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>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

<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.

<ul><li>SUM reported a relatively weak first quarter sales update.</li><li>New and resales were ~17% of our FY23 estimates, and the conversion from contracted sales at year end was 75%, compared to over 100% historically.</li><li>The slowdown in resales was attributed primarily to timings with regards to residents settling and moving in, presumably a consequence of the well-publicised major slowdown in the housing market, in particular in relation to days to sell.</li></ul>

SUM reported a relatively weak first quarter sales update.New and resales were ~17% of our FY23 estimates, and the conversion from contracted sales at year end was 75%, compared to over 100% historically.The slowdown in resales was attributed primarily to timings with regards to residents settling and moving in, presumably a consequence of the well-publicised major slowdown in the housing market, in particular in relation to days to sell.

<ul><li>Summerset (SUM) delivered a strong FY22 result, with small beats across the P&amp;L, albeit weighted towards new sales gains</li><li>We were particularly pleased by the moderation in operating expense growth, up ~+10% in 2H22 after two years of 20% to 30% opex growth</li><li>FY23 also appears to be off to a good start with management commentary suggesting the first six weeks of trading has been strong.</li></ul>

Summerset (SUM) delivered a strong FY22 result, with small beats across the P&amp;L, albeit weighted towards new sales gainsWe were particularly pleased by the moderation in operating expense growth, up ~+10% in 2H22 after two years of 20% to 30% opex growthFY23 also appears to be off to a good start with management commentary suggesting the first six weeks of trading has been strong.

Summerset Group: FY22 Result — Buy Now, Cash Later

<ul><li>Summerset (SUM) delivered a strong FY22 result, with small beats across the P&amp;L adding up to a meaningful bottom line beat of ~+10% versus our estimates</li><li>Cash flow from ongoing operations was negative and slightly weaker than we had anticipated</li><li>Capex was +NZ$150m higher than we had anticipated and net debt +NZ$100m higher</li></ul>

Summerset (SUM) delivered a strong FY22 result, with small beats across the P&amp;L adding up to a meaningful bottom line beat of ~+10% versus our estimatesCash flow from ongoing operations was negative and slightly weaker than we had anticipatedCapex was +NZ$150m higher than we had anticipated and net debt +NZ$100m higher

Summerset (SUM): FY22 Result – Initial Impressions

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: 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

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

Summerset (SUM): 1Q23 Sales Update

SUM reported a relatively weak first quarter sales update; New and resales were ~17% of our FY23 estimates, and the conversion from contracted...

Forsyth Barr

Summerset Group: FY22 Result — Buy Now, Cash Later

Summerset (SUM) delivered a strong FY22 result, with small beats across the P&L, albeit weighted towards new sales gains; FY23 also appears to be...

Forsyth Barr

Summerset (SUM): FY22 Result – Initial Impressions

Summerset (SUM) delivered a strong FY22 result, with small beats across the P&L adding up to a meaningful bottom line beat of ~+10% versus our...

Forsyth Barr

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