SUM - Summerset Group

[In4a$]

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.

It's not the $2m house thats a problem, it's the $2m of investment properties, mostly leveraged through the bank, which he intends to sell over the next few years at a reasonable capital gain, and not tell the tax man.
These are the properties the 1st home owner is struggling to raise a 20% deposit for,

[artemis]

It's not the $2m house thats a problem, it's the $2m of investment properties, mostly leveraged through the bank, which he intends to sell over the next few years at a reasonable capital gain, and not tell the tax man.
These are the properties the 1st home owner is struggling to raise a 20% deposit for,

No doubt there will be IRD checks and balances to catch these situations. Or many of them anyway. One way IRD identified property developers not paying tax on gains was by asking real estate agencies for lists of sales. Only takes a few hefty penalties before word gets round in an industry in our small country.

[couta1]

Watched Sum close off for the day seems like a few holders getting impatient waiting for a rise or maybe they thought the price would have started rising anticipating the result by now 3 individual lots of around 40k shares up for sale 1c apart,one lucky buyer scooped a lot at $3.28,irrational market staying that way longer than holders can remain rational perhaps?

[Beagle]

Watched Sum close off for the day seems like a few holders getting impatient waiting for a rise or maybe they thought the price would have started rising anticipating the result by now 3 individual lots of around 40k shares up for sale 1c apart,one lucky buyer scooped a lot at $3.28,irrational market staying that way longer than holders can remain rational perhaps?

I'd speculate that was one institution with a 3 way staggered sell order that's probably been progressivly letting stock go at circa $3.30 for some days now. Go figure why any insto would sell at this level just before a profit announcement.
Where's my sea sick pills LOL.

[cyclist]

Cyclist, PE is a metric that is often used for roughly gauging the relative value of cyclical stocks FBU, TEL, MRP etc. Value investors use PE as a quick screening tool to see if cyclical’s are under or over valued relative to the market as a precursor to performing more in-depth analysis and modelling.

Growth stocks like SUM have higher PE’s because investor’s value forward discounted cashflows, and those cashflows are increasing over time. As a rule the higher the earnings growth, the higher the PE will be for a growth stock.

If SUM report 51% earnings growth in a week or so, a PE in the 30’s will be entirely acceptable.

Do have a go at some DCF you may be pleasantly surprised, trust this assists.

Mac. Thanks for your reply. I guess I understand that DCF is the correct way to value a stock like this, but I am also mindful that the price is also significantly affected by market sentiment. As someone who has purchased more recently, I guess I am trying to figure in my head how long it will take for profit growth to give me a greater margin of safety.

Cheers

[troyvdh]

dear Moosie a thousand thankyous...Indeed why do kiwi investors continue to treat the SM as a Casino....I suspect that many folk have/do not realised the difference between being momentarily cash rich and wealth....it truly saddens me that many many folk do not yet get it....Many rejoice in a quick trade and have made money....wow big deal...what are their financial circumstances in 5 years time....Id like to think that wisdom/lessons learnt from the past WILL not be repeated....i.e...boom and busts.....

Like I have posted before...re RYM MET SUM do folk expect honestly .... the SP trajectory to rise for ever ????>? THIS does not happen in the real world...

I suspect that the behaviour/attitude of "investors" in NZ is indeed a harbinger of woeful times ahead..like do investors anticipate the fortunes/SP on a day by day basis only...what about appreciating the benefits that may accrue in 5-10 years time !!!

[Xerof]

Roger, the only logical conclusion can be that 'they' either have close knowledge of the result, or are confident in their (negative) assumptions. Remember Forbarr were down on them a short while ago. Their 'house view' probably hasn't changed, so we can only assume their clients are encouraged to continue to exit. Who-ever it is likes to weigh in near and at the close, to provide a weakened finish most days lately.

Perhaps they are trying to hit Winner69's (and others') stops, which are probably clustered just below 325/320 to provide a cascade for re-entry?

Despite my short term reservations, Mr and Mrs Xerof bought a chunk late today to hold until death us do part.....

[In4a$]

No doubt there will be IRD checks and balances to catch these situations. Or many of them anyway. One way IRD identified property developers not paying tax on gains was by asking real estate agencies for lists of sales. Only takes a few hefty penalties before word gets round in an industry in our small country.

They probably get most of the developers okay, but I hear they are having a look at ways to get more of the average Joe selling his investment property.

[Beagle]

Nice timing on buying Xerof. I am confident over time shareholders will be well rewarded.
Troyydh - There is no reason a company that grows strongly and consistently over time won't see its share price reflecting the growth in underlying earnings. SUM isn't a casino or ATM machine, its a great investment for those looking to build significant wealth in the long term with extremly favourable demographics applicable to the sector as a whole and more specifically to the company best situated to facilitate market demand.

What I think you are getting at is that PE expansion cannot go on forever and if that's the case, yes I agree with that aspect of your argument. We've seen RYM's SP triple in the last 3 years and obviously their underlying earnings have nowhere near tripled.

I think its quite possible with long term interest rates forecast to increase this year (AKA tapering) we may see some pressure regarding PE contraction world-wide.

Its well worth noting that SUM is on a PEG ratio (Price Earnings to Growth) of less than 1 and this suggests not only that the stock is compelling value but it will be more insulated from any PE contraction than others. You've got to invest your money somewhere that's going to grow for you and I beleive this is one of the most compelling opportunities, arguably the most compelling of any on the NZX.

[MPC]

Completely agree with you Roger, especially your first paragraph.
I have been accumulating these since about $2.40 and don't plan on selling for a long time unless something untoward occurs.
This year looking interesting for all investments...

Cheers,
MPC