SUM Summerset Group

[Shareguy]

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.

[Basil]

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.

[Shareguy]

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.

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

[lorraina]

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.
 

[BlackPeter]

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

Situated 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 ...

[lorraina]

Haha.
Well hidden. !.

[lorraina]

Haha.
Well hidden. !.
Missed them.

[winner (n)]

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

[winner (n)]

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.

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

[winner (n)]

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

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

[lorraina]

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."

[Basil]

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.   

[Waltzing]

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

[lorraina]

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.....////

[Minimoke]

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.