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>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

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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>Genesis Energy (GNE) had a mixed 1Q24 with normal hydro generation volumes and the effects of the Unit 5 outage only partially offset by a continued strong retail performance.</li><li>The stronger long-term outlook for retail, both better margins and lower operating costs, has lifted our medium-term EBITDAF forecasts ~+4% and target price +10cps (+4.2%) to NZ$2.50.</li><li>GNE is hosting an investor day at the end of November which will reset GNE's future direction. NEUTRAL.</li></ul>

Genesis Energy (GNE) had a mixed 1Q24 with normal hydro generation volumes and the effects of the Unit 5 outage only partially offset by a continued strong retail performance.The stronger long-term outlook for retail, both better margins and lower operating costs, has lifted our medium-term EBITDAF forecasts ~+4% and target price +10cps (+4.2%) to NZ$2.50.GNE is hosting an investor day at the end of November which will reset GNE's future direction. NEUTRAL.

Genesis Energy - Retailing Future Profitability—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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/origin-energy-ltd" target="_blank" data-smartkarma-citation="entities:797" rel="noopener">Origin Energy (ORG AU)</a>  has disclosed a best and final offer from Brookfield/EIG at A$6.59 and US$1.86 per share, which implies A$9.53 per share, 8.1% higher than the previous offer.</li>
<li>AusSuper will <a href="file:///C:/Users/aag6u/Downloads/AustralianSuper%20rejects%20best%20and%20final%20Brookfield%20bid%20for%20Origin%20Energy.pdf" target="_blank" rel="noopener">vote against</a> the final offer. Taking advantage of the share price dip, AusSuper is said to have further increased its shareholding to 14.98% of outstanding shares.</li>
<li>The scheme will likely fail as a minority YES vote turnout of 88% is required to pass. Brookfield/EIG could return with an off-market takeover offer, but it also faces issues. </li>
</ul>



Origin Energy (ORG AU)  has disclosed a best and final offer from Brookfield/EIG at A$6.59 and US$1.86 per share, which implies A$9.53 per share, 8.1% higher than the previous offer.
AusSuper will vote against the final offer. Taking advantage of the share price dip, AusSuper is said to have further increased its shareholding to 14.98% of outstanding shares.
The scheme will likely fail as a minority YES vote turnout of 88% is required to pass. Brookfield/EIG could return with an off-market takeover offer, but it also faces issues. 


Origin Energy (ORG AU): AusSuper Wreaks Havoc on Brookfield/EIG’s Final Offer

<ul><li>The electricity sector appears to have defied gravity over the past two years, generally tracking sideways despite interest rates steadily rising with earnings growth the key factor, but does the growth justify the share price performance?</li><li>Our analysis suggests the risk of a negative share price reset is rising with a growing risk of earnings downgrades ~FY27 onwards and the return of a risk on environment favouring cyclical stocks over defensive yield stocks.</li><li>We maintain our sector underweight view. Our preferred sector picks, Contact Energy (CEN) and Genesis Energy (GNE) are NEUTRAL and we have UNDERPERFORM ratings on Mercury (MCY), Meridian Energy (MEL) and Manawa Energy (MNW).</li></ul>

The electricity sector appears to have defied gravity over the past two years, generally tracking sideways despite interest rates steadily rising with earnings growth the key factor, but does the growth justify the share price performance?Our analysis suggests the risk of a negative share price reset is rising with a growing risk of earnings downgrades ~FY27 onwards and the return of a risk on environment favouring cyclical stocks over defensive yield stocks.We maintain our sector underweight view. Our preferred sector picks, Contact Energy (CEN) and Genesis Energy (GNE) are NEUTRAL and we have UNDERPERFORM ratings on Mercury (MCY), Meridian Energy (MEL) and Manawa Energy (MNW).

Electricity Sector - Sector Set for an Electric Shock

New Zealand

Genesis Energy Ltd. generates, transports, and retails electricity. The Company owns and operates hydroelectric generating stations to produce electricity, as well as explores natural gas and bottled liquefied petroleum gas.

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Genesis Energy (GNE NZ)

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

Genesis Energy - Retailing Future Profitability—1Q24 Op Stats

Genesis Energy (GNE) had a mixed 1Q24 with normal hydro generation volumes and the effects of the Unit 5 outage only partially offset by a...

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

Origin Energy (ORG AU): AusSuper Wreaks Havoc on Brookfield/EIG’s Final Offer

The scheme will likely fail. The minority YES vote turnout of 53% is required for success. Brookfield/EIG could return with an off-market takeover...

Arun George

Electricity Sector - Sector Set for an Electric Shock

The electricity sector appears to have defied gravity over the past two years, generally tracking sideways despite interest rates steadily rising...

Forsyth Barr

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