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>Freightways (FRE): We are attracted to FRE due to (1) the strength of new customer, (2) further pricing for effort opportunities, and (3) the disciplined expansion into the Australian express freight market</li><li>Mainfreight (MFT): MFT is a high quality business with a proven track record for growth</li><li>Port of Tauranga (POT): POT offers attractive defensive characteristics in the current environment</li></ul>

Freightways (FRE): We are attracted to FRE due to (1) the strength of new customer, (2) further pricing for effort opportunities, and (3) the disciplined expansion into the Australian express freight marketMainfreight (MFT): MFT is a high quality business with a proven track record for growthPort of Tauranga (POT): POT offers attractive defensive characteristics in the current environment

Equity Bottom-Up

<ul><li>July’s passenger revenue shows a step-up from previous months as school holidays helped demand and AIR increased capacity, particularly on international services</li><li>We expect available capacity increases to moderate over the next few months before building from October</li><li>Further to AIR’s FY22 result last month, consensus FY23 PBT expectations now sit at a profit of NZ$61m on Refinitiv and NZ$38m on Visible Alpha</li></ul>

July’s passenger revenue shows a step-up from previous months as school holidays helped demand and AIR increased capacity, particularly on international servicesWe expect available capacity increases to moderate over the next few months before building from OctoberFurther to AIR’s FY22 result last month, consensus FY23 PBT expectations now sit at a profit of NZ$61m on Refinitiv and NZ$38m on Visible Alpha

Air New Zealand: Revenue Recovery in Full Flight

<ul><li><p>Demand robust: Passenger demand is strong, albeit on lower industry capacity</p></li><li>Cost headwinds: AIR is exposed to a number of operational and financial headwinds as it scales up its recovery, in particular, in its two largest cost lines: fuel and labour</li><li>Capacity outlook: AIR anticipates providing 80%–85% of pre-COVID total capacity in FY23</li></ul>

Demand robust: Passenger demand is strong, albeit on lower industry capacityCost headwinds: AIR is exposed to a number of operational and financial headwinds as it scales up its recovery, in particular, in its two largest cost lines: fuel and labourCapacity outlook: AIR anticipates providing 80%–85% of pre-COVID total capacity in FY23

Air New Zealand: FY22 — Looking for Signals in the Noise

<ul><li>Air New Zealand (AIR) reported the largest underlying loss in its history for FY22, reflecting significant challenges from border closures and other COVID-19 restrictions</li><li>Cargo was again the key highlight with NZ$1.0bn of revenue, up +32% on FY21 and assisted by NZ$403m of Government support</li><li>Operating cashflows have improved materially through the year with +NZ$482m generated in 4Q22, compared to operating cash outflows of –NZ$155m in 1Q22</li></ul>

Air New Zealand (AIR) reported the largest underlying loss in its history for FY22, reflecting significant challenges from border closures and other COVID-19 restrictionsCargo was again the key highlight with NZ$1.0bn of revenue, up +32% on FY21 and assisted by NZ$403m of Government supportOperating cashflows have improved materially through the year with +NZ$482m generated in 4Q22, compared to operating cash outflows of –NZ$155m in 1Q22

Air New Zealand: FY22 Result Initial Thoughts

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

Alliance Aviation Services / Event-Driven

<ul>
<li>The ACCC has raised concerns about <a href="https://www.smartkarma.com/entities/qantas-airways-ltd" target="_blank" data-smartkarma-citation="entities:677:1" rel="noopener">Qantas Airways (QAN AU)</a> proposed acquisition of <a href="https://www.smartkarma.com/entities/alliance-aviation-services-ltd" target="_blank" data-smartkarma-citation="entities:20401:1" rel="noopener">Alliance Aviation Services (AQZ AU)</a>. The ACCC’s final decision is on 17 November.</li>
<li>Qantas knew a lengthy ACCC approval process was highly likely and committed to an additional special dividend in the SID to reflect this risk. </li>
<li>Qantas has its work cut out to address the ACCC concerns. Nevertheless, due to the selloff, the current price offers almost a free option on Qantas securing ACCC approval.</li>
</ul>


The ACCC has raised concerns about Qantas Airways (QAN AU) proposed acquisition of Alliance Aviation Services (AQZ AU). The ACCC’s final decision is on 17 November.
Qantas knew a lengthy ACCC approval process was highly likely and committed to an additional special dividend in the SID to reflect this risk. 
Qantas has its work cut out to address the ACCC concerns. Nevertheless, due to the selloff, the current price offers almost a free option on Qantas securing ACCC approval.


Alliance Aviation – Selloff Provides Optionality on ACCC Approval

New Zealand

Air New Zealand Limited operates an airline business that provides international and domestic air passenger and cargo transport services throughout New Zealand and the South West Pacific. The Company also provides engineering and ground handling services.

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Air New Zealand (AIR NZ)

Transport Trends: Mixed Bag

The post-pandemic world is a mixed bag for the transport sector: aviation is enjoying an expected and much needed resurgence; global airfreight...

Forsyth Barr

Air New Zealand: Revenue Recovery in Full Flight

Air New Zealand’s (AIR) latest monthly passenger (pax) operating stats shows a strong recovery through the mid-year school holiday period

Forsyth Barr

Air New Zealand: FY22 — Looking for Signals in the Noise

Air New Zealand (AIR) reported the biggest underlying loss in its history for FY22, yet there is some cause for optimism given the strength of...

Forsyth Barr

Air New Zealand: FY22 Result Initial Thoughts

Air New Zealand (AIR) reported the largest underlying loss in its history for FY22, reflecting significant challenges from border closures and...

Forsyth Barr

Alliance Aviation – Selloff Provides Optionality on ACCC Approval

Qantas has its work cut out to address the ACCC concerns. Nevertheless, due to the selloff, the current price offers almost a free option on Qantas...

Arun George

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