Manawa Energy Earnings: Rainfall and Prices Drive Expected Rebound

Narrow-moat-rated Manawa Energy's first-half fiscal 2024 EBITDA increased 11% to NZD 78 million on stronger hydroelectric generation and higher prices for sales to Mercury NZ. Underlying earnings increased 13% to NZD 39 million, or NZD 0.12 per share. Guidance for EBITDA of NZD 120 million to NZD 140 million in the full year is unchanged. We make only minor changes to our earnings forecasts and maintain our NZD 6.30 fair value estimate. We consider the stock undervalued at current prices. An NZD 0.08 per share dividend was declared, up 7% on the previous corresponding period, and fully imputed for New Zealand residents. We forecast a fiscal 2024 yield of 3.7% at current prices and expect solid distribution growth over the medium term.