SUM - Summerset Group

[Maverick]

Winner, you are right.... of course! While I was so focused on all the data and reading today, I mistakenly lumped together in my head "build amount " being the same thing as " sale amount". So totally my stuff up as you patiently pointed out. So retro looking at your and my numbers SUM have (or will) built 900 hundred units over the last two years and sold only 700 of those at a decreasing rate, as per your chart.

Despite the growing number of empty units I`m still happy with all my assumptions in predicting an EPS in 2018 of at least 48 cents.

The possible reasons for the accumulating empty units are many. The only one of these reasons that could be permanently damaging to SUM (and the whole sector) is oversupply and I am comfortable from my own research that is NOT a concern for at least a decade. All the other remaining reasons for empty units can be rectified by either time and/or any body under a little bit of pressure, so I see no concern that the growing empty units is a permanent or irreversible trend.

Still happy to hold and will sleep well tonight after going through the numbers thoroughly today.

Thank You Winner69 for taking the time to offer your "sale graphs."

[RupertBear]

Winner, you are right.... of course! While I was so focused on all the data and reading today, I mistakenly lumped together in my head "build amount " being the same thing as " sale amount". So totally my stuff up as you patiently pointed out. So retro looking at your and my numbers SUM have (or will) built 900 hundred units over the last two years and sold only 700 of those at a decreasing rate, as per your chart.

Despite the growing number of empty units I`m still happy with all my assumptions in predicting an EPS in 2018 of at least 48 cents.

The possible reasons for the accumulating empty units are many. The only one of these reasons that could be permanently damaging to SUM (and the whole sector) is oversupply and I am comfortable from my own research that is NOT a concern for at least a decade. All the other remaining reasons for empty units can be rectified by either time and/or any body under a little bit of pressure, so I see no concern that the growing empty units is a permanent or irreversible trend.

Still happy to hold and will sleep well tonight after going through the numbers thoroughly today.

Thank You Winner69 for taking the time to offer your "sale graphs."

He’s a good man that Winner, posts some really helpful stuff he also has a quirky sense of humour which I like although sometimes The Bear doesnt always know if he’s serious or joking, no worries either way though as what he says always makes you think

[Scrunch]

[/B]
He’s a good man that Winner, posts some really helpful stuff he also has a quirky sense of humour which I like although sometimes The Bear doesnt always know if he’s serious or joking, no worries either way though as what he says always makes you think

I hope all the bears and no bulls posting isn't a bad sign

[winner69]

You and your log price axis. So right, best advice for any TA. Kudos. A lot here have embraced the charts after many years of derision, but to move beyond the chart to actual TA, there are still a ways to go.

Baabaa — not all charts are put up for ‘actual TA’. Some are just for information or just because they are interesting

Snowy — a log scale on that SUM chart would make the line less steep but whatever the scale the current actual share price will be above the upper channel line .....the story remains unchanged.

[Beagle]

I don't really "get" the slowdown in sales. Full year presentation in February 2018 indicated the reason was that the company had built a lot of medium rise units all at once late in Q4 2017 and general ongoing building activity at the village surrounding these units impacted sales, or words to that effect. Sounded plausible enough.

I had been expecting that the ~ 70 units unsold from last year would have been sold in Q1 or Q2 or at very worst by Q3. Honestly I am surprised at the sales slowdown and can really only put it down to factors I've mentioned above or an oversupply of units presently on the market in Auckland.

70 units doesn't sound like much but at say approx. $800k each on average that's $56m of stock sitting there. I guess they can fund it cheap enough as we've seen with their recent $125m bond issuance at just 4.2% per annum so maybe not a big problem yet but if there's another 70 units unsold this year eyebrows need to be raised surely ?

[couta1]

FOR COUTA'S EYE ONLY - NOBODY ELSE TO LOOK AT (had to post here as cant post images in a PM)

Couts - getting back to that 50% mark ......spooky eh

Ryman half year next month - a solid result from them and if SUM continues to fall then the ratio might go below 50%

Nice one winner.

[Raz]

I don't really "get" the slowdown in sales. Full year presentation in February 2018 indicated the reason was that the company had built a lot of medium rise units all at once late in Q4 2017 and general ongoing building activity at the village surrounding these units impacted sales, or words to that effect. Sounded plausible enough.

I had been expecting that the ~ 70 units unsold from last year would have been sold in Q1 or Q2 or at very worst by Q3. Honestly I am surprised at the sales slowdown and can really only put it down to factors I've mentioned above or an oversupply of units presently on the market in Auckland.

70 units doesn't sound like much but at say approx. $800k each on average that's $56m of stock sitting there. I guess they can fund it cheap enough as we've seen with their recent $125m bond issuance at just 4.2% per annum so maybe not a big problem yet but if there's another 70 units unsold this year eyebrows need to be raised surely ?

I have heard a lot of deals are not going through (industry wide) as a result of clients not being able to sell existing homes for the price required or lack of interest.

[Entrep]

I have heard a lot of deals are not going through (industry wide) as a result of clients not being able to sell existing homes for the price required or lack of interest.

Auckland real estate market is DEAD. Buyers sitting on their hands across the board.

[Beagle]

I have heard a lot of deals are not going through (industry wide) as a result of clients not being able to sell existing homes for the price required or lack of interest.

Auckland real estate market is DEAD. Buyers sitting on their hands across the board.

Thanks for your feedback. That partially explains it although the hard data for September indicates that the market is still ticking along okay, although volumes are down on last year a little.
https://tmmonline.nz/article/9765137...ks+tax+changes
"Nationally, median house prices across New Zealand increased by 5.9% year-on-year to $556,000 in September 2018, as compared to $525,000 in September 2017".
Volumes down but medium price on a national basis is doing quite well.
I think there is more to this and my earlier theory that SUM simply want too much for their units and people expect fixed fees for life appear to remain as the main obvious culprits for their sales decline. Earlier this year we saw their development margin expand from 28% to 33% at the half year result.
5% extra margin on say an $800,000 unit is $40,000. Maybe we see some price pressure and margin compression going forward ?

[Gerard]

JLL's retirement village white papers (published twice per year I think) had previously indicated a likely over supply of new retirement units for sale in the Auckland area, based on the number of consented villages & current build rates v the increase in the number of people turning 75 years old (target market) for the next few years. In other words supply was likely to outstrip demand. Whilst a geographical breakdown of where SUM's completed builds and sales are located is not provided it can be assumed that many (most) of these are in Auckland. This, along with other comments already made by others would point to the reason(s) for slowing sales. The concern for me is that at the current build rate, the problems with a couple of the Auckland villages, and the continuation of purchasing land means a significant amount of working capital is being tied up, and this has real costs associated with it.