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>We downgrade Vector (VCT) to NEUTRAL from OUTPERFORM, as it is now trading at fair value following strong share price performance.</li><li>The most notable feature was the continued decline in gas throughput and connection numbers.</li><li>While gas volume and connection decline represent a long-term downside risk for VCT, this should be offset by upside in the electricity network business.</li></ul>

We downgrade Vector (VCT) to NEUTRAL from OUTPERFORM, as it is now trading at fair value following strong share price performance.The most notable feature was the continued decline in gas throughput and connection numbers.While gas volume and connection decline represent a long-term downside risk for VCT, this should be offset by upside in the electricity network business.

Vector Gas Starting to Deflate—1Q26 Op Stats

<ul><li>Vector (VCT) delivered a good result where it counts, with Adjusted EBITDA from its regulated businesses in line with expectations.</li><li>FY26 guidance was strong due to higher electricity wash-up revenue, which materially increases our FY26 Adjusted EBITDA forecast +7%.</li><li>While we have not increased near-term dividend expectations pending a future Electricity Authority decision on capital contribution use, we see more upside potential than downside risk.</li></ul>

Vector (VCT) delivered a good result where it counts, with Adjusted EBITDA from its regulated businesses in line with expectations.FY26 guidance was strong due to higher electricity wash-up revenue, which materially increases our FY26 Adjusted EBITDA forecast +7%.While we have not increased near-term dividend expectations pending a future Electricity Authority decision on capital contribution use, we see more upside potential than downside risk.

Vector FY25 Result—Outlook Brightens Further

<ul><li>We upgrade Vector (VCT) to OUTPERFORM from NEUTRAL on strong near-term earnings growth and a lift in our long-term earnings assumptions, raising the target price by +30cps (+7.1%) to NZ$4.52.</li><li>Vector is expected to fund more growth capex internally, reducing capital contribution levels, which will enhance the regulatory asset base and earnings over time.</li><li>Concerns are rising regarding the risk of stranded gas assets, although gas makes up a smaller portion of VCT's regulatory asset base compared to electricity.</li></ul>

We upgrade Vector (VCT) to OUTPERFORM from NEUTRAL on strong near-term earnings growth and a lift in our long-term earnings assumptions, raising the target price by +30cps (+7.1%) to NZ$4.52.Vector is expected to fund more growth capex internally, reducing capital contribution levels, which will enhance the regulatory asset base and earnings over time.Concerns are rising regarding the risk of stranded gas assets, although gas makes up a smaller portion of VCT's regulatory asset base compared to electricity.

<ul><li>Vector (VCT) delivered a strong 1H25 result, well ahead of 1H24 and comfortably ahead of our forecast. Regulated electricity revenue growth was the key driver, aided by good cost control.</li><li>VCT announced its much anticipated new dividend policy, which provides confidence that it can step up dividends throughout the default price path 4 (DPP4) period.</li><li>The DPP4 reset, occurring on 1 April 2025, will provide a material uplift in near-term earnings. </li></ul>

Vector (VCT) delivered a strong 1H25 result, well ahead of 1H24 and comfortably ahead of our forecast. Regulated electricity revenue growth was the key driver, aided by good cost control.VCT announced its much anticipated new dividend policy, which provides confidence that it can step up dividends throughout the default price path 4 (DPP4) period.The DPP4 reset, occurring on 1 April 2025, will provide a material uplift in near-term earnings. 

Vector - Dividends Cleared for Growth—1H25 Result

<ul><li>Vector's (VCT) 2Q/1H25 operating statistics were soft.</li><li>Volume and connection growth both declined due to a combination of warmer weather, soft economic conditions, and customers switching away from gas.</li><li>The financial impact on VCT, however, is modest, due to the rate of return nature of the regulatory regime. </li></ul>

Vector's (VCT) 2Q/1H25 operating statistics were soft.Volume and connection growth both declined due to a combination of warmer weather, soft economic conditions, and customers switching away from gas.The financial impact on VCT, however, is modest, due to the rate of return nature of the regulatory regime. 

Vector - 2Q/1H25 Op Stats and Result Preview

New Zealand

Vector Limited is an energy infrastructure company in New Zealand that provides electricity and gas transmission and distribution along with metering.  The Company is also a wholesaler of LPG and natural gas.  Vector also delivers broadband voice and data communications in the Auckland and Wellington regions.

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Vector Ltd (VCT NZ)

Vector Gas Starting to Deflate—1Q26 Op Stats

We downgrade Vector (VCT) to NEUTRAL from OUTPERFORM, as it is now trading at fair value following strong share price performance.

Forsyth Barr

Vector FY25 Result—Outlook Brightens Further

Vector (VCT) delivered a good result where it counts, with Adjusted EBITDA from its regulated businesses in line with expectations.

Forsyth Barr

Vector Two Steps Forward, One Step Back

Vector is expected to fund more growth capex internally, reducing capital contribution levels, which will enhance the regulatory asset base and...

Forsyth Barr

Vector - Dividends Cleared for Growth—1H25 Result

Vector (VCT) delivered a strong 1H25 result, well ahead of 1H24 and comfortably ahead of our forecast. Regulated electricity revenue growth was the...

Forsyth Barr

Vector - 2Q/1H25 Op Stats and Result Preview

Vector's (VCT) 2Q/1H25 operating statistics were soft. Volume and connection growth both declined due to a combination of warmer weather, soft...

Forsyth Barr

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