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>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

<div><div><div><div><ul><li>New build was the key theme in November 2023. The month saw the completion of Mercury’s (MCY) Kaiwera Downs I wind farm, first power from Meridian Energy’s (MEL) Harapaki wind farm, and first power from Lodestone’s Kaitaia solar farm, New Zealand’s first grid scale solar farm.</li><li>The month also saw Contact Energy (CEN) announce substantial delays and cost increases at its Tauhara geothermal plant.</li><li>Looking to 2024, we expect 2.0TWh+ of generation to start construction, which is in addition to the ~3.4TWh under construction. </li></ul></div></div></div></div>

New build was the key theme in November 2023. The month saw the completion of Mercury’s (MCY) Kaiwera Downs I wind farm, first power from Meridian Energy’s (MEL) Harapaki wind farm, and first power from Lodestone’s Kaitaia solar farm, New Zealand’s first grid scale solar farm.The month also saw Contact Energy (CEN) announce substantial delays and cost increases at its Tauhara geothermal plant.Looking to 2024, we expect 2.0TWh+ of generation to start construction, which is in addition to the ~3.4TWh under construction. 

Power Points - Building Boom Set to Continue — Dec 2023

Equity Bottom-Up

<ul><li>Capex guidance cuts and more projects were the main features of Manawa Energy's (MNW) 1H24 result.</li><li>Revised capex guidance effectively reversed the capex increases from six months ago, enabling us to reverse our divided reductions and lift our target price +13cps (+3.7%) to NZ$3.60.</li><li>The result itself was a moderate miss with revenue lower than estimated. </li></ul>

Capex guidance cuts and more projects were the main features of Manawa Energy's (MNW) 1H24 result.Revised capex guidance effectively reversed the capex increases from six months ago, enabling us to reverse our divided reductions and lift our target price +13cps (+3.7%) to NZ$3.60.The result itself was a moderate miss with revenue lower than estimated. 

Manawa Energy - Capex Reversal — 1H24 Result

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)

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

Power Points - Building Boom Set to Continue — Dec 2023

Looking to 2024, we expect 2.0TWh+ of generation to start construction, which is in addition to the ~3.4TWh under construction.

Forsyth Barr

Manawa Energy - Capex Reversal — 1H24 Result

Capex guidance cuts and more projects were the main features of Manawa Energy's (MNW) 1H24 result. Revised capex guidance effectively reversed...

Forsyth Barr

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