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

<ul><li>Air New Zealand’s (AIR) latest monthly passenger (pax) operating stats suggest revenue is back to FY19 levels</li><li>With October benefiting from school holidays, the first international shoulder season commencing since COVID-19 emerged, further capacity returning, and continued strong yields we expect monthly revenue in excess of 2019 levels.</li><li>AIR’s recent first time 1H23 earnings guidance (PBT of NZ$200m-NZ$275m) resulted in a significant upgrade in FY23 consensus</li></ul>

Air New Zealand’s (AIR) latest monthly passenger (pax) operating stats suggest revenue is back to FY19 levelsWith October benefiting from school holidays, the first international shoulder season commencing since COVID-19 emerged, further capacity returning, and continued strong yields we expect monthly revenue in excess of 2019 levels.AIR’s recent first time 1H23 earnings guidance (PBT of NZ$200m-NZ$275m) resulted in a significant upgrade in FY23 consensus

Air New Zealand: Revenue Back at 2019 Levels

<ul><li>Air New Zealand (AIR) has had a phenomenal start to FY23, with elevated passenger yields and strong forward bookings accelerating its return to above average levels of profitability</li><li>Management cautions against extrapolating its first half earnings guidance into the whole of FY23 as yields are likely to fall as industry capacity returns</li><li>In light of the very dynamic nature of AIR's current performance, ​its upcoming monthly operating stats will provide critical insights into its 1H23 revenue generation</li></ul>

Air New Zealand (AIR) has had a phenomenal start to FY23, with elevated passenger yields and strong forward bookings accelerating its return to above average levels of profitabilityManagement cautions against extrapolating its first half earnings guidance into the whole of FY23 as yields are likely to fall as industry capacity returnsIn light of the very dynamic nature of AIR's current performance, ​its upcoming monthly operating stats will provide critical insights into its 1H23 revenue generation

<ul><li>Air New Zealand’s (AIR) first time 1H23 guidance for profit before tax and other significant items (PBT) of NZ$200-$275m is well ahead of Visible Alpha consensus expectations of a loss of -NZ$27m</li><li>The strong guidance is consistent with AIR’s recent positive monthly operating updates, coupled with strong forward bookings through to January 2023.</li><li>AIR is benefitting from the delay in capacity returning post-pandemic and significant pent up demand resulting in high yields.</li></ul>

Air New Zealand’s (AIR) first time 1H23 guidance for profit before tax and other significant items (PBT) of NZ$200-$275m is well ahead of Visible Alpha consensus expectations of a loss of -NZ$27mThe strong guidance is consistent with AIR’s recent positive monthly operating updates, coupled with strong forward bookings through to January 2023.AIR is benefitting from the delay in capacity returning post-pandemic and significant pent up demand resulting in high yields.

Air New Zealand (AIR): First Time 1H23 Guidance Strong

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

<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

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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