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>Aviation recovery in full flight: AIA's international seat capacity had returned to 69% of pre-COVID capacity by December 2022</li><li>Inflationary impact on opex and capex: Despite lowering its FY23 capex guidance, management increased its longer term annual aeronautical capex guidance by +NZ$100m to NZ$600m; this will assist its regulatory asset base (RAB) and its mid-year aeronautical price reset</li><li>Property momentum continues: Property development revenue increased +19% against the prior year as rental increases more than offset the impact of a fair value hit given cap rate pressure</li></ul>

Aviation recovery in full flight: AIA's international seat capacity had returned to 69% of pre-COVID capacity by December 2022Inflationary impact on opex and capex: Despite lowering its FY23 capex guidance, management increased its longer term annual aeronautical capex guidance by +NZ$100m to NZ$600m; this will assist its regulatory asset base (RAB) and its mid-year aeronautical price resetProperty momentum continues: Property development revenue increased +19% against the prior year as rental increases more than offset the impact of a fair value hit given cap rate pressure

Auckland Airport: 1H23 — Profits Taking-Off After Long Layover

<ul><li>Auckland Airport (AIA) will report a robust profit recovery in its 1H23 result, due on 23 February 2023.</li><li>We expect underlying NPAT of NZ$59m, up from a prior year loss.</li><li>We don't expect the result to be pivotal from a valuation perspective as AIA's full financial recovery will play out over the medium term.</li></ul>

Auckland Airport (AIA) will report a robust profit recovery in its 1H23 result, due on 23 February 2023.We expect underlying NPAT of NZ$59m, up from a prior year loss.We don't expect the result to be pivotal from a valuation perspective as AIA's full financial recovery will play out over the medium term.

Auckland Airport: 1H23 Preview — On Runway to Recovery

<ul><li>Inflation premium on valuation: Our analysis of both AIA and global infrastructure suggests inflation is boosting their relative attractiveness</li><li>Conservative bias in our relative valuation analysis, yet AIA still appears expensive</li><li>Upcoming catalysts: There are several events that could impact AIA over the next 12 months</li></ul>

Inflation premium on valuation: Our analysis of both AIA and global infrastructure suggests inflation is boosting their relative attractivenessConservative bias in our relative valuation analysis, yet AIA still appears expensiveUpcoming catalysts: There are several events that could impact AIA over the next 12 months

Auckland Airport: Inflation Tends to Make Things More Expensive

<ul><li>Single operator model accretive to earnings: AIA has selected Lagardère Travel Retail SAS (trading as Aelia) as its main duty-free retailer, which will shift to a single operator model in September 2023</li><li>ComCom no longer a headwind: In 2007 AIA awarded a sole duty free concession to DFS Galleria</li><li>Seven year retail income recovery: The post COVID-19 recovery in AIA's retail income will be gradual over the next few years</li></ul>

Single operator model accretive to earnings: AIA has selected Lagardère Travel Retail SAS (trading as Aelia) as its main duty-free retailer, which will shift to a single operator model in September 2023ComCom no longer a headwind: In 2007 AIA awarded a sole duty free concession to DFS GalleriaSeven year retail income recovery: The post COVID-19 recovery in AIA's retail income will be gradual over the next few years

Auckland Airport: Duty Free Finally Flying Solo

Thematic (Sector/Industry)

<ul><li>Abnormal gains in international freight are unwinding rapidly, particularly for seafreight, with global spot indices now down ~80% from their peaks but still above pre-pandemic levels</li><li>Air cargo's rates compression has been slower, mirroring the slow recovery in air seat capacity</li><li>In this normalising, yet far from normal environment, Freightways (FRE; OUTPERFORM) and Mainfreight (MFT; OUTPERFORM) remain our preferred exposures in the sector</li></ul>

Abnormal gains in international freight are unwinding rapidly, particularly for seafreight, with global spot indices now down ~80% from their peaks but still above pre-pandemic levelsAir cargo's rates compression has been slower, mirroring the slow recovery in air seat capacityIn this normalising, yet far from normal environment, Freightways (FRE; OUTPERFORM) and Mainfreight (MFT; OUTPERFORM) remain our preferred exposures in the sector

Transport Trends: Nothing Normal About the Normalising

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.

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Auckland International Airport (AIA AU)

Auckland Airport: 1H23 — Profits Taking-Off After Long Layover

Auckland Airport (AIA) reported a strong rebound in profitability, above market expectations, and lifted full year guidance at its 1H23 result; the...

Forsyth Barr

Auckland Airport: 1H23 Preview — On Runway to Recovery

Auckland Airport (AIA) will report a robust profit recovery in its 1H23 result, due on 23 February 2023: We expect underlying NPAT of NZ$59m, up...

Forsyth Barr

Auckland Airport: Inflation Tends to Make Things More Expensive

We've scratched our heads many times over the years to understand Auckland Airport's (AIA) high valuation multiple backdrop; our analysis this time...

Forsyth Barr

Auckland Airport: Duty Free Finally Flying Solo

Auckland Airport (AIA) is shifting to a single duty free operator model ~15 years after it last tried to do so and ComCom has not made any...

Forsyth Barr

Transport Trends: Nothing Normal About the Normalising

The industry is normalising, but from different angles and at a different rates: Abnormal gains in international freight are unwinding rapidly,...

Forsyth Barr

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