SUM - Summerset Group

[Ginger_steps_]

Very quiet in here of late - sum looking healthy again then?! Can someone please confirm sum went Xdiv yesterday?

[777]

No it didn't but if go to their website or to the NZX you can find out for yourself when it does.

[Ginger_steps_]

No it didn't but if go to their website or to the NZX you can find out for yourself when it does.

Fair enough - called me on being lazy. And rightly so. Haha.

[ratkin]

Overlayed a chart RYM on top of the SUM chart, and was surprised to see a big dichotemy between the two over the last six months or so. Previously they both tended to move in the same direction, however recently SUM has been easily outperforming RYM.
Can it continue?

[BlackPeter]

Overlayed a chart RYM on top of the SUM chart, and was surprised to see a big dichotemy between the two over the last six months or so. Previously they both tended to move in the same direction, however recently SUM has been easily outperforming RYM.
Can it continue?

Just looking at the numbers:

SUM had in 2014 EPS of 25 cents (i.e. PE = 13.7). They said that they expect 2015 to be better - so lets assume 10 % better - 27 cents, resulting in a (admittedly - just my guess) forward PE of 12.6

RYM had in 2014 EPS of 39 cents (i.e. PE = 20.8). Expected EPS for 2015 (Reuters) is 29 cents - this would result in a forward PE of 28.

Which one would you rather hold?

[skid]

Very odd--thats a 10% drop down to to bid price

[noodles]

Very odd--thats a 10% drop down to to bid price

gone ex-div. All bids deleted

[Beagle]

Just looking at the numbers:

SUM had in 2014 EPS of 25 cents (i.e. PE = 13.7). They said that they expect 2015 to be better - so lets assume 10 % better - 27 cents, resulting in a (admittedly - just my guess) forward PE of 12.6

RYM had in 2014 EPS of 39 cents (i.e. PE = 20.8). Expected EPS for 2015 (Reuters) is 29 cents - this would result in a forward PE of 28.

Which one would you rather hold?

If you must use international financial reporting standards (IFRS numbers) which includes all revaluations on all units to market value every year regardless of whether units were sold or not and is a bit like saying you've made money because your house has gone up in value, (note my comment above about the true measure of earnings, underlying operating earnings), then you need to compare apples with apples on IFRS numbers.
MET http://www.4-traders.com/METLIFECARE-LIMITED-10089401/ Forward PE 8.70
SUM http://www.4-traders.com/SUMMERSET-G...mots=Summerset Forward PE 19.24
RYM http://www.4-traders.com/RYMAN-HEALT...ide&mots=RYman Forward PE 21.62

Best of breed and their extremely long and highly credible track record of growth would see most people selecting RYM over SUM on those numbers.
Value investors would say that MET looks the best value by miles.

[BlackPeter]

If you must use international financial reporting standards (IFRS numbers) which includes all revaluations on all units to market value every year regardless of whether units were sold or not and is a bit like saying you've made money because your house has gone up in value, (note my comment above about the true measure of earnings, underlying operating earnings), then you need to compare apples with apples on IFRS numbers.
MET http://www.4-traders.com/METLIFECARE-LIMITED-10089401/ Forward PE 8.70
SUM http://www.4-traders.com/SUMMERSET-G...mots=Summerset Forward PE 19.24
RYM http://www.4-traders.com/RYMAN-HEALT...ide&mots=RYman Forward PE 21.62

Best of breed and their extremely long and highly credible track record of growth would see most people selecting RYM over SUM on those numbers.
Value investors would say that MET looks the best value by miles.

Hi Roger, looks like we have a different standpoint on this issue (and therefore see different perspectives). I guess this is life - if everybody would stand on the same spot, than this would be a very crowded place, indeed. Maybe we just agree to disagree?

However not sure, whether your example relating IFRS numbers to the increased value of your house is totally appropriate.

If you buy a house for say $1 Million and live in it and it increases by 10%, but you still need a house to live in, than yep, I agree - you didn't really make money.

If however you own a share in a company buying and selling houses and the value of their stock went up by 10% - than you made of course these 10%, as long as there is nothing stopping you to realise your gain.

For me SUM (and any other retirement stock) falls into the second category, given that there is no restriction for me to realise any gains.

Of course - any retirement village operator has a number of different income streams - but at the end of the day it is only the sum which counts (no pun intended) - and any revaluation is clearly a part of that.

BTW - agree that MET is as well very worthwhile looking into - I didn't mention them in my post because just responding to a comparison between SUM and RYM.

Discl: hold SUM and MET. Don't hold RYM.

[Beagle]

Hi Roger, looks like we have a different standpoint on this issue (and therefore see different perspectives). I guess this is life - if everybody would stand on the same spot, than this would be a very crowded place, indeed. Maybe we just agree to disagree?Indeed it would. Happy to agree to disagree but consider the following

However not sure, whether your example relating IFRS numbers to the increased value of your house is totally appropriate.

If you buy a house for say $1 Million and live in it and it increases by 10%, but you still need a house to live in, than yep, I agree - you didn't really make money.Unless you actually sell it and move to a cheaper town which is what a lot of people retiring are doing with their over-priced Auckland homes

If however you own a share in a company buying and selling houses and the value of their stock went up by 10% - than you made of course these 10%, as long as there is nothing stopping you to realise your gain.The company only makes the money when they re-sell the licence to occupy. These companies are generally priced on a multiple of earnings, not asset value. If the unrealised value has only gone up by 3% like SUM's units have but cost of construction has gone up faster than 3%, which it has then you could make the argument their unrealised gain is worthless in terms of being earnings accretive

For me SUM (and any other retirement stock) falls into the second category, given that there is no restriction for me to realise any gains. You're confusing your position with complete flexibility on when to buy and sell shaes with the earnings issue that the company itself only makes money when they re-sell a licence to occupy

Of course - any retirement village operator has a number of different income streamsSUM is unusual in that it only makes money from new developments and re-sales, profit from operations of its villages is ostensibly nothing - but at the end of the day it is only the sum which counts (no pun intended) - and any revaluation is clearly a part of that. Its not mate. Unrealised revaluations are only part of the profit when they're realised.

BTW - agree that MET is as well very worthwhile looking into - I didn't mention them in my post because just responding to a comparison between SUM and RYM.Agreed and fair enough.

Discl: hold SUM and MET. Don't hold RYM.

Leaving aside the issue of whether IFRS profits or underlying earnings are the more appropriate measurement base, (as really I feel I've already made a fulsome effort to explain this to people from an accountants point of view so I'll leave it at that), its imperative for any meaningful comparative analysis between these companies that whichever methodology you use you're comparing apples with apples. From my analysis it doesn't matter which way you slice and dice this thing MET looks like the stand-out value investment in this sector, (Craigs underlying earnings forecast has them on a 2015 PE of 17.5 for a company growing at circa 13%.) If people are silly enough to use IFRS EPS then MET looks insane value at a 2015 PE of 8.7

Disc Now own some MET. I believe they'll lift their build rate over time as opportunities present themselves.