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

Thematic (Sector/Industry)

<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

<ul><li>May 2024 was a watershed month for the sector, ending with the news that NZAS has signed three 20 year electricity supply contracts, providing welcome certainty to the sector.</li><li>It was also a very strong electricity demand month, only partly explained by the colder weather as evidence mounts that the long-expected electricity demand growth is here.</li><li>Strong electricity demand and declining hydro storage lakes resulted in a record average Otahuhu (OTA) wholesale electricity price.</li></ul>

May 2024 was a watershed month for the sector, ending with the news that NZAS has signed three 20 year electricity supply contracts, providing welcome certainty to the sector.It was also a very strong electricity demand month, only partly explained by the colder weather as evidence mounts that the long-expected electricity demand growth is here.Strong electricity demand and declining hydro storage lakes resulted in a record average Otahuhu (OTA) wholesale electricity price.

Power Points - Demand Continues to Heat Up — June 2024 External Inbox Updates

<ul><li>After almost two years of negotiation, the deal has been done, with NZAS set to be New Zealand's largest electricity consumer for the foreseeable future.</li><li>It is a positive for the sector in many different ways, with the primary upside being the certainty that the deal provides.</li><li>Relative to our expectations, CEN, MCY and MNW were the winners from the deal, with MEL and GNE slight losers. </li></ul>

After almost two years of negotiation, the deal has been done, with NZAS set to be New Zealand's largest electricity consumer for the foreseeable future.It is a positive for the sector in many different ways, with the primary upside being the certainty that the deal provides.Relative to our expectations, CEN, MCY and MNW were the winners from the deal, with MEL and GNE slight losers. 

Electricity Sector - NZAS Powers On — The Deal Is Done

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

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

Power Points - Demand Continues to Heat Up — June 2024 External Inbox Updates

May 2024 was a watershed month for the sector, ending with the news that NZAS has signed three 20 year electricity supply contracts, providing...

Forsyth Barr

Electricity Sector - NZAS Powers On — The Deal Is Done

After almost two years of negotiation, the deal has been done, with NZAS set to be New Zealand's largest electricity consumer for the foreseeable...

Forsyth Barr

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