SUM - Summerset Group

[Beagle]

100 day MA is my go to TA tool for the retirement sector mate. Can't say if it works better than anything else, sorry. It hasn't broken through to the upside yet but I think its going too based on compelling FA. It was a very good result and surprised me a bit.

Clear break up through the 100 day MA now, see attached image chart.sum.jpg

[Ggcc]

Clear break up through the 100 day MA now, see attached image chart.sum.jpg

Glad I held on rather than transfer over to
OCA which my heart was telling me to do. It should be $7 within a few months at this pace

[winner69]

Yes beagle, it’s all looking good on the Summerset front

Not surprising because that was a pretty stunning full year report - much more robust set of numbers than some others in the sector

Ggcc says 7 bucks soon ...maybe even more I reckon

[Maverick]

FA - Wonder what the forward PE is now ?...probably about 12 (I don't have an underlying forecast for FY19 yet)
TA - Interesting image Attachment 10357

i'll put hand up for that. I've done a load of calcs and come up with about an EPS of around 60 cents fy2019. This figure is heavily dependant on clearing most of the 133 stock delivery from late December. Personally I don't see why they won't as they have said things are trucking along well. Looking back SUM have had a pretty good record of doing what they said they would. Perhaps even an excellent record.
So at $6.60 that's a forward PE of 11.

[Beagle]

i'll put hand up for that. I've done a load of calcs and come up with about an EPS of around 60 cents fy2019. This figure is heavily dependant on clearing most of the 133 stock delivery from late December. Personally I don't see why they won't as they have said things are trucking along well. Looking back SUM have had a pretty good record of doing what they said they would. Perhaps even an excellent record.
So at $6.60 that's a forward PE of 11.

That would make it the cheapest PE its ever been on since listing ! Technical analysis also looks very encouraging. Just on one month to go until we see evidence of Q1 sales.
If that's a strong number...

[winner69]

i'll put hand up for that. I've done a load of calcs and come up with about an EPS of around 60 cents fy2019. This figure is heavily dependant on clearing most of the 133 stock delivery from late December. Personally I don't see why they won't as they have said things are trucking along well. Looking back SUM have had a pretty good record of doing what they said they would. Perhaps even an excellent record.
So at $6.60 that's a forward PE of 11.

Those earnings are likely

A PE of 11 ....about as cheap as OCA ....I know which one I’d prefer on those multiples based on each of thems latest reports. .....and the preferred one doesn’t sound like a blue sea

[Beagle]

I am more cautious around the sell down timeframe of the 133 units "delivered" in December 2018.
We've seen this movie before and if I remember correctly there were about 70 that were delivered late in 2017 that were tagged with the same (delivered too late in the year to be sold) line. So were these 70 actually sold, well yes and no. SUM don't separately identify them but their sales for 2018 were materially lower than 2017 despite the 70 extra stock.

Early in 2018 I predicted $100m underlying profit for the year, (subsequently revised as the real estate market and volume cooled later in the year). First forecast was almost bang on the money. Once we have Q1 sales data in early April and here the annual meeting narrative in late April I think that should give some worthwhile information to make a forecast for FY19. Until then I will simply say I think the company is somewhat undervalued and that I have been accumulating them. I note that in FY18 they made an underlying profit of 43.74 cps. I put an awful lot of stock on prior track record and I think SUM have an exceptional one and deserve to be on a multiple slightly higher than the market is currently crediting them with, (notwithstanding the slowing Auckland real estate market).

If Q1 sales are really good and the narrative at the annual meeting is positive I think there is a very good chance we will see a material rerating of SUM probably back towards its previous high of $8.00.

[couta1]

Those earnings are likely

A PE of 11 ....about as cheap as OCA ....I know which one I’d prefer on those multiples based on each of thems latest reports. .....and the preferred one doesn’t sound like a blue sea

OCA will still be the better overall return 5 yrs from now IMO plus their care provision is superior which is important to me.PS-SUM is a property development company with a dash of care added on whereas OCA is a care company with a dash of property added on at this point in time.

[Maverick]

I am more cautious around the sell down timeframe of the 133 units "delivered" in December 2018.
We've seen this movie before and if I remember correctly there were about 70 that were delivered late in 2017 that were tagged with the same (delivered too late in the year to be sold) line. So were these 70 actually sold, well yes and no. SUM don't separately identify them but their sales for 2018 were materially lower than 2017 despite the 70 extra stock.

Early in 2018 I predicted $100m underlying profit for the year, (subsequently revised as the real estate market and volume cooled later in the year). First forecast was almost bang on the money. Once we have Q1 sales data in early April and here the annual meeting narrative in late April I think that should give some worthwhile information to make a forecast for FY19. Until then I will simply say I think the company is somewhat undervalued and that I have been accumulating them. I note that in FY18 they made an underlying profit of 43.74 cps. I put an awful lot of stock on prior track record and I think SUM have an exceptional one and deserve to be on a multiple slightly higher than the market is currently crediting them with, (notwithstanding the slowing Auckland real estate market).

If Q1 sales are really good and the narrative at the annual meeting is positive I think there is a very good chance we will see a material rerating of SUM probably back towards its previous high of $8.00.

I totally agree with your sage wisdom Beagle on waiting to see how quarter one sales go. Turns out there is no need to hurry on these behemoths.
As far as the surplus 70 ish units from FY17 being delivered late in that year, there is nothing wrong with your memory . So now we have a net 115 units on top of that (2017) to sell. So either stock is banking up or it's simply a timing thing.
If it's resale issues ( which I personally don't think it is based on SUM generally delivering on or above expectations) then the whole sector is a worry.
If it's a timing issue , as SUM says it is , then SUM is in for a great fy19 as it's sitting on lots of stock to sell. SUM say these units are selling on average in 3months.

[Maverick]

The trouble for me with trying to line SUM up OCA is that SUM has a maturing, predictable business model and have a large historical set of accounts whereas OCA are in the middle of serious mega-renovations with little history of their new, up-specking direction.
i won't bang on about OCA on this thread but my response to yours Winner is that SUM appears to be presenting better value tha OCA "right now " and you are probably right, BUT, Couta's opinion is also very likely correct, that when OCA emerges from the chrysalis it is currently in then 3-5 years from now OCA will be in a field of its own in a superior (if not slightly monopolistic) position than your bog standard retirement village.
So I guess buy SUM now and switch to OCA later. Personally, I won't play that game as I don't think switching around like that generally works out better than the long game, plus , who wants IRD pricking their ears up.