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)

<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

Equity Bottom-Up

<ul><li>Mercury (MCY) reported a watershed result, with FY23 EBITDAF increasing +41% (+NZ$244m) on FY22 to NZ$836m, well ahead of guidance and our forecast.</li><li>Driving the strong performance was record high hydro generation, the Trustpower (TPW) retail acquisition, rising retail yields and Turitea wind farm volumes.</li><li>Looking ahead, FY24 guidance was soft relative to expectations, the main issue being higher opex. </li></ul>

Mercury (MCY) reported a watershed result, with FY23 EBITDAF increasing +41% (+NZ$244m) on FY22 to NZ$836m, well ahead of guidance and our forecast.Driving the strong performance was record high hydro generation, the Trustpower (TPW) retail acquisition, rising retail yields and Turitea wind farm volumes.Looking ahead, FY24 guidance was soft relative to expectations, the main issue being higher opex. 

Mercury - Watershed Result — FY23 Result

<ul><li>We are expecting the largest ever, single year increase in the collective EBITDAF earnings of the big four generator/retailers, up +18% in FY23 to NZ$2.7b.</li><li>In many ways it was the perfect year with acquisitions, new generation, record high hydro generation, strong retail margin growth and one-off gains lifting earnings.</li><li>For the first time ever, MCY will report the strongest earnings in the sector, aided by all of the factors noted. </li></ul>

We are expecting the largest ever, single year increase in the collective EBITDAF earnings of the big four generator/retailers, up +18% in FY23 to NZ$2.7b.In many ways it was the perfect year with acquisitions, new generation, record high hydro generation, strong retail margin growth and one-off gains lifting earnings.For the first time ever, MCY will report the strongest earnings in the sector, aided by all of the factors noted. 

Electricity Sector - Step Change — FY23 Preview

<div><div><div><div><ul><li>July 2023 saw above average hydro conditions continue, with the exception of the lower South Island.</li><li>The big news of the month came from the Government reversing its emissions trading scheme (ETS) settings decision, which helped carbon prices recover to ~NZ$60/unit from a low of ~NZ$35/unit in late June 2023.</li><li>Electricity stocks continue to perform well despite interest rates edging higher and ASX futures prices edging lower as the market continues to favour risk off. </li></ul></div></div></div></div>

July 2023 saw above average hydro conditions continue, with the exception of the lower South Island.The big news of the month came from the Government reversing its emissions trading scheme (ETS) settings decision, which helped carbon prices recover to ~NZ$60/unit from a low of ~NZ$35/unit in late June 2023.Electricity stocks continue to perform well despite interest rates edging higher and ASX futures prices edging lower as the market continues to favour risk off. 

Power Points - Offshore Wind Brewing - August 2023

<ul><li>Mercury (MCY) has capped FY23 with another quarter of strong hydro generation, lifting total generation above 9TWh for the first time.</li><li>Slightly higher than forecast generation volumes and stronger than expected financial sales pricing has lifted our FY23 EBITDAF forecast +NZ$25m (+3.1%) to NZ$820m, and +NZ$25m above guidance.</li><li>Our target price has increased +6cps (+1.1%) to NZ$5.51. </li></ul>

Mercury (MCY) has capped FY23 with another quarter of strong hydro generation, lifting total generation above 9TWh for the first time.Slightly higher than forecast generation volumes and stronger than expected financial sales pricing has lifted our FY23 EBITDAF forecast +NZ$25m (+3.1%) to NZ$820m, and +NZ$25m above guidance.Our target price has increased +6cps (+1.1%) to NZ$5.51. 

Mercury: Hydro Power Does It Again — 4Q23 Op Stats

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Mercury NZ Ltd (MCY NZ)

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

Mercury - Watershed Result — FY23 Result

Mercury (MCY) reported a watershed result, with FY23 EBITDAF increasing +41% (+NZ$244m) on FY22 to NZ$836m, well ahead of guidance and our...

Forsyth Barr

Electricity Sector - Step Change — FY23 Preview

We are expecting the largest ever, single year increase in the collective EBITDAF earnings of the big four generator/retailers, up +18% in FY23 to...

Forsyth Barr

Power Points - Offshore Wind Brewing - August 2023

Electricity stocks continue to perform well despite interest rates edging higher and ASX futures prices edging lower as the market continues to...

Forsyth Barr

Mercury: Hydro Power Does It Again — 4Q23 Op Stats

Mercury (MCY) exceeded expectations with strong hydro generation and financial sales pricing, leading to a +3.1% increase in FY23 EBITDAF forecast...

Forsyth Barr

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)