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>Channel Infrastructure (CHI) revenue and earnings are closely linked to producer price index (PPI) movements, which is a negative when the PPI increase is lower than expected.</li><li>The PPI increase for the year to June 2023 was +3.0%, down from +5.2% in the March 2023 quarter and +7.7% in the December 2022 quarter.</li><li>We have lowered our September 2023 forecast -1.5pp to 2.0%, pulling back FY24 and beyond forecasts -NZ$2.1m and our target price -3cps to NZ$1.64. PPI, whilst on average higher than CPI, is more volatile. </li></ul>

Channel Infrastructure (CHI) revenue and earnings are closely linked to producer price index (PPI) movements, which is a negative when the PPI increase is lower than expected.The PPI increase for the year to June 2023 was +3.0%, down from +5.2% in the March 2023 quarter and +7.7% in the December 2022 quarter.We have lowered our September 2023 forecast -1.5pp to 2.0%, pulling back FY24 and beyond forecasts -NZ$2.1m and our target price -3cps to NZ$1.64. PPI, whilst on average higher than CPI, is more volatile. 

Channel Infrastructure - Plummeting Producers Price Index

<ul><li>Sale of old refining assets small positive with more to come: The probable sale of ex-refining assets at a price of US$33.9m (~NZ$54.6m) is ~+7cps higher than the book value of all of CHI's ex-refining assets, and there are more assets for sale.</li><li>Sustainable aviation fuel getting off the ground: In other encouraging news, CHI recently announced that Fortescue Future Industries (FFI) is progressing its hydrogen scoping study to a pre-feasibility study.</li><li>Revised electricity contract modestly higher than expected: In mid-June 2023, CHI announced it had signed a new six year renewable electricity supply contract commencing in FY24 for ~NZ$6m per annum. </li></ul>

Sale of old refining assets small positive with more to come: The probable sale of ex-refining assets at a price of US$33.9m (~NZ$54.6m) is ~+7cps higher than the book value of all of CHI's ex-refining assets, and there are more assets for sale.Sustainable aviation fuel getting off the ground: In other encouraging news, CHI recently announced that Fortescue Future Industries (FFI) is progressing its hydrogen scoping study to a pre-feasibility study.Revised electricity contract modestly higher than expected: In mid-June 2023, CHI announced it had signed a new six year renewable electricity supply contract commencing in FY24 for ~NZ$6m per annum. 

Channel Infrastructure: Scrap More Refined Than Expected

<ul><li>Producer price index (PPI) falling faster than expected, lowers FY24 expected PPI uplift</li><li>Jet volumes recovering faster and Auckland Airport confident of return to close to normal pax by year end</li><li>Government set to procure 70m litres of diesel storage, CHI remains well placed to secure a good contract</li></ul>

Producer price index (PPI) falling faster than expected, lowers FY24 expected PPI upliftJet volumes recovering faster and Auckland Airport confident of return to close to normal pax by year endGovernment set to procure 70m litres of diesel storage, CHI remains well placed to secure a good contract

<ul><li>Result a bit worse than expected, but FY23 outlook unchanged</li><li>Resumption of dividends as signalled and +0.5cps higher than forecast</li><li>Volumes recovering well and now expected to stay higher for longer, but variable price lower than previously forecast</li></ul>

Result a bit worse than expected, but FY23 outlook unchangedResumption of dividends as signalled and +0.5cps higher than forecastVolumes recovering well and now expected to stay higher for longer, but variable price lower than previously forecast

Channel Infrastructure: Volumes Jet Fuelled — FY22 Result

<ul><li>CHI has upgraded its FY23 revenue and EBITDA guidance +NZ$8.5m (+7%) and +NZ$4.0m (+5%) respectively at the midpoint of the guidance range</li><li>FY23 guidance upgrade due to strong PPI and new storage contract, partially offset by rising costs</li><li>Government decides to increase strategic reserve levels, CHI in pole position to provide most of the required storage</li></ul>

CHI has upgraded its FY23 revenue and EBITDA guidance +NZ$8.5m (+7%) and +NZ$4.0m (+5%) respectively at the midpoint of the guidance rangeFY23 guidance upgrade due to strong PPI and new storage contract, partially offset by rising costsGovernment decides to increase strategic reserve levels, CHI in pole position to provide most of the required storage

Channel Infrastructure: Producing Another Guidance Upgrade

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 - Plummeting Producers Price Index

Channel Infrastructure (CHI) revenue and earnings are closely linked to producer price index (PPI) movements, which is a negative when the PPI...

Forsyth Barr

Channel Infrastructure: Scrap More Refined Than Expected

Channel Infrastructure (CHI) has likely sold refining assets from the hydrocracking complex for US$33.9m (~NZ$54.6m); It has sold an option to US...

Forsyth Barr

Channel Infrastructure: Channel Check

Mixed news since Channel Infrastucture's (CHI) FY22 result has combined to lower our target price -4cps (-2.5%) and pull back our rating to NEUTRAL...

Forsyth Barr

Channel Infrastructure: Volumes Jet Fuelled — FY22 Result

Channel Infrastructure (CHI) produced a FY22 result moderately lower than forecast, but it reinstated the dividend at a higher level than expected;...

Forsyth Barr

Channel Infrastructure: Producing Another Guidance Upgrade

The Producer Price Index (PPI) for the 12 months to September 2022 was 8.4%, in line with expectations and locks in a price increase of +6.3% from...

Forsyth Barr

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