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

Augusta Capital
FY20 Result — Just a Formality
NEUTRAL
Augusta Capital (AUG) reported FY20 adjusted funds from operations (AFFO) of NZ$0.2m, down materially from the prior year, largely due to no new fund offerings being completed. This outcome was in line with guidance provided with AUG's recent capital raise. No FY21 guidance was provided; however, AUG has targeted 20% cost savings, a plan to launch a new fund in mid-July, and to progress development and acquisition opportunities within existing funds. The next key update for AUG is a potential takeover offer from Centuria Capital (CNI) which we expect sometime over the next two weeks given takeovers code requirements. We make minor adjustments to our earnings estimates and leave our NZ$0.95 target price unchanged.


Annus&nbsp;horribilis​​​​​​​


FY20 was a year to forget for AUG with the company significantly impacted by&nbsp;COVID-19, resulting&nbsp;in&nbsp;AFFO&nbsp;reducing NZ$7.5m&nbsp;to NZ$0.2m. The planned Augusta Property Fund and Augusta Tourism Fund did not proceed&nbsp;which resulted&nbsp;in zero revenue (vs. NZ$7.5m potential) to offset the costs incurred (NZ$2.3m) as well as the forfeiture of its deposit on the Albany Lifestyle Centre (NZ$4.5m). Post balance date AUG raised NZ$45m of new equity to 1) repay bank debt largely related to&nbsp;tourism assets stranded on its balance sheet, and 2) provide funding flexibility for future growth opportunities.


A year of rebuilding ahead


AUG did not provide any explicit FY21 guidance but 1) is targeting overhead cost savings of 20%, 2) expects to relaunch Augusta Property Fund mid-July, 3) has postponed further development spend on balance sheet tourism assets for now, 4) continues to progress development opportunities (albeit with a somewhat uncertain outlook) within Asset Plus. At 31 May 2020 AUG had a cash balance of NZ$14m and available bank debt of NZ$9m which can be used to fund growth initiatives. We have made minor changes to our FY21–23 forecasts.


Waiting for an offer


The next key update for AUG is a potential takeover offer from Centuria Capital (CNI). Under the takeovers code, if CNI decides to make a takeover offer it must do so between 14 and 30 days (i.e. 29 June to 15 July) from the date it issued the takeover notice. The offer outlined in the takeover notice comprised .392 CNI shares and NZ$0.20 per AUG share; based on the current CNI share price of A$1.885 and an exchange rate of 1.069 this implies a potential takeover value of NZ$0.99 per share.



Rohan Koreman-Smit CFA
rohan.koreman-smit@forsythbarr.co.nz
+64 9 368 0085





Ashton Olds
ashton.olds@forsythbarr.co.nz
+64 9 368 0127



Augusta Capital: FY20 Result — Just a Formality