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>Western Australian (WA) homebuilder BGC has fired the first salvo in Fletcher Building’s (FBU) Iplex Pro-fit Pipes issue.</li><li>BGC’s investigation has concluded that manufacturing issues are responsible for leaking pipes in the state and BGC believes it warrants a product recall.</li><li>FBU is in trading halt while it formulates a response. We found BGC's presentation to be credible and believe FBU should take the results seriously.</li></ul>

Western Australian (WA) homebuilder BGC has fired the first salvo in Fletcher Building’s (FBU) Iplex Pro-fit Pipes issue.BGC’s investigation has concluded that manufacturing issues are responsible for leaking pipes in the state and BGC believes it warrants a product recall.FBU is in trading halt while it formulates a response. We found BGC's presentation to be credible and believe FBU should take the results seriously.

<ul><li>Despite pre-releasing significant portions of its FY23 result, Fletcher Building (FBU) still managed to surprise the market.</li><li>The result and outlook comments were not materially different from the investor day in June, in fact margins were stronger and net debt was slightly lower.</li><li>However, the market's focus was (1) the potential for increased Iplex Australia provisions, (2) lower than expected dividend, and (3) greater than expected FY24 interest cost guidance. </li></ul>

Despite pre-releasing significant portions of its FY23 result, Fletcher Building (FBU) still managed to surprise the market.The result and outlook comments were not materially different from the investor day in June, in fact margins were stronger and net debt was slightly lower.However, the market's focus was (1) the potential for increased Iplex Australia provisions, (2) lower than expected dividend, and (3) greater than expected FY24 interest cost guidance. 

Fletcher Building - FY23 Result — No Alarms but Some Surprises

<ul><li>Fletcher Building (FBU) has announced a further NZ$105m (c.10cps post-tax) provision for its troubled New Zealand International Convention Centre (NZICC) project relating to further cost increases and insurance recoveries.</li><li>This provision will be reported as a significant item, as such we have made only minor changes to our forecasts.</li><li>FBU will report its FY23 results on Wednesday, 16 August. </li></ul>

Fletcher Building (FBU) has announced a further NZ$105m (c.10cps post-tax) provision for its troubled New Zealand International Convention Centre (NZICC) project relating to further cost increases and insurance recoveries.This provision will be reported as a significant item, as such we have made only minor changes to our forecasts.FBU will report its FY23 results on Wednesday, 16 August. 

Fletcher Building-  Provision-Ja Vu All Over Again

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The original trade was discussed at end-April in <a href="https://www.smartkarma.com/insights/tax-loss-selling-in-australia-2024-historical-analysis-and-a-trade-basket" target="_blank" data-smartkarma-citation="insights:139337" rel="noopener">Tax-Loss Selling in Australia 2024 - Historical Analysis and A Trade Basket</a> then updated <a href="https://www.smartkarma.com/insights/tax-loss-selling-in-australia-2024-a-trade-basket-updated" target="_blank" rel="noopener">here</a> and <a href="https://www.smartkarma.com/insights/tax-loss-selling-in-australia-2024-the-may-basket-april-basket-2-3-to-6-3-rtn" target="_blank" rel="noopener">here</a>. </li>
<li>That has done OK. The LIQUID basket has delta neutral performance of +8.4% over 2mos; LIQUID+LESSLIQUID +7.2%; If one did a mixed basket (3x L+LL + 1x Illiquids) it's +8.6%.</li>
<li>Now it is time to reverse the trade, buying the basket you were short, and running it against index for the next 6-8 weeks.</li>
</ul>


The original trade was discussed at end-April in Tax-Loss Selling in Australia 2024 - Historical Analysis and A Trade Basket then updated here and here. 
That has done OK. The LIQUID basket has delta neutral performance of +8.4% over 2mos; LIQUID+LESSLIQUID +7.2%; If one did a mixed basket (3x L+LL + 1x Illiquids) it's +8.6%.
Now it is time to reverse the trade, buying the basket you were short, and running it against index for the next 6-8 weeks.


Tax-Loss Selling In Australia 2024 - Time To Reverse The Trade (7.2-8.6% Rtn in Two Months So Far)

Thematic (Sector/Industry)

<ul><li>Residential consents were down slightly in April but remain within the 30–35k range they have tracked over the last nine months.</li><li>This range is c.35% below the mid-2022 peak of 51.0k, a level in excess of industry capacity.</li><li>Residential construction activity is declining, with higher interest rates, inflated construction costs, and lower house prices all contributing. </li></ul>

Residential consents were down slightly in April but remain within the 30–35k range they have tracked over the last nine months.This range is c.35% below the mid-2022 peak of 51.0k, a level in excess of industry capacity.Residential construction activity is declining, with higher interest rates, inflated construction costs, and lower house prices all contributing. 

Building Sector - NZ Consents — On a Level

New Zealand

Fletcher Building Limited manufactures, distributes, and sells materials for the building industry including wood fiber-based products, cement and aggregates, plasterboard, laminates, lumber, and aluminium extrusion. The Company operates primarily in New Zealand and Australia.

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Fletcher Building (FBU NZ)

Fletcher Building - Pro-Fit Leaks?

Western Australian (WA) homebuilder BGC has fired the first salvo in Fletcher Building’s (FBU) Iplex Pro-fit Pipes issue. BGC’s investigation has...

Forsyth Barr

Fletcher Building - FY23 Result — No Alarms but Some Surprises

Despite pre-releasing significant portions of its FY23 result, Fletcher Building (FBU) still managed to surprise the market. The result and...

Forsyth Barr

Fletcher Building- Provision-Ja Vu All Over Again

Fletcher Building (FBU) has announced a further NZ$105m (c.10cps post-tax) provision for its troubled New Zealand International Convention Centre...

Forsyth Barr

Tax-Loss Selling In Australia 2024 - Time To Reverse The Trade (7.2-8.6% Rtn in Two Months So Far)

Many of the stocks in the most beaten-down list are Australia-listed lithium producers. Some down today. Others in Asia are down today too. If one...

Travis Lundy

Building Sector - NZ Consents — On a Level

Residential consents were down slightly in April but remain within the 30–35k range they have tracked over the last nine months.

Forsyth Barr

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