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

<h2>Napier Port</h2>
Port Floats on a Rising Tide; Initiate at NEUTRAL
We initiate coverage of Napier Port (NPH) with a NEUTRAL rating and 12 month price target of NZ$3.00. NPH offers investors exposure to a long term infrastructure asset, which has a favourable catchment in Hawke’s Bay providing both import and export cargo growth opportunities. We expect cargo growth momentum to continue over the medium term supported by positive outlooks for both the forestry and pipfruit sectors, notwithstanding some near-term headwinds from lower log prices. NPH’s evident pricing power will be key in improving economic returns following the significant capital investment in a new wharf. While NPH trades at a (justifiably) large earnings valuation discount to Port of Tauranga (POT), we believe it is fairly priced at a modest premium to smaller sector peers, South Port (SPN) and Marsden Maritime Holdings (MMH).
Capex and growth
NPH has grown its cargo base consistently in recent years. Consequently, it now needs to expand its wharf footprint to ease congestion, enhance capacity and future proof its operational capability. Planned development capex for a new wharf is significant and will materially depress return on invested capital during and upon construction.
Competition and contestability
Some cargo is contestable, including its largest container customer, WPI, which we believe is at risk given competitive approaches from other ports. However, the Port’s attractive and largely captive regional catchment provides pricing power, for which it has a track record historically. As a result we expect economic returns to improve over the medium to long term after the new wharf is completed.
Valuation full, but fair
NPH currently trades at a one year forward PE ~31x and one year forward EV/EBITDA multiple of ~14x on our estimates. While these multiples appear relatively attractive compared to POT (~40x and ~26x respectively) they are at a modest premium to smaller port owners, SPN and MMH.
Andy Bowley
andy.bowley@forsythbarr.co.nz
+64 4 495 8246

Napier Port
Port Floats on a Rising Tide; Initiate at NEUTRAL
We initiate coverage of Napier Port (NPH) with a NEUTRAL rating and 12 month price target of NZ$3.00. NPH offers investors exposure to a long term infrastructure asset, which has a favourable catchment in Hawke’s Bay providing both import and export cargo growth opportunities. We expect cargo growth momentum to continue over the medium term supported by positive outlooks for both the forestry and pipfruit sectors, notwithstanding some near-term headwinds from lower log prices. NPH’s evident pricing power will be key in improving economic returns following the significant capital investment in a new wharf. While NPH trades at a (justifiably) large earnings valuation discount to Port of Tauranga (POT), we believe it is fairly priced at a modest premium to smaller sector peers, South Port (SPN) and Marsden Maritime Holdings (MMH).
Capex and growth
NPH has grown its cargo base consistently in recent years. Consequently, it now needs to expand its wharf footprint to ease congestion, enhance capacity and future proof its operational capability. Planned development capex for a new wharf is significant and will materially depress return on invested capital during and upon construction.
Competition and contestability
Some cargo is contestable, including its largest container customer, WPI, which we believe is at risk given competitive approaches from other ports. However, the Port’s attractive and largely captive regional catchment provides pricing power, for which it has a track record historically. As a result we expect economic returns to improve over the medium to long term after the new wharf is completed.
Valuation full, but fair
NPH currently trades at a one year forward PE ~31x and one year forward EV/EBITDA multiple of ~14x on our estimates. While these multiples appear relatively attractive compared to POT (~40x and ~26x respectively) they are at a modest premium to smaller port owners, SPN and MMH.
Andy Bowley
andy.bowley@forsythbarr.co.nz
+64 4 495 8246

Napier Port: Port Floats on a Rising Tide; Initiate at NEUTRAL

New Zealand

Napier Port Holdings Limited provides shipping services. The Company offers transportation for cargo and passenger. Napier Port Holdings serves customers in New Zealand.

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Napier Port (NPH NZ)

Napier Port: Port Floats on a Rising Tide; Initiate at NEUTRAL

Napier Port Port Floats on a Rising Tide; Initiate at NEUTRAL We initiate coverage of Napier Port (NPH) with a NEUTRAL rating and 12 month price...

Forsyth Barr

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