SUM - Summerset Group

[winner69]

So underlying $77m-$79m

A bit less than Beagles (outrageous forecast) but pretty close to my R$80m I said early in the year

Real profit going to be close to $200m or about 90 cents a share

So currently on a PE of about 6

At least the share price is up 15% from a year according to the NZX but still has reached a new high ....in soite of this huge wealth creation

Even super cheap if valued like a pure property company

[Beagle]

So underlying $77m-$79m

A bit less than Beagles (outrageous forecast) but pretty close to my R$80m I said early in the year

Real profit going to be close to $200m or about 90 cents a share

So currently on a PE of about 6

At least the share price is up 15% from a year according to the NZX but still has reached a new high ....in soite of this huge wealth creation

Even super cheap if valued like a pure property company

To be fair I did pull my forecast back to circa $80-85m a couple of months ago but yes your point about being valued as a pure property company and super low PE on that basis is worthy of some consideration. Whichever way you look at it what's now clear is this business makes very good money even in normal real estate conditions so the low PE relative to the market isn't justified especially when one considers their proven business model, their proven track record of strong profit growth, the embedded value in each unit and the very strong demographic tailwinds for the next 20-25 years. Not many cheap stocks left on the NZX now but this is one of them the SP this year having significantly underperformed earnings growth.

[Raz]

so up approx. 80 cents in the past year...more to be made if you had time to trade it...thats my opportunity cost this year of doing other things.... and leaving them as a long term hold..I will have to live with it.

[Beagle]

Interesting to look at it from a 2 year view too Raz. 2 years ago the shares were $4. If we assume in late December 2015 the profit for the year to 31 Dec 2015 was already baked into the price and look at profit growth since then including expected profit growth this year at 38% (the mid point of forecast) if the PE had stayed the same the SP would reflect compound growth of 50% for the YE 31/12/16 and 38% for this year so that would give a theoretical SP of $4 x 1.5 x 1.38 = $8.28.

Clearly the market thinks the slowdown in the real estate market is going to affect its profitability going forward but it would appear we are looking at very robust growth this year despite a far more normal real estate market.

If someone is really bored over the holidays and wanted to check just how far this PE contraction has gone they could start with the SP on 31 March 2014 at $3.42 and check the compound profit growth for the 3.75 years since then.

[winner69]

Read somewhere that value hasn’t done that well in 2017 and that value will outperform in 2018

Heck, with SUM you could get both

Just imagine growth as well a rerating upwards .... 9 bucks here we come.

[Raz]

Read somewhere that value hasn’t done that well in 2017 and that value will outperform in 2018

Heck, with SUM you could get both

Just imagine growth as well a rerating upwards .... 9 bucks here we come.

Love to see a winner budget..it would be a masterpiece of positivity!

[BlackPeter]

For what it is worth - we just passed the Golden Cross - and SUM clearly broke out of the wedge it oscillated in throughout the last year. Blue skies from here ...?

[Beagle]

For what it is worth - we just passed the Golden Cross - and SUM clearly broke out of the wedge it oscillated in throughout the last year. Blue skies from here ...?

I would like to think so BP. SP was right around these level's way back in March 2017 and underlying profit is forecast by the company to grow ~ 40% for 2017 so the value is clearly there. My preliminary estimate, (subject to revision once I see more commentary from the company in its Q4 sales in January and annual profit announcement in February) is $100m underlying profit for FY18 which puts SUM on a forward PE of just 12. That would make it the lowest PE its ever been on since it listed six years ago.

[winner69]

I would like to think so BP. SP was right around these level's way back in March 2017 and underlying profit is forecast by the company to grow ~ 40% for 2017 so the value is clearly there. My preliminary estimate, (subject to revision once I see more commentary from the company in its Q4 sales in January and annual profit announcement in February) is $100m underlying profit for FY18 which puts SUM on a forward PE of just 12. That would make it the lowest PE its ever been on since it listed six years ago.

About the same multiple as OCA (on a forward looking F18 expectations)

[peat]

Looks like its continuing.

I tend to think this big triangle is a continuation pattern.

Attachment 9151