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

Thematic (Sector/Industry)

<div><div><div><div><ul><li>March 2024 was a good month for Manawa Energy (MNW), electricity demand, and solar developers. It wasn’t such a good month for EV dealers.</li><li>MNW was the strongest performing electricity stock in March 2024 following its guidance upgrade.</li><li>Strong electricity demand growth continues and now appears to be a trend which is positive for medium-term pricing, although continued big falls in solar panel prices will help offset some of those pricing effects. </li></ul></div></div></div></div>

March 2024 was a good month for Manawa Energy (MNW), electricity demand, and solar developers. It wasn’t such a good month for EV dealers.MNW was the strongest performing electricity stock in March 2024 following its guidance upgrade.Strong electricity demand growth continues and now appears to be a trend which is positive for medium-term pricing, although continued big falls in solar panel prices will help offset some of those pricing effects. 

Power Points - Demand Is Trending Upwards — April 2024

<div><div><div><div><ul><li>Quarterly reports released in February 2024 from the wind turbine manufacturers suggest prices are starting to ease, which would be welcome news for wind developers.</li><li>1H24 results reported by the big four generator/retailers contained few surprises but did highlight ongoing opex and consenting challenges, with opex generally negatively surprising and delays to several projects.</li><li>Generator/retailer share prices generally remain elevated, in particular Mercury (MCY) which is trading just short of record highs. </li></ul></div></div></div></div>

Quarterly reports released in February 2024 from the wind turbine manufacturers suggest prices are starting to ease, which would be welcome news for wind developers.1H24 results reported by the big four generator/retailers contained few surprises but did highlight ongoing opex and consenting challenges, with opex generally negatively surprising and delays to several projects.Generator/retailer share prices generally remain elevated, in particular Mercury (MCY) which is trading just short of record highs. 

Power Points -  Wind Regaining Its Puff? — March 2024

<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>For the first time in three years we are moving our WACC assumptions down.</li><li>This is driven by a modestly lower (-25 bps) interpolated 10-year interest rate assumption; our proxy for the risk free rate.</li><li>We also incorporate our C&amp;ESG ratings into our WACC assumptions. We do this on an overall neutral basis, with a scale of -25 bps to +25 bps added to the cost of equity. </li></ul>

For the first time in three years we are moving our WACC assumptions down.This is driven by a modestly lower (-25 bps) interpolated 10-year interest rate assumption; our proxy for the risk free rate.We also incorporate our C&amp;ESG ratings into our WACC assumptions. We do this on an overall neutral basis, with a scale of -25 bps to +25 bps added to the cost of equity. 

Equity Strategy - WACC Review; a Lower Rfr and Adding C&ESG

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.

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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

Power Points - Wind Regaining Its Puff? — March 2024

Quarterly reports released in February 2024 from the wind turbine manufacturers suggest prices are starting to ease, which would be welcome news...

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

Equity Strategy - WACC Review; a Lower Rfr and Adding C&ESG

For the first time in three years we are moving our WACC assumptions down. This is driven by a modestly lower (-25 bps) interpolated 10-year...

Forsyth Barr

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