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

Port of Tauranga 1H21 Preview&nbsp;— Falling Tide Lowers All Boats

UNDERPERFORM
We expect Port of Tauranga's (POT) 1H21 result to be modestly impacted by global container industry congestion when it reports on 26 February 2021. The company reported 1Q21 NPAT down -1% at its Annual Shareholder Meeting in October 2020 and at that time also provided subdued FY21 NPAT guidance, which implies a decline of between -1% and -8% against the prior year. We forecast 1H21 NPAT of NZ$47.2m, down -2% against the prior year, reflecting (1) reduced log exports, with Stats NZ data showing a -7% year-on-year decline during the period, (2) a decline in container volumes, with Ministry of Transport data indicating 1H21 containers fell -2%, and (3) adverse mix with a higher proportion of (lower margin) MetroPort and transhipment containers.&nbsp;


Key things to consider at&nbsp;POT's&nbsp;1H21 result



Container volumes have declined&nbsp;by -2% in the period, against the prior year. Moreover, growth in&nbsp;MetroPort&nbsp;(anecdotal feedback) and transhipment&nbsp;(confirmed by Stats NZ data) containers highlight an adverse margin backdrop, which will be exacerbated&nbsp;by the higher costs stemming from on port congestion.&nbsp;
Log exports have fallen. Guidance provided by POT at its FY20 result was for 6.2m tonnes for FY21, implying a -12% decline on pre COVID-19 FY19 levels (FY20 volumes were COVID-19 impacted) and&nbsp;POT indicated that log exports remain in line with&nbsp;guidance after&nbsp;1Q21.&nbsp;However, we believe there is upside risk to this guidance with the strong recovery in log export prices given strengthening Chinese demand.
​​​​​​​We expect&nbsp;POT to pay a dividend&nbsp;of NZ6cps, in line with 1H20.&nbsp;POT's&nbsp;dividend policy is to "steadily increase dividends year on year consistent with Company performance".&nbsp;
​​​​​​​Associates​​​​​​​/JV income will be driven by Northport, which has experienced strong growth in export log volumes (~+25% according to Stats NZ data) during the period.&nbsp;




Andy Bowley
andy.bowley@forsythbarr.co.nz
+64 4 495 8246





Scott Anderson
scott.anderson@forsythbarr.co.nz
+64 4 914 2219



Port of Tauranga: 1H21 Preview — Falling Tide Lowers All Boats