SUM - Summerset Group

[winner69]

Investor psychology sats this may actually happen as newbies with little/no experience tend to enter favoured sectors towards the end of bull runs. To them, $1 looks waaaaaay less expensive than $8 or even $3 as it is all superficial to them. Could be worth a stag on this premise alone ;)

I be in at $2 ....for SUM that is

[Beagle]

I be in at $2 ....for SUM that is

Ouch !!!!!, even I as no longer a holder felt that sledge hammer.

[winner69]

Ouch !!!!!, even I as no longer a holder felt that sledge hammer.

Looks like we had that DEATH CROSS

Might just be abherration if she picks up a bit later today

No worries though because MAC says not always bad news

[Beagle]

What's the name for this new IPO?

Oceania Living


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%20Living%20mulls%20listing%20 in%20midst%20of%20retirement%20village%20building% 20boom&utm_content=Oceania%20Living%20mulls%20listing%20i n%20midst%20of%20retirement%20village%20building%2 0boom+CID_fab520316280ad2349569e33395b965d&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle753a1043oceani a-living-mulls-listing-in-midst-of-retirement-village-building-boomhtml

W69 - Hmmm with this new listing hanging over the sector and sucking the wind out of the sails of existing operators, strong indications the real estate market is cooling and flat sales by SUM itself its hard to see any reason why the SP trend would change anytime soon. The trend is your friend if your waiting for a point of entry, why rush ? I don't think you'll see $2.00 but the SP will have a 2 in front of it very soon. Norah Barlow timed the exit of the vast majority of her stake pretty well eh....still I suppose that's what happens when you're in possession of all the facts just before a Q1 sales announcement.
Highly esteemed ? Plenty of food for thought there I think...I can't help speculate if the buyers of that stake were as well informed...

[winner69]

Oceania Living


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%20Living%20mulls%20listing%20 in%20midst%20of%20retirement%20village%20building% 20boom&utm_content=Oceania%20Living%20mulls%20listing%20i n%20midst%20of%20retirement%20village%20building%2 0boom+CID_fab520316280ad2349569e33395b965d&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle753a1043oceani a-living-mulls-listing-in-midst-of-retirement-village-building-boomhtml

W69 - Hmmm with this new listing hanging over the sector and sucking the wind out of the sails of existing operators, strong indications the real estate market is cooling and flat sales by SUM itself its hard to see any reason why the SP trend would change anytime soon. The trend is your friend if your waiting for a point of entry, why rush ? I don't think you'll see $2.00 but the SP will have a 2 in front of it very soon.

I learnt many many years ago not to fight trends, yes the trend is your friend

[Mista_Trix]

Riiiiiiiight oooooon the eeeeeeedge...

[Vaygor1]

Riiiiiiiight oooooon the eeeeeeedge...

….. and over. :mellow:

Be an interesting day tomorrow to see if the panic merchants set in and propel their fear of a lower price into reality.

[Beagle]

Last year's underlying profit $22.154m / 217.297m shares = EPS of 10.195 cps.
299 / 10.195 = a PE of 29.3. where's the bottom ?

[Vaygor1]

Last year's underlying profit $22.154m / 217.297m shares = EPS of 10.195 cps.
299 / 10.195 = a PE of 29.3. where's the bottom ?

$2.20 if SUM copies what happened to RYM 7 years ago. Refer http://www.sharetrader.co.nz/showthread.php?5009-Summerset-Group-IPO&p=493837&viewfull=1#post493837

But without another GFC, can't see SUM going that low.

[winner69]

You guys all gone to a funeral or something, not much in the way of comment lately about how good sales are going to be and all that stuff

Chin up guys. The market just a bit irrational at the moment

Some say a good time to buy when like this

But the again the market may actually be acting rationally and this is a just a valuation rerating

Whatever one thing or sure Summerset will make heaps of dosh this year

[percy]

You guys all gone to a funeral or something, not much in the way of comment lately about how good sales are going to be and all that stuff

Chin up guys. The market just a bit irrational at the moment

Some say a good time to buy when like this

But the again the market may actually be acting rationally and this is a just a valuation rerating

Whatever one thing or sure Summerset will make heaps of dosh this year

Well I suppose I am doing it all wrong,by not selling out and waiting for the new uptrend.
However my shares in SUM average, after selling down approx. 35cents per share while I am having a free ride with RYM.
I prefer RYM and SUM to others in the sector.I would be more than happy to retire in either company's villages,which I think is the real test.
With over 1,000,000 people over the age of 65 in just a few years I feel that huge tail wind will mean both RYM and SUM will prosper.
.

[BlackPeter]

You guys all gone to a funeral or something, not much in the way of comment lately about how good sales are going to be and all that stuff

Chin up guys. The market just a bit irrational at the moment

Some say a good time to buy when like this

But the again the market may actually be acting rationally and this is a just a valuation rerating

Whatever one thing or sure Summerset will make heaps of dosh this year

Well - not much news lately (other than that the sector gets more crowded). However just looking into my magic spreadsheet: SUM has currently a much better P/E (15.1) than other companies working in this industry like MET (19.5), INA (32.3), RYM (27.7). This means that unless there is something we can't see yet in the bushes, SUM should have better growing potential from here than the rest.

Obviously - I don't like the recent dip either (discl: holding), but not too worried.

As always - DYOR;

[winner69]

Well - not much news lately (other than that the sector gets more crowded). However just looking into my magic spreadsheet: SUM has currently a much better P/E (15.1) than other companies working in this industry like MET (19.5), INA (32.3), RYM (27.7). This means that unless there is something we can't see yet in the bushes, SUM should have better growing potential from here than the rest.

Obviously - I don't like the recent dip either (discl: holding), but not too worried.

As always - DYOR;

ANZ has SUM p/e at 18.9 and RYM at 20.5 not much in it

[Beagle]

ANZ has SUM p/e at 18.9 and RYM at 20.5 not much in it

Both figures are wrong as they're working on reported EPS not underlying EPS. SUM's PE is 29 based on a SP of $2.99.

[winner69]

What is RYM's PE using underlying, roger?

On an apples for apples basis (last reported underlying profit) RYM p/e is 33.9

[BlackPeter]

ANZ has SUM p/e at 18.9 and RYM at 20.5 not much in it

O.K. - I should have noted how I get to the P/E's I used - it is one of these situations, where everybody seems to use different numbers (and some of them make even sense in context).

I use typically 2 numbers: "predicted P/E" (which is what I quoted in the post) and that's typically the earning prediction either from company announcement, Reuters or from ft.com (in this order, and normally not older than 7 days or so, when I use it) divided by the actual share price.

I use as well "average P/E" - that's the average (diluted) earnings over the last 5 years divided by current share price.

Banks and finance websites use all sort of numbers - predicted P/E, last years P/E, P/E based on real earnings or on underlying earnings and sometimes they seem to pick just a random number. It is as well not unusual that the same company uses different numbers in parallel (look e.g. at ANZsecurities - the Reuters tab shows often a different P/E than the detailled tab, so I try to keep my numbers comparable, but leave it up to everybody else what you want to use ...

So I re-state: in MY books it looks like SUM has a P/E advantage ...:)

[Beagle]

IMHO, underlying earnings is the only really useful measure of profitability for companies like this.

Agree 100% and I think RYM have earned a slightly higher PE but both are over-rated IMHO considering the modest EPS growth I'm expecting (10-15)% for the current year.
I've given up trying to pick the extent of the correction...I'll simply wait until there's a confirmed 3 day break back above the 100 day MA going back up...whenever that might be... but it won't surprise me at all if this is a very long time coming. FWIW my preferred re-entry company into this sector is RYM.

[Mista_Trix]

...I'll simply wait until there's a confirmed 3 day break back above the 100 day MA going back up...whenever that might be....

Is this methodology for picking the correction what others use? I'd be interested to hear thoughts, I'm okay at getting out (sometimes - when I stop listening to myself too much), but have few skills about when to get back in again...

I'd appreciate any thoughts around this..? :)

[Onion]

See the thread by KW etc about using TA to time entries/exits. Very detailed and interesting discussion.

http://www.sharetrader.co.nz/showthread.php?9176-Using-TA-to-time-entries-and-exits

[Mista_Trix]

See the thread by KW etc about using TA to time entries/exits. Very detailed and interesting discussion.

Cheers all, had a look through that like a year ago, took in a minimal amount (based on where I was at the time) - had completely forgotten it existed - time for a re-read of the thread I think :)

[winner69]

IMHO, underlying earnings is the only really useful measure of profitability for companies like this.

As a measure of day to day operational activities I agree with you.

From a company valuation point of view I tend to go the full profit way, t difference essentially th unrealised revaluation gains.

After all the Balance Sheet reflects all the valuation gains, be they realised or unrealised. They are included in what the company is worth at a particular point in time (on paper anyway)

[Beagle]

I reckon that including unrealised gains effectively leads to double counts, because they are later included in realised gains, and hence counted more than once...

Spot On NG. Double counting profits is a bridge too far. From a NAV perspective unrealised gains are clearly of relevance in terms of asset backing but PE based on underlying operating profit is where its at for me in terms of valuing these puppies.

[couta1]

Good news on the Ellerslie green light but why no dementia unit? The demand is increasing in hospital and dementia but static or decreasing at Resthome level.

[Beagle]

Good question Couta1.
Once upon a time an announcement like this would have sent the SP racing north...but barely a whimper. Gives quite an insight into how the institutions view the company's approach to lack of forward guidance IMHO.
Mr market is saying the half year results due on Tuesday next week will disappoint.

[percy]

Well I am very pleased with it.
Good location.

[couta1]

Well I am very pleased with it.
Good location.
I'm pleased to but why not move with the times dementia is the fastest growth area along with hospital level care and ALL Rymans facilities have dementia units bar a few of the older ones so a market disadvantage IMHO

[percy]

I'm pleased to but why not move with the times dementia is the fastest growth area along with hospital level care and ALL Rymans facilities have dementia units bar a few of the older ones so a market disadvantage IMHO

I am sure if you ring Scott Scollar on [04] 894 7317 or 0298947317 he will tell you why,then you may be kind enough to share with us.

[couta1]

I am sure if you ring Scott Scollar on [04] 894 7317 or 0298947317 he will tell you why,then you may be kind enough to share with us.
Will do when he gets back to me.

[Beagle]

If I remember correctly, didn't they say at the AGM words to the effect that they were designing late stage care facilities (hospital / rest home / dementia), that were more or less multi-purpose in their design ? Someone please refresh my memory...

[couta1]

If I remember correctly, didn't they say at the AGM words to the effect that they were designing late stage care facilities (hospital / rest home / dementia), that were more or less multi-purpose in their design ? Someone please refresh my memory...
They talked about swing beds for hospital use but dementia units require specific design in terms of security and layout not to mention specific staff training for dementia level care so my question is why have it as a afterthought when its the fastest growing level of care and all your competition (Including Oceania) are offering special purpose built units?

[Beagle]

Thanks mate, now you mention it I think you're right, they were talking swing beds between hospital and rest home so you've got a very pertinent question that deserves a proper answer in my opinion.
Looking forward to hearing the answer.

[Food4Thought]

Thanks mate, now you mention it I think you're right, they were talking swing beds between hospital and rest home so you've got a very pertinent question that deserves a proper answer in my opinion.
Looking forward to hearing the answer.

I wonder if it is to try and have a facility that is dementia free, in order to offer this option to people wanting aged care. Dementia units also requires additional costs and care. I do wonder, valid question for sure.

[couta1]

I wonder if it is to try and have a facility that is dementia free, in order to offer this option to people wanting aged care. Dementia units also requires additional costs and care. I do wonder, valid question for sure.
Dementia units are in lock down and have no effect on the rest of the facility sure there are additional costs but they also obtain additional funding to run them,looking forward to hearing their explanation although I doubt it will cut the mustard IMO bye for now off to work in a dementia unit.

[Vaygor1]

Back in November 2013 this Ellerslie site was going to contain 252 units and 79 care beds in 3 x 6-7 story buildings plus 1 x 4-story buiilding as per the council submission. Refer http://www.propbd.co.nz/summerset-seeks-consent-ellerslie-village/

Announcement today, the village will include 250 units, including townhouses, villas, apartments, and care beds to house 400 residence. Interesting to see if the 6-7 story buildings are still in there.

400 people in 250 units means 1.6 per facility
If say 50 care beds. That leaves 200 units for 350 people = 1.75 meaning 3 out of 4 townhouses/villas/apartments are expected to contain a couple. Is that realistic?

Also of note is the timeframe to get consent. And questions over SUM's ability to groom the authorities and the local community, and to submit realistically acceptable plans.

[Beagle]

Back in November 2013 this Ellerslie site was going to contain 252 units and 79 care beds in 3 x 6-7 story buildings plus 1 x 4-story buiilding as per the council submission. Refer http://www.propbd.co.nz/summerset-seeks-consent-ellerslie-village/

Announcement today, the village will include 250 units, including townhouses, villas, apartments, and care beds to house 400 residence. Interesting to see if the 6-7 story buildings are still in there.

400 people in 250 units means 1.6 per facility
If say 50 care beds. That leaves 200 units for 350 people = 1.75 meaning 3 out of 4 townhouses/villas/apartments are expected to contain a couple. Is that realistic?

Also of note is the timeframe to get consent. And questions over SUM's ability to groom the authorities and the local community, and to submit realistically acceptable plans.

I'm with you. This appears considerably less ambitious than the original proposal and the time to get consent was lengthy. Auckland city council have too much power and are an absolute bloody nightmare to deal with. Its clear the market is unimpressed.

[Beagle]

They're still waiting for a zoning change for their lower hutt proposed development and I hear they're facing fierce opposition from the locals to a high-rise development there.

[winner69]

Tomorrow big day. We find out how much they made on the 195 sales (wouldn't have made anything out of operating a village)

I reckon $14m - up 40% odd on last year. There was pretty big increase in unrealised gains the last 2 quarters and these got to come out sometime

[Beagle]

I'll bet you a beer it'll be less than that

[Vaygor1]

Tomorrow big day. We find out how much they made on the 195 sales (wouldn't have made anything out of operating a village)

I reckon $14m - up 40% odd on last year. There was pretty big increase in unrealised gains the last 2 quarters and these got to come out sometime

I might be misunderstanding the post, but I thought unrealised gains would take an average of 7 years to come out; the average time between sale and resale of any given unit.

[Joshuatree]

From a broker with a Neutral "SUM is due to release its 1H14 result on 12 August 2014 and we expect a flat underlyingresult. Operating cost increases are expected as SUM scales up head office capability forthe next level of growth and a 2H14 bias for new sales and resales. We will review ourNEUTRAL rating with the result given the sharp share price correction; however a lack ofnear-term earnings momentum continues to be a risk factor for investors. "

[cyclist]

underlying profit down

Indeed, and it will be interesting to see how the market interprets that.

I have only read the media release so far, but I am very happy with what I am seeing. As couta has alluded to, it looks like we can expect some decent results in the second half. Very tempted to top up at these levels.

[Beagle]

Underlying profit down to $9.4m compared to $10.0m in pcp. Cash flows down 15%. Expenses up significantly. Company anticipates good sales in the second half.
Inability to maintain tight control of expenses in a flat sales environment would be my #1 concern with this result and is not an encouraging sign for future profitability regardless of future sales momentum. #2 Company claims development margins are expanding but my perception is that's best described as "very, very slowly"..

[blocker3]

I think that the market has well and truly factered in the results before today

On the positive side, Net profit after tax of NZ$15.3 million, up 42% on 1H13.

[winner69]

I think that the market has well and truly factered in the results before today

On the positive side, Net profit after tax of NZ$15.3 million, up 42% on 1H13.

And the company worth a lot more on paper than 6 months

[winner69]

Underlying profit down to $9.4m compared to $10.0m in pcp. Cash flows down 15%. Expenses up significantly. Company anticipates good sales in the second half.
Inability to maintain tight control of expenses in a flat sales environment would be my #1 concern with this result and is not an encouraging sign for future profitability regardless of future sales momentum. #2 Company claims development margins are expanding but my perception is that's best described as "very, very slowly"..

Development margins - at this rate of improvement the 17% target in 3 to 4 years. Is that your concern

The green line on their chart getting steeper so maybe 2 years

[blocker3]

And the company worth a lot more on paper than 6 months

Yip and I now see that a big boy is looking to "BUY"

Lastly winner69 a great read in relation to the ASX that you posted.

Thank you

[Beagle]

Development margins - at this rate of improvement the 17% target in 3 to 4 years. Is that your concern

The green line on their chart getting steeper so maybe 2 years

I need to spend more time analysing this but first impressions are of a very disappointing result, especially with substantial expenses expansion in a flat environment (expenses $21.4m v $18.1m).
The company explanation for higher expenses is "higher operating costs for newer villages and opening of care facilities"

Based on last years result they're on a PE of 29, Ryman on a PE of 33. Both over-priced and SUM looking especially so even after the dramatic correction in the SP from $3.45 only 6 weeks ago.

Okay after reviewing development expansion more closely, that looks okay.

Disc Glad to be out at $3.55 average and not looking for a re-entry opportunity anytime soon.

https://nzx.com/companies/SUM/announcements/253730

[cyclist]

Yip and I now see that a big boy is looking to "BUY"


Can you please explain. I'm not seeing anything in the depth. Thanks.

[blocker3]

Can you please explain. I'm not seeing anything in the depth. Thanks.


I see it on my depth

unusual

[Beagle]

Roger, what is your take on their implicit forward guidance re sales over the next 6 months. Looks pretty good to me.

Looks good to me but really needs to be with a flat first half.

[nextbigthing]

What does u1 at 295c signify? A crossing price for a large block or something?

[Beagle]

I see it on my depth

unusual

u stands for undisclosed buyer where the buyer doesn't want to disclose the extent of their order but is over a pre-determined market value as determined by the NZX. Usually a large institutional order.

[Xerof]

The pre-determined amount is a piddly $100k. I don't know why they still use this u, do u?

:p

[cyclist]

I see it on my depth

unusual

As it turns out (the discussion regarding u 1), it was there but I just didn't know what I was looking at.

[Beagle]

The pre-determined amount is a piddly $100k. I don't know why they still use this u, do u?

:p

Yes that's my memory regarding this too, perhaps that was relevant many, many years ago....in any event it looks like that order was hit and then some and down she goes...

[blocker3]

Can you please explain. I'm not seeing anything in the depth. Thanks.

Looks like nextbigthing has spotted it also

1u = an undisclosed buyer over 100k

[Beagle]

Just expanding upon my earlier concerns regarding expenses expansion. Looking at other comments in the results presentation I note higher staff wages being paid. This clearly lines up with their comment of higher operating costs for new villages and leads me to think this issue of ongoing wages pressure for a minimum liveable wage, (now said to be over $18 per hour) is a serious long term headwind for the whole retirement village sector. When you consider the Reserve bank's aggressive approach towards interest rate increases, the cooling property market most notably in the provinces and the general cooling of the economy with substantial income corrections in the dairy and forestry sector, one wonders if the golden period of profit growth has come to an end, at least for the meantime ?
If one takes the view that these headwinds will materially crimp EPS growth going forward one could then ponder whether companies in this sector are really worth a PE of circa 30 ?

[percy]

After having another read of the annual report on Sunday,which I found excellent,today's announcement confirms to me SUM is a very well run company in a fast growing sector,doing all the right things.

[couta1]

I am sure if you ring Scott Scollar on [04] 894 7317 or 0298947317 he will tell you why,then you may be kind enough to share with us.
I got an answer last week but didn't want to put it on here until after today's result. Basically they don't want to build dementia units on their new sites currently due to over cautiousness in that they don't just want to dump untrained staff into a new dementia unit and just want to get things right in the whole process. I suggested to them that they review this thinking with the villages yet to be constructed for which they hadn't planned a dementia unit and they took it on board saying the whole dementia thing is very much in their thoughts. I highlighted to them the market disadvantage they have with their current thinking and as a shareholder I'm not happy with it,this coupled with the lack of forward guidance shows they are currently lacking a good dose of commercial mongrel compared with Ryman and co. Today's result nothing unexpected and the second half will be better and Q3 sales should show that but I don't expect the share price to increase much over the next while but that goes for the others as well. Disc-Holding and overweight

[winner69]

Real profit up $4.5m

That includes $6.2m fair value gain on development land in Auckland. So just sitting on it is profitable eh

At least shareholders are better off than 6 months ago

[Beagle]

I got an answer last week but didn't want to put it on here until after today's result. Basically they don't want to build dementia units on their new sites currently due to over cautiousness in that they don't just want to dump untrained staff into a new dementia unit and just want to get things right in the whole process. I suggested to them that they review this thinking with the villages yet to be constructed for which they hadn't planned a dementia unit and they took it on board saying the whole dementia thing is very much in their thoughts. I highlighted to them the market disadvantage they have with their current thinking and as a shareholder I'm not happy with it,this coupled with the lack of forward guidance shows they are currently lacking a good dose of commercial mongrel compared with Ryman and co. Today's result nothing unexpected and the second half will be better and Q3 sales should show that but I don't expect the share price to increase much over the next while but that goes for the others as well. Disc-Holding and overweight

Is it a coincidence that the board has the highest percentage of woman on it of any on the NZX, the CEO's mentor was a woman and there's too much laser focus on resident wellbeing and not enough commercial mongrel by a country mile ? I really thought with Julian Cook's investment banking background we'd see much more mongrel come out when he finally took over as sole CEO. Hugely disappointing to see their timid approach which is looking increasingly amateurish to me compared to Ryman's.
W69 - the only measure of any importance whatsoever is underlying profit which is down. Second is cash flow which is the lifeblood of any business which is down by an even greater percentage (15%).

[BlackPeter]

Just expanding upon my earlier concerns regarding expenses expansion. Looking at other comments in the results presentation I note higher staff wages being paid. This clearly lines up with their comment of higher operating costs for new villages and leads me to think this issue of ongoing wages pressure for a minimum liveable wage, (now said to be over $18 per hour) is a serious long term headwind for the whole retirement village sector. When you consider the Reserve bank's aggressive approach towards interest rate increases, the cooling property market most notably in the provinces and the general cooling of the economy with substantial income corrections in the dairy and forestry sector, one wonders if the golden period of profit growth has come to an end, at least for the meantime ?
If one takes the view that these headwinds will materially crimp EPS growth going forward one could then ponder whether companies in this sector are really worth a PE of circa 30 ?

Hi Roger, you somewhat lost me. From the announcement:

The company’s net profit after tax for 1H14 was NZ$15.3 million, an increase of 42% in 1H13.

Total assets increased over the last 12 months by NZ$157m, and are 21% higher than 1H13. Over the last three years the total assets of the company have grown by 69%.

Underlying profit for the first half of 2014 was NZ$9.4 million. This includes costs related to new village starts and the start-up phase of new care facilities. In the last 12 months Summerset has opened new villages in Hobsonville and Karaka, and has opened care facilities in Nelson, Dunedin and Hamilton. Summerset’s New Plymouth village will be opening in the second half of this year.


How does this look negative to you?

Yes, underlying profit is slightly down due to starting cost for new villages and car facilities, but how can you call that lack of cost control? Makes sense, if you start a new facility that you first need to invest, before you can reap the benefits.

And increased wages ... I'd say if they do that to retain good and experienced staff, than nothing wrong with that. Better to have loyal and experienced staff able to look after the residents than a minimum wage based workforce with little qualifications and high staff turnover - wouldn't you think so as well?

Discl: quite happy holder.

[winner69]

Just expanding upon my earlier concerns regarding expenses expansion. Looking at other comments in the results presentation I note higher staff wages being paid. This clearly lines up with their comment of higher operating costs for new villages and leads me to think this issue of ongoing wages pressure for a minimum liveable wage, (now said to be over $18 per hour) is a serious long term headwind for the whole retirement village sector. When you consider the Reserve bank's aggressive approach towards interest rate increases, the cooling property market most notably in the provinces and the general cooling of the economy with substantial income corrections in the dairy and forestry sector, one wonders if the golden period of profit growth has come to an end, at least for the meantime ?
If one takes the view that these headwinds will materially crimp EPS growth going forward one could then ponder whether companies in this sector are really worth a PE of circa 30 ?

Good insights

If you segment the P&L into running villages etc and being a property developer again marginal profit in running villages / care centres even though they collected $25m in fees.

Assumption here is all project costs capitalised.

[Beagle]

Hi Roger, you somewhat lost me. From the announcement:

The company’s net profit after tax for 1H14 was NZ$15.3 million, an increase of 42% in 1H13.

Total assets increased over the last 12 months by NZ$157m, and are 21% higher than 1H13. Over the last three years the total assets of the company have grown by 69%.

Underlying profit for the first half of 2014 was NZ$9.4 million. This includes costs related to new village starts and the start-up phase of new care facilities. In the last 12 months Summerset has opened new villages in Hobsonville and Karaka, and has opened care facilities in Nelson, Dunedin and Hamilton. Summerset’s New Plymouth village will be opening in the second half of this year.


How does this look negative to you?

Yes, underlying profit is slightly down due to starting cost for new villages and car facilities, but how can you call that lack of cost control? Makes sense, if you start a new facility that you first need to invest, before you can reap the benefits.

And increased wages ... I'd say if they do that to retain good and experienced staff, than nothing wrong with that. Better to have loyal and experienced staff able to look after the residents than a minimum wage based workforce with little qualifications and high staff turnover - wouldn't you think so as well?

Discl: quite happy holder.

Key point here is that they're always starting new villages, they did last year and they will be next year and so on. They make next to nothing from actually operating the villages as they're too timid to invest in the lucrative dementia units.
They're essentially a property development company who run retirement villages at very, very close to cost price, sell licences and make money again on re-sale. They'll always be starting up new villages and opening new care centres so these costs they've highlighted inferring they are one-off's are anything but one-off. That's my main point. That and underlying profit is the only measure by which these companies can be valued and with growth clearly slowing are they worth a PE of 30 ?

W69- Very safe assumption of development costs being capitalised.

The trend is down, why fight a clearly defined trend until its over...

[winner69]

You are right Roger

Employee expenses up $2.0m (from $7.7m) - that's 26% increase

And revenues were only up 19%

And they borrowed heaps more - ok for expansion - but paying a divie as well - hoping everybody will take the DRIP

[BlackPeter]

...
If one takes the view that these headwinds will materially crimp EPS growth going forward one could then ponder whether companies in this sector are really worth a PE of circa 30 ?

As well not quite sure, how you computed SUMs P/E (circa 30). If we look at the earnings for 1HY14 - they are something like 7.2 cps. Assuming an improved second HY will we get to something like 20 cps (potentially more if I assume for the whole year a similar rise like that for the first half year).

290 cts (current SP) / 20 cps earnings makes a PE of 14.5. If I assume however (really conservative) that the 2014 full year earnings ends up like last year (16 cps), than I still get a PE of 18 - much better than the 30 you claimed.

So where is this PE of 30 coming from?

[winner69]

methinks share price will be back to yesterdays close by the end of today

[JayRiggs]

You are right Roger

Employee expenses up $2.0m (from $7.7m) - that's 26% increase

And revenues were only up 19%

And they borrowed heaps more - ok for expansion - but paying a divie as well - hoping everybody will take the DRIP

The dividend is tiny, so I will be taking up the DRIP. If I take the cash, it'll just feel too underwhelming.
I was hoping for a bigger dividend, like 2c.
Does anyone know the percentage of shares that are on the DRIP?

[BlackPeter]

Key point here is that they're always starting new villages, they did last year and they will be next year and so on. They make next to nothing from actually operating the villages as they're too timid to invest in the lucrative dementia units.
They're essentially a property development company who run retirement villages at very, very close to cost price, sell licences and make money again on re-sale. They'll always be starting up new villages and opening new care centres so these costs they've highlighted inferring they are one-off's are anything but one-off. That's my main point.


Yes, they will always build new units (as long as they are a growth company) and during that time they are worth a somewhat higher P/E. If the growth slows down, than it is time to ask for a lower P/E. This years growth in (total ) units is roughly 13.5% (edited after using the full year numbers).

Agree with your question of not fighting the trend. If I wanted to buy more shares, than I probably would wait as well for the trend to turn. However selling at this stage a fundamentally sound share just because the price may or may not fall a bit further seems not sensible to me. I guess time will tell - maybe I say in 6 months "why didn't I sell and buy in back cheaper", but maybe not?

[BlackPeter]

Is it a coincidence that the board has the highest percentage of woman on it of any on the NZX, the CEO's mentor was a woman and there's too much laser focus on resident wellbeing and not enough commercial mongrel by a country mile ?

Not sure about you, but I (as customer) prefer to work with companies who look after my well-being. Funny thing is - most customers do, and therefore companies with a higher Customer Satisfaction Rating make in the long run larger profits.

Quite happy with my board being focussed on resident well-being. :t_up:

[winner69]

As well not quite sure, how you computed SUMs P/E (circa 30). If we look at the earnings for 1HY14 - they are something like 7.2 cps. Assuming an improved second HY will we get to something like 20 cps (potentially more if I assume for the whole year a similar rise like that for the first half year).

290 cts (current SP) / 20 cps earnings makes a PE of 14.5. If I assume however (really conservative) that the 2014 full year earnings ends up like last year (16 cps), than I still get a PE of 18 - much better than the 30 you claimed.

So where is this PE of 30 coming from?

Blackpeter, for interest sakes only RYM average PE on total earnings ( reported earnings) since 2002 has been 16 (range 11 to 25)

Maybe that is what a consistently growing aged care company is worth (on the average)

[James108]

For me positives are better than expected build rate, if we assume the demand is there (which is the underlying assumption for this sector) then everything else will hopefully come out in the wash.

[Beagle]

As well not quite sure, how you computed SUMs P/E (circa 30). If we look at the earnings for 1HY14 - they are something like 7.2 cps. Assuming an improved second HY will we get to something like 20 cps (potentially more if I assume for the whole year a similar rise like that for the first half year).

290 cts (current SP) / 20 cps earnings makes a PE of 14.5. If I assume however (really conservative) that the 2014 full year earnings ends up like last year (16 cps), than I still get a PE of 18 - much better than the 30 you claimed.

So where is this PE of 30 coming from?

See post #2263 That is last year's PE, 29, based on the only real measure of earnings, underlying earnings, on a SP of $2.95 at that time. People need to make their own 2014 year growth assumptions to work out forward PE.

The old adage of looking after your customers and profits will look after themselves is a good one when you're talking about repeat customers, but that's not the case here is it ? Besides that, there's no shortage of demand at all. Looking after customers and contemporaneously looking to maximise shareholder returns are not mutually exclusive....but if directors continue to take an extremely cautious approach you could be forgiven for wondering if the Directors are too customer focused ? All I'm suggesting is that its evident Ryman take a more commercial approach and it hasn't hurt their operation has it !!

[BlackPeter]

The old adage of looking after your customers and profits will look after themselves is a good one when you're talking about repeat customers, but that's not the case here is it ?

Well ... technically speaking you are right - repeat customers not very likely (well, obviously depending on your religious believes, but lets set that for a moment aside). However - I trust that most seniors don't go blind into a quite expensive adventure, but will do their research. Checking with existing clients, reading comparisons and reports, checking for awards ... and that's where looking after existing customers pays out for SUM. And hey, even if demand might overall outstrip supply - the supplier who looks better after their clients might be able to command a premium.

[macduffy]

No, they're not repeat customers but their friends and family, potentially, are. Poor "customer" experiences will quickly translate into a poor business.

Not suggesting that's the case here but don't underestimate the power of a good name and customer satisfaction.

Now I've got that off my chest, thanks, Roger, for your contributions to this thread!

:)

[Beagle]

Fair comments gents and the power of word of mouth recommendation is something that's never to be underestimated especially in the context of older folks recommending to their friends they come and join in the fun living at their local village.
My concern centres on the company being a little too cautious. This is evidenced in their reluctance to build dementia units and their reluctance to shift from their present operational model to a fixed fee for life like their competitors Ryman and Metlifecare are doing and comments at the AGM about not wanting to grow too fast in case the wheels fall off and this 2014 year being a year of consolidation e.t.c.. Add in that the company is reluctant to give forward build guidance beyond 300 for 2015, (I pressed Julian Cook hard on this after the AGM) and met with a brick wall in terms of any elaboration on further growth ambitions in terms of build rate beyond 2015 and I see in the commentary to today's result they talk in terms of a build rate of 300 units for 2015 and beyond. Surely they have a five year plan to grow the build rate beyond 300 units per annum or do they ?

Anyway....I guess time will tell...I'd better do some real work instead of unpaid blogging this afternoon :)

[winner69]

At least there is another set of smiling people throughout the presentation (different from last years that is)

Suppose you need to do this in case residents pass on

[percy]

I got an answer last week but didn't want to put it on here until after today's result. Basically they don't want to build dementia units on their new sites currently due to over cautiousness in that they don't just want to dump untrained staff into a new dementia unit and just want to get things right in the whole process. I suggested to them that they review this thinking with the villages yet to be constructed for which they hadn't planned a dementia unit and they took it on board saying the whole dementia thing is very much in their thoughts. I highlighted to them the market disadvantage they have with their current thinking and as a shareholder I'm not happy with it,this coupled with the lack of forward guidance shows they are currently lacking a good dose of commercial mongrel compared with Ryman and co. Today's result nothing unexpected and the second half will be better and Q3 sales should show that but I don't expect the share price to increase much over the next while but that goes for the others as well. Disc-Holding and overweight

Thank you for phoning the company,and sharing their,and your thoughts with us.

[Bjauck]

If you buy one of the licences to occupy it does not guarantee you a place in the nursing or dementia units. You may be given preference if you have your name down for the hospital, but as the need for a hospital bed is likely to be an urgent need you will have the risk of needing to find a bed before a vacancy may open in the village where you have your licence to occupy. So my feeling is that whether a village has hospital/dementia care should be quite low down in your priorities when deciding where to move. Whether it has a rest home maybe more important as you will more likely have the ability to wait it out for a vacancy to open up. Obviously if villages have greater capacity they may have more spaces available...but a greater cost blow-out.

[Goldstein]

Fair comments gents and the power of word of mouth recommendation is something that's never to be underestimated especially in the context of older folks recommending to their friends they come and join in the fun living at their local village.
My concern centres on the company being a little too cautious.

Roger, I must admit I invested in SUM over RYM based on the name. RYM seem to have a bad rep up here in Orewa. They are indeed ruthless and there are all sorts of stoires about charging an arm and a leg for sticking plaster etc. These are the stories doing the rounds at the Orewa Bridge club where my mother plays. I can't validate the stories.

I'm feeling better about my stop-loss being triggered at $3.11. I thought about getting back in today, but that sure is an ugly looking chart.

[couta1]

If you buy one of the licences to occupy it does not guarantee you a place in the nursing or dementia units. You may be given preference if you have your name down for the hospital, but as the need for a hospital bed is likely to be an urgent need you will have the risk of needing to find a bed before a vacancy may open in the village where you have your licence to occupy. So my feeling is that whether a village has hospital/dementia care should be quite low down in your priorities when deciding where to move. Whether it has a rest home maybe more important as you will more likely have the ability to wait it out for a vacancy to open up. Obviously if villages have greater capacity they may have more spaces available...but a greater cost blow-out. Partially true but people are now asking if dementia care is available upon entering the village as they want to avoid any future moves down the track and want the total continuum model in operation.It is rare when someone who has a llicense to occupy has to go elsewhere for hospital/dementia care and the odd time it happens they usually return to their chosen village as soon as a bed becomes available. Its also about commercial disadvantage from our point of view as shareholders when it doesnt need to be in Sums case.

[Beagle]

Roger, I must admit I invested in SUM over RYM based on the name. RYM seem to have a bad rep up here in Orewa. They are indeed ruthless and there are all sorts of stoires about charging an arm and a leg for sticking plaster etc. These are the stories doing the rounds at the Orewa Bridge club where my mother plays. I can't validate the stories.

I'm feeling better about my stop-loss being triggered at $3.11. I thought about getting back in today, but that sure is an ugly looking chart.

Yeah my Dad didn't have a good last part to his innings in the dementia unit there as previously mentioned and they've packed too much on to that site in my opinion.
You're not wrong mate about the chart looking ugly :eek2: That's a scary looking thing...

[Beagle]

Partially true but people are now asking if dementia care is available upon entering the village as they want to avoid any future moves down the track and want the total continuum model in operation.It is rare when someone who has a llicense to occupy has to go elsewhere for hospital/dementia care and the odd time it happens they usually return to their chosen village as soon as a bed becomes available. Its also about commercial disadvantage from our point of view as shareholders when it doesnt need to be in Sums case.

This is real worry. I thought they were looking to build all their new facilities with dementia units ? If they're not going to offer the full continuum of care to the average new resident moving in at the average age of 78 then the company is effectively handing itself a serious handicap in terms of how attractive their villages are to new residents aren't they mate ? They're also missing out on this potentially lucrative income stream...there's a reason Ryman actually make money from the day to day operation of their villages...I would have thought SUM would have realised that by now...go figure ?

Mate I'd be very interested to know your full take on this situation given your extensive experience in the field. Feel free to PM me if its too sensitive to post in the main forum.

[troyvdh]

Come on guys ...no question that daily chatter is great ..,.but what about your investment horizons...

[Bjauck]

Partially true but people are now asking if dementia care is available upon entering the village as they want to avoid any future moves down the track and want the total continuum model in operation.It is rare when someone who has a llicense to occupy has to go elsewhere for hospital/dementia care and the odd time it happens they usually return to their chosen village as soon as a bed becomes available. Its also about commercial disadvantage from our point of view as shareholders when it doesnt need to be in Sums case. I cannot quote statistics, if indeed anybody can. It would be interesting to know the rate at which village residents cannot move into care in their own village. I only know of one person who has needed rest home care when in a village - a Summerset village too. She was not able to wait long and was not able to wait for a vacancy in the on-site rest home. The continuum of care aspect had been highlighted in the village info pack when she bought her unit. Maybe a proviso should be clearly added that a place cannot be guaranteed. Maybe some would move back to the original village if they had partner/ good friends who were still there either in a unit or in the rest home/hospital. Otherwise another hassle when you do not want it and perhaps led to believe initially that would not happen.

[winner69]

Roger - what you make o the increased bank loans numbers - up $54m from a year ago to $132m

Debt:Equity ratio gone from 31% last June to 45% ths June

Appreciate need dosh to build things but note that Ryman seem to do it with keeping Debt:Equity around the 30% mark.

Seems Ryman makes money to grow, Summerset borrow to grow.

What you say?

[Joshuatree]

Whoah pretty ugly chart there ,commiserations to holders and hope longterm its just a blip.

[Onion]

Maybe Infratil will be eyeing up Summerset now.


"The company continues to see attractive opportunities in the retirement care sector, having spent $147.9m to buy 19.9 per cent of Metlifecare, but nothing is allocated to the sector in the 2015 forecast."

[Beagle]

Roger - what you make o the increased bank loans numbers - up $54m from a year ago to $132m

Debt:Equity ratio gone from 31% last June to 45% ths June

Appreciate need dosh to build things but note that Ryman seem to do it with keeping Debt:Equity around the 30% mark.

Seems Ryman makes money to grow, Summerset borrow to grow.

What you say?

Hi W69,

Not surprised by that at all and have been modelling the extra interest costs it into my forecasts. I've probably let it slip once or twice before that I'm not sure having a land bank of approx. 7 years building supply is the optimum commercial strategy and on relative capitalisation basis SUM certainly have a bigger land bank than RYM, (although very recently RYM have been fairly aggressive in their land acquisition strategies which won't show up on their balance sheet until the next set of financial statements). SUM do however manage their interest costs well through the use of swaps they've got their interest costs down to about 4% if I remember correctly, (that'll be Julian Cook's expertise in investment banking).

P.S. They spent nearly $100m on five site purchases last year so the extra holding costs have to show up and indeed have, which is another factor dragging on their result yesterday and will continue to have an effect this year and next until their forward land supply normalises. My perspective on this is this strategy would work better if they were targeting a significant increase in their build rate in future years, say 350 in 2016 and 400 in 2017 but to date the company isn't giving any forward guidance of that nature beyond the well documented 300 units for calendar year 2015 and beyond. I guess their somewhat aggressive land acquisition strategy could be viewed as a good thing if one believes they have the capability to scale up their building operations over time....but seeing as they can't even see the benefits of having dementia units in their developments one has to wonder...

[Harvey Specter]

Maybe Infratil will be eyeing up Summerset now.Unlikely I would have thought. Why buy two competing businesses? I would expect them taking out smaller operators or, just though additional investment via MET (just as how IFT counts investment by TPW as additional investment). We all know MET needs to step up its game and the jump in shareprice once IFT invested suggests everyone thinks IFT will do that for them.

[Tevita]

Have management produced a 5 year cash flow forecast to shareholders yet. Even a bold prediction to reassure us that after so many years of patient waiting a decent dividend will eventuate and within what ballpark figures .One geared to a build program that is 80% within their control. Surely that can be done. It is hard for shareholders to keep the wolf from the door living on promises into the never never. Better disclosure may endanger their jobs by being held to bottom line returns . So what That is called accountability not just semantics.

[Zaphod]

Unlikely I would have thought. Why buy two competing businesses? I would expect them taking out smaller operators or, just though additional investment via MET (just as how IFT counts investment by TPW as additional investment). We all know MET needs to step up its game and the jump in shareprice once IFT invested suggests everyone thinks IFT will do that for them.

The volume of old and somewhat badly designed care facility buildings in MET's portfolio is of a concern to me, and I expect that before too long vast sums of capital (which IFT has) will need to be spent refurbishing or perhaps even completely rebuilding them. SUM doesn't have this issue, which is a small piece of silver lining.

Perhaps IFT could look at acquiring SUM and integrate the two to improve efficiencies and gain further economies of scale, but like you, at this stage I can't see them buying the business and I suspect that they will instead keep building the MET business.

[Harvey Specter]

Have management produced a 5 year cash flow forecast to shareholders yet. Has any company ever given a 5 year cashflow forecast?


The volume of old and somewhat badly designed care facility buildings in MET's portfolio is of a concern to me, and I expect that before too long vast sums of capital (which IFT has) will need to be spent refurbishing or perhaps even completely rebuilding them. SUM doesn't have this issue, which is a small piece of silver lining.

Perhaps IFT could look at acquiring SUM and integrate the two to improve efficiencies and gain further economies of scale, but like you, at this stage I can't see them buying the business and I suspect that they will instead keep building the MET business.Refurb/rebuilt and intensification of existing sites or small add on businesses would be what I would expect for MET/IFT. A puchase of SUM would give too much of the future value to current shareholders in my opinion for IFT to consider it. Remember they bought MET on the cheap (compared to what it is now).

[Tevita]

Has any company ever given a 5 year cashflow forecast?

Refurb/rebuilt and intensification of existing sites or small add on businesses would be what I would expect for MET/IFT. A puchase of SUM would give too much of the future value to current shareholders in my opinion for IFT to consider it. Remember they bought MET on the cheap (compared to what it is now).

Okay a future of negligible dividends.

Another question- Is big necessarily beautiful? If size is the only other measure of performance.

[Goldstein]

Just been having a look at ACC's transactions lately

9/4/2014 Bought 650,000 @ $3.46
22/1/2014 Sold 50,000 @ $3.66
3/1/2014 Sold 50,000 @$3.28
18/10/2013 Bought 3,100,000 @ $3.11
9/9/2013 Sold 467,461 @ $3.00
7/5/2013 Bought 7,825,000 @ $2.90

It would seem they haven't done that well out of SUM of late.

[couta1]

Just been having a look at ACC's transactions lately

9/4/2014 Bought 650,000 @ $3.46
22/1/2014 Sold 50,000 @ $3.66
3/1/2014 Sold 50,000 @$3.28
18/10/2013 Bought 3,100,000 @ $3.11
9/9/2013 Sold 467,461 @ $3.00
7/5/2013 Bought 7,825,000 @ $2.90

It would seem they haven't done that well out of SUM of late.
They should go long like many of their longsuffering clients have to.

[percy]

Just been having a look at ACC's transactions lately

9/4/2014 Bought 650,000 @ $3.46
22/1/2014 Sold 50,000 @ $3.66
3/1/2014 Sold 50,000 @$3.28
18/10/2013 Bought 3,100,000 @ $3.11
9/9/2013 Sold 467,461 @ $3.00
7/5/2013 Bought 7,825,000 @ $2.90

It would seem they haven't done that well out of SUM of late.

Looks to me as though they are well positioned.

[gv1]

[QUOTE=NewGuy;497875]Finally had a chance to properly read the HY14 results. Overall, I am really pleased with this. Sure, expenses were up and underlying profit was down, but nearly all other metrics are very positive.
Hi Newguy, I thought the same. I don't know why the hoo ha's. Steady growth, I reckon.

[winner69]

Yes newguy, all metrics looking good and the important npat is up. One key financial one you didn't mentioned is that book value is is up 14%. Pity they don't make the extra dollars like ryman do out of running villages/care centres.

And no doubt profits will continue to grow and no doubt the shareprice will over time.

Just that overvalued at the present time. Like roger maybe 250 a good time to buy, heck that's 30% less than what I sold the last lot for. Buy heaps more than before eh

[percy]

Yes newguy, all metrics looking good and the important npat is up. One key financial one you didn't mentioned is that book value is is up 14%. Pity they don't make the extra dollars like ryman do out of running villages/care centres.

And no doubt profits will continue to grow and no doubt the shareprice will over time.

Just that overvalued at the present time. Like roger maybe 250 a good time to buy, heck that's 30% less than what I sold the last lot for. Buy heaps more than before eh

Macquaries appear to disagree with you,as they rate SUM as an "out perform" with a target price of $4.50.

[Beagle]

Finally had a chance to properly read the HY14 results. Overall, I am really pleased with this. Sure, expenses were up and underlying profit was down, but nearly all other metrics are very positive.

* I particularly like that the land bank is bigger than the current stock, meaning that they can double the size of their portfolio without needing to find any new land.
* Another thing I noticed was that the 'banked' villages will be much bigger overall. in fact, the average size (in terms of number of dwellings) is 50% higher than the current average size.
* 136 new units delivered across six sites, which is well above the target rate of 250 per annum, and 33% higher than the pcp
* Resales of occupation rights up 23% - this is more important than new sales, as the latter depends entirely on the timing of new stock (which is inherently lumpy, hence the poor new sales for the period)
* total assets up 20%
* clear signal of aggressive sales in the current HY due to four new villages having stock to sell
* "Internal development model"
* All construction managed by Summerset staff
* Development margin up from 12.4% to 13.6% (well on track to soon achieve the ultimate target of 17%)

I mean, seriously, these are impressive statistics. Roger, what is your take? I know you've had some recent doubts, but these stats paint a very good forward-looking picture IMHO. Thoughts?

Good post NG and sums up the positive attributes well.

I don't disagree with you but on the other hand I have the following concerns :
Competitor MET has now moved to a fixed weekly opex fee for life for residents matching RYM's approach which is highly attractive to retiree's given their superannuation is inflation adjusted every year
Reluctance on SUM's part to build dementia units because of staff training issues, (shakes head and wonders what the new doctor director Marie Bismark is doing other than looking pretty at the AGM)
Reluctance to give forward guidance
Lower resale margins achieved this period, company explains this with quicker turnover or units this time, (people passing on earlier) but does this really explain this fully or is this the first sign that resale margins might not be as good going forward with a cooling property market in general ? (i.e. we have some of the highest real estate prices in the world on a per capita basis so historical gains may not be repeated going forward)
Oceania, substaintial sized IPO listing over-hanging the market, institutions keeping powder dry for an attractively priced new float sucking the wind out of this sector at present ? Did price earnings ratio's get ahead of themselves in general in this sector ?...I think so.

The correction looks warranted to me. Whether any further correction is warranted or whether it tracks sideways for a while allowing some further PE contraction through time will be interesting.
The average of 7 analysts projections for 2014 according to Reuters was $25m before the announcement, I expect many analysts will be trimming their projections slightly so lets say its $24m for a 8.3% growth rate this year. This would put the stock on a forward PE of 26 which given its long term growth profile doesn't make it bad value.

I'm watching with interest where it goes from here with a possible view to re-entry but would like to see it a bit cheaper :) I'd also like to see some positive technical signals before jumping in again.

[gv1]

Yeah right mate. Cheers!!! Needs bit of positivity.. was ambused .

[Goldstein]

Buyers have dried up. I think all horizons have been pushed out with this stock. There maybe quite a few out there who could be reconsidering their time versus ROI regarding SUM. It'll be interesting to see what the SSHs do over the next wee while.

Moosie, you could have placed Couta somewhere between >5 years and WB. (Sorry Couta - I couldn't resist :) )

[Beagle]

In BREAKING NEWS Couta1 was seen quite clearly very dazed and confused with a 1000 mile stare outside the Café at the Cardrona ski field near Queenstown this afternoon.
Another ski enthusiast Buck Dollar who is head of new marketing initiatives at the N.Z. Tab was seen giving bystanders odds on what had caused Couta1's condition.
In early betting Buck dollar was quoting odds of
1. Fell over on the skifield $4.00
2. No idea what to do about his large SUM shareholding $9.00
3. Both - (Fell over on the skifield and no idea whatsoever what to do about his shareholding) $1.01

A fellow ski enthusiast taking a break named Tired Puppy was seen to be pounding the favourite bet.

Sorry mate, couldn't resist, hope you're having a good time :)

[couta1]

Classic Roger and yes I did head over to Cardrona this morning but we got turned back at the gate due to the field being closed for the day due to strong wind and snow still got to talk to a hotshot real estate agent from Sydney making a killing over there and talking about the severe lack of retirement village beds they have, he wants to get into shares so I suggested he buy some Sum being dual listed and all that:cool: PS-More worried about refining my ski technique currently than Sums falling share price,gotta get your priorities right but of course the free wi fi available on all the fields courtesy of Spark keeps you in touch with the market.

[MPC]

Couta, should be a good day up Cardrona tomorrow if the winds hold off. My home.
I am keeping a close eye on SUM after exiting half my holdings at 3.50. I still like the look of this sector longterm and my original reasons for purchasing SUM over the competitors still stand. Looking for a re entry.

Cheers,
MPC

[goldfish]

The depth on this thing is ugly...when is it going to stop on its downwards trend...Is it just me or are there next to no stocks on the nzx that are trending up at the moment?

[Goldstein]

the depth on this thing is ugly...when is it going to stop on its downwards trend...is it just me or are there next to no stocks on the nzx that are trending up at the moment?

spk, ten, pot

[Food4Thought]

spk, ten, pot- Too true

I have been rather stoked with GXH (I suggest that others look into this uniquely placed, and tradable/investor possible business. Out of a non bias and genuine suggestion). Especially if you are interested in the health care sector. There has been a beautiful 50+ % this year... so, yes, there are options.

The current problem is that the elections coming and people getting cold feet, so the profit taking. Traders will be traders. Haters going to hate. I believe that this stock will follow a BGR style of expansion... dominate and duplicate. I still think that GXH is cheap for the long term. Yet, currently a lot of traders have a wet nappy (want to make short term gains) and are trading for the short term. I can't, as this would not work with my personal objective investing for the long term.

SUM is a solid business, and it is painful to watch it drop, yet I also remember how I got burned during GFC selling a similar stock to SUM. One expensive lesson, but that was due to financial circumstances and I needed cash, not the potential for more cash later. If I held... I would be sitting very pretty right now. Valuable lessons are not cheap and don't happen over night. Just like SUM won't be an over night $5 share, IMO this will happen in the future, it's only a matter of when, not how.

Sit patient to sit pretty. Good luck everyone

[James108]

Also a holder of GXH and SUM, take the good with the bad eh?

[JayRiggs]

If they can improve 2nd half underlying profits by about 20%, then I think share price can get back to $3.60 by March next year.
Just give it time and she'll be right.


“No matter how great the talent or efforts, some things just take time. You can't produce a baby in one month by getting nine women pregnant.”

― Warren Buffett

[nextbigthing]

You can have a lot of fun trying. Just saying.

[Tevita]

You can have a lot of fun trying. Just saying.

Speak for yourself. Are your fingernails chewed down to the quick? Forget that Mormon stuff.

[winner69]

OMG ....all those SUM unrealised gains might turn into realised losses or something similar.

From interest.co.nz -

In Westpac's latest Home Truths newsletter, the bank's chief economist Dominick Stephens said the housing market was expected to stage a brief resurgence this year, "before a more pervasive downturn ensues."

"For some time the Westpac economics team has been forecasting a modest resurgence of house price inflation this year, before the market turns more decisively negative later next year," Stephens said

"Despite our near term bullishness, we anticipate a period of falling house prices later in the decade.

Dominic's report here
http://www.interest.co.nz/sites/default/files/NZ_Home_Truths_14_August_2014.pdf

Never mind - just an economists view and a bank one at that so a lad of rubbish. Just as well Westpac making heaps of money now if they are going to have lots of bad debts later in the decade

[noodles]

OMG ....all those SUM unrealised gains might turn into realised losses or something similar.


winner69, you will be banned from the thread if you continue to imply any correlation between NZ house prices and SUM profits:D

No, there is no elephant in the room. Or is the room just painted grey?

[winner69]

Latest population estimates say 274,000 of the population is 75 plus

That's 2.9% more than a year ago, and 22% more than 10 years

Growth rate of those 75plus is accelerating

Interesting 57% of the oldies are females. Does this sort of stat have any bearing on how they work out what villages should look like?

[Beagle]

Two factors account for the bulk of retirement village financial success:

1. House price inflation, and
2. The development of new villages.

The rest is all pretty insignificant.

I agree with that for SUM but IIRC RYM makes about one third of its recurring profits from the day to day operation of the villages themselves, SUM could too but apparently are too risk averse to build dementia facilities.
Most of the survey's I've read or heard of show we're in the top three countries on a per capita basis in terms of how expensive our real estate is.
With our economy being arguably the only one in the world where the Reserve bank puts up interest rates significantly while many of our biggest exports are tanking its only all the new migrants that are stopping the real estate market from dropping already. What happens if migration drops off...you guys can join the dots. I think with SUM's result we have seen the first of many future disappointments with margins on resale which going forward may be considerably lower than what these sort of companies have become accustomed too.
Just as well SUM are working towards expanding their development margins on new units, they'll need that extra profit to cover the shortfall in resale's and extra staff costs.

[Beagle]

Shortfall in resales? They were up 23%!

I think you're getting way too hung up on the dementia stuff tbh. They say that their business model is centred on a "continuum of care", which I think is what the market mostly wants. Provided the new villages are consistent with this, I don't see a problem. Also, I'm not so sure that dementia is as profitable as you say. In fact, you might want to have a look at this when you get a chance (http://www.grantthornton.co.nz/assets/documents/home/aged-residential-care-service-review.pdf). IIRC, it clearly shows that the care side of the industry is failing to cover costs, while the independent living/retirement village side is booming.

in addition, I'm not sure that you should be holding RYM's profit on village operations in such high esteem. Perhaps that's why they failed to oust SUM as the best operator for the last 5 years running and have had far more bad press about wages and poor operating conditions for staff? perhaps that part of their business model is ultimately unsustainable?

Don't get me wrong. RYM is definitely an incredibly successful company, but I think that SUM has every chance of being just as good in 5 to 10 years's time, and I can't wait for the SP to eventually show it! :)

Margins on unit resale's were down reflecting what the company said was quicker turnover but I suspect that's only part of the story and price appreciation isn't as much as they'd hoped for which is also my concern going forward.
Thanks for the link I'll have a look. Couta1 working in the field is more in the know regarding the attributes of why these developments should have dementia units, I'm sure he'll chime in when he's sick of falling over on the ski field.

[macduffy]

I took Roger's point about "shortfall in resales" to refer to the likelihood that if house prices in general were to fall it would impact on the prices that villages would be able to charge for their units. Both because of a reduced ability to pay those higher prices due to lower sale prices of the customers' homes and the lower level of activity in the market generally. I guess we will have to wait and see if/when this happens.

[couta1]

Margins on unit resale's were down reflecting what the company said was quicker turnover but I suspect that's only part of the story and price appreciation isn't as much as they'd hoped for which is also my concern going forward.
Thanks for the link I'll have a look. Couta1 working in the field is more in the know regarding the attributes of why these developments should have dementia units, I'm sure he'll chime in when he's sick of falling over on the ski field.
I won't go over all the reasons I've put on here for having dementia units but they all add up to one very important factor that being MARKET DISADVANTAGE if your competitors all have dementia units with an ever increasing demand and you don't. PS-Hospital units cost more to run than dementia units do.

[skid]

I won't go over all the reasons I've put on here for having dementia units but they all add up to one very important factor that being MARKET DISADVANTAGE if your competitors all have dementia units with an ever increasing demand and you don't. PS-Hospital units cost more to run than dementia units do.

I agree--dementia units ,even if not that profitable are an integral part of the whole package deal.
When oldies decide on a retirement village ,surely they must take into consideration the fact that they may need this care further down the line-its just part of the feeling of ....ah...whats the word.....oh yea..security.:)

[skid]

Mean while ,heres a retirement village company that is focusing more on real estate values than care facilities and every one is wondering why bits not doing so well ATM....Hmmmm

[couta1]

For what its worth I'm sure the penny will drop with the Sum management team re dementia units in the not too distant future, Boulcott in Lower Hutt will be the test to see if they will change their current plans and add a dementia unit, here's hoping.

[winner69]

Ryman say having a high-quality aged-care service (including hospital care and dementia units) will be a strong driver of future demand for the retirement village units.

They obviously feel they are better positioned/ more competitive if they have the full package, and maybe get a bit of a 'premium' for the units.

[Beagle]

NG My dad died of Dementia in 2012 so when I eventually go looking for the best retirement village if it doesn't have good dementia facilities I'll be ruling it out. Everyone wants to believe they'll be well looked after and secure in their latter years regardless of what may come their way. Does that sum it up for you ?, (pardon the pun).

[percy]

The proof of the pudding will be whether SUM sell the village to retirees without a dementia unit.
Fast sales means it is not an issue.
Slow sales means it is an issue.
Should there be slow sales I think we will see some action from SUM.

[Beagle]

Thanks for your kind words Newguy. They do seem to be selling well so perhaps that is the definitive test.

[Bjauck]

NG My dad died of Dementia in 2012 so when I eventually go looking for the best retirement village if it doesn't have good dementia facilities I'll be ruling it out. Everyone wants to believe they'll be well looked after and secure in their latter years regardless of what may come their way. Does that sum it up for you ?, (pardon the pun).

As a matter of interest Roger, did your Dad previously have a unit in the village, where his dementia unit was located? The only person I know who had a retirement village unit who then later needed rest home care was unable to get a place in her own village's rest home. I would be interested to find out the percent of village residents needing care, who need to find care away from their own village's facilities. Even if they can eventually move back to their original village's facilities when a vacancy opens up, it is still an extreme inconvenience for the resident involved; At this stage at least, I am wondering whether a village's being abe to offer a "complete package" may not mean anything to quite a few licence holders, when the crunch comes and they actually do need care. I am doubtful that villages would keep statistics on this...

[Beagle]

Hi Bjauck,

No he didn't. We shifted him in there from another village. It would be interesting to know if one has a unit already in a Ryman village whether this gives residents preference, anyone know ?

[percy]

On a slightly different note.My wife's mum is in dementia unit, [ small unlisted local ].Yesterday morning they rang and advised she had another fall and had a black eye.
Well when my wife and her brother visited her later in the morning they got a different story from her;"After the rugby we went to the pub and I must have got into a fight."!!!!!

[winner69]

Roger - I reckon you will get your wish

But don't rush in and buy though ...could go even lower .......esp if it follows RYM down

[Beagle]

I'm in no hurry to buy back in mate, (chart looks bloody awful) and until the substantial overhang of the new IPO listing of Oceania is done and dusted I think institutions will be keeping their powder dry in this sector with the incumbent players. That and anecdotal feedback I'm getting is that if it wasn't for the current glut of immigrants looking to buy the Auckland housing market would be in trouble already, (many provinces already are). A friend of mine has his Kumeu property on the market and has good interest from Chinese buyers and not a single Kiwi buyer look at the place.
These companies are nothing but a form of real estate investment and with absolutely massive gains in real estate prices in recent years...and a Reserve Bank that's now determined to be proactive...you join the dots.

[Food4Thought]

New Zealand is a desirable place to live, with limited land. People want to live there. Not (for example) in the middle of the Australian outback. With demand, prices will stay solid. NZ is much more desirable than many other countries. I don't think that the demand will drop off. There are many financially wealthy people who are waiting to come to NZ and retire there. Global population is not shrinking. The reserve bank can only control so much, for now.

Long term, rosie.

[Beagle]

Hi Food4Thought. I agree with that and concur with others recent posts that demand is strong, that development projects are generally tracking well as is gradual expansion in development margin and history tells us that Real Estate prices don't really decrease per se but have been times in history where real estate prices have flat-lined for several years, (decreased in real inflation adjusted terms). We are seeing the first signs in this recent result that despite re-sales numbers being strong profits from same were anything but. The company has tried to explain that but I'm sorry, my corporate B.S. meter gave a solid reading. After discussing national real estate prices at some length recently with the GM of one of the major N.Z. real estate chains I am left pondering whether we are about to enter a protracted period of price stagnation, what with N.Z. residential prices being the third highest per capita in the developed world, rising interest rates and a cooling economy and all. Although new build margins will be strong for SUM my perception is resale margins going forward may be a significant headwind, possibly for quite some time.

[Goldstein]

At the moment the volumes are not huge. It'll be interesting to see if any big holders start to share your opinion Roger. There seems to be a massive correction going on with SUM. We're on the way to where the SP was 18 months ago.

[winner69]

I'm in no hurry to buy back in mate, (chart looks bloody awful) and until the substantial overhang of the new IPO listing of Oceania is done and dusted I think institutions will be keeping their powder dry in this sector with the incumbent players.

Probably a good reason for the sell down of overvalued shares in the sector.

Combined market cap of the 3 incumbents is $5.3 billion

Oceania reported to raise $300m

Assuming all investors keep their sector weighting constant and want to partake in the Oceania IPO that means 6% of current holdings need to be sold. The actual number wil be higher as instos don't hold 100% of these three.

Are instos feeding say 10% of their SUM, RYM and MET holdings into the market?

Heck $6.50 for RYM and $2.50 for SUM just might happen

Maybe a trade sale of Oceania would be better.

Or is this conjecture just a load of ****.

[Goldstein]

Probably a good reason for the sell down of overvalued shares in the sector.

Combined market cap of the 3 incumbents is $5.3m

Oceania reported to raise $300m

Assuming all investors keep their sector weighting constant and want to partake in the Oceania IPO that means 6% of current holdings need to be sold. The actual number wil be higher as instos don't hold 100% of these three.

Are instos feeding say 10% of their SUM, RYM and MET holdings into the market?

Heck $6.50 for RYM and $2.50 for SUM just might happen

Maybe a trade sale of Oceania would be better.

Or is this conjecture just a load of ****.

I suspect you combined market cap of 5.3b

If your idea has merit W69, then it appears that the 6% is not being felt evenly. MET is roughly the same as it was at the beginning of the year, while RYM is down and SUM is being hung out to dry.

WIth the market caps at
RYM 3.8b
MET 0.9b
SUM 0.6b
the effect could be quite magnified if punters decided to hold a greater proportion of RYM and MET.

[Beagle]

I suspect MET at a retail level is by far the most unloved stock in this sector. Questions regarding management's ability were somewhat mitigated by Infratil's purchase but the retail investor never got a look in as the SP gapped up immediately. One suspects the significant and ongoing correction in RYM and SUM is now a momentum issue, exacerbated by institutions keeping their powder dry for the Oceania IPO effectively mitigating the support these stocks would otherwise receive. As more and more holders get sick of seeing their investment value eroded I can't see any of the institutions helping them out and therefore expect the negative momentum to continue until, at earliest, the Oceania IPO is out of the way.
Disc: Currently not holding any stock in this sector and no plans to change this approach anytime soon.

[Vaygor1]

….. These companies are nothing but a form of real estate investment and with absolutely massive gains in real estate prices in recent years...and a Reserve Bank that's now determined to be proactive...you join the dots.

The average length of tenure for a retirement village resident is 6-7 years, so when it comes to resales, the impact of the gain in NZ's housing economy is not reflected into SUM's underlying profit until 6-7 years after the previous sale/resale.

Here is the percentage change in NZ house prices since 1981 I have updated this since posting it on the RYM thread back in May this year.

6145
Source - http://www.rbnz.govt.nz/statistics/key_graphs/house_prices_values/

To gauge the increase in NZ average house prices over any 6-7 year period, take the area above the x-axis within the chosen period and subtracted the area (if any) below.

To say there has been massive gains in real estate prices in recent years flies in the face of this data. In fact, the last 6-7 years has seen the smallest increase in NZ average house prices in any 7-year period since 1981 (or even earlier probably, if the data went back that far).

And I know the Auckland/Christchurch factor can skew this a bit, but in all my life I have yet to hear any kiwi say "I am so upset at buying my house 7 years ago, I could of got it much cheaper today".

[Beagle]

http://www.stats.govt.nz/browse_for_stats/people_and_communities/Households/house-price-measurement-in-nz.aspx

Perhaps living in Auckland gives one a unique perspective.

If you have a look on page 9 you'll see the average house price according to statistics N.Z. basically flat-lined between mid 1997 and late 2001, more than 4 years.
Its hard to find reports on this but talking to older folk there were considerable periods in the 1960's and 1970's where house prices showed very little appreciation.

My contention is simply that house prices have seldom been less affordable and indeed as mentioned above I've heard reports we are the third highest on a per capita basis in the OECD. Further the Reserve bank are nothing if not zealous in their approach so my (admittedly forward looking theory) is that lack of affordability will be the main driver of a period of stagnation going forward. I'm getting reliable feedback the provinces are already being seriously affected by rising interest rates.
Going forward I foresee the gains on resale won't be of the same magnitude these companies have come to enjoy. That and their stretched PE ratio's will be questioned as EPS profit growth slows, exacerbated by the PE itself being less attractive due to higher interest rates. Asset values are stretched because we have enjoyed a prolonged period of exceptionally low interest rates...if people think that won't change when interest rates normalise then I wish them good luck with that.


At the moment the volumes are not huge. It'll be interesting to see if any big holders start to share your opinion Roger. There seems to be a massive correction going on with SUM. We're on the way to where the SP was 18 months ago.

Close to double the normal volume today.

[Vaygor1]

http://www.stats.govt.nz/browse_for_...ent-in-nz.aspx (http://www.stats.govt.nz/browse_for_stats/people_and_communities/Households/house-price-measurement-in-nz.aspx)

Perhaps living in Auckland gives one a unique perspective.

If you have a look on page 9 you'll see the average house price according to statistics N.Z. basically flat-lined between mid 1997 and late 2001, more than 4 years.

My contention is simply that house prices have seldom been less affordable and indeed as mentioned above I've heard reports we are the third highest on a per capita basis in the OECD. Further the Reserve bank are nothing if not zealous in their approach so my (admittedly forward looking theory) is that lack of affordability will be the main driver of a period of stagnation going forward. I'm getting reliable feedback the provinces are already being seriously affected by rising interest rates.

Thanks Roger.
Can you resend the hyperlink? I can't find a page 9 but the following chart from RYM seems to back up your dates where NZ house prices flatlined. But nevertheless mid '97 to late '01 is still well shy of a 7 year period.

6148

Also, I have this graph and blurb regarding NZ household debt and disposable income:

6147
Source: http://www.rbnz.govt.nz/statistics/key_graphs/household_debt/

So both interest rates and the household debt to income ratio are also pretty much currently near their historical lows. Certainly much more affordable now it seems than back in 2008-2009 if you take NZ as a whole.

I think you are right regarding the Auckland perspective. The recent Auckland/Christchurch house-price boom certainly has not been reflected one iota (yet) in the 2 NZ towns I own a house. :(

[winner69]

One thing that has always thought a bit odd is that total fair value adjustments for SUM average about 3% of investment properties value (end of previous year figure) while Rymans average about 9%, Huge difference that affects profits and total asset values.

I also wondered why oSUM went a couple of years where unrealised fair value adjustments were negative. Only now consistently positive but %age wise still much lower than Rymans.

Haven't spent much time in trying to understand but just doesn't seem right, for SUM that is

[Beagle]

Thanks Roger.
Can you resend the hyperlink?

If you click on that link and look at the page, on the right is a section with available files and the 15 page report is in there.

Yes there's a major disconnect forming between Auckland and Christchurch and the rest of the N.Z. property market, perhaps with the exception of Queenstown.

Seems all our new Asian friends like the slightly warmer weather in Auckland.

I was watching an interesting segment on CNBC last night about rampant prices in the greater London area and the commentators were absolutely aghast that average prices across London were now five times the average salary.
The expert interviewed thought that is the U.K. central bank lifted interest rates by 100 basis points the effect on the market would be cataclysmic.

I think the Auckland average property is now 11 times the average salary and of course raising the official interest rate 100 basis points is exactly what the Reserve Bank have done in their "infinite wisdom"

Time will tell but when I see run down old three bedroom townhouses in need of a major $50,000 make-over selling in an average suburb like Pakuranga for $700,000 you know something's very seriously haywire...

[BlackPeter]

Looks like the analysts are warming up to SUM:

ft:com:
As of Aug 15, 2014, the consensus forecast amongst 11 polled investment analysts covering Summerset Group Holdings Ltd advises that the company will outperform the market. This has been the consensus forecast since the sentiment of investment analysts improved on Aug 12, 2014. The previous consensus forecast advised investors to hold their position in Summerset Group Holdings Ltd.
12 month target price 340 ... 450 (median 360) - {edited - previously wrongly stated 240 ... 450}.
Who can pick the bottom?

[percy]

Looks like the analysts are warming up to SUM:

12 month target price 240 ... 450 (median 360).
Who can pick the bottom?

I find myself "well positioned " for either.!!

[winner69]

This can't be right. It implies that RYM's units are appreciating in value three times quicker than SUM. Highly doubt that.

Also, movements in the fair value of property don't really mean anything until the units are sold and hence the gains are realised. I really wouldn't get too bogged down in that. Also, having seen the way that valuers operate in this field, I'd take those fair value movements with a truckload of salt!

Yes I appreciate that this doesn't seem right but it is happening.

A rough measure only but a pretty good indicator

And they use the same outfit to do the valuations

Maybe it will right itself over time

Just an interesting observation I made that seemed to reinforce why I see Ryman performing better than SUM

[BlackPeter]

Looks like the analysts are warming up to SUM:

12 month target price 340 ... 450 (median 360) - {edited - previously wrongly stated 240 ... 450}.
Who can pick the bottom?
Oh well - maybe we passed the bottom already? Buyers waking up - already up 6cts today to 287 ...

[JayRiggs]

Oh well - maybe we passed the bottom already? Buyers waking up - already up 6cts today to 287 ...

It goes ex-dividend on Friday, so I'm hoping for another push down before accumulating.
Up to $2.88 on very light volume, less than 100k shares.

Will someone like ACC be accumulating soon?
Would be encouraging to see directors buying up now.

[cyclist]

It goes ex-dividend on Friday, so I'm hoping for another push down before accumulating.
Up to $2.88 on very light volume, less than 100k shares.


I'd be surprised if the dividend is enough to influence anyone's buy/sell decision. The amount is trivial compared to the selling price movements we are seeing on a daily basis.

[winner69]

I see Summerset advertising for a Sales Manager at Trentham

[Goldstein]

[/B]
Rob Cambell buying. I'm completely overwhelmed by the volume...what a massive vote of confidence...someone remind me, how many did Mrs Barlow sell back in April 1 day before the Q1 sales result ?

747,322 @ $3.45 = $2,578,260.90

[Tevita]

That added 90 cents she received is the straw that breaks the back of patient shareholders not blessed with her insight beyond their ken.

[Bjauck]

747,322 @ $3.45 = $2,578,260.90
I must admit I do not know what the financial/NZX regulations are. However, surely for Norah Barlow, whether recently resigned or not, to sell just before such a price-impacting announcement would be insider trading and be subject to investigation in order for investors in NZX companies to retain confidence in the market?

[Tevita]

For the Board not to be obliged to come out with some explanation. No matter how pathetic (even sudden financial hardship). That is a litmus test to me of where the Board`s greater loyalties lay..

Perhaps it is just that I am ignorant that the Board have done just that.

[Tevita]

For the Board not to be obliged to come out with some explanation. No matter how pathetic (even sudden financial hardship). That is a litmus test to me of where the Board`s greater loyalties lay..

Perhaps it is just that I am ignorant that the Board have done just that.

[Goldstein]

I think Norah Barlow's selling of shares coincided with her stepping down from being CEO.

She is on the board, but has a substantially smaller role in the company. It is perfectly OK for her to sell some of her shares at that point. I really think you guys are manufacturing a conspiracy here.

[MAC]

I respectfully disagree. She sold the majority of her holding immediately before a very disappointing Q1 sales result that was a price sensitive announcement about to be released to the NZX.
The facts speak for themselves and I am not manufacturing anything here. In my view this is prima facie insider trading. Complaints regarding same can be made to either the NZX or the Financial Markets authority.
https://nzx.com/market-regulation/complaints-procedures

The problem though Roger, is that motive is a very difficult thing to prove, one would require evidence, an email "I'm going to sell quick" or something like that.

There are a lot of reasons she may have sold, probably a combination, and they may not even all be financial.

Although directors and CEO's are well paid, generally too well paid in my opinion, they can and often do hold shares for very long durations while a company is growing from a startup position, sometimes for 10 years even without realising a profit from that investment.

I don't begrudge them selling at a time when a company finally becomes prosperous after years of work and watching that investment grow.

[Goldstein]

I respectfully disagree. The fact that she was stepping down as CEO is irrelevant as she could have sold her shares at any point in the many months leading up to this and there was a lengthy staged period where her and Julian Cook effectively joint managed the CEO role. The plain fact is she sold the majority of her holding immediately before a very disappointing Q1 sales result that was a price sensitive announcement due for imminent release to the NZX.
The facts speak for themselves and I am not manufacturing anything here. In my view this is prima facie insider trading. Complaints regarding same can be made to either the NZX or the Financial Markets authority.
https://nzx.com/market-regulation/complaints-procedures In my view, someone needs to take her too task over this as she has an ongoing role as a director and if shareholders simply roll over and accept this sort of prima facie unethical behaviour it doesn't say much for the standards they expect of their directors does it !!

Roger with greatest respect, Norah Barlow decided to step down a lot earlier than the 2014 Q1 sales figures were available. Norah would have had a plan and executed it. It is just bad timing.

If she hadn't have been stepping down then I agree it would be a bad look.

[Joshuatree]

AOG's results just out if you want to compare.

[Bjauck]

Roger with greatest respect, Norah Barlow decided to step down a lot earlier than the 2014 Q1 sales figures were available. Norah would have had a plan and executed it. It is just bad timing.

If she hadn't have been stepping down then I agree it would be a bad look.

There should be no bad tining... there should be an embargo on insider trades for a period prior to and a shorter period post the release of potentially price-sensitive information. Maybe Nora's "plan" should have been thwarted.

[Vaygor1]

I think what Norah Barlow did is just plain wrong.

She was in a position inside the company where she was privy to, and knew price sensitive information, and she acted upon that information just prior to announcement whether she intended to or not.

If what she did isn't against the law, then it should be against SUM's own constitution if they have a decent one in place.

Most decent companies I know have a constitution that includes a trading window that is not open to any directors, managers, or staff buying or selling shares for a month prior to any regular market announcement. For quarterly announcements, this still leaves 8 month a year in which these people can trade. Further those directly involved with or in the company must announce to the company their intention to trade providing at least a week's notice before making the trade.

In my view she has abused her position, and in doing so has ripped off those who bought her shares up to the tune of $0.90 x 747,322 = NZ$672,000. The actual number would be less than this if you look at what she could have sold her shares for immediately after the Q1 results were released. In any event it is the principle that counts. If I had bought her lot, I would be less than happy.

[Vaygor1]

This is actually the relevant test. How much less would she have got if she sold immediately after the announcement? And, how the heck do you get 90 cents? She sold for 3.46. How did you get to $2.56 as a counterfactual??

I got the 90 cents from this post earlier today:
http://www.sharetrader.co.nz/showthread.php?5009-Summerset-Group-IPO&p=499196&viewfull=1#post499196

[Vaygor1]

This is actually the relevant test. How much less would she have got if she sold immediately after the announcement? And, how the heck do you get 90 cents? She sold for 3.46. How did you get to $2.56 as a counterfactual??

The actual test is whether or not at the time of selling she had access to price sensitive information that the buyers of her shares did not.

[Vaygor1]

With respect this is a simplistic argument. ...

The test is whether she had access to inside information and acted on it.

I agree.

And there is normally a time frame after announcement before selling too (it varies, but is not a long time).
Otherwise the Director in question is sitting there, finger poised over the SELL button, 0.1 seconds after the results are released.

[Vaygor1]

Of course she had inside information, but we'll NEVER be able to prove that she acted on it unethically or just felt it was the right time to sell. NEVER.

It is easily proven that she acted. We can all see that.
It is also easily proven if she was aware of the info before acting on it and in your words 'Of course she did. That much is obvious.'

Why are you defending her? You should be a lot more upset with her than I am.

[Goldstein]

A few facts:

25 Feb 2104: From the FY 2013: "Mrs Barlow is to retire in April, and current CFO Julian Cook has been ..."
7 Apr 2014: Mrs Barlow disposed of shares @ $3.45 (on market)
9 Apr 2014: Q1 Sales made public
1 April SP: $3.57
30 Apr SP: $3.45

So Norah Barlow disposes of shares which she has acquired through her CEO package in the same month as she steps down as CEO, which is advertised in advance.

IMHO, there is no evidence that she has done anything wrong at all.

[Vaygor1]

...
7 Apr 2014: Mrs Barlow shares disposed of shares @ $3.45 (on market)
9 Apr 2014: Q1 Sales made public


These 2 dates are the only ones of relevance.
This behaviour from a director is not okay whether she made or lost out of it.

[Goldstein]

OK, fair enough there were two tranches and I only mentioned one.

But I'm still of the opinion she was tagging this to her retirement and not the quarterly sales report.

Perhaps I'm just naive, and she really does want to chuck away her good name and directorships with one final massive insider trade.

[Vaygor1]

OK, fair enough there were two tranches and I only mentioned one.

But I'm still of the opinion she was tagging this to her retirement and not the quarterly sales report.

Perhaps I'm just naive, and she really does want to chuck away her good name and directorships with one final massive insider trade.

6156

The screen capture above is from the 2014 SUM announcements from the NZX website. The red 'P' beside the Q1 result announcement denotes "Price Sensitive Information".
For a current director to buy or sell any volume just before this announcement is unethical and unacceptable.
Her retirement issue is utterly irrelevant.

[Tevita]

Okay, I've reviewed the NZX announcements. The fact remains that she sold a substantial part of her shares on 7 April 2014, disclosure notice dated 11 April 2014. On 9 April 2014 SUM announced what I consider to be very disappointing Q1 sales results. I would have thought there are regulations precluding directors from dealing in their own shares immediately prior to a price sensitive NZX announcement...I await the FMA's clarification with considerable interest.

Was ACC the buyer? If so, Why would they, a sophisticated institution, buy just before an announcement unless somebody made reassuring noises to them about the seller and or early indication of the forthcoming announcement?

The day before the Q1 announcement (9TH APRIL) ACC announced an increased holding as below.
For this disclosure,—
(a) Total number held in class: 13,357,315
(b) Total in class: 217,297,181
(c) Total percentage held in class: 6.1470%
For last disclosure,—
(a) Total number held in class: 10,975,598
(b) Total in class: 216,543,091
(c) Total percentage held in class: 5.069%
Details of transactions and events giving rise to relevant event
Details of the transactions or other events requiring disclosure under the instructions to this form:
Purchases of 650,000 shares for net consideration of NZD $2,249,227.50 on 7th April 2014

[Vaygor1]

Was ACC the buyer? If so, Why would they, a sophisticated institution, buy just before an announcement unless somebody made reassuring noises to them about the seller and or early indication of the forthcoming announcement?
….

Sophisticated institution? Good grief. You have got to be kidding me.

This the same institution that has recently bought Rakon.
The same institution that bought HUGELY in Allied Farmers just before the Hannover deal sent the SP down over 99% for 4 years.
The same institution that sold said ALF shares at their all-time-low just before a 700% increase.
The same institution whose business is supposed to be accident compensation but have lost their way into becoming an investment company.
The same institution that has also lost its way by becoming a claims rejection company instead of an accident compensation company (in order to prevent the ridiculous law suits such as those that continue to occur in the U.S.).

[Tevita]

Sophisticated institution? Good grief. You have got to be kidding me.

This the same institution that has recently bought Rakon.
The same institution that bought HUGELY in Allied Farmers just before the Hannover deal sent the SP down over 99% for 4 years.
The same institution that sold said ALF shares at their all-time-low just before a 700% increase.
The same institution whose business is supposed to be accident compensation but have lost their way into becoming an investment company.
The same institution that has also lost its way by becoming a claims rejection company instead of an accident compensation company (in order to prevent the ridiculous law suits such as those that continue to occur in the U.S.).

Okay, one can presume too much. An enlightenment phase- It`s not just the small fry who make all the mistakes.

[Goldstein]

Sophisticated institution? Good grief. You have got to be kidding me.

This the same institution that has recently bought Rakon.
The same institution that bought HUGELY in Allied Farmers just before the Hannover deal sent the SP down over 99% for 4 years.
The same institution that sold said ALF shares at their all-time-low just before a 700% increase.
The same institution whose business is supposed to be accident compensation but have lost their way into becoming an investment company.
The same institution that has also lost its way by becoming a claims rejection company instead of an accident compensation company (in order to prevent the ridiculous law suits such as those that continue to occur in the U.S.).

Beat me to it.. I actually laughed out loud when I read your post Tevita.

[Vaygor1]

I think we all agree that the timing of sale was unfortunate (to say the least) and is highly likely to represent unethical/illegal behaviour. However, my point was that we'll never be able to prove that beyond any reasonable doubt, which I presume is the relevant burden of proof? More importantly, I place this type of behaviour in a totally different category to that of Chris Swann (the chair of PEB) who misled the market with unsubstantiated, hyperbolic claims about the company's li8key future performance, then sold down on the basis of the resulting price spike. To my mind, that is far worse. Norah, on the other hand, has played a huge role in building SUM up to be a very profitable company, and did not abuse her position to manipulate the price and cause investors to collectively lose more than $100m in the value of their shares.

"I only chopped his fingers off your honour. The others, well, they wanted to kill him… so you should let me off."

I do very much agree with your post NG but a lesser wrong as we all know is still a wrong. As for unfortunate timing, Norah could have waited 3 or 4 days to sell… she knew the release date months in advance. The timing wasn't unfortunate, it was deliberate.

[stoploss]

I think its almost a certainty that ACC bought part of her stake. Thanks for your post.
I'd like to be clear about my intentions. I'd like to buy back into the company at some point in the future when I feel sure the current correction is done and dusted.
I'd like to have confidence that all directors take their legal, moral and ethical obligations extremely seriously.
It is not my intention in any way whatsoever to deliberately besmirch a directors reputation rather to bring it too shareholders attention so as to encourage others to put pressure on the company to institute proper ethical boundaries through the companies constitution as to directors dealings in and around price sensitive announcement releases. (If this isn't done we would have the completely farcical situation where for example one of the other directors could be buying up large on market a day or two before a potentially very strong Q3 sales announcement)

Whether there has been a legal breech of NZX regulations is a separate regulatory matter of equal importance to me. Whether this transaction constitutes insider trading is a further separate, potentially criminal matter.
FMA have acknowledged my e.mail enquiry, (which is not a formal complaint), (at this stage), and I will advise as soon as they've formally responded.
I'd prefer not to comment further until I've been appraised of the NZX regulations.

Roger have you emailed the CEO of SUM , to see if they like any good company have a policy around employee share sales / purchases and blackout periods ?

[stoploss]

AWF policy for example ....
All non-executive Directors are encouraged to hold AWF shares. Directors are subject to limitations on their ability to buy and sell AWF shares by the Company’s Insider Trading Policy and the Securities Market Act 1988. These limitations include the requirement that Directors cannot buy and sell AWF shares during the black-out periods from 30 September to the announcement of the half-year results and from 31 March to the announcement of the full year results. All trading is subject to prior approval of the Chairperson or in the Chairperson’s case by the Chairperson of the Audit and Risk Management Committee. All changes in the shareholdings of Directors are reported to the Board and the NZX. Directors shall note and acknowledge their understanding of the AWF Group Policy on Share Transactions.
The Board will seeks to ensure that new Directors are appropriately introduced to management and the business; are acquainted with relevant industry knowledge; and receive all appropriate papers, policies and documents to enable them to effectively perform their role and add value to the Company.

[Goldstein]

"I only chopped his fingers off your honour. The others, well, they wanted to kill him… so you should let me off."

I do very much agree with your post NG but a lesser wrong as we all know is still a wrong. As for unfortunate timing, Norah could have waited 3 or 4 days to sell… she knew the release date months in advance. The timing wasn't unfortunate, it was deliberate.

I suspect the SP would have gone into a real dive if Mrs Barlow sold two days after the Q1 report was released.

[Goldstein]

I think its almost a certainty that ACC bought part of her stake. Thanks for your post.
I'd like to be clear about my intentions. I'd like to buy back into the company at some point in the future when I feel sure the current correction is done and dusted.
I'd like to have confidence that all directors take their legal, moral and ethical obligations extremely seriously.
It is not my intention in any way whatsoever to deliberately besmirch a directors reputation rather to bring it too shareholders attention so as to encourage others to put pressure on the company to institute proper ethical boundaries through the companies constitution as to directors dealings in and around price sensitive announcement releases. (If this isn't done we would have the completely farcical situation where for example one of the other directors could be buying up large on market a day or two before a potentially very strong Q3 sales announcement)

Whether there has been a legal breech of NZX regulations is a separate regulatory matter of equal importance to me. Whether this transaction constitutes insider trading is a further separate, potentially criminal matter.
FMA have acknowledged my e.mail enquiry, (which is not a formal complaint), (at this stage), and I will advise as soon as they've formally responded.
I'd prefer not to comment further until I've been appraised of the NZX regulations.

Fair enough Roger. It is probably worth a please explain - and good on you for following up. I just don't like seeing NZ business people who are delivering getting nailed to a tree for something which they may have been innocent of.

[Vaygor1]

I suspect the SP would have gone into a real dive if Mrs Barlow sold two days after the Q1 report was released.

On what basis?

[winner69]

Bad timing but a fair chunk of those shares Norah sold were part of her pay or LTI plan which had vested. Just a belated payday but not a good look

I was surprised at the time it took the full three days allowabvle to disclose .... many seem to do it well within the time limit

She probably buy them back at 250 or less soon ... that be canny eh

[Vaygor1]

Fair enough Roger. It is probably worth a please explain - and good on you for following up. I just don't like seeing NZ business people who are delivering getting nailed to a tree for something which they may have been innocent of.

May have been innocent?

As a director she had all the information and dates well in advance, she knew exactly what she was doing, and she carried it out.

As a director she holds an obligation to arrange her affairs such that she is not forced to sell her lot 2 days before a fixed-schedule price sensitive announcement.

It was deliberate, planned, and her behaviour is reprehensible to say the least.

[Goldstein]

On what basis?

Because Vaygor1 it would likely have meant that she was waiting for the market to be appraised of the 'bad' Q1 figures.

As I've said, I don't believe the two are related. I suspect that Mrs Barlow acted in good faith, trying to sell at the first available opportunity in April.

Now whether SUM has any rules around this I don't know. I've looked, but I think it would have to be a question to Leanne Walker.

Let's see how Roger gets on and see if any NZX rules were broken. My brain really can't make the leap that somebody of Mrs Barlow's calibre would intentionally do something like this.

Disc: Don't currently hold any shares or have any relationship with Norah Barlow.

[Vaygor1]

I suspect the SP would have gone into a real dive if Mrs Barlow sold two days after the Q1 report was released.
On what basis?


Because Vaygor1 it would likely have meant that she was waiting for the market to be appraised of the 'bad' Q1 figures.

And that is exactly what she should have done. Her sell price would then reflect a (more) level playing field, whether she did better or worse out of waiting post-announcement to sell. The end result being no difference to the post-announcement market price, just a potentially big difference in the amount in her bank account at other peoples expense (or benefit). If she had waited 3 days, how would the market have known she was waiting? Answer.. they wouldn't, but the share price would have been fair (up or down) to reflect the Q1 result.


As I've said, I don't believe the two are related. I suspect that Mrs Barlow acted in good faith, trying to sell at the first available opportunity in April.

Acted in good faith? In the words of John McEnroe 'You cannot be serious'. I would bet my left ball that if the Q1 results were great news, Norah would have happily waited 3 days… probably 3 weeks to make sure the market had digested the news.


Now whether SUM has any rules around this I don't know. I've looked, but I think it would have to be a question to Leanne Walker.

Agreed, but more than 1 question required and to more than just Leanne.


Let's see how Roger gets on and see if any NZX rules were broken. My brain really can't make the leap that somebody of Mrs Barlow's calibre would intentionally do something like this.

Make the leap. It's clear. Have you considered SUM's latest figures are possibly a result of her ensuring the 'good news' in SUM became 'fantastic news' in the previous period while she was CEO. It has happened plenty of times before with many companies. The board and auditors can only get into so much detail given cost and time constraints.


Disc: Don't currently hold any shares or have any relationship with Norah Barlow.

Disc: Same as yours. No relationship with Norah. Not a shareholder… but wanting to be.

[Tevita]

Thank you. An informative post for people who don`t rely entirely on the tooth fairy.

[Goldstein]

It is common practice for outgoing CEOs to liquidate their stock. It simply looks to me as if Norah Barlow did this at the first available opportunity.

Looking back at SSH notices, it looks like this is the first time she has sold any of her shares.

Whether she has tripped up here I don't know, but market manipulation?

Anyway, I'll leave it there. I feel the judge and jury have decided.

[Goldstein]

Lets be clear. Nobody is suggesting she manipulated the market.

Vaygor1 has made the assertion: "Have you considered SUM's latest figures are possibly a result of her ensuring the 'good news' in SUM became 'fantastic news' in the previous period while she was CEO. It has happened plenty of times before with many companies."

So we are well and truly down that track Roger.

[winner69]

Roger you seen this

http://www.summerset.co.nz/assets/Investor-Centre/Charters-Policies/SUM-Securities-Trading-Policy-and-Guidelines-LR-2.sml.pdf


Black out periods are only prior to half and full year announcements.

Anyway think she needed to notify a few people as a restricted person

[Goldstein]

Lets be clear then. You agree that she gained a meaningful pecuniary advantage by taking advantage of insider information and selling 2 days before the announcement but then go on to appear to validate this course of action on the basis that she sold ASAP given that some of the stock was subject to a recent release from a long term incentive plan ? I'm sorry I don't follow your logic.
By extension of your logic it would be quite okay for say Julian Cook to be buying millions of dollars of shares immediatly before a really positive future quarterly sales result.
Surely you can see this is illegal insider trading ????? If it weren't so directors of all listed companies would effectively have a free printing press running off $100 notes whenever the occasion presented itself.
Perhaps you are suggesting that because she's done a good job, (in your opinion), and she's retiring she gets a free pass...kind of like if you land on the right square on the monopoly board you get a get out of jail free card ?

No you just don't see my point.

It is my belief that Mrs Barlow was selling her shares irrespective of what the Q1 figures were saying. She had planned to retire and planned to sell down when she did so.

I suggest she would have sold those shares at the same time even if the Q1 results were a lot better.

It is the intent here. They were her shares, and from what Winner has posted she hasn't broken any internal SUM rules.

[winner69]

Thanks for that W69, much appreciated. Interesting that black out period are only restricted to 30 days before the release of half and full year results but that absolutely does not give her a free pass to act in any period outside of the blackout ones where she has material inside information.Also noted therein...if in doubt don't act and other words to that effect.
My opinion remains that she sold immediately before the release of price sensitive information that disappointed many in the market, (how could a flat sales result after a company has been enjoying previous sales growth and EPS profit growth of 46% be considered to be anything other than disappointing). This has insider knowledge and insider trading written all over it in my opinion.

No prob roger

Now promise not to quote nearly the whole doc to build your case

[Vaygor1]

No you just don't see my point.

It is my belief that Mrs Barlow was selling her shares irrespective of what the Q1 figures were saying. She had planned to retire and planned to sell down when she did so.

I suggest she would have sold those shares at the same time even if the Q1 results were a lot better.

It is the intent here. They were her shares, and from what Winner has posted she hasn't broken any internal SUM rules.

Hi Goldstein.

I admire your effort in giving her the benefit of the doubt.

Norah had no obligation to sell her shares when she did any more than to give up her salary when she retired as CEO, but as a Director she sure has obligation to walk the talk when it comes to Policy, Constitution, and Governance.

Given SUM's Securities Trading Policy that Winner produced ( http://www.summerset.co.nz/assets/In...s-LR-2.sml.pdf - thanks Winner), Section 2.2 is clear enough:

2.2 INSIDER TRADING LAWS

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

2.2.3 This offence, called “insider trading”, can subject you to criminal liability including
large fines and/or imprisonment, and civil liability, which may include being sued
by another party or Summerset, for any loss suffered as a result of illegal trading.


In her capacity as a SUM director and as a very recent CEO, Norah undoubtably had material information that the rest of us minions didn't have, and she traded using it at a time she was prohibited from doing so. These are facts. It is not a matter of intent.

[Onion]

Section 2.2 is clear enough

Maybe she had the trade locked and loaded before she knew the results. She could then be covered by the...


2.8 FIXED TRADING PLAN DEFENCE
2.8.1 Trading of Summerset’s securities under a fixed trading plan will not breach the law
if the fixed trading plan was entered into at a time where an investor has no inside
information and in entering the fixed trading plan, the investor did not intend to
evade the prohibition on trading on inside information.
2.8.2 A fixed trading plan is a plan that is fixed for a period of time during which the
investor cannot withdraw from the plan or influence trading decisions after the
plan has begun.

[winner69]

Norah would have known sales on a daily basis .....surely a kip on the exec dashboard

[Vaygor1]

Maybe she had the trade locked and loaded before she knew the results. She could then be covered by the...

Thanks Onion.

Many companies I've worked with require an advanced written commitment to trade a certain amount of shares on a certain date(s) in the future, even if the trade was to take place inside the ethical window as determined by internal policy. NZR is one such company.

But you are correct. If she made a binding declaration she was going to sell well before the actual sell date before any indication of sales downturn, upturn, or anything else then well and good, but given what has transpired here so far, I would bet a pound to a pinch of goat sḩít that she did not.

And if I'm wrong then:


Given her position, she would have to give notice to the board to commit a long way in advance (at least 3 months before getting into a defendable grey area).
She was unwise to choose a date 2 days before a scheduled Price Sensitive Announcement, knowing such a decision would create a rod for own (and the board's) back. I am sure even the other board members would have advised/instructed her against it.
It would have been stated beside or in the eventual trade notification by her and/or SUM that this is a result of a binding arrangement committed to months earlier.

[Goldstein]

Maybe she had the trade locked and loaded before she knew the results. She could then be covered by the...

Thanks Onion. I would be surprised if she hadn't done something like this.

I see what Vaygor1 and Roger are saying - and I would seriously reconsider having anything to do with the NZX if they are right. I guess that's why I feel strongly about it.

[BlackPeter]

Can we please move on to something else now?

This has well and truly been done to death. Cheers!

Agree - unless somebody wants to take the issue up with NZX (or why not just ask the SUM shareholder relations)? Any takers?

[JayRiggs]

I'd be surprised if the dividend is enough to influence anyone's buy/sell decision. The amount is trivial compared to the selling price movements we are seeing on a daily basis.

I agree, the dividend is so small, it probably won't make a difference.
Still will be interesting to see what happens tomorrow when it goes ex-div...

[Tevita]

The Financial Markets Authority handles insider trading complaints. I have lodged an initial query already and am still awaiting a response.

Thank you for that. Shareholders deserve nothing less from the FMA as well as an explanation from a one-time cheerleader who once had our confidence.

[winner69]

Seems some have crucified poor old Norah. Guilty and hung her out to dry

The halo has lost some of it's shine

Never mind just remember Norah as she was. Somebody once said 'If we see a person first in a good light, it is difficult subsequently to darken that light'

Norah Barlow Officer of the NZ Order of Merit.

CEO of Summerset for many years growing it into one of NZ's largest retirement village operators
President of the Retirement Village Association for seven years
Wellingtonian of the Year (business)
Appointed to National Advisory Council on the Employment of Women for the Ministry of Women's Affairs
Received numerous awards for governance and excellence in leadership.
Director of Ingenia Communities, Cooks Global Foods and Cigna Life Insurance NZ
Beloved and much admired by many Sharetrader posters who once thought the bees knees of her

[Tevita]

Seems some have crucified poor old Norah. Guilty and hung her out to dry

The halo has lost some of it's shine

Never mind just remember Norah as she was. Somebody once said 'If we see a person first in a good light, it is difficult subsequently to darken that light'

Norah Barlow Officer of the NZ Order of Merit.

CEO of Summerset for many years growing it into one of NZ's largest retirement village operators
President of the Retirement Village Association for seven years
Wellingtonian of the Year (business)
Appointed to National Advisory Council on the Employment of Women for the Ministry of Women's Affairs
Received numerous awards for governance and excellence in leadership.
Director of Ingenia Communities, Cooks Global Foods and Cigna Life Insurance NZ
Beloved and much admired by many Sharetrader posters who once thought the bees knees of her

Not taking away anything from the good lady but shareholder valedictories can vary depending on when they first bought shares in the company.

The end of that eulogy that waxed somewhat lyrical - - - - " Beloved and much admired by many Sharetrader posters who once thought the bees knees of her" may mean that person had and had benefited from a longer association with the company`s successful growth than so many others.

This is a valid and not unfair point . Their desire for answers does not reflect a jaundiced outlook.

[BlackPeter]

The Financial Markets Authority handles insider trading complaints. I have lodged an initial query already and am still awaiting a response.
Hi Roger, thanks for that. I trust you keep us informed about progress?

[Goldstein]

Looks like SUM's SP will finish the week higher than it started - first time in a while that's happened.

I picked some up yesterday at $2.86. I'm hoping to see a drift up from here with maybe a surge when the Q3 data comes out.

Time will tell.

[winner69]

Looks like SUM's SP will finish the week higher than it started - first time in a while that's happened.

I picked some up yesterday at $2.86. I'm hoping to see a drift up from here with maybe a surge when the Q3 data comes out.

Time will tell.

Yes just up if allowing for the dividend

But the best in breed RYM was up 9% for the week

Suppose that the premium for being seen as the best and why likely to outperform (?)

[Beagle]

Yes just up if allowing for the dividend

But the best in breed RYM was up 9% for the weekSuppose that the premium for being seen as the best and why likely to outperform (?)

You sure about that mate ? Looking at the weekly graph on Bing finance which I just brought up, (which could be wrong), started the week at $7.74, finished at $8.00 most of the gain today probably on the back of that award.
Anyway, perhaps more to the point, the relative under-performance of SUM continues unabated...

[winner69]

You sure about that mate ? Looking at the weekly graph on Bing finance which I just brought up, (which could be wrong), started the week at $7.74, finished at $8.00 most of the gain today probably on the back of that award.
Anyway, perhaps more to the point, the relative under-performance of SUM continues unabated...

Yes my bad maths on a Friday - only 3% plus a bit more

[Beagle]

Update...I still haven't heard back from the simple question I e-mailed to the FMA so I have taken the proactive stance of writing to the Directors expressing my concerns. I'd like to acknowledge and thank BlackPeter for supporting and assisting with this. I have asked for a response from the board within 30 days.
Disc. I bought back into a small stake in the company recently. Three reasons:
1. I think the correction is close to an end.
2. I hear favourable things about the speed of progress at their Karaka and Hobsonville sites and expect strong Q3 and Q4 sales results and am hoping for strong sales in 2015.
3. It didn't seem right communicating my concerns with the board unless I was presently a shareholder.

[couta1]

Welcome back into the fold Roger, I do believe anyone buying in at current prices will look back in a couple of years and realize what a bargain they got:cool:

[Beagle]

Welcome back into the fold Roger, I do believe anyone buying in at current prices will look back in a couple of years and realize what a bargain they got:cool:

Thanks mate and I agree. Forgot to add my fourth reason. Gives me an excuse to go to Wellington for next year's AGM and get on the piss with my fellow most likeable shareholders :cool:

[Goldstein]

Good volume today.

I've picked parcels up at @.$2.86, $2.89 and $2.90.

Still only about a third of what I had 6 months ago. But I'm feeling more confident with that volume.

[couta1]

Good volume today.

I've picked parcels up at @.$2.86, $2.89 and $2.90.

Still only about a third of what I had 6 months ago. But I'm feeling more confident with that volume.
Nice timing Goldstein as it nudges $3 again:cool:

[Snow Leopard]

Summerset rising (sounds like a contradiction there :confused:) on the back of the Metlifecare result :p.

Good to see NewGuy committed :eek2:.

Best Wishes
Paper Tiger

[Beagle]

Good to see milford buying back in

The smart money thinks the correction is all but done and dusted and buying in well before the speculative pack with their inevitable ante-up just before Q3 sales are announced :)

[Goldstein]

The smart money thinks the correction is all but done and dusted and buying in well before the speculative pack with their inevitable ante-up just before Q3 sales are announced :)

Just need to see ACC sell a bunch then all the right signals are in place for the SP to take a trip north :)

[Beagle]

Good to see milford buying back in

+ some more.

[Toasty]

Half year report out. I thought there might be some observations? Profit up which is always nice. But I see expenses are also up ..considerably I thought, and net cashflow down. Anyone had a chance to jump to conclusions? Little jump in the share price so someone likes it.

[BlackPeter]

Half year report out. I thought there might be some observations? Profit up which is always nice. But I see expenses are also up ..considerably I thought, and net cashflow down. Anyone had a chance to jump to conclusions? Little jump in the share price so someone likes it.

No new numbers compared to their HY results as announced 12 August (as you'd expect).

One thing however I noticed in the HY report was sort of new to me (but I just might just have missed that before) is that their strategy is now to complete village centres before the first occupants move in. Previously they completed them only with the number of occupants increasing.

They say they noticed that sales of occupation rights only take off when the village centre is completed. Putting in now the money for the village centre first could obviously explain the increased costs many people noted (next to the increased staff cost due to improving their qualifications). However - both sounds like sensible investments to me.

[Beagle]

No new numbers compared to their HY results as announced 12 August (as you'd expect).

One thing however I noticed in the HY report was sort of new to me (but I just might just have missed that before) is that their strategy is now to complete village centres before the first occupants move in. Previously they completed them only with the number of occupants increasing.

They say they noticed that sales of occupation rights only take off when the village centre is completed. Putting in now the money for the village centre first could obviously explain the increased costs many people noted (next to the increased staff cost due to improving their qualifications). However - both sounds like sensible investments to me.

Brief read, looks okay. Company seems confident on 300 units for 2015 and also regarding expansion of development margins. No progress on that other bone of contention yet mate.

[BlackPeter]

No progress on that other bone of contention yet mate.

... not the sort of stuff you typically would put into a HY report ...;)

[Beagle]

... not the sort of stuff you typically would put into a HY report ...;)

LOL YEAH !!!, I was just updating you in that regard.

[Goldstein]

I thought the report was quite good. Nothing startling, but they haven't destroyed anything by bringing the build in-house. Good to see them comment about the new sales being affected by the timing of the new builds.

[Goldstein]

There seems to be a repeating pattern going on each day at the moment. Sellers around 298 - 300 during the day, then a buy at 300 after close of $100k or so.

It seems as though somebody is trying to do a drip-buy at 300.

[Vaygor1]

I thought the report was quite good. Nothing startling, but they haven't destroyed anything by bringing the build in-house.

Far too early to say yet. Might be a fair reason why the expenses are up a bit as a cost to in-house entry, so to speak.

[Beagle]

Clear break above the 30 day moving average now. On the rebound in anticipation of a real cracker Q3 sales result ? (less than a month away).

[Goldstein]

It's gone through the $3 resistance level. I was waiting for that before buying any more.

[Goldstein]

Managed to pick a few more up at $3.02 - not as many as I wanted. Strong finish again today.

[Beagle]

Yes its a curious thing that repeated strong finish to the day...

[couta1]

Yes its a curious thing that repeated strong finish to the day...
Some peoples know something about the Q3 results coming up I reckon:cool:

[PartyPooper]

I'm not sure about upcoming results. To me looking the NZX as a whole it seems everything was pushed up via the currency dropping from 82.20 US cents to 81.78 cents today.

Quote
"Reserve Bank governor Graeme Wheeler said the currency's strength remains "unjustified and unsustainable".

http://www.3news.co.nz/business/kiwi-dollar-plunges-after-reserve-bank-warning-2014091111

[Xerof]

I'm not sure about upcoming results. To me looking the NZX as a whole it seems everything was pushed up via the currency dropping from 82.20 US cents to 81.78 cents today.

Quote
"Reserve Bank governor Graeme Wheeler said the currency's strength remains "unjustified and unsustainable".

http://www.3news.co.nz/business/kiwi-dollar-plunges-after-reserve-bank-warning-2014091111

I think the market is chasing yield, given there is a slight downward reassessment of interest rate moves, inflation outlook, housing price outlook, and whats more, the risk of political change has been virtually eliminated. (Look at bellweather Electricity shares rallying strongly, and Cunliffe is toast)

nothing to do with FX IMO

[Beagle]

I think we a know that the q3 occupation metrics will be way better than q2...

I think that's fair comment.

FX won't have any effect on Kiwi's selling their homes in Kiwi dollars and buying into SUM units in Kiwi dollars. A drop in the kiwi dollar might make it more attractive for overseas purchasers to buy SUM units and live out their days in clean green N.Z. :)

[couta1]

I think we a know that the q3 occupation metrics will be way better than q2...
NG I wasn't referring to us peoples on this forum:eek2:

[winner69]

Some peoples know something about the Q3 results coming up I reckon:cool:

Maybe Norah!

[Goldstein]

Maybe Norah!

Ah nice one W69. If it was I'd personally be glued to this thread to see Roger's reaction. It's been a couple of weeks at least since we raked over that old chestnut.

[percy]

Well I read the printed half year report last night.Read well.A very well run company achieving what they set out to do.
"As we continue towards our goal of being the first choice in retirement living and aged care services in NZ."
Good to be a shareholder.

[Beagle]

Ah nice one W69. If it was I'd personally be glued to this thread to see Roger's reaction. It's been a couple of weeks at least since we raked over that old chestnut.

Eagle-eye'd SUM followers would have noticed I deleted many of my posts regarding this matter but I have had a LOT to say to SUM directors in writing and haven't finished yet.
Certain people on this forum know I've progressed this matter in a very robust manner.

[BlackPeter]

Eagle-eye'd SUM followers would have noticed I deleted many of my posts regarding this matter but I have had a LOT to say to SUM directors in writing and haven't finished yet.
Certain people on this forum know I've progressed this matter in a very robust manner.
I am seconding that ...

[Mista_Trix]

Eagle-eye'd SUM followers would have noticed I deleted many of my posts regarding this matter but I have had a LOT to say to SUM directors in writing and haven't finished yet.
Certain people on this forum know I've progressed this matter in a very robust manner.

I've somehow missed this and now the evidence is no longer there... What are you referring to - at a general level?? :)

[Goldstein]

Eagle-eye'd SUM followers would have noticed I deleted many of my posts regarding this matter but I have had a LOT to say to SUM directors in writing and haven't finished yet.
Certain people on this forum know I've progressed this matter in a very robust manner.

Much better way to do it Roger. Trial by forum isn't the best.

[couta1]

Much better way to do it Roger. Trial by forum isn't the best.
Yep I know whats that's like and its pretty ugly but fortunately with people like yourself around the lynch mob gets kept in check so to speak.

[Beagle]

I've somehow missed this and now the evidence is no longer there... What are you referring to - at a general level?? :)

With Blackpeter's kind assistance and after seeking opinions from several forum members I am communicating directly with the company with a view towards helping them understand shareholders perspectives on that sort of transaction just before the release of a price sensitive scheduled announcement. They're not there yet in terms of seeing things from a shareholders perspective so there's more work to do. Mrs Barlow has done some tremendous work with our older folk over her lengthy career. My goal is to help the company improve its insider trading guidelines to a more robust level so that staff, management and directors can avoid putting themselves in a compromised position again. I hope to have time to put my written views to the Directors in a forthright manner again next week.
Best handled this way.

[skid]

could someone please clear up something for me as I have'nt been been following this thread closely--I seem to remember from previous discussions that one of the major differences between SUM and RYM was that with SUM the emphasis was more on real estate and with RYM it was more on the service aspect.

[percy]

could someone please clear up something for me as I have'nt been been following this thread closely--I seem to remember from previous discussions that one of the major differences between SUM and RYM was that with SUM the emphasis was more on real estate and with RYM it was more on the service aspect.

SUM's business model is based on RYM's very successful model.
Everything done in house,buy the land,design,build,sell units, and then run it.
They have a better record of achieving "Best Retirement Village Operator". Won 2010,2011,2012 and 2013.

[Vaygor1]

SUM's business model is based on RYM's very successful model.
Everything done in house,buy the land,design,build,sell units, and then run it.
They have a better record of achieving "Best Retirement Village Operator". Won 2010,2011,2012 and 2013.

I've said this before and I'll say it again.

This 'Award' that SUM has historically been shouting from the roof tops is as dodgy as a dogs dinner.
In my view it holds no merit whatsoever and as long as SUM keep touting it, my view on them is somewhat less favourable than would otherwise be the case. At least SUM's website has recently, and thankfully, taken this award out of the limelight.

SUM is a good company with great prospects, with a much better looking future now that Norah-shower-me-with-awards-while-I-insider-trade-Barlow is no longer CEO.

Disc: Don't hold but intend to buy if the SP breaks over $3.08 ... (10% over the $2.80 low point).

[Beagle]

SUM is a good company with great prospects, with a much better looking future now that Norah-shower-me-with-awards-while-I-insider-trade-Barlow is no longer CEO.

I absolutely love it when people have the balls to call it as they really see it.

Can I please quote you on that in my letter to the board next week :)

[percy]

I absolutely love it when people have the balls to call it as they really see it.

Can I please quote you on that in my letter to the board next week :)

Yes always refreshing that a poster calls it as it is,however, they must be careful not to open themselves up to be sued.
A thin line?

[Beagle]

Yes always refreshing that a poster calls it as it is,however, they must be careful not to open themselves up to be sued.
A thin line?

Appears he lives overseas so any attempted defamation action would appear to be extremely difficult but I am cognisant of what you are alluding too.

[couta1]

Actually for what its worth Norah is not the sort of person looking to be showered with awards if fact she would be very humbled by the experience. I'm yet to see any substantial evidence to prove that's the company awards are not completely legit. From the ground level perspective they are commonly accepted across the sector.

[mis chief]

I've said this before and I'll say it again.

This 'Award' that SUM has historically been shouting from the roof tops is as dodgy as a dogs dinner.
In my view it holds no merit whatsoever and as long as SUM keep touting it, my view on them is somewhat less favourable than would otherwise be the case. At least SUM's website has recently, and thankfully, taken this award out of the limelight.

SUM is a good company with great prospects, with a much better looking future now that Norah-shower-me-with-awards-while-I-insider-trade-Barlow is no longer CEO.

Disc: Don't hold but intend to buy if the SP breaks over $3.08 ... (10% over the $2.80 low point).

That's a mighty laden statement, Vaygor. I am aware of the award you allude to but it doesn't interest me. Looking to get out of my present surroundings, thinking it might be pleasant to move to Tauranga, two main choices RYM or a bit further out SUM at Katikati. Visit to RYM left me totally unimpressed, cramped, dark, all about how great they are, blah, not convinced they would actually care about ME. Visit to SUM tells me first up they are totally interested in me, before they talk about anything else. BIG DIFFERENCE. I also believe you should talk to Norah Barlow before you besmirch her good name.

[Beagle]

Actually for what its worth Norah is not the sort of person looking to be showered with awards if fact she would be very humbled by the experience. I'm yet to see any substantial evidence to prove that's the company awards are not completely legit. From the ground level perspective they are commonly accepted across the sector.

I agree with other posters and more specifically in my opinion If Vaygor1 wants to have any credibility on this forum he needs to put up the substantiating evidence to support his highly controversial point of view.

[winner69]

According to Summerset's website, "Summerset has been named Best Retirement Village Operator in New Zealand and Australia at the Australasian Over 50s Housing Awards for four years running".

I have nothing against SUM at all and I am currently invested heavily in New Zealand's retirement sector. I am however sceptical about just how independent these awards are.

The awards come from an Australian based publication called Housing Care Aged Weekly. Refer http://www.seniors-housing.net/ They market themselves as a "Reuters level service" and this is their "Australian Edition", although I can't find any other edition in existence. A sample of one of their publications is here http://www.seniors-housing.net/core/achw/ACHW-Sample.pdf

Looking at the awards on the 1st link above, there was a 2010 and 2011 award, both won by Summerset. But only nominations were called for for 2012 (with a closing date of 10 Aug 2012 for the nominations) with no winner yet, and there is no mention at all of 2013 or 2014 at all. Despite the sample in the 2nd link above, I didn't get the feeling this is a very big publication.

Around July last year, Housing Care Aged Weekly wrote an article besmirching RYM's proposed Wheelers Hill Village in Melbourne. They called it a 'Foray' and went so far as to call it a 'financial suicide mission'. The article also went a long way to misinterpret MorningStars comment on RYM's Wheeler's Hill village. Refer http://www.sharetrader.co.nz/showthread.php?626-Ryman-Too-boring-to-talk-about&p=414737&viewfull=1#post414737

Due to this article, I dug a bit deeper and found what I believe to be an undisclosed tie-up between Housing Care Aged Weekly and New Zealand's Summerset Group. I can't remember exactly what I came across but the tie-up seemed pretty clear to me at the time and I was not surprised to find it. I would be astonished to see any Australian based publication in any sector recognising New Zealand in front of itself for even one year let alone four. There are hundreds of aged care companies around Melbourne alone let alone the rest of Australia yet little known Summerset keeps winning? Ask any Australian in any Australian City if they have heard of Summerset. I can tell you what the answer will be, especially with no Summerset presence there yet.

In any event, due to my findings the credibility of this award, in my mind anyway, went out the window.

There was a lot of discussion re this at the time.

Late February
http://www.sharetrader.co.nz/showthread.php?5009-Summerset-Group-IPO&p=463434&highlight=Award#post463434

[Beagle]

Well I'm sorry I don't see what the issue is.
Here's the awards criteria for 2014 - http://seniors-housing.net/core/awards-2014/

Here's the home page of the website.
http://seniors-housing.net/core/