GNE - Genesis Energy

[Left Field]

Interesting article FYI.......clearly something needs to change

https://newsroom.co.nz/2025/08/01/a-less-known-way-that-keeping-hold-of-the-gentailers-can-bring-down-power-prices/

[Red Baron]

Interesting article FYI.......clearly something needs to change

https://newsroom.co.nz/2025/08/01/a-less-known-way-that-keeping-hold-of-the-gentailers-can-bring-down-power-prices/

Ze article has a zerious omission: NZAS and Tiwai Point. Vhile NZAS vas 'counting down to leave', eet looked like NZ vas going to have plenty of power zupply.  Zhis eez vhy new power ztations vere not built vor circa ten years.  Nothing to do vith 'capital leakage'.    Indeed both Mercury and Contact have had no problem vunding their new power station roll out, despite paying 'high dividends'.

Ze article also leaves out zomething particularly relevant vor Genesis shareholders.     Namely investors outside of ze gentailers are villing to pay vor grid scale generation:   FRV(Australia) who have built ze Lauriston Solar Farm een Christchurch own 60%, vith Genesis owning ze other 40%.   Yet  Genesis have contracted control of 100% of ze generation output.   

RB

 

[seaweed]

Have bought into two companies today. What peeves me off is all the 1, 2 and 3 little parcels going through. I have 100 frigging little transactions to full up my blo.dy statements. I don't mind small amount, but 100, fair go ASB give me a break. And that is my moan for the day.   

[Cod]

GNE still pressing the top of the rising channel.
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[Basil]

Hit an intraday high of $2.415 today which is a new 12 monthly high for GNE.  Investors positioning themselves ahead of what is almost certainly an interest rate cut by the RBNZ next week.

[alkebab]

Have bought into two companies today. What peeves me off is all the 1, 2 and 3 little parcels going through. I have 100 frigging little transactions to full up my blo.dy statements. I don't mind small amount, but 100, fair go ASB give me a break. And that is my moan for the day.   

Good old sharsies at it again. Sometimes I wish they'd have their own stock exchange index with their 1x buys at $2.

[seaweed]

GNE still pressing the top of the rising channel.
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What do you think. Should we push that channel back up to $3. More bang for your buck than the other power companies. CEN used to be my favorite a few years back in the late 5s and early 6s, remember that, and overseas buyers pushed it up to $10 or $11 in a short time, something to do with clean energy or something like that. Those were the days, we made some good money on that CEN. Have bought 5 blocks of GNE from 2.27 on 9/6/25 to today. Even at 2.60 it still has a yld of about 5.4%. 

[Basil]

Assuming 14.5 cps dividends for FY26 and assuming they're fully imputed that's 8.4% gross yield at $2.40. FY25 final divvy is not far away

[Basil]

https://api.nzx.com/public/announcement/457450/attachment/450417/457450-450417.pdf

Plenty in there to chew over.  Market doesn't seem to like something in there, perhaps the EBITDAF outlook for FY26 of $430-$460m against a prior market consensus off market screener of just over $500m but I note (from memory on a brief skim read of this), ~ $60m investment in digital initiative capex for FY26, which I think has to be expensed under the new accounting rules so that might explain most of the difference.
I did note EPS exceeded DPS for the first time in many years.

Looking ahead to FY26 for GNE as an income stock, I think dividends will be ~ 14.6 cps fully imputed = 20.28 cps Gross.  On $2.35 that's a gross yield of 8.63% (8.85% if you take advantage of the DRIP at a 2.5% discount). 

If you get a bit creative and treat the pending FY 25 final divvy as part return of the purchase price and use the DRP scheme the gross yield for FY26 income becomes ($2.35 - 0.0717) = $2.2783 Net Invested.  20.28 / 227.83 = 8.9%  8.9 % with DRIP discount of 2.5% = 8.9 / 0.975 = 9.13% Gross.  I think its worthwhile noting that they have the intention of broadly moving the dividend up in line with inflation each year, although they do have a recidivist habit of failing that target.  e.g. This year 14.3 cps / 14.0 cps = 2.1% increase against an official inflation increase of 2.7% for the year ended 30 June 2025. I will certainly be hitting the board up about this failure to meet the dividend inflation increase at the annual meeting, depending where its held, either online or in person.

Anyway...up to 9.13% Gross yield depending on how you view the pending final divvy and DRIP scheme plus increases in future years that represent the majority of inflation is a very solid yield in a falling interest rate environment.

Initiatives around firming options for Huntly, Rankine life extension and renewables look solid to me.  Not sure how much credibility to attach to their targeted EBITDA of mid to late $500m's by FY28.  Time will tell.

P.S. Before today's result the average of 5 analysts view was outperform with a price target of $2.64.  Analysis of a company like this is really something I prefer to leave to professionals with relevant industry experience and I think an average view takes out any one analysts bias in respect to certain ESG matters, such as the use of coal to backstop N.Z's energy needs.  It will be interesting to have another look on Market Screener and see the average view once all analysts have updated in about a week's time.  In the meantime, here's their current view. https://www.marketscreener.com/quote/stock/GENESIS-ENERGY-LIMITED-17595957/consensus/

[seaweed]

https://api.nzx.com/public/announcement/457450/attachment/450417/457450-450417.pdf

Plenty in there to chew over.  Market doesn't seem to like something in there, perhaps the EBITDAF outlook for FY26 of $430-$460m against a prior market consensus off market screener of just over $500m but I note (from memory on a brief skim read of this), ~ $60m investment in digital initiative capex for FY26, which I think has to be expensed under the new accounting rules so that might explain most of the difference.
I did note EPS exceeded DPS for the first time in many years.

Looking ahead to FY26 for GNE as an income stock, I think dividends will be ~ 14.6 cps fully imputed = 20.28 cps Gross.  On $2.35 that's a gross yield of 8.63% (8.85% if you take advantage of the DRIP at a 2.5% discount). 

If you get a bit creative and treat the pending FY 25 final divvy as part return of the purchase price and use the DRP scheme the gross yield for FY26 income becomes ($2.35 - 0.0717) = $2.2783 Net Invested.  20.28 / 227.83 = 8.9%  8.9 % with DRIP discount of 2.5% = 8.9 / 0.975 = 9.13% Gross.  I think its worthwhile noting that they have the intention of broadly moving the dividend up in line with inflation each year, although they do have a recidivist habit of failing that target.  e.g. This year 14.3 cps / 14.0 cps = 2.1% increase against an official inflation increase of 2.7% for the year ended 30 June 2025. I will certainly be hitting the board up about this failure to meet the dividend inflation increase at the annual meeting, depending where its held, either online or in person.

Anyway...up to 9.13% Gross yield depending on how you view the pending final divvy and DRIP scheme plus increases in future years that represent the majority of inflation is a very solid yield in a falling interest rate environment.

Initiatives around firming options for Huntly, Rankine life extension and renewables look solid to me.  Not sure how much credibility to attach to their targeted EBITDA of mid to late $500m's by FY28.  Time will tell.

P.S. Before today's result the average of 5 analysts view was outperform with a price target of $2.64.  Analysis of a company like this is really something I prefer to leave to professionals with relevant industry experience and I think an average view takes out any one analysts bias in respect to certain ESG matters, such as the use of coal to backstop N.Z's energy needs.  It will be interesting to have another look on Market Screener and see the average view once all analysts have updated in about a week's time.  In the meantime, here's their current view. https://www.marketscreener.com/quote/stock/GENESIS-ENERGY-LIMITED-17595957/consensus/

That sounds good to me. I would buy another 50,000 but eggs in basket and all that stuff, will buy more FSF instead, when it slides back a bit this afternoon.

[Basil]

MSCI rebalnce today. Many of the larger stocks took a bit of a hit. Hopefully normal business resumes tomorrow.

[winner (n)]

GNE Divie Yield 8.5% Gross and 5.7% after tax (at 33%) v NZ Govt 10 Yr yield of 2.9% after tax. So the spread/difference is 2.8% points.

The spread has been trending down since the IPO. If the spread is a proxy for perceived risk than that implies GNE is seen as 'less risky' these days by punters  .

The spread has averaged 3.3% the last few years. We could say that on a 'risk adjusted' basis that GNE is currently about fair value (if anything slightly over valued.

Another observation is that the possibly to the lament of GNE management the ESG discount still prevails. Like other sector players with significantly lower yields. One thing going for us is that yield gets closer to the likes of CEN etc the GNE share price will be a lot higher.

Chart shows how that spread has moved over the years

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[winner (n)]

Updated this

Suppose one could say that GNE is a steady performer profit wise

That transcends into a dividend that hasn't grown much over the years .... even though we got a pay rise this year ....but didn't cover the extra cost of the power bill lol

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[Left Field]

Thanks for the charts Winner.

Interesting times. With recent cost increases, high fixed charges etc a mate of mine made the decision to scrap their gas water heater and gas range top to go all electric ( est 3 yr pay back.)

His longer term plan is to go all Solar/battery.

I suspect a lot of consumers will be re thinking their utility accounts these days.

[Basil]

Full imputation credits no longer a risk as EPS now exceeds DPS and is forecast to stay that way.

Forsyth Barr forecasting as follows:
FY26 EPS 17.6 cps DPS 14.5 cps
FY27 EPS 20.2 cps DPS 14.8 cps
FY28 EPS 22.3 cps DPS 15.1 cps

I think under John's leadership the company has achieved quite a bit in the last year, the most notable of which is the Huntly firming options:
 GNE highlight

- Delivered 10-year Huntly Firming Options (HFOs) signed with Meridian, Mercury and Contact for 150 MW, subject to regulatory review.
- Delivered Gen35 strategy acceleration with credible pathway to mid-to-upper $500m EBITDAF by FY28.
- Delivered the Lauriston solar farm operational; Edgecumbe and Leeston progressing to FID.
- Delivering stage 1 BESS, construction of the 100 MW/200 MWh Huntly Battery Energy Storage System ('BESS'), due for completion in Q1 FY27, with feasibility work underway for a second 200 MWh stage.
- Delivered full acquisition and delivered integration of Ecotricity; majority stake in ChargeNet secured.
- Delivered retail simplification, completed, improved customer satisfaction and brand equity.
- Delivered strategic fuel reserve established at Huntly Power Station (HPS) with 600 kt of coal.
- Delivered hot water control trial and LED bulb distribution, delivering scalable demand flexibility.
- Continuing biomass supply chain development to support long-term coal displacement at HPS.

Market has been caught off guard with ~ $60m digital investment in FY26.  The company is stating this is necessary to drive EBITDAF growth going forward.
My comment is its worth remembering that up until very recently tech spend like this could be capitalized and amortised over its useful life.  Some mandatory changes to accounting rules are a bit of a nonsense.

My view is that its common knowledge there's a lot of solar and wind generation going into the market over the next ~ 5 years from all the generators and Huntly is going to be badly needed when the wind doesn't blow and the sun doesn't shine.  The concern I have is beyond FY35, how much life is left in those Rankine units ?    My thinking. GNE a great and pretty safe retiree's dividend yield investment, especially for those like me who don't think they will have much life left in them after FY40 lol