IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/origin-energy-ltd" target="_blank" data-smartkarma-citation="entities:797" rel="noopener">Origin Energy (ORG AU)</a>  has disclosed a best and final offer from Brookfield/EIG at A$6.59 and US$1.86 per share, which implies A$9.53 per share, 8.1% higher than the previous offer.</li>
<li>AusSuper will <a href="file:///C:/Users/aag6u/Downloads/AustralianSuper%20rejects%20best%20and%20final%20Brookfield%20bid%20for%20Origin%20Energy.pdf" target="_blank" rel="noopener">vote against</a> the final offer. Taking advantage of the share price dip, AusSuper is said to have further increased its shareholding to 14.98% of outstanding shares.</li>
<li>The scheme will likely fail as a minority YES vote turnout of 88% is required to pass. Brookfield/EIG could return with an off-market takeover offer, but it also faces issues. </li>
</ul>



Origin Energy (ORG AU)  has disclosed a best and final offer from Brookfield/EIG at A$6.59 and US$1.86 per share, which implies A$9.53 per share, 8.1% higher than the previous offer.
AusSuper will vote against the final offer. Taking advantage of the share price dip, AusSuper is said to have further increased its shareholding to 14.98% of outstanding shares.
The scheme will likely fail as a minority YES vote turnout of 88% is required to pass. Brookfield/EIG could return with an off-market takeover offer, but it also faces issues. 


Origin Energy (ORG AU): AusSuper Wreaks Havoc on Brookfield/EIG’s Final Offer

New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

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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>The electricity sector appears to have defied gravity over the past two years, generally tracking sideways despite interest rates steadily rising with earnings growth the key factor, but does the growth justify the share price performance?</li><li>Our analysis suggests the risk of a negative share price reset is rising with a growing risk of earnings downgrades ~FY27 onwards and the return of a risk on environment favouring cyclical stocks over defensive yield stocks.</li><li>We maintain our sector underweight view. Our preferred sector picks, Contact Energy (CEN) and Genesis Energy (GNE) are NEUTRAL and we have UNDERPERFORM ratings on Mercury (MCY), Meridian Energy (MEL) and Manawa Energy (MNW).</li></ul>

The electricity sector appears to have defied gravity over the past two years, generally tracking sideways despite interest rates steadily rising with earnings growth the key factor, but does the growth justify the share price performance?Our analysis suggests the risk of a negative share price reset is rising with a growing risk of earnings downgrades ~FY27 onwards and the return of a risk on environment favouring cyclical stocks over defensive yield stocks.We maintain our sector underweight view. Our preferred sector picks, Contact Energy (CEN) and Genesis Energy (GNE) are NEUTRAL and we have UNDERPERFORM ratings on Mercury (MCY), Meridian Energy (MEL) and Manawa Energy (MNW).

Electricity Sector - Sector Set for an Electric Shock

<ul>
<li>The ACCC has approved Brookfield/EIG’s proposed acquisition of <a href="https://www.smartkarma.com/entities/origin-energy-ltd" target="_blank" data-smartkarma-citation="entities:797:1" rel="noopener">Origin Energy (ORG AU)</a>. The Brookfield/EIG offer is A$5.78 and US$2.19 per share, worth A$8.83 at the last close. </li>
<li>The bidders now face the challenge of convincing shareholders to accept the offer and avoid incurring ticking fees. The scheme booklet will be despatched in the coming weeks.</li>
<li>Several shareholders have justifiably argued that the offer is light. Our SoTP valuation is A$9.46 per share, 7.1% above the implied offer price of A$8.83.</li>
</ul>


The ACCC has approved Brookfield/EIG’s proposed acquisition of Origin Energy (ORG AU). The Brookfield/EIG offer is A$5.78 and US$2.19 per share, worth A$8.83 at the last close. 
The bidders now face the challenge of convincing shareholders to accept the offer and avoid incurring ticking fees. The scheme booklet will be despatched in the coming weeks.
Several shareholders have justifiably argued that the offer is light. Our SoTP valuation is A$9.46 per share, 7.1% above the implied offer price of A$8.83.


Origin Energy (ORG AU): ACCC Approves, Shareholders Justifiably Want a Bump

<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

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)

Origin Energy (ORG AU): AusSuper Wreaks Havoc on Brookfield/EIG’s Final Offer

The scheme will likely fail. The minority YES vote turnout of 53% is required for success. Brookfield/EIG could return with an off-market takeover...

Arun George

Electricity Sector - Sector Set for an Electric Shock

The electricity sector appears to have defied gravity over the past two years, generally tracking sideways despite interest rates steadily rising...

Forsyth Barr

Origin Energy (ORG AU): ACCC Approves, Shareholders Justifiably Want a Bump

Several shareholders have justifiably argued that the offer is light. Our SoTP valuation is A$9.46 per share, 7.1% above the implied offer price of...

Arun George

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

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