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.

Thematic (Sector/Industry)

<ul><li>New Zealand’s electricity sector finished September 2025 on firmer footing; Cabinet’s review of the electricity sector delivered a benign outcome; the Commerce Commission (ComCom) has given draft approval to the Huntly Firming Option (HFO) deal; and hydro storage is back above average.</li><li>The big news from the past month was Cabinet’s response to the Frontier review of New Zealand’s electricity sector, which stopped short of fundamental reform, opting instead for incremental adjustments.</li><li>Interest rate falls during September 2025 saw the sector dividend-yield spread to the 10-year government bond rate increase to its highest level in three years.</li></ul>

New Zealand’s electricity sector finished September 2025 on firmer footing; Cabinet’s review of the electricity sector delivered a benign outcome; the Commerce Commission (ComCom) has given draft approval to the Huntly Firming Option (HFO) deal; and hydro storage is back above average.The big news from the past month was Cabinet’s response to the Frontier review of New Zealand’s electricity sector, which stopped short of fundamental reform, opting instead for incremental adjustments.Interest rate falls during September 2025 saw the sector dividend-yield spread to the 10-year government bond rate increase to its highest level in three years.

Power Points - WET AND WINDY—October 2025

<ul><li>The outcome of the long-awaited Frontier report and Cabinet review is a package of proposals that tweaks New Zealand’s energy system but falls well short of structural reform.</li><li>The two most significant proposals are government underwriting of an LNG import terminal (although this is not yet certain) and removing the perceived barrier that partially Crown-owned generator-retailers were unable to raise capital.</li><li>With the review outcomes better than expected, our sector valuations and ratings are unchanged. Contact Energy (CEN), Mercury (MCY), and Meridian Energy (MEL) are rated OUTPERFORM, while Genesis Energy (GNE) is rated NEUTRAL.</li></ul>

The outcome of the long-awaited Frontier report and Cabinet review is a package of proposals that tweaks New Zealand’s energy system but falls well short of structural reform.The two most significant proposals are government underwriting of an LNG import terminal (although this is not yet certain) and removing the perceived barrier that partially Crown-owned generator-retailers were unable to raise capital.With the review outcomes better than expected, our sector valuations and ratings are unchanged. Contact Energy (CEN), Mercury (MCY), and Meridian Energy (MEL) are rated OUTPERFORM, while Genesis Energy (GNE) is rated NEUTRAL.

Electricity Sector - No Electric Shocks from Cabinet Review

<ul><li>FY25 was a challenging year operationally for all of the generator/retailers, but also a year of mixed fortunes.</li><li>We are forecasting MEL and MCY to report FY25 EBITDAF -33% and -12% below FY24 respectively.</li><li>Outlook commentary and guidance should be positive relative to FY25, and assuming relatively normal hydrology, we anticipate a bounce-back in earnings.</li></ul>

FY25 was a challenging year operationally for all of the generator/retailers, but also a year of mixed fortunes.We are forecasting MEL and MCY to report FY25 EBITDAF -33% and -12% below FY24 respectively.Outlook commentary and guidance should be positive relative to FY25, and assuming relatively normal hydrology, we anticipate a bounce-back in earnings.

Electricity Sector Winter 2024 Hurt, a Lot—FY25 Preview

<ul><li>In this report we take a closer look at capacity markets: what they are, whether they are effective, and the possible implications if New Zealand were to adopt a capacity market.</li><li>The Frontier report, commissioned by the Ministerial Review in the performance of the electricity market, was a response to the high prices of winter 2024.</li><li>CMs are a common feature of electricity markets overseas.</li></ul>

In this report we take a closer look at capacity markets: what they are, whether they are effective, and the possible implications if New Zealand were to adopt a capacity market.The Frontier report, commissioned by the Ministerial Review in the performance of the electricity market, was a response to the high prices of winter 2024.CMs are a common feature of electricity markets overseas.

Electricity Sector Capacity Considerations

<ul><li>Hydro storage has recovered above the long-run average, benefiting all generators, with Mercury (MCY) being the biggest winner in June 2025.</li><li>Regulatory uncertainty looms, but is not expected to materially affect valuations, with MCY rated OUTPERFORM and others NEUTRAL.</li><li>Genesis Energy (GNE) is considering a new peaking plant, with discussions progressing positively to extend the Rankine units' operational life.</li></ul>

Hydro storage has recovered above the long-run average, benefiting all generators, with Mercury (MCY) being the biggest winner in June 2025.Regulatory uncertainty looms, but is not expected to materially affect valuations, with MCY rated OUTPERFORM and others NEUTRAL.Genesis Energy (GNE) is considering a new peaking plant, with discussions progressing positively to extend the Rankine units' operational life.

Power Points Watts in the Bank—July 2025

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)

Power Points - WET AND WINDY—October 2025

Interest rate falls during September 2025 saw the sector dividend-yield spread to the 10-year government bond rate increase to its highest level in...

Forsyth Barr

Electricity Sector - No Electric Shocks from Cabinet Review

The outcome of the long-awaited Frontier report and Cabinet review is a package of proposals that tweaks New Zealand’s energy system but falls well...

Forsyth Barr

Electricity Sector Winter 2024 Hurt, a Lot—FY25 Preview

Outlook commentary and guidance should be positive relative to FY25, and assuming relatively normal hydrology, we anticipate a bounce-back in...

Forsyth Barr

Electricity Sector Capacity Considerations

In this report we take a closer look at capacity markets: what they are, whether they are effective, and the possible implications if New Zealand...

Forsyth Barr

Power Points Watts in the Bank—July 2025

Hydro storage has recovered above the long-run average, benefiting all generators, with Mercury (MCY) being the biggest winner in June 2025.

Forsyth Barr

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