Napier, with both already having strong levels of presales for Serviced Apartments”.
In Australia, construction at Summerset’s Cranbourne North village is well underway with presales commencing next month and the first homes expected to be finished by the end of the year.

Green shoots? There certainly are some promising indicators:

14660

Running annual total rising from Q1 (485 new and 453 resales) to Q2 (489 new and 490 resales) - pretty good to see sales increasing on the way into winter! Not unprecedented, but rare.

Good that they managed to get their unsold housing stock down, and on top of that ...

... resales taking over new sales (and those did grow as well) - this is good, resales provide a better return.

Time for the harvest ...

Great we have Summerset to keep the market informed ... assume however that the other retirement villages are enjoying a similar buying pattern.

[winner69]

Good stuff BP

Sales for H123 down on last year so won't be much growth if any in Underlying Earnings when they report in August

Nonetheless things look better than they did at the end of March

Chart still looks cool

[Maverick]

Excellent graphs BP and Winner, great stuff.

It is very hard not to be excited about this result. Not because it is Stella but rather it indicates we are back to business as usual.
I think we are all quietly and cautiously optimistic that the worst is behind us in RV land .
Passing peak inflation, housing finding its floor and the housing market volume sales volume on the up.

Loving the commentary
“ Demand for the company’s retirement living offering remains strong, despite a period of tough property market conditions, which now appear to be easing.”

The graph below is quarterly sales of new sales (blue) , resales (red) and total ( yellow).

I think it is fair to conclude the dud quarter earlier this year has since been made up for now and we are sitting on the normal growth curve . So whether it was the weather, lag time to sell houses or general doom and gloom, I think it is now safe to say we are through the storm of low turnover.

I also note this morning that building inflation is effectively down to normal. ( albeit extrapolated only on the previous 6 months) .

Draw your own conclusions but for me, I don't know what more indicators anyone would be waiting for from this point that the industry has passed its trough and more normal operations have arrived.

It is also just my opinion but the sales that were not made earlier this year will have created a backlog of demand as everyone got 6 months older . On top of that with RYM, SUM and ARV throttling back development, that also reduces future supply. Sounds like good times ahead for the industry to me.

Well done Summerset. Great result.

https://lh5.googleusercontent.com/faMvrBpRtXjX2FNryjCHBD7dU9kqYWGwb7HcXruWRJybiVg6wL ATRUo9LeLynxqw19LHYGPWnHozasJT2bx-UDyV5vuKmO7B8d-h0-QK5PZdHYTxlK6jzXR5wBis55Peu1fOk7p26W1ImSFhs7TTc5U

[Charlie]

so in the last 5 yrs

ARV gains are basically 0%
OCA around -35%
RYM about -40%
SUM about +35% and hopefully on the continued rise.

[BlackPeter]

so in the last 5 yrs

ARV gains are basically 0%
OCA around -35%
RYM about -40%
SUM about +35% and hopefully on the continued rise.

So - what do you think this tells us?

"Past performance is no guarantee of future results".

Look at it that way: You have two fireworks rockets, one just sparkling in in the air (i.e. it made a lot of gains) and one still on the ground. Which one would you use for the next flight?

[winner69]

So - what do you think this tells us?

"Past performance is no guarantee of future results".

Look at it that way: You have two fireworks rockets, one just sparkling in in the air (i.e. it made a lot of gains) and one still on the ground. Which one would you use for the next flight?

Quite of few of those fireworks rockets are real fizzers …..fail to ignite or shoot out sideways …..esp if they have been stagnating for many years

And then real rockets often explode shortly after take off …wouldn’t want to be on those ones

[ValueNZ]

so in the last 5 yrs

ARV gains are basically 0%
OCA around -35%
RYM about -40%
SUM about +35% and hopefully on the continued rise.
You are focusing too much on the changing of price rather than changing of value. Increasing value is what matters in the long term. Even better if you can purchase a stock for cheaper that continues to grow and increase its balance sheet, and therefore future cash flow potential.

[Charlie]

You are focusing too much on the changing of price rather than changing of value. Increasing value is what matters in the long term. Even better if you can purchase a stock for cheaper that continues to grow and increase its balance sheet, and therefore future cash flow potential.
My long term is running out with retirement looming :) however, I have 10% in ARV, 7% in RYM and 5% in SUM, as it stand ,but look to buy SUM more. Rising tides and all that.

[Habits]

You are focusing too much on the changing of price rather than changing of value. Increasing value is what matters in the long term. Even better if you can purchase a stock for cheaper that continues to grow and increase its balance sheet, and therefore future cash flow potential.

The business risks are dissipating, according to sum. Which means that the same income stream has greater value. Of course though, income streams change over time and the RV companies are a beneficiary at the moment on both points

[Greekwatchdog]

For Bars update. Down to Neutral. Was Outperform.

Summerset (SUM) and Ryman Healthcare (RYM) have led the recent bounce in aged care stocks, with share prices up ~+30% over the last three months. This bounce is well deserved and driven by improved housing sentiment; but is there more to come? We still see strong valuation support in the aged care sector overall, but believe that SUM specifically will consolidate recent share price gains rather than outperform the market from here. Specifically we view 2023 as somewhat of a transition year for SUM as it ramps up to deliver its first units in Australia as well as building on three apartment-heavy sites simultaneously in New Zealand. SUM has an excellent track record of cash recovery of capex. 2023 will, on our estimates, see a meaningful step up in working capital driving net debt up considerably, something we do not expect from the remainder of the sector. We downgrade to NEUTRAL with an unchanged target price of NZ$10.55.

What's changed?
Earnings: Annuity EBITDA down 0%/-1%/-2% in FY23/FY24/FY25, underlying earnings down -8%/-7%/-7% on lower new sales.
Rating: Downgrade to NEUTRAL from OUTPERFORM.
Well deserved bounce in valuation; but likely to be tougher from here
SUM is currently valued at a near all time high premium to RYM using our preferred valuation metric of EV/Annuity EBITDA. We acknowledge SUM's best in class track-record of cash recycling and earnings growth, something the market is rightly giving it credit for. However, we note that compared to RYM, SUM is still largely unproven in Australia, no longer has lower leverage and has benefited from a substantially lower care proportion of earnings, something that has been a drag on RYM's earnings. We value RYM and SUM on the same EV/Annuity EBITDA multiple and therefore see more upside in RYM.


1H23 sales; decent re-sales, weak new sales
SUM's 2Q23 sales numbers showed a meaningful bounce back from its very weak 1Q23. Looking at the first half as a whole resales for 1H23 was up a healthy +9% on 1H22, while new sales were down -17%, driven by lower deliveries. In its 2Q23 release SUM highlighted again that its deliveries would be heavily back end loaded, but it was even more skewed than we had expected. Deliveries in the first half were <1/4 of expected full year deliveries. We have reduced our expectations for FY23 new sales accordingly.


Debt likely to build meaningfully through FY23
SUM's debt is almost exclusively project finance and we do not consider the build up of debt to be concerning, in particular given SUM's strong track record of cash recovery of capex. However, we do think that SUM, much like the rest of the sector, is unlikely to re-rate to previous asset multiples unless it can demonstrate an ability to grow organically without adding significant debt.

[snigmac]

For Bars update. Down to Neutral. Was Outperform.

Summerset (SUM) and Ryman Healthcare (RYM) have led the recent bounce in aged care stocks, with share prices up ~+30% over the last three months. This bounce is well deserved and driven by improved housing sentiment; but is there more to come? We still see strong valuation support in the aged care sector overall, but believe that SUM specifically will consolidate recent share price gains rather than outperform the market from here. Specifically we view 2023 as somewhat of a transition year for SUM as it ramps up to deliver its first units in Australia as well as building on three apartment-heavy sites simultaneously in New Zealand. SUM has an excellent track record of cash recovery of capex. 2023 will, on our estimates, see a meaningful step up in working capital driving net debt up considerably, something we do not expect from the remainder of the sector. We downgrade to NEUTRAL with an unchanged target price of NZ$10.55.

What's changed?
Earnings: Annuity EBITDA down 0%/-1%/-2% in FY23/FY24/FY25, underlying earnings down -8%/-7%/-7% on lower new sales.
Rating: Downgrade to NEUTRAL from OUTPERFORM.
Well deserved bounce in valuation; but likely to be tougher from here
SUM is currently valued at a near all time high premium to RYM using our preferred valuation metric of EV/Annuity EBITDA. We acknowledge SUM's best in class track-record of cash recycling and earnings growth, something the market is rightly giving it credit for. However, we note that compared to RYM, SUM is still largely unproven in Australia, no longer has lower leverage and has benefited from a substantially lower care proportion of earnings, something that has been a drag on RYM's earnings. We value RYM and SUM on the same EV/Annuity EBITDA multiple and therefore see more upside in RYM.


1H23 sales; decent re-sales, weak new sales
SUM's 2Q23 sales numbers showed a meaningful bounce back from its very weak 1Q23. Looking at the first half as a whole resales for 1H23 was up a healthy +9% on 1H22, while new sales were down -17%, driven by lower deliveries. In its 2Q23 release SUM highlighted again that its deliveries would be heavily back end loaded, but it was even more skewed than we had expected. Deliveries in the first half were <1/4 of expected full year deliveries. We have reduced our expectations for FY23 new sales accordingly.


Debt likely to build meaningfully through FY23
SUM's debt is almost exclusively project finance and we do not consider the build up of debt to be concerning, in particular given SUM's strong track record of cash recovery of capex. However, we do think that SUM, much like the rest of the sector, is unlikely to re-rate to previous asset multiples unless it can demonstrate an ability to grow organically without adding significant debt.

Thanks GWD, that's very helpful.

[silu]

I have been told last night that Summerset emailed all families to say despite the govt changes, they'll be keeping a whole suite of Covid-19 mitigations in their care homes.

[thebusinessman]

I have been told last night that Summerset emailed all families to say despite the govt changes, they'll be keeping a whole suite of Covid-19 mitigations in their care homes.
Kudos to them!

[Sideshow Bob]

https://www.nzx.com/announcements/416856

SUMMERSET FIRST HALF UNDERLYING PROFIT OF $87.2M, UP 5.7%
• Underlying profit for 1H23 of NZ$87.2m, up 5.7% on 1H22
• Reported (IFRS) profit after tax of NZ$133.1m
• Total assets of NZ$6.3 billion, up 17.2% on 1H22
• Gearing ratio of 35.5%
• Two new sites acquired in New Zealand
• 152 new retirement units delivered
• 483 sales of occupation rights for the half
• Development margin of 33.5%
• Interim dividend of NZ11.3 cents per share

[silu]

Been a shareholder for a little over 10 years now and I'm happy to be one for many years more if they continue along their track.

[Greekwatchdog]

For Bars Review....

Summerset (SUM) reported a mixed result, with some strong points but also some weak points. New sales gains were particularly strong, with margins at an all time high, substantially ahead of our estimates. This is particularly impressive as it comes with a backdrop of falling residential house prices and rising construction costs. It was also encouraging to see opex growth continuing to moderate; 12 month rolling opex growth now down to ~+10%, in-line with unit growth, suggesting rapidly receding inflationary pressures. But cash generation was weak. Cash flow from ongoing operations was negative -NZ$30m driven in particular by weak resales cash flow as SUM bought back some units. Debt build up was also substantially ahead of our estimates, up ~+50% versus 1H22 (>+NZ$400m). The increased debt was primarily related to build up of work in progress in Australia as well as some capital intensive villages in New Zealand. We remain NEUTRAL, with a slightly reduced price target of NZ$10.40 (from NZ$10.55).

What's changed?
Earnings: FY23/24/25 underlying profit +11%/+2%/+1%, Annuity EBITDA -6%/-1%/+2%. FY23 driven by higher new sales.
Target price: Reduced to NZ$10.40 (NZ$10.55) due to higher net debt, partly offset by roll forward of earnings.
Strong message and admirable disclosure on cash recovery of capex — steady state cash flow from ongoing operations still opaque
SUM added new disclosure on cash recovery of capex and village cash flow. We were encouraged by the former but left wanting more with regards to the latter. SUM suggested an all in development cash margin of 7.1% and also gave specific disclosure on its eight most recently completed villages, delivering positive +NZ$162m cash flow, or >14% cash margin. With regards to cash generation from ongoing operations, the new disclosure did not shed much light as it was generic in nature, forward looking and included non-cash items. SUM has led the sector with better cash disclosure and we are hopeful that we will see continuous improvement.


Residential property market appears to have bottomed — risk reward in aged care stocks attractive
SUM commented that trading conditions are improving and in some instances very strong, while settlements remain lumpy. To SUM's comments we can add Winton's (WIN) comments from 22 August 2023 of, "there are strong indicators that the housing market is near to, or at, the bottom", and REINZ data showing improving trends for both turnover and prices.


A result driven by new sales gains
SUM's results beat our estimates handsomely on underlying profit but missed on annuity EBITDA. The lopsided result was driven by very strong new sales gains, almost +40% ahead of our estimates, and modest weakness relative to our expectations in relation to DMF and resale gains. That said, annuity EBITDA still grew a very respectable +18% versus 1H22.

[bull....]

As expected result as said on another thread which applies to all RV's re-sales are keeping there head's above water thx to legacy customers departing in droves now. that's why margin is up lots as well.

[Entrep]

As expected result as said on another thread which applies to all RV's re-sales are keeping there head's above water thx to legacy customers departing in droves now. that's why margin is up lots as well.

Forbar specifically says resales are weak on SUM.

[bull....]

Forbar specifically says resales are weak on SUM.

in there preso it says re-sales up 9% cant complain about that. new sales are weak though

[Entrep]

in there preso it says re-sales up 9% cant complain about that. new sales are weak though

Forbar specifically says new sales are strong on SUM.

[winner69]

Forbar specifically says new sales are strong on SUM.

I'd say that over last 6 months new sales have been a bit on the weak side but resales going great guns

Last 6 months new sales were down 48 on last year while resales were up 20

And SUM they noted that the June quarter resales at 147 was the highest number they had ever sold in a quarter ... a record

[Ggcc]

I'd say that over last 6 months new sales have been a bit on the weak side but resales going great guns

Last 6 months new sales were down 48 on last year while resales were up 20

And SUM they noted that the June quarter resales at 147 was the highest number they had ever sold in a quarter ... a record
Just spoke with a local real estate agent and they say things are turning around and quickly. Lots of oldies needing to move out and lots of first home buyers coming in with cash ready to go. Lots of houses have been lived in for 30+ years without any renovations. Why don’t people do anything to their houses for 30+ years I never understood. Ps. Areas with good homes getting good multiple cash offers and sold within 4 weeks.

[Habits]

"Lots of houses have been lived in for 30+ years without any renovations"

Expensive and disruptive. The empty nester parents probably have no need for the changes eg a kitchen is still a kitchen.

Normally something new 'broom' owners do to suit their needs.

[bull....]

Just spoke with a local real estate agent and they say things are turning around and quickly. Lots of oldies needing to move out and lots of first home buyers coming in with cash ready to go. Lots of houses have been lived in for 30+ years without any renovations. Why don’t people do anything to their houses for 30+ years I never understood. Ps. Areas with good homes getting good multiple cash offers and sold within 4 weeks.

in the preso it looks like the average age of people entering RV's has increased meaning people are putting it off till 80 on average according to presso compared to 75 yrs ago

[Azz]

in the preso it looks like the average age of people entering RV's has increased meaning people are putting it off till 80 on average according to presso compared to 75 yrs ago

On the one hand, depressing; on the other, not. :-)

[Azz]

Is this the best play in the "oldies" sector? I'm looking into all these NZ ones. Old people: could be the future!

[Azz]

Is this the best play in the "oldies" sector? I'm looking into all these NZ ones. Old people: could be the future!

(I'm not buying this or any other NZ stock for the next few months; NZ share market looks so terrible right now.)

[Azz]

Is this the best play in the "oldies" sector? I'm looking into all these NZ ones. Old people: could be the future!

I have read a bit of the content in this thread. :-) But what are the pros and cons of this company, as of today?

[Habits]

I have read a bit of the content in this thread. :-) But what are the pros and cons of this company, as of today?

Is the company undervalued and likely to outperform on a sector basis and market wide. Use the principle last years worst performer is the following year best performer as investors switch

Do you look at charts. One of the most interesting ways to assess share price direction.

[Azz]

Is the company undervalued and likely to outperform on a sector basis and market wide. Use the principle last years worst performer is the following year best performer as investors switch

Do you look at charts. One of the most interesting ways to assess share price direction.

Are these [various listed] concepts for "retirement" the only way? What could disrupt this market? Any thoughts?

Yes, I look at charts. I am intending to study the various players in NZ and as part of that will be share-price history. I'm not a "chartist", however; if I am, it's minimal.

[ValueNZ]

Are these [various listed] concepts for "retirement" the only way? What could disrupt this market? Any thoughts?

Yes, I look at charts. I am intending to study the various players in NZ and as part of that will be share-price history. I'm not a "chartist", however; if I am, it's minimal.
Read the annual reports of each retirement village operator and compare the financial statements + the market cap of each company. IMO when you do that Oceania comes out as the cheapest of them all. I think the whole sector is undervalued though, probably with the exception of radius.

[kiora]

Read the annual reports of each retirement village operator and compare the financial statements + the market cap of each company. IMO when you do that Oceania comes out as the cheapest of them all. I think the whole sector is undervalued though, probably with the exception of radius.

Sometimes/most times? the market is right

[allfromacell]

SUMs biggest strength is also it's big weakness.

The hospitals are already overflowing, it won't be long until people will be thinking very carefully before moving into a retirement settlement without premium care facilities.

[winner69]

Q3 sales up 19% on same period last year ….YTD numbers now up on last year as well.

Things looking pretty good

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/419678/404747.pdf

[bull....]

Q3 sales up 19% on same period last year ….YTD numbers now up on last year as well.

Things looking pretty good

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/419678/404747.pdf

not bad but are not new sales still behind last yr ytd yr22 == 398
yr23 = 374 6% below last yr so need a big last quarter

[winner69]

not bad but are not new sales still behind last yr ytd yr22 == 398
yr23 = 374 6% below last yr so need a big last quarter

….just like Q3 and it’ll be fine

Plenty of new ones being delivered next few months

[Maverick]

Excellent result from SUM.
I think this is a nice example to demonstrate what I've been saying on the OCA thread about the predictability of resale volume..

That the combined new sales + resales from whatever appropriate past tenure period = today's resales.

SUM is just about all villas , their tenure is 8 years.
Today's resales = resales + new sales from around 2014-2015.

From this graph one can see evidence the number of resales comes directly from new builds 8 years or so prior. Also that we can soon expect a relative tempering of the strong growth in resales SUM has created to date. That is surely the reason they have moved over the ditch, to keep increasing their build rate.

It is an excellent update and sales were exactly on track.
The biggest takeaway from me from this update
…very strong contracted stock …strong pre-sales continue…Demand for the village has been very high…Pre-sales of Serviced Apartments at our Te Awa main building are strong.

All seems very well indeed in RV land. Great job as always SUM.
Blue- new sales
Red -resales
Yellow -new+ re sales
14782

[Bikeguy]

Excellent result from SUM.
I think this is a nice example to demonstrate what I've been saying on the OCA thread about the predictability of resale volume..

That the combined new sales + resales from whatever appropriate past tenure period = today's resales.

SUM is just about all villas , their tenure is 8 years.
Today's resales = resales + new sales from around 2014-2015.

From this graph one can see evidence the number of resales comes directly from new builds 8 years or so prior. Also that we can soon expect a relative tempering of the strong growth in resales SUM has created to date. That is surely the reason they have moved over the ditch, to keep increasing their build rate.

It is an excellent update and sales were exactly on track.
The biggest takeaway from me from this update
…very strong contracted stock …strong pre-sales continue…Demand for the village has been very high…Pre-sales of Serviced Apartments at our Te Awa main building are strong.

All seems very well indeed in RV land. Great job as always SUM.
Blue- new sales
Red -resales
Yellow -new+ re sales
14782




Very well laid out, thank you.

[winner69]

And Mav …. You didn’t add that resale margins this time around are based on current prices less the sales prices of 8 years ago

[Ggcc]

https://app2.msci.com/eqb/gimi/smallcap/MSCI_Nov23_SCPublicList.pdf

Looks like Summerset and A2 deleted out of the small indexes

[Sideshow Bob]

That's pretty good....

https://www.nzx.com/announcements/424495

Summerset Group is pleased to report 360 sales for the quarter ending 31 December 2023, comprising 186 new sales and 174 resales. Total settlements for the quarter were 30% higher than Q4 2022 (277 total settlements).

[winner69]

That's pretty good....

https://www.nzx.com/announcements/424495

Summerset Group is pleased to report 360 sales for the quarter ending 31 December 2023, comprising 186 new sales and 174 resales. Total settlements for the quarter were 30% higher than Q4 2022 (277 total settlements).

Pretty good it is Bob

Scott Scoullar seemed more upbeat than usual …that’s good as well

[Muse]

Pretty good it is Bob

Scott Scoullar seemed more upbeat than usual …that’s good as well

A very positive update IMO

[Greekwatchdog]

For Bars review...

Summerset (SUM) reported record new sales and resales in 4Q23, with resales in particular ahead of our expectations. The strong Q4 resales numbers resulted in FY23 resales up +16% from its weak FY22. More importantly, resales as a proportion of overall stock for SUM is now back at its long-run average, indicating a normalised, or close to fully normalised, market. The aged care stocks have had a good holiday season, up ~+10% on average over the last month. We see SUM's update as supportive of further gains for the sector. SUM trades at ~1.1x P/B value and a ~+45% premium to Ryman Healthcare (RYM) on an EV/Annuity EBITDA basis. Retain NEUTRAL.

link


NZX Code
SUM


Share price
NZ$10.86


Target price
NZ$10.50 (from 10.15)


Risk rating
Medium


C&ESG rating
A-


Market cap
NZ$2,511m


Avg daily turnover
226.8k (NZ$2,131k)






link


Financials: Dec/
22A
23E
24E
25E


Rev (NZ$m)
413.8
464.3
499.9
539.7


NPAT* (NZ$m)
171.5
181.6
182.8
184.4


EPS* (NZc)
74.4
78.2
78.4
79.1


DPS (NZc)
22.3
24.0
25.0
26.0


Imputation (%)
0
0
0
0




*Based on normalised profits







link


Valuation (x)
22A
23E
24E
25E


PE
14.6
13.9
13.9
13.7


EV/EBIT
18.1
17.6
17.7
16.9


EV/EBITDA
16.9
16.4
16.3
15.5


Price / NTA
1.1
1.1
1.0
1.0


Cash div yld (%)
2.1
2.2
2.3
2.4


Gross div yld (%)
2.1
2.2
2.3
2.4






What's changed?


Earnings: Underlying earnings +2%/+1%/+1% driven by increased new sales and resale gains.
Target price: Increased to NZ$10.50 (from NZ$10.15) on increased annuity EBITDA from higher resale gains.


Strong resales point to an improving housing market backdrop — commentary suggests forward indicators remain positive
New sales were expected to be solid given deliveries skewed to 2H23, but the strong resales result, +16% YoY for FY23 and 4Q23 sales comfortably above trend, indicate a genuine pick-up in demand, supported by an improving NZ housing market as shown in REINZ data. SUM's 4Q23 resales of 174 were comfortably a record for the company and +16% ahead of our expectations. Resales were up +26% YoY for the quarter. We view this as another sign that the housing market has begun to improve. SUM stated it, ‘was optimistic for the year ahead, seeing positive signs that the residential property market is improving, and with strong levels of demand and pre-sales already’. Additionally, the most recent REINZ data points to an improving housing market with sales up +36% on a three month rolling basis since its trough (seasonally adjusted), with days to sell down -37% from their peak.

Solid new sales given 2H delivery skew
SUM had previously flagged its FY23 deliveries would be 2H skewed and thus stronger new sales towards the year end. Pleasingly, SUM has delivered this, with new sales of 186 for 4Q23 marginally ahead of our expectations, and growth of +34% YoY for the quarter or +4% for FY23. SUM does not disclose prices or margins achieved in its quarterly updates, but our Montgomerie-Ibbotson pricing index indicates SUM has continued to hold its unit prices broadly flat for the last 18 months.

SUM has (finally) delivered its first units in Australia
In 4Q23 SUM delivered its first 10 units at its first Australian village (Cranbourne North​​​​​​​) with residents to move in in 1Q24. This timing is in line with its expectations over the past 18 months but nearly two years later than originally planned. At its FY19 result it indicated its first village would open in late 2021/early 2022, this was pushed to early 2023 at FY21, then delayed to 4Q23 in 2022.

[bull....]

no mention of margins achieved in the announcement. the important bit

[Ferg]

no mention of margins achieved in the announcement. the important bit
Yes margins are important bull but the more important issue lately for RVs has been about shifting volumes. As they say "volume fixes everything". Get the volumes moving and we will see a return of confidence. Without volumes there is nothing; as we saw when residential sales slowed which increased the days to sell for RVs. I say get the volumes first and work the margins later. So patience my dear fellow, patience.

The trouble for RVs is if they give away too much margin on (re)sales this has a huge double whammy impact on the business => lower reported NPAT due to portfolio devaluations and a consequently lower NTA on investment properties => puts pressure on the SP, unless Mgmt & BoD can paint a picture of a bright future. So it's a bit of a balancing act between getting volumes and not giving away margins....which in fairness applies to most businesses.

[bull....]

Yes margins are important bull but the more important issue lately for RVs has been about shifting volumes. As they say "volume fixes everything". Get the volumes moving and we will see a return of confidence. Without volumes there is nothing; as we saw when residential sales slowed which increased the days to sell for RVs. I say get the volumes first and work the margins later. So patience my dear fellow, patience.

The trouble for RVs is if they give away too much margin on (re)sales this has a huge double whammy impact on the business => lower reported NPAT due to portfolio devaluations and a consequently lower NTA on investment properties => puts pressure on the SP, unless Mgmt & BoD can paint a picture of a bright future. So it's a bit of a balancing act between getting volumes and not giving away margins....which in fairness applies to most businesses.

i agree focus on one metric alone is not healthy
i do not agree with your saying volumes fix everything though. maintaining volume is important to keep the lights on but does not necessarily mean profits at the end of the day.
also re-sales are where they make the good profits and this is the important bit for me in working out the DCF valuation guess on the value of each property they have in there portfolio. At the moment we are seeing the original batch of retiree's move on hence why good re-sales volumes are being reported.
They are getting killed on development margins and this was pretty evident it was to happen hence my oringinal call on cash crunch coming.
anyway i agree with you its a balance between good revenue and achieving good margins is crucial.

I would be interested to hear your view on why you dont think the DMF is used to cover some of the exp's over and above the fee's collected weekly.

[Ferg]

"Volume fixes everything" is a well known saying (I admit in my circles) that typically applies to manufacturing businesses, but it is not unique to them. Conversely, one can't cost cut your way to success!


I would be interested to hear your view on why you dont think the DMF is used to cover some of the exp's over and above the fee's collected weekly.

DMF is used to cover expenses so I'm not sure why you think I think that....? I haven't checked SUM accounts in detail but I would expect all RVs are using DMF income to cover expenses that are not funded from weekly fees.

[Sideshow Bob]

New bond offer....

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/426453/412858.pdf

[winner69]

Summerset FY23 result printed tomorrow

FY22 Underlying Earnings were $171.5m. Forbar reckon FY23 will be $181.6m

I reckon it’ll be over $200m

Half year was up $5m on lower sales than pcp ……2nd half sales were 25% more than pcp so should expect the gains on more than 100 extra sales to flow through.

Of course focus will be Cash Flow and Debt but these should be pretty healthy as well

[Maverick]

Summerset FY23 result printed tomorrow

FY22 Underlying Earnings were $171.5m. Forbar reckon FY23 will be $181.6m

I reckon it’ll be over $200m

Half year was up $5m on lower sales than pcp ……2nd half sales were 25% more than pcp so should expect the gains on more than 100 extra sales to flow through.

Of course focus will be Cash Flow and Debt but these should be pretty healthy as wellHey Winner , I’m happy to stick my neck out with you on this too.

I too think For bar are a bit light with their $181m.

My workings show a Unpat of $188m

[winner69]

Hey Winner , I’m happy to stick my neck out with you on this too.

I too think For bar are a bit light with their $181m.

My workings show a Unpat of $188m

Be interesting to see sale price and margin trends

[Sideshow Bob]

https://www.nzx.com/announcements/426789

SUMMERSET POSTS $190.3M FULL YEAR UNDERLYING PROFIT
• Underlying profit for FY23 of NZ$190.3 million, up 11.0% on FY22
• Net profit after tax of NZ$436.3 million, up 62.1% on FY22
• Total assets of NZ$6.9 billion, up 18.9% on FY22
• Two new sites acquired this year in New Zealand
• 1,103 total sales of occupation rights, up 10% on FY22
• 643 new homes under occupation right agreement (ORA) delivered
• Land bank total of 5,571 retirement homes and 1,338 care homes across NZ and Australia
• Gearing ratio at 34.7%
• Development margin of 31.6%
• Final dividend of NZ13.2 cents per share

Retirement village operator Summerset Group Holdings Limited today announced a record full year underlying profit for the year ending 31 December 2023 of NZ$190.3 million, up 11.0% on FY22.

Net profit after tax (IFRS) was NZ$436.3 million for the year ended 31 December 2023, the company’s second highest ever NPAT.
Summerset Chief Executive Scott Scoullar said 2023 had been a very good year for Summerset, despite a very challenging macroeconomic environment.

“We are very pleased with this result. We have continued to deliver value for our residents and shareholders during a year which has been one of the most challenging we’ve seen as a company. Increasing inflation, recruitment shortages and a falling residential property market made business difficult throughout the year, and yet we withstood those challenges and continued to grow,” Mr Scoullar said.

Summerset delivered a record 1,103 ORA sales for 2023 up 10% on FY22.

“This result has again shown, that while the residential property market has an influence on our business, our strong sales and demand pipeline demonstrates that we are not solely dependent upon it to grow. Our residents are often motivated by life events such as community, security and health when coming to Summerset. We continued to see these motivating factors prompting moves into our villages.”

Mr Scoullar said Summerset continued to deliver for residents this year with continued high satisfaction scores and external acknowledgement of their work.

“Our resident satisfaction scores have remained extremely high this year with 96% of village residents and 95% of care residents telling us they are very satisfied or satisfied with their experience with us.

“We’ve also won a number of awards this year including Aged Advisor’s “Best Provider Nationwide” at their annual People’s Choice Awards and gold for the Reader’s Digest 2024 Quality Service Award in the Retirement Villages category. The most satisfying aspect of these awards are that they’re voted for by consumers, including many of our residents. It’s an honour that many of our residents and their families nominated us.”

Summerset also achieved a record year of construction, meeting its build target, delivering 643 homes under ORA. These included serviced apartments, care suites and memory care suites delivered with the opening of three main buildings at the company’s Kenepuru (Wellington), Bell Block (New Plymouth) and Te Awa (Napier) villages throughout the year.

Mr Scoullar said Summerset reported a development margin of 31.6% up from 29.7% in FY22, driven by improved margins across all unit types which continue to benefit from long-term supplier relationships and well managed procurement contracts.

“In addition to our strong build programme delivery in New Zealand, we were pleased to have achieved the significant milestone of delivering our first Australian homes at our Cranbourne North village in Victoria. We look forward to welcoming our first Australian residents in March.” said Mr Scoullar.

Construction will begin at Summerset’s second Australian village, Chirnside Park, and the company’s Oakleigh South and Craigieburn sites have both received consent.

In New Zealand the company also welcomed the first residents at four new villages at Cambridge, Boulcott (Lower Hutt), Waikanae, and Milldale (Auckland).

Summerset grew its development pipeline in New Zealand, achieving resource consent for its Half Moon Bay (Auckland) and Kelvin Grove (Palmerston North) sites and announcing the purchase of two new sites in Rolleston (Christchurch) and Mosgiel (Dunedin).
“We continue to look for opportunities to expand our portfolio and grow our business to introduce more New Zealanders and Australians to our retirement village lifestyle,” said Mr Scoullar.

Having navigated through a challenging 2023, Mr Scoullar said that Summerset is optimistic for the year ahead, remaining focussed on growth while providing an excellent retirement experience for residents.

“We expect to deliver 675-725 homes in 2024, including Stage 1 of our St Johns village in Auckland, our first multi-level village, delivering four of the seven buildings comprising the main building, care centre and sixty percent of the village’s homes.”

Shareholders will receive a final dividend of NZ13.2 cents per share, bringing the total dividend payable for FY23 to NZ24.5 cents per share, up 9.9% on FY22.
ENDS

[winner69]

Like this bit …. Net profit after tax of NZ$436.3 million, up 62.1% on FY22

[ValueNZ]

Hey Winner , I’m happy to stick my neck out with you on this too.

I too think For bar are a bit light with their $181m.

My workings show a Unpat of $188m
Great call Maverick.

[Perky]

What a well managed business. Development margins and prices going up. Added a couple of bucks to its NTA in a **** property market just for good measure lol
Best in class..well done holders

[Greekwatchdog]

Very happy holder indeed.
What this shows is that Ryman miss calculated badly hence downgrade.

[winner69]

Think they just put this chart in preso as a way of saying How Great Thou Art

Sector pecking order becoming more obvious as time goes on

[bull....]

good result overall ,

[Daytr]

Pleasing to see development margins increased. That seems to be quite a different story to other players in this space.

[bull....]

Pleasing to see development margins increased. That seems to be quite a different story to other players in this space.

prob because they screwed there contractors down on pricing by the look of it. contractors then cut corners to maintain there margin

[Greekwatchdog]

prob because they screwed there contractors down on pricing by the look of it. contractors then cut corners to maintain there margin
.
More baseless information from you Bull. You related to Trump?

[Bobdn]

Anyway....

well done to those that still hold. Ive long since left the party.

[bull....]

.
More baseless information from you Bull. You related to Trump?

the people truly get whats going on

[Bikeguy]

Hey Winner , I’m happy to stick my neck out with you on this too.

I too think For bar are a bit light with their $181m.

My workings show a Unpat of $188m

You nailed it.

[bull....]

.
More baseless information from you Bull. You related to Trump?

https://www.nzherald.co.nz/business/summerset-group-boss-scott-scoullar-explains-why-profit-rose/QTDVOQMICVCEXD34VY4R27W2V4/

ceo says costs kept down by them negotiating with contractors. just like bull said

[Greekwatchdog]

https://www.nzherald.co.nz/business/summerset-group-boss-scott-scoullar-explains-why-profit-rose/QTDVOQMICVCEXD34VY4R27W2V4/

ceo says costs kept down by them negotiating with contractors. just like bull said

Bull, There is a big difference between screwed and negotiate. You said "screwed".

And then you go on to say the "contractors cut corners to control their margins".

Go show me contractors cutting corners to save on margins??? They can't quality is very important and in building it all always shows.

[Baa_Baa]

Bull, There is a big difference between screwed and negotiate. You said "screwed".

And then you go on to say the "contractors cut corners to control their margins".

Go show me contractors cutting corners to save on margins??? They can't quality is very important and in building it all always shows.

Hey GWD, there was only one mention of 'supplier' "improved margins across all unit types which continue to benefit from long-term supplier relationships and well managed procurement contracts". Like who reads that as "screwed", no one .. well, one maybe.

Bullsh1t just likes hating on shares that he's missed the big run-ups, and showboating his ego. The negative nancy will never have anything positive to say about any of the RV's and has a very long reputation of slagging anything that he's missing out on. What's the opposite of 'rose coloured spectacles'?

SUM just posted an outstandingly good result, on top of a previous excellent result, and the market are showing their appreciation. Literally.

[Greekwatchdog]

Hey GWD, there was only one mention of 'supplier' "improved margins across all unit types which continue to benefit from long-term supplier relationships and well managed procurement contracts". Like who reads that as "screwed", no one .. well, one maybe.

Bullsh1t just likes hating on shares that he's missed the big run-ups, and showboating his ego. The negative nancy will never have anything positive to say about any of the RV's and has a very long reputation of slagging anything that he's missing out on. What's the opposite of 'rose coloured spectacles'?

SUM just posted an outstandingly good result, on top of a previous excellent result, and the market are showing their appreciation. Literally.

Thanks Baa Baa, Your right on all counts. Good to be a holder in one RV stock out of 3 that is going the right way. ARV and OCA have work to do

[Greekwatchdog]

For Bars review of the result for those interested.



Summerset Group (SUM) reported strong FY23 underlying earnings and annuity EBITDA, driven by robust resale and new sale gains, partly offset by higher costs. All time high resale margins were the stand out, an extraordinary achievement given the weak housing market. SUM guided for >+10% growth in unit deliveries for FY24. Strong margins and an increased build rate suggests high demand for SUM's product. The result was not without negatives; cash conversion was even lower than we had expected, SUM delivered negative cash flow from ongoing operations before funding costs and net debt increased by +35%, or +NZ$350m over FY23. We see SUM as well placed to deliver strong growth but at >30x FY25 EV/Annuity EBITDA we see better value elsewhere. We retain NEUTRAL with an unchanged target price of NZ$10.70.

What's changed?
Earnings: Underlying earnings up +3% to +6% and annuity EBITDA down -3% to -7% across FY24 to FY26.
Strong result...
SUM reported a strong result, with annuity EBITDA up +16% year-on-year. The strength was concentrated in resale margins, which were up ~3pp in 2H23 to ~29% sequentially, matching the all-time high achieved in 2H21. This is an extraordinary result considering the weak housing market and relatively stable prices as tracked by our aged care pricing index. A combination of a higher proportion of villas and higher average tenure likely contributed. The strong resale gains was largely offset by higher opex versus our estimates.


...weak cash
SUM reported its second consecutive year of negative cash flow from ongoing operations; driven by increased opex, expensed interest and (by SUM's high standards) weak cash conversion of sales, primarily carried through from 1H23. Even excluding funding costs, SUM's business cash flow from ongoing operations turned negative for the first time. The glass half full interpretation is that SUM is investing ahead of strong growth, as it should. The glass half empty interpretation would suggest that SUM is struggling to generate enough cash from its mature villages to support a growing corporate centre. We believe there is some truth to both.


New metrics... same old
SUM introduced a new metric called ‘Summerset free cash flow’. This metric reflects net operating business cash flow and deducts BAU capex and expensed funding costs — very similar to Forsyth Barr's cash flow from ongoing operations. SUM changed the definition of net operating business cash flow to include 25% of new sales cash flow, reflecting the DMF proportion. There is some logic to this but the change is quite dramatic, increasing net operating business cash flow in FY21–23 by a factor 3x to 5x. It all adds up to the same but we prefer to analyse cash flow from ongoing operations, separate from development activities, and continue to do so.



link


NZX Code
SUM


Share price
NZ$11.12


Target price
NZ$10.70


Risk rating
Medium


C&ESG rating
A-


Market cap
NZ$2,571m


Avg daily turnover
250.0k (NZ$2,405k)






link


Financials: Dec/
23A
24E
25E
26E


Rev (NZ$m)
481.5
529.5
580.3
641.1


NPAT* (NZ$m)
190.2
188.6
195.2
210.2


EPS* (NZc)
81.9
80.9
83.7
90.1


DPS (NZc)
24.5
18.0
19.0
20.0


Imputation (%)
0
0
0
0




*Based on normalised profits







link


Valuation (x)
23A
24E
25E
26E


PE
13.6
13.8
13.3
12.3


EV/EBIT
17.4
18.3
17.6
15.5


EV/EBITDA
16.2
16.9
16.2
14.3


Price / NTA
1.0
0.9
0.9
0.8


Cash div yld (%)
2.2
1.6
1.7
1.8


Gross div yld (%)
2.2
1.6
1.7
1.8

[Jenny Ruth]

For those who are interested, my latest column published on my Substack, Just the Business, is headlined: The volatility in Summerset's reported net profit doesn't serve investors.
I'm not criticising Summerset but the reporting rules. You can find it here: https://justthebusinessjennyruth.substack.com/p/the-volatility-in-summersets-reported

[Bjauck]

The latest Summerset bond issue was oversubscribed. My application was scaled back to 85% of what I applied for. It was issued at 6.43% interest rate.

[Grimy]

I got the amount I applied for. But it wasn't a big $ amount (didn't want to say sum....).

[Jenny Ruth]

Hi all. My latest column published on my Substack, Just the Business, looks at Summerset's problem with cash under the headline: Summerset develops a “tin ear” on presenting cash flows
You can find it here: https://justthebusinessjennyruth.substack.com/p/summerset-develops-a-tin-ear-on-presenting

[Bjauck]

Hi all. My latest column published on my Substack, Just the Business, looks at Summerset's problem with cash under the headline: Summerset develops a “tin ear” on presenting cash flows
You can find it here: https://justthebusinessjennyruth.substack.com/p/summerset-develops-a-tin-ear-on-presenting
Paywalled.

[Greekwatchdog]

Update below...

1Q24 METRICS – SALES OF OCCUPATION RIGHTSSummerset Group reported 255 sales for the quarter ending 31 March 2024, comprising 134new sales and 121 resales.“Total sales for Q1 this year were 21 per cent higher than the same time last year, with both newand resales increasing year-on-year,” says Summerset CEO Scott Scoullar.“Our highest selling villages of the quarter were Te Awa (Napier), Papamoa and Bell Block (NewPlymouth). All three villages have had their main building open in the last six months and areselling very well.Mr Scoullar said the company remains on track to deliver the 675-725 homes in 2024 includingsignificant deliveries such as its Papamoa village main building which opened in Q1 and theopening of the St Johns village in the second half of the year.“We also remain on track to deliver the main building at our Boulcott (Lower Hutt) village laterthis year. The building will include an indoor pool overlooking the Boulcott Farm Heritage GolfCourse.”Summerset hit a major milestone in Q1 with the first Australian residents moving into SummersetCranbourne North (Melbourne, Victoria) in March and more contracts expected to settle at thevillage in Q2.“Welcoming our first residents was a major step for the Australian team,” says Mr Scoullar.

[MauroNZ]

anyone attending to the AGM in person?.

[Jenny Ruth]

Hi all. My latest column published on my Substack, Just the Business, takes a look at the NZX-listed retirement operators and how they rank, including that Summerset is likely to overtake Ryman as the largest in the sector in a few years. The headline is: Mirror, Mirror on the wall, which is the biggest retirement village operator?
And you can find it here:
https://substack.com/@justthebusinessjennyruth

[SailorRob]

18/10/2011


Always exceptions.
The major reasons for not taking up Summerset,were;I believe RYM's model of doing ever thing in house is best.I believe RYM's reputation is the best.I believe RYM having more than half their units under 5 years old means there are huge earnings to come from resales.I have met CEO and CFO [and the directors at last AGM] and think a lot of them,and the way they run the business for the residents.They have grown the business without coming back to shareholders.Lastly I
found looking at Summerset made me realise RYM are superior.
thought RYM shareholders would be more stable in the next year or two.I suspose

SUM 655% return

RYM 46%. Not 460% but Forty Six.

[Jenny Ruth]

Hi all. My latest column published on my Substack, Just the Business, previews what the listed retirement village operators will tell us when they report their annual results on Friday this week and Tuesday and Wednesday next week.
The headline is: Can the listed retirement village operators dispel some murk?
And you can find it here:
https://substack.com/@justthebusinessjennyruth

[Ggcc]

Very interesting. I have seen everyone is reporting on other retirement stocks. In Napier I have heard that Summerset are offering redundancies to staff. Any ideas why??