SUM - Summerset Group

[Beagle]

Thanks folks for sharing. Both analysts appear to take a very benign view of the risks of Covid to SUM's operations. The Govt can't keep printing money forever, (to bail out business) if we have one lockdown after another after another... Serious risk remains of future outbreaks, a good example here https://www.msn.com/en-nz/news/natio...?ocid=msedgdhp Fact is SUM's shares are priced on a higher forward underlying PE than before Covid which makes no sense whatsoever to me.

Talk of delivering 500 units next year looks to be predicated upon the assumption Covid 19 will be well and truly under control and an effective vaccine being widely available at some stage in 2021 so SUM can continue that build rate going forward from there. While I would love that prediction to be right, such thinking looks very optimistic to me.

In any event the current share price is now very close to the 12 month price targets of those analysts. I think the risks are clearly to the downside in the next 12 months at least from here.

[bull....]

just goes to prove sum is a better investment than oca ( the runt of the pack)

[winner69]

Hey beagle ....as I said yesterday SUM’s RR-NUPPCA supports a share price $8.00 to $8.50

RR-NUPPCA Is Run Rate Normalised Underlying Profit Pre-Covid Adjusted

Seems to be how you look at things anyway ....and SUM seems to perform better than OCA on this measure.

No wonder market liking SUM today

[Beagle]

Hey Winner - Are any professional analysts using this measurement methodology or is this some new thing some of your neighbor's mates at the bowling club came up with ?

What would I know...I sold SUM at $9 earlier this year and bought OCA @ 70 cents. I'm obviously a dumb dog and have no idea what I'm doing.

[winner69]

Hey Winner - Are any professional analysts using this measurement methodology or is this some new thing some of your neighbor's mates at the bowling club came up with ?

What would I know...I sold SUM at $9 earlier this year and bought OCA @ 70 cents. I'm obviously a dumb dog and have no idea what I'm doing.

Good trading there mate ...well done

[winner69]

Best part of results this bit


▪ Net operating business cash flow of $16.5m, up $12.3m on 1H19 highlighting strong growth in our core business functions

[Beagle]

Good trading there mate ...well done

Not trading mate. Held that investment for quite SUM years, most of which was when there really was growth. My understanding is that investors are entitled to sell if they are protecting the capital value of their portfolio but I welcome any tax case law to be shared with me by PM to the contrary.

Cash flow was down, underlying profit was down, (especially if one backs out the Govt's wage subsidy), IFRS profit was absolutely smashed to bits, developments margin's came under serious pressure despite real estate medium prices in N.Z. rising 15% in July 2020 compared to last year, (go figure that one), new sales were down, resales were down...I've probably missed a few other things that were down. There was very strong growth in one area of their business though, Debt !

If they can make $100m underlying in FY20 that's 43.8 cps and at $8.10 they're on a forward PE of 18.5 and we have all the remaining risk of Covid still to come. They're priced higher on a forward earnings basis than to the best of my knowledge at any time in the last three years before Covid. I'll just leave it at that, if people can't see the risk to the share price in what I've said in this post with all my knowledge of the company over the years, there's nothing more I can add to help so I am wasting my time.

[winner69]

Hey Winner - Are any professional analysts using this measurement methodology or is this some new thing some of your neighbor's mates at the bowling club came up with ?

What would I know...I sold SUM at $9 earlier this year and bought OCA @ 70 cents. I'm obviously a dumb dog and have no idea what I'm doing.

It’s really the same as your look through covid underlying earnings

[Beagle]

It’s really the same as your look through covid underlying earnings

So I'll just stick to what I've been doing then because it seems to work quite well. If OCA can do $60m annualized in the ten months to 31/3/21 that's 9.7 cps and they're on a forward PE of just 10.2. Enough said.

[Lease]

NTA is $4.91. Does it deserve to be trading at a 58% premium to NTA ?, that as they say is the $64,000 question.

In calculating NTA, we all know the biggest part of liabilities is residents' loans which SUM don't need to repay until they sign a new ORA and receive a new lump sum payment. Therefore I normally exclude this one when I work out NTA. By excluding residents' loans, SUM's NTA is nearly $11 thus its SP is trading at discount of NTA.

Surely using this measurement OCA is still a lot cheaper. But OCA revenue and underlying profit have been down in two consecutive years. Portfolio(Total units and beds) has been shrinking year by year(from 4093 in 2017 down to 3846 in 2020).

Compare these metrics, SUM is much better thus deserve better valuation.

Also compare to RYM, you said "SUM is presently priced at $7.76 which is right on the very upper limit on the very well established 40-60% price relativity of RYM which is currently $12.80." Well, I think only SP comparison is pointless as SUM market cap is still only about 27% of RYM.