New Zealand Professional Investment Services Firm

Forsyth Barr

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.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Genesis Energy<br>2Q21 Nets Another Positive Retail Performance</h2>
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<p><strong>OUTPERFORM</strong></p>
<p>Genesis Energy (GNE) has produced another good set of operating statistics in 2Q21, with the highlight being continued retail performance improvement. Netbacks across all of GNE's products; electricity, gas and LPG improved on 2Q20, in particular electricity which increased +13%. Whilst largely expected, the 2Q21 operating statistics are slightly better than anticipated and we have lifted our FY21 EBITDAF forecast +NZ$3m to NZ$408m. We have also increased our target price +10cps to NZ$4.00 and GNE remains our preferred electricity stock. Our rating is OUTPERFORM.&nbsp;</p>
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<h3>What's changed?&nbsp;</h3>
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<li><strong>EBITDAF earnings</strong>:&nbsp;FY21 EBITDAF increased +NZ$3m (+0.8%) to NZ$408m</li>
<li><strong>Target price</strong>:&nbsp;Increased +10cps (+2.6%) to NZ$4.00</li>
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<h3>FY21 result expectations</h3>
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<li><strong>Reporting date</strong>:&nbsp;Thursday, 25 February 2021</li>
<li><strong>1H21 EBITDAF forecast</strong>:&nbsp;NZ$207m, up +NZ$40m (+24%) on 1H20</li>
<li><strong>1H21 interim dividend forecast</strong>:&nbsp;8.65cps, up +0.125cps (+1.5%) on 1H20</li>
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<h3>Another good set of operating statistics, particularly retail</h3>
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<p>The retail performance continues to be strong, with netbacks increasing +13%, +7% and +5% for electricity, gas and LPG respectively. This is a continuation of the positive trend that started in 1Q19 and is due to both increasing prices and lower cost to serve. Whilst generation volumes increased +5% on 2Q20 and the average generation price received was a firm NZ$116/MWh, increased financial contract sales meant GNE did not have surplus generation to sell into the market. 2Q21 was also notable for the first production acquired from the Waipipi wind farm (30GWh). Once at full production, Waipipi is expected to generate ~450GWh per annum. Kupe's 2Q21 production was well up on 2Q20 (+41%) due to Kupe's large maintenance outage in 2Q20, but was down -14% on 1Q21 (more than natural field decline) due to production well difficulties that are expected to be resolved in 4Q21.</p>
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<h3>Modest increase in short-term prospects</h3>
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<p>Retail 2Q21 operating statistics were slightly better than expected, leading to a modest +NZ$3m increase in our FY21 EBITDAF forecast to NZ$408m and modest increases in later years. We have not changed our dividend forecast, which remains at 17.5cps.</p>
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<h3>1H21 result will be up significantly on soft 1H20 comparator</h3>
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<p>We are forecasting 1H21 EBITDAF of NZ$207m, an increase of +NZ$40m on 1H20. However, 1H20 had several headwinds and was -NZ$30m lower than 1H19. Nevertheless, a result of this magnitude means GNE is on track to deliver at least NZ$400m FY21 EBITDAF. The main driver of the result is a significant increase in retail margins.</p>
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<div><strong>Andrew Harvey-Green</strong></div>
<div><a href="mailto:andrew.harvey-green@forsythbarr.co.nz" target="_blank" rel="noopener">andrew.harvey-green@<wbr>forsythbarr.co.nz</a></div>
<div>+64 4 495 8185</div>
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<div><strong>Scott Anderson</strong></div>
<div><a href="mailto:scott.anderson@forsythbarr.co.nz" target="_blank" rel="noopener">scott.anderson@forsythbarr.co.<wbr>nz</a></div>
<div>+64 4 914 2219</div>
</div>
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Genesis Energy 2Q21 Nets Another Positive Retail Performance

OUTPERFORM
Genesis Energy (GNE) has produced another good set of operating statistics in 2Q21, with the highlight being continued retail performance improvement. Netbacks across all of GNE's products; electricity, gas and LPG improved on 2Q20, in particular electricity which increased +13%. Whilst largely expected, the 2Q21 operating statistics are slightly better than anticipated and we have lifted our FY21 EBITDAF forecast +NZ$3m to NZ$408m. We have also increased our target price +10cps to NZ$4.00 and GNE remains our preferred electricity stock. Our rating is OUTPERFORM.&nbsp;


What's changed?&nbsp;



EBITDAF earnings:&nbsp;FY21 EBITDAF increased +NZ$3m (+0.8%) to NZ$408m
Target price:&nbsp;Increased +10cps (+2.6%) to NZ$4.00



FY21 result expectations



Reporting date:&nbsp;Thursday, 25 February 2021
1H21 EBITDAF forecast:&nbsp;NZ$207m, up +NZ$40m (+24%) on 1H20
1H21 interim dividend forecast:&nbsp;8.65cps, up +0.125cps (+1.5%) on 1H20



Another good set of operating statistics, particularly retail


The retail performance continues to be strong, with netbacks increasing +13%, +7% and +5% for electricity, gas and LPG respectively. This is a continuation of the positive trend that started in 1Q19 and is due to both increasing prices and lower cost to serve. Whilst generation volumes increased +5% on 2Q20 and the average generation price received was a firm NZ$116/MWh, increased financial contract sales meant GNE did not have surplus generation to sell into the market. 2Q21 was also notable for the first production acquired from the Waipipi wind farm (30GWh). Once at full production, Waipipi is expected to generate ~450GWh per annum. Kupe's 2Q21 production was well up on 2Q20 (+41%) due to Kupe's large maintenance outage in 2Q20, but was down -14% on 1Q21 (more than natural field decline) due to production well difficulties that are expected to be resolved in 4Q21.


Modest increase in short-term prospects


Retail 2Q21 operating statistics were slightly better than expected, leading to a modest +NZ$3m increase in our FY21 EBITDAF forecast to NZ$408m and modest increases in later years. We have not changed our dividend forecast, which remains at 17.5cps.


1H21 result will be up significantly on soft 1H20 comparator


We are forecasting 1H21 EBITDAF of NZ$207m, an increase of +NZ$40m on 1H20. However, 1H20 had several headwinds and was -NZ$30m lower than 1H19. Nevertheless, a result of this magnitude means GNE is on track to deliver at least NZ$400m FY21 EBITDAF. The main driver of the result is a significant increase in retail margins.



Andrew Harvey-Green
andrew.harvey-green@forsythbarr.co.nz
+64 4 495 8185





Scott Anderson
scott.anderson@forsythbarr.co.nz
+64 4 914 2219



ジェネシス・エナジー：2021年第2四半期、小売売上高が再び好調