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

<h2>Arvida Group (ARV) FY21 Result – Initial Impressions</h2>
Arvida reported a solid set of results slightly ahead of our estimates with modest growth in both underlying earnings and annuity EBITDA despite the challenges of COVID-19, a better outcome than RYM and OCA. Underlying earnings came in at NZ$51.9m vs our NZ$51.2m, part of the strength came from “other revenue” in care, we believe this relates to COVID-19 relief packages. Net debt came in c. NZ$40m higher due to higher capex and slightly lower new sales cash flow; new unit inventory increased by 32 units from the half year. Arvida also started reporting annuity EBITDA and underlying EBITDA, increasing the transparency of the earnings. NAV increased to 154cps. DPS for the full year was NZ5.35cps, slightly below our NZ5.8cps estimate.
Key details
<ul>
<li>FY22 build rate guidance: Prior guidance was for 200+ units, this has now been revised to 200 to 250 units (our current forecasts are for 235 units). Medium term commentary is also strong with the aim to increase to 300+ units over the next couple of years (our current FY23 and FY24 forecasts are for 290 and 310 units respectively)</li>
<li>Recent trading tracking well: Sales volumes were slow post lockdowns but 2H sales volumes have been strong. 95 new sales vs 42 in 1H and 164 resales vs 103 in 1H – both of which are its largest half year sales volumes on record</li>
<li>Cash flow slightly below expectations: Net debt came in ~NZ$40m above our expectations driven by a combination of; (1) higher capex and (2) lower cash flows received from new sales (~NZ$14m below our expectations).</li>
</ul>
Investor briefing — 10:30am NZ time
Dial in details; New Zealand: 0800 667 018, Australia: 1 800 148 258. Passcode; 3415879
FY21 result summary
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 184.3pt;"></td>
<td style="width: 17.95pt;">
FY20
</td>
<td style="width: 41.2pt;">
FY21
</td>
<td style="width: 54.7pt;">
% change
</td>
<td style="width: 54.7pt;">
FY21E FB
</td>
<td style="width: 90.6pt;">
Actual vs estimate
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
Care fees
</td>
<td style="width: 17.95pt;">
129.5
</td>
<td style="width: 41.2pt;">
133.6
</td>
<td style="width: 54.7pt;">
3%
</td>
<td style="width: 54.7pt;">
136.1
</td>
<td style="width: 90.6pt;">
-2%
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
DMF
</td>
<td style="width: 17.95pt;">
29.0
</td>
<td style="width: 41.2pt;">
33.5
</td>
<td style="width: 54.7pt;">
15%
</td>
<td style="width: 54.7pt;">
33.2
</td>
<td style="width: 90.6pt;">
1%
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
Resale gains
</td>
<td style="width: 17.95pt;">
23.7
</td>
<td style="width: 41.2pt;">
26.0
</td>
<td style="width: 54.7pt;">
10%
</td>
<td style="width: 54.7pt;">
26.2
</td>
<td style="width: 90.6pt;">
-1%
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
Newsale gains
</td>
<td style="width: 17.95pt;">
15.6
</td>
<td style="width: 41.2pt;">
16.3
</td>
<td style="width: 54.7pt;">
4%
</td>
<td style="width: 54.7pt;">
17.5
</td>
<td style="width: 90.6pt;">
-7%
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
Other
</td>
<td style="width: 17.95pt;">
5.1
</td>
<td style="width: 41.2pt;">
7.3
</td>
<td style="width: 54.7pt;">
42%
</td>
<td style="width: 54.7pt;">
5.0
</td>
<td style="width: 90.6pt;">
46%
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
Total revenue
</td>
<td style="width: 17.95pt;">
203.0
</td>
<td style="width: 41.2pt;">
216.8
</td>
<td style="width: 54.7pt;">
7%
</td>
<td style="width: 54.7pt;">
218.0
</td>
<td style="width: 90.6pt;">
-1%
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
Total costs
</td>
<td style="width: 17.95pt;">
141.3
</td>
<td style="width: 41.2pt;">
152.2
</td>
<td style="width: 54.7pt;">
8%
</td>
<td style="width: 54.7pt;">
152.9
</td>
<td style="width: 90.6pt;">
0%
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
EBITDA
</td>
<td style="width: 17.95pt;">
61.6
</td>
<td style="width: 41.2pt;">
64.6
</td>
<td style="width: 54.7pt;">
5%
</td>
<td style="width: 54.7pt;">
65.0
</td>
<td style="width: 90.6pt;">
-1%
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
Depreciation &amp; amortisation
</td>
<td style="width: 17.95pt;">
5.8
</td>
<td style="width: 41.2pt;">
6.7
</td>
<td style="width: 54.7pt;">
15%
</td>
<td style="width: 54.7pt;">
7.1
</td>
<td style="width: 90.6pt;">
-6%
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
EBIT
</td>
<td style="width: 17.95pt;">
55.8
</td>
<td style="width: 41.2pt;">
57.9
</td>
<td style="width: 54.7pt;">
4%
</td>
<td style="width: 54.7pt;">
58.0
</td>
<td style="width: 90.6pt;">
0%
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
Net interest
</td>
<td style="width: 17.95pt;">
4.1
</td>
<td style="width: 41.2pt;">
6.0
</td>
<td style="width: 54.7pt;">
48%
</td>
<td style="width: 54.7pt;">
5.7
</td>
<td style="width: 90.6pt;">
5%
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
Other
</td>
<td style="width: 17.95pt;">
0.0
</td>
<td style="width: 41.2pt;">
0.0
</td>
<td style="width: 54.7pt;">
n/a
</td>
<td style="width: 54.7pt;">
1.0
</td>
<td style="width: 90.6pt;">
n/a
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
Underlying profit
</td>
<td style="width: 17.95pt;">
51.7
</td>
<td style="width: 41.2pt;">
51.9
</td>
<td style="width: 54.7pt;">
0%
</td>
<td style="width: 54.7pt;">
51.2
</td>
<td style="width: 90.6pt;">
1%
</td>
</tr>
<tr>
<td style="width: 184.3pt;"></td>
<td style="width: 17.95pt;"></td>
<td style="width: 41.2pt;"></td>
<td style="width: 54.7pt;">
&nbsp;
</td>
<td style="width: 54.7pt;">
&nbsp;
</td>
<td style="width: 90.6pt;">
&nbsp;
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
Annuity EBITDA
</td>
<td style="width: 17.95pt;">
46.0
</td>
<td style="width: 41.2pt;">
48.3
</td>
<td style="width: 54.7pt;">
5%
</td>
<td style="width: 54.7pt;">
47.6
</td>
<td style="width: 90.6pt;">
2%
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
&nbsp;
</td>
<td style="width: 17.95pt;">
&nbsp;
</td>
<td style="width: 41.2pt;">
&nbsp;
</td>
<td style="width: 54.7pt;">
&nbsp;
</td>
<td style="width: 54.7pt;">
&nbsp;
</td>
<td style="width: 90.6pt;">
&nbsp;
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
DPS (cents)
</td>
<td style="width: 17.95pt;">
5.8
</td>
<td style="width: 41.2pt;">
5.4
</td>
<td style="width: 54.7pt;">
-8%
</td>
<td style="width: 54.7pt;">
5.8
</td>
<td style="width: 90.6pt;">
-8%
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
Net debt
</td>
<td style="width: 17.95pt;">
318.8
</td>
<td style="width: 41.2pt;">
371.1
</td>
<td style="width: 54.7pt;">
16%
</td>
<td style="width: 54.7pt;">
332.1
</td>
<td style="width: 90.6pt;">
12%
</td>
</tr>
<tr>
<td style="width: 184.3pt;"></td>
<td style="width: 17.95pt;"></td>
<td style="width: 41.2pt;"></td>
<td style="width: 54.7pt;">
&nbsp;
</td>
<td style="width: 54.7pt;">
&nbsp;
</td>
<td style="width: 90.6pt;">
&nbsp;
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
Net implied value per share
</td>
<td style="width: 17.95pt;">
1.33
</td>
<td style="width: 41.2pt;">
1.54
</td>
<td style="width: 54.7pt;">
16%
</td>
<td style="width: 54.7pt;">
n/a
</td>
<td style="width: 90.6pt;">
n/a
</td>
</tr>
<tr>
<td style="width: 184.3pt;"></td>
<td style="width: 17.95pt;"></td>
<td style="width: 41.2pt;"></td>
<td style="width: 54.7pt;">
&nbsp;
</td>
<td style="width: 54.7pt;">
&nbsp;
</td>
<td style="width: 90.6pt;">
&nbsp;
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
Operating cash flow incl. new sales
</td>
<td style="width: 17.95pt;">
102.9
</td>
<td style="width: 41.2pt;">
130.8
</td>
<td style="width: 54.7pt;">
27%
</td>
<td style="width: 54.7pt;">
148.4
</td>
<td style="width: 90.6pt;">
-12%
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
&nbsp;
Investing cash flow
</td>
<td style="width: 17.95pt;">
334.4
</td>
<td style="width: 41.2pt;">
154.8
</td>
<td style="width: 54.7pt;">
-54%
</td>
<td style="width: 54.7pt;">
131.2
</td>
<td style="width: 90.6pt;">
18%
</td>
</tr>
<tr>
<td style="width: 184.3pt;"></td>
<td style="width: 17.95pt;"></td>
<td style="width: 41.2pt;"></td>
<td style="width: 54.7pt;">
&nbsp;
</td>
<td style="width: 54.7pt;">
&nbsp;
</td>
<td style="width: 90.6pt;">
&nbsp;
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
Sales - new units
</td>
<td style="width: 17.95pt;">
126
</td>
<td style="width: 41.2pt;">
137
</td>
<td style="width: 54.7pt;">
9%
</td>
<td style="width: 54.7pt;">
145
</td>
<td style="width: 90.6pt;">
-6%
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
New sales margin (%)
</td>
<td style="width: 17.95pt;">
16%
</td>
<td style="width: 41.2pt;">
15%
</td>
<td style="width: 54.7pt;">
-1%
</td>
<td style="width: 54.7pt;">
15%
</td>
<td style="width: 90.6pt;">
-2%
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
Sales - resold units
</td>
<td style="width: 17.95pt;">
278
</td>
<td style="width: 41.2pt;">
267
</td>
<td style="width: 54.7pt;">
-4%
</td>
<td style="width: 54.7pt;">
263
</td>
<td style="width: 90.6pt;">
2%
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
Resales margin (%)
</td>
<td style="width: 17.95pt;">
23%
</td>
<td style="width: 41.2pt;">
22%
</td>
<td style="width: 54.7pt;">
1%
</td>
<td style="width: 54.7pt;">
23%
</td>
<td style="width: 90.6pt;">
0%
</td>
</tr>
<tr>
<td style="width: 184.3pt;"></td>
<td style="width: 17.95pt;"></td>
<td style="width: 41.2pt;"></td>
<td style="width: 54.7pt;">
&nbsp;
</td>
<td style="width: 54.7pt;">
&nbsp;
</td>
<td style="width: 90.6pt;">
&nbsp;
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
Average unit price - new sales (NZ$000's)
</td>
<td style="width: 17.95pt;">
763
</td>
<td style="width: 41.2pt;">
799
</td>
<td style="width: 54.7pt;">
5%
</td>
<td style="width: 54.7pt;">
804
</td>
<td style="width: 90.6pt;">
-1%
</td>
</tr>
<tr>
<td style="width: 184.3pt;">
Average unit price - resales (NZ$000's)
</td>
<td style="width: 17.95pt;">
377
</td>
<td style="width: 41.2pt;">
442
</td>
<td style="width: 54.7pt;">
17%
</td>
<td style="width: 54.7pt;">
428
</td>
<td style="width: 90.6pt;">
3%
</td>
</tr>
</tbody>
</table>
Source: Forsyth Barr analysis, Company reports
Aaron Ibbotson &nbsp;CFA Director / Senior Analyst, Equities
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.1&amp;permmsgid=msg-f:1700677787613851476&amp;th=179a056ff01eef54&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ-mf2_Lzop8Bsh61eVNPf2sVBnzhUNKocG0CtA06Vi_Osyl-AkV6UbFNLGcQTwukF-nrSOc_IoaWYdwbrKqmWM83FHgxzjkiZ6YnOdLIOAG1hQecrMZnCQnV0M&amp;disp=emb" class="editor-image img-responsive"></figure>
 M: +64 21 470 377 |P: +64 9 368 0024 | TF: 0800 367 227&nbsp; Level 23, Shortland &amp; Fort, 88 Shortland Street, Auckland

Arvida Group (ARV) FY21 Result – Initial Impressions
Arvida reported a solid set of results slightly ahead of our estimates with modest growth in both underlying earnings and annuity EBITDA despite the challenges of COVID-19, a better outcome than RYM and OCA. Underlying earnings came in at NZ$51.9m vs our NZ$51.2m, part of the strength came from “other revenue” in care, we believe this relates to COVID-19 relief packages. Net debt came in c. NZ$40m higher due to higher capex and slightly lower new sales cash flow; new unit inventory increased by 32 units from the half year. Arvida also started reporting annuity EBITDA and underlying EBITDA, increasing the transparency of the earnings. NAV increased to 154cps. DPS for the full year was NZ5.35cps, slightly below our NZ5.8cps estimate.
Key details

FY22 build rate guidance: Prior guidance was for 200+ units, this has now been revised to 200 to 250 units (our current forecasts are for 235 units). Medium term commentary is also strong with the aim to increase to 300+ units over the next couple of years (our current FY23 and FY24 forecasts are for 290 and 310 units respectively)
Recent trading tracking well: Sales volumes were slow post lockdowns but 2H sales volumes have been strong. 95 new sales vs 42 in 1H and 164 resales vs 103 in 1H – both of which are its largest half year sales volumes on record
Cash flow slightly below expectations: Net debt came in ~NZ$40m above our expectations driven by a combination of; (1) higher capex and (2) lower cash flows received from new sales (~NZ$14m below our expectations).

Investor briefing — 10:30am NZ time
Dial in details; New Zealand: 0800 667 018, Australia: 1 800 148 258. Passcode; 3415879
FY21 result summary





FY20


FY21


% change


FY21E FB


Actual vs estimate




Care fees


129.5


133.6


3%


136.1


-2%




DMF


29.0


33.5


15%


33.2


1%




Resale gains


23.7


26.0


10%


26.2


-1%




Newsale gains


15.6


16.3


4%


17.5


-7%




Other


5.1


7.3


42%


5.0


46%




Total revenue


203.0


216.8


7%


218.0


-1%




Total costs


141.3


152.2


8%


152.9


0%




EBITDA


61.6


64.6


5%


65.0


-1%




Depreciation &amp; amortisation


5.8


6.7


15%


7.1


-6%




EBIT


55.8


57.9


4%


58.0


0%




Net interest


4.1


6.0


48%


5.7


5%




Other


0.0


0.0


n/a


1.0


n/a




Underlying profit


51.7


51.9


0%


51.2


1%







&nbsp;


&nbsp;


&nbsp;




Annuity EBITDA


46.0


48.3


5%


47.6


2%




&nbsp;


&nbsp;


&nbsp;


&nbsp;


&nbsp;


&nbsp;




DPS (cents)


5.8


5.4


-8%


5.8


-8%




Net debt


318.8


371.1


16%


332.1


12%







&nbsp;


&nbsp;


&nbsp;




Net implied value per share


1.33


1.54


16%


n/a


n/a







&nbsp;


&nbsp;


&nbsp;




Operating cash flow incl. new sales


102.9


130.8


27%


148.4


-12%




&nbsp;
Investing cash flow


334.4


154.8


-54%


131.2


18%







&nbsp;


&nbsp;


&nbsp;




Sales - new units


126


137


9%


145


-6%




New sales margin (%)


16%


15%


-1%


15%


-2%




Sales - resold units


278


267


-4%


263


2%




Resales margin (%)


23%


22%


1%


23%


0%







&nbsp;


&nbsp;


&nbsp;




Average unit price - new sales (NZ$000's)


763


799


5%


804


-1%




Average unit price - resales (NZ$000's)


377


442


17%


428


3%




Source: Forsyth Barr analysis, Company reports
Aaron Ibbotson &nbsp;CFA Director / Senior Analyst, Equities

 M: +64 21 470 377 |P: +64 9 368 0024 | TF: 0800 367 227&nbsp; Level 23, Shortland &amp; Fort, 88 Shortland Street, Auckland

Arvida Group (ARV): FY21 Result – Initial Impressions