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>Continued strong hydro inflows and remarkably strong electricity demand growth were the key take outs from November 2024.</li><li>Risks of a repeat of winter 2024 appear low, based on ASX futures prices.</li><li>With Contact Energy’s (CEN) Te Huka geothermal plant starting its month-long reliability run, there is significantly more generation in the market compared to 12 months ago. </li></ul>

Continued strong hydro inflows and remarkably strong electricity demand growth were the key take outs from November 2024.Risks of a repeat of winter 2024 appear low, based on ASX futures prices.With Contact Energy’s (CEN) Te Huka geothermal plant starting its month-long reliability run, there is significantly more generation in the market compared to 12 months ago. 

Power Points - Looking Ahead to the New Year — Dec 2024

<ul><li>October 2024 was another strong hydro inflow month, with lake levels rising well above average, helping to suppress wholesale electricity prices and relieve winter 2025 anxiety.</li><li>Energy Margin analysis indicates Mercury (MCY) had the strongest month operationally of the generator/retailers, with Meridian Energy (MEL) still held back by the high cost hedging it took out.</li><li>With Methanex recommencing operations, November 2024 should be a more representative month for the generator/retailers. </li></ul>

October 2024 was another strong hydro inflow month, with lake levels rising well above average, helping to suppress wholesale electricity prices and relieve winter 2025 anxiety.Energy Margin analysis indicates Mercury (MCY) had the strongest month operationally of the generator/retailers, with Meridian Energy (MEL) still held back by the high cost hedging it took out.With Methanex recommencing operations, November 2024 should be a more representative month for the generator/retailers. 

Power Points - Hydro Recovery Continues — November 2024

<div><div><div><div><ul><li>The government has announced 149 projects to be included in its Fast-Track Approvals Bill, expected to pass later this year.</li><li>This has the potential to give a much needed injection of energy into the downbeat NZ economy.</li><li>Paired with all but certain continued interest rate cuts, the contours of an economic recovery are starting to take shape.</li></ul></div></div></div></div>

The government has announced 149 projects to be included in its Fast-Track Approvals Bill, expected to pass later this year.This has the potential to give a much needed injection of energy into the downbeat NZ economy.Paired with all but certain continued interest rate cuts, the contours of an economic recovery are starting to take shape.

New Zealand Moving Out of the Slow Lane - Fast-Track Approvals Welcome News

<ul><li>September 2024 was a strong month for some, but a soft month for others.</li><li>Replenishment of the hydro lakes was a welcome relief for the sector, but hedge contracts designed to protect downside risk from ongoing dry conditions has seen Meridian Energy (MEL) struggle.</li><li>Contact Energy (CEN) and Mercury (MCY) have benefitted the most in the short-term from the rapid change in conditions. </li></ul>

September 2024 was a strong month for some, but a soft month for others.Replenishment of the hydro lakes was a welcome relief for the sector, but hedge contracts designed to protect downside risk from ongoing dry conditions has seen Meridian Energy (MEL) struggle.Contact Energy (CEN) and Mercury (MCY) have benefitted the most in the short-term from the rapid change in conditions. 

Power Points - Water Works Wonders​​​​​​​ — October 2024

<ul><li>We upgrade Mercury (MCY) to OUTPERFORM from NEUTRAL, as it is offering good value relative to Meridian Energy (MEL) in particular, and we expect near-term FY25 EBITDAF earnings will be better than guidance following recent rain.</li><li>Since 2018 MEL has always traded at a premium to its peers, but is currently trading at a near record premium using our preferred EV/EBITDAF less stay-in-business (SIB) capex metric.</li><li>Looking at the three largest generator/retailers, MEL's equity value is greater than Contact Energy (CEN) and MCY combined, and yet CEN and MCY's combined businesses generate over 30% more electricity and earnings than MEL. </li></ul>

We upgrade Mercury (MCY) to OUTPERFORM from NEUTRAL, as it is offering good value relative to Meridian Energy (MEL) in particular, and we expect near-term FY25 EBITDAF earnings will be better than guidance following recent rain.Since 2018 MEL has always traded at a premium to its peers, but is currently trading at a near record premium using our preferred EV/EBITDAF less stay-in-business (SIB) capex metric.Looking at the three largest generator/retailers, MEL's equity value is greater than Contact Energy (CEN) and MCY combined, and yet CEN and MCY's combined businesses generate over 30% more electricity and earnings than MEL. 

Electricity Sector - MCY Shining Brighter Than MEL

New Zealand

Manawa Energy Limited is a renewable energy company. The Company generate powers through hydro power stations and wind farms throughout Australasia. Manawa Energy is also engaged in electricity distribution.

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Manawa Energy Ltd (MNW NZ)

Power Points - Looking Ahead to the New Year — Dec 2024

Continued strong hydro inflows and remarkably strong electricity demand growth were the key take outs from November 2024.

Forsyth Barr

Power Points - Hydro Recovery Continues — November 2024

October 2024 was another strong hydro inflow month, with lake levels rising well above average, helping to suppress wholesale electricity prices...

Forsyth Barr

New Zealand Moving Out of the Slow Lane - Fast-Track Approvals Welcome News

The government has announced 149 projects to be included in its Fast-Track Approvals Bill, expected to pass later this year.

Forsyth Barr

Power Points - Water Works Wonders — October 2024

These two stocks are our preferred of the large generator/retailers and along with Manawa Energy (MNW) are rated OUTPERFORM.

Forsyth Barr

Electricity Sector - MCY Shining Brighter Than MEL

MCY joins CEN and Manawa Energy (MNW) as our preferred electricity sector stocks with OUTPERFORM ratings. Genesis Energy (GNE) and MEL are rated...

Forsyth Barr

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52-week Range

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Power Points - Looking Ahead to the New Year — Dec 2024

Continued strong hydro inflows and remarkably strong electricity demand growth were the key take outs from November 2024.

Forsyth Barr

Power Points - Hydro Recovery Continues — November 2024

October 2024 was another strong hydro inflow month, with lake levels rising well above average, helping to suppress wholesale electricity prices...

Forsyth Barr

New Zealand Moving Out of the Slow Lane - Fast-Track Approvals Welcome News

The government has announced 149 projects to be included in its Fast-Track Approvals Bill, expected to pass later this year.

Forsyth Barr

Power Points - Water Works Wonders​​​​​​​ — October 2024

These two stocks are our preferred of the large generator/retailers and along with Manawa Energy (MNW) are rated OUTPERFORM.

Forsyth Barr

Electricity Sector - MCY Shining Brighter Than MEL

MCY joins CEN and Manawa Energy (MNW) as our preferred electricity sector stocks with OUTPERFORM ratings. Genesis Energy (GNE) and MEL are rated...

Forsyth Barr

Power Points - Water Works Wonders — October 2024