Yes, it's been that kind of market lately!
:)
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I disagree with you TJ on your projected FY underlying profit ( I presume you just doubled the HY1). For the last 3 years they have earnt 29%, 18% and 26%,respectively more in HY2 than HY1.
If they make between 40-45m this HY then we multiply that by, say 22% for HY2, (the result equates to what they earnt last HY2-as it roughly should) then they will make FY result $100-$105m this year .
That`s only 3-8% down on last year. They have already warned us there will be a no growth this year anyway - even before covid existed.
I think this is actually a very commendable result for the company given this encapsulates the whole of the covid disruption/expense. I think this underpins how solid the retirement industry is as a whole.
All that being said....if they achieve ( as I expect they will) a FY result of $100-$105m then that`s an earnings per share of about 45-48 cents per share.
Knowing there is no growth for at least one but most likely a few more years to come then I would afford this company a PE of only 14.
So... that makes the share price fair value to me of about $6.30-$6.70
I personally view SUM`s model of growth by "building even more than we did last year" has run to the end of the NZ rainbow. Therefore I don`t hold any SUM these days but this result is a clear demonstration that this company and the retirement village sector has endured the pandemic extremely well.
SUM technical challenges, been a good run but slamming into a confluence of technical resistance. 61.8 of the retrace from the COVID low. 200MA. Short term double top. RSI entering over bought. Might have to wait for the golden cross if this resistance doesn’t break.
Thanks for the good TA. On a FA basis I foresee its going to be hard for this one to make further progress north unless they can start proving they can sell the same number of new units they're building, or better still, make some decent inroads into reducing their significant stockpile of unsold units. Why are they year, on year, on year struggling to sell as many units as they build ?
Could the answer simply be what Coutts has suggested to me privately, (that notwithstanding their resident satisfaction survey's which appear to show high level's of customer satisfaction), the care services SUM provide really are second rate ?...or could it be that SUM directors as I have stated repeatedly over the years, really do not understand that there is pushback against their position which is almost now unique in the industry of being the one to stand out for the very wrong reason like a sore thumb and NOT guarantee fixed weekly fees for life ?
Whatever the reason is, they need to turn this situation around and really start putting some serious sales numbers on the board if they are ever to consider trying to meet their stated medium term objective of building 600 units per annum. Some people have told me privately that SUM has a culture problem. Money comes before people. You'd be very easily forgiven for thinking this is an outrageous claim from reading all their very politically correct reports...but insider talk is more often right then you would think...
Disc No position and not looking to down-ramp and buy at a cheaper price.
Thanks, Beagle. Appreciate the time and effort put into researching and commenting on stocks, including those that you're not holding.
:)
You're welcome mate.
Talking with the legendary Couta1 this morning he reckons this one is overpriced. Half of RYM's $13.40 = $6.70.
I think he's bang on the money and around $6.70 is full and fair value.