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>We are expecting solid FY24 EBITDAF earnings growth of +7% across the four generator/retailers reporting in August 2024.</li><li>However, given challenging operating conditions due to hydro and gas fuel shortages we see downside risk to FY25 guidance and outlook commentary.</li><li>How each company is managing the hydro and gas fuel shortfall is of particular interest. </li></ul>

We are expecting solid FY24 EBITDAF earnings growth of +7% across the four generator/retailers reporting in August 2024.However, given challenging operating conditions due to hydro and gas fuel shortages we see downside risk to FY25 guidance and outlook commentary.How each company is managing the hydro and gas fuel shortfall is of particular interest. 

Electricity Sector - Dry July Pressures FY25 - FY24 Result Preview

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>June 2024 was notable for the first dip in electricity demand in eight months, in part due to NZAS backing off demand at Meridian Energy’s (MEL) request.</li><li>Wholesale electricity prices remained high due to continued below average hydro storage. Contact Energy’s (CEN) Tauhara geothermal plant completed its reliability run in June, so we expect it will have had a strong finish to FY24.</li><li>MEL perhaps less so, as its market share fell to the lowest in three years. We retain our positive outlook on the sector and have an OUTPERFORM rating on CEN, Genesis Energy (GNE) and Manawa Energy (MNW). </li></ul>

June 2024 was notable for the first dip in electricity demand in eight months, in part due to NZAS backing off demand at Meridian Energy’s (MEL) request.Wholesale electricity prices remained high due to continued below average hydro storage. Contact Energy’s (CEN) Tauhara geothermal plant completed its reliability run in June, so we expect it will have had a strong finish to FY24.MEL perhaps less so, as its market share fell to the lowest in three years. We retain our positive outlook on the sector and have an OUTPERFORM rating on CEN, Genesis Energy (GNE) and Manawa Energy (MNW). 

Power Points - Solar Flares Again — July 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

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>The <a href="https://www.smartkarma.com/entities/genex-power-ltd" target="_blank" data-smartkarma-citation="entities:29079:1" rel="noopener">Genex Power Ltd (GNX AU)</a> IE considers <a href="https://www.smartkarma.com/entities/electric-power-development-c" target="_blank" data-smartkarma-citation="entities:292:1" rel="noopener">Electric Power Development C (9513 JP)</a>’s scheme (A$0.275) and off-market takeover offer (A$0.270) fair and reasonable. </li>
<li>The offer is conditional on FIRB and shareholder approval. Skip Capital, which can block the scheme, has not declared its intention regarding J-Power's offer or launched a competing offer.</li>
<li>Skip’s silence suggests a greater probability of accepting the scheme offer. If the scheme fails, the takeover offer, due to its structure and price, caps the downside.</li>
</ul>


The Genex Power Ltd (GNX AU) IE considers Electric Power Development C (9513 JP)’s scheme (A$0.275) and off-market takeover offer (A$0.270) fair and reasonable. 
The offer is conditional on FIRB and shareholder approval. Skip Capital, which can block the scheme, has not declared its intention regarding J-Power's offer or launched a competing offer.
Skip’s silence suggests a greater probability of accepting the scheme offer. If the scheme fails, the takeover offer, due to its structure and price, caps the downside.


Genex Power (GNX AU): Scheme Vote on 16 July as Skip Remains Silent

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)

Electricity Sector - Dry July Pressures FY25 - FY24 Result Preview

We are expecting solid FY24 EBITDAF earnings growth of +7% across the four generator/retailers reporting in August 2024.

Forsyth Barr

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

Power Points - Solar Flares Again — July 2024

June 2024 was notable for the first dip in electricity demand in eight months, in part due to NZAS backing off demand at Meridian Energy’s (MEL)...

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

Genex Power (GNX AU): Scheme Vote on 16 July as Skip Remains Silent

Skip’s silence suggests a greater probability of accepting the scheme. The takeover offer caps the downside due to structure and price. The gross...

Arun George

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