SUM - Summerset Group

[Joshuatree]

Has no-one else read the NBR article by Tim Hunter "pop goes the bubble" June 23rd issue. Seems some subscribers are being selective in their reading, confirmation bias; most of us do it; its a human failing , i have to pull myself up regularly. Will post snippets later as off to visit someone in a care facility.

A few snippets from NBR re week ago 23rd june.Worth grabbing a copy if any left? Or going to library.

Retirement villages have had a charmed life for more than a decade, aided by a tax free business model tacitly endorsed by a grateful Govt....Tim Hunter

Confidence in the sectors use of underlying profit as a performance measure could fall, he said,"with it increasingly clear that the measure can be managed from period to period" Tim Hunter " Arie Dekker" FNZC

The contrast between the sectors high valn's and low free cashflow is "both a valuation and financial risk- particularly where alot of forward value is priced in"

"there is a limited capacity to rely on the cashflow statement for the retirement village operators either"

... An important feature of the retirement prop industry is that its biggest cashflows don't count as revenues.

... key phrase "if the mkt momentum turns"

The new bond will be used to pay down some of summer sets bank debt of about $280 million.

..."its frustrating for us.... that the offer does not provide us with insight into the key covenant of interest we have in the sector- the banks ebit/ interest coverage"

"the gap between disclosure in the listed property vehicle and the retirement village sector at results time is large...."

The criticism of disclosure standards may have already made its mark but its mere existence suggests the mkt is contemplating the end of the property boom. Or is that a bubble? Tim Hunter

[winner69]

Interesting that if building consents are anything to go by there hasn't been an ever increasing number of retirement village units being built over the last 3 years

Annual numbers to March - 2015 there were 1,992 consents - 2016 there were 1,929 and to March 2017 there were 1,915 units.

[Beagle]

Thank you James108, I'll look into that paper when I get time, can anyone help me save some time by proving a link please ?

Regarding Tim Hunter's attempt to besmirch the veracity of the entire industry's accounting standards in terms of his remarks regarding underlying profit unless he's going to substantiate that with evidence I think that's extremely unprofessional journalism.

It is worth noting on that subject that SUM won some industry award for their integrity of their financial systems very recently. I understand better than most of here the balance date cut-off issues in terms of measuring IFRS profit on partly completed villages but for Tim Hunter to make such a denigrating comment one must wonder what his professional qualifications are. Does he really understand the accounting issues involved ? Perhaps he's be better directing his enquiries as to how some banks "manage" their bad, doubtful and delinquent debtors..now that's an area where things really are "managed" Disc both a SUM and HBL shareholder.

[Joshuatree]

Pretty defensive attack there Roger; i was hoping for a more objective opinions; unusual coming from someone who's encouraged folks to take up subs in NBR ; a very good quality financial paper.

[Beagle]

They're usually good, not always. Some industries manage their balance date issues a lot more than others... Sorry you're disappointed with my post Joshuatree...very limited time at present. Trading on a forward PE of 14.2 around half its average since listing I am more than confident all known and perceived risks are more than fully priced in....like AIR's risks were fully priced in at $1.73 late last year.

Fact is many people don't realise that accounting for construction is a complex subject, fill your boots if you wish https://www.accountingtools.com/cons...ccounting-book but some journalists find it easier and more importantly more sensational to simply throw mud.

[Joshuatree]

Thanks mate; you're right re accounting complexity; you're coming from the source there; my eyes for one glaze over very quickly clicking on that link .Fair comment; have a great weekend.

[peat]

We worked out that 99% of last years profit was property revaluations.
Which was a shock.
However further workings indicated that about half (forgive there gross approximations) of that was realised property valuations.
Realised propery valuation gains are cash banked. The other obviously not.
So I was surprised by hardt's post that 15% came from came from care based earnings....

Disclaimer, not a holder anymore - sold out y'day. dont read anything into that...

[Lewylewylewy]

A jounralist reporting on something that they don't really understand?! Shocking!

[Beagle]

Thanks mate; you're right re accounting complexity; you're coming from the source there; my eyes for one glaze over very quickly clicking on that link .Fair comment; have a great weekend.

No worries mate. You're not the only one who's eyes glaze over looking at that subject matter ! I guess the fact that Summerset's finance team won an award for the veracity of their reporting system means we can take some comfort that according to the experts they have their reporting systems well established. No sailing this weekend...might have to make do with watching the Lions get another hiding

Really shocking LLL, like that's never happened before

[couta1]

Bollinger Bands coming together, a move upwards is on the cards, IMO.