Mercury NZ near-term outlook favourable amid high power prices - Morningstar

Mercury General

16/08/2022 20:42

** Morningstar says the near-term outlook for Mercury NZ
 MCY.NZ  is favourable as it incorporates recent acquisitions
and progressively passes on high electricity prices to customers
    ** MCY on Tuesday reported higher fiscal 2022 results and
raised its three-year normalised EBITDAF target to NZ$800 mln
($507.2 mln)  urn:newsml:reuters.com:*:nNZW49M9Rj
    ** Last year, MCY bought electricity generator Trustpower's
 TPW.NZ  gas, telecommunications and retail electricity supply
business for NZ$441 mln as well as Tilt Renewables' domestic
business for NZ$797 mln  urn:newsml:reuters.com:*:nL2N2O20H9
    ** Morningstar hikes its fiscal 2025 EBITDAF forecast by 8%,
expects free cash flow, dividend to grow at about 6% due to
rising interest expense and maintenance costs
    ** "Further out, EBITDA growth is forecast to slow
considerably in the back half of the decade as new renewable
generation brings electricity prices back to long-term
averages," senior equity analyst Adrian Atkins writes
    ** Two of four brokerages rate the stock "buy" or higher,
two "hold"; median PT is NZ$6.86
    ** Up to Tuesday's close, stock up 3.4% this year
    
($1 = 1.5773 New Zealand dollars)

 (Reporting by Shashwat Awasthi)
 ((Shashwat.Awasthi@tr.com
mailto:Shashwat.Awasthi@thomsonreuters.com))