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>NZ Technology Sector Bits and Bytes</h2>
<h3>Pushpay (PPH) – NEUTRAL, TP NZ$1.85</h3>
Forsyth Barr hosted PPH competitor Tithe.ly earlier this morning for a fireside chat. Key takeouts:
<ul>
<li>A new work modality is driving new church modality: Church patterns have changed post COVID. As attendees work from home and work remotely or on bleisure trips, church online and giving online has become the new norm for a growing number of church attendees. The company sees industry released church attendance numbers as misleading as a result, given the change in attendance patterns highlighted.&nbsp;</li>
<li>Tithe.ly’s focus is predominantly on the medium and small church segment (sub 1,000 attendees): &nbsp;The greatest opportunity for winning additional church customers are those using legacy technology with other, older providers. Pre the acquisition of Breeze, Tithe.ly’s customer base was ~28,000 churches. The majority of Tithe.ly’s customers are currently sized 0-1,000 but the company also has a number of churches in the enterprise space (+1,000 attendees) where it sees further opportunities going forward. With 40% average digital penetration post COVID this highlights Tithe.ly’s future growth runway.</li>
<li>Employee retention/attraction: While retaining and attracting skilled workers/data engineers is an ongoing challenge for all technology companies, Tithe.ly views its missional focus as attractive for Christians in the industry (~95% of employees are church attendees), which want to align with Tithe.ly’s mission of serving the greater church body.</li>
<li>The Catholic church segment: Tithe.ly has some customers in the Catholic space. It views the Catholic segment as asset heavy and more price sensitive than Evangelical churches.&nbsp;</li>
<li>Consolidation: The company expects consolidation to continue in the US church technology market and is aiming to be one of the long term winners through 1) scaling its product further, 2) competing on price at the subscription level and 3) constantly evolving and developing its core product.</li>
</ul>
Our view on PPH remains broadly unchanged, with the stock currently trading at fair value. Key PPH upcoming dates :&nbsp;1H21 Result (10 November 2021) Serko (SKO) – OUTPERFORM, TP NZ$8.24
<ul>
<li>Third largest US travel management company Carlson Wagonlit Travel (CWT) has agreed with creditors to a financial restructuring that will eliminate ~US$900m of its existing ~US$1.5bn debt. Combined with US$350m of new equity, the company will have liquidity of ~US$400m. The announcement comes after CWT entered into forbearance in June and credit rating agency Fitch downgraded it to one rating short of bankruptcy - <a href="https://www.thecompanydime.com/carlson-family-cwt-debt-restructuring/" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.thecompanydime.com/carlson-family-cwt-debt-restructuring/&amp;source=gmail&amp;ust=1632458905043000&amp;usg=AFQjCNFpT8RpHUGUy0f8VF04p0t07UkZrQ" rel="noopener">link</a></li>
<li>Lola.com, a US business travel start-up targeted at SMEs has suspended its existing operations with all remaining users migrated to Amex GBT, which it partnered with in 2018. It comes just a month after Amex GBT released its own travel management service targeted at SMEs, Neo1 - <a href="https://www.thecompanydime.com/lola-travel-suspends-operation/" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.thecompanydime.com/lola-travel-suspends-operation/&amp;source=gmail&amp;ust=1632458905043000&amp;usg=AFQjCNFXyVHuZOTAlU6Jc51Mf7PlKC3cVw" rel="noopener">link</a></li>
<li>The CEO of Lufthansa, Carsten Spohr, has stated that business travel demand is coming back strongly in Europe with the airline currently flying 60% of its pre COVID-19 schedule and plans to ramp that up as employees come back to work post the northern summer. Europe is a key geographic market for SKO due to its partnership with Booking Holdings (BKNG). The German airline plans to increase capacity on its domestic network by +30% and +15% in September and October respectively, traditionally the busiest time of the year for European business travel - <a href="https://www.cityam.com/business-travel-is-taking-off-says-lufthansa-ceo-amid-influx-of-flights-at-city-airport/" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.cityam.com/business-travel-is-taking-off-says-lufthansa-ceo-amid-influx-of-flights-at-city-airport/&amp;source=gmail&amp;ust=1632458905043000&amp;usg=AFQjCNHUxRCv-zfKn1AwXO80f6icRVb-lg" rel="noopener">link</a></li>
</ul>
Figure 1: European Flight Activity
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/231/387/original/image_87109199721632373516558.jpg?1632373517" class="editor-image img-responsive" data-smartkarma-image-id="231387"></figure>
Source: FlightAware, Cirium, Forsyth Barr Analysis
We see weakness in the share price as a good buying opportunity. &nbsp; Key upcoming dates:&nbsp;Booking.com onboarding expected completion (30 September 2021) Plexure (PX1) – OUTPERFORM, TP NZ$1.02
<ul>
<li>PX1 held its ASM on 21 September where it passed both resolutions (re-election of Brian Russell as a director and the right for the board to fix the remuneration of Deloitte as the auditors)</li>
</ul>
Key upcoming dates: Special Meeting of Shareholders on 24 September 2021

NZ Technology Sector Bits and Bytes
Pushpay (PPH) – NEUTRAL, TP NZ$1.85
Forsyth Barr hosted PPH competitor Tithe.ly earlier this morning for a fireside chat. Key takeouts:

A new work modality is driving new church modality: Church patterns have changed post COVID. As attendees work from home and work remotely or on bleisure trips, church online and giving online has become the new norm for a growing number of church attendees. The company sees industry released church attendance numbers as misleading as a result, given the change in attendance patterns highlighted.&nbsp;
Tithe.ly’s focus is predominantly on the medium and small church segment (sub 1,000 attendees): &nbsp;The greatest opportunity for winning additional church customers are those using legacy technology with other, older providers. Pre the acquisition of Breeze, Tithe.ly’s customer base was ~28,000 churches. The majority of Tithe.ly’s customers are currently sized 0-1,000 but the company also has a number of churches in the enterprise space (+1,000 attendees) where it sees further opportunities going forward. With 40% average digital penetration post COVID this highlights Tithe.ly’s future growth runway.
Employee retention/attraction: While retaining and attracting skilled workers/data engineers is an ongoing challenge for all technology companies, Tithe.ly views its missional focus as attractive for Christians in the industry (~95% of employees are church attendees), which want to align with Tithe.ly’s mission of serving the greater church body.
The Catholic church segment: Tithe.ly has some customers in the Catholic space. It views the Catholic segment as asset heavy and more price sensitive than Evangelical churches.&nbsp;
Consolidation: The company expects consolidation to continue in the US church technology market and is aiming to be one of the long term winners through 1) scaling its product further, 2) competing on price at the subscription level and 3) constantly evolving and developing its core product.

Our view on PPH remains broadly unchanged, with the stock currently trading at fair value. Key PPH upcoming dates :&nbsp;1H21 Result (10 November 2021) Serko (SKO) – OUTPERFORM, TP NZ$8.24

Third largest US travel management company Carlson Wagonlit Travel (CWT) has agreed with creditors to a financial restructuring that will eliminate ~US$900m of its existing ~US$1.5bn debt. Combined with US$350m of new equity, the company will have liquidity of ~US$400m. The announcement comes after CWT entered into forbearance in June and credit rating agency Fitch downgraded it to one rating short of bankruptcy - link
Lola.com, a US business travel start-up targeted at SMEs has suspended its existing operations with all remaining users migrated to Amex GBT, which it partnered with in 2018. It comes just a month after Amex GBT released its own travel management service targeted at SMEs, Neo1 - link
The CEO of Lufthansa, Carsten Spohr, has stated that business travel demand is coming back strongly in Europe with the airline currently flying 60% of its pre COVID-19 schedule and plans to ramp that up as employees come back to work post the northern summer. Europe is a key geographic market for SKO due to its partnership with Booking Holdings (BKNG). The German airline plans to increase capacity on its domestic network by +30% and +15% in September and October respectively, traditionally the busiest time of the year for European business travel - link

Figure 1: European Flight Activity

Source: FlightAware, Cirium, Forsyth Barr Analysis
We see weakness in the share price as a good buying opportunity. &nbsp; Key upcoming dates:&nbsp;Booking.com onboarding expected completion (30 September 2021) Plexure (PX1) – OUTPERFORM, TP NZ$1.02

PX1 held its ASM on 21 September where it passed both resolutions (re-election of Brian Russell as a director and the right for the board to fix the remuneration of Deloitte as the auditors)

Key upcoming dates: Special Meeting of Shareholders on 24 September 2021

Pushpay Holdings

NZ Tech Sector: Bits and Bytes