Well not "completely" else what would be the point!
:)
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Well not "completely" else what would be the point!
:)
Oops!:mellow:
Makes sense to me and some volatility after the recent very strong run is to be expected. Best thing newbies can do is throw it in the bottom drawer and hold for 5 years plus and let compound earnings growth work its magic. Easier said than done because I look at the share price at least a couple of times most days lol
Was a good buy yesterday
Going by last years timing, Q4 sales should be released tomorrow. Sales numbers above 200 should be good news.
209;)
Pleasing result...slowly but surely SUM delivers.
Excellent result!!!
Great..209....I was a bit worried yesterday....all my eggs are with SUM....
Main thing the number was over 200
Total sales for year up 12 on last year .....that will add a couple million or so to earnings (v 2018) and add the huge revaluation increases from 16/17 to be realised this year the average earnings per sale will skyrocket
Up my earnings number for 2019 to $120m as a minimum
Might even get an earnings guidance later in the day
You can see how the real estate market changed during 2019 with quite a bifurcation between the two halves.
First half SUM sold 278 units
Second half SUM sold 374 units.
Augers extremely well for second half profit and when we see that momentum carry over into 2020, prospects look good for the current year.
What shareholders might enjoy is a virtual tour around the various villages. Their website now details the facilities available at each village and the types of units available and in most cases has pricing. Heaps more information here https://www.summerset.co.nz/find-a-village/
Just click on the village headline and heaps more info comes up, e.g. https://www.summerset.co.nz/find-a-v...rset-at-aotea/
I really like the Clark Coastals at my closest village in Hobsonville, more here https://www.summerset.co.nz/find-a-v...monterey-park/
Now to FY19: First half SUM sold 278 units, second half SUM sold 374 units - 652 units total (329 higher margin new sales)
Lets look at FY18: First half SUM sold 299 units, second half SUM sold 341 units - 640 units total (339 higher margin new sales)
Lets look at FY17: First half SUM sold 323 units, second half SUM sold 374 units - 682 units total (382 higher margin new sales)
Lets look at FY16: First half SUM sold 306 units, second half SUM sold 352 units - 658 units total (414 higher margin new sales)
Lets look at FY15: First half SUM sold 270 units, second half SUM sold 308 units - 578 units total (333 higher margin new sales)
There's a track record for you: 4 years of decreasing higher margin new sales
(and the lowest new sales in 5 years, and there is always a jump in the 2nd half, this year only happens to be a bit more than previous years and may be simply due to timing - not a big turn around in SUM's property prospects).
Summerset CEO Julian Cook said the results were pleasing with new sales for
the quarter being the strongest in three years and the second highest ever
for the Group.
374 units for the second half is still the equal highest for any second half and shows the momentum is strong.
T.j. keeps saying new units are "higher margin" but actually with strong valuation increases over the last 7 years (average cycle of resales), resales will have MUCH stronger margins than new sales.
New sales F19 were 329
Still quite a long way off the peak of 382 (rolling 4 quarter) of March 2017
Q$19 was first quarter for some time when new sales were ahead of pcp - thats good. the rot has stopped
but heck - lets worry about the future
For most of 2019 the real estate market in Auckland was quite subdued. Things are very different now.
I attended the annual meeting in April. If I hadn't of asked the question as to the 2019 build program nobody would have known.
Julian advised they planned to build about 350 new homes for 2019. Yet again they have done what they said they would do and slightly beaten that
"Summerset's 2019 build programme delivered 354 retirement units".
I've lost count of how many years now they have accurately predicted the number of new units they will build for the year and slightly beaten it.
My point is this is a company that can be trusted to do what it ways its going to do. They make results, not excuses.
Yet again, we will see strong growth in underlying profit for the year just finished and strong growth going forward and yet this company continues to trade at well below the market average PE. Go figure...
They make results, not excuses...
"Previously, Summerset has said it wanted to increase its build rate to 600 units a year. Chief executive Julian Cook said the company will probably build only about 350 this year as the company tailors its building programme to meet demand."
... shifting goal posts at its best, certainly sounds like an excuse to me;)
https://www.nzherald.co.nz/business/...ectid=12226636
But hey, forget the facts, SUM share price riding high so lets all enjoy it
“They make results, not excuses”
Like that phrase
Talking about delivering new units
2017 delivered 450 sold 382
2018 delivered 454 sold 339
2019 delivered 354 sold 329
Hope the development team isn’t getting paid heaps more to deliver less.
One thing I like about Summerset performance is they can make heaps more profit by selling more or less the same number of units compared to Oceania who seem to sell heaps more units but make stuff all more profit
Nice, 2020 shaping up very well!
T.J. He said he would ramp up the build rate over the next few years to 600 units per annum, try not to let your own viewpoint colour what was actually said.
I believe we will see the build rate materially increase in 2020 compared to 2019.
Assuming $117m underlying profit this year and conservatively just another 20% growth for 2020 I have them on a preliminary estimate of $142m underlying for 2020, (and I do think that's quite conservative), for a forward PE of just 13.9. Market median PE is about 19 and market average about 30 and yet SUM is the preeminent growth stock on the NZX.
Great long term hold.
Ahh yes but look at Oceanias potential plus dividend yield. Plus the 20% I'm up. With a possible good result to come.
You are comparing a promising Filly with a somewhat chequered track record with a proven well proven Thoroughbred. When you're looking at competing in the grand national steeplechase (an endurance race anyone that doesn't know), which horse would you rather be on ?
Tough crowd to please....
Today's numbers were great imo. Long term its looking good guys.
Perhaps the recent rally of buying into retirement stocks led to an exhaustion of buyers..
I totally agree there Beagle with all your maths and thinking. I recall you and I speaking with Julian after the AGM and he was quite unconcerned about meeting exact annual build targets as he said some get delivered this side of the FY and others slightly into the next FY. I know you've said it plenty but it should not be overlooked that SUM aim for ~400 pa and intend to ramp that up to 600 in a year or two.
I'm quite surprised the share price hasn't reflected this very solid evidence yet. This is asurperb result confirming everything is better than hummming along.Perhaps it will once the Aussy markets get cranking.
If I wasn't so convinced that OCA will have Superb result in a few weeks , I'd be buying a few more SUM for the long term.
Disc:hold a ton of OCA, some SUM , some MET (just for the ride), but no ARV or RYM
Thanks Maverick. Like you I am very confident about the prospects going forward and see a good ramp up in the build rate in 2020 and further out.
Maybe some people have forgotten they are expanding into Australia as well ?
The other day I quipped about building a retirement village at Dunedin to stave off climate change for many years, (was just tongue in cheek) and then yesterday I realised that although I thought I knew SUM inside and out they already have one there lol.
Pretty cheap to retire there and beat the effects of climate change https://www.summerset.co.nz/find-a-v...-bishopscourt/
It is Friday...traders are wrapping up...wait till next week...imo...good time to top up today for those looking for solid company to invest
Well, yes, and congrats to all who bought in the mid $5's, mid year, (pat on back for myself too), but let's not lose sight of the fact that the shares were $8 in mid 2018 so have significantly underperformed the market in the last 18 months.
An estimated forward FY20 PE of just 13.9 for N.Z.'s proven fastest growing retirement stock is a very compelling valuation so fundamentally this looks very good and technically this is in a very nice uptrend.
Excellent hold based on compelling metrics and a strong outlook, in my opinion.
Welcome to the forum Mogul.
If they get $118m underlying this year and on average just grow underlying earnings at just 15% average per annum for the next 10 years, (i.e. Ryman type growth which has been proven to be sustainable for them), the power of 15% compounding for 10 years gives underlying profit of $477m in 2029 by my calculations.
The cool thing about the business model is it encourages compounding growth through them clipping the ticket over and over and over again on the same properties as well as building new ones so the pool of properties for repeat ticket clipping gets ever bigger and bigger and more valuable and each time they clip the ticket its on the higher price through increase in each units value. All very tax efficient too.
If you started with a clean sheet of paper you'd struggle to come up with a more cunning business plan if your life depended on it :)
assuming constant compounding growth over long periods is unrealistic for many reasons
350 this last year. Mav says 400 as a goal, Beagle talks 600 and now a 1poster is throwing 800 around. Do I hear a k? Anyone?
Its great to have aspirations n all but before we start counting our retirees before they've even left university lets stay a bit calm and remind ourselves of sectoral balance and consider things patiently with due regard to business cycles, resource contraints, competition, demand, land availability, regulation, etc etc.
Plus a somewhat asymptotic looking chart. Remember what MET has actually shown us so far - that NTA is the best the market can do?
Even if this particular business goes perfectly to plan the market could change and mid-teens start to become considered a high PE. It does happen
(trying to play the voice of reason)
Now there is someone I would listen to.Assumptions are the mother of all FU's
And this
https://www.interest.co.nz/personal-...ng-residential
Good post Peat
Yes Peat, when markets are at all time highs and rather euphoric one should consider the voice of reason.
MET was touted around the world, the for sale sign was up. As you say when it came down to fronting up with hard cash (real money) NTA was the best they could achieve. Has to be a lesson in that.
The buyer wants a reasonable medium to long term return on his investment. Paying say 1.5 times NTA would have diluted those returns quite significantly ...the old adage is buy at high multiples and expected long term returns diminish.
Yes mid teens could one day (maybe sooner than we think) be considered a high PE
I sometimes ask myself if I had $2 billion and bought Summerset what am I getting for my bucks besides $1 billion of assets and how will ever make a decent return on that $2 billion investment.
Expanding into Australia. RYM have enjoyed mid teens growth or thereabouts for more than 2 decades.
Each to their own. My model tells me a fair PE for a no growth company is presently 11. Forward PE of 14 given SUM's superb track record of growth since it listed is a compelling metric. Technically its in a nice uptrend and while I grant you that's steepened lately there are very good reasons for that including a resurgent Auckland property market and the pending reallocation of ~ 1.5 Billion from the MET takeover.
$8.70 looks expensive relative to where it was six months ago, (well done to those that bagged themselves an exceptional bargain in the mid $5's in winter 2019, called and actioned as such by myself and other astute investors), but it looks very cheap relative to the $8 eighteen months ago and the forward PE speaks for itself. I think the outlook for the foreseeable future is very positive and has significantly improved since last winter.
For what its worth I am right on my maximum self imposed limit of 10% portfolio allocation (to any one share), and my intention is to let that ride, long term.
Might be a bit bumpy but buckle up and enjoy the ride https://www.interest.co.nz/personal-...1+January+2020
__________________________________________________ __________________________________________________ ____________________
MET - Interested parties approached them, not touted per se. We'll see what happens there, $7 looks too cheap to me even with their somewhat chequered track record.
Property market on fire
Even higher record prices
Best bit is the surge in activity ....generally increasing sales numbers means increasing prices
https://www.reinz.co.nz/Media/Defaul...ber%202019.pdf
Bindi Norwell CEO of REINZ says a real shortage of houses now. "With insufficient properties on the market to satisfy buyer demand, it suggests that buyers are being more definitive when it comes to purchasing as they are aware of the need to move quickly on properties and areas with high demand. This is backed up by the decrease in the median number of days to sell which is at its lowest point for 3 years".
SUM shareholders can feel proud that their company is one of the biggest developers in the country provided much needed housing for older folk thus freeing up houses for others. I am expecting very strong conditions for the foreseeable future.
Forsyth increased SUM's target price from $7.20 to $8.90 with outperform rating and "do not view as expensive on a 16x PE" Beagle must have helped right the report
They were right to call ARV's share price at $1.78 (when it was sub $1.30 just over 6 months ago), maybe they'll be right about sum other operators as well? Then again with the share price already in the high $8, intriguing they can give it an outperform rating
I gave up on Forsyth Barr about a decade ago. Mostly in my experience with them their analysts just follow other analysts or follow the market up. Very few insights and certainly not enough worth paying full service brokerage rates for. Company is worth $9 now and will be worth ~ 30-35% more a year from now after that much earnings growth in 2020. A year from now Forbar will raise their price target to $12.00 after its already there lol
$15 is on the cards for sometime in 2021 or early 2022...you read it from the Beagle, first :)
Lot been said about how good Julian and Earl are (even if different ways)
Question: how good is Gordon then?
Gordon, I think a league or 2 above Julian and Earl.
Unfortunately the league he play in has very few players in NZ.
Not reflected in the growth rate of RYM in recent years. I think Julian and his right hand man, deputy CEO / CFO Scott Scoullar are a lot smarter than you're giving them credit for. Earl a lovely guy, the sort of CEO you'd love if you were a resident as he is laser focused on pleasing people, residents and staff. Good for shareholders though ?
Beagle, I agree with you that julian and his team are very good. I just think Gordon and his team are exceptional.
Gordon explained in the past at meetings that the company aim is to grow underlying profits at app 15%. They could grow faster but 15% growth RYM considers a manageable long term realistic goal.
After Gordon's team has put the energie in for the 15% growth, management time is allocated to work improvements for staff and improvements for residence.
RYM is very aware that the company has 3 types of stakeholders, shareholders, employees and residence. Very important not to favour the shareholders above the other stakeholders. If they would the shareholders would get a set back in time anyway.
That is the way I see it.
You know me Forest, I'm a numbers man.
RYM average growth rate in the last five years 14% per annum.
SUM average growth rate in the last five years 36% per annum, assuming they make at least $114m in 2019 to be reported in February 2020.
Each to their own but I reckon those numbers speak for themselves.
Yes and no. RYM have been listed for longer than SUM. It gets harder to maintain a high growth rate as the company grows i.e. the law of large numbers.Quote:
Each to their own but I reckon those numbers speak for themselves.
I hold them both - and MET and OCA and ARV! A retirement village company junkie?
Mr. Beagle, which financial metric do you calculate the growth rate from ? Is it the growth in operating revenue ? I'm trying to learn how to calculate intrinsic value, and the formulae available from my Google search mention growth rate. However these explanations don't say which measure. I'm assuming it's the growth in revenue rather than NTA, or other measures like growth in the EPS.
(Please excuse this Engineer trying to learn about Financial calculations) Thanks.
Good question and thank you for asking it. Headlights on full beam, so too speak, my thoughts are:-
SUM have a vast land bank well spread geographically throughout N.Z. and they are expanding into Australia. They have stated they want to increase the build rate to 600 per annum here with the next 2-3 years from 354 last year. Expansion into Australia is on top of that. They have substantial embedded value in their existing villages and I expect resale volumes and resale profits per unit to climb significantly in the years ahead. Development margins as per the company's view are expected to moderate in the years ahead.
Overall going forward I expect them to continue to outpace RYM's growth over the next 5 years, but not buy as much as the last 5 years. I think an average growth rate of 20%-25% is attainable for the next 5 years. SUM are on a forward 2020 PE by my estimate of just 14 and RYM are on a forward PE of 31.
OK, in 2017 SUM delivered 68 more residences than they sold, in 2018 they delivered 115 more residences than they sold and just in 2019 there were 25 more build than sold.
So as a numbers man are you not concerned about the imbalance of new builds compared with new sales?
That is my one area of concern with SUM. On the other hand the vacancy rate at all their existing villages remains very low.
Real estate market only really accelerated in Q4 in 2019 and properties don't always settle for a period of a few weeks. I am hoping for strong sales numbers in Q1 2020 from people who sold their homes in late 2019. That said one or two of SUM's villages do not appear to be very fast sellers. To what extent one lets that detract from their otherwise stellar results is for each shareholder to decide for themselves.
Poking the finger around the other way, its clear RYM's profit growth has been below their stated mid term objective of 15% per annum by a material amount, (just 11.5% last year and not the first time they have missed by any means) and is forecast, (at mid point of forecast) to be just 13% in 2020 as well so maybe they aren't building enough units ?
Looking at their respective growth rates which seems to be the best approach ?
Depending which growth rates you are looking at, new sales for both SUM and RYM have been going backwards since 2017.
RYM has given a plausible explanation for that reduced new build, not to sure about how plausible SUMs is.
However resales for RYM have been going up app 14% since 2017 and 7% for SUM.
This 7% increase over 2 years makes me wonder if the churn is lower than expected.
I like the RYM approach a little better, controlled steady growth. Often promoting long term employees to management level. Having as much expertise in house as possible. Maybe boring as the name of this thread would suggest but predictable.
RYM average growth rate in the last five years 14% per annum.
SUM average growth rate in the last five years 36% per annum, assuming they make at least $114m in 2019 to be reported in February 2020.
For the sake of complete clarity, (as I am sure you probably already know), this is the growth rate in underlying earnings per share for the last 5 years.
Yes I think the churn has been a lower than expected and I am expecting this to revert to normal level's going forward and with quite substantial IFRS valuation gains in previous years, growth in resales both in volume and realised profit per unit will be a key driver of SUM's ongoing strong growth in underlying profit in the years ahead.
To me as a numbers man, the number that really matters is underlying earning per share and the rate of growth in same. RYM's growth in eps in recent years is something I find quite underwhelming to be honest and certainly not something I would pay a forward PE of 31 for. I think SUM is dirt cheap on a forward PE of about 14, (market average is about 30 and market median about 19) with a future average expected growth rate in the 20-25% rate for the years ahead. Hope SUM are not next cab off the rank for a takeover offer, that would be very disappointing.
Even if SUM's growth rate slows to an average of 15% per annum average for the next 5 years on a forward PE of 14 they're still a bargain at a PEG ratio of just on 1.
Just rounding out this discussion, here is the six year summary of RYM's results and you will see new sales for them are quite underwhelming in 2019, in fact considerably lower than 3 years ago and lower even than 6 years ago ! Gearing is steadily increasing over the years too. https://www.rymanhealthcare.co.nz/ab...al-information, scroll down a bit to the 6 year summary, which I find most underwhelming.
On the leadership thing they broke the mould when Simon Challis became CEO and there's unlikely to be another one as good as him, ever.
There's nothing in RYM business plan, growth rates or any other aspect of them, that on the FACTS, justifies a higher PE than SUM.
SUM's vastly higher underlying eps growth rate on the other hand does justify a higher PE than RYM.
I stick to the numbers and facts and leave the "which is the better company for ESG reasons" to others. This has been a good debate because it got me looking at RYM's 6 year history and honestly, there is nothing in there that impresses me. Even total numbers of units sold including resales have only marginally increased from 5 years ago ! No wonder their average underlying profit growth in the past five years has been so miserable, lower even that MET. If all MET who have been growing underlying earnings faster than RYM are worth is last years NTA, then what is RYM really worth ? :eek2:
RYM massively overrated by the market in my opinion.
The results under Julian Cook's leadership speak for themselves. I like CEO's who deliver results.
With all this discussion re SUM growth etc I was waiting for t_j to remind us that H1 NPAT was down 4% on prior year and from their reports RYM was up 11% and ARV was up 47%
I have to agree with that Ryman is better at everything than the others, they lead the pack BUT the only thing that I don’t agree with is the SP of Ryman, SUM is a better buy in terms of value. If I was just buying Shares to pass it on from generation to generation with never ever selling them for 250years, I would buy Ryman. But I think in my 25-30year timeframe, SUM will get me better returns.
Hmm - 250 years is an interesting investment time frame. Not too many companies I can think of who survived such a long time, with the exception of the Catholic Church (i.e. faith industry) who have a quite unique business model (take money now and deliver only when customers are not anymore able to complain ...).
Back to retirement villages ... I'd say that it might be possible to model perhaps the next 25 to 30 years (based on population growth and similar, though even this is difficult. We might have in 2050 ways more old people than what we expect (if e.g. all the Australians hop across the ditch because they don't like to be roasted) or we might have much less (e.g. if our economy goes for some unknown reason kaput).
If we look however into the next decade, than I agree ... while I expect both RYM and SUM to do well, I'd expect as well better growth from SUM.
Corona virus causes world market selloff, SUM holders not bothered.
Got to admit you've picked this one Beagle.
It is skyrocketing and I wont sell anymore because then it wont be a long term hold. And it may never come back.
Well done sir
Your very brave Peat...as J Ryder has said...if you dance be very close to the door...
Thanks Peat.
It still looks dirt cheap to me on fundamental's. Assuming $117m underlying to be reported next month and an estimate of 25% profit growth for FY20 as they ramp their development program back up that gives $146m underlying for FY20 which is 64 cps. At $9.25 that's a forward PE of just 14.4
That's right towards the bottom end of their own PE range over the last 8 years and the sector overall and that for the company which has clearly demonstrated its the fastest growing company in this sector on the NZX. Pretty easy with a far more robust real estate market to make a case for a NZX median forward PE of 19 suggesting 19 x 64 = $12.16 is a fair and reasonable price target.
my cash ratio is very high. as in 4:1 cash vs equities both through reductions in holdings and a cash injection so I don't really need to be near the door at all - in fact I am at the front of the dancefloor with girls all around shaking my stuff, and to be honest will probably order another magnum at this point of the night.
Excellent post peat.Ive never ever held cash in 40 odd years..Well I have kinda have with PFI which Ive always viewed as a kind of bank..i.e. 8-9 % for about 25 years.Anyways enjoy your stuff being shooken up by all the girls.Cheers troy
All residents will be die because of corona virus.....SUM will be damned..gosh....great time to buy an not have enough of SUM!
Had a tour around a Summerset village before Christmas last year.
Some aspects were quite nice definitely nicer than the older MET village they still have their name down on the waiting list for ( I think!).
Guy showing us around mentioned SUM maybe moving to a fixed weekly fee for life model as this is the way the industry is going..
I know my parents and few others are looking around at village options at the moment are particularly put off SUM due their weekly fee not being fixed for life.
I've been barking at Julian about making that change for years. He's as stubborn as an old mule. Please ensure your parents are very vocal about telling the SUM salesman what they think about it not being fixed as Julian consistently tells me that they don't get any negative feedback. Please tell the salesman in no uncertain words, words and intentions are cheap mate, change it to fixed fees for life and I will buy, don't change it and I wont.
You'd think at over $1m for this villa they could afford to fix the weekly fee for life https://www.trademe.co.nz/property/r...bd16ffd006-003
What the heck's going on with SUM, it was 930 last thurs and down 5% to 883 today with flimsy bid support above 865.
Surely hasn't caught the Coronavirus ?
Disc, holder
There were quite a few larger trades and the end of day volume is higher than normal. I think its just a bit of profit taking while the uncertainty around corona virus is dropping NZX SPs overall. It's still higher than 2 weeks ago so it isn't really much of a drop. Less than a month till then annual figures and less than 2 months till dividend. The financial results should be the thing that balances it all out.
Blue Skies..you're NDP says it all...life will teach you blue skies do indeed exist..however...not every day...and we celebrate when they do.Have a look again at the 5 year SUM chart..and the 3 yr 50 Index ..I with DB....me thinks we may have a few cloudy days...cheers
Just for light entertainment :sleep::
https://www.marketscreener.com/SUMME...438/consensus/
As per today marketscreeners
consensus analyst recommendation for SUM is "outperform" (7/10);
consensus 12 month forecast is $7.75;
and today's share price for SUM is $8.92;
I read that in the following way:
The five analysts involved say that the SUM share price will drop over the next 12 months by 15% (which well might be, if the biggie arrives) and they say as well that this stock (while dropping by 15%) will outperform the NZX 50 over the coming year.
Ouch. Maybe not that light entertainment after all ...:eek2:
Nice bounce off the red 30 day MA support line. Technically this is also looking very attractive. Attachment 11007
Wonder when the 1 SUM to 1 RYM will happen. Clearly remember RYM at $2.25 some years ago.
Ryman will split soon me thinks... thou I have been saying that for about a year...