SUM Summerset Group

[BlackPeter]

June quarter sales a disaster - I was forecasting / guessing / hoping for >300 --- turns out a miserable 232

But at least Mr Scoullar says Summerset has now achieved 511 sales for 1H22, the second highest first half ever .... so that's pretty good

Won't post the updated chart because that's how the share price will go this week. No doubt BP will and point out a downtrend in sales numbers is now in place

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/395128/374416.pdf

LOL - Didn't plan to, but just for you, here it is:

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I guess as usual, there are a number of ways to read this trend. On the plus side - it is the fifth best quarter SUM ever had as well as the second best first half. Sales CAGR is (since Q2/2016) 7.5% pa. Not too bad either, isn't it?

On the other hand: sales CAGR dropping since Q3-2021, which sort of seems to correlate with the downturn of our real estate market. Not a surprise.

I recon we will stick with a running total around 950 until the economy makes its next big turn.

Only remaining question will be - will it go up (increasing immigration, economy running hot) or will it go down (nobody able to buy into retirement homes anymore and poor people dying in the streets).

I am an optimist, but no doubt the pessimists will have the upper hand in these forums until the trend turns, and then it will be as usual the optimists taking over again :p;

[kasper]

Market doesn't seem too worried this morning, all the sector up, doom n gloom brigade might need to do a bit more barking. Lol

[Whacc]

Market doesn't seem too worried this morning, all the sector up, doom n gloom brigade might need to do a bit more barking. Lol

stock standard sell the rumour buy the news.

[Basil]

Less than 3,000 have changed hands so far this morning.  Its very early days to say the market is okay with sales numbers.

[winner (n)]

Looking ahead to a full year result this bit from announcement is really positive

Summerset is on track to deliver approximately 600 homes in FY22. Demand remains strong, with our resale villages maintaining low levels of uncontracted stock and presales continue to track at high levels.

So it seems likely that full year Underlying Earnings will be well in excess of last years $141m - maybe over $160m

We'll know more come August when half year is announced

I'm more comfortable now .... suppose thats what the market saw in the update

[Basil]

It would seem the analysts have crunched the numbers now...

Good the full year build target is on track and each resale this year will have more embedded value profit realisation than last year so I agree with you Winner that its quite possible SUM could enjoy moderate earnings growth this year despite the real estate downturn.  Unfortunately that doesn't change the fact the shares are still in a confirmed downtrend.

[Left Field]

It would seem the analysts have crunched the numbers now.....so I agree with you Winner that its quite possible SUM could enjoy moderate earnings growth this year despite the real estate downturn.

 Unfortunately that doesn't change the fact the shares are still in a confirmed downtrend.

Also a few headwinds with rising costs of care as evidenced by a few news items on RNZ today about staff shortages... (Presbyterian Support have reportedly 'closed' 1000 beds due to inadequate staffing.)

[winner (n)]

It would seem the analysts have crunched the numbers now...

Good the full year build target is on track and each resale this year will have more embedded value profit realisation than last year so I agree with you Winner that its quite possible SUM could enjoy moderate earnings growth this year despite the real estate downturn.  Unfortunately that doesn't change the fact the shares are still in a confirmed downtrend.

Fundies cruched the numbers and didn't like what the spreadsheet said --- share price down 4% so far today

[BlackPeter]

Also a few headwinds with rising costs of care as evidenced by a few news items on RNZ today about staff shortages... (Presbyterian Support have reportedly 'closed' 1000 beds due to inadequate staffing.)

Actually - reduced supply (competitors closing or reducing service) in combination with increased demand (the grey avalanche just started rolling) must not be a bad thing for a company which can deliver ...

[kasper]

Actually - reduced supply (competitors closing or reducing service) in combination with increased demand (the grey avalanche just started rolling) must not be a bad thing for a company which can deliver ...

They are not competitors as they are purely a care based and social housing business, none of the listed big players want to expand their care model, closing or reduced services will become a Govt problem to deal with.

[winner (n)]

Hers's what Kingfish have to say about Summerset in their June update --

Summerset has significantly underperformed the New Zealand Index in the year to date as investors are concerned about the local housing market, where the median house price is now 9% below the November peak.

The price buffer between retirement village units and local houses will help offset the impact from a softer housing market. Retirement village units are typically priced at a discount to local house prices. For example, in Auckland, 2-bedroom retirement units are 30% below local house prices. That gives operators scope to increase prices in a falling housing market. We saw this during the GFC, when Ryman increased unit prices 4% on average while national house prices declined 7%.

The divergence between Summerset's share price and its performance is particularly stark. Negative sentiment has punished Summerset's valuation, with the price-to-book ratio below 1.00 – its lowest ever.

This is despite Summerset seeing a surge in demand, with sales increasing 25% in 2021. The March 2022
quarter was its second-best ever, even as Omicron peaked in New Zealand. Demand is supported by the "safe haven" status retirement villages attained through the pandemic, as operators are well-versed in disease control and prevented widespread outbreaks.

Longer-term, Summerset's growth is underpinned by an ageing population. New Zealand's population of over 75-year-olds is forecast to increase by 40% over the next decade – four-times the rate of overall population growth. Ryman and Summerset's "continuum of care" retirement village model is best placed to support the healthcare and accommodation needs of the growing elderly population.

While the deteriorating housing market presents a challenge to earnings, this is more than accounted for in the price., We feel Summerset offers compelling value, supported by a long runway for growth and excellent execution.

[winner (n)]

SUM share price looking healthier these days

Good up trend from 950 a month ago (that's +11% gain --- bugger missed the first part of the recovery)

Bouncing of 997 three times is a good sign - sort of says there is strong support around that mark

Above the 50MA and getting close to 100MA and 200MA is not far away at just over 11 bucks

Might buy some now - whatever once it breaks through 11 bucks it'll go a lot higher

[winner (n)]

This popped up at the Fisher ASM this morning

Sam gave the answer at the end of preso

No doubt about it - Summerset is the one ... go Summerset ...SUM.NZX


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[Basil]

Who am I ?...easiest question I've had in a long time.
Disc: Accumulating.

[Minimoke]

Just wait until Andrew Little has got his Shortland Street advertising sorted and he announces he will be making an announcement on pay parity talks for aged care sector workers.