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>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

<ul><li>We like the valuation metrics that the sector is currently offering, with the electricity sector underperforming its yield peers despite performing well vs the market.</li><li>Electricity demand increased +5.7% in August 2025 vs 2024, with 60% of the increase due to New Zealand’s largest consumer, NZAS, returning to full demand in late August for the first time in 14 months.</li><li>FY25 saw the combined EBITDAF of the generator–retailers fall -9% vs FY24.</li></ul>

We like the valuation metrics that the sector is currently offering, with the electricity sector underperforming its yield peers despite performing well vs the market.Electricity demand increased +5.7% in August 2025 vs 2024, with 60% of the increase due to New Zealand’s largest consumer, NZAS, returning to full demand in late August for the first time in 14 months.FY25 saw the combined EBITDAF of the generator–retailers fall -9% vs FY24.

Power Points - DEMAND STORMS BACK—SEPTEMBER 2025

<ul><li>FY25 was a challenging year operationally for all of the generator/retailers, but also a year of mixed fortunes.</li><li>We are forecasting MEL and MCY to report FY25 EBITDAF -33% and -12% below FY24 respectively.</li><li>Outlook commentary and guidance should be positive relative to FY25, and assuming relatively normal hydrology, we anticipate a bounce-back in earnings.</li></ul>

FY25 was a challenging year operationally for all of the generator/retailers, but also a year of mixed fortunes.We are forecasting MEL and MCY to report FY25 EBITDAF -33% and -12% below FY24 respectively.Outlook commentary and guidance should be positive relative to FY25, and assuming relatively normal hydrology, we anticipate a bounce-back in earnings.

Electricity Sector Winter 2024 Hurt, a Lot—FY25 Preview

Equity Bottom-Up

<ul><li>The most notable announcement in the past month was the deal between the four large generator/retailers to support the retention of the third Rankine Unit through to at least 2036.</li><li>We have upgraded Contact Energy (CEN) to OUTPERFORM.</li><li>July 2025 was also notable for very high peak demand periods that largely went unrecognised, and wholesale electricity prices ~-70% lower than July 2024.</li></ul>

The most notable announcement in the past month was the deal between the four large generator/retailers to support the retention of the third Rankine Unit through to at least 2036.We have upgraded Contact Energy (CEN) to OUTPERFORM.July 2025 was also notable for very high peak demand periods that largely went unrecognised, and wholesale electricity prices ~-70% lower than July 2024.

Power Points Delivering Sector Security—August 2025

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)

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

Power Points - DEMAND STORMS BACK—SEPTEMBER 2025

We like the valuation metrics that the sector is currently offering, with the electricity sector underperforming its yield peers despite performing...

Forsyth Barr

Electricity Sector Winter 2024 Hurt, a Lot—FY25 Preview

Outlook commentary and guidance should be positive relative to FY25, and assuming relatively normal hydrology, we anticipate a bounce-back in...

Forsyth Barr

Power Points Delivering Sector Security—August 2025

The most notable announcement in the past month was the deal between the four large generator/retailers to support the retention of the third...

Forsyth Barr

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