New Zealand Professional Investment Services Firm

Forsyth Barr

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.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

Summerset Group Holdings / Equity Bottom-Up

<h2>Summerset Group</h2>
Tracking Well Pre&nbsp;Lockdown
OUTPERFORM
Summerset&nbsp;Group (SUM) has announced total sales of 141 retirement village units for the quarter to 31 March 2020, in line with 1Q19 levels, and SUM noted sales were maintained at normal levels. We have not changed our forecasts or target price and refer to our SUM research note dated 2 April 2020, and our revised earnings expectations under a scenario of very weak sales activity over the next six months. Although near-term uncertainties remain, including investor sentiment towards the sector given the&nbsp;COVID-19 outbreak and how long it will be until residential sales transact, sector share prices are back substantially and already factor in a highly negative outlook. We remain confident of the long term business model for SUM. OUTPERFORM.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/127/293/original/image_81621923821586411136075.png?1586411162" class="editor-image img-responsive" data-smartkarma-image-id="127293"></figure>
1Q20 sales volumes close to 1Q19
New sales were 70 units and&nbsp;resales&nbsp;were 71 units versus 71 and 66 units in the&nbsp;pcp&nbsp;respectively. Volumes were well down on the typically large volume fourth quarter as detailed in Figure 1 but broadly in line with other quarters. January is a seasonally slower month and typically the December quarter is very busy with year-end and selling down new stock delivery that was more heavily weighted to 2H19.
Too early to gauge&nbsp;COVID-19 impact&nbsp;
SUM noted that it was only impacted by one week of the&nbsp;lockdown&nbsp;and it does not appear to have impacted materially.&nbsp;The impact will be more pronounced in 2Q and SUM has stated that it is too early to tell what the impact of&nbsp;COVID-19 will be on this quarter. SUM also does not typically provide any&nbsp;forward guidance with its quarterly sales release.
Strong pre-sales at new villages
SUM noted that the first quarter was boosted by good pre-sales at its new&nbsp;Kenepuru&nbsp;village in Wellington and its new Te&nbsp;Awa&nbsp;village in Napier. At 31 March SUM advised that it had a high level of sales contracts in place&nbsp;with 98 new sales and 73&nbsp;resales&nbsp;contracts in place that had yet to settle.
Jeremy Simpson CFA jeremy.simpson@forsythbarr.co.nz +64 9 368 0022

Summerset Group
Tracking Well Pre&nbsp;Lockdown
OUTPERFORM
Summerset&nbsp;Group (SUM) has announced total sales of 141 retirement village units for the quarter to 31 March 2020, in line with 1Q19 levels, and SUM noted sales were maintained at normal levels. We have not changed our forecasts or target price and refer to our SUM research note dated 2 April 2020, and our revised earnings expectations under a scenario of very weak sales activity over the next six months. Although near-term uncertainties remain, including investor sentiment towards the sector given the&nbsp;COVID-19 outbreak and how long it will be until residential sales transact, sector share prices are back substantially and already factor in a highly negative outlook. We remain confident of the long term business model for SUM. OUTPERFORM.

1Q20 sales volumes close to 1Q19
New sales were 70 units and&nbsp;resales&nbsp;were 71 units versus 71 and 66 units in the&nbsp;pcp&nbsp;respectively. Volumes were well down on the typically large volume fourth quarter as detailed in Figure 1 but broadly in line with other quarters. January is a seasonally slower month and typically the December quarter is very busy with year-end and selling down new stock delivery that was more heavily weighted to 2H19.
Too early to gauge&nbsp;COVID-19 impact&nbsp;
SUM noted that it was only impacted by one week of the&nbsp;lockdown&nbsp;and it does not appear to have impacted materially.&nbsp;The impact will be more pronounced in 2Q and SUM has stated that it is too early to tell what the impact of&nbsp;COVID-19 will be on this quarter. SUM also does not typically provide any&nbsp;forward guidance with its quarterly sales release.
Strong pre-sales at new villages
SUM noted that the first quarter was boosted by good pre-sales at its new&nbsp;Kenepuru&nbsp;village in Wellington and its new Te&nbsp;Awa&nbsp;village in Napier. At 31 March SUM advised that it had a high level of sales contracts in place&nbsp;with 98 new sales and 73&nbsp;resales&nbsp;contracts in place that had yet to settle.
Jeremy Simpson CFA jeremy.simpson@forsythbarr.co.nz +64 9 368 0022

Summerset Group: Tracking Well Pre Lockdown