SUM - Summerset Group

[couta1]

As NZ tends to be a follower rather than a leader what happens in Australian law and politics has a lot of relevance to NZ at some stage so if the retirement sector becomes regulated in AUS then I would guess NZ would follow at some stage.

and yes sum or rym or what ever thread dont really matter its the theme which may or may not have relevance depending on your opinion

We are the leader when it comes to the continuum of care model, that's why Ryman are trailblazers in Aussie(And by all accounts, the Aussies love our model) Just like we haven't followed Aussie with a CGT, we don't need to follow their inferior aged care model.

[co0p]

Wrong, there has been a significant increase in the number of residents from Asian families entering these facilities over the last few years. Children don't have time or the inclination to have their parents living with them in the main, most of the elderly I talk to don't want to be a burden on their children, and understand they live busy modern lifestyles.

Perhaps, but I suspect that significant increase would be off a tiny base. The fact is kids from Asian families tend to live with their parents for longer, and in return are expected to look after their parents when required.

The other issue is many younger adults do not own their own home. Their best chance is to inherit the family home. If that means looking after the elderly parents then so be it.

[Beagle]

My standard approach to valuing no growth cyclical companies is to use a PE of 10. Benjamin Graham argued 8.5 when the risk free interest rate was just over 4%. Obviously we're lower than that at present. Using his 2g formula, (I use a 1g more conservative formula) to value growth the current market PE of 14 is suggesting that over the medium term SUM can only grow earnings at 4%, (Ben Graham 2%).

Using RYM as a test Guinea pig and using the period of the GFC (Arguably the worst financial event since the great depression of 1929-1936) as a proxy, its clear that RYM grew underlying earnings a lot quicker than 4% throughout the GFC. Strong demographic tailwinds for at least the next 20 years and RYM's example of sustained profit growth even during the GFC and SUM's faster growth than RYM suggest SUM's current PE is well short of realistic pricing. The old saying "the market can stay irrational longer than one can remain solvent" doesn't apply as I have no debt or gearing. I remain very confident of the veracity of their business model and am sure the Directors and Management are working extremely hard to meet any current and perceived challenges that lie ahead.

I'm not emotionally attached, I just like to make a lot of money long term on a very sound investment thesis.

[Xerof]

Gee, the tone of this thread is sounding like AIR at $1.80

It's a very nice gauge - bearish at the bottom, bullish at the top.

lovely

[Bjauck]

Its certainly going to be an interesting couple of years for this sector.

I do feel the development and resale margins will be squeezed once this once-in-a-lifetime housing bubble bursts.

I also suspect many baby boomers will end up living with their children during their last years - more like Asian families.

Its going to be interesting and I'm glad I'm watching from the sidelines.

Boomers perhaps inviting their adult kids, who cannot afford their own houses, and families to live in the family home? As home ownership rates are dropping, maybe more in the generations after the boomers will end up living in multi-generational households. It depends for how long housing remains unaffordable for first home buyers...

[Beagle]

Gee, the tone of this thread is sounding like AIR at $1.80

It's a very nice gauge - bearish at the bottom, bullish at the top.

lovely

Agreed. An awful lot of people were giving AIR a real beat-up when they were down around $1.80 late last year and those same people have missed a tremendous opportunity. Always darkest before the dawn

[Lewylewylewy]

For me, it's all about ensuring that they can make money during a flat market. If they can, it's good buying.

I can't see how they wouldn't make money in a flat market, otherwise the industry would fold every time the market went flat for a year or more.

This is my justification for holding through. Though I wish I sold earlier on my initial concerns (largely because I'm over exposed to NZ property), but I won't sell at this price. This price is entering buying territory.

Disc: probably won't buy more as I'm over exposed and suspect further falls in SP.

[winner69]

Don't often agree wuth Hosking but this morning he was right on - the property market in the media is not the property market in reality.

Too many have been sucked in by the media (some on here)

This has resulted in adverse market reaction to the retirement sector - but presented a great investment opportunity for those not sucked in. Reality will win out in end

[King1212]

Don't often agree wuth Hosking but this morning he was right on - the property market in the media is not the property market in reality.

Too many have been sucked in by the media (some on here)

This has resulted in adverse market reaction to the retirement sector - but presented a great investment opportunity for those not sucked in. Reality will win out in end

Not yet winner...this is just the beginning of the down trend....so expect the retirement sector a bit down for the next couple months till election n akl property shows stability n direction.

[JeremyALD]

For me, it's all about ensuring that they can make money during a flat market. If they can, it's good buying.

I can't see how they wouldn't make money in a flat market, otherwise the industry would fold every time the market went flat for a year or more.

This is my justification for holding through. Though I wish I sold earlier on my initial concerns (largely because I'm over exposed to NZ property), but I won't sell at this price. This price is entering buying territory.

Disc: probably won't buy more as I'm over exposed and suspect further falls in SP.

I think the fact that they've already released guidance so early indicates their not that worried about the property market and can still make money in a flat market (on an underlying basis)