CHORUS LIMITED (CNU)
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03/12/2024

3

Neutral

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At the investor day, management at Chorus detailed key initiatives to transition to a "great network operator" by FY30 including targeting 80% fibre uptake with a greater focus on penetration than ARPU, highlights UBS.

The broker explains management is also aiming for an all-fibre business and wants to leverage infrastructure with a focus on
growing adjacencies and increasing infrastructure revenue.

Neutral retained. NZ$8.50 target price unchanged.

FORECAST
UBS forecasts a full year FY25 dividend of 53.21 cents and EPS of 5.50 cents.
UBS forecasts a full year FY26 dividend of 55.04 cents and EPS of 9.17 cents.

19/12/2024

4

Underweight

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The Commerce Commission released its final decision on Chorus' maximum allowable revenue (MAR) for the second regulatory period (four-year period starting January 2025) which was up NZ$222m versus the draft MAR. It was higher than Jarden's published forecast by NZ$191m.

Jarden believes there's an upside risk to the company's nearer-term earnings and cash flow track if Chorus can take advantage of the headroom through demand stimulation ahead of its expectations and/or generate stronger price growth above the inflation forecast in the non-anchor products.

The broker will be watching what competition and Chorus' increased speeds mean for these dynamics, with some risk of average revenue per user dilution on the recently proposed changes.

Target remains at NZ$7.57 and Underweight retained.

FORECAST
Jarden forecasts a full year FY25 dividend of 52.75 cents and EPS of 5.87 cents.
Jarden forecasts a full year FY26 dividend of 53.94 cents and EPS of 14.31 cents.