SUM - Summerset Group

[Beagle]

Not sure I recall putting in in those terms but I think that's just FNZC way of somewhat creatively saying we've been less bullish on this one than we should have been, not that these analysts ever admit they were wrong LOL. The jump in the development margin this year was extremely pleasing but that isn't news per se, in fact as you quite rightly say I noted at the half year point last year that they were really smashing the ball out of the park with their development margins.

Their debt management and land banking have also been impressive. Overall I think the management team are doing a very good job. Not the slick well oiled machine RYM are yet but you have to hand it to them and give kudos where its due, their track record of EPS growth since they listed over six years ago has vastly exceeded the rate of RYM's growth. The numbers don't lie mate and you know me, I'm a numbers man ! Maybe we might see the multiples these two trade at close up a bit in the years ahead ? Now that would really give me a good warm contented feeling...finally SUM companies getting recognised for their real earnings growth performance.

Better get yourself a defibrillator at some stage in the next couple of years mate so you can pop around and resuscitate Couta1 from his heart attack when SUM's SP overtakes RYM's

[winner69]

Beagle ....wasn't there a huge increase in the embedded value per unit last year .... indicator of future profits when they get sold eh

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-websit...609/275030.pdf
Very good result and nice beat on recent guidance. Highly credible that they raised the development margin so significantly in what is arguably an extremely tough construction market (look no further than FBU and their sub contractor problems for an example of how tough it is out there).

Interesting snippets from the investor presentation.
Embedded value per unit now $152K up from $114k last year, augers well for future profit growth.
Underlying profit has grown on average 47% per year for the six years since they listed, (struggling to think of any company that has anything like that record ?)
For those that like the headline IFRS metric Net profit after tax has grown on average at a whopping 93% per annum since they listed.

My thoughts are that this is an outstanding company for people to build wealth over time. Very happy long term holder.

Thanks mate, this run is very enjoyable or more correctly it will be enjoyable when you can call it a run. Was $5.60 ~ 18 months ago in September 2016. Annual earnings growth was 50% in 2016 and has just been 44% so the SP has nowhere near kept up with earnings growth. A decent run would be this puppy heading to $9. Just give it time, it'll get there.

If they can hit $100m underlying profit for 2018 on 224m shares that's 44.64 cps. At $6.26 that puts SUM on a current year PE of just 14 and that for a company with a six year track record of average compound growth of 47% per annum in underlying earnings and some people reckon there's not much value left in the N.Z. market and PE's right across the board are too high....The PEG is still just 0.30...Hmmmm

I won't for a minute claim RYM isn't a great company because there's no debate about that. The issue is why should SUM which is growing at three times the earnings growth rate be priced at such a heavy PE discount ? For me, I can't see any logic to this trading at a discount to the market average PE of about 21, (which is still a material discount to RYM's forward PE) so my price target is 21 x 44.64 = $9.37.

If we get a nice stable year with real estate and some good news on an attractively priced land acquisition in Australia there's no reason this one can't have the possibility of giving shareholders a very rewarding year, which would be a pleasant change from last year. 50% SP gain a possibility ?, you betcha !

Beagle ....wasn't there a huge increase in the embedded value per unit last year .... indicator of future profits when they get sold eh

Yeap, see above comments from late February, comments made "just a little" before FNZC analyst finally got around to crunching the numbers.
Maybe you're right and they can do more than $100m underlying profit this year. That would be good wouldn't it !

[winner69]

FNZC guy said "we are watching the housing market and inventory levels closely," (from that sharechat article)

Hope he’s watching closely enough ...might have to raise his target again eh

Looks pretty good the property market per se to me.


https://www.reinz.co.nz/Media/Defaul...ary%202018.pdf

[percy]

I think the FNZC analyst disagrees with RYM and SUM on the affect the property market has on their prospects.
So far the past 20 years RYM and SUM have been correct.

[minimoke]

Since I'm new to SUM how does theri Div Reinvestment work. I see they are XD now - do I get a letter or just an update on holding at some stage?

[777]

Since I'm new to SUM how does theri Div Reinvestment work. I see they are XD now - do I get a letter or just an update on holding at some stage?

Log in to the share registry and tick the box for shares in lieu if cash. Timing for this dividend may be a problem as I think it has to be before ex date.

[Beagle]

FNZC guy said "we are watching the housing market and inventory levels closely," (from that sharechat article)

Hope he’s watching closely enough ...might have to raise his target again eh

Looks pretty good the property market per se to me.


https://www.reinz.co.nz/Media/Defaul...ary%202018.pdf

Those are really solid statistics, all the more so when you consider RBNZ deposit requirement changes and various banks making it harder to borrow money.
Worth remembering that only 6 of SUM's villages are in the wider Auckland region.
Also worth remembering in regard to future profit growth that in addition to the much higher embedded value per unit I mentioned yesterday, that the number of units available to be churned went up by 450 last year

Since I'm new to SUM how does theri Div Reinvestment work. I see they are XD now - do I get a letter or just an update on holding at some stage?

Dividend reinvestment plan (DRP) 2.5% discount to volume weighted average ex divvy price. You'll get a dividend statement in the next week or so telling you how many extra shares you've been granted in lieu of the dividend. I'm fully subscribed to the DRP.

[iceman]

Since I'm new to SUM how does theri Div Reinvestment work. I see they are XD now - do I get a letter or just an update on holding at some stage?

Login to your account at Link Market Services, select "Payments & Tax" and then "Reinvestment Plans" where you can select what you want. But like 777 said above, you may be too late for the current divie.
Welcome aboard this train mate :-)

[minimoke]

Login to your account at Link Market Services, select "Payments & Tax" and then "Reinvestment Plans" where you can select what you want. But like 777 said above, you may be too late for the current divie.
Welcome aboard this train mate :-)

I bought on 14 Nov at $4.80 so am expecting to be included.