SUM - Summerset Group

[Snow Leopard]

I think a rise is imminent because underlying profits will soon rise too. However, please feel free to quote vague/inconclusive chart patterns as additional reasons for a potential move up :p


Yep pretty simple really more sales equals more profits equals rising share price no charting skills needed:cool:

You two are just grumpy because you dished Metlifcare but it keeps going up :p.

Best Wishes
Paper Tiger

[Yoda]

My guess is short term drop to 3.40 then rise to 3.60 and remain semi-stable for 2-3months
Lets say 3.40 and up to 3.70 by july 31st 1200noon haha

[winner69]

Im very much a novice, but i see a wedge formation in the SP over the last 6 months with 3 equal peaks and rising lows. Maybe a higher rise soon? Opinions....

That not good news is it yoda

Mr Bulkowski says more likely to break down than up

[couta1]

You two are just grumpy because you dished Metlifcare but it keeps going up :p.

Best Wishes
Paper Tiger Yeah/Nah were just looking forward to some time next year when Sum and Met's share prices are on a par:cool:

[Yoda]

That not good news is it yoda

Mr Bulkowski says morevlikely to break down than up

Oh well, old Tom must be right. Just goes to show, i have to study more than one book :scared:

[winner69]

Oh well, old Tom must be right. Just goes to show, i have to study more than one book :scared:

But if you ignore the peak back in Jan and draw some lines from mid Feb you get an Ascending Triangle which break UP more often than down and when they break up the average price rise is 37%. So says Tom

On the back of couta's inside intelligence and the chart probably showing a bullish pattern SUM is screaming BUY BUY BUY BUY - about time as still below where it was 6 months ago

So SUM over 450 come the Q3 announcement

Just remember you read it here yoda

[Goldstein]

Lets say 3.40 and up to 3.70 by july 31st 1200noon haha

If it drops to $3.40 I'll be picking up some more. There's the second quarterly sales coming out early July - not sure how that will affect the price. As others have mentioned it's probably the third quarter results which will be the most significant showing whether the new build is being converted into sales.

[Beagle]

I put some spit and new special polish on my crystal ball which now shows projected 2014 profit at $26m.
EPS growth of 18%, historical PE of 35....pretty much on a par with Ryman's fundamentals.
Fair value.

[Snow Leopard]

Yeah/Nah were just looking forward to some time next year when Sum and Met's share prices are on a par:cool:

Last time was 27 September 2013 when both closed at $3.17, one of only five days when SUM as equaled or bettered MET closing price:

5919

Best Wishes
Paper Tiger

[Mista_Trix]

I reckon a bounce off $3.30 intra-day to settle mid $3.30's before moving back up again, its tracking pretty well with these peaks and troughs as it moves consistently sideways.

Has massively underperformed comparatively :(

[Beagle]

underlying earnings grew 46% over the last 12 months. You expect the current HY to show a growth rate that's less than half of this?

Yes I do. Company itself has said in a very forthright way growth will not match last year and after spending $97m last year on land acquisitions they now have the carrying cost of 8 years land supply at the current build rate. Add to that the Q1 sales were underwhelming. Julian Cook talked of a year of consolidation at the AGM, but its all crystal ball stuff as the company won't give forward guidance.
We are left to draw our own conclusions. With little to go on other than the estimated uplift in build rate, higher land carrying cost, extra directors fees and a slightly less robust housing market, possibly considerably less robust seeing as the Reserve bank are absolutly determined to cool things down...you do the maths.

[Beagle]

Interest bearing debt was just over $30m higher at the end of 2013 compared to the year earlier. I see funding costs between $1 - 1.5m more this year taking into account their average interest rate and further land acquisition at Karaka since balance date. Its not a lot, but it is material for a company which has a starting point of a modest underlying profit of $22m for 2013. I expect the company's veracious appetite for land to be good for long term growth, but clearly it has some impact on short term growth. I have some reservations that holding such a large land bank is the optimum capex strategy.
That said, getting strategic land holdings appears to be very difficult, (see what Ryman paid for their second Melbourne site), so perhaps the long view is the way to play it.

[Goldstein]

I'd rather they bought the land earlier and paid interest costs than delayed and paid much higher prices for said land. At the end of the day, the net interest rate will be much lower than annual land price inflation. This is particularly true for larger land holdings, such as those bought by village operators.

Also, bringing the build pipeline in-house is a reasonable investment. They will want a steady stream of build going through that pipeline to get a decent ROI. Otherwise possibly better to contract it out.

[Beagle]

I'd rather they bought the land earlier and paid interest costs than delayed and paid much higher prices for said land. At the end of the day, the net interest rate will be much lower than annual land price inflation. This is particularly true for larger land holdings, such as those bought by village operators.

That's fair comment and backed-up by their bare land holdings increasing by $8m in value last year...Its a good strategy with the caveat that this works only if land values continue to head north from already lofty level's.

[Beagle]

Reserve bank's policies are having quite an effect and that's before the most recent interest rate rise or the one they appear to be planning next month. Maybe the Reserve Bank are getting a bit carried away ?

http://tvnz.co.nz/business-news/nz-house-sales-fall-14-8-in-may-6003923

[Harvey Specter]

Reserve bank's policies are having quite an effect and that's before the most recent interest rate rise or the one they appear to be planning next month. Maybe the Reserve Bank are getting a bit carried away ?

http://tvnz.co.nz/business-news/nz-house-sales-fall-14-8-in-may-6003923The stupid thing is THE RBNZ set goal posts of 10% and the banks dropped it all the way down to 4.3%.

[macduffy]

The stupid thing is THE RBNZ set goal posts of 10% and the banks dropped it all the way down to 4.3%.

Did the banks "drop" the goal posts to 4.3% or were potential low deposit buyers discouraged from seeking a loan? Either way, it seems to have helped to take the heat out of the (Auckland) housing market to some extent.

[Harvey Specter]

Did the banks "drop" the goal posts to 4.3% or were potential low deposit buyers discouraged from seeking a loan? Either way, it seems to have helped to take the heat out of the (Auckland) housing market to some extent.
I am not sure whether it was the banks turning people away or people not applying in the first place. Either way, it is their fault as they could easily have advertised for more low LVR applicants as they are starting to do now.

[macduffy]

I am not sure whether it was the banks turning people away or people not applying in the first place. Either way, it is their fault as they could easily have advertised for more low LVR applicants as they are starting to do now.

Yes, those damn banks!

;)

[Jay]

I am not sure whether it was the banks turning people away or people not applying in the first place. Either way, it is their fault as they could easily have advertised for more low LVR applicants as they are starting to do now.


I think a bit of both, quite a few not bothering to apply because thay have not got 20%, also probably hard to guaage from the Bank's point of view and they would rather be conservative than potentially be seen as the Bank fuelling the Housing "bubble" and then get fined or worst case lose their Banking license if they overstep the mark.

[Mista_Trix]

"Retirement village industry shake-up on the cards";
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11280575

[couta1]

"Retirement village industry shake-up on the cards";
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11280575
Good article and food for thought re ever increasing profits in the sector also picks up on the rental potential going forward which some have discussed on here. I know of another operator looking to list later this year but can't say who at this stage for obvious reasons.

[vorno]

Good article and food for thought re ever increasing profits in the sector also picks up on the rental potential going forward which some have discussed on here. I know of another operator looking to list later this year but can't say who at this stage for obvious reasons.

Could you hint as to when later this year? perhaps the last quarter?

[couta1]

Could you hint as to when later this year? perhaps the last quarter?
Novemberish.

[percy]

"Retirement village industry shake-up on the cards";
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11280575

Thank you for the link.
It is interesting that Norah Barlow is now a director of Australian retirement village operator INA whose business model is very different to NZ operators.
Certainly there will be many changes,yet the sector benefits from the rapidly growing ageing population.

[winner69]

Im very much a novice, but i see a wedge formation in the SP over the last 6 months with 3 equal peaks and rising lows. Maybe a higher rise soon? Opinions....

How's your wedge turning out yoda ....hope you keeping an eye on it

Price was 346 when you posted that a few weeks ago ....today at 345

At least it ain't broken down eh .....yet

Time alone can make it appear as it has, even though the price is unchanged

Maybe the old saying the future is now is true .....today's price reflects performance in 2016 or something like that

[Frankenstein]

SUM beginning to flirt very closely with its lower long-term trend line - is anyone worried about this from a charting/TA perspective?

Hopefully just taking a breather before taking another run up - I believe 2Q sales metrics are due out next week so maybe this will provide the catalyst. The past month has been so boring! Bollinger bands squeezing ever tighter...

[couta1]

the fundamentals of this stock remain so strong that I can't really see anything to worry about, even if the squiggly lines don't currently look that great.
Long term vision required the short sighted should stay away:cool:

[Beagle]

Long term vision required the short sighted should stay away:cool:
Well, I just went and picked up my brand new, (first set of progressive lens glasses), another one of the joys of reaching 50+, for a whopping $1,334, (ouch), so for the first time in many years I have excellent short, medium and long term vision and it isn't helping with this stock. I don't know what to make of it when Mr Cook says so emphatically that growth this year will not match last year and its on a trailing PE of 35. I don't understand the need to so emphatically state growth will be lower than last year but then refuse to give profit guidance and I don't think the directors stance on this is doing SUM any favours with the market. Metlifecare give forward guidance and Ryman give clearly articulated medium term profit growth targets...(note to directors, not good enough, must improve forecasting systems and do better to provide forward guidance). An update on where they're at with their important Auckland Ellerslie site wouldn't hurt either.

[percy]

No need for short to medium term vision!! Just remember the long view is best!!!
"Statistics NZ estimated the number of New Zealanders aged 75 plus will almost triple to 731,000 over the next thirty years."
Now I can read that with my $2 reading glasses!!!!!!!!!!!!!!!!!!!! lol,
"I think we are well positioned".

[JayRiggs]

Well, I just went and picked up my brand new, (first set of progressive lens glasses), another one of the joys of reaching 50+, for a whopping $1,334, (ouch), so for the first time in many years I have excellent short, medium and long term vision and it isn't helping with this stock. I don't know what to make of it when Mr Cook says so emphatically that growth this year will not match last year and its on a trailing PE of 35. I don't understand the need to so emphatically state growth will be lower than last year but then refuse to give profit guidance and I don't think the directors stance on this is doing SUM any favours with the market. Metlifecare give forward guidance and Ryman give clearly articulated medium term profit growth targets...(note to directors, not good enough, must improve forecasting systems and do better to provide forward guidance). An update on where they're at with their important Auckland Ellerslie site wouldn't hurt either.

Net profit from 2012 to 2013 increased by 131%.
Mr Cook is probably trying not to be overly optimistic and saying it's not going to be 131% again, because that would be pretty tough to beat.
We'll know soon enough in a couple of months for the 2014 half year how things are tracking.
Even if FY2014 profit growth was 50%, I think that would still be excellent.

From the annual meeting speech:

Last year Norah called this company a teenager. We are becoming an adult but these is yet much work to be done. We are growing rapidly and we expect this rate of growth to continue to increase.
So we're still getting great growth, just not 131% :)

A question Roger, when you say SUM has a trailing PE of 35.
According to NZX, SUM's EPS was 15.9, giving it a PE of 21.38 at a share price of $3.40.
I'm just wondering what figures and/or calculation you used to come up with 35?

[JayRiggs]

Couple of things:

1. NPAT is a hopeless indicator of profitability. You should use underlying earnings instead.
2. pretty sure that Roger's PE figures reflect underlying profits, not NPAT.

:)

Oh OK yes you are right. Taking the underlying earnings gives a PE of 35ish.
Thanks for clearing that up!

[Beagle]

IIRC Underlying profit grew 46% 2013 compared to 2012. Mr Cook clearly articulated at the AGM that he is expecting a lower level of underlying growth this year.
I reckon blind bats living in a cave in South America have already heard about the long term tailwinds in this sector in N.Z....the question is will profit growth justify a trailing PE of 35 or are we in for PE contraction (in line with slowing growth and / or higher interest rates), by way of SP stagnation.... No easy answers when the CEO is so reticent to provide any clarity. From a TA point of view the stock looks weak.

http://www.sharechat.co.nz/article/f77bcac6/ryman-buys-wellington-site-from-foodstuffs-for-new-development.html
This is what I'm talking about. Six analysts covering Ryman which is also coincidentally on a trailing underlying PE of 35 have a 12 month price target on average of $8.25, somewhat south of the current price. Could we also see a period, (how long, who knows ?), of price stagnation for SUM as its PE gradually adjusts to a more realistic level ?

[Harvey Specter]

IIRC Underlying profit grew 46% 2013 compared to 2012. Mr Cook clearly articulated at the AGM that he is expecting a lower level of underlying growth this year.

What do you think growth will be? It would have to be very low for the PE/Growth Rate to be above 1 on a forward basis.

[Beagle]

What do you think growth will be? It would have to be very low for the PE/Growth Rate to be above 1 on a forward basis.

See posts #1984, #1988, #1990

Since then there's been plenty of anecdotal evidence the Reserve bank's extremely proactive approach is having a greater effect that some, including myself, had previously thought...but its anyone's estimated best guess since they won't provide guidance we have to extrapolate based on the 20% planned growth in build rate, (209 last year, projected this year 250), and try and work from that factoring in known additional costs, e.g. extra land holding costs and extra directors fees.

[couta1]

Just as I thought Q2 sales nothing to write home about but up on Q1 we await Q3 with anticipation:cool:

[Frankenstein]

Pretty average result really, was hoping for a little more - sales figures only 3% up on where they were this time last year. I note that the growth in sales for SUM tends to come in the second half of the year (or at least has done in the past) so the 3Q metrics may be more telling.

[couta1]

Pretty average result really, was hoping for a little more - sales figures only 3% up on where they were this time last year. I note that the growth in sales for SUM tends to come in the second half of the year (or at least has done in the past) so the 3Q metrics may be more telling.
Sales from new villages will come on board in Q3 but in order to hit that 300 unit build target the next two quarters need to be good.

[Beagle]

SP was telling people yesterday it was a disappointment. This is setting up to be a year of consolidation, as Julian Cook suggested at the AGM. ( Long view or better off elsewhere).
Couta1 - build target is 250 this year mate.

[couta1]

Thanks Roger getting a bit ahead of myself:cool:

[Beagle]

Growth Stalls
http://www.sharechat.co.nz/article/a42108b7/summerset-second-quarter-sales-growth-stalls-as-development-in-focus.html?utm_medium=email&utm_campaign=Summerset+second+quarter+sales+growth +stalls+as+development+in+focus&utm_content=Summerset+second+quarter+sales+growth+ stalls+as+development+in+focus+CID_85da11ffcb4d53f e83b1eb89a0479a26&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlea42108b7summer set-second-quarter-sales-growth-stalls-as-development-in-focushtml

[percy]

Well Roger,seems to me Julian Cook was listening to you!
The appointment of Ms Sadhana Raman to the position of General Manager of Marketing should be very positive.
Appears to me she is very well qualified.

[Beagle]

Mate, Yeap, good experience there. I thought her last name is a little ironic, just change the first a to a y and what have you got :) They need the help. Their T.V. advertisements are really tired and too long, (read too expensive). Now all they need is a really good accountant who can forecast accurately and do lots of other good stuff. I think I know the right guy for the job but he won't move from Auckland :D

[Harvey Specter]

Mate, Yeap, good experience there. I thought her last name is a little ironic, just change the first a to a y and what have you got :) They need the help. Their T.V. advertisements are really tired and too long, (read too expensive). Now all they need is a really good accountant who can forecast accurately and do lots of other good stuff. I think I know the right guy for the job but he won't move from Auckland :DAre you suggesting their marketing plan is to get to the top of Google searches due to misspelling ;)

[Citizen Erased]

Growth Stalls
http://www.sharechat.co.nz/article/a42108b7/summerset-second-quarter-sales-growth-stalls-as-development-in-focus.html?utm_medium=email&utm_campaign=Summerset+second+quarter+sales+growth +stalls+as+development+in+focus&utm_content=Summerset+second+quarter+sales+growth+ stalls+as+development+in+focus+CID_85da11ffcb4d53f e83b1eb89a0479a26&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlea42108b7summer set-second-quarter-sales-growth-stalls-as-development-in-focushtml

Where did they get the sales growth figure of 0.03 percent? Doesn't anyone proofread these things?

[Food4Thought]

Summerset will do fine (great in my unqualified eye). Without the haze, bits, pieces here and there. Bit of up, bit of down. Disruption here and there. Long term, they are like McDonalds and the ever increasing weightier population...who like to bring their slightly weightier children to McDonalds. The ever increasing ageing population... will also bring the ever increasing following of ageing population relatives and friends to the doorstep. Bless their cotton socks. Looking forward to SUM one day reinforcing my bank account. Happy weekend, from a place, where the age and number of ageing members of the population is ever increasing as they love being here... just like people love to live in safe and reliable, New Zealand.

[Goldstein]

Are you suggesting their marketing plan is to get to the top of Google searches due to misspelling ;)

As a shareholder I would endorse a name change to RYMANFREEDENTURESILOVEWINSTON.

[Zaphod]

What do you think the main factors in the poor sales were? RB intervention? Lacklustre marketing? Competition from MET/RYM?

[Harvey Specter]

What do you think the main factors in the poor sales were? RB intervention? Lacklustre marketing? Competition from MET/RYM?
I would be interested to know there unsold stock. My guess is poor sales is due to insufficient new builds and not enough, ahem, turnover in clients in existing stock.

[forest]

What do you think the main factors in the poor sales were? RB intervention? Lacklustre marketing? Competition from MET/RYM?

just wondering what RB stands for.

As for the poor sales, Sum is in the process of bringing the construction in house. Sum seems to like copying RYM, however RYM in house construction started relatively small and has grown with the company. For SUM to start the in house construction process from nothing to the required size and efficiency could be a challenge. I came to this conclusion after attending the AGM.

[winner69]

SP was telling people yesterday it was a disappointment. This is setting up to be a year of consolidation, as Julian Cook suggested at the AGM. ( Long view or better off elsewhere).
Couta1 - build target is 250 this year mate.

Does build target of 250 imply 250 new unit sales?

If so they need to sell 145 in 2nd half of year - last year they sold 112 in 2nd half.

Where they coming from couta

Even then 250 new unit sales is only a 10% increase on 2013

Bugger my long vision is a bit blurry .... so cant see the big numbers for 2015 and 2016 and 2017

[couta1]

Does build target of 250 imply 250 new unit sales?

If so they need to sell 145 in 2nd half of year - last year they sold 112 in 2nd half.

Where they coming from couta

Even then 250 new unit sales is only a 10% increase on 2013

Bugger my long vision is a bit blurry .... so cant see the big numbers for 2015 and 2016 and 2017
Yep winner that build target is for 250 new unit sales and I think they will manage that with Q3 showing a significant upside as more sales hit the recording board the last 2 quarters figures were no surprise and only highlight what they indicated to me in previous discussions I've had with management so really nothing new to add. I think the bottom line with Sum are they are being very cautious in case as they stated at the AGM the wheels start to fall off meanwhile Ryman seem to be upping the anti and driving their business aggressively and I think if you spent an hour each with Rym and Sum management you would see a stark difference in management style but which style will be the ultimate winner? You decide

[forest]

Yep winner that build target is for 250 new unit sales and I think they will manage that with Q3 showing a significant upside as more sales hit the recording board the last 2 quarters figures were no surprise and only highlight what they indicated to me in previous discussions I've had with management so really nothing new to add. I think the bottom line with Sum are they are being very cautious in case as they stated at the AGM the wheels start to fall off meanwhile Ryman seem to be upping the anti and driving their business aggressively and I think if you spent an hour each with Rym and Sum management you would see a stark difference in management style but which style will be the ultimate winner? You decide

Couta1, can you elaborate on which style you prefer and why you consider RYM aggressive?

Cheers, Forest

[couta1]

Couta1, can you elaborate on which style you prefer and why you consider RYM aggressive?

Cheers, Forest Hi Forrest, From a pure profit motive I prefer Rymans style, Rym have made a push into Aussie where other NZ companies have failed but this hasn't stopped them this highlights an aggressive business model to me also they never rest on their hands and will buy another site if they consider it a good move even if its in addition to previously published goals eg take Pukekohe and Newtown sites recently announced. They are also constantly refining processes to save costs and drive growth, in contrast Sum seem content to take it easy for a while so the wheels don't fall off at least that's the impression I got at the AGM, basically I think Sum could adopt a bit of Rymans mongrel so to speak to improve the business. Having said all that the other side of the coin is the care model in which Sum is the industry leader so from that viewpoint I prefer Sum's management style.

[forest]

Hi Forrest, From a pure profit motive I prefer Rymans style, Rym have made a push into Aussie where other NZ companies have failed but this hasn't stopped them this highlights an aggressive business model to me also they never rest on their hands and will buy another site if they consider it a good move even if its in addition to previously published goals eg take Pukekohe and Newtown sites recently announced. They are also constantly refining processes to save costs and drive growth, in contrast Sum seem content to take it easy for a while so the wheels don't fall off at least that's the impression I got at the AGM, basically I think Sum could adopt a bit of Rymans mongrel so to speak to improve the business. Having said all that the other side of the coin is the care model in which Sum is the industry leader so from that viewpoint I prefer Sum's management style.

Thanks couta1, I know you have more insight then most into this sector, where do you see SUM's superior care model makes a difference?

[percy]

I think we are seeing clearly the Ryman model is a lot more advanced and has greater staff depth than Summerset's.Remember Ryman have been doing everything "in house" for a number of years.Training new people,means they had the staff ready for Australia.

[couta1]

Thanks couta1, I know you have more insight then most into this sector, where do you see SUM's superior care model makes a difference?
At the moment the industry is heavily driven by sheer need but as the number of facilities increases those companies with the superior care model will shine through, case in point there is a home in the Wellington region I wouldn't put my dog into yet it enjoys full occupancy that shouldn't be so!!! Sum are well positioned in this respect with their award winning care model and hopefully with their cautious approach to maintain this model is their greatest strength.

[Vaygor1]

What do you think the main factors in the poor sales were? RB intervention? Lacklustre marketing? Competition from MET/RYM?

I want to know how SUM knew so early in advance that their sales would be down and then, given the resulting time period they have had to react (with customers supposedly waiting at the door in this sector) they have not managed to significantly alter this not-quite-as-rosy forecast. I have a hunch that, given her style and fixation with awards and recognition, Norah's figures for the last financial year may have been slightly on the optimistic side and could have put SUM's last set of results ahead of itself. I can't think of another logical answer at this stage but would be happy to be enlightened. I can't see how SUM getting into construction effects their sales and marketing ability apart from significant schedule delays meaning no new rooms to sell... but they haven't been into it long enough yet have they?


As for the poor sales, Sum is in the process of bringing the construction in house.

If this is correct, it causes some bells to go off in the back of my mind. I sincerely wish SUM all the luck in this endeavour if they are pursuing it. Designing, engineering, procuring materials, subcontractor arrangements, authority submissions, and project managing when undertaking a new facility is a vastly different business (with an entirely new set of very large risks associated) to that of operating a retirement village. It really is like a taxi driver (i.e. operator of a vehicle) deciding to get into engineering, designing and building a car. I have no idea how on earth RYM achieved this. It is a hell of a feat, but they must have started small and would still be running their 'project' division completely separately from their operating division I am sure.


Sum are well positioned in this respect with their award winning care model and hopefully with their cautious approach to maintain this model is their greatest strength.

If this is referring to SUM's 4 years running of 'Best Retirement Village Operator In Australasia' award, I don't believe the award is bona-fide. Apart from the reasons I have voiced earlier in this thread (and got criticised by some for it), this award used to be up in lights on SUM's main home-webpage but is now only a fine-print icon at the very bottom right corner of the page. You can also find the awards 3 levels down from the homepage within the website but all up it is well obscure compared to how it used to be.

Disc: Hold RYM. Do not hold SUM but would like to. RYM and SUM are both in my ST 2014 stock picks. Can't wait to see SUM's next audited annual report with Norah now gone.

[forest]

Anne urlwIn
Non-executive Independent
Anne is a professional Director,
chartered accountant and business
consultant with more than 20 years
of directorship experience in sectors
ranging from infrastructure and
telecommunications, to information
technology and banking.
Anne is currently the Chair of
Naylor Love Enterprises Ltd, a
privately-owned commercial
construction company, and has a
strong knowledge of the industry
across New Zealand.
Other current directorships include
Steel & Tube NZ Ltd, Chorus Ltd and
OnePath Life (NZ) Ltd.

[winner69]

Couta

What/where they actually building at the moment

Assumings sales to be made in the next quarters one would assume nearly or totally completed?

[percy]

When comparing SUM to RYM we must remember the market cap of SUM is only 17.33% of Rym's.ie $745.33 mil for SUM where as RYM's is $4,300 mil.
So SUM is still a small company compared to RYM, whose market cap is over 5.5 times SUM's.
RYM have been doing everything in house for a good number of years,while SUM is basing their model on RYM's well developed model,and therefore have a lot to do to catch up with RYM.
Disc.Free ride with RYM while av cost of SUM is now well under 50 cents. What is know as a "happy camper."

[winner69]

Percy, a better comparison between the size of SUM and RYM is to use Net Assets / Book Value / Equiy whichever you prefer to call it

SUM is $282m was RYM at $734m - RYM really only 2.6 times bigger than SUM

The difference between this and your 5.5 times is that the market has expectations of RYM continuing to create shareholder value at a greater rate than SUM. Market might be misguided in this respect but that's the market for you .....the voting machine or something like that

[percy]

Percy, a better comparison between the size of SUM and RYM is to use Net Assets / Book Value / Equiy whichever you prefer to call it

SUM is $282m was RYM at $734m - RYM really only 2.6 times bigger than SUM

The difference between this and your 5.5 times is that the market has expectations of RYM continuing to create shareholder value at a greater rate than SUM. Market might be misguided in this respect but that's the market for you .....the voting machine or something like that

Agree with you RYM are a lot bigger than SUM.In fact 2.6 times on "what ever" or even more so on market cap.
As a side issue I was thinking that John Ryder and Kevin Hickman certainly laid sound foundations for a great company.Offcourse Hickman is still there.

[Beagle]

If this is correct, it causes some bells to go off in the back of my mind. I sincerely wish SUM all the luck in this endeavour if they are pursuing it. Designing, engineering, procuring materials, subcontractor arrangements, authority submissions, and project managing when undertaking a new facility is a vastly different business (with an entirely new set of very large risks associated) to that of operating a retirement village. It really is like a taxi driver (i.e. operator of a vehicle) deciding to get into engineering, designing and building a car. I have no idea how on earth RYM achieved this. It is a hell of a feat, but they must have started small and would still be running their 'project' division completely separately from their operating division I am sure.

Well said. My impression from attending the AGM is it will take them many, many years to get to grips with this process. The degree to which they achieve margin expansion through this process remains to be seen but will be very gradual in my opinion.
I asked Julian Cook at the AGM over two months ago whether the RB's approach was having an impact on them. Not YET was the response but it was a pretty emphatic "YET". We've got to build them, then sell them and then the buyers have to sell their homes Since then the RB have been far more agressive with interest rate increases.
I can't get my head around the RB's interest rate stance, (the most hawkish in the developed world). I was chatting to the GM of one of the biggest Aussie real estate chains earlier this week and he told me the provinces around the country are really starting to pay the price for Auckland's rapid expansion...i.e. RB are using a bazooka to solve a problem that really only exists in Auckland and Christchurch.
RB putting interest rates up again this month ?...strengthening headwind for the sector ?

Are SUM really going to build, sell and deliver 145 units to customers in the second half who've sold their homes ??, (my understanding is they can only recognise unconditonal sales). Was the appointment of a new marketing manager this week a sign that they recognise they need to improve their performance in this area ? One wonders how they're getting on with finding a good procurement manager to drive efficiencies in this area or how they got on with their hearings for the Ellerslie development in May ? I presume no good news on this front is actually bad news.

[Vaygor1]

Anne urlwIn
Non-executive Independent
Anne is a professional Director,
chartered accountant and business
consultant with more than 20 years
of directorship experience in sectors
ranging from infrastructure and
telecommunications, to information
technology and banking.
Anne is currently the Chair of
Naylor Love Enterprises Ltd, a
privately-owned commercial
construction company, and has a
strong knowledge of the industry
across New Zealand.
Other current directorships include
Steel & Tube NZ Ltd, Chorus Ltd and
OnePath Life (NZ) Ltd.

Thanks Forest.

Her cv reads too well for my liking. At the end of the day she is an accountant and a committees person (like the majority of board members I suppose).

Who she and board choose to lead a project division will ultimately make the difference, but the jury is still out on that to the best of my knowledge.

This initiative will be an interesting journey for SUM and all stakeholders I think.

[Vaygor1]

Are SUM really going to build, sell and deliver 145 units to customers in the second half who've sold their homes ??, (my understanding is they can only recognise unconditonal sales).

Most retired couples/individuals probably are mortgage free I understand Roger. Which means they can get a bridging loan to make the SUM 'purchase' unconditional and then sell the house to pay the bank back… or quite often someone in the family may temporarily finance the arrangement until the house sells.

Not optimal for any family I know, but when Grandma/Grandpa have to move, generally they have to move now. Circumstances rarely allow for a 6-9 month plan to transition any relative into a rest home.

So selling 145 units might well be achievable.

[artemis]

Most retired couples/individuals probably are mortgage free I understand Roger. Which means they can get a bridging loan to make the SUM 'purchase' unconditional and then sell the house to pay the bank back… or quite often someone in the family may temporarily finance the arrangement until the house sells.
Not optimal for any family I know, but when Grandma/Grandpa have to move, generally they have to move now. Circumstances rarely allow for a 6-9 month plan to transition any relative into a rest home. So selling 145 units might well be achievable.

Units are not the same as rest homes, though, and generally nowhere near as urgent.

[Vaygor1]

Units are not the same as rest homes, though, and generally nowhere near as urgent.
Sorry. I defined a Unit as a rest home, hospital bed, or village unit. Does the 145 refer to village units only?

[couta1]

Sorry. I defined a Unit as a rest home, hospital bed, or village unit. Does the 145 refer to village units only?
Sure does but still very doable:cool:

[iceman]

Sure does but still very doable:cool:

As you have correctly pointed out in several posts, we have new villages "coming on line" and I agree 145 village units are achievable for the 2nd half. I also like the appointment of Anne Urlwin to help bring development in-house. I was impressed by her at the AGM and think she has the skills and contacts to speed this process up. I wonder if Forest, Roger and couta1 may deserve some credit for this, due to their hammering of Julian Cook at the AGM and catching him a bit off guard !

[Beagle]

Iceman - Very nice of you to suggest mate but Anne was appointed well before Forest, Couta and I gave Julian Cook 20 questions to think about.
Average age of entry is 78, (one of the questions I had for him).
Vagour1 - I think most people shifting in at 78 are doing so for lifestyle reasons so the urgency factor doesn't apply and as an accountant I would never advise an elderly client to take out a bridging loan for a lifestyle transition unless it was a matter of absolute urgency regarding their health. Regardless of whether elderly folks take professional or family advice or not, (I think they should), I think you'll find most people this age are old school and extremely reluctant to change from the comfort of a mortgage free position and would rule out a bridging loan as being too risky and putting them under untoward pressure to sell in due course without knowing the net sale value of their home.

[iceman]

Iceman - Very nice of you to suggest mate but Anne was appointed well before Forest, Couta and I gave Julian Cook 20 questions to think about.
Average age of entry is 78, (one of the questions I had for him).
.

I was aware of her being appointed as Director before the AGM. But thought Forest's post was suggesting she'd been given further responsibilities. Maybe I'm wrong

[Beagle]

It probably is her project to direct. Wouldn't it be nice if the company would give us an update about how they're getting on with this in their forthcoming half yearly report.

[forest]

I was aware of her being appointed as Director before the AGM. But thought Forest's post was suggesting she'd been given further responsibilities. Maybe I'm wrong

From the AGM I understood that Anne skills would be beneficial with bringing development in house. However the company is not giving much detail on this. When Roger, Couta and I asked Julian Cook some pointed questions I started to wonder about their progress and capability of copying RYM on this part of their business model.

[winner69]

Better stop doubting SUM's growth

The word seems to be getting around as the shareprice drifts down into th 330s ...while RYM goes up

[Beagle]

From the AGM I understood that Anne skills would be beneficial with bringing development in house. However the company is not giving much detail on this. When Roger, Couta and I asked Julian Cook some pointed questions I started to wonder about their progress and capability of copying RYM on this part of their business model.

+1. Its fair to say both Forest and I were underwhelmed in this regard. Also its clear that Ryman have spent many years developing their own construction company and refining their procurement processes. SUM have some good sites in Auckland but are many years behind Ryman in some other respects. Can SUM execute effectively and efficiently and maintain growth momentum...only time will tell.

[couta1]

Better stop doubting SUM's growth

The word seems to be getting around as the shareprice drifts down into th 330s ...while RYM goes up
Winner the simple difference between Ryman and Sum IMHO is that Rym are in overdrive while Sum have the cruise control on and were comparing a company with an aggressive style with one with a cautious style hence the respective SP movements, Sum are worried about the wheels falling off while Rym will worry about the wheels if they fall off:cool:

[Hoop]

http://i458.photobucket.com/albums/qq306/Hoop_1/a.png (http://s458.photobucket.com/user/Hoop_1/media/a.png.html)

[winner69]

http://i458.photobucket.com/albums/qq306/Hoop_1/a.png (http://s458.photobucket.com/user/Hoop_1/media/a.png.html)

You should do a YTD one - from jan 1st

[Vaygor1]

Sum will already be deeply involved in the development of villages, so doing everything in house is nowhere near as dramatic as the taxi analogy offered up earlier. What a joke

Might be a joke in your eyes NewGuy. But what you are saying is that running a rest home is not really too far different from designing and building one when in fact the risk profiles are completely different in terms of their nature, probability of occurrence, and consequences. Up until now SUM have been paying others to manage these risks (in a nutshell project risk, contract risk, technical risk, schedule risk, consent risk, construction risk, safety risk, and procurement risk). Bringing it in-house is a major undertaking and if they succeed, which I hope they do, it won't be without some major lesson's learnt along the way. I am sure RYM had (and continue to have) their fair share.

[forest]

Might be a joke in your eyes NewGuy. But what you are saying is that running a rest home is not really too far different from designing and building one when in fact the risk profiles are completely different in terms of their nature, probability of occurrence, and consequences. Up until now SUM have been paying others to manage these risks (in a nutshell project risk, contract risk, technical risk, schedule risk, consent risk, construction risk, safety risk, and procurement risk). Bringing it in-house is a major undertaking and if they succeed, which I hope they do, it won't be without some major lesson's learnt along the way. I am sure RYM had (and continue to have) their fair share.

Vaygor1 you explained the challenge for SUM very well.

[Mista_Trix]

There's $25k on the buy side, and it's just crossed downwards through its 200 day MA ... a bumpy ride ahead ... ?!?!

[couta1]

You are correct NG Sum are the second biggest DEVELOPER of retirement villages in NZ behind Ryman and ahead of Met:cool:

[Beagle]

Based on the detailed discussions Forest and I had with Julian Cook after the AGM, in my opinion development margin expansion from bringing development "in house" if you can call it that, will be very slow coming. I'm estimating 1% per annum for the next 4-5 years if they can manage to develop their expertise in-house in this area. Highly skilled staff in this area of expertise are very hard to come by, (think excessive demand and very limited supply as a result of the Christchurch rebuild). I'm estimating $1-1.5m gain in development margin this year, just enough to extinguish the additional holding costs of holding 8 years of development land banking, i.e. NO net gain this year.
I was thinking ~ $26m underlying profit this year, (profit increase of circa 16-18%) but all the risk appears to be to the downside with very disappointing sales in Q1 and Q2 and headwinds increasing by the Reserve Bank's extreme ? actions.
From a TA point of view there's also plenty to cause concern. Scrutiny of the half yearly report will be intense.

[couta1]

Roger I think Q3 will tell us a lot re the true extent of new sales coming from the new villages that to me is a key indicator for this years progress.

[vorno]

...I swear every time there is a negative post here the SP goes down by 0.3%!

[Harvey Specter]

Up until now SUM have been paying others to manage these risks (in a nutshell project risk, contract risk, technical risk, schedule risk, consent risk, construction risk, safety risk, and procurement risk). You dont have to bring these all inhouse at once - I would leave the construction contract (which includes safety and procurement) till last once they get scale. SUM have control of the biggest risk - demand risk on completion.

They can take on the additional risks as they scale up production and gain the economies of scale.

[Beagle]

Roger I think Q3 will tell us a lot re the true extent of new sales coming from the new villages that to me is a key indicator for this years progress.

Agreed mate. In my opinion the company owes shareholders a proper explanation in its half year report why sales for a growth company have been lacklustre in the first half and forward guidance on expected sales in the second half. They should know when villages will be finished and available for occupation, some forward guidance, at least on sales, (if not also projected profit), wouldn't kill them for goodness sake. I guess we have to wait till 12 August to know a bit more.

[couta1]

From the horses mouth, plenty of hand overs (Final settlements) coming up from their villages, let the fickle sell up and regret it later:cool:

[vorno]

From the horses mouth, plenty of hand overs (Final settlements) coming up from their villages, let the fickle sell up and regret it later:cool:

Harder to 'hold on' when you bought at 3.50!

[couta1]

Harder to 'hold on' when you bought at 3.50!
Not if your long and you believe the price will have a 4 in front of it next year:cool:

[rbel038]

buy side is looking pretty thing on this at the moment :mellow:.

[Pauper]

http://www.stuff.co.nz/business/industries/10241692/Summerset-bosss-challenge-to-live-and-let-live

[Beagle]

Roger, you seem like a smart and sensible guy, so your volatile perception of this long-term stock surprises me. Quarterly analysis of a business with lumpy costs and revenues is futile and meaningless yet you seem prone to engage on this. I don't get it. ps not a dig at all, just surprised you don't adopt a longer term view and ignore the inherent lumpiness from one quarter to the next :)

Two quarters in a row where sales have been lacklustre = lacklustre half year results = possibly building a foundation for a year of slow growth. Just saying the company could do much better to telegraph some forward visibility. Ryman and Metlifecare manage to do it. Hopefully there will be a thorough update on progress in the half year report.

[Vaygor1]

I am regularly involved with $100+ mill dev projects and know exactly what the risk reward continuum looks like. Sum doesn't just run villages, it is also deeply involved with their development. They are simply opting to do more of that than they currently are. If you think they currently JUST run villages, then you don't understand their business. Why don't you call and ask how any staff already work exclusively work on developing new villages?

I too have been deeply embedded with winning, executing, and delivering US$50M and US$1B projects and everything in-between and have been doing so for decades covering both commercial and technical risk. On top of that I have been, and continue to be, involved in facilitating root-causes analysis sessions for multiple companies when things go terribly wrong.

I don't know where you get risk-reward from which is a contract mechanism. I am talking risk. The sheer number, and instances, of operating companies that think they can turn their hand to creating something new never ceases to amaze me. The odd one succeeds but the vast majority do not (to varying degrees). When things do not go according to plan (assuming there even is a plan) then a combination of the following will generally result (again, to varying degrees).



Budget blowout. Double, triple, 10 times, more.
Schedule blowout causing months/years of delays and associated cost of delay.
Produce something that essentially doesn't work
Produce something that isn't safe
Produce something that is of poor quality and/or doesn't last
End up in litigation proceedings for years/decades for a wide range of reasons.
Suffer a disaster that harms people, assets, or the environment or any combination thereof.
Suffer reputation damage.


I am not one who likes having to qualify my views/comments with my track record of experience but you left me with little choice.

Further, I am not trying to change your mind for I believe it is incapable of doing so, and I do not expect a pleasant response to the above from you either given your primary form of defence seems to be attack. I have stated my view from real-world experience, and having done so, will leave this issue to those who read our brief debate and they can form their own conclusions.

[percy]

http://www.stuff.co.nz/business/industries/10241692/Summerset-bosss-challenge-to-live-and-let-live
Thanks for the link.
Seems to me he is the right man for the job.

[Vaygor1]

And they already even have a GM of development who overlooks a DEVELOPMENT TEAM. I rest my case :)

http://www.summerset.co.nz/why-summerset/about-us/our-people/paul-morris/

Here is the description of the role of Paul Morris, GM - Development straight out of the latest SUM annual report released about 100 days ago.

5993

According to this, Paul is a business banker with no stated track record in design and build; and in his primary role in Summerset up until 25 March this year or thereabouts he's been very active doing his job, as described above, with a lot of land up SUM's sleeve now. Perhaps he's been doing it too well. Incidentally, his secondary role appears to be a Director of most of Summerset Group's subsidiaries, none of which appear to be design and build, listed in Financial Note 19 referred by Note 5 of the Statutory Information Section of the Annual report.

So how big is this Development Team he runs now? When did its function turn into more than just land acquisition? Was it a team at all 100 days ago? Is he the right man for it?

There is no mention whatsoever in the Annual Report about any Development Team but the Summerset webpage article to which you refer does state this team is "one of the fastest growing departments at Summerset". Any growth in team size compared to an initial team size of one will be 200% minimum. By definition a team requires 2 people minimum so it could be argued that the initial team size was zero meaning growth since then has been infinity.

[Beagle]

I too have been deeply embedded with winning, executing, and delivering US$50M and US$1B projects and everything in-between and have been doing so for decades covering both commercial and technical risk. On top of that I have been, and continue to be, involved in facilitating root-causes analysis sessions for multiple companies when things go terribly wrong.

I don't know where you get risk-reward from which is a contract mechanism. I am talking risk. The sheer number, and instances, of operating companies that think they can turn their hand to creating something new never ceases to amaze me. The odd one succeeds but the vast majority do not (to varying degrees). When things do not go according to plan (assuming there even is a plan) then a combination of the following will generally result (again, to varying degrees).



Budget blowout. Double, triple, 10 times, more.
Schedule blowout causing months/years of delays and associated cost of delay.
Produce something that essentially doesn't work
Produce something that isn't safe
Produce something that is of poor quality and/or doesn't last
End up in litigation proceedings for years/decades for a wide range of reasons.
Suffer a disaster that harms people, assets, or the environment or any combination thereof.
Suffer reputation damage.


I am not one who likes having to qualify my views/comments with my track record of experience but you left me with little choice.

Further, I am not trying to change your mind for I believe it is incapable of doing so, and I do not expect a pleasant response to the above from you either given your primary form of defence seems to be attack. I have stated my view from real-world experience, and having done so, will leave this issue to those who read our brief debate and they can form their own conclusions.

Interested in moving to N.Z. ? I think SUM could do with someone with your skills :)

[artemis]

Interested in moving to N.Z. ? I think SUM could do with someone with your skills :)

Agree, but would also note there are quite a lot here already with the right skills. Not everyone who thinks they are expert is, however.

I have been on both sides of large IT projects. The main problem, IMO, is the client side. A lot of medium and large NZ organisations really don't understand governance, proper risk management or assessment of benefits after go live. They all think they do, though.

It is quite common for managers to recognise they need proper organisational oversight of large projects, spend a lot of time and money setting up a structure, only for it to drift away from effectiveness over time. Especially as those managers move on and there are apparent resource constraints. (I say apparent, because that is the easy answer to time and quality issues. Brook's Law applies.)

[Goldstein]

Thanks for the link.
Seems to me he is the right man for the job.

Yep. I was thinking it's good to have a money man in charge while they are 'in-housing' the build.

[winner69]

OMG price down to the 320's

Whats up

[vorno]

OMG price down to the 320's

Whats up

Well - 3 tops, 3 dips! I think it is going to bottom out soon. People looking at 6month figures will probably start buying soon.

[Mista_Trix]

Well - 3 tops, 3 dips! I think it is going to bottom out soon. People looking at 6month figures will probably start buying soon.

I dunno, if we move through $3.28, then there's; $3.25, $3.17, $3.08 then ... $2.96, thy're all pretty close together - its been quite mobile in the past :-S

I got out at $3.58 not sure when I'll get back in again... its a bit messy at the moment.

[couta1]

OMG price down to the 320's

Whats up
Come on winner put that wooden spoon away its called the Global Influence

[macduffy]

Come on winner put that wooden spoon away its called the Global Influence

Really, couta?

Nothing to do with not meeting market expectations? But I'm holding and likely to buy more when the SP turns up.

:cool:

[winner69]

Come on winner put that wooden spoon away its called the Global Influence

OK - maybe it is Global Influence

Problem with that is that it probably signals the early stages of a market rerating. Meaning that SUM, and most others, will drift down to a more reasonable multiple - somewhere around 250

However peers are still holding up. So as macduffy says maybe it is something specific to SUM, like not meeting market expectations

The old channel chart for SUM has done its dash. The uptrend well and truly broken.

Mind you the RYM chart is looking a bit dodgy at the moment, but not broken like SUMs. So maybe it is these global influences in play- bugger bugger.

[couta1]

Great shake out of the panickers and the fickle occurring here there will be quite a few regrets once the 2nd half sales figures start coming through, still some form of forward guidance would have helped here rather than individuals like myself having to keep picking up the phone to check where things are at.

[vorno]

Bascially what I have asked myself is "has the company lost 10% of its villages in a month?"

Although I'm hurting now, I feel there is no basis for people pulling out - as Couta suggests.

[blocker3]

OK ..Team where to from here.

Share price has dropped to $3.18. Not helped by the US over night at all, however there was no real bounce when the US was up yesterday as well.

Thinking at selling half of my SUM shares to cover risk. Open to anyone's comments.

The TA say sell and the FA of say hold of SUM in my mind.

Any predictions on the bottom?

Cheers

[couta1]

OK ..Team where to from here.

Share price has dropped to $3.18. Not helped by the US over night at all, however there was no real bounce when the US was up yesterday as well.

Thinking at selling half of my SUM shares to cover risk. Open to anyone's comments.

The TA say sell and the FA of say hold of SUM in my mind.

Cheers I had a brief evil thought similar to yours also but there's blood right across the board today and its the third day of hard selling so good chance of a bounce next week? Disc-Holding Heaps

[blocker3]

Hi couta 1

I am holding heaps also. Thus the concern

[Beagle]

Great shake out of the panickers and the fickle occurring here there will be quite a few regrets once the 2nd half sales figures start coming through, still some form of forward guidance would have helped here rather than individuals like myself having to keep picking up the phone to check where things are at.

Agree 110%. Technically it looks broken and there's no way to sugar coat the chart Winner69 posted yesterday so its impossible to predict a bottom but I would have thought there should be support at $3.00. Whether there is or not remains to be seen. I have been saying for a very long time now, (at grave risk of appearing to be a broken record), that the company NEEDS to be more transparent in terms of forward guidance. Some sort of explanation why a growth company has stopped growing in the first half and forward sales projections for the remaining two quarters based on anticipated build completion needs to be clearly articulated in my opinion. If they don't have the computer modelling skills and expert accountants to do this they need to hire them. Its simply not good enough when their peers are far more transparent so the market is punishing them for this.

[blocker3]

Hi Couta1

Do you not have the internet to look at the share market?

[couta1]

Hi Couta1

Do you not have the internet to look at the share market?
Sure do and I'm with ANZ so look at depth all the time when not working.

[blocker3]

Sure do and I'm with ANZ so look at depth all the time when not working.

Cool. I'm with ASB (however ANZ sounds to be a better web site)

I see now a flat line of $3.18 and the buyers are starting to arrive. Excellent

[couta1]

Okay folks for what its worth my conversations with the National sales manager the other day indicated that there are a lot of new sales coming on board to go unconditional in the near future and there is strong demand from all their villages but particularly Karaka,Warksworth,Hobsonville and Trentham and he emphasized that doubling the first two quarters results in a false way to get an idea of total yearly sales:cool:

[Beagle]

Okay folks for what its worth my conversations with the National sales manager the other day indicated that there are a lot of new sales coming on board to go unconditional in the near future and there is strong demand from all their villages but particularly Karaka,Warksworth,Hobsonville and Trentham and he emphasized that doubling the first two quarters results in a false way to get an idea of total yearly sales:cool:


Good that should help support the SP :)

[forest]

OK ..Team where to from here.

Share price has dropped to $3.18. Not helped by the US over night at all, however there was no real bounce when the US was up yesterday as well.

Thinking at selling half of my SUM shares to cover risk. Open to anyone's comments.

The TA say sell and the FA of say hold of SUM in my mind.

Any predictions on the bottom?

Cheers

-Norah has left as CEO AND sold substantial parcel of shares.
-Quadrant has sold lots. Nobody understand SUM better then Norah and Quadrant I would have thought.
-At the AGM when the question was ask of some profit guidance, the company showed an unbelievable arrogance to its share holders that I have not seen before.
Ask you broker was the reply.

AGM's are supposed to be informative to the owners of the company, if the CEO Julian Cook has that much contempt for a total predictable question, which should really have been covered in the CEO presentation, one has to wonder if he is hiding something.

Even if SUM achieve it predicted build rate of 250 this year, there is a question about the profit margins in my mind.

Their must be a pointer in there somewhere.

[couta1]

Bounce time:eek2:

[blocker3]

-Norah has left as CEO AND sold substantial parcel of shares.
-Quadrant has sold lots. Nobody understand SUM better then Norah and Quadrant I would have thought.
-At the AGM when the question was ask of some profit guidance, the company showed an unbelievable arrogance to its share holders that I have not seen before.
Ask you broker was the reply.

AGM's are supposed to be informative to the owners of the company, if the CEO Julian Cook has that much contempt for a total predictable question, which should really have been covered in the CEO presentation, one has to wonder if he is hiding something.

Even if SUM achieve it predicted build rate of 250 this year, there is a question about the profit margins in my mind.

Their must be a pointer in there somewhere.

Hi Forest/ Couta

Thank you for your replys.

Forest :I also do not like the answer of "ask your broker"

Not good

Cheers

[blocker3]

Bounce time:eek2:

Yes.. good : was that the bottom? I hope so:)

[winner69]

Okay folks for what its worth my conversations with the National sales manager the other day indicated that there are a lot of new sales coming on board to go unconditional in the near future and there is strong demand from all their villages but particularly Karaka,Warksworth,Hobsonville and Trentham and he emphasized that doubling the first two quarters results in a false way to get an idea of total yearly sales:cool:

but we not doubling first two quarters to get an idea of total years sales

We are doubling AND adding 50

[winner69]

and somebody said you need to look at rolling 4 quarter totals to see where they are heading

well 4 quarters to June 14 new unit sales weren't much higher than a year prior (217 v 200)

So lets hope all those new sales come through eh

Amazing they can sell that many in that damp cold part of Trentham ....probably if you have lived in that part of Upper Hutt all you life you used to it

[couta1]

but we not doubling first two quarters to get an idea of total years sales

We are doubling AND adding 50
What he was trying to say was that the yearly sales numbers are not determined by simply doubling first half sales when the second half will be much better ie expect final figures to be significantly more than just doubling first halve so there's your 50 hopefully:cool:

[couta1]

Beautiful outlook at Trentham winner plus you get to. see the races from your back yard.

[winner69]

Beautiful outlook at Trentham winner plus you get to. see the races from your back yard.

Yep you do but it lower than the race track itself

Tomorrow they will be able to watch the horses plod around in knee high mud

[blocker3]

Interesting on

http://www.4-traders.com/SUMMERSET-GROUP-HOLDINGS-10089438/

predicting Sales up- Net profit down for 2014

Concensus = HOLD

[couta1]

Interesting on

http://www.4-traders.com/SUMMERSET-GROUP-HOLDINGS-10089438/

predicting Sales up- Net profit down for 2014
I see they are predicting both sales and net profit to be down in 2015 for Ryman

[blocker3]

I see they are predicting both sales and net profit to be down in 2015 for Ryman

Yes , true Couta1. However Ryman is still in the upward channel at the moment.

Disc still holding Ryman also

[couta1]

Yes , true Couta1. However Ryman is still in the upward channel at the moment.

Disc still holding Ryman also
Ditto:cool:

[Joshuatree]

Turning into a One horse race folks
One Year on MET 37.31% RYM 23.7% SUM 6.29% a distant third

[cloggs]

The new Karaka development stage 1 seems to be nearly ready for business. They're putting gardens in etc.

[blocker3]

The new Karaka development stage 1 seems to be nearly ready for business. They're putting gardens in etc.

Excellent. We all need good news. Thanks for that local information of yours,cloggs

Couta1 and I can smile and rest a tad with SUM

[Beagle]

What a bloody awful week in the market, I need a drink or three.

[Jim]

What a bloody awful week in the market, I need a drink or three.

I am on my 5th and counting

[Snow Leopard]

I am on my 5th and counting

If you were an accountant who likes Kentucky Bourbon Whiskey then we could say:

Jim, Bean Counter, counts Jim Beams.

Best Wishes
Paper Tiger

Disc: Sold the last of my SUM today - I will be back some day.

[Yoda]

That not good news is it yoda

Mr Bulkowski says more likely to break down than up

So we saw this coming a month ago. Thanks for the advice, i,ve been selling out, moving to Metlifecare......

[couta1]

If you were an accountant who likes Kentucky Bourbon Whiskey then we could say:

Jim, Bean Counter, counts Jim Beams.

Best Wishes
Paper Tiger

Disc: Sold the last of my SUM today - I will be back some day.
Hopefully your re entry ticket will cost you a whole stack more than your sale price:cool:

[Vaygor1]

Up until now SUM have been paying others to manage these risks (in a nutshell project risk, contract risk, technical risk, schedule risk, consent risk, construction risk, safety risk, and procurement risk). Bringing it in-house is a major undertaking and if they succeed, which I hope they do, it won't be without some major lesson's learnt along the way. I am sure RYM had (and continue to have) their fair share.
You dont have to bring these all inhouse at once - I would leave the construction contract (which includes safety and procurement) till last once they get scale. SUM have control of the biggest risk - demand risk on completion.

They can take on the additional risks as they scale up production and gain the economies of scale.

Possibly HS, but also difficult to achieve. From my experience this approach is a bit like trying to get half pregnant. If your not in all the way then the extra interfaces, communications, points of demarcation and more complex contractual relationships between parties invariably leads to negative results with a great deal of finger-pointing to say the least.

I did some research, and although not conclusive, it appears RYM bought an entire engineering/design/construction company around 1998 (one of RYM's own service providers whose build-book had become almost 100% Ryman apparently). This would make sense to me and would explain how RYM managed to accomplish what they achieved what I call critical mass in this area.

I would suggest (actually, very much like) SUM do the same if they can afford it. The path they are appearing to be taking of growing it in-house is fraught with danger in my humble view.

Refer this ad for Greentree Software that RYM use. This is not a plug for them, and selecting a piece of software like this guarantees nothing. But it might help one appreciate a little bit about what's involved with at least just the construction bit.
http://www.youtube.com/watch?v=5IYF21b47CU

Disc: No vested interest in, or relationship with Greentree Software whatsoever.

[Beagle]

Vaygor1 This week I have had cause to reflect upon Warren Buffets saying about best of breed regardless of price.

[Joshuatree]

Roger was it a Johnnie Walker Black Label you went thru last nite:)?

[Beagle]

Nah...Just a few Mac's Gold beers mate. It helped a bit but AIR got smashed this week too, plenty of reasons to self medicate :)

[winner69]

If you love listening to Julian here he is doing a rave how he doing the very best for shareholders
https://www.youtube.com/watch?v=koSRCTjUHV8


Nothing new - just thought it might give you the warm fuzzies as the shareprice sinks

[Snow Leopard]

Hopefully your re entry ticket will cost you a whole stack more than your sale price:cool:

Well :ohmy:

I think that is just mean :crying:.

Best Wishes
Paper Tiger

[couta1]

Well :ohmy:

I think that is just mean :crying:.

Best Wishes
Paper Tiger Be consoled ill sell some back to you off market to save you the brokerage fees once they hit $4:cool:

[stoploss]

Vaygor1 This week I have had cause to reflect upon Warren Buffets saying about best of breed regardless of price.
Bravo , so valuation for RYM lifted to $ 8.50 instead of $ 6.50 Roger ?

[Beagle]

Brokers average 12 month forward price is $8.25. Given the extremely low dividend yield, for the general commercial risks involved its my view shareholders should be looking for SP growth in line with underlying EPS growth which at 15% suggests a fair current price for RYM is about $7.20.

My lament is on two fronts.
1. Small caps in general can get smashed harder when the market corrects.
2. SUM need to give more forward guidance.

SUM has greater potential to outperform RYM provided they execute efficiently and effectively. The market appears to be starting to doubt they will.

With perfect 20/20 hindsight, perhaps its would have been more prudent to have a bob each way notwithstanding my view RYM's SP is well ahead of fair value.

My view is the market as a whole is fully priced. Realistic PE's with decent dividend yields and stocks with these fundamentals growing in a sideways market is the name of the game for the foreseeable future in my opinion. You don't get that in this sector which is why I have a very low exposure to it at present.

MET with its rich asset backing relative to SP, (compared to sector average) appear to be coming into contention on the basis that previous mismanagement has been so woeful, even a half decent infusion of new strategies by Infratil's management might generate decent returns going forward. Maybe an even three way split is the optimum strategy ?

[winner69]

Roger

Overseas fundies buy the larger NZ stocks (FBU, TEL, RYM etc) ..... this guy reckons because of Kiwisaver making future increases predictable
http://www.stuff.co.nz/business/money/10260060/Foreigners-banking-on-a-KiwiSaver-goldmine

So RYM fits the bill .... best in breed .... the biggest .... so the foreigners say why both with the tinpot outfits

[couta1]

Looking for a rise this week coming, Sum has the most potential for growth as Roger states (If they get their act together) but really we should all have our 5 year glasses on. My gutometer reckons Rym will hit $10 by the end of next year unless they do a share split of course. I just can't get interested enough to buy Met not at $4.50 ish anyway but each to their own:cool:

[Vaygor1]

Looking for a rise this week coming, Sum has the most potential for growth as Roger states (If they get their act together) but really we should all have our 5 year glasses on. My gutometer reckons Rym will hit $10 by the end of next year unless they do a share split of course. I just can't get interested enough to buy Met not at $4.50 ish anyway but each to their own:cool:

I too strongly suggest all SUM holders to hang on. If you have bought at a price you are happy with based upon sound fundamentals, then have the strength of your convictions and don't sell.

If the price drops through pure market sentiment or irrational fear, then buy more.
If the price drops through a one-off bad result that will correct itself in one or two years with no long term impact (and if this happens the market will initially drive the stock through the floor) then buy loads more, especially on the way back up. I certainly will be if this occurs.

The 1st of the two scenarios above happened to me with RYM. It was a 3 to 4 year wait to even correct let alone net gain, but oh so worth it in the long run.

[Beagle]

Roger

Overseas fundies buy the larger NZ stocks (FBU, TEL, RYM etc) ..... this guy reckons because of Kiwisaver making future increases predictable
http://www.stuff.co.nz/business/money/10260060/Foreigners-banking-on-a-KiwiSaver-goldmine

So RYM fits the bill .... best in breed .... the biggest .... so the foreigners say why both with the tinpot outfits

Thanks for the link mate and its certainly an interesting theory that's not without merit.
Its clear in recent months RYM was pumped hard late in the day and this would indicate capital coming in most likely from Asia and China.
As you and I have discussed before its very hard to see value at these sort of stretched multiples but I guess for investors in Japan for instance, even a 1% dividend yield is attractive.

On another subject I just watched the short punchy T.V. add of Ryman's. From an elderly folks perspective it had all the essential elements.
Well known personality they could relate too. Highlighted the resort style facilities, the full spectrum of care and the fixed fee for life.
Frankly it makes the lengthy we value the life you bring to Summerset T.V. add look outdated and slow and you could be forgiven for thinking that the RYM add blows the SUM add out of the water in terms of dealing with the issues that really matter for old folks.

Old folks crave certainty. The fixed fee for life thing is huge. People know their super will be adjusted for inflation each year and love a fixed village fee for life because it gives them the certainty that their disposable income will absolutly
and most certainly keep up with inflation. They also crave the security of knowing they'll be taken care of, so the rest home and dementia care plays a big part in Ryman's advertisement.

In my view SUM need a completely new approach. They need to clearly articulate what exactly it is that differentiates them from other retirement facilities.
More spacious, we encourage you too keep your pet, retirement units that aren't all crammed together like sardines e.t.c.....just get it out there what your points of difference are in a new creative, and positive way and use a well known T.V. personality that people can relate too for goodness sake.

They need to take Ryman on head to head with the fixed fee for life thing. SUM have been in business long enough and have a big enough population sample size to know how long the average resident stays, what the average age of entry is and we have stable and predictable inflation and have done for many, many years. Just model it all up, account for 7-8 years of inflation or whatever the average stay is and match RYM on the fixed fee for life and add say $5,000 - $10,000 per unit depending on size as an extra profit margin on each unit to cover any untoward contingencies. Folks won't even notice the increased entry cost, (especially in Auckland where they're selling their home that's gone off the charts in terms of sale price), and will be loving the fact that they can keep their dog or other pet and fees are fixed for life and their unit is a spacious stand alone condimium...(not some four walled apartment in a multi story densely populated and cramped development), e.t.c and that there heaps of facilities and they too can have access to rest home and dementia care.

Less platitudes from management that all they care about is the residents best interests and more creative and forward thinking and more commercial mongrel around creative ways to boost profit margins please. Its almost goes without saying, if management refuse to give forward guidance and the quarterly sales are flat for two quarters then the SP is going to get belted when its priced on a historic PE of 35 based on underlying earnings so unless management lift their game in this regard I suspect there is more pain ahead and various brokers start to think about trimming their forecasts.
Failing that the only way we'll see a meaningful recovery in the SP my opinion, is when they actually start hitting the ball out of the park in terms of sales.

[iceman]

I too strongly suggest all SUM holders to hang on. If you have bought at a price you are happy with based upon sound fundamentals, then have the strength of your convictions and don't sell.

If the price drops through pure market sentiment or irrational fear, then buy more.
If the price drops through a one-off bad result that will correct itself in one or two years with no long term impact (and if this happens the market will initially drive the stock through the floor) then buy loads more, especially on the way back up. I certainly will be if this occurs.

The 1st of the two scenarios above happened to me with RYM. It was a 3 to 4 year wait to even correct let alone net gain, but oh so worth it in the long run.

I agree with this post Vaygor1 and is the position I am taking. But this is suitable for long term investors only where we obviously have many people on ST that take much more of a short term trading positions.
But I do share other posters including Roger with his well laid out reasoning that SUM is struggling a little at present with market sentiment. I don't think Julian did SUM any favours with his lack of answers (and forward guidance) to SH questions at the AGM.
But I am presently confident that this is a good long term (5 yrs+) investment but am not buying more until we see more clearly where this is heading.

[iceman]

I too strongly suggest all SUM holders to hang on. If you have bought at a price you are happy with based upon sound fundamentals, then have the strength of your convictions and don't sell.

If the price drops through pure market sentiment or irrational fear, then buy more.
If the price drops through a one-off bad result that will correct itself in one or two years with no long term impact (and if this happens the market will initially drive the stock through the floor) then buy loads more, especially on the way back up. I certainly will be if this occurs.

The 1st of the two scenarios above happened to me with RYM. It was a 3 to 4 year wait to even correct let alone net gain, but oh so worth it in the long run.

I agree with this post Vaygor1 and is the position I am taking. But this is suitable for long term investors only where we obviously have many people on ST that take much more of a short term trading position.
But I do share other posters concerns, including Roger with his well laid out reasoning, that SUM is struggling a little at present with market sentiment. I don't think Julian did SUM any favours with his lack of answers (and forward guidance) to SH questions at the AGM.
But I am presently confident that this is a good long term (5 yrs+) investment but am not buying more until we see more clearly where this is heading.

[couta1]

I've only just learnt that Metlifecare also have a fixed fee for life now in place, Sum need to address this ASAP to keep in line with the other players, think I'll ring Julian this week to see why this is not the case with Sum and if they are planning on bringing it in any time soon?

[Beagle]

Please do so mate. They cannot afford to be out of step with the market in this regard.

[couta1]

Looks like Met have also done away with their old capital loss policy upon unit sale also,upping their game for sure by aligning themselves with Sum and Rym in this regard.

[Bjauck]

It is good to see healthy competition...it may forestall any potential ComCom investigation that has played merry hell with other listed companies! Let's hope that the competition does not become a price war though.

[bull....]

heres a great article on why these companies are such great cash cows lol

http://www.abc.net.au/news/2014-07-10/kohler-retirement-village-rorts-the-booming-national-scandal/5584412

[winner69]

Majority opinion on this thread is there is no/little risk of government controlling the perceived 'excessive' profits in this sector.

[Jasemc]

No they know it would reduce supply that govts would have to create and pay for. Of course these villages are a rip off but then it's a choice people make for other than financial reasons. I know my parents went into a village for security as the main reason. I think like in my case it's the reduced inheritance that is hard for young people to cope with. My solution buy shares in the sector.

[winner69]

Grumpy residents in Lower Hutt. Jeez they just dont know how lucky they are getting somewhere to live in their golden years without having to move too far. Great to be able to pop back to the old neighbours for a whiskey eh.

Mind you a million plus home and a village don't always go together

http://www.stuff.co.nz/dominion-post/news/10262900/Hutt-residents-fear-village-expansion

[Harvey Specter]

Majority opinion on this thread is there is no/little risk of government controlling the perceived 'excessive' profits in this sector.Never, because if profits reduce, they will build less which means the government has to pick up a bigger share of the market. If the rich are prepared to pay over the odds, why stop them.

And as RYM says, their villages subsidize their hospital care so take away the profits, how will they react.

[Bjauck]

Never, because if profits reduce, they will build less which means the government has to pick up a bigger share of the market. If the rich are prepared to pay over the odds, why stop them.

And as RYM says, their villages subsidize their hospital care so take away the profits, how will they react. Who knows, regulation may creep in at some stage, the government may decide that for every so many village units that an operator builds they will need to provide a certain number of hospital/rest home beds with an associated regulated fee basis.

[couta1]

P
Who knows, regulation may creep in at some stage, the government may decide that for every so many village units that an operator builds they will need to provide a certain number of hospital/rest home beds with an associated regulated fee basis.
Won't happen my friend the industry is seriously underfunded by the Govt they know if they step in to regulate in any way they will have to open their purse extremely wide the current main players are doing the Govt a big favour by subsidising their care centres from unit sales:cool:

[artemis]

Who knows, regulation may creep in at some stage, the government may decide that for every so many village units that an operator builds they will need to provide a certain number of hospital/rest home beds with an associated regulated fee basis.

What couta1 said. Plus unintended consequences if operators decide it's less return and more hassle to deal with bureaucracy than putting their money in the bank.

[couta1]

Don't underestimate the stupidity of Labour, their "massive" inflows from new taxes will need to go somewhere if they win (read: debt funded to the hilt).
Even labor aren't stupid enough to mess too much with aged care Moosie except maybe to increase funding in the sector IMHO.

[Goldstein]

I take the opposite view. There's a shortage of housing looming and Housing NZ, RYM, MET, SUM, etc with their respective builds are not going to come anywhere near what is required over the next few decades.

Most people have been touting the grey tsunami as a good thing for the sector, but it may precipitate action by the Govt.

[Jasemc]

May well do but the quality built by govt won't be as high spec as private. Again it's what you can afford. Rich people always have more choice good or bad.

[vorno]

Even labor aren't stupid enough to mess too much with aged care...

I wouldn't put anything past labour.

[Bjauck]

Labour has had a history of introducing reform either to the right or left. "Sorry for being a man" has all but lost this coming election already. However come the housing market correction and its associated stresses (that some are predicting) the electorate may be more prepared to pick a party of reform. Perhaps a future reform policy may be for the Village operators milking profits from the wealthy retired subsidising the rest home sector. Provided there is still some (albeit reduced) profit to be had, the operators will still build the villages plus the the mandatory rest home component. Another possibility could be that a future government may introduce a windfall tax on certain industries which it considers is pulling in what it may see as super-profits. (Look at Labor in OZ and the mining companies). I don't agree with those scenarios but just speculating on what could happen.

[couta1]

Had discussions with Sum management this morning re the fixed village fee for life policy which both Rym and Met are now offering currently Sum put their fees up in line with CPI yearly. I suggested they need to review this policy to line themselves up with the other two in order not to be at a competitive disadvantage, they have no plans to change it currently but will look into it,here's hoping:cool:

[Goldstein]

Couta1, do you have any sense of whether SUM is seen as the 'top of the line' by the residents? I wonder whether the discerning/wealthy customers would be prepared to pay more.

I guess I wonder whether the way SUM does things sets them apart and allows for premium fees.

[couta1]

Couta1, do you have any sense of whether SUM is seen as the 'top of the line' by the residents? I wonder whether the discerning/wealthy customers would be prepared to pay more.

I guess I wonder whether the way SUM does things sets them apart and allows for premium fees.
Sum residents certainly are a happy bunch and the focus on customer satisfaction is what sets Sum apart so in a sense you are probably right for that top percentile of perspective buyers but for your average punter having a fixed village fee for life is a huge advantage in cost savings and peace of mind and with Rym and Met upping their game Sum need to follow suite IMHO as the competition heats up over the coming years.

[Harvey Specter]

Are SUM weekly fees more/less?

In theory, RYM should be more as they have to factor in inflation for the next X years (average of 7). SUM should be able to set it lower by passing on the inflation risk to the resident. Given superannuation is inflation adjusted (wage inflation which typically runs higher than CPI), surely this is a risk the resident would be happy to take on (since it would be their weekly pension that pays for the weekly fee)?

So the initial perception of RYM promise might not hold up to actual economic scrutiny.

[couta1]

Are SUM weekly fees more/less?

In theory, RYM should be more as they have to factor in inflation for the next X years (average of 7). SUM should be able to set it lower by passing on the inflation risk to the resident. Given superannuation is inflation adjusted (wage inflation which typically runs higher than CPI), surely this is a risk the resident would be happy to take on (since it would be their weekly pension that pays for the weekly fee)?

So the initial perception of RYM promise might not hold up to actual economic scrutiny. You raise some good point HS I will need to do some more homework to compare fees between operators but because the village fee includes things like council rates the fees may vary between villages depending on area. I think you can't rule out the value of perception when a perspective buyer compares yearly increasing fees with a fixed fee for life and then there are other advantages Rym currently offer like when you move out of your unit the village fee stops no matter how long it takes to sell.

[couta1]

Other good news for us holders is it looks like Sum found its floor last week and is now on the rise:cool:

[blocker3]

Other good news for us holders is it looks like Sum found its floor last week and is now on the rise:cool:

I agree couta1. We held and the shares rebounded. The US stocks had a bounce Friday night (our time) also which should help in relation to the world's "Black Friday of events".

[couta1]

Ouch look at the buy depth but not just Sum a pretty bleak looking market across the board.

[Beagle]

http://www.sharechat.co.nz/article/753a1043/oceania-living-mulls-listing-in-midst-of-retirement-village-building-boom.html?utm_medium=email&utm_campaign=Oceania+Living+mulls+listing+in+midst +of+retirement+village+building+boom&utm_content=Oceania+Living+mulls+listing+in+midst+ of+retirement+village+building+boom+CID_fab5203162 80ad2349569e33395b965d&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle753a1043oceani a-living-mulls-listing-in-midst-of-retirement-village-building-boomhtml

Supply and demand mate. Too much supply of new IPO's in the market and we have the Reserve Bank slamming the brakes on far too hard.

[vorno]

Ouch look at the buy depth but not just Sum a pretty bleak looking market across the board.

Ouch indeed, ouch.

... In other-news I look forward to the August announcement!

[couta1]

Ouch indeed, ouch.

... In other-news I look forward to the August announcement!
I don't think the August announcement will give things a big boost Q3 results will be the tell tale factor IMHO

[Beagle]

Ouch indeed, ouch.

... In other-news I look forward to the August announcement!

This is the time when well paid directors and the CEO should be stepping up to the plate and buying shares and demonstrating their confidence in the future of SUM.
Instead we had Norah Barlow selling heaps in early April 2014 one day or so before the poor announcement of Q1 sales and the sales and marketing manager also selling in recent months going back to late last year.
Lets not forget the company isn't prepared to give forward guidance but others in the sector are:confused:

[couta1]

Let's see if Q3 results are turning growth into sales as management have told us will happen,I'm holding them to it.

[Hoop]

A warning sign was triggered when SUM broke it's 28 month old primary up trend line (started 2 months after IPO) in Mid April 2014...

It ranged in price for a month (giving investors tim to get out)...

In Mid May SUM began its downtrend..For many investors it seemed SUM was too good to sell so the downtrending phase was gentle...However todays short term support (318) break has put an end to a small rally and has reinforced the view that downtrend is still in progress and has steepened...

Unless SUM regains above 318 at today's close it will look like that small rally is of the sucker variety that would indicate SUM is in a bear market cycle and shareholders should expect a fall to test 310, the next level of support.

If it's true that the "trend is your friend"...logic says SUM has not been your friend for 2 month now.
I only have friends in my portfolio...

[goldfish]

Yes it hit my stoploss this morning, only bought the other day in the "sucker rally". Only a small loss but seems to happen a lot these days, hard to find good shares in nz to place your capital.

[Hoop]

Yes it hit my stoploss this morning, only bought the other day in the "sucker rally". Only a small loss but seems to happen a lot these days, hard to find good shares in nz to place your capital.
Yes I'm having the same problem Goldfish,,got unceremoniously dumped out of CNU 10 days after I bought them recently for a small loss and still being slowly chucked out of the market one by one by my other stocks..not much left in my NZ portfolio:(

[Beagle]

Rock star economy, what a load of bloody crap. Won't stop he who is expert with the rear view mirror from giving us all another bludgeoning with his interest rate hammer tomorrow. Where do they find these myopic "bankers", or should I have spelt that with a "W".

[Toasty]

Rock star economy, what a load of bloody crap. Won't stop he who is expert with the rear view mirror from giving us all another bludgeoning with his interest rate hammer tomorrow. Where do they find these myopic "bankers", or should I have spelt that with a "W".

A group of bankers is described as a "Wunch", "a wunch of bankers".

ref http://www.urbandictionary.com/define.php?term=wunch

[Joshuatree]

Heehee , very good

[enzed staffy]

Not looking good at $3.09 already

[Beagle]

It seems we have the perfect storm.
1. A Reserve bank that doesn't realise the economy is already cooling fast, (projecting 3.7% GDP growth when dairy prices have fallen over 30%), really ?????
2. Another interest rate rise today
3. Slowing house sales
4. An absolute glut of new IPO's sucking the life out of the market in general, (excess supply over demand)
5. A large new IPO in the planning for this sector specifically sucking the wind out of the sails of this sector
6. Little / no growth in first half sales for SUM
7. Management reluctant to give formal projections other than a wink to selected few who take make the effort to enquire.

Swimming against the tide for a while or is this as bad as it gets ?

[longy]

It seems we have the perfect storm.
1. A Reserve bank that doesn't realise the economy is already cooling fast, (projecting 3.7% GDP growth when dairy prices have fallen over 30%), really ?????
2. Another interest rate rise today
3. Slowing house sales
4. An absolute glut of new IPO's sucking the life out of the market in general, (excess supply over demand)
5. A large new IPO in the planning for this sector specifically sucking the wind out of the sails of this sector
6. Little / no growth in first half sales for SUM
7. Management reluctant to give formal projections other than a wink to selected few who take make the effort to enquire.

Swimming against the tide for a while or is this as bad as it gets ?

With the election is coming up that is not helping either. I take capital gain taxes subject has always been a ping pong ball for the politicians. Does any body knows how is this affect this sector?

I always have a view that this sector suited for long term investor. So given enough time. It will come right. As the way the revenue for this country. I find it hard to see how the govt would have enough funds to build retirement villages and massive increase in health care. So they will have to relied to the rich willing to retire in style and take the pressur off the govt.

Of course unless the govt is will to digg the goods underneath the ground up and makes good use of it. Lol

[Harvey Specter]

With the election is coming up that is not helping either. I take capital gain taxes subject has always been a ping pong ball for the politicians. Does any body knows how is this affect this sector? NOt directly as they never sell their assets, only the occupation licenses which are taxed already and likewise, the oldies will be selling their PPOR which wont be subject to CGT under Labours leaky CGT policy. So it is only in respect of the market impact (a sinking tide lowers all boats etc) that would be of concern.

[Citizen Erased]

I appear to have set a stop-loss on SUM a few weeks ago and completely forgotten about it (too much on my mind, I guess). Just got dumped out at $3.05. Bloomin' heck!

[777]

I appear to have set a stop-loss on SUM a few weeks ago and completely forgotten about it (too much on my mind, I guess). Just got dumped out at $3.05. Bloomin' heck!


Thanks....

[couta1]

Cardinal rule number one in a storm is you stick with your vessel as long as its still structurally sound:cool:

[JohnnyTheHorse]

Cardinal rule number one in a storm is you stick with your vessel as long as its still structurally sound:cool:

In all fairness I don't think you should have been sailing in the open seas. You needed to learn in the calm waters first.

[couta1]

In all fairness I don't think you should have been sailing in the open seas. You needed to learn in the calm waters first.
Fortunately in real life I've had hundreds of hours experience sailing in the rough waters of Cook Straight so I think the principle behind my quote still stands but yes i did start off in the open sea sharemarket and have learnt some hard lessons but you cant change the past only the future, im heading back to bonds with any extra money i have this year.

[Citizen Erased]

Thanks....

Were you buying? :)

[goldfish]

Cardinal rule number one in a storm is you stick with your vessel as long as its still structurally sound:cool:

And sit on huge paper losses for years? That may or may not go back up, due to buying at the peak of a 6 year bull market, no thanks.

[777]

Were you buying? :)


Topping up

[couta1]

And sit on huge paper losses for years? That may or may not go back up, due to buying at the peak of a 6 year bull market, no thanks.
If the paper loss has no effect on your current lifestyle and cashing up wouldn't change your lifestyle in any way and you can still do all the things you enjoy doing while sitting on the paper loss then why worry?

[Hoop]

If the paper loss has no effect on your current lifestyle and cashing up wouldn't change your lifestyle in any way and you can still do all the things you enjoy doing while sitting on the paper loss then why worry?

What????:confused:

[couta1]

What????:confused:
Basically what im saying is if your wont be needing the money for many years to live as you desire then you are able to sit on those paper losses and see what happens.

[Hoop]

Basically what im saying is if your wont be needing the money for many years to live as you desire then you are able to sit on those paper losses and see what happens.
Couta...why would anyone (rich or poor) want to take the option of receiving nothing or risk a capital loss on their money for years on end ..... what a waste...You do realise that if every rich person in the world practiced what you just said there would be a ginormous global depression...

Individually I here to invest and maximise my investments so I can live in retirement without hardship and not be too much of a financial burden on society in my later years...I'm not in this business to f**k financial spiders for years on end... I expect wealthy people to do likewise..invest and attempt to accrue continuous capital growth so to help the economy...

[couta1]

Couta...why would anyone (rich or poor) want to take the option of receiving nothing or risk a capital loss on their money for years on end ..... what a waste...You do realise that if every rich in the world practiced what you just said there would be a ginormous global depression...

Individually I here to invest and maximise my investments so I can live in retirement without hardship and not be too much of a financial burden on society in my later years...I'm not in this business to f**k financial spiders for years on end... I expect wealthy people to do likewise..invest and attempt to accrue continuous capital growth so to help the economy...
Yep I've thought about this a lot but I just can't bring myself to realize another massive paper loss at this point in time so I've chosen to sit it out, in relation to Sum I'm only down 2% so don't put it in my above tech stock category,cheers

[Jay]

Agree with Hoop Even long term you must have sell strategy - KW has mentioned his a few times.
I'm am not going to sit on RYM for the rest of my life (It is is my long term portfolio), if it hits my stops then I am out

[MAC]

KW is perhaps one of the few TA's I've respect for on this forum, but rather, if you are an FA then you should sell on the fundamental shifts.

Having said that it depends on your time horizon, if you are comfortable buying the demographic and leaving it in the bottom draw then that is ok for some, each to their own, it's comparable to buying into a small business which takes a very long term view.

My time horizon is typically 1 to 2 years and I cashed up my SUM holding here (http://www.sharetrader.co.nz/showthread.php?5009-Summerset-Group-IPO&p=482182%23post482182*) back in May.

But, if folk want to be very long, so be it, get off their back, it's a defensive sector, in 2020 the demographic will be even more supportive than now, and the sector will probably deliver considerably more than their savings account over that time.

[Beagle]

Stop loss is good financial discipline in my opinion. No harm in setting a loose one at say 15%. By setting a loose stop loss, if you get stopped out then either :-
1. Market sentiment has turned to a fairly serious extent
2. The company itself isn't performing up to market expectations
3. The company is not as good as you thought it was.
4. You're timing is wrong, exit and wait for a more timely opportunity to reinvest.
5. There has been a major exogenous shock to the market or your company
6. All of the above

We all like to think we know more than we really do, (fundamental flaw of human nature).

The truth is if you get two thrids of your investment decisions right you're doing well and understanding that is one of the keys to investment success in my opinion.
Loss mitigation on the incorrect decisions is a vital part of any successful investment strategy.

[goldfish]

KW is perhaps one of the few TA's I've respect for on this forum, but rather, if you are an FA then you should sell on the fundamental shifts.

Having said that it depends on your time horizon, if you are comfortable buying the demographic and leaving it in the bottom draw then that is ok for some, each to their own, it's comparable to buying into a small business which takes a very long term view.

My time horizon is typically 1 to 2 years and I cashed up my SUM holding here (http://www.sharetrader.co.nz/showthread.php?5009-Summerset-Group-IPO&p=482182%23post482182*) back in May.

But, if folk want to be very long, so be it, get off their back, it's a defensive sector, in 2020 the demographic will be even more supportive than now, and the sector will probably deliver considerably more than their savings account over that time.

Well if the demographic may be more supportive in 2020 thats the main thing. What was I thinking..

[macduffy]

From this distance, it would appear that not a few on this forum were bedazzled by that smooth-talking Norah!

;)

[NZSilver]

Wish I had some spare cash - Sum is great value at these levels!

[Bjauck]

From this distance, it would appear that not a few on this forum were bedazzled by that smooth-talking Norah!

;) To an extent, the market prices for MET SUM and RYM were driven by sentiment and PR. Looks like the market has fallen out of love to an extent with SUM. The (erstwhile) unloved MET has held up quite well so far...perhaps because there was not an awful lot of love propping it up in the first place. The question is - has all the puffery been beaten out of SUM yet? To me, it is looking more ripe for topping up, given the (overdone?) negative market reaction generated by the recent seemingly disappointing sales report. Those big Insider trades a few months ago had been a real tell-tale that they thought that the SP had gotten away with itself! I am with Couta and will hold on to my SUM shares at this stage.
Disc: hold SUM, RYM and MET in roughly equal valuations now.

[skid]

To an extent, the market prices for MET SUM and RYM were driven by sentiment and PR. Looks like the market has fallen out of love to an extent with SUM. The (erstwhile) unloved MET has held up quite well so far...perhaps because there was not an awful lot of love propping it up in the first place. The question is - has all the puffery been beaten out of SUM yet? To me, it is looking more ripe for topping up, given the (overdone?) negative market reaction generated by the recent seemingly disappointing sales report. Those big Insider trades a few months ago had been a real tell-tale that they thought that the SP had gotten away with itself! I am with Couta and will hold on to my SUM shares at this stage.
Disc: hold SUM, RYM and MET in roughly equal valuations now.

Couta holds on to all his shares at this and any stage :)

[couta1]

Couta holds on to all his shares at this and any stage :)
Your wrong there skid i ditched 120k CNU shares last year remember and why would you ditch Sum when its only 4c down on your buy in price?:cool:

[couta1]

Be very careful here people and remember Gaynor's words about these stocks not being flavour of the year for every year. I see a sector dowturn starting, with SUM leading the way. It may seem cheap compared to recent highs, but interest rates just went up again and I suspect real estate prices have definitely seen their highs here...
The same Gaynor that told us at the beggining of the year that growth stocks were the way to go, now following his advise to a greater or lesser extent hasn't worked out so well for a lot of us especially in the tech/biotech arena.

[goldfish]

At the beginning of the year he was right, that quickly changed, not his fault, you have to be flexible and adapt to the current conditions.

[Bjauck]

Be very careful here people and remember Gaynor's words about these stocks not being flavour of the year for every year. I see a sector dowturn starting, with SUM leading the way. It may seem cheap compared to recent highs, but interest rates just went up again and I suspect real estate prices have definitely seen their highs here... I agree that it would be unreasonable to expect that the last couple of years' share price growth will continue and NZ residential property values may well/probably consolidate and, given low inflation, drop. However a possible continuing positive in the next few years is the increasing size of the potential market for SUM's services which may lead to increasing resales and new sales. SUM et al. will probably not have to sell their land or sites during a downtown and may well continue to add to their land bank during a stagnant property market, if there is a continuing growth in demand for their units. However, it is definitely a time to be cautious before making an investment decision.

[Goldstein]

Well, my stop-loss was triggered this week and sold for $3.11. I'm up in total on SUM, but the recent slide has cost me.

I feel I kind of just watched this happen and did not act. Bit silly really.

Kudos to those who acted 3 months ago.

[couta1]

Well, my stop-loss was triggered this week and sold for $3.11. I'm up in total on SUM, but the recent slide has cost me.

I feel I kind of just watched this happen and did not act. Bit silly really.

Kudos to those who acted 3 months ago. Not really silly as you probably had a long term view like many of us, I'm sitting on all my current stocks but have decided not to put any further money into the share market (Have far to much in there now) Have just over 10 years to retirement so time to head back to bonds with any money from now on.

[JayRiggs]

It's not too bad if the price goes down further.
More shares for those of us in the DRP :)

[Bjauck]

I see at $3.07 SUM is exactly at the price it was at on 25th July 2013! In that same 12 month period RYM is up about 13% and MET is up about 28%.

[couta1]

I see at $3.07 SUM is exactly at the price it was at on 25th July 2013! In that same 12 month period RYM is up about 13% and MET is up about 28%.
Going back a year further or more and Ryman are the clear winners with Met shining over the last year(We will see soon if that rise is justified) Sum need to present a clearer vision and get a bit more commercial mongrel IMHO they have heaps of potential, but my gut feeling tells me that long term Ryman are going to blow all their competition away such is the slick machine they are.

[Hoop]

It's not too bad if the price goes down further.
More shares for those of us in the DRP :)

I guess then that you would ecstatic and over the moon if it fell back to $2.95...because that's where its headed after busting through its major resistance (320) two days ago...

Thinking of all those Drps... you will pleased to know that SUM is now in a confirmed bear cycle (busting its bull/bear line 330) and with the increased downtrend momentum pressure you will be even more happier if that huge momentum pressure quickly sliced through 295 to its next support at 280..a la capitulation event..

[Mista_Trix]

Well, my stop-loss was triggered this week and sold for $3.11. I'm up in total on SUM, but the recent slide has cost me.

I feel I kind of just watched this happen and did not act. Bit silly really.

Kudos to those who acted 3 months ago.

Some of us got lucky really, I got kicked out at the top of PSAR cycle ($3.58), and had been looking to get back in again. But this movement and general sentiment worries me a little. Especially as capital gains on this stock (with the div where it is) are what most people are (or were) hunting.

[Food4Thought]

I'm with you NewGuy. I think it is a good time to top up for those with cash. I could possibly do better buying, selling, buying, selling, but then I would become a trader, and that's not where I want to be (time consuming). Long term, this is a fairly safe stock, even if my finger nails are slightly shorter due to the recent movement, no one enjoys seeing a share get a decent haircut (okay, maybe those awaiting a good buy in time). The thing is, it will re grow, and be a better stock at the end of it. Long term, I have to keep reminding myself, long term.

[Hoop]

Question: what is your investment horizon for this stock? If less than 12-24 months, beware. Anything 5 years plus, this is just a minor aberration (IMHO). I've got a 10 year window on this, so not even remotely bothered about the current SP action.
Is this post directed to me?
Anyway my 2 cents worth
Being a mostly TA orientated fundamentalist...I don't assume the future too much because there are hundreds of variables affecting SUM and I know only a few of them...From my 40year experience its usually the illogical variable flying out from the left field that stuffs up my longer term forward projections combined together with the slow moving under the radar unnoticeable stuff..also your forward projection estimates are biased, polluted by your present day surroundings e.g today's economic environment conditions...

If you think you are not affected by your surroundings and consider yourself very good at forward projection (as we all think we all are) you should test it out before committing 100's of 1000"s of hard earned dollars...Easy to do...just re-read your old ST posts:)

SUM for the shorter term..I will be back in when the uptrend resumes...or cyclic reversal happens....I'm not greedy so I won't preempting the Market when there is a short term uptick in price creating an attempt to find a near bottom reversal..I will be listening and reading all media's point of views but I will not be relying on the media...I will be gathering my own data, I will be doing my own TA homework and not relying on anyone else's data or their opinion...

When will this happen? ...who knows?..who cares?... not me as I'm not "in" freting about it...Sticking to discipline with stops guarantees me a good nights sleep and keeps my self-esteem high

[Vaygor1]

NG and F4T, you two definitely have the right mindset imho.

I have done a comparison between RYM Annual Report for year end 31-March-2007 and SUM Annual Report for year end 31-December-2013.

The reason for choosing these dates is because in the 21 months from June 2007 to March 2009, RYM's share price slowly dropped 40% from $2.15 to under $1.30 before a slow recovery commencing April 2007.





RYM 2007 Annual Report
SUM 2013 Annual Report


After Tax Profit
Up 18% to $41.6M*
Up 131% to $34.2M


Revenue
Up 33% to $190M
Up 41% to $75M


Dividend
Up 18% to 4.00c/share
Up 20% to 3.25c/share


Villages
3 Finished, 5 in planning
2 Finished, 2 under consrtn


Forward Guidance
20% growth in earnings
None



* Pre IFRS for RYM who didn't specify/state underlying profit back then so I have not used it as a measure for SUM or RYM in the table above.

But buying RYM in June 2007 was a GREAT BUY.
Buying RYM in March 2009 was an UNBELIEVABLE BUY.

Summerset's financial position now is not toooooo far different from RYM's back then (Subject to verification, the introduction of IFRS by RYM in 2008 still throws me a curve ball in comparing these, SUM also appear to separate Occupation-Right sales & resales from revenue in their figures, and on top of that SUM includes 'Fair value movement of investment property" as part of its income - I mean, how is that income?).

But with no negative outlook from RYM and purely due to market sentiment (including the GFC), RYM fell 40% in the 21 months following release of its 2007 Annual Report.
RYM's exposure to the international indexes probably wasn't too dissimilar then to what SUM's is now either.

My point is that Summerset could do the same to more or less extent (as RYM could also repeat), or it could recover. My advise is to not gamble by selling SUM through fear (or greed in the hope of buying cheaper) but instead, if the price keeps dropping - and 40% down from SUM's high of $3.60 equals about $2.20 - then buy more.

Addendum: Just read Hoop's post below, and I also agree with his strategy (assuming you're a bloke Hoop) if your not currently holding any SUM. No one knows exactly where the bottom will be for SUM and with market sentiment about as predictable as a lotto draw, TA is the way to go if one wants to get in. Again, imho.

[skid]

How is that not gambleing

[couta1]

Looks like Sums having a better day than Rym and Met:cool:

[JayRiggs]

I guess then that you would ecstatic and over the moon if it fell back to $2.95...because that's where its headed after busting through its major resistance (320) two days ago...

Thinking of all those Drps... you will pleased to know that SUM is now in a confirmed bear cycle (busting its bull/bear line 330) and with the increased downtrend momentum pressure you will be even more happier if that huge momentum pressure quickly sliced through 295 to its next support at 280..a la capitulation event..

Thanks for that Hoop.
Will be great to average down at 2.80 aye!

[Vaygor1]

How is that not gambleing
Sorry, can you clarify the question skid? I'm not sure what you mean.

[couta1]

Thanks for that Hoop.
Will be great to average down at 2.80 aye!
You'll be lucky I reckon it won't go below $3:cool:

[Beagle]

...Or slightly over 1 depending on where you guess this years growth at.

[Mista_Trix]

agreed. $3 is a psychologically-significant level of support, and unlikely to be broken (IMHO)

I said the same thing about PEB at $1 ... look what happened there :-S

[couta1]

I said the same thing about PEB at $1 ... look what happened there :-S
Compare Apples with Apples, Sum is a proven performer with bricks and mortar fundamentals.

[couta1]

why the constant references to sparky?
Exactly Sparky backed the truck up ages ago and wouldn't be fazed by the current blip,he probably has an average buy price around the $2 ish mark.

[Mista_Trix]

Compare Apples with Apples, Sum is a proven performer with bricks and mortar fundamentals.

The 'Apples' I'm comparing are downtrend apples. I know its a solid company, but like PEB, the market has turned on it, and its trend (for the moment) appears to have changed quite substantially.

[Mista_Trix]

which really just means that its PE is falling, and hence becoming an even better buy then before...

Having learned a very harsh lesson trying to average down, I will happily wait for the trend to reverse before putting my money back in again.

[Hoop]

Exactly Sparky backed the truck up ages ago and wouldn't be fazed by the current blip,he probably has an average buy price around the $2 ish mark.
Not fazed huh?....
Leaving ST and deleting all his posts leaves plenty of question marks ....maybe Mr Market caught him out... we will never know.. except for some of us who screenprint and save posted forum web pages...;):D

[Hoop]

Yeah maybe Moosie..Anyway, enough time wasting over something that won't effect me in any way.

.Back to something more worthwhile...someone just spent $10grand in an effort to boost the shareprice it was trading and tracking around 3.10 all morning ... why the 3.18 buy at lunchtime ??? all they had to do was wait.. there would've been sellers around 3.10 eventually.....Maybe it was a liquid lunch?

[vorno]

Well Hoop, it appears to have had a slight impact - back trading 3.12

[winner69]

A bad day or two this week could see a DEATH CROSS on the chart

Sometimes means stuff all but generally not really a good sign.

TTK a good example and in spite of MACs protestations ATM done not too well since one of these appeared

Hoop - DEATH CROSSES on the chart in your experience good or bad?

[Hoop]

A bad day or two this week could see a DEATH CROSS on the chart

Sometimes means stuff all but generally not really a good sign.

TTK a good example and in spite of MACs protestations ATM done not too well since one of these appeared

Hoop - DEATH CROSSES on the chart in your experience good or bad?


Hoop - DEATH CROSSES on the chart in your experience good or bad? ....yep, good or bad :)..and sometimes a DC could indicate bugger all....I think I've covered all the bases here Winner..:D

DC and GC are relatively uncommon events on charts It may be years before one pops up and then sometimes you could experience a series of them..There are 3 key areas where you would likely to find them...1 ..Cyclic top reversal bull to bear. 2....Cyclic bottom reversal bear to bull 3....Intercycle during a lengthy (year or more) trading range bound pause period (cycle hibernation).

Cyclic reversals could be sharp and quick (crash/upsurge) and you experience only one cross...These individual lone wolf type crosses indicate what they say and it usually happens after the sharp event.... too late you have felt the pain or pleasure
However, cyclic reversals are often slow burners and not noticed for several months... when its a slow burner, investors develop a denial behavioural attitude and continue to trade the same way as previously..With disappointment after disappointment each time little by little the numbers discover the cycle has changed and adjust their investing behavioural attitude occordingly ..while this reversal period takes place you get bull /bear fights thereby witnessing several Death Crosses (DC) alternating with the Golden Crosses (GC) with both sides arguing their case using either cross as evidence for their cause.

With the intercycle hibernation period event you will find that both DC and GC occur as a technical eventuality as both MA50 and MA200*** draw closer together and cross around a few times due to the nature of the lengthy trading range bound price period (elongated rectangle chart pattern)....

**** A long period MA with a short period MA...use to be MA200 and MA50 but I've seen other numbers used recently

[vorno]

No end in sight?

DISC: I'm sitting 12% down.

[couta1]

No end in sight?

DISC: I'm sitting 12% down.
A lot of us currently down hang in there may get lift next week after half yearly but not expecting any significant rise until after Q3 results in October,mind you the whole market is looking pretty sad at the moment,my portfolio is down 13% overall.

[Beagle]

Couta1 - Mate, for what its worth I think the sector will remain under pressure until the new retirement listing is done and dusted.

[couta1]

Couta1 - Mate, for what its worth I think the sector will remain under pressure until the new retirement listing is done and dusted.
You could be right that listing should occur around November and if its priced around $1to $1.40 mark I'll be in to take advantage of that initial 3 year growth phase.

[Onion]

You could be right that listing should occur around November and if its priced around $1to $1.40 mark I'll be in to take advantage of that initial 3 year growth phase.

At $1 that would make them nearly 8 times better value than RYM and 3 times better value than SUM...

... or maybe it depends on how many shares are issued aye.

[vorno]

What's the name for this new IPO?