New Zealand Professional Investment Services Firm

Forsyth Barr

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.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<ul><li>Air New Zealand (AIR) reported a strong FY23 result, boosted by record passenger yields. It was far from a normal year, AIR fairly labels it an "extraordinary operating environment"; consequently, the result offers few signals as to profit levels for the year ahead.</li><li>The airline's financial backdrop is slowly moving towards the new norm where both costs and yields are materially higher than pre-COVID levels.</li><li>We expect this differential to allow AIR to generate an attractive ROIC in FY24, but lower than FY23, and heading back towards WACC over the medium-term. Trading at ~8x one year forward PE, AIR continues to trade at a material premium (~25%) to Tasman peer Qantas (QAN.AX). ​​​​​​​NEUTRAL.</li></ul>

Air New Zealand (AIR) reported a strong FY23 result, boosted by record passenger yields. It was far from a normal year, AIR fairly labels it an "extraordinary operating environment"; consequently, the result offers few signals as to profit levels for the year ahead.The airline's financial backdrop is slowly moving towards the new norm where both costs and yields are materially higher than pre-COVID levels.We expect this differential to allow AIR to generate an attractive ROIC in FY24, but lower than FY23, and heading back towards WACC over the medium-term. Trading at ~8x one year forward PE, AIR continues to trade at a material premium (~25%) to Tasman peer Qantas (QAN.AX). ​​​​​​​NEUTRAL.

Air New Zealand - FY23 — Steep Ascent, Descending to Lower Altitude