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>Meridian Energy's (MEL) 1Q24 is best described as solid, with continued strong retail margins partially offset by rising opex costs that on an annualised basis are tracking above MEL's guidance range.</li><li>The news MEL is investing in NZ Windfarms (NWF) is a good outcome for NWF shareholders, but does not move the dial for MEL and only adds to growing overbuild concerns.</li><li>MEL remains expensive. UNDERPERFORM.</li></ul>

Meridian Energy's (MEL) 1Q24 is best described as solid, with continued strong retail margins partially offset by rising opex costs that on an annualised basis are tracking above MEL's guidance range.The news MEL is investing in NZ Windfarms (NWF) is a good outcome for NWF shareholders, but does not move the dial for MEL and only adds to growing overbuild concerns.MEL remains expensive. UNDERPERFORM.

Meridian Energy - Margins Beating Costs—1Q24 Op Stats

<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

<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>Record May 2023 operating earnings set up the FY23 finish: We estimate May 2023 EBITDAF was NZ$117m, a new May record and tying with September 2022 as a record for any month.</li><li>Lifting FY23 and FY24 forecasts on back of the strong result: We have lifted our FY23 and FY24 EBITDAF forecasts ~+3% to NZ$796m and NZ$830m respectively, +NZ$31m and +NZ$24m ahead of median consensus. </li><li>Capex guidance changes all timing related:For the second time in two months MEL has lowered its capex guidance. </li></ul>

Record May 2023 operating earnings set up the FY23 finish: We estimate May 2023 EBITDAF was NZ$117m, a new May record and tying with September 2022 as a record for any month.Lifting FY23 and FY24 forecasts on back of the strong result: We have lifted our FY23 and FY24 EBITDAF forecasts ~+3% to NZ$796m and NZ$830m respectively, +NZ$31m and +NZ$24m ahead of median consensus. Capex guidance changes all timing related:For the second time in two months MEL has lowered its capex guidance. 

Meridian Energy: Riding the Hydro Momentum Wave

Thematic (Sector/Industry)

<ul><li>October 2023 saw the electricity sector start to show some value with share price declines.</li><li>However, that has been short-lived, with the first week of November reversing most of the October movements.</li><li>Whilst there has been some softening in the long-dated ASX futures curve (down -5% during October 2023) we still see further downside risk as new developments continue to make progress to market.</li></ul>

October 2023 saw the electricity sector start to show some value with share price declines.However, that has been short-lived, with the first week of November reversing most of the October movements.Whilst there has been some softening in the long-dated ASX futures curve (down -5% during October 2023) we still see further downside risk as new developments continue to make progress to market.

Power Points - Developing Ventures Jointly—October 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 - Margins Beating Costs—1Q24 Op Stats

Meridian Energy's (MEL) 1Q24 is best described as solid, with continued strong retail margins partially offset by rising opex costs that on...

Forsyth Barr

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

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

Meridian Energy: Riding the Hydro Momentum Wave

We calculate Meridian Energy (MEL) has had a record May 2023 with momentum from this month expected to carry forward into FY24, and we have lifted...

Forsyth Barr

Power Points - Developing Ventures Jointly—October 2023

October 2023 saw the electricity sector start to show some value with share price declines. However, that has been short-lived, with the first week...

Forsyth Barr

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