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>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’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>Hydro storage has recovered above the long-run average, benefiting all generators, with Mercury (MCY) being the biggest winner in June 2025.</li><li>Regulatory uncertainty looms, but is not expected to materially affect valuations, with MCY rated OUTPERFORM and others NEUTRAL.</li><li>Genesis Energy (GNE) is considering a new peaking plant, with discussions progressing positively to extend the Rankine units' operational life.</li></ul>

Hydro storage has recovered above the long-run average, benefiting all generators, with Mercury (MCY) being the biggest winner in June 2025.Regulatory uncertainty looms, but is not expected to materially affect valuations, with MCY rated OUTPERFORM and others NEUTRAL.Genesis Energy (GNE) is considering a new peaking plant, with discussions progressing positively to extend the Rankine units' operational life.

Power Points Watts in the Bank—July 2025

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)

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

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

Power Points Watts in the Bank—July 2025

Hydro storage has recovered above the long-run average, benefiting all generators, with Mercury (MCY) being the biggest winner in June 2025.

Forsyth Barr

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