SUM - Summerset Group

[Patient Panda]

$19 is for a newbie caregiver with no experience or qualification, currently those with more experience are on up to $23.50 and this includes SUM workers, the rate will rise to $27 over the next three years.Those with a heart for the job and love for the elderly do well, unfortunately a lot of kiwi job seekers don't fit that criteria, many would rather sit on the benefit system at the end of the day.

I stand corrected.

very interesting thanks guys

[davflaws]

a lot of kiwi job seekers don't fit that criteria, many would rather sit on the benefit system at the end of the day.

I have been a counsellor, EAP provider, and employment advocate for more than 40 years. Of the thousands of people I have dealt with during this time I have met perhaps a dozen who preferred life on a benefit rather than productive work. I think you are stereotyping and/or your prejudices are showing.

[minimoke]

I have been a counsellor, EAP provider, and employment advocate for more than 40 years. Of the thousands of people I have dealt with during this time I have met perhaps a dozen who preferred life on a benefit rather than productive work. I think you are stereotyping and/or your prejudices are showing.

There is a difference between words and behaviours. I could point you any one of a huge number of employers in the low to semi skilled space. Common theme with todays primarily youth, especially male. Getting out of bed is a challenge. Not sure what 8 hours work a day means. and 5 day a week is a bit of an ask. The alternatives are preferable as this group struggle to work. I could give you 12 names this year alone.

[value_investor]

Bit slower on the result than the rest of you lot, but I'm very much impressed as well. Although slightly downplaying the result as I'm not sure how much the development margin can be maintained especially if the market slows in the short term. I'm hoping it creates me more buying opportunities at cheaper prices.

I second beagle on the $105-110m underlying profit, closer to $110m based on development margin I think especially if the 450 builds can be attained. Which on a forward PE basis puts it on a 16 which is good buying in the current market but maybe only if you're a long term investor, i'd be surprised to see a similar ramp up to what we've just had unless something drastic happens.

On the share price, I think its a result of the NPAT going down on the back of unrealised property valuations which is slightly myopic way of looking at things but insto's are focused on short term results for their clients so it makes sense. The underlying profit result and cash flow statement (especially from operating activities) prove otherwise the quality of the stock.

I still think that the results on the horizon are going to be much better, and what has caught my eye is the two lines on lifting the build rate to 600 units. That's a 33% increase on current expectations just in 2 to 3 financial years which is a mammoth task so the belief in the team must be high and they've backed it up increasing their land bank. If they do put their money where their mouth is then we could see that price continue in an upwards fashion but as always the patient ones will win the race. I'll keep holding, it's a win/win for me with the DRP.

[davflaws]

I have been a counsellor, EAP provider, and employment advocate for more than 40 years. Of the thousands of people I have dealt with during this time I have met perhaps a dozen who preferred life on a benefit rather than productive work. I think you are stereotyping and/or your prejudices are showing.

Or perhaps mine are. I jumped in with an emotional response to a subject which is really important - particularly to the future of SUM. Either we attract and train enough caregivers locally, or we compete in an international market which is suffering/enjoying the same demographic pressures as SUM. Paying better than minimum wages is a start. We have already got a career path with recognised qualifications and now we also have a progressive pay scale that means something. Next, SUM should jump right into every training initiative that is going with both feet.

[davflaws]

There is a difference between words and behaviours. I could point you any one of a huge number of employers in the low to semi skilled space. Common theme with todays primarily youth, especially male. Getting out of bed is a challenge. Not sure what 8 hours work a day means. and 5 day a week is a bit of an ask. The alternatives are preferable as this group struggle to work. I could give you 12 names this year alone.

I'm sure you could, and because each of the dozen said he wanted to work (otherwise he (probably he) wouldn't have got the job) and then screwed up in the employer's eyes, or got pissed or got arrested or his girlfriend took off or ........ then you conclude that he was lying and would rather go on the dole than work. No. He wants to work, but needs (as you say) to learn to behave differently. Pre employment courses, lifeskills training, support, mentoring and workexperience is what is needed for those on the bottom of the heap.
Writing them off as preferring the dole is a misunderstanding that is horrendously costly both to them individually, and to society as a whole.

[minimoke]

I'm sure you could, and because each of the dozen said he wanted to work (otherwise he (probably he) wouldn't have got the job) and then screwed up in the employer's eyes, or got pissed or got arrested or his girlfriend took off or ........ then you conclude that he was lying and would rather go on the dole than work. No. He wants to work, but needs (as you say) to learn to behave differently. Pre employment courses, lifeskills training, support, mentoring and workexperience is what is needed for those on the bottom of the heap.
Writing them off as preferring the dole is a misunderstanding that is horrendously costly both to them individually, and to society as a whole.

You didn't read my post. I didn't mention screwing up, getting pissed or breaking up with teh girlfriend. I said, for clarity, couldnt wake up in time, couldnt work 8 hours, couldnt do a five days work a week. Those requirements are just to hard and unfair and unreasonable Teh alternative must be easier. That is their preference and ends up being their choice.

So I can agree with you. Your people do want to work. Provided they can rock in when ever they wake up, knock off whenever they feel like and take those long weekends at will. Employers are so damn demanding!

[iceman]

Bit slower on the result than the rest of you lot, but I'm very much impressed as well. Although slightly downplaying the result as I'm not sure how much the development margin can be maintained especially if the market slows in the short term. I'm hoping it creates me more buying opportunities at cheaper prices.

I second beagle on the $105-110m underlying profit, closer to $110m based on development margin I think especially if the 450 builds can be attained. Which on a forward PE basis puts it on a 16 which is good buying in the current market but maybe only if you're a long term investor, i'd be surprised to see a similar ramp up to what we've just had unless something drastic happens.

On the share price, I think its a result of the NPAT going down on the back of unrealised property valuations which is slightly myopic way of looking at things but insto's are focused on short term results for their clients so it makes sense. The underlying profit result and cash flow statement (especially from operating activities) prove otherwise the quality of the stock.

I still think that the results on the horizon are going to be much better, and what has caught my eye is the two lines on lifting the build rate to 600 units. That's a 33% increase on current expectations just in 2 to 3 financial years which is a mammoth task so the belief in the team must be high and they've backed it up increasing their land bank. If they do put their money where their mouth is then we could see that price continue in an upwards fashion but as always the patient ones will win the race. I'll keep holding, it's a win/win for me with the DRP.

Agree with you that the result is very good and the predicted growth in the build rate a lofty target supporting continued fast growth of the company. It is important to note however, that SUM has clearly stated that they do not expect to maintain this high development margin. Julian Cook said on National Radio yesterday that he expects it to settle long term around 25%.
Whichever way we look at it, this is a great long term hold

[Beagle]

Agree with you that the result is very good and the predicted growth in the build rate a lofty target supporting continued fast growth of the company. It is important to note however, that SUM has clearly stated that they do not expect to maintain this high development margin. Julian Cook said on National Radio yesterday that he expects it to settle long term around 25%.
Whichever way we look at it, this is a great long term hold

Mate, he's being very conservative in regard to the development margin which is not a surprise. That's how he's always been when I've talked to him about it at every annual meeting I've attended and they've consistently outperformed their target's before. The reason for this is Scott the CFO does all the pricing, (sorry, I can't disclose how I know this), and he's got an extremely good head on him when it comes to extracting maximum bang for buck with unit sales. Happy long term holder like a lot of others on here. SUM shares just make so much common sense to throw in the bottom drawer...

Excellent post value investor. PE of 16 is cheap relative to the market and the sector, most especially considering their enviable well proven track record of strong growth.

Quite aside from that I see national house prices excluding Auckland are still growing nicely, with for example Nelson up a whopping 15%, pretty sure SUM have two villages there...
http://www.sharechat.co.nz/article/5...rices-gainhtml
Wide widespread regional operations SUM is well placed to meet retiree's needs and the retiree's on a national average basis are well placed to fund the cost of entry.

[James108]

To assume this years development margin will continue indefinitely is a bit reckless imo. The cross cycle development margin could be estimated by looking at Ryman. One would assume that the current development margin is still affected by the large increase in house prices (indeed house prices are still rising overall). There must be a lag of 1-3 years between house price change flowing into development margin (e.g. all the land they are developing now would have been bought at a 'steal' several years ago).

That said Summerset is my largest holding, I have modeled a decrease in development margin (albeit model is out of date by a year) and I think current price is around fair value. Always happy to pay a fair price for a great company!