SUM - Summerset Group

[Beagle]

SUM listed on 1 November 2011. The IPO price was $1.40. At the closing price on Friday 17 August 2018 the shares closed at $7.50 5.35 times your money plus dividends in 6.75 years.
RYM closed at $2.71 on 31 October 2011. At the closing price of $13.35 investors have made 4.93 times their money plus dividends in the same timeframe. RYM reported underlying profit of $84m for the year ended 31 March 2012 which is 16.8 cps so as at 1 November 2011 they were trading at $2.71 / 0.168 = 16.13 times forward earnings approximately where SUM presently trades on a forward earnings basis.

If RYM grows underlying profit 17% this year to $238m their underlying EPS will be 238/500m = 47.6 cps. At $13.35 this puts them on a forward PE of 28 times.

If SUM can make $107.5m this year on 224.8m shares issued = 47.8 cps, ostensibly the same eps as RYM. At $7.50 this places them on a forward PE of 15.7.

[winner69]

Comparing Pe /growth on all the stocks on the s&p 500 is a bit broad I suggest. On that same chart in NZ might be ATM , XRO , SNK And RBD THL gMT. So in order words the business s are so diverse that they are incomparable.
However, graphing only Rym, sum ,oca and arv all in the same sector then there is totally a correlation (when considering length of time listed)

I was going to plot eps growth and pe for the sector on the NZX but 4 traders only have SUM profits growing at 19% pa for the next three years ...can’t be right so didn’t waste my time.

[winner69]

Beagles ...you getting like Snoopy in adding to posts after I’ve read them

What I saw first was the SUM:RYM ratio has moved from 52% in 2012 to 56% today ......thats nearly 7 years for little change (and maybe still reverting to the mean ha ha)

[Beagle]

Beagles ...you getting like Snoopy in adding to posts after I’ve read them

What I saw first was the SUM:RYM ratio has moved from 52% in 2012 to 56% today ......thats nearly 7 years for little change (and maybe still reverting to the mean ha ha)

RYM has been able to do this by expanding its PE from 16 when SUM listed to 28 today an expansion of 75%. That is the only way it has been able to keep this silly completely illogical relativity thing going. Surely nobody in their right mind would think that there could be another 75% multiple expansion from 28 to 49 times earnings in another five years time ?
I am absolutely certain their PE multiple relativity is at the extreme end of what is possible, (happy to invest significant funds on that basis) so future SP movements are more than likely to be related to eps gains and if anything the relativity of their multiples should converge at least slightly over time.

Coutts mate, early days for OCA. They have a lot of potential but a LOT to prove to the market over the years ahead before I think the market will ascribe them a multiple in the late teens.

[winner69]

Beagle - dont forget that SUM once had a higher PE than RYM in the early days

Was once in the 30's

Lost those charts I once shared with you of RYM and SUMs PE over the years but heres a fairly recent SUM one


sumpe.JPG

[Beagle]

Beagle - dont forget that SUM once had a higher PE than RYM in the early days

Was once in the 30's

Lost those charts I once shared with you of RYM and SUMs PE over the years but heres a fairly recent SUM one


sumpe.JPG

Yes I know mate. SUM PE about halved since listing and RYM up 75% which is illogical but surely can't happen again can it...so unless RYM's EPS growth starts at least matching SUM's... NO way in the world I would pay $13.35 a share for RYM when I can get nearly 1.8 times the earnings power with nearly 1.8 SUM shares for the same money. I don't care what RYM's reputation is a numbers man will always say just show me the money

Come on Coutts mate, admit it publicly, there's no way in the world you're paying $13.35 for RYM is there !

[Patient Panda]

Yes I know mate. SUM PE about halved since listing and RYM up 75% which is illogical but surely can't happen again can it...so unless RYM's EPS growth starts at least matching SUM's... NO way in the world I would pay $13.35 a share for RYM when I can get nearly 1.8 times the earnings power with nearly 1.8 SUM shares for the same money. I don't care what RYM's reputation is a numbers man will always say just show me the money

Come on Coutts mate, admit it publicly, there's no way in the world you're paying $13.35 for RYM is there !

I’m one of RYM’s biggest fans and nor would I pay 13.35 per share at its current eps and nta. Generally speaking good value buying for RYM is at 3x NTA or below and a good time to sell is 4x NTA.
This for me, has been the best way to value them and get extremely good returns.

Rym has the perfect blend, that secret sauce. In 30 years you could see them all around the world. Improving retirement living wherever they go.

its a bit like Pepsi and Coke. In his early days Warren might have scoffed at the RYM P/e preferring any of the other listed retirement co’s. Just as he sold his Pepsi shares for Coke shares I believe he would have done a similar process with these other listed retirement co’s for RYM as he learned to value a brand and emphasise the economic moat of a business.

Theres a huge amount of value in a brand and being able to deliver on it.

[James108]

I’m one of RYM’s biggest fans and nor would I pay 13.35 per share at its current eps and nta. Generally speaking good value buying for RYM is at 3x NTA or below and a good time to sell is 4x NTA.
This for me, has been the best way to value them and get extremely good returns.

Rym has the perfect blend, that secret sauce. In 30 years you could see them all around the world. Improving retirement living wherever they go.

its a bit like Pepsi and Coke. In his early days Warren might have scoffed at the RYM P/e preferring any of the other listed retirement co’s. Just as he sold his Pepsi shares for Coke shares I believe he would have done a similar process with these other listed retirement co’s for RYM as he learned to value a brand and emphasise the economic moat of a business.

Theres a huge amount of value in a brand and being able to deliver on it.

Question for you, what would sum have to do for you to consider it a better company than rym (like coke is “better” than pepsi). Obviously grow earnings faster is not enough, is it simply a runs on the board thing? Or a scale thing?

At the moment I see no reason why summerset couldn’t be considered best in breed in the near future.

[couta1]

Yes I know mate. SUM PE about halved since listing and RYM up 75% which is illogical but surely can't happen again can it...so unless RYM's EPS growth starts at least matching SUM's... NO way in the world I would pay $13.35 a share for RYM when I can get nearly 1.8 times the earnings power with nearly 1.8 SUM shares for the same money. I don't care what RYM's reputation is a numbers man will always say just show me the money

Come on Coutts mate, admit it publicly, there's no way in the world you're paying $13.35 for RYM is there !

No I wouldn't pay $13.35 for Rym, nor would I pay $7.50 for SUM, on the other hand, I would pay $12.50 or under for RYM but wouldn't buy SUM unless it went $6.50 which works out at 52% ratio. Anyway I'm leaving this thread to the SUM lovers for now, will return in a long while to check out how those ratios are going, promise I won't come back on ground hog day though.

[Beagle]

Its good for friends to simply agree to disagree if they can't agree.

I've done my best to explain my point of view based on facts.