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>The Commerce Commission's (ComCom) Statement of Issues (SoI) has raised several concerns about Contact Energy's (CEN) proposed acquisition of Manawa Energy (MNW), prompting us to lower the probability of clearance to 50%.</li><li>Consequently, we reduce our MNW target price by -27cps (-4.2%) to NZ$6.15 and downgrade our rating to NEUTRAL (from OUTPERFORM).</li><li>In January 2025, inflows and hydro storage levels continued to decline, triggering thermal generation, surging wholesale electricity prices, and pushing ASX futures higher.</li></ul>

The Commerce Commission's (ComCom) Statement of Issues (SoI) has raised several concerns about Contact Energy's (CEN) proposed acquisition of Manawa Energy (MNW), prompting us to lower the probability of clearance to 50%.Consequently, we reduce our MNW target price by -27cps (-4.2%) to NZ$6.15 and downgrade our rating to NEUTRAL (from OUTPERFORM).In January 2025, inflows and hydro storage levels continued to decline, triggering thermal generation, surging wholesale electricity prices, and pushing ASX futures higher.

Power Points - ComCom Raises Clearance Concerns—Feb 2025

<ul><li>It was a particularly challenging 1H25 for the sector, with the dry start to the period resulting in expensive back-up options being procured and a drop in earnings for the sector.</li><li>Meridian Energy (MEL) took the brunt of the pain, and we anticipate a record-low six-month result (since listing in 2013) for MEL.</li><li>Very low wholesale electricity prices in 2Q25 benefited Mercury (MCY) and Genesis Energy (GNE) in particular, while we expect Contact Energy (CEN) to report a record half-year result due to the first full six months of Tauhara generation. </li></ul>

It was a particularly challenging 1H25 for the sector, with the dry start to the period resulting in expensive back-up options being procured and a drop in earnings for the sector.Meridian Energy (MEL) took the brunt of the pain, and we anticipate a record-low six-month result (since listing in 2013) for MEL.Very low wholesale electricity prices in 2Q25 benefited Mercury (MCY) and Genesis Energy (GNE) in particular, while we expect Contact Energy (CEN) to report a record half-year result due to the first full six months of Tauhara generation. 

Electricity Sector - A Tale of Two Quarters—1H25 Preview

<ul>
<li>2024 ended with index considerations influencing short-term share prices, such that we have downgraded Contact Energy (CEN) to NEUTRAL and reiterate the buying opportunity in Mercury (MCY).</li>
<li>The likely inclusion of CEN at the expense of MCY in the MSCI Standard Index has seen CEN’s share price pop and MCY's drop.</li>
<li>2024 was dominated by two events that will shape the sector in the years ahead. </li>
</ul>


2024 ended with index considerations influencing short-term share prices, such that we have downgraded Contact Energy (CEN) to NEUTRAL and reiterate the buying opportunity in Mercury (MCY).
The likely inclusion of CEN at the expense of MCY in the MSCI Standard Index has seen CEN’s share price pop and MCY's drop.
2024 was dominated by two events that will shape the sector in the years ahead. 


Power Points Index Opportunities — January 2025

<ul><li>Continued strong hydro inflows and remarkably strong electricity demand growth were the key take outs from November 2024.</li><li>Risks of a repeat of winter 2024 appear low, based on ASX futures prices.</li><li>With Contact Energy’s (CEN) Te Huka geothermal plant starting its month-long reliability run, there is significantly more generation in the market compared to 12 months ago. </li></ul>

Continued strong hydro inflows and remarkably strong electricity demand growth were the key take outs from November 2024.Risks of a repeat of winter 2024 appear low, based on ASX futures prices.With Contact Energy’s (CEN) Te Huka geothermal plant starting its month-long reliability run, there is significantly more generation in the market compared to 12 months ago. 

Power Points - Looking Ahead to the New Year — Dec 2024

<ul><li>October 2024 was another strong hydro inflow month, with lake levels rising well above average, helping to suppress wholesale electricity prices and relieve winter 2025 anxiety.</li><li>Energy Margin analysis indicates Mercury (MCY) had the strongest month operationally of the generator/retailers, with Meridian Energy (MEL) still held back by the high cost hedging it took out.</li><li>With Methanex recommencing operations, November 2024 should be a more representative month for the generator/retailers. </li></ul>

October 2024 was another strong hydro inflow month, with lake levels rising well above average, helping to suppress wholesale electricity prices and relieve winter 2025 anxiety.Energy Margin analysis indicates Mercury (MCY) had the strongest month operationally of the generator/retailers, with Meridian Energy (MEL) still held back by the high cost hedging it took out.With Methanex recommencing operations, November 2024 should be a more representative month for the generator/retailers. 

Power Points - Hydro Recovery Continues — November 2024

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 - ComCom Raises Clearance Concerns—Feb 2025

The Commerce Commission's (ComCom) Statement of Issues (SoI) has raised several concerns about Contact Energy's (CEN) proposed acquisition...

Forsyth Barr

Electricity Sector - A Tale of Two Quarters—1H25 Preview

It was a particularly challenging 1H25 for the sector, with the dry start to the period resulting in expensive back-up options being procured and a...

Forsyth Barr

Power Points Index Opportunities — January 2025

2024 ended with index considerations influencing short-term share prices, such that we have downgraded Contact Energy (CEN) to NEUTRAL and...

Forsyth Barr

Power Points - Looking Ahead to the New Year — Dec 2024

Continued strong hydro inflows and remarkably strong electricity demand growth were the key take outs from November 2024.

Forsyth Barr

Power Points - Hydro Recovery Continues — November 2024

October 2024 was another strong hydro inflow month, with lake levels rising well above average, helping to suppress wholesale electricity prices...

Forsyth Barr

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