GNE - Genesis Energy

[Monarch]

This looks quite positive to me. Gas netback up ~50% and fuel costs down. Surely if this trend continues they will have to increase guidance? Really tempted to get into this one again but interest rates are on my mind.

[Beagle]

can't be as bad as contact energy! I've been impressed with how resilient its share price has been. i'd like to acquire more CEN shares but not at these levels!

according to marketscreener genesis has yield of 6.25% at spot price, CEN is only 4.5%.

5yr bond is 3.39% and 10yr is 3.45%

not a lot excess return i'll agree!

Q3 report looks pretty good to me. Only thing holding this back in my opinion is rising 10 year Government bond rates.
Did note that the decline in Kupe output was a little quicker than they anticipated after the compression project. Also they have far too much forward cover on oil prices and are not getting much of the benefit from the current very high spot prices. Hydrology looks good. Good hold, (recession proof), for 8.1% forecast gross yield in FY23, (assumes 80% imputation rate remains). (17.6 / 0.776) / 280.

Disc: I have a significant stake and added more recently on share price weakness.

8.1% gross yield inclusive of imputation credits is about 4.5% above the 10 year Govt stock rate. I think that's a very attractive premium for a very safe utility company. 10 year Govt bonds have risen a long way in the last year...maybe not much further to rise ? Maybe 4% and that's about it ?

[Muse]

8.1% gross yield inclusive of imputation credits is about 4.5% above the 10 year Govt stock rate. I think that's a very attractive premium for a very safe utility company. 10 year Govt bonds have risen a long way in the last year...maybe not much further to rise ? Maybe 4% and that's about it ?

I wish I knew! I’ve got my fingers and toes crossed the inflation numbers surprise all and come in at a number starting with a 6 and not a 7. Would love to see gov yields arrested in the 3’s.

But I’m also hoping my wife’s lotto ticket is the lucky winner tonight too.

Interesting times

[winner69]

8.1% gross yield inclusive of imputation credits is about 4.5% above the 10 year Govt stock rate. I think that's a very attractive premium for a very safe utility company. 10 year Govt bonds have risen a long way in the last year...maybe not much further to rise ? Maybe 4% and that's about it ?

Current difference between yield (without imputation) and 5 year govt is 2.8% points

Average since GNE floated has been 4.8% points

Maybe the 2.8% points a 'very attractive premium' but GNE has never been seen (rated) by the market as so so safe

[Monarch]

Current difference between yield (without imputation) and 5 year govt is 2.8% points

Average since GNE floated has been 4.8% points

Maybe the 2.8% points a 'very attractive premium' but GNE has never been seen (rated) by the market as so so safe

Could this have something to do with the central banks asset purchases? https://tradingeconomics.com/new-zea...-balance-sheet suggests the balance sheet of the central bank has increased significantly since pre covid. Is the yield difference decrease potentially a side effect of this?

[Beagle]

Current difference between yield (without imputation) and 5 year govt is 2.8% points

Average since GNE floated has been 4.8% points

Maybe the 2.8% points a 'very attractive premium' but GNE has never been seen (rated) by the market as so so safe

Equity risk premiums have come down a lot over the years. Used to be 6% many years ago, 3.5 - 4.0% now common so I'm very comfortable with a 4.5% (inclusive of imputation credit) yield premium for GNE. Each to their own.

[Beagle]

I wish I knew! I’ve got my fingers and toes crossed the inflation numbers surprise all and come in at a number starting with a 6 and not a 7. Would love to see gov yields arrested in the 3’s.

But I’m also hoping my wife’s lotto ticket is the lucky winner tonight too.

Interesting times

I'm picking 7.5% but also picking that inflation has already peaked.

[Dlownz]

I'm picking 7.5% but also picking that inflation has already peaked.

Yes agreed inflation has peaked but the reserve Bank acted far too slow. The hand breaks coming on fast now. On a positive note I thought one of my fixed rates was coming up for renewel but I've got another year to go at 2.55%. 😅

[Nor]

This looks quite positive to me. Gas netback up ~50% and fuel costs down. Surely if this trend continues they will have to increase guidance? Really tempted to get into this one again but interest rates are on my mind.

Spark seems to have firmed on the interest rate rise which puzzles me.

[JohnnyTheHorse]

LOL you cheeky bugger. Have another look at the chart mate. "Blind Freddy" can see its built a base around this level for more than 3 months now.

Bases forming can be a bit tricky. Yes this base can signify the bottom, but when you zoom out to a monthly chart you can see this could well and truly be a bearflag forming (bearish continuation). Always good to consider the bear case too, as the most likely scenario is that the trend continues.

In scenarios like this I would only be purchasing right at the lows with a stop just below. Maximise risk/reward.