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>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

<ul><li>Scales’ (SCL) first-time FY26 guidance was exactly what we were looking for to support our positive investment thesis: (1) Shelby (SCL’s US pet food ingredients business, which is ~50% of group FY26 NPAT and its highest multiple-earnings stream) PBT growth is expected to be ~+16% vs FY25, which highlights the ramping up of SCL’s recent projects and essentially squashes the bear case that Shelby has struggled to grow over recent years; and (2) the solid Horticulture performance appears set to continue.</li><li>EBITDA guidance is NZ$129m–NZ$136m (FB prior of ~NZ$128m) and NPAT attributable to shareholders is NZ$50m–NZ$55m (FB prior of NZ$53.6m).</li><li>Consistent with history, we expect guidance is relatively conservative (the top end is essentially the midpoint).</li></ul>

Scales’ (SCL) first-time FY26 guidance was exactly what we were looking for to support our positive investment thesis: (1) Shelby (SCL’s US pet food ingredients business, which is ~50% of group FY26 NPAT and its highest multiple-earnings stream) PBT growth is expected to be ~+16% vs FY25, which highlights the ramping up of SCL’s recent projects and essentially squashes the bear case that Shelby has struggled to grow over recent years; and (2) the solid Horticulture performance appears set to continue.EBITDA guidance is NZ$129m–NZ$136m (FB prior of ~NZ$128m) and NPAT attributable to shareholders is NZ$50m–NZ$55m (FB prior of NZ$53.6m).Consistent with history, we expect guidance is relatively conservative (the top end is essentially the midpoint).

<ul><li>Scales’ (SCL) fifth earnings guidance upgrade in eight months reflects ongoing solid Horticulture pricing and fruit quality (previous assumptions were for moderation in both).</li><li>The upgrade has not materially changed our FY26+ earnings view, but the Horticulture strength highlights the upside potential in good years (we do not expect SCL to match FY25 Horticulture EBITDA until FY32) and points to further near-term upside.</li><li>We remain attracted to SCL’s: (1) earnings growth (FY26–FY28 EPS CAGR of ~+9%); (2) robust dividend (~5% gross yield); (3) near-term Horticulture upside; (4) long-term Global Proteins growth (organic and inorganic, given low single-digit market share); and (5) reasonable valuation at ~15x 12-month forward PE.</li></ul>

Scales’ (SCL) fifth earnings guidance upgrade in eight months reflects ongoing solid Horticulture pricing and fruit quality (previous assumptions were for moderation in both).The upgrade has not materially changed our FY26+ earnings view, but the Horticulture strength highlights the upside potential in good years (we do not expect SCL to match FY25 Horticulture EBITDA until FY32) and points to further near-term upside.We remain attracted to SCL’s: (1) earnings growth (FY26–FY28 EPS CAGR of ~+9%); (2) robust dividend (~5% gross yield); (3) near-term Horticulture upside; (4) long-term Global Proteins growth (organic and inorganic, given low single-digit market share); and (5) reasonable valuation at ~15x 12-month forward PE.

<ul><li>We are wholly supportive of Scales (SCL)’s NZ$104m acquisition of its Australian joint ventures (Fayman and Meateor Australia).</li><li>This deal accelerates SCL’s one-brand Global Proteins strategy, and equity earnings will now account for ~2% of FY27 EBITDA.</li><li>Implied transaction return on capital is in excess of SCL's hurdle rate and we have increased EPS forecasts by ~+10% across the forecast horizon.</li></ul>

We are wholly supportive of Scales (SCL)’s NZ$104m acquisition of its Australian joint ventures (Fayman and Meateor Australia).This deal accelerates SCL’s one-brand Global Proteins strategy, and equity earnings will now account for ~2% of FY27 EBITDA.Implied transaction return on capital is in excess of SCL's hurdle rate and we have increased EPS forecasts by ~+10% across the forecast horizon.

<ul><li>Scales (SCL) reported a very strong result.</li><li>Horticulture earnings were the highest 1H on record, driven by: (1) favourable growing conditions; (2) ongoing premium variety shift; and (3) improved margins.</li><li>We remain attracted to SCL's: (1) solid EPS outlook (FY26–FY28 CAGR of ~+12%); (2) robust Global Proteins outlook, with M&amp;A prospects and organic market share opportunities (via protein diversification, geographic expansion, and customer growth); (3) ~NZ$20m net cash position; and (4) attractive valuation support, with Global Proteins trading on ~12x two-year forward PE.</li></ul>

Scales (SCL) reported a very strong result.Horticulture earnings were the highest 1H on record, driven by: (1) favourable growing conditions; (2) ongoing premium variety shift; and (3) improved margins.We remain attracted to SCL's: (1) solid EPS outlook (FY26–FY28 CAGR of ~+12%); (2) robust Global Proteins outlook, with M&amp;A prospects and organic market share opportunities (via protein diversification, geographic expansion, and customer growth); (3) ~NZ$20m net cash position; and (4) attractive valuation support, with Global Proteins trading on ~12x two-year forward PE.

New Zealand

Scales Corporation Limited is a New Zealand provider of essential supply chain services for primary exporters, importers and FMCG businesses. The Company's horticulture division involves the global exporting of apples while its storage and logistics division includes nationwide cold storage coverage and a logistics business specialising in sea and air freight of primary produce.

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Scales Corp Ltd (SCL NZ)

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

Scales Consistent Delivery

EBITDA guidance is NZ$129m–NZ$136m (FB prior of ~NZ$128m) and NPAT attributable to shareholders is NZ$50m–NZ$55m (FB prior of NZ$53.6m).

Forsyth Barr

Scales Core Strength

Scales’ (SCL) fifth earnings guidance upgrade in eight months reflects ongoing solid Horticulture pricing and fruit quality (previous assumptions...

Forsyth Barr

Scales Grouse

We are wholly supportive of Scales (SCL)’s NZ$104m acquisition of its Australian joint ventures (Fayman and Meateor Australia).

Forsyth Barr

Scales 1H25 Result—Bearing Fruit

Horticulture earnings were the highest 1H on record, driven by: (1) favourable growing conditions; (2) ongoing premium variety shift; and (3)...

Forsyth Barr

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