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

Channel Infrastructure NZ Ltd / Equity Bottom-Up

<ul>
<li>One of the attractive aspects of Channel Infrastructure (CHI) as an investment is its exposure to the producer price index, (PPI) that has again exceeded expectations, resulting in a small increase in our FY25 forecast earnings.</li>
<li>Strong spot electricity and gas price rises over the past year have contributed a quarter of the PPI increase.</li>
<li>In addition, Auckland International Airport's (AIA) October 2024 operating metrics show modest growth on last year, albeit still well below pre-COVID. </li>
</ul>


One of the attractive aspects of Channel Infrastructure (CHI) as an investment is its exposure to the producer price index, (PPI) that has again exceeded expectations, resulting in a small increase in our FY25 forecast earnings.
Strong spot electricity and gas price rises over the past year have contributed a quarter of the PPI increase.
In addition, Auckland International Airport's (AIA) October 2024 operating metrics show modest growth on last year, albeit still well below pre-COVID. 


Channel Infrastructure - PPI Price Push Helps FY25 Outlook

<ul><li>Channel Infrastructure's (CHI) investor day re-emphasised the upside potential from leasing land to energy project developers, but with the market now pricing in some upside and with significant uncertainty on the likelihood and timing of the investments we downgrade our rating to NEUTRAL from OUTPERFORM.</li><li>The next material catalyst for CHI will be Seadra's decision on whether to proceed with the bio-refinery or not, a decision which likely depends on securing feedstock supply. </li><li>CHI's external fuel volume forecaster, Envisory, has lifted its volume forecasts out to 2045, boosting our medium-term outlook and leading to the modest +1.5% target price increase. </li></ul>

Channel Infrastructure's (CHI) investor day re-emphasised the upside potential from leasing land to energy project developers, but with the market now pricing in some upside and with significant uncertainty on the likelihood and timing of the investments we downgrade our rating to NEUTRAL from OUTPERFORM.The next material catalyst for CHI will be Seadra's decision on whether to proceed with the bio-refinery or not, a decision which likely depends on securing feedstock supply. CHI's external fuel volume forecaster, Envisory, has lifted its volume forecasts out to 2045, boosting our medium-term outlook and leading to the modest +1.5% target price increase. 

Channel Infrastructure - Energising Its Options the Next Challenge

<ul><li>Channel Infrastructure (CHI) has delivered on another private storage deal that lifts its medium-term earnings and dividend outlook, such that we upgrade our rating to OUTPERFORM from NEUTRAL.</li><li>In addition, there remains upside potential to provide additional storage for fuel security of supply issues, and CHI continues to explore options for its significant land bank.</li><li>The 1H24 result itself was in line with expectations, although it appears CHI is taking a slightly more conservative approach with its ordinary dividend, which makes sense given potential growth capex requirements.</li></ul>

Channel Infrastructure (CHI) has delivered on another private storage deal that lifts its medium-term earnings and dividend outlook, such that we upgrade our rating to OUTPERFORM from NEUTRAL.In addition, there remains upside potential to provide additional storage for fuel security of supply issues, and CHI continues to explore options for its significant land bank.The 1H24 result itself was in line with expectations, although it appears CHI is taking a slightly more conservative approach with its ordinary dividend, which makes sense given potential growth capex requirements.

Channel Infrastructure - Fuelling Up for Growth — 1H24 Result

<ul><li>Channel Infrastructure (CHI) has confirmed that throughput volumes remain robust and growing, albeit the growth rate has eased, consistent with jet traffic plateauing.</li><li>Our forecasts and target price remain unchanged ahead of CHI's 1H24 result, to be released on 23 August 2024. Seadra continues to work on acquiring ex-refining assets, rolling its option three months to the end of September 2024.</li><li>We continue to assume Seadra completes the deal. </li></ul>

Channel Infrastructure (CHI) has confirmed that throughput volumes remain robust and growing, albeit the growth rate has eased, consistent with jet traffic plateauing.Our forecasts and target price remain unchanged ahead of CHI's 1H24 result, to be released on 23 August 2024. Seadra continues to work on acquiring ex-refining assets, rolling its option three months to the end of September 2024.We continue to assume Seadra completes the deal. 

Channel Infrastructure - Sticking to the Straight Road — 2Q24 Op Stats

<ul><li>We downgrade Channel Infrastructure (CHI) to NEUTRAL from OUTPERFORM.</li><li>Whilst we continue to like CHI's long-term prospects, we see it as trading at fair value relative to other defensive stocks following CHI's strong share price run since the beginning of 2024 (CHI has outperformed Property and Infrastructure stocks ~+15%).</li><li>The temporary share price dip following BP's exit is not significant enough to maintain our previous rating.</li></ul>

We downgrade Channel Infrastructure (CHI) to NEUTRAL from OUTPERFORM.Whilst we continue to like CHI's long-term prospects, we see it as trading at fair value relative to other defensive stocks following CHI's strong share price run since the beginning of 2024 (CHI has outperformed Property and Infrastructure stocks ~+15%).The temporary share price dip following BP's exit is not significant enough to maintain our previous rating.

Channel Infrastructure - Two Down, One to Go: Downgrade to NEUTRAL

New Zealand

Channel Infrastructure NZ Limited operates a fuel infrastructure company. The Company owns and operates a petroleum pipeline from the refinery to a terminal at Marsden Point, in Northland. Channel Infrastructure produces motor gasoline, automotive and diesel fuels, aviation jet fuel, light and heavy fuel oils, and bitumen.

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Channel Infrastructure NZ Ltd (CHI NZ)

Channel Infrastructure - PPI Price Push Helps FY25 Outlook

CHI has good upside potential, but likely requires a positive outcome on the bio-refinery project to see a significant lift in its share price from...

Forsyth Barr

Channel Infrastructure - Energising Its Options the Next Challenge

The next material catalyst for CHI will be Seadra's decision on whether to proceed with the bio-refinery or not, a decision which likely depends on...

Forsyth Barr

Channel Infrastructure - Fuelling Up for Growth — 1H24 Result

Channel Infrastructure (CHI) has delivered on another private storage deal that lifts its medium-term earnings and dividend outlook, such that we...

Forsyth Barr

Channel Infrastructure - Sticking to the Straight Road — 2Q24 Op Stats

Channel Infrastructure (CHI) has confirmed that throughput volumes remain robust and growing, albeit the growth rate has eased, consistent with jet...

Forsyth Barr

Channel Infrastructure - Two Down, One to Go: Downgrade to NEUTRAL

We downgrade Channel Infrastructure (CHI) to NEUTRAL from OUTPERFORM. Whilst we continue to like CHI's long-term prospects, we see it as trading at...

Forsyth Barr

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