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>EBOS Group's (EBO) 1Q25 trading update was robust, with EBITDA growth of +7.4% excluding the Chemist Warehouse (CW) contract, highlighting it is ably managing the contract loss.</li><li>FY25 EBITDA guidance was retained. Assuming the current growth rate holds, it implies EBITDA in line with consensus expectations.</li><li>We make no changes to our earnings forecasts. Our positive view is underpinned by a robust EPS outlook from FY25 driven by: (1) solid organic growth as EBO benefits from its shift towards higher growth and higher margin segments versus history, and (2) M&amp;A upside (we forecast FY25 debt headroom of A$350m). </li></ul>

EBOS Group's (EBO) 1Q25 trading update was robust, with EBITDA growth of +7.4% excluding the Chemist Warehouse (CW) contract, highlighting it is ably managing the contract loss.FY25 EBITDA guidance was retained. Assuming the current growth rate holds, it implies EBITDA in line with consensus expectations.We make no changes to our earnings forecasts. Our positive view is underpinned by a robust EPS outlook from FY25 driven by: (1) solid organic growth as EBO benefits from its shift towards higher growth and higher margin segments versus history, and (2) M&amp;A upside (we forecast FY25 debt headroom of A$350m). 

EBOS Group - 102nd AGM — Line and Length

<ul><li>With recent indicators across its Healthcare and Animal Care segments constructive, we expect a solid FY24 result from EBOS Group (EBO) when it reports on Wednesday, 21 August.</li><li>Outlook comments on: (1) working capital release, (2) cost out, and (3) Community Pharmacy market share wins are of most interest.</li><li>We see possible upside to FY25 consensus, driven by stronger working capital release, should EBO execute on its FY25 cost out and market share gains ‘guide’.</li></ul>

With recent indicators across its Healthcare and Animal Care segments constructive, we expect a solid FY24 result from EBOS Group (EBO) when it reports on Wednesday, 21 August.Outlook comments on: (1) working capital release, (2) cost out, and (3) Community Pharmacy market share wins are of most interest.We see possible upside to FY25 consensus, driven by stronger working capital release, should EBO execute on its FY25 cost out and market share gains ‘guide’.

EBOS Group - FY24 Preview — Degree of Optimism

<ul><li>The latest NZ Nielsen supermarket scan data shows continued solid market share gains and growth for EBOS Group's (EBO) key brands.</li><li>In the period ended 30 June EBO recorded +9% year-on-year growth on a 12 month rolling basis despite category growth slowing.</li><li>The strength is led by Superior Pet Food with high teens growth and &gt;+100bps of market share gains over the past 12 months. </li></ul>

The latest NZ Nielsen supermarket scan data shows continued solid market share gains and growth for EBOS Group's (EBO) key brands.In the period ended 30 June EBO recorded +9% year-on-year growth on a 12 month rolling basis despite category growth slowing.The strength is led by Superior Pet Food with high teens growth and &gt;+100bps of market share gains over the past 12 months. 

<ul><li>We upgrade our rating on EBOS Group (EBO) to OUTPERFORM.</li><li>Our upgrade reflects: (1) relatively undemanding valuation versus peers and its own history, particularly given the shift in EBO's business towards higher growth and higher margin segments, and our analysis of EBO's organic growth (~+6% since the Symbion acquisition in 2013) which we think can at least be maintained over the medium-term, (2) solid recent trends, and (3) continued comfort levels on FY25 consensus expectations post the Chemist Warehouse (CW) contract loss. </li><li>EBO is a high quality defensive business with a robust organic growth profile and M&amp;A upside (we estimate FY25 debt headroom of A$500m).</li></ul>

We upgrade our rating on EBOS Group (EBO) to OUTPERFORM.Our upgrade reflects: (1) relatively undemanding valuation versus peers and its own history, particularly given the shift in EBO's business towards higher growth and higher margin segments, and our analysis of EBO's organic growth (~+6% since the Symbion acquisition in 2013) which we think can at least be maintained over the medium-term, (2) solid recent trends, and (3) continued comfort levels on FY25 consensus expectations post the Chemist Warehouse (CW) contract loss. EBO is a high quality defensive business with a robust organic growth profile and M&amp;A upside (we estimate FY25 debt headroom of A$500m).

EBOS Group - Inexpensive Defensive; Up to OUTPERFORM

<ul><li>Following our scenarios to assess the impact of the Chemist Warehouse (CW) contract loss in FY25, we walk away with increased comfort that EBO can navigate the loss without significant downside to current FY25 consensus expectations.</li><li>Representing only ~2% of EBO's group EBIT, we also think EBO should be able to absorb the loss of NZ CW supply contract which ends in 1H27 (should the recent competition changes drive this outcome).</li><li>In combination, our analysis provides increased confidence in the earnings outlook, however, we continue to see valuation as elevated in relative and absolute terms (even reflecting EBO's execution and change in business mix). Retain NEUTRAL. </li></ul>

Following our scenarios to assess the impact of the Chemist Warehouse (CW) contract loss in FY25, we walk away with increased comfort that EBO can navigate the loss without significant downside to current FY25 consensus expectations.Representing only ~2% of EBO's group EBIT, we also think EBO should be able to absorb the loss of NZ CW supply contract which ends in 1H27 (should the recent competition changes drive this outcome).In combination, our analysis provides increased confidence in the earnings outlook, however, we continue to see valuation as elevated in relative and absolute terms (even reflecting EBO's execution and change in business mix). Retain NEUTRAL. 

Australia

EBOS Group Limited supplies and distributes medical consumable products and equipment to the hospital and primary care sectors of the New Zealand and Australian healthcare markets. The Company's products include diagnostic instruments, surgical instruments and prosthesis, feminine protection, anesthetic equipment, and other consumer products.

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EBOS Group (EBO AU)

EBOS Group - 102nd AGM — Line and Length

EBOS Group's (EBO) 1Q25 trading update was robust, with EBITDA growth of +7.4% excluding the Chemist Warehouse (CW) contract, highlighting it is...

Forsyth Barr

EBOS Group - FY24 Preview — Degree of Optimism

With recent indicators across its Healthcare and Animal Care segments constructive, we expect a solid FY24 result from EBOS Group (EBO) when it...

Forsyth Barr

EBOS Group - Pets Persisting

The latest NZ Nielsen supermarket scan data shows continued solid market share gains and growth for EBOS Group's (EBO) key brands.

Forsyth Barr

EBOS Group - Inexpensive Defensive; Up to OUTPERFORM

EBO is a high quality defensive business with a robust organic growth profile and M&A upside (we estimate FY25 debt headroom of A$500m).

Forsyth Barr

EBOS Group - The Final CW Check-Up

Following our scenarios to assess the impact of the Chemist Warehouse (CW) contract loss in FY25, we walk away with increased comfort that EBO can...

Forsyth Barr

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