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>Building weekly</h2>
New Zealand
<ul>
<li>Surging new mortgage lending (Dec.): Total new mortgage lending up +22% yoy including owner-occupiers +19% and investors +37%.</li>
<li>No new year relief from tight housing inventory (<a href="http://realestate.co.nz/" target="_blank" data-saferedirecturl="https://www.google.com/url?q=http://realestate.co.nz&amp;source=gmail&amp;ust=1580773218152000&amp;usg=AFQjCNFcmEr5-RLUhiI0nAUAEmcqUyQZ1Q" rel="noopener">realestate.co.nz</a>, Jan.): Auckland property inventory -23% yoy on total new listings -6%. Ex-Auckland inventory -20% yoy on new listings -2%.</li>
<li>Net migration revised lower; whilst still elevated down -35% from the 2016 peak (12 months to Nov.): +41.5k -15.7% yoy (previous +43.0k).</li>
<li>Big drop in Steel &amp; Tube’s 1H earnings: STU has guided to 1H EBIT down c.70-80% impacted by (1) a c.-10% yoy decline in revenue on the back of “reduced vertical construction work and a contraction in the stainless steel market”, and (2) previously announced NZ$2m of “Project Strive” costs (STU’s programme to improve customer service and operating efficiency) and NZ$2m in bad debts.</li>
<li>Carters to shut Whangarei sawmill: Follows recent upgrade of the Kawerau mill. <a href="https://www.stuff.co.nz/business/119009784/carter-harvey-holt-whangarei-workers-shocked-and-raw-over-potential-closure" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.stuff.co.nz/business/119009784/carter-harvey-holt-whangarei-workers-shocked-and-raw-over-potential-closure&amp;source=gmail&amp;ust=1580773218153000&amp;usg=AFQjCNHIIYKKU7xPZP25ajWMY9y8QWZRUw" rel="noopener">Carter Harvey Holt Whangarei workers 'shocked and raw' over potential closure</a></li>
<li>Government details NZ$12b infrastructure package: <a href="https://www.rnz.co.nz/news/political/408385/govt-s-12b-infrastructure-spend-rail-roads-and-dhbs-the-big-winners" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.rnz.co.nz/news/political/408385/govt-s-12b-infrastructure-spend-rail-roads-and-dhbs-the-big-winners&amp;source=gmail&amp;ust=1580773218153000&amp;usg=AFQjCNGLI56uSU60uUs0d72i6igCYXpvZg" rel="noopener">Govt's $12b infrastructure spend: Rail, roads and DHBs the big winners</a></li>
</ul>
Australia
<ul>
<li>More speculation of takeover interest in Boral: <a href="https://www.theaustralian.com.au/business/dataroom/irish-firm-crh-linked-to-boral-buyout/news-story/e6e91999832e5a250617916b69dcc217" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.theaustralian.com.au/business/dataroom/irish-firm-crh-linked-to-boral-buyout/news-story/e6e91999832e5a250617916b69dcc217&amp;source=gmail&amp;ust=1580773218153000&amp;usg=AFQjCNGbMtIsLIJHhb_ONMGqSfV51Do3Ww" rel="noopener">Irish firm CRH linked to Boral buyout</a>&nbsp;(behind a paywall) |&nbsp;<a href="https://www.globalcement.com/news/item/10345-crh-rumoured-to-be-circling-boral" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.globalcement.com/news/item/10345-crh-rumoured-to-be-circling-boral&amp;source=gmail&amp;ust=1580773218153000&amp;usg=AFQjCNG4fy1vdoutO7h7dJpoYyuIo0Fwfg" rel="noopener">CRH rumoured to be circling Boral</a></li>
</ul>
International
<ul>
<li>US: New home sales remain strongly up yoy (Dec.): -0.4% mom, +23.0% yoy (previous -1.1% mom, +13.3% yoy).</li>
<li>US: Nominal house price growth (Nov): +0.5% mom, +2.5% yoy (previous +0.5% mom, +2.2% yoy).</li>
<li>US: Homebuilders continue to benefit from strong market conditions:</li>
</ul>
-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;US’s largest homebuilder D.R. Horton&nbsp;1Q new orders up +19% yoy. “We continue to see good demand and a limited supply of homes at affordable prices across our markets, and economic fundamentals and financing availability remain solid.” Highlighting the massive scale, DHI sold 58k houses during the year, and holds an inventory of 30k homes.
-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PulteGroup&nbsp;4Q19 new orders up +33% yoy. “Strong demand for new homes is benefitting from favourable market dynamics including improved affordability in part due to low mortgage rates, high employment and consumer confidence, and a generally balanced inventory of new homes”.&nbsp;
Chart of the week: Stats NZ has revised its estimate of NZ net migration. Whilst still elevated versus historic average levels, it is down by a 1/3 from its 2016 peak
New Zealand net migration vs. building consents
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.2&amp;permmsgid=msg-f:1657457515525552751&amp;th=170078d42b33ba6f&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ-LeIkLif5q5yTI-XXEC-SKbck_E-mqaNkQMV3UR-Qfok6Df3k70oQuFsu9YB090vJenlCYc1uMu7OOY7gs8dWYGClG369osTluBsZP97AuBl9T8MolzyJx1r8&amp;disp=emb" width="453" height="340" class="editor-image img-responsive" data-image-whitelisted=""></figure>
Source: Statistics NZ, Forsyth Barr analysis
Matt Henry &nbsp;CFA Head of Wealth Management Research Forsyth Barr Limited
P: +64 9 368 0115 | TF: 0800 367 227&nbsp; Level 23, Lumley Centre, 88 Shortland Street, Auckland

Building weekly
New Zealand

Surging new mortgage lending (Dec.): Total new mortgage lending up +22% yoy including owner-occupiers +19% and investors +37%.
No new year relief from tight housing inventory (realestate.co.nz, Jan.): Auckland property inventory -23% yoy on total new listings -6%. Ex-Auckland inventory -20% yoy on new listings -2%.
Net migration revised lower; whilst still elevated down -35% from the 2016 peak (12 months to Nov.): +41.5k -15.7% yoy (previous +43.0k).
Big drop in Steel &amp; Tube’s 1H earnings: STU has guided to 1H EBIT down c.70-80% impacted by (1) a c.-10% yoy decline in revenue on the back of “reduced vertical construction work and a contraction in the stainless steel market”, and (2) previously announced NZ$2m of “Project Strive” costs (STU’s programme to improve customer service and operating efficiency) and NZ$2m in bad debts.
Carters to shut Whangarei sawmill: Follows recent upgrade of the Kawerau mill. Carter Harvey Holt Whangarei workers 'shocked and raw' over potential closure
Government details NZ$12b infrastructure package: Govt's $12b infrastructure spend: Rail, roads and DHBs the big winners

Australia

More speculation of takeover interest in Boral: Irish firm CRH linked to Boral buyout&nbsp;(behind a paywall) |&nbsp;CRH rumoured to be circling Boral

International

US: New home sales remain strongly up yoy (Dec.): -0.4% mom, +23.0% yoy (previous -1.1% mom, +13.3% yoy).
US: Nominal house price growth (Nov): +0.5% mom, +2.5% yoy (previous +0.5% mom, +2.2% yoy).
US: Homebuilders continue to benefit from strong market conditions:

-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;US’s largest homebuilder D.R. Horton&nbsp;1Q new orders up +19% yoy. “We continue to see good demand and a limited supply of homes at affordable prices across our markets, and economic fundamentals and financing availability remain solid.” Highlighting the massive scale, DHI sold 58k houses during the year, and holds an inventory of 30k homes.
-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PulteGroup&nbsp;4Q19 new orders up +33% yoy. “Strong demand for new homes is benefitting from favourable market dynamics including improved affordability in part due to low mortgage rates, high employment and consumer confidence, and a generally balanced inventory of new homes”.&nbsp;
Chart of the week: Stats NZ has revised its estimate of NZ net migration. Whilst still elevated versus historic average levels, it is down by a 1/3 from its 2016 peak
New Zealand net migration vs. building consents

Source: Statistics NZ, Forsyth Barr analysis
Matt Henry &nbsp;CFA Head of Wealth Management Research Forsyth Barr Limited
P: +64 9 368 0115 | TF: 0800 367 227&nbsp; Level 23, Lumley Centre, 88 Shortland Street, Auckland

United States

PulteGroup Inc. sells and constructs homes, and purchases, develops, and sells residential land and develops active adult communities.  The Company also provides mortgage financing, title insurance, and other services to home buyers. Pulte has operations in various markets across the United States and Puerto Rico.

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Pultegroup Inc (PHM US)

Building Weekly

Building weekly New Zealand Surging new mortgage lending (Dec.): Total new mortgage lending up +22% yoy including owner-occupiers +19% and...

Forsyth Barr

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