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 Limited</h2>
<p><strong>FY20 Preview&nbsp;— Care-Full Times</strong></p>
<p><strong>OUTPERFORM</strong></p>
<p>Arvida Group (ARV) will report its FY20 result on 26 May and we are expecting robust EPS growth of +12.5%, with strong growth in resales and new sales gains given the development and acquisition activity. Of interest will be comments on how the business is tracking in Level 2 and the outlook for sales and developments given the weak economic backdrop. OUTPERFORM.</p>
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<p><strong>Strong FY20 with dividends intact</strong></p>
<div id="m_3569347686077457362imgw6-2-2-2-2-2-2-2">
<p>Robust underlying&nbsp;EPS&nbsp;growth of +12.5% is expected given the&nbsp;accretive&nbsp;acquisitions and successful developments undertaken, and is indicative of a business performing well. New sales gains in particular are expected to be a key driver.&nbsp;COVID-19 only had a limited impact on sales volumes&nbsp;late in FY20.&nbsp;ARV&nbsp;has confirmed that it developed 209 units compared with the 200 unit guidance&nbsp;and expects sales of just under 400 units, slightly below our pre&nbsp;COVID-19 forecast. We expect&nbsp;ARV&nbsp;to maintain its 55% dividend payout ratio in FY20, however, this could be lowered in FY21 given the uncertain outlook.</p>
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<p><strong>Near-term uncertainties — FY21 guidance not expected</strong></p>
<div id="m_3569347686077457362i5i2b-2-2-2-2-2-2-2">
<p>We recently reduced near-term ARV earnings based on a scenario that assumes very soft conditions for sales of retirement units over the next six months and no development activity, followed by a recovery over the next 18–24 months. Forward looking statements are likely to centre around development timing and dividend policy but are unlikely to include the underlying profit outlook. While significant uncertainties remain with regard to the operating environment and economic recovery, we remain confident about ARV's business model given its heavily 'needs based' offer and solid balance sheet.&nbsp;</p>
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<p><strong>Investor briefing for 26 May</strong></p>
<div id="m_3569347686077457362i0csc-2-2-2-2-2-2-2">
<p>Conference call: 11am (NZ time) NZ 0800 667 018, AU 1800 148 258. Passcode: 6485346</p>
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<div><strong>Jeremy Simpson CFA</strong></div>
<div><a href="mailto:jeremy.simpson@forsythbarr.co.nz" target="_blank" rel="noopener">jeremy.simpson@forsythbarr.co.<wbr>nz</a></div>
<div>+64 9 368 0022</div>
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Arvida Group Limited
FY20 Preview&nbsp;— Care-Full Times
OUTPERFORM
Arvida Group (ARV) will report its FY20 result on 26 May and we are expecting robust EPS growth of +12.5%, with strong growth in resales and new sales gains given the development and acquisition activity. Of interest will be comments on how the business is tracking in Level 2 and the outlook for sales and developments given the weak economic backdrop. OUTPERFORM.

Strong FY20 with dividends intact

Robust underlying&nbsp;EPS&nbsp;growth of +12.5% is expected given the&nbsp;accretive&nbsp;acquisitions and successful developments undertaken, and is indicative of a business performing well. New sales gains in particular are expected to be a key driver.&nbsp;COVID-19 only had a limited impact on sales volumes&nbsp;late in FY20.&nbsp;ARV&nbsp;has confirmed that it developed 209 units compared with the 200 unit guidance&nbsp;and expects sales of just under 400 units, slightly below our pre&nbsp;COVID-19 forecast. We expect&nbsp;ARV&nbsp;to maintain its 55% dividend payout ratio in FY20, however, this could be lowered in FY21 given the uncertain outlook.

Near-term uncertainties — FY21 guidance not expected

We recently reduced near-term ARV earnings based on a scenario that assumes very soft conditions for sales of retirement units over the next six months and no development activity, followed by a recovery over the next 18–24 months. Forward looking statements are likely to centre around development timing and dividend policy but are unlikely to include the underlying profit outlook. While significant uncertainties remain with regard to the operating environment and economic recovery, we remain confident about ARV's business model given its heavily 'needs based' offer and solid balance sheet.&nbsp;

Investor briefing for 26 May

Conference call: 11am (NZ time) NZ 0800 667 018, AU 1800 148 258. Passcode: 6485346




Jeremy Simpson CFA
jeremy.simpson@forsythbarr.co.nz
+64 9 368 0022





Arvida Group Limited: FY20 Preview — Care-Full Times