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>Auckland Airport (AIA) has underperformed the NZX50 over the past 10 years, in part due to the foregone earnings through COVID and the need for new capital, but also in part due to slowing pax growth, falling commercial yields, and higher bond rates.</li><li>This provides a degree of certainty over AIA’s strong EBITDA-growth outlook through to FY32, the end of its next five-year pricing window, PSE5.</li><li>While we have a positive view of AIA’s share-price performance over the medium term, as PSE5 earnings are increasingly factored into relative multiples, there is insufficient valuation appeal on a 12-month horizon.</li></ul>

Auckland Airport (AIA) has underperformed the NZX50 over the past 10 years, in part due to the foregone earnings through COVID and the need for new capital, but also in part due to slowing pax growth, falling commercial yields, and higher bond rates.This provides a degree of certainty over AIA’s strong EBITDA-growth outlook through to FY32, the end of its next five-year pricing window, PSE5.While we have a positive view of AIA’s share-price performance over the medium term, as PSE5 earnings are increasingly factored into relative multiples, there is insufficient valuation appeal on a 12-month horizon.

Auckland Airport Aero Flight Path Clearer

<ul><li>We expect Auckland Airport (AIA) to report a record FY25 underlying NPAT of NZ$307m, near the midpoint of management’s NZ$290m–NZ$320m guidance range.</li><li>The regulatory uncertainty overhanging AIA has largely lifted.</li><li>However, continued constraints in airline capacity, near-term duty-free disruption, and ongoing opex cost pressures are likely to lead to a subdued FY26 growth outlook.</li></ul>

We expect Auckland Airport (AIA) to report a record FY25 underlying NPAT of NZ$307m, near the midpoint of management’s NZ$290m–NZ$320m guidance range.The regulatory uncertainty overhanging AIA has largely lifted.However, continued constraints in airline capacity, near-term duty-free disruption, and ongoing opex cost pressures are likely to lead to a subdued FY26 growth outlook.

Auckland Airport FY25 Preview—Record Altitude, Cruising Ahead

Auckland International Airport / Equity Bottom-Up

<ul><li>Auckland Airport's regulatory environment is currently experiencing significant uncertainty, with potential government changes via the Commerce Act review that may negatively impact AIA.</li><li>The possibility of a hybrid till and its financial implications are explored, with a 10% cross-subsidisation of commercial revenue potentially lowering AIA's implied valuation by 11%.</li><li>While the regulatory noise is expected to continue in the near term, the chances of a hybrid till being implemented are considered very low at this stage.</li></ul>

Auckland Airport's regulatory environment is currently experiencing significant uncertainty, with potential government changes via the Commerce Act review that may negatively impact AIA.The possibility of a hybrid till and its financial implications are explored, with a 10% cross-subsidisation of commercial revenue potentially lowering AIA's implied valuation by 11%.While the regulatory noise is expected to continue in the near term, the chances of a hybrid till being implemented are considered very low at this stage.

<ul><li>Strong aeronautical pricing irrespective of potential reduction: AIA announced very strong aeronautical pricing for its PSE4 pricing period (FY23–FY27), which reflects a targeted post-tax return of 8.7%.</li><li>Capex drives a substantial lift in RAB: AIA's strong aeronautical price path is being driven by a major capex bulge and resultant RAB growth.</li><li>Draft input methodologies review report lowers the excess return available for airports</li></ul>

Strong aeronautical pricing irrespective of potential reduction: AIA announced very strong aeronautical pricing for its PSE4 pricing period (FY23–FY27), which reflects a targeted post-tax return of 8.7%.Capex drives a substantial lift in RAB: AIA's strong aeronautical price path is being driven by a major capex bulge and resultant RAB growth.Draft input methodologies review report lowers the excess return available for airports

Auckland Airport: The Sky Is High for Aero Pricing

<ul><li>Regulatory risk for Auckland Airport has increased due to a Ministry of Business, Innovation and Employment review of the Commerce Act and stakeholder engagement on the effectiveness of the current Information Disclosure regime for airports.</li><li>The worst-case scenario for Auckland Airport is a potential change to its dual till regulatory model, which could reduce robust returns from its commercial operations.</li><li>Despite the increased regulatory risk, material changes to the current Information Disclosure regime are considered unlikely, but Auckland Airport's current valuation multiples do not account for potential negative regulatory outcomes.</li></ul>

Regulatory risk for Auckland Airport has increased due to a Ministry of Business, Innovation and Employment review of the Commerce Act and stakeholder engagement on the effectiveness of the current Information Disclosure regime for airports.The worst-case scenario for Auckland Airport is a potential change to its dual till regulatory model, which could reduce robust returns from its commercial operations.Despite the increased regulatory risk, material changes to the current Information Disclosure regime are considered unlikely, but Auckland Airport's current valuation multiples do not account for potential negative regulatory outcomes.

Auckland Airport - Regulatory Risk Reappears

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 Intl Airport (AIA NZ)

Auckland Airport Aero Flight Path Clearer

Auckland Airport (AIA) has underperformed the NZX50 over the past 10 years, in part due to the foregone earnings through COVID and the need for new...

Forsyth Barr

Auckland Airport FY25 Preview—Record Altitude, Cruising Ahead

We expect Auckland Airport (AIA) to report a record FY25 underlying NPAT of NZ$307m, near the midpoint of management’s NZ$290m–NZ$320m guidance range.

Forsyth Barr

Auckland Airport Hybrid Till—What If?

Auckland Airport's regulatory environment is currently experiencing significant uncertainty, with potential government changes via the Commerce Act...

Forsyth Barr

Auckland Airport: The Sky Is High for Aero Pricing

Auckland Airport's (AIA) aeronautical pricing outlook is strong, though not as strong as its current pricing schedule suggests given the likely...

Forsyth Barr

Auckland Airport - Regulatory Risk Reappears

The worst-case scenario for Auckland Airport is a potential change to its dual till regulatory model, which could reduce robust returns from its...

Forsyth Barr

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