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>August 2023 saw the big four generator/retailers report operating results in line with expectations, but collectively they guided to cost increases ~2.5x forecast FY24 inflation, tempering the earnings outlook.</li><li>Development continues apace with six generation and two battery projects costing ~NZ$2.5b expected to reach final investment decision (FID) in FY24, although a positive NZAS decision is likely a pre-requisite for most of the projects.</li><li>August 2023 share price performance for most of the generator/retailers was weak, resulting in dividend yield spreads climbing off record lows. </li></ul>

August 2023 saw the big four generator/retailers report operating results in line with expectations, but collectively they guided to cost increases ~2.5x forecast FY24 inflation, tempering the earnings outlook.Development continues apace with six generation and two battery projects costing ~NZ$2.5b expected to reach final investment decision (FID) in FY24, although a positive NZAS decision is likely a pre-requisite for most of the projects.August 2023 share price performance for most of the generator/retailers was weak, resulting in dividend yield spreads climbing off record lows. 

Power Points - Costs Crescendo — September 2023

Equity Bottom-Up

<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>We are expecting the largest ever, single year increase in the collective EBITDAF earnings of the big four generator/retailers, up +18% in FY23 to NZ$2.7b.</li><li>In many ways it was the perfect year with acquisitions, new generation, record high hydro generation, strong retail margin growth and one-off gains lifting earnings.</li><li>For the first time ever, MCY will report the strongest earnings in the sector, aided by all of the factors noted. </li></ul>

We are expecting the largest ever, single year increase in the collective EBITDAF earnings of the big four generator/retailers, up +18% in FY23 to NZ$2.7b.In many ways it was the perfect year with acquisitions, new generation, record high hydro generation, strong retail margin growth and one-off gains lifting earnings.For the first time ever, MCY will report the strongest earnings in the sector, aided by all of the factors noted. 

Electricity Sector - Step Change — FY23 Preview

<div><div><div><div><ul><li>July 2023 saw above average hydro conditions continue, with the exception of the lower South Island.</li><li>The big news of the month came from the Government reversing its emissions trading scheme (ETS) settings decision, which helped carbon prices recover to ~NZ$60/unit from a low of ~NZ$35/unit in late June 2023.</li><li>Electricity stocks continue to perform well despite interest rates edging higher and ASX futures prices edging lower as the market continues to favour risk off. </li></ul></div></div></div></div>

July 2023 saw above average hydro conditions continue, with the exception of the lower South Island.The big news of the month came from the Government reversing its emissions trading scheme (ETS) settings decision, which helped carbon prices recover to ~NZ$60/unit from a low of ~NZ$35/unit in late June 2023.Electricity stocks continue to perform well despite interest rates edging higher and ASX futures prices edging lower as the market continues to favour risk off. 

Power Points - Offshore Wind Brewing - August 2023

<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

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)

Power Points - Costs Crescendo — September 2023

August 2023 share price performance for most of the generator/retailers was weak, resulting in dividend yield spreads climbing off record lows.

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

Electricity Sector - Step Change — FY23 Preview

We are expecting the largest ever, single year increase in the collective EBITDAF earnings of the big four generator/retailers, up +18% in FY23 to...

Forsyth Barr

Power Points - Offshore Wind Brewing - August 2023

Electricity stocks continue to perform well despite interest rates edging higher and ASX futures prices edging lower as the market continues to...

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

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