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>In the beginning Genesis Energy (GNE) was focussed on thermal generation, but it is now joining the exodus to renewable generation with a target of being 95% renewable by 2035.</li><li>To achieve that goal, GNE plans to invest ~NZ$1.1b in solar, wind, and batteries, use its balance sheet more and offtake agreements less.</li><li>The strategy update moves GNE's position in the market away from dividends towards a more growth oriented business, with the -2.6cps cut to the dividend (now 14cps) the cost of using its balance sheet more. </li></ul>

In the beginning Genesis Energy (GNE) was focussed on thermal generation, but it is now joining the exodus to renewable generation with a target of being 95% renewable by 2035.To achieve that goal, GNE plans to invest ~NZ$1.1b in solar, wind, and batteries, use its balance sheet more and offtake agreements less.The strategy update moves GNE's position in the market away from dividends towards a more growth oriented business, with the -2.6cps cut to the dividend (now 14cps) the cost of using its balance sheet more. 

Genesis Energy - Thermal Exodus — 2023 Investor Day

<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

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

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 - Thermal Exodus — 2023 Investor Day

In the beginning Genesis Energy (GNE) was focussed on thermal generation, but it is now joining the exodus to renewable generation with a target of...

Forsyth Barr

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

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

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