Manawa Energy Ltd MNW

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NZD 4.55 −0.09 (1.94%)

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As of Apr 16, 2024 5:00am Delayed Price Closed

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Company Report

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Manawa Energy: Positive Earnings Trend; Stock Looks Attractive

Adrian Atkins Mar 28, 2024

We increase our fiscal 2024 EBITDA forecast for narrow-moat-rated Manawa Energy by 9% to NZD 144 million, in the middle of management’s recently upgraded guidance range of NZD 142 million-NZD 147 million. We also increase medium-term EBITDA forecasts by about 5% on average on persistently high wholesale electricity prices, while marginally reducing longer-term forecasts. We maintain our NZD 6.30 per share fair value estimate and consider the stock attractive at current prices. Investors are extrapolating current depressed earnings and risk missing the strong rebound that is likely in coming years as the firm’s average electricity sales price lifts.

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Price vs Fair Value

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MNW is trading at a 28% discount.

Price

NZD 4.55

Apr 16, 2024

Fair Value

NZD 5.80

May 16, 2023

Uncertainty

Medium

1-Star Price: NZD 2.35
5-Star Price: NZD 6.98
Economic Moat: Zszqvp
Capital Allocation: Bwtdvfcr

Bulls Say, Bears Say

Bulls

High wholesale prices and the CPI-linked contract with Mercury underpin good earnings growth potential in the medium term, aided by investment to increase generation output.

Bears

Manawa faces volatility from hydrological conditions. Weak hydrology, caused by significantly lower inflows and lake levels, can adversely affect the generation business.

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Trading Information

Previous Close Price: NZD 4.64
Day Range: NZD 4.55–4.60
52-Week Range: NZD 4.10–5.05
Bid/Ask: NZD 4.55 / NZD 4.57
Market Cap: NZD 1.42 Bil
Volume/Avg: 17,853 / 61,262

Key Statistics

Price/Earnings (Normalized): 11.68
Price/Sales: 6.53
Dividend Yield (Trailing): 3.59%
Dividend Yield (Forward): 3.48%
Total Yield: 3.59%

Company Profile

Manawa is New Zealand's fifth-largest electricity generator. It has about 26 hydroelectric schemes in New Zealand, producing more than 1,900 GWh of electricity in an average rainfall year. Manawa's retail business was sold in 2022. Most electricity is sold to Mercury NZ under a long-term contract.

Sector: Utilities
Industry: Utilities - Renewable
Stock Style Box: Small Core
Total Number of Employees: 143
Website: https://www.manawaenergy.co.nz

Competitors

Valuation

Metric	MNW	MEL	GNE
Price/Earnings (Normalized)	11.68	50.04	18.34
Price/Book Value	1.08	2.56	1.03
Price/Sales	6.53	3.98	0.97
Price/Cash Flow	14.98	27.54	7.66

Price/Earnings

MNW

MEL

GNE

Financial Strength

Metric	MNW	MEL	GNE
Quick Ratio	0.73	0.67	0.60
Current Ratio	1.30	0.94	1.15
Interest Coverage	7.04	1.75	1.48

Quick Ratio

MNW

MEL

GNE

Profitability

Metric	MNW	MEL	GNE
Return on Assets (Normalized)	5.88%	0.79%	1.69%
Return on Equity (Normalized)	9.96%	1.34%	3.51%
Return on Invested Capital (Normalized)	8.26%	1.00%	2.27%

Return on Assets

MNW

MEL

GNE

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