StockTalk

Every credible share related forum need a Summerset thread so here goes.

SUM share price been beaten up like the others in the retirement sector .... but lately a glimmer of hope that things are on the improve.

June quarter sales update in next day of two. Reaction to the numbers will set the future direction of the share price.

Anything above 300 sales will be a more than solid result.

I'll be watching resale numbers. These have been a bit weak over the last year or so.

Yes looking forward to the update.  I think it's going to be good. Sum has the best growth in the last few years and is favoured over Ryman by some of the brokers and institutional buyers.

Will be very interesting.

A lot of hype in the last 2 years surrounding SUM has been borne out of its ILU sales.
Obviously this has a higher correlation to the housing market.

Intriguing to see if this housing market beta drags down this quarter's sale volumes.
Easy to look like a hero when the tide is in.

Be interesting to see how the chart looks next week with another quarters number0000sum.JPG

I prefer the rolling 4 quarters view, takes a bit of noise out of the trend:

SUM sales.JPG

But yes - what do you recon? Property prices going down, properties for sale going up while sales going down - i.e. not sure I expect much improvement this (or next) quarter.

BP....we doing things the same way lol ...rolling quarters and all that

Except you have included a Total line which changes the axis and makes your lines look less 'noisy' but in reality as 'noisy' as the lines in my chart but then one could say my smoothed lines are less noisy than your straight lines which joins the dots.

'Noise' an interesting concept - somebody once said "the wise man listens to the meaning; the fool only gets the noise."

Quote from: winner (n) on Jul 10, 2022, 03:56 PMBP....we doing things the same way lol ...rolling quarters and all that

Except you have included a Total line which changes the axis and makes your lines look less 'noisy' but in reality as 'noisy' as the lines in my chart but then one could say my smoothed lines are less noisy than your straight lines which joins the dots.

'Noise' an interesting concept - somebody once said "the wise man listens to the meaning; the fool only gets the noise."

Fair enough ... you are right re the trendlines - just a matter of scale.

"Noise" was used as in "signal to noise" ... but probably just showing off my engineering background.

Maybe just appropriate retaliation for all the beancounting terms floating around in these places ;D .

Quote from: BlackPeter on Jul 10, 2022, 04:28 PMFair enough ... you are right re the trendlines - just a matter of scale.

"Noise" was used as in "signal to noise" ... but probably just showing off my engineering background.

Maybe just appropriate retaliation for all the beancounting terms floating around in these places ;D .

And in broker lingo 'colour' is very important ........especially when they holistically re-engineer intuitive value

See I there is a commonality between finance and engineering ...you'll be ok

For what its worth I am looking forward to owning SUM again when the time is right.
I believe its very well managed with tight cost disciplines and its business model is most fit for purpose in terms of rewarding shareholders. 

Possibly worth noting that Scott Scoullar is the most experienced and has the best proven track record of any of the current CEO's in the retirement village sector and being a numbers man, learned a lot from the disciplines his predecessor Julian Cook initiated.

Also worth noting is their units are generally priced on a like for like basis a fair way south of where RYM positions itself so the affordability should still be there in a real estate downturn.

Finally its common knowledge that the care side of all in this sector is doing it extremely tough in terms of its profitability due to deliberate underfunding (a form of taxation), by this Government and SUM have the least exposure to care and the lowest level of debt so are best placed to weather this storm. 

Unfortunately no matter how skilled the captain or how few leaks there are in the ship all boats go lower on an outgoing tide so until the confirmed downturn is over I am happy to remain on the sidelines.  I'm waiting for a confirmed break up through the 200 day moving average in due course and then I'll back the truck up on this and nothing else in this sector.  I'm not expecting the tide to change anytime soon.

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

New and resales this quarter are well down on last year.  (232 v 270 in PCP)  As per comment above, this is a great company but the tide is going out on this sector.

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

Quote from: Basil on Jul 11, 2022, 08:45 AMhttp://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/395128/374416.pdf

New and resales this quarter are well down on last year.  (232 v 270 in PCP)  As per comment above, this is a great company but the tide is going out on this sector.

H1 sales down 6% on last year means Underlying Earnings will be down .....unless a huge pickup in margins which is unlikely ..... Underlying Earnings = Number sales x Average Sale Price x Margin +/- a few million from  day to day operations

Agree, will be interesting to see how the share price reacts.

Quote from: Shareguy on Jul 11, 2022, 08:56 AMAgree, will be interesting to see how the share price reacts.

Especially after a 6.6% run-up (vs NZX50 up 3.9%) last week.

Another point to ponder, if best of breed is doing it tough how are others in this sector going ?

Yes that is what I'm thinking. OCR this week.  Might be a bad one for retirement stocks. Sum back under $10

Quote from: winner (n) on Jul 11, 2022, 08:47 AMJune 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:

SUM sales.JPG

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;

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

Quote from: kasper on Jul 11, 2022, 10:26 AMMarket 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.

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

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

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.

Quote from: Basil on Jul 12, 2022, 01:06 PMIt 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.)

Quote from: Basil on Jul 12, 2022, 01:06 PMIt 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

Quote from: Left Field on Jul 12, 2022, 02:21 PMAlso 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 ...

Quote from: BlackPeter on Jul 12, 2022, 02:47 PMActually - 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.

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.

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

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


000sum.JPG

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

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.

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

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

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.

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

00000sum.JPG

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.

Quote from: Basil on Aug 07, 2022, 10:47 AMWhat 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 ...

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.

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..

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.

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.

Tomorrows the day for 1H22

Fbar says

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

Anyone else keen to add theirs?

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.

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

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.

Quote from: Left Field on Aug 23, 2022, 08:34 AMCrikey, 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%

Quote from: Basil on Aug 23, 2022, 09:26 AMI 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.

Interesting in the presentation they break Operating Cash Flow into two components - being "Net operating business cash flow" and "Receipts for residents' loans - new sales"

And good to see the "Net operating business cash flow" is positive, although not as high as pcp

Means they are actually generating cash from actually caring and looking after people and running villages - not all in sector can show this to be positive.


I've looked at this way for years ....wonder what made them change their approach (I think) ...good on them

Quote from: winner (n) on Aug 23, 2022, 04:32 PMInteresting in the presentation they break Operating Cash Flow into two components - being "Net operating business cash flow" and "Receipts for residents' loans - new sales"

And good to see the "Net operating business cash flow" is positive, although not as high as pcp

Means they are actually generating cash from actually caring and looking after people and running villages - not all in sector can show this to be positive.


I've looked at this way for years ....wonder what made them change their approach (I think) ...good on them

the focus should be free cash flow (which I notice Jarden is now making a big deal about).

Highlights how silly it is that these businesses pay dividends.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/399217/379502.pdf

Fisher funds hounding up millions more.

CEO selling

https://www.nzx.com/announcements/399201

Fisher Funds buying heaps .....CEO selling heaps

Many would say we are doomed as consequence of these actions

Pretty reasonable sales update today

September quarter sales more than a year ago

Sales for 2022 weighted to the Q4 means annual sales over 1,000 for the first time and underlying earnings a solid improvement on last

Chart could look a bit healthier though - but these are turbulent times they say .... and they are selling heaps more than before covid hit. Current sales level 964 compared to 652 as at December 2019 - that's nearly 50% more
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/400202/380740.pdf
00000sumsales.JPG

Not a huge fan of "The Block" but watched the Auction of the four houses last night and my goodness its a tough market  :'( .  Really felt for the participants with how much work they had put in and months away from their kids.

Pretty good sales update from SUM and good outlook and while I think there could be a reasonable increase in underlying profit for 2022 my sense is there is increasing concern about the speed at which the real estate market is falling.  Barfoot and Tompson reported a reduction of $47,000 (that's not a misprint) in the median Auckland house price last month, (that's huge in just one month and is a worrying lead indicator for the rest of spring and summer), and volumes dropping away badly as well.  Most of the action is in the under $1m category.  I am starting to wonder how baby boomers are going to sell their McMansions in 2023 to afford to move into retirement villages ?  My thought... Even the best boats with the smartest captains fall on an outgoing tide.

Quote from: winner (n) on Oct 10, 2022, 09:09 AMPretty reasonable sales update today

September quarter sales more than a year ago

Sales for 2022 weighted to the Q4 means annual sales over 1,000 for the first time and underlying earnings a solid improvement on last

Chart could look a bit healthier though - but these are turbulent times they say .... and they are selling heaps more than before covid hit. Current sales level 964 compared to 652 as at December 2019 - that's nearly 50% more
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/400202/380740.pdf
00000sumsales.JPG

Agree - solid numbers, and likely to get up this quarter ... given that spring is good for house sales :) ;

On the other hand - The say they are finishing more than 600 units this year but sold over the last 12 months only 519 new units. Basil would be concerned, wouldn't he? ... at least if this would happen to OCA, but I am sure with SUM this is completely fine ... they just need to up their selling act a bit. All good.

Personally - while I do see SUM as a good and solid company, I see them as fully priced ... quite different to some others in the industry.

This is what my spreadsheet (at todays SP) shows:

SUM forward PE (3 yrs avg): 10.5; Earnings CAGR (forward, 3 yrs avg): 2.1;  Div yield: 2.2 %
RYM forward PE (3 yrs avg):   7.7; Earnings CAGR (forward, 3 yrs avg): 8.2;  Div yield: 2.6 %
OCA forward PE (3 yrs avg):   7.5; Earnings CAGR (forward, 3 yrs avg): 8.3;  Div yield: 5.4 %

Sure - forward numbers always rely on forecasts, which may or may not be right ... however - given its the same bunch of analysts and the same industry do I not see how they would get it with some of the villages so wrong and with others so right?

Anyway, the numbers above clearly indicate that SUM is basically at growth saturation (with a PE which is ok, but not incredible cheap), while both Ryman and OCA both feature cheaper PE's (which is good) and seem to have as well still more growing "puff" left in them.

Discl: holding both OCA and RYM;

I use realised underlying profit so we're always going to be miles apart in our analysis and view in this sector.  I called RYM as fully priced more than 8 years ago in the high $8's and sold some OCA at $1.58 and most of the rest at $1.40 so obviously I'm a complete numpty at this game.
Good sector to avoid altogether for at least the next 12 months is my updated view on this but if you must stay invested with the tide going out at 100 miles an hour, I would own SUM and ARV and nothing else.

The real estate market is now coming down in a pretty brutal way https://www.nzherald.co.nz/entertainment/the-block-nz-social-media-calls-for-series-to-be-scrapped-after-shock-result/2KPGQAINOQAFDJU6SZBTX23RCA/

Another Oz site acquired

That Ballarine Peninsula is a cool part of Victoria


http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/402499/383587.pdf

I remember Julian telling me they sent their top development team to Australia.  Expecting huge growth there in the long run.  Shares are cheap as chips considering their extraordinary track record of growth and future prospects but sadly, all boats decline on a falling tide.

Quote from: Basil on Nov 17, 2022, 10:33 AMI remember Julian telling me they sent their top development team to Australia.  Expecting huge growth there in the long run.  Shares are cheap as chips considering their extraordinary track record of growth and future prospects but sadly, all boats decline on a falling tide.

Yes, and don't forget what you told us about market darlings.

The market darling RYM peaked 2019 and down 50% plus from there.
OCA (never market darling) peaked 2021 and down 50% plus from there ...
The market darling SUM peaked in 2021 as well - but so far down only 40% (give or take) - still a bit to go?

Not sure about the track record of past market darlings to return to their former glory ... my money is on the novice :) ;
 

Proves my point BP that all boats go lower on an outgoing tide but the ones with holes in them, (systemic issues with unfixable costs in their business model), fall the most.  I like high performing boats with a dry bilge and no leaks. When the tide turns and you're on board best of breed, oh my goodness it's a truly rewarding experience 👍  These are challenging times and even when the tide turns it won't be smooth sailing.  When the time is right, I am more than happy to jump on the back of the best of breed with its proven history of thoroughbred performance and leave you to back the unproven donkey.

The thing is my friend, although you go on about how you can't predict the future, actually there is a very good guide and its called "the past" and if something keeps getting donkey last with its earnings per share over and over and over again, I'll give you one guess what's most likely to happen going forward...history never repeats eh 😜

Summerset Greenwashing
https://www.scoop.co.nz/stories/BU2211/S00309/summerset-moves-past-going-green-to-thinking-green.htm?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Saturday+19+November+2022
I suppose many retirees' lap this sort of thing up and its good for business.

Big piss up / awards night coming up next week at the Auckland Town Hall

Night of warm fuzzies ..... and probably many committed people doing great work in the sustainability space ..... but experiencing such events myself I sometimes doubt the authenticity of some of the finalists

https://sustainable.org.nz/sustainable-business-awards/award-finalists-2022/

At its investor day SUM called out that interest remains strong, but that it is seeing some impact from the downturn in the housing market, with average days to settle a unit increasing. SUM reports its earnings on the basis of settled transactions as opposed to contracts signed, and so the delay in settlements will directly impact reported uNPAT.

Management noted that they have an ability to flex the build rate c.30% lower (i.e. to around 400-450 units) if demand softens considerably, and while demand remains healthy at present, indicated that build rate plans could be re-assessed in February.

Craigs continue to view SUM as best positioned to navigate ongoing cyclical headwinds in the sector. While SUM shares have few catalysts for a re-rate in FY23, we see the shares as sharply priced at 1.1x NTA (vs 1.7x historic average) for investors with a longer term lense, while its strong balance sheet will help it ride out the storm.

In my opinion currently the best in the sector from a quality and growth perspective. Has outperformed Ryman for years. I think great buying for long-term investors in instalments on weakness. However I agree with Basil and others that there is no rush to buy with potentially more downside in the short-term.

Excellent feedback from SUM's investor day, thankyou Shareguy.  It's clear the headwinds facing the sector are significant. 
Keep a close eye on the cash flow and gearing level to see who is under the most stress, (RYM and OCA) and who is best positioned to weather this storm, (SUM and ARV).

I find it interesting that the only two companies talking about the prospect of possibly scaling back a bit on new developments to ensure a prudent and carefully managed pathway through the headwinds are those that are the best positioned already with the lowest gearing.
Those companies with the highest gearing are not talking about scaling back...just keep building new units and hoping people will come to buy them.

A lot to like about the way SUM and ARV are being prudently managed.  Its such a shame all boats go lower on an outgoing tide.

Quote from: Basil on Dec 11, 2022, 10:30 AMI find it interesting that the only two companies talking about the prospect of possibly scaling back a bit on new developments to ensure a prudent and carefully managed pathway through the headwinds are those that are the best positioned already with the lowest gearing.
Those companies with the highest gearing are not talking about scaling back...just keep building new units and hoping people will come to buy them.

A lot to like about the way SUM and ARV are being prudently managed.  Its such a shame all boats go lower on an outgoing tide.

Yes I thought the same regarding gearing.  Both RYM and OCA will need to follow suit if demand drops off to much.

I drove past SUM's Prebbleton Village yesterday.Another very big village much like their Russley Village.[Neither appeal to me.]
Both you would need a car, as no supermarkets,doctors',or postshop within walking distance.
Seems the same for most new villages.
 

Haven't looked at it myself, but this is what Summerset says:

QuoteSituated south-west of Christchurch, Summerset Prebbleton is conveniently located close to the local shopping area, key public transport routes into Lincoln and central Christchurch and is just a short distance to the Lincoln Golf Course.

According to Google - the "Fresh Choice" is only 500m away from the village. Some people might call that "walkable". For anybody who finds that too hard, the supermarket accepts as well internet orders and delivers.
The Postshop (The arrows Dairy, 583 Springs Road) is roughly 50 m away from the village.
Prebbleton Health (https://prebbletonhealth.co.nz/) is supposed to open in December 2023 - this might be faster than many new residents can sell their old house and move in.
And - the Prebbleton Hub is growing as well, and the pictures look nice - I am sure they will get there  ...
https://www.theprebbletonvillage.co.nz/

... and don't forget the Golf course ...

Haha.
Well hidden. !.

Quote from: lorraina on Jan 08, 2023, 09:11 PMHaha.
Well hidden. !.
Missed them.

Q4 sales out in next day or two

I reckon 120 new sales and 125 resales. A tad above pcp and would bring annual sales to 970 v 978 in F21

Would be a bit disappointing if numbers were less than this but the state of the property market it wouldn't be a surprise - after all I hear the market went dead mid year

Quote from: Basil on Nov 19, 2022, 10:40 AMSummerset Greenwashing
https://www.scoop.co.nz/stories/BU2211/S00309/summerset-moves-past-going-green-to-thinking-green.htm?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Saturday+19+November+2022
I suppose many retirees' lap this sort of thing up and its good for business.

Hope they enjoyed the piss up - they didn't win

Winner was Ports of Auckland & Damen Shipyards - between them produced an electric tug boat .... isn't that cool .... and the tug was called Sparky

Quote from: winner (n) on Jan 09, 2023, 01:38 PMQ4 sales out in next day or two

I reckon 120 new sales and 125 resales. A tad above pcp and would bring annual sales to 970 v 978 in F21

Would be a bit disappointing if numbers were less than this but the state of the property market it wouldn't be a surprise - after all I hear the market went dead mid year

Great sales update .......139 new 138 resales ...18% more than pcp.

This is the highest Q4 resale settlements we've ever seen and the second highest Q4 new sales," says Mr Scoullar

More than I expected

And they still say it's tough going out there

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/405120/386777.pdf

Outstanding result.Better than you expected.

Mr Scoullar said that the motivation to move into a retirement village is often driven by life events, not the property market.

"Our residents are driven by factors like community, security or health, which lead them to look at an offering like ours. These influences don't change significantly even in a difficult property market. As a result, we continue to see good levels of demand across our portfolio."

No question about it SUM and its management is a class act and they fully deserve blue chip status once held by RYM.  Looking ahead I expect SUM's sales to prove to be very resilient throughout the downturn (also ARV), as baby boomer demand continues to build for full feature retirement villages.

SUM and ARV with close to equal lowest gearing in the sector and excellent in demand villages should do best of this sector in 2023 despite the strong headwinds.  RYM might struggle more with sales as their units are widely known to be at the very expensive end of the market and with their high gearing they look vulnerable to me.   

https://www.nzherald.co.nz/business/summerset-group-sales-up-18pc-in-latest-quarter-despite-declining-residential-market/KOGYN3YRDRB7ZJR65IHSIDHF2U/

A fantastic result which I thought would see SUM's share price back over $10.00.
Wrong yet again .Share price down 14 cents to $9.13.....????????????////

Confession time.

I recently sold out all my SUM and OCA holdings. Or so I thought. Got by holding statement to find I had under stated my Sum holding so I was left with a few pesky shares that arent worth selling on their own.

So I needed to top up to make a future trade more worthwhile. On the back of today's announcement I bought back in (ignoring my own words about labour shortages) at $9.27. Seemed now was as good a time as any.

True to form SP drops after I buy.

You did not buy enough...lol..??????????????????????

"A rising tide lifts all boats".  Unfortunately, the corollary of this is also true so when the tide goes out...

So where is the tide at present?  I would say we're just a little bit over halfway out and this is a big tide so we're probably headed down to chart datum. 

Quote from: Basil on Jan 10, 2023, 05:13 PM"A rising tide lifts all boats".  Unfortunately, the corollary of this is also true so when the tide goes out...

So where is the tide at present?  I would say we're just a little bit over halfway out and this is a big tide so we're probably headed down to chart datum. 

Or we could be half way in.

Quote from: Minimoke on Jan 10, 2023, 05:22 PMOr we could be half way in.

If only that was true.  I am so tired of dog paddling against the tide and getting nowhere.

sector to be out of for a while.... wrong tax settings for a start and wrong government....

most young nurses probable heading OS to find higher wages....
 

Agree with comments Basil and Waltzing. The pick of the bunch in my opinion. Note 2H22 sales declined by -3% versus 1H22.

Rob Campbell and Julian Cook did a great job setting SUM up for growth in the decades ahead and have left a fabulous legacy for others to build upon.

Scott Scooullar does not have their charisma but is an exceptionally bright guy and has been responsible for all the pricing and financial decisions for many years before Julian left so we have a very safe pair of hands running the business now as demonstrated by their decision to undertake a detailed review of the Parnell village business case.    I am looking forward to being a shareholder again when we get closer to low tide for this sector.

Quote from: Basil on Jan 10, 2023, 05:30 PMIf only that was true.  I am so tired of dog paddling against the tide and getting nowhere.

Basic rule of the sea - don't fight a rip. Go with it. And it will spit you out the other end alive - provided you can stay afloat.

Quote from: lorraina on Jan 10, 2023, 04:05 PMA fantastic result which I thought would see SUM's share price back over $10.00.
Wrong yet again .Share price down 14 cents to $9.13.....????????????////

Patience @lorraina. Shares trading at $10.18 today. And even a bot or sharsies crew has picked some up at $10.38.

Only a few weeks now until full year announcement on 24 Feb

From BusinessDesk

Cyclone Gabrielle has forced aged-care provider Summerset Holdings to evacuate its Te Awa village in Napier twice in the past 24 hours.

Summerset Holdings said residents from Summerset Palms had to evacuate the village in Te Awa last night and this morning on the advice of Civil Defence.

"While it appears their homes are safe and dry, currently the flooding around the village has meant it's not safe to stay there," head of communications Logan Mudge said.

Residents are either going to evacuation centres or staying with family and friends.

"All our residents and staff are doing OK in the circumstances but undoubtedly many are very tired and stressed," Mudge said.

"Things continue to be very difficult in the Hawke's Bay but we've had managed to receive intermittent updates from our team on the ground.

The Summerset village in the bay of Napier still remains on generator power in the main building – although residents are "doing well" under the circumstances.

"For those residents without power, the team at the village are assisting with provision of food and drinking needs where we can," Mudge said.

Across Summerset's other cyclone-affected villages, its Havelock residence currently has power but due to the situation in the region being "really fluid", the aged-provider was trying to get a generator to the village in case the power went out again.

The Hastings village had only a small generator for essential power needs and was also trying to access a bigger generator.

Summerset was tracking Cyclone Gabrielle's progress and listening to advice from local authorities, Mudge said.

Summerset had also provided extra support for its village teams in the most affected regions across the North Island.

At Warkworth's Summerset Falls, the care facility has been without power since Monday, and used a generator to continue operating. Today power was restored to the care centre, but power was still out for some of the independent living residents.

"We have an Emergency Response Team in place monitoring our villages around the country and our village teams are working hard caring for residents and checking in on them," Mudge said.

"The worst appears to be over for the village at this point, but we are on alert in case things change."

Ryman Healthcare told BusinessDesk this morning that Ryman had "offered help to our competitors" which also included Summerset.

In response, Summerset said aged-care providers in NZ were "collaborating" and pulling resources together to help each other.

Ú

Quote from: winner (n) on Feb 15, 2023, 02:05 PMFrom BusinessDesk

Cyclone Gabrielle has forced aged-care provider Summerset Holdings to evacuate its Te Awa village in Napier twice in the past 24 hours.

Summerset Holdings said residents from Summerset Palms had to evacuate the village in Te Awa last night and this morning on the advice of Civil Defence.

"While it appears their homes are safe and dry, currently the flooding around the village has meant it's not safe to stay there," head of communications Logan Mudge said.

Residents are either going to evacuation centres or staying with family and friends.

"All our residents and staff are doing OK in the circumstances but undoubtedly many are very tired and stressed," Mudge said.

"Things continue to be very difficult in the Hawke's Bay but we've had managed to receive intermittent updates from our team on the ground.

The Summerset village in the bay of Napier still remains on generator power in the main building – although residents are "doing well" under the circumstances.

"For those residents without power, the team at the village are assisting with provision of food and drinking needs where we can," Mudge said.

Across Summerset's other cyclone-affected villages, its Havelock residence currently has power but due to the situation in the region being "really fluid", the aged-provider was trying to get a generator to the village in case the power went out again.

The Hastings village had only a small generator for essential power needs and was also trying to access a bigger generator.

Summerset was tracking Cyclone Gabrielle's progress and listening to advice from local authorities, Mudge said.

Summerset had also provided extra support for its village teams in the most affected regions across the North Island.

At Warkworth's Summerset Falls, the care facility has been without power since Monday, and used a generator to continue operating. Today power was restored to the care centre, but power was still out for some of the independent living residents.

"We have an Emergency Response Team in place monitoring our villages around the country and our village teams are working hard caring for residents and checking in on them," Mudge said.

"The worst appears to be over for the village at this point, but we are on alert in case things change."

Ryman Healthcare told BusinessDesk this morning that Ryman had "offered help to our competitors" which also included Summerset.

In response, Summerset said aged-care providers in NZ were "collaborating" and pulling resources together to help each other.

Ú

Exactly why people should move into a Summerset home. When the going gets tough there's a whole team of people there to help you out. So much better than living on your own as the water is rising.

SUM looking for $ and get deeper into debt, to bond holders rather than a bank, right when RYM have CR'd to reduce debt. Haven't said what they what the $ for, would probably have helped if they had disclosed the reason. Either way debt/equity ratio goes up doesn't it? Crazy going's on in this sector, hard to keep up with it.

"Summerset Group Holdings Limited (Summerset) is considering making an offer of up to NZ$125 million (with the ability to accept up to an additional NZ$50 million of oversubscriptions at Summerset's discretion) of six year, fixed rate bonds"

Quote from: Buzz on Feb 20, 2023, 08:16 PMSUM looking for $ and get deeper into debt, to bond holders rather than a bank, right when RYM have CR'd to reduce debt. Haven't said what they what the $ for, would probably have helped if they had disclosed the reason. Either way debt/equity ratio goes up doesn't it? Crazy going's on in this sector, hard to keep up with it.

"Summerset Group Holdings Limited (Summerset) is considering making an offer of up to NZ$125 million (with the ability to accept up to an additional NZ$50 million of oversubscriptions at Summerset's discretion) of six year, fixed rate bonds"

They are doing a jacinda. It's an announcement of an upcoming announcement

Very solid result

And a great presentation ......clear, concise and no attempt to 'hide' / 'forget' things

Well done

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/407279/389355.pdf

Interesting how the fair value movement of investment property of + 268.7 million almost matched the profit for the period of 269.0 million.

And it did last year too + 537.5 fair value of investment property versus 543.6 of profit

Spooky - I imagine valuing retirement villages is quite a specialized art

And SUM have some great accountants as they got 3.9 million as an income tax credit this year as opposed to only 27k last year. yay

Looks like a solid result

Net profit after tax of NZ$269.1 million, down 50.5% on FY21
Total assets of NZ$5.8 billion, up 18.6% on FY21.

NTA $9.44 a share.

Divi $0.223 against Fbar estimate $0.205 and Craig's $0.22

Quote from: winner (n) on Feb 24, 2023, 08:51 AMVery solid result

And a great presentation ......clear, concise and no attempt to 'hide' / 'forget' things

Well done

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/407279/389355.pdf

Agree 100%.   Excellent result and also very nice to see them going to great lengths to look after residents during the recent cyclone, chartering a helicopter and flying in bigger generators and supplies and making sure everyone gets hot meals despite the power outages.

Fully deserves its blue chip status.
Notable highlights and observations.
Development margin up strongly to 29.7%.
FY22 PE of only 12.75 based on underlying profit.
Outlook comments about build rate for FY23 being slightly higher 625-675 units notwithstanding the review of high rise Parnell development...which will surely be put on ice for now.
NTA $9.44
Uncontracted resale stock nearly doubled from 80 units to 150 units.  Full transparency, not deliberate concealment and obfuscation like a certain company many obsess about on the other forum.

The board and management are doing a great job of carrying on the legacy and groundwork laid by Julian Cook and Rob Campbell.

Metrics comment:  Cheap when you consider they have a lot of growth to come from their Australian operations (which are currently a drag on profitability).
I can see why SUM are a favorite with institutions.
Disc: None held at this point but when we see the tide change in the property market..."I'll be back" 

Quote from: Crackity on Feb 24, 2023, 09:03 AMInteresting how the fair value movement of investment property of + 268.7 million almost matched the profit for the period of 269.0 million.

And it did last year too + 537.5 fair value of investment property versus 543.6 of profit

Spooky - I imagine valuing retirement villages is quite a specialized art

And SUM have some great accountants as they got 3.9 million as an income tax credit this year as opposed to only 27k last year. yay

Shows there's no or little money in running villages and caring for people

They are just property companies

LOL I think we've all known that for some time.  The problem is if you have too much care in the mix like one company in this sector does, you're always going to be the runt of the litter no matter what anyone says they think they know about the future.
~ 70% care, plain and simple,....people bought a "pup" when OCA was floated.
SUM and ARV have the care mix fit for purpose in my opinion.

One thing that I see in reports every where is the demand for these services is going to grow dramatically. 

The graph in the Summerset annual report highlights it well in my opinion and says

"The New Zealand population aged 75 and over is forecast to almost triple in the next 50 years".

Bit of a bugger as I doubt I will live to 124 to see it.lol.

Time will tell, but you cannot ignore the fact that many elderly folk moving into an RV, place a high level of importance on continuity of care. Most of them take that into consideration when they buy a villa or an apartment. For many, if it came down to a choice between a standalone village (property only) OR an RV that provides a continuum of care, I know which one they would choose (all other things being equal).

By your reckoning, all RVs should provide independent living only. Villas and/or apartments. Nothing else. Do you really believe that is a model that would work better than the current one? Would those RV's that only provide property attract more customers or less (than now)?

I think you are being very naive if you seriously believe RVs should not be providing care.

Who knows what the future holds. But maybe consider the possibility that you could actually be wrong.

Quote from: Basil on Feb 24, 2023, 09:49 AMLOL I think we've all known that for some time.  The problem is if you have too much care in the mix like one company in this sector does, you're always going to be the runt of the litter no matter what anyone says they think they know about the future.
~ 70% care, plain and simple,....people bought a "pup" when OCA was floated.
SUM and ARV have the care mix fit for purpose in my opinion.

Realised gains (profit / development margin) on new sales increasing nicely over recent prior periods

 Average gain last few periods have been H220 $112K / H121 $135k / H221 $159k / H122 $181k / H222 $212k

Mix has some impact but that trend looks pretty healthy to me during a period of declining house prices.

Sum must be doing something right

PS - and gains on resales not looking too bad either

Quote from: Untamed on Feb 24, 2023, 11:25 AMTime will tell, but you cannot ignore the fact that many elderly folk moving into an RV, place a high level of importance on continuity of care. Agreed and SUM and ARV provide that

Most of them take that into consideration when they buy a villa or an apartment. For many, if it came down to a choice between a standalone village (property only) OR an RV that provides a continuum of care, I know which one they would choose (all other things being equal).

By your reckoning, all RVs should provide independent living only. Can you please point me to a post when I have ever suggested that.
Villas and/or apartments. Nothing else. Do you really believe that is a model that would work better than the current one? Would those RV's that only provide property attract more customers or less (than now)? You are miles off on a tangent.  Its about getting the right mix of ILU and care that's fit for purpose both from a residents point of view and shareholders.  I believe I've made it clear which companies are fit for purpose in terms of shareholders returns.

I think you are being very naive if you seriously believe RVs should not be providing care.

Who knows what the future holds. But maybe consider the possibility that you could actually be wrong.

If you are going to make broad sweeping statements about what I believe then please take the time to read what I've actually said and stop drawing conclusions that any reasonably well read person wouldn't make.  To be crystal clear,  in my opinion ARV and SUM seem to have the mix right in terms of ILU and care units. RYM are on record as stating they are looking to decrease their level of care relative to ILU and OCA are hopelessly overweight in the care sector that's earning them a pitiful return on capital.  That's not a problem that can be fixed in the foreseeable future.
There's a reason why SUM companies are vastly outperforming others and that's because they have a winning recipe for shareholders and residents.  Most people want a full feature village with all the bells and whistles as well as care.    That's why SUM companies have no trouble selling their units and others...oh dear...

Changing gears and looking at the presentation what I found quite interesting in terms of prospective new sales in a lower real estate environment is that SUM's average ILU Auckland price is just south of $1m (page 19 of the presentation), whereas RYM's are $1.4m.  That's quite some difference in terms of affordability in the Auckland region and a useful lead indicator in terms of the relative affordability of their ILU's going forward.  Granted their villages are in different suburbs so a direct comparison is not possible but nevertheless that quite a big difference in price.  It'll be interesting to see how that plays out in the years ahead.  I think RYM's VERY high prices are a major contributing factor to the terrible trouble they've got themselves into with skyrocketing debt.  That and their debt has been egregiously mis-managed.

I don't believe I made any "broad sweeping" statements. I based my comments on your post, but also on previous posts you have made in all the RV related threads. You have made it very clear that you think there is no money to be made in care, and have implied that providers should reduce their care offerings in favour of the "property" offerings. I don't think anyone here would disagree with my observations.

You have a tendency to post comments that come across is a less than complimentary way. Your "bought a pup" comment is a prime example. We all make our own investing decisions. Criticising someone for theirs, even if done in an indirect way, is really not helpful or supportive.

As I said, I think you should consider the fact that you could actually be wrong, especially about OCA. What you see as the "rank outsider" may actually be the smartest strategist.

Quote from: Basil on Feb 24, 2023, 11:59 AMIf you are going to make broad sweeping statements about what I believe then please take the time to read what I've actually said.  ARV and SUM seem to have the mix right in terms of ILU and care units. RYM are on record as stating the are looking to decrease their level of care relative to ILU and OCA are hopelessly overweight in the care sector that's earning them a pitiful return on capital.

There's a reason why SUM companies are vastly outperforming others and that's because they have a winning recipe for shareholders and residents.  Most people want a full feature village with all the bells and whistles as well as care.    That's why SUM companies have no trouble selling their units and others...oh dear...

OCA was floated in 2017 with the promise of a 6 year business transformation that would radically improve the returns on care to shareholders.
We're almost at the 6 year point now and at an EBITDA level the net result of their so-called transformative process is that returns have nearly halved.

A whopping 15 (not a typo), of the villages that were included in the float have either been sold (5) or (10 on the market for sale with little prospect of achieving a satisfactory outcome for shareholders) identified as having no potential for development.  My contention is the transformation process has not worked and there are hundreds of care suites not sold under an ORA (a fact management are doing their best to conceal from shareholders under a growing mountain of debt).

I call a spade a spade, investors were sold a pup.  The shares are trading lower than they were when it floated nearly 6 years ago (weighted average share price of all shares issued is I understand about 91 cents when the IPO shares and subsequent DRIP shares and cash issue are taken into account).
It's been a dismal failure for investors because their business model is systemically flawed and incapable of remediation.
If you want to give them another 6 years to improve shareholder returns...fill your boots and good luck with that.  I'd rather back companies with a business model that has been proven to work well for shareholders.

Just for interest you might like to go back and have a look at the share price performance of  SUM floated at $1.40 in November 2011 and on 30 November 2017 six years later the shares traded at $5.28. 3.77 times your money in 6 years whereas OCA is trading at a 15% discount to the volume average weighted price at which shares have been issued at after trading for nearly 6 years.

Interestingly, both IPO's came from sell-down's by private equity, in SUM's case Quadrant Capital.  My conclusion is that over many years now SUM's business model has proven its effective for shareholders and its worked and OCA's hasn't.
If you think their relative performance is somehow going to magically flip around the other way going forward, good luck with that.

I stand by my pup comment because in my opinion, and I am perfectly entitled to it, shareholders were sold exactly that.  Many of their villages were originally part of the not for profit Presbyterian Support services care program and they were designed in such a way to be not for profit without many facilities.  Not really fit for purpose in a listed entity promising growth.

At this point its clear to me the tide is going out on this sector and all boats go lower on an outgoing tide.  Good luck with your OCA shares.
Leaky boats tend to fall much further than ones without leaks.

We don't have to agree. We just have to consider the possibility that we could be right ... or wrong. Me included. But thank you for the "good luck" wishes - they definitely can't hurt  ;)

Quote from: Basil on Feb 24, 2023, 12:44 PM.....At this point its clear to me the tide is going out on this sector and all boats go lower on an outgoing tide.  Good luck with your OCA shares.
Leaky boats tend to fall much further than ones without leaks.

https://www.nzherald.co.nz/business/cyclone-gabrielle-the-fate-of-1000-hawkes-bay-retirement-village-residents/ATJE75FHJBGLFMUWKTH4IGP4W4/

Craig's analyst today stated

weak cashflow result in 2H22, with net debt stepping up to $1049m (c.$120m above consensus) and unsold new stock increasing.

Very good slide SUM included in their results. Steady state free cash flow of $236m (positive) should help allay punters (including Craigs guru analyst) fears of perceived high debt

00000sum.JPG

Quote from: winner (n) on Feb 27, 2023, 08:53 AMVery good slide SUM included in their results. Steady state free cash flow of $236m (positive) should help allay punters (including Craigs guru analyst) fears of perceived high debt

How does this affect their debt, or is the perceived high debt only bank debt?
Screenshot 2023-02-27 121738.png

Quote from: Buzz on Feb 27, 2023, 12:18 PMHow does this affect their debt, or is the perceived high debt only bank debt?
Screenshot 2023-02-27 121738.png

Some going to repay existing bonds in July ($100m) so no real impact on leverage

Well it does not look as though they are going to stop "Going for it",with expanding sites and building program.
Perhaps they do not read the doom and gloom on social and other media.
Wonder why?.
Could be they know their business better than any one else.

Ociania (OCA020) and Arvida (ARV010) bonds maturing in 2028 both trading over 7%

Johnny Lee:
Summerset's result was met with cheer, as the company reported a record underlying profit, although net profit after tax fell – although still a healthy profit - from last year's 136% net profit growth.

While competitor Ryman Healthcare remains in the news for far more negative reasons, Summerset has moved from strength to strength, having avoided the debt pitfalls Ryman stumbled into over the last few years.

The development pipeline remains strong for Summerset, while the resale portfolio reaches new heights and introduces a steady flow of recurring revenue. The landbank is substantial and will be the source of much of its revenue growth going forward.

Although the dividend yield remains relatively insignificant, it is moving in the right direction and rewarding long-term shareholders. In 2015, the dividend was 5.3 cents. This year, it is 22.3 cents.

While Ryman has its hat out for shareholder funds, Summerset is filling its investors pockets with growing dividends. The share price moves have reflected this difference, with Summerset's share price rising and Ryman's diving following the respective announcements.

And Johnny was probably the cause of the share price collapse yesterday?

Final terms are 6.59% and they took all the oversubscriptions for a total issue size of $175m.
Interesting...It's got me thinking that we live in quite interesting times when one of our blue-chip companies have to pay that interest rate for corporate debt when just a couple of years ago you could raise 5–6-year corporate bonds at 2.0-2.5%.

An interesting exercise might be to have a look at which companies are enjoying tailwinds from the once in a lifetime opportunity they took advantage of, borrowing recently at ultra-low rates, and then consider what impact on their earnings if they had to replace those borrowings with funding at say 7% now.  That might give a useful heads up on the scope of the impact on earnings once funding tailwinds disappear.

Here's a worked example of what I am referring too.
With OCA 010 they have $125m at 2.3% maturing in late 2027.  These bonds trade at 7.2% currently.
If they replaced that debt at 7.2% they will face a 4.9% increase in rate on $125m = $6.125m per annum in additional funding costs.
With OCA 020 they have $100m at 3.3% currently trading at 7.6% = extra 4.3% = extra costs of $4.3m per year. 
In total marking their corporate bond funding on a mark to market basis if they were to fund that today they'd face circa $10.4m extra per annum in interest costs.  Then there's the substantial extra costs on their $500m bank funding to consider as well.
Something else to consider when they report in May is they are also enjoying tailwinds from previous fixed price construction contracts that are expected to end in 2024.  With some of their bonds trading in the late 7% range, I wonder is the market starting to get concerned about OCA's, highest of sector debt?

This SUM corporate bond has shone the spotlight on the need to be ever mindful that tailwinds from ultra cheap debt funding only last for a modest period of time and then they're gone and in my opinion there's a good chance we'll never see rates for funding in the low 2% range again in our lifetime.

If some companies, (not referring to SUM here), can't grow earnings when they're enjoying massive tailwinds from funding, what hope is there for earnings growth when debt is FAR more expensive?
 

I was thinking the same thing as SUM 030 PAYS 2.3%

Not just OCA heading for a 52 wk low, SUM not doing any better. Well there you go its just gone $8.66.

Slow start to 2023

Q1 sales down quite a lot v last year

Just as well they don't use percentages ....would have had to say 25% less



http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/409655/392297.pdf

Quote from: winner (n) on Apr 11, 2023, 08:44 AMSlow start to 2023

Q1 sales down quite a lot v last year

Just as well they don't use percentages ....would have had to say 25% less



http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/409655/392297.pdf

115 new sales and 95 resales in Q1 2023 vs 167 & 112 in Q1 2022.

So 31% less new sales but only 15% less resales.

No mention of how stock levels are building up?

Hope SUM getting good prices and margins for the sales they are making

Very useful lead indicator for what its going to be like for the other companies in this sector now we're into FY24. 

SUM sales numbers (esp new sales) started declining when peak of property market was reached

Spooky eh ... as some say they not related



0000sumsales.JPG

Quote from: Basil on Apr 11, 2023, 09:28 AMVery useful lead indicator for what its going to be like for the other companies in this sector now we're into FY24. 

Obviously not just a SUM problem this decline in sales

ARV H1 new sales down 25% on pcp and their resales were flat even with Arena numbers thrown in

That's significant; indeed a spooky graph.

My guesstimate is a share price overlay on the same graph will follow similar lines so to speak. The question is, has the market priced it in? Fully? Or not quite done yet?

Just spent half an hour with a client who's one of Auckland's top Auctioneer's.  Crickey its tough out there.  He's freelance and works from home and pleased he does.  A lot of his friends in the real estate business are struggling to pay their leases and staff.

SUM are undoubtedly best of breed in my opinion and they're obviously feeling the effects of the headwinds.
As you say Winner, resales flat with Arena numbers included (and all the extra shares issued for that acquisition) was a very poor result.  RYM having to do a capital raise of $900m because their sales are not generating sufficient cash flow and OCA sales are almost certain to also be impacted by the deep malaise the real estate market is in.

Interesting times for this sector.

Quote from: Teitei on Apr 11, 2023, 08:55 AM115 new sales and 95 resales in Q1 2023 vs 167 & 112 in Q1 2022.

So 31% less new sales but only 15% less resales.

No mention of how stock levels are building up?

Just read the announcement. They sold 115 new units and delivered 57, which points to stock levels going down. Didn't talk though about stock levels of resale apartments.

Anyway - this clearly must be good :) ;

The QV prices graph 5 years... even if house prices rise again surely they cant go past the peek again...for a while...

The market gave the sales update a big thumbs down eh ....share price down more than 3% and probably more tomorrow

Quote from: winner (n) on Apr 11, 2023, 06:24 PMThe market gave the sales update a big thumbs down eh ....share price down more than 3% and probably more tomorrow

Probably only worth $6 odd anyway.

Quote from: winner (n) on Apr 11, 2023, 06:24 PMThe market gave the sales update a big thumbs down eh ....share price down more than 3% and probably more tomorrow

Those sales figures are awful, and promising what would be a stellar 2H sales result is overconfident with little substance to back it up. Like BP says, the unknown is how many were available for sale (new), OCA got caught by that, poor new sales ... doh, because there were none available for sale! SUM is overpriced imo. Rebalanced a few in the sector today, lighten up on SUM, put it into others.

A rising tide lifts all boats and obviously the opposite of that is true as well.
Still quite some way to go before we get to low tide in my opinion.

Quote from: Basil on Apr 11, 2023, 07:23 PMA rising tide lifts all boats and obviously the opposite of that is true as well.
Still quite some way to go before we get to low tide in my opinion.

For sure, the old market maxims hold true. Wouldn't be surprised to see SUM get a hiding off these results, 6 months is a long time to wait to see whether they're immune to the same factors that have pummelled the sector (I don't think they are) .. aside from RYM which clearly screwed themselves with the debt repayment. 

Quote from: Basil on Apr 11, 2023, 07:23 PMA rising tide lifts all boats and obviously the opposite of that is true as well.
Still quite some way to go before we get to low tide in my opinion.

Maybe but I reckon all the other boats have been caught up in a faster outgoing tide than SUM and have pretty much bottomed, SUM may be about to be caught in a rip.

Sure big headwinds but downside limited in my opinion with risks priced in.

Would have to be a kitchen fill of cockroaches or another huge correction in asset values or a major event to get to $6.

Disc, long term holder.

Quote from: Shareguy on Apr 11, 2023, 08:25 PMSure big headwinds but downside limited in my opinion with risks priced in.

Would have to be a kitchen fill of cockroaches or another huge correction in asset values or a major event to get to $6.

Disc, long term holder.

Will be interesting to see, but investing abhors a vacuum and SUM just posted a Dyson in their very poor sales results.

Rather than a big bang like popping the balloon, I think the vacuum of poor sales underpinned by unsubstantiated promises of outstanding sales over the next reporting period will erode investor confidence (assuming the property market is still getting hammered), so a slow steady leak in SP seems more probable imo.

They also still have an underwhelming dividend compared to other sectors, which the conservative investors looking for income will be questioning. If it's all as good as they say, the least they could do is compete against no/low risk bank returns, even if both are losing against inflation. Would cash flows allow it though? Maybe they need to temper their enthusiasm and optimism for growth like the rest of the sector are?

Anyway, I don't think many were expecting to see SUM post such poor sales results, especially after last reporting Scott said the property market downturn hadn't really affected them. Seems like snake oil now in hindsight. 

For Bars review..

Summerset Group (SUM) reported weak 1Q23 sales, with combined new sales and resales down -25% versus 1Q22. We find this disappointing, but (so far) not concerning. The turnover in the New Zealand housing market is at record lows and days to sell at record highs. Expansion of lead times is to be expected. Contracted sales, a strong indicator of forward sales and end demand, was up strongly versus an admittedly likely weak 1Q22. Overall, we walk away with the impression that SUM is not immune to the current well publicised slowdown in the housing market, but that the weakness is primarily coming through in the form of extended lead times rather than lower prices or reduced end-demand. That said, the bears on aged care stocks are currently getting more support for their view than the bulls. Over the next 12 months demonstrating an ability to generate cash will be key to share price performance. We retain our OUTPERFORM rating and reduce our price target -NZ55c to NZ$10.55.

What's changed?



Earnings: FY23/FY24/FY25 underlying EPS down -10%/-6%/-4%. Annuity EBITDA down -3%/-4%/-3% driven primarily by reduced newsales gains but also slightly lower resales gains.
Target price: Down -NZ55c to NZ$10.55 driven by lower earnings and slightly higher net debt.


1Q23 sales shows the signs of a slowing housing market


SUM reported new sales of 115 and resales of 95 for 1Q23, both ~17% of our prior FY23 forecasts. Pre-COVID ~22% of sales were completed in Q1. Resales were down -15% on 1Q22, and -4% on a rolling 12 month basis, and lower than expected due to settlement timing delays. Contracted resales rose +41 from the end of FY22, indicating strong growth in resales contracts. New sales were down -31% on a strong 1Q22. The main reason for the decline given was the low delivery of new homes; only 57 were delivered in 1Q23. SUM stated it remains on track to deliver between 625 and 675 new homes in FY23, with >75% coming in 2H23.

Conversion from contracted sales to completed sales declined materially — most likely explanation is expanding lead times


Our understanding is that a contracted sale primarily represents the payment of a fully refundable deposit of a few thousand dollars. The conversion tends to be very high and when a contracted sale is not completed, the primary reason is a change to a different unit within the village or a change of health circumstances. Over the last five years SUM has converted well over 100% of period end contracted sales to completed sales the following quarter. At FY22 (December 2022), SUM had 279 contracted sales (163 new sales and 116 resales) and converted only 75% (210) during 1Q23. The reduced conversion can either be explained by a relatively dramatic reduction in conversions from contract to completed sales (a clear negative) or lead times have expanded well above historic levels (more transitory). Both REINZ days to sell data (up almost +50% ) and management commentary at FY22 suggests the latter.

Forbar say Over the next 12 months demonstrating an ability to generate cash will be key to share price performance.

Time to batten down the hatches for all retirement stocks I think. Pause the dividend and start buying back the shares.

Suzanne Paul in a Summerset ad on TV

Some of the residents loved being part of it

Anyway Suzanne not as terrible as that Tina

https://www.summerset.co.nz/about-us/news/retire-like-a-king/

All part of a campaign in a lead up the Coronation ...hopefully not enduring.

Might even be iin a Briscoes ad

Suzanne overload

https://thespinoff.co.nz/pop-culture/04-05-2023/why-is-suzanne-paul-suddenly-the-face-of-everything

Quote from: winner (n) on May 04, 2023, 07:05 PMSuzanne Paul in a Summerset ad on TV

Some of the residents loved being part of it

Anyway Suzanne not as terrible as that Tina

https://www.summerset.co.nz/about-us/news/retire-like-a-king/

All part of a campaign in a lead up the Coronation ...hopefully not enduring.

Might even be iin a Briscoes ad

Suzanne overload

https://thespinoff.co.nz/pop-culture/04-05-2023/why-is-suzanne-paul-suddenly-the-face-of-everything

And I thought SUM is the shining star of the retirement villages? Better don't tell the OCA distractors ... they said that the need for TV ads indicates business going downhill? SUM must be pretty desperate these days ...

But hey, this was for OCA, wasn't it. Obviously - if SUM is doing ads, all must be good for them.

https://www.youtube.com/watch?v=1DdyGoSzjXs
They should just stick with Jude Dobson.  She comes across as very relatable, likeable and trustworthy.
Suzanne Paul has been peddling all kinds of snake oil and lotions over the years...
By the way I have visited that village and been in that waterfront home that guy is talking from and stood on that exact deck.  Was hard to tear myself away from it, the sun was shining, the tide was in.   What a stunning village and awesome north facing home, no wonder he is happy !  That one is 133 sq m and I reckon that's perfect for this dog.  Was $1.6m in 2017 when I was there.

I have noticed a big uptick in advertising by all the companies in this sector.  I guess that's what happens when there's record numbers of units being delivered and house sales are at 22 year lows.  Good sector to avoid entirely at this stage.  All boats, even the best of them like SUM go lower on an outgoing tide.

Week close over $10 ...haven't seen that for best part of a year

2nd quarter sales update early next week should be interesting

Latest update out.......looking good for the holders ( tho' no mention of discounting to achieve sales targets.)

https://www.nzx.com/announcements/414535

Summerset Group is pleased to report 273 sales for the quarter ending 30 June 2023, comprising 126 new sales and 147 resales, the highest number of resale settlements in a quarter the company has ever seen. Summerset has achieved 483 settlements for 1H23.

Summerset CEO Scott Scoullar said the result is pleasing and indicative that demand for the company's retirement living offering remains strong, despite a period of tough property market conditions, which now appear to be easing.

Uncontracted new sale stock decreased by 17% from 308 as at 31 December 2022, to 256 units, with 152 new homes delivered in the period.

Much better update than the March one

Record resales quarter is good stuff

Sales for H123 down on last year so won't be much growth if any in Underlying Earnings when they report in August

Nonetheless things look better than they did at the end of March

Chart still looks cool

For Bars update. Down to Neutral. Was Outperform.

Summerset (SUM) and Ryman Healthcare (RYM) have led the recent bounce in aged care stocks, with share prices up ~+30% over the last three months. This bounce is well deserved and driven by improved housing sentiment; but is there more to come? We still see strong valuation support in the aged care sector overall, but believe that SUM specifically will consolidate recent share price gains rather than outperform the market from here. Specifically we view 2023 as somewhat of a transition year for SUM as it ramps up to deliver its first units in Australia as well as building on three apartment-heavy sites simultaneously in New Zealand. SUM has an excellent track record of cash recovery of capex. 2023 will, on our estimates, see a meaningful step up in working capital driving net debt up considerably, something we do not expect from the remainder of the sector. We downgrade to NEUTRAL with an unchanged target price of NZ$10.55.

What's changed?
Earnings: Annuity EBITDA down 0%/-1%/-2% in FY23/FY24/FY25, underlying earnings down -8%/-7%/-7% on lower new sales.
Rating: Downgrade to NEUTRAL from OUTPERFORM.
Well deserved bounce in valuation; but likely to be tougher from here
SUM is currently valued at a near all time high premium to RYM using our preferred valuation metric of EV/Annuity EBITDA. We acknowledge SUM's best in class track-record of cash recycling and earnings growth, something the market is rightly giving it credit for. However, we note that compared to RYM, SUM is still largely unproven in Australia, no longer has lower leverage and has benefited from a substantially lower care proportion of earnings, something that has been a drag on RYM's earnings. We value RYM and SUM on the same EV/Annuity EBITDA multiple and therefore see more upside in RYM.


1H23 sales; decent re-sales, weak new sales
SUM's 2Q23 sales numbers showed a meaningful bounce back from its very weak 1Q23. Looking at the first half as a whole resales for 1H23 was up a healthy +9% on 1H22, while new sales were down -17%, driven by lower deliveries. In its 2Q23 release SUM highlighted again that its deliveries would be heavily back end loaded, but it was even more skewed than we had expected. Deliveries in the first half were <1/4 of expected full year deliveries. We have reduced our expectations for FY23 new sales accordingly.


Debt likely to build meaningfully through FY23
SUM's debt is almost exclusively project finance and we do not consider the build up of debt to be concerning, in particular given SUM's strong track record of cash recovery of capex. However, we do think that SUM, much like the rest of the sector, is unlikely to re-rate to previous asset multiples unless it can demonstrate an ability to grow organically without adding significant debt.

Thanks for posting. Thought this comment was interesting.

However, we do think that SUM, much like the rest of the sector, is unlikely to re-rate to previous asset multiples unless it can demonstrate an ability to grow organically without adding significant debt.

Results out

https://www.nzx.com/announcements/416856

SUMMERSET FIRST HALF UNDERLYING PROFIT OF $87.2M, UP 5.7%

• Underlying profit for 1H23 of NZ$87.2m, up 5.7% on 1H22
• Reported (IFRS) profit after tax of NZ$133.1m
• Total assets of NZ$6.3 billion, up 17.2% on 1H22
• Gearing ratio of 35.5%
• Two new sites acquired in New Zealand
• 152 new retirement units delivered
• 483 sales of occupation rights for the half
• Development margin of 33.5%
• Interim dividend of NZ11.3 cents per share

Quote from: Left Field on Aug 23, 2023, 08:39 AMResults out

https://www.nzx.com/announcements/416856

SUMMERSET FIRST HALF UNDERLYING PROFIT OF $87.2M, UP 5.7%

• Underlying profit for 1H23 of NZ$87.2m, up 5.7% on 1H22
• Reported (IFRS) profit after tax of NZ$133.1m
• Total assets of NZ$6.3 billion, up 17.2% on 1H22
• Gearing ratio of 35.5%
• Two new sites acquired in New Zealand
• 152 new retirement units delivered
• 483 sales of occupation rights for the half
• Development margin of 33.5%
• Interim dividend of NZ11.3 cents per share

First glance looks like a good result. Slight beat on FB forecast
underlying profit at $79m and dps of 11 cps.

Big increase in development margin.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/416856/401022.pdf

Looks sound to me.  When the tide finally starts coming in on the property market I'll be very happy to be a shareholder again.  I see no compelling reason to own any of the others compared to SUM.

SUM not one to do a bit of skiting and do peer comparisons so interesting they included this slide in their presentation

Quote from: winner (n) on Aug 23, 2023, 04:01 PMSUM not one to do a bit of skiting and do peer comparisons so interesting they included this slide in their presentation

Funny comparison.

What is the point of comparing NTA per share if the share prices are widely differing?

Much better to own a company with $1.50 NTA and $1 share price, rather than a company with $10 NTA and a $10 share price (assuming NTA is your thing).

If they would have wanted to convey anything meaningful, they would have normalised these NTA's by the respective share price;

My theory is they are on the defensive a little there.  Fact is gearing is up from 29.4% this time last year to 35.5% which is a pretty big jump in 12 months.  Also in the preso they note forward build guidance is probably going to be towards the bottom of the 625-675 range due to the need to take a prudent approach to stock management, or words very close to that effect.  I expect gearing to be in the very high 30's by year end...a product of an ongoing weak real estate market and their very strong 2H build rate more than anything else.  I don't think it's time to jump back in yet....but the tide might turn in 2024.

Quote from: Basil on Aug 23, 2023, 04:59 PMMy theory is they are on the defensive a little there.  Fact is gearing is up from 29.4% this time last year to 35.5% which is a pretty big jump in 12 months.  Also in the preso they note forward build guidance is probably going to be towards the bottom of the 625-675 range due to the need to take a prudent approach to stock management, or words very close to that effect.  I expect gearing to be in the very high 30's by year end...a product of an ongoing weak real estate market and their very strong 2H build rate more than anything else.  I don't think it's time to jump back in yet....but the tide might turn in 2024.

They did make the point that New Zealand gearing ratio with Australian growth related debt excluded is 28.9%

Australia was always going to be a debt 'burden' while being developed ...let's hope it's not much of a burden eh

Yes Net debt (+$226m to $1.3B) and gearing (+310bps to 35.5%) something to watch.

Quote from: BlackPeter on Aug 23, 2023, 04:52 PMFunny comparison.

What is the point of comparing NTA per share if the share prices are widely differing?

Much better to own a company with $1.50 NTA and $1 share price, rather than a company with $10 NTA and a $10 share price (assuming NTA is your thing).

If they would have wanted to convey anything meaningful, they would have normalised these NTA's by the respective share price;

You'd have to say the chart to the right is pretty impressive ...... 'peers' charts wouldn't look as good.

Quote from: Shareguy on Aug 23, 2023, 05:42 PMYes Net debt (+$226m to $1.3B) and gearing (+310bps to 35.5%) something to watch.

I think that chart while they put up was an attempt to show the 35.5% relative to 'peers' ....ARV at 30.5% / OCA at 36.6% / RYM at 33.1%.

'Peers' presumably are as at March so possibly higher by now.

Was not long ago that Fishers were big cheerleaders of Summerset.

https://www.nzx.com/announcements/417448

I think they are making a big mistake selling SUM down.  I've had a look at all their stocks in the Kingfish portfolio and them and IFT are the last 2 I'd be selling if I was managing it.  It's hard to retail confidence in them when they do things like this.  If they replace it with OCA I'm definitely selling out lol

Quote from: Basil on Aug 31, 2023, 03:22 PMI think they are making a big mistake selling SUM down.  I've had a look at all their stocks in the Kingfish portfolio and them and IFT are the last 2 I'd be selling if I was managing it.  It's hard to retail confidence in them when they do things like this.  If they replace it with OCA I'm definitely selling out lol

I guess it all depends what you want to get out of your fund. If you want them to confirm your current view of the world, then yes, you are right. If it is however making money, than I could see the logic of replacing SUM with OCA.

The thing with SUM is - good company, but fully priced. As well - SUM is selling a cruise experience, nice to have, but not essential. Not so flash if bad times are knocking on the door, clients just might delay their "cruise" for a handful of years.

OCA on the other hand sells a needs based service. If you need it, you need it, no matter what - and the share trades currently at a significant discount compared with SUM, no matter what your favorite gauge might be.

The only serious issue I would have with OCA is the terrible shareholder commmunication, but I suppose that big shareholders like Fisher Funds well might get preferrential treatment in that regard. Actually - it might be good for FF as well as for OCA, if they buy in :) ;

And not just for the potentially better shareholder communication. Don't forget ... big funds can't wait and watch TA for their buying decisions, because they make the trends. They need to buy when they see the right fundamantals.

Discount to NTA is irrelevant and a red herring.  Assets are only worth what they can earn and blind freddy can see which company has been growing earnings and which hasn't.  Enough said, there is no comparison.  A classic case of chalk and cheese.

Fisher selling usually a good sign for punters .....like good buying when fishers sell

Maybe Fishers have subscribed to BPs theory that OCA will take off now they've listed for 6 years and passed the inflection point ....just like SUM did when they apparently passed an inflection after being listed for 5 years

Not sure I ever recall SUM having a so-called inflection point.   Went back in my portfolio spreadsheets and my records show I held them on 31 March 2017, just over 5 years after listing and the price was $5.17, nearly four times the IPO price in 5 years and a few months.  My contention is simply this.  SUM business model's work very well indeed and some others are saddled with so many fundamental issues they struggle, on and on and on...

One of the key differences as I see it is SUM were growing earnings really well even in the early years but OCA...oh dear.
Share prices tend to follow eps which is why OCA is stuck where it is.

Last weekend appeared to be a turning point in the number of people attending open homes  for residential houses, at least in the area where I live in Auckland East. A lot of Sold stickers now on signs, a high count of open home signs on each main intersection, half a dozen cars outside each open home - a turn around from just a month ago. Expect to see a considerable lift in next months REINZ sales stats. Some of those home sales will be boomers going into RV units. Discl. Holding SUM in anticipation of an improving RV market.

Quote from: Whome on Sep 12, 2023, 09:28 AMLast weekend appeared to be a turning point in the number of people attending open homes  for residential houses, at least in the area where I live in Auckland East. A lot of Sold stickers now on signs, a high count of open home signs on each main intersection, half a dozen cars outside each open home - a turn around from just a month ago. Expect to see a considerable lift in next months REINZ sales stats. Some of those home sales will be boomers going into RV units. Discl. Holding SUM in anticipation of an improving RV market.

Spring has arrived. Real estate normally gets a boost. Makes it easier to sell the family home and buy a SUM property

There are two temporary factors operating to boost the real estate market at the moment. 
1.  The 200,000 immigrants that got gifted permanent residency by Jacinda last year are buying homes.  They apparently account for 60% of First Home Buyers and are using the Kainga Ora 5% deposit and Govt guaranteed mortgage scheme to buy. 
2.  Permanent residents who arrived in the second half of last year when the borders reopened have now completed their 12 months of residency and are eligible to buy a house.  

The first factor will fizzle out eventually, and the second factor will depend on just how many are still coming in to NZ. 

"The majority of home buyers accessing the government's First Home Loan scheme are new arrivals to New Zealand, mortgage brokers have told OneRoof.
Harcourts Mount Roskill business owner Nick Kochhar says that of the first-home buyers active in his area, more than 60% would be new residents with First Home Loan approvals."

https://www.oneroof.co.nz/news/first-home-loan-scheme-is-open-to-abuse-claims-first-home-buyer-advocate-44090

And we were on track to have a negative immigration loss this year, but July saw a big influx.  August was negative again though.  "Official" statistics are a computer model, that is 16 months out of date.  It is not passenger arrival and departure data (which is where I get my data)  Even the numbers they are quoting are based on the immigration figures from last year, when the borders reopened.  We won't be past including that huge bump until we get to January 2024. 

Total applications received   106,421
Total number of people included   217,626
Applications approved and visas issued   102,118
People approved and issued visas   207,793

Thats 207,793 people who got gifted permanent residency by Jacinda.  And thats direct data from the Immigration Dept.

https://www.immigration.govt.nz/new-zealand-visas/waiting-for-a-visa/how-long-it-takes-to-process-your-visa-application/2021-resident-visa-processing-times

And the housing market data is relevant to retirement villages.  As those oldies have to sell their house to someone in order to buy a RV.  Got nothing to do with politics.  Which is why its  not in the politics thread.  A change in Govt will not change either of the two points I made. 

Totally relevant to this thread BP this immigration stuff

Annualised house price growth of 8.7% at the moment ....the sorts of renewed price pressures one might expect to see when record net immigration hits smack into a tight market.

Increasing sales volume and increasing property prices all good for Summerset  over next year or so.

Quote from: KW on Sep 13, 2023, 12:30 PMAnd we were on track to have a negative immigration loss this year, but July saw a big influx.  August was negative again though.  "Official" statistics are a computer model, that is 16 months out of date.  It is not passenger arrival and departure data (which is where I get my data)

Interesting data that is relevant to the housing market, and easy to find.  So far in 2023 we have had a nett loss of 38k NZ citizens and a nett gain of 43k non-NZ citizens for a nett overall gain of 5k.  A recent international sporting event may have increased the number of visitors in July which reversed the nett population losses observed in Mar, Apr, May & Jun.

Perhaps we should get back to discussing SUM's specific attributes and leave immigration stat's for the general retirement thread?

One thing that's garnered almost no airtime on either channel is SUM's prospects in Australia.  I believe they have 7 villages in progress at various stages over there. Three of the most interesting differences I think you will find between Australia and N.Z. is the saturation rate of these full facility villages which is very low over there and I suspect we are completely saturating demand at this point in time in N.Z.

Secondly, I believe the construction costs are materially lower, (let's be frank and admit that we are being price gouged on building material costs in N.Z.) and thirdly the difference between the average house price in Melbourne and the average 2-bedroom independent living unit is lower than the historical 70% that used to prevail here, (frankly the margin here is getting uncomfortable close) so they're affordable for Melboune retiree's.

In the long run I think SUM's business model has a long runway of growth in Australia and their slightly lower price point than RYM's competing villages there gives them an advantage.

All that said, the above will take time to come to fruition and I am taking all the talk that "real estate has turned a corner and we're set for growth next year" with a grain of salt and the very low unimputed dividends from this sector does not inspire me to jump back in until we have a confirmed new uptrend. 
When the time is right, I will reinvest in the one company in this sector who have earned my trust.

My data comes DIRECTLY from the Customs Dept who track the daily passenger numbers through NZs airports.  Its not a mistake.  In comparison, the Dept of Statistics numbers comes from a computer model where it guesses the immigration number based on historical patterns.  It then corrects its estimate 16 months later by reconciling with passport data. 

Why would I apologise for publishing the Customs data?  You can go see for yourself if you don't believe me
https://www.stats.govt.nz/experimental/covid-19-data-portal/

  Screenshot 2023-09-14 171051.png

Connection to SUM: Immigration impacts the housing market which has a potential flow on effect into the RV sector including SUM.

In May and June the net immigration was negative when viewed for the year to date commencing 1 January.  Your earlier comment referenced KW's post from May.

Refer daily border movements from this source:
Source: https://www.stats.govt.nz/indicators/international-travel-provisional

NZ Stats own data when aggregated showed net negative immigration for 2023 year to date when viewed in May and June.

You owe KW an apology.  I am impressed KW found relevant source data that leads the official stats.  Nicely done KW.

Quote from: BlackPeter on Sep 14, 2023, 12:33 PMWell, first lets not forget that it was you operating some months ago with absolutely wrong immigration numbers. You told anybody who wanted to listen that our net immigration is negative. Did you forget that already? KW, you are talking B/S and you don't even appologise for the mistakes you make.

Post #162:

QuoteIs that coming from the same source which told you in May (against all official statistics) that we will have a net immigration loss this year?

Quote from: KW on Sep 14, 2023, 05:07 PMMy data comes DIRECTLY from the Customs Dept who track the daily passenger numbers through NZs airports.  Its not a mistake.  In comparison, the Dept of Statistics numbers comes from a computer model where it guesses the immigration number based on historical patterns.  It then corrects its estimate 16 months later by reconciling with passport data. 

Why would I apologise for publishing the Customs data?  You can go see for yourself if you don't believe me
https://www.stats.govt.nz/experimental/covid-19-data-portal/

Look - I don't care where your raw data came from, but they clearly either have been wrong or you interpreted them wrong (more likely) or you missed a handful of essential processing steps in the analysis.
I used the official numbers and they have been right.

Anyway, who cares, you  have been blatantly wrong with your prediction - and instead of admitting that and appologizing you keep digging.

Of course - department of statistics clearly must be wrong if they don't agree with your faulty predictions. How dare they not to use KW's proven wrong method? Shocking!

Funny though, that the end result (net immigration rising) aligned with what the department of statistics predicted, not with your predictions.

Quote from: Basil on Sep 14, 2023, 09:23 AMPerhaps we should get back to discussing SUM's specific attributes and leave immigration stat's for the general retirement thread?

One thing that's garnered almost no airtime on either channel is SUM's prospects in Australia.  I believe they have 7 villages in progress at various stages over there. Three of the most interesting differences I think you will find between Australia and N.Z. is the saturation rate of these full facility villages which is very low over there and I suspect we are completely saturating demand at this point in time in N.Z.

Secondly, I believe the construction costs are materially lower, (let's be frank and admit that we are being price gouged on building material costs in N.Z.) and thirdly the difference between the average house price in Melbourne and the average 2-bedroom independent living unit is lower than the historical 70% that used to prevail here, (frankly the margin here is getting uncomfortable close) so they're affordable for Melboune retiree's.

In the long run I think SUM's business model has a long runway of growth in Australia and their slightly lower price point than RYM's competing villages there gives them an advantage.

All that said, the above will take time to come to fruition and I am taking all the talk that "real estate has turned a corner and we're set for growth next year" with a grain of salt and the very low unimputed dividends from this sector does not inspire me to jump back in until we have a confirmed new uptrend. 
When the time is right, I will reinvest in the one company in this sector who have earned my trust.

Good idea.

And yes, it appears tough enough to agree on a comparison of retirement village providers in NZ.

Australia is a different game - both RYM as well as SUM are competing there with a number of local providers (who know the game) and different retirement village models over there (e.g. INA - combining retirement villges and holiday homes, resident buys the house and only leases the place).

I suppose the NZ greenhorns in Australia might still learn the ropes how to deal with a much higher degreee of corruption including corrupt and powerful unions.

I am sure, this is not impossible, but clearly while it might open opportunities, it offers as well significant additional risk. So yes, I think a retirement provider without Australain baggage might well be an advantage. ARV and OCA start to look much brighter now, don't they?

SUM in its first 6 years grew underlying earnings from $15m in its first full year as a listed entity in 2012 to $99m in 2018, 6.5 times as much, driving the share price up a commensurate amount.  Puts to shame the lack of earnings growth of some of the others in their first 6 years operations as a listed entity.

Hey all, this thread has gotten a bit off topic. I've made some deletions to keep things on topic but I'm happy to leave the tail end of the argument here so long as that is where it stops. Please continue any further (civil) debate on immigration statistics in another thread. Any questions flick me a message. Cheers.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/419678/404747.pdf

Solid Q3 sales result for SUM. 

"Summerset Group and a2 Milk may move out of the MSCI Small Cap Index on Wednesday (https://www.goodreturns.co.nz/article/976522486/nz-sharemarket-dips-on-very-light-volumes.html)."

SUM share price up my than 4% on Friday.  Something afoot?

Quote from: Dolcile on Dec 16, 2023, 09:00 AMSUM share price up my than 4% on Friday.  Something afoot?

Funny things often happen on these rebalancing days

Good Q4 and annual numbers firvSUM

Scott more upbeat than usual ......that's good too

4Q23 METRICS – SALES OF OCCUPATION RIGHTS   

Summerset Group is pleased to report 360 sales for the quarter ending 31 December 2023, comprising 186 new sales and 174 resales. Total settlements for the quarter were 30% higher than Q4 2022 (277 total settlements). 

The Q4 2023 result was a record for both new sales and resales, and a significant contributor to Summerset also achieving a record full year result of 1,103 total settlements for the twelve months to 31 December 2023.   

Summerset CEO Scott Scoullar said this was an excellent result, especially in such a challenging market.   "This is a very pleasing result for both the quarter and the full year. The residential property market has been very slow and unpredictable at times but despite this we've not only continued to grow, we've also achieved record settlements.  "While the residential property market certainly has an influence on our business the drivers for residents to come to our villages including community, security and health don't change.

We've continued to see very high demand and we've managed to achieve great sales results in a very difficult macroeconomic environment.   "These record achievements are also a result of our strategic focus to target when and where we want to build our retirement villages. Our build programme can flex up and down to meet demand and with villages across all the main centres and most regions we are able to appeal to a large number of New Zealanders.   "Our villages are designed to give our residents an excellent standard of living with high quality homes set in communities with lots of greenspace, outdoor recreational facilities, beautiful landscaping and much more."

 Summerset completed and opened three main buildings throughout the year at Kenepuru (Wellington) in February, Bell Block (New Plymouth) in September, and Te Awa (Napier) in November. These buildings, which contain a mix of serviced apartments, care suites and memory care suites, saw Summerset release 309 units to the market to strong sales and pre-sales.   

This was in addition to welcoming the first residents at four new villages at Cambridge, Boulcott (Lower Hutt), Waikanae, and Milldale (Auckland).  The company has now grown to be home to more than 8,000 residents across New Zealand, with the first Australian residents moving into Cranbourne North (Victoria) in 1Q24.   "This is a major milestone for us, we were very pleased to have delivered the first 10 villas at Cranbourne North at the end of FY23 and we look forward to welcoming our Australian residents soon," said Mr Scoullar. 

While continuing to grow, delivering an exceptional customer experience that brings the best of life to residents continues to be at the heart of the company's philosophy and strategy. Summerset was pleased to see excellent resident satisfaction scores for the year, 96% for village residents, and 95% for care residents.   

Mr Scoullar said the company was optimistic for the year ahead, seeing positive signs that the residential property market is improving, and with strong levels of demand and pre-sales already.

Quote from: winner (n) on Jan 09, 2024, 09:29 AMGood Q4 and annual numbers firvSUM

Scott more upbeat than usual ......that's good too

4Q23 METRICS – SALES OF OCCUPATION RIGHTS   

Summerset Group is pleased to report 360 sales for the quarter ending 31 December 2023, comprising 186 new sales and 174 resales. Total settlements for the quarter were 30% higher than Q4 2022 (277 total settlements). 

The Q4 2023 result was a record for both new sales and resales, and a significant contributor to Summerset also achieving a record full year result of 1,103 total settlements for the twelve months to 31 December 2023.   

Summerset CEO Scott Scoullar said this was an excellent result, especially in such a challenging market.   "This is a very pleasing result for both the quarter and the full year. The residential property market has been very slow and unpredictable at times but despite this we've not only continued to grow, we've also achieved record settlements.  "While the residential property market certainly has an influence on our business the drivers for residents to come to our villages including community, security and health don't change.

We've continued to see very high demand and we've managed to achieve great sales results in a very difficult macroeconomic environment.   "These record achievements are also a result of our strategic focus to target when and where we want to build our retirement villages. Our build programme can flex up and down to meet demand and with villages across all the main centres and most regions we are able to appeal to a large number of New Zealanders.   "Our villages are designed to give our residents an excellent standard of living with high quality homes set in communities with lots of greenspace, outdoor recreational facilities, beautiful landscaping and much more."

 Summerset completed and opened three main buildings throughout the year at Kenepuru (Wellington) in February, Bell Block (New Plymouth) in September, and Te Awa (Napier) in November. These buildings, which contain a mix of serviced apartments, care suites and memory care suites, saw Summerset release 309 units to the market to strong sales and pre-sales.   

This was in addition to welcoming the first residents at four new villages at Cambridge, Boulcott (Lower Hutt), Waikanae, and Milldale (Auckland).  The company has now grown to be home to more than 8,000 residents across New Zealand, with the first Australian residents moving into Cranbourne North (Victoria) in 1Q24.   "This is a major milestone for us, we were very pleased to have delivered the first 10 villas at Cranbourne North at the end of FY23 and we look forward to welcoming our Australian residents soon," said Mr Scoullar. 

While continuing to grow, delivering an exceptional customer experience that brings the best of life to residents continues to be at the heart of the company's philosophy and strategy. Summerset was pleased to see excellent resident satisfaction scores for the year, 96% for village residents, and 95% for care residents.   

Mr Scoullar said the company was optimistic for the year ahead, seeing positive signs that the residential property market is improving, and with strong levels of demand and pre-sales already.

Great sales number - actually, I see that they had in 2023 more unit sales (1103) than in any 12 month window before ... this is an ATH! The closest 12 monthwindow before was ending 2021 Q2 with 1066 sales. Lets bring out the champaign, shall we?

Obviously - I do see this as an indicator for the whole industry and look forward to the reporting laggards OCA, RYM and ARV ...

Good things will happen in 2024 ...

Without any doubt in my mind the best of breed by such a long way this thoroughbred makes all the others look like lame donkey's.

Market getting less pessimistic about RVs after SUM sales update - both SUM and ARV solid today.

Well done Summerset ... a ripper of an update. Market close report -

"The day's big story was Summerset's absolute ripper of a quarterly update," Shane Solly, a portfolio manager at Harbour Asset Management, said. "That dragged up other parts of the market in quite a broad rally."

For Bars review...

Summerset (SUM) reported record new sales and resales in 4Q23, with resales in particular ahead of our expectations. The strong Q4 resales numbers resulted in FY23 resales up +16% from its weak FY22. More importantly, resales as a proportion of overall stock for SUM is now back at its long-run average, indicating a normalised, or close to fully normalised, market. The aged care stocks have had a good holiday season, up ~+10% on average over the last month. We see SUM's update as supportive of further gains for the sector. SUM trades at ~1.1x P/B value and a ~+45% premium to Ryman Healthcare (RYM) on an EV/Annuity EBITDA basis. Retain NEUTRAL.

link
NZX Code   SUM
Share price   NZ$10.86
Target price   NZ$10.50 (from 10.15)
Risk rating   Medium
C&ESG rating   A-
Market cap   NZ$2,511m
Avg daily turnover   226.8k (NZ$2,131k)




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Financials: Dec/   22A   23E   24E   25E
Rev (NZ$m)   413.8   464.3   499.9   539.7
NPAT* (NZ$m)   171.5   181.6   182.8   184.4
EPS* (NZc)   74.4   78.2   78.4   79.1
DPS (NZc)   22.3   24.0   25.0   26.0
Imputation (%)   0   0   0   0
*Based on normalised profits





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Valuation (x)   22A   23E   24E   25E
PE   14.6   13.9   13.9   13.7
EV/EBIT   18.1   17.6   17.7   16.9
EV/EBITDA   16.9   16.4   16.3   15.5
Price / NTA   1.1   1.1   1.0   1.0
Cash div yld (%)   2.1   2.2   2.3   2.4
Gross div yld (%)   2.1   2.2   2.3   2.4




What's changed?



Earnings: Underlying earnings +2%/+1%/+1% driven by increased new sales and resale gains.
Target price: Increased to NZ$10.50 (from NZ$10.15) on increased annuity EBITDA from higher resale gains.


Strong resales point to an improving housing market backdrop — commentary suggests forward indicators remain positive


New sales were expected to be solid given deliveries skewed to 2H23, but the strong resales result, +16% YoY for FY23 and 4Q23 sales comfortably above trend, indicate a genuine pick-up in demand, supported by an improving NZ housing market as shown in REINZ data. SUM's 4Q23 resales of 174 were comfortably a record for the company and +16% ahead of our expectations. Resales were up +26% YoY for the quarter. We view this as another sign that the housing market has begun to improve. SUM stated it, 'was optimistic for the year ahead, seeing positive signs that the residential property market is improving, and with strong levels of demand and pre-sales already'. Additionally, the most recent REINZ data points to an improving housing market with sales up +36% on a three month rolling basis since its trough (seasonally adjusted), with days to sell down -37% from their peak.

Solid new sales given 2H delivery skew


SUM had previously flagged its FY23 deliveries would be 2H skewed and thus stronger new sales towards the year end. Pleasingly, SUM has delivered this, with new sales of 186 for 4Q23 marginally ahead of our expectations, and growth of +34% YoY for the quarter or +4% for FY23. SUM does not disclose prices or margins achieved in its quarterly updates, but our Montgomerie-Ibbotson pricing index indicates SUM has continued to hold its unit prices broadly flat for the last 18 months.

SUM has (finally) delivered its first units in Australia


In 4Q23 SUM delivered its first 10 units at its first Australian village (Cranbourne North�������) with residents to move in in 1Q24. This timing is in line with its expectations over the past 18 months but nearly two years later than originally planned. At its FY19 result it indicated its first village would open in late 2021/early 2022, this was pushed to early 2023 at FY21, then delayed to 4Q23 in 2022.

Thanks for sharing and interesting that they're not projecting any meaningful eps growth in the next 2 years.  If its that way for SUM that's going to be the very "best case" scenario for the others, in my opinion.

Can someone please help me understand why the ratio of PPE to Investment Property is so different amoung the RV operators.  Ryman and OCA seem to be real outliers. Thanks

PPE/Investment property:

SUM at June 2023: 348m / 5,795m = 6%        [HY uNPAT $87m, MC $2.5m]
RYM at Sept 2023: 2,238m / 9,833m = 22.7%   [HY uNPAT $139m, MC $4B
OCA at Sept 2023: 753m / 1,728m = 43%       [HY uNPAT $37.6m, MC $500m]
ARV at Sept 2023: 205m / 3,689m = 5.5%       [HY uNPAT $33.6m, MC $877m]

Nice to see it break through $11.00 today. Onwards and upwards!

Quote from: Dolcile on Jan 11, 2024, 01:39 PMCan someone please help me understand why the ratio of PPE to Investment Property is so different amoung the RV operators.  Ryman and OCA seem to be real outliers. Thanks

PPE/Investment property:

SUM at June 2023: 348m / 5,795m = 6%        [HY uNPAT $87m, MC $2.5m]
RYM at Sept 2023: 2,238m / 9,833m = 22.7%   [HY uNPAT $139m, MC $4B
OCA at Sept 2023: 753m / 1,728m = 43%       [HY uNPAT $37.6m, MC $500m]
ARV at Sept 2023: 205m / 3,689m = 5.5%       [HY uNPAT $33.6m, MC $877m]

It might help if you - as a first step - check your numbers and as second step explain what you mean with PPE (personal protective equipment?) , uNPAT (unaudited NPAT?) and MC. I suppose MC is not Marketcap, is it?, otherwise I would based on your numbers happily buy out SUM.

Quote from: BlackPeter on Jan 11, 2024, 04:09 PMIt might help if you - as a first step - check your numbers and as second step explain what you mean with PPE (personal protective equipment?) , uNPAT (unaudited NPAT?) and MC. I suppose MC is not Marketcap, is it?, otherwise I would based on your numbers happily buy out SUM.

Good spot.. I mistakenly typed $2.5m instead of $2.5 BILLION for Summerset.

PPE....property, plant and equipment . I.e. the care assets, on the balance sheet

uNPAT....underlying NPAT, standard RV measure of performance

Yes, MC = Market capitalisation 

Quote from: Dolcile on Jan 11, 2024, 04:32 PMGood spot.. I mistakenly typed $2.5m instead of $2.5 BILLION for Summerset.

PPE....property, plant and equipment . I.e. the care assets, on the balance sheet

uNPAT....underlying NPAT, standard RV measure of performance

Yes, MC = Market capitalisation 

I think you have answered your own question ..at least in OCA case they have a greater %ge of care units relative to others

SUM $11.00, RYM $5.76 - a long way from a few years ago when RYM price was twice SUM. Hats off to SUM management and Board for industry leading strategy and execution.

I was a lone voice, the only one on the other channel who called out the 1 RYM = 2 SUM as being a load of crap and predicted one day SUM would exceed RYM. I also called RYM a SELL 10 years ago @ $8.50.

What matters now though is where to from here?  Need to take my dog for a long walk in the park, when my injured knee comes right and see what new insights come to mind.

Summerset Blenheim opens.  https://www.stuff.co.nz/business/350158329/first-residents-move-new-blenheim-retirement-village
I think a weekly fee of $167 is very reasonable for what it covers and what will be on offer as the village is completed.

Quote from: Basil on Jan 29, 2024, 12:13 PMSummerset Blenheim opens.  https://www.stuff.co.nz/business/350158329/first-residents-move-new-blenheim-retirement-village
I think a weekly fee of $167 is very reasonable for what it covers and what will be on offer as the village is completed.

72m unit has a sale price price of $8,540 a SQM. And $669 for 112sqm. Far from cheap buying. Got to be a hefty margin in there.

Quote from: Minimoke on Jan 29, 2024, 05:16 PM72m unit has a sale price price of $8,540 a SQM. And $669 for 112sqm. Far from cheap buying. Got to be a hefty margin in there.

Hefty margins ....great stuff

Like keeping an eye on Heartlands NIM

Stats NZ says number of retirement village units consented last year was down 23.3%

Quote from: KW on Feb 02, 2024, 01:05 PMStats NZ says number of retirement village units consented last year was down 23.3%

RYM, ARV and OCA are slowing their build rate, all have problems to varying degrees. ARV arguably a heck of a lot less than the other two.
Best of breed SUM never seem to put a foot wrong and are the only one in this sector performing like a well-oiled Swiss watch.
Noticed SUM getting a fair bit of support with brokers picks for 2024.

Overall another good result.

Notice divi payout range changed to 20 to 50 percent of underlying profit, which makes sense.

Portfolio revaluations rose 64 per cent....WOW. Did not realise the housing market was in such a good state. Met last week reported a unrealised devaluation of its portfolio.........

Intention to enter Queensland market. Operating cashflow nearly doubled in 2H2023 vs 1h2023

Nta at $11.10 up 18 percent.

Very solid result. Frankly, this is in a class of its own.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/426789/413412.pdf

Think Summerset put this graphic in the preso just to remind everybody of the pecking order in their sector ...and saying How Great Thou Art

Least had decency not to name them by name .....but alphabetical is a good guess for Peer1 etc

IMG_5665.jpeg

Big picture...they have continued to grow underlying earnings nicely over the years even during the pandemic.  On a historic underlying PE of only 13.3 for this proven growth company.  Lifting their projected build rate yet again to another new record forecast for 2024 while many in the sector, by stark contrast, are retrenching. Why would you bother owning anything else in this sector ?

Zooming in a bit, what I found a bit interesting is the margin between house prices and 2 bedroom ILU SUM units is gone in main sectors 100% v 100% and 90% in regional sectors.  Very different to how it was years ago.

Almost unlimited potential for SUM to roll out their very successful business model throughout Australia which brings me back to the rhetorical question I asked in paragraph 1.

Quote from: winner (n) on Feb 26, 2024, 01:54 PMThink Summerset put this graphic in the preso just to remind everybody of the pecking order in their sector ...and saying How Great Thou Art

Least had decency not to name them by name .....but alphabetical is a good guess for Peer1 etc

IMG_5665.jpeg

Not quite sure I understand why a $11 share with $9.50 NTA (SUM) would be in any form or shape better than a 60 cents share with $1.40 NTA (OCA)? But hey - if you say so ...

The other thing this graph shows is that the gearing ratio is for all four "peers" very similar.

Anyway - I am sure they have been happy they found something to fill another slide, and if it even makes some people happy, than this is great, isn't it?

NTA up over $11 now BP but NTA is not how companies in this sector should be valued.  Earnings is what counts and SUM have a stellar track record of eps growth while all others in this sector are tripping themselves up for one reason or another and while all other are busy making excuses, SUM are busy making earnings growth.    That said I don't own any SUM at this point as I see headwinds in this sector remaining for quite some time and their yield of only 2.3% unimputed does not fit my investment objectives.

Quote from: BlackPeter on Feb 26, 2024, 05:13 PMNot quite sure I understand why a $11 share with $9.50 NTA (SUM) would be in any form or shape better than a 60 cents share with $1.40 NTA (OCA)? But hey - if you say so ...

The other thing this graph shows is that the gearing ratio is for all four "peers" very similar.

Anyway - I am sure they have been happy they found something to fill another slide, and if it even makes some people happy, than this is great, isn't it?

No doubt SUM has done exceptionally well and the market has rewarded that, and may continue to do so, although the rewards will top out soon enough.

But to your point in other words, 'how much upside is there in SUM?' having already smashed the leading contender and the rest of the sector.

In real terms the listed RV's are not all that dissimilar, the difference is at the margins and not the macro, and for a longer term view I'm in the camp of backing massively discounted RV's, rather than seeking out probably modest gains in SUM, ie I think it's peaking or has peaked, for the meantime. Time to move on, find another horse, as there's no doubt that this sector will prosper for decades to come.

Of course, if one hates the whole sector then there is no reason to be involved at all. SUM has proved that might not be the best course of action, but SUM does not have the enormous SP potential anymore, that the hugely discounted side of the sector does. Jmho.

For Bars review of the result for those interested.



Summerset Group (SUM) reported strong FY23 underlying earnings and annuity EBITDA, driven by robust resale and new sale gains, partly offset by higher costs. All time high resale margins were the stand out, an extraordinary achievement given the weak housing market. SUM guided for >+10% growth in unit deliveries for FY24. Strong margins and an increased build rate suggests high demand for SUM's product. The result was not without negatives; cash conversion was even lower than we had expected, SUM delivered negative cash flow from ongoing operations before funding costs and net debt increased by +35%, or +NZ$350m over FY23. We see SUM as well placed to deliver strong growth but at >30x FY25 EV/Annuity EBITDA we see better value elsewhere. We retain NEUTRAL with an unchanged target price of NZ$10.70.

What's changed?
Earnings: Underlying earnings up +3% to +6% and annuity EBITDA down -3% to -7% across FY24 to FY26.
Strong result...
SUM reported a strong result, with annuity EBITDA up +16% year-on-year. The strength was concentrated in resale margins, which were up ~3pp in 2H23 to ~29% sequentially, matching the all-time high achieved in 2H21. This is an extraordinary result considering the weak housing market and relatively stable prices as tracked by our aged care pricing index. A combination of a higher proportion of villas and higher average tenure likely contributed. The strong resale gains was largely offset by higher opex versus our estimates.


...weak cash
SUM reported its second consecutive year of negative cash flow from ongoing operations; driven by increased opex, expensed interest and (by SUM's high standards) weak cash conversion of sales, primarily carried through from 1H23. Even excluding funding costs, SUM's business cash flow from ongoing operations turned negative for the first time. The glass half full interpretation is that SUM is investing ahead of strong growth, as it should. The glass half empty interpretation would suggest that SUM is struggling to generate enough cash from its mature villages to support a growing corporate centre. We believe there is some truth to both.


New metrics... same old
SUM introduced a new metric called 'Summerset free cash flow'. This metric reflects net operating business cash flow and deducts BAU capex and expensed funding costs — very similar to Forsyth Barr's cash flow from ongoing operations. SUM changed the definition of net operating business cash flow to include 25% of new sales cash flow, reflecting the DMF proportion. There is some logic to this but the change is quite dramatic, increasing net operating business cash flow in FY21–23 by a factor 3x to 5x. It all adds up to the same but we prefer to analyse cash flow from ongoing operations, separate from development activities, and continue to do so.



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NZX Code   SUM
Share price   NZ$11.12
Target price   NZ$10.70
Risk rating   Medium
C&ESG rating   A-
Market cap   NZ$2,571m
Avg daily turnover   250.0k (NZ$2,405k)




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Financials: Dec/   23A   24E   25E   26E
Rev (NZ$m)   481.5   529.5   580.3   641.1
NPAT* (NZ$m)   190.2   188.6   195.2   210.2
EPS* (NZc)   81.9   80.9   83.7   90.1
DPS (NZc)   24.5   18.0   19.0   20.0
Imputation (%)   0   0   0   0
*Based on normalised profits





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Valuation (x)   23A   24E   25E   26E
PE   13.6   13.8   13.3   12.3
EV/EBIT   17.4   18.3   17.6   15.5
EV/EBITDA   16.2   16.9   16.2   14.3
Price / NTA   1.0   0.9   0.9   0.8
Cash div yld (%)   2.2   1.6   1.7   1.8
Gross div yld (%)   2.2   1.6   1.7   1.8

Quote from: Greekwatchdog on Feb 27, 2024, 07:33 AMSUM introduced a new metric called 'Summerset free cash flow'. This metric reflects net operating business cash flow and deducts BAU capex and expensed funding costs — very similar to Forsyth Barr's cash flow from ongoing operations. SUM changed the definition of net operating business cash flow to include 25% of new sales cash flow, reflecting the DMF proportion. There is some logic to this but the change is quite dramatic, increasing net operating business cash flow in FY21–23 by a factor 3x to 5x. It all adds up to the same but we prefer to analyse cash flow from ongoing operations, separate from development activities, and continue to do so.

I'm pleased to see SUM has done this.  I have banged on about this for some time.....analysts can think what they like but they are still incorrect to exclude ALL cashflows from new ORAs.  They even state they want to see cashflows from operating activities - last time I checked DMF fees are part of operating activities so the analysts continue to talk out of the rear end on this subject.

SUM bond offer over subscribed ....got the 75m plus 50m more

Plenty of punters happy with 6.43% pa

Sign of confidence in the company

Quote from: Greekwatchdog on Feb 27, 2024, 07:33 AM...weak cash
SUM reported its second consecutive year of negative cash flow from ongoing operations; driven by increased opex, expensed interest and (by SUM's high standards) weak cash conversion of sales, primarily carried through from 1H23. Even excluding funding costs, SUM's business cash flow from ongoing operations turned negative for the first time. The glass half full interpretation is that SUM is investing ahead of strong growth, as it should. The glass half empty interpretation would suggest that SUM is struggling to generate enough cash from its mature villages to support a growing corporate centre. We believe there is some truth to both.

This is the issue I have with this industry.  Currently its running like a giant ponzi scheme.  So long as they keep building new units, they can disguise the fact that they dont make any money from the old ones.  So if in the future they stop building (either voluntarily or by force majeure) then what happens to the company, the villages, and the people living in the villages?  The whole ponzi falls apart as the company becomes insolvent.

Personally I would like to see the two parts of the business separated, split in the same way a traditional stapled REIT splits its operations - a development arm (building new villages) and an operational arm (managing existing villages) with the structure being a company share for the development arm stapled to a trust unit for the existing real estate.  Then you can clearly see how both arms of the business are performing. 

Because eventually all ponzi's come undone.

Had an interesting chat with Julian Cook years ago about new villages and how much they make when they're established.  In a nutshell there's nothing really in a new village as lots of capex is spent on community facilities and buildings.  The real money is in resales he said when the village matures and is about 10 years old.  That said, we've had this extraordinary period over the last 25 years that I've posted extensively about already where house price growth has vastly outstripped inflation so I'm not sure the huge gains on resale are going to be there in the future, like they have been in the past.

There is ongoing strong growth in the aging population and will continue to be and arguably SUM have massive room for expansion in Australia and what they're building is the style of village people seem to want.

That said, Forbar are only picking ~ 3% growth in eps in the next 3 years for SUM and that might be indicative of what shareholders can expect to see for the foreseeable future, i.e. a mature low growth company.  Growth of 3% + no growth PE of 7.8 suggests to me that a fair multiple for SUM might be only ~ 11 at this point and with it trading right around the NTA and only paying a ~ 2% yield the numbers are not "talking to me" at all.

Dare I say it there could be better value in the short run in a couple of the other names in this sector which have been very heavily beaten down to below half their NTA, ARV and OCA.  Absolutely scandalous that ARV directors showed their takeover suitor the door at an indicative price of $1.70.   Accordingly, there would appear to be no chance of a takeover putting ARV shareholders out of their misery as nobody in their right mind would pay more than that.

On the other hand, OCA is trading well below half their NTA.  Maybe OCA directors will allow shareholders to have a say in their own future if someone comes knocking on the door at around ~ $1?    You never know, there's a possible chance of a takeover there.  I am sure many long-suffering shareholders would welcome the opportunity to sell into a takeover at around, or slightly above $1.

Last thing I want to see is a takeover, and no way in hell I'd sell mine for $1.00.

Quote from: Basil on Mar 04, 2024, 10:33 AMYou never know, there's a possible chance of a takeover there.  I am sure many long-suffering shareholders would welcome the opportunity to sell into a takeover at around, or slightly above $1.

I haven't been following lately.  What's their latest stated NTA guys ?

Quickly looked it up.  My goodness, NAV which includes everything is $1.48 as at 30/09/23, page 22, up from $1.36 as at 31 March 2023.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/OCA/422074/407732.pdf

I reckon those people buying in the late 50's cent range recently might do okay then ?  Maybe $1.20 for a possible takeover then ?

Quote from: Untamed on Mar 04, 2024, 11:00 AMLast thing I want to see is a takeover, and no way in hell I'd sell mine for $1.00.

Agree, what a steal that would be. Keep in mind that the Directors/Chair own a lot of shares and I'd be appalled if they chickened out for $1!!!

Haven't looked for ages but funnily enough the analysts all rate it a buy with an average targeted 12 month price of 99.25 cents, call it $1  https://www.marketscreener.com/quote/stock/OCEANIA-HEALTHCARE-LIMITE-103506268/consensus/

Anyway, back to SUM.  An exceptionally well-managed company that's trading at a full and fair price.  Whilst I have the upmost respect for KW, I disagree on this matter.  SUM is not a Ponzi scheme in my opinion.

Quote from: Untamed on Mar 04, 2024, 11:00 AMLast thing I want to see is a takeover, and no way in hell I'd sell mine for $1.00.

Agreed, although a takeover at $1 would give me a CAGR of ~42% over the last 1.5 years so regardless I'd do well.

I'd rather be able to invest my wage at these cheap prices for as long as possible.

Quote from: Basil on Mar 04, 2024, 12:46 PMAnyway, back to SUM.  An exceptionally well-managed company that's trading at a full and fair price.  Whilst I have the upmost respect for KW, I disagree on this matter.  SUM is not a Ponzi scheme in my opinion.

Everyone who invests in a ponzi scheme says that  ;D  Sadly, when you do find out it is one, its too late. 

Solid Q1 sales numbers to start new financial year

"Total sales for Q1 this year were 21 per cent higher than the same time last year, with both new and resales increasing year-on-year," says Summerset CEO Scott Scoullar.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SUM/429243/416386.pdf

Long term chart still looks pretty good
IMG_5749.png

Quote from: Basil on Mar 04, 2024, 10:33 AMOn the other hand, OCA is trading well below half their NTA.  Maybe OCA directors will allow shareholders to have a say in their own future if someone comes knocking on the door at around ~ $1?    You never know, there's a possible chance of a takeover there.  I am sure many long-suffering shareholders would welcome the opportunity to sell into a takeover at around, or slightly above $1.

Another possibility for OCA is rapid unscheduled financial implosion.

Quote from: Azz on Apr 12, 2024, 05:26 PMAnother possibility for OCA is rapid unscheduled financial implosion.

Troll along.

Quote from: Breezy on Apr 12, 2024, 05:51 PMTroll along.

This is the wrong thread so I'll keep it brief. I think OCA is in serious trouble. My view is not trolling; it is my view.

Re Summerset, I've described it as:

"The only shining light currently of the big four RV operators"

And I stick by that.

Quote from: Azz on Apr 12, 2024, 05:55 PMThis is the wrong thread so I'll keep it brief. I think OCA is in serious trouble. My view is not trolling; it is my view.

Please close the door on the way out and stop cross pollinating unsubstantiated rubbish on the wrong thread.

Quote from: Breezy on Apr 12, 2024, 06:19 PMPlease close the door on the way out and stop cross pollinating unsubstantiated rubbish on the wrong thread.

I was merely replying to Basil's comment that OCA could be ripe for a takeover.

Not Bad

2Q24 METRICS – SALES OF OCCUPATION RIGHTS AND HY PROFIT GUIDANCEThe wider property market in NZ has been softer than anticipated to start 2024, restrained by high interest rates, weak consumer confidence and cost of living pressures.Despite these conditions, Summerset Group reported 333 sales for the quarter ending 30 June 2024, comprising 156 new sales and 177 resales.Total sales for the first half of the year were the highest first half the company has recorded, with resales being particularly strong, resale pricing was up 0.3%. Sales for the six months to 30 June were the second highest ever behind 2H23.Summerset CEO Scott Scoullar said the result was pleasing. "Settlements were strong for the second quarter of the year, up 31% on the first quarter and up 22% year-on-year."Our residents' motivation to buy continues to be driven by life events, such as their health or desire for more community, these factors don't change in a constrained economy. While our prospective residents are still highly motivated the sluggish property market is restricting them from selling their home as quickly as they would like which is slowing some moves to our villages."In spite of this it's been very pleasing that Summerset has now achieved total sales volumes of 1,200 units over the past 12 months against challenging market conditions."Mr Scoullar said that while sales have increased and continue to track well the company expects underlying profit for the half year to 30 June to be similar to the same period last year."The market is very challenging, our sales are progressing well but at the same time our construction costs, interest rates and labour costs have all increased and we expect to deliver an underlying profit between $87m-$90m."Mr Scoullar also noted that 2023's underlying profit included $4.9m of high value waterfront Hobsonville homes sold in 1H23, and Summerset did not have similar unique units for sale in the first half of this year.The company has construction in progress at 17 sites throughout New Zealand and Australia and continues to be on track to deliver approximately 675-725 homes in 2024. Summerset expects it will deliver closer to the lower end as the company actively and prudently manages deliveries to market conditions."The year end result is dependent on an uplift in new sales in the second half, and we have confidence at this point those sales will be achieved noting that new deliveries are on track," says Mr Scoullar.

Best of breed by a VERY long way.

Quote from: Basil on Jul 04, 2024, 12:26 PMBest of breed by a VERY long way.

And priced as such.

Updated sales chart ....looks pretty healthy I reckon, esp that resales line

IMG_5846.png

Quote from: ValueNZ on Jul 04, 2024, 12:33 PMAnd priced as such.

Yes it is but on the other hand the bitter taste of poor quality lingers long after the thrill of an apparent bargain

So 1H24 sales volumes up 22 % on pcp. A great result and looks like they are gaining market share, but from who?

uNPAT flat due to higher costs and lower margin.

2H waiting to new sales with 55 percent of new unit completions to occur. St John's has pre sold 40 units with move in date early October.

The announcement states "Our residents' motivation to buy continues to be driven by life events, such as their health or desire for more community, these factors don't change in a constrained economy" House prices are just part of the equation.

All the modelling that I have seen suggests demand is going to increase without question.
I reckon all the operators will be looking at increasing prices. Interest rate cuts are not far away. Then there is Nationals announcement today on increasing land supply, what affect if any will this have.

On the whole a good update. With share prices so beaten down in the sector one would think that M&A is a real possibility.

No doubt about it that SUM continue to impress and execute like a very well-oiled Swiss watch.  An absolute master class in this sector which is otherwise dogged with all others tripping themselves up in so many ways.

I would buy except for one thing.  I think the downwards momentum in the real estate market is really picking up pace and is now essentially a crash.  https://www.interest.co.nz/property/128530/average-asking-price-homes-listed-sale-realestateconz-down-90071-february-auckland

I think we are only approx. halfway through a really major house price correction in N.Z. and when the dust has settled this will have major ramifications for the margins on new builds and resale in the years ahead.  When the tide is going out at a really fierce pace, its best to simply not go swimming.

Quote from: Basil on Jul 04, 2024, 08:13 PMNo doubt about it that SUM continue to impress and execute like a very well-oiled Swiss watch.  An absolute master class in this sector which is otherwise dogged with all others tripping themselves up in so many ways.

I would buy except for one thing.  I think the downwards momentum in the real estate market is really picking up pace and is now essentially a crash.  https://www.interest.co.nz/property/128530/average-asking-price-homes-listed-sale-realestateconz-down-90071-february-auckland

I think we are only approx. halfway through a really major house price correction in N.Z. and when the dust has settled this will have major ramifications for the margins on new builds and resale in the years ahead.  When the tide is going out at a really fierce pace, its best to simply not go swimming.

You may be right who knows, but you keep conflating the general housing market to the RV market, and SUM keeps showing you that this is not the case. None of the RV's are significantly lowering the ORA sell prices, and none of them are suffering serious declines in sales volumes.

I think the correlation of the general housing market property prices and sales volumes, to a needs based RV property price and sales volumes is fraught. They do not seem to closely correlate, maybe some echo but not close correlation.

People get old, the ones that are prospective listed RV's residents have money, they sell regardless of the market eventually, they buy an ORA, they move in and enjoy a lovely lifestyle for the rest of their life.

RV's are not, imo, illustrative of the general housing market and visa versa. SUM today told us again, as they have in the past, that this is the case. Conflating general housing property market circumstances to needs bases RV's is fraught.

Quote from: Basil on Jul 04, 2024, 08:13 PMI think we are only approx. halfway through a really major house price correction in N.Z. and when the dust has settled this will have major ramifications for the margins on new builds and resale in the years ahead.  When the tide is going out at a really fierce pace, its best to simply not go swimming.

Oh dear - try some happy pills, it helped my father in his last years.

Obviously everybody is entitled to their opinion, but trying to correlate them with some facts could make them more credible.

Here are some facts:

House prices in all parts of NZ settled around early this year at between 10% and 20 % lower than their respective peaks in second half of 2021. Look at any house price graph, and it looks like rock bottom with in most areas a slight recovery over the last handful of months visible. Actually, quite unusual given we moved into winter.

Economy moved nicely into the by RBNZ designed recession and no doubt RBNZ will soon need to do something to prevent the slow down turning into a crash. So - what is a bus driver doing when he notices there is a chasm in front of him in the road? Stay on the pedal, or slow down? Exactly, i.e. interest rates will go down (and likely earlier than later) and markets will relax.

Look, Einstein told us that only the universe and human stupidity are infinite ... but so far I don't see why our RB's would want to crash their respective economies. If things are really as bad as you say (I think you carry as well some selective goggles), then no doubt the RB's of the world will drop interest rates soon. Actually - Europe started already. Did you miss this memo? US next? How long after that do you think a RBNZ bus driver can survive keeping his pace without being replaced by politicians who want to be re-elected?

No doubt one day we will have this terrible crash some Internet gurus are predicting every other year for the last 30 years or so ... but honestly - I don't see the odds for this time being now.

Maybe you missed the link to the article I provided earlier that said the average house price is already down 30% in real inflation adjusted terms, (I presume you know what real inflation adjusted terms means?), from the late 2021 peak or maybe the other link to an article that said average asking prices for houses in N.Z. are down another $90,000 just since February 2024.  The pace of the decline seems to be accelerating but if it makes you more content to think otherwise...that's fine mate.  I prefer to be a realist than either a pessimist or an optimist but whatever works for you....go for it.

My happy place is walking my dog with or without friends or on my boat with or without friends and family.  I don't need anti-depressants but "thanks" so much for the medical advice, that was so kind of you.

Quote from: Basil on Jul 05, 2024, 05:04 PMMaybe you missed the link to the article I provided earlier that said the average house price is already down 30% in real inflation adjusted terms, (I presume you know what real inflation adjusted terms means?), from the late 2021 peak or maybe the other link to an article that said average asking prices for houses in N.Z. are down another $90,000 just since February 2024.  The pace of the decline seems to be accelerating but if it makes you more content to think otherwise...that's fine mate.  I prefer to be a realist than either a pessimist or an optimist but whatever works for you....go for it.

My happy place is walking my dog with or without friends or on my boat with or without friends and family.  I don't need anti-depressants but "thanks" so much for the medical advice, that was so kind of you.

Pessimistic means taking an unfavorable view of events or conditions and expecting an unfavorable outcome. In terms of the RV sector this definitely describes your stance so just embrace it, no point dressing it down by saying you are a realist.

https://www.interest.co.nz/property/128530/average-asking-price-homes-listed-sale-realestateconz-down-90071-february-auckland

down at the moment ...

does that mean people are moving where or just dumping those xtra homes now that bright lines (bright lines?)... who makes up this junk...

1st july change ... its dump season and that is why the prices are probably down as people rush to exit the brick and wood huts, apartments and sheds...

QuoteThe amount of housing stock for sale is at a 10 year high and average asking prices are tumbling, according to the latest data from property sales and rental website Realestate.co.nz.   The website had 31,745 residential properties available for sale at the end of June. That's up 28.6% compared to June last year, and the highest level of stock for sale on the website for the month of June since 2014.

Hey Waltzing.  That record level of stock for sale and record rate of asking price declines is before the change in bright line test was reduced from 10 to 2 years on 1 July 2024.  Some commentators are saying they expect a lot of new listings as a result of that big tax change.  For example, if you bought 6-7 years ago, you're still ahead compared to current prices, but can you sell...that's the big question.

One thing we know from history is that when there's record levels of houses for sale, that's normally a lead indicator for further price reductions.   Others will have a different view and think this is the bottom for housing but I note we're still 16% above average level's of affordability according to a recent article I posted a link to.  Another 16% decline in nominal terms is likely at least 20% in real inflation adjusted terms and adding that to the 30% we've already experienced, it seems quite plausible to me that in real terms, housing could easily halve between late 2021 and some point in the short to medium term future.    Some will still think that will have no impact on the RV sector.  Good luck with that.  History tells us that the fortunes of the RV and housing market are inextricably linked.

Quote from: Basil on Jul 06, 2024, 10:40 AMHey Waltzing.  That record level of stock for sale and record rate of asking price declines is before the change in bright line test was reduced from 10 to 2 years on 1 July 2024.  Some commentators are saying they expect a lot of new listings as a result of that big tax change.  For example, if you bought 6-7 years ago, you're still ahead compared to current prices, but can you sell...that's the big question.

Those that are looking to sell are the ones under the old 5 year Brightline period, so anyone who bought between 2019 and 2022.  The ones that bought closer to 2019 may still have some profits left to preserve.  Those that bought in 2022 probably have none, and would have been better off selling within the Brightline period so as to preserve the tax losses they can carry forward.  Currently real estate agencies are advertising for landlords to sell due to the Brightline change.  Allowing for the 90 day tenancy termination notice period, rental properties should start hitting the market July-Oct.  

Also note that realestate.co.nz has a much smaller number of listings than TradeMe.  TradeMe currently has 42,785 homes for sale.  And that's not counting the advertisements for blocks of townhouses that cover multiple properties rather than just one.

Slight;y off topic but the threat of a house price collapse could panic the public to sell and also panic the RBNZ..

The reserve bank will no doubt realise that underwater home owners both in monetary and real world climate ways are not what it wants.. expect the RBNZ to keep house prices within a range that does not cause banking problems and scares the economy ...

recently observed the behaviours of KIWIS (human version) and what they will do to secure properties and the basic instincts that kick in...

 This madness in which there is no expert financial modelling deployed by the private investor public (plumbers in this case) showed a complete lack of logic and therefore it is likely the threat to the banking system is a real and present danger...
 

Quote from: Basil on Jul 06, 2024, 10:40 AMHey Waltzing.  That record level of stock for sale and record rate of asking price declines is before the change in bright line test was reduced from 10 to 2 years on 1 July 2024.  Some commentators are saying they expect a lot of new listings as a result of that big tax change.  For example, if you bought 6-7 years ago, you're still ahead compared to current prices, but can you sell...that's the big question.

One thing we know from history is that when there's record levels of houses for sale, that's normally a lead indicator for further price reductions.   Others will have a different view and think this is the bottom for housing but I note we're still 16% above average level's of affordability according to a recent article I posted a link to.  Another 16% decline in nominal terms is likely at least 20% in real inflation adjusted terms and adding that to the 30% we've already experienced, it seems quite plausible to me that in real terms, housing could easily halve between late 2021 and some point in the short to medium term future.    Some will still think that will have no impact on the RV sector.  Good luck with that.  History tells us that the fortunes of the RV and housing market are inextricably linked.

[/irony on]

You are so right. Things are terrible and will get worse and worse over time. No need to assume that the market movement so far is already half way to the bottom, given that any intelligent being extrapolates trends in a linear fashion. Remember - the past is the best indicator of the future!

Obviously - intelligent forecasters put the start of the past where it suits them, otherwise this whole business would not work - i.e. please start at the last peak, and not - say - a couple of decades ago.

So - given that you remembered us that prices dropped in real terms 30% in the last two years, it clearly means that prices will keep dropping by 15% per year in real terms. The past after all is the best indicator for the future as an unnamed poster used to say - and linear extrapolation is king!

Lets do the numbers: Your property was 130% 2 years ago, it is now worth 100%, next year it will be 85%, in 2 years 70% ... and after only 6 years its price will be 10% of what it is now. Worse - one year later you will need to pay any buyer to take your property off you.

Shudder - the end of the world is nigh, lets hope this asteroid hits us before, shall we?

There is just this thing with the past ... the end of the world has been predicted hundreds of times before ... and guess what - the world didn't care.

Maybe one thing we really can learn from the past: More doomsday prophets around than you can place angels dancing on the point of a needle ... and none of them so far was right (the prophets, I obviously wouldn't doubt the angels :P )

Maybe just a case of much more doom-sayers than dooms.

Anyway - waiting to takeover in 10 years all of NZ property - and get 50% of the current value paid just to take it (remember - 15% pa - i.e. property will be at negative 50%) - but then, if I wait another decade longer I would get 200%! I love the power of linear extrapolation;

PS: I know, I forgot the power of compounding interest, but this was just to be nice to the faint hearted. Trust the doomers - The real devaluation of our property and shares will be much worse. Be afraid, be very afraid ... the end is nigh!

Ah - I forgot - we live in a housing crisis, don't we? What happens if supply is lower than demand - right - prices always move at the will of the doomer ...?

Interesting times

[/irony off]

Good idea to "do an ostrich" and keep your head down BP, everything will work out okay if you just ignore what's going on and how the speed of the housing falls is picking up and that's before the National Govt wants to flood cities with housing supply.  RYM down 75% from the peak, OCA down 65%, ARV down 55%...it cannot possibly get any worse.  Great strategy, what could possibly go wrong  ;)

Not a good look Paywalled out of the Herald

Short

A delay in the construction of care facilities at Whangārei's new Summerset Mt Denby retirement village has upset some residents who say they wouldn't have bought into the complex had they known there'd be such a long wait.
One resident, who didn't want to be named, said four people had died while being forced to live separately from their spouses due to the lack of onsite care facilities at Mt Denby. Couples had been distraught at the separation from each other.

Neglecting care facilities is good for short term profitably but will come back to bite as shortages worsen against rising demand.   

Quote from: allfromacell on Jul 19, 2024, 09:40 AMNeglecting care facilities is good for short term profitably but will come back to bite as shortages worsen against rising demand.   

Good point. It is short sighted traders who determine the share price. That's why investors always win in the long run.

Results out..... I'll leave it for others to comment

https://www.nzx.com/announcements/436785

SUMMERSET FIRST HALF UNDERLYING PROFIT $89.9M, UP 3%
 
 - Underlying profit for 1H24 of NZ$89.9m, up 3% on 1H23
 - Reported (IFRS) profit after tax of NZ$102.2m
 - Total assets of NZ$7.4 billion, up 17% on 1H23
 - Gearing ratio of 36.2%
 - 352 new units delivered
 - 588 sales of occupation rights for the half
 - Development margin of 28.3%
 - New site acquired in New Zealand
 

Excerpt.

QuoteHealth New Zealand's most recent offer of a 3.2% increase in aged care funding is well below the 11% required to simply cover aged care providers' rising costs over the last 12 months.

"We'll continue to provide care, as it's highly valued by our residents, but with the funding model the way it is we are focusing our care offering on smaller care facilities that are targeted at our village residents only.

"The wider aged care sector faces systemic challenges with over 60% of aged care provided by not-for-profits or charities, many of which are closing or reducing aged care beds. We will continue to strongly support the New Zealand Aged Care Association's work to highlight the underfunding of aged care and the consequences for us all."

Serious implications for those with a large degree of care in their business model.

Craig's latest

When the going gets tough...
SUM delivers acceptable 1H24 result
Price at 26 Aug 2024 Price target - 12mth
11.69 13.29
 SUM delivered 1H24 uNPAT of $90m, up 3% on pcp and in line with guidance, with record resale gains largely offset by a decline in development margin. Operating cashflows improved, but net debt stepped-up (as expected) as the first stage of its flagship c.$500m St Johns village neared completion. NTA increased 3% HoH to $11.43/share, and an 11.3cps dividend was declared.
2H24 outlook softens
SUM reiterated that it will build towards the lower end of its 675-725 target range in NZ given an increase in unsold stock in some locations, implying it will complete c.720 units in FY24 in total (i.e. c.680 in NZ and c.40 in Victoria), up 12% YoY. The largest 2H24 delivery will be 196 units at St Johns, where tough market conditions has seen pre-sales shrink from c.$100m in Feb to c.$90m now. Accordingly, we cut FY24e uNPAT 2% to $206m. While St Johns may be off to a slower start than hoped, we note SUM still expects to generate a cash margin of 18% on the project - 11% above portfolio aver

No need to change reporting standards for honest companies that comply with them like SUM.

Good result for SUM in challenging conditions.

Quote from: Basil on Aug 26, 2024, 10:46 AMExcerpt.
Serious implications for those with a large degree of care in their business model.

I guess you can see anything either as a problem or as an opportunity.

If people are hungry and food is running low - what happens? Right, food prices go up ... just look at what happened to the price of grain after Putlers attack on the Ukraine.

If people need care services and more and more providers go out of business (i.e. care places running low) - what exactly do you think is going to happen?

I guess sure - the Indian model comes to mind with poor old and sick people simply dying in the streets. Works perfectly fine. However - given that people here do have money (and just chose not to spend it for care ... maybe they change their priorities if they have to?

The old Palestinian adage comes to mind: If Apricots are cheap, plant apricot trees.

Care services currently are clearly too cheap.

Solid update.

3Q24 METRICS – SALES OF OCCUPATION RIGHTS

Summerset Group reported 289 sales for the quarter ending 30 September 2024, comprising 129 new sales and 160 resales.

Summerset CEO Scott Scoullar said "Total sales for Q3 were up 11 percent on the same time last year, with resales increasing 26 percent year-on-year."

Mr Scoullar said Summerset continues to sell homes despite the challenging economic conditions and is assisted by having 15 villages selling new homes across different locations in New Zealand.

"We are seeing a good balance of sales throughout the country with 55 percent of sales coming from outside Auckland, Wellington and Christchurch during this quarter.

"The economy was still extremely difficult in Q3, with a slow property market, weak consumer confidence and inflation continuing to have an impact. Despite this we've continued to manage through.

"Our sales show that we still have highly motivated prospective residents, and we've worked hard to bring them into our villages. We're seeing positive signs too with an interest rate cut (and further cuts anticipated) bringing more optimism to the market."

The first stage of Summerset's flagship St Johns village was delivered on time as expected this quarter, a major milestone for the company.

"The first of the St Johns' buildings was handed over in August, and the second building (which includes the care centre, café, bar, theatre and other resident amenities) was completed at the end of September.

"We are delighted to have welcomed our first residents into Summerset St Johns in October too. We're looking forward to introducing this premium village experience to our residents," said Mr Scoullar.

Another outstanding result, continuing the theme that SUM isn't as affected by the economy/property market as common thinking suggests.

Quote from: Greekwatchdog on Oct 08, 2024, 10:15 AMSolid update.

3Q24 METRICS – SALES OF OCCUPATION RIGHTS

Summerset Group reported 289 sales for the quarter ending 30 September 2024, comprising 129 new sales and 160 resales.

Summerset CEO Scott Scoullar said "Total sales for Q3 were up 11 percent on the same time last year, with resales increasing 26 percent year-on-year."

Mr Scoullar said Summerset continues to sell homes despite the challenging economic conditions and is assisted by having 15 villages selling new homes across different locations in New Zealand.

"We are seeing a good balance of sales throughout the country with 55 percent of sales coming from outside Auckland, Wellington and Christchurch during this quarter.

"The economy was still extremely difficult in Q3, with a slow property market, weak consumer confidence and inflation continuing to have an impact. Despite this we've continued to manage through.

"Our sales show that we still have highly motivated prospective residents, and we've worked hard to bring them into our villages. We're seeing positive signs too with an interest rate cut (and further cuts anticipated) bringing more optimism to the market."

The first stage of Summerset's flagship St Johns village was delivered on time as expected this quarter, a major milestone for the company.

"The first of the St Johns' buildings was handed over in August, and the second building (which includes the care centre, café, bar, theatre and other resident amenities) was completed at the end of September.

"We are delighted to have welcomed our first residents into Summerset St Johns in October too. We're looking forward to introducing this premium village experience to our residents," said Mr Scoullar.

The trend looks good (12 months rolling window):



SUM sales - Copy.JPG

Quote from: Buzz on Oct 08, 2024, 10:35 AMAnother outstanding result, continuing the theme that SUM isn't as affected by the economy/property market as common thinking suggests.

Correct because they are selling what the market really wants.  On the other hand others...

Quote from: Greekwatchdog on Oct 08, 2024, 10:15 AMSummerset Group reported 289 sales for the quarter ending 30 September 2024, comprising 129 new sales and 160 resales.

Summerset CEO Scott Scoullar said "Total sales for Q3 were up 11 percent on the same time last year, with resales increasing 26 percent year-on-year."

26% growth in resales - are more people dying? Anyone got a graph tracking their new sales and resales?  

Quote from: KW on Oct 08, 2024, 12:26 PM26% growth in resales - are more people dying? Anyone got a graph tracking their new sales and resales? 

BP put a graph up earlier ...not to be outdone here's my graph

Funny I also thought more people must be dying  ...especially when you mentioned mortality rates the other day

IMG_5928.png

Looks like the trend line is getting steeper in recent times.  All the others must be scratching their heads and wondering how SUM do it.

Quote from: Basil on Oct 08, 2024, 02:17 PMLooks like the trend line is getting steeper in recent times.  All the others must be scratching their heads and wondering how SUM do it.

Quote from: winner (n) on Oct 08, 2024, 01:02 PMFunny I also thought more people must be dying  ...especially when you mentioned mortality rates the other day

More people are dying.  Sadly, Stats NZ are no longer publishing the weekly figures so I cant track them.  But PFP.ASX is very optimistic on the outlook for their business lol  (which I own).

Fortunately the Australian Govt still publishes their deaths on a reasonably up to date basis. As you can see, 2024 deaths are approaching the record 2022 (Covid) death levels. 

As Lorraina likes to say, "I am well positioned"   ;D

Screenshot 2024-10-10 115931.png

Actually, Stats NZ has published the numbers up to June 2024.  As you can see, we are not far off the record either.  Note that a grand total of 4.435 people have died from covid in total since the pandemic began - these are mostly in the latter quarter of 2022 and first 2 quarters of 2023, distributed differently to Australia which was mostly all in 2022 due to them reopening the border 7 months earlier)

Death by numbers - June year ending 2010 to 2024

Screenshot 2024-10-10 171547.png

Quote from: KW on Oct 10, 2024, 11:54 AMMore people are dying.  Sadly, Stats NZ are no longer publishing the weekly figures so I cant track them.  But PFP.ASX is very optimistic on the outlook for their business lol  (which I own).

Fortunately the Australian Govt still publishes their deaths on a reasonably up to date basis. As you can see, 2024 deaths are approaching the record 2022 (Covid) death levels.

As Lorraina likes to say, "I am well positioned"   ;D

Screenshot 2024-10-10 115931.png

Now - your interest in some undertaker (PFB) is obviously absolutely irrelevant for this thread. However - in your defence - a higher death rate is good for retirement villages as well - for all of them, but presumably better for the villages with a higher proportion of care-cases than SUM.

Care doesn't generally make money.  Shorter tenure does / quicker turnover of LTO does. 

Quote from: Dolcile on Oct 10, 2024, 06:12 PMCare doesn't generally make money.  Shorter tenure does / quicker turnover of LTO does. 

Maybe you need to think a bit deeper :P ;

Quote from: Dolcile on Oct 10, 2024, 06:12 PMCare doesn't generally make money.  Shorter tenure does / quicker turnover of LTO does. 

Which is why Summerset is switching to Care ORA's.  Charge them for 2 years, then hope they die soon after.  Repeat. 

Notice in Pie funds latest update that their property and infrastructure fund lists SUM as fifth largest holding.

Quote from: Shareguy on Nov 15, 2024, 08:21 AMNotice in Pie funds latest update that their property and infrastructure fund lists SUM as fifth largest holding.

Exceptionally well-managed company on undemanding metrics and SUM is extremely well positioned to benefit from any significant uptick in the property market.  If I believed a really decent improvement in the property market would happen in 2025, I'd buy back in without hesitation.

Another solid update

4Q24 METRICS – SALES OF OCCUPATION RIGHTS

Summerset Group is pleased to report 361 sales for the quarter ending 31 December 2024, comprising 169 new sales and 192 resales. The company ended the financial year with its highest ever full year result of 1238 total settlements (an increase of 12 percent over FY23).

Total settlements in Q4 were on par with the same period in 2023 (360 sales) with the company seeing it's highest resale quarter ever.

Summerset CEO Scott Scoullar said this was an encouraging result to end the year, especially in such a challenging market.

"This is a positive result for both the quarter and the full year, the residential property market has been slow but despite this we've continued to grow.

"We've seen good demand, and we've managed to achieve a strong sales result in a difficult economic environment. It's been very pleasing to see the strength of our resales, reflecting our growing number of fully completed and established villages, and we have a substantial portfolio of both quality new and pre-occupied units around the country that continue to appeal to our target audience."

The big milestone in the quarter was the completion and opening of the first stage at St Johns village in October seeing 60 percent of the village's homes delivered as well as the village's main centre (including pool, café, bar and resident theatre).

Summerset St Johns now has 25 percent of the village units completed to-date under contract across independent living, serviced apartments and care suites.

Outside Auckland, the Pāpāmoa, Te Awa and Richmond villages were among the strongest performers in new sales for the quarter. Resales were led by Casebrook and Avonhead, however Summerset still continues to see a good balance of sales throughout the country with 59 percent of sales from outside Auckland, Wellington and Christchurch. In Australia, our Cranbourne North village continues to perform well as new stages of homes are released.

Mr Scoullar said the company has a strong pipeline of committed sales contracts heading into 2025 across its New Zealand and Australian villages.

Summerset will release its full year results on 28 February 2025.

Running total (4 quarters) now 1238 sales p.a. - just one higher than the last ATH. Are they running out of puff?

Just kidding - well done, though looking for a better rise next time around ...

Quote from: Basil on Nov 15, 2024, 11:14 AMExceptionally well-managed company on undemanding metrics and SUM is extremely well positioned to benefit from any significant uptick in the property market.  If I believed a really decent improvement in the property market would happen in 2025, I'd buy back in without hesitation.

On that note where do you think the property market is heading Basil?

I think it's on a road to nowhere.
Huge amount of supply and demand remains constrained by housings lack of affordability. Much lower levels of new immigration won't help.

SUM have proven to be a solid performer in a very soft real estate market so I am pleased Kingfish have a decent sized stake as I now have a significant shareholding in KFL..

yeah .... nowhere...

https://www.youtube.com/watch?v=LQiOA7euaYA

A slight correction from Tuesdays announcement ex  CEO and some questions from Anne Gibson. (Paywalled)

https://www.nzherald.co.nz/business/summerset-groups-mistake-and-why-450m-project-is-mainly-unsold/U3Q7KLAW65FPJMLD4ZKE6YF3I4/

Excellent result in a tough market. SUM make all other listed company management in this sector look like absolute idiots.

Yes it is a good result.

Found this quite telling and who can blame any of the RV's for not doing this.
Aged care funding

Mr Scoullar said that Summerset was considering changes to its care model due to the state of aged care underfunding in New Zealand.

"While we've created greater financial certainty for ourselves, and our residents, by moving to care ORAs at many of our villages there is still a major gap between our aged care funding and the costs of running our care centres.

"We are currently reviewing our policies and where this funding gap is leaving us. We will have to consider making our care centres available to our village residents only and no longer accepting referrals from the public health system.

"It's not a step we want to take but we need to focus our limited funding and staffing resources on our village residents and their needs. We don't want to end up overstretching our staff. We know this will mean a bigger burden will be placed on the public health system, but we can't keep taking the strain."

I was talking about this yesterday with a care giver, where will they go? The government spend, from what I'm told, 2.5x looking after a potential resident than they pay a care home. It is idiocy at its best and clogging the health system.

Quote from: Basil on Feb 28, 2025, 08:52 AMExcellent result in a tough market. SUM make all other listed company management in this sector look like absolute idiots.

I remember the days that many on the other channel swore black and blue RYM would always be twice the price of SUM and my position back then many years ago was that someday SUM would eclipse RYM's share price and go on to be twice the price of RYM.  I was ridiculed by many for that apparently preposterous long-term prognosis.  I can't help myself wryly observing that today, SUM's closing share price is now more than four times the share price of RYM !  That's the difference between management who know what they're doing over time and the gross incompetence shown by RYM management in the years since Simon Challis left.  I don;t think things are really any better over at OCA but at least there, the heavy discount to NTA fairly reflects the full extent of the headwinds faced.  That's right, I'd rather buy OCA at 67 cents than RYM at $3.08 but it's definitely a case of picking the least really ugly sister lol.  Thankfully there's plenty of other choice on the NZX and I remain of the view in this sector the best choice is SUM or have none.  KFL have some SUM and their portfolio allocation is all I feel I want or need.  Hope KFL not tipping more money down the RYM black hole.

More than solid sales update from Summerset


June Qtr sales up 20% on last year

Cite 'strong demand' ...that's good

https://announcements.nzx.com/attachment/447070.pdf

 IMG_6190.png

Very impressive and not surprising considering they're selling what customers really want.  Inferring from SUM's great result that others in the sector are doing well is fraught with a lot of risk.

Latest research from Craigs 9 July titled "SALES SIZZLE" out just after SUM's stunning first half sales result the other day.
Rating, OUTPERFORM.
Price target $16.63
Underlying EPS forecasts for 2025 and future years, (rounded). $1.00, $1.07, $1.16
PE at $12 FY25 12.0, FY26 11.2, FY27 10.4

My observations yesterday separate to the above.
I also estimated FY25 eps at $1.
How have SUM weathered all the extraordinary challenges of the last 5 and a half years since I sold out just before Covid at around $9 ?
Underlying EPS FY19 47.0 cps
Underlying EPS FY24 87.6 cps
5 year CAGR of underlying EPS against severe housing, Covid and economic headwinds, a deeply impressive 13.26% per annum.
The only company in this sector that's left with a competitive fully integrated internal development model.
Now has the most competitive DMF in the sector at 25%, everyone else is on 30% or more.
Building what people want, vast majority is broad acre stand alone housing and the rate of development can be easily modulated to match demand.
Very large land bank here and decent one in Australia
The only company that has no legacy issues to deal with in terms of residents hanging around for a decade or even more on ultra cheap fixed weekly fees for life.
Their main competitor RYM has had to radically reduce its forward development book while SUM keeps trucking on.  This gives SUM a real opportunity in the years ahead to grow market share, especially with by quite some margin, the lowest DMF
Competitors have major problems at a village level with operational cash burn and headwinds from a much higher level of care in their business model
SUM will get immediate material tax advantages from the new investment boost scheme (20% immediate tax deduction) for new commercial buildings when they're delivered and have the biggest development program in the years ahead so will benefit disproportionately more than its competitors.

SUM have a LOT of significant advantages going for them, many of which confer a permanent competitive advantage over their competitors.
Despite all this they are priced below NTA and on forward metrics that really are completely out of line with their proven CAGR.
My thinking is the atrocious performance of RYM has really caused a lot of negative sentiment in this sector, none of which is deserved as far as SUM is concerned and has dragged SUM down.   I think Craigs are about right and this should be trading in the late $16 range.

On a forward PE of less than 12 and with a CAGR of 13.26% and a housing market that's come off about 30% in real terms over the last 4 years and now at face value seems to have stabilized, I think long term holders will do well buying here.  Not a quick road to riches but I expect solid progress in the years ahead.  SUM in a class all of its own compared to how the others have handled the challenges in recent years.
Disc: Have established a small position.  Best of breed by a VERY VERY long way.

Final thought.  That sales result the other day was so good it would shake anyone with an interest in this sector out of their slumber.  It's certainly piqued my interest and I am very happy to be back on the share register with SUM again.  Have always liked how this company has been run...just a case for me of waiting for the strong headwinds to abate.  I'm very impressed with how SUM have grown EPS over the last 5 years.

 

Sorry,  a few other things I forgot to include which are HUGE for me.
1. Highly experienced management team I trust and have complete confidence in. Scott Scouller has been there since 2014 as CFO and was Julian Cook's protégé and has now had many years at the helm as CEO and has a proven ability to drive underlying EPS growth.   Similar length of service for head of construction Dean Tallentire.  Proven development and delivery systems that deliver proven growth.
2. To the best of my knowledge they have never missed a new build delivery target since they listed.  They just keep doing what they say they're going to do.  100% credibility.
3. There's a clear focus as part of their purpose on delivering satisfactory returns to shareholders...as opposed to others that don't even have this in their business mandate
4. Executive remuneration seems fair and reasonable for a company of this size
5. They actually pay a reliable dividend, albeit a modest one.
6. Last but not least by any means, I checked in with top gun guru TA specialist KW on the TA and she said it looks quite encouraging.

Added a few more as a long term hold.

Results out

https://www.nzx.com/announcements/457627

Very impressive performance.  No sure how anyone could fault that result.

I like this from the presentation - Estimated NTA uplift approx $12.30 per share when all villages under construction are completed.

Jeez, current NTA is $13.18

They saying in a few years time NTA will be well over $25.00 ...mayb

Quote from: winner (n) on Aug 28, 2025, 02:07 PMI like this from the presentation - Estimated NTA uplift approx $12.30 per share when all villages under construction are completed.

Fixed that for ya

For Bar Review

Summerset (SUM) reported annuity earnings down -28% year on year, its lowest since the COVID-impacted 1H20. The weak result was driven by declining village deferred management fees (DMF), higher opex, and refurbishment costs. Cash conversion of both resales and new sales was the worst on record. Net debt increased by +22% year on year. But it wasn't all bad news. SUM stuck its neck out and guided for largely flat net debt from FY25 onwards—a marked change from the last five years, when net debt increased by a factor of 3x. NTA continued to grow strongly, in contrast to peer Ryman Healthcare, and contracted sales were up ~+30% year on year in July/August 2025; the future looks brighter. If SUM delivers on expectations of a substantial acceleration in cash generation and sales over the next 12 months, not least in Australia, the stock could do well. But it is a big if. SUM is likely to face headwinds in both DMF and resales cash flow as NZ approaches a full cycle of flat house prices, like-for-like cost inflation continues, and the recovery in house prices remains pedestrian. Retain NEUTRAL with a slightly reduced target price.

What's changed?
Earnings: Annuity earnings reduced >-20%, given lower DMF, lower care fees, and higher opex.
Target price: Reduced to NZ$11.70 (from NZ$12.10), due to reduced earnings, partly offset by roll-forward.
Annuity earnings were the weakest in five years—should grow strongly from here
SUM reported its lowest annuity EBITDA margins since the COVID-impacted FY20, as opex outgrew revenues. Below the line, D&A, refurbishment costs, and interest meant annuity earnings were down -28% year on year, to NZ10cps, -45% below our estimate. On a 12-month rolling basis, annuity earnings have been largely stable for five years. DMF, resale gains, as well as care and village fees have almost doubled, but the diseconomies of scale continue. Opex and below-the-(EBITDA)-line items outgrew revenues. We are optimistic this will improve going forward. Over the next two to three years, SUM will benefit from converting >750 care beds to care suites, which appears to have been well received by residents. Over time this should improve annuity earnings by >+NZ$20m. We expect the rest of the sector to take note. We have pushed out our earnings growth by 12 months and continue to expect a relatively rapid recovery; but at ~32x 24-month forward earnings, we see this as reflected in the share price.

Net debt higher than expected—but guidance inspires confidence
SUM reported its worst cash conversion of sales on record, which, in combination with continued high capex, drove net debt up ~+NZ$150m since FY24. While disappointing in 1H25, SUM stuck its neck out and guided the market to largely flat net debt from FY25 onwards; this would mark a sharp reversal of the last four years, when net debt grew on average by ~+NZ$300m annually. It will need both a meaningful recovery in sales and a reduction in capex, despite increased deliveries. A tall order, but achievable.

Earnings changes
We make relatively large reductions to our annuity earnings estimates. This is driven by reduced DMF (lower village DMF, partly offset by higher care DMF), lower care (fewer premium accommodation charges, given more care is to be sold under ORA) and village fees, higher opex, and increased D&A and refurbishment costs. These are only partly offset by higher resale gains and lower P&L interest. Our estimates for underlying earnings are reduced less, given increased estimates for new sales gains as we include the gains from transitioning to care suites.

Forbsr ravevabout annuity earnings being down >20%

Summerset say Annuity EBITDA up 5%

Suppose Forbar's annuity earnings not calculated same way as DpSummerset's Annuity EBITDA

Anybody how Forbar calculate such things    ....in the past they've never replied to my requests

I continue to believe that underlying profit is the best reporting metric and it was a very good result.  SUM is best of breed by a VERY long way.

I guess the big concern I have for the sector is the super normal profits of the past maybe won't ever repeat.  Share prices in this sector are inextricably linked to house prices and until the outlook for the latter improves, I've come around to the point of view its hard to see any company in this sector gaining meaningful traction, even SUM.   

https://tmmonline.nz/article/976524812/predicted-zero-growth-in-house-prices-good-for-first-home-buyers?utm_source=GR&utm_medium=email&utm_campaign=Flat+house+prices+open+door+for+first+home+buyers

Quote from: Basil on Aug 29, 2025, 10:50 AMI continue to believe that underlying profit is the best reporting metric and it was a very good result.  SUM is best of breed by a VERY long way.

Their entire profit came from property revaluations ($109M profit from $123M in property revaluations).  Their total property assets were suddenly worth 18% ($1.3 Billion) more than last year. 

How much are they going to have to "revalue" their property portfolio up next year to achieve a profit?  

You must be happy with the update Basil.

289 in 3Q 2024 sales v 420 3Q 2025.

Good volume going thru today after todays positive update.

Well managered, happy holder. Was great buying in June 2023 for patient investor

Quote from: ValueNZ on Oct 07, 2025, 02:36 PMYou must be happy with the update Basil.

289 in 3Q 2024 sales v 420 3Q 2025.

Solid update no question although its worth noting a lot of the increase was in lower value care units.
Caution is warranted in drawing any conclusions from this data release in terms of how others in this sector are going as SUM has a very long track record of performing well while others in this sector are struggling.

For Bar Update

We upgrade our rating on Summerset (SUM) from NEUTRAL to OUTPERFORM with an increased target price of NZ$14.30. We expect SUM to sustain its sector-leading asset growth over the next decade, given: (1) its best-in-class development engine already delivering ~700 units per year; (2) NZ retirement village consents at the lowest level in a decade; and (3) key competitors significantly scaling back development. While SUM's balance sheet has been a key market focus, our analysis suggests its current growth trajectory is sustainable. We expect the build-up of net debt to slow from 1H26 as capital is released from eight developments currently at or near peak capital intensity. This should provide SUM optionality to capitalise on any recovery in the NZ housing market over the next 12 to 24 months, enabling it to adjust delivery volumes in line with market conditions.

What's changed?
Earnings: Annuity EPS falls -8% in FY25 but rises +13% in FY26 and FY27 on higher care fees and lower interest.
Target price: Rises to NZ$14.30 on earnings changes and the incorporation of a discounted cash flow (DCF) valuation.
Rating: Upgraded to OUTPERFORM from NEUTRAL.
Best-in-class development engine poised to capitalise on increasingly favourable supply–demand dynamics
SUM has delivered NTA growth of ~+23% per year over the last decade, largely through disciplined execution of a simple and repeatable development strategy: building broadacre sites on ~10ha parcels of land. Looking ahead, SUM has the largest land bank in the sector and a mature development engine delivering ~700 units per year. This gives it significant optionality to capitalise on a more favourable competitive backdrop over the next three to five years as the volume of new stock coming to market reduces significantly.

Net debt growth to slow as capital intensive developments wind down
SUM's net debt has risen by more than NZ$1bn since FY20. Our analysis of village accounts suggests this has largely been driven by land purchases (partly to support Australian expansion) and spend on eight developments currently at or near peak capital intensity, including high-cost projects St Johns and Boulcott. We expect net debt growth to moderate from 1H26 as spend on these developments slows and new stock sells through, even as Australian deliveries ramp towards ~250 units per year from FY27.

SUM is highly levered to an improving NZ housing market
The likelihood of a recovery in the NZ housing market over the next 12 to 24 months appears to be improving, underpinned by: (1) falling interest rates; (2) affordability back to long-run average levels; and (3) rising sales activity. We see SUM as the most levered to improving market conditions, given its development capacity and flexibility to scale up deliveries as necessary.

Earnings revisions
We make several changes to our earnings forecasts, including a modest reduction in ILU new sales volumes and lower interest (lower average interest rates). We have factored in weaker cash conversion of new sales in the near to medium term to reflect the working capital impact of SUM's ongoing transition to care beds sold under an occupational rights agreement (ORA). However, our net debt forecasts are largely unchanged in FY26 and FY27, as this is offset by: (1) lower capex following our analysis of SUM's development spend; and (2) lower dividend cash outflows due to modelling out of SUM's dividend reinvestment plan (DRP).

We have also modelled Australian care revenue independently for the first time, given recent changes to government funding and the introduction of RAD retentions from 1 November 2025. This leads to higher care revenue across our forecast horizon and the incorporation of RAD cash flows from FY26 onwards.

A Newsroom article about the country's biggest home builder ..Summerset of course

Even mentions AI

https://newsroom.co.nz/2025/12/12/a-new-wave-of-retirement-village-development/?utm_source=Newsroom&utm_campaign=0f2d4cd166-Daily_Briefing+12.12.2025&utm_medium=email&utm_term=0_71de5c4b35-0f2d4cd166-97970805&mc_cid=0f2d4cd166&mc_eid=f260d735f1

What is the gist of the article?  Can it be summarised in 1-2 sentences?

Quote from: Ferg on Dec 12, 2025, 07:50 AMWhat is the gist of the article?  Can it be summarised in 1-2 sentences?

How about a Tsunami of residents coming and that the sector and Govy are not prepared for it.

Feel like I have said this before

Quote from: Ferg on Dec 12, 2025, 07:50 AMWhat is the gist of the article?  Can it be summarised in 1-2 sentences?

The "article" is written, "in partnership with Summerset."  It's a puff piece masquerading as journalism.

LOL yes it is mate but that shouldn't detract from the superb job SUM have done building shareholder value over the last 14 years.  Makes others performance in the sector over that timeframe look disgraceful to say the least. 

Quote from: Basil on Dec 12, 2025, 01:11 PMLOL yes it is mate but that shouldn't detract from the superb job SUM have done building shareholder value over the last 14 years.  Makes others performance in the sector over that timeframe look disgraceful to say the least. 

How is it disgraceful, yeah with RYM plainly obvious. OCA just been a tad frustrating just never meet your short term momentuem trade philosophy

Do you really want to do history? Yours maybe hazy given your age?

Remember "you" rated OCA as a home run and told everyone to go all in (I have this from several investors)

OCA was always a 10 year project before we get returns which you advertised when the naysayers at the time were telling you otherwise who you told they didn't know what they were doing.

I remember you complaining they werent building enough so when they signaled they were stepping up you were happy, needless to say you then complained about debt levels. So OCA couldn't win either way with you.

OCA was never going to make big returns in a short time and certainly the Covid Bubble caused alot of issues for them due to soaring coats associated with their Care side.

Makes me wonder what "you" were researching way back them when you were highlighting them as a good thing.

Beggars beleif TBH.

Anyway back to SUM

Quote from: Greekwatchdog on Dec 12, 2025, 01:39 PMOCA was always a 10 year project

IPO investors were promised a 6 year point of inflection from which returns would grow.  In the first full year after listing the company made 8.5 cps underlying profit.  Nearly 9 years after listing investors are still waiting for this so called point of inflection and those earnings per share to grow.

The "you can't have too many" was a bit of a catch-cry at one of our annual get-togethers in the viaduct many years ago, yes, when we were drunk and having a good time.  Back then we all thought and were assured the business model would generate huge returns from the 6 year point.  I can't recall my PF allocation back then but I do recall having 300K at one point which was a fair bit of my portfolio value at that point in time.  At no point did I ever suggest to anyone they really go "all in" as you allege.  That's never been me, see my signature line on the other forum.

Investors were sold a pup full of old care villages with little prospect for successful development.  Nobody knew this at the time.  The care suite model that we were assured would be earnings transformative hasn't been.  Its a failed experiment as EBITDA returns per bed are still lower than at the IPO but company management still go on ad museum every year assuring shareholders they're invested in a growth company, and all the while EPS has been stagnant or declining and down a whopping 30% in inflation adjusted terms.

I woke up and smelled the coffee and sold most of my shares many years ago at $1.40 very close to the time Greg Tomlinson took a big stake at that price.  I took a great deal of trouble on the other channel to explain why I sold down.  Nobody could reasonably ask for a more fulsome explanation of why I changed my investment position.  There were many dozens of posts.

The shares need to get to $1.28 just to match the IPO price in inflation adjusted terms and remember this is a property company so its supposed to go up, not down.  The company hasn't paid a dividend in years but senior management are paid twice what they were at the time of the IPO and frankly are masters of information obfuscation.

Meanwhile SUM is nearly 10 times its IPO price 14 years ago, (let me say that again, nearly ten times your money) while the OCA share price languishes and RYM's share price has collapsed over that timeframe under the weight of extremely poor management and highly creative and disingenuous accounting policies as well as a raft of other extremely poor decision making.

So yeah, I stand by my comment above that SUM has made others in this sector look disgraceful / pathetic / ridiculously weak, pick whatever adjective you prefer or some combination of the three.

Quote from: Basil on Dec 12, 2025, 02:05 PMIPO investors were promised a 6 year point of inflection from which returns would grow.  In the first full year after listing the company made 8.5 cps underlying profit.  Nearly 9 years after listing investors are still waiting for this so called point of inflection and those earnings per share to grow.

The "you can't have too many" was a bit of a catch-cry at one of our annual get-togethers in the viaduct many years ago, yes, when we were drunk and having a good time.  Back then we all thought and were assured the business model would generate huge returns from the 6 year point.  I can't recall my PF allocation back then but I do recall having 300K at one point which was a fair bit of my portfolio value at that point in time.  At no point did I ever suggest to anyone they really go "all in" as you allege.  That's never been me, see my signature line on the other forum.

Investors were sold a pup full of old care villages with little prospect for successful development.  Nobody knew this at the time.  The care suite model that we were assured would be earnings transformative hasn't been.  Its a failed experiment as EBITDA returns per bed are still lower than at the IPO but company management still go on ad museum every year assuring shareholders they're invested in a growth company, and all the while EPS has been stagnant or declining and down a whopping 30% in inflation adjusted terms.

I woke up and smelled the coffee and sold most of my shares many years ago at $1.40 very close to the time Greg Tomlinson took a big stake at that price.  I took a great deal of trouble on the other channel to explain why I sold down.  Nobody could reasonably ask for a more fulsome explanation of why I changed my investment position.  There were many dozens of posts.

The shares need to get to $1.28 just to match the IPO price in inflation adjusted terms and remember this is a property company so its supposed to go up, not down.  The company hasn't paid a dividend in years but senior management are paid twice what they were at the time of the IPO and frankly are masters of information obfuscation.

Meanwhile SUM is nearly 10 times its IPO price 14 years ago, (let me say that again, nearly ten times your money) while the OCA share price languishes and RYM's share price has collapsed over that timeframe under the weight of extremely poor management and highly creative and disingenuous accounting policies as well as a raft of other extremely poor decision making.

So yeah, I stand by my comment above that SUM has made others in this sector look disgraceful / pathetic / ridiculously weak, pick whatever adjective you prefer or some combination of the three.

More Yadda Yadda from you.

Just for the record we have never met, so whatever discussions you and others were having at your outings were for you only, I couldn't care less.

So perhaps when you go on one of your a 'Bull rampage's" maybe you should fully do your research before gas lighting a stock.

I think you're bitterly disappointed you backed the wrong horse.

Quote from: Basil on Dec 12, 2025, 02:25 PMI think you're bitterly disappointed you backed the wrong horse.

Waiting for that. Nope on the contrary. Been in SUM since they annouced push into Care. Paid $9.07

So your barking up the wrong tree. Besides Basil, don't get emotional about money, take your losses as you take your wins, empathy and humility something you lack.

Right time to get dressed up and spend some of my divvie at Casino..

Not fat from SUM's next update so no need to comment until then

Quote from: Greekwatchdog on Dec 12, 2025, 04:09 PMWaiting for that. Nope on the contrary. Been in SUM since they annouced push into Care. Paid $9.07

So your barking up the wrong tree. Besides Basil, don't get emotional about money, take your losses as you take your wins, empathy and humility something you lack.

Right time to get dressed up and spend some of my divvie at Casino..

Not fat from SUM's next update so no need to comment until then

How did Casino go gwd

If it was a gambling casino no doubt came home with heaps more than you took.

Quote from: winner (n) on Dec 13, 2025, 09:47 AMHow did Casino go gwd

If it was a gambling casino no doubt came home with heaps more than you took.

Hey Winner, (Yes) didn't end up going as I had visitors arrive that I weasn't expecting so entertained them.

Divvie still there, so next time, hmm maybe tonight after Te Rapa races...

GWD

Gosh look-through total sales for FY25 up 16% YoY, driven by strong Serviced Apartment resales in 4Q25. SUM's strong finish to the year, slight dip in unsold inventory, and positive commentary on pre-sales demand at its second village in Australia (Chirnside Park) are encouraging.

Disc. I'm back in. Ryman still my larger aged care stock.

https://www.nzx.com/announcements/466132

Very solid result underpinned by resales is my read on it. Superbly managed company.

Quote from: Basil on Jan 20, 2026, 01:27 PMVery very solid result underpinned by resales is my read on it. Superbly managed company.

Yep a very solid result

Full year new sales (not counting care conversions) up 16% on F24 and resales also up 16% on F24

Then on top of that there were 125 Care Conversions into new ORAs which must add a lot of overall value.

Good to see first signs of success in Australia after sluggish early sales at SUM's first Australian village at Cranbourne North. While they expect sales to improve it is very good to see that a block of 28 units at Chirnside Park already presold 50 percent,indicating a much stronger early demand than at Cranbourne.

Though it remains early days it gives encouragement that Summerset has its product-market fit right for Australia.

Quote from: Basil on Jan 20, 2026, 01:27 PMVery solid result underpinned by resales is my read on it. Superbly managed company.

As per usual eh.

I've sold a ton of my OCA, gone 1/3rd OCA RYM SUM, which now totals about 45% of my portfolio.

ValueNZ, I'm curious why are you going to heavy on the retirement sector?

Quote from: Dolcile on Jan 27, 2026, 09:47 AMValueNZ, I'm curious why are you going to heavy on the retirement sector?

Balance sheets from heaven for ultra cheap. Think about what a dollar worth of stock in each of these companies gets you...

https://assets.ctfassets.net/hjeh5mvg3dxz/2G6NCEB1t9FOZhuph9onTl/967b64427a87f5b2a23d43dc4a4e9512/Summary_14_Year_Metric_Summary.pdf

How many companies in the world have grown like this...

Summerset have weathered the real estate downturn since the peak in late 2021 very well.  What's happened underneath the surface however is more concerning for long term capital gains.  Average ILU units as a percentage of average house prices in the surrounding suburbs have moved up a heck of a lot to  in some cases be 100%, raising questions of affordability going forward and whether ILU asking prices are realistic as the housing market softens further.

My own quite cynical view is that many bank economists are not much better than "house poodles" producing optimistic views on forecast house price growth to "sell debt".  Take what they say with a grain of salt.  The reality on the ground is that the steady grind down in prices, (especially in real inflation adjusted terms) continues.  https://www.interest.co.nz/property/136868/average-asking-price-residential-properties-listed-trade-me-property-sank-82500 
This is not the sort of environment where this sector thrives and the migration figures are not supportive of a trend change anytime soon.

Basil how do you feel about the listed commercial property sector comparatively ?

Quote from: Dolcile on Jan 27, 2026, 12:53 PMBasil how do you feel about the listed commercial property sector comparatively ?

No comparison really, chalk and cheese.  The retirement sector simply doesn't produce cash, even SUM only pay a ~ 2% unimputed dividend and that's only out of resale gains, (new village development margin all gets ploughed back into common area village facilities and operationally they lose money on most villages).  My thoughts on RYM and OCA are well known.

Many of the listed REIT's are trading at a decent discount to asset backing, are PIE's and for 33% taxpayers are yielding up to ~ 8% gross.  After years of deep recession I feel the commercial property sector is well placed to benefit from increased occupancy, decent ongoing rent reviews and the recovering economic situation.

I hold ARG 12% portfolio position and KPG, 14% both bought at prices materially south of here last year and yielding ~ 10% gross on my average purchase price.  Rightly or wrongly I treat my investment in these companies as a quasi bond / quasi bunch of rental properties.

I still believe that a decent chunk of the $160 Billion invested in term deposits will find its way into term deposit alternatives when those investments mature and top of the list for many investors is REIT's which are underpinned by property which I believe most people feel comfortable with.

I think last weeks reaction to the slight inflation miss is an overreaction.  0.1% lower annual print and everything would have been fine and dandy.  I reckon 0.1% is immaterial in the overall scheme of things and well within the margin of error / irrelevance.  e.g. the price of international airfares and accommodation, mentioned as being problematic in that print which rose steeply last year is completely irrelevant to a lot of people.

Thanks Basil, much appreciated. I recently taken exposure to a basket of REITs via the Kernel NZ Commercial Property Fund - and similarly I'm treating it as part of my bond allocation.   

One comment on the RV operators.   I'm wondering if the likes of SUM stopped developing, whether the cash flow would materially improve.  It seems a lot of the fcf is fuelling growth. 

Quote from: Basil on Jan 27, 2026, 03:51 PMNo comparison really, chalk and cheese.  The retirement sector simply doesn't produce cash, even SUM only pay a ~ 2% unimputed dividend and that's only out of resale gains, (new village development margin all gets ploughed back into common area village facilities and operationally they lose money on most villages).  My thoughts on RYM and OCA are well known.

Many of the listed REIT's are trading at a decent discount to asset backing, are PIE's and for 33% taxpayers are yielding up to ~ 8% gross.  After years of deep recession I feel the commercial property sector is well placed to benefit from increased occupancy, decent ongoing rent reviews and the recovering economic situation.

I hold ARG 12% portfolio position and KPG, 14% both bought at prices materially south of here last year and yielding ~ 10% gross on my average purchase price.  Rightly or wrongly I treat my investment in these companies as a quasi bond / quasi bunch of rental properties.

I still believe that a decent chunk of the $160 Billion invested in term deposits will find its way into term deposit alternatives when those investments mature and top of the list for many investors is REIT's which are underpinned by property which I believe most people feel comfortable with.

I think last weeks reaction to the slight inflation miss is an overreaction.  0.1% lower annual print and everything would have been fine and dandy.  I reckon 0.1% is immaterial in the overall scheme of things and well within the margin of error / irrelevance.  e.g. the price of international airfares and accommodation, mentioned as being problematic in that print which rose steeply last year is completely irrelevant to a lot of people.

If the sector doesn't produce cash, how has Summerset managed to grow assets at a 22% CAGR.

What you mean is they don't currently produce free cash flow.

But if you can plow capital into projects with a 20% + cash IRR that's exactly what you ought to do.

Quote from: ValueNZ on Jan 27, 2026, 08:27 PMIf the sector doesn't produce cash, how has Summerset managed to grow assets at a 22% CAGR.

Realised capital gains on resales has been reinvested in the business during the boom times, quite rightly but if the real estate market falls for a protracted period of time that source of funds eventually dries up.  2026 will be the fifth year in the row the real estate market has fallen in real inflation adjusted terms if the market is ostensibly flat this year which is my base case assumption.  The cash flow effects of the decline in real estate has been masked by SUM as their ratio of the cost of an ILU to a house in the surrounding suburbs has risen sharply from circa 70% to circa 100%.  That's a one time change that literally cannot be repeated for affordability reasons.

The whole sector has been built upon the assumption that licenses to occupy can be resold at a meaningful profit when the resident passes away but what if that's not the case in the future and resales in real inflation adjusted terms are no growth or at lower prices ?  People keep forgetting all the profits in this sector where built upon a time when real estate showed an unprecedented period of growth from 1996 to 2021 with prices growing at 5 times the inflation rate to a level that was completely unaffordable.     As I've said before, I think the golden days for this sector are over.

Quote from: Basil on Jan 27, 2026, 09:42 PMRealised capital gains on resales has been reinvested in the business during the boom times, quite rightly but if the real estate market falls for a protracted period of time that source of funds eventually dries up.  2026 will be the fifth year in the row the real estate market has fallen in real inflation adjusted terms if the market is ostensibly flat this year which is my base case assumption.  The cash flow effects of the decline in real estate has been masked by SUM as their ratio of the cost of an ILU to a house in the surrounding suburbs has risen sharply from circa 70% to circa 100%.  That's a one time change that literally cannot be repeated for affordability reasons.

The whole sector has been built upon the assumption that licenses to occupy can be resold at a meaningful profit when the resident passes away but what if that's not the case in the future and resales in real inflation adjusted terms are no growth or at lower prices ?  People keep forgetting all the profits in this sector where built upon a time when real estate showed an unprecedented period of growth from 1996 to 2021 with prices growing at 5 times the inflation rate to a level that was completely unaffordable.     As I've said before, I think the golden days for this sector are over.

Far as I'm concerned gains on resales have never been higher at SUM. Partially this is because unit prices never hit those highs that residential housing did in 2021. Another is SUM is now a significantly larger company than it was in 2021. So resale margins will be lower than the boom times yep, which makes sense.

You talk about real inflation adjusted house price growth. This is not the right way of thinking about it when you borrow at 0%. What matters is the nominal growth in house prices.

Why is this getting smashed?

See the thread on possible refloat of MET.  I think the overhang will put pressure on the pricing of the entire sector until its dealt with.  EQT are "brave" to try and relist MET in the prevailing environment for the sector on the NZX.   They're probably sick of the pathetic return they've got on assets employed by MET and want to give others the "opportunity" to be involved.  I see it as an attempted "hospital pass"  Who wants to be left holding the baby with shitty nappies ?

Quote from: Basil on Feb 17, 2026, 02:53 PMSee the thread on possible refloat of MET.  I think the overhang will put pressure on the pricing of the entire sector until its dealt with.  EQT are "brave" to try and relist MET in the prevailing environment for the sector on the NZX.   They're probably sick of the pathetic return they've got on assets employed by MET and want to give others the "opportunity" to be involved.  I see it as an attempted "hospital pass"  Who wants to be left holding the baby with shitty nappies ?

Can you provide some detail on MET's "pathetic return" since they delisted?

They still report on the NZX because the MET010 bonds are still listed. Reporting over the years is all there on the NZX under that ticker.

Fill year results just announced
SUMMERSET POSTS $234.2M FULL YEAR UNDERLYING PROFIT

• Underlying profit for FY25 of NZ$234.2m, up 13% on FY24
• IFRS net profit $259.7m down 22% on FY24
• Total revenue of NZ$361.8m up 13% on FY24
• Total assets of NZ$9.2b, up 15% on FY24
• 1,560 total sales of occupation rights, up 26% on FY24
• 693 new homes delivered under occupation right agreement (ORA) (637 in New Zealand and 56 in Australia)
• Land bank total of 5,499 retirement homes and 1,173 care homes across NZ and Australia
• Uncontracted NZ stock decreased 7% compared to 1H25
• Development margin of 27.8%
• Final dividend of NZ13.2 cents per share
• Village and care resident satisfaction 91% and 89% respectively
• Staff retention 84% up 3% on FY24

Anyone got a view on why the SP is down in the low $10's.  Down a couple of bucks in the last 2 months. 

The year end report looks good to me.

There's another thread here, but Basil mentioned that it's possibly due to funds selling down to purchase, I think, Metlife Care, possible listing. https://stocktalk.co.nz/index.php?topic=408.0

Quote from: Dolcile on Feb 27, 2026, 11:21 AMAnyone got a view on why the SP is down in the low $10's.  Down a couple of bucks in the last 2 months. 

The year end report looks good to me.

I'm not aware of anything specific to SUM but maybe the subdued outlook for NZ residential property market and the sharp reversal from last years forecast of dropping OCR to rising.

I think some of the analyst might have a view they can't keep growing at the pace without increasing their debt levels which are already on the high side.
All the listed RVs are down similar amount YTD

OCA -12%
RYM -14%
SUM -14%


SUM are the NVIdia of the sector...keeps on delivering and market still chooses to mark it down.

Probably good long term buying if you believe in the sector and their NTA uplift from today +$12 and your patient..lol

https://api.nzx.com/public/announcement/468297/attachment/463399/468297-463399.pdf

Very good result, as usual.  An extremely well managed company with a well proven track record of growth extending all the way back to when it first listed in late 2011.  Underlying profit was just $38m in 2015, now $234m.  10 year underlying EPS CAGR 18% !

I see underlying EPS of 95 cps for FY25  NTA 10 years ago was $1.89, now $13.75.  Embedded value of just on $8 per share.

Has been an outstanding performer ever since it listed.

I had a brief foray into SUM in 2025 in a very small way and got stopped out on a 10% stop loss limit I apply to all new positions.  Only lost a few thousand dollars.  Before that I sold out a decent sized holding at $9 in early 2020 just before Covid hit as a capital preservation measure.  Happy with that decision as my portfolio performance in the last 6 years has vastly outstripped the share price performance of SUM..

So with the above outstanding metrics and the company performing in a completely different league to its peers, 1. why is the share price going nowhere and has basically done a round trip to nowhere since I sold out 6 years ago and 2, why am I not a holder now ?

The first is a very difficult question to answer, the second is simple, this simply doesn't fit my investment parameters now in that being close to retirement I need a decent dividend yield with the vast majority of my portfolio.

Possibly answers to question 1 in my opinion in order of importance include:
a) The endless malaise the housing market is stuck in and the outlook appears to be for more of the same
b) Greatly increased competition in the sector from listed and unlisted companies making many parts of the retirement market over supplied
c) Their relatively slow start with their Australian growth plans and very modest development margin of 8-10% over there suggesting there's quite considerable work to be done on development efficiencies there
d) The popularity of this sector has been very badly tarnished by horrific value destruction by RYM over the last 10 years, (was $8.50 a decade ago), and endless lackluster performance from OCA
e) The pitiful unimputed dividend yield makes this extremely unattractive for retiree's who need income.
f) possible overhang of stock in this sector from a possible listing of MET.

Opportunity knocks for long term capital appreciation for younger investors.
The housing market will not stay in the doldrums forever but a protracted period of sideways type price movement (declining in real terms by 2-3% per annum), in my opinion should be expected.  The almost endless malaise of house prices could easily extend through the remainder of this decade and possibly even longer
For long term investors who don't need yield, I think SUM makes a compelling case to be included as part of a well diversified portfolio.  I don't see any reason at all to own anything else in this sector other than SUM for those investors.  Others in this sector have not earned and don't deserve the trust of investors in my opinion.  SUM have well and truly earned the respect of the investment community, its just that this sector is so badly out of favour with investors.

This weakness is wild. Have not seem SUM underperform other retirement shares or the index like this in several years.

Doesn't seem crazy relative to RYM (green), if anything the divergence between OCA and the rest is most noticeable.

Maybe investors have started to hear about the joys of the 'float' at OCA.

NZRV.png

Market seems unhappy with SUM.  If I was a younger dog I'b be watching the chart closely looking for the bottom.

The yield on these does my head in.

Asked Claude what his theory on SUM's underperformance was and received this answer?

Good question! Here's a theory piecing together what we know about Summerset's situation right now.

Why SUM.NZX Is Lagging — A Working Theory

The short summary: Summerset's underlying business is actually performing well, but several macro and sector-specific headwinds are weighing heavily on the share price.

1. NZ Property Market Weakness
This is probably the biggest driver. Retirement village operators like Summerset are deeply tied to house prices — when residents move in, they often sell their family home first, and when they leave, the village recycles that unit value. Housing inventory is at a 10-year high, creating a buyer's market, and net migration has dropped off since its 2023 peak, removing a key source of demand. � A soft property market directly compresses the resale margins Summerset earns on its units. This showed up in results — while FY25 underlying profit was a record $234.2m (up 13%), IFRS net profit after tax was down to $259.7m, with the change largely driven by lower median house prices impacting revaluations of the company's portfolio. �

2. Interest Rate Uncertainty
OCR cuts through 2025 were supposed to be a tailwind, but the picture has become murkier. ANZ has cut its 2026 house price inflation forecast to 2% (from 5%), arguing that as the cycle progresses, mortgage rates may shift from a tailwind to a headwind if the OCR track turns less accommodative — with their first OCR hike expectation now brought forward to December 2026. � Markets hate uncertainty, and rising rate expectations tend to reprice property-linked stocks downward.

3. Share Price Already Reflects the Underperformance
SUM is down about 15% over the past 52 weeks on the NZX �, which is significant underperformance. As of mid-March 2026, shares were trading around $10.14, reflecting a 13.18% 52-week decline. � Yet analysts remain relatively bullish — the analyst consensus price target is around $14.04 NZD, with a max estimate of $16.00. � That gap between the current price and analyst targets suggests the market is pricing in risks that analysts may be underweighting.

4. Earnings Quality Concerns
Retirement village sector earnings can be hard to read. The headline IFRS profit swings based on property revaluations, which introduces volatility unrelated to operating performance. This can make investors nervous even when underlying profits are growing, as it adds noise to the earnings story.

5. Macro NZ Headwinds More Broadly
New Zealand has seen a continued exodus of residents to Australia — every family leaving is one fewer buyer and potentially one more seller — and unemployment concerns linger. � This weighs on consumer confidence, which affects the pace at which retirees commit to moving into a village.

The Contrarian Angle
With a P/E of around 9.4 and analysts sitting well above the current price, the case can be made that SUM is being over-punished by the market. If the NZ housing market stabilises and OCR fears ease, the stock could re-rate meaningfully. The demographic tailwind (ageing NZ population) is a genuine long-term driver that hasn't gone away.

As always, this is a theoretical analysis, not financial advice — I'm not a financial advisor. Worth speaking to one before making any investment decisions.

Excellent synopsis.  I think if I was a shareholder I would have significant concern about their very poor development margin of only 8% in Australia.

On one hand this is a relatively small part of their overall business, however on the other hand Australia offers a massive long term opportunity but yet, despite being there for many years they are not yet executing with anywhere near satisfactory margin. Why not ?

INVESTMENT MEMO: Summerset Group Holdings Limited (SUM.NZX)
Date: 23 March 2026
Current Price: NZ$9.32
NTA per Share: NZ$13.75 (31 Dec 2025)
Market Capitalisation: ~NZ$2.3 billion
Recommendation: Attractive for long-term, patient capital

EXECUTIVE SUMMARY
Summerset is the best-in-class retirement village developer and operator in New Zealand, now expanding into Australia. The company just delivered a record FY25 underlying profit of $234.2m (+13%) on record sales of 1,560 units (+26%), yet the share price has fallen ~25% from mid-2025 highs and trades at a 32% discount to NTA. The disconnect between operational excellence and share price creates an opportunity, though significant macro headwinds explain the de-rating and could persist.

The core thesis is simple: SUM is a proven compounder (NTA 6x growth since FY16, underlying EPS ~18% CAGR over 10 years) trading near multi-year lows because the entire NZ retirement village sector is deeply out of favour due to property market malaise, interest rate uncertainty, and sector contamination from the Ryman Healthcare debacle.

COMPANY OVERVIEW
Summerset builds, owns and operates integrated retirement villages across New Zealand (40 villages) and is expanding into Victoria, Australia (4 villages in development). The business serves 9,500+ residents with 7,198 retirement units and 1,475 care units in its existing portfolio, with a land bank of 6,672 additional units (NZ and Australia).

Business Model: Summerset generates returns through:

Development margin on first-time sale of new units under Occupation Right Agreements (ORAs) — 27.8% in FY25
Resale gains and DMF realisation when residents vacate and units are resold — $104.5m realised resale gain + $60.6m DMF in FY25
Ongoing village and care fees — growing as the portfolio matures
Interest-free resident loans — $3.3b of residents' capital funding the asset base

The company claims "no core debt" — arguing that development assets ($2.3b) exceed net debt ($1.96b) by $318m, and that the first sell-down of each village fully repays the capital invested.

FY25 FINANCIAL HIGHLIGHTS

Key observations:

The IFRS profit decline is driven by lower fair value movements of investment property ($264.5m vs $364.7m restated), reflecting the subdued NZ housing market. This is a non-cash, mark-to-market item.
Underlying profit — which strips out unrealised revaluations — grew 13%, demonstrating genuine operational momentum.
A prior period restatement of investment property values (relating to the accounting treatment of long-term resident loans) reduced FY24 investment property by $24.9m and FY23 by $17.1m. This is small (<0.5% of total) but is a minor governance mark.


VALUATION
At $9.32, SUM trades on the following metrics:
MetricValueP/Underlying Earnings~9.8x
Price/NTA0.68x (32% discount)
Price/Embedded Value (NTA + $1.9b embedded)~0.40x
Dividend Yield2.6% (unimputed)
EV/Underlying EBITDA~13.5x (est.)

Broker targets (most recent):

Forsyth Barr: $14.30 (OUTPERFORM, Nov 2025) — later trimmed to $11.70 post-1H25 annuity earnings weakness
Craigs Investment Partners: $16.63 (OUTPERFORM, Jul 2025)
Consensus mean: ~$14 (per forum discussion citing analyst data)

NTA trajectory: Management has disclosed that villages under construction are estimated to generate ~$12.00 per share of additional NTA uplift once complete and sold down. Of this, ~$2.50 has been delivered, leaving ~$9.50 to come. Combined with the current $13.75, this implies potential future NTA well above $20 per share over the medium term, subject to property market conditions.
The valuation case in a sentence: You are buying a proven growth compounder at <10x underlying earnings and a 32% discount to current NTA, with a pathway to NTA roughly doubling over the development cycle.

COMPETITIVE STRENGTHS — WHY SUM IS "BEST IN CLASS"

Unbroken execution track record: SUM has never missed a build delivery target since listing in 2011. FY25 delivered 693 units across NZ and Australia, consistent with guidance. This is remarkable in construction-intensive businesses.
Fully integrated, in-house development model: SUM is the only NZ-listed retirement operator that retains a complete internal development and construction capability. This provides cost control, quality assurance, and margin discipline (28% development margins vs 20-25% medium-term target).
Broadacre strategy with regional diversification: The focus on easily-stageable broadacre sites (typically ~10ha) across diverse NZ regions allows SUM to modulate build rates to match demand. Eight regions saw 40+ settlements each in FY25.
Lowest DMF in the sector at 25%: This is the most competitive offering for residents (competitors charge 30%+), supporting demand and brand strength. SUM is #1 in brand "consideration" and "first choice" among its target audience.
Largest land bank: 6,672 units in NZ and Australia, enabling the portfolio to nearly double over time.
Experienced, stable management: CEO Scott Scoullar (with SUM since 2014, previously CFO, protégé of founder Julian Cook) and Head of Construction Dean Tallentire provide deep institutional knowledge and proven execution capability.
Best-in-class resident satisfaction: 91% village satisfaction, 89% care satisfaction, 84% staff retention (up 3%).
Growing care ORA model: The conversion of care beds to ORA has materially improved care profitability — care EBITDA surged from $2.7m (FY24) to $18.8m (FY25), with further upside as more beds convert. DMF on care units increasing to 27.5% from 1 January 2026.
No equity raise required: Unlike peer Ryman Healthcare (which raised ~$1 billion in early 2025 and ~$1 billion prior), SUM has maintained its growth trajectory without dilutive capital raises.


GROWTH CATALYSTS
1. Australian Expansion

Four villages under construction in Victoria (Cranbourne North, Chirnside Park, Oakleigh South, Torquay) with three further proposed sites (Craigieburn, Drysdale, Mernda) plus a new planning permit lodged for Mornington.
Target 300 units per year in Australia from FY27.
Sales momentum building: 1.5+ contracts per week since Q4 2025, Chirnside Park 60% sold of first release.
Net cash position on Australian completion forecast around breakeven; expected to add >$550m NTA.
Development margins of 8-10% in Australia are lower than NZ (~28%), reflecting early-stage market entry. This is a watch item but expected to improve as SUM brings construction in-house (Torquay targeted as first internally-managed Australian build).
Queensland expansion being explored with a dedicated land targeting specialist.

2. Massive NTA Uplift in Pipeline

~$12 per share of NTA uplift from current developments (villages + care centres).
$240m+ of projected net cash profits from villages under construction.
Completed villages in FY25 (Bell Block, Te Awa) returned combined cash profit of $72.7m at $105k per unit average.

3. Care Bed Conversion to ORA

586 care beds identified for conversion (of 778 total targeted for ORA).
125 conversions completed in FY25 at $250k average, 23% margin.
Target: 75% of all care beds under ORA over time.
Medium-term target: care EBITDA per bed of $20-25k per annum (vs ~$13k in completed villages currently).

4. Improving NZ Housing Market (eventual)

SUM is the most operationally leveraged to any NZ housing recovery given its development capacity and the flexibility to scale up deliveries.
Affordability has returned to long-run average levels; falling interest rates should eventually be supportive.
Q1 2026 sales ahead of FY25 same period per company guidance.

5. Competitive Consolidation

NZ retirement village consents at lowest level in a decade.
Key competitor Ryman has radically reduced its development book.
Oceania Healthcare and Arvida have struggled operationally.
SUM is positioned to gain significant market share.


KEY RISKS AND CONCERNS
1. NZ Property Market Malaise (HIGH)
This is the single biggest headwind. NZ house prices have been declining in real terms for ~5 years. The forum discussions extensively debate this, with one knowledgeable poster ("Basil") arguing that real inflation-adjusted house prices are down ~30% from the late 2021 peak and could remain flat to declining for years. Key indicators:

Housing inventory at 10-year highs
Net migration has dropped sharply from 2023 peak
ANZ has cut 2026 house price inflation forecast to just 2%
Interest rate path uncertain — the anticipated OCR cutting cycle has become murkier, with some forecasters now expecting rate hikes by late 2026

This matters because: (a) resale margins compress when house prices are flat/falling (residents can't sell homes quickly or for as much); (b) fair value movements on investment property decline, reducing IFRS profits; (c) prospective residents delay purchasing decisions.
However, SUM has demonstrated resilience: FY25 was another record sales year despite these conditions, and underlying profit grew 13%. The business model has proven more robust to property cycles than pure housing developers.
2. Balance Sheet / Net Debt ($1.96 billion) (MEDIUM-HIGH)
Net debt has roughly tripled since FY20 ($680m). While management guides for the $2.0-2.5b band and gearing to decline in FY26, the quantum is substantial:

Gearing of 37.1% is within the 30-40% target but above the historical range
LVR covenant at 38.5% vs 50% limit — reasonable headroom but not massive
Interest cover at 6.43x is strong
$626.8m undrawn facility provides buffer

Forsyth Barr noted (Aug 2025) that cash conversion of sales was the worst on record and net debt came in higher than expected. Management has guided for flat to declining net debt from here, which would be a material positive inflection if achieved.
There is no indication of a capital raise need. The company has explicitly denied it. Development assets exceed net debt by $318m.
3. Australian Execution Risk (MEDIUM)

Only 8-10% development margins in Australia vs 28% in NZ
Very early stage — only 98 units in total Australian portfolio
Operational complexity of entering a new market with different regulatory, care and consumer dynamics
The new Australian Aged Care Act (effective 1 Nov 2025) adds regulatory uncertainty
Working toward bringing construction in-house to improve margins — not yet proven in Australia

Australia is a very large addressable market and could be transformative, but the returns need to improve materially for this to be value-accretive rather than a capital sink.
4. Property Revaluation Dependency (MEDIUM)
One forum poster (KW) correctly noted that FY25 IFRS profit was substantially supported by $264.5m of property revaluations — including $123m from a revaluation uplift (of which $54.8m was reversal of valuers' stock discount assumptions). If the property market deteriorates further, these could reverse, pressuring IFRS earnings and potentially NTA.
That said, underlying profit (the metric used for dividends and internal management) strips out revaluations and grew 13%.
5. Cash Flow Generation from Existing Operations (MEDIUM)
Cash flow from existing operations (CFEO) was just $32.3m in FY25 on a $9.2 billion asset base. Villages at the "operating" level (excluding development) lose money on a cash basis — village and care fees of $220m are exceeded by village suppliers and employees of $238.4m. This is offset by resale cash flows of $145.4m and care bed conversion receipts.
The "Ponzi" concern raised in the forums is overstated but not entirely without merit — the business model requires ongoing development to generate development margins, and existing village cash yields are modest (5.3% in mature villages, 1.1% overall including corporate). Management's task is to demonstrate that as the portfolio matures and care ORA conversions embed, CFEO improves materially.
6. Sector Sentiment / Metlife Care Re-listing Overhang (MEDIUM)
The entire NZ retirement sector is deeply out of favour. All listed operators are down 12-14% YTD. A potential re-listing of Metlife Care could create additional supply of retirement sector equity. Fund managers may be selling existing RV holdings to accommodate new listings.
7. Low Dividend Yield (LOW-MEDIUM for income investors)
The 2.6% unimputed dividend yield is unattractive for income-focused investors. The 20-50% payout range on underlying profit suggests dividends will grow with earnings but will remain modest relative to yield alternatives.
8. Regulatory Risk — Aged Care Funding (LOW-MEDIUM)
SUM has flagged it may restrict care centres to village residents only due to government underfunding of aged care. While this is a rational economic response, it has reputational and potential regulatory implications.

COMPARISON WITH SECTOR PEERS
SUM is unquestionably the sector leader. The forum discussions are emphatic and data-supported on this point:
SUM trades at a premium to peers on P/NTA, which is appropriate given the quality differential. However, the absolute valuation at <10x underlying PE is undemanding by historical standards.

FINANCIAL PROJECTIONS (SIMPLIFIED)

Based on Craigs' July 2025 estimates ($1.00, $1.07, $1.16 EPS), Forsyth Barr's +13% annuity earnings growth in FY26-27, and current sales momentum. These assume relatively stable NZ property market and continued Australian ramp.
At $9.32, implied FY26 PE: ~9x. FY27 PE: ~8-8.6x.

WHAT COULD GO WRONG (BEAR CASE)

NZ house prices fall a further 10-15% in real terms, compressing resale margins and requiring investment property write-downs that erode NTA
Interest rates rise rather than fall, pushing gearing toward the top of the range
Australian development proves to be a capital-destroying exercise with margins stuck at 8-10%
A Metlife Care re-listing depresses sector multiples further
Government regulatory intervention on the ORA/DMF model
In a deep bear case, NTA could decline and the discount could widen, producing capital losses even from current depressed levels

Downside scenario: If NTA declined to ~$12 and the stock traded at 0.6x NTA, the share price could fall to ~$7.20 (a further -23%).

WHAT COULD GO RIGHT (BULL CASE)

NZ housing market stabilises and begins recovering, driving IFRS earnings recovery and NTA expansion
Australian villages hit their stride with margins improving toward 15%+
Care ORA conversions drive care EBITDA to $40-50m (from $18.8m)
Sector re-rating as investors recognise the disconnection between operating performance and valuations
Net debt peaks and declines, removing a key investor concern
Competitor weakness (Ryman, Oceania) allows SUM to capture disproportionate demand

Upside scenario: If the P/NTA discount narrows to 0.9x and NTA reaches $18-20 over 3 years, the stock could reach $16-18 (70-90% upside). Craigs' mid-2025 target of $16.63 is illustrative of this scenario.

CONCLUSION
Summerset is an exceptional operator trading at a valuation that assumes the worst. At $9.32:

You pay <10x record underlying earnings for a company with a 10-year underlying EPS CAGR of ~18%
You get a 32% discount to current NTA of $13.75, with $9.50 per share of NTA still to be created from existing developments
You get the best management team in the NZ retirement sector with an unblemished delivery record
You get an early-stage Australian growth optionality that could be transformative

The risks are real: NZ property malaise, elevated debt, Australian execution uncertainty, and deep sector pessimism. The share price could remain depressed or fall further if the housing market deteriorates.
But the asymmetry is compelling. Even modest improvement in conditions could drive a significant re-rating. A return to 1.0x NTA (let alone any premium) on current NTA implies $13.75 — 47% upside. If NTA grows as guided, the upside is substantially greater.
For long-term investors who can tolerate near-term volatility and don't require yield, SUM at $9.32 represents one of the more compelling risk-reward propositions on the NZX. This is a genuine quality-at-a-discount opportunity, with the caveat that the catalysts for re-rating (housing recovery, debt peak, Australian proof points) may take 12-24 months to materialise.
Position sizing should reflect the macro uncertainty — this is not a table-pounding "all-in" at current prices given the property market headwinds, but a strong candidate for a meaningful portfolio position built over time.

Crickey A.I. is getting very good.  Don't think I could have said it better if I took quite a few hours to draft it up.

Is it tempting you yet, Basil?
Disc: not a holder but I've been taking notice...

I think SUM management have executed exceptionally well ever since they listed but the headwinds in the sector are too strong at present.

We're probably at the bottom of the interest rate cycle and to me its really telling that real estate has not in any way responded to the downcycle in interest rates.  That in many parts of the country its lost more than 30% of its real inflation adjusted value in a strong interest rate downcycle indicates to me its was horrendously overpriced at the peak of the market in 2021 but its also speaks of structural issues in the economy and N.Z.'s relative attractiveness as a place to live.  I like living here but the economy has been awful for a very long time and I can understand why bright young people are leaving for better prospects overseas.

With inflation and interest rates headed up I can't at this stage see what the catalyst is for the 5 year property malaise to end ?  In fact I think the outlook for the real estate sector is quite daunting.  Stock level's at 10 year high's and interest rates headed up do not make for many happy outcomes for vendors.  I think the share price of companies in this sector is very closely aligned with real estate prices and that's why despite SUM's management executing extremely well the share price is drifting.  They really need to prove up their Australian development model.  I see that as a key catalyst for a rerating but that's not going to happen overnight and in fact it might take them several years and its not certain they can execute there as well as they are doing here..

The lack of cash flow the sector generates is concerning and the very low unimputed dividend yield leaves me still feeling pretty cold.   That said, if SUM did get down to approx 50% discount to NTA I might be tempted.  About $7 as mentioned by A.I. would be tempting but if things get that bad there's probably more tempting opportunities to be had with better yield.  Time will tell.    Investment in this sector is a capital gains game.  If real estate is not going up in real terms the share prices are not going up, its that simple.  I'm keeping my powder dry at this stage.

Quote from: Basil on Mar 23, 2026, 05:34 PMI think SUM management have executed exceptionally well ever since they listed but the headwinds in the sector are too strong at present.

We're probably at the bottom of the interest rate cycle and to me its really telling that real estate has not in any way responded to the downcycle in interest rates.  That in many parts of the country its lost more than 30% of its real inflation adjusted value in a strong interest rate downcycle indicates to me its was horrendously overpriced at the peak of the market in 2021 but its also speaks of structural issues in the economy and N.Z.'s relative attractiveness as a place to live.  I like living here but the economy has been awful for a very long time and I can understand why bright young people are leaving for better prospects overseas.

With inflation and interest rates headed up I can't at this stage see what the catalyst is for the 5 year property malaise to end ?  In fact I think the outlook for the real estate sector is quite daunting.  Stock level's at 10 year high's and interest rates headed up do not make for many happy outcomes for vendors.  I think the share price of companies in this sector is very closely aligned with real estate prices and that's why despite SUM's management executing extremely well the share price is drifting.  They really need to prove up their Australian development model.  I see that as a key catalyst for a rerating but that's not going to happen overnight and in fact it might take them several years and its not certain they can execute there as well as they are doing here..

The lack of cash flow the sector generates is concerning and the very low unimputed dividend yield leaves me still feeling pretty cold.  That said, if SUM did get down to approx 50% discount to NTA I might be tempted.  About $7 as mentioned by A.I. would be tempting but if things get that bad there's probably more tempting opportunities to be had with better yield.  Time will tell.    Investment in this sector is a capital gains game.  If real estate is not going up in real terms the share prices are not going up, its that simple.  I'm keeping my powder dry at this stage.

Totally agree with your views on the housing market, more and more houses I see are for sale by negotiation or priced now which is always a sign.
  Is there any way to short the NZ housing market?

Quote from: Playa on Mar 30, 2026, 09:52 AMTotally agree with your views on the housing market, more and more houses I see are for sale by negotiation or priced now which is always a sign.
  Is there any way to short the NZ housing market?

Yes, sell your house at auction ASAP and let the lawyers hold your monies in trust accounts.
Good luck, there's an enormous number of camper options out there this time of year. Better living everyone.

Can't really be worried about sales progress at Summerset

Remember 'challenging times' abound they say

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https://www.nzx.com/announcements/470509
Crickey, I know I've said it before but my goodness, this business is run like a very well oiled Swiss watch.
If it weren't for the pathetic unimputed dividend yield and headwinds with real estate I'd be a holder at this price again but that's just me and my profile as a semi retired investor.  Maybe an opportunity coming up for younger investors who are unconcerned by the low yield to build a position for long term capital gain ?

Tbh Basil, I'm tempted.  At $9 p/share SUM is now down 30% since the 52 week high.  It is just very hard to buy in the midst of such a strong downtrend.

Shares have down a round trip to nowhere in the last 6 years, was $9 when I sold out in early 2020.
Mind you, houses have also done a round trip to nowhere, probably backwards over the same timeframe.
The chances of this being a coincidence are extremely low and you're dead right to be concerned about buying in a downtrend. 

This might be in your $7 buy zone soon, much sooner than expected, Basil. Wild!

Quote from: entrep on Apr 13, 2026, 04:13 PMThis might be in your $7 buy zone soon, much sooner than expected, Basil. Wild!

To add to this, and please correct me if I am wrong, but to someone with the timeframe to wait, could buying at $7.xx be like buying HLG and TRA at the lows/bargain prices of years ago?

To me, SUM seems like a best in class, extremely well run and managed company, like TRA and HLG. The setup seems similar.

The issue I have with the RV sector is, they haven't demonstrated a credible story on how / when they are going to deliver meaningful cash back into investors pockets.   

Quote from: entrep on Apr 13, 2026, 07:13 PMTo add to this, and please correct me if I am wrong, but to someone with the timeframe to wait, could buying at $7.xx be like buying HLG and TRA at the lows/bargain prices of years ago?

To me, SUM seems like a best in class, extremely well run and managed company, like TRA and HLG. The setup seems similar.

Personally I wouldn't touch until it bases.
I had a tour of a Summerset down here in February and was amazed at the high asking prices.
I had a feeling sales were slow.

I agree with all of the posts above but my concern is around the lack of cash flow at an operational level from villages. I think they need to move to 30% dmf fees, the same as the rest of the sector, ASAP.

Hallenstein Glasson and Turners have proven they can get great compounding sustained growth over a long period of time while still maintaining excellent dividends to shareholders so this must beg the question why can't Summerset do the same ?

In recent years we've seen the unit asking prices creeping up as a percentage of the surrounding suburbs house prices now to such an extent that often there is very little difference between a two-bedroom independent living unit and house in the same suburb. Obviously that growth in unit prices relative to house prices cannot keep going indefinitely is it raises severe affordability issues for new incoming residents.

Therefore as I see it, in the future unit prices will be very closely related to house prices and with house prices stuck in an endless malaise the likelihood of interest rates hiking up again, I fail to see how asking prices  of the retirement village units can rise meaningfully from here.

The huge unknown is how profitable are these retirement village companies in an era where prices just stay flat for an almost endless period of time.

To me this industry has always been built upon the presumption that house prices go up quite a bit faster than inflation and that's simply not happening any more and may not happen again in our lifetime.

Somerset is a very well-run company, frankly I think some people are mad to own OCA or RYM over this, but the headwinds for the sector are just simply too strong. The government are squeezing care costs to the point where there's no money in it, villages at an operational level are break even at very best and the whole business model hangs on reselling units for more than the original occupier paid.  If that presumption is no longer the case it would appear there are fundamental cracks in the business model of these companies.

I expect the share price to closely follow what's happening with house prices and at this stage it would appear the share price could stay in the same malaise that house prices are stuck in for many years to come.

That brings me back full circle to the inadequate yield. If the company can't pay a decent yield and the share price is not going up, I don't see a good case to own the shares.

I can't indulge myself in the retirement lifestyle I want to enjoy based on NTA no matter what the size of the discount to NTA. I.e. you can't eat NTA.

Will the industry change in the future and go back to the high growth model it once was in the golden era for the sector,. I cannot say. I cannot see that far ahead but one thing is for sure. There are a heck of a lot more companies trying to find gold in the sector than there was when Ryman started and Summerset followed them. First and second mover advantage has long gone.

Show me the money ! Pay me a 5% dividend that grows over time and I'll seriously consider buying back in.

Good post Basil.  The other question I have is why can Radius generate an adequate return and dividend from care, but SUM etc can't?

Good question and I don't have an answer.

My contention is that without capital gains the retirement village sector is broken.

For example invest a million dollars in summerset and you are effectively investing into one independent living unit.  10 years later sell it for 1 million dollars and what have you made?. On the face of it you've made 250,000 dollars dmf fees but I believe most of that gain is gobbled up in the fact that villages are not covering their operational costs and dmf fees are subsidising village operational costs. Your stock turn is once every 10 years and you have probably made almost nothing after paying for village operational losses over the years.

 Invest that one million dollars into Turners and over that same period of 10 years you would have turned that stock over profitably more than 100 times or invested in Hallenstein Glasson you would have turned that stock over more than 60 times at a 60% gross profit margin. Just let that vast difference in stock turn rate sink in and you will realise why the business model at Turners and HLG is vastly more capital efficient, profitable and cash flow rewarding than SUM. In the context of this, the level of discount to NTA at SUM is a red herring and almost completly irrelevant.

Thanks all, ran everything through my AI advisor:

Updated View at $8.50
The price has now fallen 38% from the 52-week high and trades at a 38% discount to NTA. The Q1 operational update was strong, yet the stock kept falling. That tells you the market doesn't care about operations right now — it's repricing the sector structurally.

The Forum Commentary Deserves Serious Engagement
Basil and Dolcile are raising the most important question about this investment, and it's one that my original memo arguably didn't weight heavily enough:
"Without capital gains on resales, is the retirement village business model fundamentally broken?"
Let me walk through this honestly.
The capital efficiency argument is real. Basil's comparison to TRA and HLG is directionally correct even if imperfect (you shouldn't compare property to retail directly). The core point stands: SUM ties up enormous capital (~$800k per unit) that turns over once every 7-10 years. A retailer turns inventory dozens of times per year. The cash return on capital employed at SUM's village level is genuinely poor — completed villages generated just 5.3% CFEO return on net assets in FY25, and only 1.1% across the whole portfolio.
The operational cash flow problem is structural, not cyclical. Village and care fee receipts of $220m don't cover village supplier and employee payments of $238m. This isn't a one-off — it's been the pattern for years. DMF and resale gains are subsidising operations, not providing a return on top of them. Basil is right about this.
The business model does depend on nominal house price growth. SUM's entire embedded value of $1.9 billion — the future resale gains and DMF — assumes units can be resold at prices that generate meaningful margins. If house prices are flat in nominal terms for a prolonged period (let alone declining in real terms), those embedded gains compress. Management lifted prices 2.7% in FY25, but that was against a backdrop where surrounding house prices only rose 0.8%. That gap can't persist indefinitely.
The "you can't eat NTA" point is valid for income investors. At $8.50, the dividend yield is still only ~2.9% unimputed. For retirees or income-focused investors, this is simply not competitive versus term deposits at 4%+ or REITs yielding 6-8%.

What's Changed in My Assessment
I'm lowering my conviction level from "attractive" to "interesting but requires higher risk tolerance." Here's why:
1. The macro has deteriorated further since my memo.
Long-term rates rising (not just short rates flat), fuel/geopolitical uncertainty adding a new headwind, and Australian institutional appetite for NZ weak. The catalyst for re-rating is further away, not closer.
2. The structural critique has more merit than I initially gave it.
I focused too much on the NTA discount and underlying earnings trajectory, and not enough on the fundamental question: what is a fair multiple for a business that generates minimal free cash flow, pays a sub-3% unimputed dividend, and depends on nominal house price growth to make its embedded value real?
3. The downtrend is accelerating, not stabilising.
From $12+ to $9.32 to $8.50 in weeks. Clearasmud's anecdotal comment about high asking prices and slow village sales, if representative, suggests the Q1 sales numbers may be masking pricing pressure. Technical support at the $9.26 level identified by one poster has already broken.

Revised Valuation Framework
At $8.50:

P/Underlying Earnings: ~8.7x (cheaper, but what's the right multiple for no-free-cash-flow growth?)
P/NTA: 0.62x (massive discount, but Basil's point — what's NTA worth if you can't monetise it except through more development that consumes more capital?)
Dividend yield: 2.9% unimputed
EV/Underlying EBITDA: ~12x (est.)

The bear case is now more plausible: If you apply a "mature, low-growth, capital-intensive" framework rather than a "growth compounder" framework, a PE of 8-9x on earnings that aren't backed by free cash flow could actually be fair value, not cheap. This is Dolcile's point — until SUM demonstrates it can return meaningful cash to shareholders, the discount may be deserved rather than an opportunity.
The bull case still exists but requires more patience: If you believe (a) house prices eventually recover in nominal terms, (b) St Johns sells down successfully generating material cash, (c) gearing declines as guided, and (d) care ORA conversions lift care EBITDA to $40-50m over the medium term — then $8.50 will look very cheap in hindsight. But all four of those need to happen, and the timeline is uncertain.

The Honest Summary
Your friend in finance, Basil, and Dolcile are all circling the same truth: SUM is operationally excellent but the business model has a structural cash flow problem that the market is now pricing in. The stock could be a great long-term investment if house prices recover and the business matures into better cash generation. It could also be a value trap if the NZ property market stays flat for another 3-5 years and the company keeps reinvesting every dollar it generates.
At $8.50, the risk-reward is more balanced than at $9.32. You're paying less, but the reasons for the decline are partly structural, not just sentiment. I'd want to see one or more of the following before building a meaningful position:

Evidence of St Johns sell-down momentum (Q2/Q3 settlement data)
Gearing declining at the 1H26 result (August 2026)
NZ house price stabilisation with genuine transaction volume recovery
Technical basing pattern rather than continued freefall

If those trigger, you'll probably be buying at $9-10, not $7-8 — but you'll be buying with confirmation rather than hope. For someone with a very long time horizon and genuine tolerance for further downside, accumulating a small position at $8.50 is defensible. But this is no longer the "compelling risk-reward" I described at $9.32. It's a more nuanced situation where the bear case deserves equal weighting.

If SUM can get the EBITDA per care bed up to $25k then I think we are having a different conversation. 

At that point we have three aspects of the business all playing there part:

1. ILU's kicking off DMF that isn't absorbed by operations
2. Development business generating margin on sale OR if development slows then the liberation of investment capital
3. free cash flow from care

SO what is the business model?  Lend us the money to build the place, give us 3% or so per annum to maintain ("manage") it, and we will throw in day-to-day operating expenses at cost, care costs at or below cost.  In return for keeping anything left over at the end.  Plus development margin, if any.  Or to give residents a pleasant place to live for the rest of their years at cost, in the hope of being able to cream a bit more cash off the new resident if the property market cooperates?

It may be a flawed business model, as it does not seem to work in a flat or slow growth environment no matter how well run the business is.  Despite all the free capital they all seem to end up weighed down with debt, and thus exposed to another environment factor, interest rates. 

Maybe a better model would be more based around the value proposition they are actually providing, which is a worry free living ecosystem tuned to the physical, financial and psychological needs of aging residents.  After all, this must why people move in, and why new buyers were prepared to hand over capital appreciation upside even during the boom years.  I would be more comfortable investing in an entity that makes their money from providing the living experience to residents, rather than from a ponzi scheme that only delivers if the real estate market booms.  To do this you would need to migrate to a fees structure that generates an ongoing and reliable bottom line from operations, even if this mean abandoning or attenuating the inherently risky capital appreciation upside.

However I dont see how the RV operators can easily get out of the model they have locked themselves in to, which is why I agree with the comments that NTA is meaningless in the context of a going concern, and until and unless there is consistent cash generation the investment case is more hope than anything, no matter how well run the business is...