SUM - Summerset Group

[mrjeems]

[edit] Sorry just realised this is a couple of days late... [/edit]

Not sure if this has already been posted but Summerset have just gotten consent for a New Plymouth village:

on Sunday 16 February 2014 in Gainz, Sectors, Securities - NZ, Summerset 0
Summerset Group Holdings Ltd has been granted resource consent for a $55 million retirement village on Carrington Rd, New Plymouth.
The 4ha village will be Summerset’s first in Taranaki. Chief executive Norah Barlow said it would have about 150 homes in a mix of townhouses, villas, care apartments & care rooms, with a rural outlook towards Mt Taranak

[MAC]

For those interested, this is the Macquarie report I referenced during the weekend;

Macquarie have a price target for SUM of $4.50 (+37%), a price target for RYM of $7.50 (-2%), and a price target for MET of $4.65 (+14%).

“we prefer Summerset Group” …… “it has a stronger growth rate and larger discount to our price target”.

Seems Macquarie see SUM and RYM moving in different directions.

http://www.macquarie.com.au/dafiles/...MTA2Mjk5NTk5S0

[Beagle]

Thanks for that Mac. Interestingly since that report dated 16 December 2013 we have had the extraordinary sales result of 50% growth on the previous compareable period in the final quarter of 2013, an exceptional result that McQuarie couldn't have known about when preparing that report, so it could easily be argued their fair value target could be shifted a little further north...perhaps even more so later next week after the profit announcement

SUM seems impervious to good news at the present time...can't stay like that forever though...

I'm buying more if the profit growth is > 50%

[couta1]

For those interested, this is the Macquarie report I referenced during the weekend;

Macquarie have a price target for SUM of $4.50 (+37%), a price target for RYM of $7.50 (-2%), and a price target for MET of $4.65 (+14%).

“we prefer Summerset Group” …… “it has a stronger growth rate and larger discount to our price target”.

Seems Macquarie see SUM and RYM moving in different directions.

http://www.macquarie.com.au/dafiles/...MTA2Mjk5NTk5S0

Rymans price was overdriven by its inclusion into the international index late last year IMHO but it seems the market has now got the scales out and giving it a good old weigh,shame it hasn't yet happened for Sum yet in the opposite direction

[Bjauck]

Until the last few months, my parents' broker was recommending RYM as their preferred exposure to the sector. Now SUM is their preferred choice. If other brokers are doing the same, as more long term holders make switches in their portfolios, maybe we will see a gradual strengthening of SUM relative to RYM.

I think my post at #1202 may have got lost in the other news concerning SUM. However I am still interested to know what others may think of the article on stuff and how Labour's capital gains tax policy may impact on property and aged care stocks. My understanding on the subject is not clear.

[Harvey Specter]

I think my post at #1202 may have got lost in the other news concerning SUM. However I am still interested to know what others may think of the article on stuff and how Labour's capital gains tax policy may impact on property and aged care stocks. My understanding on the subject is not clear.

A CGT wouldn't impact them directly as they are unlikely to sell. To date we have not seen any indication that the business model of any of the major three is to build and then dispose at some point, they all appear to be long term hold. Even from a diversification perspective, if they are under represented in an area, they are more likely to construct their own than acquire of someone else.

A CGT may have an indirect impact as some suggest that a CGT would result in lower house prices. One only has to look at Sydney or Melbourne to know this is not the case but for arguments sake, lets say they are correct. If the Oldies get less money for their house, they will have less to purchase an occupation license. From memory, RYM targets the cost to be about 75% of the average house price in the area, so if the average house price goes down, so does the occupation license (and the 25-30% they earn from that). They could always counter this by increasing the deferred charge or increasing the weekly charge as we all know, aged care is expensive and if you can pay you will. So it really comes down to affordability. If CGT means oldies have less money, the they have less to spend on their retirement. Having said that, they may just choose to spend it all and not give away such a big inheritance or donation to the SPCA.

Bjauck - This is all off the top of the head thinking - is that what you were thinking?

[Snow Leopard]

Labours CGT policy.

Probably means that gains in the value of the property creates a deferred tax liability that never actually becomes payable because they do not or rarely sell properties.

In this case it would generally not affect cash flow.


Best Wishes
Paper Tiger

Disc: Could well be wrong.

If they are going to exempt the family home then that is an unfair tax on those who choose to rent and invest in other assets: discuss.

[Bjauck]

Thanks HS, PT and M900. I was thinking along the lines of all three of you...
I still do not know why the article seems to think that the retirement sector will be affected more than the average company. CGT would not just be levied on real estate gains. In fact real estate in general would be less affected because of the Labour Party exemption for the family home!

I guess a CGT with an exception for the family home has a very big exemption, with incentive for people to have a very big and expensive family residence! If the family home is included...it would be certain political suicide for Labour.

[artemis]

The whole thing is a non-starter anyways as a booming economy, bungling Labour leadership and Green Party that can't even get their economic policies right on simple matters means National will get a third term in November!

Maybe, but remember nobody ever went broke underestimating the intelligence of the average NZ voter. To me the election still looks too close to call, and we have yet to see the 2014 version of WfF or interest free student loans.

[artemis]

Thanks HS, PT and M900. I was thinking along the lines of all three of you... I still do not know why the article seems to think that the retirement sector will be affected more than the average company. CGT would not just be levied on real estate gains. In fact real estate in general would be less affected because of the Labour Party exemption for the family home! I guess a CGT with an exception for the family home has a very big exemption, with incentive for people to have a very big and expensive family residence! If the family home is included...it would be certain political suicide for Labour.

If implemented it will take a few years to show a half decent revenue stream. By then, small business owners (of which there are many), Kiwisaver account holders, farmers and investors in productive enterprises (incl shares) will perhaps have twigged that they are paying a CGT while their neighbour in the $2 million plus house is not.