Market News – 8 December 2025

Ryman Healthcare’s half year result has been well received, with the share price rising 5% following the result. It remains well down from its historical highs, trading near $2.90.

Ryman’s result showed the company has finally achieved positive free cash flow for the first time in over a decade, producing $56.2 million. While the headline result of a $45.2 million loss will look alarming to shareholders, Ryman expects these negative property revaluations to have stabilised and bottomed out.

Its core focus remains better cost control and the sell down of existing stock. Development investment is being scaled back, while further efforts are being made to reduce vacant stock, which currently sits at 1,335 units.

Much of the focus for investors is on the balance sheet. Ryman raised significant capital in March of this year, via a rights issue, and had been criticised for taking on too much debt.

Gearing now sits around 28.5%, with debt at $1.65 billion. Following earlier refinancing, the RYM010 bond is the next major debt facility to reach maturity. Bondholders are due for repayment on the 18th of December next year. If refinanced, one imagines the coupon of 2.55% will see some upward movement.

The next maturity is not expected until 2030.

Guidance for next year has been increased from a midpoint of 1,200 ORA sales to 1,350. Further cost savings are expected, while capital expenditure is also expected to moderate further.

Ryman intends to provide a major update to shareholders on February 3, including a discussion on a return to dividends.

Genesis Energy hosted an Investor Day, outlining its progress for the year and plans for the year ahead.

Genesis shareholders have enjoyed a reasonable 2025, with modest share price gain and a slowly growing dividend. Across the electricity sector, Mercury has seen the greatest share price improvement this year, while Meridian and Contact have both declined throughout the year.

Genesis changed direction in November 2023, when the company announced its Gen35 strategy. Leadership made the decision that the best pathway forward was to shift profits from Kupe, the gasfield off Taranaki, towards renewable energy, particularly solar. This led to a reduction in the dividend, which was not popular among shareholders.

Two years on, the company has finished the first stage of this transformation. Its three retail brands, Genesis, Frank and Ecotricity, are now one brand. Its development team has grown, and a strategy is now in place for its largest asset, the Huntly Power Station.

Much of the announcement related to this and the future of Huntly.

For now, coal and gas remain the best available options. Genesis has successfully sold some of its future generation to competitors, by way of Firming Options. These give other companies the right to generation from Huntly and help Genesis reduce risk from its position as the backup generator.

Part of Huntly’s future will involve batteries. The first stage of a Battery Energy Storage System in the Huntly precinct is underway, with a second stage being considered for a 2027 decision.

Biomass was also discussed. Trials have confirmed that using wood pellets to replace the existing coal plants is viable.

The advantages of making this change are compelling. The price of coal is set internationally and exposes Genesis to price risk, while a domestic wood pellet market would offer more stable pricing.

The switch to biomass would also extend the life of Huntly’s Rankine generators, as coal faces declining viability from cost and regulatory change.

The two main concerns of this strategy have long been supply and economics.

On the supply front, Genesis now has early stage agreements with Carbona, Natures Flame and Foresta. These agreements matter for both sides. Genesis does not want to invest in technology without reliable fuel supply, and producers do not want to expand production without certainty of demand.

The economics are not yet settled. Much will depend on the price of coal and carbon pricing.

The use of the balance sheet was also discussed.

Capital recycling will form an important part of Genesis’ balance sheet management. Not every asset needs to be owned permanently. The company has a strong balance sheet and development capability.

The company remains optimistic about its target of mid to upper $500 millions by the 2028 financial year. Achieving this would give Genesis optionality, including faster development, external investment or higher dividends. While three years away, it provides a clear benchmark for judging progress.

The electricity sector remains one of our core industries, with reliable dividends, long histories of profitability and relatively low correlation to discretionary spending. Like Contact Energy, Genesis expects considerable growth in electricity demand, mostly from electric vehicles, and is preparing for this uplift.

Channel Infrastructure has announced a new strategic acquisition with the purchase of 25 % of the Somerton jet fuel pipeline.

The Somerton pipeline is part of Melbourne Airport’s jet fuel supply chain and is operated by ExxonMobil, who is also a joint owner. The pipeline supplies about half of Melbourne Airport’s jet fuel throughput.

The 25% stake cost $14.2 million AUD and was funded through Channel’s existing debt facilities. No equity injection was needed.

Channel is confident that the acquisition has long term growth potential. Melbourne Airport intends to add a third runway next decade, which will lead to more aircraft movements. Melbourne is one of Australia’s fastest growing cities and is forecast to become Australia’s largest city next year.

The Somerton pipeline will be owned by four groups, being Channel at 25%, ExxonMobil at 37.5%, and bp and Viva Energy at 18.75% each. The seller was CVC DIF, a European infrastructure fund manager.

The transaction is expected to be cashflow accretive by 2027. The acquisition also diversifies Channel’s assets and provides earnings exposure in AUD.

Channel noted the possibility of international acquisitions in its 2025 half year result. The company had highlighted Australia as a likely market for expansion.

Channel’s journey over the last five years has been impressive. Former chief executive Naomi James and current chief executive Rob Buchanan have guided the company through a significant transition. It is now a diversified and profitable business, paying increasing dividends with debt under control.

The strong share price performance over the last twelve months, up 51%, shows confidence in Channel’s strategy. The company has several other opportunities under review, and shareholders can expect an active period ahead.

Johnny Lee

Chris Lee & Partners Limited 

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