SUM - Summerset Group

[Vaygor1]

https://www.nzx.com/announcements/323212

Why does Sum need more money? Have they over-committed?
RYM seem to grow at a manageable rate without issuing bonds.

Disc: Holding RYM an SUM

[Ggcc]

Why does Sum need more money? Have they over-committed?
RYM seem to grow at a manageable rate without issuing bonds.

Disc: Holding RYM an SUM
It was mentioned by an institution some time back and they also mentioned the bond offer would be backed by them. I can’t remember which one. They need to grow fast to meet demand. I support it and i knew it would be coming

[Beagle]

Why does Sum need more money? Have they over-committed?
RYM seem to grow at a manageable rate without issuing bonds.

Disc: Holding RYM an SUM

Rob Campbell says they're diversifying their funding sources and lengthening their debt maturity profile. Another bond issue was clearly telegraphed at the annual meeting.
I know Julian is keen on expanding into Australia.
Fact is SUM is growing faster than RYM.
Long bonds currently offer very cheap financing for strong corporates.
I think this fuels more growth and I see it as a positive.

[LAC]

They need some cash when they hit the 600 build rate:)
Good move to get some cheap cash when you look at their growth rate. Just hope they can get the workforce required in future...

[Ggcc]

They need some cash when they hit the 600 build rate:)
Good move to get some cheap cash when you look at their growth rate. Just hope they can get the workforce required in future...
Tradies are stretched to the limit. I have local contractors booked up for 6 months minimum with more enquiries every day extending that timeframe. I have heard from one that he looked at his quotes and now throws an extra $1,500 on a week’s job just if people are in a hurry at no extra cost to him. I agree and hope Summerset don’t struggle with that

[winner69]

Why does Sum need more money? Have they over-committed?
RYM seem to grow at a manageable rate without issuing bonds.

Disc: Holding RYM an SUM

Mind you RYM has increased debt from $0.3 billion to $1.0 billion last 4 years

Obviously prefer dealing with bankers etc or bankers are more flexible with them.

[winner69]

At rate SUM are going with this bond issue and if they use that touted $200 undrawn credit sooner than later they might need to go to shareholders for sum more capital

What’s a ‘healthy’ level of leverage in this sector?

[Beagle]

At rate SUM are going with this bond issue and if they use that touted $200 undrawn credit sooner than later they might need to go to shareholders for sum more capital

What’s a ‘healthy’ level of leverage in this sector?

40% ? I think their balance sheet is pretty conservative mate. Nothing worries me about this issue indeed I welcome it. If bondholders want to fund more growth for shareholders at around 4.0 - 4.50% per annum, I am very pleased. (NB 2023 bonds previously issued at 4.78% currently trade at 3.8% so I think the interest rate range I guessed will be where the new bonds are at for a 2025 maturity)

[Lewylewylewy]

I was very happy to see the bond offer. Remember that debt = profit in real estate, and these guys get a good return on their debt. Also, bonds are a super cheap debt. Good stuff.

I imagine they'll issue more bonds in future, if the demand is there and the rates are still low.

[winner69]

40% ? I think their balance sheet is pretty conservative mate. Nothing worries me about this issue indeed I welcome it. If bondholders want to fund more growth for shareholders at around 4.0 - 4.50% per annum, I am very pleased. (NB 2023 bonds previously issued at 4.78% currently trade at 3.8% so I think the interest rate range I guessed will be where the new bonds are at for a 2025 maturity)

If they draw down the remaining $200m and bonds are $100m leverage will be around 40% at the end of this year

[Bjauck]

I was very happy to see the bond offer. Remember that debt = profit in real estate, and these guys get a good return on their debt. Also, bonds are a super cheap debt. Good stuff.

I imagine they'll issue more bonds in future, if the demand is there and the rates are still low.
I am confident that the bond issue will be good for SUM at this stage in the market for retirement villages.

NZ residential land is very expensive (using international and affordability gauges) in a currently low interest rate environment.

However Debt can also = negative equity in real estate - so should be used cautiously after such a long run up in residential land values.

[Ggcc]

I am confident that the bond issue will be good for SUM at this stage in the market for retirement villages.

NZ residential land is very expensive (using international and affordability gauges) in a currently low interest rate environment.

However Debt can also = negative equity in real estate - so should be used cautiously after such a long run up in residential land values.

It is quite funny how friends and all people I talk to believe house prices will never retreat. All home owners are claiming over $150,000 in profit and some are leveraging themselves for house extensions as their houses keep going up. In Napier new valuations have gone up considerably and only recently. These people see these new values and consider that they will always sell well above q.v. and that the future only gets better. Flat land itself is over the top expensive, but I am glad that Summerset have purchased a great spot. The question is how much higher can land get and will it go back down to a realistic price? I am sure it is unsustainable to think land will continue to rise at such a fast rate and I am waiting for property values to reduce in all the smaller cities. I hope Summerset are planning what would happen if properties devalued 10-15%

[BlackPeter]

It is quite funny how friends and all people I talk to believe house prices will never retreat. All home owners are claiming over $150,000 in profit and some are leveraging themselves for house extensions as their houses keep going up. In Napier new valuations have gone up considerably and only recently. These people see these new values and consider that they will always sell well above q.v. and that the future only gets better. Flat land itself is over the top expensive, but I am glad that Summerset have purchased a great spot. The question is how much higher can land get and will it go back down to a realistic price? I am sure it is unsustainable to think land will continue to rise at such a fast rate and I am waiting for property values to reduce in all the smaller cities. I hope Summerset are planning what would happen if properties devalued 10-15%

You are right - real estate will certainly not keep going upwards with two digit rises year after year, however - long term it will go upwards. More and more people around needing space and last time I checked they don't make more land (well - Singapore and Holland do, but that's not material). As well - NZ is still a quite desirable place on this globe to live in. Population pressure is on and I don't expect real estate here to go on sale anytime soon.

But you are right - it is certainly unwise if somebody buying real estate now is taking two digit rises every year for granted. Not sure, though where the problem for SUM and other retirement village operators would be if we have a (modest) reduction in real estate prices.

They do need the land to build units which are required - and their clients will buy them no matter whether real estate goes up or down. Worst thing I see is that they could have purchased some land a bit cheaper, if they would have waited, but hey - that's like hedging currencies - you win a bob or you loose one, but it typically does not cost the farm (and wouldn't in this case).

Worst thing I could see for investors is that they might have for some time (couple of years) less outrageous revaluation gains. But than - how bad would this be? As long as SUM and others have a healthy underlying profit (most do) - why would any long term investor worry?

[Beagle]

Good post BP. Latest quarterly Summerset Scene magazine arrived today. Always an enjoyable read. Nice to see the staff getting new stylish uniforms and staff now eligible to win one of a number of $3,000 travel vouchers each quarter in addition to existing staff benefits including health scheme and staff share scheme.

For those who worry about real estate prices flattening out in the likes of Auckland its worth remembering that SUM have just 4 villages at present in Auckland, (plus one in Warkworth, (not sure if this is strictly Auckland or not depends upon your definition), and a further two proposed. Just six out of a total of 30 villages either existing or planned which is just 20% exposure to the Auckland market. When you consider that approx. 30% of Kiwi's live in the greater Auckland area they are actually under represented in this market and therefore offer a truly well diversified portfolio of villages well spread geographically across New Zealand.

I therefore think its the average national real estate price, (for people who like to keep an eye on such things) that's the relevant statistic. SUM investors would have noticed the average national real estate prices have continued to increase very nicely.

[Timesurfer]

It will be interesting to see what happens to national realestate prices if investors decide to dump houses in response to Twyfords lunatic ideals. There might be an opportunity for renters to jump into substandard home ownership (since they aren't allowed to rent them). However, I would imagine this will be short lived opportunity before the market settles down and climbs ever higher. Although I agree that at some point after the boomer bubble we will likely see a return to the 80's duldrums in capital gains.

[Ggcc]

It will be interesting to see what happens to national realestate prices if investors decide to dump houses in response to Twyfords lunatic ideals. There might be an opportunity for renters to jump into substandard home ownership (since they aren't allowed to rent them). However, I would imagine this will be short lived opportunity before the market settles down and climbs ever higher. Although I agree that at some point after the boomer bubble we will likely see a return to the 80's duldrums in capital gains.
We also have to consider a 10-15% drop in house prices when Jacinda introduces capital gains tax after next elections. That is what I think Westpac economists mentioned would happen if capital gains tax was introduced. Which I feel will be linked to the sharemarket and a possible short term (1-2 years) drop in share prices. Especially the retirement sector.

[stoploss]

We also have to consider a 10-15% drop in house prices when Jacinda introduces capital gains tax after next elections. That is what I think Westpac economists mentioned would happen if capital gains tax was introduced. Which I feel will be linked to the sharemarket and a possible short term (1-2 years) drop in share prices. Especially the retirement sector.

https://www.kiwiblog.co.nz/2017/09/has_a_cgt_impacted_house_prices_in_australia.html

[minimoke]

Divi Reinvestment PLan strike price set at $7.573, including 2% discount

[Beagle]

Divi Reinvestment PLan strike price set at $7.573, including 2% discount

Happy with that and fully subscribed to shares in lieu of dividend. A great way to accumulate more shares cheaply without brokerage.

[Beagle]

Those worried that the Auckland market is in decline might want to read this http://www.sharechat.co.nz/article/8015edf7/auckland-housing-market-rears-its-head-as-sale-prices-new-listings-pick-up-in-august.html?utm_medium=email&utm_campaign=Auckland%20housing%20market%20rears%2 0its%20head%20as%20sale%20prices%20new%20listings% 20pick%20up%20in%20August&utm_content=Auckland%20housing%20market%20rears%20 its%20head%20as%20sale%20prices%20new%20listings%2 0pick%20up%20in%20August+CID_64c7e1e198bc4b5ffa4e1 f12e6faa0cb&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle8015edf7auckla nd-housing-market-rears-its-head-as-sale-prices-new-listings-pick-up-in-augusthtml
Labour has already stated that the family home will be exempt from any possible future CGT. I think SUM people, (perhaps currently shut out of the real estate market due to unaffordability) are getting a little over optimistic with their hopes for a 10-15% decline. Besides that if they campaign the next election on the basis of a CGT that's the end of this government's term of "governance"

[Timesurfer]

I am somewhat sceptical of a CGT making a huge impact.
So you have to pay tax on your profit - it is profit, and I am sure those with a lot at stake will have a loophole around tax as they always do.
From the property investors I talked to it sounded like business as usual for them. A slower housing market has more of an impact leaving only the long term investors playing the game. The flippers might be driven back to the stockmarket for their quick buck?

[Ggcc]

https://www.kiwiblog.co.nz/2017/09/has_a_cgt_impacted_house_prices_in_australia.html
Great and thanks for this information. I can't for the life of me find the quote from that economist discussing houses falling in value when CGT gets introduced. Anyway great to see a different outcome scenario

[stoploss]

Great and thanks for this information. I can't for the life of me find the quote from that economist discussing houses falling in value when CGT gets introduced. Anyway great to see a different outcome scenario
Sorry I know it's on the wrong thread... just remember they invented economists to make weather forecasters look good ....... Here is the article you are thinking about . Lets see who's right ....

https://www.westpac.co.nz/rednews/property/capital-gains-tax-would-reduce-house-prices-westpac-economists-estimate/

[winner69]

Sorry I know it's on the wrong thread... just remember they invented economists to make weather forecasters look good ....... Here is the article you are thinking about . Lets see who's right ....

https://www.westpac.co.nz/rednews/property/capital-gains-tax-would-reduce-house-prices-westpac-economists-estimate/

......and the Westpac economists in particular make the weatherman look good

Forecasts based on which political barrow they pushing at the time thinking they can ‘sway’ the RBNZ and the government ...and we talk about bias from businesses in the confidence surveys

[Ggcc]

Sorry I know it's on the wrong thread... just remember they invented economists to make weather forecasters look good ....... Here is the article you are thinking about . Lets see who's right ....

https://www.westpac.co.nz/rednews/property/capital-gains-tax-would-reduce-house-prices-westpac-economists-estimate/

Thanks again!! Yes let’s see who is correct. Only time will tell who is correct and if the government vote for CGT.

[longy]

I am somewhat sceptical of a CGT making a huge impact.
So you have to pay tax on your profit - it is profit, and I am sure those with a lot at stake will have a loophole around tax as they always do.
From the property investors I talked to it sounded like business as usual for them. A slower housing market has more of an impact leaving only the long term investors playing the game. The flippers might be driven back to the stockmarket for their quick buck?

As usual. It does not affect investors with a deep pocket much. CGT did not dent the Sydney and Melbourne's housing market... In fact I would pay close attention to the immigration policy than anything re demand for houses.

[artemis]

As usual. It does not affect investors with a deep pocket much. CGT did not dent the Sydney and Melbourne's housing market... In fact I would pay close attention to the immigration policy than anything re demand for houses.

A proposed CGT did Labour no good at the last 3 elections. Dropped by Mr Little after 2014, then sort of proposed in 2017 by Ms Ardern then dropped by a Captain's Call until post 2020.

With some 600,000 private rentals in NZ that is a lot of impacted people, including tenants facing increased rents.

Agree with watching immigration levels, but also watch sales of new build / off the plan apartments esp in Auckland. In recent years many if not most have become rentals. Will that continue?

[winner69]

None of this CGT and housing shortage on this thread please

Back on topic — SUM will continue to build heaps of retirement units and continue to make heaps of money

Why complicate matters with a lot of noise.

[artemis]

None of this CGT and housing shortage on this thread please

Back on topic — SUM will continue to build heaps of retirement units and continue to make heaps of money
Why complicate matters with a lot of noise.

Why? Because the property market is complex, with many levers and facets. Retirement property providers are part of that market. Some might think understanding wider market issues is useful.

[winner69]

Why? Because the property market is complex, with many levers and facets. Retirement property providers are part of that market. Some might think understanding wider market issues is useful.

So sorry ......

[Bjauck]

None of this CGT and housing shortage on this thread please...
Whether there is a CGT introduced in NZ could be relevant if it means that the tax regime for the retirement village owners changes as well. SUM earns what is currently non-taxable capital gains in its investment properties. Also would the tax rulings for village operators change?

However many hurdles - and probably years - need to be scaled by any political party wishing to introduce even an incomplete CGT (omitting owner-occupied real estate). Also what would the government do if SUM and others no longer provided possibly cross-subsidised nursing home and rest home level care?

I think a major goal of most CGT regimes overseas is to broaden the revenue raising base not necessarily to reduce asset prices. The current concentration on taxing income as opposed to taxing wealth or capital gains is an arbitrary one.

[Beagle]

Moving on...If I don't get any OCA under the placement that's okay because SUM other company with a superb track record of growth was on sale yesterday and hopefully this morning too.

[Blendy]

Moving on...If I don't get any OCA under the placement that's okay because SUM other company with a superb track record of growth was on sale yesterday and hopefully this morning too.

I love a good sale :)

[couta1]

Moving on...If I don't get any OCA under the placement that's okay because SUM other company with a superb track record of growth was on sale yesterday and hopefully this morning too. I must have missed SUMthing as I never saw any for sale at $6.50.

[minimoke]

Moving on...If I don't get any OCA under the placement that's okay because SUM other company with a superb track record of growth was on sale yesterday and hopefully this morning too.
Bit of a conundrum. Might have to swap my OCA bid for a SUM one. Feeling a bit piggy already with SUM though - up 60% this year. I need a change of feed.

[dabsman]

I got none but Ive bought a lot recently firstly under $1 then a bunch around $1.10 so I was sort of pissed off but not angry about it all really. More annoyed I called Craig's twice to become a new client and I went nowhere fast...

[Beagle]

I must have missed SUMthing as I never saw any for sale at $6.50.

It might go there if your mate Norah came back :lol: :lol:

[winner69]

To continue the discussion ...must be time to sell SUM and take the profits while share price remains so high


QV data shows New Zealand house prices falling

https://www.stuff.co.nz/business/106855889/qv-data-shows-new-zealand-house-prices-falling

[James108]

To continue the discussion ...must be time to sell SUM and take the profits while share price remains so high


QV data shows New Zealand house prices falling

https://www.stuff.co.nz/business/106855889/qv-data-shows-new-zealand-house-prices-falling

YoY they still very much positive, nothing to see here folks move along.

[Bjauck]

YoY they still very much positive, nothing to see here folks move along.
Recent buyers, mortgaged to the max, won’t want to see too many negative quarters if they have to become distressed vendors.

NZ has so much residential property debt that we don’t want it to suddenly collapse like a house of cards.

[James108]

I believe house price falls in the order of 1.5% are healthy for NZ and therefore good in the longterm for Summerset, I don't expect many on here will agree with this "pain today, gain tomorrow" mentality. But hey, I have held Summerset shares for several years now and don't expect to sell unless their business model seriously deteriorates which will most likely occur due to regulation (i.e. another GFC will not cause me to sell), in this case the lower the share price the better for me as I can buy more. Having said that, they keep increasing in value so they are at max portfolio allocation, just need my other shares to increase more so I can buy more SUM!

[winner69]

Summerset 8 year bonds around 4.15% pa

Suppose retirement villages are just about as safe as banks with that sort of rate.

Punters no doubt gobble this offer up

[winner69]

Another failed attempt to get to $8 and above and the share price falls back to the $7.50 mark

Maybe the market has weighed SUM up and the scales say that even $7.50 is too much. I wouldn’t be surprised to see it drop below $7 over the next few months.

[couta1]

Another failed attempt to get to $8 and above and the share price falls back to the $7.50 mark

Maybe the market has weighed SUM up and the scales say that even $7.50 is too much. I wouldn’t be surprised to see it drop below $7 over the next few months. Have you managed to find that Reversion chart mate, looking forward to viewing the updated one.PS-Dont worry about Beagle, he's too preoccupied with body preservation on the ski slopes currently.

[winner69]

Have you managed to find that Reversion chart mate, looking forward to viewing the updated one.PS-Dont worry about Beagle, he's too preoccupied with body preservation on the ski slopes currently.

I heard beagle was going to get the snowboard out and try a few ollies

You take care of him please

[BlackPeter]

Another failed attempt to get to $8 and above and the share price falls back to the $7.50 mark

Maybe the market has weighed SUM up and the scales say that even $7.50 is too much. I wouldn’t be surprised to see it drop below $7 over the next few months.

Jeez - Patience does not seem to be your middle name ;);

Have a look at the long term trend ...

9916

Share price nearly tripled in less than four years ... and there are people whinging whether it will reach the $8 today or tomorrow.

I'd call this a beautiful uptrend .... hardly ever touching the MA400. Happy holder - and the $8 will come when it comes :);

[Blue Skies]

Start of the week often generally seems a bit flat? Looked a bit oversold yesterday & an opportunity presenting itself.

[winner69]

Jeez - Patience does not seem to be your middle name ;);

Have a look at the long term trend ...

9916

Share price nearly tripled in less than four years ... and there are people whinging whether it will reach the $8 today or tomorrow.

I'd call this a beautiful uptrend .... hardly ever touching the MA400. Happy holder - and the $8 will come when it comes :);

Yep ....been going up at about 25% pa since IPO

Yep ..the long term regression chart is awesome ....even though price currently above the upper channel line

And above all the Rainbow MA on yahoo charts is just so beautiful it almost makes you cry

But will SUM go to $8 soon or fall back to the $6’s

Yep ...and

[BlackPeter]

Yep ....been going up at about 25% pa since IPO

Yep ..the long term regression chart is awesome ....even though price currently above the upper channel line

And above all the Rainbow MA on yahoo charts is just so beautiful it almost makes you cry

But will SUM go to $8 soon or fall back to the $6’s

Yep ...and

Absolutely - based on TA is a 6 in front of the dot not out of question. Touched the MA400 before and MA400 is currently at $6.16, MA200 is 6.86. Personally I think a drop below $7 is unlikely, but you never know.

Based on FA the company appears undervalued right now (no matter if we use the Graham formula or compare PE and growth with its significant competitor) ....

... but FA means nothing for short term price fluctuations.

So yes, traders ... the SP might fall down into the $6 range - or it might not. Make the best out of it - the opportunities are limitless :p!

[winner69]

".............

Based on FA the company appears undervalued right now (no matter if we use the Graham formula or compare PE and growth with its significant competitor) ....

... but FA means nothing for short term price fluctuations.

p!

Perception of quality of earnings creates a premium

Graham formula .....probably put it on a PE between 50 and 100 .....wow

[BlackPeter]

Perception of quality of earnings creates a premium

Graham formula .....probably put it on a PE between 50 and 100 .....wow

Can you help us to follow your maths?

In my books the forward PE (based on average estimates for the next 3 years) is 9.9 and the backward PE (based on earnings since 2010) is 20.7.

forward CAGR (3 years forward, 4 years back) is 23.7.

Putting these data into the original Graham formula comes up with a target of nearly $40 (or $24 if I use Rogers more conservative formula);

Ah yes - and if you are a Slaten fan ... PEG is 0.42.

Must be a sell :p;

[winner69]

Can you help us to follow your maths?

In my books the forward PE (based on average estimates for the next 3 years) is 9.9 and the backward PE (based on earnings since 2010) is 20.7.

forward CAGR (3 years forward, 4 years back) is 23.7.

Putting these data into the original Graham formula comes up with a target of nearly $40 (or $24 if I use Rogers more conservative formula);

Ah yes - and if you are a Slaten fan ... PEG is 0.42.

Must be a sell :p;

Looks like you done maths anyway

Doesnt it show this Graham formula is a bit (don’t know which word to use) these days.

[percy]

Looks like you done maths anyway

Doesnt it show this Graham formula is a bit (don’t know which word to use) these days.

I think I read in one of Buffett's books to look at a company's five years earnings and dividend growth record,but noted it was better to base any investment on ten years of earnings and dividend growth,allowing for one bad year.
No insight into how to value any company with negative earnings and not paying a dividend.
Jim Slater also would not look at loss making companies.
So I agree Graham formula too is a bit...……[I don't know either] these days.

[BlackPeter]

Looks like you done maths anyway

Doesnt it show this Graham formula is a bit (don’t know which word to use) these days.

I don't know any financial model which can give you an accurate idea of the future share price of a security - and if there would be such a model, than it would not work in a level 2 chaotic system if system participants (that's us ...) would know it.

I do use a number of models helping me to recognize potential - and the Graham formula is one of them. It tells me that this security has potential to grow - and maybe more so than some other securities I could hold instead. That's all.

[Patient Panda]

I think I read in one of Buffett's books to look at a company's five years earnings and dividend growth record,but noted it was better to base any investment on ten years of earnings and dividend growth,allowing for one bad year.
No insight into how to value any company with negative earnings and not paying a dividend.
Jim Slater also would not look at loss making companies.
So I agree Graham formula too is a bit...……[I don't know either] these days.

Spot on. I believe dividends are not of concern to him so much so long as the retained capital is being spent in judicious ways with strong returns.

this is one of the main reasons I have never bought into a loss making company regardless of how good their revenue growth or their story sounded and it has worked very well for me.


almost all valuation methods will indicate very strong value proposition in SUM at current prices because it is great value at these levels. I unusually took up the DRIP as was more than happy with the strike price. Normally prefer to take divis in cash and allocate it to where I see best value but no need in SUMs case.

[Beagle]

A reminder. $105m underlying profit is my forecast for the FY18 year. No matter how you do the SUM's the forward underlying PE of about 16.5 is very cheap compared to the historical average growth rate and the current years projected growth rate. In my opinion patient investors will enjoy outstanding rewards in the years ahead.

[winner69]

Spot on. I believe dividends are not of concern to him so much so long as the retained capital is being spent in judicious ways with strong returns.

this is one of the main reasons I have never bought into a loss making company regardless of how good their revenue growth or their story sounded and it has worked very well for me.


almost all valuation methods will indicate very strong value proposition in SUM at current prices because it is great value at these levels. I unusually took up the DRIP as was more than happy with the strike price. Normally prefer to take divis in cash and allocate it to where I see best value but no need in SUMs case.

Still trying to work out what the highlighted bit is saying. I’ll get it one day

[Patient Panda]

Still trying to work out what the highlighted bit is saying. I’ll get it one day


:scared: Some serious circular reasoning going on there!

will correct by saying Using a proven business model of capital recycling and ROE of >25% every year for last 5 years. Reuters says ttm ROIC of 10.46 so massive value being created when debt only at 4.15%:D

Underlying PEG on a forward basis around 0.65

[peat]

Still trying to work out what the highlighted bit is saying. I’ll get it one day

cheap as chips?

[winner69]

:scared: Some serious circular reasoning going on there!

will correct by saying Using a proven business model of capital recycling and ROE of >25% every year for last 5 years. Reuters says ttm ROIC of 10.46 so massive value being created when debt only at 4.15%:D

Underlying PEG on a forward basis around 0.65

Pretty good return on capital eh

However what is the price / value of those “massive returns” ...market seems to think $7.60 odd which seems more than fair for a company whose book value is – massive amount of market value added at $7.60 eh

[Patient Panda]

Pretty good return on capital eh

However what is the price / value of those “massive returns” ...market seems to think $7.60 odd which seems more than fair for a company whose book value is – massive amount of market value added at $7.60 eh

The market will ‘tell’ you many strange things if you let it.

I only pay attention to the market price when its of benefit for me to do so. In this case I still see SUM as ripe pickings
I don’t hold a large number and not looking to buy more beyond the DRIP but still happy holder.

[Beagle]

Jeez - Patience does not seem to be your middle name ;);

Have a look at the long term trend ...

9916

Share price nearly tripled in less than four years ... and there are people whinging whether it will reach the $8 today or tomorrow.

I'd call this a beautiful uptrend .... hardly ever touching the MA400. Happy holder - and the $8 will come when it comes :);

Good post BP, you're on fire lately. As I get older I realise the single most important investment skill is to learn to have a very large degree of patience when holding growth stocks like this one.

[davflaws]

... but FA means nothing for short term price fluctuations.



FA means FA????

[limmy]

Patience and holding power !
Good post BP, you're on fire lately. As I get older I realise the single most important investment skill is to learn to have a very large degree of patience when holding growth stocks like this one.

[BlackPeter]

FA means FA????

Fundamental Analysis

[RTM]

Fundamental Analysis

I think the last A is perhaps short for All. I’ll leave the F word to your imagination.

[winner69]

I think the last A is perhaps short for All. I’ll leave the F word to your imagination.

Would have clearer if dav had just said FA means SFA

[winner69]

Good to see Chairman Rob get his 309 DRP shares ...and a few other directors as well

[Beagle]

This dog snapped up a few extra shares too but I still think its a bit odd that they don't carry forward fractions to the next dividend like almost every other company does.
Might rattle their cage at the next annual meeting about that point although if that's all I've got to complain about then I'm sure I'll be happy overall :t_up:

[Beagle]

https://www.nzx.com/announcements/323909

Thank you to all bond investors who supported growing SUM and loaned money at 4.2% for 7 years on the enlarged $125m issue.

[peat]

https://www.nzx.com/announcements/323909

Thank you to all bond investors who supported growing SUM and loaned money at 4.2% for 7 years on the enlarged $125m issue.

Yes thats very generous to loan funds at 4.20% for 7 years. I imagine there is walls of cash from conservative kiwisavers looking for a home in bonds of one sort or another. Good for us indeed.

Is there something up with this number 420 recently what with Tesla takeover being set at that and now Summerset yield. :p

[value_investor]

I'm still amazed that in our lifetimes we have seen interest rates go this low and borrowing is so cheap. At 4.20% and having that much money go into it makes me wonder.

It use to be a huge part of looking at balance sheets especially a few years ago so good for SUM to take advantage, not sure how long this is going to last. I'm sure with Kiwisaver growth and the govt contributing again to the super fund there must be a lot of cash rolling around.

[Vaygor1]

Yes thats very generous to loan funds at 4.20% for 7 years. I imagine there is walls of cash from conservative kiwisavers looking for a home in bonds of one sort or another. Good for us indeed.

Is there something up with this number 420 recently what with Tesla takeover being set at that and now Summerset yield. :p

Obviously !! ...

https://www.urbandictionary.com/define.php?term=420%20friendly

[Beagle]

Very cheap rate to lock in funds for 7 years. Plenty of financial grunt to undertake their Australian expansion now and pursue strong growth on both sides of the Tasman :t_up:
Forward PE only 16.5 and average earnings growth rate of 45% since listing and SUM people think its expensive against a forward market PE in the low 20's...go figure.
Some people still don't grasp the very basics of sound investing where the PE is less than the growth rate. https://en.wikipedia.org/wiki/PEG_ratio
Disc: Looking to add SUM more on any slight pullback.

[Sinvester]

Very cheap rate to lock in funds for 7 years. Plenty of financial grunt to undertake their Australian expansion now and pursue strong growth on both sides of the Tasman :t_up:
Forward PE only 16.5 and average earnings growth rate of 45% since listing and SUM people think its expensive against a forward market PE in the low 20's...go figure.
Some people still don't grasp the very basics of sound investing where the PE is less than the growth rate. https://en.wikipedia.org/wiki/PEG_ratio
Disc: Looking to add SUM more on any slight pullback.

Hey Beagle,
Thanks for all your posts, I follow your posts on SUM and OCA quite religiously... kind of contradicts my user name! Any way I have 2 questions for you, What portion of your portfolio is exposed to the retirement sector and apart from property price movements what other risks do you think is involved for some one quite heavily exposed to the aged care sector? I have started a modest portfolio in the last couple of years and have about 40% exposure to the sector. and hold RYM, OCA & SUM. Thanks in advance for your advice.

[LAC]

Hey Beagle,
Thanks for all your posts, I follow your posts on SUM and OCA quite religiously... kind of contradicts my user name! Any way I have 2 questions for you, What portion of your portfolio is exposed to the retirement sector and apart from property price movements what other risks do you think is involved for some one quite heavily exposed to the aged care sector? I have started a modest portfolio in the last couple of years and have about 40% exposure to the sector. and hold RYM, OCA & SUM. Thanks in advance for your advice.

Great question mate, I was just looking at the same thing last week, I am quite heavy in the retirement sector as well. With the exception of EBOS, my portfolio is almost 30% in this sector.

[bull....]

Australia announce royal commission into retirement villages

http://www.thebull.com.au/articles/a/77039-aged-care-set-for-'tough'-royal-commission.html

guess probably not a good time for summerset to go to aus now.

guess they can feel happy there will be no investigations here if the banking investigations is anything to go off, as they say nz is squeaky clean.

[winner69]

Hey Beagle,
Thanks for all your posts, I follow your posts on SUM and OCA quite religiously... kind of contradicts my user name! Any way I have 2 questions for you, What portion of your portfolio is exposed to the retirement sector and apart from property price movements what other risks do you think is involved for some one quite heavily exposed to the aged care sector? I have started a modest portfolio in the last couple of years and have about 40% exposure to the sector. and hold RYM, OCA & SUM. Thanks in advance for your advice.

Probably less than what it was as he said he’s gone big on Heartland ...but then Heartland could be described as beingbin the aged care sector

[Beagle]

Hey Beagle,
Thanks for all your posts, I follow your posts on SUM and OCA quite religiously... kind of contradicts my user name! Any way I have 2 questions for you, What portion of your portfolio is exposed to the retirement sector and apart from property price movements what other risks do you think is involved for some one quite heavily exposed to the aged care sector? I have started a modest portfolio in the last couple of years and have about 40% exposure to the sector. and hold RYM, OCA & SUM. Thanks in advance for your advice.


Welcome to the forum Sinvester. Without any doubt the risk to the sector apart from property prices is dominated by Government policy. At this stage Govt has chosen not to release the preliminary findings of the tax working group for reasons best known to them but there is speculation that a capital gains tax may be less likely than previously thought. In any event its worth noting that the sale of an occupation right falls under the financial arrangements section of the Income tax Act and would presently be exempt from any capital gains tax on property per se, unless the Act was changed such that a possible new proposed Capital Gains tax also includes gains under financial arrangements which I think is very unlikely.

Human resources is another area of significant challenge for the sector. One shouldn't underestimate the additional costs imposed by the pay equity settlement last year as the process works its way through, caregivers will eventually earn as much as $27 per hour in 2020 or is it 2021, (Couta1 help me out here mate).
This affects retirement village operators with a more intensive care operation the most. ARV, OCA and RYM. SUM least affected due to its predominant independent living care model.

The significant pay rises accorded to Nurses in the DHB settlement are presently causing some waves in the retirement sector as there is presently a significant difference between what DHB's are now paying Nurses and what retirement village companies are paying. My understanding is this is probably only a temporary matter as funding increases should be forthcoming for all those in care but I will ask the CEO of OCA about this on Wednesday night at the shareholders association presentation.

Due to the tax policy working group's present work and risk from Govt policy change I have kept my sector exposure at a very modest level up until quite recently with the OCA placement but my sense is that the Govt policy intervention risks now appear lower than I previously thought so I am looking at increasing my stake in OCA and SUM fairly considerably as opportunities present themselves in the coming months.

This is a sector with huge demographic tailwinds and the structure is such that these companies are all very tax efficient. I think RYM, ARV and MET shareholders will also do very well over the long run and I wouldn't rule out buying RYM if the SP corrects to somewhere near historical normal valuation metrics.

P.S. I got on with the job of adding a bit to my OCA holding this morning.

[Yoda]

Thanks Beagle... helpful post.

[BlackPeter]

Australia announce royal commission into retirement villages

http://www.thebull.com.au/articles/a/77039-aged-care-set-for-'tough'-royal-commission.html

guess probably not a good time for summerset to go to aus now.

guess they can feel happy there will be no investigations here if the banking investigations is anything to go off, as they say nz is squeaky clean.

Why would you say that? Sure - there are some bad apples in the Australian system, but none of them is called Summerset (or Ryman). And yes - there are some bad resthomes in New Zealand as well. Does not reflect on the whole industry - it even opens up chances for newcomers to be better ...

Obviously - there are as well the children who expect 5 star service for their parents but prefer not to pay for it. They never did anything to earn their inheritance but they feel a sense of entitlement. These parasites are everywhere, but they won't impact on the industry.

[bull....]

Why would you say that? Sure - there are some bad apples in the Australian system, but none of them is called Summerset (or Ryman). And yes - there are some bad resthomes in New Zealand as well. Does not reflect on the whole industry - it even opens up chances for newcomers to be better ...

Obviously - there are as well the children who expect 5 star service for their parents but prefer not to pay for it. They never did anything to earn their inheritance but they feel a sense of entitlement. These parasites are everywhere, but they won't impact on the industry.

royal commission will create uncertainty as to future regulations etc that will come out of it and they will come with some certainty.
look at all the extra costs the banks are getting now due to there royal commission and they still havnt finished.

[BlackPeter]

royal commission will create uncertainty as to future regulations etc that will come out of it and they will come with some certainty.
look at all the extra costs the banks are getting now due to there royal commission and they still havnt finished.

Well, yes - uncertainty is never good for a sector. On the other hand - bank shares didn't drop through the bottom despite the investigation (but yes, there have been some up and down) and I'd expect that the banking investigation created more unrest looking at the findings.

At the end - as long as there is demand, it will be good business for good operators to satisfy it, unless you expect the government to take over the complete aged care sector (heavens forbid ...). Don't see that happening.

[bull....]

Well, yes - uncertainty is never good for a sector. On the other hand - bank shares didn't drop through the bottom despite the investigation (but yes, there have been some up and down) and I'd expect that the banking investigation created more unrest looking at the findings.

At the end - as long as there is demand, it will be good business for good operators to satisfy it, unless you expect the government to take over the complete aged care sector (heavens forbid ...). Don't see that happening.

only have to look at the performance of the hospital operators in aus , dismal due to cutbacks to funding , regulation to see where the retirement sector will go over there. my personal opinion is these sectors should be socialised as not for profit sectors more as a needs based service which only provides a stay in business return.
I also see nz sector as only a good investment until it becomes saturated and that nz sector is a race to build as many places as quickly as they can to beat there competitors this speeding up the time it will take to reach saturation. once stauration is acheived the govt here can regulate the sector as well without fear of the building stopping. make hay why the sun shines is my motto for the sector.

[Sinvester]

Welcome to the forum Sinvester. Without any doubt the risk to the sector apart from property prices is dominated by Government policy. At this stage Govt has chosen not to release the preliminary findings of the tax working group for reasons best known to them but there is speculation that a capital gains tax may be less likely than previously thought. In any event its worth noting that the sale of an occupation right falls under the financial arrangements section of the Income tax Act and would presently be exempt from any capital gains tax on property per se, unless the Act was changed such that a possible new proposed Capital Gains tax also includes gains under financial arrangements which I think is very unlikely.

Human resources is another area of significant challenge for the sector. One shouldn't underestimate the additional costs imposed by the pay equity settlement last year as the process works its way through, caregivers will eventually earn as much as $27 per hour in 2020 or is it 2021, (Couta1 help me out here mate).
This affects retirement village operators with a more intensive care operation the most. ARV, OCA and RYM. SUM least affected due to its predominant independent living care model.

The significant pay rises accorded to Nurses in the DHB settlement are presently causing some waves in the retirement sector as there is presently a significant difference between what DHB's are now paying Nurses and what retirement village companies are paying. My understanding is this is probably only a temporary matter as funding increases should be forthcoming for all those in care but I will ask the CEO of OCA about this on Wednesday night at the shareholders association presentation.

Due to the tax policy working group's present work and risk from Govt policy change I have kept my sector exposure at a very modest level up until quite recently with the OCA placement but my sense is that the Govt policy intervention risks now appear lower than I previously thought so I am looking at increasing my stake in OCA and SUM fairly considerably as opportunities present themselves in the coming months.

This is a sector with huge demographic tailwinds and the structure is such that these companies are all very tax efficient. I think RYM, ARV and MET shareholders will also do very well over the long run and I wouldn't rule out buying RYM if the SP corrects to somewhere near historical normal valuation metrics.

P.S. I got on with the job of adding a bit to my OCA holding this morning.

Thank you sir very much appreciate it.:)

[peat]

these are real risks bull....
which is why portfolio sector allocations (and hence limits) need to be considered otherwise one could be almost 100% invested in the sector
and also, even some companies which aren't specifically in the retirement sector but peripherally related to caring for sick and/or old people eg healthcare (yes even my beloved Ebos) and VHP could also be considered as subject to similar risks.

But one must also have faith in managements to respond well. If they do well in good times they're more likely to hatch a cunning plan in the bad times as well.

[bull....]

be interesting whats come out in the royal commission. if the banking and insurance one is anything to go by there will be some very sad tales.

did you relise over the last yr in aus 1 service provider per week is being closed down due to non compliance and abuses in failures of care.

[BlackPeter]

be interesting whats come out in the royal commission. if the banking and insurance one is anything to go by there will be some very sad tales.

did you relise over the last yr in aus 1 service provider per week is being closed down due to non compliance and abuses in failures of care.

Some operators woes are some other operators opportunities :t_up: I don't assume they send all the old ones these closed down operators looked after into detention camps? Though than - this is the Ossie way to detain people in need of help - isn't it?

Bad genes of their criminal fore-fathers coming through ... :p?

[bull....]

Some operators woes are some other operators opportunities :t_up: I don't assume they send all the old ones these closed down operators looked after into detention camps? Though than - this is the Ossie way to detain people in need of help - isn't it?

Bad genes of their criminal fore-fathers coming through ... :p?

quite correct.
although i think your find the ones that are left will make less money going forward.

[bull....]

https://www.fool.com.au/2018/09/17/investors-beware-this-sector-is-next-to-face-a-royal-commission-meltdown/

good write up on todays big news

It will be good news the royal commission into aged care will give grey power and aged concern plenty of ammo in nz to lobby the govt here to follow suit.

[couta1]

be interesting whats come out in the royal commission. if the banking and insurance one is anything to go by there will be some very sad tales.

did you relise over the last yr in aus 1 service provider per week is being closed down due to non compliance and abuses in failures of care. The level of compliance and care are of a higher standard here in NZ.PS-Did you realise that many service providers in NZ have shut up shop over the last year due to the pay equity settlement and a shortfall of funding from the Govt, the Govt would need to tread carefully in making any changes to avoid shooting themselves in the foot.

[peat]

quite frankly I dont take much stock of Motley Fool.
I took an interest for a while but they seem to have a habit of recommending just before a drop and getting out at the bottom. See their RFG history.

[bull....]

aged care and dementia units are the staff to resident ratios any better in nz to aus? the royal commission may mean aus operators are required to have a set ratio without any extra funding. the govt does not care about profits being hit as they now see it as a social responsibility to provide care.

[Snow Leopard]

The level of compliance and care are of a higher standard here in NZ.PS-Did you realise that many service providers in NZ have shut up shop over the last year due to the pay equity settlement and a shortfall of funding from the Govt, the Govt would need to tread carefully in making any changes to avoid shooting themselves in the foot.

Evidence points to this government being crack shots when it comes to self-inflicting wounds to the lower extremities.

[dabsman]

Evidence points to this government being crack shots when it comes to self-inflicting wounds to the lower extremities.

Evidence points to this this government being on crack...

[Beagle]

I for one am more than happy to take Couta1 and his wife's decades of experience in the aged care sector and comments on the differences between aged care standards in Aust and N.Z. at face value rather than some silly Motley Fool or other person of unknown, if any, experience hiding behind a pseudonym acting like a bear.
This hound knows Mr and Mrs Couta1 are people of integrity and very good character.

Further, at the recent SUM annual meeting SUM directors opinioned that their product offer was very different to that currently available in Australia.

[Ggcc]

I for one am more than happy to take Couta1 and his wife's decades of experience in the aged care sector and comments on the differences between aged care standards in Aust and N.Z. at face value rather than some silly Motley Fool or other person of unknown, if any, experience hiding behind a pseudonym acting like a bear.
This hound knows Mr and Mrs Couta1 are people of integrity and very good character.
I too have always appreciated Couta’s input with any questions I have had in the past and of course you as well beagle

[bull....]

I for one am more than happy to take Couta1 and his wife's decades of experience in the aged care sector and comments on the differences between aged care standards in Aust and N.Z. at face value rather than some silly Motley Fool or other person of unknown, if any, experience hiding behind a pseudonym acting like a bear.
This hound knows Mr and Mrs Couta1 are people of integrity and very good character.

Further, at the recent SUM annual meeting SUM directors opinioned that their product offer was very different to that currently available in Australia.

no bears on here , by the way it comes down to weather you view aged care ( not retirement village) as an ethical model when its for profit.

[couta1]

no bears on here , by the way it comes down to weather you view aged care ( not retirement village) as an ethical model when its for profit. If the facility can't keep the wages to revenue ratio within certain boundaries there is no profit hence why many not for profits have shut up shop, retirement village operators subsidise their care operations with profits from unit sales when necessary.

[Beagle]

If the facility can't keep the wages to revenue ratio within certain boundaries there is no profit hence why many not for profits have shut up shop, retirement village operators subsidise their care operations with profits from unit sales when necessary.


What Couta1 said Bull is bang on the money. SUM financial statements have shown consistently year after year they ostensibly make nothing from the operation of their villages and all the money comes from the development and resale of units. Even if some companies like OCA who have arguably the very best late stage care standards in the industry do make reasonable money I have no issue whatsoever with that in fact I see the opportunity to support a business which provides the very best care standards in N.Z. to our vulnerable elderly citizens as highly ethical and a real feel good investment. There will never been enough of the likes of Presbyterian support services not for profit service providers for everyone..in a perfect world there would be but until heaven arrives we have wonderful companies like OCA looking after our elderly and SUM others trying very hard to lift their care service standards too.

[bull....]

If the facility can't keep the wages to revenue ratio within certain boundaries there is no profit hence why many not for profits have shut up shop, retirement village operators subsidise their care operations with profits from unit sales when necessary.

isnt that good.? anyway how do not for profit operators in aus survive then.

[couta1]

isnt that good.? anyway how do not for profit operators in aus survive then. Your homework for the week bull is to work out why it actually isn't good.PS-A bit of lateral thinking will be required to figure it out.

[bull....]

Your homework for the week bull is to work out why it actually isn't good.PS-A bit of lateral thinking will be required to figure it out.

i dont need too.

my opinion is aged care should be not for profit full stop and i view it as unethical when it is done for profit. i must ask some kiwisaver providers where they stand on this matter.

[couta1]

i dont need too.

my opinion is aged care should be not for profit full stop and i view it as unethical when it is done for profit. i must ask some kiwisaver providers where they stand on this matter. A very misinformed and naive post bull.

[Jim]

A very misinformed and naive post bull.

Charity begins at home and ends at home, bull

[Ggcc]

i dont need too.

my opinion is aged care should be not for profit full stop and i view it as unethical when it is done for profit. i must ask some kiwisaver providers where they stand on this matter.
I would think KiwiSaver providers would stand behind most of us in this forum on this matter. I would say Skycity as unethical, but the ages care/retirement villages? This is a supply and numbers game. We need care for the elderly!!! The government supplies the legislation and the companies supply the business model to that legislation. The government has nowhere near enough money to provide aged care for all New Zealand’s aging population. I for one have spoken to many residents at villages in Napier and they love it. They all have different stories, but they love the social interaction villages provide. I could go on but sorry you need to see the broader picture here bull. Ask Percy he was looking at going into one recently (at some stage) he could let you know what he thought making an informed decision.

[Beagle]

i dont need too.

my opinion is aged care should be not for profit full stop and i view it as unethical when it is done for profit. i must ask some kiwisaver providers where they stand on this matter.

I am sure they will be "absolutely delighted" to hear from an idealist such as yourself and to have to explain their position to you.
I couldn't agree more with Couta1's response to your post.
Shall we make it unethical to provide all goods and services to the elderly for a profit, food, vehicles, electricity, houses, airfares...all these things should be provided at cost right...lol

[Yoda]

And back to the share price. Come on now.....Which one of you guys Have been selling Sommerset today to buy OCA .? Bit of a drop in SUM. and a rise in the other.....

[Beagle]

Not guilty here...happy to own both and do lots of this https://www.youtube.com/watch?v=FhSX7kRGIwM

[Yoda]

Nice one ...

[Vaygor1]

... aged care [not retirement villages] should be not for profit full stop...


'''the [Australian] govt does not care about [retirement village operators'] profits being hit as they now see it as a social responsibility to provide care.


... I also see nz sector as only a good investment until it becomes saturated and that nz sector is a race to build as many places as quickly as they can to beat there competitors this speeding up the time it will take to reach saturation. once stauration is acheived the govt here can regulate the sector as well without fear of the building stopping. make hay why the sun shines is my motto for the sector.

NZ Care Bed's reach saturation??

9948


The increase in capacity (aka Supply) above is due to all NZ's biggest retirement operators building as much as they can as fast as they can.

NZ's biggest operator is currently RYM. Here is their NZ and Victorian (aged 75+) market share by 2020 (long after Aussie's royal commission of enquiry is finished)...

9949


Governments both sides of the Tasman are in serious enough trouble right now, without cutting the big players off at the knees. Both governments utterly depend on the big operators within their respective countries, and will continue to do so for the foreseeable future.

9950

[bull....]

think most of you miss the point about the royal commission and what it is about.

its not about stopping aged care facilities being built. its about ensuring adequate care is in place , in such areas as staff to resident ratios etc and regulations are being followed to name a few. suggest some read up on it more.
the argument is does a for profit model provide this care against a not for profit model. the commission will decide

anyway enough said on the topic from me , dont want to upset you profit only people

[oldtech]

And back to the share price. Come on now.....Which one of you guys Have been selling Sommerset today to buy OCA .? Bit of a drop in SUM. and a rise in the other.....

I have previously sold shares in one company to buy another, nearly always regret it. It's very rare that I personally am able to time things precisely enough to make the best deal in both companies - usually ends up being a compromise. I try to avoid it these days.

I have previously sold SUM shares at $4.96 and $5.13 to invest in other companies. I regret it now, those companies have not grown anything like as much as SUM has in the same time period.

[artemis]

i dont need too.

my opinion is aged care should be not for profit full stop and i view it as unethical when it is done for profit. i must ask some kiwisaver providers where they stand on this matter.

New Zealand is one of the easiest countries in the world to set up a business. If not top of the list then very close.

Nothing stopping folk from putting money where mouth is and setting up a not-for-profit.

Let's do this.

[minimoke]

i dont need too.

my opinion is aged care should be not for profit full stop and i view it as unethical when it is done for profit. i must ask some kiwisaver providers where they stand on this matter.We could probably do with a separate thread on ethical investing.

But I consider myself to be pretty high on the ethical scale. And "ethic's" isnt something that drives my investment decisions - its a rabbit hole full of hypocrisy so I choose not to go there.

That said investing in aged care on an ethical basis is very easy. It is quite simply, about choice.

It is a given the public health system cannot fully fund our ever aging population. If it was to try the standard of care would need to be consistently very low.

So I prefer a system that, arguably, provides a reasonable standard of care through not-for-profit. And a higher standard of care from "profit" organisations. And its not so much about choice for the high dependency aged person - often their mind has passed the point of conscious awareness. Its about the family providing the best they can to see a family member through the last months / years of their life in an environment that provides as much dignity as possible for the aged person as well as comfortable surroundings for visiting families.

Over the past few years I have had to make decisions. And we have been fortunate to be in a position where we can afford choice. And given that choice on several occasions the "profit" focussed organisation has been given the nod over the not-for-profit. And for me, ethically, that was the right thing to do

[winner69]

I reckon SUM share price will go up today ...and over the next two weeks

Third quarter sales report due early October ....along with a profit upgrade

[Beagle]

I reckon SUM share price will go up today ...and over the next two weeks

Third quarter sales report due early October ....along with a profit upgrade

woof woof :t_up: Keep it quiet though...see if we can nick SUM more at ~ $7.60.

[oldtech]

sssh, keep it quiet ... some good bargains at the moment :drool:

[Bjauck]

only have to look at the performance of the hospital operators in aus , dismal due to cutbacks to funding , regulation to see where the retirement sector will go over there. my personal opinion is these sectors should be socialised as not for profit sectors more as a needs based service which only provides a stay in business return.....
I agree with the gist of your point. The same could be said that many sectors are "needs based". For example, to name but two, the provision of food (food retailers) and housing (residential land.) However, there is good argument that the need to earn a good profit for the capital employed increases efficiency and research in the provision of a service - enabling better quality and bang per buck.

[winner69]

Hey Couts me old mate

Found that SUM/RYM file

What sort of line do you want on it?

[couta1]

Hey Couts me old mate

Found that SUM/RYM file

What sort of line do you want on it? The middle one on the bottom line looks the ticket.

[winner69]

With Summerset long term bonds going for 4.2% it’s almodt getting to stage where it’s better to own the retirement village than invest in it

Double your money on shares (with a relatively reasonable divie) cum 2025 better than collecting 4.2% pa

In a few years SUM divie might be equivalent to 4.2% if shares bought today

If SUmmerset go broke probably both bond and shareholders on thin ice.

[smiley]

Sorry I'm semi new to the share market and find this forum very helpful and have learnt heaps but feel I dont know enough yet to make posts well worthwhile ones anyway but have a quick question.

Have a parcel of SUM and signed up to there divi reinvestment plan which I got an email earlier in the month to say they have been allocated to me, however when I look at my anz securities portfolio they are not there?

Do they just take awhile to show or if I were to trade them do I have to do so by other means (dont plan on selling long long term hold hopefully help with retirement in 30 or 40 years).

Thanks

[Snow Leopard]

Sorry I'm semi new to the share market and find this forum very helpful and have learnt heaps but feel I dont know enough yet to make posts well worthwhile ones anyway but have a quick question.

Have a parcel of SUM and signed up to there divi reinvestment plan which I got an email earlier in the month to say they have been allocated to me, however when I look at my anz securities portfolio they are not there?

Do they just take awhile to show or if I were to trade them do I have to do so by other means (dont plan on selling long long term hold hopefully help with retirement in 30 or 40 years).

Thanks

If ANZ are like ASB then they do not add your DRP shares to the automated portfolio. They only know about the shares you buy and sell direct through them.

The amount of shares shown on your last statement from Link will have the correct amount.

[dubya]

Sorry I'm semi new to the share market and find this forum very helpful and have learnt heaps but feel I dont know enough yet to make posts well worthwhile ones anyway but have a quick question.

Have a parcel of SUM and signed up to there divi reinvestment plan which I got an email earlier in the month to say they have been allocated to me, however when I look at my anz securities portfolio they are not there?

Do they just take awhile to show or if I were to trade them do I have to do so by other means (dont plan on selling long long term hold hopefully help with retirement in 30 or 40 years).

Thanks

You can add them manually to your ANZ Sec portfolio. Click 'Movements' at the end of the SUM line, then 'New Movement' and then add the DRP ones in.

[winner69]

Another quarter and the sales downtrend continues. There were 148 sales v 156 in pcp

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/324833/288031.pdf

[winner69]

How often have we heard this from Jillian or Mr Cook

“Total sales have remained at consistent levels across the year, and we continue to expect higher sales in the final quarter of 2018, with a large proportion of retirement units built this year being delivered in the fourth quarter,” Mr Cook said.


Just as well they’ve had a bit of tailwinds in property prices this year ...next year?

[minimoke]

Another quarter and the sales downtrend continues. There were 148 sales v 156 in pcp

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/324833/288031.pdf
"Summerset is on track to deliver 450 new homes this year,” said Mr Cook."

[Beagle]

Q4 is going to be gargantuan, no worries. Drove past the Hobsonville village yesterday, really looking good and noted the sign saying care center is now open. This really is a top class village, serious investors should pop out and have a look through, I am sure the village manager or one of the assistants would be happy to show you around.

[minimoke]

Flu season wasn't bad this year - so Q4 resales may not be great.

[Beagle]

Flu season wasn't bad this year - so Q4 resales may not be great.

I had the worst flu in more than a decade and almost everyone I know had it too.

[James108]

Less sales than I was expecting. Not overly worried.

[winner69]

Hope Q4 is going to be gargantuan - the darker line on the chart looks even sadder than before ...six quarters of declining new sales

[Brain]

I had the worst flu in more than a decade and almost everyone I know had it too.
You might have been responsible for it Mr Beagle. The vector the common denominator.

[Beagle]

Hope Q4 is going to be gargantuan - the darker line on the chart looks even sadder than before ...six quarters of declining new sales

I think we need to bring back Norah :D

[Gecko]

Hi, first post from a long term lurker. Attended a recent open day of two Christchurch SUM villages several weeks ago with aging parents. Wigram Village now perhaps 3 years old (now well established) and Casebrook village early stage development with maybe 20 residences inhabited. Parents in early 70's commented how old fashioned and "Ryman like' the Casebrook village seemed with predominantly brick and tile units versus the rendered residences of Wigram. Comment from sales team was that "the CEO prefers brick and tile." Interesting to note we did not see any other prospective residents looking through the brick and tile residences. Interest seemed to be solely on the small number of rendered units available. Come on Julian just because your catering to an "older" clientele doesn't mean you need to be old fashioned! Maintenance costs may be lower but how many of today's 50 & 60 year olds are going to want brick and tile in future?


DISC: Small holding in SUM, tiny holding in RYM and a BIG one in OCA :t_up:

[Beagle]

Welcome to the forum Gordon Gecko and the answer is lots. Heaps of baby boomers have grown up in cold old poorly insulated weatherboard homes and want the warmth of brick and tile. I was reading my granddaughter the old 3 little pigs story the other evening...heck even the 3 little pigs know to build in bricks :)

DISC: Modest holding in SUM, no holding in RYM, MET or ARV and a BIG one in OCA (and looking to do a Couta1) in OCA :t_up:

[Gecko]

Take your point Beagle. I too have a vested interest in SUM making lot's of sales but interested in feedback from those in the demographic and where perspective purchasers interests lay.

[dobby41]

Heaps of baby boomers have grown up in cold old poorly insulated weatherboard homes and want the warmth of brick and tile.

Poorly insulated brick and tile were no better.

[Lewylewylewy]

Im contemplating selling my SUM shares. I don't understand why sales are down for a company increasing their supply of homes, in an industry touting that there isn't enough supply of homes to cover demand. Have I missed something here?

[Beagle]

Last year I suggested to Julian Cook that SUM needed to move to a fixed fees for life model like virtually all other retirement villages have done. My message fell on deaf ears. The board at the most recent annual meeting appeared very confident they will sell all the units they're building. The sales stat's that Winner has posted a graph for paint a different picture and speak for themselves. The results for Q4 will determine whether I sell some more and go all in on OCA or not.

[minimoke]

The sales figures only tell part of the story.

How many properties were available for sale? If they sold 100% of available stock then thats not a bad picture. If they sold 50% then that would be a worry.

Were those sales achieved through reduced margin? Or has high demand demand seen a growth in margin?

How many prospective buyers are there on a "wait list".

Cook has said there will be gargantuan sales in Q4. I'll give him a 1/4 to see if he is true to his word. If not might be time to swap allegiances.

(Disc. hold more RYM than SUM, and a bit more SUM than OCA. Currently still happy to share my love amongst the sector)

[Lewylewylewy]

Thanks, comforting to know that other folk are thinking along the same lines, helps me validate my own thinking.

You know, there's a theory that a bunch of people guestimating something, are collectively able to get a more correct result when they hear each others guesses than individually without hearing each others guesses.

I tested this with some friends and found it worked for our group. My feeling is that we get a similar effect on this forum.

[Lewylewylewy]

... and yes, I agree with you, Beagle. Older people need certainty and no stress. That's obvious. That's what I'd want.

[Lewylewylewy]

On target to build 450 homes according to the . Assuming they sell 100 new homes in q4 (based on last year), that will leave 100 new buildings empty for the year.

By the end of q2 they had built 165, and sold 145. 20 left over. I wonder if this is a thinking thing with the accounts, or if it's normal to have that much stock floating around? It's not clear from the reports, how many are sitting empty. I guess the underlying profit changes in q4 are the numbers to look at.

[James108]

On target to build 450 homes according to the . Assuming they sell 100 new homes in q4 (based on last year), that will leave 100 new buildings empty for the year.

By the end of q2 they had built 165, and sold 145. 20 left over. I wonder if this is a thinking thing with the accounts, or if it's normal to have that much stock floating around? It's not clear from the reports, how many are sitting empty. I guess the underlying profit changes in q4 are the numbers to look at.

Look into the H1 presentation for the answers you seek.

[Carpenterjoe]

On target to build 450 homes according to the . Assuming they sell 100 new homes in q4 (based on last year), that will leave 100 new buildings empty for the year.

By the end of q2 they had built 165, and sold 145. 20 left over. I wonder if this is a thinking thing with the accounts, or if it's normal to have that much stock floating around? It's not clear from the reports, how many are sitting empty. I guess the underlying profit changes in q4 are the numbers to look at.


Remember their stock is scattered over 23 sites (plans to be 31) all around NZ. And they house 5000 residents, depending on a lot of variables, a case could be made that 100 units with potential to house 100-200 residents is not enough.

[minimoke]

I'll go and re look at the H1 report. But I wouldn't expect new units to be sitting around empty. My expectation would be for them to be sold, with wait lists prior to completion.

Where i would expect empty houses is where one set of residents have vacated and the property is being refurbished for the next occupiers. Again I would hope for wait lists to deal to any sale / purchase agreement lags and maybe 6 a six week "vacant" period while property is being refurbished.

[Ggcc]

As far as I understand it takes approximately 7 years for a village to be up and running to full potential. Sometimes accomodation will be built but not sold, as no one wants to live on a construction sight while the other half of the village gets completed. This is where I believe the surplus properties might be, unless someone can explain it in a better way.

I have lived in a new development and it is not fun and games with debris from other houses ending up on my property and one day I felt I was in the Sahara and could not see my neighbours across the road. If I did not enjoy that, I can say that the elderly would have struggled let alone the workers.

All in all I am still very happy with Summerset’s longterm outlook and am still invested.

[James108]

One possible explanation is that management are not concerned that there are a few more empty units given the very high development margins. They could probably knock 10% off the price and fill the units but choose not to?

[Beagle]

^^^^ What you've suggested above is certainly an aspect of this. They have been building more multi level units at Hobsonville and Ellerslie and its a tough sell when development is going on all around you. SUM's holding costs are not huge as their recent 7 year bond offer clearly showed pitched at just 4.2% per annum. They'd probably rather sell units at premium prices when the multi level construction is complete than discount them to shift units in the middle of a Sahara sandstorm.

On another topic its good to see them buying a decent chunk of land in the fast growing Papamoa area. I for one am happy to see them buy there rather than expanding in Australia at present what with their falling real estate market over there and Royal commission of enquiry ongoing. https://www.nzx.com/announcements/324901

One thing you have to take your hat off to SUM is when they say they are going to build XYZ units in any given year they do exactly that, they have never once failed to meet a build number target since listing nearly 7 years ago. That's no easy feat in this construction market and their development margin has shown excellent growth over the years. I think I will hang in here and trust management know what they're doing. I think they have earned my trust over the years.

[Gecko]

One possible explanation is that management are not concerned that there are a few more empty units given the very high development margins. They could probably knock 10% off the price and fill the units but choose not to?


Knocking 20K off for Casebrook Village Christchurch for sign up by 23rd October. Average unit price 520-550K.

[Beagle]

Knocking 20K off for Casebrook Village Christchurch for sign up by 23rd October. Average unit price 520-550K.

Interesting. Client told me yesterday Fletcher residential knocked $30K off an already modestly priced unit $610K down to $580K because that was all the bank would lend his son.

As we saw on the block auctions the other night the market is definitely a bit tighter than it was. A few years ago I made enquiries of the REINZ and found out that the average difference between asking price and buy price of homes nationwide was 6%, i.e. 6% negotiation margin. Now days with so many homes sold by auction and so many listed without a price its harder to gauge but I think we could be headed back into a more normal environment where buyers and sellers need to negotiate more to find common ground. Perhaps the days of retirement villages naming their own terms in regard to price and take it or leave it are over ?

[artemis]

..... A few years ago I made enquiries of the REINZ and found out that the average difference between asking price and buy price of homes nationwide was 6%, i.e. 6% negotiation margin. Now days with so many homes sold by auction and so many listed without a price its harder to gauge but I think we could be headed back into a more normal environment where buyers and sellers need to negotiate more to find common ground. Perhaps the days of retirement villages naming their own terms in regard to price and take it or leave it are over ?

TradeMe Property Price Index includes average asking prices and we also have data on REINZ median actual selling prices, nicely presented on interest.co.nz. Interesting but not apples and apples. (TradeMe could probably provide median listing prices but don't as far as I could see.)

A quick comparison. Because of the time lag between listing and selling I have used May listings as the first number and August selling as the second number. Note that they are indicative only as average and median are different, obviously actual is better than listed, and IMO median is better than average.

There's a lot more info in each of the reports, including many more locations.

Auckland $918650 $852000 (big difference)
Wellington $589,600 $590000 (no difference)
Christchurch $366550 $425000 (but note the median is for Canterbury not just Christchurch)

(This is displacement activity, supposed to be doing the GST return.)

[minimoke]

On another topic its good to see them buying a decent chunk of land in the fast growing Papamoa area. I for one am happy to see them buy there rather than expanding in Australia at present what with their falling real estate market over there and Royal commission of enquiry ongoing. https://www.nzx.com/announcements/324901


I've got some tough choices in the future. Retire to Papamoa or Napier. Both get a tick as a village location from me.

[winner69]

Knocking 20K off for Casebrook Village Christchurch for sign up by 23rd October. Average unit price 520-550K.

H1 report says they made about $150k underlying profit per sale (on average over new and resales)

If that is typical that $20k could affect ongoing uderlying profit would by 13%

[Gecko]

Hi Winner, they were definitely discounting new units at Wigram Christchurch last year but from memory it was not quite to this level. Still have sales material, but not to hand, so will seek it out and confirm.

Update: Can confirm that the 20K discount offer seems to be a regular promo. Sales material from this time last year and for period 23 May to 31 July this year.

[minimoke]

H1 report says they made about $150k underlying profit per sale (on average over new and resales)
Profit is the gain made when a deal between willing seller and buyer is complete.

We dont necessarily know starting / advertised / first offer price.

[Beagle]

I've got some tough choices in the future. Retire to Papamoa or Napier. Both get a tick as a village location from me.

I have about 20+ years to make up my mind, plenty of time to mull it over but the north facing waterfront homes at Hobsonville are very nice...and you'd want them to be at $1.6m 132 sq metres and a double garage...not too shabby I tell ya !

[iceman]

Start of a new week and hopefully the mood on this thread will lighten up a little and people become more positive again.

I´ve just read an article on lack of funding for Alzheimer´s research and liked this bit " the World spends more on boob jobs and Viagra than on Alzheimers research. So in 2040, the elderly will have perky tits and stiff cocks buty no fu..ing idea why"

Couta1 I hope your industry is adjusting plans for different accommodation requirements for that eventuality. I´m looking forward to being there in 2040 :-)

[whome]

LOL, Love it Iceman!!!

[bull....]

https://www.stuff.co.nz/national/health/107549934/warning-about-the-financial-fishhooks-of-moving-into-a-retirement-village

Warning about the financial 'fish-hooks' of moving into a retirement village
applies to all retirement villages

[artemis]

https://www.stuff.co.nz/national/health/107549934/warning-about-the-financial-fishhooks-of-moving-into-a-retirement-village

Warning about the financial 'fish-hooks' of moving into a retirement village
applies to all retirement villages

Interesting that the article talks about fish hooks, pitfalls and losses. And not much about that retirees entering independent units in these villages, and paying big money for them are compos mentis and have had their own legal advice. People don't usually retire one day and their brains turn to mush the next day.

[Timesurfer]

The issues appeared to be with the offspring not getting "their share" rather than retirees suffering.
Doesn't hurt to read the fine print all the same.

[Lewylewylewy]

Interesting that the article talks about fish hooks, pitfalls and losses. And not much about that retirees entering independent units in these villages, and paying big money for them are compos mentis and have had their own legal advice. People don't usually retire one day and their brains turn to mush the next day.

Agreed, our brains go mushy well before retirement.

Speaking of positivity on this thread, i was thinking about the latest announcement recently. Specifically in the way we perceive things differently depending on how they are presented to us.

The announcement said that new sales had dropped, and resales had benefitted from unit growth. Overall sales were down compared to last year.

Didnt feel good to read that. Let's take the same info and put it another way:

Number of units have increased. Resales have increased in line with that growth. A load of extra units have been sold, growing the business just under the record rate of growth last year which saw a 50% increase in SP.

Suddenly doesn't sound so bad.

On a different note, do you think im wrong to suggest that the main driver for the current SP is ursaphobia? Or are we waiting for the next announcement to rerate this thing?

Personly i was sitting on ~55% cash but then i bought a business so I'm now on about 30% cash. Kinda wish I had more in case i see a bear.

[macduffy]

That "resales have benefitted from unit growth" puzzles me somewhat. Shouldn't resales be constrained, rather than benefitted if there is more choice from new units?

:confused:

[Beagle]

Hope Q4 is going to be gargantuan - the darker line on the chart looks even sadder than before ...six quarters of declining new sales

Post #6886 - Been mulling that over this past week or so. No denying that sales have under-performed new build since Q4 last year. Julian Cook is confident of a big Q4 and building 450 units.
I am not especially confident they will sell any more than the ~ 380 they sold last year even with a big Q4. Why are new sales an issue ? We hear the much talked about multi level construction being an issue but one wonders a little seeing as their development margin has expanded to 33% whether they're simply asking too much for some of these new units ?

One could also ponder whether with the royal commission of enquiry going on in Australia and some real negative momentum in Melbourne and Sydney real estate prices whether this is the right time to be spending serious money looking at expanding into Australia ?

macduffy - resales benefiting from the fact that as whole the company has more existing stock to resell, (450 new units built last year). New sales continue to underwhelm but according to Julian Cook its all going to be solved in Q4....we'll see.

Shares have enjoyed a big run this year up 50% from $5.00 in December 2017 against a backdrop of sales underperforming since then. I took some money off the table regarding SUM today. Not because its a bad company fundamentally per se but because I see OCA as a better opportunity. I do note that SUM broke down through its 100 day moving average today so from a TA perspective that's not good. I think RYM are extremely overpriced at the current price and SUM probably fair value but questions about SUM's ability to push through consenting on difficult sites, first Boulcott and now issues with ST John's have me scratching my head a bit.

Why on earth would they propose a 7 level retirement village at St John's when the maximum height there is 3 level's ? In light of OCA's brilliant track record of obtaining consents, see post #2022 on OCA thread, I have been reflecting upon SUM's chequered track record a little lately.

[Entrep]

Sold out of SUM today also. Was a nice ride from $4.70

[couta1]

Sold out of SUM today also. Was a nice ride from $4.70 More than fully priced according to the Couta Theorum, only worth $6.70.

[macduffy]

macduffy - resales benefiting from the fact that as whole the company has more existing stock to resell, (450 new units built last year). New sales continue to underwhelm but according to Julian Cook its all going to be solved in Q4....we'll see.


Perhaps I'm looking through the wrong end of the telescope - but if it was a car dealer, having a sudden intake of new stock wouldn't benefit sales of used vehicles. I think your suspicion that the new units are overpriced, at least in comparison with existing units, is more likely the explanation.

[couta1]

Perhaps I'm looking through the wrong end of the telescope - but if it was a car dealer, having a sudden intake of new stock wouldn't benefit sales of used vehicles. I think your suspicion that the new units are overpriced, at least in comparison with existing units, is more likely the explanation. Your onto it, my wife found in her last position that it was often harder to sell the new units over the refurbished older ones due to price and layout.

[Beagle]

You might get your $6.50 if Q4 sales disappoint.

[Lewylewylewy]

I think revaluations will be the biggest play on the share price, personally.

[44wishlists]

Retirement unit is a finite resource. Good unit in good location is often popular. Just try to think like buying a house. Some folks prefer not leaving/living too far from their original neighbourhood, where they are used to the neighbourhood, approximate to their friends and family, or may even be their bowling clubs. Hence, people maybe looking to pick up a unit in the existing area, instead of moving to a completely new area. For example that I have been living in Epsom for so long, will I move to Hobsonvile Point for my retirement? For sure I will look around in the area first, before giving a thought moving to an outer area.

[winner69]

I think revaluations will be the biggest play on the share price, personally.

For the good or maybe get they be a drag

[bull....]

chart breaking down on those bad results

[Food4Thought]

I think revaluations will be the biggest play on the share price, personally.

The price revaluation is an attempt to buy up more shares by large investors. Smaller ones will sell out through the pressure of seeming to be less of a positive return. This charade is always hilarious to watch. Plays out every few years and the next thing.... boom... new over all share price high. Don't get distracted team. Eye on the long game for this one and a couple of OCAs

[Beagle]

Last year I suggested to Julian Cook that SUM needed to move to a fixed fees for life model like virtually all other retirement villages have done. My message fell on deaf ears. The board at the most recent annual meeting appeared very confident they will sell all the units they're building. The sales stat's that Winner has posted a graph for paint a different picture and speak for themselves. The results for Q4 will determine whether I sell some more and go all in on OCA or not.

I decided not to give them the benefit of the doubt. Many thanks to Winner for graphically representing the new sales decline in post 6886. You do some very good work on here with your graphs Winner which is of very good service to all and is much appreciated. I tried my best to give them the benefit of the doubt but six quarters in a row of disappointing new sales results is not a spasmodic thing, its a trend. The fact that Summerset chose to ignore my advice to a fixed fees for life model is also a factor here as is the 50% increase in share price since December 2017 against a series of disappointing sales results.
Some accountants (including myself) believe that cash flow is the life blood of business and its worth noting that although underlying profit was up 54% last year cash flow was up just 7.8%. Finally, technically this is also looking bad. I'm out for now and will reevaluate down the track if the price corrects to be more commensurate with the current sales performance of the company.

[cyclist]

How exciting. We are all getting pessimistic. I like it when that happens :cool:

[minimoke]

Retirement villages aren't like going down to the dairy and getting a bottle of A2. They take time to build and they take time for the demographic to move through. Still holding and waiting for the young 'uns to get older.

[Maverick]

Sorry Winner, but I don`t agree with your build rate chart. When I use the final end of year "actual houses delivered" I don't get a decline over 2017 at all . In fact in 2017 they increased delivery to 450 units YOY (have I missed something winner?). That would mean a continual climb on your graph up until end of 2017 (not a decline on the graph suggesting 380 units). We are told it will be flat this year at 450 new builds in 2018. (and just to remind us all , that's 450 more houses this year on top of what we had)
I have attached a spreadsheet that historically covers the last 4 years profit and build rates.
Then I've personally forecast a normalised profit increase of 30% for this year simply based on the reducing trend of increasing profits YOY (as it does when a behemoth grows). Because this year which is almost over so I`m using a forward PE of 16 on forecast EPS of $.48 which makes the share price $7.70 . Based on today's SP of $7.17 that makes a forward PE of 15. That has to be a bargain surely?
I`d love to buying more SUM at this price but unlike you guys that keep "topping up" I`m all out of dry powder (OCA to thank for that:t_up:-cant have too many). But I`m very happily holding the SUM I`ve got




All figures at year end (which is also FY end )in December



FY end (December)
EPS
% Increase in EPS from previous year
Normalised profit-mil
New houses built
Share price at PE of 16-(Not actual)


2013
0.103
46%
22.2
209
$ 1.66


2014
0.113
9%
24.4
261
$ 1.81


2015
0.175
55%
37.8
303
$ 2.80


2016
0.26
42%
56.6
409
$ 4.16


2017
0.37
42%
81.7
450
$ 5.92


2018
0.48
30%
106
450
$ 7.70


Red cells are my own " conservative" forecast

There has got to be an easy 10% gain between now and February for anyone with some cash lying around- just saying.

[winner69]

Maverick me old mate .....pay attention

The chart heading says ‘Rolling 4 quarter SALES numbers’

[Maverick]

Also , while Im at it. I`m not overly fanatical on the build rate being too crucial to increasing profits. Over the years (7.5 on average villa occupancy rate) units are now come up for releasing. So what was signed up 7.5 years ago is now coming up for remodeling and re-leasing (some remodeling paid for by ex -resident). So 2 things are working well for us here....
Firstly - the re-leasing will be 7.5 years more expensive than in 2011, we all know what property prices and rents have done over those years. So there are large increasing profits with re-leasing regardless of the Auckland house prices flattening over the last year or so.
Secondly - the volume of ORA`s being re-leased will be ever increasing as the volume of units built then have annually increased since way back in 2011, and escalating ever since.
They say it takes 7 years for a retirement village to really get going and I`m sure the 7.5 year churn is the main basis for that.
To quote Warren himself- "someone is sitting under an oak tree right now from an acorn planted long ago by someone else.

Just image the amplification effect of these factors with OCA with its care beds turning over every 2.5 years instead of 7.5 for a a villa.( sorry all, I couldn't help myself. CHTMoca)

[Maverick]

Sure.... I read that Winner, but I would have thought the final "rolling" rate would have equalled out to actually be the actual build rate at year end (December). It works for all the other years except 2017 - which is the one painting this declining picture. I'm all ears, me ol` matey.

[winner69]

Maverick ....what’s happened to SUM’s PE over time

[Maverick]

Crickey Winner, i`ll get back to that ( are you're meaning that is has reduced over time?) but I`ve just got to do some real work for now. ....

[winner69]

Sure.... I read that Winner, but I would have thought the final "rolling" rate would have equalled out to actually be the actual build rate at year end (December). It works for all the other years except 2017 - which is the one painting this declining picture. I'm all ears, me ol` matey.

Yes they delivered (built) 450 new units in 2018 but only sold 382 new units (sales in 2017 were 414 which seems to show less new unit sales in 2018 than 2017)

Annual number (Rolling 4 quarters) of new sales as at last September is 333 .....even less than 382 sold in 2017

That to me is a downtrend

What’s happening to all the ‘unsold’ units?

[Beagle]

Also , while Im at it. I`m not overly fanatical on the build rate being too crucial to increasing profits. Over the years (7.5 on average ) units are now come up for releasing. So what was signed up 7.5 years ago is now coming up for remodeling and releasing (some remodeling paid for by ex -resident). So 2 things are working well for us here....
Firstly - the releasing will be 7.5 years more expensive than in 2011, we all know what property prices and rents have done over those years. So there are large increasing profits with releasing regardless of the Auckland house prices flattening over the last year or so.
Secondly - the number of ORA`s will be ever increasing as the volume of units built increased then way back in 2011, and escalating ever since.
They say it takes 7 years for a retirement village to really get going and I`m sure this is the main basis for that.
To quote Warren himself- "someone is sitting under a tree right now from an acorn planted long ago by someone else.

Just image the amplification effect of these factors with OCA with its care beds turning over every 2.5 years instead of 7.5 for a a villa.( sorry all, I couldn't help myself.)

LOL there's the main competition for SUM right there mate and someonme reckons you can't have too many and I think he's right :) Look at it another way MAV, last year there was 382 sales of new units against 450 built. I expected this additional new stock carried of 68 units to be sold in Q1 and Q2 or at worst Q3. It hasn't happened. Why ? I think they are beginning to face market resistance with their pricing and they are silly to fly against the widespread expectation now of retirees expectations of fixed fees for life...you know like virtually every other retirement company does but SUM think they know better ! A little bit of arrogance on the part of the board and or Julian Cook ?, you be the judge.
I really do not think they will sell all their 450 units they build this year either. If I thought they could I'd still hold. For sales to be as weak as they have been since Q4 last year something in the mix is not quite right and the trail or breadcrumbs leads to over pricing, lack of fixed fees for life or some combination of those factors.

[Snow Leopard]

...

What’s happening to all the ‘unsold’ units?

Huh, huh, pick me sir, I know the answer to that one :D


It is always fascinating to watch the 'newbies' going through the process of working out how the likes of SUM make their profits.
I remember my journey to enlightenment many years ago.

Maverick looks like they will probably get there.

[Beagle]

Yes they delivered (built) 450 new units in 2018 but only sold 382 new units (sales in 2017 were 414 which seems to show less new unit sales in 2018 than 2017)

Annual number (Rolling 4 quarters) of new sales as at last September is 333 .....even less than 382 sold in 2017

That to me is a downtrend

What’s happening to all the ‘unsold’ units?

Ouch, no way in the world anyone can sugar coat that and that's against ongoing increases in new units completed and available for sale :eek2:
Any wonder why they took the extra $25m and raised $125m in new debt just recently !

I reckon Couta1 might get his $6.50 after all.

[minimoke]

and they are silly to fly against the widespread expectation now of retirees expectations of fixed fees for life....The fixed for life has to be fraught with difficulty. The trouble with our bulge of upcoming of folks is we are also keeping old folks alive for longer. So you are expecting SUM to manage the risk of an ever increasing aged population. Wouldn't SUM need to put up their sale price to cover this risk exposure?

[Beagle]

The fixed for life has to be fraught with difficulty. The trouble with our bulge of upcoming of folks is we are also keeping old folks alive for longer. So you are expecting SUM to manage the risk of an ever increasing aged population. Wouldn't SUM need to put up their sale price to cover this risk exposure?
Rym have been successfully getting premium prices for their units using this fixed fee for life methodology for years. The tactic they use is that they know in the vast majority of cases an incoming resident releases significant capital when going into a village so they know the resident is generally flush with funds at this point and their main concern is can they afford the weekly ongoing fees ? Better to get extra margin up front and make village life appear to be as cheap as chips which is what the resident is focusing on going forward. I believe talking with industry players RYM actually go further. At pre-release sales meetings they have been known to discount fixed fees for life to as low as $99 per week for people that sign up off the plans. This is a key tool to get pre-sales at premium prices.

All these villages have masses of data about life expectancy and average expected occupancy duration by unit type and we have enjoyed a stable inflation rate in the 1-3% range for years. Not hard to model out life expectancy using actuarial tables and estimated inflation and pick the mid point of an incoming resident's stay to set the fixed weekly fee for life but its much smarter to use RYM's methodology.

That a Very brief synopsis.. but there are powerful psychological forces at play here that SUM are not tapping into. Who has this model right, RYM that have set the benchmark for nearly 20 years and nearly every other company has followed in regard to fixed fees or SUM the outlier who think they know better and adjust their fees for inflation every year ? What's more attractive, weekly fees fixed at $99 per week for life or $179 per week adjusted for inflation each year ?

[Lewylewylewy]

I would hope that either the build rate would decrease (unlikely as its in house resource, and therefore many fixed costs to consider) and / or questions leading to market research around unsold units would cause a change in sales strategy in the coming year or two.

Hopefully egos aren't too big, as to cause blame to fall on the property market... it's important to be agile in business, especially when there are headwinds.

[James108]

Sum are biggest developers as a percent of total units. Relatively cheap multiple. In my view best value of retirement operator. I will look past poor sales, very high margin has offset this so far.

Let’s check In 5 and 10 years to see who was right.

Been holding for about 4 years and added a lot last year.

[winner69]

Always thought the SUM share price had got ahead of itself of late and that it would fall back into the long term linear regression channel


Might just be doing that .....top of the channel is about $6.80


Some might say this defies logic ....who am I to deny ....but is a bit spooky though

[winner69]

FOR COUTA'S EYE ONLY - NOBODY ELSE TO LOOK AT (had to post here as cant post images in a PM)

Couts - getting back to that 50% mark ......spooky eh

Ryman half year next month - a solid result from them and if SUM continues to fall then the ratio might go below 50%

[Beagle]

Always thought the SUM share price had got ahead of itself of late and that it would fall back into the long term linear regression channel


Might just be doing that .....top of the channel is about $6.80


Some might say this defies logic ....who am I to deny ....but is a bit spooky though

Ouch the mid point of that channel is presently only about $5.80 ! This reversion to the mean thing bites pretty hard doesn't it !

[Beagle]

FOR COUTA'S EYE ONLY - NOBODY ELSE TO LOOK AT (had to post here as cant post images in a PM)

Couts - getting back to that 50% mark ......spooky eh

Ryman half year next month - a solid result from them and if SUM continues to fall then the ratio might go below 50%

Couldn't help myself and had to have a look. Spooky eh ! That Couta a real legend...hope he didn't kill himself on the ski slopes today as I can't wait to here his next insight and when TRA will revert to the mean at $3.80 or when OCA will get to $1.32 ! You can't have too many...thought I might have got lucky today at $1.20, seeing as he was busy and not standing in front of me backing up his Kenworth truck like yesterday, but sadly, no joy.

[Snow Leopard]

Always thought the SUM share price had got ahead of itself of late and that it would fall back into the long term linear regression channel


Might just be doing that .....top of the channel is about $6.80


Some might say this defies logic ....who am I to deny ....but is a bit spooky though

Have you tried that with a log price axis ?

It gives one a whole different view.

[Baa_Baa]

Have you tried that with a log price axis ?

It gives one a whole different view.

You and your log price axis. So right, best advice for any TA. Kudos. A lot here have embraced the charts after many years of derision, but to move beyond the chart to actual TA, there are still a ways to go.

[Maverick]

Winner, you are right.... of course! While I was so focused on all the data and reading today, I mistakenly lumped together in my head "build amount " being the same thing as " sale amount". So totally my stuff up as you patiently pointed out. So retro looking at your and my numbers SUM have (or will) built 900 hundred units over the last two years and sold only 700 of those at a decreasing rate, as per your chart.

Despite the growing number of empty units I`m still happy with all my assumptions in predicting an EPS in 2018 of at least 48 cents.

The possible reasons for the accumulating empty units are many. The only one of these reasons that could be permanently damaging to SUM (and the whole sector) is oversupply and I am comfortable from my own research that is NOT a concern for at least a decade. All the other remaining reasons for empty units can be rectified by either time and/or any body under a little bit of pressure, so I see no concern that the growing empty units is a permanent or irreversible trend.

Still happy to hold and will sleep well tonight after going through the numbers thoroughly today.

Thank You Winner69 for taking the time to offer your "sale graphs."

[RupertBear]

Winner, you are right.... of course! While I was so focused on all the data and reading today, I mistakenly lumped together in my head "build amount " being the same thing as " sale amount". So totally my stuff up as you patiently pointed out. So retro looking at your and my numbers SUM have (or will) built 900 hundred units over the last two years and sold only 700 of those at a decreasing rate, as per your chart.

Despite the growing number of empty units I`m still happy with all my assumptions in predicting an EPS in 2018 of at least 48 cents.

The possible reasons for the accumulating empty units are many. The only one of these reasons that could be permanently damaging to SUM (and the whole sector) is oversupply and I am comfortable from my own research that is NOT a concern for at least a decade. All the other remaining reasons for empty units can be rectified by either time and/or any body under a little bit of pressure, so I see no concern that the growing empty units is a permanent or irreversible trend.

Still happy to hold and will sleep well tonight after going through the numbers thoroughly today.

Thank You Winner69 for taking the time to offer your "sale graphs."

He’s a good man that Winner, posts some really helpful stuff :) he also has a quirky sense of humour which I like although sometimes The Bear doesnt always know if he’s serious or joking, no worries either way though as what he says always makes you think ;)

[Scrunch]

[/B]
He’s a good man that Winner, posts some really helpful stuff :) he also has a quirky sense of humour which I like although sometimes The Bear doesnt always know if he’s serious or joking, no worries either way though as what he says always makes you think ;)

I hope all the bears and no bulls posting isn't a bad sign

[winner69]

You and your log price axis. So right, best advice for any TA. Kudos. A lot here have embraced the charts after many years of derision, but to move beyond the chart to actual TA, there are still a ways to go.

Baabaa — not all charts are put up for ‘actual TA’. Some are just for information or just because they are interesting

Snowy — a log scale on that SUM chart would make the line less steep but whatever the scale the current actual share price will be above the upper channel line .....the story remains unchanged.

[Beagle]

I don't really "get" the slowdown in sales. Full year presentation in February 2018 indicated the reason was that the company had built a lot of medium rise units all at once late in Q4 2017 and general ongoing building activity at the village surrounding these units impacted sales, or words to that effect. Sounded plausible enough.

I had been expecting that the ~ 70 units unsold from last year would have been sold in Q1 or Q2 or at very worst by Q3. Honestly I am surprised at the sales slowdown and can really only put it down to factors I've mentioned above or an oversupply of units presently on the market in Auckland.

70 units doesn't sound like much but at say approx. $800k each on average that's $56m of stock sitting there. I guess they can fund it cheap enough as we've seen with their recent $125m bond issuance at just 4.2% per annum so maybe not a big problem yet but if there's another 70 units unsold this year eyebrows need to be raised surely ?

[couta1]

FOR COUTA'S EYE ONLY - NOBODY ELSE TO LOOK AT (had to post here as cant post images in a PM)

Couts - getting back to that 50% mark ......spooky eh

Ryman half year next month - a solid result from them and if SUM continues to fall then the ratio might go below 50% Nice one winner.

[Raz]

I don't really "get" the slowdown in sales. Full year presentation in February 2018 indicated the reason was that the company had built a lot of medium rise units all at once late in Q4 2017 and general ongoing building activity at the village surrounding these units impacted sales, or words to that effect. Sounded plausible enough.

I had been expecting that the ~ 70 units unsold from last year would have been sold in Q1 or Q2 or at very worst by Q3. Honestly I am surprised at the sales slowdown and can really only put it down to factors I've mentioned above or an oversupply of units presently on the market in Auckland.

70 units doesn't sound like much but at say approx. $800k each on average that's $56m of stock sitting there. I guess they can fund it cheap enough as we've seen with their recent $125m bond issuance at just 4.2% per annum so maybe not a big problem yet but if there's another 70 units unsold this year eyebrows need to be raised surely ?


I have heard a lot of deals are not going through (industry wide) as a result of clients not being able to sell existing homes for the price required or lack of interest.

[Entrep]

I have heard a lot of deals are not going through (industry wide) as a result of clients not being able to sell existing homes for the price required or lack of interest.

Auckland real estate market is DEAD. Buyers sitting on their hands across the board.

[Beagle]

I have heard a lot of deals are not going through (industry wide) as a result of clients not being able to sell existing homes for the price required or lack of interest.


Auckland real estate market is DEAD. Buyers sitting on their hands across the board.

Thanks for your feedback. That partially explains it although the hard data for September indicates that the market is still ticking along okay, although volumes are down on last year a little.
https://tmmonline.nz/article/976513728/september-sales-at-7-year-low?utm_source=GR&utm_medium=email&utm_campaign=Sept+sales+plummet%3B+Finance+Ministe r+talks+tax+changes
"Nationally, median house prices across New Zealand increased by 5.9% year-on-year to $556,000 in September 2018, as compared to $525,000 in September 2017".
Volumes down but medium price on a national basis is doing quite well.
I think there is more to this and my earlier theory that SUM simply want too much for their units and people expect fixed fees for life appear to remain as the main obvious culprits for their sales decline. Earlier this year we saw their development margin expand from 28% to 33% at the half year result.
5% extra margin on say an $800,000 unit is $40,000. Maybe we see some price pressure and margin compression going forward ?

[Gerard]

JLL's retirement village white papers (published twice per year I think) had previously indicated a likely over supply of new retirement units for sale in the Auckland area, based on the number of consented villages & current build rates v the increase in the number of people turning 75 years old (target market) for the next few years. In other words supply was likely to outstrip demand. Whilst a geographical breakdown of where SUM's completed builds and sales are located is not provided it can be assumed that many (most) of these are in Auckland. This, along with other comments already made by others would point to the reason(s) for slowing sales. The concern for me is that at the current build rate, the problems with a couple of the Auckland villages, and the continuation of purchasing land means a significant amount of working capital is being tied up, and this has real costs associated with it.

[Onion]

I don't really "get" the slowdown in sales. Full year presentation in February 2018 indicated the reason was that the company had built a lot of medium rise units all at once late in Q4 2017 and general ongoing building activity at the village surrounding these units impacted sales, or words to that effect. Sounded plausible enough.

I had been expecting that the ~ 70 units unsold from last year would have been sold in Q1 or Q2 or at very worst by Q3. Honestly I am surprised at the sales slowdown and can really only put it down to factors I've mentioned above or an oversupply of units presently on the market in Auckland.

70 units doesn't sound like much but at say approx. $800k each on average that's $56m of stock sitting there. I guess they can fund it cheap enough as we've seen with their recent $125m bond issuance at just 4.2% per annum so maybe not a big problem yet but if there's another 70 units unsold this year eyebrows need to be raised surely ?

Ryman, represented by David Bennett (Chief Financial Officer) and Michelle Perkins (Investor Relations Manager) presented to the Wellington branch of the Shareholders Association on Tuesday.


They spoke about Ryman's high level of occupancy (high 90%) and their ability to quickly sell units that became available. They suggested that in these respects that Ryman were superior to their competitors.


I guess if they are correct, Ryman will never sit with 70 unsold units on their books.

[Gerard]

Ryman don't supply figures for "new" unsold units, although they do for units offered for resale. An analysis of new units built v sales over the past 5 years indicates at least 70 units more built v sold during the 5 years to March 31. Of course because there is no baseline data provided, the assumption was starting from a zero surplus of units in 2013. The reality would likely be there were at least some back then. For the size of Ryman, and the fact that completion numbers are "lumpy" due to the units in blocks of completed apartments coming on stream concurrently, and also unsold new units being spread right through the country and Melbourne, the issue is not likely to be of the same significance as with SUM. A visit out to RYM's Lynfield village a few weeks back indicated plenty of pre sales, given the number of "red" sold stickers on the plans.

[Beagle]

Ryman don't supply figures for "new" unsold units, although they do for units offered for resale. An analysis of new units built v sales over the past 5 years indicates at least 70 units more built v sold during the 5 years to March 31. Of course because there is no baseline data provided, the assumption was starting from a zero surplus of units in 2013. The reality would likely be there were at least some back then. For the size of Ryman, and the fact that completion numbers are "lumpy" due to the units in blocks of completed apartments coming on stream concurrently, and also unsold new units being spread right through the country and Melbourne, the issue is not likely to be of the same significance as with SUM. A visit out to RYM's Lynfield village a few weeks back indicated plenty of pre sales, given the number of "red" sold stickers on the plans.

Thanks for your input, much appreciated. RYM are known to heavily discount the weekly fee at pre sales meetings to get said units sold off the plans and that along with their fixed weekly fee for life, full continuum of care and only 20% capital retention model as well as a number of other superior aspects to their villages and product offer, (such as free downsizing within a village whilst SUM still charges 2%) means SUM has much to learn on the marketing front. I tried to help them get ahead of the curve but you can lead a horse to water but you can't make it drink.

Gosh if Couta1 is right about his reversion to the mean and SUM are really only worth 50% of RYM, I looked at RYM a short time ago and they were $12.66 which suggests only $6.33 for SUM. All eyes will be on the Q4 new sales numbers to see if this unsold stock problem keeps growing.

[Snow Leopard]

...Snowy — a log scale on that SUM chart would make the line less steep but whatever the scale the current actual share price will be above the upper channel line .....the story remains unchanged.

Winny - It might be better if you actually plot it and look at it rather than make assumptions. It is possible that you could be wrong. Just saying.

[Snow Leopard]

Snow Leopard - always willing to learn but not too sure what you saying. Obviously more to what you are just saying

Same data plotted with a log y axis below. Even if I use a different log scale much the same

Winny

OK, So I have just finished banging my head against a brick wall whilst counting to 100 slowly.

Now obviously I blame myself for not sending you fully detailed instructions that had been signed in triplicate, sent in, sent back, queried, lost, found, subjected to public inquiry, lost again, and finally buried in soft peat for three months and recycled as firelighters.

Deep breath:

You do a linear regression on the log of the price data.


PS - acknowledgements to Douglas Adams for borrowing a few well ordered words

[Raz]

OK, So I have just finished banging my head against a brick wall whilst counting to 100 slowly.

Now obviously I blame myself for not sending you fully detailed instructions that had been signed in triplicate, sent in, sent back, queried, lost, found, subjected to public inquiry, lost again, and finally buried in soft peat for three months and recycled as firelighters.

Deep breath:

You do a linear regression on the log of the price data.


PS - acknowledgements to Douglas Adams for borrowing a few well ordered words

Lovely financial econometrics...seeking deviations from the random walk theory..

[winner69]

OK, So I have just finished banging my head against a brick wall whilst counting to 100 slowly.

Now obviously I blame myself for not sending you fully detailed instructions that had been signed in triplicate, sent in, sent back, queried, lost, found, subjected to public inquiry, lost again, and finally buried in soft peat for three months and recycled as firelighters.

Deep breath:

You do a linear regression on the log of the price data.


PS - acknowledgements to Douglas Adams for borrowing a few well ordered words


I thought that might be what you were saying before .....but in your round about way of saying things it came across as something different

Anyway if I did post a revised chart it would confuse most as they would arge that the share price isn't 195 today ....and worse still Beagle might just be tempted to buy back in if he saw it.


Thanks for your help

[Beagle]

I thought that might be what you were saying before .....but in your round about way of saying things it came across as something different

Anyway if I did post a revised chart it would confuse most as they would arge that the share price isn't 195 today ....and worse still Beagle might just be tempted to buy back in if he saw it.


Thanks for your help

Fundamentally they look fine, technically this looks ugly. I won't revisit unless they get very cheap and / or actual sales numbers, (not units euphemistically called "delivered" which simply means built), start to show they are climbing back towards 450 per annum. In the meantime I think its increasingly looking like they are stuck between a rock and a hard place with their expensive unsold Auckland units https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12140611

[winner69]

SUM at 687 is about half of RYM shareprice

[couta1]

SUM at 687 is about half of RYM shareprice Continuing to revert to the mean aye winner, now around 53.6% relative to RYM, will be completely reverted by end of Nov, maybe even Inverted.Lol

[Beagle]

Continuing to revert to the mean aye winner, now around 53.6% relative to RYM, will be completely reverted by end of Nov, maybe even Inverted.Lol

LOL inverted I love it. Most overseas buyers can't buy residential property from next Monday, wonder what effect that will have on SUM ?

[winner69]

Continuing to revert to the mean aye winner, now around 53.6% relative to RYM, will be completely reverted by end of Nov, maybe even Inverted.Lol

That 53.6% is really half in Synlait lingo

[dobby41]

Most overseas buyers can't buy residential property from next Monday, wonder what effect that will have on SUM ?

Why would it have any effect?
Surely overseas buyers don't buy SUM properties?
Or are you thinking it will drop house prices in general? Given everyone keeps saying that overseas buyers buy few of our houses removing them shouldn't make much difference?

[Entrep]

Why would it have any effect?
Surely overseas buyers don't buy SUM properties?
Or are you thinking it will drop house prices in general? Given everyone keeps saying that overseas buyers buy few of our houses removing them shouldn't make much difference?

From what I can tell this event already seems to be priced into the Auckland market. I see property prices flat or down slightly for the next couple of years.

[dobby41]

From what I can tell this event already seems to be priced into the Auckland market. I see property prices flat or down slightly for the next couple of years.

This and a number of other events!

[Beagle]

Why would it have any effect?
Surely overseas buyers don't buy SUM properties?
Or are you thinking it will drop house prices in general? Given everyone keeps saying that overseas buyers buy few of our houses removing them shouldn't make much difference?


From what I can tell this event already seems to be priced into the Auckland market. I see property prices flat or down slightly for the next couple of years.

Auckland market has gone flat and essentially stayed close to a medium price of $850K for more than 18 months as reported by the Herald. There is great debate exactly how many homes are sold to overseas buyers but one thing is for sure, these new regulations cannot help. As I posted recently I think SUM are a little stuck with some of their units in as much as their average price may not be all that much below the average price of the surrounding suburbs. SUM have a sales problem with their units and these latest regulations cannot help that, in as much as it just got a little bit harder for retired folks to sell their home at a price they find acceptable so they can afford to buy one of SUM's units.

My expectations are that the Auckland market for the foreseeable future will stay flat (losing value in real inflation adjusted terms at circa 2.0% per annum) or decline very slightly, plus loss of value in inflation adjusted terms. Volumes may decline slightly due to overseas buyers being taken out of the market.

I think this affects SUM more than others because they have two big new developments in Auckland that they appear to be struggling to sell down, (Ellerslie and Hobsonville).

P.S. Talking with one of Auckland's most experienced real estate agents this morning, (more than 30 years experience) on a clients development deal the subject of Auckland's flat market came up. The sweet spot for easy sales in Auckland is currently $650-$750K. Over $900K is noticeably more difficult. Interesting anecdotal evidence on why higher priced apartments are struggling a bit...

[oldtech]

Both SUM and RYM have taken a beating this month.

SUM started at $7.81 (closing price on 28/09) and has closed today at $6.94; RYM started at $14.00 and has closed today at $12.78. By my calculations this means SUM is down by 11.1% and RYM is down 8.7%.

So neither looking particularly flash :(

[iceman]

Too right oldtech, Been a tough month for RYM & SUM like so many other shares that I follow.

But also interesting how I could rewrite your post by changing the time frame being looked at from 1 month to 12 months :

"Both SUM & RYM have had a great last 12 months. Since 17/10/17 SUM is up 17.87% and RYM 30.23%. Both looking extremely good :)"

[oldtech]

Too right oldtech, Been a tough month for RYM & SUM like so many other shares that I follow.

But also interesting how I could rewrite your post by changing the time frame being looked at from 1 month to 12 months :

"Both SUM & RYM have had a great last 12 months. Since 17/10/17 SUM is up 17.87% and RYM 30.23%. Both looking extremely good :)"


Always look on the bright side of life! :)

Very true iceman.

[Bjauck]

LOL inverted I love it. Most overseas buyers can't buy residential property from next Monday, wonder what effect that will have on SUM ?The overseas foreign buyers restrictions should have been introduced years ago when prices were charging their way up. They are now introduced when prices have stabilised anyway - so the overseas buyers may well have lost interest in the NZ housing market anyway! The easy bucks have already made by the overseas investors.

[longy]

The overseas foreign buyers restrictions should have been introduced years ago when prices were charging their way up. They are now introduced when prices have stabilised anyway - so the overseas buyers may well have lost interest in the NZ housing market anyway! The easy bucks have already made by the overseas investors.

The question is how much will the prop market fall if much at all? If you are selling in the current market I don't see it as a problem and if it falls say 7% like in OZ given the gain it has over the last few years... So what right?

[Lewylewylewy]

"...Summerset CEO Julian Cook said new sales of occupation rights in the year to August are aligned with the delivery of new retirement units over the same period..."

What do you guys read "aligned" to mean? Does that mean 1:1 or some other "aligned" ratio? Am i thinking about this too much? The announcement infers that they sold everything.

[freddagg]

"...Summerset CEO Julian Cook said new sales of occupation rights in the year to August are aligned with the delivery of new retirement units over the same period..."

What do you guys read "aligned" to mean? Does that mean 1:1 or some other "aligned" ratio? Am i thinking about this too much? The announcement infers that they sold everything.

It can only mean that the number of builds is very close to the number of sales. Anything else is unthinkable.

[iceman]

It can only mean that the number of builds is very close to the number of sales. Anything else is unthinkable.

A bit of a worry that wording. The sun and the moon are aligned but not really close :-)

[winner69]

A bit of a worry that wording. The sun and the moon are aligned but not really close :-)

A lot of Summerset announcements are rather vague / obtuse.

Probably doing it on purpose and hoping punters think real positively.

Some statements are so vague you can’t even read between the lines.

[Maverick]

it's a comforting statement when everything is going swell but if things really are getting a little unstuck in the sales department then it's vagueness is well constructed to put us off the scent for now. If Derek Handley had said it then it would definitely be very bad ( then no doubt followed by how SUM is improving global sustainability and enabling everyone's full potential) but the fact Julian cook said it then everything is probably all steady as she goes. In my mind Julian has built up a lot o f credibility over the years so I'll decide to take it positively until more evidence to the contrary. It would really help if some explanation was given as to why the apparent widening gap from new deliveries compared to new sales.
Really good observation Lewy, thanks for raising it.

[Beagle]

A lot of Summerset announcements are rather vague / obtuse.

Probably doing it on purpose and hoping punters think real positively.

Some statements are so vague you can’t even read between the lines.

Giving themselves quite a lot of wiggle room. You could easily say that last years sales were aligned with the build rate as they sold ~ 85% of what they built.
Strong Q4 sales numbers are crucial as is some progress on the fiasco at Boulcott St..
A less than impressive Q4 sales number could see this with a 5 handle again.

[Beagle]

Would someone like to do some research please ? (Hound is a bit tight time-wise today)
1. Taking into account sales for the first 3 quarters this year what sales do they need for Q4 to match last years sales number ?
2. What Q4 sales number do they need to achieve to sell all expected new builds this year i.e. 450 units ?
3. Have they ever achieved new sales in any quarter in their history before to achieve either of the above scenario's ?

[winner69]

Would someone like to do some research please ? (Hound is a bit tight time-wise today)
1. Taking into account sales for the first 3 quarters this year what sales do they need for Q4 to match last years sales number ?
2. What Q4 sales number do they need to achieve to sell all expected new builds this year i.e. 450 units ?
3. Have they ever achieved new sales in any quarter in their history before to achieve either of the above scenario's ?

Dorothy Dixer

[BlackPeter]

Would someone like to do some research please ? (Hound is a bit tight time-wise today)
1. Taking into account sales for the first 3 quarters this year what sales do they need for Q4 to match last years sales number ?
2. What Q4 sales number do they need to achieve to sell all expected new builds this year i.e. 450 units ?
3. Have they ever achieved new sales in any quarter in their history before to achieve either of the above scenario's ?

Just consulting my spreadsheet ...

Last years total sales numbers: 682, of them 382 new and 300 resale.
Q1 to Q3 2018 sale: 447, of them 227 new and 220 resale.

Q4 required to match last year: 235, of them 155 new and 80 resale.

Q4 required to match 450 new sales: 223 new to sell in Q4

Have they ever sold 155 or 223 new units in one quarter? No, highhest new unit sells in any one quarter have been 125 units in Q3-2016;

Highest resell number in any quarter have been 98 in Q4 2017 ... I.e. they might make up a bit with that, but unlikely a material amount.

Sounds like they do have a challenging task ahead ... :D;

Discl: still holding SUM, but significantly reduced the holding while SP was between MA50 and MA100 ;);

[winner69]

Sounds like they do have a challenging task ahead ... :D;

Discl: still holding SUM, but significantly reduced the holding while SP was between MA50 and MA100 ;);

gargantuan is the word I'm told

Dorothy would be proud of Beagle's question

[winner69]

Summerset achieve 223 new unit sales in Q4 .....as the yanks say that’s 1,000 annualised

So 1,000 annualised would be zillions of underlying profit

Means share price about $12.00

[Beagle]

Just consulting my spreadsheet ...

Last years total sales numbers: 682, of them 382 new and 300 resale.
Q1 to Q3 2018 sale: 447, of them 227 new and 220 resale.

Q4 required to match last year: 235, of them 155 new and 80 resale.

Q4 required to match 450 new sales: 223 new to sell in Q4

Have they ever sold 155 or 223 new units in one quarter? No, highhest new unit sells in any one quarter have been 125 units in Q3-2016;

Highest resell number in any quarter have been 98 in Q4 2017 ... I.e. they might make up a bit with that, but unlikely a material amount.

Sounds like they do have a challenging task ahead ... :D;

Discl: still holding SUM, but significantly reduced the holding while SP was between MA50 and MA100 ;);

Thanks BP, may I nominate you for the understatement of the day ?

[winner69]

Thanks BP, may I nominate you for the understatement of the day ?

But Julian says new sales are aligned to new units delivered

He can’t be wrong

[Beagle]

Summerset achieve 223 new unit sales in Q4 .....as the yanks say that’s 1,000 annualised

So 1,000 annualised would be zillions of underlying profit

Means share price about $12.00


But Julian says new sales are aligned to new units delivered

He can’t be wrong

LOL We will see.

[BlackPeter]

But Julian says new sales are aligned to new units delivered

He can’t be wrong

I guess there are different ways to align two numbers: you can increase one of them or you can reduce the other ...

[LAC]

Hey guys,
If you would only have these two options, which would u prefer in say the medium term with the way property prices etc are going.
SUM to less 400 units at higher margins or SUM to sell 450 units at slightly lower margins?
I am just trying to see what other investors are more inclined towards.
Thanks

[winner69]

Hey guys,
If you would only have these two options, which would u prefer in say the medium term with the way property prices etc are going.
SUM to less 400 units at higher margins or SUM to sell 450 units at slightly lower margins?
I am just trying to see what other investors are more inclined towards.
Thanks

Jeez Dorothy is busy today with her questions

One other question LAC .....hold out for higher margins ....when is the ‘clearance sale’ due?

[LAC]

Jeez Dorothy is busy today with her questions

One other question LAC .....hold out for higher margins ....when is the ‘clearance sale’ due?

I hope there isnt one, but they might so do if all keep wanting them to 450 sales;)

[couta1]

I see the Govt is now under pressure to increase the funding in order for nurses to be retained in the sector, they are currently running off to work for the DHB for a substantial better hourly rate. Not for profits are under particular pressure of course.