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.

Thematic (Sector/Industry)

<ul><li>RAB multiples (enterprise value divided by regulatory asset base) provide a useful means of valuing and sense checking valuations for regulated companies.</li><li>The issue of RAB multiples has been brought up by numerous submitters in the current Commerce Commission (ComCom) Input Methodologies (IM) review process.</li><li>Some submitters have referenced Forsyth Barr reports, at times extensively (CEG in particular). </li></ul>

RAB multiples (enterprise value divided by regulatory asset base) provide a useful means of valuing and sense checking valuations for regulated companies.The issue of RAB multiples has been brought up by numerous submitters in the current Commerce Commission (ComCom) Input Methodologies (IM) review process.Some submitters have referenced Forsyth Barr reports, at times extensively (CEG in particular). 

Regulated Companies - The Relevance of RAB Multiples

Equity Bottom-Up

<ul><li>Chorus (CNU) has guided towards long-term sustainable dividend growth.</li><li>To achieve this CNU needs to balance the need to invest enough capex to grow its Regulated Asset Base (RAB) with the short/medium-term need to leave enough free cash flow to grow its dividend, a difficult balancing act.</li><li>At its FY23 results, CNU reported slightly higher than anticipated capex and also guided towards substantially higher capex than we had anticipated for FY24. </li></ul>

Chorus (CNU) has guided towards long-term sustainable dividend growth.To achieve this CNU needs to balance the need to invest enough capex to grow its Regulated Asset Base (RAB) with the short/medium-term need to leave enough free cash flow to grow its dividend, a difficult balancing act.At its FY23 results, CNU reported slightly higher than anticipated capex and also guided towards substantially higher capex than we had anticipated for FY24. 

Chorus - Having the Cake or Eating It? A Balancing Act

<ul><li>Chorus (CNU) will report its FY23 result on Monday, 21 August 2023.</li><li>CNU is guiding to EBITDA between NZ$668m to NZ$683m after including NZ$7m of flood and cyclone related costs it flagged at its 4Q23 update.</li><li>We update our forecasts for the latest connections and these costs, and our FY23 EBITDA falls to NZ$672m (consensus NZ$683m). </li></ul>

Chorus (CNU) will report its FY23 result on Monday, 21 August 2023.CNU is guiding to EBITDA between NZ$668m to NZ$683m after including NZ$7m of flood and cyclone related costs it flagged at its 4Q23 update.We update our forecasts for the latest connections and these costs, and our FY23 EBITDA falls to NZ$672m (consensus NZ$683m). 

Chorus - FY23 Preview — Focus Shifts to RP2

<ul><li>An expected beneficiary of inflation combined with increased capex are the key drivers of a higher RAB for RP2</li><li>Both the wash from CY22 and a higher WACC will drive MAR growth in RP2</li><li>Keeping RAB stable going forward is plausible and will depend on the regulator buying into CNU's vision</li></ul>

An expected beneficiary of inflation combined with increased capex are the key drivers of a higher RAB for RP2Both the wash from CY22 and a higher WACC will drive MAR growth in RP2Keeping RAB stable going forward is plausible and will depend on the regulator buying into CNU's vision

<ul><li>Chorus (CNU) has reported an operationally in-line 1H23 result, with EBITDAF of NZ$342m, +1% ahead of our NZ$338m forecast, and upgraded the midpoint of its EBITDA guidance for FY23 by ~+2.5%, with the midpoint now being ~+2% ahead of consensus.</li><li>Underlying NPAT of NZ$20m was -42% below consensus and -26% below Forsyth Barr.</li><li>Normalised NPAT was weak driven by substantially higher interest expense, even excluding an NZ$11m one off payment for the re-payment of the 2023 EMTN note</li></ul>

Chorus (CNU) has reported an operationally in-line 1H23 result, with EBITDAF of NZ$342m, +1% ahead of our NZ$338m forecast, and upgraded the midpoint of its EBITDA guidance for FY23 by ~+2.5%, with the midpoint now being ~+2% ahead of consensus.Underlying NPAT of NZ$20m was -42% below consensus and -26% below Forsyth Barr.Normalised NPAT was weak driven by substantially higher interest expense, even excluding an NZ$11m one off payment for the re-payment of the 2023 EMTN note

Chorus (CNU): 1H23 Result − Initial Impressions

New Zealand

Chorus Limited is a wholesale and retail telecommunications company.  The Company maintains and build the Chorus local access network which is made up of local telephone exchanges, cabinets and copper and fiber cables that connects New Zealand homes and businesses throughout the country.

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Chorus Ltd (CNU NZ)

Regulated Companies - The Relevance of RAB Multiples

RAB multiples (enterprise value divided by regulatory asset base) provide a useful means of valuing and sense checking valuations for regulated...

Forsyth Barr

Chorus - Having the Cake or Eating It? A Balancing Act

At its FY23 results, CNU reported slightly higher than anticipated capex and also guided towards substantially higher capex than we had anticipated...

Forsyth Barr

Chorus - FY23 Preview — Focus Shifts to RP2

CNU is guiding to EBITDA between NZ$668m to NZ$683m after including NZ$7m of flood and cyclone related costs it flagged at its 4Q23 update.

Forsyth Barr

Chorus: Meat on the Bones

Chorus (CNU) has submitted its 2022 fibre regulatory report and the three key points are; (1) CNU estimates its revenue wash-up for CY22 to be...

Forsyth Barr

Chorus (CNU): 1H23 Result − Initial Impressions

Chorus (CNU) has reported an operationally in-line 1H23 result, with EBITDAF of NZ$342m, +1% ahead of our NZ$338m forecast, and upgraded the...

Forsyth Barr

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