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

<h2>Investore (IPL)</h2>
1H20 result initial thoughts
Investore (IPL) has reported a steady 1H20 result with distributable profit of NZ$8.9m, down NZ$1.1m on the pcp largely as a result of a NZ$0.9m performance fee. Excluding performance fees the result was close to our forecast and the pcp. 1H20 adjusted funds from operations (AFFO) is 3.74 cps, slightly ahead of our forecast, but below the pcp of 4.1 cps driven by the performance fees and higher maintenance capx . We don’t expect to make material changes to our earnings forecasts. We continue to like IPL given its strongly defensive characteristics. OUTPERFORM
Key points
<ul>
<li>Flat FY20 dividend guidance maintained – This is unchanged from the FY19 result and &nbsp;flat on the pcp. The 1Q20 dividend is 1.9cps, providing a 1H20 dividend of 3.8cps in line with forecast.&nbsp;</li>
<li>Sector-leading portfolio metrics retained – FY20 WALT and occupancy is 11.9 years and 99.7% (FY19: 12.1 years / 99.9%). &nbsp;The Countdown refurbishment programme remains a key ongoing strategy.</li>
<li>Benign lease expiry profile highlights defensive qualities — all FY20 lease expiries have been renewed. Only 2.7% of the portfolio expires over FY21 - FY23.</li>
<li>Balance sheet remains solid – Gearing at 40.6% is down slightly following the sale of Countdown Dunedin South early in 1H20. Gearing remains well within the company’s target of &lt;48%. Countdown New Brighton was purchased for NZ$5.75 with a 7.2% yield. IPL noted that it has a pipeline of acquisitions under consideration. NTA per share is flat at NZ$1.70 versus FY19 and up versus 1H19 NTA of NZ$1.64.</li>
</ul>
1H20 result summary
<table class="table table-striped"><colgroup><col> <col span="4"></colgroup>
<tbody>
<tr>
<td style="width: 95.4pt;">Financial period</td>
<td style="text-align: center; width: 48pt;">1H19</td>
<td style="text-align: center; width: 48pt;">1H20</td>
<td style="text-align: center; width: 48pt;">Change</td>
<td style="text-align: center; width: 48pt;">Forecast</td>
</tr>
<tr>
<td>Six months ending:</td>
<td style="text-align: center;">09/18</td>
<td style="text-align: center;">09/19</td>
<td style="text-align: center;"></td>
<td style="text-align: center;"></td>
</tr>
<tr>
<td>Net rental income</td>
<td style="text-align: center;">23.3</td>
<td style="text-align: center;">24.1</td>
<td style="text-align: center;">3.4%</td>
<td style="text-align: center;">23.4</td>
</tr>
<tr>
<td>NPAT (underlying)</td>
<td style="text-align: center;">10.8</td>
<td style="text-align: center;">10.2</td>
<td style="text-align: center;">-5.5%</td>
<td style="text-align: center;">10.9</td>
</tr>
<tr>
<td>EPS</td>
<td style="text-align: center;">4.13</td>
<td style="text-align: center;">3.74</td>
<td style="text-align: center;">-9.4%</td>
<td style="text-align: center;">4.19</td>
</tr>
<tr>
<td>AFFO</td>
<td style="text-align: center;">3.99</td>
<td style="text-align: center;">3.40</td>
<td style="text-align: center;">-148%</td>
<td style="text-align: center;">3.72</td>
</tr>
<tr>
<td>DPS</td>
<td style="text-align: center;">3.73</td>
<td style="text-align: center;">3.80</td>
<td style="text-align: center;">2.0%</td>
<td style="text-align: center;">3.75</td>
</tr>
</tbody>
</table>
Source: Forsyth Barr analysis
Jeremy Simpson &nbsp;CFA Director / Senior Analyst, Equities Forsyth Barr Limited
T:&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;+64 9 368 0022 M:&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; +64 21 995 998 TF:&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;0800 367 227 F:&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;+64 9 368 0092 P:&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;PO Box 97, Auckland 1140 W:&nbsp; &nbsp;&nbsp; &nbsp;&nbsp; &nbsp;&nbsp; &nbsp;<a href="https://foundry.smartkarma.com/www.forsythbarr.co.nz" target="_blank" rel="noopener">www.forsythbarr.co.nz</a> Twitter: @forsythbarr

Investore (IPL)
1H20 result initial thoughts
Investore (IPL) has reported a steady 1H20 result with distributable profit of NZ$8.9m, down NZ$1.1m on the pcp largely as a result of a NZ$0.9m performance fee. Excluding performance fees the result was close to our forecast and the pcp. 1H20 adjusted funds from operations (AFFO) is 3.74 cps, slightly ahead of our forecast, but below the pcp of 4.1 cps driven by the performance fees and higher maintenance capx . We don’t expect to make material changes to our earnings forecasts. We continue to like IPL given its strongly defensive characteristics. OUTPERFORM
Key points

Flat FY20 dividend guidance maintained – This is unchanged from the FY19 result and &nbsp;flat on the pcp. The 1Q20 dividend is 1.9cps, providing a 1H20 dividend of 3.8cps in line with forecast.&nbsp;
Sector-leading portfolio metrics retained – FY20 WALT and occupancy is 11.9 years and 99.7% (FY19: 12.1 years / 99.9%). &nbsp;The Countdown refurbishment programme remains a key ongoing strategy.
Benign lease expiry profile highlights defensive qualities — all FY20 lease expiries have been renewed. Only 2.7% of the portfolio expires over FY21 - FY23.
Balance sheet remains solid – Gearing at 40.6% is down slightly following the sale of Countdown Dunedin South early in 1H20. Gearing remains well within the company’s target of &lt;48%. Countdown New Brighton was purchased for NZ$5.75 with a 7.2% yield. IPL noted that it has a pipeline of acquisitions under consideration. NTA per share is flat at NZ$1.70 versus FY19 and up versus 1H19 NTA of NZ$1.64.

1H20 result summary
 


Financial period
1H19
1H20
Change
Forecast


Six months ending:
09/18
09/19




Net rental income
23.3
24.1
3.4%
23.4


NPAT (underlying)
10.8
10.2
-5.5%
10.9


EPS
4.13
3.74
-9.4%
4.19


AFFO
3.99
3.40
-148%
3.72


DPS
3.73
3.80
2.0%
3.75



Source: Forsyth Barr analysis
Jeremy Simpson &nbsp;CFA Director / Senior Analyst, Equities Forsyth Barr Limited
T:&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;+64 9 368 0022 M:&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; +64 21 995 998 TF:&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;0800 367 227 F:&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;+64 9 368 0092 P:&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;PO Box 97, Auckland 1140 W:&nbsp; &nbsp;&nbsp; &nbsp;&nbsp; &nbsp;&nbsp; &nbsp;www.forsythbarr.co.nz Twitter: @forsythbarr

Investore (IPL): 1H20 Result Initial Thoughts

Investore Property

Investore (IPL): 1H20 Result Initial Thoughts