SUM - Summerset Group

[percy]

I guess the hound will be selling.!!!...lol.

[hardt]

Mmmm, either SUM are having trouble selling new units due to the property markets slight wobble this quarter.

Or perhaps someone else is snagging the buyers with a more enticing deal...

~ speculatively topping up on MET this morning ~

No mention of missing volume forecast impacting earnings guidance, seems fine.

[BlackPeter]

Well (lacking some other word) - they clearly under delivered on new unit sales - big way. I agree it is disappointing that this didn't come with an explanation. I wonder whether Julian might still be on holidays and the announcement has been put together by some young and inexperienced intern?

What would be really important to know is what happened with these missing 68 units. Are they completed and on market but nobody wants to buy them? - Unlikely since they say that their waiting lists look healthy.

Are they delayed due to the miserable weather last year and likely to be completed and sold in the current quarter? This would be good, but given that they said end of Q3 that they are on track for 450 end of Q4 - how likely is it that the completion of these units was end of Q3 still weather dependent? It takes a while from closing the roof to completing all the (not whether dependent) inside jobs.

Maybe their construction team did run away or they decided to give their sales team over December off or something like that - but they clearly need to explain the market what happened. Leaving this open for speculation is clearly not good enough.

Julian - are you listening?

(Edit ) I did write an e-mail to their "investor relations", expressing my concerns about the lack of information re the reasons for missing their annual target. Shall keep you guys up to date, if & when I hear something back.

[minimoke]

Glass half full view is that we have 68 new sales in the bag for 2018

That’s a boomer of a start to the year

Back in August Metrics were "on target to build approx 450 units". October update was to deliver 450 units. 382 sold in year end. 68 new sales comes 450 units sold

[JeremyALD]

I think the other thing is that in Q4 you really should have a pretty good idea of settlements and sales before the end of the year, especially if lots of sales from Q3 had pushed into the latter quarter. There's no point having a target number if you're not going to hold yourself accountable.

Looking back in the Q2, Half Year and Q3 announcements they mentioned the 450 target and that they were on track and now it's come to Q4 and it seems they have completely forgotten about their target.

Not good enough really, even if they've upgraded their underlying profit forecast.

[winner69]

And selling less new units in 2017 than they did in 2016 doesn’t look good either (for a growth company)

Just as well property prices were on a roll ......healthy fair value adjustments and margins drive earnings.

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-websit...796/272772.pdf

Quite a few different ways you can look at this.
For those that can read the tea leaves it was clear in their 19 December 2017 announcement they weren't going to make the 450 sales, (the only reason to do such a modest profit upgrade announcement was to reassure the market that growth in underlying profit of ~ 35-40% is on track).
That said falling under 400 undershot my expectations a little and I agree with the consensus view that it should have come with an explanation.
Resale's met my expectations almost exactly for the year.

It is impressive that they are forecasting a 35-40% underlying profit increase on a modest increase in overall sales, (inclusive of resale's) this year.
Less impressive is the lack of explanation regarding missing the target.
One would hope some units scheduled for completion and sale in Q4 will fall into Q1 FY18 which will set the company up for good FY18 profit growth.

35-40% underlying profit growth is still impressive relative to RYM estimated to be running at ~ 12%. Disc: Holding.
One must remind oneself from time to time that investment in this sector is a long term game.

[winner69]

SUMMERSET LIFTS FOURTH-QUARTER SALES 31% AS STRONG RESALES BOLSTER ANNUAL FIGURE

Sharechat.co.nz Monday 8th January 2018




All is well on the Western Front

Missing sales targets well signalled in advance

No damage to share price

No worries

[Jantar]

What is not made clear is whether the new sales not achieved was because they just simply didn't sell in time, or because the units weren't completed and therefore not actually ready for sale. So really that is a question of was it sales that were not achieved because of lack of demand, or was it a delay in completing the units and getting them ready for sale, but the demand is still there.

[percy]

[
One must remind oneself from time to time that investment in this sector is a long term game.

Classic.
Reminds me of the old share trader's definition of Long Term Hold.;"A short term trade that did not work out."...lol.