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>Abnormal gains in international freight are unwinding rapidly, particularly for seafreight, with global spot indices now down ~80% from their peaks but still above pre-pandemic levels</li><li>Air cargo's rates compression has been slower, mirroring the slow recovery in air seat capacity</li><li>In this normalising, yet far from normal environment, Freightways (FRE; OUTPERFORM) and Mainfreight (MFT; OUTPERFORM) remain our preferred exposures in the sector</li></ul>

Abnormal gains in international freight are unwinding rapidly, particularly for seafreight, with global spot indices now down ~80% from their peaks but still above pre-pandemic levelsAir cargo's rates compression has been slower, mirroring the slow recovery in air seat capacityIn this normalising, yet far from normal environment, Freightways (FRE; OUTPERFORM) and Mainfreight (MFT; OUTPERFORM) remain our preferred exposures in the sector

Transport Trends: Nothing Normal About the Normalising

Equity Bottom-Up

<ul><li>Mainfreight’s (MFT) 68 page semi-annual employee newsletter highlights an increased focus on quality, network expansion and sustainable growth within the business</li><li>In particular we count a material increase in the use of words like “quality”, “growth”, ”LCL”, “sustainable” compared to previous newsletters</li><li>In contrast, there are no direct references to the potential impact of declining international (sea and air) freight rates.</li></ul>

Mainfreight’s (MFT) 68 page semi-annual employee newsletter highlights an increased focus on quality, network expansion and sustainable growth within the businessIn particular we count a material increase in the use of words like “quality”, “growth”, ”LCL”, “sustainable” compared to previous newslettersIn contrast, there are no direct references to the potential impact of declining international (sea and air) freight rates.

Mainfreight: December 2022 Team Newsletter Insights

<ul><li>Mainfreight's (MFT) 1H23 result had been pre-released at its investor day three weeks ago</li><li>Outlook commentary highlights a sequential slowdown in growth</li><li>We welcome the higher capex guidance, which highlights management's confidence in the outlook for its US and European Transport operations, and helps resolve what was becoming an under-geared balance sheet</li></ul>

Mainfreight's (MFT) 1H23 result had been pre-released at its investor day three weeks agoOutlook commentary highlights a sequential slowdown in growthWe welcome the higher capex guidance, which highlights management's confidence in the outlook for its US and European Transport operations, and helps resolve what was becoming an under-geared balance sheet

Mainfreight: 1H23 — Growth Capex Injection

<ul><li>Consistent with its pre-release at its 21 October 2022 investor day, Mainfreight (MFT) reported 1H23 PBT up +66%, and a similar increase in NPAT</li><li>As anticipated MFT’s stellar growth profile over the past two years is slowing and likely to reverse as sea freight rate pressures impact A&amp;O earnings</li><li>MFT is “confident of trading conditions for the remainder of the financial year, albeit cognisant of economic headwinds and declining sea freight rates and volumes leading into the New Year”</li></ul>

Consistent with its pre-release at its 21 October 2022 investor day, Mainfreight (MFT) reported 1H23 PBT up +66%, and a similar increase in NPATAs anticipated MFT’s stellar growth profile over the past two years is slowing and likely to reverse as sea freight rate pressures impact A&amp;O earningsMFT is “confident of trading conditions for the remainder of the financial year, albeit cognisant of economic headwinds and declining sea freight rates and volumes leading into the New Year”

Mainfreight: 1H23 Result Initial Thoughts

<ul><li>In contrast, MFT's very strong 1H23 provisional result and bullish investor day commentary highlight further customer wins, strong momentum in network development, and margin improvement strategies across its three core products, particularly Air &amp; Ocean (A&amp;O).</li><li>We broadly reverse our downgrades from last week, but more importantly accept a higher level of sustainability within current A&amp;O profits and higher customer win driven growth over the medium term, despite cyclical risks.</li><li>MFT now trades on ~16x PE on our revised earnings estimates, which more than compensates investors for current A&amp;O over-earning.</li></ul>

In contrast, MFT's very strong 1H23 provisional result and bullish investor day commentary highlight further customer wins, strong momentum in network development, and margin improvement strategies across its three core products, particularly Air &amp; Ocean (A&amp;O).We broadly reverse our downgrades from last week, but more importantly accept a higher level of sustainability within current A&amp;O profits and higher customer win driven growth over the medium term, despite cyclical risks.MFT now trades on ~16x PE on our revised earnings estimates, which more than compensates investors for current A&amp;O over-earning.

Mainfreight: Blue Blood Transfusion; Upgrade to OUTPERFORM

New Zealand

Mainfreight Limited provides and supplies freight, warehousing and logistics services throughout New Zealand and Australia.  The Company provides freight forwarding services by road, rail, sea and air along with providing international freight forwarding services, customs clearance services and specialized handling of hazardous substances.

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Mainfreight Ltd (MFT NZ)

Transport Trends: Nothing Normal About the Normalising

The industry is normalising, but from different angles and at a different rates: Abnormal gains in international freight are unwinding rapidly,...

Forsyth Barr

Mainfreight: 1H23 — Growth Capex Injection

Mainfreight's (MFT) 1H23 result had been pre-released at its investor day three weeks ago; new news was largely limited to (1) updated outlook...

Forsyth Barr

Mainfreight: 1H23 Result Initial Thoughts

Consistent with its pre-release at its 21 October 2022 investor day, Mainfreight (MFT) reported 1H23 PBT up +66%, and a similar increase in NPAT;...

Forsyth Barr

Mainfreight: Blue Blood Transfusion; Upgrade to OUTPERFORM

MFT's very strong 1H23 provisional result and bullish investor day commentary highlight further customer wins, strong momentum in network development

Forsyth Barr

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Transport Trends: Nothing Normal About the Normalising

The industry is normalising, but from different angles and at a different rates: Abnormal gains in international freight are unwinding rapidly,...

Forsyth Barr

Mainfreight: December 2022 Team Newsletter Insights

Mainfreight’s (MFT) 68 page semi-annual employee newsletter highlights an increased focus on quality, network expansion and sustainable growth...

Forsyth Barr

Mainfreight: 1H23 — Growth Capex Injection

Mainfreight's (MFT) 1H23 result had been pre-released at its investor day three weeks ago; new news was largely limited to (1) updated outlook...

Forsyth Barr

Mainfreight: 1H23 Result Initial Thoughts

Consistent with its pre-release at its 21 October 2022 investor day, Mainfreight (MFT) reported 1H23 PBT up +66%, and a similar increase in NPAT;...

Forsyth Barr

Mainfreight: Blue Blood Transfusion; Upgrade to OUTPERFORM

MFT's very strong 1H23 provisional result and bullish investor day commentary highlight further customer wins, strong momentum in network development

Forsyth Barr