SUM - Summerset Group

[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 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?