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>September 2024 was always going to be a tough month for Meridian Energy (MEL) and so it proved to be, albeit it was worse than expected.</li><li>High cost hedges, the NZAS demand response contract, and a surprisingly poor LWAP/GWAP ratio all contributed to MEL making an EBITDAF loss in the month — the first time this has happened since the 2012 dry spell, which was pre-listing.</li><li>October 2024 is also expected to be a difficult month (albeit an improvement on September 2024). After that, we expect earnings to normalise and step up in 2H25, as MEL supplies less of the NZAS volume. NEUTRAL.</li></ul>

September 2024 was always going to be a tough month for Meridian Energy (MEL) and so it proved to be, albeit it was worse than expected.High cost hedges, the NZAS demand response contract, and a surprisingly poor LWAP/GWAP ratio all contributed to MEL making an EBITDAF loss in the month — the first time this has happened since the 2012 dry spell, which was pre-listing.October 2024 is also expected to be a difficult month (albeit an improvement on September 2024). After that, we expect earnings to normalise and step up in 2H25, as MEL supplies less of the NZAS volume. NEUTRAL.

Meridian Energy - Airing the Dirty Washing — Sept 2024 Op Stats

<ul><li>We upgrade Meridian Energy (MEL) to NEUTRAL from UNDERPERFORM.</li><li>MEL has delivered a strong FY24 result, in line with expectations, and its new dividend policy resulted in a big dividend uplift. </li><li>MEL's sector low debt level should result in solid ongoing dividend growth. </li></ul>

We upgrade Meridian Energy (MEL) to NEUTRAL from UNDERPERFORM.MEL has delivered a strong FY24 result, in line with expectations, and its new dividend policy resulted in a big dividend uplift. MEL's sector low debt level should result in solid ongoing dividend growth. 

Meridian Energy - Dividend Amped — FY24 Result

<ul><li>FY24 has been a watershed year for Meridian Energy (MEL), following the signing of the landmark NZAS contract and a strong operating performance that will deliver record EBITDAF earnings.</li><li>Whilst MEL's June 2024 performance was solid, it was down on recent months as dry hydro conditions impacted earnings; we expect the trend to continue into FY25.</li><li>The flipside of lower hydro generation is high wholesale electricity prices, which should help lift FY26 and beyond earnings. We increase our target price +15cps (+2.3%) but retain our UNDERPERFORM rating, with MEL remaining the most expensive electricity stock.</li></ul>

FY24 has been a watershed year for Meridian Energy (MEL), following the signing of the landmark NZAS contract and a strong operating performance that will deliver record EBITDAF earnings.Whilst MEL's June 2024 performance was solid, it was down on recent months as dry hydro conditions impacted earnings; we expect the trend to continue into FY25.The flipside of lower hydro generation is high wholesale electricity prices, which should help lift FY26 and beyond earnings. We increase our target price +15cps (+2.3%) but retain our UNDERPERFORM rating, with MEL remaining the most expensive electricity stock.

Meridian Energy - Closing Out a Watershed Year — June 2024

<ul><li>Meridian Energy's (MEL) investor day was notable for its consistent messaging relative to past presentations, as opposed to new announcements that may drive a change in thinking.</li><li>MEL didn't even tag its presentation as material.</li><li>The day reinforced the view (to us) that following the new NZAS electricity deal, MEL's focus is squarely on developing new generation and progressing its pipeline of opportunities, with significant pipeline progression revealed. </li></ul>

Meridian Energy's (MEL) investor day was notable for its consistent messaging relative to past presentations, as opposed to new announcements that may drive a change in thinking.MEL didn't even tag its presentation as material.The day reinforced the view (to us) that following the new NZAS electricity deal, MEL's focus is squarely on developing new generation and progressing its pipeline of opportunities, with significant pipeline progression revealed. 

Meridian Energy - Steadily Developing for the Future

<ul><li>Strong hydrology, wind, and wholesale electricity prices have combined to produce a strong March 2024 and 3Q24 operating performance for Meridian Energy (MEL), with that momentum expected to flow through to 4Q24.</li><li>We have lifted our FY24 EBITDAF and dividend forecast +NZ$53m (+6%) and +0.4cps (+2%) respectively, driving our +4% (+20cps) increase in target price to NZ$5.25.</li><li>The changes are largely short-term operational benefits, so the longer-term outlook is little changed. </li></ul>

Strong hydrology, wind, and wholesale electricity prices have combined to produce a strong March 2024 and 3Q24 operating performance for Meridian Energy (MEL), with that momentum expected to flow through to 4Q24.We have lifted our FY24 EBITDAF and dividend forecast +NZ$53m (+6%) and +0.4cps (+2%) respectively, driving our +4% (+20cps) increase in target price to NZ$5.25.The changes are largely short-term operational benefits, so the longer-term outlook is little changed. 

Meridian Energy - It's W3 — Wind, Water and Wholesale Prices

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)

Meridian Energy - Airing the Dirty Washing — Sept 2024 Op Stats

September 2024 was always going to be a tough month for Meridian Energy (MEL) and so it proved to be, albeit it was worse than expected.

Forsyth Barr

Meridian Energy - Dividend Amped — FY24 Result

MEL is navigating the challenging operating conditions well. However, it does come at a cost, with expensive hedges impacting the expected FY25...

Forsyth Barr

Meridian Energy - Closing Out a Watershed Year — June 2024

We increase our target price +15cps (+2.3%) but retain our UNDERPERFORM rating, with MEL remaining the most expensive electricity stock.

Forsyth Barr

Meridian Energy - Steadily Developing for the Future

Meridian Energy's (MEL) investor day was notable for its consistent messaging relative to past presentations, as opposed to new announcements that...

Forsyth Barr

Meridian Energy - It's W3 — Wind, Water and Wholesale Prices

Strong hydrology, wind, and wholesale electricity prices have combined to produce a strong March 2024 and 3Q24 operating performance for Meridian...

Forsyth Barr

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