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 an in-line 1H24 annuity EBITDA result.</li><li>In the result, SUM: (1) gave new earnings breakdowns, which showed stronger Village earnings and softer Care earnings than we expected, and (2) cited a ~NZ$15m cost-out programme.</li><li>The strong cost control contributed to SUM delivering ~+20% growth in annuity EPS over one of the toughest periods on record, an impressive result. SUM also delivered higher-than-expected dividends, suggesting confidence in continued strong cash recovery of development capex. SUM acknowledged slightly slower than hoped for sales at its flagship St John development; it needs to execute well over the coming 12 months.</li></ul>

Summerset (SUM) reported an in-line 1H24 annuity EBITDA result.In the result, SUM: (1) gave new earnings breakdowns, which showed stronger Village earnings and softer Care earnings than we expected, and (2) cited a ~NZ$15m cost-out programme.The strong cost control contributed to SUM delivering ~+20% growth in annuity EPS over one of the toughest periods on record, an impressive result. SUM also delivered higher-than-expected dividends, suggesting confidence in continued strong cash recovery of development capex. SUM acknowledged slightly slower than hoped for sales at its flagship St John development; it needs to execute well over the coming 12 months.

Summerset Group - 1H24 Result — New Metrics, New Valuation

<ul><li>Summerset (SUM) will report its 1H24 result on Monday, 26 August.</li><li>With unit sales known, and narrow underlying earnings guidance, our key points of interest for the result are: (1) sales margins and the breakdown between new sale and resale gains.</li><li>We estimate 1H24 resales margins of 25% versus 26% in 1H23 and consensus of ~27%.</li></ul>

Summerset (SUM) will report its 1H24 result on Monday, 26 August.With unit sales known, and narrow underlying earnings guidance, our key points of interest for the result are: (1) sales margins and the breakdown between new sale and resale gains.We estimate 1H24 resales margins of 25% versus 26% in 1H23 and consensus of ~27%.

Summerset Group - 1H24 Preview — Margins and Metrics

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>On 22 July, <a href="https://www.smartkarma.com/entities/arvida-group-ltd" target="_blank" data-smartkarma-citation="entities:14485:1" rel="noopener">Arvida (ARV NZ)</a> entered a scheme implementation agreement with Stonepeak at NZ$1.70, a 65.0% premium to the undisturbed price.</li>
<li>The transaction will require OIO approval, statutory supervisors' consent and shareholder approval. The <a href="https://www.smartkarma.com/entities/metlifecare-ltd" target="_blank" data-smartkarma-citation="entities:19219:1" rel="noopener">Metlifecare Ltd (MET NZ)</a> precedent suggests that the OIO and statutory supervisor should be forthcoming.</li>
<li>The offer is attractive, and shareholders representing 18% of outstanding shares are supportive. At the last close and for a November payment, the gross/annualised spread was 4.9%/14.2%.  </li>
</ul>


On 22 July, Arvida (ARV NZ) entered a scheme implementation agreement with Stonepeak at NZ$1.70, a 65.0% premium to the undisturbed price.
The transaction will require OIO approval, statutory supervisors' consent and shareholder approval. The Metlifecare Ltd (MET NZ) precedent suggests that the OIO and statutory supervisor should be forthcoming.
The offer is attractive, and shareholders representing 18% of outstanding shares are supportive. At the last close and for a November payment, the gross/annualised spread was 4.9%/14.2%.  


Arvida Group (ARV NZ): Stonepeak’s Binding Proposal at NZ$1.70

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>
<strong><a href="https://www.smartkarma.com/entities/arvida-group-ltd" target="_blank" data-smartkarma-citation="entities:14485:1" rel="noopener">Arvida (ARV NZ)</a></strong>, a leading retirement living and aged care service provider in New Zealand, <a href="https://www.arvida.co.nz/investors/nzx-releases/release/arvida-board-unanimously-recommends-stonepeak-acquisition-38581" target="_blank" rel="noopener">announced</a> a Scheme from PE-outfit Stonepeak at NZ$1.70/share, in cash, a 65% premium to undisturbed. </li>
<li>The Offer has unanimous board support. ~18% of shares out are supportive. Standard Scheme voting applies. Consent from NZ's Overseas Investment Office also required. </li>
<li>A Scheme Meeting is expected to be held in 4Q24 with implementation in the same quarter. Optics are a tad opportunistic; but this looks priced to complete. </li>
</ul>



Arvida (ARV NZ), a leading retirement living and aged care service provider in New Zealand, announced a Scheme from PE-outfit Stonepeak at NZ$1.70/share, in cash, a 65% premium to undisturbed. 
The Offer has unanimous board support. ~18% of shares out are supportive. Standard Scheme voting applies. Consent from NZ's Overseas Investment Office also required. 
A Scheme Meeting is expected to be held in 4Q24 with implementation in the same quarter. Optics are a tad opportunistic; but this looks priced to complete. 


<ul><li>Summerset (SUM) delivered a solid 2Q24 sales update, with resales strong against the backdrop of a subdued New Zealand housing market. </li><li>SUM's ~+23% year-on-year increase in resales for 1H24 (+20% in 2Q24) is a reminder that: (1) there is inbuilt growth in the village operations as they mature; and (2) buying into a village is, to a significant degree, a needs-based decision.</li><li>SUM's first time 1H24 earnings guidance is for earnings broadly flat year-on-year, while at the same time we expect double-digit growth in annuity EBITDA — a more accurate view of its business growth as its villages mature. </li></ul>

Summerset (SUM) delivered a solid 2Q24 sales update, with resales strong against the backdrop of a subdued New Zealand housing market. SUM's ~+23% year-on-year increase in resales for 1H24 (+20% in 2Q24) is a reminder that: (1) there is inbuilt growth in the village operations as they mature; and (2) buying into a village is, to a significant degree, a needs-based decision.SUM's first time 1H24 earnings guidance is for earnings broadly flat year-on-year, while at the same time we expect double-digit growth in annuity EBITDA — a more accurate view of its business growth as its villages mature. 

Summerset Group - Through the Cycle Growth Continues

New Zealand

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 (SUM NZ)

Summerset Group - 1H24 Result — New Metrics, New Valuation

We estimate ~20% annuity EPS CAGR over the next five years. SUM trades on a ~33x 12 month forward annuity EPS versus its average since 2016 of ~35x.

Forsyth Barr

Summerset Group - 1H24 Preview — Margins and Metrics

With unit sales known, and narrow underlying earnings guidance, our key points of interest for the result are: (1) sales margins and the breakdown...

Forsyth Barr

Arvida Group (ARV NZ): Stonepeak’s Binding Proposal at NZ$1.70

The offer is attractive, and shareholders representing 18% of outstanding shares are supportive. At the last close and for a November payment, the...

Arun George

Arvida (ARV NZ): Stonepeak's Offer

Assuming mid-Dec payment, this is trading at a reasonable gross/annualised spread of 4.9%/12.6%. Also run a ruler over other NZ peers such as...

David Blennerhassett

Summerset Group - Through the Cycle Growth Continues

Summerset (SUM) delivered a solid 2Q24 sales update, with resales strong against the backdrop of a subdued New Zealand housing market.

Forsyth Barr

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