CHORUS LIMITED (CNU)
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14/10/2024

3

Neutral

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UBS assesses the loss of -10k lines in 1Q25 for Chorus as worse than expectation of a decline of -5k lines.

Some losses were the result of timing, the broker acknowledges. Annualising the rate would suggest a loss of -40k lines in FY25 compared to the analyst's estimate of -29k.

At this stage, it is "only one quarter" the broker notes, with Chorus expected to benefit from 10k new premises being constructed with fibre, which is included in UBS' forecasts.

Neutral retained. NZ$8.50 target price unchanged.

FORECAST
UBS forecasts a full year FY25 dividend of 53.31 cents and EPS of 5.51 cents.
UBS forecasts a full year FY26 dividend of 55.15 cents and EPS of 9.19 cents.

02/09/2024

4

Underweight

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Chorus delivered an in-line result on revenue and earnings, while FY25 guidance came in at $700-720m, below Jarden's $721.5m, on modest cost growth. Gross capex guidance is higher but sustaining capex guidance is a touch under the broker's forecasts.

Jarden sees upside to the dividend over the medium-term if greater competition does not eventuate and constrain Chorus. For now, the broker takes a cautious approach, waiting to see how 5G competition plays out for fibre penetration and pricing.

in the long term, Chorus remains constrained by the regulatory framework and its dividend profile will come under pressure from a reducing regulated asset base, the broker notes. Target rises to NZ$7.57 from NZ$7.17, Underweight retained.

FORECAST
Jarden forecasts a full year FY25 dividend of 52.85 cents and EPS of 5.88 cents.
Jarden forecasts a full year FY26 dividend of 54.04 cents and EPS of 14.34 cents.