SUM - Summerset Group

[Beagle]

Last year I suggested to Julian Cook that SUM needed to move to a fixed fees for life model like virtually all other retirement villages have done. My message fell on deaf ears. The board at the most recent annual meeting appeared very confident they will sell all the units they're building. The sales stat's that Winner has posted a graph for paint a different picture and speak for themselves. The results for Q4 will determine whether I sell some more and go all in on OCA or not.

[minimoke]

The sales figures only tell part of the story.

How many properties were available for sale? If they sold 100% of available stock then thats not a bad picture. If they sold 50% then that would be a worry.

Were those sales achieved through reduced margin? Or has high demand demand seen a growth in margin?

How many prospective buyers are there on a "wait list".

Cook has said there will be gargantuan sales in Q4. I'll give him a 1/4 to see if he is true to his word. If not might be time to swap allegiances.

(Disc. hold more RYM than SUM, and a bit more SUM than OCA. Currently still happy to share my love amongst the sector)

[Lewylewylewy]

Thanks, comforting to know that other folk are thinking along the same lines, helps me validate my own thinking.

You know, there's a theory that a bunch of people guestimating something, are collectively able to get a more correct result when they hear each others guesses than individually without hearing each others guesses.

I tested this with some friends and found it worked for our group. My feeling is that we get a similar effect on this forum.

[Lewylewylewy]

... and yes, I agree with you, Beagle. Older people need certainty and no stress. That's obvious. That's what I'd want.

[Lewylewylewy]

On target to build 450 homes according to the . Assuming they sell 100 new homes in q4 (based on last year), that will leave 100 new buildings empty for the year.

By the end of q2 they had built 165, and sold 145. 20 left over. I wonder if this is a thinking thing with the accounts, or if it's normal to have that much stock floating around? It's not clear from the reports, how many are sitting empty. I guess the underlying profit changes in q4 are the numbers to look at.

[James108]

On target to build 450 homes according to the . Assuming they sell 100 new homes in q4 (based on last year), that will leave 100 new buildings empty for the year.

By the end of q2 they had built 165, and sold 145. 20 left over. I wonder if this is a thinking thing with the accounts, or if it's normal to have that much stock floating around? It's not clear from the reports, how many are sitting empty. I guess the underlying profit changes in q4 are the numbers to look at.

Look into the H1 presentation for the answers you seek.

[Carpenterjoe]

On target to build 450 homes according to the . Assuming they sell 100 new homes in q4 (based on last year), that will leave 100 new buildings empty for the year.

By the end of q2 they had built 165, and sold 145. 20 left over. I wonder if this is a thinking thing with the accounts, or if it's normal to have that much stock floating around? It's not clear from the reports, how many are sitting empty. I guess the underlying profit changes in q4 are the numbers to look at.

Remember their stock is scattered over 23 sites (plans to be 31) all around NZ. And they house 5000 residents, depending on a lot of variables, a case could be made that 100 units with potential to house 100-200 residents is not enough.

[minimoke]

I'll go and re look at the H1 report. But I wouldn't expect new units to be sitting around empty. My expectation would be for them to be sold, with wait lists prior to completion.

Where i would expect empty houses is where one set of residents have vacated and the property is being refurbished for the next occupiers. Again I would hope for wait lists to deal to any sale / purchase agreement lags and maybe 6 a six week "vacant" period while property is being refurbished.

[Ggcc]

As far as I understand it takes approximately 7 years for a village to be up and running to full potential. Sometimes accomodation will be built but not sold, as no one wants to live on a construction sight while the other half of the village gets completed. This is where I believe the surplus properties might be, unless someone can explain it in a better way.

I have lived in a new development and it is not fun and games with debris from other houses ending up on my property and one day I felt I was in the Sahara and could not see my neighbours across the road. If I did not enjoy that, I can say that the elderly would have struggled let alone the workers.

All in all I am still very happy with Summerset’s longterm outlook and am still invested.

[James108]

One possible explanation is that management are not concerned that there are a few more empty units given the very high development margins. They could probably knock 10% off the price and fill the units but choose not to?