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>September 2023 was a typical El Niño month resulting in record wind generation and strong hydro generation conditions for the lower South Island stations.</li><li>Interest rates marched higher in September 2023, lifting ~+50bp (and have continued to lift).</li><li>Sector share prices were down, but not enough to prevent the dividend yield spread to bond rates falling to a record low. </li></ul>

September 2023 was a typical El Niño month resulting in record wind generation and strong hydro generation conditions for the lower South Island stations.Interest rates marched higher in September 2023, lifting ~+50bp (and have continued to lift).Sector share prices were down, but not enough to prevent the dividend yield spread to bond rates falling to a record low. 

Power Points - El Niño Blows Into Town — September 2023

<ul><li>August 2023 saw the big four generator/retailers report operating results in line with expectations, but collectively they guided to cost increases ~2.5x forecast FY24 inflation, tempering the earnings outlook.</li><li>Development continues apace with six generation and two battery projects costing ~NZ$2.5b expected to reach final investment decision (FID) in FY24, although a positive NZAS decision is likely a pre-requisite for most of the projects.</li><li>August 2023 share price performance for most of the generator/retailers was weak, resulting in dividend yield spreads climbing off record lows. </li></ul>

August 2023 saw the big four generator/retailers report operating results in line with expectations, but collectively they guided to cost increases ~2.5x forecast FY24 inflation, tempering the earnings outlook.Development continues apace with six generation and two battery projects costing ~NZ$2.5b expected to reach final investment decision (FID) in FY24, although a positive NZAS decision is likely a pre-requisite for most of the projects.August 2023 share price performance for most of the generator/retailers was weak, resulting in dividend yield spreads climbing off record lows. 

Power Points - Costs Crescendo — September 2023

Equity Bottom-Up

<ul><li>Mercury (MCY) reported a watershed result, with FY23 EBITDAF increasing +41% (+NZ$244m) on FY22 to NZ$836m, well ahead of guidance and our forecast.</li><li>Driving the strong performance was record high hydro generation, the Trustpower (TPW) retail acquisition, rising retail yields and Turitea wind farm volumes.</li><li>Looking ahead, FY24 guidance was soft relative to expectations, the main issue being higher opex. </li></ul>

Mercury (MCY) reported a watershed result, with FY23 EBITDAF increasing +41% (+NZ$244m) on FY22 to NZ$836m, well ahead of guidance and our forecast.Driving the strong performance was record high hydro generation, the Trustpower (TPW) retail acquisition, rising retail yields and Turitea wind farm volumes.Looking ahead, FY24 guidance was soft relative to expectations, the main issue being higher opex. 

Mercury - Watershed Result — FY23 Result

<ul><li>We are expecting the largest ever, single year increase in the collective EBITDAF earnings of the big four generator/retailers, up +18% in FY23 to NZ$2.7b.</li><li>In many ways it was the perfect year with acquisitions, new generation, record high hydro generation, strong retail margin growth and one-off gains lifting earnings.</li><li>For the first time ever, MCY will report the strongest earnings in the sector, aided by all of the factors noted. </li></ul>

We are expecting the largest ever, single year increase in the collective EBITDAF earnings of the big four generator/retailers, up +18% in FY23 to NZ$2.7b.In many ways it was the perfect year with acquisitions, new generation, record high hydro generation, strong retail margin growth and one-off gains lifting earnings.For the first time ever, MCY will report the strongest earnings in the sector, aided by all of the factors noted. 

Electricity Sector - Step Change — FY23 Preview

<div><div><div><div><ul><li>July 2023 saw above average hydro conditions continue, with the exception of the lower South Island.</li><li>The big news of the month came from the Government reversing its emissions trading scheme (ETS) settings decision, which helped carbon prices recover to ~NZ$60/unit from a low of ~NZ$35/unit in late June 2023.</li><li>Electricity stocks continue to perform well despite interest rates edging higher and ASX futures prices edging lower as the market continues to favour risk off. </li></ul></div></div></div></div>

July 2023 saw above average hydro conditions continue, with the exception of the lower South Island.The big news of the month came from the Government reversing its emissions trading scheme (ETS) settings decision, which helped carbon prices recover to ~NZ$60/unit from a low of ~NZ$35/unit in late June 2023.Electricity stocks continue to perform well despite interest rates edging higher and ASX futures prices edging lower as the market continues to favour risk off. 

Power Points - Offshore Wind Brewing - August 2023

New Zealand

Mercury NZ Ltd provides utility services. The Company generates and supplies electricity from hydro, geothermal, gas-fired, and wind power stations, as well as owns and manages bio-energy power plants. Mighty River Power serves customers throughout New Zealand.

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Mercury NZ Ltd (MCY NZ)

Power Points - El Niño Blows Into Town — September 2023

September 2023 was a typical El Niño month resulting in record wind generation and strong hydro generation conditions for the lower South Island...

Forsyth Barr

Power Points - Costs Crescendo — September 2023

August 2023 share price performance for most of the generator/retailers was weak, resulting in dividend yield spreads climbing off record lows.

Forsyth Barr

Mercury - Watershed Result — FY23 Result

Mercury (MCY) reported a watershed result, with FY23 EBITDAF increasing +41% (+NZ$244m) on FY22 to NZ$836m, well ahead of guidance and our...

Forsyth Barr

Electricity Sector - Step Change — FY23 Preview

We are expecting the largest ever, single year increase in the collective EBITDAF earnings of the big four generator/retailers, up +18% in FY23 to...

Forsyth Barr

Power Points - Offshore Wind Brewing - August 2023

Electricity stocks continue to perform well despite interest rates edging higher and ASX futures prices edging lower as the market continues to...

Forsyth Barr

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