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>Skellerup (SKL) 1H21 Result initial Impressions — Firing on all Cylinders</h2>
Skellerup (SKL) delivered a stellar 1H21 result, reporting NPAT of NZ$19.5m vs. our expectations of NZ$14.7m. The beat was broad based, driven primarily by margin expansion, with group revenue in line (1H21 NZ$137m vs. FB NZ$136m). Continued operational gains are called out as a primary driver of margin expansion in both divisions, which we expect provide a basis for lifting margin assumptions in forecast years. 1H21 EBIT margin achieved was significantly ahead of both our expectations and longer-term assumptions. Understanding the product mix benefits vs. operational gains will be key to determining the quantum.
SKL will pay an interim dividend of 6.5cps (50% imputed). Balance sheet has plenty of headroom, with net debt down to NZ$13m (0.4x Net debt/EBITDA)
Outlook commentary — FY21 guidance appears conservative at first read, operational gains positive for medium to longer-term outlook
SKL raised its FY21 NPAT guidance range, +8% at the mid-points, to NZ$33m to NZ$37m (previously NZ$30m to NZ$35m, Forsyth Barr FY21E NZ$34m). In our view guidance appears conservative, although the company noted potential 2H21 headwinds from supply chain congestion, elevated freight costs, and FX. These headwinds appear largely transitional in nature (COVID-19 related), which combined with operational gains gives us confidence in the medium-term outlook.
Conference call details
SKL will host a post-result investor conference call at 10:30am. Dial in details: 0800 423 972 (Australia 1800 590 693), conference code 345840
1H21 result summary (NZ$m)
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Source: Company reports, Forsyth Barr analysis
Guy Hooper&nbsp; Analyst, Equities
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.3&amp;permmsgid=msg-f:1691975948897381259&amp;th=177b1b293a886b8b&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ_BXwhaQkVU0wea24xGYd3LybZvNvJjWtpYbmFGFXCNtSf12rA-7cKRRv794GWqg61dxSeEvlbsl_hFdsdxB03CFh_MaYFHDorPjA2iDIc2qLZUasYRa6x2FSw&amp;disp=emb" class="editor-image img-responsive"></figure>
 P: +64 4 495 5255 | TF: 0800 367 227&nbsp; Level 22, NTT Tower, 157 Lambton Quay, Wellington

Skellerup (SKL) 1H21 Result initial Impressions — Firing on all Cylinders
Skellerup (SKL) delivered a stellar 1H21 result, reporting NPAT of NZ$19.5m vs. our expectations of NZ$14.7m. The beat was broad based, driven primarily by margin expansion, with group revenue in line (1H21 NZ$137m vs. FB NZ$136m). Continued operational gains are called out as a primary driver of margin expansion in both divisions, which we expect provide a basis for lifting margin assumptions in forecast years. 1H21 EBIT margin achieved was significantly ahead of both our expectations and longer-term assumptions. Understanding the product mix benefits vs. operational gains will be key to determining the quantum.
SKL will pay an interim dividend of 6.5cps (50% imputed). Balance sheet has plenty of headroom, with net debt down to NZ$13m (0.4x Net debt/EBITDA)
Outlook commentary — FY21 guidance appears conservative at first read, operational gains positive for medium to longer-term outlook
SKL raised its FY21 NPAT guidance range, +8% at the mid-points, to NZ$33m to NZ$37m (previously NZ$30m to NZ$35m, Forsyth Barr FY21E NZ$34m). In our view guidance appears conservative, although the company noted potential 2H21 headwinds from supply chain congestion, elevated freight costs, and FX. These headwinds appear largely transitional in nature (COVID-19 related), which combined with operational gains gives us confidence in the medium-term outlook.
Conference call details
SKL will host a post-result investor conference call at 10:30am. Dial in details: 0800 423 972 (Australia 1800 590 693), conference code 345840
1H21 result summary (NZ$m)

Source: Company reports, Forsyth Barr analysis
Guy Hooper&nbsp; Analyst, Equities

 P: +64 4 495 5255 | TF: 0800 367 227&nbsp; Level 22, NTT Tower, 157 Lambton Quay, Wellington

Skellerup (SKL): 1H21 Result Initial Impressions — Firing on All Cylinders

Skellerup Holdings

Skellerup (SKL): 1H21 Result Initial Impressions — Firing on All Cylinders