New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

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.

Equity Bottom-Up

<ul><li>Contact Energy (CEN) has got through a tricky 3Q24 largely unscathed and is well positioned for 4Q24 with above average hydro storage.</li><li>In addition, CEN should see the month-long reliability run of its Tauhara geothermal development project, which may now be fully commissioned before the end of FY24, ~three months ahead of CEN's revised timetable.</li><li>We have lifted our FY24 EBITDAF forecast +5% and CEN only has to match FY23 performance to deliver a result ~+NZ$40m ahead of its FY24 EBITDAF guidance. </li></ul>

Contact Energy (CEN) has got through a tricky 3Q24 largely unscathed and is well positioned for 4Q24 with above average hydro storage.In addition, CEN should see the month-long reliability run of its Tauhara geothermal development project, which may now be fully commissioned before the end of FY24, ~three months ahead of CEN's revised timetable.We have lifted our FY24 EBITDAF forecast +5% and CEN only has to match FY23 performance to deliver a result ~+NZ$40m ahead of its FY24 EBITDAF guidance. 

Contact Energy  - Steaming Ahead — March 2024 Op Stats

<ul><li>Contact Energy (CEN) reported a record half year 1H24 EBITDAF result as expected, albeit only just.</li><li>The NZ$323m result (after market making losses) was up +27% on 1H23, with stronger retail and wholesale electricity prices the main driver.</li><li>CEN lifted FY24 EBITDAF guidance, with better retail pricing the key factor, although guidance looks conservative in light of the strong January 2024 operating performance. </li></ul>

Contact Energy (CEN) reported a record half year 1H24 EBITDAF result as expected, albeit only just.The NZ$323m result (after market making losses) was up +27% on 1H23, with stronger retail and wholesale electricity prices the main driver.CEN lifted FY24 EBITDAF guidance, with better retail pricing the key factor, although guidance looks conservative in light of the strong January 2024 operating performance. 

Contact Energy - Pipeline ConFIDence — 1H24 Result

<ul><li>We calculate Contact Energy (CEN) will report a record six month EBITDAF result on 19 February 2024, but strong headwinds means it faces a challenging 2H24.</li><li>The strong 1H24 result has been driven by a big lift in the mass market retail netback, with the effects of the delayed start of CEN's Tauhara geothermal project the main negative impacting 2H24.</li><li>These negative headwinds facing CEN should be transitory, and the effect of lower interest rates has lifted our target price +35cps (+4.8%) to NZ$7.70.</li></ul>

We calculate Contact Energy (CEN) will report a record six month EBITDAF result on 19 February 2024, but strong headwinds means it faces a challenging 2H24.The strong 1H24 result has been driven by a big lift in the mass market retail netback, with the effects of the delayed start of CEN's Tauhara geothermal project the main negative impacting 2H24.These negative headwinds facing CEN should be transitory, and the effect of lower interest rates has lifted our target price +35cps (+4.8%) to NZ$7.70.

Contact Energy - Speed Wobbles Ahead — Dec '23 Op Stats

<ul><li>Contact Energy (CEN) has announced that its 174MW Tauhara geothermal project has been delayed another ~six months: this is the fourth delay since the project commenced.</li><li>Total delays are now ~15 months with commissioning of a 152MW plant (the original plant capacity planned in 2021) now expected in September 2024, with full plant capacity not likely to be reached for another year.</li><li>We estimate the total EBITDAF impact from the delay is ~NZ$125m, which is in addition to the NZ$40m capex increase. We lower our target price -15cps (-2%) to NZ$7.35. NEUTRAL.</li></ul>

Contact Energy (CEN) has announced that its 174MW Tauhara geothermal project has been delayed another ~six months: this is the fourth delay since the project commenced.Total delays are now ~15 months with commissioning of a 152MW plant (the original plant capacity planned in 2021) now expected in September 2024, with full plant capacity not likely to be reached for another year.We estimate the total EBITDAF impact from the delay is ~NZ$125m, which is in addition to the NZ$40m capex increase. We lower our target price -15cps (-2%) to NZ$7.35. NEUTRAL.

<ul><li>Contact Energy (CEN) has had a mixed start to FY24.</li><li>Solid operating results reported to the end of 30 September 2023 were boosted by record hydro generation in October 2023, but offset by the news Tauhara commissioning has been delayed ~three months.</li><li>A reassessment of short-term earnings has resulted in a -3% pull back in FY24 EBITDAF and we have trimmed our target price -0.7% (-5cps) to NZ$7.50. NEUTRAL. </li></ul>

Contact Energy (CEN) has had a mixed start to FY24.Solid operating results reported to the end of 30 September 2023 were boosted by record hydro generation in October 2023, but offset by the news Tauhara commissioning has been delayed ~three months.A reassessment of short-term earnings has resulted in a -3% pull back in FY24 EBITDAF and we have trimmed our target price -0.7% (-5cps) to NZ$7.50. NEUTRAL. 

Contact Energy - Bumper October—1Q24 Op Stats

New Zealand

Contact Energy Limited is a diversified and integrated energy company which focuses on the generation of electricity and the sale of electricity and gas in New Zealand.

Contact Energy (CEN NZ)

Contact Energy - Steaming Ahead — March 2024 Op Stats

Contact Energy (CEN) has got through a tricky 3Q24 largely unscathed and is well positioned for 4Q24 with above average hydro storage. In...

Forsyth Barr

Contact Energy - Pipeline ConFIDence — 1H24 Result

CEN lifted FY24 EBITDAF guidance, with better retail pricing the key factor, although guidance looks conservative in light of the strong January...

Forsyth Barr

Contact Energy - Speed Wobbles Ahead — Dec '23 Op Stats

We calculate Contact Energy (CEN) will report a record six month EBITDAF result on 19 February 2024, but strong headwinds means it faces a...

Forsyth Barr

Contact Energy - Tauhara in Hot Water

Contact Energy (CEN) has announced that its 174MW Tauhara geothermal project has been delayed another ~six months: this is the fourth delay since...

Forsyth Barr

Contact Energy - Bumper October—1Q24 Op Stats

A reassessment of short-term earnings has resulted in a -3% pull back in FY24 EBITDAF and we have trimmed our target price -0.7% (-5cps) to...

Forsyth Barr