New Zealand Professional Investment Services Firm

Forsyth Barr

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New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Kiwi Property Group (KPG)</h2>
1H20 initial thoughts
<ul>
<li>1H20 was close to our forecasts in most areas, guidance remains for a +1.4% lift in dividend in FY20 to 7.05 cps in line with our forecast and we expect to maintain a flat EPS outlook for FY20 with minimal changes to our forecasts.</li>
<li>Net property rental income was flat at NZ$89.6m and up +2.1% on a like-for-like basis adjusting for asset sales. New leasing and rent reviews had rental growth of +14.1% for mixed-use portfolio (Sylvia Park, LynnMall and The Base) and +8.5% from the office portfolio and +0.8% for the retail portfolio providing total rental growth of +4.6%. Key retail sales metrics were steady verses the pcp with like-for-like sales growth of +2.4%. Occupancy and WALT were maintained at strong levels at 99.4% and 5.1 years respectively.</li>
<li>FFO was NZ$51.9m cps, down -1% reflecting the dilution from asset sales. Distributable profit per share was &nbsp;3.34cps, versus our forecast of 3.44 cps.</li>
<li>NTA was NZ$1.42 to versus NZ$1.43 cents at 31 March 2019 with no interim revaluation. Gearing is 32.8% and pro-forma gearing post capital raise drops to ~27%</li>
<li>1H dividend of 3.525 cps up +1.4%.</li>
<li>Sylvia Park Galleria is on track for August 2020 opening and pre-leasing is at two thirds of available space. Total project costs remain NZ$258m. KPG continues to advance its planning change at the Drury project, the Base F&amp;B precinct and a second office tower at Sylvia Park.</li>
</ul>
Figure heading - use this for all figures
<table class="table table-striped"><colgroup><col> <col span="4"></colgroup>
<tbody>
<tr>
<td style="width: 145.8pt;">Underlying profit &amp; loss (NZ$m)</td>
<td style="width: 48pt;"></td>
<td style="width: 48pt;"></td>
<td style="width: 48pt;"></td>
<td style="width: 48pt;"></td>
</tr>
<tr>
<td>Six monts ending 30 September:</td>
<td style="text-align: right;">1H19</td>
<td style="text-align: right;">1H20</td>
<td style="text-align: right;">chg %</td>
<td style="text-align: right;">Forbar</td>
</tr>
<tr>
<td>Net rental income</td>
<td style="text-align: right;">89.5</td>
<td style="text-align: right;">89.6</td>
<td style="text-align: right;">0.1%</td>
<td style="text-align: right;">90.9</td>
</tr>
<tr>
<td>EBITDA</td>
<td style="text-align: right;">78.4</td>
<td style="text-align: right;">80.3</td>
<td style="text-align: right;">2.4%</td>
<td style="text-align: right;">80.5</td>
</tr>
<tr>
<td>NPAT (underlying)</td>
<td style="text-align: right;">60.1</td>
<td style="text-align: right;">60.9</td>
<td style="text-align: right;">1.3%</td>
<td style="text-align: right;">61.2</td>
</tr>
<tr>
<td>EPS</td>
<td style="text-align: right;">749.0</td>
<td style="text-align: right;">49.6</td>
<td style="text-align: right;">1.3%</td>
<td style="text-align: right;">49.5</td>
</tr>
<tr>
<td>DPS</td>
<td style="text-align: right;">3.43</td>
<td style="text-align: right;">3.45</td>
<td style="text-align: right;">0.3%</td>
<td style="text-align: right;">3.44</td>
</tr>
<tr>
<td>AFFO</td>
<td style="text-align: right;">3.48</td>
<td style="text-align: right;">3.53</td>
<td style="text-align: right;">1.4%</td>
<td style="text-align: right;">3.50</td>
</tr>
<tr>
<td></td>
<td style="text-align: right;">3.11</td>
<td style="text-align: right;">3.21</td>
<td style="text-align: right;">3.2%</td>
<td style="text-align: right;">3.13</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

Kiwi Property Group (KPG)
1H20 initial thoughts

1H20 was close to our forecasts in most areas, guidance remains for a +1.4% lift in dividend in FY20 to 7.05 cps in line with our forecast and we expect to maintain a flat EPS outlook for FY20 with minimal changes to our forecasts.
Net property rental income was flat at NZ$89.6m and up +2.1% on a like-for-like basis adjusting for asset sales. New leasing and rent reviews had rental growth of +14.1% for mixed-use portfolio (Sylvia Park, LynnMall and The Base) and +8.5% from the office portfolio and +0.8% for the retail portfolio providing total rental growth of +4.6%. Key retail sales metrics were steady verses the pcp with like-for-like sales growth of +2.4%. Occupancy and WALT were maintained at strong levels at 99.4% and 5.1 years respectively.
FFO was NZ$51.9m cps, down -1% reflecting the dilution from asset sales. Distributable profit per share was &nbsp;3.34cps, versus our forecast of 3.44 cps.
NTA was NZ$1.42 to versus NZ$1.43 cents at 31 March 2019 with no interim revaluation. Gearing is 32.8% and pro-forma gearing post capital raise drops to ~27%
1H dividend of 3.525 cps up +1.4%.
Sylvia Park Galleria is on track for August 2020 opening and pre-leasing is at two thirds of available space. Total project costs remain NZ$258m. KPG continues to advance its planning change at the Drury project, the Base F&amp;B precinct and a second office tower at Sylvia Park.

Figure heading - use this for all figures
 


Underlying profit &amp; loss (NZ$m)






Six monts ending 30 September:
1H19
1H20
chg %
Forbar


Net rental income
89.5
89.6
0.1%
90.9


EBITDA
78.4
80.3
2.4%
80.5


NPAT (underlying)
60.1
60.9
1.3%
61.2


EPS
749.0
49.6
1.3%
49.5


DPS
3.43
3.45
0.3%
3.44


AFFO
3.48
3.53
1.4%
3.50



3.11
3.21
3.2%
3.13



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

Kiwi Property Group (KPG): 1H20 Initial Thoughts