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>Milk prices continue to trend lower: On February 24, 2023, Fonterra downgraded its estimated FGMP payout from between NZ$8.50 and NZ$9.50 to between NZ$8.20 and NZ$8.80, a -6% downgrade at the midpoint</li><li>Dairy production slightly softer than prior seasons: New Zealand dairy production for December 2022 was flat compared to December 2021</li><li>Farm costs continue to rise: Farmers in New Zealand are facing increasing costs of fertiliser, fuel, and labour, resulting in a squeeze on profit margins</li></ul>

Milk prices continue to trend lower: On February 24, 2023, Fonterra downgraded its estimated FGMP payout from between NZ$8.50 and NZ$9.50 to between NZ$8.20 and NZ$8.80, a -6% downgrade at the midpointDairy production slightly softer than prior seasons: New Zealand dairy production for December 2022 was flat compared to December 2021Farm costs continue to rise: Farmers in New Zealand are facing increasing costs of fertiliser, fuel, and labour, resulting in a squeeze on profit margins

Forsyth Barr Dairy Farm Digest: Edition 1: Pricing Down, Costs Up

Equity Bottom-Up

Fisher & Paykel Healthcare Cor / Equity Bottom-Up

<ul><li>We make a number of temporary changes to our company coverage responsibilities with immediate effect due to Matt Montgomerie's period of travel-related extended leave.</li><li>Coverage temporarily transferred to Ben Crozier.</li><li>Matt is due to return in early 2027.</li></ul>

We make a number of temporary changes to our company coverage responsibilities with immediate effect due to Matt Montgomerie's period of travel-related extended leave.Coverage temporarily transferred to Ben Crozier.Matt is due to return in early 2027.

Company Coverage Temporary Coverage Changes

<ul><li>On 22 December 2025, NZ signed a free trade agreement (FTA) with India after nine months of negotiations.</li><li>Within our research coverage, we view Scales Corporation (SCL) as the most positively exposed to this agreement, both near term and long term.</li><li>The benefits to other exporters within our coverage (The a2 Milk Company [ATM], Port of Tauranga [POT], Napier Port [NPH], Skellerup [SKL], Sanford [SAN], and Synlait Milk [SML]) are relatively immaterial today (varies by company), but the FTA is still a small positive, particularly for medium to long-term growth potential.</li></ul>

On 22 December 2025, NZ signed a free trade agreement (FTA) with India after nine months of negotiations.Within our research coverage, we view Scales Corporation (SCL) as the most positively exposed to this agreement, both near term and long term.The benefits to other exporters within our coverage (The a2 Milk Company [ATM], Port of Tauranga [POT], Napier Port [NPH], Skellerup [SKL], Sanford [SAN], and Synlait Milk [SML]) are relatively immaterial today (varies by company), but the FTA is still a small positive, particularly for medium to long-term growth potential.

Equity Strategy NZ–India FTA — An Early Christmas Present

Fonterra Shareholders Fund / Equity Bottom-Up

<ul><li>Fonterra (FSF) reported a solid FY25 result.</li><li>EPS of NZ71cps was ahead of the midpoint of its guidance, well ahead of our NZ51cps estimate post its FY24 result, and its balance sheet has returned to a robust position following weak cashflow in 1H25.</li><li>We think the balance sheet strength opens up the path for further capital management opportunities, but management was reluctant to be drawn on this.</li></ul>

Fonterra (FSF) reported a solid FY25 result.EPS of NZ71cps was ahead of the midpoint of its guidance, well ahead of our NZ51cps estimate post its FY24 result, and its balance sheet has returned to a robust position following weak cashflow in 1H25.We think the balance sheet strength opens up the path for further capital management opportunities, but management was reluctant to be drawn on this.

Fonterra FY25 Result—Cream Rising to the Top

<ul><li>Initiated coverage on Fonterra with a NEUTRAL rating and a target price of NZ$6.00, reflecting a balanced investment view.</li><li>Concerns over the Mainland Group's valuation and performance, particularly in Australia, which has shown poor returns on capital and cash flow generation.</li><li>Increased confidence in Fonterra's core Ingredients and Foodservice earnings and returns profile, potentially supporting dividends of NZ30cps post-Mainland divestment.</li></ul>

Initiated coverage on Fonterra with a NEUTRAL rating and a target price of NZ$6.00, reflecting a balanced investment view.Concerns over the Mainland Group's valuation and performance, particularly in Australia, which has shown poor returns on capital and cash flow generation.Increased confidence in Fonterra's core Ingredients and Foodservice earnings and returns profile, potentially supporting dividends of NZ30cps post-Mainland divestment.

Fonterra - Mainland and Beyond—Initiate at NEUTRAL

New Zealand

Fonterra Cooperative Group Ltd is a New Zealand multinational dairy co-operative and its farmer shareholders are the suppliers of milk to Fonterra in New Zealand. The Company operates Fonterra Shareholders' Fund, which provides additional financial flexibility for farmer shareholders who would have the opportunity to sell economic rights of shares to the fund.

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Fonterra Shareholders Fund (FSF NZ)

Forsyth Barr Dairy Farm Digest: Edition 1: Pricing Down, Costs Up

The Forsyth Barr Dairy Farm Digest provides a snapshot of information relevant to New Zealand's dairy sector; we include forecasts on the Farmgate...

Forsyth Barr

Company Coverage Temporary Coverage Changes

We make a number of temporary changes to our company coverage responsibilities with immediate effect due to Matt Montgomerie's period of...

Forsyth Barr

Equity Strategy NZ–India FTA — An Early Christmas Present

Within our research coverage, we view Scales Corporation (SCL) as the most positively exposed to this agreement, both near term and long term.

Forsyth Barr

Fonterra FY25 Result—Cream Rising to the Top

We think the balance sheet strength opens up the path for further capital management opportunities, but management was reluctant to be drawn on this.

Forsyth Barr

Fonterra - Mainland and Beyond—Initiate at NEUTRAL

Initiated coverage on Fonterra with a NEUTRAL rating and a target price of NZ$6.00, reflecting a balanced investment view.

Forsyth Barr

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