CONTACT ENERGY LIMITED (CEN)
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24/07/2025

3

Resumes coverage with Neutral

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UBS resumes coverage of Contact Energy with a Neutral rating and NZ$9.75 target price post the acquisition of Manawa Energy.

Manawa Energy is expected to contribute to earnings at the start of FY26 and will boost the combined business to forecast FY26 earnings (EBITDAF) of NZ$1bn, commentary points out.

Renewable generation should rise to around 98% of FY26 forecast earnings and circa 88% for FY27 forecast earnings.

The acquisition should also underwrite synergy benefits over the next 18 months to corporate and head office cost outs, commentary suggests, optimising hydro management and peaking, and improved locational generation distribution.

From a macro perspective, UBS highlights NZ electric utilities have had a flat performance over the past nine months and slightly under-performed the NZX50 index due to both regulatory and hydrological risks.

Share price upside is likely to be limited by ongoing high long bond yields, the broker concludes.

FORECAST
UBS forecasts a full year FY25 dividend of 4.93 cents and EPS of 4.75 cents.
UBS forecasts a full year FY26 dividend of 2.38 cents and EPS of 24.02 cents.

24/07/2025

1

Buy

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After reviewing Contact Energy's June operating report, Jarden maintains a Buy rating, noting updated indication for FY25 earnings (EBITDA) of NZ$774m exceeded its own NZ$765m forecast as well as the company’s prior guidance.

Geothermal generation rose 34% year-on-year to 4,543GWh, offsetting declines in hydro (-9%) and thermal (-33%), explains the broker, Due to higher gas prices, observes the analyst, average unit generation cost rose to NZ$54.40/MWh.

Retail mass market netback averaged NZ$145.16/MWh, up 9% on FY24, supporting Jarden's confidence in organic earnings growth.

Major projects under development include Glenbrook battery (-NZ$163m), Kowhai Park Solar JV (-NZ$273m), and Te Mihi Stage 2 geothermal (-NZ$712m), highlights the broker.

Jarden retains its NZ$10.83 12-month target price and Buy rating.

FORECAST
Jarden forecasts a full year FY25 dividend of 35.62 cents and EPS of 49.96 cents.
Jarden forecasts a full year FY26 dividend of 36.54 cents and EPS of 46.95 cents.