SUM - Summerset Group

[Lease]

Agreed with you on the housing comment. The pricing has held up strongly everywhere, except the sales numbers has not grown at all across the retirement sector in the past two years which is something to keep an eye on. The thesis on the industry as a whole is that there will an avalanche of retirees as time goes on looking at care suites and apartments. It will happen with time but I'm a bit worried that in the meantime we'll see a supply glut that will make it harder for SUM and others to differentiate their product.

In FY18, 454 units delivered and 339 new sales (OCA delivered 272, sold 133 for comparison). Same thing is likely to happen this FY again with new sales tracking slightly lower than last year. Not sure how they reverse that in the short to medium term and I think that the weak sales reflects on the price of the stock because I'm not really sure where gains are going to come from. If you are long on the retirement sector, you will probably do okay, based purely on the numbers.

Just on the short/medium term, building consents on retirement units is currently 17% higher than last year, 1972 units consented in 2018, and 2310 in 2019 and this is just on 9 months data. There's a glut of listings coming on the market. Interesting times ahead.

https://www.stats.govt.nz/informatio...september-2019

This is a capital intensive industry thus small players can't beat big ones like RYM or SUM. The industry is highly related to property cycle. Given the current very low interest rate, and seems no economic recession is imminent, property market should be still strong and it is good news to SUM.

I have worked out SUM CAGR of underlying profit has been at 31% since listing. Portfolio has been rising at double digit every year. Given the current SP at Price/underlying EPS is only 16, the share is really cheap.

[winner69]

SUM doesn’t really need to sell more units at the moment to grow earnings strongly

Like in F19 realised gains per sale likely to be ~20% higher than F18 (and about the same in F20)

Sales stay the same but 20% more realised gains = 20% increase in underlying earnings

All the result of a booming property market over the last few years.

Good eh

[winner69]

This is a capital intensive industry thus small players can't beat big ones like RYM or SUM. The industry is highly related to property cycle. Given the current very low interest rate, and seems no economic recession is imminent, property market should be still strong and it is good news to SUM.

I have worked out SUM CAGR of underlying profit has been at 31% since listing. Portfolio has been rising at double digit every year. Given the current SP at Price/underlying EPS is only 16, the share is really cheap.

Not just cheap .....as you say really cheap ...and probably extremely cheap

[Beagle]

SUM doesn’t really need to sell more units at the moment to grow earnings strongly

Like in F19 realised gains per sale likely to be ~20% higher than F18 (and about the same in F20)

Sales stay the same but 20% more realised gains = 20% increase in underlying earnings

All the result of a booming property market over the last few years.

Good eh

Is good and you are quite right but I would like to see a pick up in the sales rate in 2020 and see the build rate grow to ~ 500 per annum. That's the key to driving this a lot higher.

[macduffy]

Is good and you are quite right but I would like to see a pick up in the sales rate in 2020 and see the build rate grow to ~ 500 per annum. That's the key to driving this a lot higher.

I havn't been able to find any info on the number of vacancies in SUM's portfolio from time to time. Does anyone know how the occupancy rate is tracking over time?

Disc: Holding.

[Maverick]

Julian has said "resales " are the thing to watch as the indicator to the supply / demand balance , not "new sales". These new villages being developed now are so big that the time it takes for them to be "digested " by the area, that would skew the numbers (for the information you are looking for) by including them the un/occupancy rate.
So in their last release (FY18 results presentation pg25) they said un-contracted resale stock is 1.4% (53)which averages 2 per village. This is similar to FY17 despite more houses in the portfolio.
There is also a nice graph on that page too which goes back to FY13 that demonstrates their un-occupancy fluctuates between 1.0% and 1.5% over that time.

[Beagle]

Here's a link to that presentation. See page 25 as Maverick has suggested and I note that resales stock availability has been consistently very low.
http://nzx-prod-s7fsd7f98s.s3-websit...947/295456.pdf

After a difficult 2019 I expect SUM will be one of my top performing stocks for 2020. Anyone thinking they have missed the boat might like to reflect on the fact that SUM has underperformed the NZX50 by 25% in the last year. I believe its probably the cheapest "proven growth stock" on the NZX by quite SUM margin.SUMvNZX50.jpg

[macduffy]

Thanks to both of you.

That 1.4% number reassures!

[couta1]

Here's a link to that presentation. See page 25 as Maverick has suggested and I note that resales stock availability has been consistently very low.
http://nzx-prod-s7fsd7f98s.s3-websit...947/295456.pdf

After a difficult 2019 I expect SUM will be one of my top performing stocks for 2020. Anyone thinking they have missed the boat might like to reflect on the fact that SUM has underperformed the NZX50 by 25% in the last year. I believe its probably the cheapest "proven growth stock" on the NZX by quite SUM margin.SUMvNZX50.jpg

Might be one of the top performing stocks but it will still only be worth half of RYM and that's a long proven fact that no amount of barking has been able to change. Lol

[winner69]

Might be one of the top performing stocks but it will still only be worth half of RYM and that's a long proven fact that no amount of barking has been able to change. Lol

Seems the whole sector will be top performers ...although Oceania probably still around $1.04