Some Near-Term Weakness For Genesis but an Attractive Dividend Could Be Supportive for Shares

We make slight modifications to our near- and medium-term projections following the release of the firm's third-quarter operating results and guidance. Genesis expects to miss its full-year earnings before interest tax depreciation and amortisation, or EBITDA, target of NZD 363 million reflecting softer retail sales numbers, lower hydro generation and fall in international oil prices. Consequently, we lower our 2015 EBITDA projections by 7.2% to NZD 330 million, which is at the bottom of the firm's guidance of between NZD 330 and NZD 345 million. We also make adjustments to our long-term forecasts given a competitive market for electricity and gas, especially in Auckland where Genesis has a significant presence. We lower our forecasts for retail and electricity customer numbers through our five-year explicit forecast period. This, however, has been somewhat offset by higher sales to commercial and industrial customers.