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>SAN (Sanford) FY21 result first take</h2>
Sanford’s (SAN) FY21 result beat Forsyth Barr forecasts at an adjusted EBIT level although marginally missed consensus estimates
The business has had a number of COVID-19 related challenges during the year but positively we note:
1) 4Q21 saw a significant improvement in the adjusted EBIT run rate and
2) SAN is targeting a return to pre-COVID financial levels in 2023
Although no explicit guidance was provided for FY22 the stated focus will be on business recovery with a strategic update expected during 1C22
Key takeaways
<ul>
<li>Although the business faced a number of COVID related challenges during FY21 and supply chain issues remains, conditions have reportedly improved since SAN’s previous update in August 2021</li>
<li>Much of the recent improvement has been driven by the reopening of global food service sector</li>
<li>4Q21 saw the adjusted EBIT run rate substantially improve on Q1/2/3 at NZ$2m/9m/-3m respectively</li>
<li>Divisionally Salmon outperformed both Wildcatch and Mussels during the year which saw significant pricing pressure across the year</li>
</ul>
Financials
<ul>
<li>Revenue came ahead of Forbarr forecasts at NZ$490m vs our NZ$459m</li>
<li>Adjusted EBIT was reported marginally ahead of our forecast NZ$22.5m at NZ$23.3m but behind consensus NZ$25m</li>
<li>CAPEX for FY21 was reported at NZ$39m (FY20 NZ$44m) with company expectations of NZ$50m for FY22</li>
</ul>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 119.8pt; height: 13pt;">
NZ$m
</td>
<td style="width: 44.8pt; height: 13pt;">
FY20
</td>
<td style="width: 44.8pt; height: 13pt;">
FY21E
</td>
<td style="width: 44.8pt; height: 13pt;">
FY21A
</td>
<td style="width: 44.8pt; height: 13pt;">
Var
</td>
</tr>
<tr>
<td style="width: 119.8pt; height: 13pt;">
Revenue
</td>
<td style="width: 44.8pt; height: 13pt;">
468.8
</td>
<td style="width: 44.8pt; height: 13pt;">
458.4
</td>
<td style="width: 44.8pt; height: 13pt;">
489.6
</td>
<td style="width: 44.8pt; height: 13pt;">
7%
</td>
</tr>
<tr>
<td style="width: 119.8pt; height: 13pt;">
Underlying EBIT
</td>
<td style="width: 44.8pt; height: 13pt;">
38.3
</td>
<td style="width: 44.8pt; height: 13pt;">
22.5
</td>
<td style="width: 44.8pt; height: 13pt;">
23.3
</td>
<td style="width: 44.8pt; height: 13pt;">
4%
</td>
</tr>
<tr>
<td style="width: 119.8pt; height: 13pt;">
Underlying EBIT margin
</td>
<td style="width: 44.8pt; height: 13pt;">
8%
</td>
<td style="width: 44.8pt; height: 13pt;">
5%
</td>
<td style="width: 44.8pt; height: 13pt;">
5%
</td>
<td style="width: 44.8pt; height: 13pt;">
0%
</td>
</tr>
<tr>
<td style="width: 119.8pt; height: 13pt;">
Reported NPAT
</td>
<td style="width: 44.8pt; height: 13pt;">
19.4
</td>
<td style="width: 44.8pt; height: 13pt;">
13.3
</td>
<td style="width: 44.8pt; height: 13pt;">
16.2
</td>
<td style="width: 44.8pt; height: 13pt;">
22%
</td>
</tr>
</tbody>
</table>
Analyst call 9.30am NZT
Preregistration link &nbsp;<a href="https://event.webcasts.com/starthere.jsp?ei=1513177&amp;tp_key=70869837e5" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://event.webcasts.com/starthere.jsp?ei%3D1513177%26tp_key%3D70869837e5&amp;source=gmail&amp;ust=1637282469105000&amp;usg=AOvVaw2-Y8hhvETN7_01WONXo383" rel="noopener">https://event.webcasts.com/starthere.jsp?ei=1513177&amp;tp_key=70869837e5</a>

SAN (Sanford) FY21 result first take
Sanford’s (SAN) FY21 result beat Forsyth Barr forecasts at an adjusted EBIT level although marginally missed consensus estimates
The business has had a number of COVID-19 related challenges during the year but positively we note:
1) 4Q21 saw a significant improvement in the adjusted EBIT run rate and
2) SAN is targeting a return to pre-COVID financial levels in 2023
Although no explicit guidance was provided for FY22 the stated focus will be on business recovery with a strategic update expected during 1C22
Key takeaways

Although the business faced a number of COVID related challenges during FY21 and supply chain issues remains, conditions have reportedly improved since SAN’s previous update in August 2021
Much of the recent improvement has been driven by the reopening of global food service sector
4Q21 saw the adjusted EBIT run rate substantially improve on Q1/2/3 at NZ$2m/9m/-3m respectively
Divisionally Salmon outperformed both Wildcatch and Mussels during the year which saw significant pricing pressure across the year

Financials

Revenue came ahead of Forbarr forecasts at NZ$490m vs our NZ$459m
Adjusted EBIT was reported marginally ahead of our forecast NZ$22.5m at NZ$23.3m but behind consensus NZ$25m
CAPEX for FY21 was reported at NZ$39m (FY20 NZ$44m) with company expectations of NZ$50m for FY22





NZ$m


FY20


FY21E


FY21A


Var




Revenue


468.8


458.4


489.6


7%




Underlying EBIT


38.3


22.5


23.3


4%




Underlying EBIT margin


8%


5%


5%


0%




Reported NPAT


19.4


13.3


16.2


22%




Analyst call 9.30am NZT
Preregistration link &nbsp;https://event.webcasts.com/starthere.jsp?ei=1513177&amp;tp_key=70869837e5

Sanford Limited

SAN (Sanford): FY21 Result First Take