SUM - Summerset Group

[Mickey]

Not selling, but not buying either. I see SUM as a solid long term hold, but it could be pretty flat for a while yet. The interesting thing is they've had some great announcements in the last year but it hasn't done any favours to the SP due to the concerns about the property market and construction delays.

I'm curious about what makes you see SUM as a long term hold Jeremy? Even at the current SP, they only represent a 1.8% yield on current dividend and so for me - I'm currently losing income with the amount of capital that I've got tied up in them and would do better if it was sitting in my Heartland call account at 2.75%. Are you expecting them to show a similar growth to Ryman at some stage or are you expecting a much higher dividend later on down the track? I'd appreciate your opinion.

FYI - I'm more oriented towards dividend investing and try to achieve an average of >7% (after tax) p.a. across my share portfolio. Perhaps that is why I'm looking at these differently and maybe why they don't feel as if they fit as comfortably into my strategy as much as other shares do.

[JeremyALD]

I'm curious about what makes you see SUM as a long term hold Jeremy? Even at the current SP, they only represent a 1.8% yield on current dividend and so for me - I'm currently losing income with the amount of capital that I've got tied up in them and would do better if it was sitting in my Heartland call account at 2.75%. Are you expecting them to show a similar growth to Ryman at some stage or are you expecting a much higher dividend later on down the track? I'd appreciate your opinion.

FYI - I'm more oriented towards dividend investing and try to achieve an average of >7% (after tax) p.a. across my share portfolio. Perhaps that is why I'm looking at these differently and maybe why they don't feel as if they fit as comfortably into my strategy as much as other shares do.

Primarily I see it as a long term hold because of strong historical performance, demographic tailwinds and a very good leadership team. I'm not too worried about the Property market given they have performed in each downturn but I could see why this could bring some concerns.

Dividend play it is not, and I wouldn't expect it to be for sometime. However they have continually lifted dividends and if growth opportunities subsided I could see them lifting the dividend (but I think with the aging population and mentions of reviewing the Australian market) they'll be unlikely to significantly increase dividends in the near term in order to presue growth.

Ulimately there may be better times to enter into SUM and if there's a significant property downturn or Labour does something silly then SUM will be hit; however given their relatively low PE and the fact I see growth ahead for many years I'm not too worried. I have plenty of dividend stocks to balance out this one bouncing around for a little while.

If you're looking for strong dividends there's plenty of other stocks to look at on the NZX but I don't think most of them have the long term tailwinds or growth opportunities as SUM.

[fish]

I'm curious about what makes you see SUM as a long term hold Jeremy? Even at the current SP, they only represent a 1.8% yield on current dividend and so for me - I'm currently losing income with the amount of capital that I've got tied up in them and would do better if it was sitting in my Heartland call account at 2.75%. Are you expecting them to show a similar growth to Ryman at some stage or are you expecting a much higher dividend later on down the track? I'd appreciate your opinion.

FYI - I'm more oriented towards dividend investing and try to achieve an average of >7% (after tax) p.a. across my share portfolio. Perhaps that is why I'm looking at these differently and maybe why they don't feel as if they fit as comfortably into my strategy as much as other shares do.

I started buying more yesterday-its my only retirement/property stock and am balancing my portfolio

I just cannot see demand for their products falling and hence I dont believe their property values can go down or their financial models fail.Dont underestimate the aging population demand

Would like to buy more but will wait and see if sentiment drives the sp lower

[Lewylewylewy]

Percy, I'm interested to hear why you think property prices won't drop. They're already dropping in a short term measure, and more policy is coming to hammer it again.

[JeremyALD]

Percy, I'm interested to hear why you think property prices won't drop. They're already dropping in a short term measure, and more policy is coming to hammer it again.

Supply vs Demand. There's clearly not enough houses being built in NZ, and in particular Auckland to keep up with population growth and demand

[percy]

Percy, I'm interested to hear why you think property prices won't drop. They're already dropping in a short term measure, and more policy is coming to hammer it again.

I sometimes do not explain my thoughts clearly.Sorry.
Yes property prices are falling.
So will property prices falling,or a slow down in the property market affect the retirement sector?
I very much doubt it.
Both RYM and SUM are on record of saying the rise and fall of the property market has had no affect on them over the past 20 or more years.Think about that.I think they would know.
They are also on record as saying demand is driven by lifestyle decisions.These lifestyle decisions are made for a number of reasons,;
A partner having a health scare or dying.
Security,
Care.
Companionship.
So worry about the property market is just that, worry.
In the meantime us oldies are getting older.I guess everyone else is too.Property prices going up or down is not going to stop us ageing?

[James108]

I sometimes do not explain my thoughts clearly.Sorry.
Yes property prices are falling.
So will property prices falling,or a slow down in the property market affect the retirement sector?
I very much doubt it.
Both RYM and SUM are on record of saying the rise and fall of the property market has had no affect on them over the past 20 or more years.Think about that.I think they would know.
They are also on record as saying demand is driven by lifestyle decisions.These lifestyle decisions are made for a number of reasons,;
A partner having a health scare or dying.
Security,
Care.
Companionship.
So worry about the property market is just that, worry.
In the meantime us oldies are getting older.I guess everyone else is too.Property prices going up or down is not going to stop us ageing?

I guess the current development margin of 28% should be maintained then? and has nothing to do with a buoyant property market.

Before you say that the above development margin was achieved in a plataue phase of house prices - Bollox. It takes several years to develop a village and house prices have gone up a lot in the past 3 years.

My view is the development margin will trend downward but this may happen with a bit of a lag. Demand may remain but margin will not imo, I have modelled the long term development margin at 18%, 1% more than the SUM stated target of 17% (as I believe they have learnt a fair bit since they set that target). I still think this is an excellent company though and currently trading at a slight discount to fair value.

If it drops much further I will buy more shares, however this is almost at my portfolio limit.

[percy]

I guess the current development margin of 28% should be maintained then? and has nothing to do with a buoyant property market.

Before you say that the above development margin was achieved in a plataue phase of house prices - Bollox. It takes several years to develop a village and house prices have gone up a lot in the past 3 years.

My view is the development margin will trend downward but this may happen with a bit of a lag. Demand may remain but margin will not imo, I have modelled the long term development margin at 18%, 1% more than the SUM stated target of 17% (as I believe they have learnt a fair bit since they set that target). I still think this is an excellent company though and currently trading at a slight discount to fair value.

If it drops much further I will buy more shares, however this is almost at my portfolio limit.

I do not know what SUM or RYM will achieve in development margins,this year,next year or the year after.
I would expect there will be greater demand for some villages and lesser demand for others,and this will alter the development margins a great deal.A bit like some suburbs prices go up more than others.
I just think RYM and SUM's development margins will remain healthy for the foreseeable future..

[LAC]

Anyone here buying at these prices?

I'm reducing my exposure to the SM, but nut selling SUM at these prices.

I have reduced THL and bought SUM. Will also reduce RBD in favour of SUM. Not that I believe that THL and RBD are over priced but more along the lines that for the long term I have to constantly watch THL and RBD news, but I feel long term SUM is less of a bother for me constantly watching the SP and announcements etc.

[percy]

I have reduced THL and bought SUM. Will also reduce RBD in favour of SUM. Not that I believe that THL and RBD are over priced but more along the lines that for the long term I have to constantly watch THL and RBD news, but I feel long term SUM is less of a bother for me constantly watching the SP and announcements etc.

Three excellent companies.
You must find it hard trying to get your balance correct.