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>Aeronautical returns: AIA will continue to generate aeronautical returns in excess of its 'true market' WACC applied by the marginal investor, despite the Commerce Commission's (ComCom) potential move to lower the target returns available for airports.</li><li>RAB multiple highlights the incentive to invest: Returns in excess of cost of capital create value in most valuation frameworks</li><li>Aeronautical currently represents less than a third of group value: We expect AIA's aeronautical business to represent ~56% of group EBITDA in FY28 (once the step-up in PSE5 pricing is absorbed in earnings), but only ~33% of pre-tax earnings, given its increasing depreciation and interest burden</li></ul>

Aeronautical returns: AIA will continue to generate aeronautical returns in excess of its 'true market' WACC applied by the marginal investor, despite the Commerce Commission's (ComCom) potential move to lower the target returns available for airports.RAB multiple highlights the incentive to invest: Returns in excess of cost of capital create value in most valuation frameworksAeronautical currently represents less than a third of group value: We expect AIA's aeronautical business to represent ~56% of group EBITDA in FY28 (once the step-up in PSE5 pricing is absorbed in earnings), but only ~33% of pre-tax earnings, given its increasing depreciation and interest burden

Auckland Airport: Still Incentivised to Invest

<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>Auckland Airport (AIA) has published very strong aeronautical pricing for the next four years, well above our and market expectations.</li><li>However, the level of targeted return (~8.7% vs our 7.9% assumption) for PSE4 (price setting event 4 covering FY23-FY27), which drives the pricing decision, risks the Commerce Commission’s (ComCom’s) wrath, when it reviews AIA’s pricing over the next 12 months.</li><li>Irrespective of any ComCom/government driven adjustment to pricing part way through PSE4 (as what happened through PSE3) aeronautical pricing would still be above our expectations given higher RAB growth than forecast.</li></ul>

Auckland Airport (AIA) has published very strong aeronautical pricing for the next four years, well above our and market expectations.However, the level of targeted return (~8.7% vs our 7.9% assumption) for PSE4 (price setting event 4 covering FY23-FY27), which drives the pricing decision, risks the Commerce Commission’s (ComCom’s) wrath, when it reviews AIA’s pricing over the next 12 months.Irrespective of any ComCom/government driven adjustment to pricing part way through PSE4 (as what happened through PSE3) aeronautical pricing would still be above our expectations given higher RAB growth than forecast.

<ul><li>Public relations exercise: AIA's announcement appears akin to a public relations exercise trying to convince stakeholders of the need for a significant increase in capex</li><li>Significant increases in aeronautical prices in FY24 and FY28</li><li>Balance sheet capacity issue resurfaces</li></ul>

Public relations exercise: AIA's announcement appears akin to a public relations exercise trying to convince stakeholders of the need for a significant increase in capexSignificant increases in aeronautical prices in FY24 and FY28Balance sheet capacity issue resurfaces

Auckland Airport: Building Over the Green Line

<ul><li>Auckland Airport (AIA) has confirmed the go-ahead for construction of an integrated domestic terminal having completed a more than decade long consultation process with airlines</li><li>As a result and in addition to other aeronautical projects the company now expects to spend ~NZ$3.9bn over the next five to six years.</li><li>In addition AIA will also allocate capex on non-aeronautical activities including investment property development meaning total annual capex averaging  NZ$800m-NZ$900m over the medium term.</li></ul>

Auckland Airport (AIA) has confirmed the go-ahead for construction of an integrated domestic terminal having completed a more than decade long consultation process with airlinesAs a result and in addition to other aeronautical projects the company now expects to spend ~NZ$3.9bn over the next five to six years.In addition AIA will also allocate capex on non-aeronautical activities including investment property development meaning total annual capex averaging  NZ$800m-NZ$900m over the medium term.

Auckland Airport: New Domestic Terminal Confirmed

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Auckland Intl Airport (AIA NZ)

Auckland Airport: Still Incentivised to Invest

The value of Auckland Airport's (AIA) aeronautical business is materially higher than its regulatory asset base (RAB); The magnitude of AIA's RAB...

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: Strong Aero Repricing

Auckland Airport (AIA) has published very strong aeronautical pricing for the next four years, well above our and market expectations; However, the...

Forsyth Barr

Auckland Airport: Building Over the Green Line

Auckland Airport (AIA) has announced a further uplift in aeronautical capex ahead of its aeronautical re-pricing mid-year; Higher capex reflects...

Forsyth Barr

Auckland Airport: New Domestic Terminal Confirmed

Auckland Airport (AIA) has confirmed the go-ahead for construction of an integrated domestic terminal having completed a more than decade long...

Forsyth Barr

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)