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>Auckland Airport (AIA) is lodging an appeal with the High Court, together with Wellington and Christchurch airports, and separately via the NZ Airports Association, against the Commerce Commission's (ComCom) recent Input Methodologies (IM) decision.</li><li>Details of the appeals are not public, but given the interest and changes made by the ComCom through the IM review process last year in its assessment of the asset beta for airports, we expect this will be a key area of the appeals. </li><li>The current regulatory regime for airports is favourable for AIA, providing a high RAB (regulatory asset base) multiple (we currently assume ~2.0x) for its aeronautical assets. </li></ul>

Auckland Airport (AIA) is lodging an appeal with the High Court, together with Wellington and Christchurch airports, and separately via the NZ Airports Association, against the Commerce Commission's (ComCom) recent Input Methodologies (IM) decision.Details of the appeals are not public, but given the interest and changes made by the ComCom through the IM review process last year in its assessment of the asset beta for airports, we expect this will be a key area of the appeals. The current regulatory regime for airports is favourable for AIA, providing a high RAB (regulatory asset base) multiple (we currently assume ~2.0x) for its aeronautical assets. 

<ul><li>We expect Auckland Airport's (AIA) retail business to feature more prominently over the next 12 months, after taking a back seat through COVID and during the regulatory focus of 2023.</li><li>It's an important value driver for AIA, accounting for almost one third of NPAT and generating a very attractive return on capital.</li><li>In the decade prior to COVID retail income had grown strongly, a function of passenger (pax) growth, international departures space expansion, improving pax mix with growth in Chinese arrivals, improving concession yield and minimum annual guarantees (MAG), and the development of off-airport duty-free retail. </li></ul>

We expect Auckland Airport's (AIA) retail business to feature more prominently over the next 12 months, after taking a back seat through COVID and during the regulatory focus of 2023.It's an important value driver for AIA, accounting for almost one third of NPAT and generating a very attractive return on capital.In the decade prior to COVID retail income had grown strongly, a function of passenger (pax) growth, international departures space expansion, improving pax mix with growth in Chinese arrivals, improving concession yield and minimum annual guarantees (MAG), and the development of off-airport duty-free retail. 

<ul><li>The Commerce Commission's (ComCom) ​​​final input methodologies (IMs) report provides a material aeronautical return uplift for Auckland Airport (AIA) compared to the draft report of June 2023.</li><li>There are four key positive implications for AIA. (1) Its incentive to continue to invest in its airport development programme has increased, meaning the prospect of higher capex for longer. </li><li>(2) The new IMs support another step-up in airport pricing for its next pricing period, PSE5 (FY28–FY32). </li></ul>

The Commerce Commission's (ComCom) ​​​final input methodologies (IMs) report provides a material aeronautical return uplift for Auckland Airport (AIA) compared to the draft report of June 2023.There are four key positive implications for AIA. (1) Its incentive to continue to invest in its airport development programme has increased, meaning the prospect of higher capex for longer. (2) The new IMs support another step-up in airport pricing for its next pricing period, PSE5 (FY28–FY32). 

Auckland Airport - ComCom U-Turn Provides Christmas Cheer

Thematic (Sector/Industry)

<ul><li>Mega trends have been dictating transport sector performance over the last few years.</li><li>The pandemic saw international travel halt overnight, congested supply chains, and ripples sent across the broader freight sector.</li><li>Just as these trends began to normalise, global economic conditions started to deteriorate, leading to supply chain destocking, and weaker passenger and freight end demand. </li></ul>

Mega trends have been dictating transport sector performance over the last few years.The pandemic saw international travel halt overnight, congested supply chains, and ripples sent across the broader freight sector.Just as these trends began to normalise, global economic conditions started to deteriorate, leading to supply chain destocking, and weaker passenger and freight end demand. 

<ul><li>For the first time in three years we are moving our WACC assumptions down.</li><li>This is driven by a modestly lower (-25 bps) interpolated 10-year interest rate assumption; our proxy for the risk free rate.</li><li>We also incorporate our C&amp;ESG ratings into our WACC assumptions. We do this on an overall neutral basis, with a scale of -25 bps to +25 bps added to the cost of equity. </li></ul>

For the first time in three years we are moving our WACC assumptions down.This is driven by a modestly lower (-25 bps) interpolated 10-year interest rate assumption; our proxy for the risk free rate.We also incorporate our C&amp;ESG ratings into our WACC assumptions. We do this on an overall neutral basis, with a scale of -25 bps to +25 bps added to the cost of equity. 

Equity Strategy - WACC Review; a Lower Rfr and Adding C&ESG

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 - Reviewing the Merits

The current regulatory regime for airports is favourable for AIA, providing a high RAB (regulatory asset base) multiple (we currently assume ~2.0x)...

Forsyth Barr

Auckland Airport - Call of Duty Free

We expect Auckland Airport's (AIA) retail business to feature more prominently over the next 12 months, after taking a back seat through COVID and...

Forsyth Barr

Auckland Airport - ComCom U-Turn Provides Christmas Cheer

The Commerce Commission's (ComCom) final input methodologies (IMs) report provides a material aeronautical return uplift for Auckland Airport...

Forsyth Barr

Transport Trends - A Second Wave

Mega trends have been dictating transport sector performance over the last few years. The pandemic saw international travel halt overnight,...

Forsyth Barr

Equity Strategy - WACC Review; a Lower Rfr and Adding C&ESG

For the first time in three years we are moving our WACC assumptions down. This is driven by a modestly lower (-25 bps) interpolated 10-year...

Forsyth Barr

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Auckland Airport - Reviewing the Merits

The current regulatory regime for airports is favourable for AIA, providing a high RAB (regulatory asset base) multiple (we currently assume ~2.0x)...

Forsyth Barr

Auckland Airport - Call of Duty Free

We expect Auckland Airport's (AIA) retail business to feature more prominently over the next 12 months, after taking a back seat through COVID and...

Forsyth Barr

Auckland Airport - ComCom U-Turn Provides Christmas Cheer

The Commerce Commission's (ComCom) ​​​final input methodologies (IMs) report provides a material aeronautical return uplift for Auckland Airport...

Forsyth Barr

Transport Trends - A Second Wave

Mega trends have been dictating transport sector performance over the last few years. The pandemic saw international travel halt overnight,...

Forsyth Barr

Equity Strategy - WACC Review; a Lower Rfr and Adding C&ESG

For the first time in three years we are moving our WACC assumptions down. This is driven by a modestly lower (-25 bps) interpolated 10-year...

Forsyth Barr

The Commerce Commission's (ComCom) final input methodologies (IMs) report provides a material aeronautical return uplift for Auckland Airport...