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>As we have become accustomed to, Meridian Energy (MEL) delivered a FY23 result in line with expectations.</li><li>The key feature of the result was FY24 cost guidance higher than expected, both opex and capex.</li><li>A combination of inflation and increased IT spend are the main culprits. We trim our target price -5cps (-0.9%) to NZ$5.25. </li></ul>

As we have become accustomed to, Meridian Energy (MEL) delivered a FY23 result in line with expectations.The key feature of the result was FY24 cost guidance higher than expected, both opex and capex.A combination of inflation and increased IT spend are the main culprits. We trim our target price -5cps (-0.9%) to NZ$5.25. 

Meridian Energy - Costly Repeat — FY23 Result

Thematic (Sector/Industry)

<ul><li>We are expecting the largest ever, single year increase in the collective EBITDAF earnings of the big four generator/retailers, up +18% in FY23 to NZ$2.7b.</li><li>In many ways it was the perfect year with acquisitions, new generation, record high hydro generation, strong retail margin growth and one-off gains lifting earnings.</li><li>For the first time ever, MCY will report the strongest earnings in the sector, aided by all of the factors noted. </li></ul>

We are expecting the largest ever, single year increase in the collective EBITDAF earnings of the big four generator/retailers, up +18% in FY23 to NZ$2.7b.In many ways it was the perfect year with acquisitions, new generation, record high hydro generation, strong retail margin growth and one-off gains lifting earnings.For the first time ever, MCY will report the strongest earnings in the sector, aided by all of the factors noted. 

Electricity Sector - Step Change — FY23 Preview

<div><div><div><div><ul><li>July 2023 saw above average hydro conditions continue, with the exception of the lower South Island.</li><li>The big news of the month came from the Government reversing its emissions trading scheme (ETS) settings decision, which helped carbon prices recover to ~NZ$60/unit from a low of ~NZ$35/unit in late June 2023.</li><li>Electricity stocks continue to perform well despite interest rates edging higher and ASX futures prices edging lower as the market continues to favour risk off. </li></ul></div></div></div></div>

July 2023 saw above average hydro conditions continue, with the exception of the lower South Island.The big news of the month came from the Government reversing its emissions trading scheme (ETS) settings decision, which helped carbon prices recover to ~NZ$60/unit from a low of ~NZ$35/unit in late June 2023.Electricity stocks continue to perform well despite interest rates edging higher and ASX futures prices edging lower as the market continues to favour risk off. 

Power Points - Offshore Wind Brewing - August 2023

<ul><li>Record hydro generation washed out by retail revenue wash-ups</li><li>FY23 a solid year, but would have been better with normal wholesale electricity prices</li><li>Harapaki wind farm delay expected to be three months</li></ul>

Record hydro generation washed out by retail revenue wash-upsFY23 a solid year, but would have been better with normal wholesale electricity pricesHarapaki wind farm delay expected to be three months

Meridian Energy: Wash-Ups Wash Out FY23 End Game

<ul><li>Another wet month caps FY23 for the big four generator/retailers: June 2023 was the 12th month in a row where North Island hydro generation was at least +19% above average — it has been a record breaking hydro generating year.</li><li>Desperately seeking certainty: The carbon market is desperate for some certainty with June the sixth out of the last seven months when carbon unit prices have fallen.</li><li>Fonterra spruiks future electricity demand: Fonterra sent out requests for electricity supply from 2026 for its dairy factories.</li></ul>

Another wet month caps FY23 for the big four generator/retailers: June 2023 was the 12th month in a row where North Island hydro generation was at least +19% above average — it has been a record breaking hydro generating year.Desperately seeking certainty: The carbon market is desperate for some certainty with June the sixth out of the last seven months when carbon unit prices have fallen.Fonterra spruiks future electricity demand: Fonterra sent out requests for electricity supply from 2026 for its dairy factories.

Power Points: Carbon Confidence Crisis — July 2023

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 - Costly Repeat — FY23 Result

As we have become accustomed to, Meridian Energy (MEL) delivered a FY23 result in line with expectations. The key feature of the result was FY24...

Forsyth Barr

Electricity Sector - Step Change — FY23 Preview

We are expecting the largest ever, single year increase in the collective EBITDAF earnings of the big four generator/retailers, up +18% in FY23 to...

Forsyth Barr

Power Points - Offshore Wind Brewing - August 2023

Electricity stocks continue to perform well despite interest rates edging higher and ASX futures prices edging lower as the market continues to...

Forsyth Barr

Meridian Energy: Wash-Ups Wash Out FY23 End Game

June 2023 saw Meridian Energy (MEL) break hydro generation records, but that did not translate into earnings as retail revenue wash-ups washed out...

Forsyth Barr

Power Points: Carbon Confidence Crisis — July 2023

June 2023 saw carbon unit prices collapse, with prices now NZ$36.5/tonne, down -40% in the past three weeks due to a lack of confidence in the...

Forsyth Barr

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