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>Synlait Milk (SML) has announced its intentions to divest its Dairyworks and Talbot Forest Cheese (TFC) businesses as part of its asset/capital structure review</li><li>Strategically, we think it broadly makes sense for SML to focus on its Advanced Nutrition, Ingredients and Foodservice businesses.</li><li>Albeit we do note Dairyworks has been one of SML’s few strong performing business units over the past 12 months – however, with its elevated current gearing positon its hand has been forced.</li></ul>

Synlait Milk (SML) has announced its intentions to divest its Dairyworks and Talbot Forest Cheese (TFC) businesses as part of its asset/capital structure reviewStrategically, we think it broadly makes sense for SML to focus on its Advanced Nutrition, Ingredients and Foodservice businesses.Albeit we do note Dairyworks has been one of SML’s few strong performing business units over the past 12 months – however, with its elevated current gearing positon its hand has been forced.

Synlait Milk (SML): Dairyworks Sale Initiated

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>There were a lot of rebalance implementations in China on Friday, plus a few upcoming index changes that were announced during the week.</li>
<li>There are a lot of implementations this week, with <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">KOSPI 200</a> and <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150</a> on Thursday and then others across a bunch of countries on Friday.</li>
<li>There were big inflows to <a href="https://www.smartkarma.com/entities/tracker-fund-of-hong-kong-ltd" target="_blank" data-smartkarma-citation="entities:29257:1" rel="noopener">Tracker Fund of Hong Kong (2800 HK)</a> during the week taking units outstanding to a new high. ETF inflows continue even as the market drops.</li>
</ul>


There were a lot of rebalance implementations in China on Friday, plus a few upcoming index changes that were announced during the week.
There are a lot of implementations this week, with KOSPI 200 and KOSDAQ 150 on Thursday and then others across a bunch of countries on Friday.
There were big inflows to Tracker Fund of Hong Kong (2800 HK) during the week taking units outstanding to a new high. ETF inflows continue even as the market drops.


Index Rebalance & ETF Flow Recap: NKY, TW Div+, ASX200, NZX50, Mom30, Top10EW, MVW, Rakuten Bank

<ul>
<li>
<a href="https://www.smartkarma.com/entities/gentrack-group-ltd" target="_blank" data-smartkarma-citation="entities:2752:1" rel="noopener">Gentrack (GTK NZ)</a> and <a href="https://www.smartkarma.com/entities/dorchester-pacific-ltd" target="_blank" data-smartkarma-citation="entities:1854:1" rel="noopener">Turners Automotive (TRA NZ)</a> will be added to the S&amp;P/NZX 50 Index while <a href="https://www.smartkarma.com/entities/synlait-milk-ltd" target="_blank" data-smartkarma-citation="entities:16298:1" rel="noopener">Synlait Milk (SML NZ)</a> and <a href="https://www.smartkarma.com/entities/pacific-edge-ltd" target="_blank" data-smartkarma-citation="entities:20261:1" rel="noopener">Pacific Edge (PEB NZ)</a> will be deleted.</li>
<li>There is a lot to trade on the stocks. The impact in terms of days of ADV appears high but historically there has been volume on implementation date.</li>
<li>The adds have jumped recently and there will be pre-positioning on the stocks. Not so much on the deletes.</li>
</ul>



Gentrack (GTK NZ) and Turners Automotive (TRA NZ) will be added to the S&amp;P/NZX 50 Index while Synlait Milk (SML NZ) and Pacific Edge (PEB NZ) will be deleted.
There is a lot to trade on the stocks. The impact in terms of days of ADV appears high but historically there has been volume on implementation date.
The adds have jumped recently and there will be pre-positioning on the stocks. Not so much on the deletes.


S&P/NZX 50 Index Rebalance: Two High Impact Changes Coming Up

Thematic (Sector/Industry)

<ul><li>The Forsyth Barr Dairy Digest provides a snapshot of information relevant to New Zealand's dairy sector.</li><li>We include forecasts on the Farmgate Milk Price (FGMP), dairy production, on-farm costs and farm prices with supplementary information on lending, confidence, emissions, the infant formula market and our global analysis of the dairy industry. </li><li>This edition highlights that times are tough for farmers with volatile prices, subdued Chinese demand, and elevated operating and interest costs are pressuring on-farm profitability.</li></ul>

The Forsyth Barr Dairy Digest provides a snapshot of information relevant to New Zealand's dairy sector.We include forecasts on the Farmgate Milk Price (FGMP), dairy production, on-farm costs and farm prices with supplementary information on lending, confidence, emissions, the infant formula market and our global analysis of the dairy industry. This edition highlights that times are tough for farmers with volatile prices, subdued Chinese demand, and elevated operating and interest costs are pressuring on-farm profitability.

Forsyth Barr Dairy Digest - Edition 2 Cashflow Constraints

<ul><li>Synlait Milk's (SML) second FY23 NPAT guidance downgrade in the space of six weeks provided another timely reminder of the significant operating leverage in the business and the high concentration (and therefore high risk) nature of its operations</li><li>FY23 NPAT is now expected to be approximately break-even versus March 2023 guidance of ~NZ$20m and December 2022 guidance of exiting FY23 at similar profitability levels to pre-FY21 (~NZ$75m)</li><li>There is a wide margin of error on the recovery trajectory, but we now forecast normalised FY25 NPAT (which includes the full contribution of SML's new multinational customer and a strong ATM margin recovery) of NZ$30m (~12x FY25 PE).</li></ul>

Synlait Milk's (SML) second FY23 NPAT guidance downgrade in the space of six weeks provided another timely reminder of the significant operating leverage in the business and the high concentration (and therefore high risk) nature of its operationsFY23 NPAT is now expected to be approximately break-even versus March 2023 guidance of ~NZ$20m and December 2022 guidance of exiting FY23 at similar profitability levels to pre-FY21 (~NZ$75m)There is a wide margin of error on the recovery trajectory, but we now forecast normalised FY25 NPAT (which includes the full contribution of SML's new multinational customer and a strong ATM margin recovery) of NZ$30m (~12x FY25 PE).

New Zealand

Synlait Milk Ltd is a milk production company.  The Company produces, processes, markets and distributes milk, milk powder products and ingredients.

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Synlait Milk (SML NZ)

Synlait Milk (SML): Dairyworks Sale Initiated

Synlait Milk (SML) has announced its intentions to divest its Dairyworks and Talbot Forest Cheese (TFC) businesses as part of its asset/capital...

Forsyth Barr

Index Rebalance & ETF Flow Recap: NKY, TW Div+, ASX200, NZX50, Mom30, Top10EW, MVW, Rakuten Bank

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

S&P/NZX 50 Index Rebalance: Two High Impact Changes Coming Up

As expected, Gentrack and Turners Auto will replace Synlait Milk and Pacific Edge in the NZX50 Index. The adds have jumped recently and there...

Brian Freitas

Forsyth Barr Dairy Digest - Edition 2 Cashflow Constraints

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

Forsyth Barr

Synlait Milk: Stuck in the Mud

Synlait Milk's (SML) second FY23 NPAT guidance downgrade in the space of six weeks provided another timely reminder of the significant operating...

Forsyth Barr

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