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

New Zealand King Salmon / Equity Bottom-Up

<h2>New Zealand King Salmon (NZK) 1H22 First Take</h2>
NZK’s 1H22 result was better than expected with pro forma operating EBITDA of NZ$3.3m ahead of Forsyth Barr forecast of NZ$0.4m. Commentary around FY22 guidance was unclear with the company stating ‘NZK will update market guidance over the coming months’. This follows previous FY22 EBITDA guidance of NZ$8-10m stated at 30 July 2021 (Forbarr NZ$9.3m, consensus NZ$9.7m). &nbsp;
Beyond disruption driven by COVID-19 and NZK’s recent change in operating model, the market will likely focus on the outcome of NZK’s open ocean farming consent (Blue Endeavour) with the hearing set for 18 October 2021. &nbsp;
1H22 result: Key areas of interest
<ul>
<li>Revenue: was +3% ahead of expectations due to additional sales through clearance of excess inventory (470t of the 3,629t sold). Although the business was able to maintain premium prices during COVID for its core product, product successfully sold through NZ retail was heavily discounted.</li>
<li>Pro-forma operating EBITDA: was above Forsyth Barr forecasts for 1H22. Recent month run rate has been positive with July and August generating NZ$1.3m and NZ$1.6m respectively (aided by return of the US food service sector) following break even for the month of June and a loss for the first four months of the year.</li>
<li>Outlook: the company had previously signalled at July 2021 that the majority of the FY22 guided EBITDA of NZ$8-10m would be generated in 2H22. The company is expecting to harvest total volumes of 7,629t at FY22 (4,000t in 2H22). NZK states that returning demand now exceeds supply, while the company has launched further brands to complement its Ora King product.&nbsp;</li>
<li>COVID-19: has seen excess unbranded stock (whole frozen fish) successfully sold to a number of concentrated international customers. Freight availability and increased cost remains a headwind for the company.</li>
<li>Balance sheet: Inventory of NZ$43m remains above prior year levels (increase of +2% on January 2021) vs average inventory of NZ$26m for the period FY17-FY21, while net debt of NZ$38m is broadly unchanged from NZ$39m since 31 January 2021.</li>
</ul>
Results Table
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 95.8pt; height: 13pt;">
NZ$m
</td>
<td style="width: 59.8pt; height: 13pt;">
1H21
</td>
<td style="width: 60.8pt; height: 13pt;">
1H22E
</td>
<td style="width: 60.8pt; height: 13pt;">
1H22A
</td>
<td style="width: 44.8pt; height: 13pt;">
% chg
</td>
</tr>
<tr>
<td style="width: 95.8pt; height: 13pt;">
Revenue
</td>
<td style="width: 59.8pt; height: 13pt;">
67.0
</td>
<td style="width: 60.8pt; height: 13pt;">
77.9
</td>
<td style="width: 60.8pt; height: 13pt;">
80.1
</td>
<td style="width: 44.8pt; height: 13pt;">
3%
</td>
</tr>
<tr>
<td style="width: 95.8pt; height: 13pt;">
Operating EBITDA
</td>
<td style="width: 59.8pt; height: 13pt;">
7.1
</td>
<td style="width: 60.8pt; height: 13pt;">
0.4
</td>
<td style="width: 60.8pt; height: 13pt;">
3.3
</td>
<td style="width: 44.8pt; height: 13pt;">
759%
</td>
</tr>
<tr>
<td style="width: 95.8pt; height: 13pt;">
EBITDA margin %
</td>
<td style="width: 59.8pt; height: 13pt;">
10.6%
</td>
<td style="width: 60.8pt; height: 13pt;">
0.5%
</td>
<td style="width: 60.8pt; height: 13pt;">
4.1%
</td>
<td style="width: 44.8pt; height: 13pt;">
4%
</td>
</tr>
<tr>
<td style="width: 95.8pt; height: 13pt;">
Operating NPAT
</td>
<td style="width: 59.8pt; height: 13pt;">
(5.6)
</td>
<td style="width: 60.8pt; height: 13pt;">
(4.0)
</td>
<td style="width: 60.8pt; height: 13pt;">
(5.6)
</td>
<td style="width: 44.8pt; height: 13pt;">
41%
</td>
</tr>
</tbody>
</table>
Investor Call – 11am NZT
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New Zealand Toll Free 0800 453 055 Australia Toll Free - 1800 809 971 Auckland local 09 929 1687 Sydney - 02 9007 3187 Christchurch - 03 974 2632 Hong Kong - 800 966 806 Wellington - 04 974 7738 Singapore - 800 101 2785

New Zealand King Salmon (NZK) 1H22 First Take
NZK’s 1H22 result was better than expected with pro forma operating EBITDA of NZ$3.3m ahead of Forsyth Barr forecast of NZ$0.4m. Commentary around FY22 guidance was unclear with the company stating ‘NZK will update market guidance over the coming months’. This follows previous FY22 EBITDA guidance of NZ$8-10m stated at 30 July 2021 (Forbarr NZ$9.3m, consensus NZ$9.7m). &nbsp;
Beyond disruption driven by COVID-19 and NZK’s recent change in operating model, the market will likely focus on the outcome of NZK’s open ocean farming consent (Blue Endeavour) with the hearing set for 18 October 2021. &nbsp;
1H22 result: Key areas of interest

Revenue: was +3% ahead of expectations due to additional sales through clearance of excess inventory (470t of the 3,629t sold). Although the business was able to maintain premium prices during COVID for its core product, product successfully sold through NZ retail was heavily discounted.
Pro-forma operating EBITDA: was above Forsyth Barr forecasts for 1H22. Recent month run rate has been positive with July and August generating NZ$1.3m and NZ$1.6m respectively (aided by return of the US food service sector) following break even for the month of June and a loss for the first four months of the year.
Outlook: the company had previously signalled at July 2021 that the majority of the FY22 guided EBITDA of NZ$8-10m would be generated in 2H22. The company is expecting to harvest total volumes of 7,629t at FY22 (4,000t in 2H22). NZK states that returning demand now exceeds supply, while the company has launched further brands to complement its Ora King product.&nbsp;
COVID-19: has seen excess unbranded stock (whole frozen fish) successfully sold to a number of concentrated international customers. Freight availability and increased cost remains a headwind for the company.
Balance sheet: Inventory of NZ$43m remains above prior year levels (increase of +2% on January 2021) vs average inventory of NZ$26m for the period FY17-FY21, while net debt of NZ$38m is broadly unchanged from NZ$39m since 31 January 2021.

Results Table




NZ$m


1H21


1H22E


1H22A


% chg




Revenue


67.0


77.9


80.1


3%




Operating EBITDA


7.1


0.4


3.3


759%




EBITDA margin %


10.6%


0.5%


4.1%


4%




Operating NPAT


(5.6)


(4.0)


(5.6)


41%




Investor Call – 11am NZT
Registration:&nbsp;https://s1.c-conf.com/diamondpass/10016814-2h7sgw.html
New Zealand Toll Free 0800 453 055 Australia Toll Free - 1800 809 971 Auckland local 09 929 1687 Sydney - 02 9007 3187 Christchurch - 03 974 2632 Hong Kong - 800 966 806 Wellington - 04 974 7738 Singapore - 800 101 2785

New Zealand King Salmon (NZK): 1H22 First Take