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>FY24 has been a watershed year for Meridian Energy (MEL), following the signing of the landmark NZAS contract and a strong operating performance that will deliver record EBITDAF earnings.</li><li>Whilst MEL's June 2024 performance was solid, it was down on recent months as dry hydro conditions impacted earnings; we expect the trend to continue into FY25.</li><li>The flipside of lower hydro generation is high wholesale electricity prices, which should help lift FY26 and beyond earnings. We increase our target price +15cps (+2.3%) but retain our UNDERPERFORM rating, with MEL remaining the most expensive electricity stock.</li></ul>

FY24 has been a watershed year for Meridian Energy (MEL), following the signing of the landmark NZAS contract and a strong operating performance that will deliver record EBITDAF earnings.Whilst MEL's June 2024 performance was solid, it was down on recent months as dry hydro conditions impacted earnings; we expect the trend to continue into FY25.The flipside of lower hydro generation is high wholesale electricity prices, which should help lift FY26 and beyond earnings. We increase our target price +15cps (+2.3%) but retain our UNDERPERFORM rating, with MEL remaining the most expensive electricity stock.

Meridian Energy - Closing Out a Watershed Year — June 2024

<ul><li>Meridian Energy's (MEL) investor day was notable for its consistent messaging relative to past presentations, as opposed to new announcements that may drive a change in thinking.</li><li>MEL didn't even tag its presentation as material.</li><li>The day reinforced the view (to us) that following the new NZAS electricity deal, MEL's focus is squarely on developing new generation and progressing its pipeline of opportunities, with significant pipeline progression revealed. </li></ul>

Meridian Energy's (MEL) investor day was notable for its consistent messaging relative to past presentations, as opposed to new announcements that may drive a change in thinking.MEL didn't even tag its presentation as material.The day reinforced the view (to us) that following the new NZAS electricity deal, MEL's focus is squarely on developing new generation and progressing its pipeline of opportunities, with significant pipeline progression revealed. 

Meridian Energy - Steadily Developing for the Future

<ul><li>Strong hydrology, wind, and wholesale electricity prices have combined to produce a strong March 2024 and 3Q24 operating performance for Meridian Energy (MEL), with that momentum expected to flow through to 4Q24.</li><li>We have lifted our FY24 EBITDAF and dividend forecast +NZ$53m (+6%) and +0.4cps (+2%) respectively, driving our +4% (+20cps) increase in target price to NZ$5.25.</li><li>The changes are largely short-term operational benefits, so the longer-term outlook is little changed. </li></ul>

Strong hydrology, wind, and wholesale electricity prices have combined to produce a strong March 2024 and 3Q24 operating performance for Meridian Energy (MEL), with that momentum expected to flow through to 4Q24.We have lifted our FY24 EBITDAF and dividend forecast +NZ$53m (+6%) and +0.4cps (+2%) respectively, driving our +4% (+20cps) increase in target price to NZ$5.25.The changes are largely short-term operational benefits, so the longer-term outlook is little changed. 

Meridian Energy - It's W3 — Wind, Water and Wholesale Prices

<ul><li>Meridian Energy (MEL) delivered a record 1H24 operating result for its New Zealand operations, with strong retail margin growth underpinning the increase in earnings.</li><li>Whilst ongoing opex challenges took some of the shine off, the outlook for the remainder of FY24 is positive as MEL and the rest of the industry await the NZAS decision (which will hopefully be in the next few months).</li><li>Forecasts, target price, and our investment view are little changed. UNDERPERFORM.</li></ul>

Meridian Energy (MEL) delivered a record 1H24 operating result for its New Zealand operations, with strong retail margin growth underpinning the increase in earnings.Whilst ongoing opex challenges took some of the shine off, the outlook for the remainder of FY24 is positive as MEL and the rest of the industry await the NZAS decision (which will hopefully be in the next few months).Forecasts, target price, and our investment view are little changed. UNDERPERFORM.

Meridian Energy - Sun Shines on Electrification — 1H24 Result

<ul><li>Meridian Energy (MEL) has closed out 1H24 with a (slightly) soft month operationally, due mainly to below average hydro generation.</li><li>Despite the soft finish, we expect 1H24 to come in ahead of 1H23 with the key drivers higher wholesale electricity prices and retail margins. </li><li>Opex remains a concern and is running +2% above the top of MEL's FY24 guidance range. </li></ul>

Meridian Energy (MEL) has closed out 1H24 with a (slightly) soft month operationally, due mainly to below average hydro generation.Despite the soft finish, we expect 1H24 to come in ahead of 1H23 with the key drivers higher wholesale electricity prices and retail margins. Opex remains a concern and is running +2% above the top of MEL's FY24 guidance range. 

Meridian Energy - Treading Water — 1H24 Operating Statistics

New Zealand

Meridian Energy Ltd. operates as a state-owned electricity generator. The Company produces hydro-electric power and supplies electricity to residential, business, and rural customers. Meridian Energy provides services throughout New Zealand.

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Meridian Energy (MEL NZ)

Meridian Energy - Closing Out a Watershed Year — June 2024

We increase our target price +15cps (+2.3%) but retain our UNDERPERFORM rating, with MEL remaining the most expensive electricity stock.

Forsyth Barr

Meridian Energy - Steadily Developing for the Future

Meridian Energy's (MEL) investor day was notable for its consistent messaging relative to past presentations, as opposed to new announcements that...

Forsyth Barr

Meridian Energy - It's W3 — Wind, Water and Wholesale Prices

Strong hydrology, wind, and wholesale electricity prices have combined to produce a strong March 2024 and 3Q24 operating performance for Meridian...

Forsyth Barr

Meridian Energy - Sun Shines on Electrification — 1H24 Result

Meridian Energy (MEL) delivered a record 1H24 operating result for its New Zealand operations, with strong retail margin growth underpinning the...

Forsyth Barr

Meridian Energy - Treading Water — 1H24 Operating Statistics

Meridian Energy (MEL) has closed out 1H24 with a (slightly) soft month operationally, due mainly to below average hydro generation. Despite the...

Forsyth Barr

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