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 FY26 dividend of 2.37 cents and EPS of 24.01 cents.

19/08/2025

2

Overweight

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Contact Energy delivered FY25 earnings (EBITDA) of NZ$774m, up from NZ$663m year-on-year, which Jarden calls a "solid" outcome given market volatility. FY26 guidance of NZ$980m is in line with the broker’s forecast.

The analysts note the result includes the Manawa acquisition, which is expected to contribute around NZ$150m plus NZ$20m of cost and portfolio synergies.

Normalised FY26 guidance is NZ$945m after transaction costs, close to Jarden’s NZ$948m estimate. A FY26 dividend of NZ40c per share exceeds the 80-100% payout range, though the policy has reverted to board discretion.

The broker highlights early FY26 momentum, with July earnings (EBITDA) up NZ$12.5m year-on-year excluding Manawa, and NZ$90m in total including contributions.

The Manawa portfolio is on track to deliver NZ$216-229m once synergies, contract resets and refurbishments are realised, explains the broker.

The prior NZ$10.81 target price rises to NZ$10.86. Overweight rating retained.

FORECAST
Jarden forecasts a full year FY26 dividend of 36.52 cents and EPS of 28.76 cents.
Jarden forecasts a full year FY27 dividend of 38.35 cents and EPS of 30.50 cents.