SUM - Summerset Group

[Beagle]

Their respective balance dates couldn't be further apart, MET June, SUM December.

In this comparison to alleviate this considerable difference I have used the half year earnings of MET to 31 December which showed a 15% increase in underlying earnings as a proxy for their full year.

2 x $38.6m = $77.2m which would give them underlying earnings growth of just on 17% for the year to 30 June 2017, (last year was $66.1m).
There are 213 m shares on issue so the eps = 36.24 and on a SP of $6.06 this gives them a comparative PE of 16.72 v 21.2 for SUM. Met look cheap but I think there are very good reasons for that.
Very poor development track record and major remedial issues with their existing buildings to name just two factors.

Agree with Winner's analysis above regarding ARV, forward PE approx. 21. The new kid on the block appears very expensive on a relative basis to SUM considering it much shorter track record and inferior earnings growth. Quite a few people holding for the dividend yield with that one.

Might compare all their development land banks to see who has the most scope to keep growing at some stage soon when I have spare time.

[Joshuatree]

Great stuff thanks guys; ARV certainly had a great run earlier and looks to out of puff.

[Fox]

Adding to what others have said recently, my opinion is that this pup is very undervalued due to its sustained growth rate (48% CAGR) proven with consistent delivery of strong results. This is mostly down to the sector growing at tremendous rates.

Using some old figures from the 2013 Cencus:
- 29.4% increase in people aged 85+ since 2006
- ~30% increase in people aged between 60-74 since 2006

Its clear the median population age is only going one way and this sector is the fundamental core that the older folks rely on. IMO any retirement stock should do well in the next 15-20 years due to these changing demographics, however it comes down to which company will outperform the others on a growth perspective.

SUM historically has a 47.58% CAGR since 2011 and a PE that is hovering around the low 20's (current trailing PE of 21.02). This gives it a PEG ratio of 21.02/47.58 = 0.44 . For a comparison, CVT was at 0.41 whilst it was growing, and RYM is sitting on a PE of 24.5 (Roger's calc) with a CAGR of ~15%, giving us a PEGR of 1.63. I'll let the numbers talk for this part.

It's often very difficult for a large company to consistently grow at a high level due to increased pressure on it's surroundings and diminishing abilities of management to manage (think turning the big ship analogy). Personally, I believe SUM has entered the market at the perfect time - still small enough to control growth and change with market movements, yet large enough to deploy enough capital and develop units at an astonishing rate. By 2020, the retirement sector will face the largest growth in demand which will continue for 10 years thereafter, and SUM is in the best position to take advantage of this.

I see true fair value around a PE of 24, providing a current fair value, using FY16 results, of $6.13.

[Carpenterjoe]

http://www.theage.com.au/victoria/va...05-gur4zn.html

Might effect Rym more than NZ based retirement villages or it might be just residential properties. Interesting approach.

[Joshuatree]

Int thanks CJ; great idea tax empty properties (over 24000 empty houses in melbourne). lLke the new 3 b/r houses for $400,000 !!

[winner69]

Int thanks CJ; great idea tax empty properties (over 24000 empty houses in melbourne). lLke the new 3 b/r houses for $400,000 !!

Apparently more than 30,000 empty properties in Auckland

[Carpenterjoe]

Sydney sitting around 200,000. Alot of apartment land banking from Sydney's building boom. Some owners have circa 150 empty dwellings i first heard of this style of investment about a decade ago.


https://www.google.co.nz/amp/www.dai...rs-blamed.html

[Brain]

That's a lot of vacant properties. Anybody know how this data is gathered?

[Beagle]

Adding to what others have said recently, my opinion is that this pup is very undervalued due to its sustained growth rate (48% CAGR) proven with consistent delivery of strong results. This is mostly down to the sector growing at tremendous rates.

Using some old figures from the 2013 Cencus:
- 29.4% increase in people aged 85+ since 2006
- ~30% increase in people aged between 60-74 since 2006

Its clear the median population age is only going one way and this sector is the fundamental core that the older folks rely on. IMO any retirement stock should do well in the next 15-20 years due to these changing demographics, however it comes down to which company will outperform the others on a growth perspective.

SUM historically has a 47.58% CAGR since 2011 and a PE that is hovering around the low 20's (current trailing PE of 21.02). This gives it a PEG ratio of 21.02/47.58 = 0.44 . For a comparison, CVT was at 0.41 whilst it was growing, and RYM is sitting on a PE of 24.5 (Roger's calc) with a CAGR of ~15%, giving us a PEGR of 1.63. I'll let the numbers talk for this part.

It's often very difficult for a large company to consistently grow at a high level due to increased pressure on it's surroundings and diminishing abilities of management to manage (think turning the big ship analogy). Personally, I believe SUM has entered the market at the perfect time - still small enough to control growth and change with market movements, yet large enough to deploy enough capital and develop units at an astonishing rate. By 2020, the retirement sector will face the largest growth in demand which will continue for 10 years thereafter, and SUM is in the best position to take advantage of this.

I see true fair value around a PE of 24, providing a current fair value, using FY16 results, of $6.13.

Great post and I think you've hit the nail sweetly on the head. SUM have six years land banked even at their new increased build rate of 450 units per annum. Haven't had time to look into this properly yet but I very much doubt any of the other retirement companies are as well positioned for further growth.

[mondograss]

That's a lot of vacant properties. Anybody know how this data is gathered?

I think the councils collect that information by data matching against water consumption as that utility is usually under their control.