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>The Commerce Commission (ComCom) has made its final decision on the 4th default price path reset (DPP4), which will result in Vector's (VCT) lines charges increasing materially from 1 April 2025.</li><li>The final decision is very similar to the draft decision made in May 2024, with the only notable difference being the drop in interest rates during July 2024, modestly lowering the price increase.</li><li>The key next step for VCT is resetting its dividend policy. With no material changes, we retain our NEUTRAL rating.</li></ul>

The Commerce Commission (ComCom) has made its final decision on the 4th default price path reset (DPP4), which will result in Vector's (VCT) lines charges increasing materially from 1 April 2025.The final decision is very similar to the draft decision made in May 2024, with the only notable difference being the drop in interest rates during July 2024, modestly lowering the price increase.The key next step for VCT is resetting its dividend policy. With no material changes, we retain our NEUTRAL rating.

Vector - Prices Cleared for Launch — DPP4 Reset

<ul><li>Vector (VCT) delivered a strong FY24 result and a big positive dividend surprise.</li><li>The final total dividend was +55% higher than expected and sends a message that the base dividend has been reset higher.</li><li>There are mixed messages, however, with VCT lifting its dividend before resetting its dividend policy, a decision that has been pushed back to February 2025. </li></ul>

Vector (VCT) delivered a strong FY24 result and a big positive dividend surprise.The final total dividend was +55% higher than expected and sends a message that the base dividend has been reset higher.There are mixed messages, however, with VCT lifting its dividend before resetting its dividend policy, a decision that has been pushed back to February 2025. 

Vector - Party at Entrust's House — FY24 Result

<ul><li>Falling interest rates are coming at the wrong time for Vector (VCT), as the halfway point for the Commerce Commission's (ComCom) risk-free rate setting process has just passed.</li><li>Lower interest rates reduce the regulatory cost of capital impacting VCT's electricity revenue under its default price path (DPP4).</li><li>Lower interest rates, however, do help valuation metrics. </li></ul>

Falling interest rates are coming at the wrong time for Vector (VCT), as the halfway point for the Commerce Commission's (ComCom) risk-free rate setting process has just passed.Lower interest rates reduce the regulatory cost of capital impacting VCT's electricity revenue under its default price path (DPP4).Lower interest rates, however, do help valuation metrics. 

Vector - Unhelpful Interest - 4Q24 Op Stats

<ul><li>The Commerce Commission's (ComCom) default price path (DPP) draft decision is a positive for Vector (VCT) as it has granted VCT's full 2024 asset management plan opex and capex.</li><li>This allowance, plus rising interest and inflation, has resulted in material regulatory price increases, albeit in-line with expectations.</li><li>The main benefit from the ComCom's announcement is a reduction of regulatory risk (at least for the next five years). </li></ul>

The Commerce Commission's (ComCom) default price path (DPP) draft decision is a positive for Vector (VCT) as it has granted VCT's full 2024 asset management plan opex and capex.This allowance, plus rising interest and inflation, has resulted in material regulatory price increases, albeit in-line with expectations.The main benefit from the ComCom's announcement is a reduction of regulatory risk (at least for the next five years). 

Vector - ComCom Accommodating—DPP Draft Decision

<ul><li>Vector (VCT) reported a strong 1H24 result, with Adjusted EBITDA of NZ$192m +NZ$10m ahead of our forecast, mainly due to a lift in OnGas margins.</li><li>The result was notable for VCT increasing its cash dividend, to offset the removal of imputation credits, and providing first time guidance for Bluecurrent (metering) dividends it expects to receive.</li><li>Both were positive surprises and are the main reason for our +18cps (+4.8%) increase in our target price to NZ$3.95. </li></ul>

Vector (VCT) reported a strong 1H24 result, with Adjusted EBITDA of NZ$192m +NZ$10m ahead of our forecast, mainly due to a lift in OnGas margins.The result was notable for VCT increasing its cash dividend, to offset the removal of imputation credits, and providing first time guidance for Bluecurrent (metering) dividends it expects to receive.Both were positive surprises and are the main reason for our +18cps (+4.8%) increase in our target price to NZ$3.95. 

Vector - Scattered Surprises — 1H24 Result

New Zealand

Vector Limited is an energy infrastructure company in New Zealand that provides electricity and gas transmission and distribution along with metering.  The Company is also a wholesaler of LPG and natural gas.  Vector also delivers broadband voice and data communications in the Auckland and Wellington regions.

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Vector Ltd (VCT NZ)

Vector - Prices Cleared for Launch — DPP4 Reset

The Commerce Commission (ComCom) has made its final decision on the 4th default price path reset (DPP4), which will result in Vector's (VCT) lines...

Forsyth Barr

Vector - Party at Entrust's House — FY24 Result

Notwithstanding the medium-term increase in our dividend forecast, we have left our rating unchanged at NEUTRAL, pending more dividend clarity.

Forsyth Barr

Vector - Unhelpful Interest - 4Q24 Op Stats

Falling interest rates are coming at the wrong time for Vector (VCT), as the halfway point for the Commerce Commission's (ComCom) risk-free rate...

Forsyth Barr

Vector - ComCom Accommodating—DPP Draft Decision

The Commerce Commission's (ComCom) default price path (DPP) draft decision is a positive for Vector (VCT) as it has granted VCT's full 2024 asset...

Forsyth Barr

Vector - Scattered Surprises — 1H24 Result

Vector (VCT) reported a strong 1H24 result, with Adjusted EBITDA of NZ$192m +NZ$10m ahead of our forecast, mainly due to a lift...

Forsyth Barr

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