As I hold both RYM and SUM I prefer the conclusion that RYM is due for a SP rise. $15+ anyone?
:t_up:
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will be fascination if indeed the market move to 6.40 but are we seeing a turbo charge version of the GFC as the money supply around the world ramps up much faster then in 2009. SUM might never make it down that far. Im expecting the likes of GMT, PCT , ARG ect to move up next year. If you missed the graphic card plays in the US its that not being in the states prehaps we just dont ZOOOOOM enough. But we might see that effect from the money supply on stock later next year.
Its quiet a meh result really and I'm not really sure the price bump up justifies the result. A reduction in development margin being lamented by a slowdown in sales in Auckland. I think that part of it might not really be Covid related but more of a saturation issue of units in the general market. Its a tricky scenario to spend the money upfront like they have and have about 250 units unsold.
Interesting to see more debt on the balance sheet being taken on but not really mentioned by anyone in the report. The debt is being used to fund cashflow and pay a dividend. When you have net proceeds of borrowing $42m, pay a $11m dividend and end the 6 month period $8m down in cash its not a good look. Yes you can borrow a lot more in the current environment but interest payments are up to $7.6m and won't be long until it swallows the dividend.
A full year result of $90-95m puts the stock at current levels at a PE of 18-20. Its not a value play, like it used to be. At this point, I would probably sell my position if it got back up to its heights again. I'd be a buyer in the low 6s but I don't see it happening. I think we might see some sideways results for the next couple FYs.
I think the SP increase denotes investors surmising that the results would have been a bit worse.
The good news is of course that New Zealanders are very busy ratcheting up the prices of property again, which will help the retirement sector stocks. I wonder who will be blamed for the ratcheting this time.
It is a systemic issue: The taxation efficiency of investing in your own home and investor real estate, willingness to lend with real estate as security, Investing more into kiwisaver brings no tax efficiency or advantage, baby boomers traditionally preferring real estate as a result of being burnt by previous share market failures and finance company collapses.
Warning...morning frustration rant coming...
Nicely summed up and pretty much how I see it too.
In the current Covid (lockdown rinse and repeat environment) the current share price does not correctly reflect the risk in my view. The plain fact of the matter is despite a lot of soothing talk by Cindy and Dr Bloomfield and repeated assurances the military is in control and we have a rigorous testing system for front line border staff, Kiwi's have been exposed to extreme level's of gross incompetence and gross recklessness by ministry health so called "professionals" with a woefully pathetic effort at testing front line border staff most at risk of transmitting this virus into the wider community and I believe this is something that poses a clear and very present danger going forward, despite assurances this testing is now under way.
The naked truth is we have been mislead and lied too and like many others I am angry about it. https://www.nzherald.co.nz/nz/news/a...ectid=12357416
I would like to think lessons have been learned but I think the level of organizational ability within the ministry of health is simply not up to the task.
Sadly I think the likelihood of further Covid outbreaks in N.Z. going forward, (assuming we can get the Auckland one under control), is very, very high.
This risk appears to be reflected in some shares but definitely not in SUM others. end of rant.
From Craigs, quite a different view to most here.
Quote:
Summerset – Passes the Stress Test – up to Overweight. Yesterday’s interim result from SUM sent the shares up c5% but the run has only just begun with Stephen Ridgewell upgrading SUM from Neutral to Overweight overnight with a revised TP of $8.85 (+21%). SUM delivered 1H20 uNPAT of -6%, at the top of the -6 to-16% guidance range, a particularly strong result given the sector headwinds from the pandemic – SUM have enjoyed a V-shaped recovery post the first lockdown and look set to deliver a broadly flat bottom line result for FY20, consistent with pre-COVID expectations. The recovery in SUM’s sales reflects a range of factors including 1) broader housing recovery underway 2) enhanced reputation following SUM’s pandemic response 3) diversified nature of the SUM portfolio across a wide range of locations. In the note, Ridgewell & White have provided some detailed proprietary analysis (1st Chart, p.g. 11) of demand and supply in each region SUM operates – it indicates that SUM will face only limited competition at its current locations with c20% of its villages in “oversupplied” locations. SUM have experienced relatively flat NPAT over the past few years whilst they have; repositioned their portfolio, increased the size of their land-bank and tilted towards more geographically diverse and less intensive broad-acre sites. SUM now looks well positioned to regain earnings momentum as it lifts its build rate from c350 units in FY20 to a (sustainable) c500 units from FY21 whilst at the same time delivering its first Village in Victoria later next year. With SUM shares trading at 1.6x P/Book (c16% discount to 5 year historical average) and a DCF derived TP factoring in 1% unit price growth in FY20/21 (+3% long term) Ridgewell moves to Overweight – time to get ahead of the story with SUM the top pick in the Retirement Village merit order followed by RYM, OCA and MET.
and another major broker.. DYOR please
Solid 1H result despite challenging operating conditions - underlying NPAT NZ$45.1m (-6% YoY) ahead of guidance of NZ$40m-45m. The company received a net benefit of NZ$5.4m from wage subsidies in excess of higher COVID-19 related operating expenses. However, even if this one-off gain is excluded, underlying NPAT exclu development margin still increased 7% vs 1H19. While SUM’s new sale and resale volumes were both down year-on year due to lockdown, the company noted a strong bounce back in sales activities with recent new sales +50% YoY and resales +30%. This should help unwind the spike in resales inventory which increased to 4.8% of total units (typically ~3%). NTA declined by -2.2% to NZ$4.91/share. The company noted current unit pricing outcomes are broadly flat YoY and in-line with recent CBRE assumptions. Target price $8.05 (prev $7.30) - reflects 7-16% earnings upgrades due to better realised resale gains and lower operating costs. Downgrade to Neutral. While SUM remains our preferred retirement operator, following recent share price strength (+21% since start of July), upside and diversity of the company’s growth profile is offset by our caution on the broader macro / housing outlook.