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>The Producer Price Index (PPI) for the 12 months to September 2023 was 2.1%, modestly above expectations and locks in a price increase of +2.1% from 1 January 2024, for ~92% of CHI's revenue.</li><li>We upgrade our earnings forecast slightly and lift our target price +2cps (+1.3%) to NZ$1.60.</li><li>We like CHI's defensive characteristics, but whilst we see good upside potential, a negative PPI adjustment for FY25 is possible based on historic trends. NEUTRAL.</li></ul>

The Producer Price Index (PPI) for the 12 months to September 2023 was 2.1%, modestly above expectations and locks in a price increase of +2.1% from 1 January 2024, for ~92% of CHI's revenue.We upgrade our earnings forecast slightly and lift our target price +2cps (+1.3%) to NZ$1.60.We like CHI's defensive characteristics, but whilst we see good upside potential, a negative PPI adjustment for FY25 is possible based on historic trends. NEUTRAL.

Channel Infrastructure - PPI Positive but Slide Yet to Bottom Out

<ul><li>Channel Infrastructure’s (CHI) investor day focussed on the strong strategic position it occupies in New Zealand’s infrastructure.</li><li>CHI continues to perform well, executing on opportunities as they arise, and we continue to see more upside than downside risk in the business.</li><li>Long-term volume forecasts and near-term earnings guidance remain unchanged. </li></ul>

Channel Infrastructure’s (CHI) investor day focussed on the strong strategic position it occupies in New Zealand’s infrastructure.CHI continues to perform well, executing on opportunities as they arise, and we continue to see more upside than downside risk in the business.Long-term volume forecasts and near-term earnings guidance remain unchanged. 

Channel Infrastructure - Re-Emphasising the Pipe Dream

<ul><li>We see positive earnings momentum for Channel Infrastructure continuing, with jet volumes continuing to recover better than expected and rising oil prices likely to boost September 2023 PPI Index above our current estimate.</li><li>Stronger price and quantity expectations lifts FY24 and beyond EBITDAF ~+1.5m and we increase our target price +2cps (+1.2%) to NZ$1.69.</li><li>We see good value in CHI at current levels. NEUTRAL. </li></ul>

We see positive earnings momentum for Channel Infrastructure continuing, with jet volumes continuing to recover better than expected and rising oil prices likely to boost September 2023 PPI Index above our current estimate.Stronger price and quantity expectations lifts FY24 and beyond EBITDAF ~+1.5m and we increase our target price +2cps (+1.2%) to NZ$1.69.We see good value in CHI at current levels. NEUTRAL. 

Channel Infrastructure - P's and Q's Encouraging

<ul><li>It is hard to fault Channel Infrastructure's (CHI) 1H23 result; revenue was better than expected, costs were lower and FY23 guidance was upgraded.</li><li>We too have lifted our FY23 EBITDA forecast to the top of CHI's revised guidance range, but have left our dividend forecast unchanged.</li><li>Whilst we increase our target price +3cps (+1.8%) to NZ$1.67, CHI represents fair value at current levels. NEUTRAL.</li></ul>

It is hard to fault Channel Infrastructure's (CHI) 1H23 result; revenue was better than expected, costs were lower and FY23 guidance was upgraded.We too have lifted our FY23 EBITDA forecast to the top of CHI's revised guidance range, but have left our dividend forecast unchanged.Whilst we increase our target price +3cps (+1.8%) to NZ$1.67, CHI represents fair value at current levels. NEUTRAL.

Channel Infrastructure - Fulfilling the Pipe Dream — 1H23 Result

<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

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 - PPI Positive but Slide Yet to Bottom Out

The Producer Price Index (PPI) for the 12 months to September 2023 was 2.1%, modestly above expectations and locks in a price increase of +2.1%...

Forsyth Barr

Channel Infrastructure - Re-Emphasising the Pipe Dream

Channel Infrastructure’s (CHI) investor day focussed on the strong strategic position it occupies in New Zealand’s infrastructure.

Forsyth Barr

Channel Infrastructure - P's and Q's Encouraging

We see positive earnings momentum for Channel Infrastructure continuing, with jet volumes continuing to recover better than expected

Forsyth Barr

Channel Infrastructure - Fulfilling the Pipe Dream — 1H23 Result

It is hard to fault Channel Infrastructure's (CHI) 1H23 result; revenue was better than expected, costs were lower and FY23 guidance was upgraded.

Forsyth Barr

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

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