Nicely summed up.
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You guys should really be looking at the future winners in this sector ARV & OCA. :p
I recon SUM might be ready to disappoint a little later this month.
With greater understanding from my recent OCA wrangle I've run my updated spreadsheets back over SUM.
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.
Thats basically a PE of 18.5 at $9 and an underlying YOY growth of 13%.
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.
I anticipate their annual underlying earnings growth will be more inline with RYM from here (who obviously had to go over to Aussy to maintain their ever increasing build rates)
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)
Anyway, you all know I've been wrong before , just the results of my workings for those interested.
Technically it would make a lot of sense for a correction back to $8 or thereabouts.
It has put on 72% in the last 8 months. without a significant retracement.
Fisher Funds Management reduced holding from 14m to 11.2m to 4.95% ...... may be a worry for recent buyers
Good bounce off the 30 day MA the other day and technically its looking very strong. Never count out Julian and his team to deliver surprisingly good earnings growth.
Fishers said in their Kingfish monthly report they had trimmed their position after adding several times last year. Still 8% of their portfolio.
I believe they can do ~ $140-150m underlying profit this year and have them on underlying eps of 64 cents for FY20, forward underlying PE of just 14.
Compelling fundamental value considering their long track record of being the fastest growing retirement company on the NZX.
Wow property market on fire big time
Busiest January for a while
Median price up 11% on January last year and even the price index reaches new highs
https://www.reinz.co.nz/Media/Defaul...ary%202020.pdf
Good current info, thanks for sharing. Even Auckland is on fire ! MET is being sold way too cheap and less than current NTA eh. Who cares though, SUM is where the really strong underlying eps growth is...other retirement companies have "pup" eps growth by comparison.
Not that exciting ... but today SUM's number came up to check consensus forecast and recommendation:
So - how good are analyst consensus predictions?
SUM had in January 2019 a (peak) share price of $6.50 and analysts (consensus) forecast for January 2020 was $7.75; The share price in January 2020 however actually peaked at $9.25;
Analyst consensus predicted the SP to rise by 19% and rise it did, however consensus significantly underestimated the amount of the actual rise (42%).
Looking into the consensus buy recommendation - SUM's Buy recommendation in January 2019 was a "Hold"(5/10) - i.e. analysts said that the share will roughly move with the NZX. This was no quite right, because SUM outperformed the NZX50 over the last 12 months by 15%.
Both analyst consensus prediction and recommendation has been ways too pessimistic to be useful, i.e. for my wee exercise I call them both "FAIL".
I am doing this exercise as well with other NZX listed stocks - the overview is here:
https://www.sharetrader.co.nz/showth...arket-analysts
8 stocks checked so far (checking for each consensus and buy recommendation);
Consensus shareprice forecasts correct: 1/8; analyst hitrate: 12.5%
Consensus recommendation vs NZX50 correct: 2/8; analyst hitrate: 25%
You might be right .... though my results so far might well prove that analyst recommendations might be useful - as long as you bet against them.
The only problem is - while it seems to be more likely that they are wrong (obviously - depending on the definition of "wrong"), you can't rely on them to be wrong, sometimes they are not ;):
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
Couta theorem is weighing heavily on SUM SP, stuck on 53%. All you need to know, FA, TA, analysts, dyor, all worthless useless waste of time. Lol.
;)
https://www.nzherald.co.nz/business/...ectid=12309458
LOL Baa Baa I will stick with FA and TA...others are welcome to use Coutts theorem if they like.
Just as fyi, last weekend there was an open home at Kenepuru village, I couldn't go as per family activities.
Fair enough mate. Central to any bull case is a sell down of existing inventory and a lift in the build rate this year.
Resale volumes should start increasing nicely in the years ahead and if the N.Z. real estate market is going up 10% this year we are going to see some very strong gains on resales.
Probably too early to predict with any degree of accuracy what 2020 looks like but certainly the real estate market has started off with a hiss and a roar so the early signs are encouraging.
You and Maverick are both around that $110m mark. I'm sticking with $115m or thereabouts for FY19.
Better hope forsyth are wrong by miles... they saying underlying EPS growth of +7% for FY19...and, perhaps worse still, EPS growth expected to continue to grow slower than sum others (1 in particular I like) for FY20 and FY21... WOW!
With growth of +7%, +16.7%, + 15.5% this is far below the previously trumpeted CAGR of 30 something percent for the past several years... I suppose past performance really is not an indicator at all of future performance.
EPS growth is gonna be really high they say, but sum are saying it is only going to be 7% (meanwhile on sum other threads EPS growth of "high single digits" was rubbished)
No worries - although they still have an outperform rating on it, Forsyth are gonna be wrong by miles and we're gonna see something close to that CAGR rather than terrible "high single digits" growth rate.
I stopped listening to forbar analysts about a decade ago. Some of them wouldn't know preferred stock from livestock.
The company itself has said past super high growth rates will not be sustained going forward at last year's annual meeting. Be a good chap and try and keep up :p
Result tomorrow..
I`ve got an technical question that I`m hoping the accountant guru`s among us , Beagle, Mogul, Winner etc might know the answer....
Firstly, I`m confident with all of my SUM workings and still see SUM around 111m underlying NP tomorrow. That`s a dramatic fall in historical growth to 13% and if this proves true then this will be a big fat red flag for me that this will be the new growth rate form here on until they increase (and also sell) their current build rate.
Back to the question.. the area I`m confused on is their depreciation,
Up until 2015 there was no depreciation/amortization (D/A) then FY14-0m...FY15-3.7m...FY16-3.7m..FY17-4.6m...FY18-6.7m
So, why does D/A go from nothing to rapidly rising when in fact there new sales have been falling slightly towards the end of this time frame?
I know OCA`s D/A is also rapidly rising but they have been spending big on computer systems which depreciates real fast. So wondering if SUM has a similar thing going on or whether accounting methods has changed recently. (i.e IFRS16, whatever that is?)
I`m not motivated enough to look into it (the numbers are too small and its a non cash expense anyway) but by any chance is there a simple answer someone already has the answer to?
Sorry mate I have no quick answers for you and have been flat out today.
I will review SUM's result as best as time allows tomorrow and get deep inside the numbers later this week or early next week when time allows.
SUM did well to hold up today in a market down ~ 2% so hopefully that augers well for tomorrow.
Things like roads and community centres are capitalised (and not included in underlying profit, so margin for a total village is less than reported for individual units) so there should definitely be some depreciation. I’m not sure why it wasn’t there before 2014.
Thanks Beagle, James and Mogul for responding.
Obvious to me know now, FY14 depreciation of 0, was a non-number I chucked in there in my earlier days to fill the original spreadsheets (I had a real job back then). Now I see the overall depreciation is in fact a predictable ratio to assets where one would expect.
Thanks again for helping
Dow down 1000p points...no matter how good is the result....the SP will be also squashed!
Nearly all us were out in out in a forecasts of underlying earnings
But heck they made $175m real profit ..pretty good that is
But no worries as Julian says ”Annual growth in underlying profit has averaged 38% since the company listed on the NZX in November 2011.”
Good of him to remind us
NPAT down yet again winner...
FY20 build rate only 400 units - where was the talk of the 600+ gone?
Development margin falling as well...
Available new sales uncontracted stock as a % of portfolio increasing for the 4th consecutive year (not a good track record to have) Resales also up on pcp
Trying to distract us with talk of Australian growth yet the growth story in NZ is faltering big time... no worries nice of him to talk about the past as you point out winner (might as well start reminiscing on Kodak, blockbuster and Lehman brothers while we're at it - talking about the past didn't seem to help them much)
I think Julian has mislead Beagle about build rates and other things.
Might be angry Beagle at ASM ...no Julian will be safe as most punters not flying or going to crowded meetings in April.
It is what I've been saying all along - they need care, they can't just ignore it and pump out units otherwise they'll find demand (as people get older and desire increased continuum of care) will drop... finally they've bitten the bullet (rather than nibbling at it over the last few years like other operators (RYM, ARV, OCA).
book Value up 16%
Company worth heaps more than a year ago
That’s good.
hey winner, there is one good thing about SUM's FY19 results today... it makes ARV look really good!
So OCA aren't the only one getting hit in the pocket by increased care wages...
Disc: hold OCA and SUM
Well looks like it's not only my pet share that's going to get SUMwhat of a hammering, hey Beagle you still got these? That reversion to the mean not to be messed with aye winner.
Much as I meditate on the way of SUM I fail to comprehend how they continue to under-perform on their potential.
38% is so the day before yesterday.
Mayday...mayday...mayday!
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 :( :(
The Beagle has exited stage left, or is that stage right.:cool:
8% up not terrible but that outlook for 2020 is abysmal. Glad my holding is only small.
i’ve even noticed Ryman having ads on youtube so sales must be getting more competitive. Theres a lot of new units being built by a lot of players so looks like those supernormal profits are thing of the past
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 :( :( :(
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.
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:
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...
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.
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).
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.
Freefall seems to have stopped for now ...
can never have enough SUM right gais!@#!3132
Go Couta1...reversion to the mean rules !!!!!!
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
No AIR or SUM shares..."I'm lost" https://www.msn.com/en-nz/news/offbe...cid=spartandhp
What is my purpose in life now ?, what can I bark about ?....I'm sure something will come to mind lol
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...5A&FORM=WRVORC
What to do...I am so bored already...
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.
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.
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.
,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.
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.
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 ?
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
The future looks bright for Summerset irrespective of what people think of today’s announcement
well...like i said...market is resilient!!! back to normal at no time....and record high....
dangerous world out there....