SUM - Summerset Group

[Onion]

I don't really "get" the slowdown in sales. Full year presentation in February 2018 indicated the reason was that the company had built a lot of medium rise units all at once late in Q4 2017 and general ongoing building activity at the village surrounding these units impacted sales, or words to that effect. Sounded plausible enough.

I had been expecting that the ~ 70 units unsold from last year would have been sold in Q1 or Q2 or at very worst by Q3. Honestly I am surprised at the sales slowdown and can really only put it down to factors I've mentioned above or an oversupply of units presently on the market in Auckland.

70 units doesn't sound like much but at say approx. $800k each on average that's $56m of stock sitting there. I guess they can fund it cheap enough as we've seen with their recent $125m bond issuance at just 4.2% per annum so maybe not a big problem yet but if there's another 70 units unsold this year eyebrows need to be raised surely ?

Ryman, represented by David Bennett (Chief Financial Officer) and Michelle Perkins (Investor Relations Manager) presented to the Wellington branch of the Shareholders Association on Tuesday.


They spoke about Ryman's high level of occupancy (high 90%) and their ability to quickly sell units that became available. They suggested that in these respects that Ryman were superior to their competitors.


I guess if they are correct, Ryman will never sit with 70 unsold units on their books.

[Gerard]

Ryman don't supply figures for "new" unsold units, although they do for units offered for resale. An analysis of new units built v sales over the past 5 years indicates at least 70 units more built v sold during the 5 years to March 31. Of course because there is no baseline data provided, the assumption was starting from a zero surplus of units in 2013. The reality would likely be there were at least some back then. For the size of Ryman, and the fact that completion numbers are "lumpy" due to the units in blocks of completed apartments coming on stream concurrently, and also unsold new units being spread right through the country and Melbourne, the issue is not likely to be of the same significance as with SUM. A visit out to RYM's Lynfield village a few weeks back indicated plenty of pre sales, given the number of "red" sold stickers on the plans.

[Beagle]

Ryman don't supply figures for "new" unsold units, although they do for units offered for resale. An analysis of new units built v sales over the past 5 years indicates at least 70 units more built v sold during the 5 years to March 31. Of course because there is no baseline data provided, the assumption was starting from a zero surplus of units in 2013. The reality would likely be there were at least some back then. For the size of Ryman, and the fact that completion numbers are "lumpy" due to the units in blocks of completed apartments coming on stream concurrently, and also unsold new units being spread right through the country and Melbourne, the issue is not likely to be of the same significance as with SUM. A visit out to RYM's Lynfield village a few weeks back indicated plenty of pre sales, given the number of "red" sold stickers on the plans.

Thanks for your input, much appreciated. RYM are known to heavily discount the weekly fee at pre sales meetings to get said units sold off the plans and that along with their fixed weekly fee for life, full continuum of care and only 20% capital retention model as well as a number of other superior aspects to their villages and product offer, (such as free downsizing within a village whilst SUM still charges 2%) means SUM has much to learn on the marketing front. I tried to help them get ahead of the curve but you can lead a horse to water but you can't make it drink.

Gosh if Couta1 is right about his reversion to the mean and SUM are really only worth 50% of RYM, I looked at RYM a short time ago and they were $12.66 which suggests only $6.33 for SUM. All eyes will be on the Q4 new sales numbers to see if this unsold stock problem keeps growing.

[Snow Leopard]

...Snowy — a log scale on that SUM chart would make the line less steep but whatever the scale the current actual share price will be above the upper channel line .....the story remains unchanged.

Winny - It might be better if you actually plot it and look at it rather than make assumptions. It is possible that you could be wrong. Just saying.

[Snow Leopard]

Snow Leopard - always willing to learn but not too sure what you saying. Obviously more to what you are just saying

Same data plotted with a log y axis below. Even if I use a different log scale much the same

Winny

OK, So I have just finished banging my head against a brick wall whilst counting to 100 slowly.

Now obviously I blame myself for not sending you fully detailed instructions that had been signed in triplicate, sent in, sent back, queried, lost, found, subjected to public inquiry, lost again, and finally buried in soft peat for three months and recycled as firelighters.

Deep breath:

You do a linear regression on the log of the price data.


PS - acknowledgements to Douglas Adams for borrowing a few well ordered words

[Raz]

OK, So I have just finished banging my head against a brick wall whilst counting to 100 slowly.

Now obviously I blame myself for not sending you fully detailed instructions that had been signed in triplicate, sent in, sent back, queried, lost, found, subjected to public inquiry, lost again, and finally buried in soft peat for three months and recycled as firelighters.

Deep breath:

You do a linear regression on the log of the price data.


PS - acknowledgements to Douglas Adams for borrowing a few well ordered words

Lovely financial econometrics...seeking deviations from the random walk theory..

[winner69]

OK, So I have just finished banging my head against a brick wall whilst counting to 100 slowly.

Now obviously I blame myself for not sending you fully detailed instructions that had been signed in triplicate, sent in, sent back, queried, lost, found, subjected to public inquiry, lost again, and finally buried in soft peat for three months and recycled as firelighters.

Deep breath:

You do a linear regression on the log of the price data.


PS - acknowledgements to Douglas Adams for borrowing a few well ordered words

I thought that might be what you were saying before .....but in your round about way of saying things it came across as something different

Anyway if I did post a revised chart it would confuse most as they would arge that the share price isn't 195 today ....and worse still Beagle might just be tempted to buy back in if he saw it.


Thanks for your help

[Beagle]

I thought that might be what you were saying before .....but in your round about way of saying things it came across as something different

Anyway if I did post a revised chart it would confuse most as they would arge that the share price isn't 195 today ....and worse still Beagle might just be tempted to buy back in if he saw it.


Thanks for your help

Fundamentally they look fine, technically this looks ugly. I won't revisit unless they get very cheap and / or actual sales numbers, (not units euphemistically called "delivered" which simply means built), start to show they are climbing back towards 450 per annum. In the meantime I think its increasingly looking like they are stuck between a rock and a hard place with their expensive unsold Auckland units https://www.nzherald.co.nz/business/...ectid=12140611

[winner69]

SUM at 687 is about half of RYM shareprice

[couta1]

SUM at 687 is about half of RYM shareprice

Continuing to revert to the mean aye winner, now around 53.6% relative to RYM, will be completely reverted by end of Nov, maybe even Inverted.Lol