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  1. #7061
    Speedy Az winner69's Avatar
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    Quote Originally Posted by Beagle View Post
    The extremely well respected and legendary Couta1 reversion theory says 5:1 OCA v SUM, so SUM is only worth $5.30 but I would not be a buyer at that price because most purchases of SUM units are discretionary lifestyle choices made only if and when people can sell their homes for what they want for them.
    The theorem re OCA v SUM hasn’t been tested over a long enough period to be ‘proved’ yet

    Way it’s going likely the ratio will end up like 6 (or even more) OCA for 1 SUM (but a 10:5:1 split looks sexier)
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  2. #7062
    ShareTrader Legend Beagle's Avatar
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    Shareholders will be anxiously awaiting Q4 sales numbers. Astute observers will have noticed that cash flow growth has been a LOT slower than underlying profit growth in the last 2 years. They've got away with that so far by issuing a lot of cheap debt but that can't go on forever.
    I remain of the view that its a BIG mistake not to have fixed weekly fees for life when almost every other company in this sector does.
    Last edited by Beagle; 07-01-2019 at 09:11 AM.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  3. #7063
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    Quote Originally Posted by Beagle View Post
    Shareholders will be anxiously awaiting Q4 sales numbers. Astute observers will have noticed that cash flow growth has been a LOT slower than underlying profit growth in the last 2 years. They've got away with that so far by issuing a lot of cheap debt but that can't go on forever.
    I remain of the view that its a BIG mistake not to have fixed weekly fees for life when almost every other company in this sector does.
    You may be correct with this and I value your input with these companies, as well as Couta with insider knowledge. On that note I have done a guess as to what the sales figures will look like. I am guessing at 135 new sales and about 102 resales. This brings a Total of around 237 sales, plus the 447 already sold and a Total for 684 for the year. I am hoping for more new sales, but I am trying to be realistic..... DYOR and I would love to hear other guesses.

  4. #7064
    ShareTrader Legend Beagle's Avatar
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    I'm too scared to guess mate because on the balance of probabilities one looks like an idiot within a very short time frame lol
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  5. #7065
    …just try’n to manage expectations… Maverick's Avatar
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    Quote Originally Posted by Ggcc View Post
    You may be correct with this and I value your input with these companies, as well as Couta with insider knowledge. On that note I have done a guess as to what the sales figures will look like. I am guessing at 135 new sales and about 102 resales. This brings a Total of around 237 sales, plus the 447 already sold and a Total for 684 for the year. I am hoping for more new sales, but I am trying to be realistic..... DYOR and I would love to hear other guesses.
    I`m up for it. After looking back the last 4 years of performance and mixing in a flat property market here are my (fairly conservative) estimates;
    new sales for the quarter -85
    resales for the quarter -75
    I also predict they will make c. 100 m FY 2018 = 45 cps @ average PE of 16.3 = share price of $7.33
    I think think the general investors withdrawal of retirement stocks is overdone. Time is linear and there are plenty of , every increasing -old stubborn , intolerant rich guys who will fill our offerings- where else will they live - with their kids?.
    The retirement village juggernaut is not over for a very long time.
    I will mostly be using the result tomorrow as a bell weather for OCA. After all you just can't have too many of them.
    (disc - have 15% sum)

  6. #7066
    Speedy Az winner69's Avatar
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    Hey Maverick that 45 cents eps you came up with is about as the same as beagle came up with for Ryman

    Share prices a bit different eh ....it’s not fair.
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  7. #7067
    ShareTrader Legend Beagle's Avatar
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    I'd be surprised if they made an underlying profit of $100m. If they were confident of a strong profit increase over FY17 I think its almost certain we would have seen a forecast to that effect in late December 2018, like we did the previous year. The fact that we didn't speaks for itself and probably carries far more weight than anything else.

    Auckland market really tanked in the last quarter of 2018. I think that's just getting started and there's a fair chance we'll follow Sydney down (which has fallen 9% in the last year) so I see price pressure on new units and resales. On the other side of the coin there is no let-up in the rate of construction cost inflation with Auckland the worst market by a long way. I foresee compressed development margins going forward, the beginning of which might be starting to make itself evident in 2H FY18.

    SUM's business model is still primarily independent living which relies on discretionary lifestyle based decisions to buy which are contingent on new entrants selling their homes for what they want.
    OCA's business model is primarily needs based late stage care which is reliant on motivated vendors meeting a need and selling their homes for whatever they can get.
    Highly motivated and realistic vendors are the ones actually selling their houses in the current Auckland market from what I hear....whereas on the other hand there's a lot of dreamers wishing the good days would return.

    Some may want to have a somewhat diversified exposure to this sector but I don't see the need and the forward metrics, business model and defensive properties of OCA make for a far more compelling investment proposition in my opinion. I think the demand-supply characteristics of the market in terms of what OCA are offering and SUM are, are more in favour of OCA going forward.
    Last edited by Beagle; 07-01-2019 at 07:37 PM.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  8. #7068
    …just try’n to manage expectations… Maverick's Avatar
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    Quote Originally Posted by Beagle View Post
    I'd be surprised if they made an underlying profit of $100m. If they were confident of a strong profit increase over FY17 I think its almost certain we would have seen a forecast to that effect in late December 2018, like we did the previous year. The fact that we didn't speaks for itself and probably carries far more weight than anything else.
    Yes , totally agree on this Beagle. Historically they have upgraded their guidance between October and December each and every year except this one. Certainly raised a BIG flag as you have pointed out.

    However, even despite this , until I see the actual underlying profit result next month I find it hard to accept that their business model has suddenly slowed so rapidly from years of gangbuster growth. Just because of Auckland property flattening?

    As you know my perspective is from Wanganui, a town with no property growth (until the last few years because you Aucklanders have seen the light and are moving down). So, from my perspective ,the fact Auckland property growth has ceased does not in itself mean disaster for the underlying business of retirement villages. Life can actually function well without house growth. So I just don't see why the SUM train should suddenly stop. (but all will be revealed one way or another)

    Of course I totally agree with you OCA comments but Kelly McGuinness insists I hold something else other than OCA. Happy wife , happy life.
    Last edited by Maverick; 08-01-2019 at 08:38 AM.

  9. #7069
    always learning ... BlackPeter's Avatar
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    Quote Originally Posted by Maverick View Post
    However, even despite this , until I see the actual underlying profit result next month I find it hard to accept that their business model has suddenly slowed so rapidly from years of gangbuster growth. Just because of Auckland property flattening?
    Actually - the running 12 month total of their sales numbers peaked in Q4 2017 (total of 682 unit sales in a 12 month window). This number is flatlining since the Q4 2017 peak in the 650'ies and the new sales (12 month window) to Q3 have been only 333.

    They would need an outrageously good Q4 2018 to fullfill the markets sales expectations for 2018 ... and how likely is that given the recent development of the Auckland housing market? I guess I know, they only forecasted to "deliver" another 450 new units - but even if they do, what good is it if they can't sell them? There still must be some empty new units around they delivered in 2016 ... ?

    Question is - is the market disappointment already priced in or will the SP further drop? While I don't know whether we can buy after the announcement cheap SUM shares, in my view they will be cheaper than now.
    Last edited by BlackPeter; 08-01-2019 at 09:15 AM.
    ----
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  10. #7070
    ShareTrader Legend Beagle's Avatar
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    Quote Originally Posted by BlackPeter View Post
    Actually - the running 12 month total of their sales numbers peaked in Q4 2017 (total of 682 unit sales in a 12 month window). This number is flatlining since the Q4 2017 peak in the 650'ies and the new sales (12 month window) to Q3 have been only 333.

    They would need an outrageously good Q4 2018 to fullfill the markets sales expectations for 2018 ... and how likely is that given the recent development of the Auckland housing market? I guess I know, they only forecasted to "deliver" another 450 new units - but even if they do, what good is it if they can't sell them? There still must be some empty new units around they delivered in 2016 ... ?

    Question is - is the market disappointment already priced in or will the SP further drop? While I don't know whether we can buy after the announcement cheap SUM shares, in my view they will be cheaper than now.
    Very unlikely. New sales have disappointed for 6 quarters now...more than enough for any seasoned investor to ask, is this a trend ?
    Why are people apparently shying away from buying a SUM unit ? That is the $64m question !
    SUM directors were very confident at the last annual meeting there was no issue with their increased inventory level's and made reference to historical inventory norms when SUM were listed. They were confident they would sell them and they talked about how with multi level developments it was harder to sell until the whole block was completed as nobody is especially keen on living in a construction zone.

    Their narrative with the Q4 sales result is something I will find incredibly interesting as well as the result itself. I don't want to be a prophet of doom but the warning signs with new sales over the last 6 quarters are hard to ignore. Maybe they will have an absolute "blinder" of a quarter and everything is fine but they would have had a very good idea what the Q4 sales result was likely to be in late December and yet chose not to give any profit guidance for FY18, unlike both previous years...that's got to be a worry and I would be fretting if I was a shareholder.
    Last edited by Beagle; 08-01-2019 at 09:28 AM.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

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