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>Manawa Energy (MNW) has reported a weak 1H25 result, as expected, albeit it was worse than we were anticipating.</li><li>Soft hydro and wind generation volumes from May 2024 through to mid-August 2024 and a substantial bad debt provision were the two factors behind the soft result.</li><li>While the dividend also disappointed, and FY25 guidance contained an implicit downgrade, the current value of MNW remains tied to that of Contact Energy (CEN), given the high scrip component of its takeover offer. </li></ul>

Manawa Energy (MNW) has reported a weak 1H25 result, as expected, albeit it was worse than we were anticipating.Soft hydro and wind generation volumes from May 2024 through to mid-August 2024 and a substantial bad debt provision were the two factors behind the soft result.While the dividend also disappointed, and FY25 guidance contained an implicit downgrade, the current value of MNW remains tied to that of Contact Energy (CEN), given the high scrip component of its takeover offer. 

Manawa Energy - Disappointment Double Down — 1H25 Result

<ul><li>We estimate there is a 70% chance that Contact Energy (CEN)'s takeover of Manawa Energy (MNW) will be approved, up from 50%.</li><li>Our increased confidence comes from analysis of the issues the Commerce Commission (ComCom) is likely to focus on, Industry Code provisions providing protection against anticompetitive practises, and some of the political heat coming off the sector, with the recent Government Policy Statement generally supportive of the wholesale electricity market.</li><li>With MNW's takeover price closely linked to CEN's value, we lift our target price +7% to NZ$6.42 and our positive view of both CEN and MNW drives our OUTPERFORM rating. </li></ul>

We estimate there is a 70% chance that Contact Energy (CEN)'s takeover of Manawa Energy (MNW) will be approved, up from 50%.Our increased confidence comes from analysis of the issues the Commerce Commission (ComCom) is likely to focus on, Industry Code provisions providing protection against anticompetitive practises, and some of the political heat coming off the sector, with the recent Government Policy Statement generally supportive of the wholesale electricity market.With MNW's takeover price closely linked to CEN's value, we lift our target price +7% to NZ$6.42 and our positive view of both CEN and MNW drives our OUTPERFORM rating. 

Manawa Energy - Clearance Confidence Climbing

<ul><li>Manawa Energy (MNW) will be glad 2Q25/1H25 is behind it, and that it can look forward to better operating conditions in the coming months.</li><li>Low hydro generation and reduced wind volumes challenged MNW's risk management.</li><li>While 1H25 EBITDAF is expected to be a record low, MNW has come through this challenging period well and should have a much stronger 2H25. </li></ul>

Manawa Energy (MNW) will be glad 2Q25/1H25 is behind it, and that it can look forward to better operating conditions in the coming months.Low hydro generation and reduced wind volumes challenged MNW's risk management.While 1H25 EBITDAF is expected to be a record low, MNW has come through this challenging period well and should have a much stronger 2H25. 

Manawa Energy - 1H Slog Into the Wind Complete, Downwind in 2H — 2Q25 Op Stats

<ul><li>Based on the current share prices of Contact Energy (CEN) and Manawa Energy (MNW), our view on the value of both stocks, and our view on whether the Commerce Commission (ComCom) will grant clearance for CEN's takeover of MNW, MNW shareholders should consider switching to CEN.</li><li>Doing so locks in some of the upside from the takeover, but removes the downside risk the ComCom does not grant clearance.</li><li>Our analysis suggests the market is pricing in a ~60% probability the deal will get clearance, slightly higher than our current view, making a switch more favourable. </li></ul>

Based on the current share prices of Contact Energy (CEN) and Manawa Energy (MNW), our view on the value of both stocks, and our view on whether the Commerce Commission (ComCom) will grant clearance for CEN's takeover of MNW, MNW shareholders should consider switching to CEN.Doing so locks in some of the upside from the takeover, but removes the downside risk the ComCom does not grant clearance.Our analysis suggests the market is pricing in a ~60% probability the deal will get clearance, slightly higher than our current view, making a switch more favourable. 

<ul><li>Manawa Energy (MNW) has received a takeover bid from Contact Energy (CEN) for the equivalent of NZ$5.95/share.</li><li>The offer price is a combination of CEN scrip and cash. With MNW directors unanimously supporting the deal, and key shareholders Infratil (IFT) and TECT Holdings (TECT) supporting the transaction, the only key risk to it not proceeding is Commerce Commission (ComCom) opposition.</li><li>Given the current political/regulatory climate, we cannot call what the ComCom will do. We increase our target price +$1.05cps (+20%) to NZ$6.20, reflecting a 50/50 weighted probability of the deal going ahead, and our positive view on CEN scrip which is ~80% of the NZ$5.95 offer price. </li></ul>

Manawa Energy (MNW) has received a takeover bid from Contact Energy (CEN) for the equivalent of NZ$5.95/share.The offer price is a combination of CEN scrip and cash. With MNW directors unanimously supporting the deal, and key shareholders Infratil (IFT) and TECT Holdings (TECT) supporting the transaction, the only key risk to it not proceeding is Commerce Commission (ComCom) opposition.Given the current political/regulatory climate, we cannot call what the ComCom will do. We increase our target price +$1.05cps (+20%) to NZ$6.20, reflecting a 50/50 weighted probability of the deal going ahead, and our positive view on CEN scrip which is ~80% of the NZ$5.95 offer price. 

New Zealand

Manawa Energy Limited is a renewable energy company. The Company generate powers through hydro power stations and wind farms throughout Australasia. Manawa Energy is also engaged in electricity distribution.

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Manawa Energy Ltd (MNW NZ)

Manawa Energy - Disappointment Double Down — 1H25 Result

While the dividend also disappointed, and FY25 guidance contained an implicit downgrade, the current value of MNW remains tied to that of Contact...

Forsyth Barr

Manawa Energy - Clearance Confidence Climbing

We estimate there is a 70% chance that Contact Energy (CEN)'s takeover of Manawa Energy (MNW) will be approved, up from 50%.

Forsyth Barr

Manawa Energy - 1H Slog Into the Wind Complete, Downwind in 2H — 2Q25 Op Stats

Manawa Energy (MNW) will be glad 2Q25/1H25 is behind it, and that it can look forward to better operating conditions in the coming months.

Forsyth Barr

Manawa Energy - Time to Flip the Switch?

Our analysis suggests the market is pricing in a ~60% probability the deal will get clearance, slightly higher than our current view, making a...

Forsyth Barr

Manawa Energy - Contact Swoops In

Whilst MNW’s share price has rerated +NZ$1.32 (+33%) to NZ$5.35 following the announcement, we retain our OUTPERFORM rating, with MNW shareholders...

Forsyth Barr

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