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

<h2>EBOS Group<br>1H21 Preview&nbsp;— Looking For A Strong Delivery</h2>
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<p><strong>OUTPERFORM</strong></p>
<p>We expect EBOS Group (EBO) to report a strong 1H21 result on Wednesday 17 February, with growth across the portfolio, following on from a buoyant 1Q21. Animal Care will likely be the key highlight; a beneficiary of increased pet ownership, helped by consumer 'nesting'.​​​ While we expect it to be largely business as usual at a headline level, weekly/monthly trading has likely been more volatile than usual given COVID-19 and fluid government restrictions. EBO's portfolio and core product exposures are defensive and well positioned in the current backdrop. Key focus areas are (1) outlook/trading insights, (2) balance sheet and M&amp;A update — with material headroom available.</p>
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<h3>Key points of interest</h3>
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<li><strong>Recent trading insights and any outlook comments</strong>: A fluid trading backdrop in both Australia and New Zealand has likely seen continued monthly volatility, particularly in over-the-counter products and CBD/mall exposed pharmacies. Aside from this, we expect EBO's portfolio to be performing well, helped by a diversified revenue base and defensive core product exposures. We forecast 1H21E NPAT growth of +12%, following on from strong 1Q21 trading (EBITDA +9%; NPAT +15%).</li>
<li>​​​​​​​<strong>Divisional detail:</strong>&nbsp;We expect Animal Care to be the standout segment, with industry growth attractive and EBO well positioned to be outperforming. Within&nbsp;Healthcare&nbsp;we expect a strong result from Contract Logistics and Institutional&nbsp;Healthcare, outpacing cost inflation in NZ and slower growth in Community Pharmacy and Consumer Products.&nbsp;</li>
<li><strong>Balance sheet,&nbsp;cashflow&nbsp;and&nbsp;M&amp;A</strong>:&nbsp;EBO has a well signalled and consistent bolt-on acquisitive strategy, albeit has been quiet over the past 12 months. Cash conversion is strong and gearing conservative; we estimate headroom of c. A$450–500m.</li>
<li><strong>Vaccine&nbsp;rollout</strong>:&nbsp;Any insight will be of broader interest. EBO does not appear to be directly involved in the distribution at this point (and if it was we do not see it as a material earnings driver), however, both Australia and New&nbsp;Zealand&nbsp;are planning to use pharmacies for vaccination, which may see incremental benefit for the segment through higher foot traffic.&nbsp;</li>
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<h3>Conference call&nbsp;— 11:30am NZ time on Wednesday, 17 February</h3>
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<p>Requires pre-registration:&nbsp;<a href="https://apac.directeventreg.com/registration/event/3870155" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://apac.directeventreg.com/registration/event/3870155&amp;source=gmail&amp;ust=1613434131092000&amp;usg=AFQjCNEAzz1aVt4pbbikeuLkTWIFrRYC2g" rel="noopener">https://apac.directeventreg.<wbr>com/registration/event/3870155</a><wbr>.</p>
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<div><strong>Chelsea Leadbetter CFA</strong></div>
<div><a href="mailto:chelsea.leadbetter@forsythbarr.co.nz" target="_blank" rel="noopener">chelsea.leadbetter@<wbr>forsythbarr.co.nz</a></div>
<div>+64 4 495 5262</div>
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EBOS Group 1H21 Preview&nbsp;— Looking For A Strong Delivery

OUTPERFORM
We expect EBOS Group (EBO) to report a strong 1H21 result on Wednesday 17 February, with growth across the portfolio, following on from a buoyant 1Q21. Animal Care will likely be the key highlight; a beneficiary of increased pet ownership, helped by consumer 'nesting'.​​​ While we expect it to be largely business as usual at a headline level, weekly/monthly trading has likely been more volatile than usual given COVID-19 and fluid government restrictions. EBO's portfolio and core product exposures are defensive and well positioned in the current backdrop. Key focus areas are (1) outlook/trading insights, (2) balance sheet and M&amp;A update — with material headroom available.


Key points of interest



Recent trading insights and any outlook comments: A fluid trading backdrop in both Australia and New Zealand has likely seen continued monthly volatility, particularly in over-the-counter products and CBD/mall exposed pharmacies. Aside from this, we expect EBO's portfolio to be performing well, helped by a diversified revenue base and defensive core product exposures. We forecast 1H21E NPAT growth of +12%, following on from strong 1Q21 trading (EBITDA +9%; NPAT +15%).
​​​​​​​Divisional detail:&nbsp;We expect Animal Care to be the standout segment, with industry growth attractive and EBO well positioned to be outperforming. Within&nbsp;Healthcare&nbsp;we expect a strong result from Contract Logistics and Institutional&nbsp;Healthcare, outpacing cost inflation in NZ and slower growth in Community Pharmacy and Consumer Products.&nbsp;
Balance sheet,&nbsp;cashflow&nbsp;and&nbsp;M&amp;A:&nbsp;EBO has a well signalled and consistent bolt-on acquisitive strategy, albeit has been quiet over the past 12 months. Cash conversion is strong and gearing conservative; we estimate headroom of c. A$450–500m.
Vaccine&nbsp;rollout:&nbsp;Any insight will be of broader interest. EBO does not appear to be directly involved in the distribution at this point (and if it was we do not see it as a material earnings driver), however, both Australia and New&nbsp;Zealand&nbsp;are planning to use pharmacies for vaccination, which may see incremental benefit for the segment through higher foot traffic.&nbsp;



Conference call&nbsp;— 11:30am NZ time on Wednesday, 17 February


Requires pre-registration:&nbsp;https://apac.directeventreg.com/registration/event/3870155.




Chelsea Leadbetter CFA
chelsea.leadbetter@forsythbarr.co.nz
+64 4 495 5262




EBOS Group: 1H21 Preview — Looking For A Strong Delivery

Ebos Group Ltd

EBOS Group: 1H21 Preview — Looking For A Strong Delivery