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>We upgrade our rating on ​​​​​​​Auckland Airport (AIA) to NEUTRAL from UNDERPERFORM due to: (1) earnings upgrades following the FY24 result, (2) reduced regulatory risk following the Commerce Commission's (ComCom) recent interim report on AIA's aeronautical pricing (PSE4), and (3) recent relative share price underperformance, despite softening bond rates. AIA's FY24 result was broadly in line with market expectations, though first time FY25 earnings guidance leads us to materially lift our NPAT estimates, despite only marginal increases in operating income.</li><li>The pax recovery may be lagging, but the earnings recovery remains in full swing. Both FY24 EBITDA and NPAT are above FY19 levels.</li><li>AIA currently trades at ~20x one year forward EV/EBITDA and ~36x PE. Its valuation premium, relative to the domestic market and other infrastructure players, remains above historical levels (justified by a higher RAB and valuation multiple, now applicable for its aeronautical assets), but has retreated to levels that we are more comfortable with.  </li></ul>

We upgrade our rating on ​​​​​​​Auckland Airport (AIA) to NEUTRAL from UNDERPERFORM due to: (1) earnings upgrades following the FY24 result, (2) reduced regulatory risk following the Commerce Commission's (ComCom) recent interim report on AIA's aeronautical pricing (PSE4), and (3) recent relative share price underperformance, despite softening bond rates. AIA's FY24 result was broadly in line with market expectations, though first time FY25 earnings guidance leads us to materially lift our NPAT estimates, despite only marginal increases in operating income.The pax recovery may be lagging, but the earnings recovery remains in full swing. Both FY24 EBITDA and NPAT are above FY19 levels.AIA currently trades at ~20x one year forward EV/EBITDA and ~36x PE. Its valuation premium, relative to the domestic market and other infrastructure players, remains above historical levels (justified by a higher RAB and valuation multiple, now applicable for its aeronautical assets), but has retreated to levels that we are more comfortable with.  

Auckland Airport - FY24 — Capex Has Taken-Off

<ul><li>Auckland Airport (AIA) will report further progress in its post-COVID recovery when its releases its FY24 result on 22 August 2024.</li><li>Better retail yields and continued robust progress in investment property should compensate for lower-than-anticipated pax, with AIA likely to report underlying NPAT comfortably within its NZ$260m–NZ$280m guidance range.</li><li>However, first time guidance for FY25 may underwhelm, despite favourable aeronautical pricing (with potential price cuts due from FY26), given a constrained airline capacity outlook and the rapidly rising P&amp;L costs of depreciation and interest. </li></ul>

Auckland Airport (AIA) will report further progress in its post-COVID recovery when its releases its FY24 result on 22 August 2024.Better retail yields and continued robust progress in investment property should compensate for lower-than-anticipated pax, with AIA likely to report underlying NPAT comfortably within its NZ$260m–NZ$280m guidance range.However, first time guidance for FY25 may underwhelm, despite favourable aeronautical pricing (with potential price cuts due from FY26), given a constrained airline capacity outlook and the rapidly rising P&amp;L costs of depreciation and interest. 

Auckland Airport - FY24 Preview — Final Approach

<ul><li>Auckland Airport (AIA) reported a strong 1H24 result, more than doubling the prior year NPAT, reflective of the recovery in international air travel and materially higher aeronautical prices.</li><li>However, earnings growth should slow markedly over the next 12 months as the passenger (pax) recovery has stalled, and the costs associated with its major capex programmes hit the profit and loss account as assets are commissioned. </li><li>Capex spend is at elevated levels and will remain elevated for the next few years. A capital raise is still possible, given a likely breach of S&amp;P credit metrics over the medium term, but would be well supported. </li></ul>

Auckland Airport (AIA) reported a strong 1H24 result, more than doubling the prior year NPAT, reflective of the recovery in international air travel and materially higher aeronautical prices.However, earnings growth should slow markedly over the next 12 months as the passenger (pax) recovery has stalled, and the costs associated with its major capex programmes hit the profit and loss account as assets are commissioned. Capex spend is at elevated levels and will remain elevated for the next few years. A capital raise is still possible, given a likely breach of S&amp;P credit metrics over the medium term, but would be well supported. 

Auckland Airport - 1H24 — Ascending into Regulatory Clouds

<ul><li>Air New Zealand's (AIR) official request to the Minister of Commerce, for an inquiry into the regulation of Auckland Airport (AIA), adds to the risk that the current favourable regulatory backdrop for airports changes in future.</li><li>​​​​AIA, along with Wellington and Christchurch airports, is currently subject to information disclosure within Part 4 of the Commerce Act.</li><li>AIR and other airlines would prefer the framework to incorporate negotiate/arbitrate regulation. </li></ul>

Air New Zealand's (AIR) official request to the Minister of Commerce, for an inquiry into the regulation of Auckland Airport (AIA), adds to the risk that the current favourable regulatory backdrop for airports changes in future.​​​​AIA, along with Wellington and Christchurch airports, is currently subject to information disclosure within Part 4 of the Commerce Act.AIR and other airlines would prefer the framework to incorporate negotiate/arbitrate regulation. 

Auckland Airport  - A Right Regulatory Ruck

<ul><li>Strong aeronautical pricing irrespective of potential reduction: AIA announced very strong aeronautical pricing for its PSE4 pricing period (FY23–FY27), which reflects a targeted post-tax return of 8.7%.</li><li>Capex drives a substantial lift in RAB: AIA's strong aeronautical price path is being driven by a major capex bulge and resultant RAB growth.</li><li>Draft input methodologies review report lowers the excess return available for airports</li></ul>

Strong aeronautical pricing irrespective of potential reduction: AIA announced very strong aeronautical pricing for its PSE4 pricing period (FY23–FY27), which reflects a targeted post-tax return of 8.7%.Capex drives a substantial lift in RAB: AIA's strong aeronautical price path is being driven by a major capex bulge and resultant RAB growth.Draft input methodologies review report lowers the excess return available for airports

Auckland Airport: The Sky Is High for Aero Pricing

New Zealand

Auckland International Airport Limited owns and operates the Auckland International Airport.  The Airport includes a single runway, an international terminal and two domestic terminals.  The Airport also has commercial facilities which includes airfreight operations, car rental services, commercial banking center and office buildings.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Auckland International Airport (AIA AU)

Auckland Airport - FY24 — Capex Has Taken-Off

The pax recovery may be lagging, but the earnings recovery remains in full swing. Both FY24 EBITDA and NPAT are above FY19 levels.

Forsyth Barr

Auckland Airport - FY24 Preview — Final Approach

Auckland Airport (AIA) will report further progress in its post-COVID recovery when its releases its FY24 result on 22 August 2024.

Forsyth Barr

Auckland Airport - 1H24 — Ascending into Regulatory Clouds

Auckland Airport (AIA) reported a strong 1H24 result, more than doubling the prior year NPAT, reflective of the recovery in international air...

Forsyth Barr

Auckland Airport - A Right Regulatory Ruck

AIA, along with Wellington and Christchurch airports, is currently subject to information disclosure within Part 4 of the Commerce Act.

Forsyth Barr

Auckland Airport: The Sky Is High for Aero Pricing

Auckland Airport's (AIA) aeronautical pricing outlook is strong, though not as strong as its current pricing schedule suggests given the likely...

Forsyth Barr

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)