SUM Summerset Group

[winner (n)]

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

[Whacc]

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

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.

[Basil]

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

Fisher funds hounding up millions more.

[Shareguy]

CEO selling

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

[winner (n)]

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

Many would say we are doomed as consequence of these actions

[winner (n)]

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
You cannot view this attachment.

[Basil]

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.

[BlackPeter]

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
You cannot view this attachment.

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;

[Basil]

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/

[winner (n)]

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

[Basil]

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.

[BlackPeter]

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.

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 ;
 

[Basil]

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 😜

[Basil]

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.

[winner (n)]

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/