better rave about underlying profit because real profits are down and underlying profit is a far better measure of operational performance anywayI know you don't believe that but I do.
Very solid result. Development margin is absolutely stunning. Noted their target build rate rises to 600 units per annum over the next 2-3 years. Also noted this half's expenses include project related matters that may not be repeating.
I have raised my underlying profit estimate for the year to 31 March 2018 to $105 - $110m. This is off the back of their stunning development margin and the heavily weighted delivery of new units to the second half. At the mid point that represents underlying profit of $107.5m and 47.8 cps.
Choose whatever PE you believe in taking into account their track record of CAGR of 45% per annum in underlying profit since listing. I estimate current year growth in underlying earnings at approx. 30%. I remain with a price target of ~ $9 - $9.50 by mid 2019.
I am pleased they are treading very cautiously in Australia.
I reckon SUM people that think SUM is overpriced should have another look at their SUM's...
Last edited by Beagle; 14-08-2018 at 09:33 AM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
33% development margin.....WOW...was just a few years ago and it was only half that. This shows the development team at SUM are really firing on all cylinders.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
33% development margin.....WOW...was just a few years ago and it was only half that. This shows the development team at SUM are really firing on all cylinders.
Sounds like margins are going to revert to the mean ...great term that eh
Over the medium to long term we expect margins at levels more consistent with the last few years’ performance
But we won’t see the impact of that for a while so no worries in the short term
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
Sounds like margins are going to revert to the mean ...great term that eh
Over the medium to long term we expect margins at levels more consistent with the last few years’ performance
But we won’t see the impact of that for a while so no worries in the short term
Conservative... I like it. They have consistently surprised to the upside with development margins. I drilled senior management and directors about development trends at the annual meeting and they were all conservative saying they didn't expect any further gains from 28%. Build target growing to 600 units over the next couple of years, (assuming they don't expand into Australia). SUM stocks just make good common sense to stick in the bottom drawer and let compound growth in underlying earnings do its thing. SUM is shaping up as a classic under promise and over deliver stock. Happy holder and added a few more this morning.
A few years ago at the annual meeting when they raised their development margin from 15 to 17% Julian Cook played down the scope of increasing it beyond 17%.
Its actually the CFO Scott that sets the prices of new units at SUM villages. He's a good solid numbers man and really knows his stuff.
Last edited by Beagle; 14-08-2018 at 12:02 PM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
Originally Posted by Timesurfer
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