SUM - Summerset Group

[Food4Thought]

http://www.stuff.co.nz/business/prop...rement-village

Thanks to Couta1 for e.mailing me the article.

Wow... nice to read. Know the Hutt reasonably well. ... suits a retirement village well... I'd prefer a retirement village nearby than a Westfield or shopping complex. Wonder how that Lower Hutt earthquake damaged mall is going. . . Hope they make easy access for people a little less mobile

[Food4Thought]

Very good news and look at that .... it's schwinging onwards and upwards. Jaaaaa .... lazy +9% the last 4 weeks.... also think it is early days...

[Lewylewylewy]

So glad I decided not to profit take on these. Decided that I would allow myself to keep holding as they are in my "long term hold - growth" category, and also on some advice (I think it was Percy gave a while ago), which was to "let your profits run".

I would not be surprised to see these go even further, but need to take some time to do the maths to see how far I would estimate they will go (short term).

[Beagle]

Stunning result. Build rate ahead of guidance, development margin well ahead of expectations, (note second half development margin was 23.6% provides momentum into FY17 as they continue to refine their development methodologies and business model), increased build rate forecast of 450 which I was not expecting given the dramatic ramp up last year from a target of 300 in 2015 to 400 in 2016.
They have consistently beat their build rate target over many years now. 6 years land bank supply at the new higher build rate. Dementia units going into all new developments going forward.
Embedded value of existing units up very dramatically on last year, refreshed board, strong balance sheet with external debt lower than I anticipated, very strong cash flow...seriously....what is not to love about this result !
48% compound average growth rate in the five years since listing...in anyone's language this is a highly successful growth company.
Tailwinds remain very strong for this sector for at least the next twenty years.
Underlying EPS 25.57 cps. Chose what PE you think is appropriate for a company growing at a CAGR of 48% per annum.

Nobody seems to want to call it so I will. I think this stock deserves to be on a trailing PE of at least 23....really deserves a forward PE of 23, same as when RYM are cheap. A forward PE for FY17 assuming 30% growth this year 25.57 x 1.3 = 33.24 x 23 = $7.65, that's my hoped for share price as at reporting time late February 2018. There's a strong argument for a higher PE than RYM because of the companies vastly superior CAGR over the last five years and demonstrated ability to systematically improve their development model. I see potential for further development margin gains whereas RYM's systems have been very long established. If we see three or four more years of super normal growth 30-40% as this company starts to mature nicely we could easily see the share price double in the next three years, potentially even more. In my opinion SUM is worth AT LEAST $5.88 now, my target for the end of the year $7.00. Disc: Been busy buying more since the annual result.
This post should be a good conversation starter for Saturday's Auckland sharetrader meeting. SUM has much better medium term prospects than RYM, what do you think Vaygor1 ?

[Food4Thought]

Nobody seems to want to call it so I will. I think this stock deserves to be on a trailing PE of at least 23....really deserves a forward PE of 23, same as when RYM are cheap. A forward PE for FY17 assuming 30% growth this year 25.57 x 1.3 = 33.24 x 23 = $7.65, that's my hoped for share price as at reporting time late February 2018. There's a strong argument for a higher PE than RYM because of the companies vastly superior CAGR over the last five years and demonstrated ability to systematically improve their development model. I see potential for further development margin gains whereas RYM's systems have been very long established. If we see three or four more years of super normal growth 30-40% as this company starts to mature nicely we could easily see the share price double in the next three years, potentially even more. In my opinion SUM is worth AT LEAST $5.88 now, my target for the end of the year $7.00. Disc: Been busy buying more since the annual result.
This post should be a good conversation starter for Saturday's Auckland sharetrader meeting. SUM has much better medium term prospects than RYM, what do you think Vaygor1 ?

I like the 7 at the front. I also wonder about share splits, and dangling the carrot for additional investors. So far, the special tricks and insentives from SUM have been pretty average. I believe they are keeping a few tricks up their sleeves and playing a safe game. Which I love. Very happy with this outcome and where the share price is going. Was expecting a bit more overall banter from the ST participants.... perhaps waiting before they count their chickens

[macduffy]

I'm enthusiastic about SUM's prospects too, but I note Roger's caveat, beginning "If.....".

I think we've canvassed the pros and cons of share splits in other threads but as far as SUM is concerned I wouldn't see any point in one. Let's wait until they're up with RYM's SP before getting into that!

[h2so4]

I like the 7 at the front. I also wonder about share splits, and dangling the carrot for additional investors. So far, the special tricks and insentives from SUM have been pretty average. I believe they are keeping a few tricks up their sleeves and playing a safe game. Which I love. Very happy with this outcome and where the share price is going. Was expecting a bit more overall banter from the ST participants.... perhaps waiting before they count their chickens

I think 7 is too cheap.
Even on a cash return basis SUM is currently returning over12%.

[Beagle]

I like the 7 at the front. I also wonder about share splits, and dangling the carrot for additional investors. So far, the special tricks and insentives from SUM have been pretty average. I believe they are keeping a few tricks up their sleeves and playing a safe game. Which I love. Very happy with this outcome and where the share price is going. Was expecting a bit more overall banter from the ST participants.... perhaps waiting before they count their chickens

Julian Cook coming from an investment banking background probably has a whole deck of cards to play in terms of financial engineering and such like. Probably wait till 2019 when the SP is ten dollars something and then do a share split

[ratkin]

Julian Cook coming from an investment banking background probably has a whole deck of cards to play in terms of financial engineering and such like. Probably wait till 2019 when the SP is ten dollars something and then do a share split

Roger Rampjet is on board, looking forward to a barrage of pro summerset postings

[Beagle]

Roger Rampjet is on board, looking forward to a barrage of pro summerset postings

Good stuff then, settle back in your finest armchair and enjoy the show.

How's this for starters. What possible share price in five years time using actual results for the last five years of a compound average growth rate of 48% per annum assuming SUM stay at the same current modest PE for such a strong growth company. EPS 25.5 cps x 1.48 x 1.48 x 1.48 x 1.48 x 1.48 = $1.81 EPS in 2022. Impossible you might say, perhaps not, they have after all grown EPS at exactly that average rate compounding for the last 5 years.
Stock currently trades at $5.40 on 25.5 cps underlying = PE of 21 times.

21 times $1.81 = $38 share price in 2022. Potentially SUM could increase in value by as much as seven times in the next five years. Could SUM become the next greatest wealth creator on the NZX and follow in the footsteps of RYM ?

Of course my modelling suggests growth will slow to more normal rates similar to RYM at some stage in the next few years but you never know. Pays to invest in stocks with heaps of potential.

How are you enjoying the show so far ?