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

Metro Performance Glass / Equity Bottom-Up

<h2>Building weekly</h2>
<h3>New Zealand</h3>
<ul>
<li>House prices may be starting to ease (REINZ, May): House prices -0.5% mom, +7.9% yoy (previous -1.7% mom, +8.5% yoy), with Auckland +7% yoy and ex-Auckland +9% yoy. Post lockdown trends in house sales yet to be delineated; house sales up +86.7% mom, -46.6% yoy (previous -74.9% mom, -77.5% yoy); days to sell in Auckland +16 yoy to 61 (vs. long-term average 35), ex-Auckland +19 to 57 (vs. long-term average 42).</li>
<li>Surge in home buyer interest but will it translate into activity? Trade Me property views up 69% yoy in May <a href="https://www.landlords.co.nz/article/976517036/huge-surge-in-buyer-demand?utm_source=ST&amp;utm_medium=email&amp;utm_campaign=ShareTrader+AM+Update+for+Friday+19+June+2020" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.landlords.co.nz/article/976517036/huge-surge-in-buyer-demand?utm_source%3DST%26utm_medium%3Demail%26utm_campaign%3DShareTrader%2BAM%2BUpdate%2Bfor%2BFriday%2B19%2BJune%2B2020&amp;source=gmail&amp;ust=1592619566258000&amp;usg=AFQjCNEmembCCDgRWmykLOqE9cubA_wi6A" rel="noopener">Huge surge in buyer demand</a></li>
<li>Migration locked down: net gain of 48 migrants in April -97.1% yoy (previous +9.6k). 12 months to Apr. 46.6k (previous 78.2k).</li>
<li>Rents stable (May): 3m rolling average rents – Auckland -0.2% yoy, Wellington +0.5% yoy, rest of North Island +5.5% yoy, Canterbury -0.7% yoy and rest of South Island -1.5% yoy.</li>
<li>Government announces first ‘shovel ready’ projects: 11 projects to be fast-tracked. <a href="https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&amp;objectid=12340102" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.nzherald.co.nz/business/news/article.cfm?c_id%3D3%26objectid%3D12340102&amp;source=gmail&amp;ust=1592619566259000&amp;usg=AFQjCNGLKsnDOF66zsCa7SGzHtYC4G9nAw" rel="noopener">Fast-tracked projects just the beginning</a></li>
<li>First week of lockdown softens infrastructure (“other”) construction (1Q20): -2.0% qoq, +2.5% yoy (previous +0.6% qoq, -0.1% yoy).</li>
<li>Metroglass expects a 20% decline in ANZ residential activity: Base case for NZ residential consents to be down slightly in FY21, -20% in FY22, and +5% in FY23. In Australia they expect -20% in FY21 and +9% in FY22. <a href="https://www.nzx.com/announcements/354919" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.nzx.com/announcements/354919&amp;source=gmail&amp;ust=1592619566259000&amp;usg=AFQjCNGKBBNSsuqc1fKj6zk700vxIX9rhQ" rel="noopener">Metro Performance Glass 2020 Results</a></li>
</ul>
<h3>Australia</h3>
<ul>
<li>Challenged Boral appoints new CEO, is restructuring on the cards? – Ex Brambles CFO <a href="https://www.boral.com/sites/corporate/files/media/field_document/20200615-ASX-Release-Boral-CEO-Appointment.pdf" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.boral.com/sites/corporate/files/media/field_document/20200615-ASX-Release-Boral-CEO-Appointment.pdf&amp;source=gmail&amp;ust=1592619566259000&amp;usg=AFQjCNGhDWqk8xn36m704n75PGC73abpkA" rel="noopener">Zlatko Todorcevski</a></li>
<li>Pandemic slows new home sales (May): Detached dwellings -4.2% mom, -29.8% yoy (previous -1.1% mom, -5.7% yoy).</li>
<li>Net migration soft pre-pandemic (4Q19): Net migration down -21.4% yoy (previous -15.9%). Population growth past 12 months +1.4% yoy (vs. +1.6% 10-year average).</li>
</ul>
<h3>International</h3>
<ul>
<li>US: Largest US homebuilder Lennar’s 2Q new orders resilient (2Q): New orders (number of units) down -10% in 2Q. “Home sales grew steadily, as record-low interest rates and low inventory levels drove a favorable rebound in the homebuilding industry.”</li>
<li>US: Strong bounce back in homebuilder confidence (Jun.): 58 (previous 37; positive &gt;50&gt; negative).</li>
<li>China: Construction activity continues to rebound after being down ~50% (May): Total building starts -12.8% yoy (previous -18.4%) with residential -13.9% (previous -18.7%), office -11.3% yoy (previous -28.7%) and business buildings -16.1% (previous -20.5%).</li>
</ul>
Chart of the week: Strong bounce back in US homebuilder confidence suggesting COVID impact not as bad as first thought
US housing permits vs. homebuilder confidence
<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:1669892053911488478&amp;th=172ca5f9bea447de&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ_kgax0j4aR718D1aAoWmz91dMwf9mBwN5G3CSFeez6ZQX32_qchR_0F_3K5hhYH-kcR0DplMsSkRG1j-X3C9IY1Z_hxPGpGyPdHShwW61C3cmVY81CFg3mrlc&amp;disp=emb" width="450" height="340" class="editor-image img-responsive" data-image-whitelisted=""></figure>
Source: Bloomberg, Forsyth Barr analysis
Rohan Koreman-Smit&nbsp; Senior Analyst, Equities Forsyth Barr Limited
P: +64 9 368 0085 | TF: 0800 367 227&nbsp; Level 23, Lumley Centre, 88 Shortland Street, Auckland

Building weekly
New Zealand

House prices may be starting to ease (REINZ, May): House prices -0.5% mom, +7.9% yoy (previous -1.7% mom, +8.5% yoy), with Auckland +7% yoy and ex-Auckland +9% yoy. Post lockdown trends in house sales yet to be delineated; house sales up +86.7% mom, -46.6% yoy (previous -74.9% mom, -77.5% yoy); days to sell in Auckland +16 yoy to 61 (vs. long-term average 35), ex-Auckland +19 to 57 (vs. long-term average 42).
Surge in home buyer interest but will it translate into activity? Trade Me property views up 69% yoy in May Huge surge in buyer demand
Migration locked down: net gain of 48 migrants in April -97.1% yoy (previous +9.6k). 12 months to Apr. 46.6k (previous 78.2k).
Rents stable (May): 3m rolling average rents – Auckland -0.2% yoy, Wellington +0.5% yoy, rest of North Island +5.5% yoy, Canterbury -0.7% yoy and rest of South Island -1.5% yoy.
Government announces first ‘shovel ready’ projects: 11 projects to be fast-tracked. Fast-tracked projects just the beginning
First week of lockdown softens infrastructure (“other”) construction (1Q20): -2.0% qoq, +2.5% yoy (previous +0.6% qoq, -0.1% yoy).
Metroglass expects a 20% decline in ANZ residential activity: Base case for NZ residential consents to be down slightly in FY21, -20% in FY22, and +5% in FY23. In Australia they expect -20% in FY21 and +9% in FY22. Metro Performance Glass 2020 Results

Australia

Challenged Boral appoints new CEO, is restructuring on the cards? – Ex Brambles CFO Zlatko Todorcevski
Pandemic slows new home sales (May): Detached dwellings -4.2% mom, -29.8% yoy (previous -1.1% mom, -5.7% yoy).
Net migration soft pre-pandemic (4Q19): Net migration down -21.4% yoy (previous -15.9%). Population growth past 12 months +1.4% yoy (vs. +1.6% 10-year average).

International

US: Largest US homebuilder Lennar’s 2Q new orders resilient (2Q): New orders (number of units) down -10% in 2Q. “Home sales grew steadily, as record-low interest rates and low inventory levels drove a favorable rebound in the homebuilding industry.”
US: Strong bounce back in homebuilder confidence (Jun.): 58 (previous 37; positive &gt;50&gt; negative).
China: Construction activity continues to rebound after being down ~50% (May): Total building starts -12.8% yoy (previous -18.4%) with residential -13.9% (previous -18.7%), office -11.3% yoy (previous -28.7%) and business buildings -16.1% (previous -20.5%).

Chart of the week: Strong bounce back in US homebuilder confidence suggesting COVID impact not as bad as first thought
US housing permits vs. homebuilder confidence

Source: Bloomberg, Forsyth Barr analysis
Rohan Koreman-Smit&nbsp; Senior Analyst, Equities Forsyth Barr Limited
P: +64 9 368 0085 | TF: 0800 367 227&nbsp; Level 23, Lumley Centre, 88 Shortland Street, Auckland

Metro Performance Glass

Building Weekly