SUM - Summerset Group

[Maverick]

Sorry Winner, but I don`t agree with your build rate chart. When I use the final end of year "actual houses delivered" I don't get a decline over 2017 at all . In fact in 2017 they increased delivery to 450 units YOY (have I missed something winner?). That would mean a continual climb on your graph up until end of 2017 (not a decline on the graph suggesting 380 units). We are told it will be flat this year at 450 new builds in 2018. (and just to remind us all , that's 450 more houses this year on top of what we had)
I have attached a spreadsheet that historically covers the last 4 years profit and build rates.
Then I've personally forecast a normalised profit increase of 30% for this year simply based on the reducing trend of increasing profits YOY (as it does when a behemoth grows). Because this year which is almost over so I`m using a forward PE of 16 on forecast EPS of $.48 which makes the share price $7.70 . Based on today's SP of $7.17 that makes a forward PE of 15. That has to be a bargain surely?
I`d love to buying more SUM at this price but unlike you guys that keep "topping up" I`m all out of dry powder (OCA to thank for that-cant have too many). But I`m very happily holding the SUM I`ve got

All figures at year end (which is also FY end )in December
FY end (December)	EPS	% Increase in EPS from previous year	Normalised profit-mil	New houses built	Share price at PE of 16-(Not actual)
2013	0.103	46%	22.2	209	$ 1.66
2014	0.113	9%	24.4	261	$ 1.81
2015	0.175	55%	37.8	303	$ 2.80
2016	0.26	42%	56.6	409	$ 4.16
2017	0.37	42%	81.7	450	$ 5.92
2018	0.48	30%	106	450	$ 7.70
Red cells are my own " conservative" forecast There has got to be an easy 10% gain between now and February for anyone with some cash lying around- just saying.

[winner69]

Maverick me old mate .....pay attention

The chart heading says ‘Rolling 4 quarter SALES numbers’

[Maverick]

Also , while Im at it. I`m not overly fanatical on the build rate being too crucial to increasing profits. Over the years (7.5 on average villa occupancy rate) units are now come up for releasing. So what was signed up 7.5 years ago is now coming up for remodeling and re-leasing (some remodeling paid for by ex -resident). So 2 things are working well for us here....
Firstly - the re-leasing will be 7.5 years more expensive than in 2011, we all know what property prices and rents have done over those years. So there are large increasing profits with re-leasing regardless of the Auckland house prices flattening over the last year or so.
Secondly - the volume of ORA`s being re-leased will be ever increasing as the volume of units built then have annually increased since way back in 2011, and escalating ever since.
They say it takes 7 years for a retirement village to really get going and I`m sure the 7.5 year churn is the main basis for that.
To quote Warren himself- "someone is sitting under an oak tree right now from an acorn planted long ago by someone else.

Just image the amplification effect of these factors with OCA with its care beds turning over every 2.5 years instead of 7.5 for a a villa.( sorry all, I couldn't help myself. CHTMoca)

[Maverick]

Sure.... I read that Winner, but I would have thought the final "rolling" rate would have equalled out to actually be the actual build rate at year end (December). It works for all the other years except 2017 - which is the one painting this declining picture. I'm all ears, me ol` matey.

[winner69]

Maverick ....what’s happened to SUM’s PE over time

[Maverick]

Crickey Winner, i`ll get back to that ( are you're meaning that is has reduced over time?) but I`ve just got to do some real work for now. ....

[winner69]

Sure.... I read that Winner, but I would have thought the final "rolling" rate would have equalled out to actually be the actual build rate at year end (December). It works for all the other years except 2017 - which is the one painting this declining picture. I'm all ears, me ol` matey.

Yes they delivered (built) 450 new units in 2018 but only sold 382 new units (sales in 2017 were 414 which seems to show less new unit sales in 2018 than 2017)

Annual number (Rolling 4 quarters) of new sales as at last September is 333 .....even less than 382 sold in 2017

That to me is a downtrend

What’s happening to all the ‘unsold’ units?

[Beagle]

Also , while Im at it. I`m not overly fanatical on the build rate being too crucial to increasing profits. Over the years (7.5 on average ) units are now come up for releasing. So what was signed up 7.5 years ago is now coming up for remodeling and releasing (some remodeling paid for by ex -resident). So 2 things are working well for us here....
Firstly - the releasing will be 7.5 years more expensive than in 2011, we all know what property prices and rents have done over those years. So there are large increasing profits with releasing regardless of the Auckland house prices flattening over the last year or so.
Secondly - the number of ORA`s will be ever increasing as the volume of units built increased then way back in 2011, and escalating ever since.
They say it takes 7 years for a retirement village to really get going and I`m sure this is the main basis for that.
To quote Warren himself- "someone is sitting under a tree right now from an acorn planted long ago by someone else.

Just image the amplification effect of these factors with OCA with its care beds turning over every 2.5 years instead of 7.5 for a a villa.( sorry all, I couldn't help myself.)

LOL there's the main competition for SUM right there mate and someonme reckons you can't have too many and I think he's right Look at it another way MAV, last year there was 382 sales of new units against 450 built. I expected this additional new stock carried of 68 units to be sold in Q1 and Q2 or at worst Q3. It hasn't happened. Why ? I think they are beginning to face market resistance with their pricing and they are silly to fly against the widespread expectation now of retirees expectations of fixed fees for life...you know like virtually every other retirement company does but SUM think they know better ! A little bit of arrogance on the part of the board and or Julian Cook ?, you be the judge.
I really do not think they will sell all their 450 units they build this year either. If I thought they could I'd still hold. For sales to be as weak as they have been since Q4 last year something in the mix is not quite right and the trail or breadcrumbs leads to over pricing, lack of fixed fees for life or some combination of those factors.

[Snow Leopard]

...

What’s happening to all the ‘unsold’ units?

Huh, huh, pick me sir, I know the answer to that one


It is always fascinating to watch the 'newbies' going through the process of working out how the likes of SUM make their profits.
I remember my journey to enlightenment many years ago.

Maverick looks like they will probably get there.

[Beagle]

Yes they delivered (built) 450 new units in 2018 but only sold 382 new units (sales in 2017 were 414 which seems to show less new unit sales in 2018 than 2017)

Annual number (Rolling 4 quarters) of new sales as at last September is 333 .....even less than 382 sold in 2017

That to me is a downtrend

What’s happening to all the ‘unsold’ units?

Ouch, no way in the world anyone can sugar coat that and that's against ongoing increases in new units completed and available for sale
Any wonder why they took the extra $25m and raised $125m in new debt just recently !

I reckon Couta1 might get his $6.50 after all.