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 (EBO) 1H22 Result – Initial Impressions</h2>
EBOS Group (EBO) reported a solid 1H22 result in line with&nbsp;our expectations&nbsp;and ahead of consensus showcasing a continuation of recent positive earnings growth through the back end of the period. Underlying EBITDA was up +13% to A$207.7m (FB; A$208.8m, consensus; A$202.4m) and underlying NPAT +14% to A$109.3m (FB; A$107.3m, consensus; A$103.9m). Consistent with EBO’s standard practice no guidance was provided but EBO “continue(s) to be comfortable with current trading conditions”, albeit, not surprisingly,&nbsp;it&nbsp;noted ongoing COVID-19 uncertainties.
Key points of interest
<ul>
<li>Divisional detail: Healthcare underlying EBITDA +15% and Animal Care +14%. Animal Care was in-line with expectations with higher Healthcare EBITDA relative to our expectations offset by higher corporate costs (primarily non-recurring IT related).
<ul>
<li>Healthcare: Broad based strength with Community Pharmacy the standout feature versus our expectations (revenue growth of +15%) driven by customer and market share growth, strong performance from its retail brands (including TerryWhite Chemmart) and the return of Pfizer’s retail volumes to the wholesale channel. Institutional Healthcare and Contract Logistics had solid periods with revenue growth of +8% and +13%, respectively.</li>
<li>Animal Care: A strong period, continuing recent trends. EBO’s key brands, Black Hawk and Vitapet, both recorded solid growth in revenue, up ~+20% and ~+10% respectively.</li>
</ul>
</li>
<li>FY22 outlook: Minimal commentary provided but EBO “continue(s) to be comfortable with current trading conditions”. Capex across the group is expected to “remain elevated” as EBO continues to invest in infrastructure for growth – total 1H22 capex excluding acquisitions was A$43m.</li>
<li>Balance sheet / cash flow: Underlying net debt to EBITDA increased to 1.28x (from 0.85x at FY21) primarily reflecting EBO’s pre-announced acquisitions in the period (total consideration of ~A$107m). Return on capital was again impressive, at 18.2%, a further lift on FY21 (18%) and comfortably above EBO’s target of &gt;15%.</li>
<li>LifeHealthcare (LHC) acquisition updates: Minimal updates – EBO retained guidance that it expects the transaction to complete prior to the end of FY22. EBO still expects ND/EBITDA post acquisition will be &lt;2.25x. For more detail on the acquisition refer our note published 27 January 2022 (<a href="https://www.forsythbarr.co.nz/research-library/research/ebos-group-ticking-the-boxes" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.forsythbarr.co.nz/research-library/research/ebos-group-ticking-the-boxes&amp;source=gmail&amp;ust=1645059519655000&amp;usg=AOvVaw3QrYutAor8imxvRjmGvWqD" rel="noopener">link</a>).</li>
<li>Dividend: Interim dividend of NZ 47cps, a touch ahead of our expectations. EBO reiterated its recently revised (at the FY21 result) dividend policy to 60-80% of NPAT (prior policy “no less than” 60% of NPAT).</li>
</ul>
Investor briefing – 11:30am NZT (9:30am AEST)
Requires pre-registration;&nbsp;<a href="https://apac.directeventreg.com/registration/event/5149484" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://apac.directeventreg.com/registration/event/5149484&amp;source=gmail&amp;ust=1645059519655000&amp;usg=AOvVaw0x8HIhcbyC56L2VLvBdalj" rel="noopener">https://apac.directeventreg.com/registration/event/5149484</a>
1H22 result summary&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 166.8pt; height: 13.5pt;">
A$m
</td>
<td style="width: 63.8pt; height: 13.5pt;">
1H21
</td>
<td style="width: 63.8pt; height: 13.5pt;">
1H22
</td>
<td style="width: 63.8pt; height: 13.5pt;">
% chg
</td>
<td style="width: 63.8pt; height: 13.5pt;">
Forsyth Barr
</td>
<td style="width: 63.8pt; height: 13.5pt;">
Consensus
</td>
</tr>
<tr>
<td style="width: 166.8pt; height: 13.5pt;">
Total revenue
</td>
<td style="width: 63.8pt; height: 13.5pt;">
4,653.3
</td>
<td style="width: 63.8pt; height: 13.5pt;">
5,250.9
</td>
<td style="width: 63.8pt; height: 13.5pt;">
12.8%
</td>
<td style="width: 63.8pt; height: 13.5pt;">
5,125.1
</td>
<td style="width: 63.8pt; height: 13.5pt;">
4,979.0
</td>
</tr>
<tr>
<td style="width: 166.8pt; height: 13.5pt;">
Underlying EBITDA
</td>
<td style="width: 63.8pt; height: 13.5pt;">
184.1
</td>
<td style="width: 63.8pt; height: 13.5pt;">
207.7
</td>
<td style="width: 63.8pt; height: 13.5pt;">
12.8%
</td>
<td style="width: 63.8pt; height: 13.5pt;">
208.8
</td>
<td style="width: 63.8pt; height: 13.5pt;">
202.4
</td>
</tr>
<tr>
<td style="width: 166.8pt; height: 13.5pt;">
Underlying EBITDA margin
</td>
<td style="width: 63.8pt; height: 13.5pt;">
4.0%
</td>
<td style="width: 63.8pt; height: 13.5pt;">
4.0%
</td>
<td style="width: 63.8pt; height: 13.5pt;">
0.0%
</td>
<td style="width: 63.8pt; height: 13.5pt;">
4.1%
</td>
<td style="width: 63.8pt; height: 13.5pt;">
4.1%
</td>
</tr>
<tr>
<td style="width: 166.8pt; height: 13.5pt;">
Underlying EBIT
</td>
<td style="width: 63.8pt; height: 13.5pt;">
147.8
</td>
<td style="width: 63.8pt; height: 13.5pt;">
169.1
</td>
<td style="width: 63.8pt; height: 13.5pt;">
14.4%
</td>
<td style="width: 63.8pt; height: 13.5pt;">
167.5
</td>
<td style="width: 63.8pt; height: 13.5pt;">
163.5
</td>
</tr>
<tr>
<td style="width: 166.8pt; height: 13.5pt;">
Underlying NPAT
</td>
<td style="width: 63.8pt; height: 13.5pt;">
94.3
</td>
<td style="width: 63.8pt; height: 13.5pt;">
109.3
</td>
<td style="width: 63.8pt; height: 13.5pt;">
14.2%
</td>
<td style="width: 63.8pt; height: 13.5pt;">
107.3
</td>
<td style="width: 63.8pt; height: 13.5pt;">
103.9
</td>
</tr>
<tr>
<td style="width: 166.8pt; height: 13.5pt;">
Reported NPAT
</td>
<td style="width: 63.8pt; height: 13.5pt;">
92.9
</td>
<td style="width: 63.8pt; height: 13.5pt;">
101.9
</td>
<td style="width: 63.8pt; height: 13.5pt;">
9.7%
</td>
<td style="width: 63.8pt; height: 13.5pt;">
107.3
</td>
<td style="width: 63.8pt; height: 13.5pt;">
103.9
</td>
</tr>
<tr>
<td style="width: 166.8pt; height: 13.5pt;">
Underlying EPS (A cps)
</td>
<td style="width: 63.8pt; height: 13.5pt;">
57.5
</td>
<td style="width: 63.8pt; height: 13.5pt;">
66.6
</td>
<td style="width: 63.8pt; height: 13.5pt;">
12.7%
</td>
<td style="width: 63.8pt; height: 13.5pt;">
64.3
</td>
<td style="width: 63.8pt; height: 13.5pt;">
63.1
</td>
</tr>
<tr>
<td style="width: 166.8pt; height: 13.5pt;">
Dividend (NZ cps)
</td>
<td style="width: 63.8pt; height: 13.5pt;">
42.5
</td>
<td style="width: 63.8pt; height: 13.5pt;">
47.0
</td>
<td style="width: 63.8pt; height: 13.5pt;">
10.6%
</td>
<td style="width: 63.8pt; height: 13.5pt;">
46.5
</td>
<td style="width: 63.8pt; height: 13.5pt;">
45.3
</td>
</tr>
<tr>
<td style="width: 166.8pt; height: 13.5pt;"></td>
<td style="width: 63.8pt; height: 13.5pt;"></td>
<td style="width: 63.8pt; height: 13.5pt;"></td>
<td style="width: 63.8pt; height: 13.5pt;"></td>
<td style="width: 63.8pt; height: 13.5pt;"></td>
<td style="width: 63.8pt; height: 13.5pt;"></td>
</tr>
<tr>
<td style="width: 166.8pt; height: 13.5pt;">
Underlying EBITDA breakdown
</td>
<td style="width: 63.8pt; height: 13.5pt;"></td>
<td style="width: 63.8pt; height: 13.5pt;"></td>
<td style="width: 63.8pt; height: 13.5pt;"></td>
<td style="width: 63.8pt; height: 13.5pt;"></td>
<td style="width: 63.8pt; height: 13.5pt;"></td>
</tr>
<tr>
<td style="width: 166.8pt; height: 13.5pt;">
Healthcare EBITDA
</td>
<td style="width: 63.8pt; height: 13.5pt;">
161.3
</td>
<td style="width: 63.8pt; height: 13.5pt;">
185.3
</td>
<td style="width: 63.8pt; height: 13.5pt;">
14.8%
</td>
<td style="width: 63.8pt; height: 13.5pt;">
181.7
</td>
<td style="width: 63.8pt; height: 13.5pt;"></td>
</tr>
<tr>
<td style="width: 166.8pt; height: 13.5pt;">
Animal Care EBITDA
</td>
<td style="width: 63.8pt; height: 13.5pt;">
33.9
</td>
<td style="width: 63.8pt; height: 13.5pt;">
38.8
</td>
<td style="width: 63.8pt; height: 13.5pt;">
14.3%
</td>
<td style="width: 63.8pt; height: 13.5pt;">
38.8
</td>
<td style="width: 63.8pt; height: 13.5pt;"></td>
</tr>
<tr>
<td style="width: 166.8pt; height: 13pt;">
Corporate costs
</td>
<td style="width: 63.8pt; height: 13pt;">
(11.1)
</td>
<td style="width: 63.8pt; height: 13pt;">
(16.4)
</td>
<td style="width: 63.8pt; height: 13pt;">
47.0%
</td>
<td style="width: 63.8pt; height: 13pt;">
(11.7)
</td>
<td style="width: 63.8pt; height: 13pt;"></td>
</tr>
<tr>
<td style="width: 166.8pt; height: 13pt;">
Total EBITDA
</td>
<td style="width: 63.8pt; height: 13pt;">
184.1
</td>
<td style="width: 63.8pt; height: 13pt;">
207.7
</td>
<td style="width: 63.8pt; height: 13pt;">
12.8%
</td>
<td style="width: 63.8pt; height: 13pt;">
208.8
</td>
<td style="width: 63.8pt; height: 13pt;"></td>
</tr>
</tbody>
</table>
Source: Forsyth Barr analysis, Company reports

EBOS Group (EBO) 1H22 Result – Initial Impressions
EBOS Group (EBO) reported a solid 1H22 result in line with&nbsp;our expectations&nbsp;and ahead of consensus showcasing a continuation of recent positive earnings growth through the back end of the period. Underlying EBITDA was up +13% to A$207.7m (FB; A$208.8m, consensus; A$202.4m) and underlying NPAT +14% to A$109.3m (FB; A$107.3m, consensus; A$103.9m). Consistent with EBO’s standard practice no guidance was provided but EBO “continue(s) to be comfortable with current trading conditions”, albeit, not surprisingly,&nbsp;it&nbsp;noted ongoing COVID-19 uncertainties.
Key points of interest

Divisional detail: Healthcare underlying EBITDA +15% and Animal Care +14%. Animal Care was in-line with expectations with higher Healthcare EBITDA relative to our expectations offset by higher corporate costs (primarily non-recurring IT related).

Healthcare: Broad based strength with Community Pharmacy the standout feature versus our expectations (revenue growth of +15%) driven by customer and market share growth, strong performance from its retail brands (including TerryWhite Chemmart) and the return of Pfizer’s retail volumes to the wholesale channel. Institutional Healthcare and Contract Logistics had solid periods with revenue growth of +8% and +13%, respectively.
Animal Care: A strong period, continuing recent trends. EBO’s key brands, Black Hawk and Vitapet, both recorded solid growth in revenue, up ~+20% and ~+10% respectively.


FY22 outlook: Minimal commentary provided but EBO “continue(s) to be comfortable with current trading conditions”. Capex across the group is expected to “remain elevated” as EBO continues to invest in infrastructure for growth – total 1H22 capex excluding acquisitions was A$43m.
Balance sheet / cash flow: Underlying net debt to EBITDA increased to 1.28x (from 0.85x at FY21) primarily reflecting EBO’s pre-announced acquisitions in the period (total consideration of ~A$107m). Return on capital was again impressive, at 18.2%, a further lift on FY21 (18%) and comfortably above EBO’s target of &gt;15%.
LifeHealthcare (LHC) acquisition updates: Minimal updates – EBO retained guidance that it expects the transaction to complete prior to the end of FY22. EBO still expects ND/EBITDA post acquisition will be &lt;2.25x. For more detail on the acquisition refer our note published 27 January 2022 (link).
Dividend: Interim dividend of NZ 47cps, a touch ahead of our expectations. EBO reiterated its recently revised (at the FY21 result) dividend policy to 60-80% of NPAT (prior policy “no less than” 60% of NPAT).

Investor briefing – 11:30am NZT (9:30am AEST)
Requires pre-registration;&nbsp;https://apac.directeventreg.com/registration/event/5149484
1H22 result summary&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;




A$m


1H21


1H22


% chg


Forsyth Barr


Consensus




Total revenue


4,653.3


5,250.9


12.8%


5,125.1


4,979.0




Underlying EBITDA


184.1


207.7


12.8%


208.8


202.4




Underlying EBITDA margin


4.0%


4.0%


0.0%


4.1%


4.1%




Underlying EBIT


147.8


169.1


14.4%


167.5


163.5




Underlying NPAT


94.3


109.3


14.2%


107.3


103.9




Reported NPAT


92.9


101.9


9.7%


107.3


103.9




Underlying EPS (A cps)


57.5


66.6


12.7%


64.3


63.1




Dividend (NZ cps)


42.5


47.0


10.6%


46.5


45.3












Underlying EBITDA breakdown









Healthcare EBITDA


161.3


185.3


14.8%


181.7





Animal Care EBITDA


33.9


38.8


14.3%


38.8





Corporate costs


(11.1)


(16.4)


47.0%


(11.7)





Total EBITDA


184.1


207.7


12.8%


208.8





Source: Forsyth Barr analysis, Company reports

EBOS Group (EBO): 1H22 Result – Initial Impressions

Ebos Group Ltd

EBOS Group (EBO): 1H22 Result – Initial Impressions