SUM - Summerset Group

[minimoke]

and they are silly to fly against the widespread expectation now of retirees expectations of fixed fees for life....

The fixed for life has to be fraught with difficulty. The trouble with our bulge of upcoming of folks is we are also keeping old folks alive for longer. So you are expecting SUM to manage the risk of an ever increasing aged population. Wouldn't SUM need to put up their sale price to cover this risk exposure?

[Beagle]

The fixed for life has to be fraught with difficulty. The trouble with our bulge of upcoming of folks is we are also keeping old folks alive for longer. So you are expecting SUM to manage the risk of an ever increasing aged population. Wouldn't SUM need to put up their sale price to cover this risk exposure?

Rym have been successfully getting premium prices for their units using this fixed fee for life methodology for years. The tactic they use is that they know in the vast majority of cases an incoming resident releases significant capital when going into a village so they know the resident is generally flush with funds at this point and their main concern is can they afford the weekly ongoing fees ? Better to get extra margin up front and make village life appear to be as cheap as chips which is what the resident is focusing on going forward. I believe talking with industry players RYM actually go further. At pre-release sales meetings they have been known to discount fixed fees for life to as low as $99 per week for people that sign up off the plans. This is a key tool to get pre-sales at premium prices.

All these villages have masses of data about life expectancy and average expected occupancy duration by unit type and we have enjoyed a stable inflation rate in the 1-3% range for years. Not hard to model out life expectancy using actuarial tables and estimated inflation and pick the mid point of an incoming resident's stay to set the fixed weekly fee for life but its much smarter to use RYM's methodology.

That a Very brief synopsis.. but there are powerful psychological forces at play here that SUM are not tapping into. Who has this model right, RYM that have set the benchmark for nearly 20 years and nearly every other company has followed in regard to fixed fees or SUM the outlier who think they know better and adjust their fees for inflation every year ? What's more attractive, weekly fees fixed at $99 per week for life or $179 per week adjusted for inflation each year ?

[Lewylewylewy]

I would hope that either the build rate would decrease (unlikely as its in house resource, and therefore many fixed costs to consider) and / or questions leading to market research around unsold units would cause a change in sales strategy in the coming year or two.

Hopefully egos aren't too big, as to cause blame to fall on the property market... it's important to be agile in business, especially when there are headwinds.

[James108]

Sum are biggest developers as a percent of total units. Relatively cheap multiple. In my view best value of retirement operator. I will look past poor sales, very high margin has offset this so far.

Let’s check In 5 and 10 years to see who was right.

Been holding for about 4 years and added a lot last year.

[winner69]

Always thought the SUM share price had got ahead of itself of late and that it would fall back into the long term linear regression channel


Might just be doing that .....top of the channel is about $6.80


Some might say this defies logic ....who am I to deny ....but is a bit spooky though

[winner69]

FOR COUTA'S EYE ONLY - NOBODY ELSE TO LOOK AT (had to post here as cant post images in a PM)

Couts - getting back to that 50% mark ......spooky eh

Ryman half year next month - a solid result from them and if SUM continues to fall then the ratio might go below 50%

[Beagle]

Always thought the SUM share price had got ahead of itself of late and that it would fall back into the long term linear regression channel


Might just be doing that .....top of the channel is about $6.80


Some might say this defies logic ....who am I to deny ....but is a bit spooky though

Ouch the mid point of that channel is presently only about $5.80 ! This reversion to the mean thing bites pretty hard doesn't it !

[Beagle]

FOR COUTA'S EYE ONLY - NOBODY ELSE TO LOOK AT (had to post here as cant post images in a PM)

Couts - getting back to that 50% mark ......spooky eh

Ryman half year next month - a solid result from them and if SUM continues to fall then the ratio might go below 50%

Couldn't help myself and had to have a look. Spooky eh ! That Couta a real legend...hope he didn't kill himself on the ski slopes today as I can't wait to here his next insight and when TRA will revert to the mean at $3.80 or when OCA will get to $1.32 ! You can't have too many...thought I might have got lucky today at $1.20, seeing as he was busy and not standing in front of me backing up his Kenworth truck like yesterday, but sadly, no joy.

[Snow Leopard]

Always thought the SUM share price had got ahead of itself of late and that it would fall back into the long term linear regression channel


Might just be doing that .....top of the channel is about $6.80


Some might say this defies logic ....who am I to deny ....but is a bit spooky though

Have you tried that with a log price axis ?

It gives one a whole different view.

[Baa_Baa]

Have you tried that with a log price axis ?

It gives one a whole different view.

You and your log price axis. So right, best advice for any TA. Kudos. A lot here have embraced the charts after many years of derision, but to move beyond the chart to actual TA, there are still a ways to go.