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>September 2024 was a strong month for some, but a soft month for others.</li><li>Replenishment of the hydro lakes was a welcome relief for the sector, but hedge contracts designed to protect downside risk from ongoing dry conditions has seen Meridian Energy (MEL) struggle.</li><li>Contact Energy (CEN) and Mercury (MCY) have benefitted the most in the short-term from the rapid change in conditions. </li></ul>

September 2024 was a strong month for some, but a soft month for others.Replenishment of the hydro lakes was a welcome relief for the sector, but hedge contracts designed to protect downside risk from ongoing dry conditions has seen Meridian Energy (MEL) struggle.Contact Energy (CEN) and Mercury (MCY) have benefitted the most in the short-term from the rapid change in conditions. 

Power Points - Water Works Wonders​​​​​​​ — October 2024

<ul><li>We upgrade Mercury (MCY) to OUTPERFORM from NEUTRAL, as it is offering good value relative to Meridian Energy (MEL) in particular, and we expect near-term FY25 EBITDAF earnings will be better than guidance following recent rain.</li><li>Since 2018 MEL has always traded at a premium to its peers, but is currently trading at a near record premium using our preferred EV/EBITDAF less stay-in-business (SIB) capex metric.</li><li>Looking at the three largest generator/retailers, MEL's equity value is greater than Contact Energy (CEN) and MCY combined, and yet CEN and MCY's combined businesses generate over 30% more electricity and earnings than MEL. </li></ul>

We upgrade Mercury (MCY) to OUTPERFORM from NEUTRAL, as it is offering good value relative to Meridian Energy (MEL) in particular, and we expect near-term FY25 EBITDAF earnings will be better than guidance following recent rain.Since 2018 MEL has always traded at a premium to its peers, but is currently trading at a near record premium using our preferred EV/EBITDAF less stay-in-business (SIB) capex metric.Looking at the three largest generator/retailers, MEL's equity value is greater than Contact Energy (CEN) and MCY combined, and yet CEN and MCY's combined businesses generate over 30% more electricity and earnings than MEL. 

Electricity Sector - MCY Shining Brighter Than MEL

Equity Bottom-Up

<ul><li>Contact Energy (CEN) has made a takeover bid for Manawa Energy (MNW) at an effective price of NZ$5.95, a +48% premium to MNW's last closing price and +20% premium to our MNW valuation.</li><li>The deal makes strategic sense, but the offer price is full and will require CEN to deliver on synergy benefits to create value.</li><li>With MNW directors and major shareholders Infratil (IFT) and TECT Holdings supportive of the deal, the only hurdle of note is obtaining Commerce Commission (ComCom) clearance. </li></ul>

Contact Energy (CEN) has made a takeover bid for Manawa Energy (MNW) at an effective price of NZ$5.95, a +48% premium to MNW's last closing price and +20% premium to our MNW valuation.The deal makes strategic sense, but the offer price is full and will require CEN to deliver on synergy benefits to create value.With MNW directors and major shareholders Infratil (IFT) and TECT Holdings supportive of the deal, the only hurdle of note is obtaining Commerce Commission (ComCom) clearance. 

Contact Energy - Time to Contact the ComCom

<ul><li>August 2024 was one of the more eventful months for the electricity sector.</li><li>The sector was jolted into action by record high wholesale electricity prices at the beginning of the month, with electric shock treatment setting up the conditions to reverse those prices by month end.</li><li>August 2024 was also reporting season. Whilst the results were in line with expectations, the FY25 outlook for most of the companies was tempered by low hydro generation. </li></ul>

August 2024 was one of the more eventful months for the electricity sector.The sector was jolted into action by record high wholesale electricity prices at the beginning of the month, with electric shock treatment setting up the conditions to reverse those prices by month end.August 2024 was also reporting season. Whilst the results were in line with expectations, the FY25 outlook for most of the companies was tempered by low hydro generation. 

Power Points - Electric Shock Treatment Worked — Sept 2024

<ul>
<li>Contact Energy's (CEN) FY24 result hit the mark, with EBITDAF in line with expectations and well up on FY23, despite its Tauhara commissioning challenges.</li>
<li>Whilst wholesale electricity market conditions remain volatile, we believe CEN is best placed to weather the storm, and our FY25 forecast is little changed.</li>
<li>Recent decisions indicate CEN is preserving cash as much as possible. </li>
</ul>


Contact Energy's (CEN) FY24 result hit the mark, with EBITDAF in line with expectations and well up on FY23, despite its Tauhara commissioning challenges.
Whilst wholesale electricity market conditions remain volatile, we believe CEN is best placed to weather the storm, and our FY25 forecast is little changed.
Recent decisions indicate CEN is preserving cash as much as possible. 


Contact Energy - Pipeline Balancing Act — FY24 Result

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 - Water Works Wonders — October 2024

These two stocks are our preferred of the large generator/retailers and along with Manawa Energy (MNW) are rated OUTPERFORM.

Forsyth Barr

Electricity Sector - MCY Shining Brighter Than MEL

MCY joins CEN and Manawa Energy (MNW) as our preferred electricity sector stocks with OUTPERFORM ratings. Genesis Energy (GNE) and MEL are rated...

Forsyth Barr

Contact Energy - Time to Contact the ComCom

Contact Energy (CEN) has made a takeover bid for Manawa Energy (MNW) at an effective price of NZ$5.95, a +48% premium to MNW's last closing price...

Forsyth Barr

Power Points - Electric Shock Treatment Worked — Sept 2024

August 2024 was also reporting season. Whilst the results were in line with expectations, the FY25 outlook for most of the companies was tempered...

Forsyth Barr

Contact Energy - Pipeline Balancing Act — FY24 Result

Contact Energy's (CEN) FY24 result hit the mark, with EBITDAF in line with expectations and well up on FY23, despite its Tauhara commissioning...

Forsyth Barr

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Power Points - Water Works Wonders​​​​​​​ — October 2024

These two stocks are our preferred of the large generator/retailers and along with Manawa Energy (MNW) are rated OUTPERFORM.

Forsyth Barr

Electricity Sector - MCY Shining Brighter Than MEL

MCY joins CEN and Manawa Energy (MNW) as our preferred electricity sector stocks with OUTPERFORM ratings. Genesis Energy (GNE) and MEL are rated...

Forsyth Barr

Contact Energy - Time to Contact the ComCom

Contact Energy (CEN) has made a takeover bid for Manawa Energy (MNW) at an effective price of NZ$5.95, a +48% premium to MNW's last closing price...

Forsyth Barr

Power Points - Electric Shock Treatment Worked — Sept 2024

August 2024 was also reporting season. Whilst the results were in line with expectations, the FY25 outlook for most of the companies was tempered...

Forsyth Barr

Contact Energy - Pipeline Balancing Act — FY24 Result

Contact Energy's (CEN) FY24 result hit the mark, with EBITDAF in line with expectations and well up on FY23, despite its Tauhara commissioning...

Forsyth Barr

Power Points - Water Works Wonders — October 2024