Who's in for the Mighty River Power float?

[Major von Tempsky]

And what's your breakeven point in terms of buying not buying with regard to the prospective gross dividend yield?

[karen1]

Fancy that!

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10815503

[Balance]

This is great : http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10815716

Will turn the masses against the IPO hopefully which means more shares for those who apply.

So typical of NZ media!

[CJ]

And what's your breakeven point in terms of buying not buying with regard to the prospective gross dividend yield? I hold shares in Contact (not very happy with this at the moment), Trustpower and Infratil (who own a lot of Trustpower).

The decision will be therefore do I want to hold all three (or 5 once they are all listed) or do I choose the best out of them. Therefore, the benchmark has to be the yeild/growth of Contact and Trustpower.

If it is more expensive than Contact, there is no way I will take part. If it is more attracgive than Contact, then I have a decision to make.

[bung5]

hopefully the government will make it cheaper so its a success for the others to follow and/or bonus shares for kiwis .

6% yield would be nice :)

[Arbitrage]

I agree Bung5. The Government will want this to be a success or the whole SOE sale process will turn to custard. I imagine the initial pricing will be attractive and we will see an article by the IRD saying they will be watching for stags not declaring the gain on their tax returns. This will suggest a BUY.

[CJ]

hopefully the government will make it cheaper so its a success for the others to follow and/or bonus shares for kiwis . It is a fine balance as National wont want to be seen as giving away to much value to Rich M&D investors. They are still getting hassled over their tax cuts to the rich.

[Balance]

It is a fine balance as National wont want to be seen as giving away to much value to Rich M&D investors. They are still getting hassled over their tax cuts to the rich.

Hasn't stopped Key looking after his mates?

[percy]

hopefully the government will make it cheaper so its a success for the others to follow and/or bonus shares for kiwis .

6% yield would be nice :)

Subject to reading the prospectus I am very keen to take a large position in this float.Would appear their generation is close to their customers.I hold CEN,and may end up holding both.6% yield I agree would be nice, infact don't think I would accept less.Govt must get this first one away,and I am ready to help them out.!!!!

[slimwin]

Me too. With bells on.

[Billy Boy]

Shonky-jonkey will have to give a reasonable divvy if he wants Mums & Dads to get in,
Else there are better pickings out there.
Div must be = or > 6% for a long hold. I think there's to be a bit sh-t to go down in the first
year - eighteen months or so. Directors etc will not accept such low Fees when compared to
CEN, TWP, etc.

I will be in if the prospectus and price are in order.
BB

[macduffy]

Yes, let's see some numbers first. Pricing will probably aim to be a "nice" balance between indicative demand, best return to the govt - and a bit over to encourage a strong aftermarket. But, we'll see in due course!

:cool:

[ratkin]

Many people i talk to will not buy any on principle (against the selloffs) Should be more for us more level headed types.

[percy]

Many people i talk to will not buy any on principle (against the selloffs) Should be more for us more level headed types.

ratkin.I miss your charts.

[bung5]

I agree Bung5. The Government will want this to be a success or the whole SOE sale process will turn to custard. I imagine the initial pricing will be attractive and we will see an article by the IRD saying they will be watching for stags not declaring the gain on their tax returns. This will suggest a BUY.

I wasn't aware I had to pay tax on my capital gains?

[Lizard]

I wasn't aware I had to pay tax on my capital gains?

Well if you actually live in Buenos Aires, it has to depend on whether you're tax resident in NZ for starters... but for NZ tax residents, they pay tax on gains if they bought shares with the intention to sell for profit. "Intention" is crucial. Stagging is seen as clearly displaying that intent, so capital gains in these circumstances are taxable.

[winner69]

Will they persevere with the notion of a bonus shares if you hold for a year or two?

[Marilyn Munroe]

I will be paying close attention to what they say about the profitability of their recent enthusiasm for geothermal.

Their hydro-electric stations on the Waikato should be cash cows provided they are valued sensibly.

Boop boop de do

Marilyn

[fungus pudding]

Subject to reading the prospectus I am very keen to take a large position in this float.Would appear their generation is close to their customers.I hold CEN,and may end up holding both.6% yield I agree would be nice, infact don't think I would accept less.Govt must get this first one away,and I am ready to help them out.!!!!


Would 6% be e3nough for a share in a great heap of concrete and some fast depreciating plant?

[bung5]

Would 6% be e3nough for a share in a great heap of concrete and some fast depreciating plant?

6% with imputation credits, yes for sure

[CJ]

I remain suspicious of power companies and SOE floats, mainly because I worry about the sticky beaking from the Commerce Commission. Comcom shouldn't be too interested considering there are multiply companies and they are not a monopoly. LInes business a different.


Well if you actually live in Buenos Aires, it has to depend on whether you're tax resident in NZ for starters... but for NZ tax residents, they pay tax on gains if they bought shares with the intention to sell for profit. "Intention" is crucial. Stagging is seen as clearly displaying that intent, so capital gains in these circumstances are taxable.If you buy for long term gain of say 6% a year (ie. dividend yeild) and it happens to go up 10% on the first day, why not lock in the gain.

[Lizard]

What do we think sustainable earnings look like? At a quick glance, ROE looks pretty low, but presumably they'd want to get it away for at least NTA?

(Though from my point of view, issuing 250m shares at $3.50 for a total of 520m on issue would make it interesting)

[Lizard]

If you buy for long term gain of say 6% a year (ie. dividend yeild) and it happens to go up 10% on the first day, why not lock in the gain.

In my own view, there are circumstances which justify a opportunistic sell on day one that would not necessarily suggest intent. However, IRD can only make a call based on observed behaviour. Though not sure IRD would particularly want to pursue investors on this one right now, as they could discover that many investors then decided to also claim capital losses on other share purchases - which could have been more prevalent in recent years.

[Under Surveillance]

In my own view, there are circumstances which justify a opportunistic sell on day one that would not necessarily suggest intent. However, IRD can only make a call based on observed behaviour. Though not sure IRD would particularly want to pursue investors on this one right now, as they could discover that many investors then decided to also claim capital losses on other share purchases - which could have been more prevalent in recent years.
Surely IRD's call on behaviour associated with the MRP IPO would need to take account of the taxpayer's general shareholding behaviour as well as behaviour specific to MRP? And, as IRD touts its job as to be fair, IRD could hardly make a snap judgement, but would need to seek from the taxpayer an explanation/evidence of the intent at the time of purchase, and the basis of the change in intention leading to sale at/soon after the commencement of trading?
Anyone with a modicum of wit need have no fear. Those with imagination could have fun in the unlikely event that IRD asked questions. How about "I was finding I couldn't sleep for guilt at having taken up shares in this grubby political pursuit of vacuous idealogical dogma; I just had to get shot of them so I could return to feeling a decent New Zealander".

[troyvdh]

dear Under....me thinks that you should post more often.

[fungus pudding]

Surely IRD's call on behaviour associated with the MRP IPO would need to take account of the taxpayer's general shareholding behaviour as well as behaviour specific to MRP? And, as IRD touts its job as to be fair, IRD could hardly make a snap judgement,


Didn't the IRD get stopped from using that slogan? Their job is to act as directed by the govt. of the day. There is no discreton for them to act fairly. They have to follow the rules, whether they are fair or not, and as I recall the claim 'It's our job to be fair' was therefore ruled as false advertising.

[Xerof]

I just had to get shot of them so I could return to feeling a decent New Zealander".

Could you tell us which decent New Zealander you wish to feel, so we can at least give them a heads-up to look out for you post-IPO

:D:D

[minimoke]

I've been out of the market for a variety of reasons but these IPO's are what I've been waiting for since I am into any IPO if it looks half decent. Unfortunately there haven't been too many of those lately. KMD, MAD, PLU and the others all dogs. ECO being a bit of an exception but I just couldn't get into a candle maker!

However, a government dead set on flogging the silver is money for jam. Its a dead cert especially when you hear Ministers talking about mom and pop investors. This means only one thing - votes!. How do you get votes - you make an unsavoury proposition irresistible. How do you do that - you price low to give the moms and pops an entry level position which will see at least a 10% gain on listing. I'll draw my line in the sand now and say a 10 - 15 % gain in the first week of listing. It won't be much higher because govt will get accused of selling cheap. This level also enables them to take the high moral ground with the bleaters - "You had the opportunity to buy but didn't so look at how much you have missed out on”. So you have a major political driver on SOE sales.

This is the first cab off the rank - it has to succeed. That is non negotiable and merits no further discussion. Therefore. politically it will succeed.

National needs policy runs on the board. Notice how they have gone quiet on the privatisation of ACC. That’s because the insurance market don't want a bar of it. So how else can National appeal to its electorate - proceed with asset sales. That = success.

Keeping an eye on Kiwsaver? There’s something like $11b sloshing around in there now. That loot has to go somewhere. There will be political pressure applied (palms greased) to ensure Kiwisaver invests kiwis money back in kiwi assets. That's demand over supply which equals a stag success.

The special people seem likely to get a bit of a cut. That will soak up a bit of supply and demand pressure will show.

It doesn’t matter what the price is - it will be cheap.

So certain am I, I have the whole whanau set to buy. They all got registered with IRD to take advantage of the "free" kiwisaver cash. I'll now be leveraging this resource for SOE buys. A bit of paper work transfers the shares to my name with no brokerage fees and I'm onto a winner. If I can get my money out of EQC and time a repair after the float I’ll be tossing as much as I can, through as many parties as possible, into this one.

IRD will also be advertising that they will have their eyes on the stags. More hot air to blow up their own asses. Look good but totally ineffectual.

This one is a no brainer but the one I’m really after is Solid Energy.

That said I’m not so ken on Genisis with its clapped out coal station and taniwha lurking nearby. Some care with these IPO’s will be needed.

[CJ]

Minimoke - 10% in the first week sounds a bit much (I hope it is though) as there is talk there will be 6% bonus shares if you hold for 2 years.

I also think if 'special people' as you call them get a big allocation, then the Govt should have first right to purchase at VWAP. Same with the Cullen fund if it gets a big allocation. Dont think you can do the same for kiwisaver funds though but they wont be getting as big a block. This should apease Labour etc to some extent about shares being sold overseas.

[Joshuatree]

Hope theres not a drought in the central plateau following listing, divis not necessarily a sure thing.

[CJ]

I heard Brian Gaynor over the weekend on "the nation". He is only expect about 8%-20% return over the next two years (I think thats what he said). Definately said 8% and return (meaning dividend and growth).

WOuld you be happy with 8% over 2 years? I want at least that per year.

[Major von Tempsky]

With the Commerce Commission lurking ready to pounce, dividends are very certainly NOT a sure thing or any reasonable rate of return. Youshould at least wait until the Auckland power company's latest appeal against the Com Com trying to get a reasonable rate of return is decided.

[janner]

Would it not be better to wait until we know what is on offer and terms ??

[CJ]

With the Commerce Commission lurking ready to pounce, dividends are very certainly NOT a sure thing or any reasonable rate of return. Youshould at least wait until the Auckland power company's latest appeal against the Com Com trying to get a reasonable rate of return is decided.With at least 5 big players in the industry (for Generation) and lots of plays in retail (Over 19), why does the Com Com get involved unless there is price fixing.

Power Generation is different to lines companies (like Vector in Auckland to which you refer) as lines companies are monopolies (unless you are dumb enough to want to run a second set of lines beside the current ones).

Can you please explain. Are Com Com currently involved?

[CJ]

Would it not be better to wait until we know what is on offer and terms ??Where is the fun in that.

That's why I refered to expected return rather than would you be interested at 2.53 per share.

[Major von Tempsky]

Good luck in getting the Commerce Commission to explain why it is irrational, unreasonable and insane.

Why does the ComCom prey upon newly privatised Government trading bodies?

Why does the well fed cat prey upon mice?

Hunting instinct, for the sheer hell of it. Because it's staffed by left leaning socialists who couldn't get an easy job elsewhere.

[macduffy]

A great shoal of red herrings there, Major, but I reckon CJ has a point. The Commerce Commission is concerned to investigate restrictive trading/lack of competition situations. Unless pricing collusion is suspected it's hard to see how the govt selling off a minority shareholding in MRP is going to trigger an investigation.

[CJ]

A great shoal of red herrings there, Major, but I reckon CJ has a point. The Commerce Commission is concerned to investigate restrictive trading/lack of competition situations. Unless pricing collusion is suspected it's hard to see how the govt selling off a minority shareholding in MRP is going to trigger an investigation.I have never heard of Contact or Trustpower being chased by the Com Com despite Labours attacks that the privatized ones are ripping of consumers.

Discl: unhappy Contact shareholder but happy Contact customer (changed to them recently as they are cheaper), hold TPW as well.

[macduffy]

Discl: unhappy Contact shareholder but happy Contact customer (changed to them recently as they are cheaper), hold TPW as well.

Same here, CJ, but without the TPW holding unfortunately - although indirectly through Infratil.

I've priced the opposition frequently but CEN are cheaper once the 22% discount for electronic billing plus direct debit payment is taken into the calculation. We have gas heating/water heating as well as electricity and none of the others seem to match the total package. I guess CEN's bad experience with lost customers has caused them to keep their pencil pretty sharp! Will be interesting to see if Mercury (MRP) come out with anything innovative when MRP floats.

[CJ]

I've priced the opposition frequently but CEN are cheaper once the 22% discount for electronic billing plus direct debit payment is taken into the calculation. We have gas heating/water heating as well as electricity and none of the others seem to match the total package. I guess CEN's bad experience with lost customers has caused them to keep their pencil pretty sharp! Will be interesting to see if Mercury (MRP) come out with anything innovative when MRP floats.I am on the same duel fuel with 22% discount. Great ay to get the customers they want (ie. pay on time) and get rid of the ones they dont.

Re MRP - do you mean to attract customers? Bit late to do it after IPO. Or do mean some form of shareholder loyalty discount - Registered shareholders get a 5% discount?

[macduffy]

I'm no expert here CJ but I was thinking of the general marketing thing. Something to keep up the momentum from the publicity around listing. And, of course, to generate good news to support the SP. I'm sure the majority shareholder would want to see that!

:cool:

[toast2success]

Anyone know what the minimum buy-in is set at ?

[slimwin]

From stuff.co.nz today.

The price is likely to be set at a level that will deliver a dividend similar to other comparable listed shares of about 4 per cent. Prime Minister John Key has pointed to the estimated $110b in bank term deposits that could be a source of investments in the shares, with the Government keen to ensure as many small Kiwi investors as possible buy into the company.
He has also signalled plans for a minimum application amount of about $1000 with small shareholders guaranteed to receive up to a set value of shares, likely to be between $2000 and $3000.
Ministers are also considering incentives to encourage investors to buy, which could include bonus shares for those who hold shares long term, a cap on the price retail investors would pay, a discount on the float price or extra shares for those who pre-register their interest.
Treasury has made no recommendation on the options.
The final price will be announced a few weeks before the listing, after a "book-building" process that will assess demand from big institutional investors.

[CJ]

Anyone know what the minimum buy-in is set at ?While they would like to make it as small as possible, my guess is they would have to go with the industry norm of $1000. $500 is just too low.


From stuff.co.nz today.

The price is likely to be set at a level that will deliver a dividend similar to other comparable listed shares of about 4 per cent. Prime Minister John Key has pointed to the estimated $110b in bank term deposits that could be a source of investments in the shares, with the Government keen to ensure as many small Kiwi investors as possible buy into the company.
He has also signalled plans for a minimum application amount of about $1000 with small shareholders guaranteed to receive up to a set value of shares, likely to be between $2000 and $3000. IF they expect scaling and offer retail investors only around $3-$4k worth, I think every man, woman, kid and dog (in rich households at least) will be applying, just to get a meaningful holding.

I was only young at the time but I seem to recall when capital properties was listed, everyone only got the minimum of $1,000. Or did my parents advisor just apply for $1,000 in the name of each family member to avoid the risk of scaling.

[Major von Tempsky]

Hooray! and up she rises, earlie in the morning!

Radio news lunchtime today. Old fashioned socialist Ross Patterson gone from ComCom, replaced by a man with riding instructions to advance UFB!
Just as predicted. Red herrings? So action by Ross Patterson to slow down UFB and protect copper is a red herring? He's (was) an industrial saboteur, a modern day Luddite!
Dividend comparable to other listed shares of 4%?

Ha! ha! ha! I wouldn't touch it with a bargepole at 4% - you can getter better returns at your boring old bank or in buying a property!

[toast2success]

What influence do you think the current discussions the Govt are having re water ownership rights etc will have on the sale and/or sale price ? I firmly believe the sale will go ahead and ultimately it won't influence the price,.....the hooplah will soon blow by and the Govt will be a better prepared and detailed in the way they execute the sale of the next SOE.

[CJ]

What influence do you think the current discussions the Govt are having re water ownership rights etc will have on the sale and/or sale price ? I firmly believe the sale will go ahead and ultimately it won't influence the price,.....the hooplah will soon blow by and the Govt will be a better prepared and detailed in the way they execute the sale of the next SOE.I dont really understand the claim Maori are making. Did the Pakeha not fully explain to the Maori how Hydro dams worked back in 1840?

Having said that, anyone who said you cant own water has obviously never bought a bottle of Pump/H2Go - Coke figured out a way to own and therefore sell.

I dont think it will hold up the IPO - if anything, Government may retain an extra 10% or so for future settlements or give an allocation to Iwi as part of the sale.

[BIRMANBOY]

I will wait for the bond which may come out following year and will have to be 6% or so.

[fungus pudding]

I dont really understand the claim Maori are making. Did the Pakeha not fully explain to the Maori how Hydro dams worked back in 1840?



All a bit reminiscent of Muldoon, who once claimed that while on a tour of a hydro-eletric scheme, a little old lady asked 'what do they do with the water once they've taken the electricity out of it?' :t_up:

[Major von Tempsky]

So, when's the Iwi claim to the air we breathe going to be lodged with the Waitangi Tribunal?

Can't understand why they are taking so long to do that.

[yabster]

Its just IWI greed nothing to do with care for the land etc.

If the Maori own water then if my house floods can I sue them? The human body is made up of 60 to 65% of water hmmmmmmmm

The Treaty is a joke - scrap it.

[digger]

Actually I think the IWI should stop mucking about with Foreshore,water,and the sky and claim life itself. After all this great maori was alive so the claim on life should be valid.

[karen1]

What's next?

http://www.stuff.co.nz/business/industries/7263925/Dual-listing-may-hit-Kiwi-investors

[CJ]

What's next? http://www.stuff.co.nz/business/industries/7263925/Dual-listing-may-hit-Kiwi-investorsProbably sensible for the 'private' goal of maximising price but the wrong thing to do given the 'public' goal of NZ ownership.

[ratkin]

Probably sensible for the 'private' goal of maximising price but the wrong thing to do given the 'public' goal of NZ ownership.
More ammuntion for those against the sales

[Billy Boy]

Its just IWI greed nothing to do with care for the land etc.

If the Maori own water then if my house floods can I sue them? The human body is made up of 60 to 65% of water hmmmmmmmm

The Treaty is a joke - scrap it.

If Maori want to own water, then they must also take responsiblity for the damage it causes.
EG floods etc
BB

[sideline]

If Maori want to own water, then they must also take responsiblity for the damage it causes.
EG floods etc
BB

Yes, just think of all those leaky buildings - that will let the councils and the government off the hook.

[percy]

I am not happy about NZ mums and dads missing out because of Australian institutions.

[CJ]

Water Rights - Could possibly go on its own thread but since directly related to the SOE sales, thought I would discuss it here.

I haven't really been following as I have the same veiw as Key - it is opportunistic by the Maori iwi. Has anyone followed this in detail as I have a few questions:

- Is it proposed the power companies would be charged for using the water?
- does this mean it will effect Contact, Trustpower as well (I note that Geothermal is probably next, then wind??)
- Dont the hydro dams give back the exact same amount of water as they take in?
- dont coal/gas plants actually waste water - ie water cooling turning to steam (though I dont remember seeing any big cooling towers like you see with nuclear plants).
- Isn't this more an issue for farms as the water they use goes into producing the milk/meat/crop (and forestry) which is then removed from the system and sold.
- How does this effect other big industries like the aluminum and steel plants? do they use water?
- If I harvest rain water from my roof/land, can I feed this into the system and charge
- Isn't the ETS a complicated enough mess without introducing a WTS?

[fungus pudding]

I am not happy about NZ mums and dads missing out because of Australian institutions.

NZ Mums and dads can get even any time they like - just buy shares in an Australian company.

[percy]

NZ Mums and dads can get even any time they like - just buy shares in an Australian company.

Yes offcourse you are right,but I can't help but feeling it is wrong.CEN Aussie controlled,major banks Aussie controlled.
They are NZ assets at present owned by NZ,if they are to be sold down,sell to NZders.

[fungus pudding]

Yes offcourse you are right,but I can't help but feeling it is wrong.CEN Aussie controlled,major banks Aussie controlled.
They are NZ assets at present owned by NZ,if they are to be sold down,sell to NZders.

I'd say sell to the wider market, otherwise we really are losing. Heaps of NZers own shares in General motors, apple, Facebook no doubt, and comanies throughout the world, either directly or through one of a zillion funds. Nobody seems to see this as a problem. There really is nothing special about a bunch of old plant in an old concrete structure.

[Billy Boy]

NZer's financial literacy is a joke as these asset sales are proving!

And there in lies the the real problem.
BB

[fungus pudding]

Then Kiwi's need to wise up and stop selling off the family silver, or if it does get sold, they need to put their money wihere their mouthes are become perpetual holders!




Heaps? Actually not in percentage terms. Very few NZers invest in shares in NZ or Aus or anywhere else. Kiwi's just don't get shares as an investment class; perferring instead property and bank accounts (and finance companies!)

NZer's financial literacy is a joke as these asset sales are proving!

I dispute that. Have a look at Kiwisaver and a zillion other well supported funds, although direct investing might be low.

[fungus pudding]

Fine, dispute it FP. I'd suggest that before you get too carried away you compare NZ's total holdings of shares on a per capitia basis against other countries with (now) enormous soveriegn funds - Start with Australia, Singapore and Norway.

Looking forward to your discoveries. :)

Oy! You've changed the rules. We weren't talking about any comparative basis. I merely said, or implied, quite correctly, that lots of NZers have overseas shares. :cool:

[craic]

This mornings talkback seems to be running at about 8 to 2 in favour of this listing. A lot of people keen to buy in at the one or two G level and that completely stuffs up Buffet's priccipal (and mine) that you never buy into an IPO. The price may be inflated as is usually the case with an IPO but the dynamics of hordes of ordinary folk, many of whom know nothing of the market, grabbing their pound of flesh ahead of institutional buyers, could be very interesting. At this stage, I have couple of g's sitting in my account that I intend to invest in this lot - talk me out of it!

[Major von Tempsky]

4% yield John Key sez....you can do better at your bank....why not wait until the initial enthusiasm bubble has popped like EnergyMad and Facebook and pick some up cheap so you can look at the pretty pictures in the Annual Report....

[CJ]

4% yield John Key sez....you can do better at your bank...CEN is 4.74% and TPW 5.47% per Google finance. Not sure if these (or JKs 4%) are grossed up for IC's. Grossed up, 4% would be 5.55% which would be OK if you assume the shareprice grows at a rate slightly higher than inflation per year (power prices seem to so safe assumption?).

[fungus pudding]

This mornings talkback seems to be running at about 8 to 2 in favour of this listing. A lot of people keen to buy in at the one or two G level and that completely stuffs up Buffet's priccipal (and mine) that you never buy into an IPO. The price may be inflated as is usually the case with an IPO but the dynamics of hordes of ordinary folk, many of whom know nothing of the market, grabbing their pound of flesh ahead of institutional buyers, could be very interesting. At this stage, I have couple of g's sitting in my account that I intend to invest in this lot - talk me out of it!
]
Nah .... you're a big boy! :t_up: Just remember to read the prospectus, unlike those talkback callers I heard this morning; very few of whom I suspect have ever heard the word 'prospectus' in their lives.

[CJ]

unlike those talkback callers I heard this morning; very few of whom I suspect have ever heard the word 'prospectus' in their lives.YOu must be wrong - surely they read the prospectus's of the finance companies they invested in.

[fungus pudding]

YOu must be wrong - surely they read the prospectus's of the finance companies they invested in.


I very much doubt it!

[troyvdh]

...honestly I cannot believe the amount of bull about all this...I am a nurse and work with a lot of so called educated white (mostly) middle class people.The outfit I work for is the CDHB...9500 employees...biggest employer in the SI.
It will surprise some but a lot/most of my colleagues will not be able be afford to buy any/many....but more importantly would not want to.....the word "investing" reduces most folk to cynical laughing....the mention of "shares"....is even worse....this whole topic/issue ...given the appalling goverance by successive powers at be...over the years ....is of no surprise to me....with so many high profile examples of folk being slaughtered who in there right mind would listen/invest in anything other that the house next door.
What I imagine will happen....various financial commentators will announce that purchasing these shares are probably an advantageous addition for those seeking a diversified portfolio ..........bollocks ...given most peoples experience with shares.....they will buy...then flick...after a 40------80 cent increase.....

....now Im not saying that this is acceptable/the right thing to do....oh no...but given our history.....

....whats more ...it will be even worse for most folk if they are told that the div ..they are recieving is better that what they could get at bank......like folk are going to believe that.....

PS...I acknowledge the above sounds quite negative ...but heh ..am I wrong....

[percy]

...honestly I cannot believe the amount of bull about all this...I am a nurse and work with a lot of so called educated white (mostly) middle class people.The outfit I work for is the CDHB...9500 employees...biggest employer in the SI.
It will surprise some but a lot/most of my colleagues will not be able be afford to buy any/many....but more importantly would not want to.....the word "investing" reduces most folk to cynical laughing....the mention of "shares"....is even worse....this whole topic/issue ...given the appalling goverance by successive powers at be...over the years ....is of no surprise to me....with so many high profile examples of folk being slaughtered who in there right mind would listen/invest in anything other that the house next door.
What I imagine will happen....various financial commentators will announce that purchasing these shares are probably an advantageous addition for those seeking a diversified portfolio ..........bollocks ...given most peoples experience with shares.....they will buy...then flick...after a 40------80 cent increase.....

....now Im not saying that this is acceptable/the right thing to do....oh no...but given our history.....

....whats more ...it will be even worse for most folk if they are told that the div ..they are recieving is better that what they could get at bank......like folk are going to believe that.....

PS...I acknowledge the above sounds quite negative ...but heh ..am I wrong....

Unfortunately your post is too correct.

[fungus pudding]

...honestly I cannot believe the amount of bull about all this...I am a nurse and work with a lot of so called educated white (mostly) middle class people.The outfit I work for is the CDHB...9500 employees...biggest employer in the SI.
It will surprise some but a lot/most of my colleagues will not be able be afford to buy any/many....but more importantly would not want to.....the word "investing" reduces most folk to cynical laughing....the mention of "shares"....is even worse....this whole topic/issue ...given the appalling goverance by successive powers at be...over the years ....is of no surprise to me....with so many high profile examples of folk being slaughtered who in there right mind would listen/invest in anything other that the house next door.
What I imagine will happen....various financial commentators will announce that purchasing these shares are probably an advantageous addition for those seeking a diversified portfolio ..........bollocks ...given most peoples experience with shares.....they will buy...then flick...after a 40------80 cent increase.....

....now Im not saying that this is acceptable/the right thing to do....oh no...but given our history.....

....whats more ...it will be even worse for most folk if they are told that the div ..they are recieving is better that what they could get at bank......like folk are going to believe that.....

PS...I acknowledge the above sounds quite negative ...but heh ..am I wrong....


But this might be the very thing to start the odd-bod learning about investing, which to far too many NZers means holding $100 worth of Bonus Bonds.

[Te Whetu]

I very much doubt it!

I disagree, I think many of them have read the prospectuses. Problem is I suspect it was a little too late once they did start reading the Prospectus (i.e. after the loss became apparent). :(

Also you can't avoid the fact that some prospectuses lied, and others deceived (hence jail sentences). So don't be too quick to judge the finance company investors. Still it's sad that many of them invested so much with finance companies.

Also, troyvdh... yes... you... are... wrong...

Extensive overseas experience tells us people will keep the shares till they get their allocation of bonus shares. After that, largely due to status quo bias, many won't sell the shares, and will just collect dividends (which will likely be more than what they receive from the bank). Remember this is three years away, so investors won't have to make a "belief" based decision like you imply, rather they will be able consider their decision based on what dividends they historically received.

You state that people will flick them on for a 40 to 80 cent gain. Without knowing knowing what the share price is going to be it's hard to quantify if that is a large gain, however let's assume it is (it probably will be). This implies institutional investors (e.g. Kiwisaver providers and NZ Superannuation Fund) massively undervalue the company and don't show enough interest. While it could happen, my opinion is this won't – a more likely scenario is that there is small capital gains over the three years plus dividends plus a bonus share at the end.

It's sad that so many of your colleagues are so anti-investing. You're probably right here, and that's a huge problem. We really need better financial education in this country, my ideal would be that some basics on budgeting is taught as part of maths in primary school (say 8 to 10 year olds) and basic investing is taught to intermediate aged children. May not help the adult population, but you need to start somewhere.

In the end, I'm lucky, I'm financially literate. I may not be correct 100% of the time, but no one is (even the house next door can go down in value). I've been investing for around 10 years now (since I left school). I started with $300 to $400 investments (in three companies, approximately $1,100 total, commissions were killer), started small and learned as I went.

[percy]

TeWhetu.
a/ Lady next door invested in shares.Met halfwit who worked at Lyttleton Port.Nice guy,no brains. When LPC gave all staff shares, he sold his and made lady sell all her shares,as "he knew"shares were risking.Only investment was property.Lost everything on property investment at Adianfield.
b/ Friend dies who owned property and shares.Wife was advised by another "friend" to sell shares and property and put the money in the bank so it would be "safe."
c/ A friend only buys "Tats" raffle tickets as his/and wife's retirement fund.
d/Old mate of mine who plays golf tells me of a lot of his golf friends have no investments,and still have a mortgage,and can't life on national super.They all enjoyed well paying jobs.
e/Wise investor spread his $600,000 between three finance companies"to spread the risk". All gone.
Yes I know my fair share of halfwits,but if you met them you would think they are sensible people,until you talk finance with them.

[troyvdh]

Dear Te Whetu.....the clincher in your post was "Im financially literate".....you think folk read a "propectuses"......are you taking the micheal here....

....I bet you are young and educated and have never lost any significant dosh....whats more your investment in finanacial mkts would be minimal...

....haviing said the above is NOT a critiscm...at all...in fact I celebrate your input.....cheers cobber....

[janner]

All three of the last posters are talking the truth.. Sad but true..

Put it down to the poor education system that we have here.

How many of the children of today would even have heard of Mr. Micawber.

[janner]

From Zero hedge ( I think )

'I've imagined 3 investors, each starting with a million quid on 2nd January 1991, using the 3 consistent investment strategies of:-

1. Buy every day am, sell pm.

2. Buy every day pm, sell following morning.

3. Buy on 2nd Jan 1991 & keep your gold, ie follow the official market.


As of yesterday, investor 3 would have his original 5k troy oz stash, worth just over £5m, lucky man.


Investor 2 would have amassed a gargantuan 37k troy oz stash worth £37million.


Investor 1 would stand shirtless with 131oz of Gold left, worth £133k, an 87% loss.'
!!!.


Just goes to show how perilous investing is really :-))

[slimwin]

I was quite surprised talking about the float a work how may are considering buying. I'm an engineer working for an airline in ChCh and most that are pro are mid 40's. Young un's know they have to pay their debt first. Oldies only trust banks. I hope these floats are successful and maybe those young un's will see investing in a positive light one day. It was refreshing to not hear any ideological opposition or even pro ranting. Seems nobody really takes much notice of the news around our work!

[troyvdh]

dear slim ...thats my point....what do you mean by being "successful".....if on the first day they go up up 10-20 %...and folk sell ..is that successfull.....?.....or will folk remain "in there"for say 8 years and achieve 60% return ....in gains ..but what off a tax paid div of say 5 %.......per year in a share/holding that will be scrutinised over breakfast every day......where the share price may well duck and dive.....and the holders off same will be subjected to the taunts and cheers of those at smoko...daily...we are NZ ers are so blatantly naieve about finance ..its almost embarrasing.....

[Te Whetu]

Dear Te Whetu.....the clincher in your post was "Im financially literate".....you think folk read a "propectuses"......are you taking the micheal here....

....I bet you are young and educated and have never lost any significant dosh....whats more your investment in finanacial mkts would be minimal...

....haviing said the above is NOT a critiscm...at all...in fact I celebrate your input.....cheers cobber....

If you read my post you'll note that I think people read the prospectus after they lost there money.

Yes I'm financially literate, though to be honest I studied finance, so that helps. However you don't need a huge amount of financial literacy to make adequate decisions, sure you won't be flawless, you will lose money at time, but overall you should be better off.

As for your estimate of me, you got the easy one's correct:

I'm young –> yes, after all I did finish school only 10 years ago.

Educated –> yep.

Never lost a significant amount –> that depends on what you consider significant, however I suspect you'd consider my 2008 loss significant, everyone is going to have down years, even in the bank there will be periods where you get less than inflation (i.e. make a loss).

Investment in financial markets is minimal –> wrong, I could buy a house with my financial markets investment (if I wanted to).

percy, I know a few people like those you mention. It's sad, though thankfully most (but not all) the ones I know still have enough time to change.

[peat]

has anyone looked at the numbers?

4059

[janner]

To Percy.

" Yes I know my fair share of halfwits,but if you met them you would think they are sensible people,until you talk finance with them ".

NZ is still trying to get over 1987.. The YUPPIE period.. remember them.. ??

You could have been one.. 20 something investor and making money :-))

Since then they have recovered and made their money out of property..
Passing on to their offspring that it is the only way to go..
BRICKS AND MORTAR.. .. Never let you down.. Look at mine !!..

It is hopefully people like Te Whetu that are now emerging from that period..

People willing to look at other avenues..

Badly burnt and tak

[janner]

oops take out .. Badly burnt and tak

[slimwin]

Everybodys idea of success is different. It depends on your situatuion. A couple of guys have mentioned they want to beat the bank rates and are thinking of retirement savings while still 20-25 years away. They'll probably get a shock when things go down for the first time but I can't imagine anybody taunting people at my work place over losing money. There's way too many guys that have divided their money with ex partners for that. They have the GST club at work. Married once gave half away, second marriage gave half away again, third marriage like wise. Voila 12.5% left. Ok,it doesn't apply nowdays but you get the drift.
Glad I don't work at your work place. It sounds abusive.

[janner]

Thank you peat.. It is what is needed.

[peat]

40604061

Doesnt look anything special to me
Return on equity got slammed year before last. Trending down really.
Interest paid increased out of the range it had been in for the previous four years
Total Revenue static for the last four years - but EBITDAF at the peaks. So keeping it managed well but nowhere to grow?

If you know the business well enough there may of course be some reasons for these... but on the face of it nothing too impressive.

We dont know price of course.

I cant say I agree with this bonus shares concept. Hey dont forget thats my asset you're selling.

[troyvdh]

....thanks for the breather.....troy

[craic]

And all Itried to do was draw attention to the interesting dynamics of horde of non-investors buying up a company. Will there be enough shares to satisfy the small investor demand? Will there be raffles?

[troyvdh]

..thanks janner....more of the same please.....

PS....aint it amazing...that the media (seemingly) are totally fixated with access of share purchases .........but HEY...is it worth it......honestly this whole fiasco is embarrasing....its crude and deamening......I voted nats but sure as hell I cannot get my head around this,,,,,,

[percy]

Maoris want water rights.
Govt wants to sell water.
Peat just pours cold water.
Percy just wants to pass water.
lol

[janner]

Percy.. Maybe you should be passing all of your water onto the Maori and the Govt...

I'm sure you would be applauded ..

[janner]

It has to come down to VALUE.. Forget the politics.. Forget the hype.. Is it ??..

peat sum's it up very well.. " Hey dont forget thats my asset you're selling ".. Bonus wise ..

[Major von Tempsky]

C'mon guys u r going over the top.

The National Party is to be commended for trying to get more people into share ownership, into taking more personal responsibility for their own financial planning, for getting more SOEs into a fully business and less socialist environment.

O.K. it's not for professional investors - the 4% return is a hoot and there may be a real danger of CommComm sabotaging the investment. But if you consider the Mums and Dads that go in for it are trying to be patriotic and their alternative would be fixed interest minus the financial adviser's capital and management fees it won't be too bad for them, give them another interest in life, a reason to read the business pages and some pretty pictures of hydro dams and geothermal generators once a year.... They may even be encouraged to make a more daring investment in an NZX company with a decent return...

[J R Ewing]

That's pretty close to how I see it as well Belge. I simply don't see the big picture gain for everyone that Key has been harping on about. No point in selling off productive assets, especially at a market low point. All we get is a short term gain in lower interest and a host of new treaty rights for water for the long term...

I might buy some though if the deal looks OK, and I think it will.

[macduffy]

I might buy some too - if the numbers stack up - but must admit to strong reservations around the issue of encouraging thousands of new investors to buy MRP and then sitting on those shares as their only equity investment. I know that part of the rationale is to get NZer's to see investing as something more than buying a rental property but I'm not confident that this will be the outcome. Without some degree of diversification, equity investment is higher risk than many people are comfortable with and I can't see MRP being "good" enough to negate that.

[Silverlight]

This is simply the wrong time to float off government assets. It is foolishness in the extreme when share markets are down.... NZ Inc should be borrowing up big at these low rates and ditching the old debt with higher rates as quickly as possible.

I agree that this is the best time to borrow, when interest rates are cheap, I disagree that this is the wrong time to sell off utilities; this is the perfect time.

When the market is in full swing, who wants to pay full price for a utility, investors want to buy the risky stocks. However the current environment investors are weary and utilities are being valued highly. S&P Utilities index up over 21% pa past 2 years, ASX200 Utilities index up over 16% pa for the past 2 years; this is the perfect time to be selling the businesses, as the valuations are at the high end.

[Zaphod]

"The government can borrow for 10 years at a rate of 3 per cent. They could retain the assets that way."[/I]
From: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10821563

This is Shonkey economic policy led by "free market" dogma and idiots like MVT who think its a Nation vs Labour issue!

Except, Kiwi's don't want debit either - we've been taught that all debt is bad - so as a country, what are we to do?

[elZorro]

Why is MRP dropping back on retail customers and picking up more industrial ones? With most of their power coming from hydro schemes, MRP will be able to meet the tougher discount structure that bigger businesses dictate. These firms put their power needs out to tender. Fewer customers will allow lower overheads, but the margin might not be as good. That could reduce the dividends to shareholders, but big business will still be OK.

[Major von Tempsky]

Pity Belge, you can't keep your debate above the level of the gutter and introduce some intellectual content.
I bet I could beat you any day of the week in a game of chess, an "evil" level sudoku, a cryptic crossword, an IQ test. Why then am I automatically an "idiot" because I disagree with you? I bet lots of other Sharetraders are getting sick of your petulant childish level of debate. Pity the MODERATORS don't step in more often to avoid personal abuse!

[Billy Boy]

A high school student I was talking too made a good point.
"The only reason the Govnt is wanting to sell out, is coz
most the generating plant is reaching it's use-by dates"
He could well be right !!
Waitaki system is 50+ years old, and some of the canels are leaking.
Roxbourgh is filling up with stones.
Mighty river hydro power is ageing rapidly.
etc...etc
I like how the young of today think.
BB

[peat]

It may not be as relevant here in NZ but I note that many homes in Australia have solar cells on their roof's and are generating enough power to reduce their power bills substantially if not completely. My dear old Mum even gets a credit on her power bill now and it only cost her a few grand of investment. Of course in Aussie currently both the installation and tariffs are govt subsidized (but that could happen here too??). As Photovoltaic cells get cheaper and cheaper this could become a factor in reducing demand over coming years.
Govt wants to sell just before they subsidize alternatives? Yes unlikely but possible.

Utilities are generally regarded as stable but do have risk of course.... look at Telecom and CNU , technology risk, regulatory risk, I agree that inducing novice retail investors into a single share in their portfolio is tantamount to giving bad financial advice. Any AFA would be slammed!

[percy]

It may not be as relevant here in NZ but I note that many homes in Australia have solar cells on their roof's and are generating enough power to reduce their power bills substantially if not completely. My dear old Mum even gets a credit on her power bill now and it only cost her a few grand of investment. Of course in Aussie currently both the installation and tariffs are govt subsidized (but that could happen here too??). As Photovoltaic cells get cheaper and cheaper this could become a factor in reducing demand over coming years.
Govt wants to sell just before they subsidize alternatives? Yes unlikely but possible.

Utilities are generally regarded as stable but do have risk of course.... look at Telecom and CNU , technology risk, regulatory risk, I agree that inducing novice retail investors into a single share in their portfolio is tantamount to giving bad financial advice. Any AFA would be slammed!

I think the Australian Government or State governments may have stopped help,going by the share price free falls of SOO and AIR,whose businesses are the supply and installation of solar cells .

[CJ]

I think the Australian Government or State governments may have stopped help,going by the share price free falls of SOO and AIR,whose businesses are the supply and installation of solar cells .The Queensland government reduced the legislated feed in rate from over 20c to about 8c per unit. Over 20c was a huge subsidy as I think the 8c is closer to market rates. As such it was a huge incentive. However, I think they old feed in rates still apply to existing/approved solar panals as they were get a new application every second in the lead up to the cut off.

Wow - not the article I previously read but the fee in rate was 44c per unit - http://www.energymatters.com.au/index.php?main_page=news_article&article_id=3286

[Billy Boy]

Electric solar seams to be the up and comming.
My friend and I looked into electric solar some eighteen months ago.
You dont need battries but you do need an inverter and a new meter.
The new meter read how much the grid is taking.
I was told that Meridian would pay dollar for dollar
and the others would only pay wholesale rate. I dont know
the odds right at the moment.
There are a number of installers poping up all over the place.
I hear there is one in Wanaka even....
BB

[slimwin]

Ah, that changes the game. I looked into it when I got back to NZ 'bout 4 years ago and was told the big producers would not pay for the power. Now with an installation subsidy, perhaps even GST off, it may get close to working.
Perhaps the greens could promise to not so virolently attack the govt at every chance for the trade off.
Then they will have actually achieved something by next election.

[Blendy]

hey guys, I'm going to write up a bit of an opinion piece on this topic for the Discourse Podcast. It will be kind of a "for dummies, why you should/should not do this" basic facts type piece. There are some good points made in this thread - mind if I anonymously use some of them? I'll post my story here before I send it in, and you can pick it apart :)

[modandm]

hey guys, I'm going to write up a bit of an opinion piece on this topic for the Discourse Podcast. It will be kind of a "for dummies, why you should/should not do this" basic facts type piece. There are some good points made in this thread - mind if I anonymously use some of them? I'll post my story here before I send it in, and you can pick it apart :)

Honestly if you are getting information from this site you should really consider if you are knowledgable enough to be giving your own opinion or advice to others in any form of media.

Not to say this forum is incorrect - there are many great contributors - there is just a lot of rubbish and stuff that is not true or not relevant or not backed up with facts or of question.

Fair warning.

[fungus pudding]

hey guys, I'm going to write up a bit of an opinion piece on this topic for the Discourse Podcast. It will be kind of a "for dummies, why you should/should not do this" basic facts type piece. There are some good points made in this thread - mind if I anonymously use some of them? I'll post my story here before I send it in, and you can pick it apart :)



It might well be basic, but I don't know if the word 'facts' willl apply, or could apply to an opinion piece.

[Hoop]

I receive this in my email box this morning

http://i458.photobucket.com/albums/qq306/Hoop_1/MightyRiverShareJulyupdate-1.png

[Arbitrage]

Me too. If 4 million New Zealanders apply for $2000 each what will they do about oversubscription?

[fungus pudding]

Me too. If 4 million New Zealanders apply for $2000 each what will they do about oversubscription?

Shoot every third applicant I suppose. It'd be a novel way of scaling back.

[777]

People can't get off their buts to vote so hardly likely will they write out a cheque. Mind you I wonder how many will ask WINZ to do it for them.

[Blendy]

fair call - but obviously my writing would not come solely from this thread and would require plenty of investigating and research. Use of comments would really just be to reflect on the official information that has been presented so far.

I might wait to see what the info pack has to offer that Hoop mentioned is coming out soon.

Thanks for the comments.

[macduffy]

fair call - but obviously my writing would not come solely from this thread and would require plenty of investigating and research. Use of comments would really just be to reflect on the official information that has been presented so far.

I might wait to see what the info pack has to offer that Hoop mentioned is coming out soon.

Thanks for the comments.

Just take care not to appear to be offering advice. Unless you're a licenced financial advisor, of course!

;)

[Billy Boy]

Just take care not to appear to be offering advice. Unless you're a licenced financial advisor, of course!

;)
Even then use a very very long stick

[macduffy]

Brian Gaynor's article today. More food for thought.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10822694

[stanace]

Brian Gaynor's article today. More food for thought.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10822694

Looks like it went up 40% in about 4 months after the IPO. Not to be sneezed at.

[POSSUM THE CAT]

John Key IMHO would not have the balls to put the restrictions on the MRP float that the Australian Govt. put on the QR float

[craic]

I will be trying for $2,000 worth simply because I already have the money in my DB account and I am too old to worry about losing it or,for that matter, about any profit I may make. I have already told mine that I have already spent their inheritance and I am now living off my ill-gotten gains.

[fungus pudding]

I will be trying for $2,000 worth simply because I already have the money in my DB account and I am too old to worry about losing it or,for that matter, about any profit I may make.

You're guaranteed to get them then; but why bother when you don't know the price (likely yield). Even if you really don't care, why not at least wait and see if there are better pickings? I'm sure there will be.

[peat]

Fits their criteria better than mine, which is focusing more on growth than dependable cashflow.

Sparky
Do you really see MRP as a growth stock?
I would've thought its strength lay in its dependable cash flow ...

[Anna Naum]

Well the Rio announcement today re the Aluminum Plant electricity supply has HUGE implications for all the power companies valuations, as it does for what we all pay for power. Will be VERY interesting to see how this develops.

[fungus pudding]

Well the Rio announcement today re the Aluminum Plant electricity supply has HUGE implications for all the power companies valuations, as it does for what we all pay for power. Will be VERY interesting to see how this develops.

Care to enlighten the ill-informed amongst us on details of this announcement?

[macduffy]

Care to enlighten the ill-informed amongst us on details of this announcement?

From the Stuff website:

http://www.stuff.co.nz/business/industries/7446695/Bluff-smelter-seeks-power-contract-change

[Anna Naum]

Would be great if they said we dont want as much power as before....as a consumer. But not so good for anyone looking to sell a power company!

[POSSUM THE CAT]

Anna Naum as they have closed or are closing a pot line that is exactly what they want. They may even decide to close the whole smelter

[troyvdh]

....Anna,,,,your not wrong.....my understanding about power supply at present..is that it aint as much as it could be...in fact I understand that overall we have an over supply....sounds bizzare huh....but that is what a spokesman at CEN told me.....As you would...ask why prices continue to rise....good question...its "the Mkt" ..I suppose....as i have said before ...I often camp along the outlet of lake hawea.....near Albert Town....and see CEN discharge water (I actually lost a dozen cans once)....when in my opinion ...Im thinking "why on Earth are you doing that for"....becomes an issue.
However....I have been on a guided tour of the Clyde Dam (as all CEN SH are entilted to)....its amazing.....50-100 meters of solid concrete......but I did notice that there were at least 5-6 folk in the a room with BIG computer screens constantly monitoring supply/demand/price......24/7....cheers

[elZorro]

I think at one stage the smelter owners openly discussed their options for building their own thermal power station using lignite coal, about the time they negotiated this current contract that's about to start. They're in a powerful position, no govt would want to see this large employer mothball the plant, and downstream, big manufacturing exporters like Ullrich Aluminium feed off the relatively cheap aluminium.

Small wonder we currently have a power surplus, with manufacturing doing a big backpedal. It's not as if a lot of new generation has gone in, but the winters have provided good rain lately. So with the generators wanting to look a bit pumped up, the timing from Rio is perfect. It's top secret whatever their contract deal is, but it would be unlikely to be over 10c a kWhr. A few years back it was apparently in the region of 5-7c.

[CJ]

It's top secret whatever their contract deal is, but it would be unlikely to be over 10c a kWhr. A few years back it was apparently in the region of 5-7c.Given MRP and Meridian are both owned by the government, and the Alloy plant is a material power user, I would have to think the Govt would have to disclose in the MRP IPO docs if it has any effect on supply or price of the market.

[troyvdh]

...thanks el...but i would have thought that any power suppling entity either existing or intending to be would acknowledge that if current demand for power was low...and acknowledging that this will not continue to be case...then perhaps now ...as opposed to when there will be a greater demand...and the consequent increased costs of providing of this power if suddenly results in folk responding in shock.....like ...gee.... we need to now ...build something to make more of the stuff....

...At times me thinks (often) that we have an investment horizon of a ......knat....omeba...labour voter.....any intention to offend...denied....we are all so bad.

[elZorro]

The tiny investment horizon of a labour voter? We're not all like that Troy..no offence taken.
Most of Muldoon's THINK BIG projects have worked out fine. Even one of the quickest to fall, the Motonui gas to gasoline plant, is in big favour now as a methanol plant. If the state had it, we could make all of our own petrol at competitive prices.

The whopper station at Huntly has also been very handy, and Manapouri was built for the smelter as the main customer I think. Not long after it was built we had a school trip down there to see the station and the smelter, amongst other things. Impressive.

But for now, distrubuted smaller power sources might be the go, unless another big firm wants to build a smelter or similar. Our labour rates and location might mean this won't happen, and maybe it shouldn't. We need to be more like Ullrich, start with cheap raw material and add value to it.

[Hoop]

.............But for now, distrubuted smaller power sources might be the go.......

Gee.. the more I look at MRP the more negative I'm starting to feel. I'm starting to believe it maybe a good thing for the Govt (taxpayer) to sell off a 49% of this one.

Interesting to see Wind and solar becoming more economical nowadays and this form of Electricity becoming increasingly cheaper to produce with the technology advancements... maybe at some point houses will become more power producers than power users and all networked into the national grid. (This would be on a smaller scale again to ElZ quote above)

This think big stuff maybe a good efficient asset atm but thinking future-wise I'm not so sure....for example Hydro dams have an efficient life of about 70 years...So there are some serious economical baggage waiting around the corner for the shareholders in the future. The upkeep of these aging dams are going to become more expensive and their output less efficient as time marches on. To extend a dams efficient life past 70 years will require extra maintainance. At some point though the mantainace costs will outweigh the productive revenue resulting in decommission. Decommissioning and dismantling old dams I'm told is a very expensive exercise, it's no easy feat, and can cause all sorts of serious environmental headaches.

NZ dams are at various ages...Arapuni Dam is the oldest at 80 years old and to add to the future economic dilemma it is protected by the Heritage Trust and cannot be dismantled or demolished....so MRP may soon have it's first albatross around it's neck.

I'm told that MRP has 8 dams.

Will Hydroelectric Dams become an outdated form of energy producing technology compared to wind and solar in the future?

Will these dam maintenance costs cause MRP to become increasingly competitively disadvantaged.

Now another negative??? has sprung to mind yesterday. MRP has this Smelter as a customer.. Back in my varsity days I was told that it's wasn't a good business practice to become reliant to one big Customer.

OK there are positives...Industry,Businesses and the general population are totally reliant on electricity

Am I being too one-eyed and dramatic in my thinking that MRP is a Company in a mature energy market and has the potential to become a large cumbersome dinosaur..if so then, the new shares would in theory have to attract a low PE Ratio and have to have a high yield rate to compensate....hence not a cheap buy-in but more like a mum and dad investor stock?

What do other posters think.

Disc: probably be in on this one at the beginning....maybe...depends.

[percy]

I think it Meridian,not MRP who supply the smelter.
MRP produce their power very close to where thier customers situated.

[macduffy]

Yes, Meridian is the supplier to the smelter. May be seen to be a negative to the sector as a whole though if they cut back on their power usage and/or are able to negotiate a better deal at a lower price.

[Financially dependant]

Will Hydroelectric Dams become an outdated form of energy producing technology compared to wind and solar in the future?


Not in my opinion, most renewable forms of power generation are intermittent and therefore require to be balanced with a stored power source.....Hydro dams!

The other important aspect of power supply is the peak usage times of day when the power is at it's most expensive, hydro can supplies the network to match the load as it requires....

Technology will produce other forms of storage but it will take time to the scale of Hydro dammed lakes

[Lizard]

I cannot see how they can sell this for less than 95% of current net assets - or more than about 110%. They would either be accused of "giving away our assets" or accused of "ripping off Mum & Dad investors". I would go for the 95% figure. I thought there was also mention of a 4% yield at some stage, and that would also tally.

[777]

Belge can this not happen at present? The Government puts in an order for next years dividend and maintenance is adjusted accordingly.


The real question though, is the maintenance all up to date when the shares are sold into the partial float.

[Hoop]

I think it Meridian,not MRP who supply the smelter.
MRP produce their power very close to where thier customers situated.

Yes Percy I stand corrected its Meridan (another State Asset to be sold down)...My poor choice of words "Customer" rather than overall Power user in my last post.

Interesting article in the NZH today... I was wondering how much power Tiwai Pt used.The NZH today says the Smelter uses about 15% of NZ total electricity.

A "bolt out the blue" or impeccable timing to get an even better than the (2007) better deal ?

Smelter power review 'bolt from blue' for asset sales (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10826095) By Jamie Gray (http://www.nzherald.co.nz/jamie-gray/news/headlines.cfm?a_id=744) 5:30 AM Saturday Aug 11, 2012

[Hoop]

Belge can this not happen at present? The Government puts in an order for next years dividend and maintenance is adjusted accordingly.


The real question though, is the maintenance all up to date when the shares are sold into the partial float.

I would like to think that the prospectus would contain all that sort of data......such as.. the present state of the dams, their predicted maintenance upkeep and their remaining effective life span...

[elZorro]

Very interesting thread this one. Hoop's article contained..


Under the new contracts, Rio's take or pay obligations will rise from 543.75 megawatts annually at present to 572MW annually, with the electricity price calculated on a formula taking into account exchange rates and global aluminium prices.

That's smart, there's no fixed price at all, it'll scale down if aluminium prices hit the floor. As long as it rains enough, the Smelter can be supplied with power that would only cost 2-3c per kwHr, and Rio Tinto know that. But any chances for uber-profits from this contract look to be limited in a global downturn. I've seen a NZ manufacturing plant on a much smaller scale being dismantled and parts sent overseas, 100 jobs lost. It's not a great sight. They'll certainly do that, or mothball the plant, if an oversupply looks like a semi-permanent feature. It would be a major capital loss though, on someone's books.

Interesting perspective on what the company directors might do once these SOEs once listed, from Belgarion. I know of one engineering firm who have a neat contract monitoring the bearing wear etc in power plants around the country. You take a snapshot and store the signal, then on the next trip make sure it's not showing up any differences that might be pitting etc. The gear is expensive, it's quite technical. So these plants all know when it's time for a refurb, usually well in advance. But the signals don't lie, if it's getting bad they'll have to pull the gear apart and fix it. Getting these engineers in to check everything can mean sheduled downtime will be safely stretched out on occasions, maybe.

[Hoop]

Yes ELZ I guess if we look at these partial selling down of State Assets ...I guess a small part of the equation for MRP and Meridan would have to include Aluminum prices and the NZ $ rate effect on Aluminum.

So are things as bad as they say with regards to Aluminum...
The charts say yes...no media hype here folks its not looking good and when the NZ$ is factored in it looks even worse (chart in NZ$).


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

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

[percy]

Pleased the smelter power supply news came before I loaded up on MRP.!!!!
Hoop you will enjoy looking at AWC [Alumina] chart.SP has gone from $2 to 77cents in the past year.

[elZorro]

Wikipedia background on Manapouri shows that some good decisions have been made, especially for NZ to retain ownership. The original power pricing deal was at "basement pricing with no adjustment for inflation"

http://en.wikipedia.org/wiki/Manapouri_Hydroelectric_Power_Station

As late as 1986, Comalco was paying 1.5c per kWhr for power. The Labour govt was trying to get them to pay 3.5c.

http://www.multinationalmonitor.org/hyper/issues/1992/06/mm0692_07.html

Belgarion, do you think that the NZ Electricity Corp would have been an easier/better model to look after all these assets over the last few years?

[Major von Tempsky]

Here's a shock for all you devoted Labour liners... from The Australian newspaper today







Ferguson to states: sell power assets

Annabel Hepworth and Imre Salusinszky FEDERAL Labor wants the states to sell their energy assets and WA to dump its policy of reserving gas for local industry, amid concerns about investment.

[elZorro]

This article MVT? (http://www.theaustralian.com.au/business/federal-energy-minister-martin-ferguson-to-states-sell-power-assets/story-e6frg8zx-1226447885280) But further on it seems this is just one Labour person, and someone well up the tree is saying the opposite. All of the bad feeling is the result of one thing: the rising cost of energy (for most people).

Interesting chart from Hoop, just as well I'm investing in gold (sort of) and not aluminium metal. At the moment it would be a cunning plan to design something in aluminium and export it. It's cheap to airfreight too.

[macduffy]

Further to Hoop's charts yesterday on the aluminium price, this from Stephen Bartholomeuz, commenting on recent results from the smelter's owner, RIO.

"The real issue for Rio, however, and it is no secret to anyone, is that even after a $US8.9 billion writedown it still has about $US27 billion tied up in an aluminium division that contributed only $US24 million ($US344 million previously) to the result.

Rio continues to restructure the division, shedding assets, cutting costs and even investing selectively – and plans to hive off the Pacific Aluminium business if it can – but that ill-fated decision to bid$US38 billion for Alcan ahead of the financial crisis still haunts it and will for the foreseeable future. Tom Albanese talked about his willingness, if there are parts of that division deemed unviable, to take tough decisions. He may well have to."

Investors in the power generation business in NZ will need to take this into account in coming months.

[Hoop]

Pleased the smelter power supply news came before I loaded up on MRP.!!!!
Hoop you will enjoy looking at AWC [Alumina] chart.SP has gone from $2 to 77cents in the past year..

Yeah...Hey Percy the chart shows AWC at $6.00 before the GFC crash...:):(

It seems that their Smelters are running at a loss too.

The question is how low can these metal stocks go before the ultimate turnaround?

[elZorro]

An article this morning, Tiwai smelter is not replacing staff, and they have no reduncancy provisions there.

http://www.stuff.co.nz/business/industries/7458378/Smelter-staff-vulnerable-says-union-boss

[Hoop]

How good is MRP top management???.. and the ability of the Govt to forecast what going to happen by 2025

Mark Hanson, acting communications manager for retail at Mighty River Power, said the state-owned company was not involved in any form of solar power investigation.

"The company's priority is with its geothermal programme and potential wind farm developments,” he said.

You would think that any power generation business would keep an eye on the possibility of thousands of low cost solar technology micro competitors entering the grid in the near future..


When he sat down with a chartered accountant he realised that installing the panels at the house he shares with his wife, Helen, and children Harrison, 17, Stephanie, 16, and Jonathan, 13, would pay for itself in about seven years.

"It's got a 9.6 per cent return on investment, compared to 4 per cent if I put it in the bank." he said.
In the three weeks since he threw the switch he has saved $22 on his power bill. As well as generating their own electricity, both the Posa and Forlong families receive a one-for-one credit for energy they do not use that is fed into the national grid. That means their solar panels can earn them money on a sunny day when they are out or on holiday.

I think the Govt targeting of 90% is a product of linear thought ...they obviously assume that by 2025 their big renewable power sources wont be at threat to compete economically from the increasing number of private micro power generating technology participants.

"The government has a target of generating 90 per cent of electricity from renewable sources by 2025, so more grid-scale renewable electricity generation is anticipated. Consequently, there is less drive for domestic-scale renewable electricity generation here than in many other countries. Instead, the government's push has tended to be for more energy-efficient homes through insulation standards, efficient household heating, and encouraging energy efficiency."


Read the full article Waikato Times 13/8/2012

Solar electricity generation makes a lot of cents (http://www.stuff.co.nz/waikato-times/news/7467303/Solar-electricity-generation-makes-a-lot-of-cents) CHRIS GARDNER

[CJ]

[/COLOR]Read the full article Waikato Times 13/8/2012

Solar electricity generation makes a lot of cents (http://www.stuff.co.nz/waikato-times/news/7467303/Solar-electricity-generation-makes-a-lot-of-cents) CHRIS GARDNERThe first two comments fairly accurately explain the issues with Solar.

Re MRP - of course they are not investigating it. For them to do it, it would have to be on a commercial scale which isn't cost effective in NZ. They will have other teams who, while not investigating it (as a source of power) will be keeping an eye on it in relation to demand to determine when and where their next power station should be built.

[elZorro]

Financial report from Meridian, (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10826752) and MRP is due soon. Sounds like cheap hydro inflow was down over the year.

If the govt is saying treat the approach from Rio on its own, and Meridian are implying they won't "take one for the team", then this strongly National-type attitude may backfire horribly. There are not too many major power users down the South end of NZ. To send this power North will incur heating losses in the cables, remember P (W)=I2R or V2/R, IxV, any way you look at it, maybe 30-40% (wrong, see later) of the power will never be sold because it's heating up the wiring and air on the way.

I repeat my mantra, why didn't we keep it all as NZEC so we have a better overview of the situation. If Meridian stick to their guns and Rio decides to mothball the plant in the interim (unlikely, but if no sale in the offing..) then what? Many more hundreds/thousands of NZers downstream, also out of work.

Oops, I'm probably well out on the losses, these average 3% but can get up to 7%? (Average distribution loss throughout NZ is 7.3%, so Bluff to Auckland must be well higher than that). Cook Straight cables and hardware either side approx 7% lossy.

http://www.powerco.co.nz/uploaded_files/Our%20Buisness/Buisness%20Overview/NZ%20Electricity%20Market/Aboutthesector.pdf

However it's not unusual to end up with say 180VAC at a wall power point when you're running a 2kW heater. You haven't pulled the entire street's voltage down, or even the rest of the house. You've lost 50/230 or 20% of the power, heating up the (possibly under-rated) wiring in the wall. You still pay for all of the power used, as measured at the meterbox.

[elZorro]

On 1st August 2012, part of the Cook Straight transmission hardware was pulled out of service. This will be replaced with something better within a few months.

I wonder how practical it might be for the govt to own all or part of the smelter in future. This would ensure downstream industries have access to cheap aluminium for adding value to our exports.

[fungus pudding]

On 1st August 2012, part of the Cook Straight transmission hardware was pulled out of service. This will be replaced with something better within a few months.

I wonder how practical it might be for the govt to own all or part of the smelter in future. This would ensure downstream industries have access to cheap aluminium for adding value to our exports.

How would it? By selling aluminium at a loss? Or in other words by the taxpayer subsidising aluminium production. No thanks. Those days are gone.

[Zaphod]

I wonder how practical it might be for the govt to own all or part of the smelter in future. This would ensure downstream industries have access to cheap aluminium for adding value to our exports.

One could provide the same argument for any of our core industries: oil & gas, dairy, etc. Do you really want your taxes used to purchase and operate such entities? From my perspective it's a "no, thanks".

[elZorro]

National voters, right? You guys are easy to spot...

The smelter on average has made good returns on investment, and it's one of the biggest around. If the govt owned it, they could take a drop in the power price and make it up on the aluminium side, and from their point of view the taxes and GST from all the workers on the site make it a compelling investment. They probably do the best out of the operation already.

Take the smelter away, and what is the net cost to the nation then? We'd need to ship in our aluminium from Australia, there might be some cheaper power kicking around for a while, but Bluff would depopulate and it might even tip over some of the big aluminium moulding firms spread throughout NZ.

[CJ]

Interesting comments in CEN release yesterday. Will be stopping all capital investment gong forward as no expected growth in electricity demand for the next few years.

Cant wait to see what goes in the prospectus.

elZorro - should all business in towns with unemployment above (say) 20% get a government subsidy to hire more staff, even it not economically viable without the subsidy. If you do this for one industry/town, you have to do it for all. How do we solve Northlands unemployment problem? (some out of the box thinking - should we legalize marijuana to to take them out of the black economy and into the taxed economy?)

[elZorro]

Interesting comments in CEN release yesterday. Will be stopping all capital investment gong forward as no expected growth in electricity demand for the next few years.

Cant wait to see what goes in the prospectus.

elZorro - should all business in towns with unemployment above (say) 20% get a government subsidy to hire more staff, even it not economically viable without the subsidy. If you do this for one industry/town, you have to do it for all. How do we solve Northlands unemployment problem? (some out of the box thinking - should we legalize marijuana to to take them out of the black economy and into the taxed economy?)

CJ, don't know if you've been an employer, but 20% subsidy isn't enough to play guessing games. You'd start with a definite chargeable job that has a decent timeline to run. The way to feed employment growth is to boost the business owner's confidence in their profitability. Ergo, R&D tax credits, so over time, they're putting out smarter goods/services with better margins. More exports especially. Then the business owner is forced to take on staff to satisfy the orders, it's the right way around.

The private sector doesn't behave like a CRI and design items for the hell of it (with taxpayer money), they target a market, usually one they already have sales channels into.

Re the black economy, it's not just the Northlanders that are into it from my experience, it's all over, in the semi-professional areas too.

[craic]

I have an old portfolio belonging to one of my offspring that records a pile of shares in SOE. I can't remember that far back and every time I try to enter it in the register I get a not known reply and Google fires me back to Mighty River? Can someone please embarrass me by telling me what I have forgotten. Did they go to the wall?

[Lizard]

I have an old portfolio belonging to one of my offspring that records a pile of shares in SOE.

Software of Excellence (http://www.sharetrader.co.nz/showthread.php?3450-SOE-under-the-radar-screen)? Taken over.

[fungus pudding]

CJ, don't know if you've been an employer, but 20% subsidy isn't enough to play guessing games. You'd start with a definite chargeable job that has a decent timeline to run. The way to feed employment growth is to boost the business owner's confidence in their profitability. Ergo, R&D tax credits, so over time, they're putting out smarter goods/services with better margins. More exports especially. Then the business owner is forced to take on staff to satisfy the orders, it's the right way around.

The private sector doesn't behave like a CRI and design items for the hell of it (with taxpayer money), they target a market, usually one they already have sales channels into.

Re the black economy, it's not just the Northlanders that are into it from my experience, it's all over, in the semi-professional areas too.

Do you want us to return to subsiding farming as well? Subsidising hotel acommodation would boost tourism. How about kiwi fruit? Timber? Or do you just want subsidised r+d and aluminium?

[elZorro]

Do you want us to return to subsiding farming as well? Subsidising hotel acommodation would boost tourism. How about kiwi fruit? Timber? Or do you just want subsidised r+d and aluminium?

Ah, FP, such logic. Of course the govt has subsidised this particular smelter for over 30 years. They purchase power at a massive discount, we get the employment and downstream, and at the moment we don't have any big industries capable of taking that power down in the SI. We don't have any other energy-intensive industries like that, full stop.

Farming and the commercial property sector as complete whole-of-life operations are effectively subsidised with no capital gains tax. The smelter will certainly depreciate, unlike farms and most commercial buildings longer term. But I see your point, sort of.

Think Big meant NZ made an honourable commitment to a big power user, to make the deal work for both sides. What if, in a downturn like this, the country gets the upper hand in the end.

[Zaphod]

Ah, FP, such logic. Of course the govt has subsidised this particular smelter for over 30 years. They purchase power at a massive discount, we get the employment and downstream,

Just because a smelter purchases power at a discount from an SOE, it does not logically follow that they have received a subsidy. Our business recently renegotiated our power prices - does that mean that we too have received a subsidy from the taxpayer? In reality, this is simply the common power of negotiation that one possesses when you are a volume purchaser of a product or service.

If anyone can produce evidence that, during the process of previous negotiations between SOE power companies and the smelter, these downstream benefits you mention were taken into account, then I am quite happy to be corrected!

And what if, by purchasing an aluminium smelter, the country and its taxpayers are exposed to the risk of the price of aluminium precipitously dropping due to weakening demand? Something that is not unrealistic given the current circumstances. Overall there are a large number of risks to the purchase of such a large commercial entity, especially in a weak economic environment, and these need to be taken into account.

But the bottom line is that if the smelter is wonderfully profitable - as you've stated - even with power being purchased at the existing prices, surely the smelter will be snapped up by another company! IMO, Rio Tinto/Sumitomo are simply trying to put some icing on the cake in order to fetch an even higher asking price when it is placed on the market, all at the expense of the power companies. Why would the power companies even bother to bend over backwards?

[Hoop]

“It is amazing that people who think we cannot afford to pay for doctors, hospitals, and medication somehow think that we can afford to pay for doctors, hospitals, medication and a government bureaucracy to administer it.”
Quote Thomas Sowell (American Writer and Economist)

[elZorro]

Hi Zaphod, there is one flaw in your logic. We have a high-wage economy compared to most of the world. We have some of the world's cheapest power down there though. Plentiful rainfall most years, a relatively short transmision distance to the port of Bluff.

Rio are losing money on the operation at the moment, and unless there's a lot of labour they can save on, this will carry on until aluminium prices recover. If they could move it all to a place like the Philippines, I'm sure they would. I bet your firm didn't get the price down to a few cents per kwHr, or related to your output prices achieved - it is subsidised at Bluff - and the original decision-making must have factored in overall economy benefits.

I'm just making the point: if Meridian look at this new deal with blinkers on, as the current National Govt want them to, it could get messy for the entire country.

[fungus pudding]

Hi Zaphod, there is one flaw in your logic. We have a high-wage economy compared to most of the world. We have some of the world's cheapest power down there though. Plentiful rainfall most years, a relatively short transmision distance to the port of Bluff.

Rio are losing money on the operation at the moment, and unless there's a lot of labour they can save on, this will carry on until aluminium prices recover. If they could move it all to a place like the Philippines, I'm sure they would. I bet your firm didn't get the price down to a few cents per kwHr, or related to your output prices achieved - it is subsidised at Bluff - and the original decision-making must have factored in overall economy benefits.

I'm just making the point: if Meridian look at this new deal with blinkers on, as the current National Govt want them to, it could get messy for the entire country.

Lack of capital gain tax is not a subsidy. Commercial property, like dresidential property, actually depreciates and even that is no longer recognised by the taxman. Neither is it recognised by the public at large. ?That's because the nominal price rises due to govt. caused inflation. And you think people should be taxed for that !!

[fungus pudding]

Ah, FP, such logic. Of course the govt has subsidised this particular smelter for over 30 years. They purchase power at a massive discount, we get the employment and downstream, and at the moment we don't have any big industries capable of taking that power down in the SI. We don't have any other energy-intensive industries like that, full stop.

Farming and the commercial property sector as complete whole-of-life operations are effectively subsidised with no capital gains tax. The smelter will certainly depreciate, unlike farms and most commercial buildings longer term. But I see your point, sort of.

Think Big meant NZ made an honourable commitment to a big power user, to make the deal work for both sides. What if, in a downturn like this, the country gets the upper hand in the end.

Pinned this reply to the wrong post. So here it goes again:............
Lack of capital gain tax is not a subsidy. Commercial property, like dresidential property, actually depreciates and even that is no longer recognised by the taxman. Neither is it recognised by the public at large. ?That's because the nominal price rises due to govt. caused inflation. And you think people should be taxed for that !!

[elZorro]

Pinned this reply to the wrong post. So here it goes again:............
Lack of capital gain tax is not a subsidy. Commercial property, like dresidential property, actually depreciates and even that is no longer recognised by the taxman. Neither is it recognised by the public at large. ?That's because the nominal price rises due to govt. caused inflation. And you think people should be taxed for that !!

I guess things have changed in that area. I know that years ago, farms were being paid off with inflation, when it raged as high as 20% or so, helped by subsidies. These were golden opportunities that most missed out on. But it wasn't that long ago when a dairy farm cost $300,000, many of us have had those chances. I know from my own building, that it's not always a pot of gold, recent inflation no help.

My central point is not about capital gains tax. It's that if there is going to be a lot of capital employed, like the millions used up in a farm or a good building, how much more productive would it be in a profitable manufacturing business, along with the benefits to NZ's employment and economic figures.

I checked the average net profits on turnover for the construction/manufacturing sector, average is over 20%, goes up to 50% in the best categories. Since many businesses don't have as much capital employed as their annual turnover, these are great figures. And these firms employ people.

[fungus pudding]

My central point is not about capital gains tax. It's that if there is going to be a lot of capital employed, like the millions used up in a farm or a good building, how much more productive would it be in a profitable manufacturing business, along with the benefits to NZ's employment and economic figures.




Sort of hard for a simpleton like me work out where these businesses go to keep their employees dry and their stock and plant from getting stolen without a building to house the whole show.

[elZorro]

Sort of hard for a simpleton like me work out where these businesses go to keep their employees dry and their stock and plant from getting stolen without a building to house the whole show.

FP, you're obviously far from a simpleton, and of course manufacturers usually prefer to lease premises, using their available capital on plant and stock, so there is a great partnership to be made there. But don't you think that whatever govt is in place, if they want to see NZ moving ahead, they need to help encourage people into investments of all kinds? Given that in a downturn there will be a surplus of vacant buildings, they don't need to do anything there. National have already ensured there are a few more unemployed people available, although many with in-demand skills have moved overseas.

We all know that employing staff can be difficult, and costly. We don't hear too much about the multiplication factor of manufacturing, when the recipe is right. And how a few smarts put in at the front end can make all the difference. This is what brought the smelter to NZ for example.

No. 1, cheap power in a tight contract. Without it, no smelter for NZ. That was smart, the rest of the technology and employment, downstream, followed.

Now imagine thousands of new and expanding smaller businesses, each insulated a bit from each other with some technology or edge, they would be massive employers as a collective. And great for those with buildings to lease, and for retailers.

[fungus pudding]

FP, you're obviously far from a simpleton, and of course manufacturers usually prefer to lease premises, using their available capital on plant and stock, so there is a great partnership to be made there. But don't you think that whatever govt is in place, if they want to see NZ moving ahead, they need to help encourage people into investments of all kinds?



The best way that govt. can encourage investment is to relax the very discouraging labour laws. Demand for employment will look after workers'. conditions if the demand is high enough, in a far better way than at present. Tough legislation lowers that demand. .Result is everybody loses.

[elZorro]

The best way that govt. can encourage investment is to relax the very discouraging labour laws. Demand for employment will look after workers'. conditions if the demand is high enough, in a far better way than at present. Tough legislation lowers that demand. .Result is everybody loses.

I think on balance the labour laws are OK, although I mostly use common sense when dealing with people. The minimum wage is too low for many to live on by itself, should be topped up, (http://www.stuff.co.nz/business/industries/7486644/Parliaments-cleaners-seek-pay-rise) and as I've mentioned before, if a business has an edge, things like 4 weeks holiday can be fitted in. There are plenty of advisors who provide employment contracts with clauses and actions to take so that employers can "move on" unsuitable staff. I tend to be more polite than that, and it's worked out OK. I'm still a small employer though.

John Walley of the MEA was on TV today, and when asked what incentives are needed for manufacturers, banged on the drum of "the govt should do something about the high exchange rate". Not worded like that of course, but that is the intention. So we should allow inflation?

No, I think we should go back to the start of all this manufacturing process. What sort of stuff should we manufacture or develop, does it have a margin, how can we reduce the costs involved, and what unique, protected features can we add to it. Then we'll have some gear to export, no matter what the exchange rate.

[Zaphod]

Hi Zaphod, there is one flaw in your logic. We have a high-wage economy compared to most of the world. We have some of the world's cheapest power down there though. Plentiful rainfall most years, a relatively short transmision distance to the port of Bluff.


Rio are losing money on the operation at the moment, and unless there's a lot of labour they can save on, this will carry on until aluminium prices recover. If they could move it all to a place like the Philippines, I'm sure they would. I bet your firm didn't get the price down to a few cents per kwHr, or related to your output prices achieved - it is subsidised at Bluff - and the original decision-making must have factored in overall economy benefits.

I'm just making the point: if Meridian look at this new deal with blinkers on, as the current National Govt want them to, it could get messy for the entire country.

Hi ElZ -

What is the underlying reason for the loss? If it is that the market has turned, then that's part of the risk of being in business and no business can expect a special deal from the Government by right. There have been some recent cases in the financial sector of complete bailouts (obviously larger than a simple subsidy) , but losses were in the extreme and would likely lead the country into economic collapse. While the smelter is no doubt an important cog in the New Zealand economy, it would not have had the same effect on the economy as these finance sector failures.

I still do not see any evidence that power to the smelter is subsidised by the Government. Tiwai consumes (from memory) roughly 50%-60% of Meredian's total output - that makes them an extremely large customer for that one company, with commensurate bargaining power.

While a mutually agreeable deal might be reached – and I too, hope it does for the "greater good" - Meredian need to ensure that they meet their legal obligation to act in the best interests of the company. Causing a significant hole in their balance sheet in the name of the greater good would leave them in a very precarious position from a legal perspective.

Edit: It's great to see some good debate on this forum!

[Billy Boy]

A few year back Mitsubiti want the biuld a Glass Plant in Southland.
"yes you can do that but not in Southland, it's gotta be Auckland",
said the Govmt of the day.
So here's chance.... DO Both
Scale down the aluminium and produce high quality glass with the
spare accommodation. Accommodation, Energy, Shipping, etc etc all
in place.
BB

[fungus pudding]

Hi ElZ -

What is the underlying reason for the loss? If it is that the market has turned, then that's part of the risk of being in business and no business can expect a special deal from the Government by right. There have been some recent cases in the financial sector of complete bailouts (obviously larger than a simple subsidy) , but losses were in the extreme and would likely lead the country into economic collapse.

Hardly comparable though. These outfits were paying an insurance premium against such events into an especially established govt. insurance package. Unfortunately they claimed on the scheme.

[elZorro]

Zaphod, big energy users get tailored contracts, and the terms are not made public. If they were, how could the power companies charge differing prices depending on how much power they have spare this year, the size of the company etc. In the case of the smelter, it'll be especially secretive. Also too much of an eye-opener for Joe Public I'd think.

At these small margins, Meridian as the operator of Manapouri, is likely to be the only suitable SOE provider that can offer a big enough discount, and the certainty of supply. Whether or not you call it a subsidy or a discount, depends on how fair you think it is to pay over 25c per kWHr at home (plus GST of course). Hydro costs less than 3c to generate, and even coal-fired was under 10c last time I looked. Capital and transmission costs excluded.

I was speaking with a rep from a big aluminium moulder today. They buy their billets only from the Tiwai smelter. In recent years, the price comparisons between steel and aluminium have improved.

Here's perhaps a great example of the sort of gear we should be building.

http://www.nzte.govt.nz/features-commentary/Features/Going-global/Pages/Flying-start-for-revolutionary-helicopter.aspx

[Anna Naum]

See another electricity demand hit with Norske Skog saying it is going to halve NZ production. I understand that Norske Skog’s Tasman mill is one of NZ’s largest electricity consumers, currently accounting for c.2.9% of NZ demand.

[Zaphod]

Zaphod, big energy users get tailored contracts, and the terms are not made public. If they were, how could the power companies charge differing prices depending on how much power they have spare this year, the size of the company etc. In the case of the smelter, it'll be especially secretive. Also too much of an eye-opener for Joe Public I'd think.

At these small margins, Meridian as the operator of Manapouri, is likely to be the only suitable SOE provider that can offer a big enough discount, and the certainty of supply. Whether or not you call it a subsidy or a discount, depends on how fair you think it is to pay over 25c per kWHr at home (plus GST of course). Hydro costs less than 3c to generate, and even coal-fired was under 10c last time I looked. Capital and transmission costs excluded.

Perhaps 25c per KwH is unfair, but perhaps that simply reflects the relative weakness of bargaining power due to the sheer number of power companies versus a relatively small (compared to other countries) consumer base? Last time I looked there were around 14 power retailers, meaning that there are approximately 121,000 private residences per power retailer (some retailers, like KCE have far fewer customers than that). Obviously these retailers do not have the bargaining power that a single entity like Tiwai has. Industrial customers would undoubtedly bolster such bargaining capability however.



I was speaking with a rep from a big aluminium moulder today. They buy their billets only from the Tiwai smelter. In recent years, the price comparisons between steel and aluminium have improved.

Here's perhaps a great example of the sort of gear we should be building.

http://www.nzte.govt.nz/features-commentary/Features/Going-global/Pages/Flying-start-for-revolutionary-helicopter.aspx

Yes, that's exactly the sort of value-added high-margin product we should be building and exporting. Fantastic!

[CJ]

If generation is problematic, can the govt split out the retail, sell that in total, and then sell down a pro-rata part of the generation companies , eg only 30% once the retail side is taken out? THey could but it would take 2years to do the split. Just look at how long TEL took. YOu wouldn't do an IPO in the middle of the process.

I also dont think you want to split retail from generation. For one, you wouldnt get to call them Gentailers (always a laugh) but seriously, if their generation and retail input/outputs are balanced, they hedge price spikes,drops.

[Fudosan]

Hi I'm new here but very interested in these SOEs. I have never bought any NZ share so there will be some learning. Is there any way I can look at the history of financial performance of MRP, say in the last 10 years? Do they release their financial statements? Thanks.

[Sideshow Bob]

http://www.mightyriver.co.nz/Results/Financial-Information/Reports.aspx

Goes back to 2001

[Fudosan]

Thanks for the info, Bob. I need many cups of coffee to help me go through these numbers to get a general picture of MRP performance in the past years. Has anyone done this exercise to tell us how solid MRP is?

I generally don't like IPOs because of hype and top management's doing things to make sure the latest financial results are superb so as to get top dollars out of the float. It looks like this time it's different. Most folks either can't afford or don't like to buy MRP this time? I really want to build up a steady dividend income over the coming years and so am taking an exception to look at the SOE floats. BTW, is there any share investor meeting regularly held in Auckland?

[Balance]

IPO action over for now, until March next year at earliest.

What a sham.

[CJ]

IPO action over for now, until March next year at earliest.

What a sham.Had to be delayed. Too much uncertainty. Should have the water rights issue sorted by early next year but the Tiwai oversupply issue probably wont be.

Now where to put my money now in the mean time.

[Fudosan]

Then John Key has to break the self-imposed 30% debt limit promise and borrow more for his deficit budget.

[Balance]

Had to be delayed. Too much uncertainty. Should have the water rights issue sorted by early next year but the Tiwai oversupply issue probably wont be.

Now where to put my money now in the mean time.

Tiwai deal falling over will be best thing to happen to NZ - cheaper electricity for New Zealanders.

Shipping in alumina ore from Oz to be processed in NZ, and then shipped out as aluminium ingots - how can that make economic sense for a country like NZ which is a net importer of energy?

[Hoop]

IPO action over for now, until March next year at earliest.

What a sham.

A dogs breakfast...
All focus will turn to where money put aside for MRP will go to now...Equity markets??

[CJ]

Then John Key has to break the self-imposed 30% debt limit promise and borrow more for his deficit budget.Nah - just take it off the Whanau Ora budget ;)

[Fudosan]

Does it mean we're gonna see three SOE floats next year and then two in 2014 before the next election?

[CJ]

Does it mean we're gonna see three SOE floats next year and then two in 2014 before the next election?I Think it will be two and two for the energy companies - probably with Solid Energy being the last.

AirNZ is small and already listed so is easy to do and is really about timing the market for the right price more than anything.

They will want everything to be going well so they can say for the next election that Kordia, kiwibank etc are being prepared to be partially listed at some point.

[POSSUM THE CAT]

CJ Kiwi Bank should have been the first cab of the Rank. Makes more sense than the power companies

[CJ]

CJ Kiwi Bank should have been the first cab of the Rank. Makes more sense than the power companiesI disagree. It still has room for safe growth which the government should recoup through a higher sale price in later years.

They still don't target big business or government as they dont have the capabilities internally. Therefore the govt should fund this growth and partially list once it has doubled in size (winning the govt contract would help but they are on record saying they couldn't handle it).

Note: I also think they should keep 100% of the smallest power co (at least for the next 5+ years). That way consumers always have the option to go with the 'cheaper people owned option' if they want. If that option is needed, its market share will increase, increasing the governments investment, if it is not, National can blame Labour/Greens. Government should not sell monopolies but Power co's aren't monopolies.

[Fudosan]

Is there a paradox here? As an investor you want the assets to be sold at the lowest price possible, but as a citizen/tax payer you want the assets to be sold at the highest price possible, right?

[Hoop]

Is there a paradox here? As an investor you want the assets to be sold at the lowest price possible, but as a citizen/tax payer you want the assets to be sold at the highest price possible, right?

No paradox at all Fudosan....Its called a marketplace ..the buyer (investor) wants to buy at the cheapest price possible the seller wants to sell at the highest price possible..

Its more unusual with Equity assets but not an uncommon activity overall that you would want to gain outright ownership of an asset you partially own...e.g One ex-partner buying outright a dissolved matrimonial property.

[Zaphod]

A relevant article for the Mighty River sale....

65 jobs to go at Tiwai

Tiwai Point Aluminium Smelter near Bluff will lay off about 65 staff during the next two months.

In August last year, New Zealand Aluminium Smelters announced plans to reduce its organisation by 100 roles over a five-year period through natural attrition. So far, the smelter has reduced 35 of the 100 roles through natural attrition.

Because of deteriorating economic conditions, the smelter will now complete the organisational restructure by the end of November.

http://www.stuff.co.nz/southland-times/business/7616207/65-jobs-to-go-at-Tiwai

[CJ]

Is there a paradox here? As an investor you want the assets to be sold at the lowest price possible, but as a citizen/tax payer you want the assets to be sold at the highest price possible, right?As an investor, you will be buying more than your share of the tax take so paradox solved.


A relevant article for the Mighty River sale....

65 jobs to go at Tiwai They don't have a Waitangi Tribunal but they do have employees. I could almost guarantee they will be using this as ammunition to get a good deal or else they will announce more cuts a month out from the new IPO date. They were going to be nice and settle for natural attrition but they get to save costs now and improve their bargaining. win win for them. Well played.

[Joshuatree]

I see ZYL on the ASX which has Anthracite coal projects in south africa in trading halt. Im assuming its the NZ Mighty River on the register with a re 3 % stake in ZYL which may present BFS results monday and poss even funding.

[iceman]

Unsurprisingly the High Court has ruled against the Maori Councils bid to delay the MRP float. So this should now definitely be on in the 2nd quarter of 2013

[POSSUM THE CAT]

iceman unless they do something about the commerce commission who will be interested in buying. look what the did to chorus

[iceman]

iceman unless they do something about the commerce commission who will be interested in buying. look what the did to chorus

Agree PTC that something needs to be done about The Commerce Commission, or like some commentator (think Brian Gaynor or Terry Hall) said recently, it should be called the Consumer Commission (CONcom) based on recent actions. Investing in utilities in NZ is very risky while the ComCom works like this. I will be surprised if the Chorus fiasco will not push the Government into action to make sure the CC does not destroy flagship Government policies such as Fibre rollout and partial privatisations !

[CJ]

I dont see the Comcom as an issue for Genitailiers. They are not a monopoly and therefore do not need to be regulated. Neither CEN or TPW has felt any heat from the ComCom despite Labour (incorrectly - I am a CEN customer) claiming the publicly listed companies are the most expensive.

Chorus, VCT, SKY and the airports are monopolies which is why regulation is an issue. Still trying to figure out why they are looking into telecom/vodafone as there seems to be enough competition there, especially since 2degress came along.

Can any of you explain why you think Comcom will be an issue.

Disc: hold CEN, TPW and IFT and will be looking to buy MRP.

[CJ]

Govt interference would be a real risk. National has kept out of AIR business and Labour did before that (after crippling them by refusing the Singapore investment). Not sure I trust Greens though.

NOt to concered wit the Maori claim once this court case goes away. Their interests can be addressed by other means and any additional cost to water would be passed through to consumers though would make Hydro plants more expensive. They are looking to claim ownership geothermal and no doubt wind so all power would be effected.

[horus1]

The Com.Com. does not recognise efficiency in setting monopoly revenues nor is it taking note of long term consumer benefits. It has been inconsistent in applying policies and has acted to the disadvantage of investors repeatedly.

[macduffy]

It doesn't seem to have been reported in NZ but Aussie reports say that RIO has decided to continue refining alumina at their Gove refinery - this having been under review by the company for some time. As the Tiwai Point smelter sources its alumina from Gove, this must improve prospects for the smelter. Implications also for NZ govt, power prices, part sales of SOE's?

[iceman]

It doesn't seem to have been reported in NZ but Aussie reports say that RIO has decided to continue refining alumina at their Gove refinery - this having been under review by the company for some time. As the Tiwai Point smelter sources its alumina from Gove, this must improve prospects for the smelter. Implications also for NZ govt, power prices, part sales of SOE's?

Yes it is surprising that we haven't seen anything in the media about this. Tiwai still has 3 years to run on its power contract, which they have to honour whether the smelter is operating or not. If they want to sell the smelter, as they claim, they are unlikely to mothball it. It must be easier to sell a smelter that is operating than one that has been shut down !

[777]

Dollar continuing to climb. Is it possible that money is coming into the country for these floats?

[Jay]

Could be 777
I also heard that there is a fair amount coming from Insurance companies to cover the payouts/re-insurance for Chch etc which would help to keep the $ higher

[voltage]

if you were to choose for new money mighty river, vector, contact or trust power/ how do you compare?

[CJ]

if you were to choose for new money mighty river, vector, contact or trust power/ how do you compare?We cant compare MRP as we dont know what the IPO price will be to work out P/E comparisons for example. Post IPO, once the share price has settled down (ie. ignoring the decision to stag it or not) will be the time to review.

For the 3 Gentailers - you would have to look at the strength of their retail base and the strength of their generation and their shareprice compared to earnings. All in all, for a long term holder, it is hard to predict the whether so as long as Directors dont give themselves a payrise while trying to increase prices, all should be equal as any power plant inefficiencies should be built into the price. I doubled down on CEN a while ago to get any benefit from a Origin takeover though I think that is now unlikely. I am doubly invested in TPW as I also hold IFT. Overall, I am overweight in powerco's and in Infrastructure in general.

I really should do more research to figure out which is best but currently I hold both CEN and TPW. Will leave figuring out what to do re MRP till we have more info.

Vector has huge regulatory risk which makes it hard to value unless you assume it will just keep earning is current fixed rate of return.

[CJ]

Mighty River will probably be the most attractive over a three month horizon once it lists, as it will be priced to succeed. If MRP is a flop on listing, then the subsequent govt listings will face headwinds.Agree. I will probably sell down CEN, TPW or IFT to get funds to invest.

[macduffy]

The latest Chalkie column on the stuff website makes interesting reading for those interested in the MRP float - or other SOE's for that matter.

[Vaygor1]

if you were to choose for new money mighty river, vector, contact or trust power/ how do you compare?

And that is an excellent question. As a matter of fact that is THE question.

So in simple terms read on for NZ Electricity business 101....

These companies you mention Voltage (very apt name I must say) are not allowed to be in the electricity distribution game. On a national grid level, that is run by Transpower (Gov't owned, not for sale) and on a local level by Electricity Distribution companies like PowerCo who own poles and lines and meters. In VERY simplistic terms, these distributors are not allowed to Generate or Retail (ie Sell to the market) electricity... and visa versa those that generate/retail are not allowed to distribute.
Distributers never own nor sell the electricity. They just charge a fee for transporting it.

Generating involves owning and operating power stations and feeding the national grid and GETTING PAID for doing so.
Retailing involves marketing, getting customers (by promising to deliver electricity at a $/unit volume), reading meters, invoicing, chasing bad debts, and PAYING the Generators for the electricity it has promised to deliver.

To one extent or another, most Generators also Retail. Most Retailers also Generate.

e.g.
Trustpower from their 2013 Annual Report stated that they generated 2330 GW of electricity and sold 2683 GW of electricity. Refer https://www.nzx.com/files/attachments/176917.pdf

This means in the last financial year Trustpower did not produce enough of their own electricity to meet their obligations in supplying their own customers... but they're not that far off. They aren't as exposed as others in having to forward hedge and/or pay the electricity spot price which can skyrocket (and I mean really skyrocket) when our hydro lake levels are low.

So casting aside other areas these business' function in such as Natural Gas, LPG, telecoms (fibre mostly), overseas interests, etc and looking purely at NZ electricity...
...And then casting aside IPO prices, EPS, NTA's, Operating efficiencies, Economies of Scale etc etc so I am writing in VERY simple terms...

The companies with the correct fundamentals to go for are those that can produce (ie generate) enough electricity to feed their own customers.

Why? Because these companies are not exposed to having to buy electricity off the others. They can look after themselves. They are safe.
Conversely those who are able generate more than they retail can make a fortune at times when selling to those who can't.

Based on this SIMPLE criterion, and ignoring everything else and to answer your question voltage:
Contact. No Brainer YES.
MRP. Hmmm Not bad.
Trustpower. Hmmm Not bad.
Vector. No Brainer AVOID.


Vaygor1.

[macduffy]

Yes, Vaygor, Vector is the odd one out in this group and operates in a heavily regulated environment, more perhaps in common with Chorus in that they are both carriers of other parties' products. That doesn't automatically rule Vector out as an investment proposition though and it might have appeal to those looking for steady income with a lower level of risk than the generator/retailers.

As for the relative merits of the latter group, the complexities involved in the various businesses are too hard for me to fathom although I tend to favour those with a good chunk of the cheaper (hydro) generation - questions of water rights excluded meanwhile!

[Vaygor1]

Yes, Vaygor, Vector is the odd one out in this group and operates in a heavily regulated environment, more perhaps in common with Chorus in that they are both carriers of other parties' products. That doesn't automatically rule Vector out as an investment proposition though and it might have appeal to those looking for steady income with a lower level of risk than the generator/retailers.

As for the relative merits of the latter group, the complexities involved in the various businesses are too hard for me to fathom although I tend to favour those with a good chunk of the cheaper (hydro) generation - questions of water rights excluded meanwhile!

Quite right MacDuffy. Vector should definitely not be ruled out.

Recall that Vector bought Australian Gas Light's share of the Natural Gas Corporation.
AGL went down the "Let's Retail" path, went ahead and got mega retail customers, didn't forward hedge, and then the NZ Spot Price for electricity went through the roof.

AGL haemorrhaged and lost 100's of millions (nearly 1/2 a billion?) in a few weeks. NGC was only a subsidiary of AGL and it nearly sent the entire AGL operation under. In this case AGL were idiots for not forward hedging.

I remember at the time thinking 'Where has all that money gone?' and decided the only place that the vast majority could have gone was Contact who had huge generation capacity and by comparison very few customers.

I learn't a huge lesson here, as I didn't have the strength of my convictions to buy buy buy Contact... and then Contact announced. Contact's profit, and (as a result) its shareprice went gangbusters that year, and I missed out on it all despite coming to the right conclusion at the right time.

Vector bought out AGL's share after that. I think AGL had to sell it to survive. Their business (Vector's) involves a lot more than retailing, and the company that it is today learn't a lot from AGL's complete mismanagement. Vector should not be ruled out, just a bit more carefully watched imho.

[Vaygor1]

.... As for the relative merits of the [Generators/retailers], the complexities involved in the various businesses are too hard for me to fathom although I tend to favour those with a good chunk of the cheaper (hydro) generation - questions of water rights excluded meanwhile!

I'm not worried about the Water Rights issue... it's a ludicrous claim.

At what point does the molecule of water, evaporated from the ocean off the Queensland coast (or Perth's coast, or Antarctica's coast, or Indonesia's coast) suddenly become the property of the local Iwi?

The whole thing is such a joke that it beggars belief. Those claiming ownership of this water are literally farting against thunder.

[Vaygor1]

You have a very good point Sparks, especially when a Taniwha can cause the halting & redevelopment of NZ's State Highway One, and play a part in the location of the Ngawha prison in Northland. http://www.kiwianarama.co.nz/taniwha-based-transport-policy/...

...Thus allowing a myth to 'have its say' at the expense of NZ becoming the laughing stock of the world.

I find I am unable to express my utter dismay regarding the above to the extent I want to without resorting to swearing.

[binary]

They are all equally capable of being molested by one of the following: the Commerce Commission, Iwi, Labour/Green/Mana governments and weather patterns. The stocks would have to be VERY cheap to be attractive.

Mighty River will probably be the most attractive over a three month horizon once it lists, as it will be priced to succeed. If MRP is a flop on listing, then the subsequent govt listings will face headwinds.

Don't forget being molested by more and more people going off grid as solar etc become cheaper and more efficient. Give it 10-20 years once hydrogen can be safely split from water and these power companies may barely exist.

[digger]

Don't forget being molested by more and more people going off grid as solar etc become cheaper and more efficient. Give it 10-20 years once hydrogen can be safely split from water and these power companies may barely exist.

binary, I had a good laugh about that hydrogen being split from water and then used as a power source. I went to school way back in the 50ths and that was just around the corner then and still is so if that is all MRP has to worry about I would say the future is lookig secure.

[binary]

binary, I had a good laugh about that hydrogen being split from water and then used as a power source. I went to school way back in the 50ths and that was just around the corner then and still is so if that is all MRP has to worry about I would say the future is lookig secure.

From my sources this is not that far from reality. It's already easily done only highly volatile, but techniques for safely storing hydrogen are well on their way to being viable for energy production.

[CJ]

From my sources this is not that far from reality. It's already easily done only highly volatile, but techniques for safely storing hydrogen are well on their way to being viable for energy production.
Laws of physics would say there is no net gain in energy if you go h2o > h + O2 > h2o

[binary]

Laws of physics would say there is no net gain in energy if you go h2o > h + O2 > h2o

Not if you use a catalyst.

[neopoleII]

if you can discover a catalyst you would be the maker of the proverbial doomsday bomb.
just imagine a terrorist dropping a ton of catalyst into a water storage facility?

[bohemian]

Binary you are effectively saying that by using a catalyst you can create energy.

[binary]

More or less you could however this is highly unstable. If metal organic frameworks can be developed to effectively store hydrogen safely then there is the potential to produce limitless energy.

This is still many years away and gets away from my main point that alternate forms of energy production are becoming more efficient i.e solar, wind etc and this will lead to higher numbers of people going off grid over the next few decades.

Therefore the demand for energy from power companies is likely to diminish significantly over the next decade.

[bohemian]

"More or less" you don't get sometthing for nothing.

[CJ]

Not if you use a catalyst.my car engine makes free power too! You just have to add petrol.

[Dej]

Loving the physics diversion in here :t_up: I am a chemical engineer by occupation so this stuff is right up my alley - but I wont pass comment.. will just say that energy is neither made nor destroyed, just transferred from one form to another. Some technologies convert what we would deem useless energy into usable energy through the use of biological pathways. For example, their is a NZ company that takes carbon monoxide gas and turn it to ethanol using an microbe which needs no major input of energy. Ethanol has a much higher enthalpy of combustion compared to CO in oxygen, meaning to the naked eye they have made energy from nothing.

The fact of the matter is that its just an illusion. The reality is that the feedstock of the microbe contains this energy in a 'useless form' such as metals. We cannot burn metals to produce energy. But we can make processes that transfer this energy from one form to another through different pathways. As the aforementioned company does.

Speel over. Funny I said I wouldnt pass comment! Owell... Back to financial markets eh? :p

[Vaygor1]

Can you just make Gold these days? Yes
Can you make it for cheaper than the cost of getting it out of the ground? No

Can you split H2O into water + hydrogen? Yes
Does the energy it takes to do this greater than the energy your left with? Yes

Can you transport electricity through the air without wires? Yes
Can you do it publicly without killing/harming anyone? No

Can you transport energy without any losses via superconductors? Yes
Is the cost of cooling the superconductor greater than the savings? Yes

There's always a catch.
Electricity Generation and Distribution through copper and aluminium conductors will still be in full swing long after I'm dead.

[minimoke]

Beware the tax man! The IRD will be merciless in tracing down those who bought in and sold with the intent of making a quick profit. Make sure your intent to sell is well defined and reasonable. Otherwise the man in short sleeves and necktie will gobble your wealth up.

If its a great company, you should try buy and hold. Nowhere near as much stress, activity and worry as constantly jumping in and out. All that trading will eat up your returns if you aren't careful! :-)
I love stags and have been in every one that has involved the govt and anything that looks half decent. Not once has IRD been in touch and I haven't come across as single person who has been touched. We'l get the usual "we are watching you" from the commissioner but it will end up just puffery.

All my whanau are IRD registered to take advantage of Kiwsaver. They will now be part of my plan to by these IPO's up large. I did have an eye on SE but that one has crashed and burned. The govt has totaled botched up this IPO launch. Form keeping the hands far removed from the SE tiller and letting the water claim get to where it did. They have even more incentive now to make it work for "moms and pops" MRP is guaranteed to be a winner - the only question is just how big a winner and over what time. Even ex Hanover investors are guaranteed to make a bob or two - if only they had some left after the ALF debacle.

One thing I can't figure is I've heard commentators say the success will depend on how expensive the shares are. This is surely a red flag to the Hanover types who figure a thousand shares at a dollar is a much better deal than 500 at $2

For the record I plan to be a long term holder. I'm just hoping my cash flow challenges don't put me in a situation where I have to sell up. I haven't figured out how to buy into each of the floats yet. It might be I'll need to sell to raise the cash for a better opportunity.

One thing I will be looking closely at is the deferred maintenance. I suspect there will be a fair bit of massaging expenditure to show a strong revenue / dividend yield. I'm super suspicious when I hear of the potential for bonus shares for long term holders. I may be a cynic but I suspect there will be no coincidence between the time these shares are issued and major expenditure is required.

[rmbbraver]

Mighty River set for ASX listing - Oz media

Mighty River Power is to be listed on the Australian stock exchange as well as New Zealand's NZX sharemarket according to an Australian media report.

The investment banks running the sale process Credit Suisse First NZ Capital, Goldman Sachs and Macquarie Group met this week following the Supreme Court ruling on Wednesday which cleared the way for the float, the Australian Financial Review reported.

"The deal will result in Mighty River being dual-listed in Australia and New Zealand" it said.

"The theory is Mighty River will be reasonably priced to ensure the subsequent floats are well received.''

The report goes on to say a 49 per cent stake in Meridian Energy, worth $3.18 billion, is tipped to be the next company to be partially privatised under the mixed ownership model.

Many of New Zealand's top companies are "dual-listed" on the Australian Stock Exchange as well as the NZX, including Fletcher Building, Auckland International Airport, Sky City, Telecom and The Warehouse.

A spokesman for Finance Minister Bill English said Mighty River's "primary" stock exchange listing would be in New Zealand.

"Decisions beyond that will be announced after they have been confirmed by ministers. As we've promised, the share offer will put New Zealanders firmly at the front of the queue for shares and ministers will decide who receives the shares in the IPO."

Labour's State Owned Enterprises spokesman Clayton Cosgrove said English needed to tell the public "whether he is planning to flog off their assets on the Australian share market, and if he is, why he thinks it is a good idea".

"The Finance Minister keeps promising that Kiwis will be at the front of the queue to buy shares in the power companies that they already own as taxpayers. And he has insisted that the first share float is likely to be oversubscribed. So if Kiwis get first dibs and demand is going to exceed supply, why list the company in Australia too?"

At its Monday meeting Cabinet is expected to give its final sign off to legislation allowing the partial privatisation of Mighty River and to a timetable for the share float which it wants completed before mid year.

English has said potential investors may be able to preregister or indicate their interest in buying shares by the end of next week.

[iceman]

A good article from Brian Gaynor

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10868635

[corporateraider]

A good article from Brian Gaynor

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10868635

The electricity generator's proposed business model, namely government control with a sharemarket listing, offers a great opportunity for the company to produce good investment returns and sustainable dividend increases for the Crown and private shareholders.

So where has Contact Energy gone wrong? The performance of this company over the last 5 years has been very disappointing to say the least. Yes I realise that there is no longer government involvement, but for Gaynor to suggest that share market listing is somehow a track to "gold paved street" prosperity is wide of the mark.

[Snoopy]

Pre-registration open from tomorrow:
http://www.stuff.co.nz/national/politics/8379087/Mighty-River-Power-share-deal-announced


Kiwi investors guaranteed a parcel of shares worth $2k? That isn't even an economically marketable parcel. If that is the extent of NZers allocation, while large blocks are allocated to Australian institutions, I for one am unimpressed!

SNOOPY

[minimoke]

Snoopy it is par for the course. All these floats are for around $2k s person.that's why I have my whanau all locked and loaded.a few of market transfers and I end up with a decent holding. I think this time around we might get $3k each by the time it's scaled

[macduffy]

It's not normal to charge commission to buyers in such issues.

And no fees for off-market transfers if you handle them yourself.

[peat]

probably something to read turmeric http://www.directbroking.co.nz/directtrade/static/OffMarketTransfers.aspx the pre-reg for MRP wont be committal. usually you apply for how many you want and then they scale your allotment back.

[POSSUM THE CAT]

tumeric just ask for the forms from the share registry & follow instructions

[777]

"Also would you mind telling me more about making off-market transfers?"


Down load the transfer form from the share registrar and once completed send it into them.

[Under Surveillance]

Snoopy it is par for the course. All these floats are for around $2k s person.that's why I have my whanau all locked and loaded.a few of market transfers and I end up with a decent holding. I think this time around we might get $3k each by the time it's scaled
Way to go, minimoke. You might have to keep them in the whanau's names until after the loyalty bonus is paid, if you want to pick that up.

The way the sale is shaping up, it will -by design or otherwise - convert some of those against the sale based on principle into patriotic loyalists, buying up small to thwart he Australians, Asians, etc from getting stakes through the IPO. Then putting personal interest ahead of all else, and selling them (overseas) to "lock in their gains".

[CJ]

"Also would you mind telling me more about making off-market transfers?"


Down load the transfer form from the share registrar and once completed send it into them.I assume what this is referring to is you apply for $2k in your name, wifes name, 2 kids names and the dogs name, all of which have IRD numbers. Then at some point (after what ever bonus the govt offers for holding on) you transfer all five holdings to your trust (or to whoever holds your share portfolio).

That way you bought $10k with no scaling. If you apply for $10k in your own name, then it will be scaled back to, say, $6k and about 3 months later, you get a cheque back for the $4k you didn't get (having lost 4 months interest and/or missed investment opportunities in the mean time. Note: 4 months is an exaggeration - timeline will be in the prospectus)..

[777]

Thanks CJ. My post was in reply to tumeric's query in earlier post.

You are correct in money being tied up in these issues. They should only scale if the retail investor's reach the 51%. Can't see that happening though.

[rmbbraver]

$2000 guarenteed with no scaling back is a bit of a joke really.

I would probably need all 4 family members to get $20,000 worth.

Lets say the shares go up 10% within a few months of listing so that's $2000 profit and a lot of mucking around filling in forms and off market transfers.

And if they do go up, the wife and the kids will be demanding their share of the profits for the priviledge of using their IRD numbers, (EVEN THOUGH ITS MY MONEY), before they sign the off market transfer form.

[GR8DAY]

$2000 guarenteed with no scaling back is a bit of a joke really.

I would probably need all 4 family members to get $20,000 worth.

Lets say the shares go up 10% within a few months of listing so that's $2000 profit and a lot of mucking around filling in forms and off market transfers.

And if they do go up, the wife and the kids will be demanding their share of the profits for the priviledge of using their IRD numbers, (EVEN THOUGH ITS MY MONEY), before they sign the off market transfer form.



............EXACTLY RIGHT RMB, NOT WORTH WASTING YOUR TIME AND EFFORT ON THIS ONE.......may as well just wait for listing day and buy up large then......if you feel so inclined. $2000 worth what a frikn joke!!!

[janner]

$2000? But a dual listing in Oz.... Bloody Fonterra all over again.

. I don't want some scrap holding in the portfolio....

.

Probably true Sparky.. But I think that it could be good cheap start, for some averaging up .. Who knows.. ??.

Also the thought hits me .. What is this IPO going to do to the market as punters cash up to invest.. ???..

[percy]

$2000 guarenteed with no scaling back is a bit of a joke really.

I would probably need all 4 family members to get $20,000 worth.

Lets say the shares go up 10% within a few months of listing so that's $2000 profit and a lot of mucking around filling in forms and off market transfers.

And if they do go up, the wife and the kids will be demanding their share of the profits for the priviledge of using their IRD numbers, (EVEN THOUGH ITS MY MONEY), before they sign the off market transfer form.

Don't think my lot would sign the off market forms."Thought you were giving them to us.! "

[JohnnyTheHorse]

Also the thought hits me .. What is this IPO going to do to the market as punters cash up to invest.. ???..

I can't imagine there being a huge effect as people will only really be able to pick up small parcels. Even if it does drop a wee bit, there is going to be an influx of mum and dad investors who will become interested in the market. That'll surge the market to news highs I'm picking.

[janner]

STAG STAG STAG STAG STAG STAG STAG STAG :drool:

There you go again moosie !!... Really must invest in Incontinence Product Distributors.. .. :-))

[macduffy]

$2,000 worth is the "guaranteed" minimum but we don't know yet whether (some) brokers will secure an allocation that enables them to offer a significantly larger parcel to their regular clients. That will all come out in the book-build, I suspect.

[Xerof]

They require an IRD and bank account number, allegedly to prevent your cat, budgie, and tortoise applying, but it would seem a dangerous occupation to stag if you are not prepared to pay the tax on any gain. They have the technology available to efficiently follow the money, and seem determined to prevent significant churn as well by offering the free shares for being 'loyal'