SUM - Summerset Group

[alokdhir]

Its nice to see Winners optimism even in the face of a very difficult period. The company and entire sector has continued to date on its juggernaut path despite staff shortages, staff costs, Omicron, supply shortages and now a cooling housing market. Despite all these well thrashed out headwinds we are yet to see any material dipping of results ( outside of the temporary direct covid costs and disruptions when covid was at its CY2020 peak).

Tomorrows result will be an important waypoint for the "post covid" RV industry and in particular any commentary on current pricing and sales trends.
My expectations of SUM are also very high ( why wouldn't they be after their track record, they are an incredible company) but is a tad short on Winners.

My maths says a result of somewhere around underlying $87m, I would be delighted for Winner to be right.

Thanks Mav for your precise and deep insights ....always appreciated .

For me if it comes in between 87 -95 ie say 91 M then it will be perfect ....

[alokdhir]

82.5 M seems below both estimates ...but overall its a good result ...under the circumstances ...

[Maverick]

82.5 M seems below both estimates ...but overall its a good result ...under the circumstances ...

Not to worry, that’s still an excellent result considering all the difficulties in the period.
The commentary is the key , waiting lists, empty stock levels , sales and prices holding up nicley. The other big takeaway is the comment “demand doesn’t appear to be teathered to the property market.”
In fact the commentary is borderline outstanding.

Seems all the doom and gloom priced in by Mr Market has well and truly been over done. If I wasn’t so certain of another particular RV companies prospects I’d be very comfortable loading up on these at these prices.

[alokdhir]

Not to worry, that’s still an excellent result considering all the difficulties in the period.
The commentary is the key , waiting lists, empty stock levels , sales and prices holding up nicley. The other big takeaway is the comment “demand doesn’t appear to be teathered to the property market.”
In fact the commentary is borderline outstanding.

Seems all the doom and gloom priced in by Mr Market has well and truly been over done. If I wasn’t so certain of a certain other RV companies prospects in this sector I’d be very comfortable loading up on these.

Fully agree and endorse ...as me not big on any other RV so I am big here ....

[justakiwi]

Just saw this on my Facebook feed. Why would they be offering a "special" given their decent result?

Link won't paste for some reason. Reduced entry fees for serviced apartments in Christchurch, for limited time.

[Baa_Baa]

Just saw this on my Facebook feed. Why would they be offering a "special" given their decent result?

Link won't paste for some reason. Reduced entry fees for serviced apartments in Christchurch, for limited time.

They're advertising it here https://www.summerset.co.nz/flexiblepricing/ read the T&C's.

[bull....]

They're advertising it here https://www.summerset.co.nz/flexiblepricing/ read the T&C's.

makes sense when you consider they said the market was flat to declining in the mths ahead

[winner69]

Interesting in the presentation they break Operating Cash Flow into two components - being “Net operating business cash flow” and “Receipts for residents' loans - new sales”

And good to see the “Net operating business cash flow” is positive, although not as high as pcp

Means they are actually generating cash from actually caring and looking after people and running villages - not all in sector can show this to be positive.


I’ve looked at this way for years ….wonder what made them change their approach (I think) …good on them

[Maverick]

I'm kind of Surprised that after the result there hasn't been more chit-chat here. I guess there's a lot of other company news going on. This result is noteworthy that seems to have gone under the radar. The significance is the steadiness of the result within peak omicron, building shortages, significant cost increases , labour shortages , falling public confidence and falling prices of the housing market and all done with an increasing supply ( which should, but isn`t, result in growing unsold stock.)

Basically my half year expected result was $4.5m too high because I just lazily halved the full year expected result which I'd previously carefully worked out a few months ago.
My workings with SUM are always done in full years without breaking down into half years.
I don't own any so aren't willing to go through the chore of all that extra work.

So it turns out I should have tilted more of the profit towards the HY2 based on sales figures already known and with the higher deliveries due in HY2 ( in fact 60% more new deliveries of which will have many pre-sales). Essentially the excess $4.5m I was expecting in HY1 will simply show up in HY2.

Obviously with SUM giving us a quantity of sales updates so the final figure can easily be fine tuned before the FY22 result.( last FY I forecast $141m here and the actual result was 141.1m - just demonstrating this company , outside of covid, is predictable)

I have put more effort in since the result to see where I went wrong and reworked things now using the previously known sales /supply specifics tailored to both half years. I'm still happy my full year is still correct enough.
That's a profit of $174m or up 23% YOY.
Putting it on an anticipated PE of 15.3 on today's SP.
To me that's great value for a company with such a strong track record and strong pipeline.

There were concerns about SUM noted here pre-covid as it was amassing a lot of unsold stock. It looked like it was oversupplying and Winner rightly posted many sad looking graphs on this at the time. I even visited Rototuna- Hamilton to get an insight as to why. The sales lady said the villas don't really sell well until the core community facilities are up and running ( which they weren't at the time). Turned out she “speaketh the truth” because SUM are having no trouble selling their product now even as they produce them in greater numbers than ever.

It will be well known here that I'm probably OCAs biggest fan and I still claim they have a tidal wave of value about to wash through over the next few years and beyond. Plus I love their expertise in the high end market and their point of difference. That's enough of that on this SUM thread.…

So while I'm still not personally going to switch to SUM, IMO it clearly offers high value. This company has a ton of history, plenty of pipeline and can be understood without too much work. ( no new share issues, or acquisitions to worry about). I can't see any reason SUM can't keep doing these high 15-20% CAGRs for at least a few years yet. Apart from a big rise in new build rate , they also have clearly increased their existing pricing looking at the jump in embedded value. That will flow through for many years yet

Just saying that SUM continues to be an outstanding company at very good value.
Their margins remain surprisingly high considering the conditions and their sales are unfaltering. The beauty of this company is its ever increasing profit is smooth and predictable. Got to love just doing green field developments for that.

[winner69]

I'm kind of Surprised that after the result there hasn't been more chit-chat here. I guess there's a lot of other company news going on. This result is noteworthy that seems to have gone under the radar. The significance is the steadiness of the result within peak omicron, building shortages, significant cost increases , labour shortages , falling public confidence and falling prices of the housing market and all done with an increasing supply ( which should, but isn`t, result in growing unsold stock.)

Basically my half year expected result was $4.5m too high because I just lazily halved the full year expected result which I'd previously carefully worked out a few months ago.
My workings with SUM are always done in full years without breaking down into half years.
I don't own any so aren't willing to go through the chore of all that extra work.

So it turns out I should have tilted more of the profit towards the HY2 based on sales figures already known and with the higher deliveries due in HY2 ( in fact 60% more new deliveries of which will have many pre-sales). Essentially the excess $4.5m I was expecting in HY1 will simply show up in HY2.

Obviously with SUM giving us a quantity of sales updates so the final figure can easily be fine tuned before the FY22 result.( last FY I forecast $141m here and the actual result was 141.1m - just demonstrating this company , outside of covid, is predictable)

I have put more effort in since the result to see where I went wrong and reworked things now using the previously known sales /supply specifics tailored to both half years. I'm still happy my full year is still correct enough.
That's a profit of $174m or up 23% YOY.
Putting it on an anticipated PE of 15.3 on today's SP.
To me that's great value for a company with such a strong track record and strong pipeline.

There were concerns about SUM noted here pre-covid as it was amassing a lot of unsold stock. It looked like it was oversupplying and Winner rightly posted many sad looking graphs on this at the time. I even visited Rototuna- Hamilton to get an insight as to why. The sales lady said the villas don't really sell well until the core community facilities are up and running ( which they weren't at the time). Turned out she “speaketh the truth” because SUM are having no trouble selling their product now even as they produce them in greater numbers than ever.

It will be well known here that I'm probably OCAs biggest fan and I still claim they have a tidal wave of value about to wash through over the next few years and beyond. Plus I love their expertise in the high end market and their point of difference. That's enough of that on this SUM thread.…

So while I'm still not personally going to switch to SUM, IMO it clearly offers high value. This company has a ton of history, plenty of pipeline and can be understood without too much work. ( no new share issues, or acquisitions to worry about). I can't see any reason SUM can't keep doing these high 15-20% CAGRs for at least a few years yet. Apart from a big rise in new build rate , they also have clearly increased their existing pricing looking at the jump in embedded value. That will flow through for many years yet

Just saying that SUM continues to be an outstanding company at very good value.
Their margins remain surprisingly high considering the conditions and their sales are unfaltering. The beauty of this company is its ever increasing profit is smooth and predictable. Got to love just doing green field developments for that.

Mav said ‘I'm kind of Surprised that after the result there hasn't been more chit-chat here’

A good post that sums up all the good things about SUM …nothing much to add I suppose ….and that’s possibly a reason why not much chit chat on this thread