Renewable Generation Expansion to Drive Mercury's Growth
Mercury is one of New Zealand's leading producers of electricity, accounting for more than 15% of the country's total generation. The firm enjoys a good retail presence, with Mercury Energy being the largest supplier of electricity in the key Auckland region, with an estimated market share of 40%. Mercury currently operates in a favorable environment dominated by four electricity producers. Barring regulatory change, we believe the four major players will continue to generate favorable returns on invested capital in the long run. Mercury possesses strong competitive advantages and deserves a narrow economic moat rating.
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