GNE - Genesis Energy

[winner (n)]

Forbar say capital raise likely mid year

Get it done and dusted before the election

[Basil]

Not so sure about that. Very good profit upgrade last week that's received no comments on here. Making HEAPS of EBITDA, no need for more capital I reckon.

[winner (n)]

Not so sure about that. Very good profit upgrade last week that's received no comments on here. Making HEAPS of EBITDA, no need for more capital I reckon.

Didn't Genesis say they have $800m/$900m of 'unfunded' Capex in the plans

[Basil]

Not sure mate.  Lots of EBITDA and cashflow between now and their 2035 Gen35 ambitions that's not being paid out as dividends.

[Shareguy]

More than that Winner. The current government agreeing to support any cap raise has opened the door. Both FB and Craig's suggest that Genesis stands out as the most capital constrained.

From FB

In its 2Q26 release, it republished its development pipeline, which highlights ~NZ$1bn of 'progressed growth opportunities' and a further ~NZ$1bn of 'discretionary growth opportunities' that are unfunded. While some of the projects could be progressed without GNE capital and there is no immediate need for additional capital (the first of these projects are a few months from a final investment decision), we anticipate GNE will want to raise equity before mid-2026 due to the proximity of the November 2026 election.

At the end of the day any equity raise would be well supported and a high probability of investors doing ok I suggest.

[Basil]

I'm sure both brokers are champing at the bit, (trying to fly a kite?), to push this idea to gain investment banking and / or underwriting fees.  Time will tell if their thesis holds water.  For what its worth I hold a fairly modest 5% portfolio position for yield.  I'll consider any possible future capital raise on its merits.

[winner (n)]

The Genesis dividend is now less than when it listed. It did slowly rise from 15.5 cents in 2015 to 17.7 cents in 2023 and its now down to 14.3 cents (been varying imputation rates over that time)

With this talk of $800m or more 'unfunded' capex and capital raises you'd have to think that even the current 14 cent dividend is in danger and there is a possibility of the divie going lower.

Suppose we still have to hope the bemoaned ESG Discount that GNE has disappears over time. Average yield of CEN/MCY/MEL/VCT is 5.14% (v GNE8.11%) and if GNE share price traded in line with sector average it would be $3.86. The ESG Discount is thus 36%.

Whatever it could be interesting to see how market reacts if a sizeable capital raise is forthcoming in coming montsh

[Gerald]

Speaking of unfunded capex, $400m raise: https://www.nzx.com/announcements/467920

Seems like a big discount on the rights offer. My favourite line: " Genesis delivered total shareholder return of over 13% across calendar year 2025, reflecting both dividend yield and share price appreciation. "

Even if GNE is a questionable investment, atleast raises like this and Contact's are good for NZ inc.

[Basil]

Presentation is here  https://api.nzx.com/public/announcement/467920/attachment/462823/467920-462823.pdf

[winner (n)]

Presentation is here  https://api.nzx.com/public/announcement/467920/attachment/462823/467920-462823.pdf

Like the slide that shows 6% pa EBITDAF growth next 6 years ...should underpin a good dividend even with more shares out there

[winner (n)]

Impressive chart indeed - EBITDAF going from say $500m in F26 to say $700m in F32

But on a per share basis it remains at about 46 cents/ 47 cents. That's allowing for this capital raise and future DRP shares

Does this imply dividend in F32 will still be about what it is today? and if the dividend yield remains much the same the share price will still be around what it is today -- for 6 years


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[Basil]

Yeah looks like the number of shares to be issued adds 17% to the quantum already on issue. Gearing is coming down though so on a net profit basis this could still be EPS accretive but not by much.  Seems to be mostly about meeting ESG goals.  Lot of new generation coming to the market in the next few years by GNE and all the other Gentailiers.  I guess we just have to hope that the demand is there for all the new supply.

"Wonderful" how the dividend went up by 2.38% and inflation has been 3.1%.  Every year since they listed and they promised to keep their dividends in line with inflation and every year including after the dividend reset they have fallen short.

I guess we have no choice as to whether to apply for new shares in the pro rata issue as they're priced at only $2.05.   I'm not enthusiastic as this seems mainly about ensuring a surplus of ESG friendly generation to meet ESG and socialist agenda's.  I guess I shouldn't have been surprised given this is a Govt controlled company trading as basically a type of listed Government department.

[xafalcon]

Impressive chart indeed - EBITDAF going from say $500m in F26 to say $700m in F32

But on a per share basis it remains at about 46 cents/ 47 cents. That's allowing for this capital raise and future DRP shares

Does this imply dividend in F32 will still be about what it is today? and if the dividend yield remains much the same the share price will still be around what it is today -- for 6 years

They discussed dividend policy during the 10.30 investor conference call. Current thinking is - status quo until FY28, then a review into moving to FCF basis. The directors will make that call in FY28, based on performance of recent/imminent generation & storage projects and overall company performance. So it appears they are considering a change, albeit 2 years away

The takwaway i got, was they are in a development and transition phase FY26-27.

[entrep]

The dilution is a one-off event, not ongoing. Post-raise you have roughly 1,300 million shares (up from ~1,107m). That's ~17% dilution. But the EBITDAF growth from ~$500m to ~$700m is ~40% over six years. The dilution doesn't eat all of it.
Rough per-share EBITDAF:

FY25 actual (pre-raise): $470m / 1,107m = ~42.5 cps
FY26 (post-raise): $505m / 1,300m = ~38.9 cps
FY28: ~$550m / 1,300m = ~42.3 cps
FY32: ~$700m / 1,300m = ~53.8 cps

Impressive chart indeed - EBITDAF going from say $500m in F26 to say $700m in F32

But on a per share basis it remains at about 46 cents/ 47 cents. That's allowing for this capital raise and future DRP shares

Does this imply dividend in F32 will still be about what it is today? and if the dividend yield remains much the same the share price will still be around what it is today -- for 6 years


You cannot view this attachment.

[winner (n)]

The dilution is a one-off event, not ongoing. Post-raise you have roughly 1,300 million shares (up from ~1,107m). That's ~17% dilution. But the EBITDAF growth from ~$500m to ~$700m is ~40% over six years. The dilution doesn't eat all of it.
Rough per-share EBITDAF:

FY25 actual (pre-raise): $470m / 1,107m = ~42.5 cps
FY26 (post-raise): $505m / 1,300m = ~38.9 cps
FY28: ~$550m / 1,300m = ~42.3 cps
FY32: ~$700m / 1,300m = ~53.8 cps

You have to allow new shares issued under DRP - nearly 20,000 last year

that's another 130,000 plus shares through to F32 (6.5 years)