SUM - Summerset Group

[ratkin]

Wow, that was fast


Thats me out, was disapointed but then looked at the chart for the last couple of years and it still a very big win

[peat]

Thats me out, was disapointed but then looked at the chart for the last couple of years and it still a very big win

yeh that's what I thought too.... substantially out.

[Beagle]

It has been a great run. On another subject I am not impressed with their carbon neutral politically correct nonsense.

Despite what Julian Cook officially says in the NZX announcement I know he will be disappointed with just 8% underlying earnings growth, the slowest growth rate since they listed...but wait there's more, we're not going to grow earnings at all in the current year....WOW...what a "clanger" of a statement that is :eek2:
What happened to their target build rate of 600 units per annum ?
Despite a booming real estate market across N.Z. their current build rate target is only 400 units, far less than they built in 2018...why so low ?

They should just come out and admit that they have a sales problem. Julian Cook stated at the April 2019 meeting he didn't expect stock level's to go up in 2019 but they have and quite significantly. I was the one that asked towards the conclusion of last year's annual meeting what their build rate target was for 2019 ? If I hadn't asked they weren't going to disclose it.

They're just not selling enough...but according to Cook nobody gives them bad feedback that they don't have fixed fees for life....but that's not what I hear...

I won't be at the annual meeting in April to bark about their issues...first annual meeting I will have ever missed as I'm no longer entitled to attend with no shares :( :( :( That's okay because its a long road trip to Wellington and I wasn't going to fly. I will miss catching up with my mates and fellow shareholders down there this year though :( :( :(

[Blue Skies]

Better off to DYOR. "Past performance is no guarantee of future performance" But think about this. How many times in your life have you read that disclaimer ?
Have you ever read this one that I have long believed is the truth "Past performance is no guarantee of future performance but it is the very best guide we have" ?

Reason for this rant. DYOR is not that hard, just look at a companies history and extrapolate things out and adjust for known current economic factors.
All that suggests to me is SUM is on for a cracker year in 2020. Maybe $150m underlying profit ?

Shares were ~ $8 in mid 2018. Are they really that expensive now given the real estate pendulum has swung so dramatically towards growth again compared to back then ?...or maybe they are really cheap ? $150m would give eps of 66 cps and put SUM on a forward PE of just 13.6 at $8.98.

13.6 with their track record of eps growth. Hmmmm


In hindsight it appears at same time you were writing this glowing forecast last week, you were selling 2/3rds of your SUM at $9.
Hope I'm wrong, but confused.

[King1212]

In hindsight it appears at same time you were writing this glowing forecast last week, you were selling 2/3rds of your SUM at $9.
Hope I'm wrong, but confused.


Come on man.. everyone has their agenda here.. therefore take your own responsibility...this is a share market....people buy
.. people sell...market up.. market down...follow human emotions...

[Beagle]

In hindsight it appears at same time you were writing this glowing forecast last week, you were selling 2/3rds of your SUM at $9.
Hope I'm wrong, but confused.

That post was made exactly a week ago. If a "week is a long time in politics" its an eternity in this market. There have been major developments in the market since then, especially in relation to the virus and the risk of a global pandemic has substantially increased in my view, in the last couple of days so I reverted to over 80% cash and substantially reduced almost all my positions. Others will see the market risk from this virus differently and that's fine and I hope they are right.

[Sideshow Bob]

yeh that's what I thought too.... substantially out.

Have the feeling that will have the chance to buy back in at a substantially cheaper price. That may have already come today...…

[macduffy]

It's become pretty clear that the retirement village sector has over-estimated the short term demand for their product in recent years and that we will now see a slowing in unit completion for a while. Bluntly, most of us got a bit ahead of ourselves in that respect.

Well done, percy, for your foresight there!

:blush:

[King1212]

That post was made exactly a week ago. There have been major developments in the market since then especially in relation to Virus and the risk of a global pandemic has substantially increased in my view, very recently. In the last few days I reverted to over 80% cash and substantially reduced almost all my positions.

N we did warn the market ...isnt Beagle? But people are in denial...what u can say....well...market will be up in no time and will hit record again next week.

[ratkin]

It has been a great run. On another subject I am not impressed with their carbon neutral politically correct nonsense.

Despite what Julian Cook officially says in the NZX announcement I know he will be disappointed with just 8% underlying earnings growth, the slowest growth rate since they listed...but wait there's more, we're not going to grow earnings at all in the current year....WOW...what a "clanger" of a statement that is :eek2:
What happened to their target build rate of 600 units per annum ?
Despite a booming real estate market across N.Z. their current build rate target is only 400 units, far less than they built in 2018...why so low ?

They should just come out and admit that they have a sales problem. Julian Cook stated at the April 2019 meeting he didn't expect stock level's to go up in 2019 but they have and quite significantly. I was the one that asked towards the conclusion of last year's annual meeting what their build rate target was for 2019 ? If I hadn't asked they weren't going to disclose it.

They're just not selling enough...but according to Cook nobody gives them bad feedback that they don't have fixed fees for life....but that's not what I hear...

I won't be at the annual meeting in April to bark about their issues...first annual meeting I will have ever missed as I'm no longer entitled to attend with no shares :( :( :( That's okay because its a long road trip to Wellington and I wasn't going to fly. I will miss catching up with my mates and fellow shareholders down there this year though :( :( :(

Maybe the build rate is low because they are not confident they can fill them. There is so much competition, and if the virus does come here hen there really would be a lot sitting empty

[Beagle]

N we did warn the market ...isnt Beagle? But people are in denial...what u can say....well...market will be up in no time and will hit record again next week.

Market has had a fabulous run in the last 11 years of this Bull market since early March 2009, and especially last year. It can't continue forever...I think many of today's investors have never experienced the GFC and don't know what a bad recession feels like or its impact. All they know is a BULL market which they think will go on forever...

[percy]

It's become pretty clear that the retirement village sector has over-estimated the short term demand for their product in recent years and that we will now see a slowing in unit completion for a while. Bluntly, most of us got a bit ahead of ourselves in that respect.

Well done, percy, for your foresight there!

:blush:

Thanks macduffy.
Seemed a bit odd not having a retirement stock in our portfolios,while people on here were so bullish..
Did well with RYM,SUM and OCA in the past.Even MET many many years ago.
Remember Water Beds?.Everyone had to have one.New stores opening up everywhere.
My wife often says to me when everyone is rushing into something."Waterbeds".
So it was easy to see the retirement sector was the new "waterbeds"...lol.

[Beagle]

Looks like Fisher Funds got their analysis right when they sold down significantly over the last quarter prior to this announcement. Perhaps had some good insight into slow sales continuing into 2020.

They still retained an 8% portfolio position at the latest reporting period after trimming down, was still a top five investment position for KFL. Their call to top up several times in mid 2019 was right but they can't get out as quickly as an individual investor so this highlights one of the weaknesses of managed funds. Agree they got the trimming part right though, just didn't trim enough.

What's fair value for FY20 eps of 46.7 cps which is $106m underlying. What's the right PE given eps growth in FY21 could be held back by ongoing "investment" into nurses and caregivers and human resource cost investment in Australia before development really ramps up there ? Really modest eps growth for FY 21 ? Growth not returning to ~ 15% per annum until FY22 ?
Fair PE 14-15 = $6.53 - $7.00 ? (Assuming no material impact to SUM from a possible worldwide virus pandemic which might not be a safe assumption).

[Beagle]

Thanks macduffy.
Seemed a bit odd not having a retirement stock in our portfolios,while people on here were so bullish..
Did well with RYM,SUM and OCA in the past.Even MET many many years ago.

To be objective about it though, you missed a great run in MET, ARV and SUM in 2019. Party is over now though for the next wee while, of that I am quite sure.

[Blue Skies]

Come on man.. everyone has their agenda here.. therefore take your own responsibility...this is a share market....people buy
.. people sell...market up.. market down...follow human emotions...



Wasn't accusing anyone of anything & you've made a few assumptions.

As a keen observer of human nature, like many am always curious about apparent contradictions.

Had been tempted to top up my long standing minor holding recently, but (glad) I didn't.

Always best to try not to get too emotional ( or cynical) tends to cloud judgement.

[Blue Skies]

That post was made exactly a week ago. If a "week is a long time in politics" its an eternity in this market. There have been major developments in the market since then, especially in relation to the virus and the risk of a global pandemic has substantially increased in my view, in the last couple of days so I reverted to over 80% cash and substantially reduced almost all my positions. Others will see the market risk from this virus differently and that's fine and I hope they are right.

Thanks Beagle, was just curious as always appreciate your insight & analysis on here.

[oldtech]

Freefall seems to have stopped for now ...

[Cadalac123]

can never have enough SUM right gais!@#!3132

[percy]

To be objective about it though, you missed a great run in MET, ARV and SUM in 2019. Party is over now though for the next wee while, of that I am quite sure.

More than made up for it elsewhere...lol.

[Beagle]

Go Couta1...reversion to the mean rules !!!!!!

[winner69]

The Beagle has exited stage left, or is that stage right.:cool:

...thankfully he didn’t fall into the mosh pit

[winner69]

Fast forward to Chairman Campbell’s intro to the AGM. “Welcome to New Zealand’s fastest growing retirement village company, except for profit that is.”

Chairman Rob’s companies not having a good run of lately

I think Rob has lost the Midas touch and should retire.

[winner69]

SUM share price at 830 is still more than 50% up from a low last June

Just going the ebb and flow of the market ...or in SUMs case from height of exuberance to stupid lows

Long term trend still intact

But remains a traders delight ..well done Beagle and others

[couta1]

Go Couta1...reversion to the mean rules !!!!!! Dont ever doubt it again mate.

[Beagle]

Fast forward to Chairman Campbell’s intro to the AGM. “Welcome to New Zealand’s fastest growing retirement village company, except for profit and sales that is.”
:lol:

Chairman Rob’s companies not having a good run of lately

I think Rob has lost the Midas touch and should retire. Agreed.


SUM share price at 830 is still more than 50% up from a low last June

Just going the ebb and flow of the market ...or in SUMs case from height of exuberance to stupid lows

Long term trend still intact

But remains a traders delight ..well done Beagle and others

Thanks mate.

[winner69]

Dont ever doubt it again mate.

Totally reliable ...unlike that fandangled relative PE nonsense

[Beagle]

Totally reliable ...unlike that fandangled relative PE nonsense

LOL - I give up. Couta1 was right BUT he didn't buy at $5.50 and sell at $9 :D

[couta1]

LOL - I give up. Couta1 was right BUT he didn't buy at $5.50 and sell at $9 :D Nah I was fully immersed in milk at the time.:cool:

[Beagle]

No AIR or SUM shares..."I'm lost" https://www.msn.com/en-nz/news/offbeat/dog-gets-himself-lost-but-then-reports-himself-missing-at-local-police-station/ar-BB10kvPh?ocid=spartandhp
What is my purpose in life now ?, what can I bark about ?....I'm sure something will come to mind lol

[oldtech]

No AIR or SUM shares..."I'm lost" https://www.msn.com/en-nz/news/offbeat/dog-gets-himself-lost-but-then-reports-himself-missing-at-local-police-station/ar-BB10kvPh?ocid=spartandhp
What is my purpose in life now ?, what can I bark about ?....I'm sure something will come to mind lol

HGH looking cheap at the moment ...

[trader_jackson]

HGH looking cheap at the moment ...

ARV as well... ;)

[couta1]

No AIR or SUM shares..."I'm lost" https://www.msn.com/en-nz/news/offbeat/dog-gets-himself-lost-but-then-reports-himself-missing-at-local-police-station/ar-BB10kvPh?ocid=spartandhp
What is my purpose in life now ?, what can I bark about ?....I'm sure something will come to mind lol Start buying your HLG back, you know you want to being a divvy hound at heart.

[Beagle]

ARV as well... ;)

I concede that its time for a very deep dive into their financials.

[Raz]

I concede that its time for a very deep dive into their financials.

all that cash, just sitting there, is not very exciting:)

[Beagle]

all that cash, just sitting there, is not very exciting:)

LOL Especially not with the autosum on the spreadsheet already adding up the various accounts for me...even the fun of counting it is gone lol

Worse was to come today when one of my mates (in a nice way) suggested I have no long term loyalty to any company and implied I was a bad dog, but said also a clever one so I suppose that's good..
https://www.bing.com/videos/search?q=bad+beagle&qs=AS&cvid=5e5df024d8c844c48581ca517efb8abd&refig=75cbdcba150a4e87fa5af4668095b233&cc=NZ&setlang=en-US&plvar=0&ru=%2fsearch%3fq%3dbad%2bbeagle%26form%3dEDGTCT%26 qs%3dAS%26cvid%3d5e5df024d8c844c48581ca517efb8abd% 26refig%3d75cbdcba150a4e87fa5af4668095b233%26cc%3d NZ%26setlang%3den-US%26plvar%3d0&view=detail&mmscn=vwrc&mid=5F658AC3B7B6AF523C5A5F658AC3B7B6AF523C5A&FORM=WRVORC

What to do...I am so bored already...

[BlackPeter]

No question the result was a bit disappointing and the outlook for no underlying profit growth in FY20 extremely disappointing, especially against a backdrop of what will likely be a full year of strong residential property price growth.

Despite all the sugar coating of talk of "investment" in staff...really I am over this so called "investment" in staff, why don't they just call it what it is, we faced substantial cost increases with staff.

Unsold new stock keeps rising year on year on year as does resale stock. Debt level's keep rising and rising and their land bank is actually looking quite excessive now for their build rate...I have to look at the numbers some more but something like 12 years land bank at the FY20 build rate is really looking excessive.

The expansion into Australia with all the necessary resources marked a major turning point in the growth rate of RYM and really has acted as a headwind for years for them. I expect the FY20 outlook reflects the human resource cost increase over there for SUM and I expect Australian development will be a big drag on earnings growth in FY21 as well.

To me it seems all the retirement companies are struggling to a greater or lesser extent to sell their units and I suspect the market is actually quite over supplied.

I have been on at Julian Cook for years that they need to change to a fixed fee for life model and he won't listen.

Bulcott Street hearing in June 2019 at the Environment court...they are still waiting on a decision. To me the system is broken when the Environment court takes more that 7 months to even make a decision...that's beyond ridiculous.

I have made major changes to my expectations of growth rates going forward and now see this growing in the 10-15% rage, similar to RYM going forward from FY21 onward.

Based on no growth in FY20 earnings this gives eps of 46.7 cps in FY20. It's clear this is not a $9 stock anymore so I am glad I sold two thirds of my stake in the last week for ~ $9 and the rest this morning.

I initial sense is I see fair value somewhere around $7 after a major reassessment of expected growth rates in the long term and no growth in FY20.
To say I am disappointed would be a considerable understatement.

Disc: No shares left :( :(

Confused :confused:. Is this the same beagle who told me off some weeks ago when I mentioned that SUM share price around $9 feels to get a bit ahead of itself? I sold at that stage part of my holding.

Looking into the report - revenue is pretty spot on where the analysts expected it to be and revenue (the real one :) - not the underlying) is even well ahead of analyst expectations.

NPAT kept climbing nicely and a RoE of above 15% looks good to me as well.

Industry has increasing tailwind (just look at these nice graphs with above 75's) ... and yes, while the talk about "investment into staff" might be as well some PC PR exercise, it is good to see their staff retention improving. This actually will save money. Recruitment and staff training is expensive.

Glad to see SP somehow de-hyped and moving towards fair value - if SUM behaves as in previous events there even might be soon some specials with a $6 handle available.

Looking forward to re-fill my boots again at the end of this dip ... good company, just a pity the share price is that much pushed around by traders.

[winner69]

Most of my SUM are held for the long term and I intend it to stay that way.. I started collecting in 2012 ...jeez that’s a long time ago. Maybe I’m in love with SUM but really see no reason to divorce her. A bit like RBD I’ve kept most of some bought so long ago I can’t remember when

Over that time the share price has gone up by 24% pa.

On days like today I take solace from the chart below .....just says SUM still over priced at the moment but still trending up so why pack a sad now.

The red line is the linear regression line and the lines above and below are 1/2 STD DEV. Not a chart of log prices so Snowie will laugh his head off and say it’s rubbish.

Still have fun trading the swings with my punting money.

[Leftfield]

Confused :confused:. Is this the same beagle who told me off some weeks ago when I mentioned that SUM share price around $9 feels to get a bit ahead of itself? I sold at that stage part of my holding..

Investing is all about backing your own judgement.

[Beagle]

Big volume day with over 2 million shares smashed out the door. Maybe investors think the dream is over and they will struggle to even get RYM like growth in the very low teens after no growth at all in FY20 :eek2:

Maybe Rob and Julian could play this tune at the opening of the annual meeting https://www.youtube.com/watch?v=XjBwAYIxUso Got to say something instead of claiming to be the fastest growing retirement company eh.

[ratkin]

,
Most of my SUM are held for the long term and I intend it to stay that way.. I started collecting in 2012 ...jeez that’s a long time ago. Maybe I’m in love with SUM but really see no reason to divorce her. A bit like RBD I’ve kept most of some bought so long ago I can’t remember when

Over that time the share price has gone up by 24% pa.

On days like today I take solace from the chart below .....just says SUM still over priced at the moment but still trending up so why pack a sad now.

The red line is the linear regression line and the lines above and below are 1/2 STD DEV. Not a chart of log prices so Snowie will laugh his head off and say it’s rubbish.

Still have fun trading the swings with my punting money.

Normally I would agree with you, and if it was not for this damn virus I would never have even considered selling my shares today. However there are just so many massive unknowns at present, and the price is going to be driven by factors beyond SUMs control. Technically I would not have sold until it got somewhere near your yellow line, but with everything that is happening I guess fear/greed/relief at selling took precedence.

You asked on another thread if I had been to St Mawes, used to go there all the time on the ferry from Falmouth, but did not recognise the other place name you mentioned.

[Beagle]

Confused :confused:. Is this the same beagle who told me off some weeks ago when I mentioned that SUM share price around $9 feels to get a bit ahead of itself? I sold at that stage part of my holding.

Looking into the report - revenue is pretty spot on where the analysts expected it to be and revenue (the real one :) - not the underlying) is even well ahead of analyst expectations.

NPAT kept climbing nicely and a RoE of above 15% looks good to me as well.

Industry has increasing tailwind (just look at these nice graphs with above 75's) ... and yes, while the talk about "investment into staff" might be as well some PC PR exercise, it is good to see their staff retention improving. This actually will save money. Recruitment and staff training is expensive.

Glad to see SP somehow de-hyped and moving towards fair value - if SUM behaves as in previous events there even might be soon some specials with a $6 handle available.

Looking forward to re-fill my boots again at the end of this dip ... good company, just a pity the share price is that much pushed around by traders.

No need to be confused. A lot has changed in the market in very recent times. Some people have made major portfolio changes due to market risk perceptions around the virus and others are hoping it all blows over, I am in the former category.. right up to 4.50 yesterday afternoon I held a 2/3rds position after selling a one third position due to virus risk management a couple of days prior and then the Dow futures were very ugly and I shifted to a one third position on a hunch on the close yesterday.....some would say good proactive risk management of one's portfolio.....and then there was today's result and in particular outlook statement which made it crystal clear my assumptions around FY20 underlying profit, (the real one) were far too optimistic so I sold the remaining third.
Just good risk and capital management in my view. I think this is likely to have a 6 handle at some stage, agree with you on that.
Good on you for letting some go at ~ $9..of course I was going to bark, I hadn't sold any at that stage :lol:
I've been told off all day...I must be a naughty dog.

[BlackPeter]

Normally I would agree with you, and if it was not for this damn virus I would never have even considered selling my shares today. However there are just so many massive unknowns at present, and the price is going to be driven by factors beyond SUMs control. Technically I would not have sold until it got somewhere near your yellow line, but with everything that is happening I guess fear/greed/relief at selling took precedence

That's what gets the SP down - fear.

Still unsure, though how the virus is supposed to depress the business model of any retirement village.

Their profit is linked to the property prices - and these won't be impacted in the long term, even if the virus hits us with the fullest brunt our resident scaremongers can imagine.

Just do the numbers ... say 15% of the population catch the virus (which would be pretty much worst case and consistent with the 2009 swine flu) - and roughly 1% of the infected are dying (which is consistent with the current mortality rate outside of China - and btw most of the fatalities well above retirement age). This would be 0.15% of the total population. What exactly would this do to a country with roughly 2% population growth per year (over the last decade). Right.

It might reduce a bit New Zealand's super payments, and it would increase the DMF capital return to the relevant retirement village. While obviously from a human perspective sad, it even would improve the books.

SUM might be at the moment still a bit dear, but the virus has certainly no negative impact on its (or any other retirement villages) fundamentals.

But sure - the scaremongers might make a dent in the flow of hype ... i.e. temporary share price swings are well possible.

[percy]

Love it. Maybe it should be over for the sales team. Let’s get some people in there who know how to sell newly built units.

The gridlock for sales in ChCh is because of the lack of Chinese buyers for the houses, the people who need to sell, before they can settle on their retirement village unit,.

[Beagle]

Love it. Maybe it should be over for the sales team. Let’s get some people in there who know how to sell newly built units.

Not sure they're the issue. SUM not the only one struggling to sell their units by any means. All the listed operators seem to be struggling. Many players now and not all of them are listed. Market appears to be totally saturated with supply.

[Beagle]

That's what gets the SP down - fear.

Still unsure, though how the virus is supposed to depress the business model of any retirement village.

Their profit is linked to the property prices - and these won't be impacted in the long term, even if the virus hits us with the fullest brunt our resident scaremongers can imagine.

Just do the numbers ... say 15% of the population catch the virus (which would be pretty much worst case and consistent with the 2009 swine flu) - and roughly 1% of the infected are dying (which is consistent with the current mortality rate outside of China - and btw most of the fatalities well above retirement age). This would be 0.15% of the total population. What exactly would this do to a country with roughly 2% population growth per year (over the last decade). Right.

It might reduce a bit New Zealand's super payments, and it would increase the DMF capital return to the relevant retirement village. While obviously from a human perspective sad, it even would improve the books.

SUM might be at the moment still a bit dear, but the virus has certainly no negative impact on its (or any other retirement villages) fundamentals.

But sure - the scaremongers might make a dent in the flow of hype ... i.e. temporary share price swings are well possible.

SUM don't need any help from scaremongers, just look at their numbers. Its clear they can't sell what they are building even at the vastly reduced build rate of 350 units per year. Growth has never been slower and is forecast to stall in 2020 in a booming real estate market when Westpac are forecasting a whopping 10% increase in the national average price. WTF ???? Without a single word of exaggeration, I can tell you I am profoundly shocked by their FY20 outlook.
Just go back and have a look how unsold stock both new and units come up for resale have steadily tracked up year on year on year...along with debt...that's where the real growth has been. How many years in a row now that cash flow has only grown at single figures ?

[winner69]

I thought the mystery shoppers were going to fix the sales problem ... Julian was so proud of them when he talked about them at the ASM

[winner69]

SUM don't need any help from scaremongers, just look at their numbers. Its clear they can't sell what they are building even at the vastly reduced build rate of 350 units per year. Growth has never been slower and is forecast to stall in 2020 in a booming real estate market when Westpac are forecasting a whopping 10% increase in the national average price. WTF ???? Without a single word of exaggeration, I can tell you I am profoundly shocked by their FY20 outlook.
Just go back and have a look how unsold stock both new and units come up for resale have steadily tracked up year on year on year...along with debt...that's where the real growth has been. How many years in a row now that cash flow has only grown at single figures ?

Talking of cash flow Free Cash Flow was negative $90m (cash burn in other words) ...they paid $20m out in divies ....and paid $15m in interest

All that $125m funded from more debt

[Beagle]

Talking of cash flow Free Cash Flow was negative $90m (cash burn in other words) ...they paid $20m out in divies ....and paid $15m in interest

All that $125m funded from more debt

"Fabulous"

[winner69]

The future looks bright for Summerset irrespective of what people think of today’s announcement

[King1212]

well...like i said...market is resilient!!! back to normal at no time....and record high....

dangerous world out there....

[Baa_Baa]

No need to be confused. A lot has changed in the market in very recent times. Some people have made major portfolio changes due to market risk perceptions around the virus and others are hoping it all blows over, I am in the former category.. right up to 4.50 yesterday afternoon I held a 2/3rds position after selling a one third position due to virus risk management a couple of days prior and then the Dow futures were very ugly and I shifted to a one third position on a hunch on the close yesterday.....some would say good proactive risk management of one's portfolio.....and then there was today's result and in particular outlook statement which made it crystal clear my assumptions around FY20 underlying profit, (the real one) were far too optimistic so I sold the remaining third.
Just good risk and capital management in my view. I think this is likely to have a 6 handle at some stage, agree with you on that.
Good on you for letting some go at ~ $9..of course I was going to bark, I hadn't sold any at that stage :lol:
I've been told off all day...I must be a naughty dog.

So you are a trader when it comes down to it, a momentum trader seems to fit and you do seem to time it very well mostly. Does it work out ok after tax and broker fees? I suppose it would with SUM, it has gained a heck of a lot in recent times.

[Beagle]

The future looks bright for Summerset irrespective of what people think of today’s announcement

https://www.goodreturns.co.nz/article/976516378/nz-shares-fall-as-the-risk-of-global-pandemic-rises.html?utm_source=GR&utm_medium=email&utm_campaign=GoodReturns+Market+Report+for+25+Feb+ 2020

Result being described as "Weak" with a "Weaker" outlook...must really mean it because Weak or Weaker is mentioned 3 times !
Got me looking up synonyms for weak in an online dictionary...lucky "pathetic" wasn't one of them but "feeble" was :ohmy:

[Beagle]

Yep. Might be worth the sales folk, who came up short of 330 new sales in 2019, having a chinwag with the guy on steroids buying property who has built the pipeline up to over 5,000 units. Perhaps worth discussing the two figures and giving the property acquisition man a year or two off.

But the dynamic duo of Rob and Julian wouldn't here of that. Much talk in the annual report how they are keen for more land acquisitions in Melbourne...grass must be greener on the other side of the fence eh :) Just do another bond issue of $125m to fix the cash flow situation, what could possibly go wrong :eek2:

I am gutted by today's (outlook in particular), statement, seriously gutted and disappointed. The dream run of high growth really has come to a shuddering and screaming halt :crying: and when growth starts again its probably just going to be in line with others in this sector :sleep:

[winner69]

But the dynamic duo of Rob and Julian wouldn't here of that. Much talk in the annual report how they are keen for more land acquisitions in Melbourne...grass must be greener on the other side of the fence eh :) Just do another bond issue of $125m to fix the cash flow situation, what could possibly go wrong :eek2:

I am gutted by today's (outlook in particular), statement, seriously gutted and disappointed. The dream run of high growth really has come to a shuddering and screaming halt :crying: and when growth starts again its probably just going to be in line with others in this sector :sleep:

Today Julian said 8 year earnings growth has been 38% pa

I blame you for that - he shouldn’t have read all your posts

But a real weird thing to include in the 2019 highlights - Julian must think we’re idiots

[peat]

Technically it would make a lot of sense for a correction back to $8 or thereabouts.

sorry I have to requote myself but no one even listened.
8 days ago.

[winner69]

Metlife underlying earnings down 5% puts SUM +8% in good light

MET book value hardly moved ...SUM up 16%

[winner69]

As alluded to yesterday the ‘abysmal’ underlying earnings growth is down to new sales

They had less new than 2018 but worse still the average realised gain per sale was significantly down on 2018 ...ie selling less and making less per sale

Suppose we blame the sales execs and those dastardly greedy tradies and building product suppliers.

[Beagle]

Today Julian said 8 year earnings growth has been 38% pa

I blame you for that - he shouldn’t have read all your posts

But a real weird thing to include in the 2019 highlights - Julian must think we’re idiots

LOL - When underlying profit is only up 8%, (lowest growth in their entire history) and one is forecasting no underlying profit growth this year, (weird how they can forecast that this early in the year which has never happened before, deliberate attempt to hose down the share price ?), what else do you do but cling to past glory ?...oh and sing praises of how we're carbon neutral now, like anyone really cares...

Good they're "investing" in their nurses and care givers though eh Winner...you frequently remind me that all stakeholders are just as important as each other and how Human Capital is just as important as monetary capital. You must be really impressed that the really good gains are going to staff now...give you the warm fuzzies over morning tea this morning, you're doing your bit to make so many of the workers and their families happier and happy workers look after residents better so residents are winners too. This is brilliant, its almost like some form of capitalist philanthropy and heck, even the environment is better as they're carbon neutral. Who needs strong profit growth with so much other "feel good" going on... Maybe Jude Dobson could shoot some new sales video's showing her cuddling polar bears because the current ones don't seem to be working :p

[Maverick]

As alluded to yesterday the ‘abysmal’ underlying earnings growth is down to new sales

They had less new than 2018 but worse still the average realised gain per sale was significantly down on 2018 ...ie selling less and making less per sale

Suppose we blame the sales execs and those dastardly greedy tradies and building product suppliers.deleted ... wrong tread

[macduffy]

LOL - When underlying profit is only up 8%, (lowest growth in their entire history) and one is forecasting no underlying profit growth this year, (weird how they can forecast that this early in the year which has never happened before, deliberate attempt to hose down the share price ?), what else do you do but cling to past glory ?...oh and sing praises of how we're carbon neutral now, like anyone really cares...

Good they're "investing" in their nurses and care givers though eh Winner...you frequently remind me that all stakeholders are just as important as each other and how Human Capital is just as important as monetary capital. You must be really impressed that the really good gains are going to staff now...give you the warm fuzzies over morning tea this morning, you're doing your bit to make so many of the workers and their families happier and happy workers look after residents better so residents are winners too. This is brilliant, its almost like some form of capitalist philanthropy and heck, even the environment is better as they're carbon neutral. Who needs strong profit growth with so much other "feel good" going on... Maybe Jude Dobson could shoot some new sales video's showing her cuddling polar bears because the current ones don't seem to be working :p

You sound rather bitter there, Beagle. Don't be, it's still a good company and perhaps SUMwhat better years are ahead!

:)

[Beagle]

You sound rather bitter there, Beagle. Don't be, it's still a good company and perhaps SUMwhat better years are ahead!

:)

Nah, not bitter...just having a good tongue in cheek bark and a playful bite of Winner's leg...a bad dog has to bark about something lol

[Beagle]

That's what gets the SP down - fear.

Still unsure, though how the virus is supposed to depress the business model of any retirement village.

Their profit is linked to the property prices - and these won't be impacted in the long term, even if the virus hits us with the fullest brunt our resident scaremongers can imagine.

Just do the numbers ... say 15% of the population catch the virus (which would be pretty much worst case and consistent with the 2009 swine flu) - and roughly 1% of the infected are dying (which is consistent with the current mortality rate outside of China - and btw most of the fatalities well above retirement age). This would be 0.15% of the total population. What exactly would this do to a country with roughly 2% population growth per year (over the last decade). Right.

It might reduce a bit New Zealand's super payments, and it would increase the DMF capital return to the relevant retirement village. While obviously from a human perspective sad, it even would improve the books.

SUM might be at the moment still a bit dear, but the virus has certainly no negative impact on its (or any other retirement villages) fundamentals.

But sure - the scaremongers might make a dent in the flow of hype ... i.e. temporary share price swings are well possible.

I don't think fear is a major worry.

More concerning is that all participants in the sector are really struggling to sell the units they "deliver"

I can't help wonder who came up with the euphemistic term deliver. I used to think that meant delivery to an incoming resident and can't help wondering how many others and mislead by the use of this creative term.

[couta1]

The Couta reversion theorum says SUM is worth about $6.70 now, Beagle set your buy alarm in readiness.

[Beagle]

The Couta reversion theorum says SUM is worth about $6.70 now, Beagle set your buy alarm in readiness.

Yeah, no need for technical analysis (TA) or fundamental analysis (FA), just stick with Couta1 analysis (CA).

Seeing as the outlook is so WEAK maybe SUM should revert right to the bottom of the 40-60% Couta1 Gold Standard theory relative to RYM ?

If the market has a decent correction and RYM comes back to say fair value of around $12-13, 40% of that is just $4.80 - $5.20, heck SUM could retrace right back to $5 :eek2:

[Maverick]

I recon SUM might be ready to disappoint a little later this month.
........The general consensus here seems to be an underlying profit of 115-118m. (I was one of them too). Now I'm changing my forecast down to around 111 m

So good value for sure but the growth has substantially tailed off from its stunning previous YOY growth rates.

Basically SUM's built rate has plateaued to around 400 units per year but what really hurts is they are selling much slower . Although the average sale price per unit is heaps more it still isn't enough to keep the growth at the level it has been.

Looking ahead I personally question wether their target of 600 units PA is wise until we see increasing new sales. I suspect SUM have already been choking the built rate?..

Snow Leopard seems on the money here saying OCA and ARV are the new kids to deliver high growth rates.( I obviously pick OCA way ahead of ARV, no surprise there)
.

this post is a few weeks old now but with SUMs very disointing result out and now MET I think it is worth restating. (Saves me retypying)

it would appear new sales are slowing across the board so the growth model of " keep building even more " is dead. I do not see the market as over supplied at this point, rather, it is now better balanced. After all , we still need 1700 new deliveries in total YOY for our aging population.

I believe we have currently reached a point of collective sustainable building numbers and am actually very happy to see build rates now being trimmed rather than bloodymindedly flooding of the market.

In order for the various business's to keep impressive growth rates there are options the players have chosen.
RYM , expanding in to Aussy,
SUM , expanding into Aussy, albeit only just starting now and a few years behind RYM.
ARV, buy existing villages,
OCA , adding value to existing stock, focusing on late stage care.
MET , no clear direction, let's just hope we get taken over.

IMO SUM is heading to mid $7-$8. I can see no reason to own SUM right now especially after they doomed the share price with their statement of " no underlying " growth next year. Crickey ...it might even go into the $6's

[Mr Slothbear]

this post is a few weeks old now but with SUMs very disointing result out and now MET I think it is worth restating. (Saves me retypying)

it would appear new sales are slowing across the board so the growth model of " keep building even more " is dead. I do not see the market as over supplied at this point, rather, it is now better balanced. After all , we still need 1700 new deliveries in total YOY for our aging population.

I believe we have currently reached a point of collective sustainable building numbers and am actually very happy to see build rates now being trimmed rather than bloodymindedly flooding of the market.

In order for the various business's to keep impressive growth rates there are options the players have chosen.
RYM , expanding in to Aussy,
SUM , expanding into Aussy, albeit only just starting now and a few years behind RYM.
ARV, buy existing villages,
OCA , adding value to existing stock, focusing on late stage care.
MET , no clear direction, let's just hope we get taken over.

IMO SUM is heading to mid $7-$8. I can see no reason to own SUM right now especially after they doomed the share price with their statement of " no underlying " growth next year. Crickey ...it might even go into the $6's


Ryman hasn’t and will not reduce their build rate in NZ.

they have more sites being developed than ever before

[winner69]

Impact of rising building costs was HUGE in 2019

On average each new sale proceeds were $665k ..up 17% on 2018

But on average realised gain per sale was $185k ...some 2% less than 2018

This implies that on average the average cost per unit was a whooping 27% than 2018

Mix of location / unit size etc etc might explain some of the variances but at the end of the day the cost of what they’re building went up by more than the selling prices went up.

That’s what happens when margins are down significantly.

No wonder they saying margins will reduce further ...and I’d hazard a guess that’s the main reason for no growth in 2020 earnings ...got heaps of relatively expensive new stock to sell.

But as long they continue to sell stuff for more than it cost no worries going forward.

[Beagle]

this post is a few weeks old now but with SUMs very disointing result out and now MET I think it is worth restating. (Saves me retypying)

it would appear new sales are slowing across the board so the growth model of " keep building even more " is dead. I do not see the market as over supplied at this point, rather, it is now better balanced. After all , we still need 1700 new deliveries in total YOY for our aging population.

I believe we have currently reached a point of collective sustainable building numbers and am actually very happy to see build rates now being trimmed rather than bloodymindedly flooding of the market.

In order for the various business's to keep impressive growth rates there are options the players have chosen.
RYM , expanding in to Aussy,
SUM , expanding into Aussy, albeit only just starting now and a few years behind RYM.
ARV, buy existing villages,
OCA , adding value to existing stock, focusing on late stage care.
MET , no clear direction, let's just hope we get taken over.

IMO SUM is heading to mid $7-$8. I can see no reason to own SUM right now especially after they doomed the share price with their statement of " no underlying " growth next year. Crickey ...it might even go into the $6's

Good post mate but I think its clear the market is well and truly saturated. Julian Cook might as well have got a fire hose out and just hosed down the share price. "Spooky" how all of a sudden they can predict FY20 profit this far out when they didn't actually issue a forecast at all last year at any point. You'd swear they want the share price to have a major correction.

On another subject, RYM building villages all over the place around where I live and I can't help wondering how they are going to sell all those units.

[Mr Slothbear]

Good post mate but I think its clear the market is well and truly saturated. Julian Cook might as well have got a fire hose out and just hosed down the share price. "Spooky" how all of a sudden they can predict FY20 profit this far out when they didn't actually issue a forecast at all last year at any point. You'd swear they want the share price to have a major correction.

On another subject, RYM building villages all over the place around where I live and I can't help wondering how they are going to sell all those units.


a lot of ryman villages have a waiting list to get in.

if a resident hears there a brand new village being built not too far away and that they can transfer later down the road when a space opens up at their desired village it can’t be too hard to fill them up fast.

also my neighbour tells me all her friends are in ryman villages and won’t stop raving about how great it is and how happy they are there so word of mouth has to be worth a lot.

never heard any comments like that about Summerset.

[Beagle]

I did a site visit at SUM's Hobsonville waterfront village in 2017 and everyone I met seemed very contented...mind you it was a beautiful sunny day, the tide was in and we had just won the America's cup that morning so that might have had something to do with everyone walking around looking very happy :)

Fact is on an objective basis the numbers of RYM's sales have not been that impressive in the last 5 years given the size of the company.

[Mr Slothbear]

I did a site visit at SUM's Hobsonville waterfront village in 2017 and everyone I met seemed very contented...mind you it was a beautiful sunny day, the tide was in and we had just won the America's cup that morning so that might have had something to do with everyone walking around looking very happy :)

Fact is on an objective basis the numbers of RYM's sales have not been that impressive in the last 5 years given the size of the company.


Yes the selling hasn’t been the issue but they’ve certainly had some constructions issues mainly due to difference in how consenting works between aus and NZ so quite the learning experience. NZ projects get consented as they are built but aussie ones get consented all in one go at the start.

resulted in the significant delay of one or two of the large aussie villages.

[value_investor]

Yikes, bit of a sore result on first glance but there are seeds being planted for future growth. The movement into Australia is clever and offers a bit of diversification in terms of housing markets.

Increased staff costs that have impacted the industry as a whole, noticed a lot more slides on staff this time around. As per note 5, in the past 12 months staffing costs are up a whopping 11.6%, which to me is probably the most important stat on the expense side. On the income side, you have lower sales and delivery.

There was a JLL report released earlier last year, slating that the amount of supply is outstripping demand, and that the pipeline of all the providers have suggest that it will be a while until the demand side catches up. They also highlighted labour supply and staffing costs as big issues going forward which based on this is bang on.

Page 33 "In FY20 we do not expect underlying profit growth' is perhaps the direct answer to the recent falls. Priced for growth previously but unlikely now. It has changed my long term forecast on the stock, the wage issues are not limited to OCA as one company. Still a incredibly strong long term hold but I'm now more weary on what price I would want to enter.

Disc: Hold a decent position, not looking to accumulate unless it falls considerably

[Beagle]

Some ponderances out on my walk this morning...
Am I the only one that thinks its really strange they have forecast so early in the year there will be no underlying profit growth ?
Fact is to the best of my recollection they have never forecast the full year ahead before at the time of announcing the annual result. Why forecast a full 12 months ahead this time ?
What gives them this remarkable ability to predict the future so far ahead this time ?
Does forecasting so far ahead this time mean they have some serious confidence that no growth in underlying profit is the best case result and it could be worse ?
I guess we have to wait for their scheduled guidance update in August to find out but one cannot rule out a downgrade to an earnings decline this year, surely ?
What does this suggest they know about the difficulty in selling their steadily growing supply of unsold units ?
Why do they think the development margin is going to track so much lower when Westpac are projecting a 10% average increase in the national house price this year ?
What does their development margin compression against a very strong real estate market suggest about ongoing strong increases in the cost of construction ? or alternatively the general lack of sale-ability about what they're trying to sell ?
Are they suggesting their is effectively a major glut in market supply with their announcement and they are expecting unprecedented level's of discounting this year to try and sell it down ?
Is there something in the sales data for January and February 2020 that's not currently disclosed to the market that gives them so much confidence about 2020's weak outlook ?

I don't have any answers to the above, sorry.

[winner69]

I forecasted $118m / $120n Underlying earnings ...actual was $106m odd

Reviewing my forecast the thing I got badly wrong was the impact of construction costs on new sales margins

I reckon that costs impacted profit by about $12m (significant drop in development margin)

That’s where I went wrong ....always good to look where one went wrong ...should learn from the experience eh

Is a bit of a worry when they are saying margins are going to contract further.

[Mr Slothbear]

I forecasted $118m / $120n Underlying earnings ...actual was $106m odd

Reviewing my forecast the thing I got badly wrong was the impact of construction costs on new sales margins

I reckon that costs impacted profit by about $12m (significant drop in development margin)

That’s where I went wrong ....always good to look where one went wrong ...should learn from the experience eh

Is a bit of a worry when they are saying margins are going to contract further.

especially when their care division is a loss leader.

prior to this new units and resales been only source of profit. Not good if that gets squeezed and still have the loss making care division.

[Beagle]

I forecasted $118m / $120n Underlying earnings ...actual was $106m odd

Reviewing my forecast the thing I got badly wrong was the impact of construction costs on new sales margins

I reckon that costs impacted profit by about $12m (significant drop in development margin)

That’s where I went wrong ....always good to look where one went wrong ...should learn from the experience eh

Is a bit of a worry when they are saying margins are going to contract further.

Tells you they are really struggling to sell and don't think they can sell their units for anywhere close to their asking prices...remember they know more than shareholders...almost two more months sales evidence in January / Feb 2020 they know about but haven't disclosed to the market yet. Fixed weekly fees for life not costing you sales Julian ?...yeah right...wake up and smell the coffee for goodness sake.

Just talking to Coutts by phone and he told me Bupa have a massive unsold stock issue too. I can't help wondering how much unsold stock is out there from other non listed retirement companies ?

Bottom line is SUM differentiate themselves from almost all other retirement companies by being one of, or the only one who don't offer fixed weekly village fees for life.
Its long overdue the board ask themselves how that point of difference is working out for them ?...I've told them in no uncertain terms year, after year, after year, that they must move to the market norm of fixed fees for life but they are tone deaf. Makes you wonder, what with THL as well, whether Rob Campbell is due to retire ?

Dr Wong should be Chairman in my opinion...a very bright and highly articulate guy. https://www.summerset.co.nz/investor-centre/our-board/

Someone needs to really stir things up at the annual meeting...

[macduffy]

Someone needs to really stir things up at the annual meeting...

You'd better buy back that million shares, Beagle!

;)

[ratkin]

Do not want to sound too macabre but has anyone looked at how deathrates effect their profitability/unprofitability. I know one of the companies made an announcement a few years ago that profits were down because not many had died over a certain timeframe.

Would say a 25% extra deathrate for a year be good or bad for the company?

[winner69]

Stats NZ data

There were 1951 consents for retirement units in 2017 and then 1829 in 2018

But in 2019 a big increase to 2381

So plenty of ‘supply’ coming on stream in next year or so.

[winner69]

Do not want to sound too macabre but has anyone looked at how deathrates effect their profitability/unprofitability. I know one of the companies made an announcement a few years ago that profits were down because not many had died over a certain timeframe.

Would say a 25% extra deathrate for a year be good or bad for the company?

If they can sign up new occupants reasonably quickly I think increased death rate is favourable

It’s all about turning over units at higher prices ....and the higher the turnover the better

[Beagle]

Good questions. I do not have too much of a problem with Development Margin assumptions in the 20-25% range despite it being a drop from 28% (MET shareholders would love that level). Over the last 5 years from 2016 SUM development margins have been 20%, 22%, 27%, 33% and 28% and they have said for a long time that their long run expectation remains 20-25%. By way of comparison RYM development margins have been 24%, 19% and 30% over last three years and were as low as 20% in most recent half year partly due to Malvina Major partial demolition/rebuild. I suspect that SUM are factoring in a need to sharpen their pencil on pricing and/or incentives to lift sales in 2020 impacting margins. Cost and mix may also be drivers.

The larger concern for me is weak new unit sales which has been going on for four years already. As noted in a previous post, I think they must only be factoring in modest sales growth to around 370 units in 2020 (up from 329 in 2019 result), assuming a 24% development margin, to arrive at a flat underlying net profit forecast for 2020. It is concerning that SUM do not seem to have the confidence to back themselves to achieve a step up in new sales when they have acquired a land bank of over 5,000 units. It would be nice to see a bit more Mainfreight style frankness in SUM's shareholder communications, being transparent about what has not gone to plan and more direct on how they will address challenges.

The business is clearly not broken, but the issues around declining/flat new sales have added some uncertainty to the investment case. The "good news only pr style" shareholder communications are not helping build confidence for me. Excellent post, I couldn't agree more. Julian and the board are well overdue to take a humility pill and I agree, do a "Mainfreight" and own up to what isn't working and where they need to improve. Their unrelenting appetite for more land (more than 15 years supply at last years sales rate), is starting to look like a very questionable strategy.


You'd better buy back that million shares, Beagle! ;)
LOL, What's the minimum shareholding :)

[Beagle]

Stats NZ data

There were 1951 consents for retirement units in 2017 and then 1829 in 2018

But in 2019 a big increase to 2381

So plenty of ‘supply’ coming on stream in next year or so.

To add to all the unsold stock currently on the market.

[RTM]

To add to all the unsold stock currently on the market.

Yes...currently Beagle.
But the story hasn't really changed. Real Estate is slowly marching up in price as it always seems to. People are getting old and retiring. More and more of them. And a % of them are going to move into retirement villages. And the supply will adjust to the number that are. May be a bit slower transition than some of us anticipated. But I really don't think the sky has fallen in. My glass is half full.

[winner69]

Yes...currently Beagle.
But the story hasn't really changed. Real Estate is slowly marching up in price as it always seems to. People are getting old and retiring. More and more of them. And a % of them are going to move into retirement villages. And the supply will adjust to the number that are. May be a bit slower transition than some of us anticipated. But I really don't think the sky has fallen in. My glass is half full.

....my glass is almost flowing over

[Beagle]

Yes...currently Beagle.
But the story hasn't really changed. Real Estate is slowly marching up in price as it always seems to. People are getting old and retiring. More and more of them. And a % of them are going to move into retirement villages. And the supply will adjust to the number that are. May be a bit slower transition than some of us anticipated. But I really don't think the sky has fallen in. My glass is half full.

Yes BUT, (you knew there was a BUT coming eh mate :) ) underlying eps growth has never been slower than in 2019 before and forecast at the profoundly shocking rate of NIL in 2020 and the forward PE on $106m for 2020 is 17.6 ! By comparison based on my research today the forward PE of these companies who are growing underling eps nicely is ARV 16 (assumed forward growth rate 16%), OCA PE 13.6 (assumed underlying eps growth rate 5%, my own forecast of $55m underlying).

To make the comparison even more stark both these two comparative companies are well into their current financial year and SUM just started theirs's so maybe we should be comparing FY21 PE's of OCA and ARV with SUM's FY20 PE, which would make it worse as I doubt ARV and OCA will stop growing.

Last year for much of the year, (when we all assumed it had a far better eps growth outlook) it was trading on a PE in the very low teens, as low as 12 at one stage.

Primarily I have sales execution and valuation concerns. Regarding the latter I couldn't pay more than a PE of 15 at present given the new and MUCH WEAKER outlook so 15 x 46 cps = $6.90 and that assumes they can articulate a reasonable game plan to actually sell 400 units this year so the ever increasing stock of unsold units doesn't grow further still like their land bank. PE of 13-14 is where I would need to see it to get SUM back on board to give me some margin of safety in case they stuff up 2020 sales so 13 x 46 = $5.98 is all I really want to pay.

Maybe the game is up on building these villages with pretty "economically" sized care facilities like trader Jackson is suggesting ? SUM sales results for years now suggests potential residents are taking a very deep dive into looking very hard at whether SUM really does provide a robust degree of continuum of care services ? If its not that, something else is wrong and what do you think that is ?

The worry with SUM in FY21 is that they are going to carry huge human resource cost in Australia in 2021 with little sales progress over there that year so growth even if it does resume that year could be quite anemic.

The Glass is definitely half empty at the current price.

[Beagle]

My units are only half sold.

Exactly and therein lies the nub of the problem. Cash flow is going to be king and if they can't sell them then...

SUM correction now gaining momentum but is still in the very early stages in my opinion.

[bull....]

always said retirement stocks risky ( whoops mean property development stocks) credit will become harder to get soon and if virus arrives NZ and you get one go in lock down price probably be walloped

[Food4Thought]

Exactly and therein lies the nub of the problem. Cash flow is going to be king and if they can't sell them then...

SUM correction now gaining momentum but is still in the very early stages in my opinion.

I have a weird gut feeling this is only the start.

Yes, I let emotions get in the way and previous experiences. I exited all stock with the recent drop.

What I hear from overseas is not news I've ever experienced before.

I wonder what the people who experienced WWII know in regards to the current turbulence. And it's only a couple of weeks of fear setting in.

House prices are the next thing... and yes that will certainly take impact on SUM and some others in this sector.

Disc... sold out

[Beagle]

I have a weird gut feeling this is only the start.

Yes, I let emotions get in the way and previous experiences. I exited all stock with the recent drop.

What I hear from overseas is not news I've ever experienced before.

I wonder what the people who experienced WWII know in regards to the current turbulence. And it's only a couple of weeks of fear setting in.

House prices are the next thing... and yes that will certainly take impact on SUM and some others in this sector.

Disc... sold out

My sense is the same. Average bear market is 10-11 months according to our resident expert Hoop. There's a real chance this could be worse than average.
I am in no hurry whatsoever to buy anything on the NZX at present. The whole market could easily halve in the year ahead, or worse.

[Ggcc]

Any ideas where we will see this share in the months to come?? I sold most of my holding in SUM, not due to the virus but more due to the lack of results. Quietly waiting on the sidelines for an entry point, but value it at less than this on the figures provided and the mentioning of no growth on the future underlying profits. I value it at roughly $6.50-$7, just an opinion, but love other ideas

[Beagle]

I am not far away from you and see fair value as $6.00 - $6.50 but have no interest whatsoever in paying anything like fair value in a bear market.

[BlackPeter]

I am not far away from you and see fair value as $6.00 - $6.50 but have no interest whatsoever in paying anything like fair value in a bear market.

Are we sure we are already in bear territory? So far this looks more to a nice and sharp correction to me, but I guess time will tell ...

[forest]

Any ideas where we will see this share in the months to come?? I sold most of my holding in SUM, not due to the virus but more due to the lack of results. Quietly waiting on the sidelines for an entry point, but value it at less than this on the figures provided and the mentioning of no growth on the future underlying profits. I value it at roughly $6.50-$7, just an opinion, but love other ideas

The way I look is if SUM can not grow underlying earnings in NZ this year as they forecast than that is a worry in itself.
Now they are diverting their attention to set up business in Australia. Mm, does that sound like some other NZ companies. FBU, MPG come to mind.
I hope it won't be the case but if a business model is not working to well with full attention, it rarely works if management is distracted. And making the business model more complicated is likely a huge distraction.

Value, alot less than we have today. Remember we have a forecast of no operational earnings growth BUT every year SUM have more shares on issue and that is likely to continue.

[Beagle]

Are we sure we are already in bear territory? So far this looks more to a nice and sharp correction to me, but I guess time will tell ...

Definition of a bear market is >20% fall. SUM peaked at $9.30 so a 20% fall from that is $7.44. It closed at $7.43 this afternoon so there's your answer mate.

In terms of the market overall we're not even in correction territory yet, down just under 8% from the market peak NZX50 of ~ 12,050.

I agree with Forest 100%...the share price has a long journey to make southwards from here before I'd be interested again. The lack of sales progress is a mess and expansion risks across the Tasman will at best be a drag on earnings growth in FY21 and at worst we could see an earnings decline in FY20 and FY21 :eek2:

[BlackPeter]

Definition of a bear market is >20% fall. SUM peaked at $9.30 so a 20% fall from that is $7.44. It closed at $7.43 this afternoon so there's your answer mate.

I agree with Forest 100%...the share price has a long journey to make southwards from here before I'd be interested again.

Ah .... you talk about mini-bears :) ... I thought at the big picture; NZX50 not even 10% down from peak yet, isn't it?

[Beagle]

Ah .... you talk about mini-bears :) ... I thought at the big picture; NZX50 not even 10% down from peak yet, isn't it?

Quite right mate, this hasn't even started properly yet...give it time.

[winner69]

And Probably need a decent capital raise to get Aussie underway ....dont forget they’ve burned a lot of cash recently just in NZ

[ratkin]

Most of my SUM are held for the long term and I intend it to stay that way.. I started collecting in 2012 ...jeez that’s a long time ago. Maybe I’m in love with SUM but really see no reason to divorce her. A bit like RBD I’ve kept most of some bought so long ago I can’t remember when

Over that time the share price has gone up by 24% pa.

On days like today I take solace from the chart below .....just says SUM still over priced at the moment but still trending up so why pack a sad now.

The red line is the linear regression line and the lines above and below are 1/2 STD DEV. Not a chart of log prices so Snowie will laugh his head off and say it’s rubbish.

Still have fun trading the swings with my punting money.

Has it reached the bottom line on your chart yet? For some reason chart will not repost

[winner69]

Has it reached the bottom line on your chart yet? For some reason chart will not repost

Todays close is spot on the trend line (linear regression one) .... the lower channel is currently at 630.

[winner69]

couta theorem seems to be standing up to scrutiny well in the new bear market scenario

....and wise old dogs believed in the theorem and sold all his SUM just as the %age came off the peak....knowing it was going to revert to the mean.

[ratkin]

Todays close is spot on the trend line (linear regression one) .... the lower channel is currently at 630.

Thx, maybe a decent bounce point, (6.30) or maybe it will bounce off the middle one

[Beagle]

Thx, maybe a decent bounce point, (6.30) or maybe it will bounce off the middle one
Or maybe seeing as Julian has just dropped the clanger of a result of his entire career it will simply sail past the bottom of the trend line at $6.30 and plumb new depths.
Could easily retest last years low of ~ $5.30 in my opinion. No growth in FY20...WOW...I am still trying to get my head around that ABSOLUTE SHOCKER !!

[winner69]

Or maybe seeing as Julian has just dropped the clanger of a result of his entire career it will simply sail past the bottom of the trend line at $6.30 and plumb new depths.
Could easily retest last years low of ~ $5.30 in my opinion. No growth in FY20...WOW...I am still trying to get my head around that ABSOLUTE SHOCKER !!

Maybe you can now appreciate why I didn’t join you and Mav in going to the ASM ...too easy to be seduced by smooth talking leaders with a pack of glossy sides who generally only tell you how bright the future looks.

Julian has signalled things not to good in his words over the last year.

One was him talking about ‘mystery shoppers’ at the ASM. Jeez what a thing for a builder of retirement villages to talk about. Were mystery shoppers really going to solve their sales problem.

Another good one was announcing Q3 sales when as new sales numbers declined again he said ‘new sales maintained the momentum reported in the first half’. Quick read sounds really positive but in reality sales were going backwards just as fast as before.

Then that all resulted in Julian coming out With that ‘clanger’ of no growth in 2020. Doesn’t usually give guidance does he so probably going to happen. Gave a few reasons ...maybe he’s going to use the virus excuse for the next downgrade.

Beagle me old mate ...read between the lines.

Whatever SUM will still make heaps in 2020 and the company will continue to get more valuable ....like maintaining the momentum of the past lol

[forest]

And Probably need a decent capital raise to get Aussie underway ....dont forget they’ve burned a lot of cash recently just in NZ

You right Winner, a lot of cash is being used.
Had a look at the interest bearing loans and borrowings, this went up in 2019 from $453m to $597m or more than 30%.
One would think with so much extra borrowing the company would do more than the prior year.
However SUM delivered a decline in residences from 454 in 2018 to 354 in 2019 or 22%.
Something seem to be broken.

[ratkin]

Six people dead now in that old peoples home in Washington. Just shows what will happen if the virus gets into those places. It in a home in Germany too. By the end of this winter we could be looking at a lot of vacant units in SUM villages.
They need the staff to live and be permanently onsite, and to ban all visitors etc. Pretty harsh if the old sticks cannot see their families but the alternative is wipeout.

How many staff on minimum wage would do that though? Reality is the virus will find a way in

[Beagle]

I hear you Winner. The annual report read like a public relations marketing exercise. "Investing in staff"...like that's some sort of achievement, when all they are doing is paying people what the DHB does so they reduce staff churn...calling this "investment" is just plain and simple "public relations bull****"...carbon neutral..Chris Luxon would be proud but does anyone else care ?
No real ownership taken and explanations of what's gone wrong.

If you had of come along to the annual meeting you would have heard Cook express his confidence that stock level's had peaked in 2018 and that he was confident that they would reduce in 2019, or words to that effect...what an epic fail that was.

Or if you had of joined Mav and I in discussions with him after the meeting you would have heard how I asked him what sort of growth for 2019 and I suggested single figure growth and he said he would be very disappointed if it was only that...but then he goes on about what a great year it was, now.

I really do believe that (just like when RYM started across the Tasman, that really put a handbrake on underlying earnings growth) and so it will be the case for SUM for at least in the FY20 and FY21 years.

The question has to be asked, what is the point of expanding over there when the N.Z. operations are not working anywhere near optimally ? Losing focus ?

No worries...another $150m bond issue will fix the cash flow problem, for another year...

[dobby41]

Six people dead now in that old peoples home in Washington. Just shows what will happen if the virus gets into those places. It in a home in Germany too. By the end of this winter we could be looking at a lot of vacant units in SUM villages.
They need the staff to live and be permanently onsite, and to ban all visitors etc. Pretty harsh if the old sticks cannot see their families but the alternative is wipeout.

How many staff on minimum wage would do that though? Reality is the virus will find a way in

How many die of the Flu in those homes?
Bearing in mind that they probably vaccinate for the Flu as best they can.

[oldtech]

Wow, that dead cat must have hit hard, the bounce has started!

[ratkin]

How many die of the Flu in those homes?
Bearing in mind that they probably vaccinate for the Flu as best they can.

Not Six in a day that is for sure

[BlackPeter]

Wow, that dead cat must have hit hard, the bounce has started!

I guess only hindsight will show whether the cat is really dead :); They say cats have nine lives, don't they?

[BlackPeter]

Definition of a bear market is >20% fall. SUM peaked at $9.30 so a 20% fall from that is $7.44. It closed at $7.43 this afternoon so there's your answer mate.


Well, it is back to $7.80 - i.e. must have been a micro bear ;):

[oldtech]

I guess only hindsight will show whether the cat is really dead :); They say cats have nine lives, don't they?

Yup, I took advantage of the bounce and have now sold all SUM shares.

This cat seems to have reached maximum trajectory in the first 30 minutes, cruising along now. I will watch with interest to see what happens, but I am out and at a tidy profit, so breathing easier.

[Beagle]

Well, it is back to $7.80 - i.e. must have been a micro bear ;):

LOL Our mate Coutts thinks its a teddy bear :)

Nobody ever went broke taking a sizeable profit :cool:

[BlackPeter]

LOL Our mate Coutts thinks its a teddy bear :)

Nobody ever went broke taking a sizeable profit :cool:

... absolutely ... and I do agree as well that SUM might well go further down before it comes up again. But it will.

Not sure though, whether I would call every downleg in SUM companies beautiful cycles "Bear".

[dreamcatcher]

Not touching ANY Retirement stock but If people think SUM is great value TODAY then fill the cupboards.

Rest home worries over coronavirus they are ignoring us ..........(Currently NZ has 1 case)

https://www.rnz.co.nz/news/national/410869/rest-home-worries-over-coronavirus-they-are-ignoring-us

[ratkin]

Always are chance the govt chips in with some funding, to help keep the residents safe

[justakiwi]

As a rest home carer this is something I have thought about. My understanding/expectations would be that we would manage it the same way we currently manage any contagious illness. Unwell residents would be isolated in their rooms. Meals would be delivered to their rooms. Most of our residents have shared en-suite but in a situation like this we would provide them with a commode in their room, and they would not use the shared facilities. We would need to forgo showers temporarily but that is not a huge issue - every resident has their own hand basin, so carers would assist them to have a wash or bed bath instead during any period of isolation.

We already use protective plastic (disposable) aprons, gloves and masks when someone has a contagious illness (such as vomiting or diarrhoea) so this is what would happen in a coronavirus situation too. We would probably need DHB help with provision of these items as we most probably don’t have enough on hand for a major outbreak, but if we only had one or two residents affected, we would be fine.

Staffing could be an issue especially on evening and night shifts where we only have two staff on duty. We would need additional staff on those shifts if we had any more than one or two residents in isolation. This would also depend on the current needs of our residents at the time eg: if we had any residents needing two carers for cares, any palliative/end of life residents etc. Any of those scenarios would mean a need for extra staff if we were also dealing with the virus.

Other measures would no doubt be taken such as restricting/banning visitors temporarily, RNs may initiate more frequent general health checks for “well” residents, and maybe we would decide to use disposable plates/cutlery for meals for unwell residents?

We would do what we always do. Turn up for work, take recommended health and safety precautions, and do our very best to care for our people. Any resident who became extremely unwell would no doubt be transferred to hospital. I don’t believe our residents are at a significantly greater risk in our rest home than they would be anywhere else. If they were living at home with community support, they would still have people in and out of their home who could potentially introduce the virus. Same thing applies if they were living in the care of family.

All any of us, including our Health Department, DHBs and hospitals, can do ... is our best. There are no guarantees about anything in life. We have not yet perfected anything in terms of health and health related interventions. We still have no cure for the common cold. Or cancer. Why do we expect that “somebody” should be able to miraculously solve this issue?


Not touching ANY Retirement stock but If people think SUM is great value TODAY then fill the cupboards.

Rest home worries over coronavirus they are ignoring us ..........(Currently NZ has 1 case)

https://www.rnz.co.nz/news/national/410869/rest-home-worries-over-coronavirus-they-are-ignoring-us

[dreamcatcher]

@justakiwi.............. Hopefully worst case scenario never eventuates.

[dobby41]

Not touching ANY Retirement stock but If people think SUM is great value TODAY then fill the cupboards.

Rest home worries over coronavirus they are ignoring us ..........(Currently NZ has 1 case)

https://www.rnz.co.nz/news/national/410869/rest-home-worries-over-coronavirus-they-are-ignoring-us

It seems to me that that rest home should be doing better risk assessments and disaster preparations.
They are not very well prepared and want someone else to do it for them.

[winner69]

Post GFC nz property prices slumped 10% in a year and then took 3 years to get back to where they were.

Summerset with all their unsold units which have cost heaps more than expected to build (maybe 10% to 15% more) wouldn’t want a repeat of property prices collapsing like they did in 2008/2009

[Baa_Baa]

Didn’t get to the 200 dma now back up through the 100 dma

[dreamcatcher]

Retirement Investments Very-High-Risk-Currently and now suggestions from another news source that NZ property sales may be impacted by Covid-19. Australia already facing a decline with Residential building approvals falling -15.3%mom in January against expectations for little change.

https://www.theaustralian.com.au/nation/fears-infected-doctor-passed-on-coronavirus/news-story/29abdc7a3c5970511c92f4781453f52e
https://www.canberratimes.com.au/story/6661018/nsw-aged-care-worker-catches-coronavirus/?cs=14231

[BlackPeter]

Retirement Investments Very-High-Risk-Currently

Your unsubstantiated opinion or do you have anything to support this claim?

Retirement investments are in their nature long term ... and I see no evidence at all that the headwind which supports this industry will stop anytime soon. Do you?

China, a country with 1.3 billion people managed to get the virus under control - and they have so far some 3000 dead people. Make this 5000 to allow for the not yet recovered people. If you compare that with NZ - this would equal to roughly 20 dead people in New Zealand, if it gets here as bad as it was in China.

Even if the majority of these 20 people is likely to be elderly, what material impact would this have on the industry? - None at all.

What is the basis for your claim that the industry is very-high-risk?

[peat]

What is the basis for your claim that the industry is very-high-risk?

Technical analysis can support the notion.
Let us consider Average True Range, a volatility indicator and hence quantifying risk
If we take Summerset and apply the ATR then we clearly see a significant and accelerating rise in that indicators values since Nov 19.

11079

. And we can see that Ryman is very similar although Fletcher Building is not. So perhaps he is correct. I havent looked at OCA or ARV obviously MET is shielded by the T/O.

[TFA]

Your unsubstantiated opinion or do you have anything to support this claim?

Retirement investments are in their nature long term ... and I see no evidence at all that the headwind which supports this industry will stop anytime soon. Do you?

China, a country with 1.3 billion people managed to get the virus under control - and they have so far some 3000 dead people. Make this 5000 to allow for the not yet recovered people. If you compare that with NZ - this would equal to roughly 20 dead people in New Zealand, if it gets here as bad as it was in China.

Even if the majority of these 20 people is likely to be elderly, what material impact would this have on the industry? - None at all.

What is the basis for your claim that the industry is very-high-risk?

Maybe not very high risk, but downside risk has certainly got a whole lot higher. The Chinese have made great progress in arresting things, but that does't mean it is over and could escalate again especially as they try to return to normality.
We don't know how this virus is going to play out, however one real scenario is a spanish flu like pandemic.
Do the math's on that using the using WHO's (not Trumps) mortality rates for humans and it would be very bad. However the mortality percentage climbs sharply from about aged 60 upwards (80+ is running over 18% ). They will be doing some serious sensitivity analysis in their projections.

[BlackPeter]

Technical analysis can support the notion.
Let us consider Average True Range, a volatility indicator and hence quantifying risk
If we take Summerset and apply the ATR then we clearly see a significant and accelerating rise in that indicators values since Nov 19.

11079

. And we can see that Ryman is very similar although Fletcher Building is not. So perhaps he is correct. I havent looked at OCA or ARV obviously MET is shielded by the T/O.

Looks like we need to clarify some definitions first.

Risk rating of a security is about its long term ability to grow and survive. It has nothing to do with the hype of the day, which is measured by TA.

A good example for risk ratings are the credit ratings as assessed by various credit rating agencies (and lets not get into the quality of their assessments - shall we :):

An A rating is low risk.

A B rating would still be investment grade (moderate risk).

C would be high risk

D or below would be Very high risk (default highly likely).

Based on these definitions is Retirement industry clearly not very-high-risk.

But sure - any investment goes up and down, and given the current market mood nearly all stocks got the virus.

This does not make them very-high-risk investments, it just makes them better bargains - day for day.

Short term TA might be a useful tool to time exit and entry into stocks, but it has absolutely nothing to do with the risk assessment of a security.

[peat]

Risk IS price movement.
If price stayed the same there would be no risk , if price moves there is risk ,
Price reflects everything else all combined in one easy number You say all that stuff about ability to survive and grow but that is what price shows. Why consider a hundred variables when there is the perfect one staring you right in the face.
Pfft to the credit agencies. Why use them as a rating when you acknowledge their poor quality.

Risk is up as defined by ATR and NZ retirement villages are not immune to risk or the virus.

PS I don't know why you mention Short Term TA. I can only chart 9 years of SUM but it clearly shows risk is higher than ever! Anything over 5 years is med-long term in my opinion

11080

Disclaimer no holding either way.

[dreamcatcher]

@BlackPeter Almost all folks at Retirement Villages are elderly over 60's so presently are imo Very-High-Risk to Covid-19 sure they may escape catching virus. Smart money already left or reduced SUM now watching from sidelines but others buying now could risk capital loss. Off course its how one see's the risks.

Suppose you are not currently buying airline stock ......

(Never Held SUM hold OCA after selling 1/2)

[BlackPeter]

Risk IS price movement.


According to Dr. Google:

Risk is the potential for uncontrolled loss of something of value. ... Risk can also be defined as the intentional interaction with uncertainty. Uncertainty is a potential, unpredictable, and uncontrollable outcome; risk is an aspect of action taken in spite of uncertainty.


So - yes, if I want to sell tomorrow, than the daily share price movement is one risk factor I need to consider as a trader.

However - it is no risk at all for the company.

If I am a long term investor, than any daily share price movement is irrelevant to both myself as well as to the company.

Obviously - you are free to choose the risk definition for a short term trader, but in that case any stock is always very high risk. Still - has nothing to do with the industry, and I don't see the benefit of rating any stock as "very high risk". What would be the point?

[peat]

According to Dr. Google:


So - yes, if I want to sell tomorrow, than the daily share price movement is one risk factor I need to consider as a trader.

However - it is no risk at all for the company.

If I am a long term investor, than any daily share price movement is irrelevant to both myself as well as to the company.

Obviously - you are free to choose the risk definition for a short term trader, but in that case any stock is always very high risk. Still - has nothing to do with the industry, and I don't see the benefit of rating any stock as "very high risk". What would be the point?

It is a risk for the company if price goes lower because it demonstrates that investors are losing faith and the reason they are losing faith is because the business isnt doing so well. Price tells us what the world thinks of the company's prospects. You say its no risk for the day to day operations but it is because apart from their being a high chance that negative sentiment has some basis in reality , price falling also means less availability of capital to expand.

The reason for rating something high-risk is so that one can have expectations based on that. Eg yes I will go for high risk because I am expecting a high return. Or no I wont go for high risk because it is unlikely that the risk I am taking will be sufficiently rewarded for me to take that risk. thats the point.

[winner69]

I can see peat and bp debating for a while and then agreeing to disagree

if 'risk' is price volatility then imho sum is only slightly 'riskier' now than in the past. If one takes the spikes and says its become heaps more 'risky' than a few weeks ago (like the present) one should note that at times its been just as 'risky' in the past.

My tuppence worth and my calculations on chart

[BlackPeter]

It is a risk for the company if price goes lower because it demonstrates that investors are losing faith and the reason they are losing faith is because the business isnt doing so well. Price tells us what the world thinks of the company's prospects. You say its no risk for the day to day operations but it is because apart from their being a high chance that negative sentiment has some basis in reality , price falling also means less availability of capital to expand.

The reason for rating something high-risk is so that one can have expectations based on that. Eg yes I will go for high risk because I am expecting a high return. Or no I wont go for high risk because it is unlikely that the risk I am taking will be sufficiently rewarded for me to take that risk. thats the point.

You still seem to believe in the efficient market theory. Personally I think that the story about father Christmas is more credible :p;

Price has nothing to do with the the financial risk of a security, or do you think that in times of the cybercr*p bubbles there was no risk in buying Bitcoins? What about all the other bubbles in history? You could even argue that the financial risk (to the investor, i.e. as you define it) is always the highest when a stock peaks. You certainly can't say that about the retirement industry now.

SUM SP cycled various times by up to 50% ... without any material changes to its fundamentals or risk rating.

But anyway - we will need to agree to disagree, but if you don't, then I can live with that as well :);

Just for disclosure - I am not holding SUM at the moment (but still lots of OCA).

[BlackPeter]

I can see peat and bp debating for a while and then agreeing to disagree


You did beat me to it :);

Just wondering - given that this prediction was spot on ... could you try next weeks Lotto numbers or maybe next months stock prices :):

[Beagle]

The $106m question is will this virus have any material impact on the underlying assumptions that went into the forecast of no growth for 2020 ?
Will those who were looking to move to a village for lifestyle reasons, (most of SUM's units are independent living and therefore the sale of these units are predominantly lifestyle discretionary decisions made by home owners), reevaluate the risk of living in closer proximity to neighbours and decide they are better off to stay in their own homes for the foreseeable future ?
Does this make it harder for SUM to sell its units, especially apartment ones where people live very closely together ?
Does this suggest the virus risk poses some downside risk to SUM's forecast of no growth ?
Will we see the scheduled August forecast update result in a downgrade to underlying profit actually declining this year ?
Will SUM's considerable stock of unsold units lurch higher still ?

I was thinking around $6.50 is fair value underlying PE of 14, but I think there is some risk to the downside. Might wait for NTA at $5, probably safer buying down there.

[macduffy]

I'm not so sure about "lifestyle choice". Most of the elderly people that I know have moved into retirement village apartments and villas because they find property maintenance getting beyond them and health problems appearing or increasing. Certainly, there is an element of lifestyle there and concerns about the perceived risk in villages will probably defer some decisions to move for a while but I wouldn't overstate the financial impact on retirement companies. The market's reaction is another matter though!

[Beagle]

I'm not so sure about "lifestyle choice". Most of the elderly people that I know have moved into retirement village apartments and villas because they find property maintenance getting beyond them and health problems appearing or increasing. Certainly, there is an element of lifestyle there and concerns about the perceived risk in villages will probably defer some decisions to move for a while but I wouldn't overstate the financial impact on retirement companies. The market's reaction is another matter though!

Average entry age is 80 so yes, for sure the factors you mention are often the catalyst for the move but some will defer the shift as a precautionary measure, I think that much is a given and SUM have already been struggling to sell their units for years.

[winner69]

Ryman continued to grow earnings through the worst recession the world had seen since the Great Depression.

[Beagle]

Think you meant the great recession...probably why they command a PE premium to SUM.
SUM's underlying earnings quite likely to decline in 2020 in my opinion.

[BlackPeter]

Ryman continued to grow earnings through the worst recession the world had seen since the Great Depression.

True - but still - Rymans shares at the end of the GFC have been on special (I think down 50% on pre GFC highs) as well. This is not about problems for the industry, it is about buying great companies still cheaper by telling everybody the industry will have problems.

[Beagle]

I think you are right about downside risk to this years sales. Inertia often kicks in at times like these. So less people looking to move where it is lifestyle choice until worst of virus behind us. Soft year potentially gets softer. Long term prospects still strong, so if it gets to $5, will be great buying.

Not just less volume of sales but could be at lower prices too. As recently as last month Westpac were extremely bullish on house price growth predicting 10% growth this year in the national average price. Not any more ! https://www.interest.co.nz/property/103938/westpac-slashes-forecasts-house-price-growth-and-gdp-coronavirus-starts-hit-jobs-and?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Saturday+7+ March+2020

[winner69]

Not just less volume of sales but could be at lower prices too. As recently as last month Westpac were extremely bullish on house price growth predicting 10% growth this year in the national average price. Not any more ! https://www.interest.co.nz/property/103938/westpac-slashes-forecasts-house-price-growth-and-gdp-coronavirus-starts-hit-jobs-and?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Saturday+7+ March+2020

Great selection of a photo to head that story

Maybe Westpac are forecasting that all diseased houses are to be torched.

[Beagle]

I guess they call that "dramatic licence" :) I see they are forecasting -0.2% GDP this quarter. Its almost certain that the June quarter will be a minus figure so on the balance of probabilities we're already in a recession, (just awaiting confirmation).

[winner69]

I guess they call that "dramatic licence" :) I see they are forecasting -0.2% GDP this quarter. Its almost certain that the June quarter will be a minus figure so on the balance of probabilities we're already in a recession, (just awaiting confirmation).

A few years ago when the media was raving on about an impending recession Somebody asked me ‘are recessions bad’ and ‘what happens during a recession’. He was getting really worried because the media made them out to be really bad.

I asked him - ‘how were things with you and your family in 1998/1999 and in 2008/2010.”

He said ‘life was just fine both times, even best times in my life because .......’

I said “well, that’s what happens during recessions”

He said ‘really’

As long as people don’t lose their job most wouldn’t even know recessions happen.

[percy]

A Recession is when a friend loses their job.
A Depression is when you lose your job.

[winner69]

A Recession is when a friend loses their job.
A Depression is when you lose your job.

Like it percy....so true

Shame economists and bank commentators are so full of themselves they can’t help coming out with all this the sky is falling in stuff which the media laps up

[rooster]

Found the following interesting (highlighted in bold):



Health Care Stocks Aren't Alone in Getting a Coronavirus Boost



29/02/2020 11:04PM



By Mike Cherney SYDNEY -- As the coronavirus spread in China and then to more countries around the globe, dairy executive Geoff Babidge noticed a curious development: sales of his company's infant formula were unexpectedly strong.
A2 Milk Co., the New Zealand-based company that Mr. Babidge leads, responded to the demand by ramping up production and using ships and planes to send more product to China, where he says customs officials give it a priority status similar to medical supplies.
The virus has infected more than 80,000 people globally and killed about 3,000, disrupting global supply lines and knocking stock markets off course. Aside from health-care firms researching possible treatments to the virus, a handful of other companies in sectors ranging from dairy to videoconferencing to online gaming could also benefit financially from the epidemic.
A2's Australia-listed shares surged 5% on Thursday when the strong demand was disclosed and over the entire week, the stock fell just 1.3% as global markets had their worst run since 2008. Mr. Babidge said customers were buying the infant formula both in stores and online, an attractive option for parents worried about contracting the virus in crowds or while standing in long lines.
"We are here to really do whatever we can to support Chinese consumers," Mr. Babidge said in an interview. "Our sales are reflecting the fact that we are responding to customer needs, and we'll continue to do that."
Elsewhere, shares in San Jose, Calif.-based Zoom Video Communications Inc., which offers videoconferencing services, rose 3.2% this week. The company is providing free services to mental health charities and medical institutions, Chinese universities are using a Zoom platform to keep classes going and doctors from more than 1,000 public hospitals in China are using its video meetings to remotely diagnose patients, Chief Executive Eric Yuan wrote in a blog post on Wednesday.
The company also scrapped its 40-minute time limit on meetings with more than two participants for users in China who aren't paying a fee, Mr. Yuan said in the post. Zoom declined to comment beyond Mr. Yuan's post.
Shares in Peloton Interactive Inc., which makes fitness bikes and also streams fitness classes online, rose nearly 5% for the week after an analyst suggested the epidemic could increase sales from fitness buffs who might be concerned about contracting the virus at the gym. Peloton declined to comment on the stock move.
Earlier in February, some online gaming and entertainment stocks in China jumped as investors bet that extended holidays would boost their earnings. Tencent Holdings Ltd. even hit a 20-month high at one point, given that Chinese consumers were using various news and social-networking platforms -- including Tencent's popular WeChat messaging app -- to keep abreast of virus-related developments.
Tencent's shares have given up some of those gains recently, however, and some Chinese tech companies have warned that the virus could have a negative impact on their businesses. Alibaba Group Holding Ltd. has said its ability to deliver packages has been hampered by the many workers who are stranded at home while factories remain closed. And search giant Baidu Inc. warned on Friday that its first-quarter revenue could plunge 5% to 13% as the outbreak hurts many sectors that fuel its core advertising business.
Dermot Ryan, a portfolio manager at AMP Capital in Australia, said he could see the appeal of infrastructure stocks that tend to hold up better during downturns. He said his firm is also looking to add stocks that could help with the governmental pandemic preparations, like retirement-home operators.
Mr. Ryan also said companies that diversified their manufacturing and procurement operations out of China due to the trade war with the U.S. could benefit from the coronavirus epidemic.
Back at a2 Milk, Mr. Babidge said it isn't clear whether the revenue boost during January and February will continue in the coming months. He also didn't know if a2 Milk has attracted new Chinese consumers, or if it was repeat customers stockpiling product that they would normally have bought in March and April, a scenario which could mean falling sales in the next couple of months.
"This is not about us profiteering from what is a calamity in China," said Mr. Babidge, adding that his company has donated cash and product in response to the coronavirus. "It's about us being able to respond to consumer demand, be it people who know our product or people who can't access other brands."
--Shan Li, Xie Yu and Joanne Chiu contributed to this article.
Write to Mike Cherney at mike.cherney@wsj.com

[Beagle]

Some of the real growth for SUM in recent times has been their debt level and unsold stock level. Market starting to wake up to those concerns ?

Anyway, we know its only worth half what RYM is worth so when RYM corrects down to $8 SUM will be $4. Nobody will care that their NTA is $5 as all its worth is half of RYM.

[oldtech]

SUM not looking pretty at the moment ...

[Beagle]

Talk about a fall from grace !
Two weeks ago it was north of $9 and now $6.58. A 27%+ share price collapse in just 2 weeks.
If Julian Cook's "no growth for 2020" was his attempt to hose down expectations he's been spectacularly successful in that regard.

[Baa_Baa]

Talk about a fall from grace !
Two weeks ago it was north of $9 and now $6.58. A 27%+ share price collapse in just 2 weeks.
If Julian Cook's "no growth for 2020" was his attempt to hose down expectations he's been spectacularly successful in that regard.

Code for "closely looking for the re-entry price". Might be a wee while yet, but it will come.

[ratkin]

Code for "closely looking for the re-entry price". Might be a wee while yet, but it will come.

Just follow Beagle in, and let him ramp it back up. I am waiting for the Beagle entry signal

[King1212]

Just follow Beagle in, and let him ramp it back up. I am waiting for the Beagle entry signal

He already mentioned it...$4..

[Baa_Baa]

Just follow Beagle in, and let him ramp it back up. I am waiting for the Beagle entry signal

Don't rely on anyone to post their trades here, DYODD. Do what is right for you when the time is right. Followers are losers. Decide in haste, repent at leisure.

[ratkin]

Don't rely on anyone to post their trades here, DYODD. Do what is right for you when the time is right. Followers are losers. Decide in haste, repent at leisure.

I have faith in the Beagle.

[Beagle]

He already mentioned it...$4..

Too early to be too prescriptive but yes, $4 would be very nice BUT my sense is to get down that low we'd need some very unpleasant things to happen, like widespread community transmission of Covid 19 including within retirement villages. I hope that doesn't happen and things settle down and this finds support somewhere around last years low of $5.30. Time will tell. That said I am still shocked by the extent of the sea change with this one how its gone from growing super fast to now the very real chance of a profit decline in FY20 and perhaps even FY21. I think this has a fair way to go to the downside yet.

[Lewylewylewy]

After the wage increase, retirement sector must renegotiate payments from the govt.

I believe reporting zero earnings growth is the start of negotiation.

But that's not to say it's not true for underlying earnings not to grow. There's also revaluations to consider that will effect the SP next year.

[Food4Thought]

Just follow Beagle in, and let him ramp it back up. I am waiting for the Beagle entry signal

Keepa snout and ear to the ground for the hound
... Yet we are a few weeks off. Because these cases of Corona are about to open up

[ratkin]

Keepa snout and ear to the ground for the hound
... Yet we are a few weeks off. Because these cases of Corona are about to open up

Yeah, until we see if the elderly survive the winter it all a bit difficult to predict

[dobby41]

Yeah, until we see if the elderly survive the winter it all a bit difficult to predict

Sounds like you are thinking all the villages may end up empty.

[King1212]

The chief is preparing the plan....in case the virus get in the retirement homes

[winner69]

Sounds like you are thinking all the villages may end up empty.

Worse still if like in older days the units were burnt down to get rid of virus,

[winner69]

WOW WOW

Median house prices across New Zealand increased by 14.3% in February to a new record median price of $640,000, up from $560,000 in February 2019. This was the largest percentage increase in 53 months according to the latest data from the Real Estate Institute of New Zealand (REINZ)

Maybe Julian was just kidding with his no growth story ...he’s a pretty switched into CEO



https://www.reinz.co.nz/Media/Default/Statistic%20Documents/2020/February/REINZ%20Residential%20Press%20Release%20%20-%20February%202020.pdf

[BlackPeter]

WOW WOW

Median house prices across New Zealand increased by 14.3% in February to a new record median price of $640,000, up from $560,000 in February 2019. This was the largest percentage increase in 53 months according to the latest data from the Real Estate Institute of New Zealand (REINZ)

Maybe Julian was just kidding with his no growth story ...he’s a pretty switched into CEO



https://www.reinz.co.nz/Media/Default/Statistic%20Documents/2020/February/REINZ%20Residential%20Press%20Release%20%20-%20February%202020.pdf

... and volume increasing as well, this must be good :):

To be fair, though - it takes a bit of time for people to pick a house, negotiate the conditions and settle. I'd expect the Covid-19 dip to show up (at least in reduced volumes) in the coming months. But hey, it is unlikely to be anything else then a temporary dip, this virus his hardly changing the fundamentals.

[couta1]

I have faith in the Beagle. He only follows a certain other ratio which incidentally makes SUM a good buy today at $5.31.

[Beagle]

... and volume increasing as well, this must be good :):

To be fair, though - it takes a bit of time for people to pick a house, negotiate the conditions and settle. I'd expect the Covid-19 dip to show up (at least in reduced volumes) in the coming months. But hey, it is unlikely to be anything else then a temporary dip, this virus his hardly changing the fundamentals.

Yes, unfortunately not much can be read into that because most sale and purchase contracts that settled in February would have been initiated before the virus became a major concern. I don't share your benign view however and expect at best a protected recession which will impact the real estate market going forward.
SUM's steadily rising debt level's over the years and steadily rising stockpile of unsold units and vast undeveloped land bank, (15 years at projected 2020 build rate) do not leave it very well positioned to weather a possible depression.

[Beagle]

He only follows a certain other ratio which incidentally makes SUM a good buy today at $5.31.

I just tell you that to humour you :p

[couta1]

I just tell you that to humour you :p Yeah right, pull the other leg.

[Beagle]

Spectacular fall from grace continues. Spectacular is probably an understatement. No growth Cook really did a "fantastic" job of torpeoding the share price. Now well under half of what it was less than one month ago !

I am not tempted despite the discount to NTA.

In my view we have seen a seismic transition in the nature of this company from a growth company, to one that is likely to have negative growth in a deep recession for the foreseeable future. Their rising debt levels and rapidly rising unsold stock level's which have been trending now for several years are an ominous warning for the future of SUM in a deep and protracted recession. Their insatiable appetite for building a massive land bank of about 13 years at the projected 2020 build rate now looks conceptually flawed.

I expect the share price to head down into a dark place at a significant discount to NTA. I am no longer interested at $4. A 20% discount to NTA is insufficient to entice me back in. I am thinking more like 40% (which is what MET were trading at late in 2019), which suggests $3. Even less if we see fairly widespread community transmission of Covid 19 within retirement villages...it doesn't matter which company owns the villages, it will severely taint the whole sector and we could see that impact demand for many years to come in a market that is already substantially oversupplied.

Dark days ahead for the entire industry in my opinion.

[Baa_Baa]

Spectacular fall from grace continues. Spectacular is probably an understatement. No growth Cook really did a "fantastic" job of torpeoding the share price. Now well under half of what it was less than one month ago !

I am not tempted despite the discount to NTA.

In my view we have seen a seismic transition in the nature of this company from a growth company, to one that is likely to have negative growth in a deep recession for the foreseeable future. Their rising debt levels and rapidly rising unsold stock level's which have been trending now for several years are an ominous warning for the future of SUM in a deep and protracted recession. Their insatiable appetite for building a massive land bank of about 13 years at the projected 2020 build rate now looks conceptually flawed.

I expect the share price to head down into a dark place at a significant discount to NTA. I am no longer interested at $4. A 20% discount to NTA is insufficient to entice me back in. I am thinking more like 40% (which is what MET were trading at late in 2019), which suggests $3. Even less if we see fairly widespread community transmission of Covid 19 within retirement villages...it doesn't matter which company owns the villages, it will severely taint the whole sector and we could see that impact demand for many years to come in a market that is already substantially oversupplied.

Dark days ahead for the entire industry in my opinion.

From the master of hyperbole ;) maybe but not certainly. Anywhere from here or lower is a life changing long hold, we'll look back one day and thank the gods of covid-19 for giving us such exceptional entry/re-entry prices, a few bucks either way will be immaterial.

DCB today or the bottom is in? I say DCB. Punters can't resist stocks that trade at multiples below NTA, whether or not it will be cheaper in a few months.

[Voskar56]

Am I reading this right, Fisher Funds brought 5.086% of SUM yesterday ?


https://www.nzx.com/announcements/350195




Disclosure of beginning to have substantial holding
Section 276, Financial Markets Conduct Act 2013
To New Zealand Exchange
And
To Summerset Group Holdings Limited
Date this disclosure made: 18 March 2020
Date on which substantial holding began: 17 March 2020
Substantial product holder(s) giving disclosure
Full name(s): Fisher Funds Management Limited
Summary of substantial holding
Class of quoted voting products: Ordinary Shares
Summary for Fisher Funds Management Limited
For this disclosure,—
(a) total number held in class: 11,536,247
(b) total in class: 226,827,675
(c) total percentage held in class: 5.086%

[blackcap]

Am I reading this right, Fisher Funds brought 5.086% of SUM yesterday ?


https://www.nzx.com/announcements/350195




Disclosure of beginning to have substantial holding
Section 276, Financial Markets Conduct Act 2013
To New Zealand Exchange
And
To Summerset Group Holdings Limited
Date this disclosure made: 18 March 2020
Date on which substantial holding began: 17 March 2020
Substantial product holder(s) giving disclosure
Full name(s): Fisher Funds Management Limited
Summary of substantial holding
Class of quoted voting products: Ordinary Shares
Summary for Fisher Funds Management Limited
For this disclosure,—
(a) total number held in class: 11,536,247
(b) total in class: 226,827,675
(c) total percentage held in class: 5.086%

No, they crossed the 5% threshold on the 17th March.

[Voskar56]

Ok, I think I got it, they sold at around $9 in Feb and then re-bought at $6.66 to go over the 5%.
Thanks

[ratkin]

Dark days ahead for the entire industry in my opinion.

It is 17 years since I started that thread on Ryman, and the industry has had a terrific run, and had irresistible tailwinds, could not really fail. However now it seems to have reached the point where competition has grown, capacity has growth it has now matured and is no longer the growth sector it once was. The easy money has all been had.

Plus right now it is the most exposed sector to the virus, should it take hold, if it was not for that I would be buying up at these prices for the dividends, but it a big risk and essentially you are placing a bet that the virus will not hit us hard.

[Bobdn]

I'd like to reinvest back into Sum at some stage. I sold back November for $7.45 and really kicked myself as it went to over $9.

I'm going to hold off for now. I'm happy to drip feed into some index funds but I don't feel like a gamble on individual shares or even sectors.

[Beagle]

It is 17 years since I started that thread on Ryman, and the industry has had a terrific run, and had irresistible tailwinds, could not really fail. However now it seems to have reached the point where competition has grown, capacity has growth it has now matured and is no longer the growth sector it once was. The easy money has all been had.

Plus right now it is the most exposed sector to the virus, should it take hold, if it was not for that I would be buying up at these prices for the dividends, but it a big risk and essentially you are placing a bet that the virus will not hit us hard.

Long run I really like the sector a LOT. The business model is a fantastic one for shareholders and its incredibly tax efficient. The long term demographics are superb but it does seem with multiple new entrants including many unlisted ones the market is presently saturated with supply as evidenced by almost all operators struggling to sell their units and having big plans for further expansion.

Bringing up the various share price graphs for the companies in this sector I have never witnessed anything like the "falling off the face of a cliff" images that present, which are confronting to say the very least.

I think with the virus risk, oversupply which will get worse with significant planned capacity expansion by most operators, we are headed to a day of reckoning for the sector. SUM could not have timed their Australian expansion and massive land acquisition program worse. Most of their profits are from property development and their gearing is towards the higher end of this sector, RYM is actually the worst at just on 40%. RYM and SUM's prices still look very vulnerable to me.

I do not foresee that any company in this sector deserves to trade on a premium to NTA and think RYM has the most to lose from here. SUM is probably next in line as its property development profits come under serious pressure. ARV might hold up a bit better with its more modest debt level's, development plans and care focus and OCA has copped the most savage beating of them all despite the vast bulk of its business model being Govt funded care beds. I expect the takeover of MET to be withdrawn and a serious downward rerating on its share price.

Interesting times ahead for the industry in the near term. Long term I really like the sector but in the short term there are some serious challenges ahead, no question. (Disc 0.8% portfolio allocation to OCA, was 1% earlier in the week lol)….so if a week is a long time in politics it sure is a long time in this sector too ! I am very cautious on the sector but mindful there is very deep value in OCA with it trading well below half its NAV, (a situation that is unique to this sector at present).

Challenges down the track ? Could we see even more new entrants offering to split the capital gain with residents ? Might there be retirement villages set up where retirees simply pay a weekly rent and don't have to come up with any up front cost ?

In terms of SUM, I will let TA tell me where the bottom is, its simply too hard to predict.

[winner69]

Add in what residents are owed SUM is 63% geared.

[Beagle]

Add in what residents are owed SUM is 63% geared.

Just as well those loans are interest free and not repayable upon demand :) Notice how none of the retirement companies guarantee to pay the estate out within 6 months any more ? Ryman and others used too. The removal of that guarantee was a big clue the fundamentals of this sector have really changed.
Effectively the companies have shifted this repayment obligation on to the new incoming resident.

[Beagle]

Plenty of talk in today's update about bank facility headroom and ability to scale back development as well as extra costs for more staff in care facilities and security staff.
Pretty obvious no growth SUM has become negative growth SUM.
Annual meeting - virtual meeting only. Interesting times we live in.
https://www.nzx.com/announcements/350404

[Bjauck]

...
Challenges down the track ? Could we see even more new entrants offering to split the capital gain with residents ? Might there be retirement villages set up where retirees simply pay a weekly rent and don't have to come up with any up front cost ?

In terms of SUM, I will let TA tell me where the bottom is, its simply too hard to predict. The oversupply of ORA units was obvious before the epidemic. I have long thought that alternative occupancy structures should be an option. They had the luxury of sticking to ORAs when supply could barely keep up with demand. I think minimum ages used to be lower. They could drop minimum ages down to 60 or 55 or so with lease agreements for younger ages including an option to purchase an ORA at age 70. Lease agreements could be for a year prepaid. At the end of the day, the villages are well designed valuable assets, especially in Auckland which is likely to remain overcrowded.

[Beagle]

Couta wanted me to post that according to his relativity theory 1 SUM = 5 OCA. With OCA at 43 cents with its predominant Govt funded model that makes SUM, (without the security of Govt funding for most of its business model), fair value just $2.15 :eek2:

[BlackPeter]

Couta wanted me to post that according to his relativity theory 1 SUM = 5 OCA. With OCA at 43 cents with its predominant Govt funded model that makes SUM, (without the security of Govt funding for most of its business model), fair value just $2.15 :eek2:

Which would put Ryman at $4.30 - right?

[Beagle]

Which would put Ryman at $4.30 - right?

Yeah. RYM's NTA is only $4.50 so I expect it to trade under NTA, like every other property company on the NZX, although probably at the lowest discount to NTA of any.

[Bjauck]

SUM distributed an excellent market update. If people were concerned that their older family members were at greater risk in an independent unit in a village compared to being elsewhere, it may help give them greater comfort. There seems to have been a considerable amount of down-ramping in that regard.

[tomm]

Yeah. RYM's NTA is only $4.50 so I expect it to trade under NTA, like every other property company on the NZX, although probably at the lowest discount to NTA of any.
Well, in this case, I assume that you are buying or selling something from the supermarket instead of stocks. lol

[Entrep]

This "safe" retirement stock was under $3.50 last week. Now at $6. Showing unbelievable strength!

[Beagle]

This "safe" retirement stock was under $3.50 last week. Now at $6. Showing unbelievable strength!

This no growth stock is a favourite with Kingfish Funds. People might like to reflect on the famous Couta1 reversion theory. 1 SUM = 5 OCA.

[winner69]

Solid Q1 sales numbers from Summerset ....higher than last year

And 39 more sales contracts in place than this time last year

Good stuff

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/351509/320603.pdf

[Beagle]

Worth a 20% premium to NTA for negative growth when some others are trading at a deep discount to NTA ?

[traineeinvestor]

Plenty of talk in today's update about bank facility headroom ...

Not ac comment on SUM specifically, but I don't understand why companies emphasise "facility headroom" and "undrawn facilities" etc. so much. The banks can always cut a credit facility and if they think a company is under pressure they'll do it pretty quickly (just as they have done in every economic contraction).

[trader_jackson]

I was going to post about how this is the 3rd first quarter in a row of virtually no growth (aka FY18, FY19 and FY20 first quarters are all basically the same, and FY17 was actually higher than FY20 first quarter is today)... how the market could possibly like it... but I suppose the share price itself has done the talking. After an initial pump and dump, and on a day when most retirement operators are up alot, SUM is in the red. I'd expect this to trade at no more than NTA ($5.02) at best... yet its nearly 20% higher today.

Clearly sum still have hope this company (with its weak care offering) will pull a rabbit out of a hat.

[macduffy]

Perhaps in 12 months time a quarter of no growth - but an avoidance of negative growth - will be something to celebrate.

:cool:

[Pricey]

Not ac comment on SUM specifically, but I don't understand why companies emphasise "facility headroom" and "undrawn facilities" etc. so much. The banks can always cut a credit facility and if they think a company is under pressure they'll do it pretty quickly (just as they have done in every economic contraction).

Banks can't cancel committed facilities. They only have an "out" in very limited circumstances i.e. illegality to fund, event of default etc. (this includes something which has a material adverse impact on the business, but let's not mention that).

[Beagle]

I was going to post about how this is the 3rd first quarter in a row of virtually no growth (aka FY18, FY19 and FY20 first quarters are all basically the same, and FY17 was actually higher than FY20 first quarter is today)... how the market could possibly like it... but I suppose the share price itself has done the talking. After an initial pump and dump, and on a day when most retirement operators are up alot, SUM is in the red. I'd expect this to trade at no more than NTA ($5.02) at best... yet its nearly 20% higher today.

Clearly sum still have hope this company (with its weak care offering) will pull a rabbit out of a hat.

I'm not one of them any longer. MET my top pick in this sector at the moment, then OCA. I'd own ARV in a heartbeat over SUM and anyone paying more than 2 1/2 times NTA for RYM in the current environment has rocks in their head in my opinion.

[Baa_Baa]

COVID-19 Wage Subsidy Employer Search (https://services.workandincome.govt.nz/eps/search)



Business Name
Number of employees paid
Total amount paid
Last updated


SUMMERSET MANAGEMENT GROUP LIMITED (https://app.companiesoffice.govt.nz/companies/app/ui/pages/companies/1152703?backurl=H4sIAAAAAAAAAC2MPQoCQQyFbzONxZ4giJ XNFoJeIEweumAy4yQj7O0Ni937%2B97S%2BQlfatPOtqVy8Kiv szYBebAJDymxdxAstshJ%2BZBPVQxHnJQtDzS7wvJlq5AbG94U Y6IcyP5I2umyrn9%2FD47p19FmP%2BIfgSMgjoQAAAA%3D)
1344
$8,870,544.00
08/04/2020

[winner69]

COVID-19 Wage Subsidy Employer Search (https://services.workandincome.govt.nz/eps/search)



Business Name
Number of employees paid
Total amount paid
Last updated


SUMMERSET MANAGEMENT GROUP LIMITED (https://app.companiesoffice.govt.nz/companies/app/ui/pages/companies/1152703?backurl=H4sIAAAAAAAAAC2MPQoCQQyFbzONxZ4giJ XNFoJeIEweumAy4yQj7O0Ni937%2B97S%2BQlfatPOtqVy8Kiv szYBebAJDymxdxAstshJ%2BZBPVQxHnJQtDzS7wvJlq5AbG94U Y6IcyP5I2umyrn9%2FD47p19FmP%2BIfgSMgjoQAAAA%3D)
1344
$8,870,544.00
08/04/2020



Well, beagle did say they were a no growth company.

[Baa_Baa]

COVID-19 Wage Subsidy Employer Search (https://services.workandincome.govt.nz/eps/search)



Business Name
Number of employees paid
Total amount paid
Last updated


SUMMERSET MANAGEMENT GROUP LIMITED (https://app.companiesoffice.govt.nz/companies/app/ui/pages/companies/1152703?backurl=H4sIAAAAAAAAAC2MPQoCQQyFbzONxZ4giJ XNFoJeIEweumAy4yQj7O0Ni937%2B97S%2BQlfatPOtqVy8Kiv szYBebAJDymxdxAstshJ%2BZBPVQxHnJQtDzS7wvJlq5AbG94U Y6IcyP5I2umyrn9%2FD47p19FmP%2BIfgSMgjoQAAAA%3D)
1344
$8,870,544.00
08/04/2020




From MSD "you need to know whether your business has had a 30% decline in revenue" so assuming SUM have got the payout, we shareholders should expect 'at least' a 30% decline in revenue in the current reporting period. $8.87m of easy money granted to offset against employment costs (which per employee will be a great deal more), still a good thing.

But basically a forecast loss of revenue, not sure how they could lose 30%+ revenue per se with essentially a fixed income. Maybe some clever convoluted SUM accounting which they're renowned for conflating 'revenue' from ORA and care fees to include development margins? dyodd. Scott didn't get CFO of the year for nothing, clever guy, take the easy govt money, tidy up the revenue story later.

No other listed retirement company has received the subsidy, as far as I can see. May have applied though.

[winner69]

It’s great that in these desperate times of falling revenues Summerset have made a huge commitment to keep 1,344 employees on the payroll and retain them for at least 12 weeks. No job losses in the short term - that’s good.

[macduffy]

It’s great that in these desperate times of falling revenues Summerset have made a huge commitment to keep 1,344 employees on the payroll and retain them for at least 12 weeks. No job losses in the short term - that’s good.

Yes, success in the retirement village business relies heavily on the quality of its people, never more so than in times like this!

:)

[justakiwi]

Regardless of falling revenue the only areas of staffing reduction they could make, would be top level/back office positions. There is no way in hell they could reduce staffing in caregiving, housekeeping, kitchen, laundry. Most of those areas would already be working on minimum staffing levels so cutting them would mean a significant drop in the quality of care/service. Without their “hands on” staff, they have no business.


It’s great that in these desperate times of falling revenues Summerset have made a huge commitment to keep 1,344 employees on the payroll and retain them for at least 12 weeks. No job losses in the short term - that’s good.

[BlackPeter]

Regardless of falling revenue the only areas of staffing reduction they could make, would be top level/back office positions. There is no way in hell they could reduce staffing in caregiving, housekeeping, kitchen, laundry. Most of those areas would already be working on minimum staffing levels so cutting them would mean a significant drop in the quality of care/service. Without their “hands on” staff, they have no business.

You are right re front line staff, and to be honest, I don't see that much back office staff surplus to requirements either. Given that they can't close down villages - bills still need to be sent out as well as paid, staff needs to be paid, subsidies need to be applied for.

Maybe they need a handful less of bowling green coordinators and gym managers (with these activities closed down), but more than 1300 people?

On the other hand - SUM is not just running retirement villages, they are developing and building them. I suppose this activity was grinding to a rapid halt with the lock down. Builders, carpenters, plumbers, electricians, painters and other tradespeople as well as sales staff now all busy twiddling their thumbs thanks to the lock down instead of developing the next set of units. Pretty sure that these are the people SUM applied for the wage subsidy - and rightly so.

[Beagle]

About sixty something million came from development activities last year, (the bulk of their profit). This being down more than 30% (for any one month ?), may be all they need to show to receive this subsidy.

Another fine piece of journalism from our very own Sylvester the Cat. https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12323990

[winner69]

About sixty something million came from development activities last year, (the bulk of their profit). This being down more than 30% (for any one month ?), may be all they need to show to receive this subsidy.

The only way it makes sense (to justify the subsidy) is that cash received from ORAs is way down ...or going to be way down) ...but Q1 sales announcement was pretty upbeat wasn’t it.

Can’t imagine care and village fee revenue collapsing

Never mind they got the $6m odd ....help the cash flows

Said 1,344 staff on application ...last AR mentioned 1,400 employees ...so put their hand up for the max.

Nice they not going to dispense with people .....yet

[Cyclical]

There is no way in hell they could reduce staffing in caregiving, housekeeping, kitchen, laundry.

Imagine too if they had an outbreak in some of the villages and some staff couldn't work due to self isolation...with that in mind, now is not the time for thinning out those frontline staff.

[Oliver Mander]

Kind comments Beagle, especially coming from you as 'retirement sector guru dog'!

The physical paper had some graphs in there too, highlighting the major comparisons. Will put those pics on a website so you can see them.

[Baa_Baa]

Never mind they got the $6m odd ....help the cash flows

$8,870,544

[Beagle]

Kind comments Beagle, especially coming from you as 'retirement sector guru dog'!

The physical paper had some graphs in there too, highlighting the major comparisons. Will put those pics on a website so you can see them.

That would be great. Been looking at MET as you know. Nearly $1.2 billion in embedded value in existing units. Slap a one in 12 year churn on that and they make $100m a year underlying profit without doing anything !...whereas SUM stop development and the majority of their underlying profit disappears....Hmmm

[dreamcatcher]

Unemployment to average above 9 per cent next year with house prices down 11 per cent - economist forecasts

https://www.stuff.co.nz/business/121055899/unemployment-to-average-above-9-next-year-with-house-prices-down-11--economist-forecasts

[Beagle]

That's SUMwhat cunning, the old announcement late Friday afternoon trick after the market closes but we see you Julian Cook. Even the chief thinks there's a better place for his cash than owning SUM shares at $6.27, selling 250,000 shares. http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/351858/321014.pdf Might have invested the proceeds in a real growth company at a dirt cheap price that MET his investment objectives better :)

[peat]

That's SUMwhat cunning, the old announcement late Friday afternoon trick after the market closes but we see you Julian Cook. Even the chief thinks there's a better place for his cash than owning SUM shares at $6.27, selling 250,000 shares. http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/351858/321014.pdf Might have invested the proceeds in a real growth company at a dirt cheap price that MET his investment objectives better :)

we all need our insurance policy , that is a pretty good price historically. and he still has quite a few if things get really tough.


this is no longer a dead cat bounce as it has retraced a full 50% of the downward movement. so if we are in a bear market then it is a fully fledged correction and of course they often go to 61.8% or even higher before they resume the downtrend. it is however , as many things are right now, starting to look peaky to me at this 50% level showing signs of losing momentum.

11333

[trader_jackson]

Better off to DYOR. "Past performance is no guarantee of future performance" But think about this. How many times in your life have you read that disclaimer ?
Have you ever read this one that I have long believed is the truth "Past performance is no guarantee of future performance but it is the very best guide we have" ?

Reason for this rant. DYOR is not that hard, just look at a companies history and extrapolate things out and adjust for known current economic factors.
All that suggests to me is SUM is on for a cracker year in 2020. Maybe $150m underlying profit ?

Shares were ~ $8 in mid 2018. Are they really that expensive now given the real estate pendulum has swung so dramatically towards growth again compared to back then ?...or maybe they are really cheap ? $150m would give eps of 66 cps and put SUM on a forward PE of just 13.6 at $8.98.

13.6 with their track record of eps growth. Hmmmm

Exactly 2 months ago this was posted to the day this was posted... The share price was $9.12, Julian was being hailed as a great man (as was the case for the past several years), he could do no wrong. Now he is dumping SUM shares - no surprise given how unbelievably high the share price is relative to NTA which I doubt would grow in FY21.

I had often pointed out that "Past performance is no guarantee of future performance", I really couldn't have put it better myself as barely a few days later when SUM announced its full year result, and that it expected no growth in FY21... then sh*t really hit the fan, but sum companies were already struggling prior to that.

But its not as if all retirement operators are like SUM... NZX website telling me ARV has returned over 16% in the past 52 weeks.

[Beagle]

SUM have really, really disappointed me in 2020. Enough said.

[Balance]

SUM have really, really disappointed me in 2020. Enough said.

Go easy on yourself and Summerset, Beagle.

The whole sector shot up on the back of the Metlife takeover - suddenly they all looked cheap, they were also all takeover targets, and best of all, money was freed up from Metlife and recycled into the likes of Summerset.

Now the whole sector has been sold down so it's a question of relative value.

And we know where the relative value is - Metlife!

[Beagle]

Thanks Balance.

Optics on this are pretty bad. Official company line is we can't tell you what the effect is on the business.
Julian Cook sells 250,000 shares and then the next trading day tells the Herald that there is a material impact on the business and that's why they took the wage subsidy.
Only admits to the Herald after he has sold what cost saving measures the company has taken.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12326016

[macduffy]

I had a nasty case of deja vu Summerset after reading this!

:ohmy:

[Beagle]

I had a nasty case of deja vu Summerset after reading this!

:ohmy:

Maybe Julian has been taking notes from Norah :lol:

[winner69]

I had a nasty case of deja vu Summerset after reading this!

:ohmy:

...at least a grumpy shareholders won’t find it necessary to get the Chairman to amend the company’s share trading policy.

Had a thought though. ...maybe Julian going to top up staff wages after subsidy runs out.

[Balance]

Thanks Balance.

Optics on this are pretty bad. Official company line is we can't tell you what the effect is on the business.
Julian Cook sells 250,000 shares and then the next trading day tells the Herald that there is a material impact on the business and that's why they took the wage subsidy.
Only admits to the Herald after he has sold what cost saving measures the company has taken.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12326016

WTH - that is disgraceful conduct!

[winner69]

Maybe Julian has been taking notes from Norah :lol:

you always admired how hard nosed julian was - apprently true:t_up:

[Beagle]

SUM have really, really disappointed me in 2020. Enough said.


you always admired how hard nosed julian was - apprently true:t_up:


WTH - that is disgraceful conduct!

See above !

[Blue Skies]

you always admired how hard nosed julian was - apprently true:t_up:


Agreed, it was the mongrel in Julian which was supposed to help the shareholders, not shaft them! :eek2:

[Beagle]

Perhaps Julian has now convened the meeting suggested in my 25 Feb post, and as a result decided to liberate $1.56 m to build a new deck? Carrying 15 years of land bank at current run rate with land prices unlikely to rise anytime soon.

History shows that bare land falls the most when the market falls. I would expect if the real estate market overall falls 7.5% in the year ahead, (average of what some economists are predicting) bare blocks of land would fall at least double if not triple that. With the recent growth in unsold units, grossly excessive land bank and increasing debt level's I am not at all surprised Julian Cook would want to sell some of his shares issued to him for free under his long term incentive program.

I don't think some of the institutional shareholders will be very impressed with the way he went about it though !

[winner69]

Market agreeing with you beagle

Share price collapsing

[winner69]

The virus making the government keen on infrastructure and construction to try to resurrect the mess they’ve got us into - one outcome might be doing away with the RMA

Apparently it’s the RMA that has name land prices so high

Doing away with that make land cheaper .....existing prices collapse?

How much land SUM got now

[winner69]

Last accounts SUM have $306,000,000 worth of land to be developed.

Beagle mentioned above land prices might fall by more by 20%

Jeez ...that’s more than $60,000,000 possible revaluation down.

[Beagle]

Last accounts SUM have $306,000,000 worth of land to be developed.

Beagle mentioned above land prices might fall by more by 20%

Jeez ...that’s more than $60,000,000 possible revaluation down.

That's a lot of land. If they go about the consenting of new villages will all the adept "skills and finesse" they've demonstrated at Boulcott Street that's enough land to keep them busy for several decades lol

[Bjauck]

Last accounts SUM have $306,000,000 worth of land to be developed.

Beagle mentioned above land prices might fall by more by 20%

Jeez ...that’s more than $60,000,000 possible revaluation down. Was it Julian's sign off that to built up the expensive land bank? It looks like he is offloading his shares before those chickens come home to roost.

[winner69]

Not that long ago Julian and his team were geniuses getting their hands on all this land for development. I even recall getting some provincial sites was a ‘masterstroke’

Now they seem to have been reckless and idiotic.

Poor Julian, can’t seem to win

I still have faith in him ...we may look back in a few years time and say ‘yes, Julian was a genius and had great insights’

[BlackPeter]

Not that long ago Julian and his team were geniuses getting their hands on all this land for development. I even recall getting some provincial sites was a ‘masterstroke’

Now they seem to have been reckless and idiotic.

Poor Julian, can’t seem to win

I still have faith in him ...we may look back in a few years time and say ‘yes, Julian was a genius and had great insights’

You right - Julian's genius only seems to depend on SUM's share price ...

SUM going up: Julian clever, SUM going down: Julian dumb.

Just wondering how above axiom agrees with the Couta theorem (2*SUM = 1*RYM)? I guess, why would RYM go up or down based on Julians cleverness of the day?

[Beagle]

Julian's overcooked, (you see what I did there :)) ) the land banking SUMwhat and can't seem to get planning consents through in a timely manner or sell what they build. The market can be a very tough taskmaster when it turns for those who thought it only goes one way and you are left with a vast amount of undeveloped land falling much faster than any other form of real estate.

One thing is for sure though, you can save a lot of time using Couta1 analysis. 1 RYM = 2 SUM, has stood the test of time through thick and thin and this to such an extent I would imagine even some institutions use his theory to arbitrage price differences from time to time.

Talked to him this morning. He's enjoying his time in Siberia. He has started buying MET. He must be working on a new relativity theory...maybe 1 SUM = 1 MET ?

[steveb]

But wait there's more,the reserve bank are looking at scrapping the 20% min deposit for home loans.Could well see land values on the rise again.

[winner69]

You right - Julian's genius only seems to depend on SUM's share price ...

SUM going up: Julian clever, SUM going down: Julian dumb.

Just wondering how above axiom agrees with the Couta theorem (2*SUM + RYM)? I guess, why would RYM go up or down based on Julians cleverness of the day?

The halo effect is always an interesting subject .... good guy that Edward Thorndike

[winner69]

But wait there's more,the reserve bank are looking at scrapping the 20% min deposit for home loans.Could well see land values on the rise again.

...but banks tightening up lending to only ‘credit worthy’ borrowers. (Whatever that means)

[macduffy]

...but banks tightening up lending to only ‘credit worthy’ borrowers. (Whatever that means)

It's all in the eye of the credit scoring formula, winner!

;)

[steveb]

yes winners quite correct and with a lot of people taking pay cuts and of course the job losses the banks are going to have a problem finding credit worthy people to lend to.Perhaps this is why the reserve bank are looking at reducing the min deposit.(or even scrapping it)

[Cyclical]

But wait there's more,the reserve bank are looking at scrapping the 20% min deposit for home loans.Could well see land values on the rise again.

Yep, it'll likely play into property investor's hands (at least the serious ones) more than say FHB's, assuming they drop the LVR requirements for that space too. Quite the pickle really for a government that set out to do the opposite. Still, CGT will be back on the table soon enough...especially after they bump Winnie out of the next government :ohmy:

[Blue Skies]

Yep, it'll likely play into property investor's hands (at least the serious ones) more than say FHB's, assuming they drop the LVR requirements for that space too. Quite the pickle really for a government that set out to do the opposite. Still, CGT will be back on the table soon enough... :ohmy:


NZF won't allow a CGT & can't see Jacinda Adern going back on her word.

CGT's also have a lot of slippage & implementation & enforcement costs & possibly years to wait now for any meaningful revenue for the govt. So more about optics than practical benefit.
With many asset prices under pressure, it could result in the converse effect of more tax being written off by taxpayers.

Increasing GST though would be very effective, as no govt collection costs, provides instant increased revenue stream from day one & no new law required, just increasing the existing percentage.

[Beagle]

20% GST rate coming within a couple of years I reckon. Labour will ease the burden on low income families with some additional level of working for families payments.

Inflation will spike a bit.

[peat]

yeh definitely increased taxes are coming and consumption tax is very morally defensible.

I think the forums have caught corona coz everyone is posting everywhere , no thread respect anymore - why are we talking about taxes in a SUM thread hahah (I dont really care, j/k)
Its like everyone has lockdown fever or something.

[winner69]

yeh definitely increased taxes are coming and consumption tax is very morally defensible.

I think the forums have caught corona coz everyone is posting everywhere , no thread respect anymore - why are we talking about taxes in a SUM thread hahah (I dont really care, j/k)
Its like everyone has lockdown fever or something.

Peat - world is disorderly these days

Being structured (like keeping threads relevant) is so boring

Life’s more fun if one can post things where ever they like

Hope it stays that way

[Cyclical]

NZF won't allow a CGT...

Sorry Blue Skies, you were probably tapping that one out while I was editing my post to read...


Still, CGT will be back on the table soon enough...especially after they bump Winnie out of the next government :ohmy:



...& can't see Jacinda Adern going back on her word.

You'd be a brave man/woman to bet on it. No disrespect to Cindy, but there's been a...what's that term they like to use...Material Adverse Change... If it does come back into view, I do hope they are up front about it prior to the election.

[winner69]

Kingfish (have a decent sized holding and not really enough) not too concerned about SUM

Extract from latest update:

We have run stress tests on our retirement operators Ryman and Summerset, testing liquidity, cash flow, and balance sheet strength. Ryman has $300m headroom on its debt facilities and Summerset has over $400m, both with no meaningful expiries for two+ years. Both can withstand large falls in new sales and resales without breaching covenants. Long wait lists and residents often having medical events that necessitate moving into a village or into care mitigates the risk that sales are weak for an extended period of time. This is a time when both operators will provide assurance and comfort for their residents and further build their brand strength

[Beagle]

https://www.nzherald.co.nz/business/news/article.cfm?objectid=12327104&&ref=topbox Rob Campbell comes to Julian Cook's defence over share sale.

[winner69]

https://www.nzherald.co.nz/business/news/article.cfm?objectid=12327104&&ref=topbox Rob Campbell comes to Julian Cook's defence over share sale.

I like this bit. Rob said “No money leaves the company and it doesn't harm the company in any way whatsoever.”

[Jaa]

I like this bit. Rob said “No money leaves the company and it doesn't harm the company in any way whatsoever.”

Not a good look though is it? Aren't CEOs paid the big bucks via these share compensation schemes in part for their EQ skills?


"I would be amazed if shareholders had any reason to raise it."

Guess Mr Campell is going to be amazed too... Yet more great leadership and empathy on display. Lucky company.

[macduffy]

I don't blame CEO's or other company execs for spreading their investments, if that's the case here. While we like them to have some skin in the game, asking them to bet their entire financial future on their job, their super and their investments all in one company, is asking them to take a risk too many, IMO.

[Baa_Baa]

I don't blame CEO's or other company execs for spreading their investments, if that's the case here. While we like them to have some skin in the game, asking them to bet their entire financial future on their job, their super and their investments all in one company, is asking them to take a risk too many, IMO.

He's sold only 12.7% of his holding, 250k shares for $1,567,500. He still has a massive stake in the company 1,724,185 shares worth $10,758,914 at SP close Friday. That's a lot of "skin" in the game.

In other news, probably mentioned already, Scott received 150,000 LTIP shares, taking his holding to 558,731 shares worth $3,486,481 at SP close Friday, plus another 54,945 LTIP not yet vested.

Good guys Julian and Scott, know their stuff, happy they're running our company just fine.

[winner69]

Annual Meeting this coming Wednesday

Hope shareholders have voted against increasing the Directors Fee Pool by $72,000 from $768,000 to $840,000.

Footnote: don’t think Covid wage subsidies cover Directors fees

[winner69]

I note Chairman Rob up for re-election as a Director

If successful at the end of that term he would have done 12 years.

The NZSA says that good practice that after serving that long one shouldn’t be classed as independent and hopes the aboard will discuss this in coming years.

Suppose he deserves to stay on even though all the companies he’s involved in these days are going through a rough patch (and not just Covid related) so I voted with the masses .....but SUM desperately in need of some lucky ones.

[Balance]

I note Chairman Rob up for re-election as a Director

If successful at the end of that term he would have done 12 years.

The NZSA says that good practice that after serving that long one shouldn’t be classed as independent and hopes the aboard will discuss this in coming years.

Suppose he deserves to stay on even though all the companies he’s involved in these days are going through a rough patch (and not just Covid related) so I voted with the masses .....but SUM desperately in need of some lucky ones.

I would vote him out if I were a shareholder.

Rob is starting to remind me of the directors who stayed on after their use-by-date - Bill Falconer being the one mentioned the most back in the 2000s of hanging around like a bad smell when he was clearly past his coherent stage.

[winner69]

I would vote him out if I were a shareholder.

Rob is starting to remind me of the directors who stayed on after their use-by-date - Bill Falconer being the one mentioned the most back in the 2000s of hanging around like a bad smell when he was clearly past his coherent stage.

His luck / charisma or whatever is fading fast

The Campbell Index made up of SUM, SKC, THL and Precinct probably underperformed the NZX big time.

Needs to retire I reckon and bask in past glories.