New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

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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).

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Equity Bottom-Up

Channel Infrastructure NZ Ltd / Equity Bottom-Up

<ul>
<li>One of the attractive aspects of Channel Infrastructure (CHI) as an investment is its exposure to the producer price index, (PPI) that has again exceeded expectations, resulting in a small increase in our FY25 forecast earnings.</li>
<li>Strong spot electricity and gas price rises over the past year have contributed a quarter of the PPI increase.</li>
<li>In addition, Auckland International Airport's (AIA) October 2024 operating metrics show modest growth on last year, albeit still well below pre-COVID. </li>
</ul>


One of the attractive aspects of Channel Infrastructure (CHI) as an investment is its exposure to the producer price index, (PPI) that has again exceeded expectations, resulting in a small increase in our FY25 forecast earnings.
Strong spot electricity and gas price rises over the past year have contributed a quarter of the PPI increase.
In addition, Auckland International Airport's (AIA) October 2024 operating metrics show modest growth on last year, albeit still well below pre-COVID. 


Channel Infrastructure - PPI Price Push Helps FY25 Outlook

<ul><li>Channel Infrastructure's (CHI) investor day re-emphasised the upside potential from leasing land to energy project developers, but with the market now pricing in some upside and with significant uncertainty on the likelihood and timing of the investments we downgrade our rating to NEUTRAL from OUTPERFORM.</li><li>The next material catalyst for CHI will be Seadra's decision on whether to proceed with the bio-refinery or not, a decision which likely depends on securing feedstock supply. </li><li>CHI's external fuel volume forecaster, Envisory, has lifted its volume forecasts out to 2045, boosting our medium-term outlook and leading to the modest +1.5% target price increase. </li></ul>

Channel Infrastructure's (CHI) investor day re-emphasised the upside potential from leasing land to energy project developers, but with the market now pricing in some upside and with significant uncertainty on the likelihood and timing of the investments we downgrade our rating to NEUTRAL from OUTPERFORM.The next material catalyst for CHI will be Seadra's decision on whether to proceed with the bio-refinery or not, a decision which likely depends on securing feedstock supply. CHI's external fuel volume forecaster, Envisory, has lifted its volume forecasts out to 2045, boosting our medium-term outlook and leading to the modest +1.5% target price increase. 

Channel Infrastructure - Energising Its Options the Next Challenge

Thematic (Sector/Industry)

<ul><li>The announcement that a biorefinery may be built at Channel Infrastructure's (CHI) Marsden Point site demonstrates the potential land value of the site, and is a proof of concept for CHI's Energy Precinct.</li><li>It is another example of CHI unlocking the potential at Marsden Point (albeit it is not certain the biorefinery will go ahead).</li><li>If the biorefinery does go ahead, we estimate value upside of between +19cps to +30cps, coming from a combination of additional asset sales, leasing land for the project, additional storage facilities, and jetty throughput fees.</li></ul>

The announcement that a biorefinery may be built at Channel Infrastructure's (CHI) Marsden Point site demonstrates the potential land value of the site, and is a proof of concept for CHI's Energy Precinct.It is another example of CHI unlocking the potential at Marsden Point (albeit it is not certain the biorefinery will go ahead).If the biorefinery does go ahead, we estimate value upside of between +19cps to +30cps, coming from a combination of additional asset sales, leasing land for the project, additional storage facilities, and jetty throughput fees.

Channel Infrastructure - Marsden Goes Back to the Future

<ul><li>Channel Infrastructure (CHI) has delivered on another private storage deal that lifts its medium-term earnings and dividend outlook, such that we upgrade our rating to OUTPERFORM from NEUTRAL.</li><li>In addition, there remains upside potential to provide additional storage for fuel security of supply issues, and CHI continues to explore options for its significant land bank.</li><li>The 1H24 result itself was in line with expectations, although it appears CHI is taking a slightly more conservative approach with its ordinary dividend, which makes sense given potential growth capex requirements.</li></ul>

Channel Infrastructure (CHI) has delivered on another private storage deal that lifts its medium-term earnings and dividend outlook, such that we upgrade our rating to OUTPERFORM from NEUTRAL.In addition, there remains upside potential to provide additional storage for fuel security of supply issues, and CHI continues to explore options for its significant land bank.The 1H24 result itself was in line with expectations, although it appears CHI is taking a slightly more conservative approach with its ordinary dividend, which makes sense given potential growth capex requirements.

Channel Infrastructure - Fuelling Up for Growth — 1H24 Result

<ul><li>Channel Infrastructure (CHI) has confirmed that throughput volumes remain robust and growing, albeit the growth rate has eased, consistent with jet traffic plateauing.</li><li>Our forecasts and target price remain unchanged ahead of CHI's 1H24 result, to be released on 23 August 2024. Seadra continues to work on acquiring ex-refining assets, rolling its option three months to the end of September 2024.</li><li>We continue to assume Seadra completes the deal. </li></ul>

Channel Infrastructure (CHI) has confirmed that throughput volumes remain robust and growing, albeit the growth rate has eased, consistent with jet traffic plateauing.Our forecasts and target price remain unchanged ahead of CHI's 1H24 result, to be released on 23 August 2024. Seadra continues to work on acquiring ex-refining assets, rolling its option three months to the end of September 2024.We continue to assume Seadra completes the deal. 

Channel Infrastructure - Sticking to the Straight Road — 2Q24 Op Stats

New Zealand

Channel Infrastructure NZ Limited operates a fuel infrastructure company. The Company owns and operates a petroleum pipeline from the refinery to a terminal at Marsden Point, in Northland. Channel Infrastructure produces motor gasoline, automotive and diesel fuels, aviation jet fuel, light and heavy fuel oils, and bitumen.

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Channel Infrastructure NZ Ltd (CHI NZ)

Channel Infrastructure - PPI Price Push Helps FY25 Outlook

CHI has good upside potential, but likely requires a positive outcome on the bio-refinery project to see a significant lift in its share price from...

Forsyth Barr

Channel Infrastructure - Energising Its Options the Next Challenge

The next material catalyst for CHI will be Seadra's decision on whether to proceed with the bio-refinery or not, a decision which likely depends on...

Forsyth Barr

Channel Infrastructure - Marsden Goes Back to the Future

The announcement that a biorefinery may be built at Channel Infrastructure's (CHI) Marsden Point site demonstrates the potential land value of the...

Forsyth Barr

Channel Infrastructure - Fuelling Up for Growth — 1H24 Result

Channel Infrastructure (CHI) has delivered on another private storage deal that lifts its medium-term earnings and dividend outlook, such that we...

Forsyth Barr

Channel Infrastructure - Sticking to the Straight Road — 2Q24 Op Stats

Channel Infrastructure (CHI) has confirmed that throughput volumes remain robust and growing, albeit the growth rate has eased, consistent with jet...

Forsyth Barr

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