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.

Thematic (Sector/Industry)

<div><div><ul><li>It has been a tough week in the electricity sector, but we have been encouraged by the swift response, with Methanex redirecting its gas supplies to Contact Energy (CEN) and Genesis Energy (GNE) the most significant example.</li><li>With the big changes in wholesale electricity prices, the continued falls in hydro storage (now at 44% of average nationally), and the likes of the Methanex gas deal, we have revised our near-term forecasts.</li><li>Thermal generators, CEN and GNE get a modest increase, but we have trimmed our Mercury (MCY) and Meridian Energy (MEL) forecasts. </li></ul></div></div>

It has been a tough week in the electricity sector, but we have been encouraged by the swift response, with Methanex redirecting its gas supplies to Contact Energy (CEN) and Genesis Energy (GNE) the most significant example.With the big changes in wholesale electricity prices, the continued falls in hydro storage (now at 44% of average nationally), and the likes of the Methanex gas deal, we have revised our near-term forecasts.Thermal generators, CEN and GNE get a modest increase, but we have trimmed our Mercury (MCY) and Meridian Energy (MEL) forecasts. 

Electricity Sector - Weathering the Drought — Outlook Update

<div><ul><li>July 2024 broke several records and since month end, spot wholesale electricity prices and ASX futures prices have gone to a whole new level.</li><li>Hydro and snow storage at record lows and gas constraints are the main drivers of the record high prices.</li><li>We see downside risk to FY25 sector earnings with below average hydro generation and the rising cost of alternative generation the main negative impact. </li></ul></div>

July 2024 broke several records and since month end, spot wholesale electricity prices and ASX futures prices have gone to a whole new level.Hydro and snow storage at record lows and gas constraints are the main drivers of the record high prices.We see downside risk to FY25 sector earnings with below average hydro generation and the rising cost of alternative generation the main negative impact. 

Power Points - Lakes Dry, Prices High — August 2024

<ul><li>We are expecting solid FY24 EBITDAF earnings growth of +7% across the four generator/retailers reporting in August 2024.</li><li>However, given challenging operating conditions due to hydro and gas fuel shortages we see downside risk to FY25 guidance and outlook commentary.</li><li>How each company is managing the hydro and gas fuel shortfall is of particular interest. </li></ul>

We are expecting solid FY24 EBITDAF earnings growth of +7% across the four generator/retailers reporting in August 2024.However, given challenging operating conditions due to hydro and gas fuel shortages we see downside risk to FY25 guidance and outlook commentary.How each company is managing the hydro and gas fuel shortfall is of particular interest. 

Electricity Sector - Dry July Pressures FY25 - FY24 Result Preview

<ul><li>June 2024 was notable for the first dip in electricity demand in eight months, in part due to NZAS backing off demand at Meridian Energy’s (MEL) request.</li><li>Wholesale electricity prices remained high due to continued below average hydro storage. Contact Energy’s (CEN) Tauhara geothermal plant completed its reliability run in June, so we expect it will have had a strong finish to FY24.</li><li>MEL perhaps less so, as its market share fell to the lowest in three years. We retain our positive outlook on the sector and have an OUTPERFORM rating on CEN, Genesis Energy (GNE) and Manawa Energy (MNW). </li></ul>

June 2024 was notable for the first dip in electricity demand in eight months, in part due to NZAS backing off demand at Meridian Energy’s (MEL) request.Wholesale electricity prices remained high due to continued below average hydro storage. Contact Energy’s (CEN) Tauhara geothermal plant completed its reliability run in June, so we expect it will have had a strong finish to FY24.MEL perhaps less so, as its market share fell to the lowest in three years. We retain our positive outlook on the sector and have an OUTPERFORM rating on CEN, Genesis Energy (GNE) and Manawa Energy (MNW). 

Power Points - Solar Flares Again — July 2024

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>The <a href="https://www.smartkarma.com/entities/genex-power-ltd" target="_blank" data-smartkarma-citation="entities:29079:1" rel="noopener">Genex Power Ltd (GNX AU)</a> IE considers <a href="https://www.smartkarma.com/entities/electric-power-development-c" target="_blank" data-smartkarma-citation="entities:292:1" rel="noopener">Electric Power Development C (9513 JP)</a>’s scheme (A$0.275) and off-market takeover offer (A$0.270) fair and reasonable. </li>
<li>The offer is conditional on FIRB and shareholder approval. Skip Capital, which can block the scheme, has not declared its intention regarding J-Power's offer or launched a competing offer.</li>
<li>Skip’s silence suggests a greater probability of accepting the scheme offer. If the scheme fails, the takeover offer, due to its structure and price, caps the downside.</li>
</ul>


The Genex Power Ltd (GNX AU) IE considers Electric Power Development C (9513 JP)’s scheme (A$0.275) and off-market takeover offer (A$0.270) fair and reasonable. 
The offer is conditional on FIRB and shareholder approval. Skip Capital, which can block the scheme, has not declared its intention regarding J-Power's offer or launched a competing offer.
Skip’s silence suggests a greater probability of accepting the scheme offer. If the scheme fails, the takeover offer, due to its structure and price, caps the downside.


Genex Power (GNX AU): Scheme Vote on 16 July as Skip Remains Silent

New Zealand

Mercury NZ Ltd provides utility services. The Company generates and supplies electricity from hydro, geothermal, gas-fired, and wind power stations, as well as owns and manages bio-energy power plants. Mighty River Power serves customers throughout New Zealand.

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Mercury NZ Ltd (MCY NZ)

Electricity Sector - Weathering the Drought — Outlook Update

Thermal generators, CEN and GNE get a modest increase, but we have trimmed our Mercury (MCY) and Meridian Energy (MEL) forecasts.

Forsyth Barr

Power Points - Lakes Dry, Prices High — August 2024

July 2024 broke several records and since month end, spot wholesale electricity prices and ASX futures prices have gone to a whole new level.

Forsyth Barr

Electricity Sector - Dry July Pressures FY25 - FY24 Result Preview

We are expecting solid FY24 EBITDAF earnings growth of +7% across the four generator/retailers reporting in August 2024.

Forsyth Barr

Power Points - Solar Flares Again — July 2024

June 2024 was notable for the first dip in electricity demand in eight months, in part due to NZAS backing off demand at Meridian Energy’s (MEL)...

Forsyth Barr

Genex Power (GNX AU): Scheme Vote on 16 July as Skip Remains Silent

Skip’s silence suggests a greater probability of accepting the scheme. The takeover offer caps the downside due to structure and price. The gross...

Arun George

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