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>Port of Tauranga<br>1H22 Preview — Land(side Congestion) Ahoy</h2>
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<p><strong>UNDERPERFORM</strong></p>
<p>We expect Port of&nbsp;Tauranga&nbsp;(POT) to report a robust 1H22 result on 25 February 2022. Following a very strong 1Q22, we anticipate a slowdown in cargo growth sequentially through the period; our forecasts still imply +14% growth in NPAT against the prior year. We recognise the key person risk that ports are exposed to with the current Omicron outbreak, yet POT will likely benefit from higher storage charges given the absenteeism threat to third party land-side logistics. We remain comfortable with our above guidance (FY22 NPAT of NZ$103m–NZ$110m) forecasts for the full year.</p>
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<h3>Key issues to look out for at the 1H22 result&nbsp;</h3>
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<li><strong>Container growth and congestion</strong>:&nbsp;After a strong 1Q22 (+8% against the prior year), due to some cargo being shipped later than normal (from 4Q21) and a weak prior year comparative (-8% in 1Q21), we expect container growth to have slowed through 2Q22. Storage volumes and income will likely remain elevated but will have slowed through the period due to improved rail capacity.&nbsp;</li>
<li><strong>Logs</strong>:&nbsp;Stats NZ data suggests&nbsp;POT's&nbsp;log exports were down -4% in the period against 1H21. We assume a flat period of log exports at 3.3mT and recognise the risk of a slower 2H22 in light of lower log export pricing and elevated shipping costs.&nbsp;&nbsp;</li>
<li><strong>Associates</strong>:&nbsp;Lower log exports at&nbsp;Northport&nbsp;(Stats NZ&nbsp;data suggests volumes are -11% down year on year) may weigh on associate income in the period, though an ongoing recovery at Coda may help to mitigate.&nbsp;</li>
<li><strong>Omicron outlook</strong>:&nbsp;While Omicron poses a risk to port operations with potential for absenteeism among&nbsp;skilled workers, we anticipate that&nbsp;POT's&nbsp;risk mitigation measures will allow it to remain operational through the outbreak. Moreover, likely congestion around land-side&nbsp;logistics may drive improved container yard&nbsp;storage charges through 2H22.&nbsp;</li>
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<h3>Result conference call&nbsp;</h3>
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<p>Management will host a result briefing for investors and analysts at 11am on 25 February 2022.&nbsp;Those wishing to participate need to register&nbsp;by contacting&nbsp;<span style="text-decoration: underline;"><a href="mailto:cfo@port-tauranga.co.nz" target="_blank" rel="noopener">cfo@port-tauranga.<wbr>co.nz</a></span>.&nbsp;</p>
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Port of Tauranga 1H22 Preview — Land(side Congestion) Ahoy

UNDERPERFORM
We expect Port of&nbsp;Tauranga&nbsp;(POT) to report a robust 1H22 result on 25 February 2022. Following a very strong 1Q22, we anticipate a slowdown in cargo growth sequentially through the period; our forecasts still imply +14% growth in NPAT against the prior year. We recognise the key person risk that ports are exposed to with the current Omicron outbreak, yet POT will likely benefit from higher storage charges given the absenteeism threat to third party land-side logistics. We remain comfortable with our above guidance (FY22 NPAT of NZ$103m–NZ$110m) forecasts for the full year.


Key issues to look out for at the 1H22 result&nbsp;



Container growth and congestion:&nbsp;After a strong 1Q22 (+8% against the prior year), due to some cargo being shipped later than normal (from 4Q21) and a weak prior year comparative (-8% in 1Q21), we expect container growth to have slowed through 2Q22. Storage volumes and income will likely remain elevated but will have slowed through the period due to improved rail capacity.&nbsp;
Logs:&nbsp;Stats NZ data suggests&nbsp;POT's&nbsp;log exports were down -4% in the period against 1H21. We assume a flat period of log exports at 3.3mT and recognise the risk of a slower 2H22 in light of lower log export pricing and elevated shipping costs.&nbsp;&nbsp;
Associates:&nbsp;Lower log exports at&nbsp;Northport&nbsp;(Stats NZ&nbsp;data suggests volumes are -11% down year on year) may weigh on associate income in the period, though an ongoing recovery at Coda may help to mitigate.&nbsp;
Omicron outlook:&nbsp;While Omicron poses a risk to port operations with potential for absenteeism among&nbsp;skilled workers, we anticipate that&nbsp;POT's&nbsp;risk mitigation measures will allow it to remain operational through the outbreak. Moreover, likely congestion around land-side&nbsp;logistics may drive improved container yard&nbsp;storage charges through 2H22.&nbsp;



Result conference call&nbsp;


Management will host a result briefing for investors and analysts at 11am on 25 February 2022.&nbsp;Those wishing to participate need to register&nbsp;by contacting&nbsp;cfo@port-tauranga.co.nz.&nbsp;


Port of Tauranga: 1H22 Preview — Land(Side Congestion) Ahoy