New Zealand Professional Investment Services Firm

Forsyth Barr

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.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Contact Energy<br>Gathering Momentum</h2>
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<p><strong>OUTPERFORM</strong></p>
<p>Contact Energy's (CEN) April 2021 monthly operating statistics is another data point highlighting CEN's earnings momentum. April 2021 EBITDAF was NZ$52m, +NZ$18m up on the prior year and means year-to-date FY21 EBITDAF is +NZ$65m ahead of FY20. We are upgrading our FY21 EBITDAF forecast +NZ$23m (+4.7%) to NZ$518m and raise our target price +10cps (+1.2%) to NZ$8.50. OUTPERFORM.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/204/773/original/image_65813924521620345466711.png?1620345481" class="editor-image img-responsive" data-smartkarma-image-id="204773"></figure>
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<h3>What's changed?&nbsp;</h3>
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<li><strong>Earnings</strong>:&nbsp;FY22/FY23/FY24 EBITDAF increased +5%/+2%/+1% to NZ$518m/NZ$524m/NZ$510m</li>
<li><strong>Target price</strong>:&nbsp;Increased +10cps (+1.2%) to NZ$8.50</li>
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<h3>Benefitting&nbsp;from being long generation, upgrading near-term forecasts</h3>
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<p>CEN is currently&nbsp;benefitting&nbsp;from having more generation volume than sales volume. That is enabling it to take advantage of the high wholesale electricity prices and produce record monthly earnings, despite hydro volumes being well below average. April 2021 is the fourth month in a row of record&nbsp;monthly earnings.</p>
<p>We are upgrading our FY21 EBITDAF forecast +5% to NZ$518m, with more modest upgrades for the following two years and no change to our longer-term forecasts. Our target price change is relatively modest, +10cps to NZ$8.50 as the earnings upgrade is short-term in nature.</p>
<p>Rolling 12-month EBITDAF is NZ$513m, so our revised EBITDAF forecast assumes modest outperformance in the last two months of FY21. A little bit of rain in the last two months would put the icing on the cake for CEN.</p>
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<div><strong>Andrew Harvey-Green</strong></div>
<div><a href="mailto:andrew.harvey-green@forsythbarr.co.nz" target="_blank" rel="noopener">andrew.harvey-green@<wbr>forsythbarr.co.nz</a></div>
<div>+64 4 495 8185</div>
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<div><strong>Scott Anderson</strong></div>
<div><a href="mailto:scott.anderson@forsythbarr.co.nz" target="_blank" rel="noopener">scott.anderson@forsythbarr.co.<wbr>nz</a></div>
<div>+64 4 914 2219</div>
</div>
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Contact Energy Gathering Momentum

OUTPERFORM
Contact Energy's (CEN) April 2021 monthly operating statistics is another data point highlighting CEN's earnings momentum. April 2021 EBITDAF was NZ$52m, +NZ$18m up on the prior year and means year-to-date FY21 EBITDAF is +NZ$65m ahead of FY20. We are upgrading our FY21 EBITDAF forecast +NZ$23m (+4.7%) to NZ$518m and raise our target price +10cps (+1.2%) to NZ$8.50. OUTPERFORM.


What's changed?&nbsp;



Earnings:&nbsp;FY22/FY23/FY24 EBITDAF increased +5%/+2%/+1% to NZ$518m/NZ$524m/NZ$510m
Target price:&nbsp;Increased +10cps (+1.2%) to NZ$8.50



Benefitting&nbsp;from being long generation, upgrading near-term forecasts


CEN is currently&nbsp;benefitting&nbsp;from having more generation volume than sales volume. That is enabling it to take advantage of the high wholesale electricity prices and produce record monthly earnings, despite hydro volumes being well below average. April 2021 is the fourth month in a row of record&nbsp;monthly earnings.
We are upgrading our FY21 EBITDAF forecast +5% to NZ$518m, with more modest upgrades for the following two years and no change to our longer-term forecasts. Our target price change is relatively modest, +10cps to NZ$8.50 as the earnings upgrade is short-term in nature.
Rolling 12-month EBITDAF is NZ$513m, so our revised EBITDAF forecast assumes modest outperformance in the last two months of FY21. A little bit of rain in the last two months would put the icing on the cake for CEN.



Andrew Harvey-Green
andrew.harvey-green@forsythbarr.co.nz
+64 4 495 8185





Scott Anderson
scott.anderson@forsythbarr.co.nz
+64 4 914 2219



Contact Energy

Contact Energy: Gathering Momentum