New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

Summerset Group Holdings / Equity Bottom-Up

<ul><li>Summerset (SUM) reported a mixed result, with some strong points but also some weak points.</li><li>New sales gains were particularly strong, with margins at an all time high, substantially ahead of our estimates.</li><li>This is particularly impressive as it comes with a backdrop of falling residential house prices and rising construction costs. </li></ul>

Summerset (SUM) reported a mixed result, with some strong points but also some weak points.New sales gains were particularly strong, with margins at an all time high, substantially ahead of our estimates.This is particularly impressive as it comes with a backdrop of falling residential house prices and rising construction costs. 

Summerset Group - New Sales Take the Cake, but Cash Weak

<ul><li>Summerset (SUM) will report its 1H23 result on Wednesday, 23 August.</li><li>The only listed aged care company with a June period end.</li><li>As mentioned in our recent report titled, Balanced Risk Reward — Down to NEUTRAL, published 21 July 2023, we view FY23 as somewhat of a transition year for SUM as it aims to deliver its first units in Australia and build on multiple high density sites in New Zealand.</li></ul>

Summerset (SUM) will report its 1H23 result on Wednesday, 23 August.The only listed aged care company with a June period end.As mentioned in our recent report titled, Balanced Risk Reward — Down to NEUTRAL, published 21 July 2023, we view FY23 as somewhat of a transition year for SUM as it aims to deliver its first units in Australia and build on multiple high density sites in New Zealand.

Summerset Group - 1H23 Preview — Cash and Costs in Focus

<ul><li>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.</li><li>1H23 sales; decent re-sales, weak new sales: SUM's 2Q23 sales numbers showed a meaningful bounce back from its very weak 1Q23. </li><li>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. </li></ul>

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.1H23 sales; decent re-sales, weak new sales: SUM's 2Q23 sales numbers showed a meaningful bounce back from its very weak 1Q23. 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. 

Summerset Group: Balanced Risk Reward — Down to NEUTRAL

Thematic (Sector/Industry)

<ul><li>May REINZ data suggested that some glimmers of hope may be returning to the NZ residential property market.</li><li>Turnover was up +30% versus April and monthly price declines slowed to -0.7%.</li><li>The Auckland region, which tends to lead the rest of the country, saw volumes +38% versus April and prices down only -0.4%.</li></ul>

May REINZ data suggested that some glimmers of hope may be returning to the NZ residential property market.Turnover was up +30% versus April and monthly price declines slowed to -0.7%.The Auckland region, which tends to lead the rest of the country, saw volumes +38% versus April and prices down only -0.4%.

Aged Care Sector: Montgomerie-Ibbotson Aged Care Pricing Index

<ul><li>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.</li><li>The turnover in the New Zealand housing market is at record lows and days to sell at record highs.</li><li>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.</li></ul>

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.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.

Australia

Summerset Group Holdings Ltd. is a profit-oriented entity and develops, owns and operates integrated retirement villages, rest homes and hospitals for the elderly within New Zealand.

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Summerset Group Holdings (SNZ AU)

Summerset Group - New Sales Take the Cake, but Cash Weak

Summerset (SUM) reported a mixed result, with some strong points but also some weak points. New sales gains were particularly strong, with margins...

Forsyth Barr

Summerset Group - 1H23 Preview — Cash and Costs in Focus

Summerset (SUM) will report its 1H23 result on Wednesday, 23 August. The only listed aged care company with a June period end.

Forsyth Barr

Summerset Group: Balanced Risk Reward — Down to NEUTRAL

The recent rise in aged care stocks, led by Summerset (SUM) and Ryman Healthcare (RYM), is justified by improved housing sentiment, but further...

Forsyth Barr

Aged Care Sector: Montgomerie-Ibbotson Aged Care Pricing Index

May REINZ data suggested that some glimmers of hope may be returning to the NZ residential property market; Turnover was up +30% versus April and...

Forsyth Barr

Summerset Group: No Summer in Sight

Summerset Group (SUM) reported weak 1Q23 sales, with combined new sales and resales down -25% versus 1Q22, which we find disappointing, but (so...

Forsyth Barr

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