SUM Summerset Group

[winner (n)]

Summerset reported 289 new unit sales and 222 resales for first half F22

I reckon / estimate that should produce $90m in realised gains - add another $5m profit from caring for people and running villages and Underlying Profit is estimated to be $95m

Yep, I reckon $95m - about 30% higher than H121

No wonder there's been a bit of interest in the share price of late

[Shareguy]

Yes agree Winner. A lot to like. Still think Oca will surprise on the upside.

[Basil]

I wouldn't hold your breath for that Shareguy.  All they are delivering this half is 114 more care suites at Lady Allum in Milford.  They already had a whole years worth of unsold stock at balance date they couldn't sell, most of which are...you guessed it, care suites.

In terms of proven eps growth OCA and SUM are chalk and cheese.  My Mum used to say "the bitter taste of poor quality lingers long after the thrill of a bargain"  A very apt cliché when comparing these two.

[winner (n)]

Added my reckon/estimate of first half earnings to my chart of Summerset's EPS (Underlying Profit)

This is what 25%pa compounding growth looks like - all without raising new capital (except not many new shares from a DRP)

Covid a bit of a hiccup but seem to be recovering well

Pretty cool eh

You cannot view this attachment.

[Basil]

What an outstanding track record !  That's why the insto's love them.  Over the long run they just keep growing earnings and you can't go wrong.
Fisher Funds reckon they're the cheapest they have ever been...used price to NTA as their yardstick but I reckon on a forward multiple basis they're also as cheap as they have ever been.  On the TA front they've just recently broken up through the 100 day MA.

[BlackPeter]

What an outstanding track record !  That's why the insto's love them.  Over the long run they just keep growing earnings and you can't go wrong.
Fisher Funds reckon they're the cheapest they have ever been...used price to NTA as their yardstick but I reckon on a forward multiple basis they're also as cheap as they have ever been.  On the TA front they've just recently broken up through the 100 day MA.

Look - no doubt SUM used to be a great buy at $3 or so, and may or may not be a good buy at current - but using the promotion of instos in order to continue to hype up the stock at current is sort of one-eyed, isn't it? It just means that instos made in the past some money with them (well - who didn't?), but as we all know: past performance ... future performance ... well, you know the drill.

 
Just remember - instos used to love A2M, XRO (and yes, - shudder - CBL) as well. I still remember when FisherFunds told us some years ago that XRO is the best thing since the invention of sliced bread  ... and at that time the XRO share price was significantly higher than it is today. And just look how the other mentioned shareprices developed after the insto generated hype was fading away.

What instos are doing really great is to push hype uphill. Good indicator for momentum traders anytime ready to jump, less useful for long term investors. Personally I try to avoid stocks when the big instos start to promote them. This is a great indicator that the share is reaching its hype peak.

What I am saying is - while I agree that SUM will perform ok into the future, I don't think there is any evidience that they will perform better than their competitors in the same industry ... and the fact that the funds praise them will only push their current SP up, which is bad for potential new entrants.

Its a bit like the story with the shoe shine boy. Just saying ...

[Basil]

There are some very good fundamental reasons SUM has been growing underlying earnings faster than the others in the sector and I believe that trend will continue.

[winner (n)]

I see SUM was the 3rd biggest net BUY (by value) last week by Direct Broking clients last week ...big mover as was 123rd the week before

A measure of sentiment ......good sign if investors are keen on buying ...



Definition: Top 10 Net Buys: ranked in order of net value of buy trades minus sell trades, executed during the preceding week for Direct Broking retail customers..

[Shareguy]

Craig's latest note today insert

Maintain Overweight, target price $14.85 (-10%)
We estimate SUM is trading at <1.2x June 30th NTA, still well below its ten year average and below its IPO valuation of 1.3x despite the considerable improvement in portfolio quality, franchise strength, and excellent track record of value creation since then. Retain Overweight and #1 sector rank, with the shares currently offering c.40% upside to our $14.85 target price.

[Basil]

Thanks for that Shareguy.
Stellar history ever since they listed.  Never been cheaper on a price to book or forward earnings basis.
CAGR of 33% over a decade is the stuff of legend.  Disc: Gradually accumulating on any untoward weakness.

[Shareguy]

Tomorrows the day for 1H22

Fbar says

$87m EBITDA
EPS $31.9c
DPS.$11c

Anyone else keen to add theirs?

[Basil]

Keenly interested in this tomorrow, won't guess earnings so close to the announcement as its almost impossible to look clever doing that, (a fools errand if ever there was one).

Disc: Looking to accumulate more on any untoward weakness.

[Left Field]

Crikey, will Winner be disappointed?? (he was expecting NP $95 mill ?? ForBar expecting $87 mill??)

https://www.nzx.com/announcements/397399

SUMMERSET FIRST HALF UNDERLYING PROFIT OF $82.5M, UP 9.2%

• Underlying profit for 1H22 of NZ$82.5m, up 9.2% on 1H21
• Reported (IFRS) profit after tax of NZ$134.6m
• Total assets of NZ$5.4 billion, up 22.9% on 1H21
• Gearing ratio of 29.4%
• Three new sites acquired this year across New Zealand and Australia
• 223 new retirement units delivered, our second highest first half ever
• 511 sales for the half
• Development margin of 28.1%
• Interim dividend of NZ10.7 cents per share

[Basil]

I think expectations by some were too high.
I note the commentary from the company regarding very robust demand and pricing, the much improved development margin, the extra Covid costs, massive increase in embedded value to $1.5 billion.

More site acquisitions are great and positions them very well for strong growth in the years ahead.
I note the development program is very heavily skewed to the second half and they are on track for approx 600 units this year my preliminary forecast for FY22 based on the vast increase.

Just looking at the extra development margin on the huge extra number of units they are on track to deliver in the second half (and assuming the development margin remains intact) at very first glance I am seeing ~ $122m underlying profit in the second half $204m for the year = 88 cps.
This puts SUM on a current year PE of only 13 and this for a company that has arguably one of the very best growth rates of any company on the NZX in the last decade.

Disc: Accumulating on any untoward weakness.  Hope the market dislikes this result so I can get some more cheap shares.

[Whacc]

Crikey, will Winner be disappointed?? (he was expecting NP $95 mill ?? ForBar expecting $87 mill??)

https://www.nzx.com/announcements/397399

SUMMERSET FIRST HALF UNDERLYING PROFIT OF $82.5M, UP 9.2%

I think expectations by some were too high.

You're both confusing "profit"(i.e. NPAT) and EBITDA.

SUM beat ForBarr($86.6m) and consensus($92.7m) with 1H22 underlying EBITDA of $96.4m.