Retirement village operators
Seems a good to me to combine the discussion into one thread. I hold MET SUM OCA.
I read this line on the MET thread.
"Thought of that when I.heard
Oceania a real dog eh .....doubt if the hype will even become reality"
(think it was winner) OCA is my largest holding, could you please explain why it's a dog?
A Bullish case for SUM based on superior growth and very realistic PE
Is more than a little spooky. The other day I noted way back in 2011 when SUM first listed the situation prevailed even then.
Thankfully the past no matter how sticky is not always a good guide to the future and I note for many years the two stocks traded on not dissimilar underlying PE's.
That situation is vastly different today.
At the mid point of RYM's forecast 31/3/20 underlying profit of $257.5m RYM trades on a forward earnings of 51.5 cps = forward PE at $16 of 31.
If SUM make $117m underlying for 31/12/19 that's also 51.5 cps, that's right folks exactly the same, and SUM's only a forward PE of just 15.5.
SUM trading at half the PE is not common over the years comparing these two and reflects the fact that SUM's earnings have grown much faster than RYM's over the 8 years since its listed that we can compare these two.
Heck, if SUM lifts its build rate in 2020 and the real estate market is strong so we get a ~ 25% lift in underlying profit for 2020 to 64.4 cps at $8 (even though this is a fresh all time high), SUM could be trading on a forward PE for 2020 of just 12.4 times earnings. WOW, that is stupidly cheap and this sector is going to be on fire and flush with well over $1.5 billion dollars of capital looking for a new home after the probable MET takeover. SUM were nearly $8 way back in August 2018 so in relative terms has done very little in gains for well over a year.
2020 could be SUM's year and with a resurgent real estate market there's no logical reason why we shouldn't see some PE expansion up towards the market median PE of 19.
How good could it get for SUM in 2020 ?. 19 x 64.4 cps underlying earnings = $12.23. We could see 50% added to SUM's price in 2020 in a favourable rerating scenario. One day the market will wake up to what a phenomenal growth story SUM has been since it listed, maybe after a decade of fantastic growth, heck that's late 2021, not that far away and could be $15 by then. I think its time to add SUM more to my position.