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>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

<ul><li>Genesis Energy (GNE) delivered the expected record result, with FY23 EBITDAF up +19% on the record set in the prior year, but that was overshadowed by a big negative surprise on operating costs, and to a lesser extent capex.</li><li>Both opex and capex are materially higher than previously thought, with the opex increase appearing stickier than capex.</li><li>In addition, GNE also surprised by holding the FY23 dividend flat to FY22, sending a signal it is likely to be more cautious going forward. </li></ul>

Genesis Energy (GNE) delivered the expected record result, with FY23 EBITDAF up +19% on the record set in the prior year, but that was overshadowed by a big negative surprise on operating costs, and to a lesser extent capex.Both opex and capex are materially higher than previously thought, with the opex increase appearing stickier than capex.In addition, GNE also surprised by holding the FY23 dividend flat to FY22, sending a signal it is likely to be more cautious going forward. 

Genesis Energy - Cost Crunch Tarnishes Record Result — FY23

<ul><li>Strong commercial pricing and record hydro generation: The key features of the 4Q23 operating statistics were the strong hydro generation numbers and strong commercial electricity pricing.</li><li>FY23 result will be another record: We are now forecasting GNE to produce a record FY23 EBITDAF result of NZ$532m, up +NZ$92m (+21%) on the old record of NZ$440m set in FY22.</li><li>Unit 5 outage extended to late August 2023: The only significant negative from the 4Q release was the news that the Unit 5 outage has been extended a month to the end of August 2023. </li></ul>

Strong commercial pricing and record hydro generation: The key features of the 4Q23 operating statistics were the strong hydro generation numbers and strong commercial electricity pricing.FY23 result will be another record: We are now forecasting GNE to produce a record FY23 EBITDAF result of NZ$532m, up +NZ$92m (+21%) on the old record of NZ$440m set in FY22.Unit 5 outage extended to late August 2023: The only significant negative from the 4Q release was the news that the Unit 5 outage has been extended a month to the end of August 2023. 

Genesis Energy: Charging to the Finish — 4Q23 Op Stats

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/genex-power-ltd" target="_blank" data-smartkarma-citation="entities:29079:1" rel="noopener">Genex Power Ltd (GNX AU)</a> IE considers <a href="https://www.smartkarma.com/entities/electric-power-development-c" target="_blank" data-smartkarma-citation="entities:292:1" rel="noopener">Electric Power Development C (9513 JP)</a>’s scheme (A$0.275) and off-market takeover offer (A$0.270) fair and reasonable. </li>
<li>The offer is conditional on FIRB and shareholder approval. Skip Capital, which can block the scheme, has not declared its intention regarding J-Power's offer or launched a competing offer.</li>
<li>Skip’s silence suggests a greater probability of accepting the scheme offer. If the scheme fails, the takeover offer, due to its structure and price, caps the downside.</li>
</ul>


The Genex Power Ltd (GNX AU) IE considers Electric Power Development C (9513 JP)’s scheme (A$0.275) and off-market takeover offer (A$0.270) fair and reasonable. 
The offer is conditional on FIRB and shareholder approval. Skip Capital, which can block the scheme, has not declared its intention regarding J-Power's offer or launched a competing offer.
Skip’s silence suggests a greater probability of accepting the scheme offer. If the scheme fails, the takeover offer, due to its structure and price, caps the downside.


Genex Power (GNX AU): Scheme Vote on 16 July as Skip Remains Silent

Thematic (Sector/Industry)

<ul><li>May 2024 was a watershed month for the sector, ending with the news that NZAS has signed three 20 year electricity supply contracts, providing welcome certainty to the sector.</li><li>It was also a very strong electricity demand month, only partly explained by the colder weather as evidence mounts that the long-expected electricity demand growth is here.</li><li>Strong electricity demand and declining hydro storage lakes resulted in a record average Otahuhu (OTA) wholesale electricity price.</li></ul>

May 2024 was a watershed month for the sector, ending with the news that NZAS has signed three 20 year electricity supply contracts, providing welcome certainty to the sector.It was also a very strong electricity demand month, only partly explained by the colder weather as evidence mounts that the long-expected electricity demand growth is here.Strong electricity demand and declining hydro storage lakes resulted in a record average Otahuhu (OTA) wholesale electricity price.

Power Points - Demand Continues to Heat Up — June 2024 External Inbox Updates

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)

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

Genesis Energy - Cost Crunch Tarnishes Record Result — FY23

Genesis Energy (GNE) delivered the expected record result, with FY23 EBITDAF up +19% on the record set in the prior year, but that was overshadowed...

Forsyth Barr

Genesis Energy: Charging to the Finish — 4Q23 Op Stats

Genesis Energy (GNE) has had a strong finish to FY23 with favourable commercial pricing outcomes and record 4Q hydro generation lifting our FY23...

Forsyth Barr

Genex Power (GNX AU): Scheme Vote on 16 July as Skip Remains Silent

Skip’s silence suggests a greater probability of accepting the scheme. The takeover offer caps the downside due to structure and price. The gross...

Arun George

Power Points - Demand Continues to Heat Up — June 2024 External Inbox Updates

May 2024 was a watershed month for the sector, ending with the news that NZAS has signed three 20 year electricity supply contracts, providing...

Forsyth Barr

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