Meridian Energy has a good strategic position within the electricity industry but the regulatory risks facing the company are high, an analyst says.
In his first report on New Zealand's largest electricity retailer and generator, Forsyth Barr analyst Andrew Harvey-Green valued Meridian's installment receipts at $1.03.
That compares with the $1 each the Government sold them for in October and the 94.5 cents they were trading at on Tuesday.
Mr Harvey-Green said while forecast returns may appear attractive, Meridian's receipts were a high-risk investment for three key reasons, including the political risk around whether a single-buyer model was going to be implemented.
As well, there were concerns around electricity demand and what happened with Tiwai Point Aluminium Smelter long-term, as well as around transmission pricing, he said.
