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

New Zealand King Salmon / Equity Bottom-Up

<h2>New Zealand King Salmon<br>1H21 Preview&nbsp;— Taking the Temperature</h2>
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<p><strong>OUTPERFORM</strong></p>
<p>Market conditions remain tough and we expect New Zealand King Salmon (NZK) to report a subdued 1H21 result on Wednesday, 24 February 2021. We expect investor focus will be on export channel performance, given the fluid backdrop of COVID-19 restrictions in key markets. NZK's previous guidance commentary indicated FY21 Operating EBITDA was unlikely to exceed FY20 (FY20 NZ$25m, FY21E NZ$22m), however, NZK has since changed its balance date to year end January (previously June) to better align with fish performance.</p>
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<h3>Key areas of focus at&nbsp;NZK's&nbsp;1H21 result</h3>
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<li><strong>Export market performance</strong> —&nbsp;High COVID-19 case numbers&nbsp;and revolving&nbsp;lockdowns&nbsp;in key export markets continue&nbsp;to suppress demand. NZK has made noticeable progress in its push into USA retail markets, announcing new hires and&nbsp;new distribution agreements.</li>
<li><strong>Prices</strong>&nbsp;—&nbsp;NZK has a track record of delivering price gains. We understand NZK has not undertaken any price changes on its export product, but elevated promotional activity in domestic retail, in combination with unfavourable mix change, is likely to weigh on average price achieved.</li>
<li><strong>Water temperatures and fish performance</strong> —&nbsp;Warming waters have proved a challenge for NZK in recent years. The 2020–2021 summer to date has been cooler than prior periods in the high-risk areas; however, the marine environment forecast appears challenging.</li>
<li><strong>Farm consents and open ocean</strong> —&nbsp;NZK operates a number of under performing locations, we look for an update on a possible relocation of these consents.&nbsp;In 2019 NZK applied for its first open ocean site, which would eventually allow for ~8,000MT of production over an 18 month cycle. A hearing on its application is due to occur in May 2021.</li>
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<h3>1H21 conference call —&nbsp;12:00pm on Wednesday, 24 February 2021</h3>
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<p>Dial in details: New Zealand 0800 122 136, Conference ID: 10011811.</p>
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<div><strong>Guy Hooper</strong></div>
<div><a href="mailto:guy.hooper@forsythbarr.co.nz" target="_blank" rel="noopener">guy.hooper@forsythbarr.co.nz</a></div>
<div>+64 4 495 5255</div>
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New Zealand King Salmon 1H21 Preview&nbsp;— Taking the Temperature

OUTPERFORM
Market conditions remain tough and we expect New Zealand King Salmon (NZK) to report a subdued 1H21 result on Wednesday, 24 February 2021. We expect investor focus will be on export channel performance, given the fluid backdrop of COVID-19 restrictions in key markets. NZK's previous guidance commentary indicated FY21 Operating EBITDA was unlikely to exceed FY20 (FY20 NZ$25m, FY21E NZ$22m), however, NZK has since changed its balance date to year end January (previously June) to better align with fish performance.


Key areas of focus at&nbsp;NZK's&nbsp;1H21 result



Export market performance —&nbsp;High COVID-19 case numbers&nbsp;and revolving&nbsp;lockdowns&nbsp;in key export markets continue&nbsp;to suppress demand. NZK has made noticeable progress in its push into USA retail markets, announcing new hires and&nbsp;new distribution agreements.
Prices&nbsp;—&nbsp;NZK has a track record of delivering price gains. We understand NZK has not undertaken any price changes on its export product, but elevated promotional activity in domestic retail, in combination with unfavourable mix change, is likely to weigh on average price achieved.
Water temperatures and fish performance —&nbsp;Warming waters have proved a challenge for NZK in recent years. The 2020–2021 summer to date has been cooler than prior periods in the high-risk areas; however, the marine environment forecast appears challenging.
Farm consents and open ocean —&nbsp;NZK operates a number of under performing locations, we look for an update on a possible relocation of these consents.&nbsp;In 2019 NZK applied for its first open ocean site, which would eventually allow for ~8,000MT of production over an 18 month cycle. A hearing on its application is due to occur in May 2021.



1H21 conference call —&nbsp;12:00pm on Wednesday, 24 February 2021


Dial in details: New Zealand 0800 122 136, Conference ID: 10011811.




Guy Hooper
guy.hooper@forsythbarr.co.nz
+64 4 495 5255




New Zealand King Salmon: 1H21 Preview — Taking the Temperature