Shane Solly: Harbour Asset Management expert on the market reactions to Contact Energy's results

Contact Energy has reported a record net profit of $423 million, driven by the acquisition of Manawa Energy and higher renewable generation.

The result was good for investors, but some have raised concerns over other issues.

Harbour Asset Management expert Shane Solly explained further.

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Episode Transcript

Speaker 1 (00:00):
And Shane Soli Harbor asset managements with us Ay Shane
Hello ether right, how did the market react to Contact
the energy today? Wow? The contact result today was pretty solid.
They delivered a bet a billion dollars even death profit
which was in line with the expectations. Bitter cost control
of sitting with Lohydra. They gave guidance for twenty twenty
seven of just over one point zero four or five
billion forty two divident there was in line with expectations.

(00:23):
The underline business humming along nicely. They pronounced some good
development generation activity, including quite a chunky Tahura Stage two
which is fifty to seventy megawatts. But the big news
today was the announcement of a deal with Infuto owner
into owned Camera Data Centers to develop a two hundred
and fifty megawat data center using context excess capacity from

(00:45):
its retired TCC plum Stratford and Taranaki's potentially supported by
Solon battery. So this is going to be a massive
new development for Taranaki if it comes through. So it's
pretty goodly stages yet we don't know all the finance structure.
Maybe that Contact has to put some the equid into
that development. Contact sheep price actually ended the day down
one point two percent eight ninety seven. Stock has been

(01:06):
a bit weak heather going into this. A couple of
things driving that wholesale electricity prices are falling a little
bit of political scrutiny and the potential for infratil to
sell at stake and Contact down. So I think certainly
that chunky potential data setinger development. Maybe the market's just
grappling with that as well. That if Contact has to

(01:26):
invest in that, that'll be a fair few dollars. So
a good result but not enough today. Now why the
markup not like the Wistpac announcement. Yeah, yeah, so wispec.
It was a quarterly update, third quarter update for twenty
twenty six. They delivered a net profit result of Australia
and one point eight b in, which is a pretty
good number, quite solid lending and deposit numbers, strong need

(01:48):
interest margins. The update was broadly in mine with expectation,
but unfortunately Westpac management provided quite a cautious outlook statement.
They're talking about housing credit growth falling from it just
below seven percent to just below five percent for the
next year, and that's off setting a strong business lending
and then they're also talking about daddriss margins coming out
of pressure in mortgage and deposit pricing. They noted. Wespek

(02:12):
management noted that mortgage applications are down twenty percent since
the Australian government's budget in May. And but that's when
they talked about changing capital tax capital gains tax settings.
We know what that's like and is on and so
that's seen the housing market really shows some signs of slowing.
Look of the truth also is banks sheep price valuations.
They're pretty high. They're well above average due to a

(02:35):
lot of buying by the Aisy super funds who have
to cling on to that benchmark pretty closely. They're quite passive.
So yeah, rolling over at earnings momentum, that was enough
to drive the WISPAC shehep rice down five point four
percent to day to thirty five eighty nine. Isie. We've
got CBA out on Wednesday and Aims instead quarter out
on Thursday, so we'll be looking for confirmation if that's
slowing trend and earnings for banks. Interesting stuff. I look

(02:58):
forward to that. Okay, Shane, thanks for much mate, We'll
look to it. We'll chat you again in a week's time.
That Shanes Solly Harbor Asset Management. For more from Hither
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