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

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Auckland Intl Airport / Equity Capital Markets

<ul>
<li>Auckland City Council plans to sell 7% of <a href="https://www.smartkarma.com/entities/auckland-intl-airport-ltd" target="_blank" data-smartkarma-citation="entities:597:1" rel="noopener">Auckland Intl Airport (AIA NZ)</a>  to fund its budget requirements for 2023-24.</li>
<li>Auckland City Mayor has been talking about selling the stake since at least Dec 2022 and hence, the deal is already very well flagged.</li>
<li>In this note, we will talk about the possible placement and other deal dynamics.</li>
</ul>


Auckland City Council plans to sell 7% of Auckland Intl Airport (AIA NZ)  to fund its budget requirements for 2023-24.
Auckland City Mayor has been talking about selling the stake since at least Dec 2022 and hence, the deal is already very well flagged.
In this note, we will talk about the possible placement and other deal dynamics.


Auckland Airport Possible Placement - Will Be Very Well Flagged US$540m Block

<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

<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

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 Intl Airport (AIA NZ)

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 Possible Placement - Will Be Very Well Flagged US$540m Block

Auckland Airport just reported its full year results, this in effect frees its largest shareholder, Auckland City Council to progress with its...

Sumeet Singh

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

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

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