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

<ul><li>Contact Energy (CEN) is close to fully commissioning its 174MW Tauhara geothermal plant, the first in a series of what we expect to be four geothermal investments in the next six years.</li><li>We expect strong earnings growth over the next two financial years as a result, with FY24 expectations boosted by better than expected guidance.</li><li>We have lifted our FY24 EBITDAF forecast +5% to NZ$675m. CEN has also dropped strong hints that it will lift its FY24 dividend if NZAS stays.</li></ul>

Contact Energy (CEN) is close to fully commissioning its 174MW Tauhara geothermal plant, the first in a series of what we expect to be four geothermal investments in the next six years.We expect strong earnings growth over the next two financial years as a result, with FY24 expectations boosted by better than expected guidance.We have lifted our FY24 EBITDAF forecast +5% to NZ$675m. CEN has also dropped strong hints that it will lift its FY24 dividend if NZAS stays.

Contact Energy - Building a Head of Steam — FY23 Result

<ul><li>We calculate that Contact Energy (CEN) finished FY23 with a record monthly EBITDAF of NZ$83m, although that was boosted by a significant one-off gain and an abnormally low LWAP/GWAP ratio.</li><li>CEN is also making an accounting change that will boost reported EBITDAF a further ~+NZ$22m to NZ$575m, however, from our perspective, we will continue to treat market making gains and losses as operating earnings.</li><li>With little change to later forecasts, we leave our target price unchanged at NZ$8.30 at retain our NEUTRAL rating.</li></ul>

We calculate that Contact Energy (CEN) finished FY23 with a record monthly EBITDAF of NZ$83m, although that was boosted by a significant one-off gain and an abnormally low LWAP/GWAP ratio.CEN is also making an accounting change that will boost reported EBITDAF a further ~+NZ$22m to NZ$575m, however, from our perspective, we will continue to treat market making gains and losses as operating earnings.With little change to later forecasts, we leave our target price unchanged at NZ$8.30 at retain our NEUTRAL rating.

Contact Energy: One-Off Gains - June 2023 Op Stats

<ul><li>New FY27 targets highlight earnings growth and development goals: CEN’s revised targets show it is generally on track to achieve the FY26 goals set out two years ago and that it can do more.</li><li>Capex growth the only negative: The only negative we took from the day was higher SIB capex (up +NZ$50m in the FY24–FY26 period) and Te Mihi upgrade costs increasing ~+10% (+NZ$75m) on our old assumption.</li><li>April 2023 operating result was strong, points to CEN meeting FY23 EBITDAF guidance</li></ul>

New FY27 targets highlight earnings growth and development goals: CEN’s revised targets show it is generally on track to achieve the FY26 goals set out two years ago and that it can do more.Capex growth the only negative: The only negative we took from the day was higher SIB capex (up +NZ$50m in the FY24–FY26 period) and Te Mihi upgrade costs increasing ~+10% (+NZ$75m) on our old assumption.April 2023 operating result was strong, points to CEN meeting FY23 EBITDAF guidance

Contact Energy: Outlook Building Nicely — 2023 Investor Day

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 - 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

Contact Energy - Building a Head of Steam — FY23 Result

Contact Energy (CEN) is close to fully commissioning its 174MW Tauhara geothermal plant, the first in a series of what we expect to be four...

Forsyth Barr

Contact Energy: One-Off Gains - June 2023 Op Stats

We calculate that Contact Energy (CEN) finished FY23 with a record monthly EBITDAF of NZ$83m, although that was boosted by a significant one-off...

Forsyth Barr

Contact Energy: Outlook Building Nicely — 2023 Investor Day

Contact Energy’s (CEN) 2023 investor day canvassed familiar topics and updated FY26 targets to new FY27 targets and in general, CEN is achieving...

Forsyth Barr