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>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

<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>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

<ul><li>Increasing interest expense may sharpen the focus on the next few years of free cash flow</li><li>Connections and capex: CNU has released its fiscal 2Q (calendar 4Q) connections showing +37k connections versus FY22 (30 June 2022)</li><li>EBITDA guidance of NZ$655–675m likely maintained — weather and cost inflation versus cost out in focus</li></ul>

Increasing interest expense may sharpen the focus on the next few years of free cash flowConnections and capex: CNU has released its fiscal 2Q (calendar 4Q) connections showing +37k connections versus FY22 (30 June 2022)EBITDA guidance of NZ$655–675m likely maintained — weather and cost inflation versus cost out in focus

Chorus: 1H23 Preview — Limited Room for Error

New Zealand

Spark New Zealand Limited (formerly Telecom Corporation of New Zealand Limited) provides digital communications, entertainment and IT services over its networks and the Cloud to New Zealanders and businesses. The Company's strategy is focused on mobility, data and effortless service, and cost.

TeamTalk Limited provides radio communication services in New Zealand.  The Company's services is mainly provided through two networks, TeamTalk and Fleetlink. The mobile radio communication service is used by ambulance services, rescue helicopters, courier companies, security services personnel, utility companies, contractors. local authorities and civil defense sectors.

HFCL Ltd provides telecommunication infrastructure construction services. The Company offers optical fiber cables, microwave radios, battery management, and solar solutions. HFCL serves customers in India.

TIME dotCom Berhad through its subsidiaries, provides fixed-line telecommunication services such as data and voice, international bandwidth provision which includes submarine cable and data centre business.

Liberty Global plc owns interests in broadband, distribution, and content companies operating outside the continental United States, principally in Europe, Asia, and Latin America.

Globalstar, Inc. provides mobile voice and data communications services via satellite. The Company primarily provides business and recreational communications to industry, government, and individual customers located in remote areas throughout the world.

Gamma Communications PLC supplies voice, data and mobile products and services in the United Kingdom. The Company provides fixed telephony, IP telephony, hosted phone systems, broadband and data connections, mobile services, security and unified communications solutions.

USEN-NEXT HOLDINGS Co.,Ltd. provides network information services. The Company provides video contents distribution, music contents distribution, and other services. USEN-NEXT HOLDINGS also provides internet agency, mobile communication, and other services.

Macquarie Telecom Group Limited is an Australian telecommunications service provider.  The Group provides local and long distance, calling card and inbound calling services along with the management of telecommunications facilities. The Group also provides data services such as ATM, ISDN and digital leased line along with telecommunications advisory services.

NetLink NBN Trust designs, builds, owns, and operates fiber network infrastructures. The Company offers fiber network resources, including ducts, manholes, and cables. NetLink NBN Trust also focuses on leasing telecommunication infrastructures to telecommunication service providers. NetLink NBN Trust serves customers in Singapore.designs, builds, owns, and operates fiber network infrastructures. The Company offers fiber network resources, including ducts, manholes, and cables. NetLink NBN Trust also focuses on leasing telecommunication infrastructures to telecommunication service providers. NetLink NBN Trust serves customers in Singapore.

Zegona Communications plc is an investment company. The Company buys and sells businesses in the European Telecommunications, Media and Technology (''TMT'') sectors.

LG Uplus Corp., an affiliate of LG Group, provides a wide range of personal communications services (PCS) using code division multiple access (CDMA) technology.  The Company offers call forwarding, call and data transfer, call waiting, voice mail, Internet-phone, prepaid call, and authentication text-to-speech (TTS) services.

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)

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

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: 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

Chorus: 1H23 Preview — Limited Room for Error

Chorus (CNU) reports 1H23 earnings on Monday, 20 February 2023 and we expect focus to be on interest expense, dividend path and sustaining capex;...

Forsyth Barr

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