Budget 2021 Aims At Greenhouse Gas Emissions; A glance At 5 NZX Energy Stocks- ZEL, MEL, MCY, TPW, TLT

Summary

The New Zealand government has set out new funds and policies in budget 2021 to reduce the country’s GHG emissions.

Budget has revealed the government’s plans to make investments in rail, EVs, and agriculture for greener practices.

These 5 companies have been also contributing to NZ’s efforts to become carbon neutral by 2050.

The New Zealand government unveiled its annual budget for FY21 with funds allotted to several sectors like housing, health, education, and infrastructure, etc. The government also announced many policies along with substantial investments in rails and electric vehicles amid its efforts to bring down greenhouse gas emissions.

On one hand, KiwiRail will receive $1.3 billion over four years to replace locomotives, maintain infrastructure, and build new facilities. A total of $300 million will be invested in a green investment fund, which will be placed towards low-carbon energy, electric vehicles, and green public transportation.

The Budget allocated $24 million to boost agricultural greenhouse gas mitigation research and development as well as $37 million for the development of a national farm planning system for farmers and growers.

MUST READ: 10 Takeaways From The New Zealand Budget 2021

Let’s have a look at the performance of these 5 energy stocks-

Z Energy Limited (NZX:ZEL, ASX:ZEL)

Z Energy reported a 165% rise in its historic cost NPAT to $57 million in FY21.

Z has predicted RC EBITDAF earnings for FY22 to be between $270 million and $310 million with dividends to be in the range of 19 cents to 23cps.

ZEL has also been addressing climate change impact. The group launched Z Electric in March to help customers buy electricity from Z.

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The Climate Change Commission’s long-term market demand curve for transportation fuels fits into the simulations already released by the Business Energy Council (BEC), on which Z's long-term scenario plans are based.

Meridian Energy Limited (NZX: MEL, ASX:MEZ)

Meridian Energy reported a 15.4% higher electricity demand in April 2021 than in the same month in 2020.

Meridian is also focusing on decarbonisation and is planning to launch a nationwide network of 200 EV chargers as part of its efforts to switch to electric mode and help in combating climate change. It is also offering solutions to businesses through process heat electrification programme, e-certified renewable energy, and solar energy option.

Mercury NZ Limited (NZX:MCY, ASX:MCY)

Mercury NZ recently allocated $200 million of green bonds to the participants in the bookbuild process. The issue margin for green bonds has kept at 0.85% pa while interest rate has been kept at 2.16% pa.

ALSO READ: Budget 2021 To Aid NZ’s Goal Of Achieving Zero Carbon Emissions by 2050

MCY paid an interim dividend of 6.8cps on 1 April 2021. The Group’s ordinary dividend guidance remains at 17cps for FY21.

The Group also decided to build new Harapaki wind farm to add to the country’s plan of decarbonisation.

Trustpower Limited (NZX:TPW)

Trustpower performed strongly in both retail and generation for FY21 with a 7% increase in EBITDA.

Trustpower expects group EBITDA between $200 to $225 million and group capex in the range of $43–$59 million in FY22. A dividend of 35.5cps for FY21 will be paid on 18 June 2021.

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TPW is a positive supplier to NZ’s Climate Change attempt. In 2021, TPW refreshed its greenhouse gas data collection methodology, set new emissions reduction targets for itself and further rooted climate change risk into its asset management programme.

Tilt Renewables Limited (NZX:TLT, ASX:TLT)

Tilt delivered its 2 key construction projects in FY21 and got external validation of the value accumulated in the TLT platform. The business has been set to accelerate its transition to renewables in Australia and New Zealand through the SIA, signed with Powering Renewables Australia Fund and Mercury NZ Limited at the end of FY2021.

The Group successfully completed Waipipi Wind Farm within the timeframe. Tilt expects EBITDA to be between AU$46 million and AU$48 million for FY21.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)