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>A deteriorating economic backdrop is impacting demand for freight and passengers.</li><li>Imports into New Zealand have slumped over 2023 as supply chain destocking has compounded slowing domestic consumption.</li><li>The latter has softened demand across different transport modes. </li></ul>

A deteriorating economic backdrop is impacting demand for freight and passengers.Imports into New Zealand have slumped over 2023 as supply chain destocking has compounded slowing domestic consumption.The latter has softened demand across different transport modes. 

Transport Trends - Where's the Freight, Mate?

<ul><li>RAB multiples (enterprise value divided by regulatory asset base) provide a useful means of valuing and sense checking valuations for regulated companies.</li><li>The issue of RAB multiples has been brought up by numerous submitters in the current Commerce Commission (ComCom) Input Methodologies (IM) review process.</li><li>Some submitters have referenced Forsyth Barr reports, at times extensively (CEG in particular). </li></ul>

RAB multiples (enterprise value divided by regulatory asset base) provide a useful means of valuing and sense checking valuations for regulated companies.The issue of RAB multiples has been brought up by numerous submitters in the current Commerce Commission (ComCom) Input Methodologies (IM) review process.Some submitters have referenced Forsyth Barr reports, at times extensively (CEG in particular). 

Regulated Companies - The Relevance of RAB Multiples

<ul><li>The transport industry's road to normalisation, after the disruption of the past three years, is increasingly being influenced by the deteriorating economic cycle; A global de-stocking event is impacting freight flows, which has helped international freight rates fall as quickly as they went up. </li><li>Sea freight spot rates on many trade lanes are now below pre-COVID levels, while their corresponding contract rates and air cargo rates continue to fall, but remain above pre-COVID levels.</li><li>While cognisant of the exposure to operating deleverage in a weaker volume environment, we have a preference for the high quality Mainfreight (MFT; OUTPERFORM) which should help mitigate cyclical pressures through market share gains, pricing and its defensive industry vertical exposure. </li></ul>

The transport industry's road to normalisation, after the disruption of the past three years, is increasingly being influenced by the deteriorating economic cycle; A global de-stocking event is impacting freight flows, which has helped international freight rates fall as quickly as they went up. Sea freight spot rates on many trade lanes are now below pre-COVID levels, while their corresponding contract rates and air cargo rates continue to fall, but remain above pre-COVID levels.While cognisant of the exposure to operating deleverage in a weaker volume environment, we have a preference for the high quality Mainfreight (MFT; OUTPERFORM) which should help mitigate cyclical pressures through market share gains, pricing and its defensive industry vertical exposure. 

Transport Trends: Bare Feeling From De-Stocking

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

iShares MSCI ACWI ETF / Technical Analysis

<ul>
<li>The pullback in global equities continues with the MSCI ACWI (ACWI-US) testing 1.5-month downtrend resistance while the STOXX Europe 50 tests resistance at 3800-3840.</li>
<li>We expect a rejection at the 1.5-month downtrend and for the stair-step lower to continue, with our targets being $84 (December 2022 low) and potentially $75-77 (the 2022 lows).</li>
<li>If ACWI-US is able to reverse above the 1.5-month downtrend, we still expect $93 to cap upside in 2023. Remain overweight Europe. Also highlighting individual stock buys on pullbacks.</li>
</ul>


The pullback in global equities continues with the MSCI ACWI (ACWI-US) testing 1.5-month downtrend resistance while the STOXX Europe 50 tests resistance at 3800-3840.
We expect a rejection at the 1.5-month downtrend and for the stair-step lower to continue, with our targets being $84 (December 2022 low) and potentially $75-77 (the 2022 lows).
If ACWI-US is able to reverse above the 1.5-month downtrend, we still expect $93 to cap upside in 2023. Remain overweight Europe. Also highlighting individual stock buys on pullbacks.


MSCI ACWI and EAFE Testing 1.5-Month Downtrends; Remain OW EU; Buys in Leading Sectors on Pullbacks

<ul><li>Abnormal gains in international freight are unwinding rapidly, particularly for seafreight, with global spot indices now down ~80% from their peaks but still above pre-pandemic levels</li><li>Air cargo's rates compression has been slower, mirroring the slow recovery in air seat capacity</li><li>In this normalising, yet far from normal environment, Freightways (FRE; OUTPERFORM) and Mainfreight (MFT; OUTPERFORM) remain our preferred exposures in the sector</li></ul>

Abnormal gains in international freight are unwinding rapidly, particularly for seafreight, with global spot indices now down ~80% from their peaks but still above pre-pandemic levelsAir cargo's rates compression has been slower, mirroring the slow recovery in air seat capacityIn this normalising, yet far from normal environment, Freightways (FRE; OUTPERFORM) and Mainfreight (MFT; OUTPERFORM) remain our preferred exposures in the sector

Transport Trends: Nothing Normal About the Normalising

New Zealand

Auckland International Airport Limited owns and operates the Auckland International Airport.  The Airport includes a single runway, an international terminal and two domestic terminals.  The Airport also has commercial facilities which includes airfreight operations, car rental services, commercial banking center and office buildings.

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Auckland International Airport (AIA AU)

Transport Trends - Where's the Freight, Mate?

Imports into New Zealand have slumped over 2023 as supply chain destocking has compounded slowing domestic consumption. The latter has softened...

Forsyth Barr

Regulated Companies - The Relevance of RAB Multiples

RAB multiples (enterprise value divided by regulatory asset base) provide a useful means of valuing and sense checking valuations for regulated...

Forsyth Barr

Transport Trends: Bare Feeling From De-Stocking

The transport industry's road to normalisation, after the disruption of the past three years, is increasingly being influenced by the deteriorating...

Forsyth Barr

MSCI ACWI and EAFE Testing 1.5-Month Downtrends; Remain OW EU; Buys in Leading Sectors on Pullbacks

Pullback in global equities continues with MSCI $ACWI testing 1.5-month downtrend resistance as $STOXX Europe 50 tests 3800-3840 resistance....

Vermilion Research

Transport Trends: Nothing Normal About the Normalising

The industry is normalising, but from different angles and at a different rates: Abnormal gains in international freight are unwinding rapidly,...

Forsyth Barr

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