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

Auckland Airport 1H21 Preview&nbsp;—&nbsp;​​​​​​​COVID Casualty

NEUTRAL
We expect Auckland Airport (AIA) to report a challenged 1H21 result on 18 February 2021, with its first underlying NPAT loss since listing in 1998, though this result is unlikely to mean much when considering the forward earnings profile of the company. The monumental decline in international passengers (pax), to which AIA is more leveraged than domestic pax, will result in a significant decline in airport business revenue and EBITDAFI. In contrast, we expect AIA's property business to exhibit more defensive performance with assistance from the first time inclusion of the new Foodstuffs facility. The pax recovery outlook remains highly uncertain, with NZ border restrictions likely to be enforced at least for another 12 months.&nbsp;&nbsp;


Key issues



EBITDAFI run rate:&nbsp;At its ASM in October 2020 the company suggested that EBITDAFI had averaged ~NZ$10m per month through July-September, despite the impact on domestic pax through the second Auckland&nbsp;lockdown&nbsp;during August and September. We expect the EBITDAFI run-rate to have strengthened further into the holiday season.&nbsp;
Opex:&nbsp;Following cost-cutting in March/April 2020&nbsp;annualised&nbsp;opex&nbsp;should now be NZ$120m–NZ$130m while borders remain closed. This will likely increase as the pax recovery takes hold but may not peak at the pre COVID-19&nbsp;opex&nbsp;level.&nbsp;
Property revenue:&nbsp;Revenue derived from the new Foodstuffs facility will begin in 1H21 and increase through 2H21.&nbsp;
Border controls insight:&nbsp;Scope for two-way travel bubbles continues to exist with Pacific Islands and Australia, though the risk averse nature of the New&nbsp;Zealand&nbsp;Government may delay implementation, or limit scope,&nbsp;of the latter until domestic vaccinations are well advanced.&nbsp;
Capex&nbsp;outlook:&nbsp;We expect AIA to provide general commentary on its revised&nbsp;capex&nbsp;path with delays to key projects likely until a clearer picture evolves for border&nbsp;reopenings&nbsp;and the pax recovery.&nbsp;



Conference call details


Management will host an investor conference call at 10am on 18 February 2021. Investors need to register&nbsp;for the call via the following link:&nbsp;http://apac.directeventreg.com/registration/event/1358088




Andy Bowley
andy.bowley@forsythbarr.co.nz
+64 4 495 8246




Auckland Airport: 1H21 Preview — ​​​​​​​COVID Casualty

Auckland Intl Airport

Auckland Airport: 1H21 Preview — COVID Casualty

Auckland Intl Airport

Auckland Airport: 1H21 Preview — ​​​​​​​COVID Casualty

Auckland Airport: 1H21 Preview — COVID Casualty