SUM - Summerset Group

[LAC]

Depending which growth rates you are looking at, new sales for both SUM and RYM have been going backwards since 2017.
RYM has given a plausible explanation for that reduced new build, not to sure about how plausible SUMs is.
However resales for RYM have been going up app 14% since 2017 and 7% for SUM.
This 7% increase over 2 years makes me wonder if the churn is lower than expected.

I like the RYM approach a little better, controlled steady growth. Often promoting long term employees to management level. Having as much expertise in house as possible. Maybe boring as the name of this thread would suggest but predictable.

I have to agree with that Ryman is better at everything than the others, they lead the pack BUT the only thing that I don’t agree with is the SP of Ryman, SUM is a better buy in terms of value. If I was just buying Shares to pass it on from generation to generation with never ever selling them for 250years, I would buy Ryman. But I think in my 25-30year timeframe, SUM will get me better returns.

[BlackPeter]

I have to agree with that Ryman is better at everything than the others, they lead the pack BUT the only thing that I don’t agree with is the SP of Ryman, SUM is a better buy in terms of value. If I was just buying Shares to pass it on from generation to generation with never ever selling them for 250years, I would buy Ryman. But I think in my 25-30year timeframe, SUM will get me better returns.

Hmm - 250 years is an interesting investment time frame. Not too many companies I can think of who survived such a long time, with the exception of the Catholic Church (i.e. faith industry) who have a quite unique business model (take money now and deliver only when customers are not anymore able to complain ...).

Back to retirement villages ... I'd say that it might be possible to model perhaps the next 25 to 30 years (based on population growth and similar, though even this is difficult. We might have in 2050 ways more old people than what we expect (if e.g. all the Australians hop across the ditch because they don't like to be roasted) or we might have much less (e.g. if our economy goes for some unknown reason kaput).

If we look however into the next decade, than I agree ... while I expect both RYM and SUM to do well, I'd expect as well better growth from SUM.

[Davexl]

LAC,

Agree with your synopsis. My models have RYM and SUM converging on a valuation of $36 per share in a decade based on reasonable growth, new sales margins reverting to 24%, investment property gains reducing to 3% p.a. in the long run and respective PE’s converging to 20 and 18 times forecast Comprehensive Income (lower than current RYM multiple of 24 and much higher than current SUM multiple.

Happy to own both (and OCA) as long term holds delivering increasing dividend income and value.

Like your thinking Mogul. Currently a major OCA minor SUM holder looking to get the configuration right, but need income (hence OCA) as a primary focus (with the capital gain)

[Food4Thought]

Like your thinking Mogul. Currently a major OCA minor SUM holder looking to get the configuration right, but need income (hence OCA) as a primary focus (with the capital gain)

Agree with this.

At what Ratio...

1 SUM: 6 OCA

Dividend long term play. Both good if you buy at the right price... bit of a waiting game after that.

[pierre]

Agree with this.

At what Ratio...

1 SUM: 6 OCA

.

Perfect. I hold both in almost exactly that ratio.
Also hold RYM but sold my MET to top up SUM.
Happy to watch the action unfold over the next few years from the sideline.

[ratkin]

Corona virus causes world market selloff, SUM holders not bothered.

[Beagle]

Corona virus causes world market selloff, SUM holders not bothered.

Clearly not with it roaring up to a fresh all time high today.

[peat]

Got to admit you've picked this one Beagle.
It is skyrocketing and I wont sell anymore because then it wont be a long term hold. And it may never come back.
Well done sir

[troyvdh]

Your very brave Peat...as J Ryder has said...if you dance be very close to the door...

[Beagle]

Thanks Peat.

It still looks dirt cheap to me on fundamental's. Assuming $117m underlying to be reported next month and an estimate of 25% profit growth for FY20 as they ramp their development program back up that gives $146m underlying for FY20 which is 64 cps. At $9.25 that's a forward PE of just 14.4

That's right towards the bottom end of their own PE range over the last 8 years and the sector overall and that for the company which has clearly demonstrated its the fastest growing company in this sector on the NZX. Pretty easy with a far more robust real estate market to make a case for a NZX median forward PE of 19 suggesting 19 x 64 = $12.16 is a fair and reasonable price target.