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>We like the valuation metrics that the sector is currently offering, with the electricity sector underperforming its yield peers despite performing well vs the market.</li><li>Electricity demand increased +5.7% in August 2025 vs 2024, with 60% of the increase due to New Zealand’s largest consumer, NZAS, returning to full demand in late August for the first time in 14 months.</li><li>FY25 saw the combined EBITDAF of the generator–retailers fall -9% vs FY24.</li></ul>

We like the valuation metrics that the sector is currently offering, with the electricity sector underperforming its yield peers despite performing well vs the market.Electricity demand increased +5.7% in August 2025 vs 2024, with 60% of the increase due to New Zealand’s largest consumer, NZAS, returning to full demand in late August for the first time in 14 months.FY25 saw the combined EBITDAF of the generator–retailers fall -9% vs FY24.

Power Points - DEMAND STORMS BACK—SEPTEMBER 2025

<ul><li>FY25 was a challenging year operationally for all of the generator/retailers, but also a year of mixed fortunes.</li><li>We are forecasting MEL and MCY to report FY25 EBITDAF -33% and -12% below FY24 respectively.</li><li>Outlook commentary and guidance should be positive relative to FY25, and assuming relatively normal hydrology, we anticipate a bounce-back in earnings.</li></ul>

FY25 was a challenging year operationally for all of the generator/retailers, but also a year of mixed fortunes.We are forecasting MEL and MCY to report FY25 EBITDAF -33% and -12% below FY24 respectively.Outlook commentary and guidance should be positive relative to FY25, and assuming relatively normal hydrology, we anticipate a bounce-back in earnings.

Electricity Sector Winter 2024 Hurt, a Lot—FY25 Preview

<ul><li>In this report we take a closer look at capacity markets: what they are, whether they are effective, and the possible implications if New Zealand were to adopt a capacity market.</li><li>The Frontier report, commissioned by the Ministerial Review in the performance of the electricity market, was a response to the high prices of winter 2024.</li><li>CMs are a common feature of electricity markets overseas.</li></ul>

In this report we take a closer look at capacity markets: what they are, whether they are effective, and the possible implications if New Zealand were to adopt a capacity market.The Frontier report, commissioned by the Ministerial Review in the performance of the electricity market, was a response to the high prices of winter 2024.CMs are a common feature of electricity markets overseas.

Electricity Sector Capacity Considerations

<ul><li>Hydro storage has recovered above the long-run average, benefiting all generators, with Mercury (MCY) being the biggest winner in June 2025.</li><li>Regulatory uncertainty looms, but is not expected to materially affect valuations, with MCY rated OUTPERFORM and others NEUTRAL.</li><li>Genesis Energy (GNE) is considering a new peaking plant, with discussions progressing positively to extend the Rankine units' operational life.</li></ul>

Hydro storage has recovered above the long-run average, benefiting all generators, with Mercury (MCY) being the biggest winner in June 2025.Regulatory uncertainty looms, but is not expected to materially affect valuations, with MCY rated OUTPERFORM and others NEUTRAL.Genesis Energy (GNE) is considering a new peaking plant, with discussions progressing positively to extend the Rankine units' operational life.

Power Points Watts in the Bank—July 2025

<ul><li>May 2025 saw a shift from dry winter concerns to upcoming political and regulatory decisions, with a Methanex gas deal and moderate rainfall alleviating winter 2025 risks.</li><li>The Ministerial Review and Energy Competition Task Force are anticipated to prompt changes, though they may not significantly impact company valuations.</li><li>Mercury (MCY) remains the preferred investment, trading at a discount relative to its history and peers, with the sector showing resilience despite potential challenges in winter 2026.</li></ul>

May 2025 saw a shift from dry winter concerns to upcoming political and regulatory decisions, with a Methanex gas deal and moderate rainfall alleviating winter 2025 risks.The Ministerial Review and Energy Competition Task Force are anticipated to prompt changes, though they may not significantly impact company valuations.Mercury (MCY) remains the preferred investment, trading at a discount relative to its history and peers, with the sector showing resilience despite potential challenges in winter 2026.

Power Points Water Worries Washed Away—June 2025

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 - DEMAND STORMS BACK—SEPTEMBER 2025

We like the valuation metrics that the sector is currently offering, with the electricity sector underperforming its yield peers despite performing...

Forsyth Barr

Electricity Sector Winter 2024 Hurt, a Lot—FY25 Preview

Outlook commentary and guidance should be positive relative to FY25, and assuming relatively normal hydrology, we anticipate a bounce-back in...

Forsyth Barr

Electricity Sector Capacity Considerations

In this report we take a closer look at capacity markets: what they are, whether they are effective, and the possible implications if New Zealand...

Forsyth Barr

Power Points Watts in the Bank—July 2025

Hydro storage has recovered above the long-run average, benefiting all generators, with Mercury (MCY) being the biggest winner in June 2025.

Forsyth Barr

Power Points Water Worries Washed Away—June 2025

May 2025 saw a shift from dry winter concerns to upcoming political and regulatory decisions, with a Methanex gas deal and moderate rainfall...

Forsyth Barr

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