SUM - Summerset Group

[Beagle]

I decided not to give them the benefit of the doubt. Many thanks to Winner for graphically representing the new sales decline in post 6886. You do some very good work on here with your graphs Winner which is of very good service to all and is much appreciated. I tried my best to give them the benefit of the doubt but six quarters in a row of disappointing new sales results is not a spasmodic thing, its a trend. The fact that Summerset chose to ignore my advice to a fixed fees for life model is also a factor here as is the 50% increase in share price since December 2017 against a series of disappointing sales results.
Some accountants (including myself) believe that cash flow is the life blood of business and its worth noting that although underlying profit was up 54% last year cash flow was up just 7.8%. Finally, technically this is also looking bad. I'm out for now and will reevaluate down the track if the price corrects to be more commensurate with the current sales performance of the company.

For the record I posted this on 10 October 2018. Note the last sentence which is what I did when the share price subsequently corrected significantly. One person should get over themselves when calling others out. As Couta1 quite correctly posted yesterday, people call it as they see it at the time. The forward PE is approx. 12 and the company has a very long track record of growth and is still growing in the current market.

On the ARV thing, the devil is in the detail. The company is forecasting the acquisition will be eps accretive "assuming no change in market conditions"
Pretty obvious development margins are coming under pressure so I would say the vendor got out of those villages at a very opportune time and at a real premium price. I think Winners forecast eps growth looks about right for the two companies in post #8138 above.

[44wishlists]

ARV dividend policy is also a concern for me. Their high payout ratio means they have to borrow more, via bank loan, bond issue, capital rising to keep their growth going. You could argue it's a reasonable move in the low, and lower-ing, interest race, but to me it could end up taking more loan to just to pay dividend.

[Meister]

I am holding SUM and thinking of topping up more but a general reluctance to increase my overall market position right now has had me held back. I wonder if I should have tried to take a more active role in managing my position here given the ups and downs over the last year, probably could have wound up better off but for me this is one of those bottom drawer check it again in 10 years type of stocks.

During the last financial crisis/recession Ryman continued to grow... maybe it is a bad comparison but I think that helps show the resilience of this business model to adverse conditions; it would have to be a VERY significant housing downturn with no recovery to make Summerset a questionable long term hold. That type of downturn would affect the whole economy drastically and sink every ship, not just this one.

[mshierlaw]

I am holding SUM and thinking of topping up more but a general reluctance to increase my overall market position right now has had me held back. I wonder if I should have tried to take a more active role in managing my position here given the ups and downs over the last year, probably could have wound up better off but for me this is one of those bottom drawer check it again in 10 years type of stocks.

During the last financial crisis/recession Ryman continued to grow... maybe it is a bad comparison but I think that helps show the resilience of this business model to adverse conditions; it would have to be a VERY significant housing downturn with no recovery to make Summerset a questionable long term hold. That type of downturn would affect the whole economy drastically and sink every ship, not just this one.

I have dipped my toe in the water 3 time with SUM. Timing was not perfect (well not even very good) but every dip cost more. Patiently waiting to see my Millions but not concerned at all about holding long term.

[LAC]

I have dipped my toe in the water 3 time with SUM. Timing was not perfect (well not even very good) but every dip cost more. Patiently waiting to see my Millions but not concerned at all about holding long term.

There’s nothing to worry about in those dips, I just add a few more if I can. SUM is just a great business and those worrying about the small fluctuations in the SP are just not looking at the big picture in my opinion. Even during the slow period this business is performing well, they are bound to get the ups over the next 25years-30years, and can one imagine what those earning will look like. It’s a great business with a great management team. Unless those things change, I will accumulate over the dips so don’t stress about the short term dips is my advice. (Not that I can give any advice, DYOR)

[mshierlaw]

There’s nothing to worry about in those dips, I just add a few more if I can. SUM is just a great business and those worrying about the small fluctuations in the SP are just not looking at the big picture in my opinion. Even during the slow period this business is performing well, they are bound to get the ups over the next 25years-30years, and can one imagine what those earning will look like. It’s a great business with a great management team. Unless those things change, I will accumulate over the dips so don’t stress about the short term dips is my advice. (Not that I can give any advice, DYOR)

If I can dip my toe in again at less $$$ than last time then would very happy. Apart from that there is always the DRP.

[winner69]

Wonder if there’s an early redemption clause of those Summerset bonds ....4.78% pa until 2023 not looking like cheap finance these days ...or even the 4.2% until 2025

[RTM]

One would imagine so. Other companies will be thinking along similar lines. They owe it to their shareholders.

[Grimy]

I don't have the prospectus in front of me but I doubt it. Most bonds if they have a reset or buy back clause it is every five years or so (usually on perpetual type bonds). Short term bonds are usually fixed without a buy back clause (I may be wrong with these particular bonds, but I don't think so).
As a holder of some SUM010 bonds I hope not!
They thought it was cheap (or reasonable) finance at the time, and it was pretty clear that rates would continue to fall.
As a holder of SUM shares I am comfortable with the rate. They can refinance in 2023.
Stop trying to screw me out of the already meagre income that rate provides! :-)

[Grimy]

From the prospectus;

Neither you nor Summerset is able to redeem the Bonds before the Maturity Date.
However, Summerset may be required to repay the Bonds early if there is an Event of
Default (as described below).