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).

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New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Arvida Group (ARV) 2H22 Sales update – Initial Impressions</h2>
Arvida released a strong 2H22 sales update to the market this morning. Comparisons with prior periods is somewhat difficult due to the major acquisition of Arena Living in November 2021, but either way it looks like a strong sales number. Management commented that Arena Living is performing in-line with expectations &nbsp;- on our estimates Arena Living will contribute with about 1/3 of annuity EBITDA in FY23. The all-important re-sales margins came in at around 28%, up from a run-rate of 20-25% over the last few reporting periods. While strength will be driven by the super normal re-sale margins from Arena Living – it is very pleasing to see the theory turn into practise. Arena living was part of Arvida for only ~4.5 of the 6 month 2H22 period, suggesting solid support for our FY23 estimates of 28% re-sale margins. The re-sale gains is the good news story in the sector while operating expenses is the bad news story in the sector. Here we didn’t get much news, but Arvida commented that it had ~NZ$4-NZ$5m of additional COVID related costs in 2H, this is broadly in-line with our estimates, maybe NZ$1m or so above.
Key details
<ul>
<li>Resales gains: NZ$31m, 28% margins, up 100% YoY. We estimate up 25-30% up organically, excluding Arena Living. This is 35% above our (downgraded in January) estimates.</li>
<li>New sales gains: NZ$14m, ~16% margins, up 24% YoY. This is broadly in-line with historical new sales margin range. Number of new sales was 123, up from 120 in 1H22 and 95 in 2H21. Also ahead of our estimates.</li>
<li>Opex: ARV commented that it had ~ NZ$4-NZ$5m of additional COVID related costs related to staff, PPE and COVID tests. This is broadly in-line with our revised numbers from January.</li>
</ul>

Arvida Group (ARV) 2H22 Sales update – Initial Impressions
Arvida released a strong 2H22 sales update to the market this morning. Comparisons with prior periods is somewhat difficult due to the major acquisition of Arena Living in November 2021, but either way it looks like a strong sales number. Management commented that Arena Living is performing in-line with expectations &nbsp;- on our estimates Arena Living will contribute with about 1/3 of annuity EBITDA in FY23. The all-important re-sales margins came in at around 28%, up from a run-rate of 20-25% over the last few reporting periods. While strength will be driven by the super normal re-sale margins from Arena Living – it is very pleasing to see the theory turn into practise. Arena living was part of Arvida for only ~4.5 of the 6 month 2H22 period, suggesting solid support for our FY23 estimates of 28% re-sale margins. The re-sale gains is the good news story in the sector while operating expenses is the bad news story in the sector. Here we didn’t get much news, but Arvida commented that it had ~NZ$4-NZ$5m of additional COVID related costs in 2H, this is broadly in-line with our estimates, maybe NZ$1m or so above.
Key details

Resales gains: NZ$31m, 28% margins, up 100% YoY. We estimate up 25-30% up organically, excluding Arena Living. This is 35% above our (downgraded in January) estimates.
New sales gains: NZ$14m, ~16% margins, up 24% YoY. This is broadly in-line with historical new sales margin range. Number of new sales was 123, up from 120 in 1H22 and 95 in 2H21. Also ahead of our estimates.
Opex: ARV commented that it had ~ NZ$4-NZ$5m of additional COVID related costs related to staff, PPE and COVID tests. This is broadly in-line with our revised numbers from January.


Arvida Group (ARV): 2H22 Sales Update – Initial Impressions