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>Based on the current share prices of Contact Energy (CEN) and Manawa Energy (MNW), our view on the value of both stocks, and our view on whether the Commerce Commission (ComCom) will grant clearance for CEN's takeover of MNW, MNW shareholders should consider switching to CEN.</li><li>Doing so locks in some of the upside from the takeover, but removes the downside risk the ComCom does not grant clearance.</li><li>Our analysis suggests the market is pricing in a ~60% probability the deal will get clearance, slightly higher than our current view, making a switch more favourable. </li></ul>

Based on the current share prices of Contact Energy (CEN) and Manawa Energy (MNW), our view on the value of both stocks, and our view on whether the Commerce Commission (ComCom) will grant clearance for CEN's takeover of MNW, MNW shareholders should consider switching to CEN.Doing so locks in some of the upside from the takeover, but removes the downside risk the ComCom does not grant clearance.Our analysis suggests the market is pricing in a ~60% probability the deal will get clearance, slightly higher than our current view, making a switch more favourable. 

<ul><li>Manawa Energy (MNW) has received a takeover bid from Contact Energy (CEN) for the equivalent of NZ$5.95/share.</li><li>The offer price is a combination of CEN scrip and cash. With MNW directors unanimously supporting the deal, and key shareholders Infratil (IFT) and TECT Holdings (TECT) supporting the transaction, the only key risk to it not proceeding is Commerce Commission (ComCom) opposition.</li><li>Given the current political/regulatory climate, we cannot call what the ComCom will do. We increase our target price +$1.05cps (+20%) to NZ$6.20, reflecting a 50/50 weighted probability of the deal going ahead, and our positive view on CEN scrip which is ~80% of the NZ$5.95 offer price. </li></ul>

Manawa Energy (MNW) has received a takeover bid from Contact Energy (CEN) for the equivalent of NZ$5.95/share.The offer price is a combination of CEN scrip and cash. With MNW directors unanimously supporting the deal, and key shareholders Infratil (IFT) and TECT Holdings (TECT) supporting the transaction, the only key risk to it not proceeding is Commerce Commission (ComCom) opposition.Given the current political/regulatory climate, we cannot call what the ComCom will do. We increase our target price +$1.05cps (+20%) to NZ$6.20, reflecting a 50/50 weighted probability of the deal going ahead, and our positive view on CEN scrip which is ~80% of the NZ$5.95 offer price. 

Thematic (Sector/Industry)

<ul><li>August 2024 was one of the more eventful months for the electricity sector.</li><li>The sector was jolted into action by record high wholesale electricity prices at the beginning of the month, with electric shock treatment setting up the conditions to reverse those prices by month end.</li><li>August 2024 was also reporting season. Whilst the results were in line with expectations, the FY25 outlook for most of the companies was tempered by low hydro generation. </li></ul>

August 2024 was one of the more eventful months for the electricity sector.The sector was jolted into action by record high wholesale electricity prices at the beginning of the month, with electric shock treatment setting up the conditions to reverse those prices by month end.August 2024 was also reporting season. Whilst the results were in line with expectations, the FY25 outlook for most of the companies was tempered by low hydro generation. 

Power Points - Electric Shock Treatment Worked — Sept 2024

<div><div><ul><li>It has been a tough week in the electricity sector, but we have been encouraged by the swift response, with Methanex redirecting its gas supplies to Contact Energy (CEN) and Genesis Energy (GNE) the most significant example.</li><li>With the big changes in wholesale electricity prices, the continued falls in hydro storage (now at 44% of average nationally), and the likes of the Methanex gas deal, we have revised our near-term forecasts.</li><li>Thermal generators, CEN and GNE get a modest increase, but we have trimmed our Mercury (MCY) and Meridian Energy (MEL) forecasts. </li></ul></div></div>

It has been a tough week in the electricity sector, but we have been encouraged by the swift response, with Methanex redirecting its gas supplies to Contact Energy (CEN) and Genesis Energy (GNE) the most significant example.With the big changes in wholesale electricity prices, the continued falls in hydro storage (now at 44% of average nationally), and the likes of the Methanex gas deal, we have revised our near-term forecasts.Thermal generators, CEN and GNE get a modest increase, but we have trimmed our Mercury (MCY) and Meridian Energy (MEL) forecasts. 

Electricity Sector - Weathering the Drought — Outlook Update

<ul><li>Manawa Energy (MNW) is the first generator/retailer to downgrade guidance due to current wholesale electricity market conditions.</li><li>In essence, on some days it is unable to generate enough to cover its sales position and is being forced to buy from the spot market at elevated prices.</li><li>In addition, it is providing for a bad debt associated with an electricity retailer that MNW had been acting as an intermediary for. </li></ul>

Manawa Energy (MNW) is the first generator/retailer to downgrade guidance due to current wholesale electricity market conditions.In essence, on some days it is unable to generate enough to cover its sales position and is being forced to buy from the spot market at elevated prices.In addition, it is providing for a bad debt associated with an electricity retailer that MNW had been acting as an intermediary for. 

Manawa Energy - Dehydrated and Out of Puff

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)

Manawa Energy - Time to Flip the Switch?

Our analysis suggests the market is pricing in a ~60% probability the deal will get clearance, slightly higher than our current view, making a...

Forsyth Barr

Manawa Energy - Contact Swoops In

Whilst MNW’s share price has rerated +NZ$1.32 (+33%) to NZ$5.35 following the announcement, we retain our OUTPERFORM rating, with MNW shareholders...

Forsyth Barr

Power Points - Electric Shock Treatment Worked — Sept 2024

August 2024 was also reporting season. Whilst the results were in line with expectations, the FY25 outlook for most of the companies was tempered...

Forsyth Barr

Electricity Sector - Weathering the Drought — Outlook Update

Thermal generators, CEN and GNE get a modest increase, but we have trimmed our Mercury (MCY) and Meridian Energy (MEL) forecasts.

Forsyth Barr

Manawa Energy - Dehydrated and Out of Puff

Manawa Energy (MNW) is the first generator/retailer to downgrade guidance due to current wholesale electricity market conditions.

Forsyth Barr

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