Contact Energy - CEN Chart

[gonzo56]

Hey,
Just a question, I have 6 rights (haha, I only own 48 shares from the bonus issue) , if I choose to sell my rights, DB will charge me $30 wont they?
Or if I choose to buy only 6 shares for $5.05 I will be charged then too. I was just wondering, because these are renounceable, can I just do nothing and get paid out my $5 worth, without being charged a transaction fee higher than what my rights are worth...?

[winner69]

Hey,
Just a question, I have 6 rights (haha, I only own 48 shares from the bonus issue) ,

if I choose to sell my rights, DB will charge me $30 wont they? Probably so not really an option

Or if I choose to buy only 6 shares for $5.05 I will be charged then too. Buy the 6 shares at $5.05 in the rights issue and no brokerage etc

I was just wondering, because these are renounceable, can I just do nothing and get paid out my $5 worth, If you do nothing you will get athe difference between what the book build price is and $5.05 (not $5.05) so you could be in for a windfall of 30 cents or something


without being charged a transaction fee higher than what my rights are worth...?

as above in red

[percy]

Pay the $5.05 per share and take up your rights,or do nothing and CEN will sell them, and send you a cheque.I would take them up.$30.30 and no brokerage.Usually/sometimes shares will rise once rights issue is out of the way.I also think CEN is a good share to hold.

[winner69]

Pay the $5.05 per share and take up your rights,or do nothing and CEN will sell them, and send you a cheque.I would take them up.$30.30 and no brokerage.Usually/sometimes shares will rise once rights issue is out of the way.I also think CEN is a good share to hold.

I don't think he would get the $5.05 .... only the difference between the bookbuild price and the $5.05 ... so if the instos buy the shares not taken up at $5.10 gonzo would get 30 cents ......... afterall the right to buy at $5.05 has been foregone

Then again I may be completely and utterly wrong

[macduffy]

I don't think he would get the $5.05 .... only the difference between the bookbuild price and the $5.05 ... so if the instos buy the shares not taken up at $5.10 gonzo would get 30 cents ......... afterall the right to buy at $5.05 has been foregone

Then again I may be completely and utterly wrong

You're right there, winner.

In theory, the bookbuild should see a price close to but probably a little less than $5.05 plus the last price at which the rights trade. Again, assuming that the rights are somewhere around 85c, the 6 rights will be worth a total of something around $5 to the lucky owner!

Update; Rights are a bit stronger today - trading at 93c.

[winner69]

You're right there, winner.

In theory, the bookbuild should see a price close to but probably a little less than $5.05 plus the last price at which the rights trade. Again, assuming that the rights are somewhere around 85c, the 6 rights will be worth a total of something around $5 to the lucky owner!

That would mean the instos paying full price for the shares .... and not getting their hands on the cheap ones eh

Soome I have seen in Aust the bookbuild price has not been much more than the price offered .... my bet in this case is $5.10 and gonzo gets 30 cents .... hope he is set up for direct crediting otherwise a lot of paperwork and all that sort of stuff eh

[percy]

I don't think he would get the $5.05 .... only the difference between the bookbuild price and the $5.05 ... so if the instos buy the shares not taken up at $5.10 gonzo would get 30 cents ......... afterall the right to buy at $5.05 has been foregone

Then again I may be completely and utterly wrong

Sorry I did not make my post clear. He would get 30 cents.Gonzo,I would take them up,also take dividend reinvestment and your holding will grow,without further funds from you.

[gonzo56]

Thanks everyone, I will take them up at $5.05. Thats good there is no transaction fee. How do you actually do it?

[macduffy]

That would mean the instos paying full price for the shares .... and not getting their hands on the cheap ones eh

Soome I have seen in Aust the bookbuild price has not been much more than the price offered .... my bet in this case is $5.10 and gonzo gets 30 cents .... hope he is set up for direct crediting otherwise a lot of paperwork and all that sort of stuff eh

Well, we'll have to wait and see.

With the rights trading now at 93c - an all-up price of $5.98 to the buyer - I'd be mightily surprised if the bookbuild came out at around $5.10, which it would have to if gonzo is only to get 30c total for his 6 rights!

[percy]

Thanks everyone, I will take them up at $5.05. Thats good there is no transaction fee. How do you actually do it?

They will send you the paperwork.You sign it,and return it with a cheque.

[gonzo56]

Ok, thanks Percy.

[percy]

They are in your name,and they do have your address?
If they are in your broker's account,phone the broker and ask them to "take up your rights'.They will not/should not charge you a fee just the $30.30.

[CJ]

Sorry I did not make my post clear. He would get 30 cents.Gonzo,I would take them up,also take dividend reinvestment and your holding will grow,without further funds from you.Sounds like this is what you are gonig to do which I would agree with. Try to grow your small holding to a marketable parcel.

[percy]

Craigs have a target price of $7.33

[percy]

I received the paperwork today.

[blockhead]

"Craigs have a target price of $7.33"

Which means nothing Percy, Mr Market sets the price, not Craigs

[percy]

"Craigs have a target price of $7.33"

Which means nothing Percy, Mr Market sets the price, not Craigs

Means a lot to people looking for guidance.At present I would think it would help people to decide whether to take up their rights or not.
I posted to be helpful. Do not see much help in your post. Any fool knows the market sets the price.
Give you a bit of free advice.Go to your library and order a copy of CROZ.An old petrol head like you will love it.You will be pleased to know THE MARKET place agrees that it is a great read.

[Te Whetu]

Yes Mr Market sets price, but often Price <> Value. Neither price nor value mean anything to an investor in isolation from the other (unless you believe the market is perfectly efficient, in which case just buy the market...).

All percy was trying to do was inform the "value" side, and he stated it was Craigs target price (and therefore just an opinion).

Now I'm uncertain of CEN value. I don't follow reasonably well covered stocks, they are generally more likely to have Price = Value, however this does not always hold.

[Arbitrage]

In the past five years the Price has been over $8 and now it is clawing its way up to $6. Surely the value of the company should have increased over the past 5 years. This company should be a licence to make money, especially when Meridian seems to be able to continually pump special dividends into the governments empty coffers. I think there is a third variable at work here called the "Performance Of Overseas Directors". The acronym makes interesting reading.

[bung5]

especially when Meridian seems to be able to continually pump special dividends into the governments empty coffers.

That was because of a one off sale of assets to another SOE . Just the goverments way of taking money out of the SOE on the down low.

[percy]

As a matter of record.
Forsyth Barr value CEN at $7.45.
disclosure.Percy is taking up his rights.He has sent his cheque and signed application to his broker,so the broker can put his stamp on it and be paid a 0.5% stamping fee.

[blockhead]

Percy, I was not meaning to offend you earlier, point I was making is you have put forward (2 now) valuations now from brokers but the price doesn't resemble either.

Incidentaly, as an old petrol head I have read Cros's book a fair few years ago and back in the old days I actually had the job of checking bikes (scrutineering) before they could race, I remember once telling Cros at Levels he should perhaps do up the rear axle nut a little tighter than finger tight and she should be good.

Petrol is still in the veins and on Sunday I am off to Argentina to see how Geraldine boy Hayden Paddon goes in the WRC round there !

[percy]

Must be another book on Croz as this one only came out before Xmas.
Have a great trip to Argentina.Paddon is some driver.
Brokers' valuations.As you know some are good, some are bad.They do look fairly closely at a company,the sector and make assumptions of future earnings.No one[except the moon man] can predict the future,however when a company such as CEN is having a rights issue I think it is important to post brokers view.Their valuations may be helpful to any one who is undecided as to whether they should take up their rights or not.Both valuations are well above current "market"price.
I think this is important.My own view is that the weakness in CEN share price has been because the "market" knew that there was a cash issue coming up.Often the 'market"will be weak during a rights issue.the"market" will then firm up a couple months after the issue is out of the way.I feel this may be the case with this issue.The issue is at a good price,and has been well received by the "market".Time will tell what price the "market" will put on CEN shares,and then we will be able to judge how good the broker's projections were.

[RRR]

Electricity prices are up significantly - for eg I was buying electricity using powershop for 15-20 cents/unit same time last year and now the price range is 26 cents/unit and upwards. Looking to buy contact energy but will wait to see how this rights issue pans out.

[RRR]

Who said inflation is only 2-3% - probably they excluded energy/oil and food prices very conveniently. May be for political reasons.

[777]

CPI is higher than 2-3%

http://www.rbnz.govt.nz/statistics/econind/a3/data.html

[Hoop]

"Craigs have a target price of $7.33"

Which means nothing Percy, Mr Market sets the price, not Craigs


Means a lot to people looking for guidance.At present I would think it would help people to decide whether to take up their rights or not.
I posted to be helpful. Do not see much help in your post. Any fool knows the market sets the price.
Give you a bit of free advice.Go to your library and order a copy of CROZ.An old petrol head like you will love it.You will be pleased to know THE MARKET place agrees that it is a great read.



Hi I hope I don't get singed by a fire-breath by wading into a debate uninvited :mellow:

I had to reply... sorry I couldn't help myself as these posts bought back memories of 30+ years ago when I was a newbie fundie investor and relied on stock brokers valuation reports because I did not have a personal investment strategy and being a novice I didn't realise that sort of thing was relevant. I had all sorts of decision dilemmas back then...my small profits were frustrated by larger losses many with buy recommendations from brokers and my BMS degree wasn't helping me.

Now, back to today.....The dilemma of this rights issue decision-making some of you folk are having is caused by making your process more complicated than it should be. Remember the future is unknown. One can guess the future using past performance and analyse to get the best chance scernario....but honestly this is not needed to make that "rights' decision atm in time

FA over TA is irrevelant so forget it......mathematics will do nicely and simply together with your personal investing strategy

Forget valuation reports.... you are controlled by market forces because that is the price, when you have to make this decision... as to whether to:
Mathematically
1....do nothing and let them lapse.
2....sell your rights.
3....convert your rights to ords
Investor personality.
Not an Investor
small time timid
small time aggressive
in the middle
Investor FA timid, middle, aggressive
Investor FA+TA, timid, middle, aggressive
Investor TA timid, middle, aggressive.
Investor short,medium,long-term using the above over again for each term.
Your present financial situation. Desperate, low, middle, high, using the above over again using your financial status.


Ok.. mathematically
1...no brainer..don't let them lapse..You will get something but probably not 92c/share.
2&3...CENRA trading at 92cents...If you sell you are are diluting your shareholding..Therefore think!! and ask yourself...If there was no rights issue would you sell 11% of your ord share atm..if the answer is no then dont sell and convert.
....If your number of rights is small take brokerage fees into consideration if you decide to sell.
....If you are considering selling your converted rights once you have converted them...theres no point...because the margin of profit is usually the brokerage fee Mr Market has figured that out.

(CENRA 92.1 + 505 = $5.97) - (intraday share price [10.52am] CEN $5.98) = 1cent

Therefore the conclusion....People can "advise" you what to do..but they usually do so using their personal traits as a reference not yours...so I can't advise to you whether to sell or convert....You have to evaluate your own personal strengths and weaknesses (don't cheat) and then apply those to create your own personal investing strategy that you feel comfortable with and can sleep at nights without worrying.

Best of luck and I hope all is successful and rewarding.

[percy]

No.
A very helpful and thought out post.

[Jay]

Good one Hoop - Thanks

[blockhead]

Right enough I say Hoop

[troyvdh]

...call me old fashioned ....but man this makes me mad...i mean....given what has occured ....why does "the mkt " continue to focus on the "quick buck"...what ever happened to "wealth"....like ..you know ..accummulation of assets....it would not surprise me at all if the CEN price gathers pace towards the $5.....given that us Kiwis on average change our houses every 7 years its a sad but a true indictment that our collective financial savvyness is pitifull/woefull ...is it our education system....or perhaps (as I strongly suspect) that here in NZ ....should your circumstances/decision making has been so poor ....fear not....continue to do so...with glee...and more offspring....as the "gment"...will provide.....

and no I do not vote for ACT....

[macduffy]

Now, now, troyvdh, you've been investing long enough to know that the market can be an illogical and unpredictable beast, not just here in NZ but throughout the world as the famous Charlie Munger, I think it was, remarked that " the market can sometimes remain illogical longer than you can remain solvent" or words to that effect.

If CEN is starting to look cheap I'd be monitoring it and waiting for the SP to trend up again.

[Snoopy]

In the past five years the Price has been over $8 and now it is clawing its way up to $6. Surely the value of the company should have increased over the past 5 years. This company should be a licence to make money.

The $8 price you refer to was because of actual and/or speculated takeover activity by Origin. In a more normal market situation I would say $8 for CEN was way overvalued. I agree that CEN has increased in intrinsic value over the last five years. But that doesn't mean the share price should have gone up, for the reason that I just explained.

Having just bought a few more CEN the other day myself, I do think that the share behaved very unusually during the recent rights issue. The share price went up when the rights issue details were confirmed. The share price strengthened as the Mums and Dads got their rights entitlement, then weakened towards the end of rights trading. Then when rights trading ended, the share price went down.

All of this is exactly opposite to what you would normally expect. I suspect someone, probably Origin, was using the rights trading period to top up their holding. I expect an announcement to the NZX confirming this within a few days.

SNOOPY

[Arbitrage]

I heard that not all the rights were taken up. Is this true?

[troyvdh]

....if I recall Im pretty sure that the price re Origin rumour...was damn near or over $11....

...Im with you Arb....I recall a debate..as to how much it would cost to rebuild Clyde Dam....Ive walked through (twice..all shareholders are welcome)....folk down there still recall how much concrete was poured into that thing...it went on for nigh on a year....in fact a chap (ex CEN mag)...told it was quite laughable that folk were concerned ..should an earthquake strike...he said the only thing left standing would be the Dam...!!!!

...me thinks that Origin (via there mate Saunders) will sooner or later ...for a third time...suggest we sell.

As someone said at Bastonge (I think) ....Nuts...

[macduffy]

I heard that not all the rights were taken up. Is this true?

That's right. But given the fact that the rights not taken up will be put out to tender with proceeds going back to those entitled to them, there probably wasn't the usual pressure to get value from the rights on the part of those either unwilling or unable to afford to take them up. Particularly for smaller holdings where brokerage would have been a factor.
It will be interesting to see where the tender price is struck, in relation to the final rights trading price.

[Arbitrage]

Would the fact they weren't all taken up had an influence on the share price around the closing time?

[macduffy]

I would think that any instos interested in bidding in the tender would back off from buying towards the end to allow the SP to weaken a bit.

[macduffy]

In theory, the bookbuild should see a price close to but probably a little less than $5.05 plus the last price at which the rights trade. Again, assuming that the rights are somewhere around 85c, the 6 rights will be worth a total of something around $5 to the lucky owner!



Fairly close to the mark.

The bookbuild price was set at 80c. Payment to shareholders was due yesterday.

[tim23]

Apparently Origin bid strongly - will they have another go at takeover?

[macduffy]

Apparently Origin bid strongly - will they have another go at takeover?

I would think that's inevitable, sooner or later.

Meanwhile, I'm treating my holding more as a hedge against rising power prices than purely on its investment merits.

[CJ]

Apparently Origin bid strongly - will they have another go at takeover?They cant increase unless they go for take over (?) so not sure how they could be bidding - they already took up their full entitlement.

[troyvdh]

....given the current doom and gloom....(I live in CHCH).....the ulitimate disgrace possible would a successful takeover of CEN by "them"...again ...as i have stated in the past...should folk adopt an investment horizon beyond today.....next week...but perhaps ....in the next 5-10 years...then perhaps some good may appear....as opposed to the current overwhelming ...deluge of "****"...which some of us are curently endeauring....

No sympathy asked for....no sympathy expected ...just to set the record straight...

[macduffy]

They cant increase unless they go for take over (?) so not sure how they could be bidding - they already took up their full entitlement.

I'm badly out of date here but I think there's a provision in the takeovers code that allows a small percentage "creep" without making a full takeover. Is it 5% pa or thereabouts? If so, it would have allowed ORG to participate in the shortfall tender.

[CJ]

I'm badly out of date here but I think there's a provision in the takeovers code that allows a small percentage "creep" without making a full takeover. Is it 5% pa or thereabouts? If so, it would have allowed ORG to participate in the shortfall tender.You cant use the creep provisions to get above 50%. once above 50% however, you can creep 5% in a 12 month period until you get to 90% when you can go to compulsory takeover.

[macduffy]

Thanks, CJ.

I see that ORG were at about 51.7% prior to the issue so would have had some margin to "creep" a bit further via the tender.

[troyvdh]

giday....this annoucement today was pretty depressing.....but again ...I am suspicious....are origin ....at there old tricks again..

...is it possible that origin are maniupulting the numbers';situation to such a degree that such reports of relentless despondency in this company is at such a level that NZ folk...wil be compelled ...to sell...

....I apologise if these views are naieve.....and that i should accept that this is "just the MKT at work"...

[CJ]

It is a hard call. Get out because the price is falling or stay in because if the price goes low enough, Origin may try to take over.

Also thinking, profit issues are due to warm early winter. If this continues, it is bad for this year but it also means a better year next year as the dams will be empty (due to less snow). Have I got this right?

With infrastructure shares you need to take a long term veiw. The biggest issue in my view is not the lower profit on electricity sales but the churn and loss of retail customers which makes their earnings a lot more volitile since they have to sell on the spot market rather than hedging that risk with retail customers.

[macduffy]

I view my modest CEN parcel as much as a hedge against rising energy prices as an investment. Yes, it allows me to be rather detached from fluctuating shareprices and yes, Trustpower would have been a better choice!

[troyvdh]

....why would folk sell at $5.50...CEN is paying a div of 4.4 % (in the hand) ....you cant build anymore dams like Clyde...
....are short of cash....some place better to put there money...a belief that the SP will fall further....

......perhaps perhaps the "heavens" will no longer provide precipatation....THATS ...IT....Ive missed the most obvious cause....Mr Ring has convinced some folk that RAIN ...will no longer occur....well in that case we all knackered.... man what a relief....I feel better already....huuuuuuu

[percy]

I view my modest CEN parcel as much as a hedge against rising energy prices as an investment. Yes, it allows me to be rather detached from fluctuating shareprices and yes, Trustpower would have been a better choice!

Like you I take my CEN holding as a hedge.My have to increase my holding some what, as number two daughter is working from home as her office was lost in quakes.She certainly likes it hot.!! Power bill was horrendus.Don't think she has ever thought of lake levels,or rain to fill them. Reckons herself a conservationist.
Only thing she conserves is her cash,as I pay the bill.!!!!

[rotweiller]

As a longtime holder of CEN shares, doubts have occurred when you plug into the new web-site for elecricity pricing and I find as a "low" user I could save $356 per year. To a pensioner that is a hell of a lot of money that could be saved by jumping ship???

Cheers

[iceman]

I agree with you rotweiller. As a shareholder and a "high user" customer in Nelson, I am concerned about their non competitive pricing in our area and am not surprised that data suggests they are struggling to retain customers.


As a longtime holder of CEN shares, doubts have occurred when you plug into the new web-site for elecricity pricing and I find as a "low" user I could save $356 per year. To a pensioner that is a hell of a lot of money that could be saved by jumping ship???

Cheers

[CJ]

I agree with you rotweiller. As a shareholder and a "high user" customer in Nelson, I am concerned about their non competitive pricing in our area and am not surprised that data suggests they are struggling to retain customers.The question is do they really care. The obviously make money on the retail side since they have high prices. But would they just prefer to make money on the wholesale side than try to build the retail side by dropping their prices. Has anyone looked to see where the really money is made (retail or whoesale)?

[h2so4]

Like you I take my CEN holding as a hedge.My have to increase my holding some what, as number two daughter is working from home as her office was lost in quakes.She certainly likes it hot.!! Power bill was horrendus.Don't think she has ever thought of lake levels,or rain to fill them. Reckons herself a conservationist.
Only thing she conserves is her cash,as I pay the bill.!!!!

Hedges dont always work. Tell your daughter to put more clothes on, or you could charge her for electric at commercial rates!!!!!

[troyvdh]

...OK ...on the face of it it appears that i have "a particular bent" in regards to this company but am i alone here...

...should you (as i do ) listen and respect gareth M....in his views re nz res housing...(which I have to admit has done me no harm for the past 30 years)...and direct our investment focus instead to those companies in NZ which actually produce "stuff" and are profoundly more advantegous for NZ inc....but here i am with a considerable percentage of my dosh's future being dictated by a company in OZ called Origin who have in the past failed miserably in taking over this company.
Yet on the face of it...folk such as me would see CEN as a (I hate this word i.e. "BlueChip"...IE BIL )...shoe in as a really good story.....given ...will NZ INC ..allow another dam being built....I think not....i spend a considerable amount or time down in central....for those who dont....you have no idea what your missing out on.....
So what am I saying.....CEN should be a "safe bet" and indeed an example held aloft as an example as an ideal alternative to housing/investment options which have historically found favour with NZ investors....and yet I suspect this company is "a play' with folk overseas as a "quick buck" play.

[troyvdh]

....just curious....its probably better if you respond to me personally.....how many of you jokers (sorry lizard)...have shares in CEN....troy

[percy]

Hedges dont always work. Tell your daughter to put more clothes on, or you could charge her for electric at commercial rates!!!!!

Hi h2so4.
I enjoyed your sense of humour.I take it you do not have daughters,or they are under 5 years of age and still do what they told.!!! lol
troyvdh. Yes I do hold,and have held for sometime.

[Jay]

I hold a few

[Snoopy]

I view my modest CEN parcel as much as a hedge against rising energy prices as an investment. Yes, it allows me to be rather detached from fluctuating shareprices and yes, Trustpower would have been a better choice!


Always easy to see these things in hindsight Macduffy, but I would disagree with you. Contact has more customers and I think a better mix of generation assets. The move to update their baseload geothermal generation stations in the centre of the North Island I think is particularly savvy. If the wind stops blowing my guess is that Trustpower is more exposed to the spot price market. Just because the wind didn't stop blowing last year doesn't make Trustpower the better underlying investment.

SNOOPY

[DarkRed]

http://business.scoop.co.nz/2011/07/12/genesis-overtakes-contact-as-largest-electricity-retailer/?ScoopSrc=business

The customer switching campaign by the EA has been a huge success with 43000+ switch requests. Unfortunately Contact has lost 7679 customers in June alone.
Hopefully these are low use customers.

Average household annual power bill of $1500 x 7679 customers = $11.5 mil potential loss of revenue
Revenue in 2010 = $2,143 Mil
loss of customers in June alone = 0.54% loss in potential revenue

[Arbitrage]

Now they have got the share price down, when will Origin make its move?

[troyvdh]

Spot on Arb....what is of concern is that thus far (to the best of my recollection) there have been no announcements of shareholdings increasing/decreasing.
Is there a method(s) that could be employed by Origin to "mask" their 3rd ? 4 th ? assault on CEN.

I have in the past few weeks attempted to personally converse with someone from CEN as to why currently there retail prices are (for at me at least with three accounts) are about 2o % more than say Genesis and why the SP is at an all time low on good volume.
Its my experience that if a company is so reluctant to talk - reply to e mails ...something is afoot.
I have sent 3 e mails .....nil response.

It has been suggested that CEN are reducing there exposure to retail customers-hence there pricing.

What would be trully galling (for me at least) is I spend considerable time around Alex/Lake Dunstan and would really hate the thought that those mongrel aussies stole the thing from us.

...I wonder what price they will pitch at....550.....570.....630......

[CJ]

It has been suggested that CEN are reducing there exposure to retail customers-hence there pricing.I think they are on record as saying they think other power co's are offer low prices to get customers and they wont compete in a race to the bottom.

It will stabilise once the current campaign ends and they will get some back (slowly) as other firms push their prices up in the next cycle. I am not to concerned about them losing 2% of customers who are probably small and probably tend to jump more often than the other 98%.

[gonzo56]

Rise in OBV. What do ya reckon? Will it stay above $5.40 from here on, or have a small correction before falling further?

[Steve]

Rise in OBV. What do ya reckon? Will it stay above $5.40 from here on, or have a small correction before falling further?

Possibly could creep back up to 560 before hitting some decent resistance?

[macduffy]

It will stabilise once the current campaign ends and they will get some back (slowly) as other firms push their prices up in the next cycle. I am not to concerned about them losing 2% of customers who are probably small and probably tend to jump more often than the other 98%.

It seems that CEN is concerned about the loss of retail customers.

Discount for "on-line, on time" payment has been increased from 12% to 22%.

[fish]

It seems that CEN is concerned about the loss of retail customers.

Discount for "on-line, on time" payment has been increased from 12% to 22%. Seems they are gaining lots of high value customers. I changed to contact today-very easy process.Was told that this is their aim-they want lots of high user clients that pay their bills.Furthermore they have had a tremendous response.
Thinking about this later it means that every new customer means they can convert water that is being spilled over dams into pure profit .

[fish]

The 22% discount seems like a clever tactic to me. It's going to attract and retain the more mobile, price-sensitive customers without dropping their price to the less price-sensitive, less mobile customers. Once this competitive phase is over, they can ditch the discount without putting prices up.

This tactic is so brilliant . Please correct me if I make any wrong assumptions .
Its been a wet winter so power prices are relatively low and contact is probably spilling water and losing customers whilst doing so as cheap prices means opportunistic newcomers with no generation assets attract customers with low temporary prices .
Contact undercuts this by attracting new good payers with a 22%discount -which makes their prices lower than anywhere else yet still generates income .
My guess is they will continue the discount until we have a dry year and power prices are up .
They will start gaining the cream of customers .
More customers will require more generated power -they probably have a lot of spare generation power going to waste at the present moment so more customers equates with much increased profits as costs remain the same .
When contact have enough customers to use all their generated power they may reduce the discount entirely at their discretion .
With more geothermal coming on line they will have end users who will go to contact for the discount with prompt payment .Geothermal is the cheapest as well as being constant source of power.
If they have a dry year they can reduce the discount accordingly-power prices will be up and newcomers will not be able to match their prices.
During this time with one of the higheast charging companies they can shed their poor payers which are costly to maintain .
We are in a cold spell-contact customers such as me can increase use of heatpumps-i have 5 domestic and countless commercial pumps in my business,whilst knowing i am getting cheap electricity through the big discount
.

[macduffy]

The only proviso I would add is that CEN will still be constrained by competition in the degree to which they can reduce the discount. That won't be entirely at their discretion now that consumers are becoming used to shopping around for their electricity. CEN will be well aware of that from their recent heavy losses and as prices increase, consumers will become ever more prone to switch.

[craic]

As a CEN shareholderfor several years, I have watched my inv. in that company slowly drop away to the point where I, for one, consider them a second rate badly managed outfit. I dumped the shares last week and now have the pleasure of watching that little pile growing in SKC. I am a customer and quite happy to remain because I have an efficient logburner right beside the water heating and endless firewood. In winter the power bill drops right down because the fire boils all the water and heats the house. Just to put some icing on the cake, Unison, the power lines people have announced that we can expect a cheque for $125 in a week or so, a refund to all customers in this area. This is the second or possibly the third annual refund they have made. Come and live in sunny Hawkes Bay Where its winter time and the living is easy.

[CJ]

The only proviso I would add is that CEN will still be constrained by competition in the degree to which they can reduce the discount. That won't be entirely at their discretion now that consumers are becoming used to shopping around for their electricity. CEN will be well aware of that from their recent heavy losses and as prices increase, consumers will become ever more prone to switch.Butt their big discount encourages the customers they want (electronic payers who pay in full) and penalise those they dont want (late payers or those that pay manually).

[macduffy]

No argument there, CJ.

I was only qualifying the point about CEN being able to reduce the discount "entirely at their discretion". I don't see the market being that compliant to Contact's whim these days!

[troyvdh]

...OK...I do have a "thing" about this company....none the less....could anyone who has sold CEN in recent times state why...most sales appear to have been made on mimimal value/volume...CEN is paying nigh on 5 % tax paid..better tha banks et al...the SP is at historic lows...do folk believe that "things" ..can indeed get worse....cheers

[fish]

...OK...I do have a "thing" about this company....none the less....could anyone who has sold CEN in recent times state why...most sales appear to have been made on mimimal value/volume...CEN is paying nigh on 5 % tax paid..better tha banks et al...the SP is at historic lows...do folk believe that "things" ..can indeed get worse....cheers

IMHO unlikely to get much worse-annual report is out soon and I suspect results will be poor-wet year,cheap electricity prices,plus loss of customers .
once this is out i expect we will see a turn around.
Look at power prices for august compared to previous months-http://www.electricityinfo.co.nz/comitFta/ftapage.mainp
As I found out on monday they have gone from being the most expensive to the cheapest for good payers-check out your own power prices at powershop . Plus fly-buys.
Hydrolakes and input haves recently fallen below normal and demand up.

So I feel potential downside is small-perhaps 20 cents a share-upside in next year is tremendous .

[Jay]

Hope you are right fish.

I changed to them about a year ago when they were offering fixed price for 2 years I think it was at prices cheaper than our previous suppler by quite a bit - saving around $250 pa (- we are not big electricity users) and now with a 22% discount - have taken up that "offer" as well.

[craic]

From 570cps down to 500cps in one year. How can a 4.99% dividend be seen as good value? as one poster suggests. You lose 70 cents and gain 25 cents per share in a year.

[macduffy]

Grossed up with imputation credits gives a yield - presumably historic - of 7.05% for CEN, according to the DomPost. Not a bad return in today's conditions.

I'm taking a similar view to fish in that the downside appears limited, with potential for good capital gain if a few ducks fall into line. Potential renewed interest from Origin adds a speculative element.

[craic]

My figures come from DirectBrokings "detail" and the simple one-year graph on the same site. Dividend is given as 4.99% and the capital drop of 70 cps over one year shows the share as a dog in todays conditions. They would need to pay a dividend of up around 30% for the holder to break even.

[macduffy]

Fair enough, craic. But that's history now and what's important is CEN's prospects going forward. ( Can't believe I wrote "going forward" - hate that term!)

Different views are what make the market!

[fish]

Fair enough, craic. But that's history now and what's important is CEN's prospects going forward. ( Can't believe I wrote "going forward" - hate that term!)
Different views are what make the market!
talking about markets and improving prospects made me check powerprices{ -google wits free to air-August has been a great month but scorching hot power use today took the price at haywoods up to nz 529 at 8am this morning-about 10 times what it was last month

[fish]

talking about markets and improving prospects made me check powerprices{ -google wits free to air-August has been a great month but scorching hot power use today took the price at haywoods up to nz 529 at 8am this morning-about 10 times what it was last month


cen profits are very weather dependent and average inflow into lakes is now only 84% of average . A big high will sit in the tasman for the next week so rainfall should be low. This looks like being a very profitable begining to a new financial year and I know cen is gaining lots good customers with their 22% discount .Every chance it will be a turnaround year for cen .

[macduffy]

Well, we'll soon know how 2010/11 finished up.

CEN is due to report on Monday.

[troyvdh]

...looking at the recent performance of CEN...i.e. now worth nigh on a dollar more than a few weeks back...what does it say about some of the investing public logic....did some folk believe that CEN was going broke ?....some folk may have needed the money for an emergency operation perhaps...the tax paid return of 4.5-5 % was insufficient/under threat....folk had perhaps found a better investment....trully the mind does boggle....and NO I am not perfect...have made plenty of mistakes....and yes I have done my bit by e mailing CEN complaining about their costs (to us )...in fact I believe I have been a pain in there butt...but it appears that they have acknowledged their pathetic performance and service and perhaps there is better future.

[percy]

...looking at the recent performance of CEN...i.e. now worth nigh on a dollar more than a few weeks back...what does it say about some of the investing public logic....did some folk believe that CEN was going broke ?....some folk may have needed the money for an emergency operation perhaps...the tax paid return of 4.5-5 % was insufficient/under threat....folk had perhaps found a better investment....trully the mind does boggle....and NO I am not perfect...have made plenty of mistakes....and yes I have done my bit by e mailing CEN complaining about their costs (to us )...in fact I believe I have been a pain in there butt...but it appears that they have acknowledged their pathetic performance and service and perhaps there is better future.
I can't help thinking we shareholders are "well positioned" for the upturn.

[janner]

Like me with NPX Percy :-))

But as an aside.. I am watching another " Boring " company as it drops rapidly..

From a dismal return..

GFF..

I know... It is only food.. A basic boring commodity ..

Your thoughts will be appreciated ..

Should i open a new thread ??

[fish]

I can't help thinking we shareholders are "well positioned" for the upturn.
CEN was grossly oversold
We have a good dividend coming .
hydroinflows dropping-79% of normal
Cold spell coming and little rain around could escalate power prices with big gains for cen .
I expect CEN to rise above $6 soon

[percy]

Like me with NPX Percy :-))

But as an aside.. I am watching another " Boring " company as it drops rapidly..

From a dismal return..

GFF..

I know... It is only food.. A basic boring commodity ..

Your thoughts will be appreciated ..

Should i open a new thread ??

I think a new GFF thread would be interesting.As you point out "It is only food..A basic boring commodity."Enough to get the juices going.!!!!
I did not buy as I did not think Graeme Hart would give us "mug punters" an even chance.I think there is a newish CEO who is trying to do a "turn around".Like most turn arounds I think it is best to watch from the sidelines until such time it has started a new up trend.Like you I look forward to other posters' views.

[lou]

Like me with NPX Percy :-))

But as an aside.. I am watching another " Boring " company as it drops rapidly..

From a dismal return..

GFF..

I know... It is only food.. A basic boring commodity ..

Your thoughts will be appreciated ..

Should i open a new thread ??

CEN NPX and GFF are on my target list of companies under value. Old GFF thread to stem some discussion here http://www.sharetrader.co.nz/showthread.php?5852-GFF-Goodman-Fielder&p=355825#post355825

[percy]

CEN NPX and GFF are on my target list of companies under value. Old GFF thread to stem some discussion here http://www
.sharetrader.co.nz/showthread.php?5852-GFF-Goodman-Fielder&p=355825#post355825
lou,
thanks for the link.

[bung5]

CEN planning on moving their IT over to same datacentres as Origin in Australia. Wonder how long before Origin try another takeover offer...

[troyvdh]

,,,Dear bung....I think you are quite correct....at what price ???...I have and always believed that this utility energy company has been undervalued...mainly by virtue of their abysmal management performance thus far (well that was until recently they woke up and begun this 22 % discount thingy)...one day...CEN inherent asset value will be appreciated by the "MKT"...but alas I fear that Origin will will the one to do this...so sad.

As an aside are you really domiciled in BA....on Tuesday I am passing through BA ...to Cuba...am biking around the Island for a few days....would like some Marmite dropped off....cheers troy

[Anna Naum]

Doubt it, look at Origin balance sheet and outlook, has much bigger fish to fry

[bung5]

,,,Dear bung....I think you are quite correct....at what price ???...I have and always believed that this utility energy company has been undervalued...mainly by virtue of their abysmal management performance thus far (well that was until recently they woke up and begun this 22 % discount thingy)...one day...CEN inherent asset value will be appreciated by the "MKT"...but alas I fear that Origin will will the one to do this...so sad.

As an aside are you really domiciled in BA....on Tuesday I am passing through BA ...to Cuba...am biking around the Island for a few days....would like some Marmite dropped off....cheers troy

It seems the Origin directors on the board are running the show as they are the "big brother" and the other directors will just follow their reccomendations.
This will stop any growth or accusations outside of NZ.
Yes in BA .. was 28 degrees here today very nice. way too many other delicous foods here like ducle de leche :P

[peat]

thoughts on how the sale of the other power companies will have an effect on CEN and its share price
Effectively there is going to be a big supply of utility shares available and a well managed portfolio would not want to become overweighted in the area. So reduce CEN might have to happen. If that means that stock gets oversold on a fundamental basis then there may be some good opportunities to accumulate over the next couple of years as that plays out.
I wonder...

[troyvdh]

...Giday...Ive read all the posts going back...all agree that CEN makes more dosh when...its hot
...little rain
...lakes are low
...prices are high....yup good...last few days...CEN down 30-40 cents....not much volume however.

Next week Im camping again on the banks of the Hawea River ...am expecting just a wee trickle....enough flow to cover the cans....

[fish]

Seems strange that the sp is still falling and yet the rain isnt-lake levels and inflows well below average .Four years or so ago I sold out at around $10 and have been buying back in slowly over the past couple of years . Today I bought some more at 4.79 .I am expecting a generous dividend in march but wonder if i am mistaken .
Does anyone know who is selling and why ?

[percy]

May be because on12/1/12 Craigs said "Contact will not achieve its forecast for FY12."
They altered their rating from "buy" to "hold".So sellers may be Craigs clients.

[fish]

May be because on12/1/12 Craigs said "Contact will not achieve its forecast for FY12."
They altered their rating from "buy" to "hold".So sellers may be Craigs clients.

Thanks for that insight percy.
I cant access craigs report and my last one from asb was over 2 months ago . Since then the sp has dropped nearly a dollar whilst wholesale prices have continued to climb.With the sp dropping so much since craigs reommendation-?what was their valuation- i am not sure -but doubt if they would still recommend clients to sell at todays sub 4.80 price .Seems unlikely that fixed term investment interest rates will be much above inflation this year so cen should be attractive to those wanting fixed income plus some growth .
From asb securities-Latest recommendation reportValuation: $5.50Last updated:07/11/11Wholesale prices surge but retail business continues to struggle
Investment rating
CEN is the second-largest electricity retailer and generator in NZ. Being both a generator and retailer somewhat insulates it against the vagaries of the wholesale electricity market. Consequently earnings are less volatile than otherwise might have been the case. CENs preponderance towards thermal power plants put it somewhat at a disadvantage under the ETS regime. This concern along with the government's desire to promote renewable sources of energy has prompted the firm to look at geothermal energy in a big way. CEN is not a growth stock but its dividend remains fairly reliable and stable. The stock will suit income oriented investors with a modest risk appetite.

Event

•Wholesale electricity prices have jumped significantly over the last few months aided by a decline in lake storage levels.


•September prices rose to $96/MWh from $38/MWh in June. In the North Island storage levels are around 72% of mean while it is 74% of mean in the South Island. A prolonged dry spell could push up wholesale prices even further.


•The cost of thermal generation will likely reduce this year due to the availability of Stratford peakers and the Ahuroa gas storage facility in FY12.


•In August the firm increased its prompt payment discount from 12% to 22% for customers who receive their bills online. This has made CEN more competitive from a pricing perspective and has helped the firm stem customer losses.



Impact

•High wholesale electricity prices are likely to lift earnings of exposed generation. Furthermore the cost of running the thermal power plant will likely reduce due to the reduction in take or pay gas to 40 PJ from 52 PJ in the first-half. This is already visible in the first quarter wherein the company purchased significantly lower amount of gas and did not pay for gas that it did not take. In Q1FY11 the company paid for 1.1PJ of gas it did not take.


•Countering these benefits is the continued competitive retail environment. The online on time payment will put pressure on retail margins evidenced by the trend in margins witnessed in the first quarter.


•We think CEN’s first quarter earnings are tracking slightly ahead of last year. At this point we are not making any changes to our forecasts.

[troyvdh]

Ive just had a quick look at the 5 year charts of CEN FBU TEL....broadly fairly similar......generally negative and staying there....and of the NZ50 which largely looks positive ...going up.....(Im not sure what the impact of Chorus had)..

I am not a conspiracy theorist...but other folk aside from me have our suspicions about the majority SH-Origin...and what they are up to....my experiences with CEN have been disappointing (in addition to my earlier posts after I had switched to Genises..3 accounts...my first bill was for $11.39 cents...Genises stated that CEN had been misreading my meters............................Im thinking oh really...just mine ?...since the switch...my bills have generally lower..)...Origin have tried twice (?) and failed to take CEN over....and as I have stated in the past...there aint gonna be another Clyde build anytime soon....

[fish]

Ive just had a quick look at the 5 year charts of CEN FBU TEL....broadly fairly similar......generally negative and staying there....and of the NZ50 which largely looks positive ...going up.....(Im not sure what the impact of Chorus had)..

I am not a conspiracy theorist...but other folk aside from me have our suspicions about the majority SH-Origin...and what they are up to....my experiences with CEN have been disappointing (in addition to my earlier posts after I had switched to Genises..3 accounts...my first bill was for $11.39 cents...Genises stated that CEN had been misreading my meters............................Im thinking oh really...just mine ?...since the switch...my bills have generally lower..)...Origin have tried twice (?) and failed to take CEN over....and as I have stated in the past...there aint gonna be another Clyde build anytime soon....

Customer service and cheaper prices have changed at cen-the december report actually shows a monthly increase of customers . We changed from genesis to cen a few months ago to get cheaper prices through the 22% online ontime discount-really easy to do and great customer service and follow up to check we were happy .
Too many other improvements to mention but a couple outstand-the Te Mihi geothermal that will provide substantial green NI generation next year and the Ahuroa gas field storage .
Results will disappoint this year due to increased rainfall in north island and decreased in south substantially where contact get their wonderfully low cost green hydro-generation . I suspect this is the main reason for sp dropping but do suspect a big overseas investor is geting money out with the high exchange rate as usually there is only one big seller on the market

[bung5]

Results will disappoint this year due to increased rainfall in north island and decreased in south substantially where contact get their wonderfully low cost green hydro-generation . I suspect this is the main reason for sp dropping but do suspect a big overseas investor is geting money out with the high exchange rate as usually there is only one big seller on the market

Results will disapoint this year becaue of huge corporate overhead costs . Heard they were rolling out SAP for 80 million but now nearly double that cost.
Whats the cost of outsoucing IT to HP Australia into the same datacentres of Origin?
Only seems cost effective if Orgin own 100% right?

There has been huge generation investment with minimal increase in consumption.

[fish]

Results will disapoint this year becaue of huge corporate overhead costs . Heard they were rolling out SAP for 80 million but now nearly double that cost.
Whats the cost of outsoucing IT to HP Australia into the same datacentres of Origin?
Only seems cost effective if Orgin own 100% right?

There has been huge generation investment with minimal increase in consumption.

I agree in the short -term results will disappoint-although if this weeks increases in power prices continue the future will likely be a different story . Sooner or later retail prices will reach close to the marginal cost generation of wind and thermal - contact with low cost generation will make multiples of current profits .

I am convinced the sp reflects neither current returns nor the growth potential in profits-so I bought more today .

[CJ]

I am convinced the sp reflects neither current returns nor the growth potential in profits-so I bought more today .As a long term holder, everytime I reconvince myself of this, the price drops further. I didn't expect it to drop below $5 last time I topped up.

I also wonder want impact the impending MRP IPO has. I wonder if investors are showing CEN less interest than they should as they know they will be taking part in the IPO later in the year.

[Hoop]

http://i458.photobucket.com/albums/qq306/Hoop_1/CEN27012012.png

[fish]

2 reasons to buy-
dividend yield is greater than investing in banks . This yield is likely to rise in coming years unlike banks .
The current sp allows cheap entry into a stock that is not going to die-even in a recession -not that i believe nz is going into a recession.
I agree your chart -if current trend line continues-indicates death of this company .If I believed it predicts future trends for cen of course I would not buy .
No death wish here-i believe the sp is very low and far more likely in the long -term to go up than down .
People sell for all sorts of reasons-hopefully all the speculating chartists will have sold out by now !
If not I will have an opportunity to buy cheaper .
Hoop -it would be interesting if you could take up a challenge-post on here when you see the buy signals. I doubt if this will be at a cheaper price-including dividends -than the current sp .

[percy]

"It's always darkest before dawn".I hope you are right fish, but Hoop's chart paints a very dark picture.!!!
I own CEN shares.

[Hoop]

2 reasons to buy-
dividend yield is greater than investing in banks . This yield is likely to rise in coming years unlike banks .
The current sp allows cheap entry into a stock that is not going to die-even in a recession -not that i believe nz is going into a recession.
I agree your chart -if current trend line continues-indicates death of this company .If I believed it predicts future trends for cen of course I would not buy .
No death wish here-i believe the sp is very low and far more likely in the long -term to go up than down .
People sell for all sorts of reasons-hopefully all the speculating chartists will have sold out by now !
If not I will have an opportunity to buy cheaper .
Hoop -it would be interesting if you could take up a challenge-post on here when you see the buy signals. I doubt if this will be at a cheaper price-including dividends -than the current sp .
Hi Fish I will try to remember to post when buy signals appear.

Death of CEN due to continued future downward projections of the CEN chart is totally unreliable..not worth even thinking about.. Charts are only graphic data showing the "now" and what has happened in the past..nothing lasts forever ..not even downtrends...

TA buy/sell signal indicators try to prevent investors mistiming an entry/exit with better odds than a random punt...the more indicators firing off at once the better the odds eg the major breaks in the middle of my CEN chart. I usually use FA as homework for a share I like, then use TA for entry and exit.

Who knows Fish???... today could see the CEN share hit bottom...however the TA indicators as at Friday 27th suggest that the odds that a bottom has been reached "now" is low.

I always plan for entries with 70+% odds....OK..I may lose some with bull traps and others vagaries such as when the share breaks a downtrend and levels out to go no-where...but if you keep plugging away using a TA 70%+ odds strategy you usually come out ahead eventually......patience is a virtue... so to is sticking to the strategy discipline

Disc:.. Mrs Hoop owns CEN shares...bought and held from the beginning, ( public $2 float XXX Edit: GTM is right $3.10 not $2 )

[fish]

Hi Fish I will try to remember to post when buy signals appear.

Death of CEN due to continued future downward projections of the CEN chart is totally unreliable..not worth even thinking about.. Charts are only graphic data showing the "now" and what has happened in the past..nothing lasts forever ..not even downtrends...

TA buy/sell signal indicators try to prevent investors mistiming an entry/exit with better odds than a random punt...the more indicators firing off at once the better the odds eg the major breaks in the middle of my CEN chart. I usually use FA as homework for a share I like, then use TA for entry and exit.

Who knows Fish???... today could see the CEN share hit bottom...however the TA indicators as at Friday 27th suggest that the odds that a bottom has been reached "now" is low.

I always plan for entries with 70+% odds....OK..I may lose some with bull traps and others vagaries such as when the share breaks a downtrend and levels out to go no-where...but if you keep plugging away using a TA 70%+ odds strategy you usually come out ahead eventually......patience is a virtue... so to is sticking to the strategy discipline

Disc:.. Mrs Hoop owns CEN shares...bought and held from the beginning, ( public $2 float )
Thanks for the explaination hoop.
I admit my ignorance about TA .
Too me I feel TA is a bit like trying to forcast the weather . At times there will be a big high over us and rainfall will be unlikely and temperatures high for a week or more . At other times there maybe many active fronts and rainfall or not less predictable
At the moment weather patterns are looking a lot more favourable for contact and power prices are rising . Indeed heavy rain is forcast for the contact catchments by wednesday but dry for the next week in the NI .
Hoping the sp trend will take its cue from price trends and the weather forcast rather than the TA forcast

[macduffy]

Hi, fish.

I don't profess to know much about TA but a simple TA rule that has served me well - when I follow it! - is not to buy a stock in a downtrend. There's almost always a better Buy when the trend reverses and it's not worth the risk that the reversal may be some time in arriving and that the SP drops further.

The only exception to that rule would be if I thought there was a pretty good chance that a stock was going into play in short order. If I felt that Origin was likely to make another bid soon I'd be buying. But all the signs are that they aren't - downtrending SP; no abnormal turnover - so I'm not!

Cheers

[fish]

Hi Macduffy ,

All downtrends on rock solid stocks will come to an end .
I believe contact is as secure as government bonds.
With some stocks -such as prc and nzo I made big mistakes such as buying on downtrends-I was risk taking for sure and have learnt hard lessons .
Now I am getting closer to retirement I am looking for income stocks with growth potential which I dont see in bank deposits.
I will also buy and sell to make profits when stocks go ahead of themselves-for instance I am considering selling vector after buying low last year .
I am not convinced that TA will tell me when to buy low until after I should have bought .I believe that fundamentally the price is very low .
In the case of cen the number of sellors has seemed very low-its just that they have been selling a lot with few buying-a situation that can reverse very quickly and those waiting for ta signals could miss the boat .

[macduffy]

All downtrends on rock solid stocks will come to an end .


No argument with that, but why not wait until the end?

I don't see any risk of "missing the boat ". The object should be to buy near the bottom - too hard to judge where the absolute bottom is going to be.

But I agree with your conclusion that CEN is a good pick for your purpose - just that I wouldn't be adding any just yet.

:)

[GTM 3442]

I seem to remember that CEN had an IPO price of $3.10, and over the next few years traded down to $2.50. The SP recovered, and at about $4, someone from the (then) majority shareholder justified an attempted full takeover by saying something along the lines of "kiwi shareholders have made some money by now. Best they should sell out to us". After which the SP continued to recover to $9-odd.

Question - compared to 10 years ago, do you have more or fewer devices which use electricity in your house ? How likely is it that any of the electricity companies will go belly up - or even stop paying dividends ? Is there a likely replacement for electricity on the horizon (even the distant horizon) ?

The issue seems to be accessing that dividend stream at the best possible price - and there are lots of tools and models which we can use to do that.

[Hoop]

I seem to remember that CEN had an IPO price of $3.10, and over the next few years traded down to $2.50. ....

Yes GTM you are correct listed at $3.10 in May 1999...I have no idea why I thought it was $2....Can't use Telecom listing as an excuse as it is reported as being public floated at $1.82 back in 1991.


In Hindsight... we* now need the good dividend yields to make up for the presently poorish capital return (based on real NZ$) using the continuous Buy and Hold strategy since listing.

*Disc: Mr Hoop has no shares in CEN atm

[troyvdh]

GTM...you are my hero....That is why myself and many others are so suspicious...as i have stated so often ...so often....its so long ago...You GTM will probably remember...the difference between the purchase price (from the govn't to CEN )and value of asset ..so many years ago ...was jawing dropping...perhaps over a billion...Im not kidding...

...whilst driving today through Bendigo...Clyde...today in brilliant sunshine....I was a thinking....I will not go on....

...years ago i remember valuations being banted around...being 10-12......I sold some at 9....not enough....

...I am a listener of RNZ....some intellectual joker said today (with CR) that the world could not sustain the energy requirements in 20 + years..... of refrigerators alone...given the increased us of electricity...et al.........he ..said a lot more....

....anyways....may we remain staunch against another "under arm"...from Oz...it will happen....

PS ...if any folk believe that I am being "over the top"...please tell me....

...oops sorry...hold over 8000 cen...

[ratkin]

All these electricity floats coming up will keep a lid on CEN shareprice for sometime. Especially if they floated at a nice
user friendly price

[fish]

Possibly-I think this might be part of the reason for the drop in cen price .
However will be a lot of promotion of the value of electricity generators and if cen listing is a precedent we may be limited to a small number of shares .
I think the 2 dividends i get from cen before mighty river power is listed will pay for my allocation .

[Hoop]

All these electricity floats coming up will keep a lid on CEN shareprice for sometime. Especially if they floated at a nice
user friendly price
Agree ..that factor would create strong sideways pressure...hopefully with enough oscillation for Belg and I to range trade within;).

I wondered what the May 1999 CEN listing price of $3.10 be worth in 2011 NZ Dollars..For the record that CEN 1999 listing price is worth $4.31 in today's NZ$$$ currency
courtesy of the NZ Reserve Banks Inflation Calculator tool (http://www.rbnz.govt.nz/statistics/0135595.html)

CEN closed today $4.82 up 5 (1%) So after 12.5years it has preserved its capital in real terms and a lot better compared to money in the bank earning interest.

[percy]

[

CEN closed today $4.82 up 5 (1%) So after 12.5years it has preserved its capital in real terms and a lot better compared to money in the bank earning interest.[/QUOTE]

Thank you Hoop;that's really what is important.

[ratkin]

In the retail buisness another factor which cannot be underestimated is the proliferation of online price comparison sites.

Its early days in New Zealand , however in the UK the price comparison sites have resulted in a massive increase in]competition to cut bills. With just a few clicks of the mouse a consumer can go online , see exactly which provider is going to be the cheapest , in less than a minute they can switch provider to any they choose.
The days of sticking with one provider are ending , it used to be , and in this country still can be too much effort to bother switching . However that will soon change , and if the example in the UK is anything to go by it will force the retail providers to cut prices, and therefore margins

[GTM 3442]

I rather see electricity as a perfect commodity - you can't tell one "brand" from the other (like petrol). And, like petrol, production/generation costs are pretty similar between the companies ( Brand A's windfarm costs pretty much the same to run as Brand B's). So it's kinda hard to build a "brand preference".

So the various companies will try to reduce production costs - either by building new capacity, or by trading existing generation capacity.

Either way, they're going to be doing more spending, and less paying of dividends, methinks.

Small tangent - how does the team see this affecting the small players - KCE or HED ?

[macduffy]

I would have thought that production/generation costs would vary quite considerably between those with older, mainly hydro stations and those with a bigger proportion of generation from more costly gas or wind plants. Certainly, the newer capacity will be more expensive and the various companies' costs will be influenced by the proportion between older and newer facilities as well as the mix of generation types.

I don't see this as leading to marked differences in prices to the consumer, however, but rather to different degrees of profitability as the more efficient companies take advantage of their lower production costs.

I could be totally wrong about this, not having any particular insights into the industry.

:confused:

[macduffy]

I could be totally wrong about this, not having any particular insights into the industry.



Infratil, who hold 51% of Trustpower, published an interesting study last year on wholesale electricity prices in NZ. They concluded that the price required to justify new generation construction varies according to type from a little over 7c/kwh for the best geothermal projects to a bit over 12c/kwh for coal fired, gas and some of the less viable South Island wind prospects. New hydro generation was not included being too location specific and "too minor to have a significant impact on NZ medium term prices."

Clearly, those companies with a high proportion of "legacy" hydro generation will have the lowest costs.

[fish]

Infratil, who hold 51% of Trustpower, published an interesting study last year on wholesale electricity prices in NZ. They concluded that the price required to justify new generation construction varies according to type from a little over 7c/kwh for the best geothermal projects to a bit over 12c/kwh for coal fired, gas and some of the less viable South Island wind prospects. New hydro generation was not included being too location specific and "too minor to have a significant impact on NZ medium term prices."

Clearly, those companies with a high proportion of "legacy" hydro generation will have the lowest costs.

This of course is precisely what cen have been onto for the last few years.
With no significant rain forcast for at least a week,lake levels and inflow low and power demand usually rises in february we are likely to see much bigger rises in the cost of power . CEN are looking -in my eyes-to have a very profitable second half to the financial year .

I had an order in at 4.79 at close today which failed as just at the close someone changed their order at the last second .There are now very few sellers at under 4.95 so I wouldnt be surprised if cen hit $5 again before the week-end .

[Arbitrage]

The 30 day and 90 day moving averages are still on a downward trend with no obvious upswing. I wonder whether Origin is waiting for the right price.

[fish]

The 30 day and 90 day moving averages are still on a downward trend with no obvious upswing. I wonder whether Origin is waiting for the right price.

Or manipulating the price .
As I have stated before I believe 1 or 2 sellors are trying to manipulate the price down .
For instance today the buy order i placed at close yesterday for 10000 shares was completed.
This however took 33 trades -three trades at 329 shares -the highest transaction -then 3 trades at 212 and so on until a lot of trades at 1 .
Personally I dont mind people selling me shares at way under what i perceive the value as i have infinite patience, time and still working earning lots outside the sharemarket . I will be buying more .
P.S as i write this the current electricity price is over $200 at Otahuhu so contact will be making at real killing with gas turbines strategically positioned here . No rain forcast so prices could rise a lot more as hydrogenerators cut down production and people switch on air conditioners and have fridges working overtime .

[fish]

Considering many factors it seem to me that the coming months will likely be the third and final chance for origin to make a cheap takeover offer and then next year reap all the benefit of improvents cen have made plus those made by transpower-especially the new cook strait poles.
They have the added assistance of investors tempted to sell cen to buy into the state generators .
Consider this -if mighty river power lists in 6 months investors may want to raise new funds-origin offers a low but attractive offer-say $7.50 ,the current sp. is under $5-would 4 out of 5 shareholders accept the offer and move into mighty river to make some big gains?

[CJ]

Origin could even time it such that the offer closes say 2-4 weeks before the SEO float. That would be a good way to get the small investors to accept so they would just need to convince the bigger investors who may not get the same sized allocation in the IPO as they hold in CEN.

[fish]

Wholesale power prices continue to surge ahead-now over $200 in the SI for much of the day .Yet someone is still doing some very strange selling-one day at the end of last week someone sold me just 1 share at $4.79. Today was more productive-208 shares. I guess it must be some sort of no cost computer trading as it seems no sense to keep on selling 1 share at a time ?
http://www.electricityinfo.co.nz/comitFta/ftapage.main
This is 10 times the price it was same time last year

[Hoop]

Wholesale power prices continue to surge ahead-now over $200 in the SI for much of the day .Yet someone is still doing some very strange selling-one day at the end of last week someone sold me just 1 share at $4.79. Today was more productive-208 shares. I guess it must be some sort of no cost computer trading as it seems no sense to keep on selling 1 share at a time ?
http://www.electricityinfo.co.nz/comitFta/ftapage.main
This is 10 times the price it was same time last year

Hi Fish
This is not strange behaviour....it's classic human behaviour. A group of investors (maybe small) are sensing, rightly or wrongly, that a bottom is somewhere close...they want to buy into CEN and they think they have plenty of time if they do it early...and they also think the price could go lower thereby they are accumulating slowly... so the last thing they want to do is jump in and outstrip supply at that price and push up the price while still accumulating....This group of individuals are also willing to temporary halt their buying if they see a bad day and allow the stock to fall then re-enter with their slow buying strategy again.....This doesn't necessarily raise their brokerage costs...as the investor can go online and readjusts the buy price/volume amount with the remaining order....A good tactic for the accumulator is to look at the share depth and if there are enough shares at a certain price to satisfy the accumulator for the meantime they (accumulator) buy up all those shares except one. Why?...because most people go on-line and don't use depth therefore they see that the share price /buy price/sell price has not changed..therefore they are unaware of whats happened and this minimizes the buy pressure signal.

Fish I'm a little surprised this has happened with CEN usually it happens with an illiquid stock that has big gaps within the sell prices.

Fish..I know you are not a TA fan but the short term CEN Chart has picked this activity up. My previous chart post#361 29th January (http://www.sharetrader.co.nz/showthread.php?2674-CEN-Chart/page25) is very long term and doesn't reflect CEN's short term behaviour so a shorter term chart (below) has picked up this behaviour.... The accumulation/distrubution indicators are showing slight divergence to the shareprice indicating that here isn't a huge number of investors or any big players doing it....Although this slight divergence is deemed slightly bullish it is best to be cautious as other TA indicators have not followed yet (not shown on chart)..

A buy signal for a stock need more than one indicator (or indicator group) firing off.....The OBV indicator is a good stock indicator (Phaedrus's favourite) it shows the flow of "smart" money.

http://i458.photobucket.com/albums/qq306/Hoop_1/CEN08022012.png

[fish]

Hi Fish
This is not strange behaviour....it's classic human behaviour. A group of investors (maybe small) are sensing, rightly or wrongly, that a bottom is somewhere close...they want to buy into CEN and they think they have plenty of time if they do it early...and they also think the price could go lower thereby they are accumulating slowly... so the last thing they want to do is jump in and outstrip supply at that price and push up the price while still accumulating....This group of individuals are also willing to temporary halt their buying if they see a bad day and allow the stock to fall then re-enter with their slow buying strategy again.....This doesn't necessarily raise their brokerage costs...as the investor can go online and readjusts the buy price/volume amount with the remaining order....A good tactic for the accumulator is to look at the share depth and if there are enough shares at a certain price to satisfy the accumulator for the meantime they (accumulator) buy up all those shares except one. Why?...because most people go on-line and don't use depth therefore they see that the share price /buy price/sell price has not changed..therefore they are unaware of whats happened and this minimizes the buy pressure signal.

Fish I'm a little surprised this has happened with CEN usually it happens with an illiquid stock that has big gaps within the sell prices.

Fish..I know you are not a TA fan but the short term CEN Chart has picked this activity up. My previous chart post#361 29th January (http://www.sharetrader.co.nz/showthread.php?2674-CEN-Chart/page25) is very long term and doesn't reflect CEN's short term behaviour so a shorter term chart (below) has picked up this behaviour.... The accumulation/distrubution indicators are showing slight divergence to the shareprice indicating that here isn't a huge number of investors or any big players doing it....Although this slight divergence is deemed slightly bullish it is best to be cautious as other TA indicators have not followed yet (not shown on chart)..

A buy signal for a stock need more than one indicator (or indicator group) firing off.....The OBV indicator is a good stock indicator (Phaedrus's favourite) it shows the flow of "smart" money.

http://i458.photobucket.com/albums/qq306/Hoop_1/CEN08022012.png

Thanks for the TA Hoop-It is always interesting and to me reflects how investors are behaving and have been behaving .
In a stable market with steady investor thinking I can see how it predicts future trends better than complete guessswork . I doubt if it can however tell us when to start buying as this for instance can be initiated by an unanticipated event-e,g a takeover offer for cen could put the prce up by over $2 in minutes .

The numerous times someone has recently sold me a share for $1 to me seems to be an effort to push the price down-its not due to 1 buyer leaving 1 share left at a certain price to make it look as if the price hasnt gone up Rather it is somone selling me repeatedly 1 share to make the last sale price seem lower.

Today i put a buy order in at lunchtime for $4.76-I managed to accumulate a few more shares but the bulk of the order hasnt been filled .
5min power prices are very high and no significant rain in sight for at least a week

[Financially dependant]

Hi Fish
This is not strange behaviour....it's classic human behaviour. A group of investors (maybe small) are sensing, rightly or wrongly, that a bottom is somewhere close...they want to buy into CEN and they think they have plenty of time if they do it early...and they also think the price could go lower thereby they are accumulating slowly... so the last thing they want to do is jump in and outstrip supply at that price and push up the price while still accumulating....This group of individuals are also willing to temporary halt their buying if they see a bad day and allow the stock to fall then re-enter with their slow buying strategy again.....This doesn't necessarily raise their brokerage costs...as the investor can go online and readjusts the buy price/volume amount with the remaining order....A good tactic for the accumulator is to look at the share depth and if there are enough shares at a certain price to satisfy the accumulator for the meantime they (accumulator) buy up all those shares except one. Why?...because most people go on-line and don't use depth therefore they see that the share price /buy price/sell price has not changed..therefore they are unaware of whats happened and this minimizes the buy pressure signal.

Fish I'm a little surprised this has happened with CEN usually it happens with an illiquid stock that has big gaps within the sell prices.

Fish..I know you are not a TA fan but the short term CEN Chart has picked this activity up. My previous chart post#361 29th January (http://www.sharetrader.co.nz/showthread.php?2674-CEN-Chart/page25) is very long term and doesn't reflect CEN's short term behaviour so a shorter term chart (below) has picked up this behaviour.... The accumulation/distrubution indicators are showing slight divergence to the shareprice indicating that here isn't a huge number of investors or any big players doing it....Although this slight divergence is deemed slightly bullish it is best to be cautious as other TA indicators have not followed yet (not shown on chart)..

A buy signal for a stock need more than one indicator (or indicator group) firing off.....The OBV indicator is a good stock indicator (Phaedrus's favourite) it shows the flow of "smart" money.

http://i458.photobucket.com/albums/qq306/Hoop_1/CEN08022012.png

A great overview of accumulating CEN Hoop.... but it seems to be happening to a lot of stocks atm, it just seems easier to see the illiquid ones...

[CJ]

This doesn't necessarily raise their brokerage costs...as the investor can go online and readjusts the buy price/volume amount with the remaining order....A good tactic for the accumulator is to look at the share depth and if there are enough shares at a certain price to satisfy the accumulator for the meantime they (accumulator) buy up all those shares except one.

I am not sure these two sentences work together.

The only way to take all the shares except 1 is to offer to only buy that amount of shares (ie. no part of the trade outstanding). That means your order has been completed and the brokerage set. You cant readjust price/volume at that point can you? - I thought this can only be done if you all/part of your trade is outstanding.

How can this be done?

Note: I use ASB securities online so this may be the limitation?

[fish]

I am not sure these two sentences work together.

The only way to take all the shares except 1 is to offer to only buy that amount of shares (ie. no part of the trade outstanding). That means your order has been completed and the brokerage set. You cant readjust price/volume at that point can you? - I thought this can only be done if you all/part of your trade is outstanding.

How can this be done?

Note: I use ASB securities online so this may be the limitation?

Below shows the quantity of shares in each trade when i put in a single buy order a week ago -22 trades were single digit and similar numbers are repeated.

Reference Trade Date Quantity Currency Settlement Amount Settlement Date
6099317 02-Feb-2012 329 4.7900 NZD 1,605.91 8-Feb-2012
6099319 02-Feb-2012 212 4.7900 NZD 1,015.48 8-Feb-2012
6099387 02-Feb-2012 329 4.7900 NZD 1,575.91 8-Feb-2012
6099399 02-Feb-2012 212 4.7900 NZD 1,015.48 8-Feb-2012
6099411 02-Feb-2012 1 4.7900 NZD 4.79 8-Feb-2012
6099421 02-Feb-2012 3 4.7900 NZD 14.37 8-Feb-2012
6099423 02-Feb-2012 6 4.7900 NZD 28.74 8-Feb-2012
6099429 02-Feb-2012 2 4.7900 NZD 9.58 8-Feb-2012
6099431 02-Feb-2012 7 4.7900 NZD 33.53 8-Feb-2012
6099433 02-Feb-2012 2 4.7900 NZD 9.58 8-Feb-2012
6099435 02-Feb-2012 6 4.7900 NZD 28.74 8-Feb-2012
6099439 02-Feb-2012 1 4.7900 NZD 4.79 8-Feb-2012
6099445 02-Feb-2012 6 4.7900 NZD 28.74 8-Feb-2012
6099447 02-Feb-2012 2 4.7900 NZD 9.58 8-Feb-2012
6099449 02-Feb-2012 5 4.7900 NZD 23.95 8-Feb-2012
6099451 02-Feb-2012 1 4.7900 NZD 4.79 8-Feb-2012
6099453 02-Feb-2012 6 4.7900 NZD 28.74 8-Feb-2012
6099455 02-Feb-2012 4 4.7900 NZD 19.16 8-Feb-2012
6099457 02-Feb-2012 1 4.7900 NZD 4.79 8-Feb-2012
6099459 02-Feb-2012 4 4.7900 NZD 19.16 8-Feb-2012
6099461 02-Feb-2012 2 4.7900 NZD 9.58 8-Feb-2012
6099469 02-Feb-2012 2 4.7900 NZD 9.58 8-Feb-2012
6099477 02-Feb-2012 4 4.7900 NZD 19.16 8-Feb-2012
6099487 02-Feb-2012 4 4.7900 NZD 19.16 8-Feb-2012
6099491 02-Feb-2012 1 4.7900 NZD 4.79 8-Feb-2012
6099495 02-Feb-2012 2 4.7900 NZD 9.58 8-Feb-2012
6099499 02-Feb-2012 329 4.7900 NZD 1,575.91 8-Feb-2012
6099501 02-Feb-2012 2 4.7900 NZD 9.58 8-Feb-2012
6099505 02-Feb-2012 48 4.7900 NZD 229.92 8-Feb-2012
6099511 02-Feb-2012 212 4.7900 NZD 1,015.48 8-Feb-2012

I havnt experienced before so many small trades to complete an order and am not sure what it signifies.
Its interesting that asb securities-morningstar -have an accumulate recommendation posted today for cen .

[CJ]

Below shows the quantity of shares in each trade when i put in a single buy order a week ago -22 trades were single digit and similar numbers are repeated.I am not disputing that it is happening. I just dont think it is being by a small place using a normal online broking account. It must be being done by someone who can create a sell order for 1 share and not be concerned with brokerage costs. Hoop seemed to be suggesting taht you could sell individual shares as past of a larger sell order.

I wonder if they are trying to get you to raise your buy price for fear of having only bought 1 share and having to pay full commission on it.

[fish]

I am not disputing that it is happening. I just dont think it is being by a small place using a normal online broking account. It must be being done by someone who can create a sell order for 1 share and not be concerned with brokerage costs. Hoop seemed to be suggesting taht you could sell individual shares as past of a larger sell order.

I wonder if they are trying to get you to raise your buy price for fear of having only bought 1 share and having to pay full commission on it.

No-I think the opposite is true as i only pay 1 commission fee for any buy order-ie if i put a buy order in for 5000 shares-i pay the same commission whether it is filled in 1 transaction or several smaller transactions over several days .

yes-I believe whoever is selling 1 share at a time isnt bothered about transaction costs as they would have to repeatedly put in sell orders for 1 share at a time and pay brokerage and trade fee on each order .I think the aim must be to make the last sale price appear lower as a computer could send in repeat small orders until the share price drops.I dont really mind as i bought more shares today at a very low price .

Incidentally hydro lake levels are exceptionally low and hydro inflows are at the lowest I can see on record . It will be interesting seeing just how high power prices will go with no significant rain forcast .

[Financially dependant]

I am not disputing that it is happening. I just dont think it is being by a small place using a normal online broking account. It must be being done by someone who can create a sell order for 1 share and not be concerned with brokerage costs. Hoop seemed to be suggesting taht you could sell individual shares as past of a larger sell order.

I wonder if they are trying to get you to raise your buy price for fear of having only bought 1 share and having to pay full commission on it.

Hedge funds don't get charged per share but by quantity....some information on algorithmic trading that operates how most stocks are trading now..http://en.wikipedia.org/wiki/Algorithmic_trading

[CJ]

I think we are all on the same page except maybe Hoop who started this. He seemed to suggest that this could be a small player doing the small sell parcels but I think it has to be a big player (who doesn't pay brokerage on a trade basis). Which big player would have an incentive to keep the price down. Origin is the only one I can think of.

[Financially dependant]

I think we are all on the same page except maybe Hoop who started this. He seemed to suggest that this could be a small player doing the small sell parcels but I think it has to be a big player (who doesn't pay brokerage on a trade basis). Which big player would have an incentive to keep the price down. Origin is the only one I can think of.

Any bank or fund that wants to accumulate would keep a lid on prices until they have the amount they want...plus drain any last share from weak hands before allowing price to appreciate. Funds don't want to buy all the way up just at there targeted accumulation range so then let SP rise on it's own.

[Toulouse - Luzern]

Is it possible it is someone like ACC that is accumulating shares ...?

[fish]

Is it possible it is someone like ACC that is accumulating shares ...?

Possible but unlikely . The pattern of selling small amounts repeatedly suggests to me some automated computer selling to try and get the price down.

We know origin wants to takeover . The aussie dollar is very high . CEN profits are likely to take off as all the new projects come online. As I have said before making a takeover offer soon may be the last chance origin have . A low share price will mean the offer is more likely to be accepted-especially if investors can use the proceeds to buy cheap state owned power generators .

[Toulouse - Luzern]

Results will disapoint this year becaue of huge corporate overhead costs . Heard they were rolling out SAP for 80 million but now nearly double that cost.
Whats the cost of outsoucing IT to HP Australia into the same datacentres of Origin?
Only seems cost effective if Orgin own 100% right?

There has been huge generation investment with minimal increase in consumption.

If there are IT issues there could be significant impact ... = uncertainty and risk to consider ...

[fish]

Any IT issues could be negative press created by origin in order to depress the sp so that shareholders accept their 3rd time lucky takeover offer-thats when it comes which i think will be in the second quarter of this year ,
1st half results will be poor . Origin may have to up their offer if we get bonanza profits in the second half due to the south island drought and demand increases . I therefore think an early offer by origin is on the cards .

[troyvdh]

Today I e- mailed Origin asking if the could inform me as to whether or not they were going to make another bid CEN.
I also requested the date and what the price they were thinking of.
At least I tried.

[Lizard]

Today I e- mailed Origin asking if the could inform me as to whether or not they were going to make another bid CEN.
I also requested the date and what the price they were thinking of.
At least I tried.

Love it! :D

[CJ]

Today I e- mailed Origin asking if the could inform me as to whether or not they were going to make another bid CEN.
I also requested the date and what the price they were thinking of.
At least I tried.Did you say the reason you wanted to know is so you could diarise rejecting their offer and so you could look forward to them stopping suppressing the shareprice with bad news.

[troyvdh]

CJ...funny you would say that.... i did mention the fact CEN has had its fair share of bad (and justified) press....inferring that perhaps this may have been somewhat of a deliberate ploy....blah blah...

...what would be really spooky...if IT actually happened....say tomorrow....I mean ....WOULD i be the MAN or WHAT....

[Silverlight]

Currently it would cost Origin 1.3b AU at market prices to buy the other 49% of Contact, and if they have to add 20%+ in premium they have to pay 1.6b AU plus. While Origin could get the funding from current debt facilities, the ROE and ROIC is significantly lower than they need to make such a move given other projects they are involved in.

Origin make about 5-600m AU in profits a year and have to fund nearly 8b in capex requirements for their stake in Australia Pacific LNG, with many expecting that Origin may have to do another capital raising as their debt to equity is at 19% already, compared AGL energy is under 10%, granted though AGL exploration is very small.

Purchasing Contact, which has even higher debt to equity (32%) at a premium, does not make financial sense for Origin at this stage, as it would increase their current debt levels, and lead to a re-rating profile of the price by analysts to higher risk, at a time when they may need to raise more capital anyway.

While from the point of view of retail holders, the price is lower than 1 year ago, Origin could be purchasing shares on market using the creep provision I doubt a full takeover would happen at the moment as it is not the place they can get the best return for their investment dollar

[macduffy]

I'm with Silverlight on this one. The LNG project is higher priorty with them at present so they're unlikely to be looking to take on more debt to buy out minority CEN holders, despite the lower CEN price currently. I suppose a scrip bid might be a possibility but how about this for a thought? Origin to steal a march on the NZ Govt by putting its CEN holding up for sale before the SOE's come to market? Would free up funds to help with the LNG project anf maybe Origin is a bit disillusioned with its NZ adventure?

OK, probably a bit left field but I wouldn't be surprised if Origin has at least thought about the idea.

[troyvdh]

Thanks for the last two posts...you have "slamd duncked"....me ...man i hate facts.....cheers...much appreciated....none the less....

[fish]

Currently it would cost Origin 1.3b AU at market prices to buy the other 49% of Contact, and if they have to add 20%+ in premium they have to pay 1.6b AU plus. While Origin could get the funding from current debt facilities, the ROE and ROIC is significantly lower than they need to make such a move given other projects they are involved in.

Origin make about 5-600m AU in profits a year and have to fund nearly 8b in capex requirements for their stake in Australia Pacific LNG, with many expecting that Origin may have to do another capital raising as their debt to equity is at 19% already, compared AGL energy is under 10%, granted though AGL exploration is very small.

Purchasing Contact, which has even higher debt to equity (32%) at a premium, does not make financial sense for Origin at this stage, as it would increase their current debt levels, and lead to a re-rating profile of the price by analysts to higher risk, at a time when they may need to raise more capital anyway.

While from the point of view of retail holders, the price is lower than 1 year ago, Origin could be purchasing shares on market using the creep provision I doubt a full takeover would happen at the moment as it is not the place they can get the best return for their investment dollar

Origin have massive secure cashflow which is likely to increase with them becoming australia,s largest retailer with their recent $3 billion plus takeover of other autralian retailers . They have made over $600 million au in profits last 2 years and this will rapidly increase .They know that interest costs will stay low this year and contact profits could double or triple-just look at wholesale electricity prices . If they take over contact they will have full access to this cash .
They like renewable energy and geothermal in particular . They know contact inside out . They want their cashflow.A takeover is unlikely to significantly reduce their profits in the short-term and will very likely enhance them sooner than later. They will gain more renewable energy credentials which may open more doors.

They have tried 2 previous takeover offers . They have senior staff running contact .

We know they want 100% contact-they currently own 51.9%. Will there ever be a cheaper time to takeover contact?
Never before has the sp looked so cheap compared to future profits

[fish]

I checked origin energy website-they last stated they owned 52.6% contact and underlying profits $680 million au-and expecting rapid growth . They announced a change in their DIP so that investors electing shares instead of cash get a 2.5 % discount for shares . This is one big rapidly growing company with expansion a priority . Taking over contact now with current low interest rates would probably not reduce their profit-it would be good if someone here had the capability and time to see what effect it would have in different scenarios of interest rates and cen profits .
I feel it would be a very safe investment for origin .

[troyvdh]

thanks guys...we all know that CEN is worth more than the current SP...what is sad is that this fact is meaninglyless...and that the future fortunes of CEN will depend upon the opinions held by those in Oz ...

[Silverlight]

Origin have massive secure cashflow which is likely to increase with them becoming australia,s largest retailer with their recent $3 billion plus takeover of other autralian retailers . They have made over $600 million au in profits last 2 years and this will rapidly increase .They know that interest costs will stay low this year and contact profits could double or triple-just look at wholesale electricity prices . If they take over contact they will have full access to this cash .
They like renewable energy and geothermal in particular . They know contact inside out . They want their cashflow.A takeover is unlikely to significantly reduce their profits in the short-term and will very likely enhance them sooner than later. They will gain more renewable energy credentials which may open more doors.

They have tried 2 previous takeover offers . They have senior staff running contact .

We know they want 100% contact-they currently own 51.9%. Will there ever be a cheaper time to takeover contact?
Never before has the sp looked so cheap compared to future profits

Don't want to take this thread too off topic with Origin, while in general I agree Origin profits are forecast to increase to 8-900m in the next few years, their LNG project carries significant risk, and any delays to the timeline, or a cost blowout, like Woodside has faced with Pluto, will mean downgrades to Origin's forecasts, and may lead to a capital raising.

This risk, and the need for Origin to execute on their LNG project, both financially and on time, leads to an unlikely chance of a takeover at the current time.

[ratkin]

thanks guys...we all know that CEN is worth more than the current SP...what is sad is that this fact is meaninglyless...and that the future fortunes of CEN will depend upon the opinions held by those in Oz ...

Ah but do we?

[fish]

thanks guys...we all know that CEN is worth more than the current SP...what is sad is that this fact is meaninglyless...and that the future fortunes of CEN will depend upon the opinions held by those in Oz ...

A big determinant of the sp will be the market value of electricity-this is getting better and better everyday for cen shareholders-over $200 for most nodes at this moment-around 10 times what it was last year . Hydro levels and inflows are very low . Contact is right in developing geothermal-clearly cheaper and more reliable than windpower or new hydro .

[winner69]

Methinks that that H1 ann will see the shareprice take off today and tomorrow .... a good un

[winner69]

Not one usually interested in CEn but a pretty good preso with the announcement

Gaynor won't like all the different types of profits .... EBITDAF and Underlying Earnings and all those sort of things ..... his question what they trying to hide

Fish -- maybe you understand some of those charts better tahn me .... Page 34 I think you have already explained ...... is the one on page 32 good or bad .... and the one about Stratford Peakers has got me truly stuffed

[Hoop]

Those Accumulators around the 1st to 13th pushing the prices around using their fancy tactics I wonder how they feel this morning ...presently 475 down 3c.

[Jaa]

The problem with Contact is its not growing the business through free cash generation. It is growing via issuing new shares as part of the DRP and rights issues. This helps Origin slowly gain a greater % of Contact but that is a minor point as its really a show of weakness.

I almost fell off my chair the other day when I fired up my energy sector spreadsheet to see if $4.76 was as good a price as it looked. In 2 years the share price has gone from $5.56 to $4.75 but Contact's market capitalisation is almost exactly the same, 3.364b today versus 3.312b in Feb 2010. The number of shares has increased from 583m to 706m over the same period.

The earnings per share results tell the story.



Underlying earnings per share (cents) down to 10.89 from 12.72 previous period and 13.36 in 2009
Basic and diluted earnings per share (cents) down to 9.70 from 13.50 previous period and 14.71 in 2009

[Silverlight]

Isnt Contact fully consolidated on Origin's balance sheet anyway (ie all Contacts debt is already on Origins balance sheet)?

You are correct, however for my own analysis I reversed this out to get 19%, other wise it is around 24%. Depending how they would fund a takeover, out of debt, which increases the ratio, or equity, where their cash flows have been earmarked for other projects, the conclusion is the same.

[fish]

I would have thought in these times cash is king and would more likely to be accepted

Power prices despite rain forcast tomorrow remain phenominally high-just looked at wits and most over $200 . This will lead to higher electricity prices in future .

I thought the decison to maintain the dividend announced today was good-
Outlook
The financial year to date has been marked by low hydro generation levels.
With current national hydro storage levels at the end of January at the
lowest seen in the past 15 years there is the potential that Contact's
diverse generation assets will be required to ensure continued security of
supply to our customers.

"EBITDAF in the second half of the 2012 financial year is expected to benefit
from retail price rises including seasonally higher prices for Time of Use
customers and an increase in contract for difference sales volumes.

The second half looks like being much better .

[troyvdh]

Giday...for those who are interested...Louise from Origin sent me a message today stating that as of end of 2011 Origin held 52.8 % of CEN "and has given no indication of any change to this holding at this stage"...

...there you have it ...you paranoid bunch of naysayers....shame on you...humbug....snort...shuffle....

[fish]

Accumulating shares in large secure companies when they are grossly oversold on fundamentals makes for good investment advice ,
Hoop- Stating that one must have a death wish because a retrospective chart shows a downtrend is placing too much faith in charts . Have you seen a buy signal yet ?

[Hoop]

Accumulating shares in large secure companies when they are grossly oversold on fundamentals makes for good investment advice ,
Hoop- Stating that one must have a death wish because a retrospective chart shows a downtrend is placing too much faith in charts . Have you seen a buy signal yet ?

Hi Fish.

Accumulating shares in large secure companies when they are grossly oversold on fundamentals makes for good investment advice
In theory... yes
In practise....not always yes... a stock can stay oversold, for months even years for no apparant reason, this creates an opportunity loss situation while the investor waits for this stock to rise they miss the boat by not invested in other rising stocks. TA helps with entry and exits.

Have you seen a buy signal yet ?

ohhh yes... 29th Feb ...note how the near bottom prices didn't move up for two to three days after that mass of short /medium term buy signals...A terrific entry level opportunity....eh?

http://i458.photobucket.com/albums/qq306/Hoop_1/CEN06032012.png

[percy]

Hoop,
Thank you for posting CEN chart.As always I found it most interesting.

[fish]

Thanks also for the post Hoop .
Hope you took advantage of the buy signal.
Should the chart have shown a steeper rise by adding on the 11 cent dividend when cen went ex ?

[Hoop]

Thanks also for the post Hoop .
Hope you took advantage of the buy signal.
Should the chart have shown a steeper rise by adding on the 11 cent dividend when cen went ex ?

Hmmm.. unadjusted data?? when it says it's adjusted....yes I now have my doubts too Fish
A problem I may always have to live with, with the delayed Yahoo data feed methinks...There's been a few debates on ST in the past about TA accuracy .... Phaedrus reworked some of his charts and reposted.... Most reworked charts I saw had very minor changes. Most Div effects were minor.,,,splits were grossly obvious.

[Snow Leopard]

Hmmm.. unadjusted data?? when it says it's adjusted....yes I now have my doubts too Fish
A problem I may always have to live with, with the delayed Yahoo data feed methinks...There's been a few debates on ST in the past about TA accuracy .... Phaedrus reworked some of his charts and reposted.... Most reworked charts I saw had very minor changes. Most Div effects were minor.,,,splits were grossly obvious.

I have never worked out what Yahoo's 'adjusted' closing price is all about. If there is a stock split/consolidation they tend to rework all the historical data and often there is a spike because they get the date out by one day. They do not take dividends into account at all as far as I am aware. As an added bonus Yahoo (and Google) do not cover all stocks, miss trading days out and provide data for days when the market is closed.

My current source of free end of day for the NZX is stocknessmonster.com.

On another note a break of the 50 day (E)MA is as arbitrary a buy signal as any. So what's your exit strategy ?

best wishes
Paper Tiger

[Jay]

Phaedrus did adjust his charts as far as I know for dividends and of course you have to, however as far as dividends are concerned, he answered a question of mine around that, saying something along the lines of don't sweat the small stuff, it does not make that much difference unless you get a disproportional dividend, such as the usual plus a special

[troyvdh]

...for what its worth...in very recent times I have been in communication with CEN ...(and having been comforted by those folk with whom I have spoken to that ...they to are disheartened by the circumstances leading to the current ongoing collapse of the SP)....that perhaps (acknowledging various constraints).......we can expect a flurry....nay....a deluge of annoucements indicating purchases by those running this outfit that they increased there holdings in CEN...personally....

..now that would be a relief.....

[Pumice]

...for what its worth...in very recent times I have been in communication with CEN ...(and having been comforted by those folk with whom I have spoken to that ...they to are disheartened by the circumstances leading to the current ongoing collapse of the SP)....that perhaps (acknowledging various constraints).......we can expect a flurry....nay....a deluge of annoucements indicating purchases by those running this outfit that they increased there holdings in CEN...personally....

..now that would be a relief.....

Hi troyvdh, are you saying Contatct energy employees told you that insiders may soon be buying up CEN stock?

[troyvdh]

....not at all....an employee expressed disappointment about the SP....it is entirely my inference that should CEN employees purchase some shares ...given the historic low SP...then ...that would be a relief/expression of support ..."skin in the game"...et al...

[bung5]

Any thoughts on what will happen to the SP once the other SOE power companies are partially privatised by the Govt. over the next year or two? The NZX will suddenly have a lot of power generators in the NZX top 50 for what is really a pretty small sharemarket! More pressure to come on CEN's SP?

Origin will launch their 3rd ( or 4th?? ) takeover attempt!

[fish]

Origin will launch their 3rd ( or 4th?? ) takeover attempt!

As I have said before the most strategic time for the takeover will be middle of this year (low sp and profits down-shareholders more likely to jump into a lowish takeover offer if they can reinvest capital and profits into mighty river )
Next year profits are likely to rise a lot with more geothermal providing stable predictable energy -as well as energy price rises greater than inflation -and mighty river which looks the best SOE gone-ie no longer a cheap entry .

[Pumice]

....not at all....an employee expressed disappointment about the SP....it is entirely my inference that should CEN employees purchase some shares ...given the historic low SP...then ...that would be a relief/expression of support ..."skin in the game"...et al...

Cheers Troyvdh, I work for Origin energy, was just a bit concerned someone might be leaking sensitive information.
I get to do all the fun valuation modelling of the generation portfolio. Unfortunately I haven’t had a lot to do with CEN side of things though.

[troyvdh]

,,,,really is that your job...how exciting....could you not look over a mates shoulder.....and sniff out if Origin are intending to make (another) bid....you must surely be able to determine ...ball park figures accepted...if a company like CEN fullfills any criteria that Origin may be exploring.....we on this side of the ditch are convinced that another "low ball offer" is imminent......Im pretty emotional about this company having spent heaps of family time down in central otago...

[winner69]

Never really followed CEN but hard to believe that their shareprice was about $10 not that long ago .... and today isn't much more than it was 9 years ago

Whats happened

[troyvdh]

....gee thats a bit under the belt....are you "Balance2".....actually you do have a point....a very sore point....on the face of it this is a company that owns a big dam...that was very very very very very expensive to build...(like 12 months of pouring concrete down into...well....no one is sure...anyways it was/is a big hole)....and it produces electricity quite reliably...from (Lakes Wakatipu,Wanaka and Hawea....Hawea being the only one damned).... CEN has other investments (going forward.....vomit)...now is it unreasonable to expect that is a company that could be a prudent and wise investment...(the words "blue chip"...somehow induces more vomit) ....anyways I have always thought so...that aside the political/MKT regulation declaration decrees....and the on going suspicion that Origin will put together another low ball offer ...have combined to smother this company to smitherians.Im not sure anymore what will determine the fate of this company...cheers

...thats what happened in my view anyways...

[macduffy]

CEN "unhappy" with NZX' new ruling on index weightings.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10795539

This company seems to have finally realised that it has customers - but still has a long way to go to recover its former status.
As for Origin's majority shareholding and possible future plans, I remain convinced that they have bigger fish to fry at home before committing themselves any further to CEN.

[bung5]

Thought the Tom Scott today was quite fitting ...

http://www.stuff.co.nz/dominion-post/comment/tom-scott-cartoons/

[Silverlight]

Origin's presentation last week had some interesting views on Contact, also aligned with the view that a Takeover is unlikely.

Train 2 for APLNG may need to be funded by earliest middle of the year, with a equity raising touted the most likely outcome, around $6b. Unless they raise $8b, they can't really afford to make an offer for Contact.

[fish]

Barnes said that once the 166MW Te Mihi geothermal plant was completed in 2013 that would bring to an end four years in which Contact had committed an average of $500 million of capital annually.
With current power prices and power companies indicating that there will be no new major hydro for decades my feeling is that the market will soon wake up to the large future earnings growth that is highly likely for cen long before it becomes apparent on contacts results.

[Winston001]

Must admit I'm deeply troubled by CEN. I bought on the original listing $3.15 thinking it would pay for my daughters first year at university. That was 13 years ago and the current $4.87 price doesn't even cover half her hostel fees. I haven't sold but am close to doing so - in disgust.

I've read commentary that Origin are stripping Contact and will make another takeover offer after having successfully driven the company down. Clever business for them but awful for the average investor.

[fish]

Relax Winston
You have forgotten the dividends or that you could have sold for $10 before the economic turndown .
Future profits look phenominal .They have done their investments and will soon reap the returns

[Silverlight]

Calculating the 10 year return is a tad under 8% per year, for the past 10 years, vs the NZX50 return of just under 6% per year, not a bad outperformance for a utility. However, Contact has returned negative 6% pa for the past 5 years, while the indes is only down 4% pa, so being disappointed in this time frame looks justified.

A holder from the start should calculate their return since the start though.

To reiterate Fish's comment, Contact have almost finished their long term capex cycle and from 2013 the cash flows are going to look good. Short term the SOE listings are creating negative volatility, but as Fish points out, the past investment programs are about to pay off over the next few years.

[Hoop]

Must admit I'm deeply troubled by CEN. I bought on the original listing $3.15 thinking it would pay for my daughters first year at university. That was 13 years ago and the current $4.87 price doesn't even cover half her hostel fees. I haven't sold but am close to doing so - in disgust.

I've read commentary that Origin are stripping Contact and will make another takeover offer after having successfully driven the company down. Clever business for them but awful for the average investor.


Never really followed CEN but hard to believe that their shareprice was about $10 not that long ago .... and today isn't much more than it was 9 years ago

Whats happened

Secular head winds are nearly always overlooked while holding long term shares....I'm not saying this is the sole cause of CEN lackluster share performance over the years..but it could be a significant part of the problem.

Winston I have written something with your quote on the Investing strategies and secular bear markets thread (http://www.sharetrader.co.nz/showthread.php?5171-Investing-strategies-and-secular-bear-markets/page18)

[MANDRAKE]

Today's trading saw nearly 5M CEN shares change hands, and closed up. The OBV indicator is now well and truly rising (and has been creeping up for a few months now) meanwhile the SP just gets lower. Seems like a glaring bullish divergence to me. But of course this does not in itself constitute a BUY signal. Or does it?! In any case I'm interested. Pity Origin's interests in CEN don't seem to be aligned with those of the minority holders.

[fish]

Today's trading saw nearly 5M CEN shares change hands, and closed up. The OBV indicator is now well and truly rising (and has been creeping up for a few months now) meanwhile the SP just gets lower. Seems like a glaring bullish divergence to me. But of course this does not in itself constitute a BUY signal. Or does it?! In any case I'm interested. Pity Origin's interests in CEN don't seem to be aligned with those of the minority holders.

last months financial results should be out on monday . Suspecting they will reflect the higher wholesale prices i bought some more a couple of days ago at 4.63

[fish]

last months financial results should be out on monday . Suspecting they will reflect the higher wholesale prices i bought some more a couple of days ago at 4.63
Monthly operational data released-looks good on initial perusal- electricity -customer numbers steady but sold a lot more power and gas.
north island lake levels dropped by 10% and south up 3%.
Current -this minute power prices-over $400 in south and $150 in north reflecting increasing demand .

[troyvdh]

.....perhaps the expected improvement of CEN's fortunes (and for shareholders)....aint gonna happen then.......cynical.....nahhh

CEN has responded to me...the fall is probably due to the Rio/Bluff story this AM....

[macduffy]

For what it's worth. From Macquarie today:

"Contact Energy CEN Outperform

Retail prices will defy wholesale gloom

FY12 result 14 August. CEN provided FY12 EBITDAF guidance of ~$500m (down from $520m+ at the FY11 result). Macq. is lower at $481m (consensus $514m)
We think an increasing focus on CEN’s FCF growth (x2 CPI) and reduced retail electricity margin pressure will be key drivers of MT performance.
Downside risks from higher cost-to-hedge, over-supplied wholesale market, index changes and competing MOM supply are now well understood by market. "

[troyvdh]

...thanks mac....do you think was scribed before Rio made that statement...

[fish]

QUOTE=macduffy;378632]For what it's worth. From Macquarie today:

"Contact Energy CEN Outperform

Retail prices will defy wholesale gloom

FY12 result 14 August. CEN provided FY12 EBITDAF guidance of ~$500m (down from $520m+ at the FY11 result). Macq. is lower at $481m (consensus $514m)
We think an increasing focus on CEN’s FCF growth (x2 CPI) and reduced retail electricity margin pressure will be key drivers of MT performance.
Downside risks from higher cost-to-hedge, over-supplied wholesale market, index changes and competing MOM supply are now well understood by market. "[/QUOTE]

I could add a few more positives to that- more geothermal coming on line,cheap gas supply and storage,increased inter-island capacity and lower interest rates . They have also been accumulating high users and good payers .It will take time for the market to realise the stars are lining up for contact

[fish]

results out today
2nd half should be much more profitable and annual result up 7% approx-I bought more yesterday -market overly fearful of losing aluminium smelter

[fish]

results out today
2nd half should be much more profitable and annual result up 7% approx-I bought more yesterday -market overly fearful of losing aluminium smelter

results are up more than even i expected-gross profit up more like 27%-sold 4% more electricity at bigger margins-looks like this will be sustained.12 cent dividend as shares-next year likely to be cash

[Snow Leopard]

results are up more than even i expected-gross profit up more like 27%-sold 4% more electricity at bigger margins-looks like this will be sustained.12 cent dividend as shares-next year likely to be cash

raw EPS is up 12.8%
and
normalised EPS is up 4.0%

back to sleep
Paper Tiger

[fish]

sorry pt -but a much better than anticipated result nevertheless
i have always enjoyed waking people up

[macduffy]

Profit Distribution Plan strike price has been set at $4.87.

With current SP at $5.06, I'll accept the bonus shares.

[fish]

Profit Distribution Plan strike price has been set at $4.87.

With current SP at $5.06, I'll accept the bonus shares.

Just dont sell them too soon !
Electricity Spot prices are phenomenal in the north island atm-over $1000-I have never seen them so high

[troyvdh]

...cheers fish...youve woken me....

...can you please send me the link....that alerts you to what you have spoken about.....cheers troy

[fish]

...cheers fish...youve woken me....

...can you please send me the link....that alerts you to what you have spoken about.....cheers troy

google WITS free to air

spot 5 minute power prices are back to reasonable levels atm-around $70

Companies like CEN that have largely fixed expenses stand to make big increases in profits for smaller increases in power prices

[troyvdh]

...whats with the latest bouyancy of the SP on thin volume.....is it the 4.35 % div....some trades look like computer generated...i.e. multiple mini trades....I suppose if one gets 4.35 % imputed ..then that probably equates to what...6 plus gross....not bad i suppose....if i was an old fella....cheers

[fish]

cheap generation-lakes full but power prices up-bodes well for growth in profit and increased dividends.
Dont forget cen reached $10 pre-crash . Now we have more and cheaper generation and a far better company .Announcement of 2% pa growth in economy today and christchurch rebuild will help prices

[troyvdh]

....lakes full....is that right ...I thought that wakatipu,wanaka/hawea...relied on southern generated air flow.....are you saying that the last few days of southerlies has indeed made a significant contribution to warrant a share price increase....no need to remind me about the $10....share price....I did sell a few....But I remain a beliver.....cheers....am missing the Alexandra Blossom festival this year.....occuring this weekend.....because of work obligations....quite sad about that...

[fish]

just putting down a few ideas I should have said fuller rahter than full-a few weeks ago the lakes were well below average levels now they are above yet power prices havnt fallen as much as expected by me.
The market price will reflect so many factors and maybe the positives are building .I could list so many but off to work-one important newish factor could be more investment money available and delay in mighty river.

[Jaa]

I doubt short term factors like the lakes filling up a bit move the CEN share price much.

The more important drivers in my opinion are:


Economic growth - more growth traditionally means more electricity demand.
Decoupling of electricity demand from economic growth. Traditionally electricity demand grows at a faster rate than economic growth but this has not been happening for the last few years. Blame energy efficient heating or the loss of energy hungry manufacturing overseas (the aluminium shelter is the biggest potential example, but the pulp and paper mills are also reducing capacity).
Ability of the new and upgraded cook strait cables upon completion to balance power prices between the North and South Islands. This is a big win for Contact but even more so for Meridian.
Ability of Contact's new gas storage and peaker plant to optimally manage Contact's gas contracts and maximise profits.


Note the upgraded cook strait cables are the key reason Meridian is not so fussed about the smelter shutting down. There will be capacity to shift some if not most of this power (the cheapest in NZ) north. This of course would be a big negative for Contact and the other generators.

[MANDRAKE]

4160

Ill just leave this here..
Check out the OBV trend breaking above the long term downtrend, retesting it, and then reversing. Interesting ay

[troyvdh]

..its always good seeing the SP go up.....but Im somewhat confused...(again)...what will happen should Tiwai close....wont the issue of 25 % more supply of electricity to the grid suppress prices...?...or is that to simplistic...cheers

[CJ]

I dont see Tiwai closing.

I think the increases has been in part due to the prospects of a higher dividend. In the past 6m, CEN and TPW are both up 20% though TPW much higher if going YTD.

[Jaa]

There was a great story the other day in the Herald about changes at the Norske Skog pulp and paper mill in Kawerau. They are shutting down one line which will half their electricity demand by 65MW and plan to have their own 22MW geothermal plant online by the end of the year. That's almost a year's worth of normal" electricity demand growth.

These changes will affect Might River more than Contact but are clear evidence of Contact's expectation of zero or low electricity demand growth over the next few years.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10841322

[Hoop]

One just have to think outside the square such as LED street lighting and Zero Energy homes/businesses (http://www.ieeeusa.org/about/default.asp) and it becomes clear that a country would need to have a huge increase in either population or industrial growth to justify a planned increase in power consumption in the future.

I looked outside and I see that Rotokauri Campus (Avalon Wintec) have erected a wind turbine.

[CJ]

One just have to think outside the square such as LED street lighting and Zero Energy homes/businesses (http://www.ieeeusa.org/about/default.asp) and it becomes clear that a country would need to have a huge increase in either population or industrial growth to justify a planned increase in power consumption in the future.

I looked outside and I see that Rotokauri Campus (Avalon Wintec) have erected a wind turbine.CEN has acknowledged that there will be no increase in demand going forward. Any efficiencies you mention will be offset by the population growth I would expect.

[gonzo56]

4160

Ill just leave this here..
Check out the OBV trend breaking above the long term downtrend, retesting it, and then reversing. Interesting ay

I was just going to comment on the turnaround! A bit late I see.

[macduffy]

How's this for a theory?

I read recently in the AFR that CEN's parent, Origin Energy, will be facing the prospect of raising additional funding to pay for the cost blowouts in their Gladstone LNG plant. Opinions vary as to the amount and urgency of the funds needed but one broker thinks they will need at least $1b in the next few months. All seem to agree that the alternatives are a $1b equity issue; more debt; or asset sale(s). To complicate matters, S and P have apparently signalled a credit rating downgrade if the debt option is taken.

Now Origin own 52% of CEN worth, say, NZD1.9b or thereabouts. As we know, they have made a couple of attempts to take full ownership but have been thwarted by "minority" holders who have demanded a higher price. I'm speculating that they might be tempted to sell out now and be done with this pesky NZ investment, a fairly minor part of their portfolio and one which hasn't performed particularly well for them. With the delays to the partial SOE sales, the next few months would seem to be a good time to do this if they are so inclined, particularly with all the cash that is said to be sloshing around the NZ market from the FPA takeover, GPG bond redemption, etc.

Just a thought.........

[percy]

Very interesting thought.

[CJ]

Just a thought.........


Very interesting thought.Sell to who though. It is too big for a retail offering like STU did. And a single buyer would risk having to make an offer to all other shareholders, making the cost very uncertain (though if they buy low enough, then they can guarantee the uptake would be close to zero).

Only buyer I can think of are the Greens/Labour and they wont have any money till 2014 at the earliest.

[macduffy]

I had in mind that it would be an institutional/retail offer - to appeal to all those investors who were lining up to have a piece of Mighty River, Meridian, Solid Energy etc, which now look to be down the track a bit. Certainly, it couldn't be like the STU placement where most investors weren't aware until after the event. Rather, it would take a fair bit of work, publicity etc and the brokers/managers to the issue would have to put in a bit of effort to earn their fee!

[CJ]

A full 're-listing' to take the glory out of the governments MOM. Probably the only way to offload $2B worth of shares but timing for that has to be bad given the MOM. If the govt loses in the courts, then this could be a good option for Origin.

[troyvdh]

gee CEN has been thrashed again.....excitement about higher divs have evaporated....who/whats to blame....global warming or this ridiculous notion that being energy efficent is a good thing...ba humbug....

[troyvdh]

..gee CEN has been thrashed again...excitement about higher divs have evaporated....blah blah....but I suppose ..as i said to mate about banks offering 5.9 % for 5 years for mortgages...I suppose there is very good reason for that..."things" are probably going to be quite flat for a while...at least for energy supply ...hopefully the div of 4.5 % (net) plus will excite some plus the promise of more and better to come...

...I agree with Mr Gaynor...folk will "have to"...look at shares that offer better rates than banks....

...Im actually heading to Alex tomorrow...I hear the lakes there are filling up..could be great viewing....and I believe that Pukaki and Tekapo have the "taps " wide open...great stuff....cheers troy

[fish]

..gee CEN has been thrashed again...excitement about higher divs have evaporated....blah blah....but I suppose ..as i said to mate about banks offering 5.9 % for 5 years for mortgages...I suppose there is very good reason for that..."things" are probably going to be quite flat for a while...at least for energy supply ...hopefully the div of 4.5 % (net) plus will excite some plus the promise of more and better to come...

...I agree with Mr Gaynor...folk will "have to"...look at shares that offer better rates than banks....

...Im actually heading to Alex tomorrow...I hear the lakes there are filling up..could be great viewing....and I believe that Pukaki and Tekapo have the "taps " wide open...great stuff....cheers troy

Troy are you still keeping an eye on the lakes?
Looks to me on the weather charts that the SI has had all the rain and the N.Island catchments are parched.
If so could be a very bad year for trustpower and a bumper year for CEN.
Long range forcasts are to stay much the same-in fact looks as if NI will be dry for rest of February so should be a windfall for cen.
Then we have Te Mihi coming on line and the investments made over the last 5 years returning an increased dividend.
I am wondering if april.s dividend will be increased ?

[troyvdh]

gee thanks for that....when in alex....the overspill from the Clyde dam was indeed impressive....CEN has indicated that cap ital spending has ceased and that divs are to be increased....not being a conspriacy bloke by any means...but i cannot help thinking that Origin are beavouring away at keeping the SP low.....blah blah...cheers

[fish]

gee thanks for that....when in alex....the overspill from the Clyde dam was indeed impressive....CEN has indicated that cap ital spending has ceased and that divs are to be increased....not being a conspriacy bloke by any means...but i cannot help thinking that Origin are beavouring away at keeping the SP low.....blah blah...cheers

I cant pretend to anticipate origin strategy but do not believe a takeover offer is likely soon-unless they see a mighty river power float as the last opp.to get a cheap price.
have just perused cen websit-1/2 year report out tues andit says next dividend is bring paid in march-not april as i thought .

[iceman]

CEN has just announced cost cutting with plans to cut around 10% of its workforce throughout the organisation. Blaming flat or lowering electricity demand ! Probably understandable that this is happening with previous announcements of no more generation investment and low demand.

[iceman]

They will make money out of this one, so will I, but my wifes job could be in jeopardy...

Agree Drongo. I am content with this decision, both as a shareholder and a customer

[fish]

Agree Drongo. I am content with this decision, both as a shareholder and a customer

This market is so perverse and ignores the fundamentals-perhaps the high nz dollar is encouraging overseas profit taking . With hydrolake inflows on the steepest downfall I have ever seen and lightwinds and no sign of rain wholesale power prices are rising and I suspect will be redhot by the end of the week . This will lead to bumper profits for cen who are ideally placed to take advantage with cheap gas storage and reservoirs in south island still plenty of potential reserve power to take advantage of very high prices to come .

I cant resist buying in this kind situation and got more for 506 cents-with a dividend due in april and rising dividends more likely than not i was perplexed as to why the sp fell this afternoon. On my buy note I see there were a number of small trades at the same amount .

Wonder if there are a few UK sellers who are taking a profit on the exchange rate ?

[winner69]

that result will put a rocket under the shareprice ... 550 by end of week and maybe 600 by easter

and then evrybody will get excited about mighty river et al

[troyvdh]

...I would love to know what the rational for selling yesterday was....

[Arbitrage]

A great result considering the flat electricity market.

[Arbitrage]

With such a good looking result, is it time for the company's major shareholder to let go? That would be an interesting scenario...

[Arbitrage]

Looks like more buyers are appreciating the good results.

[troyvdh]

Drongo...I would like to believe that you are right....if one looks at the chart (5 years)....we have been here before....My basic reason for hanging is partly emotional (dum I know)...2...no one is going to build another dam soon...and the divs are meant to be going up.

Do you remember the great Waitaki dam(s) debate...i.e. divert the river blah blah....Some folk at the time said that the extra energy provided by this series of dams (6?) would only suffice for a period of 3 years of current NZ demand...i.e.insinuating huge geographical consequences for a relatively short period of temporay gain....

HOW WRONG these bofins appear to have been.....who would have thought that NZ INC would have an over supply of energy !!!!!!!!

Me thinks that (the GFC acknowledged) all those energy efficient white appliances,bulbs et al have made an influence....but huh you might say what about Heatpumps...

I often wonder if a "strengthening economy" will indeed increased returns for companies as CEN...BUt I also understand that if a "company" wishes to be more efficient ...they actually will save money.....

What am I saying...not sure really ...again....cheers

[macduffy]

CEN's big shareholder, Origin, has posted a profit warning and reported a $2b cost blowout on its Queensland LNG project.

Increases the chances of a sell-off of their CEN stake?

:cool:

[CJ]

Increases the chances of a sell-off of their CEN stake?Bad time to sell $2B worth of stock given the SOE IPO's etc.

Can do a trade sale as that would trigger a take over offer for the rest.

If they did manage to get it away, it would add to the free float so presumably would increase its weighting in the NZX50.

[fish]

CEN's big shareholder, Origin, has posted a profit warning and reported a $2b cost blowout on its Queensland LNG project.

Increases the chances of a sell-off of their CEN stake?

:cool:

I agree with cj that it would be a bad time for origin to sell.
I havnt seen any analysis of the likely effect of this drought on cen 2nd half profits . There is no significant rain likely for the rest of this month and the beginning of march .We are in a weather pattern of successive anticyclones that has got sometime to run yet .
Lake inflows are already exceptionally low .Power demand is at least as high as same period last year .Hydropower-the mainstay of power production will fall rapidly particularly in north island-and i suspect windpower is not producing much also .
CEN with its southern lakes,geothermal and gas turbine and gas storage should do exceptionally well-possible profits for 2nd half could be a multiple of last year !

Origin is unlikely to sell its golden goose unless an offer is made which it cant refuse-which is unlikely in current climate

[gv1]

what's happening here!!!

[fish]

what's happening here!!!

Please explain

In the meantime i see great profits being made for cen which is ideally positioned to take advantage of current climate conditions-a drought in the taupo catchment means big profits for contact.We are unlikely to get significant rain for sometime
Origin will want a big dividend in september-i suspect we will see 18 cents plus imputation credits in september and rising thereafter-a big jump from the 11cents plus imps in march .
Got a nice letter from contact today stating that to maintain a quality service my power prices are rising . A little rise each year is the way to go-in the meantime generation costs should decrease with te mihi geothermal generating cheaper power soon

[gv1]

Thanks fish. Increase in S/P later today.

[iceman]

Please explain

In the meantime i see great profits being made for cen which is ideally positioned to take advantage of current climate conditions-a drought in the taupo catchment means big profits for contact.We are unlikely to get significant rain for sometime
Origin will want a big dividend in september-i suspect we will see 18 cents plus imputation credits in september and rising thereafter-a big jump from the 11cents plus imps in march .
Got a nice letter from contact today stating that to maintain a quality service my power prices are rising . A little rise each year is the way to go-in the meantime generation costs should decrease with te mihi geothermal generating cheaper power soon

I think you might be right about the possibility of increased dividend fish. I got the same letter this morning and was surprised to see an increase of 10.1%. That combined with job losses, dry weather, no further capacity investment and geothermal coming on line, CEN is certainly a good share to hold. I just hope this doesn't bring on a consumer backlash like we have experienced before. As a consumer, I will be comparing the new charges to other suppliers in my area !

[POSSUM THE CAT]

Desperate for customers had the Contact Door Knockers again last night average at least once a month. Would a price cut be a better answer to their obvious lack of customers?

[iceman]

Desperate for customers had the Contact Door Knockers again last night average at least once a month. Would a price cut be a better answer to their obvious lack of customers?

I think they all do that PTC. Trustpower regularly calls me to try and get me to change. As a customer I am very disappointed with this increase and as a shareholder I question whether it is necessary and whether the timing of it is risking backlash.

[macduffy]

I think you might be right about the possibility of increased dividend fish. I got the same letter this morning and was surprised to see an increase of 10.1%. That combined with job losses, dry weather, no further capacity investment and geothermal coming on line, CEN is certainly a good share to hold. I just hope this doesn't bring on a consumer backlash like we have experienced before. As a consumer, I will be comparing the new charges to other suppliers in my area !

I must be the lucky one!

My letter from Contact this morning announced an increase of only 1.44% - and attributed that to an increase in price charged by the local lines company. But I do seem to remember another increase in the recent past. For another valid reason, no doubt!

The persistent door-knocker in my case seems to be Meridian. Because we have gas water and space heating, Contact offer the best combined deal - others have offered to provide cheaper electricity but the gas price/provision has them beaten, particularly when CEN's online billing/direct debit payment "discount" is taken into account.

Meanwhile, I kid myself that I have some sort of hedge in holding CEN shares.

[CJ]

I must be the lucky one!

My letter from Contact this morning announced an increase of only 1.44% - and attributed that to an increase in price charged by the local lines company. But I do seem to remember another increase in the recent past. For another valid reason, no doubt!

The persistent door-knocker in my case seems to be Meridian. Because we have gas water and space heating, Contact offer the best combined deal - others have offered to provide cheaper electricity but the gas price/provision has them beaten, particularly when CEN's online billing/direct debit payment "discount" is taken into account.

Meanwhile, I kid myself that I have some sort of hedge in holding CEN shares.The recent increase you remember is the removal of the dual fuel discount. They did offer another discount in its place but if you already got the online/direct payment discount, you got no benefit.

Given everyone's (john campbells at least) moaning about the price of electricity, it is very competitive and it differs by area as well.

[POSSUM THE CAT]

ICEMAN If they stopped wasting money doing this they could bring the price down & so possibly be competitive. As the power price comparison web site I use usually makes them the dearest unless you buy gas off them. Mercury has announced a price cut as from 1st of April

[POSSUM THE CAT]

MAC DUFFY others are passing on a decrease in lines charges where I live

[iceman]

ICEMAN If they stopped wasting money doing this they could bring the price down & so possibly be competitive. As the power price comparison web site I use usually makes them the dearest unless you buy gas off them. Mercury has announced a price cut as from 1st of April

I've just checked on the Powerswitch website and with the 23% online and prompt payment discount from Contact, it is still the cheapest plan I can get here in Nelson, despite this steep increase

[POSSUM THE CAT]

Iceman unfortunately I do not reside in Nelson & I assume they do not go door knocking every month there.

[fish]

Iceman unfortunately I do not reside in Nelson & I assume they do not go door knocking every month there.

I suspect you would find cen the cheapest around if you count the prompt payment discount .They have a great web site and helpful customer relations .

[iceman]

down 25c at close

Finished the day where is started didn't it ?