IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/origin-energy-ltd" target="_blank" data-smartkarma-citation="entities:797:1" rel="noopener">Origin Energy (ORG AU)</a> has postponed its scheme meeting to 4 December after it received a non-binding indicative proposal from Brookfield/EIG to amend the current scheme.</li>
<li>The Board admitted the current scheme was likely to be voted down if the meeting was held today. The alternative transaction structure will struggle to gain shareholder support.</li>
<li>If Brookfield/EIG walks, the share price will fall, at least in the short term. We think a reasonable deal break price is A$7.40, an 11% downside to the last close.</li>
</ul>



Origin Energy (ORG AU) has postponed its scheme meeting to 4 December after it received a non-binding indicative proposal from Brookfield/EIG to amend the current scheme.
The Board admitted the current scheme was likely to be voted down if the meeting was held today. The alternative transaction structure will struggle to gain shareholder support.
If Brookfield/EIG walks, the share price will fall, at least in the short term. We think a reasonable deal break price is A$7.40, an 11% downside to the last close.


Origin Energy (ORG AU): Brookfield/EIG’s Latest Effort Falls Flat

<ul>
<li>The <a href="https://www.smartkarma.com/entities/origin-energy-ltd" target="_blank" data-smartkarma-citation="entities:797:1" rel="noopener">Origin Energy (ORG AU)</a> scheme vote is on 23 November. Brookfield/EIG’s best and final offer is A$6.59 and US$1.86 per share, currently worth A$9.45.</li>
<li>With AusSuper reportedly increasing its stake past 17% on Friday, the scheme vote remains too close to call. Brookfield/EIG will need a large YES vote turnout for a successful vote.</li>
<li>If the scheme is voted down, there are mainly three Plan Bs – Brookfield/EIG’s alternate transaction structure, Board-initiated strategic review or maintaining the status quo.</li>
</ul>


The Origin Energy (ORG AU) scheme vote is on 23 November. Brookfield/EIG’s best and final offer is A$6.59 and US$1.86 per share, currently worth A$9.45.
With AusSuper reportedly increasing its stake past 17% on Friday, the scheme vote remains too close to call. Brookfield/EIG will need a large YES vote turnout for a successful vote.
If the scheme is voted down, there are mainly three Plan Bs – Brookfield/EIG’s alternate transaction structure, Board-initiated strategic review or maintaining the status quo.


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 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

Thematic (Sector/Industry)

<ul><li>October 2023 saw the electricity sector start to show some value with share price declines.</li><li>However, that has been short-lived, with the first week of November reversing most of the October movements.</li><li>Whilst there has been some softening in the long-dated ASX futures curve (down -5% during October 2023) we still see further downside risk as new developments continue to make progress to market.</li></ul>

October 2023 saw the electricity sector start to show some value with share price declines.However, that has been short-lived, with the first week of November reversing most of the October movements.Whilst there has been some softening in the long-dated ASX futures curve (down -5% during October 2023) we still see further downside risk as new developments continue to make progress to market.

Power Points - Developing Ventures Jointly—October 2023

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)

Origin Energy (ORG AU): Brookfield/EIG’s Latest Effort Falls Flat

The alternative transaction structure will struggle to gain support. We think a reasonable deal break price is A$7.40, an 11% downside to the last...

Arun George

Origin Energy (ORG AU): State of Play

With AusSuper increasing its stake on Friday, the scheme vote remains too close to call. If the scheme fails, there are mainly three Plan Bs, which...

Arun George

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

Power Points - Developing Ventures Jointly—October 2023

October 2023 saw the electricity sector start to show some value with share price declines. However, that has been short-lived, with the first week...

Forsyth Barr

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