And it'll fill quite a few pages on this thread along the way ;)
Printable View
Hmmm...$4.37 That's interesting Winner...That's my H&S pattern Target price..$4.37 See Chart link at bottom of my post#4952 15th June ..Back then SUM closed at $4.72 today it closed at $4.64..getting closer..
Channel lines are S&R lines...TP is not a support point
Looks like the Teddy bears are setting up camp on planet SUM, could be a long winter of hibernation, or is that occupation.
Occupation..nah, sounds too hash.....Picnic sounds good, cute furry and cuddly:cool:
Winner...If SUM stays within its channel, that rising channel will come up to 4.44 a major support (bull/bear line)... TA charting says If the channel goes higher above 4.44 SUM becomes somewhat derisked (a buy with stops [set just below the second support]) as the bottom channel line is also a support line..further up another support at 4.57..
Sentiment still sucks ..eh
I remind myself that SUM and MET dropped exactly the same as this last year then climbed back up. A good report / update from SUM will get things heading back in the right direction. I just hope there's no unexpected delays / costs from Auckland construction projects because that could hammer SP some more.
SUM now same price as it was 52 weeks ago - $4.65
A year ago SUM was on a PE of 11.7 (trailing NPAT) - if it was still on this PE its price today would be $7.83
So the rerating / negative sentiment / unloved things has negatively impacted shareprice by $3.27
Huge rerating downwards eh - impacted things by 40% odd - planet SUM (couts phrase) must be going to self destruct or something
Three years ago RYM share price was $9.00 with a PE of 23.2 (trailing NPAT) - if it was still on this PE its price today would be $16.45
So the rerating / negative sentiment / unloved things has negatively impacted shareprice by $8.13 (about 50%)
Rerating impact of RYM is 50% over 3 years and SUM is 40% over 1 year
Probably says that RYM was outrageously/ridiculously over priced in 2014 ....but SUM has been ridiculously rerated down by so much
Whoops, I should have put 2014, not 2013, corrected now(All this work with dementia patients is wearing off on me)
I think so but sentiment is a funny thing mate and often the correction goes on deeper and longer than one would like.
I really do believe some people are letting this potential housing correction and extra cost of construction thing in Auckland get the better of them.
Barfoot and Thompson provide monthly price stat's by suburb in Auckland. People should DYOR and have a look at how prices have moved in Ellerslie, Hobsonsille, Warkworth, Karaka and the new proposed village area's of Parnell and St John's over the last three years. By looking into that people might gain an understanding of the degree of latitude the company has regarding setting its pricing and the degree of accommodation there is with those vastly increased prices to accommodate increased construction costs.
Consider also the fact that there's no let-up whatsoever in immigration, (another record this week at just on 72,000), and then consider Labour's shocking poll result last week, (what chance have they really got of getting into power in September), maybe, just maybe, people who take the time to do their own research and thinking might get a few very valuable insights.
Article in NBR behind paywall on retirement sector....
Hunter's Corner: A reality check for a boom sector
While the rerating of (lowering of PE) RYM has been gradual over 3 years (and likely to continue) SUMs rerating has been like a shock out of the blue (rerated by as much as RYM but over 1 year)
But thats the way of the market eh. Maybe the market is right and the things are settling towards more realistic multiples for all in this sector - are the good days over?
Perhaps people would do well to ponder in this very low interest rate environment what is a fair underlying earnings multiple for this sector with excellent tailwinds from population demographics given the market average multiple is about 18 ? 22-23 based on forward earnings seems perfectly fair and reasonable to me given strong prevailing tailwinds for this sector for the next 20-25 years.
On a stock specific selection basis people might then want to consider which stock has the best growth rate in the last five years. Directors were buying before the annual meeting in the low $5 range...good enough for them, good enough for others ?
Some analysis on property trends - Hamilton prices seem about the same / ever so slightly up. Wellington prices are up nicely. Nearly 50% gain in one year on my last purchase, based on comparibles. I don't monitor markets in other parts, well.... not actively enough to make comment on change since the start of the year.
House sales in Auckland down in May, but the average and median prices remain rock solid, thats the important bit for an elderly person selling up to move into a retirement unit.
I've found this old document interesting to refer back to, im sure everyone one has already read it.
http://www.rbnz.govt.nz/-/media/Rese...016jan79-1.pdf
helps with understanding the importance of Auckland's market with rest of NZ.
shocking article in SMH today on 'the retirement racket'
http://www.smh.com.au/interactive/20...dom/index.html
I hope our companies are way better than this; they will come under scrutiny too. I feel ashamed about owning Aveo previously. 120 pages of dense legalistic contracts which most of us wouldn't understand.
Maybe EHE welcomed Norah Barlow as a director, and then as CEO, so she could oversee "the New Zealand" way. ?
Simon Challies told me years ago when I asked him about Aveum, that Australian retirement villages were "lifestyle" while their model was "total care".
Interesting enough Aveum's CEO,Simon Owen, went on to run INA,which is a very different model altogether.buying a lot of holiday parks, and then leasing out land for retirees to put relocatable homes on.
Nice article in The Sunday Star Times. (If someone can add it to thread please)It states workers wanting employment rather than six months of a pay increase before smaller operators are forced to close unless they can attract more people. The Governments contribution would mean employers would still have to come up with remaining $245 million.
I love How Sam Jones of one of the unions said "that they pushed hard for the appropriate funding in the settlement and there should be no excuse for cut ours or closure". Also saying " if the rest times are facing closure, then a shortfall must have already been there,as wages should have no real impact " where do these guys come from to believe that?
Not just me but Simon Wallace the New Zealand age care Associations Chief executive disagree with Sam.
I really feel sorry for the smaller operators that are genuinely struggling.
Here is the link to the article.
http://www.stuff.co.nz/the-press/nat...orkforce-looms
Feel sorry for the residents - the operators won't have a problem. Residents have little options but pay up if rest homes are forced by the unions to increase their fees. What else are they supposed to do? Move out and live under the bridge? Last time I checked we didn't had an over capacity on rest home places in New Zealand (or anywhere else), meaning competition is hardly an issue (particularly for the "cheaper" rest home places).
Rest homes will increase their fees and residents will pay. If they can't pay than the state will chip in, not too many politicians will want to see residents in need for care thrown out of their home. Makes bad headlines. However - expect contributions from the residents who still have some remaining capital to rise. The whole exercise is just transferring money for the next generation (inheritance) to the care staff. However: maybe fair enough - care for your parents or lose your inheritance.
Aveo is focused on churning customers for profit (given that it is entitled to large exit fees of up to 35%-40% of the property value when residents leave)
Despite units being freehold, Aveo imposes draconian clauses and restrictions on residents with overly legalistic and imposing contracts
The company is effectively converting its freehold properties to leasehold ‘by stealth’ and is confusing customers about what they are actually purchasing
The company is engaged in ‘asset stripping’ via charging very high fees including real estate agent fees (the company is its own agent) and exit fees when a resident leaves
http://www.fool.com.au/2017/06/26/wh...-plunge-today/
Might start getting hot over here soon too.
So $56.6m profit last year ......and $75m expected this year
Jeez, that's more than 30% growth
SUM say things are humming along
And still priced as if going broke (sort of)
Announcement
SUMMERSET PROVIDES EARNINGS GUIDANCE FOR THE 2017 YEAR
Summerset Group advises that its underlying profit for the year ended 31 December 2017 is forecast to be between NZ$72 million and NZ$75 million. This reflects positive trading conditions across all of our villages.
We are continuing to see strong development margins from new sales of occupation rights, a key driver of the underlying profit forecast.
You never know, the SUM share price might even go up today
Maybe even GAP up - I like that
But then impending property crash and the huge increase in the wage bill from next week could see it decline further. Not a good sector to be in at the moment I'm told.
As often is the case winner, the SP is complete nonsense and can not be used as a guide to how a company is performing or the true value of a company, especially with the likes of SUM aye. PS-Remember when the market thought Air was only worth $1.70, less than a year ago.
Nice touch coming out and issuing strong guidance so early in the year. They must be super confident of meeting that target to issue guidance so early, last year guidance wasn't till October if I remember correctly. I have been conservatively modelling up $70m for FY17 so this is higher than my model which underscores the robustness and veracity of their business model. $75m would equate to underlying earnings of 33.74 cps...chose what PE you think is appropriate for this fast growing company with an compound average growth rate of 48% in underlying earnings since listing, with strong long term demographic tailwinds.
Even if you use just a NZX50 market average forward PE of 18 that's $6.07
make hay while the sun shines:) as they say as the heat on the sector in AUS heats up , in todays paper
"Elderly people have no status. Everybody knows that once you get old and you retire, you don't have any rights as elderly people."
Opposition Leader Bill Shorten went on the front foot and condemned the exploitation of vulnerable people.
"A nation that treats its old people in the manner in which we saw on television [ABC's Four Corners] last night should be ashamed of itself," Mr Shorten said
Yes once public opinion swings the politicians get on the bandwagon and the unregulated get regulated - the ball is rolling - make hay why the sun shines:)
http://www.canberratimes.com.au/busi...27-gwzncg.html
Summerset has a fantastic 94% satisfaction rate amongst its residents. Whenever I've been in a Summerset village the staff seem very professional and friendly and residents seem very contented.
To be fair; i think some of the 4 corners programme may be unbalanced, worth reading AOG's right to reply Aveo's response to Fairfax/Four Corners but yes some things need sorting out for sure. I do wonder if the retirement/care/prop industry won't be as rosy an investment going forward but still think its a good investment and better for it after being scrutinised and improved esp for elderly folks rights and self respect.
With the NZX having 5 such companies listed we had better get the model sorted!
Boom! 480 on opening....:)
Here is a shocking statistic from Aussie. In the last 5 years preventable deaths in rest homes has increased 10 fold. No I do not have a link to it. Hearsay from a doctor referring to some medical report.
There are lots of investor biases. One, confirmation or myside bias is seeing only what you want to see to support your position. I hope a rigourish review and scrutiny makes our 5 companies better at what they do with our elders or else big trouble ahead. The 4 corners programme is a great opp to test our own models against and make any necessary improvements.And they will be tested.
Could numbers in rest homes have also increased by X % !
No mate its people that don't receive their medication or have a fall that sort of preventable death.
If you can find a link would be helpful h2so4.You mean "preventable" deaths don't you? I do suspect stuff like that happens. A less mortal example. This elderly lady at a care centre lost her lower denture; 6 days later a family member looked under the head of her bed and there it was 15cm in.!!!? No one bothered to look ,or to clean.
Spot on, people on here need to stop comparing us with Aussies (Except that Ryman are kiwi trailblazers over there, offering a different model to their current one) NZ Audit standards are incredibly robust in this industry and care standards are by and large incredibly high.
If he sends me the link I'll post it. Yes I meant preventable. You guys. Ha!
SUM people are missing the main point today. 2017 PE based on $75m underlying is only 14.2 for a company proving they can grow at 30% in a flat-ish real estate market.
Cheep, Cheep...said the budgie :) That's a PEG ratio of less than 0.5 based on 2017 growth and a PEG ratio of less than 0.33 based on average underlying profit growth of 48% since listing. Complete this sentence...you can lead a horse to water...
Nice guidance, clearly saw the share price consistentlydropping and felt they had to say something. You could also say that they are clearly confident of achieving it(hence the very early indication), although I note, at best this is 33% growth,which is well down on 50% growth, and well below their several year average of47% (I think?)... maybe this will drop down further to be 16% growth for FY18? – 33% or 16% is still not bad growth of course, just not exactly the much hyped 47% “consistentaverage growth year after year”.
Share price reaction was to be expected and would be nice to see a small upward trend rebegin... I imagine some on here probably own aquarter or so of the company given all the “doubling down” done every time it wentdown (which has occurred a lot in the past 6 months).:t_up:
At the end of the day, it is just a forecast, and 6 months is still a long time for things to change, particularly in the ‘booming’ construction industry, which those with heavy development, such as SUM, are ultimately exposed to (took fletchers only weeks to write off a hundred millionor something from their original forecast/outlook).
If we believed OCA’s forecast, even after asmall recent rise (also now at a record high), they’d be trading on a single digit PE for FY 18 - the cheapest by far - but they're a dog like Arvida so don't believe them ;).
make hay while the sun shines - once supply meets demand some easy profits are gone and with 5 big players rapidly expanding how long is this going to take.
t_j, have you ever heard of growth rate decay?
Even the likes of Arvida/Oceania will suffer that fate in due course
Of course, it just seemed like sum people on here thought sum companies could keep it up year after year (well at least not see a big drop in the next couple of years)... maybe I interpreted some posts wrong.
On another note, I agree that today sum people are missing the point (at the end of the day this is still a solid update)
Nothing more that a complete speculative guess on your part. The facts about their profit growth to date are in no way whatsoever supportive of your guess.Quote:
maybe this will drop down further to be 16% growth for FY18? T.J.
Wouldn't todays SUM announcement be good for the sector as a whole...indicates a bit of strength in property resale when perhaps the market expects this to not be the case...? I understand why SUM shares would be rising on the back of an earnings update, but surprised to see RYM dropping on the back of this...
Good update overall. Nice to get some guidance and theres not a huge spread in forcast so they must be pretty confident.
Has SUM ever missed guidance?
If SUM had same profit multiples as RYM it's share price would be $6.75
I'd be happy with 6 bucks .....soon that is
the other way round is RYM at $5.00 if priced at SUM multiples ...no way
OK - good we established that you meant "preventable" instead of "unpreventable" despite saying the latter. When I read your original post I just thought you had a dry sense of humour, but it looks like the problem lies deeper. You throw quite concerning numbers around without any base ... this is how malicious rumours are started.
So let us see:
How many "preventable" deaths did occur last year in Aussie rest homes?
How many did occur five years ago?
How has the rest home population changed during that time (i suppose it grew)?
How many preventable deaths occurred in Aussie 5 years ago outside of rest homes?
How has this number changed over the last 5 years?
You don't know? So, what is the meaning of the rumour you are spreading? Even if the numbers are correct, they are absolutely meaningless without context.
Maybe the number of preventable deaths increased from 1 to 10 but there are 100 less preventable deaths due to more old people moving into a rest home instead of struggling for themselves?
Lets help you: I found a potential source for your rumour:
https://www.theguardian.com/australi...ed-in-10-years
So - it was not 10 folding in 5 years but 4 folding in 11 years. As well - the authors note that the reporting base significantly changed during the last decade, making the numbers not really comparable. 10 years ago it was still considered much more normal that old people might die at some stage ... while today basically any external cause of death (including fall and suicide) is considered "preventable".
So, yes - maybe there is something the rest homes can learn from the report, and I am sure that there are things which can be improved. However - is it really the report which is shocking - or more the rumours spread based on it?
While I realise that sulfuric acid is quite corrosive - lets try to use this property in future a bit more constructive - shall we?
Can we please get back on topic
This is SUM thread on the SUM share price - not a thread to discuss the morbid ins and outs of Aussie retirement villages.
Today SUM announced they are going to have a boomer of a year ......and the SUM share priced gapped up today - that's good
...and that's before we consider the fact that RYM is growing at 13% and SUM at 31% and not just based on latest data, consider the divergence of their respective growth rate averages over the last 5 years, (RYM 15% SUM 48%) Something tells me the PE divergence should be the other way around !
Agree 100%
Amen to that mate.
Pretty strong response . 2nd highest vol of the year; almost at the 30DMA. Still in a bear mkt though if you follow T/A. Hoops post on investment strategies thread.
I can understand that if you're holding on but I've never been on SUM to be bucked off it. Quite a lot going on atm; scrutiny wise, cost wise, property wise,chartwise etc so will watch for some conflict reconciliations, smoother waters. Just in OCA in the sector atpit; sold RYM a few years back.
All the time the Tsunami of ageing grows.
At present time 50 aged a week, are making a retirement village their home.
So next milestone 100 a week,and then 200 a week.
Pity the sector's build rate will steadily fall behind demand.
In my DCF model I had $70.5M for underlying profit in FY17. Quite pleased with the guidance.
I think current SP is approximately fair value, even slightly under fair value. Having said that I don't mind paying fair value for a good company, as they will probably suprise on the upside.
Has no-one else read the NBR article by Tim Hunter "pop goes the bubble" June 23rd issue. Seems some subscribers are being selective in their reading, confirmation bias; most of us do it; its a human failing , i have to pull myself up regularly. Will post snippets later as off to visit someone in a care facility.
I believe the biggest risk is an oversupply of retirement units in the Auckland region in the short to medium term. This is well documented.
The proportion of retirees going into villages will need to increase a fair amount to balance the supply/demand, which may happen but the risk is there.
I was wondering the same thing recently about oversupply - some big build-outs going on in Wellington from RYM and SUM. But then - there seems to be a fairly steady supply of residents and potential residents as well so hopefully there'll be a good balance of supply & demand.
Summerset is flat out building as fast as it can across a wide range of sites and believe me, they have no trouble selling them often well before they're built !
I was going to reply to a good post from hardt (I think it was) but it has been deleted. Shame as it must have taken a while to write.
Always good to hear the quant's view
Allow me to explain to you. The proportion of retirees entering villages is increasing. For one thing this can't occur forever. Is this offset by the rate of eligible retirees coming "online" increasing (note I said rate not number) or are we on the steep part of the curve already?
Secondly all operators seem to be increasing their build rate. Requiring more retirees to come "online" than the last year.
As for the Americas cup, can't see that raising the number of people looking to live in a village.
Let me know if you need further explanation regarding the above.
Yes a real shortage unless the build rate is substantially increased.
The size of the ageing population Tsunami is expected to peak in twenty five to thirty years
time.
ps I wonder whether we will see Australian retirees, deciding to move to NZ,so as they may enjoy their golden years in a SUM village?
I read this thread and all I see is the positives,,, and one large positive is increasing numbers of weathy (thanks to the 40year property boom cycle) baby boomers entering their retirement years and one negative (possible property crash)...
There is a "perception" that the retirement village sector will see good times like it is now for the next 30 years so we all will use this sector as our very long term (superannuation type) investment....But..is this perception valid?..Is this created perception based around the current environment?
There are many other important factors which lie in the shadows....
I think it was Halebop (Halebop can you add comment) a few years back on ST that said the demographic factor will be the biggest factor that will affect the property market starting in the near future, when the baby boomer generation bubble reach retirement and start downsizing ....As they move into smaller dwellings their last big 3 -4 bedroom home that once housed them and their children will be sold off into an ever decreasing market as there isn't the replacement numbers of Gen Y and Millennial couples...also .. the wealthy Generation is the exiting Baby boomers not the entering Millenials.
Here lies the problem...The property market could become fractionated...and the mobility to move from house to retirement village may become more restrictive due to financial contraints rather than willingness..
Also there are the usual other potential problems.. Politicians and their Party's housing policies (upcoming election), Competition and large dictating Competitors entering and diluting an affluent market...NZ's ever changing Fiscal Policies.... tightening migration restrictions (upcoming election) ...
Well Balance whilst I agree with you the property market is not crashing and if there is a property market crash it will impact more than just retirement sectors. I can't see a property market crash in the near future and that is common opinion of those in the know. A 5% YOY drop is probably a good thing. Its not sustainable for price to keep going up.
I agree the elections are a risk but National is sitting pretty at the moment. At $4.80 with 30% growth this year predicted I think the risks you outlined are factored into the SP.
As for a glut of houses in the future I guess this could happen, however New Zealand remains an attractive country to live so high levels of migration might offset some of that risk.
Fair point, Hoop. But if the current housing shortage persists, perhaps those big 3-4 bedroom homes will be bought up and converted into flats - or, maybe boarding houses will see a resurgence in popularity!
:cool:
What if I told you penetration rate in Auckland had increased from 14.8% in 2015 to 15.1% in 2016.
How long can a 0.3% increase in penetration per year be maintained?
What is the increase in penetration required for this year when SUM has increased build rate by 12.5%, keep in mind all the other operators are also increasing build rate.
What if I told you that based on the current development pipeline Auckland needs to have a penetration rate of 19.2% by 2023 to avoid an oversupply. Either that or reduce buildrate.
Why would you expect the current buildrate to continue unabated for another six years? Are retirement companies not aware of this risk?Quote:
What if I told you that based on the current development pipeline Auckland needs to have a penetration rate of 19.2% by 2023 to avoid an oversupply. Either that or reduce buildrate.