New Zealand Professional Investment Services Firm

Forsyth Barr

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.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>NZX</h2>
Tracking Brief
<ul>
<li>NZX May Data suggests upside risk of our forecasts</li>
<li>FY20 Annual Listing fee likely to be ahead of expectations</li>
<li>Secondary Equity capital raised exceeds May expectations with total number of raises in line</li>
<li>Data and Insights total terminals and licences +24% driven by COVID demand</li>
<li>Reiterate OUTPERFORM rating
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.1&amp;permmsgid=msg-f:1668517503809753448&amp;th=1727c3d45c1a1168&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ93huOnOxmxQ_OApF-Xq1HVXmoaqk00yJ_I5ymCF-UF3obo3oq6q_6tisUfKCV4mSxPHARJWK6Iut0vwBOEfGLXhI2szzwsAUzwtUq4aml_ms5DMFPylMU-hqU&amp;disp=emb" class="editor-image img-responsive"></figure>
</li>
</ul>
Issuer Relationships
<ul>
<li>Making up 15.2% of FY19 Revenue, the Annual Listing Fee is a combination of two billing periods – 31 May each side of the year end date (31 December). Total market capitalisation as of 31 May 2020 was NZ$193.5bn vs 31 May 2019 of NZ$180.2bn (Annual Listing Fees for FY19 was NZ$10.6m). Applying a higher weighting of debt vs equity combined with no change to the fee structure, we would expect Annual Listing Fees for FY20 to be slightly ahead of our forecast of NZ$10.6m.</li>
<li>Our forecast numbers for total capital raised look a little light with marginally higher than expected Secondary equity raised in May taking YTD to NZ$2.1bn for the period January to May 2020 against our forecast NZ$1.9bn. With 10 market secondary equity raises so far in New Zealand, our estimated target of 10-15 companies recapitalising balance sheet is comfortably in line.&nbsp;&nbsp;</li>
</ul>
<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:1668517503809753448&amp;th=1727c3d45c1a1168&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ_YlkN_p7lJqQROe3yOarDOpOdYHQp8HfGyJQaVO1D-0zQl6rqk7OiHGnNMf4LZIG59S5TdJWMftxBgVrnw0LxoN_DqNghvbEZH3AN5h8vDyufo6C8CySxCOpE&amp;disp=emb" class="editor-image img-responsive"></figure>
Secondary Markets
<ul>
<li>Total cash value traded for May was +22% higher year-on-year with a total value of NZ$4.4bn, down from a peak of NZ$6.5bn in March. We would expect the period of super-trading (March/April 2020) to be over for now and would expect normal pre-COVID trading levels to resume bar any additional unexpected market movements.</li>
</ul>
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.3&amp;permmsgid=msg-f:1668517503809753448&amp;th=1727c3d45c1a1168&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ9lOI-A49VHSBeEZts6hMK3ZheWs4kyY38sGWJ9sprqdrGFpSFIUhUpBG3BUbhnY_4bkd_d5N9RRbBztTf67O_6VxUY1yzyg0xDuVcLKPA33Psl1SWRMl0Pn0s&amp;disp=emb" class="editor-image img-responsive"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.4&amp;permmsgid=msg-f:1668517503809753448&amp;th=1727c3d45c1a1168&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ8QN5qTvqDVBopQB-I_thDicLMNjfqG7BDWWd4nPlzZS_I0p9lGV5TYZhROApwOsO_52Ta5TWJeRuT-EjHbzyW4PnCqO_iO48KNTtzChvuehO1ae1NxtnL8x5I&amp;disp=emb" class="editor-image img-responsive"></figure>
<ul>
<li>&nbsp;Dairy derivatives continue slow growth, with total lots traded up&nbsp;+3%&nbsp;year-on-year. Making up just 2.2% of FY19 revenue we do not expect material impact on group performance and view this as a long term opportunity.</li>
</ul>
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.5&amp;permmsgid=msg-f:1668517503809753448&amp;th=1727c3d45c1a1168&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ9Femi_Wz3jWEdxmJ6WjmiidyFVpZYj4CyvFvE89ZRXirkE7m9gsvWcWamRh7_FXDXyj6VTm0jLQ-neD0cgrhvUJAQ9eXpTGWqwULuTHoeYj8_qZ6NUfag0QJw&amp;disp=emb" class="editor-image img-responsive"></figure>
Data and Insights
<ul>
<li>The division continues to benefit from growth in total terminal and licences with a COVID impact for April and May with May 2020 total +24% year-on-year. We believe continued demand growth will continue for the year with increased interest and participation in New Zealand capital markets both domestically and internationally.</li>
</ul>
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.6&amp;permmsgid=msg-f:1668517503809753448&amp;th=1727c3d45c1a1168&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ-Dwql7OxIESdvcPzp7KRRmWafwKfxRZONv694oyi4KKwkL70UZrjTpsbw5H1KRKXAT9tIMqeUmJ7klN2dXosx-StgLWW80vQqEoXM5POb9pMp9SI5sLQG7yaw&amp;disp=emb" class="editor-image img-responsive"></figure>
Funds Management
<ul>
<li>Both Funds Under Administration and the Wealth Technologies continue to recover from a low in March with FUM up +16% year-on-year and Wealth Technologies up +13% year-on-year.</li>
</ul>
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.7&amp;permmsgid=msg-f:1668517503809753448&amp;th=1727c3d45c1a1168&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ8E_cBxPI94I9GEmgPh7EVpyeVu4uy19IpC13X3-CsYwBxVnPfJi5XNdU4CHNKccqqvAhI1pmlkUjCDdtLPh5H_K_cUvMCa37iJNFActoEvhbJ1NXI76l1uwd8&amp;disp=emb" class="editor-image img-responsive"></figure>
Funds Under Administration&nbsp;(average growth)
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.8&amp;permmsgid=msg-f:1668517503809753448&amp;th=1727c3d45c1a1168&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ9SeidD3KHV1GQXzY-lxdwoORE1u7xUk2EXg5FjGksrC411WZso2YdXY0NjN6eHHQuITKMbitcm9hmIlQoUsoFIE-rznqaG-Xg_6J-VFuLpwwmkIZFL8eRvxG4&amp;disp=emb" class="editor-image img-responsive"></figure>
Wealth Technologies&nbsp;(average FUA) 
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.9&amp;permmsgid=msg-f:1668517503809753448&amp;th=1727c3d45c1a1168&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ8OV9cZi87wR6Co_vgkmYRj_SubHWV04vhzd0cO28wLNMIYGvbTqSHA6wdspYY6cwiObsoChFjtpxL35DUourVnUZ8-YmIdsHO7vXKBVAGj-NJ9q-F2b6VB6EM&amp;disp=emb" class="editor-image img-responsive"></figure>
Jamie Foulkes&nbsp; Analyst, Equities Forsyth Barr Limited
P: +64 4 914 2217 | TF: 0800 367 227&nbsp; Level 22, NTT Tower, 157 Lambton Quay, Wellington

NZX
Tracking Brief

NZX May Data suggests upside risk of our forecasts
FY20 Annual Listing fee likely to be ahead of expectations
Secondary Equity capital raised exceeds May expectations with total number of raises in line
Data and Insights total terminals and licences +24% driven by COVID demand
Reiterate OUTPERFORM rating



Issuer Relationships

Making up 15.2% of FY19 Revenue, the Annual Listing Fee is a combination of two billing periods – 31 May each side of the year end date (31 December). Total market capitalisation as of 31 May 2020 was NZ$193.5bn vs 31 May 2019 of NZ$180.2bn (Annual Listing Fees for FY19 was NZ$10.6m). Applying a higher weighting of debt vs equity combined with no change to the fee structure, we would expect Annual Listing Fees for FY20 to be slightly ahead of our forecast of NZ$10.6m.
Our forecast numbers for total capital raised look a little light with marginally higher than expected Secondary equity raised in May taking YTD to NZ$2.1bn for the period January to May 2020 against our forecast NZ$1.9bn. With 10 market secondary equity raises so far in New Zealand, our estimated target of 10-15 companies recapitalising balance sheet is comfortably in line.&nbsp;&nbsp;


Secondary Markets

Total cash value traded for May was +22% higher year-on-year with a total value of NZ$4.4bn, down from a peak of NZ$6.5bn in March. We would expect the period of super-trading (March/April 2020) to be over for now and would expect normal pre-COVID trading levels to resume bar any additional unexpected market movements.




&nbsp;Dairy derivatives continue slow growth, with total lots traded up&nbsp;+3%&nbsp;year-on-year. Making up just 2.2% of FY19 revenue we do not expect material impact on group performance and view this as a long term opportunity.


Data and Insights

The division continues to benefit from growth in total terminal and licences with a COVID impact for April and May with May 2020 total +24% year-on-year. We believe continued demand growth will continue for the year with increased interest and participation in New Zealand capital markets both domestically and internationally.


Funds Management

Both Funds Under Administration and the Wealth Technologies continue to recover from a low in March with FUM up +16% year-on-year and Wealth Technologies up +13% year-on-year.


Funds Under Administration&nbsp;(average growth)

Wealth Technologies&nbsp;(average FUA) 

Jamie Foulkes&nbsp; Analyst, Equities Forsyth Barr Limited
P: +64 4 914 2217 | TF: 0800 367 227&nbsp; Level 22, NTT Tower, 157 Lambton Quay, Wellington

NZX

NZX: Tracking Brief