Vector Limited (VCT)

[rmbbrave]

Vector endorsed despite crisis warning


25.07.05


By Chris Daniels, Energy Writer


Investing in energy network company Vector has been endorsed by a leading fund manager, despite its warnings of a looming power crisis.

Vector has been warning that power cuts to Auckland homes and businesses might come as early as winter 2007.

It says the system is too stretched to cope with the failure of a major part of the infrastructure - such as Contact's gas-fired power station at Otahuhu.

The Electricity Commission has asked for submissions from the public and industry about possible alternatives to Transpower's plan for a controversial new 400kV transmission line through the Waikato.

Simon Botherway, principal at Brook Asset Management, which expects to be the second-largest Vector shareholder after its IPO, said he shared Vector's concerns about security of supply.

It did not change his view of Vector as a good investment though, since many of the potential problems came from a lack of past investment in generation and transmission. These were not caused by Vector.

Vector says that the kind of blackouts it is warning of would not affect company revenues, since it would be "shaving" demand for electricity at peak times. The actual amount of electricity sent through the system would not change, but big users may not get as much power as they needed. It would not be like a "dry winter" where electricity use falls over a long period.

Transpower runs the national power grid under a philosophy known as "N-1" which means it can cope with the loss of any one major component, be that a transmission line or power station. Vector says this level of protection was close to being breached last month.

In its submission to the Electricity Commissioner, it says that after looking at other comparable cities around the world, a higher standard of security - approaching N-2 - should be in place for Auckland.

[Snow Leopard]

This announcement (http://stocknessmonster.com/news-item?S=NZXR&E=NZSE&N=118489) from the NZXR amounts to permission for brokers to sell off Vector shares without going through all that tedious opening accounts business and is expectation that there will be lots of new shareholders in Vector who want to sell out on or soon after listing.

PT I think you will find that it allso applies to non resident NGC shareholders whose Vector Shares will be compulsorally sold as per terms of NGC takeover

[tsb]

They cashed my cheques promptly on the 21st July
I took oldriders hint and sent off early for the whole family
If they scale hopefully I will be left with a meaningfull parcel

[Snow Leopard]

ENIGMA. This ruling (on 9.8.1) has nothing to do with the attempt to takeout NGC. "Non-natural person" is an entity such as a company, trust etc that is not a homo-sapien. It does not mean non-resident.

I think the ruling on 9.8.2 covers the case where an entity gets more than one allotment by dint of paying the electricity bill on more than address with a variation in name.
For instance, I notice that on my application form the "put your CSN here" bit already contains a new CSN, probably because the name on my electricity bill and my existing shareholder account name are slightly different.
I have had this before when each year the company I worked for dreamt up a new variation on my name for the employee share scheme.

[Snow Leopard]

[V]

quote:
VCT
28/07/2005
COMCOM

REL: 0845 HRS Vector Limited

COMCOM: VCT: Commission to administer control of gas pipeline services

Commission to administer control of gas pipeline services

Energy Minister Trevor Mallard has accepted the Commerce Commission's
recommendation that gas pipeline services provided by Powerco and Vector be
controlled, under Part 5 of the Commerce Act.

The Commission found in its gas control inquiry report that competition in
the gas pipeline industry was limited and excess returns were being made by
Powerco and Vector. In November 2004 it recommended that the Government move
to control these two companies, and introduce a thresholds regime for the
industry.

"The Commerce Commission is pleased the Government accepted our
recommendations," said Commission Chair Paula Rebstock.

"Moving to control Vector and Powerco means the companies will no longer be
able to take advantage of their market power. There will be benefits for
consumers, with the potential for significant price drops."

The Commission could not say at this stage exactly what the savings to
consumers would be, said Ms Rebstock, but its analysis suggested a saving on
distribution prices of up to 12.2 percent for Powerco customers and 18.5
percent for Vector customers could be achieved over time.

Ms Rebstock said the Commission was also pleased the Government had agreed a
regulatory thresholds regime should be brought in for gas pipeline services.

Control of Vector and Powerco will be effective from 25 August. At that time
the Commission is required to authorise prices. This will be a provisional
price authorisation, and the Commission will undertake further investigation
and consultation to determine final authorised prices.

Ms Rebstock said the Commission would carefully balance the benefits to
consumers and the investment incentive effects on the businesses.

"Achieving that balance is important for the long term benefit of consumers."

Background
The Commerce Commission commenced its inquiry into gas pipelines services in
April 2003 following a request from the Minister of Energy under the
regulatory control provisions of the Commerce Act. The Minister requested
the Commerce Commission to make recommendations on whether or not supply of
gas pipeline (transmission and distribution) services should be controlled.
The Minister has requested the Commission to complete the inquiry by 29
November 2004.

Under the Commerce Act, the Commission is required to consider two issues to
determine whether control may be imposed:
- whether competition in the supply of gas pipeline services is limited
or likely to be lessened; and
- whether control is necessary or desirable in the interests of
acquirers or suppliers of gas pipeline services.

Having determined whether control "may" be imposed, the Commission was then
asked to consider additional matters to determine whether control "should" be
imposed. The additional matters include:
- the efficiency costs of achieving reductions in excess returns;
- the magnitude of the benefit of acquirers; and
- the impact of a recommendation not to control.

A copy of the Commission's final report and subsequent advice to government
is available on the Ministry of Economic Development's website,
http://www.med.govt.nz/ers/gas/control-inquiry/

Media contact: Kate Camp, Communications Manager
Phone work (04) 924 3708, mobile 0275 24 3708

If you wish to speak to Paula Rebstock, please contact Kate
Camp in the
first instance.

Commission media releases can be viewed on its web site www.comcom.govt.nz
End CA:00118598 For:VCT Type:COMCOM Time:2005-07-28:08:45:53

[Snow Leopard]

See page 71 of the Investment Statement for "info" on above.

[Snow Leopard]

Control of vector & powerco from 25th August.
Vector due to list 26th August.
coincidence? maybe?

and of course General Election 17th Sept [:0]

[prius]

VECTOR cashed my cheque on 27 July. I sent mine on 25th July. Let the waiting game start.

[toffee]

If I were at all thinking about selling my allocation (whatever that may be, although worst case scenario is looking at around $1300 per beneficiary)on Day 1, how would I go about this?

Will I have my allocation or share certificate by listing day or not?

Purely hypothetical at this stage you understand!

TIA

toffee

[rmbbrave]

A worst case scenario would be:

$59,000,000/286,000 = $206 each.

Vector closes in as share deadline looms


10.08.05


By Chris Daniels


Vector, poised on the verge of partial privatisation and a stock exchange listing, has snared more than 80 per cent of takeover target NGC.

Its takeover offer closes today, as does its invitation to many Auckland power users to apply for new shares in the energy network company.

Vector told the stock exchange yesterday it now had 82.4 per cent of NGC, just under 8 per cent short of the threshold needed to compulsorily acquire all remaining shares.

Vector hopes to gain complete control of NGC, so it can fully merge the takeover target's wholesale gas, gas transmission and energy metering operation within Vector.

The lure of being paid in Vector shares is a big part of the offer to NGC shareholders, as the stock is expected to be keenly sought.

NGC shares have themselves consistently traded on the open market at prices well above the $3.40 a share Vector is offering.

Shareholders in NGC are being paid the $3.40 partly in cash - 78c a share - and the rest in new Vector shares.

NGC shares have been trading at more than $3.70 for the past month.

New Vector shares are due to start trading on the stock exchange on August 26.

One of the big questions due to be answered this week is how many new Vector shares will be allocated among potential investors.

NGC shareholders are being allocated $380.4 million from the float, and Vector capital bondholders are in line for $153.6 million, leaving $59 million worth of shares for the remaining 286,000 power account holders.

If the response to the share offer from NGC shareholders, beneficiaries of Vector owner the Auckland Energy Consumer Trust and Vector capital bondholders is so high that there are no shares left for anyone else, an allotment will be made within five business days.

Statements saying how many shares each person has been allocated will then be posted out.

[Dazza]

rmb it doenst look good....

a paultry 206 bucks.... pathetic..

[moimoi]

any chance at this late stage of renaming vector Baidu???

cheers
moi

[Adam]

NGC
10/08/2005
TAKEOVER

REL: 1755 HRS NGC Holdings Limited

TAKEOVER: NGC: Vector signals move to compulsory acquisition

Vector today announced that it will now move to compulsorily acquire the
remaining shares in NGC Holdings Limited after receiving acceptances in
respect of its offer for NGC shares which, when aggregated with Vector's
existing shareholding, exceeds 90 per cent of NGC's shares. All conditions in
the offer were fulfilled or waived by Vector.

The announcement comes after its Takeover Offer to NGC shareholders closed
today (Wednesday 10 August 2005).

As a result of the successful offer, Vector also today announced that the
company has brought its plans to list on the NZSX forward to Monday 15 August
2005.

Vector chairman Michael Stiassny says the company has had an excellent
response to its offers and is looking forward to making its debut on the NZSX
next week.

Mr Stiassny confirmed that, of the $592 million worth of shares being issued,
$380 million would now be allocated as part consideration under the NGC
acquisition. Capital bondholder entitlements that have been taken up through
the offer totalled $140 million, leaving $72 million available for allocation
to AECT Beneficiaries.

He also confirmed that, given that the AECT Beneficiary offer was
significantly over-subscribed, the closing date for the General Offer had
been brought forward and it is now closed and that the Institutional Offer
and the Primary Market Participant Offer, all of which form part of the
Vector Share Offer, would not proceed.

Holding statements will be sent to Vector shareholders early next week.
Alternatively, shareholders can contact Computershare on (09) 4888 777 from
Monday 15th August regarding their allocations.

Application has been made to New Zealand Exchange Limited ("NZX") for
permission to list the shares in Vector Limited, and all the requirements of
NZX relating thereto that can be complied with on or before the date of this
announcement have been duly complied with. However, NZX accepts no
responsibility for any statement in this announcement.

ends

Contact:
Charlene White
External Communications Manager
Ph: (09) 978 7638
Mob: 021 512 829

[Lawso]

Vector is to list on Monday, 15th, but holding statements won't be issued to shareholders until "early next week". So how can the stock be traded on Monday if most holders won't know until about Wednesday how many shares they own? I expect to get some as a AECT beneficiary, a bondholder and a NGC holder but have no idea how many I'll get and in no position to decide whether to sell, buy more or sit tight because it won't be a true market situation. At least, that's how I see it.

[Tycoon]

206 dollars of shares, that would be even less than 100 shares!!!!

what the blood pointless exercise it was to send in thousands dollars worth of cheques.

Think about the investors who have no further reserves to buy once listed on 15th because they sent all their money in! probably won't get a refund until a few days later as well!

a tad farcical really
[xx(][xx(]

[toffee]

I can't believe that the allocation would be that low. How ridiculous! How much interest is being made on these cheques that have been banked? My cheque for $2k was cashed 2 days after posting.

[CJ]

Dont worry guys, YOu will get at least $250 worth, the amount unallocated is $72m.

What sort of minimum do you think would be acceptable for beneficiary pool considering you all knew it would be oversubscribed. $500, $1000? Even at a low 25% uptake, that only gives you $1,000.

[rmbbrave]

quote:Originally posted by Dazza

rmb it doenst look good....

a paultry 206 bucks.... pathetic..


It's only $206 if everyone takes up their entitlement. What you need to find out is the take up rate. Why not ask everyone you know the following 2 questions.

1) Are you a vector customer?

2) Are you buying shares in the IPO?

30 people is a statisically significant sample.

[whatsup]

Q ,How many AECT beneficiary holders are there? divided by the available $72mil divided by 1 in 10 or so (AECT benificaries who have registered/will take their shares up?)
A please

[moimoi]

286,000 beneficiaries as far as i know....

[Futurz]

I would be very suprised if more than 10-15% of the AECT benificaries have applied.

Not all people will have the spare cash to start with, especially if you look at the socio-economic breakdown of the benificaries. My understanding is the AECT zone goes as far south as Papakura. Then there are the people who got the info in the mail and just chucked it away without even reading it.

If there is a 10% acceptance then the allocation will be:
$72 million/28600 = $2517

If there is a 15% acceptance then the allocation will be:
$72 million/42900 = $1678

These figures obviously assume that all applications are scaled back but you have to also take into account many people would have just applied for the minimum of $500 worth.

[whatsup]

$72 mil divided by say 47,667(1/6 benificies takeup)

$1510.00
$72 mil divided by say 95,333(1/3 takeup)
$755.00

$72 mil divided by say 28600 (1/10 takeup)

$2517.00
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[moimoi]

futurz,

oversubscribed....

"He also confirmed that, given that the AECT Beneficiary offer was
significantly over-subscribed, the closing date for the General Offer had
been brought forward and it is now closed and that the Institutional Offer
and the Primary Market Participant Offer, all of which form part of the
Vector Share Offer, would not proceed. "

[limegreen]

quote:Originally posted by rmbbrave
30 people is a statisically significant sample.


30 people would give you a margin of error of up to 20%. Further, people on this forum asking people they know is likely to give a highly skewed sample. Thus, the indicated range from such a sample spreading over 40% of the possible range, without accounting for lack of representativeness makes a guess about as accurate.

Don't mean to sound snippy, but estimating population values is much harder than it seems....

[Futurz]

quote:Originally posted by moimoi

futurz,

oversubscribed....

"He also confirmed that, given that the AECT Beneficiary offer was
significantly over-subscribed, the closing date for the General Offer had
been brought forward and it is now closed and that the Institutional Offer
and the Primary Market Participant Offer, all of which form part of the
Vector Share Offer, would not proceed. "




Of course it is oversubscribed, but the key is the percentage (or number) of benificaries who applied as this will be what determines the allocation. One would assume that the scaling will be the same for everyone. So someone who applied for $20,000 will get the same as someone who applied for $10,000.

[Yossarian]

Do people think it's worth buying in one day one, or wait a while?

If on day one, any thoughts about the best time to make your move?

[foodee]

Vector statement as quoted by Moimoi indicates that the 'public offer' applicants will get zero! This leaves me with the impression that Vector has use the 'public offer' as an 'underwriting tool' (just in case the AECT bids did not meet expectation). Further insult is that fact that Vector stands to earn interest from the funds in a possible 'Claytons process'. Someone will tell me that Vector made no promise - I am aware of that, but...........[xx(]

The AECT category is the only one where scaling is possible...but public offer applicants should not hold their breath.

[Futurz]

quote:Originally posted by Yossarian

If on day one, any thoughts about the best time to make your move?


Market open!

[StainlessSteelRat]

quote:Originally posted by whatsup

$72 mil divided by say 47,667(1/6 benificies takeup)

$1510.00
$72 mil divided by say 95,333(1/3 takeup)
$755.00

$72 mil divided by say 28600 (1/10 takeup)

$2517.00
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


Significantly short of the $20k that i applied for. It's no wonder that the beneficiary allocation has been over-subscribed.

[moimoi]

i wonder what sort of damage one could do to oneself by putting a buy order in "at Market" on monday morning..??

where's it gonna be $3,$4,$5..??

[whatsup]

Moi---, If you were serious about buying Vector why not buy NGC today equivalent price of approx$2.95/ share

[moimoi]

granted....ngc last sale @ 3.89 less 0.78 cash....means i'm paying 3.11 per vector share..

[Futurz]

quote:Originally posted by moimoi

granted....ngc last sale @ 3.89 less 0.78 cash....means i'm paying 3.11 per vector share..

It's not a one for one entitlement though, for every NGC share you have you get $2.62 worth of Vector, which is approx 1.1 Vector shares for every NGC share (2.62/2.38).
So NGC @ $3.89 has an implied price for Vector of $2.83.

[moimoi]

thank you lads...!!

cheers
moi

[Lawso]

Having reached the 90% holding in NGC yesterday, Vector is now moving to compulsorily acquire the remaining NGC shares. But at what price? I don't think VCT is required to make the same shares-plus-cash offer. The hold-outs might get cash only, in which case it's now too late to buy NGC as a sure way of getting into VCT.
I see that NGC will disappear from the NZX indices on 18 August.

[Yossarian]

quote:Originally posted by Lawso

Having reached the 90% holding in NGC yesterday, Vector is now moving to compulsorily acquire the remaining NGC shares. But at what price? I don't think VCT is required to make the same shares-plus-cash offer. The hold-outs might get cash only, in which case it's now too late to buy NGC as a sure way of getting into VCT.
I see that NGC will disappear from the NZX indices on 18 August.


Will Vector be going straight into the NZX50 as well? Does that mean one other company has to drop out of the NZX50 for 4 days? Could be some price fluctuations if so...

[Lawso]

Yes. Read all about it on www.nzx.com - Today's Market Announcements.

[StainlessSteelRat]

quote:Originally posted by Yossarian
Will Vector be going straight into the NZX50 as well? Does that mean one other company has to drop out of the NZX50 for 4 days? Could be some price fluctuations if so...


I believe it will be large enough to be going straight into the NZX10, at the expense of KIP.

[CJ]

quote:Originally posted by Lawso

Having reached the 90% holding in NGC yesterday, Vector is now moving to compulsorily acquire the remaining NGC shares. But at what price? I don't think VCT is required to make the same shares-plus-cash offer. The hold-outs might get cash only, in which case it's now too late to buy NGC as a sure way of getting into VCT.

Does anyone know the rules. I thought they had to be offered the same, but note sure if that is just same price or includeds share/cash split. Have Vector held shares aside for this as that would be a telling factor.

[rmbbrave]

Staged index entry will ease Vector's way


12.08.05


By Chris Daniels


Plenty of new Vector shares should be there for whoever wants them come Monday morning, says the New Zealand Stock Exchange.

Vector shares will start trading on the exchange next week after its successful takeover of gas transmission and wholesaling company NGC and a $592 million initial public offering.

All remaining NGC shares are now being compulsorily acquired and the Wellington-based company will be delisted.

The shares are expected to be thinly spread across 45,000 investors, including former NGC shareholders, Vector capital bondholders and power users in Auckland City, Manukau City and most of Papakura.

Of the $592 million of shares being issued, $380 million are going to NGC shareholders, $140 million to capital bondholders and $72 million to Auckland Energy Consumer Trust beneficiaries.

If there are 45,000 beneficiary shareholders, each would get $1600 of new Vector shares.

James Lindsay, of Tyndall Investment Management, said he did not expect many problems with liquidity of Vector shares on Monday.

Big funds and institutional investors had been able to buy into Vector through buying NGC shares or Vector capital bonds.

Large numbers of NGC shares were still changing hands yesterday, after the close of the Vector takeover offer, because they would be compulsorily acquired - paid for in new Vector shares and cash.



NZX chief executive Mark Weldon said it had been decided to put Vector shares into the NZX50 index in two tranches, to ensure there were no problems for fund managers wanting to buy them.

"Because there was no real liquidity available to the public pool, it would have created artificial price pressure on the stock to put the whole of the stock in the index at one time," he said.

"You don't want the index to drive any type of trading patterns that are not in the best interests of true pricing for value, which is what a market should do."

Index managers and passive managers, who track the NZX50 index closely, have to buy up shares according to their presence in the index.

There should be no problems for fund managers wanting to buy the shares up to the level Vector will be represented in the index.

Weldon said he was not worried about liquidity levels.

"We think it will be a very sought-after stock for a lot of people's portfolios. We think it will attract a lot of analysts' attention, a lot of attention from offshore.

"We think it will be very liquid and are very confident that putting it in the tranche way that we are in the index will create absolutely no artificial pressure in liquidity."

Weldon said he had heard of a substantial appetite for the shares from AECT income beneficiaries.

"You like to see people take up those opportunities, and you like to see them have implicit faith in putting their money into capital assets. That's good and important."

Many new Vector shareholders would be first-time investors.

"We would hope they have a good experience."

[mentat]

So is float day this Monday? I saw some comment to this affect... So when do we find out how many shares we get? I applied for 15k as an AECT

[Lawso]

quote:
------------------------------------------------------------------------
Originally posted by Yossarian
If on day one, any thoughts about the best time to make your move?

My inclination would be to watch and wait. Chances are the price could slip back a little after the feeding frenzy of the first day or two. At least, that's always been my strategy with IPOs and it's paid off more often than not.

[Lawso]

quote:So is float day this Monday? I saw some comment to this affect... So when do we find out how many shares we get? I applied for 15k as an AECT
Do try to keep up, mentat.

Yes, the shares start trading on Monday and about then Computershare will mail out a statement of each applicant's holding. If you can't wait you can phone Computershare on Monday and ask them how many you've got. Indications are that AECT beneficiaries will allreceive the same amount - maybe about $1500 worth, unless of course they applied for fewer than that.

[Yossarian]

Notice from Vector Limited pursuant to Listing Rule 7.12.1

Pursuant to Listing Rule 7.12.1 please be advised as follows:

(a) Class of Security:
ISIN: Fully paid ordinary Shares
NZVCTE0001S7
(b) Number of securities issued: 213,677,618
(c) Issue price: 58,722,274 Shares at the Capital Bondholder Price of $2.32 and 154,955,344 Shares at the Final Price of $2.38
(d) Payment: Payment for 89,177,086 Shares issued pursuant to the Capital Bondholder Offer, AECT Beneficiary Offer and General Offer was cash. 124,500,532 Shares were issued Pursuant to the NGC Takeover Offer, where Vector Shares having an aggregate issue price of $2.62 and $0.78 in cash were offered as consideration for each NGC share.
(e) Amount paid up: Fully paid
(f) % of the total class of securities issued
22.15%
(g) Reason for issue: The purpose of the issue of Shares was to:
- Repay certain acquisition borrowings associated with the takeover offer for NGC made on 7 December 2004 (including the PIPEs)
- Provide consideration, in the form of Shares, pursuant to the NGC Takeover Offer made on 11 July 2005
(h) Specific authority for issue: Resolution of Directors dated 11 August 2005
(i) Terms or details of issue: The Shares issued are fully paid ordinary Shares. The Shares issued rank equally to the existing Shares.
(j) Total number of Securities of the Class in existence after the issue:
964,677,618 Shares
(k) Treasury Stock (acquisition only): Not applicable
(l) Date of issue: 12 August 2005

Vector advises that at the date of listing 22.15% of Vector's shares were held by members of the public, being a total of 49,398 shareholders

***********************

22.15%? Where did the other 2.8% or so vanish to?

[StainlessSteelRat]

quote:Originally posted by Yossarian
Vector advises that at the date of listing 22.15% of Vector's shares were held by members of the public, being a total of 49,398 shareholders


Presumably this includes the Bondholders and NGC shareholders? If so, it probably means that the number of AECT beneficiaries was at the lower end of the scale.[?]

[Yossarian]

interesting - might mean a bigger allotment for AECT beneficiaries...

Are there any figures out there for no. of NGC shareholders and Vector bondholders?

[Tycoon]

Sounds like if you buy NGC shares today you will still get paid in vector shares and cash..

I am very tempted [:p]

[Wanderer]

Vector have moved to compulsory acquisition of NGC having achieved the 90% threshold.

If you were to buy NGC shares today at $3.85, what guarantee is there that Vector will buy your shares under the same terms and conditions as the original takeover offer - could they choose to offer you cash instead?? - based on the assumption that you have not accepted their original offer.

This would mean perhaps only receiving $3.40 ($2.62 + .78) for your outlay of $3.85

Is there anything in the offer document?

[Yossarian]

I'm fairly sure they have to offer the same consideration (ie "no less favourable" to those being compulsorily acquired) but don't guarantee it!

[whatsup]

Dont forget to divide by the 1.1 factor
$3.85-.78div by 1.1=$2.79

[Dazza]

so we have bond holders at 2.32 and 2.38?

NGC at2.62

what about us AECT peeps?

[Futurz]

quote:Originally posted by Dazza

so we have bond holders at 2.32 and 2.38?

NGC at2.62

what about us AECT peeps?


$2.38 for the AECT "peeps" too:)

Also the NGC shareholders get VCT @ $2.38 a share too, it's just for every NGC share you get $2.62 worth of VCT i.e. 1.1 VCT shares for each NGC share.

[Yossarian]

Vector Limited's board of directors advise that Vector's Share Offer has been fully subscribed, and is now closed.

Shares have now been allotted and the Final Price has been set at $2.38 per share.

Vector chairman Michael Stiassny says the company is very pleased that thousands of New Zealanders have elected to participate in this unique investment opportunity.

Shares have been allotted to successful applicants as set out below:

Pre-registered AECT Beneficiaries and eligible Vector employees:
Applicants will receive an allotment of shares issued at $2.38 each, which is
the lesser of:
- the value of shares that you pre-registered for; or
- the value of shares that you applied and submitted payment for; or
- $3,146 worth of shares.

NGC Shareholders:
Acceptances have been received for shares in NGC taking Vector's ownership to 92.75%. Remaining NGC shares will be compulsorily acquired with the same consideration as for those shareholders who accepted the offer.

Vector Capital Bondholders:
Pre-registered Capital Bondholders will receive the value of shares applied for at an issue price of $2.32 per share, but in any event not more than their pre-registered application amount.

General Offer:
No shares have been allocated to any applicant other than as previously stated.

Vector shares will be listing on the NZSX on Monday 15 August at 11:00am.

Successful applicants will receive holding certificates within the next few days. Refunds to unsuccessful applicants will be posted by Wednesday 17 August.

Vector would like to remind all applicants of the risk of selling shares until it is known if, and how many, shares have been allotted to them.

ends

Contact:
Charlene White
External Communications Manager
Ph: (09) 978 7638
Mob: 021 512 829

********************8

$3k - much more than expected....

[Tycoon]

Pretty pleasantly surprised by the amount allocated as an AECT beneficiary.

I have a feeling the Vector shares may list at a significant premium to even the NGC offer price of 2.62. Approaching $ 3 perhaps.

Will be interesting to watch on Monday.
Will be acquiring more.

[kura]

Yep, $3146 was on my high side of expectations as ACET beneficiary (Applied for $3000)

[CJ]

That is a high allocation. Cant be bothered doing the figures but that must be less than a 10% uptake.

wonder how many $500 holder there will be as I guess a lot of beneficiaries would have just put in for that amount.

CJ

[Sky Tower]

Should be an interesting day on Monday
The AECT offer has the benefit of bringing a large number of new investors into the sharemarket who may not have purchased shares before
Just what the NZX needs right now
And should any of the newbies find sharetrader and post can we be gentle on them ?

[kura]

quote:Originally posted by Sky Tower

And should any of the newbies find sharetrader and post can we be gentle on them ?


Nope, the market is equally brutal/beneficial to everyone, why should this forum be any different !

[Dazza]

hehehe sky tower :P

nice to c ur double stars
welcome to the club


wow... 3k worth of shares... my lord wahoot :P
its as if i have struck gold...
awaits for monday with glee..

[StainlessSteelRat]

quote:Originally posted by Dazza
wow... 3k worth of shares... my lord wahoot :P
its as if i have struck gold...


Someone struck it! Spare a thought for those of us who are waiting for the refund before we can get our "true" allocation. ;)

[Lawso]

Yes, the prospect of getting $3146 worth of VCT is pretty satisfactory and better than expected. I figure that I'll have about 5380 shares, or about $12,800 worth at the opening price, counting those obtained as a V bondholder and NGC shareholder. Interesting to see what the stake will be worth after a week or two. But I'm likely to be underweight on VCT and will probably put the refund money towards buying more.

[Paddie]

quote:Originally posted by Lawso

Yes, the prospect of getting $3146 worth of VCT is pretty satisfactory and better than expected. I figure that I'll have about 5380 shares, or about $12,800 worth at the opening price, counting those obtained as a V bondholder and NGC shareholder. Interesting to see what the stake will be worth after a week or two. But I'm likely to be underweight on VCT and will probably put the refund money towards buying more.


I figure that there will be a lot of people wanting to buy more with their refund money, which should help initially push the price up.
The question is will the dust settle in a couple of weeks allowing buying at a less bullish price?


Paddie[:p]

[Dazza]

doubt it paddie...

u will have the first wave next week

then by end of next week to begin of next..

ppl like myself , lawso and u included will hopefully hopefully have our refunds by then...

then u gotta what give about 5 days to clear that?

id say prob a month to settle?!?!?!

muahhahahahh here we come!!!

and yes any refund will be topped up :P

[rmbbrave]

Bullish debut expected for Vector


13.08.05


By Chris Daniels


The biggest local share float in six years is all but complete, with just under $600 million of new Vector shares due to debut on the stock exchange on Monday morning.

Some 50,000 new shareholders will find out within the next few days how many of the sought-after shares they will have been allocated.

Signs of their attractiveness to the market continued yesterday, with investors snapping up NGC shares, and their price increasing by 10c each, finishing the day at $3.85. Anyone buying the few remaining NGC shares is guaranteed the same payout as those shareholders who accepted the Vector cash and shares takeover offer, which closed on Wednesday.

Vector is paying only $3.40 for NGC shares, but the most attractive part of this deal is that $2.62 of the price is being paid out in new Vector shares. The expected jump in the Vector share price is why investors were willing to pay 45c more for each NGC share yesterday.

Of the $592 million raised in the initial public offering (IPO), $380 million is going to NGC shareholders, $140 million to Vector capital bondholders and $72 million to Auckland Energy Consumer Trust (AECT) beneficiaries.

While announcing the $3146 allocation yesterday, the company warned of the risk of trying to sell any shares until it is known exactly how many each shareholder has been allotted.

Auckland-based fund manager Brook Asset Management says it expects to be the biggest new shareholder in Vector after the float.

Stock exchange chief executive Mark Weldon this week welcomed the entry of Vector to the share market and said he hoped the experience of many first-time investors would be a good one.

"We think it will attract a lot of analysts' attention, a lot of attention from offshore."

Weldon said he had heard of a substantial appetite for the shares from AECT income beneficiaries. "You like to see people take up those opportunities, and you like to see them have implicit faith in putting their money into capital assets."

The $592 million raised from the share float is being used to pay off debt incurred when Vector bought 66 per cent of gas wholesaling and transmission company NGC. With a much larger, integrated company, Vector says it expects dividends to its income beneficiaries to double.

VECTOR FLOAT

The details:

Holding statements will be sent to new Vector shareholders early next week.

Refund cheques are due to be posted out on Wednesday.

Any shareholder can ring Computershare on (09) 4888-777 from Monday to find out how many shares they have been allocated.

Vector shares will start trading on Monday morning at 11am.

The listing price is $2.38 each.

Money raised in the IPO is being used to pay for the takeover of NGC.

The recent price of NGC shares points to a healthy premium for new Vector shares.

Anyone who did not pre-register for the beneficiary entitlement, but sent in an application anyway, will not get any shares.

Income beneficiaries will be issued with no more than $3146 worth of new shares.

All Vector capital bondholders are receiving their full allocation.

[rmbbrave]

Vector is paying only $3.40 for NGC shares but they are trading at $3.85 a premium of 13%

Is it fair to asume that Vector shares will also be up 13% on their list price of $2.38?

[stockbroker]

or will they be trading at 45c above $2.38, as people are willing to pay 45c more for the NGC shares.

[Dazza]

im punting for $3 :P

[icehot]

quote:Originally posted by Dazza

im punting for $3 :P


Plenty of NGC to be bought at $3.85 giving a Vector price of $2.78. Why pay $3.00 today? Makes no sense.

[toffee]

Any joy contacting Computershare? I am trying but just ringing out so must be a little busy I guess!

[slavros]

quote:Originally posted by toffee

Any joy contacting Computershare? I am trying but just ringing out so must be a little busy I guess!


Toffee,

Why not try this link: (http://www.nzx.com/psh/PS301P.shtml?browser-redirect-from-PSWELCOM)? Have your Shareholder Number handy.

[Sky Tower]

Please be advised that Vector Limited ordinary shares (VCT) will
commence trading on the NZSX Market at 11.00am. Pre-open will commence
as usual at 9.00am.

NZX also advises that the maximum number of VCT shares that has been
allotted to a successful AECT Beneficiary applicant is 1322 (being
$3146.36 / $2.38 per share).

Regards
Listed Company Relations
NZX

[Yossarian]

NGC up to $3.98 already....

[toffee]

Anyone selling their VCT on Day 1?

[Seiya]

i m in wait and see mode. Think there will be such a premium on the debut that might have to wait few days before top up my shares.

[toffee]

Thinking of selling and banking some profit to buy some more at a later stage. Not sure yet...

[Sky Tower]

Vector (from NBNZ site - I have truncated the table a bit)
VCT
Bid (Buyers)
Bid Volume Price
1 2,000 3.55
4 29,370 3.50
1 10,000 3.33
1 10,000 3.31
Ask (Sellers)
Price Volume Ask
2.88 11,008 1
2.89 21,206 2
2.90 10,775 2
2.93 55,000 1
2.95 0 1
2.99 24,303 3
3.00 10,631 4
3.05 6,969 1
3.08 10,775 1
3.10 230 1
3.30 3,232 1
3.40 1,200 1
3.60 955 1
3.80 1,322 1

[Yossarian]

looks like it's going to be an interesting day...

[rmbbrave]

First trades around $3

[Sky Tower]

First trades @ 3.00 and 3.03 (from NBNZ site)

Latest Trades
Time Price Volume Value
11:01:55 a.m. 3.0300 2,762 $8,368.86
11:01:41 a.m. 3.0300 3,300 $9,999.00
11:01:14 a.m. 3.0300 5,000 $15,150.00
11:01:11 a.m. 3.0300 10,000 $30,300.00
11:01:08 a.m. 3.0300 10,000 $30,300.00
11:00:53 a.m. 3.0300 15,000 $45,450.00

[rmbbrave]

Buyers for 400,000 @ $3.00 - $3.05

Sellers of 30,000 @ $3.05 - $3.08

No doubt where the SP is heading.

[toffee]

Is there a settlement period on trade deals here? Sorry fresh from the UK where there is such a 5-6 day period.

I only ask because obviously not in posession of a share cert yet and may wish to sell either today or tomorrow. I deal through NBNZ btw.

TIA

[Dazza]

mmm maybe it will surpass my prediction of 3.20 for the day :D

[rmbbrave]

quote:Originally posted by Dazza

im punting for $3 :P


I though you "predicted $3"

[lucky]

must be the drugs

[Sky Tower]

Toffee - with the National Bank system settlement is near real time (some exceptions) as opposed to T+3
Disc: Work for NBNZ

[toffee]

Anyone got a realtime (near rt) sell/buy breakdown?

TIA

[toffee]

Thanks Sky. Which brokers' trade T+3 out there? If anyone has any recommendations, please let me know.

TIA.

toffee

[rmbbrave]

quote:Originally posted by Dazza

hehehe sky tower :P

nice to c ur double stars
welcome to the club


wow... 3k worth of shares... my lord wahoot :P
its as if i have struck gold...
awaits for monday with glee..


I think your right Lucky,

That's what the all the "P"s stand for.

[rmbbrave]

quote:Originally posted by rmbbrave

This vector float had better be a roaring success.

I bought 80,000 bonds for $89757 just before the deadline to get shares in the IPO. Received $2378 in interest and sold them for $80842.31.

My current loss is $6536.

I can get get $40,000 worth of shares which will have to rise by 16.3% for me to break even.

What are my chances of breaking even 1 week after listing?


Well I'm ahead.

Lost $6500 buying $80,000 worth of bonds.

Got $40,000 worth of shares, which are up 28% or $11200.

Profit about $4700.

Also got my dad, whose a customer, to buy me $3146 so that's another $880 in profit. My Dad might stiff me though now that they are up 28%.

How do you do an off market transfer anyway?

[Bobby_Fischer]

Go to computershare.co.nz, Investor centre, downloadable forms, and download the offmarket transfer PDF (I'd give the URL, but I think you need to come through their home page to get NZ info).

[Sky Tower]

Just gift the stock to your dad. How many years has he put up with you now?

And besides its nearly Fathers Day. What a great long term present (a parcel of VCT shares would be)

[ananda77]

Sold my shares as soon as I could see out of my sleepy eyes.

31% profit...exactly according to plan set last November.

Next time I will be looking at vct is when there will be a buying opportunity.

Kind Regards...and to all those who will be more patient than me and holding...Good on You, Well done!!

[toffee]

ananda.
How did u sell the shares? Have you got a T+3 broker?

[ananda77]

What is a T+3 broker??

I sold my shares as usual through Direct Broking...not the slightest problem at all.

Kind Regards

[Sky Tower]

Toffee
If you have your CSN and FIN you should have no problems doing it through the NBNZ site. If you placed your existing CSN (Common Shareholder Number) on your application form you should be able to sell your holding. Confirm your holding under CSN with Computershare first (09 488 8700). Then go Trading > Shareholdings > Transfer Holdings and enter your CSN and FIN. Then place your order.

You can call 0800 22 68 98 if you need to - they should be able to help.

[toffee]

Thanks.

Yep, gave it a go...

Tried Computershare but they wouldn't give me the required info over the phone (CSN/FIN). Said a statement would be mailed out on Tuesday.

toffee

[Sky Tower]

Did you place your CSN on your application form? or is it your first lot of shares ever ?
If this is your first time, statement of holding will come one day and the FIN will be posted another day, separately

[Dazza]

nice one rmb :P hehe

my 3.20 prediction was what i had placed on my msn nickname over the weekend

soz for the confusion hahahha

mmmmm this ones a long term for me

im wondering will they have a DRIP?

whats the divi yield?


also note in the article that divi payment to users will be up 100%!!! thats afta the float etc... due to NGC take over...


will be buying more definately !!

[rmbbrave]

quote:Originally posted by Bobby_Fischer

Go to computershare.co.nz, Investor centre, downloadable forms, and download the offmarket transfer PDF (I'd give the URL, but I think you need to come through their home page to get NZ info).


Thanks very much Bobby.

[rmbbrave]

quote:Originally posted by Sky Tower

Just gift the stock to your dad. How many years has he put up with you now?

And besides its nearly Fathers Day. What a great long term present (a parcel of VCT shares would be)


My dad bought them with his money.

I had to badger him to do it though.

He said he didn't want them and that I had to pay him back. That was fine with me but I reckon he might change his tune now.

[Tycoon]

how come NGC shares are still trading?

[Sky Tower]

coz not everyone accepted the takeover offer. Will be quite awhile before NGC delists I think

[fish]

must admit i am brassed off at the paltry number shares allocated-i feel the indicative offer form which beneficiaries sent back could have enabled the company to announce there would be no scaling-in my case i received less than 10% of the value of the cheque i sent the company-they still haveabout $47,000 of mine which they are earning interest on.

[fish]

sorry my post isnt that clear-the company could have told applicants that it would be unlikely that anyone applying as a beneficiary would be allocated more than say 5000 shares so they didnt mislead investors

[fish]

does anyone know when refunds will be sent?

[Sky Tower]

Fish, Did you really expect to get a large amount of shares in the hottest share float since Auckland Airport and Contact Energy (see my early posts) as an AECT beneficiary? since there were what about 290,000 of you eligible to apply? plus the NGC bondolders ($307 million of bonds on issue) and the NGC shareholders.

Anyway on the shares you did get - you have made a good paper profit

[warthog]

quote:Originally posted by fish

does anyone know when refunds will be sent?


Wednesday this week.

[Sky Tower]

quote:Originally posted by Paper Tiger

It was a rhetorical question.
I do not agree with your conclusion ST. Why will it be massively overscribed?


well it was the hottest float for years and years.
Your thoughts now since NO shares were allocated in the Public Offer?? and AECT beneficiaries got ONLY $3146.36 worth?
:D just kidding

[Snow Leopard]

quote:Originally posted by Sky Tower

well we'll see
I expect allocations to be scaled to the minimum or something close to the minimum

$3146.36 as opposed to minimum $500.00: Your thoughts?
maybe kidding as well ;)

[Bullet]

What is the thoughts of what these shares will do. I am happy sold them today for $3.11 but am keen to buy back in around the $3 mark, does anybody see them going lower than $3? If so why?

[Sky Tower]

quote:Originally posted by Paper Tiger


quote:Originally posted by Sky Tower

well we'll see
I expect allocations to be scaled to the minimum or something close to the minimum

$3146.36 as opposed to minimum $500.00: Your thoughts?
maybe kidding as well ;)


[B)] PT point well made. I stand corrected
Long term shares will go from strength to strength (my personal thoughts only)
In the next few days perhaps there will be a dip, perhaps not - but one thing is for sure the broking community will be very happy.

[Sky Tower]

$0.00 vs $500.00 ;)
anyway....it was a fun day
the smart money was buying today

[Dazza]

doubt it will dip $3 mark....

today was just the beginning of things to come IMO....

id be holding LT and adding to it when there are dips

[Lawso]

Paper Tiger posted last month on Inv. Strats:

quote:
NGC shares have been trading in the stratosphere because it was a guaranteed way to get Vector shares and some people were willing to pay the ludicrous price, it has been up around $4.
And I replied:

quote:These words may come back to haunt you, PT. Let's wait and see.
PS. I've bought NGC @ 380 and feeling confident.
How are you feeling now, PT?

[Snow Leopard]

Paper Tiger then replied

quote:
I have never been haunted by my words, Lawso. So no worries, heh?
May your confidence remain forever intact.

I am feeling good, thank you.
May I enquire as to your state of health and mind at the present time?

[Snow Leopard]

I will further post so that the likes of Sky Tower and Lawso can save my words for a rainy day.
$3 a share is too much. However I expect only a moderate settling of the SP over the next few weeks, but over the year it will underperform the market average to reach the correct price.

[Yossarian]

Fish,
it was possible you could have got a large allocation, if the NGC offer had not been successful (and it almost wasn't successful - Vector only just squeaked past 90% on the last day of the offer).

So Vector could only have made the comment you suggest on the basis that the takeover was successful.

[rmbbrave]

Vector traders make a killing
16 August 2005
By MARTA STEEMAN

A quick-acting punter could have made nearly $1000 profit selling his Vector shares in the biggest share float in six years.


Vector, New Zealand's biggest energy infrastructure company, debuted on the New Zealand Exchange at $3, a healthy 26 per cent premium to the $2.38 issue price.

It soared to $3.12 early on in a rush of trades and then settled to close at $3.02.

That gave Vector a market worth of $3 billion, making it the fifth biggest company on the exchange.

Vector's first day of trading was largely a retail investors' show.

Brokers said that from the size of the trades many of the buyers and sellers were small investors topping up their holdings or selling for a quick profit.

There was some institutional buying because institutions benchmark their performance against the NZSE 50 index and Vector will be included in that.


Nearly 7.2 million Vector shares worth $21.9 million were traded, about 3 per cent of the Vector shares available for trading.

It was strong trading but nowhere near the volumes of some frenetic stock exchange listings, brokers said.

With a new listing of this size for a firm of this quality, a first-day turnover of up to 10 per cent of all shares could be expected.

But this did not happen, possibly a sign that new retail shareholders might not be so quick to sell out, as had happened with previous privatisation at Auckland International Airport and Contact Energy.

[rmbbrave]

Small holders not selling up at the "usual" rate.

Is this because they reckon Vector is worth INVESTING in or because they have got the share certificates or a broker and haven't got around to it yet.

[Lawso]

Paper Tiger's latest:

quote:$3 a share is too much. However I expect only a moderate settling of the SP over the next few weeks, but over the year it will underperform the market average to reach the correct price.
You're not a tiger at all, PT. I think you're a bear in *****cat clothing.
Since you ask, my health and mind are fine, thank you. What's more, I'm picking $4 for VCT by mid-2006.[^]

[Snow Leopard]

quote:Originally posted by Paper Tiger

May your confidence remain forever intact.


quote:Originally posted by Lawso

What's more, I'm picking $4 for VCT by mid-2006.

Good on you

[Dazza]

a good finish today at 3.10 :P

im happy very happy

PT good luck to u for trying to buy sub $3... what is ur buy price anyways?

while u mellow it out in the rain....

we will be enjoying summer with our big wads of $$$ from vectors divi and cap gains :P

go vector go!

[Snow Leopard]

Ha, so you assume that I am trying to buy on market?
As an AECT beneficiary the number of shares I acquired was satisfactory. I am not currently looking to buy any because I believe they will be better value for money down the track and I can do better in the mean time.

Sorry to not be running with the sheep in the mindless enthusiam stakes on this one.

The weather is BEAUTIFUL now where I am sitting and I expect the summer will not dissappoint.

[Sideshow Bob]

Does anybody know the bondholder price for the shares (presuming 226cps given 5% bondholder discount).

Cheers
SSB

[Dazza]

PT

same here, i am not yet buying with my refund as of yet

but to bag it and say that it will underperform the market in the next year?
is a bit strong IMO

what do u base ur arguments on that?

[Sky Tower]

Paper BEAR ? [:p]

[CrossTrainer]

Ananda77 - Are you a trader? If you sold so soon the taxman will be on the lookout.

[CJ]

quote:Originally posted by Dazza


but to bag it and say that it will underperform the market in the next year?
is a bit strong IMO

what do u base ur arguments on that?


This actually posses two issues. How well will the market perform and how well with vector perform. Only then can you compare.

Given it has already risen 30%, for it to raise another 20 % this year (about what the NZSE50 did this year) would be a good effort.

Does anyone see an issue with further expansion given the AECT wont want to issue new capital? Does Vector really need to grow any bigger?

[ananda77]

Cross Trainer:

Yes I do like trading...and declare my profits.

[Winston001]

quote:Originally posted by Dazza

PT

same here, i am not yet buying with my refund as of yet

but to bag it and say that it will underperform the market in the next year?
is a bit strong IMO

what do u base ur arguments on that?


Perhaps quite simply because it is a hot stock. Boring is beautiful. See the following:

Jeremy Siegel's Latest Book Lays out the Future for Investors

In his 1994 best seller, Stocks for the Long Run, Wharton finance professor Jeremy Siegel showed investors that stocks, rather than bonds or cash, are the most profitable long-term investments, and he endorsed index-style investing. But investors wanted to know more. "I gave scores of talks across the country on Stocks for the Long Run," Siegel recalled recently. "The two questions I received most were: 'Which stocks for the long run?' and, 'What about the age wave and the baby boom?'"

Siegel's response was voluminous research for his new book, The Future for Investors: Why the Tried and True Triumph Over the Bold and the New. The unexpected conclusion: It's not the hot, new-industry stocks that serve investors best. More often it's the humdrum, traditional firms that sell cigarettes, pump oil or peddle soft drinks and chewing gum. Siegel concluded that investors can improve on index-style investing by also holding stocks with low price-to-earnings ratios and high dividend yields, and by putting as much as 40% of their stock portfolios into foreign issues. "Indexing is great," he said in an interview. "But now, after doing all my research, I think we can do a little better." A proper mix could boost annual returns to one or two percentage points above those provided by indexing, he noted.

For his new work, Siegel searched through the Standard & Poor's 500 Index to find patterns among the winners and losers. "I was frankly shocked that Philip Morris would be the number-one stock," Siegel said. "I would just never have guessed that. I would have said, 'Maybe IBM.'" From 1925 through the end of 2003, tobacco company Philip Morris, now called Altria Group, delivered a 17% average annual return, assuming all dividends were reinvested in the company's shares. That beat the average stock by 7.3 percentage points a year. A $1,000 investment in Philip Morris in 1925 would now be worth more than a quarter of a billion dollars.

Similarly, consider a choice available to an investor in 1950 who could have put money into the most cutting-edge company of the day, computer maker IBM, or the numbingly ordinary Standard Oil of New Jersey. Even today, most investors would assume IBM was the best bet. Indeed, according to the most widely watched measures of growth, IBM was the winner over the next 53 years, dramatically outstripping Standard Oil in per-share growth of revenue, dividends and earnings.

But Standard Oil shareholders did better, with average annual returns of 14.42% versus 13.83% for IBM. That half-point difference, compounded over 53 years, put the oil-company shareholders ahead by more than 25%. A $1,000 investment in Standard Oil would have grown to $1.26 million, compared to less than $1 million for an equal investment in IBM.

Siegel found similar results again and again. Since 1950, the top-performing companies were National Dairy Products (now Kraft Foods), returning 15.47% a year; R.J. Reynolds Tobacco, 15.16%; Standard Oil of New Jersey (now ExxonMobil), 14.42%; and Coca-Cola, 14.33%. A $4,000 investment in the top four would have grown to $6.29 million, versus $1.11 million for a similar investment in the stock market as a whole.

The "Growth Trap"

What causes the out-performance of the prosaic old-style stocks over the more exciting trailblazers? "The answer is simple," Siegel writes. "Although the earnings, sales and even market values of the new firms grew faster than those of the older f

[Sky Tower]

Skytower *falls asleep*

[Snow Leopard]

Good post Winston001

BTW
based on 2006 forecast results this is now trading (SP = $3.08)
on a forward P/E of 84.5 (NPAT = $36m468)
or a forward whatever of 22.8 (NPAT + Intangible Assest Amortization = $134m8)

Just thought it might wake Sky Tower up [|)]

[Lawso]

My poor brain has been stretched to its limit but I've finally figured out that the 5678 VCT I've obtained from all sources (AECT beneficiary, V bondholder and NGC shareholder) have cost me $14,627, or 257.6cps. Current market value: $17,600 [^]
E&OE

[CJ]

quote:Originally posted by Paper Tiger

Good post Winston001

BTW
based on 2006 forecast results this is now trading (SP = $3.08)
on a forward P/E of 84.5 (NPAT = $36m468)


I enjoyed the post as well as it summed up my current investing strategy. Base of index funds with some hand picked safe stocks ie CEN.

Can anyone confirm that that forcast PE of 84 is correct. Surely no one would buy an energy stock on a PE of that. I see VCT as a cash cow, not a grown stock so I would assume PE to be a lot lower ie about 20ish.

[Snow Leopard]

You could of course do it yourself.

The forecast NPAT for 2006 with 100% of NGC is on Page 20 of the investment statement.

Given that Vector have bought lots of goodwill recently there is a lot of cash kicking round from amortizing that. Along with a reasonable fund of accumulated imputation credits that allows them to [initially] offer up dividends beyond the profit.

[CJ]

Sorry for doubting you PT. That P/E seems rediculous.

Anyone care to comment on why it is so high? For everyone who is holding (long term) do you see this as an issue?

[Mick Jagger]

vetcors pe at 306cps is 22.4x

no idea how that person worked out their numbers..

forecast profit is 137m

[CJ]

forecast profit of 137m. 1,000,000,000 shares. SP 3.10. Therefore EPS of 0.137, therefore P/E of 22.

That takes NPAT but before Amortisation which makes sence. Do other companies measure PE before Amortisation or are PE figures in newspapers etc going to give different results?

[Mick Jagger]

pre amortisation is the correct method to use... newspapers ususally are incorrect though...

[Snow Leopard]

quote:Originally posted by Mick Jagger

vetcors pe at 306cps is 22.4x

no idea how that person worked out their numbers..

forecast profit is 137m


No idea? The information is clearly available in my post 5 above that of yours that I have quoted.

Forecast profit? I have taken the liberty of copying the relevent part of the prospectus for your edification below. The IS adds back in the intangible amortization as a new "bottom line" to indicate the cash increase for the year of which you are quoting the wrong one, but you were not fooled by that were you?

http://i7.photobucket.com/albums/y269/TheTigerWithNoName/VCT-Temp/VCT-050818.png

I am taking P/E in the usual way in which it is used for companies on the NZX.
However what this shows is that P/E is not the whole story of a companies financials and you should not get hung up on it. You do need to read the report fully and make decisions based on that.
In this case the P/E (taken in the usual sense) is obviously causing a few heart attacks, but the company is in [a lot] better shape than this suggests.

The full year is out tomorrow, the headline profit, assuming they quote it, is going to disappoint you unless you take a wider view of the financials.

So how many of you actually did due diligence and read the IS, on this IPO as opposed to just rush in?

regards

Paper Tiger

[rmbbrave]

"So how many of you actually did due diligence and read the IS, on this IPO as opposed to just rush in?"

Not me.

I bought simply because everyone else was therefore indicating a successful IPO, becasue there was a obvious lack of supply versus demand for shares, because the price of Vector's listed proxy NGC was going up, up, up, and because other electricty related companies are going so well.

I even made a loss on my bond purchase to get Vector shares.

[Mick Jagger]

i don't have time to go back and read some guys post number whatever...

the pe is 22x... calculated in the correct way... price over normalised EPS (pre amortisation)...

no financial analyst would use the post amortisation NPAT for a PE... its non-cash... its meaningless

[pimpit]

so how does the PE stand against other companys in the same sector?

[Mick Jagger]

CEN is about 20x

TPW about 23x

HED about 20.5x

so VCT more expensive then CEN... and you'd think CEN has far more growth potential

[Dazza]

well VCT up 10 cents..
prob due to ppl buying up with their refunds :P

[Lawso]

quote:"So how many of you actually did due diligence and read the IS, on this IPO as opposed to just rush in?"
In this instance, fools like me rush in and end up with a juicy paper profit[^]. Due diligence? What a bore[|)]

[Dazza]

u can say aye to that lawso...

my dads and i's reasoning for buying into this...

1. demand vs supply... some of u guys obviously dunno what that meant pre-ipo.... now we are sitting on 30%+ :P

2. well its power... powerlines right? ... steady divis ... since been a power user... we all need power right?

i didnt even read the prospectus....... ehhe

[Lawso]

diligence, schmiligence!

[Snow Leopard]

:D

[rmbbrave]

Supplier costs a turn-off for Vector


20.08.05


Electricity lines company Vector has posted a 29.5 per cent fall in annual profit, but met its prospectus forecast.

It logged a net surplus of $40.77 million for the year to June, down from $57.8 million but slightly ahead of its predicted $40.73 million.

Total operating revenue grew 52 per cent to $833 million from $578 million.

Chief executive Mark Franklin said revenue growth across the group was due to a buoyant economy, higher selling prices and infrastructure changes.

But increased supplier costs meant the company was experiencing margin pressure across many businesses. Electricity transmission costs had risen 15 per cent during the year and electricity maintenance cost 33 per cent more.

The company said it was hard to make direct year-on-year comparisons because the results included six months' operations from its investment in gas distribution and metering company NGC Holdings.

Vector, which listed on the stock exchange this week and issued a quarter of its shares, took a majority stake in NGC in December and is now completing a total takeover.

Looking ahead, Franklin said Vector's immediate task was to integrate the operations of NGC. "There is a lot to do, and we expect that it will take a few months.

"We are aiming to keep the transition as smooth as possible with particular focus on continuing to deliver customer service and shareholder value."

UBS NZ research sales director Richard Leggat said the result was not unexpected.

"The reason the price has gone up is it's seen as a good company and there was no public or institutional pool so there's been a shortage of stock," he said.

Chairman Michael Stiassny said the NGC buy would take Vector to the next level, "considerably broadening our energy infrastructure portfolio".

"Our key indicators of ebitda [earnings before interest, tax, depreciation and amortisation] and npata [net surplus before intangible asset amortisation] are showing solid growth."

Ebitda, at $466.1 million, was 36.7 per cent up on the same period last year, and npata was on target, up 7.9 per cent to $104.3 million, despite increased tax and interest.

Operating net cashflows of $239.5 million were up $59.4 million on the previous year.

Vector's total assets increased over the period from $3.07 billion to $4.85 billion largely due to the acquisition of NGC.

- NZPA

[Tinker]

Has anyone received their refund cheque yet?

Still waiting for mine

Cheers
Tinker

[Dazza]

yes i have recieved both of ours, i tink yesturday or thursday ?

[Year of the Tiger]

quote:Originally posted by Tinker

Has anyone received their refund cheque yet?

Still waiting for mine


Yep, mine arrived Thursday.

[Tinker]

MMmm I'll wait to see what Mondays mail brings then start tracking down who hasn't been doing their job.

Ta
Tinker

[rmbbrave]

Vector lights the way, says exchange boss
21 August 2005
By TIM HUNTER

Vector's successful share offer and stock exchange listing is a model for state-owned enterprises, says exchange chief Mark Weldon.


On Monday, the electricity and gas lines company's shares opened at $3 a share, an immediate premium on the offer price of $2.38, as investors keenly sought stock from the few sellers.

The listing was the culmination of Vector's ambition to grow from a local lines company into a major infrastructure player, but it meant its community owners had to accept 75% rather than 100% ownership.

"Vector was extraordinarily instructive in terms of a model," said Weldon. "You have an asset of enormous importance and strategic value which is ultimately owned by the New Zealand public. You have a transaction which doesn't change control, but gives you a vehicle for investment."

Weldon said the current debate on the sale of state assets was destructive.

"I think this election has shown us that we need a new language of business. We need to discard some of the language and rhetoric that has so much emotional and political baggage."

Labour's campaign has highlighted its commitment to retaining ownership of state assets - and adding to them with the purchase of the rail track and a majority stake in Air New Zealand.

National has been cautious about how it presents its state-owned enterprises policy, and leader Don Brash was evasive on the subject in an election TV debate. It says it may sell Landcorp farms and part of Solid Energy but will retain other assets.

Weldon said phrases such as "asset sales" and "privatisation" had associations that automatically pushed debate into opposing corners.

"It's like the abortion debate in the US. It's the right to life versus the right to choose. Rights talk always produces an adversarial approach."

Instead of staking out positions on principle, the talk should be about outcomes, said Weldon.

"The conversation nationally is destructive not constructive. It should be about the best bloody outcome for the country."

Vector used the $593m share offer to help finance its takeover of gas lines company NGC after building up its debt to buy key assets of UnitedNetworks in 2002.

Expansion of that magnitude was not possible under the sole ownership of Auckland Energy Consumer Trust.

The trust, meanwhile, had an obligation to safeguard and increase its capital base.

The deal struck to allow the share offer gave the trust a controlling 75.1% stake, and built further safeguards into the company's constitution.

Lawyer Andrew Harmos said that arrangement showed the trust's goals could co-exist with a listed company structure.

"The government could have a mix-and-match model," he said. "Using the examples of Vector, Air New Zealand and Telecom, you could construct a model where there's 75% government ownership, 25% in public ownership, you could have a special constitution (to enshrine particular aims), and combine it with a kiwi share which says no overseas person can own more than 5%.

"There'd be a terrific investor appetite for some of these businesses - Solid Energy, Transpower, for example. I just think it's a complete no-brainer."

Harmos said it was important that savings could be invested in strong local companies.

"It just creates a terrific environment and gives New Zealanders an alternative to investment in sausage machine apartments."

Weldon said he had not discussed the issue with state-owned enterprise bosses - "I'm conscious of the fact that the whole area is very political" - but it was important to shift the issue on to a more practical footing.

After a strong start, Vector shares remained strong throughout the week and closed at $3.19 on Friday, giving the company a market capitalisation of $3.08 billion.

[Paddie]

quote:Originally posted by Tinker

Has anyone received their refund cheque yet?

Still waiting for mine

Cheers
Tinker


Why is it in this day and age, that when you send your cheque in, the funds went out of your account the same day. When you get your refund cheque, you have to wait 5 workings days?

Paddie[:o)]

[Sky Tower]

And so the smart money really was buying on Day 1

[Dazza]

exactly its reached 3.24 lately
so PT u were saying...
been over a week now yet its still going strong..

[Winston001]

This happened with CEN too when it listed. Then it dropped back to below issue price.

[Snow Leopard]

quote:Originally posted by Dazza

so PT u were saying...


quote:Orginally posted by Paper Tiger

I expect only a moderate settling of the SP over the next few weeks


Patience, young man [|)]

[Bobby_Fischer]

Volume down today. The top might not be too far away.

[Dazza]

winston and PT

for me either way it doenst matter :P
i still have half of my initial funds for VCT sitting and waiting patiently...

[Paddie]

quote:Originally posted by Dazza

winston and PT

for me either way it doenst matter :P
i still have half of my initial funds for VCT sitting and waiting patiently...


Dazza,

I don't think that you are alone here.
I am sure that there are still alot of people ready to buy, at any weakness in the Vector share price.

Paddie[:p]

[small fish]

There cant be any comparison here with what CEN did on listing. The price dropped cause overseas shareholders dumped soon after. This time round they didnt get any.

small fish overseas shareholders paid a lot more than the IPO price for CEN

[tinking]

Anyone monitoring the market depth of VCT since it listed will be able to tell you that there are way more buyers of VCT than sellers in the market. Was no different today.

The share price will continue to rise as long as this demand continues.

Disc: missed out on ipo but bought a large chunk on day 1

[small fish]

Thats true but I have always thought, based on what had been discussed by industry people that it was overseas sellers exiting after it was apparent there wouldnt be any quick profits. If this wasnt the case im happy to hear other opinions.

[Dazza]

Tinking good on u for buying a ton at day 1

let me guess u brought at 3?
with it being at 3.25 lately.. thats nearly 10% in less than a month

hahahahahah .... tudos to PT trying to get some?

unless u already have ur AECT allocation?

[tinking]

I got 10,000 at 3.02 - so making a tidy couple of grand profit in 1 week.

I now need to decide whether or not to take the profit, or keep my holding and wait for VCT to go ex-div. I made the purchase on margin, so need to be wary of the interest expense.

[Snow Leopard]

quote:Originally posted by tinking

I got 10,000 at 3.02 - so making a tidy couple of grand profit in 1 week.

I now need to decide whether or not to take the profit, or keep my holding and wait for VCT to go ex-div. I made the purchase on margin, so need to be wary of the interest expense.

You are aware that you will not get a dividend from Vector until next April (as opposed to the AECT who get a dividend this year)?

[tinking]

PT

Knew that VCT paid $53.6 million as a dividend to AECT just prior to VCT's listing on the NZX.

Also know that forecast 17.1c a share dividend to all shareholders (AECT and non-AECT) in the June 2006 year. However, wrongly assumed that there would be an interim dividend payment...not sure where I got that from.

So what's your view on today's media reports urging caution due to a "rampant market"?

[Snow Leopard]

projection is:
interim dividend of 5.74cps + imp April 2006
final dividend of 5.74cps + imp Sept 2006

The article, may be right, may be wrong. Time will tell, like with my predictions.
Still some good buys out there.

[tinking]

Hmmm...I need to make a decision on whether to sell VCT and lock in my gain. Up at 3.28 today, still many investors on the hunt on the buy side.

My feeling is that I shouldn't stray from my strategy when I bought them - to take advantage of the upward pressure and market sentiment in the short term and then get out.

[Snow Leopard]

Well I am impressed, another 9c today.

[Ru]

Wednesday August 24
Price controls ordered on two NZ gas companies
WELLINGTON, Aug 24 (Reuters) - New Zealand's competition regulator has ordered New Zealand gas network companies Powerco and Vector to control their prices, to curb what it calls excessive returns.
The authorisation followed a high court rejection on Wednesday of applications from Powerco, owned by Australia's Bab****and Brown Infrastructure , and Vector , for urgent interim orders over the commission's form of control.

Commission Chairwoman Paula Rebstock said Powerco would be required to keep its average price for controlled services from Oct. 1 at least 9 percent lower than the average price on June 30. Vector had to keep its average price at least 9.5 percent lower.

"The provisional authorisation takes into account the interests of all those affected," Rebstock said in a statement issued after the close of the share market.

The commission will seek information from gas retailers about how the price reductions will be passed on to consumers.

In July, the government accepted a Commerce Commission recommendation that price controls be imposed on the two companies because they had substantial market power and were earning excessive returns above their cost of capital.

The regulator has estimated that controls on Vector and Powerco would achieve an annual net benefit to users of NZ$6.9 million ($4.8 million) and NZ$3.7 million respectively.

The gas pipelines under scrutiny are those linking the gas production region of Taranaki in the North Island to large commercial users such as power companies, as well as smaller district networks for domestic consumers.

Shares in Vector, which debuted on the share market on Aug. 15 and is now finalising a takeover of NGC Holdings, closed up nine cents or 2.8 percent at NZ$3.34.

[tinking]

3.40 currently on the bid side - looks like VCT is going to rally today despite the Commerce Commission news.

[Placebo]

Slap on the hand. This is very similar to a ruling Commcomm gave against Auckland airport some years back over landing charges. Think it was 4 or 5 years ago. Anyway, have a look at the AIA chart to see what effect that has had... :D

[tinking]

Article here from the Herald (I highlighted interesting bits myself):

Gas price controls in place 25.08.05
By Chris Daniels

A new dawn of Government-imposed price control breaks today for energy network companies Vector and Powerco, as their gas pipelines business come into the embrace of the Commerce Commission.

In its first use of its price control powers, the commission has ordered Vector to drop its average prices from October 1 by 9.5 per cent and Powerco must cut its prices by 9 per cent. This must be lower than the average price charged at June 30.

The impact of price control on Vector shares - now trading on the stock exchange after a $593 million float, is not yet known, since the commission made its statement after the market closed.

Since Vector shares were issued at $2.38 earlier this month, they have soared in value, yesterday gaining another 9c to finish the day at $3.34 each.

From today, control of Vector's and Powerco's gas pipelines business will be taken over by regulators in Wellington. The commission is required to authorise any prices charged by the two companies for moving gas along their local networks of pipes.

Yesterday's move is a provisional price authorisation and the commission will start working on a way of assigning "final authorised prices".

Last year, the commission said abuse of market position meant Vector would reap monopoly profits of $76.9 million from its gas pipes between 1997 and 2008, and Powerco would gain just over $50 million.

Both companies are unhappy with the regulation, saying use of gas in homes and businesses is not compulsory, and that gas competes with other fuels, notably electricity. Legal challenges by them against the regulatory moves failed yesterday in the High Court at Wellington.

Market opinion holds that it is unlikely the details of commission regulation will have a negative effect on the popularity of Vector shares. Some investors like putting their money into regulated businesses.

While not wanting to say exactly how much money consumers would save, the commission has said that an 18.5 per cent saving on prices in the Vector network and 12.2 per cent on the Powerco pipes "could be achieved over time".

Vector chief executive Mark Franklin said this month that the new regulations affected "only an incremental part of one of our small businesses, which is the gas business in Auckland - so it's not a huge deal for us. The issue for me is the principle."

Mercury, the retail brand of the state-owned Mighty River Power, would not say if it would pass on any price cuts, saying it would instead make a decision once the details of any commission move were known.

The country's biggest gas retailer, Genesis, says it will pass on any price cuts imposed by the commission to its 116,000 customers.

A Contact spokesman said the retail gas sector was competitive, so it would expect prices to customers to drop if transmission charges fell.

Australian investment fund Bab****& Brown, as owner of Powerco, said it was difficult to quantify the impact of the Government's decision, but its initial assessment was of a $5.5 million impact on net revenues.

* The Court of Appeal has dismissed an appeal by Unison Networks that tried to stop the commission deciding whether to head down the path of controlling its electricity lines activities.

Unison is the fourth largest powerlines company in New Zealand. Owned by the Hawkes Bay Power Consumers Trust, it is based in Hastings and runs the local powerlines networks in Hawkes Bay, Taupo and Rotorua.

The commission is undertaking a post-breach inquiry of Unison's performance and behaviour after a breach of regulatory thresholds.

[luckysexice]

VCT went down 9 cent today it could be worse tomorrow

[CrossTrainer]

I purchased more today on the drop as I think that it is only temporary and will recover over the next few days to continue its upward trend.

[tinking]

I agree that it'll only be a temporary drop. Question is whether or not VCT will retreat further before regaining lost territory.

Will definitely pick some up again if price heads back to around $3.

Slightly nervous about the CEO Mark Franklin's comment that it will take VCT a few days to work out the real impact of the Commission's authorisation on its business.

Disc: sold VCT at 3.30 (short term trade)

[CJ]

It has been a while since anyone has talked about Vector (on this thread so thought i would have a look at it.

After all the initial excitement, it appears to be trading in quite a narrow range of $3.20 to $3.30. The market has obviulsy decided that this is where it should stay while we await new info.

Given that those who got in at the IPO are sitting on good gains, is this a good share to buy into for a long term portfolio or is likely to stay stagnant for a while whle those who bought at IPO slowly take there profits.

If you were to buy (or sell the rest so you only hld one) which power share would you hold - VCT, CEN, TPW??

[Snow Leopard]

from Stuff.co.nz (http://www.stuff.co.nz/stuff/0,2106,3416436a13,00.html)

Broker Forsyth Barr has started its ratings on New Zealand power distributor Vector Ltd at "hold" but valued it 7 per cent below its market price.


Forsyth Barr analysts said Vector investors a broad exposure to infrastructure assets which would provide relatively stable long-term earnings growth.

However, the growth outlook and risks did not warrant the share price premium. It valued the stock at $3.02.

"The principal risk for Vector is a change in the regulatory environment. This could cap the return Vector earns from its regulated asset base, impact capital investment levels and/or impact which sectors Vector is able to operate in," Forsyth Barr said.

Shares in Vector last traded one cent lower at $3.22, having traded between $3.00 and $3.37 since its listing on the stock exchange in mid-August.

Competition regulators in late-August ordered Vector to limit its gas distribution prices to reduce excessive returns, a move expected to produce around $6.9 million in annual net benefits to users.

Vector has more than 650,000 electricity connections and 145,000 gas connections, owns a liquefied petroleum gas processing and distribution business, and operates metering services.

[Lawso]

Perusing the Vector annual report (arrived today), it is reassuring to know that the directors and management are in no doubt that the future lies ahead.That's about all they do say about the future.


quote: CEO Mark Franklin:
" . . . we will to [sic] continue to assess opportunities that are now possible with the integrated and expanded business and look forward to an exciting future ahead.


quote: Chairman Stiassny:
" . . . Vector can now focus on new market opportunities that offer a strong mix of regulated and unregulated businesses. We will continue to use technology and innovation as sources of leverage and strategic advantage, and we also remain committed to enhancing our core business and delivering value to our customers and shareholders.
YAWN [|)]
In amongst all the jargon, cliches and platitudes, it's impossible to find any whorthwhile indication as to how the year is going so far and what the earnings and distribution prospects are. There'll be no interim div payment till next April and as Vector had only one shareholder in the year under review presumably it will be about this time next year before directors have to front up to their new shareholders.

Let's hope that at least they'll have something worthwhile to say in the 1st quarter results announcement, due in November.

The sour tone of this post doesn't mean I'm an unhappy holder. I just hate to see incompetent and inadequate communication with investors.

[kura]

Came accross this that may be of interest
http://www.wallstreetreporter.com/profiles/VectorLimited.html

[CrossTrainer]

I think that Vector should be treated like Contact Energy and Auckland International Airport and will thus be very profitable in the medium to long term.

[whatsup]

Wheres the bottom for Vector $2.75 should be a recession proof share!! :views anyone.

[TheBossMan]

$3 is the bottom. Market will pay a premium for Vector given the near-monopolistic status.

I'm piling up as many as my margin finance account would allow and at this stage, I hold approx. 40,000 VCT.

[TheBossMan]

1 week later, my prediction has proven wrong. Some of my stop loss kicked in at sub-$3. Not buying in again till some upward trend appears.

Anyone else buying at these levels?

[whatsup]

Ths Boss will stick with my 13th prediction-weakness still to come.

[whatsup]

$2.96 WOW!!!!

[TheBossMan]

make it $2.91 WOW by close of business!!

[pimpit]

$3600 loss for 40000 going from 300c to 291c

[CrossTrainer]

Utilities often go big on float and then drop back. However, they are usually a good long term investment.

[Sideshow Bob]

From SST today:

Vector's largest institutional shareholder has urged the electricity and gas lines company to return money to shareholders rather than invest it in its gas networks.

http://www.stuff.co.nz/stuff/0,2106,3461334a13,00.html

[kura]

Interesting arguement that if they earn higher returns than cost of capital, then will be subject to regulation/price control, but hey why stop with energy infrastructure, what about airports, ports and other localised monopolies ?

[kura]

Come to think of it why wasn't Telecom split up into a line company (monopoly & subject to regulation) and a phone service provider (open to competition)?

If government forced the old power companies to split their operations in two, why not TEL ?

[Snow Leopard]

quote:Originally posted by Sideshow Bob

From SST today:

Vector's largest institutional shareholder has urged the electricity and gas lines company to return money to shareholders rather than invest it in its gas networks.

http://www.stuff.co.nz/stuff/0,2106,3461334a13,00.html


Vector has more than enough debt having paid top whack for United Networks and NGC without undertaking capital repayments at the bequest of Brook. If they want dollars in the bank then they show sell up, nice and gradually.

[winner69]

quote:Originally posted by Paper Tiger


quote:Originally posted by Sideshow Bob

From SST today:

Vector's largest institutional shareholder has urged the electricity and gas lines company to return money to shareholders rather than invest it in its gas networks.

http://www.stuff.co.nz/stuff/0,2106,3461334a13,00.html


Vector has more than enough debt having paid top whack for United Networks and NGC without undertaking capital repayments at the bequest of Brook. If they want dollars in the bank then they show sell up, nice and gradually.


Brook isn't saying they want $s in the bank .... they are saying to VCT don't invest in anything that is not going to return your cost of capital (ie value destruction)

In other words if you can't do better than that than give us the money (shareholders money) so we can

Something SKC should have taken notice off ... and not made those value destroying investments like Adelaide

PT - doesn't that rationale make sense .... just like how you think I would say

[Snow Leopard]

what ho, w69

re-read the article, I think it is a tad more complex than that even.
Earn a decent return on capital and have the government tellng you off, otherwise have your shareholders having a go at you.
Personally I have little confidence in this company as a good long term investment given the present government, trust, management, board of directors, weather, wine-cellar etc.

[CJ]

The only why to increase shareholder wealth is to earn a return above the WACC. If regulation says you cant do this, then any new project will not increase shareholder wealth. Therefore you face the risk without the upside. ie. regulations will be capping your potential income to what your current return is.

IMO - That is what they are trying to say. I think it is actually clever way of telling government that if you regulate, we wont invest. If all players did the same, either the goverment would have to not regualte or jump in and do it them selves (unfortunately there is a risk of this.).

Same goes for other potential regulated industries like AIA and TEL.

[CJ]

Price still drifting lower.

Is this becoming a good yeild stock? Having said that, CEN is drifting lower too. TPW going strong though so it isn't the whole industry.

[ketanr]

$2.86 now ... would anyone like to guess how low she will go ?

[kura]

My guess is $2.00 I am saying this as I recall when CEN floated (at approx $3) it drifted down to $2.30, and stayed there for a while, despite making profits that exceeded prospectus forecasts.

Personally I'm negative on it (as I believe they overpaid for NGC) in medium term, but if you could pick them up for the right price they would be a good addition to long term portfolio.

Disc: Still holding my beneficiary entitlement.

[Sky Tower]

From: XTRA website: (Tuesday 15th November)

Vector Earns $36.3m In First Quarter

Vector Limited, the Auckland-based gas and power lines company, said it earned $36.3 million for the first quarter ending 30 September 2005.

The figure represented an increase compared with last year, after Vector had bought gas company NGC Holdings Ltd, Chairman Michael Stiassny said, adding that the result was in line with expectations. The company did not supply comparative figures.

The first quarter period saw Vector record earnings before interest, tax, depreciation and amortisation (EBITDA) of $180.1 million and a net profit after tax and before amortisation (NPATA) of $60.3 million.

"Our result is particularly difficult to compare to the same time last year given it includes the addition of NGC's operations in to the group," Stiassny said in a statement.

Vector said it continues to integrate the operations of NGC, after agreeing to buy Australian Gas Light Company's (AGL) 66.05% stake in December last year for $2.91 per share.

Vector, which is controlled by the consumer-owned Auckland Energy Trust, began trading on the New Zealand Stock Exchange in August after an Initial Public Offering where 24.9% of the company was sold.

Vector shares last traded at $2.79, down 4 cents, and are well below its $3.37 high shortly after it floated.

[Animeart]

Definitely agree that this is a good long term investment.

Don't forget that unlike CEN, VEC owns both the lines and the network. Also, it's portfolio is spread over a wide range of business/industry, ie cable, landscaping, gas, electricity & etc. ;)

[whatsup]

Still drifting but at a slower rate , whats the EPS again and DIV intended payout?

[fisho]

Who cares ? The attraction of this company has disolved with the increase in government scrutiny for the energy sector. Give me market competition any day.

[Snow Leopard]

quote:Originally posted by whatsup

Still drifting but at a slower rate , whats the EPS again and DIV intended payout?

the info you want can be found or calculated from the previous few pages of this thread.

regards

PT

[whatsup]

At $2.75 with a .17cps div thats 6.18% yeild isnt this great buying almost self funding with upside to come!!!

[rmbbrave]

Paper Tiger said that there will be 2 divies in April and Sept of 5.74 cents and whatsup one divie of 17 cents (in April?). Who is correct?


quote:Originally posted by Paper Tiger

projection is:
interim dividend of 5.74cps + imp April 2006
final dividend of 5.74cps + imp Sept 2006

The article, may be right, may be wrong. Time will tell, like with my predictions.
Still some good buys out there.

[Snow Leopard]

rmbbrave, we both are: read what the posts actually say and use a calculator

[rmbbrave]

Not very good advice PT.

"Read what the posts actually say"

If I did that whatsup would be saying the divie would be 0.17 cents per share. I assumed he meant 17 cents.

"use a calculator"

I did think that 5.74 + imp + 5.74 + imp = 17, could be possible but a calculator isn't going to tell me that because I don't know the value of "imp".

[rmbbrave]

Vector shareholder threatens to quit
04 December 2005
By TIM HUNTER

One of Vector's largest shareholders is threatening to sell its stake and invest in Australia because of what it says is unreasonable regulation by the Commerce Commission.


Brook Asset Management, a fund manager controlling $950 million of assets, has told the commission it will try to depose Vector directors if the company persists with investment under the current regime.

The warnings come in a submission to the commission on Friday criticising the way it calculates acceptable returns for monopoly lines companies.

"We face two alternatives with respect to our investment in Vector Ltd," said Brook. "Sell our stake and reinvest in Australia, which has a more attractive regulatory regime, or lobby the company to refrain from investing in its regulated businesses... and either raise the dividend payout ratio or invest in regulated Australian businesses or unregulated businesses."

Brook was pursuing the lobbying route, but if Vector continued to invest in regulated businesses "we may choose to seek to remove/replace directors to achieve a governance regime that will take a rational approach to capital allocation".

Brook chief executive Simon Botherway said the message to Vector directors was simple. "We just expect them to act rationally and we want them to demonstrate they're doing that. We're not holding a big stick."

Vector chief executive Mark Franklin said Brook's submission was "just one fund manager's view".

"Vector has its own view on the situation and has prepared a submission based on its own analysis."

Vector, which operates electricity and gas networks, listed on the stock exchange in August and has a market capitalisation of $2.8 billion. The argument surrounds its weighted average cost of capital (Wacc) - a percentage figure used to determine the feasibility of investment projects.

The commission says Vector's Wacc is 7.2%, and that any returns on gas pipeline investment in excess of that will be capped. Brook, which owns less than 5% of Vector, said imposing such a low threshold meant investment could never earn an economic return.

"We consider a company's Wacc is merely the point of indifference between carrying out investment and returning cash to shareholders." That point seemed to have been missed by the Commerce Commission.

The commission said it did not comment on submissions.

[CJ]

quote:Originally posted by rmbbrave
The commission says Vector's Wacc is 7.2%, and that any returns on gas pipeline investment in excess of that will be capped.

Brooks are right. If a company has a WACC of 7.2% it means that no project should be undertaken unless it exceeds the WACC or else it will distroy shareholder wealth. So to cap returns at 7.2% should simply mean to the directors of Vector that no project passes the threshold as the projects return does not exceed 7.2%.

Simple!!!

Does anyone else agree with this analysis? Anyone bold enough to disagree??

I have watched the shareprice drift down and this has to be the reason. Until the dividend ratio gets even better, then it is a no buy.

[Dubdee]

absolutely agree: WACC is the breakeven for valuing investment projects. Anything greater should be seized, anything less discounted.

But a key question is also deal scale. Should you do a $1 million deal that is WACC postive, but disregard a $100 million deal that is slightly WACC negative? Both will probably deliver positve EBIT

deals that are WACC postive are a bit like waiting on the perfect man

[CJ]

quote:Originally posted by DubdeeBut a key question is also deal scale. Should you do a $1 million deal that is WACC postive, but disregard a $100 million deal that is slightly WACC negative? Both will probably deliver positve EBIT

All other things being equal, reject all projects below WACC - it is costing you money!!!

Economies of scale and protecting competitive advantage are some reasons to do a negative WACC but in general, it distroys shareholder wealth.

[Lawso]

Time for a stop-loss on VCT don't you think, guys? All this talk of re-regulation of the power industry has to be negative for VCT, CEN. Having acquired VCT as a bondholder, NGC shareholder and AECT beneficiary, I'm still ahead by about 10cps at today's price but with no divvy for another four months and the price looking shaky I'm thinking of getting out. What do others think?

[limegreen]

I don't see any virtue in VCT whatsoever. It initially spiked up a little (green trend). The SP found some initial support which turned into resistance. It's now in a confirmed downtrend (not marked), and running below even a very short MA.

http://img.photobucket.com/albums/v361/limegreenz/vct9dec05.gif

DISC: None

[ananda77]

...looks like the CEN-Scenario of a few years ago will be repeated. Impossible for me to play around with numbers but propably someone may be interested in comparing the two scenarios.

What is, for example, a good entry point for VCT in comparison with CEN's low of yesteryear???

[kura]

I had a vauge recollection of CEN drifting down approx 30% Applying same logic to VCT would suggest we could hope to buy at $2.00- $2.20 in a few more months. (Depending on how you put a value on initial issue price )

[rmbbrave]

A firm's weighted average cost of capital (WACC) is a difficult concept to understand. It may be helpful to think of a company's WACC in relation to the weighted average return on your own investment portfolio. You may own $10,000 in a money market fund that has an expected yearly return of 6%. You also may own $10,000 of a preferred stock with an expected return of 8%. And you also may own $80,000 market value of a common stock with an expected return of 10%. The expected weighted average return of your $100,000 (in total) investment portfolio equals:

Exp. Port. = ($10,000 x .06) + ($10,000 x .08) + ($80,000 x .10) = $9,400 = 9.4%
Return ($100,000) $100,000

A company's WACC is very similar to your investment portfolio's weighted average return as described above. It's simply the weighted average expected cost for the company's various types of obligations—debt, preferred stock, and common stock—that are issued by the corporation to finance its operations and investments.

The company's WACC is a very important number, both to the stock market for stock valuation purposes and to the company's management for capital budgeting purposes. In an analysis of a potential investment by the company, investment projects that have an expected return that is greater than the company's WACC will generate additional free cash flow and will create positive net present value for stock owners. These corporate investments should result in an increase in stock prices. These projects are good things! Investments that earn less than the firm's WACC will result in a decrease in stockholder value and should be avoided by the company.

[CJ]

RMB - so you agree with me that Brook's is correct.

Has anyone else noticed that Brooks is becoming a vocal shareholder (what is the other share they were commenting on the otherday). Maybe if more funds did this, we would have a better quality of investment in NZ.

[Lawso]

Simon Botherway of Brook is the best and most outspoken of the fund managers when it comes to giving wayward, slapdash and/or incompetent listed companies a well deserved kick in the butt at agms and no doubt at other opportunities. He led the fight against Telecom a couple of years ago when the arrogant bustards wanted to appoint one of their no-hoper mates to the board. He has spoken up effectively at other meetings as well. More effective than BSheppard because less of a showoff IMO. Other instos should follow his example and speak up more at agms in front of retail shareholders, instead of or as well as at their chummy private meetings.

[CJ]

http://www.stuff.co.nz/stuff/0,2106,3508395a1865,00.html

Good to see the journo's are into it to. No disclure note though.

Disc: no point owning till this is sorted!

The powers that be have got it completely wrong
11 December 2005

By TIM HUNTER
Investor activist Simon Botherway, fresh from victory over the managers of Kiwi Income Property Trust, has a bigger target in his sights - the Commerce Commission.


It's a big ask to get a back-down from the commission - as the government's head sheriff on business matters, the organisation goes to a lot of trouble to be righteous and zealous.

This time though, the commission is making a mistake so plain it stands out like a TV presenter's pay packet.

The are two potential victims. One is anyone with shares in Vector - almost everyone in Auckland and quite a few private investors. The other is the public.

Here's why.

Vector, the electricity and gas lines company that listed on the stock exchange in August, wants to invest up to $200 million in new gas pipelines to accommodate expected new gas-fired power stations around Auckland.

But the commission says Vector shouldn't earn a profit from that investment, which naturally puts a different complexion on the whole idea. What business will invest in something that won't make money?

AdvertisementAdvertisementIt comes down to the commission's view on two bits of jargon - the NPV and the WACC.

Businesses commonly calculate the net present value (NPV) of the cash flows involved in a proposed investment.

There are outgoings at the beginning, offset by inflows later on. Those numbers are crunched into a single figure - the NPV. A positive NPV means the investment is worth doing, a negative NPV means it is not. Zero means you're not making any money, nor are you losing any -effectively, "why bother?".

A key number used to calculate the NPV is the weighted average cost of capital (WACC).

This shows how much a business pays for its money, whether it's debt or equity. Cashflows from an investment are discounted using the WACC to discover whether it is covering its finance costs as well as its set-up costs.

Botherway, chairman of fund manager Brook Asset Management, says the commission's estimate of Vector's WACC is too low, which makes investments look more viable than they really are. He is probably right, though it is a matter for debate.

What is not a matter for debate is the commission's view on NPV. It says: "The Commission considers that over the life of an asset the returns discounted by an appropriate WACC should equal the initial investment amount. This is referred to as the Net Present Value (NPV) = 0 principle."

The principle can also be summed up as daft. It means Vector can't make money from, and shouldn't invest in, infrastructure that Auckland desperately needs.

If Botherway doesn't win this fight, many people will regret it.

[winner69]

quote:Originally posted by ananda77

...looks like the CEN-Scenario of a few years ago will be repeated. Impossible for me to play around with numbers but propably someone may be interested in comparing the two scenarios.

What is, for example, a good entry point for VCT in comparison with CEN's low of yesteryear???


CEN floated May99 at $3.10

Looking at an old chart never went above the $3.10 for many years

Dipped to about $2.50 odd after 2-3 months (ie down about 20%) ... went back to $3.10 over the next 6 months before falling to $2.20 in May 2000.

So kura was right .... one after after listing CEN was down 30% .... applying to VCT gives about 200

[Snow Leopard]

Small print:
The past performance of one particular share does not guarantee the future performance of another share. Even if it is, more or less, in the same market segment.
Please consult your clairvoiant before making any share purchase or sale decisions.

[ananda77]

From memory, VCT wasn't cheap($2.32) at the IPO, thus adding on current troubles...definitely -NO BUY- at current levels...patiently waiting to at least the $2.32-level.

Thanks and Kind Regards

[Zaphod]

quote:Originally posted by Paper Tiger

Small print:
The past performance of one particular share does not guarantee the future performance of another share. Even if it is, more or less, in the same market segment.
Please consult your clairvoiant before making any share purchase or sale decisions.


LOL - I agree.

We are also now in an era where government regulation of essential infrastructure is the norm. This is quite a different situation from the environment that CEN was floated in, back in '99.

Quite frankly, I won't touch this puppy until the government’s regulatory intent becomes clear.

[Snow Leopard]

Notice the big sell-off starting about 10 minutes before the close.

Anybody got a conspiracy theory to share?

[Lawso]

We haven't talked about VCT for a while but I'm losing patience with it and am wondering how others feel.
The sp is stuck in a rut, no doubt due in large part to the Com Com's threat to put a cap on new infrastructure investment, and is now within a couple of cents of my average cost of purchase at the IPO, as a bondholder, NGC holder and AECT customer. So they've had my money for six months and in another two months the miserable beggars are promising a div of 5.74cps + imp. [V]. Talk about lazy money!

[kura]

Quality defensive stock, should be a core part of any long term portfolio. Trouble is, that looks expensive in terms of fundamentals (overvalued ?)
Will look at again once interim numbers are announced towards end of month, but doubt if I will be a buyer, even at todays low price.

[CJ]

Commerce commission is the biggest downer. It is on my watchlist but only for interest.

Kura - there are plenty of other defensive stocks out there so until this one shows groth opportunity I will hold off.

[Sideshow Bob]

Result doesn't warrant any discussion - positive or negative??

HY to 31/12/2005 $38.383m ; $43.321m -11.4%

LISTED ISSUER: VECTOR LIMITED

CONSOLIDATED OPERATING STATEMENT FOR THE HALF YEAR ENDED 31/12/2005


Current Period is Unaudited NZ$'000; Previous Corresponding Period is Audited NZ$'000

Current Period; Previous Corresponding Period

OPERATING REVENUE

Trading revenue 551,432 ; 319,111
Other revenue 17,260 ; 26,723
Total Operating Revenue 568,692 ; 345,834

OPERATING SURPLUS (DEFICIT)
BEFORE TAXATION 83,038 ; 74,306

Less taxation on operating profit (38,864) ; (30,164)

OPERATING SURPLUS (DEFICIT) AFTER TAX 44,174 ; 44,142

Extraordinary items after tax - ; -

Unrealised net change in value
of investment properties - ; -

NET SURPLUS (DEFICIT) FOR THE PERIOD 44,174 ; 44,142

Net Surplus (Deficit) attributable
to minority interests 5,791 ; 821

NET SURPLUS (DEFICIT) ATTRIBUTABLE TO MEMBERS OF THE LISTED ISSUER 38,383 ; 43,321

EPS 3.8 cps ; 5.8 cps
(EPS current period calculated on 1 billion shares;
previous corresponding period calculated on equivalent 751 million shares)

Interim Dividend: 6.0 cps



Vector today announced an unaudited net profit after-tax and before amortisation (NPATA) of $86 million for the six-month period to 31 December 2005 - 33% ahead of the same period last year.

The interim period includes, for the first time, a full-period of contribution from NGC and reflects Vector's move from majority to full ownership in August 2005.

The company has declared a fully imputed interim dividend of 6 cents per share, its first dividend to shareholders since listing as a share issuer on 15 August 2005, and is forecasting higher than expected full year net earnings of $38 to $43 million.

Overview of Group results:

Half year (NZ$m)
31 Dec 05 31 Dec 04 % change
Revenue 568.7 345.8 +64
EBITDA * 303.1 206.5 +47
NPAT 38.4 43.3 -11
NPATA 86.0 64.8 +33

* Earnings before interest, tax, depreciation & amortisation

Vector Chairman Michael Stiassny says the company's interim result was very satisfactory as it exceeded expectations, despite relatively tough trading conditions.

"We have achieved all of our operating targets despite an unseasonably warm winter which resulted in lower energy consumption and, therefore, reduced revenues from our electricity and gas businesses.

However, this was partially offset by operating cost containment which has allowed us to achieve our targets for EBITDA and EBIT."

Mr Stiassny says while the company also exceeded its projections for both NPAT and NPATA, the result is difficult to compare to the previous corresponding period.

"Our net earnings have already exceeded our IPO prospectus NPAT forecast of $36.5 million for the full year, and reflect a $5 million benefit from Vector's earlier than expected move to 100% ownership of NGC."

The latest half year period included increased borrowing costs of $39.3 million and an additional $26.2 million of amortisation of goodwill, both as a result of the full acquisition of NGC.

Therefore, the results are not directly comparable to the previous period due to the full inclusion of NGC's revenues and earnings contributions, its costs and the increased debt associated with the full acquisition.

Vector Group CEO Mark Franklin says the full acquisition of NGC, is already providing the company with significant benefits.

"It has considerably strengthened our cash flows, with operating cash flows for the period amounting to $218.9 million compared with $151.9 million in the previous half year.

We also now have a broader business platform and therefore more scope to identify and pursue new business opportunities. We look forward to capitalising on this further."

The Vector board has declared a fully imputed interim dividend of 6 cents per share, which represents a 5% increase over the prospectus forecast of 5.7 cents per share and 70% of NPATA.

The record date for the dividend is 31 March 2006, with the p

[Sideshow Bob]

Vector expects to top forecast profit
24 February 2006
By MARTA STEEMAN

Vector says it will beat prospectus forecast profit for the year by up to $6.5 million after delivering a half year after-tax profit of $38.4 million, 11 per cent down on the previous half year.


Chief executive Mark Franklin said Vector expected full-year profit to be in the range of $38 million to $43 million.

That is ahead of the $36.5 million net profit after tax forecast in the prospectus.

The half-year results saw its share price fall 3 cents to $2.70 in moderate trade yesterday.

The six months to December 31, 2005, is the first full period to include the contribution of gas company NGC Holdings, of which Vector took 100 per cent control last August.

Vector is in the midst of integrating the NGC business into its own and will have completed that by the end of the financial year in June.

Mr Franklin said the two businesses were substantially complementary "but there are certainly some people who have left and who will be leaving in our shared services type of environment".

"We expect there to be some less staff than what we've got," Mr Franklin said, but he would not reveal how many.

Vector's directors declared a dividend of 6c a share, 5 per cent higher than the 5.7c forecast in its prospectus.

Chief financial officer Peter Fredricson said the dividend policy in the prospectus was to pay a minimum of 60 per cent of free cash flow subject to the needs of the business and it envisaged a higher initial payment of about 85 per cent of net profit after tax and before amortisation (npata). The half-year dividend of 6c was 70 per cent of npata.

Vector's revenue for the half year jumped 64 per cent to $568.7 million because of the purchase of NGC.

Earnings before interest, tax depreciation and amortisation were up 47 per cent to $303 million. Earnings after tax and before amortisation were $86 million.

The company said it expected a full-year net profit after tax and before amortisation of $138 million to $143 million compared with a prospectus forecast of $134.4 million.

There is no change to the forecast dividend of 11.5c a share for the full year.

Chairman Michael Stiassny said the proposed 11.5c dividend still stood.

The half year included increased borrowing costs of $39.3 million and an additional $26.2 million of amortisation of goodwill, the result of moving to 100 per cent purchase of Vector from 67 per cent.

Mr Stiassny said the results of the two half years were not directly comparable because of the full inclusion of NGC's revenues and earnings, its earnings and higher costs from the acquisition.

On regulatory issues, Mr Franklin said Vector as an infrastructure company was very concerned about where the Commerce Commission was heading on the issue of weighted average cost of capital for infrastructure businesses.

Vector has a considerable portion of its business regulated – electricity distribution and its gas distribution business in Auckland.

Mr Fredricson said the financial impact of regulation on Vector's Auckland gas network was $3.2 million in the year to June 2006.

ABN Amro analyst James Miller said Vector's half-year result was good and the company had delivered on its prospectus forecast.

[kura]

If nothing else, it means they can forecast reasonably accurately.
Basic EPS does not tempt me to put in a buy order at moment. (Even after ignoring goodwill ammortisation) With threats from commerce commission, it just another TEL in disguise.

[Captain Ramjet]

Im just a newbie to technical analysis but it seems to me like this share is showing some positive technical indictators having gone up through the 20 and 50 day moving averages on reasonable volume, making higher highs and higher lows with some good support around $2.76. Anyone with more TA experience care to comment / contribute to my education?

[pugnut]

Hi Captain,

You are absolutely correct! This stock has given a few buy signals in the last couple of days. Most importantly it has broken it's downtrend on above average volumne.

http://homepages.ihug.co.nz/~forhunt/img/VCT-6month.JPG

:):)

The first day that closed above the downtrend line would have given the buy signal, around 270. Did you buy in when you got your signals?

[rmbbrave]

A large chunk of the shares on the NZX have gone up 10% in the last month. It looks as though Vector has too.

AS it has been in a down trend for so long it is too be expected that the latest up trend for all shares would give a "buy signal" for laggards like Vector.

Are you shore there are not better shares out there?

[moimoi]

record date for the 6 cent divi is tomorrow....

no doubt providing for some of the recent support.[8D]

moi.

[pugnut]

Of course there are better shares out there, there always is. In this case I was just confirming that Captains TA was pretty accurate. The divvy may have something to do with it, and yeah the rising tide floats most boats :D.

FBU is always a favourite in my books, F&P, POT etc.

[Captain Ramjet]

thanks for that pugnut...good to know Im on the right track. No I didn't buy then as Im still getting my head around this TA thing and am only paper trading at the moment but once I get a few more right Ill part with some hard earned dosh and see where I end up. Will be interesting (to me at least) to see what effect the dividend will have on the price...from a TA perspective.

[kura]

In last week or so its been drifting down, hopefully not far off my target buy price (2.20) I presune the TEL regulatory affair has put the frightners on VCT holders.

[Paddie]

quote:Originally posted by kura

In last week or so its been drifting down, hopefully not far off my target buy price (2.20) I presune the TEL regulatory affair has put the frightners on VCT holders.


I am off loading mine, not because of regulatory affairs frightening holders. There are far better opportunities out there currently.

Paddie[^]

[lambton]

quote:Originally posted by Paddie


quote:Originally posted by kura

In last week or so its been drifting down, hopefully not far off my target buy price (2.20) I presune the TEL regulatory affair has put the frightners on VCT holders.


I am off loading mine, not because of regulatory affairs frightening holders. There are far better opportunities out there currently.

Paddie[^]


Yep - this one is right in Helengrad's sights. Becomes more and more dangerous to hold em as inflation takes hold and the great unwashed begin to bleat louder about the cost of living. Easy target and an easy vote bank. More about timing but VCT will get thumped sometime sooner or later. Ouch

[moimoi]

has reverted back to its downtrend....

anyone got any comment?

[Lawso]

In its short life (10 months) as a listed company, VCT has achieved minimal s p growth and pathetic div yield. Forward indications (regulatory interference, etc) are for no real improvement IMO. So why would you hold? I began with high hopes for this stock but decided to reduce in February, @ 263cps, and finally exited in April @ 280cps, making modest gains each time.

There are plenty of better places to put your money, moimoi.

[Snow Leopard]

cheer up

1) It is still above issue price :)
2) You have had a divvy as well :)

Disclaimer: I realise these comments may be cold comfort to people who bought in the market, but it is the best I can do.

[moimoi]

the chart is looking quite sick.
Am struggling to determine whether or not to stick with them.

Am concious of selling my CEN shares to edison in frustration at $3.10...then watching them rise to $7.

VCT seems to be following a similar path to CEN in that they looked sick early on....

moi.