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.

Thematic (Sector/Industry)

<ul><li>The NZ mobile market has had a good few years, with service revenue growing mid-single-digit led by ARPU growth towards the top end globally, but growth has been slowing.</li><li>While all telcos have increased prices on some plans this year, we don’t see this adding to growth given: (1) price increases have not been across the board; some plans decreased, and a new lower-priced tier of plans introduced; (2) global mobile prices have not illustrated structural growth; and (3) 2degrees and MVNO will likely continue to gain share.</li><li>We view One NZ as better positioned and have upgraded Infratil (IFT) to OUTPERFORM in our concurrently published report Infratil: Dialing up Growth—Up to OUTPERFORM, and downgrade Spark NZ (SPK) to UNDERPERFORM in our report Spark NZ: Low Signal—Down to UNDERPERFORM.</li></ul>

The NZ mobile market has had a good few years, with service revenue growing mid-single-digit led by ARPU growth towards the top end globally, but growth has been slowing.While all telcos have increased prices on some plans this year, we don’t see this adding to growth given: (1) price increases have not been across the board; some plans decreased, and a new lower-priced tier of plans introduced; (2) global mobile prices have not illustrated structural growth; and (3) 2degrees and MVNO will likely continue to gain share.We view One NZ as better positioned and have upgraded Infratil (IFT) to OUTPERFORM in our concurrently published report Infratil: Dialing up Growth—Up to OUTPERFORM, and downgrade Spark NZ (SPK) to UNDERPERFORM in our report Spark NZ: Low Signal—Down to UNDERPERFORM.

Telecommunications Sector Roaming The Mobile Market

<ul><li>We downgrade Spark NZ (SPK) to UNDERPERFORM from NEUTRAL.</li><li>SPK's incremental connection share is ~-3% points below its current share, its ARPUs are already ahead of One NZ's, its recent price changes have been mixed and it under-indexes in the growing MVNO market.</li><li>While SPK may benefit from a cyclical recovery in some IT services, the endgame for this segment is unclear.</li></ul>

We downgrade Spark NZ (SPK) to UNDERPERFORM from NEUTRAL.SPK's incremental connection share is ~-3% points below its current share, its ARPUs are already ahead of One NZ's, its recent price changes have been mixed and it under-indexes in the growing MVNO market.While SPK may benefit from a cyclical recovery in some IT services, the endgame for this segment is unclear.

Spark NZ Low Signal—Down To UNDERPERFORM

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

<ul>
<li>President Trump has indicated that he will lower tariffs on ASEAN countries in exchange for future supply commitments of Rare Earth Elements (REEs) to counter China's industry dominance.</li>
<li>Although the supply commitments of REEs to supplant China's production will take years to fulfill, the tariff relief will provide immediate benefits to Chinese textile manufacturers with Southeast Asian production.</li>
<li>
<a href="https://www.smartkarma.com/entities/shenzhou-intl-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10415:1" rel="noopener">Shenzhou Intl Group Holdings (2313 HK)</a> , <a href="https://www.smartkarma.com/entities/bosideng-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:6537:1" rel="noopener">Bosideng International Holdings (3998 HK)</a> ,<a href="https://www.smartkarma.com/entities/yue-yuen-industrial-holdings-limited" target="_blank" data-smartkarma-citation="entities:12281:1" rel="noopener">Yue Yuen Industrial Holdings (551 HK)</a> , and <a href="https://www.smartkarma.com/entities/stella-international" target="_blank" data-smartkarma-citation="entities:7610:1" rel="noopener">Stella International (1836 HK)</a> will benefit from the tariff relief.
</li>
</ul>


President Trump has indicated that he will lower tariffs on ASEAN countries in exchange for future supply commitments of Rare Earth Elements (REEs) to counter China's industry dominance.
Although the supply commitments of REEs to supplant China's production will take years to fulfill, the tariff relief will provide immediate benefits to Chinese textile manufacturers with Southeast Asian production.

Shenzhou Intl Group Holdings (2313 HK) , Bosideng International Holdings (3998 HK) ,Yue Yuen Industrial Holdings (551 HK) , and Stella International (1836 HK) will benefit from the tariff relief.



How Rare Earth Elements Helped China's Textile Companies

Cross Asset Strategy

<ul>
<li>Healthcare sector continues to gain momentum in Hong Kong market during pullback with materials and energy sectors lagging.</li>
<li>Value and Liquidity factors have outperformed since stimulus announcement in September.</li>
<li>
<a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a> , <a href="https://www.smartkarma.com/entities/jd-health-international-inc" target="_blank" data-smartkarma-citation="entities:29677:1" rel="noopener">JD Health International (6618 HK)</a> and <a href="https://www.smartkarma.com/entities/sands-china-ltd" target="_blank" data-smartkarma-citation="entities:182:1" rel="noopener">Sands China (1928 HK)</a> were rated as BUY as analysts turn toward China consumption plays as future winners.
</li>
</ul>


Healthcare sector continues to gain momentum in Hong Kong market during pullback with materials and energy sectors lagging.
Value and Liquidity factors have outperformed since stimulus announcement in September.

Anta Sports Products (2020 HK) , JD Health International (6618 HK) and Sands China (1928 HK) were rated as BUY as analysts turn toward China consumption plays as future winners.



BUY/SELL/HOLD: Hong Kong Stock Updates (October 15)

<ul>
<li>Hong Kong Dollar continues to trade at the strong end of its band  resulting in upward pressure on HIBOR in turn causing a further unwind of the HKD carry trade.</li>
<li>HSI shows the strongest market breadth in 15 years as nearly all members trade above 200 DMA.</li>
<li>
<a href="https://www.smartkarma.com/entities/xtep-international-holdings" target="_blank" data-smartkarma-citation="entities:18118:1" rel="noopener">Xtep International (1368 HK)</a> , <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a> and <a href="https://www.smartkarma.com/entities/china-education-group-holdin" target="_blank" data-smartkarma-citation="entities:18218:1" rel="noopener">China Education Group (839 HK)</a> all had breakouts to form uptrends.  All are part of the consumption sector in China
</li>
</ul>


Hong Kong Dollar continues to trade at the strong end of its band  resulting in upward pressure on HIBOR in turn causing a further unwind of the HKD carry trade.
HSI shows the strongest market breadth in 15 years as nearly all members trade above 200 DMA.

Xtep International (1368 HK) , Xiaomi Corp (1810 HK) and China Education Group (839 HK) all had breakouts to form uptrends.  All are part of the consumption sector in China



Technically Speaking, Breakouts and Breakdowns: HONG KONG (OCTOBER 14)

China

361 Degrees International is a leading Chinese sportswear enterprise that manufactures and trades in a wide range of sporting goods, including footwear, apparel, and accessories for adults and children. The company focuses on professional sports functionality and offers products under its 361° core and 361° Kids brand names. It was founded in 2003 and is headquartered in Xiamen, People's Republic of China.

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361 Degrees International (1361 HK)

Telecommunications Sector Roaming The Mobile Market

The NZ mobile market has had a good few years, with service revenue growing mid-single-digit led by ARPU growth towards the top end globally, but...

Forsyth Barr

Spark NZ Low Signal—Down To UNDERPERFORM

We downgrade Spark NZ (SPK) to UNDERPERFORM from NEUTRAL. SPK's incremental connection share is ~-3% points below its current share...

Forsyth Barr

How Rare Earth Elements Helped China's Textile Companies

President Trump will lower tariffs on ASEAN countries in exchange for future supply commitments of Rare Earth Elements (REEs) to counter China's...

David Mudd

BUY/SELL/HOLD: Hong Kong Stock Updates (October 15)

Healthcare sector gains momentum in HK and materials and energy lag. Anta is appealing to the mass market with new megastores. JDH benefits from...

David Mudd

Technically Speaking, Breakouts and Breakdowns: HONG KONG (OCTOBER 14)

HKD strengthens, HIBOR moves higher and HK shorts become more expensive. HK market breadth reached its highest level in 15 years last week. Xtep,...

David Mudd

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