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

<h2>Skellerup Holdings<br>FY21 Preview&nbsp;— A Well Oiled Machine</h2>
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<p><strong>OUTPERFORM</strong></p>
<p>Skellerup&nbsp;(SKL) is set to report record earnings when it releases its FY21 result on Thursday, 19 August 2021, having guided to NPAT in the range of NZ$37m to NZ$39m (Forsyth&nbsp;Barr NZ$38m), up c. +31% on the prior year period. Driving the stellar earnings growth has been 1) meaningful margin expansion from operational gains and improved pricing, 2) further execution on new business wins, and 3) favourable operating backdrops for a number of its key product lines. We expect the market to focus on sustainability of margins, mitigation of post-pandemic cost headwinds, and its project pipeline.</p>
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<h3>Key issues to consider at&nbsp;SKL's&nbsp;FY21 result</h3>
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<li><strong>Rising input costs</strong> —&nbsp;Global commodity prices are rising, in addition to higher labour costs and supply chain challenges. How SKL is handling cost pressures is likely to be an area of focus at this result, particularly given margin expansion has been a key feature of earnings growth in recent periods.&nbsp;SKL's&nbsp;position as a supplier of small technical products, often subject to food safety regulations, suggests reasonable pricing power. We expect SKL to be able to mitigate much of the cost pressures</li>
<li><strong>Project pipeline</strong> —&nbsp;SKL has previously signalled a number of new&nbsp;and existing customer growth opportunities. Any indication on quantum/timing of new contracts will be of interest&nbsp;in addition to the potential size&nbsp;the&nbsp;customer relationships could become, as investors look to gain further confidence in the growth outlook</li>
<li><strong>Acquisition opportunities</strong> —&nbsp;Border closures have been an impediment to acquisitive growth.&nbsp;SKL's&nbsp;conservatively geared balance sheet (c. 0.2x net debt/EBITDA) provides headroom&nbsp;to pursue further bolt-on opportunities, an area of past success. With&nbsp;global travel restrictions easing, we look for indications of&nbsp;possible target areas.</li>
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<h3>Conference call details&nbsp;— 10:30am</h3>
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<p>SKL will host a post result conference call at 10:30am NZT on Thursday, 19 August 2021 via Zoom. Investors can join the web cast at&nbsp;<a href="https://zoom.us/join" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://zoom.us/join&amp;source=gmail&amp;ust=1629245043962000&amp;usg=AFQjCNGsQYpC6vnsiNzu1o7JgNcGfyOb6g" rel="noopener">https://zoom.us/join</a>, using the meeting ID 947 9604 0769,&nbsp;passcode&nbsp;950160. Alternatively, investors can dial in +64 9 884 6780.</p>
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Skellerup Holdings FY21 Preview&nbsp;— A Well Oiled Machine

OUTPERFORM
Skellerup&nbsp;(SKL) is set to report record earnings when it releases its FY21 result on Thursday, 19 August 2021, having guided to NPAT in the range of NZ$37m to NZ$39m (Forsyth&nbsp;Barr NZ$38m), up c. +31% on the prior year period. Driving the stellar earnings growth has been 1) meaningful margin expansion from operational gains and improved pricing, 2) further execution on new business wins, and 3) favourable operating backdrops for a number of its key product lines. We expect the market to focus on sustainability of margins, mitigation of post-pandemic cost headwinds, and its project pipeline.


Key issues to consider at&nbsp;SKL's&nbsp;FY21 result



Rising input costs —&nbsp;Global commodity prices are rising, in addition to higher labour costs and supply chain challenges. How SKL is handling cost pressures is likely to be an area of focus at this result, particularly given margin expansion has been a key feature of earnings growth in recent periods.&nbsp;SKL's&nbsp;position as a supplier of small technical products, often subject to food safety regulations, suggests reasonable pricing power. We expect SKL to be able to mitigate much of the cost pressures
Project pipeline —&nbsp;SKL has previously signalled a number of new&nbsp;and existing customer growth opportunities. Any indication on quantum/timing of new contracts will be of interest&nbsp;in addition to the potential size&nbsp;the&nbsp;customer relationships could become, as investors look to gain further confidence in the growth outlook
Acquisition opportunities —&nbsp;Border closures have been an impediment to acquisitive growth.&nbsp;SKL's&nbsp;conservatively geared balance sheet (c. 0.2x net debt/EBITDA) provides headroom&nbsp;to pursue further bolt-on opportunities, an area of past success. With&nbsp;global travel restrictions easing, we look for indications of&nbsp;possible target areas.



Conference call details&nbsp;— 10:30am


SKL will host a post result conference call at 10:30am NZT on Thursday, 19 August 2021 via Zoom. Investors can join the web cast at&nbsp;https://zoom.us/join, using the meeting ID 947 9604 0769,&nbsp;passcode&nbsp;950160. Alternatively, investors can dial in +64 9 884 6780.


Skellerup Holdings: FY21 Preview — A Well Oiled Machine