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>Mercury's investor day highlighted several incremental positives that should deliver value for investors, including a FY30 EBITDAF target implying 5%-7% annualized growth.</li><li>There is potential upside from geothermal development through a mix of greenfield and brownfield projects, albeit post-2030.</li><li>Mercury's new management team is expected to maintain its strong execution track record, reaffirming MCY as a top pick in the electricity sector with an OUTPERFORM rating.</li></ul>

Mercury's investor day highlighted several incremental positives that should deliver value for investors, including a FY30 EBITDAF target implying 5%-7% annualized growth.There is potential upside from geothermal development through a mix of greenfield and brownfield projects, albeit post-2030.Mercury's new management team is expected to maintain its strong execution track record, reaffirming MCY as a top pick in the electricity sector with an OUTPERFORM rating.

Mercury Developing Options—2025 IR Day Take-Outs

Thematic (Sector/Industry)

<ul><li>November 2025 was dominated by three of the four generator-retailers hosting investor days—all three of which were positive on the long-term outlook for the sector and focused on how each business will meet the expected demand growth and fuel supply challenges.</li><li>Looking ahead to 2026, key themes are likely to be the election, the progression of new developments, the gas market (and the LNG decision) and electricity demand growth.</li><li>Our preferred sector exposures are Contact Energy (CEN) and Mercury (MCY), both rated OUTPERFORM.</li></ul>

November 2025 was dominated by three of the four generator-retailers hosting investor days—all three of which were positive on the long-term outlook for the sector and focused on how each business will meet the expected demand growth and fuel supply challenges.Looking ahead to 2026, key themes are likely to be the election, the progression of new developments, the gas market (and the LNG decision) and electricity demand growth.Our preferred sector exposures are Contact Energy (CEN) and Mercury (MCY), both rated OUTPERFORM.

Power Points - FUELLED FOR 2026—December 2025

<ul><li>New Zealand is around 12 months from a general election, where electricity is more likely to be an election issue than at any election since 2014.</li><li>Meridian Energy (MEL), as the largest hydro generator, is the company most at risk from the implementation of a negative policy, and we downgrade it to NEUTRAL from OUTPERFORM.</li><li>The Frontier report, released 1 October 2025, is the latest in a long line of studies into the electricity market.</li></ul>

New Zealand is around 12 months from a general election, where electricity is more likely to be an election issue than at any election since 2014.Meridian Energy (MEL), as the largest hydro generator, is the company most at risk from the implementation of a negative policy, and we downgrade it to NEUTRAL from OUTPERFORM.The Frontier report, released 1 October 2025, is the latest in a long line of studies into the electricity market.

Electricity Sector - Pondering The Political Landscape—Assessing The Headwind

<ul><li>New Zealand’s electricity sector finished September 2025 on firmer footing; Cabinet’s review of the electricity sector delivered a benign outcome; the Commerce Commission (ComCom) has given draft approval to the Huntly Firming Option (HFO) deal; and hydro storage is back above average.</li><li>The big news from the past month was Cabinet’s response to the Frontier review of New Zealand’s electricity sector, which stopped short of fundamental reform, opting instead for incremental adjustments.</li><li>Interest rate falls during September 2025 saw the sector dividend-yield spread to the 10-year government bond rate increase to its highest level in three years.</li></ul>

New Zealand’s electricity sector finished September 2025 on firmer footing; Cabinet’s review of the electricity sector delivered a benign outcome; the Commerce Commission (ComCom) has given draft approval to the Huntly Firming Option (HFO) deal; and hydro storage is back above average.The big news from the past month was Cabinet’s response to the Frontier review of New Zealand’s electricity sector, which stopped short of fundamental reform, opting instead for incremental adjustments.Interest rate falls during September 2025 saw the sector dividend-yield spread to the 10-year government bond rate increase to its highest level in three years.

Power Points - WET AND WINDY—October 2025

<ul><li>The outcome of the long-awaited Frontier report and Cabinet review is a package of proposals that tweaks New Zealand’s energy system but falls well short of structural reform.</li><li>The two most significant proposals are government underwriting of an LNG import terminal (although this is not yet certain) and removing the perceived barrier that partially Crown-owned generator-retailers were unable to raise capital.</li><li>With the review outcomes better than expected, our sector valuations and ratings are unchanged. Contact Energy (CEN), Mercury (MCY), and Meridian Energy (MEL) are rated OUTPERFORM, while Genesis Energy (GNE) is rated NEUTRAL.</li></ul>

The outcome of the long-awaited Frontier report and Cabinet review is a package of proposals that tweaks New Zealand’s energy system but falls well short of structural reform.The two most significant proposals are government underwriting of an LNG import terminal (although this is not yet certain) and removing the perceived barrier that partially Crown-owned generator-retailers were unable to raise capital.With the review outcomes better than expected, our sector valuations and ratings are unchanged. Contact Energy (CEN), Mercury (MCY), and Meridian Energy (MEL) are rated OUTPERFORM, while Genesis Energy (GNE) is rated NEUTRAL.

Electricity Sector - No Electric Shocks from Cabinet Review

Malaysia

Mercury Industries Berhad is an investment holding company.  The Company, through its subsidiaries, invests and develops property, and markets paint and other related products.  Mercury Industries also manufactures and sells putty, underseal, lacquer, and paints for the automotive Industry.

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Mercury Industries (MER MK)

Mercury Developing Options—2025 IR Day Take-Outs

Mercury's investor day highlighted several incremental positives that should deliver value for investors, including a FY30 EBITDAF target implying...

Forsyth Barr

Power Points - FUELLED FOR 2026—December 2025

Looking ahead to 2026, key themes are likely to be the election, the progression of new developments, the gas market (and the LNG decision) and...

Forsyth Barr

Electricity Sector - Pondering The Political Landscape—Assessing The Headwind

New Zealand is around 12 months from a general election, where electricity is more likely to be an election issue than at any election since 2014.

Forsyth Barr

Power Points - WET AND WINDY—October 2025

Interest rate falls during September 2025 saw the sector dividend-yield spread to the 10-year government bond rate increase to its highest level in...

Forsyth Barr

Electricity Sector - No Electric Shocks from Cabinet Review

The outcome of the long-awaited Frontier report and Cabinet review is a package of proposals that tweaks New Zealand’s energy system but falls well...

Forsyth Barr

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