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>Manawa Energy's (MNW) FY24 EBITDAF guidance upgrade (+11% at the midpoint) is encouraging, notwithstanding three of the four factors cited for the upgrade are more one-off in nature and come from favourable 2H24 operating conditions.</li><li>The most positive aspect of the upgrade is the indication MNW has been able to reduce operating costs, which is particularly encouraging given the current inflationary environment.</li><li>We have increased our target price +25cps (+6.7%) to NZ$3.95 with the earnings upgrades also enabling a dividend increase. </li></ul>

Manawa Energy's (MNW) FY24 EBITDAF guidance upgrade (+11% at the midpoint) is encouraging, notwithstanding three of the four factors cited for the upgrade are more one-off in nature and come from favourable 2H24 operating conditions.The most positive aspect of the upgrade is the indication MNW has been able to reduce operating costs, which is particularly encouraging given the current inflationary environment.We have increased our target price +25cps (+6.7%) to NZ$3.95 with the earnings upgrades also enabling a dividend increase. 

Manawa Energy - Trading Energises Earnings

Thematic (Sector/Industry)

<div><div><div><div><ul><li>Quarterly reports released in February 2024 from the wind turbine manufacturers suggest prices are starting to ease, which would be welcome news for wind developers.</li><li>1H24 results reported by the big four generator/retailers contained few surprises but did highlight ongoing opex and consenting challenges, with opex generally negatively surprising and delays to several projects.</li><li>Generator/retailer share prices generally remain elevated, in particular Mercury (MCY) which is trading just short of record highs. </li></ul></div></div></div></div>

Quarterly reports released in February 2024 from the wind turbine manufacturers suggest prices are starting to ease, which would be welcome news for wind developers.1H24 results reported by the big four generator/retailers contained few surprises but did highlight ongoing opex and consenting challenges, with opex generally negatively surprising and delays to several projects.Generator/retailer share prices generally remain elevated, in particular Mercury (MCY) which is trading just short of record highs. 

Power Points -  Wind Regaining Its Puff? — March 2024

<ul><li>For the first time in three years we are moving our WACC assumptions down.</li><li>This is driven by a modestly lower (-25 bps) interpolated 10-year interest rate assumption; our proxy for the risk free rate.</li><li>We also incorporate our C&amp;ESG ratings into our WACC assumptions. We do this on an overall neutral basis, with a scale of -25 bps to +25 bps added to the cost of equity. </li></ul>

For the first time in three years we are moving our WACC assumptions down.This is driven by a modestly lower (-25 bps) interpolated 10-year interest rate assumption; our proxy for the risk free rate.We also incorporate our C&amp;ESG ratings into our WACC assumptions. We do this on an overall neutral basis, with a scale of -25 bps to +25 bps added to the cost of equity. 

Equity Strategy - WACC Review; a Lower Rfr and Adding C&ESG

<ul><li>January 2024 saw a good top-up of hydro lakes, easing near-term hydro generation concerns, strong electricity demand growth and EV sales collapsing to pre-Clean Car Discount levels.</li><li>Share price performance was subdued, with two stocks outperforming and three underperforming.</li><li>We continue to view the sector as expensive with the Electricity Authority’s (EA) generation development survey indicating more solar projects are being built (or are about to be built) than has been publicly announced, suggesting a short-term overbuild risk is real.</li></ul>

January 2024 saw a good top-up of hydro lakes, easing near-term hydro generation concerns, strong electricity demand growth and EV sales collapsing to pre-Clean Car Discount levels.Share price performance was subdued, with two stocks outperforming and three underperforming.We continue to view the sector as expensive with the Electricity Authority’s (EA) generation development survey indicating more solar projects are being built (or are about to be built) than has been publicly announced, suggesting a short-term overbuild risk is real.

Power Points - Clean Car Discount Cuts Sales—February 2024

<ul><li>December 2023 saw hydro lake levels fall, wholesale electricity prices rise, and more thermal generation being used; the market will be keen to avoid a dry January.</li><li>Whilst it is too early to be overly concerned, NIWA’s climate outlook points to below average river flows being likely to the end of March 2024.</li><li>We view Genesis Energy (GNE) as the main beneficiary if conditions remain dry, with Contact Energy (CEN) the most exposed. </li></ul>

December 2023 saw hydro lake levels fall, wholesale electricity prices rise, and more thermal generation being used; the market will be keen to avoid a dry January.Whilst it is too early to be overly concerned, NIWA’s climate outlook points to below average river flows being likely to the end of March 2024.We view Genesis Energy (GNE) as the main beneficiary if conditions remain dry, with Contact Energy (CEN) the most exposed. 

Power Points - Dry January Not What the Sector Wants — January 2024

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 - Trading Energises Earnings

Nevertheless, we still view MNW as expensive relative to most of its peers and it is still some way off reaching a final investment decision on its...

Forsyth Barr

Power Points - Wind Regaining Its Puff? — March 2024

Quarterly reports released in February 2024 from the wind turbine manufacturers suggest prices are starting to ease, which would be welcome news...

Forsyth Barr

Equity Strategy - WACC Review; a Lower Rfr and Adding C&ESG

For the first time in three years we are moving our WACC assumptions down. This is driven by a modestly lower (-25 bps) interpolated 10-year...

Forsyth Barr

Power Points - Clean Car Discount Cuts Sales—February 2024

January 2024 saw a good top-up of hydro lakes, easing near-term hydro generation concerns, strong electricity demand growth and EV sales collapsing...

Forsyth Barr

Power Points - Dry January Not What the Sector Wants — January 2024

December 2023 saw hydro lake levels fall, wholesale electricity prices rise, and more thermal generation being used; the market will be keen to...

Forsyth Barr

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