Vector Limited (VCT)

[Dr_Who]

Phaedrus

I recall buying WHS a few years back at $5 and it went down to below $3.50. And yes I did average down, cos I knew the fundamental value was well over $5. WHS gave good div and they were sorting out the problems in Aussie. As a long term investor it doesnt matter where the sp goes as long as you are buying the asset at well below the valuation. The value of WHS was eventually realised on T/O offers which traded over $7. Now, I am told WHS is worth well over $7.50+ if the T/O is successful.

The result is in the pudding mate. This is only one of a few examples of fundamental value investing. I too believe VCT is way under valued and that the value will come into play in the long term. I am happy to keep buying as long as there are no fundamental problems associated with the company.

[duncan macgregor]

Phaedrus

I recall buying WHS a few years back at $5 and it went down to below $3.50. And yes I did average down, cos I knew the fundamental value was well over $5. WHS gave good div and they were sorting out the problems in Aussie. As a long term investor it doesnt matter where the sp goes as long as you are buying the asset at well below the valuation. The value of WHS was eventually realised on T/O offers which traded over $7. Now, I am told WHS is worth well over $7.50+ if the T/O is successful.

The result is in the pudding mate. This is only one of a few examples of fundamental value investing. I too believe VCT is way under valued and that the value will come into play in the long term. I am happy to keep buying as long as there are no fundamental problems associated with the company. The fundamental value has very little to do with the price of a share, which is ruled by market sentiment plus other non related factors. That is why i am out the market which has nothing at all to do with company fundamentals.
The whole market is downtrending why fight it being right all the time, never swim against the tide wait until it turns. The American economy has more to do with our downtrending market than company fundamentals. Bush is about to inflict new measures to right the economy so expect another major cock up coming very soon. VCT will be a good long term uptrending stock one day, but not today, or tomorrow wait until the market in general turns. Macdunk

[Dr_Who]

I agree with you DM that there could be further downside to this economy. Unlike traders, I am prepare to ride it out and pick up bargains on the way. VCT is looking so cheap that I cant help myself. VCT is a stock that I feel very comfortable with and can sleep very well at nights even with a falling sp.

It is abit like someone coming to me with a good quality Remuera property with a CV of $1 million and I can buy it now for $500k with a net rental yield of 7.7%. Even thou I know there are further dowside the property market, I will not hesitate to buy that property at that price and yield.

[Bilo]

I agree with you DM that there could be further downside to this economy. Unlike traders, I am prepare to ride it out and pick up bargains on the way. VCT is looking so cheap that I cant help myself. VCT is a stock that I feel very comfortable with and can sleep very well at nights even with a falling sp.

It is abit like someone coming to me with a good quality Remuera property with a CV of $1 million and I can buy it now for $500k with a net rental yield of 7.7%. Even thou I know there are further dowside the property market, I will not hesitate to buy that property at that price and yield.

The year long punitive squeeze on VCT appears to be coming to an end.
Does anyone know anything?
Phaedrus do the numbers agree?
Doc you must be feeling some relief?

[Dr_Who]

Doc you must be feeling some relief?

Na mate, I was hoping it to go down more so that I can pick up some more cheap stocks. I am a happy holder on this stock. Abit like my buying strategy in PRC and NZO which has paid off very well, thank you.

As long as one knows the fundamental value of a good quality company in both its micro and macro environment, you shouldnt be afraid to buy more when the sp drops. Be honest, no one can pick the absolute bottom and top.

[AMR]

Na mate, I was hoping it to go down more so that I can pick up some more cheap stocks. I am a happy holder on this stock. Abit like my buying strategy in PRC and NZO which has paid off very well, thank you.

As long as one knows the fundamental value of a good quality company in both its micro and macro environment, you shouldnt be afraid to buy more when the sp drops. Be honest, no one can pick the absolute bottom and top.

PRC and NZO are great stocks fundamentally. I'm not sure about your other pick DPC though :o:o.

Fundamentalists make money, technicians make money, greedy people without money management systems get butchered...and I'm not sure averaging down is a good system.

[Stupid tight stop loss on PRC whipped me out! :mad:]

[duncan macgregor]

AMR, Your stop loss might have whipped you out at the wrong time but how often has it saved you?. Look at VCT for instance, it showed a buy for me at just over $2-30 went up to $2-50 then continued to downtrend. I thought that was the bottom but was wrong if i had have bought my stupid stop loss would have saved me. I slacken off my stop loss level only when i am well in front trending up, otherwise its 5%. Right now VCT is trending down, the buy signal is at the moment is still above the share price by about 5c. Macdunk

[Financially dependant]

This might be the bottom...

http://www.stuff.co.nz/4468391a13.html

[Dr_Who]

:):) VCT is also ex dividend 6.5 cents... beautiful! :)

[CJ]

:):) VCT is also ex dividend 6.5 cents... beautiful! :)
When did it go ex? I didn't see any 6c fall.

VCT is on my watchlist. Lots of uncertaintly but surely it must be about time to pick the bottom??

[Dr_Who]

When did it go ex? I didn't see any 6c fall.

VCT is on my watchlist. Lots of uncertaintly but surely it must be about time to pick the bottom??

I think it was last week it went XD. Thats what my broker told me. The so is so low it cant possibly go any lower.

[AMR]

AMR, Your stop loss might have whipped you out at the wrong time but how often has it saved you?. Look at VCT for instance, it showed a buy for me at just over $2-30 went up to $2-50 then continued to downtrend. I thought that was the bottom but was wrong if i had have bought my stupid stop loss would have saved me. I slacken off my stop loss level only when i am well in front trending up, otherwise its 5%. Right now VCT is trending down, the buy signal is at the moment is still above the share price by about 5c. Macdunk

Yes yes of course! Still a comparative newbie so the stops I was setting back then were far too tight. I should emphasise to the others here who now think stop losses are rubbish that my mistake was not getting back in when things turned bullish again, setting stop losses are a good money management technique!

[Phaedrus]

ALL of the indicators featured in the chart on page 51 have now triggered Buy signals.

The trendline was broken on 4/4/08.

This chart has been corrected for the dividend payment.

http://h1.ripway.com/Phaedrus/VCT47.gif

[BDLBOM]

[QUOTE=CJ;193396]When did it go ex? I didn't see any 6c fall.

It went ex dividend on the 31st March. I watching it waiting for the 6c drop.
It just didn't happen. Nobody noticed.
Now we see the Chinese are going to bid on the Wellington networks.
Things are hotting up.
A year to drop from $3 to $1.70.
How long to get back up to $3?

[Dr_Who]

Thanks for the graph Phaedrus. :)

I am a long term holder of this pup and will buy more if it does drop again. This company is worth north of $2.80 factoring CC intervention. It has great dividend and a monoply. The only negative is management.

As I said, you cant always pick the bottom, but you can pick up cheap stocks near the bottom. Its all good.

[Toulouse - Luzern]

VCT popped up on my radar this week also...
and here you go...
from this mornings DomPost

Chinese firm eyes Wgtn network - report
Fairfax Media | Monday, 07 April 2008

China's State Grid Corporation and Hong Kong's Cheung Kong Infrastructure Holdings are eyeing separate bids for Vector's Wellington electricity network, the South China Morning Post reported.


State Grid would lodge a bid later this week, the newspaper reported today. Cheung Kong Infrastructure is Hong Kong's largest listed infrastructure company, with investments in energy, transport and water infrastructure in Hong Kong, mainland China, Britain, the United States, Canada, the Philippines and Australia.

Vector shares jumped 9 cents, or 5 per cent, to $1.85.

In February The Dominion Post reported that Vector had invited three parties to do due diligence on the Wellington network ahead of potential bids. These included Cheung Kong plus rival Hastings Funds Management in partnership with Westpac.

Full article at:

http://www.stuff.co.nz/4468391a13.html

[Dr_Who]

Holy CRAP! VCT is going for a bull run also!!! Up 10 cents today with $1.93 bid and $2.03 sell. Something must be up for people to buy like that.

[Phaedrus]

Something must be up for people to buy like that.

Yes. The trend!

[Hoop]

Damm...missed out

Depth showed sellers at 183 cents put in order at 185 should've been 186 in hindsight. That 1c difference cost me $2000 in lost opportunity...now at 195

[Hoop]

Holy CRAP! VCT is going for a bull run also!!! Up 10 cents today with $1.93 bid and $2.03 sell. Something must be up for people to buy like that.

Phaedrus quote Yes the trend

Hmmm..... trend + Chinese invasion of little ol' NZ

[Dr_Who]

Phaedrus quote Yes the trend

Hmmm..... trend + Chinese invasion of little ol' NZ

yeah, this time round there will be no poll tax and they wont be treated like second class citizens.

[CJ]

Phaedrus quote [COLOR=green]
Hmmm..... trend + Chinese invasion of little ol' NZSurely network assets are "strategic"?

[AMR]

Darn, I missed it too. Waiting for the pullback I suppose...

[macduffy]

Surely network assets are "strategic"?

One would think so.

Or perhaps the Chinese have special expertise in networks?

Yeah, right.

:rolleyes:

[Balance]

One would think so.

Or perhaps the Chinese have special expertise in networks?

Yeah, right.

:rolleyes:

You mean the NZ expertise on display when Auckland was plunged into darkness during the Mercury crisis? Or with the electricity grid expertise we have now in Transpower?

Good one! I say we sell to the Americans who stripped Telecom back to third world standard.

[Dr_Who]

You mean the NZ expertise on display when Auckland was plunged into darkness during the Mercury crisis? Or with the electricity grid expertise we have now in Transpower?

Good one! I say we sell to the Americans who stripped Telecom back to third world standard.

I say sell to the highest bidder. Any management cant be worst than the current trust.

[Dr_Who]

Well, the market seems like the financing deal with potential corporate play. The sp has jumped 28 cents in the few couple of days with a 6.5 cents dividend. :):)

I cant comment on the financing package without looking at the details and crunching some numbers.

[macduffy]

Well, the market seems like the financing deal with potential corporate play. The sp has jumped 28 cents in the few couple of days with a 6.5 cents dividend. :):)

I cant comment on the financing package without looking at the details and crunching some numbers.

Awaiting your comments, Dr, once you've " crunched the numbers ".

;)

[Steve]

personally i wouldnt go near vct with a ten foot barge pole. all that debt!!! having to refinance in the uk with the nzd where it is. as if the cfo hasnt got enough to deal with he'll now be playing currencies.

Which currency was this existing debt in?

[Bilo]

vct's interim report notes $A500m of Aussie debt, but it could be any of the maturing debt which is being refinanced. i stand to be corrected. i dont follow vct too closely.

VCT are up to their eyeballs in debt, as utilities are wont to do. however as this debt matures, they are facing significantly increased rates of interest.

given the effect that interest has on the bottom line and the chances of the reset rate being set significantly lower, i just can't understand why anyone would invest in this, unless they had to under a NZX50 indexing mandate.

anyway, as i said, we shall see.

Psycho,
Like so many things you have to know what is behind the numbers.

Firstly the 75% shareholder, the Auckland Energy Trust, can always (and most say, should have) let more shares go when they bought the North Shore & Wellington networks and the Natural Gas Corporation.


Second they are looking to divest the electricity lines portion of their Wellington assets. Just one option that they have to raise cash and reduce their cost of capital towards the Commerce Commission’s (previous) stupid level (was that 7pc! Their response at the time was to stop investing which is what the Cullen & the labour government deserved (or did they see an opportunity to nationalise these as well? Vector put their customers first and battled on).


Third the business generates buckets of cash. Their customers pay for their assets and then pay Vector to maintain them. They continue to invest in a number of related technologies - they have significant engineering capabilities.


Next they have a number of options to raise BILLIONS in cash and have time and are capable of choosing the best available option.


Last they are owned by the people of NZ’s largest city, have a monopoly situation, get the best deals in the country for electricity, and can borrow money anywhere anytime – even times much worse than these.


Vector: These assets are better to own than a bank. IMO.
PS and every politiican at every political level knows it.

[Dr_Who]

CC will take into account the cost to service the debt and the fact that NZ need VCT to continue to invest in CAPEX. It is political kamakazi to kill off VCT especially with so many Auckland households who benefit from its dividend.

I see the trust either dissolved or they privatise VCT with the sp at these levels. This is an assumption only.

[Bilo]

CC will take into account the cost to service the debt and the fact that NZ need VCT to continue to invest in CAPEX. It is political kamakazi to kill off VCT especially with so many Auckland households who benefit from its dividend.

I see the Trust either dissolved or they privatise VCT with the sp at these levels. This is an assumption only.

Dr, you can only get away with suggesting that to the Labour government in election year. Free speech will not be welcomed next year. Look what they did to Telecom and all the Telecom shareholders. If Labour get another term it would not be a good idea to be holding anything (like VCT shares) that could be privatised to dump billions in special dividends into government coffers for the fat cats in Wellington to fritter away. While the nation's networks are terminally ill - Meridian was it? Transpower?

It will be hard to crow about any compelling financial argument for Vector while they have to salt away the fruits of their efforts, I agree. But that situation, as the Dr says, cannot last forever. I remind you that VCT were rapped over the knuckles by the CC for making too much money. Once the profits from their other businesses start flooding in, who will be able to determine where (monopoly controlled or competitive business) the costs and profits lie? Vector is lean and mean and efficient - you should have seen the Auckland Electric Power Board.

"Maui gas to be used in the second half of the financial year". Now how do you interpret that statement? ;)

[CJ]

AIA decision must have negative impact on wellington network sale. or is a network asset not strategic?

[beacon]

AIA decision sends strongly negative signals to VCT holders. Fall it will now, just don't know how much, and how long ...

[Dr_Who]

Seems like Labour will loose the this election. :) And National will start the sale process.

[BDLBOM]

AIA decision must have negative impact on wellington network sale. or is a network asset not strategic?

Helen has been so busy cosying up to the Chinese that she won't want to get off side with them now
China are bully boys from way back and Helen has given them a lever that they can be expected to use.

[Bilo]

Helen has been so busy cosying up to the Chinese that she won't want to get off side with them now
China are bully boys from way back and Helen has given them a lever that they can be expected to use.

The honorable ministers were apparently unable to see that investment by foreigners as good for New Zealand. They obviously prefer to bring people in (voters to replace the ones that have been chased away perhaps :rolleyes: ) rather than just take foreign money.

[Bilo]

The Australain perspective is always of interest. This in The AGE:

"New Zealand's government blocked Canada Pension Plan Investment Board from acquiring a 40% stake in Auckland International Airport because the proposal offers no advantage for the South Pacific nation."

Our mates didn't say "banana republic" - just a "South Pacific nation".

[CJ]

Would it matter verymuch if the Chinese acquired VCT's Wellington network? Presumably they are not planning to store power in batteries and ship it back to China.
hiawatha
And teh Canadians were going to dig up the land and ship it back to Canada.

What would happen if the Chinese bought teh asset then flipped the switch. The rest of the country would rejoice as Wellington group to a halt (some would call this progress). Each house in Welly only has one power line so there are no options.

[Dr_Who]

What would happen if the Chinese bought teh asset then flipped the switch. .

Now you are talking crap!

If you even bother to look at who is bidding for the assets, you will know that the bidder is one of the most successful companies and the wealthiest man in Hong kong with infrastructure and telecom investments around the world.

I welcome any bidder who will pay the highest price for the welly asset.

[CJ]

Now you are talking crap!.That must qualify me to be part of the government.


If you even bother to look at who is bidding for the assets, you will know that the bidder is one of the most successful companies and the wealthiest man in Hong kong with infrastructure and telecom investments around the world.And what were the canadians going to do with the airport??? Both the Canadians and the Chinese are highly successful investors who what to increase the profits of the business they are buying. Tell me what the Canadians were going to do to the airport that the Chinese couldnt do to Wellys power network.

I see the power network as far more strategic than a airport.

[Dr_Who]

Interesting comment: Initial offers already exceed the company's assessment of an ``appropriate value'' and a sale was possible in the second quarter, Chairman Mike Stiassny (http://search.bloomberg.com/search?q=Mike+Stiassny&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) said Feb. 14.

Vector Shares Gain Most in Four Months on Network Bid (Update2)

By Gavin Evans
April 7 (Bloomberg) -- Vector Ltd. (http://www.bloomberg.com/apps/quote?ticker=VCT%3ANZ), New Zealand's biggest electricity and gas distributor, gained the most in four months on the nation's stock exchange after a report that three parties are bidding for the company's Wellington power network.
Cheung Kong Infrastructure Holdings Ltd., State Grid Corp. of China, and a group led by Westpac Banking Corp. may pay as much as $1 billion for the asset, the South China Morning Post reported, without saying where it got the information. Vector gained 4 percent, the biggest jump (http://www.bloomberg.com/apps/quote?ticker=VCT%3ANZ) since Nov. 30.
Vector's biggest assets are its power and gas networks in Auckland, the country's largest city, and pipelines delivering natural gas around the nation's North Island. It hired Goldman Sachs JBWere Ltd. last August to manage the Wellington sale after receiving approaches from potential buyers.
``The process regarding the potential sale of the Wellington network is continuing,'' Vector said in an e-mail to Bloomberg News. The company wouldn't comment on the participants or the bidding timeframe.
Vector shares rose 7 cents to NZ$1.83 in Wellington, the highest close since March 17. The stock fell 42 percent in the year ended March 31, almost three-times the decline in the benchmark (http://www.bloomberg.com/apps/quote?ticker=VCT%3ANZ) NZX 50 index, on concern increasing regulation will reduce future earnings.
State Grid, which is expanding in other countries to seek higher returns, will file its bid later this week, the South China Morning Post said. New Zealand is a new market for Cheung Kong Infrastructure, it said.
Electricity and gas account for about 95 percent of Vector's pretax earnings. The company runs telecommunications networks in Auckland and Wellington and last year rolled its metering unit into a joint venture with Siemens AG to help speed the introduction of new technology.
The Wellington assets accounted for about 23 percent of the company's power deliveries in the six months ended Dec. 31.
Initial offers already exceed the company's assessment of an ``appropriate value'' and a sale was possible in the second quarter, Chairman Mike Stiassny (http://search.bloomberg.com/search?q=Mike+Stiassny&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) said Feb. 14.
To contact the reporter on this story: Gavin Evans (http://search.bloomberg.com/search?q=Gavin+Evans&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) in Wellington at gavinevans@bloomberg.net

http://www.bloomberg.com/apps/news?pid=20601081&sid=an168eqjojrk&refer=australia

[Dr_Who]

Blocking of Vector deal 'unlikely'

By ANDREW JANES - The Dominion Post | Thursday, 17 April 2008

The Government is unlikely to block a sale of Wellington's electricity network to a foreign party, according to legal sources.

http://www.stuff.co.nz/4483353a13.html

[wsheridan2]

My god.... common sense being shown by local government politicians. Whatever is becoming of the world? :eek:
http://www.scoop.co.nz/stories/AK0804/S00195.htm

[CJ]

Blocking of Vector deal 'unlikely'

By ANDREW JANES - The Dominion Post | Thursday, 17 April 2008

The Government is unlikely to block a sale of Wellington's electricity network to a foreign party, according to legal sources.

http://www.stuff.co.nz/4483353a13.html

The article makes some good common sense points. problem is common sense and politics are not the same.

[Steve]

And the shareprice is up, up and away... :)

[Dr_Who]

Here are the real the facts!

I have been buying VCT from $2 down to $1.72 with a very good average price. Toady's pricetrading at $2.14 + 6.5 cents hlf yr div. Is the market telling us somethings good is up? Analyst valuation range $2.70-$3.20.

I am a happy investor in VCT. :):):)

Making money and laughing to the bank isnt rocket science either.. LOL

[Dr_Who]

Oh I forgot the mention.....

the analyst are all expecting the welly sale to be below $500m, so if VCT can pull off a sale over $500m, the market will re-rate VCT. From media speculation it looks likely a deal will be $700m+. Is that why VCT is going up?

Is not rocket science is it? ROFL! :D

Hey Psycho.. Are you putting your money where your mouth is and buying a PUT option $1.50 on VCT or are you just full of hot air?

[Deev8]

make sure you post here when you sell, because i'll be laughing my ass off in 6 months time when you haven't and the share price is <$1.50.It's quite sad when discussion of share descends to this level.

[BDLBOM]

It's quite sad when discussion of share descends to this level.

Agreed. I joined this forum because I liked the idea of being able to express my views and reading other peoples views on the issues.
You can express your views without ridiculing or attacking others personally.

[Mysterybox]

as far as attacking his investments, this is a trading forum, is that not fair game? or should we all ramp the hell out of every stock?

Obviously ramping the hell out of every stock will just lower the value of this forum for all users, ruining the experience and learning opportunites for all.

As for "attacking" investments, aslong as your claim is justified (ie: can back with some proof/idea) I (personally) have no quarrels with people attempting to "attack" or warn others against stocks, after-all, this is a forum, a place in which we can express opinions and everyone is entitled to a different opinion

In the end, any decision to buy/sell should come down to the personal research from the trader, before the words of the forum, more just for advice/direction. Or stocks to look into :D

[PointyHat]

VCT
22/04/2008
OFFICE

REL: 1517 HRS Vector Limited

OFFICE: VCT: Vector appoints new Group General Manager

Vector Limited announced today that it has appointed a new Group General
Manager of Regulatory and Pricing.

Vector has restructured its senior executive team, and is realigning from a
division based organisational structure to one based around business
functions.

Group General Manager of Regulatory and Pricing Allan Carvell will report to
Vector Chief Executive Officer Simon Mackenzie and will sit on the executive
team.
I am with Dr Who on this, I stacked up well under $2.00


"We are very pleased to welcome Allan to Vector," said Mr Mackenzie. "His
appointment further strengthens the executive team and he brings with him
extensive experience in the energy sector."

"One of Vector's four key focus areas is regulatory outcomes. Allan Carvell
will help us execute our strategy of continuing constructive regulatory
relationships."

Mr Carvell has previously held the position of Chief Financial Officer at
Transpower. Most recently he was formerly General Manager Finance and
Commercial at Unison Networks Limited.

Allan Carvell will take up his position on 16 June.

[PointyHat]

(I am with Dr Who on this, - sorry this comment appeared in the middle of the statement above)

[Steve]

make sure you post here when you sell, because i'll be laughing my ass off in 6 months time when you haven't and the share price is <$1.50.


re dr who: as far as attacking his investments, this is a trading forum, is that not fair game? or should we all ramp the hell out of every stock?

I think what people are getting at is that you should feel free to attack the investment by way of your analysis, but that there is no need to personalise your attack...

[Deev8]

make sure you post here when you sell, because i'll be laughing my ass off in 6 months time when you haven't and the share price is <$1.50.


... as far as attacking his investments, this is a trading forum, is that not fair game? or should we all ramp the hell out of every stock?Taking a different point of view to another poster is certainly reasonable, personal attacks are not.

In other words - Play the ball not the man!

[PointyHat]

VCT
28/04/2008
ASSET

REL: 0913 HRS Vector Limited

ASSET: VCT: Vector sells Wellington network to CKI

Vector Limited (VCT) today announced the sale of its Wellington electricity
network to Cheung Kong Infrastructure Holdings Limited (CKI) for a price of
$785 million.

"We are pleased with the outcome of the strategic review process begun in
August last year, which has now resulted in this sale," said Vector Chairman
Michael Stiassny.

"This price represents a positive outcome for all Vector stakeholders."

Vector CEO Simon Mackenzie said that Vector will initially apply the funds to
retire debt.

"The divestment further strengthens Vector's balance sheet and positions it
strongly to consider any potential infrastructure opportunities should they
arise.

At the moment we have no specific investment plans but given current market
dynamics, we believe it is possible that increased infrastructure investment
opportunities may be available. In the meantime we continue to focus on our
existing assets and business objectives" he said.

CKI is a global infrastructure owner and operator with assets and operations
in Australia, (including interests in Melbourne's CBD electricity network) as
well as operations in the United Kingdom, Canada, mainland China and Hong
Kong.

Vector will be working with CKI over the coming months to ensure there is a
smooth transition in ownership.

The sale is subject to conditions including the approval of Vector's
shareholders and Overseas Investment Office approval.

Vector acknowledges Goldman Sachs JBWere who acted as the company's exclusive
financial advisor throughout the strategic review process.
ENDS.
For further information contact:
Philippa White
External Communications Manager
09 978 7638, 021 579 522

Editors notes

CKI facts

*CKI is a major global infrastructure owner and operator with assets in
Australia, where it has an interest in the company which operates Melbourne's
CBD electricity network, as well as operations in the United Kingdom, Canada,
mainland China and Hong Kong.

- CKI has significant shareholdings in the major electricity networks of
South Australia and Victoria, as well as a company supplying power to
Ontario, Alberta and Saskatchewan in Canada.

Wellington network facts

- The Wellington electricity network serves customers in Lower Hutt, Upper
Hutt, Porirua and Wellington City.

- Vector acquired its Wellington network in 2002 from Aquila, an American
company. Prior to that it was owned by Transalta, a Canadian company.

Vector facts

- Vector is a leading New Zealand energy infrastructure group. Our assets
perform a key role in delivering energy and energy services to more than one
million homes and businesses across New Zealand.

- Vector is a significant provider of Electricity distribution, Gas
transmission and distribution, Electricity and gas metering installations and
data management services (including in Australia), Natural gas and LPG. In
addition to our energy infrastructure assets, we own fibre-optic networks in
Auckland and Wellington, delivering high speed broadband services.

- Vector is 75.1% owned by the Auckland Energy Consumers Trust. The balance
of shares are held by institutional and retail investors.
End CA:00163754 For:VCT Type:ASSET Time:2008-04-28:09:13:32

[Yossarian]

the market seems very unexcited...

[Dr_Who]

the market seems very unexcited...

Wait till the analyst crunch the numbers and then make their recommendations to the institutions. Also VCT have had a good run from $1.72 to $2.11. That over 22% increase in less than a month. What other blue chip stocks have rallied lately?

I think the analyst may re-rate VCt based on that sale. They were all expecting the Welly asset only worth less than $500m, so a sale of $785m is a fantastic price.

[macduffy]

Wait till the analyst crunch the numbers and then make their recommendations to the institutions. Also VCT have had a good run from $1.72 to $2.11. That over 22% increase in less than a month. What other blue chip stocks have rallied lately?

I think the analyst may re-rate VCt based on that sale. They were all expecting the Welly asset only worth less than $500m, so a sale of $785m is a fantastic price.


Yes, the price of $785m looks pretty good and certainly higher than the market expected. So we may see a bit of a further SP increase. It seems clear, however, that investors' problems with VCT go a lot deeper and I wouldn't expect too much out-performance from here.

[Dr_Who]

It seems clear, however, that investors' problems with VCT go a lot deeper and I wouldn't expect too much out-performance from here.

It would be the icing onthe cake if the Chairman resigned at the same time. If he resigns the sp would put on 40 cents.

[AMR]

That was a pretty muted reaction to what should have been excellent news...either someone already let the cat out of the bag or people are still worried about the great credit crunch. I'm still considering a position, will hope on in the next retracement.

[COLIN]

So, the Wellington electricity network is not strategic but Auckland Airport is. Unbelievable!
If I lived in Wellington I would feel a lot uneasier about my electricity supply being totally at the mercy of the Chinese than about 40% of Auckland Airport being owned by a Canadian Pension Fund (with only 25% voting rights)!
What shocking political shenanigans.

[mondograss]

It was previously foreign owned, by Canadians no less (and Americans too I think), so there is little the govt can do to argue strategic value.

[Yossarian]

So, the Wellington electricity network is not strategic but Auckland Airport is. Unbelievable!
If I lived in Wellington I would feel a lot uneasier about my electricity supply being totally at the mercy of the Chinese than about 40% of Auckland Airport being owned by a Canadian Pension Fund (with only 25% voting rights)!
What shocking political shenanigans.

the deal is still subject to OIO approval...

[CJ]

the deal is still subject to OIO approval...

The OIO approved the AIA sale. It is the pollies you have to worry about. But dont worry - they will agree to anything with China, their NBF (that is girly magazine talk for "new best friend")

[POSSUM THE CAT]

When the Govt try to regulate lines charges in Wellington are they going to say this breaches free trade agreement? Surely they should say no very quickly and gain the public opinion votes out of it? To hell with Vectors Share Holders one of them is only A cat

[Dr_Who]

I am wondering if selling the welly asset was also part of the strategy to negotiate a favourable term with the CC?

[Dr_Who]

It is a done deal!

Airport law doesn't apply to Vector deal, Cullen says

12:34PM Tuesday April 29, 2008

Finance Minister Michael Cullen says Vector's Wellington electricity network is not on sensitive land and doesn't come under the same sale criteria as Auckland International Airport.

Vector is seeking approval for a $785 million deal to sell the network to Hong Kong-based Cheung Kong Infrastructure Holdings (CKI).
The sale is subject to conditions, including the approval of Vector's shareholders and the Overseas Investment Office, which will report to ministers.

Dr Cullen told reporters today that unlike the airport, Vector's network could not be described as a strategic asset because sensitive land was not involved.

"Sensitive land is defined in the Act, it borders reserves, or foreshore and seabed, or whatever it maybe.

"We can't just say we think this is sensitive land because it's Wellington," he said.

The Government changed the rules on foreign ownership to block the sale of the airport to a foreign bidder, but Dr Cullen said Vector was not in the same category.

We have to obey the law and the law is quite clear - this doesn't involve sensitive land," he said.

"I can't change the law on that, it would require legislation."
Asked whether it concerned him that Wellington's electricity network would be in foreign hands, he replied: "It's been in foreign ownership twice before. I think that's sufficient answer to that question."

Vector is optimistic the deal will be approved. It stands to make a profit of about $195 million from the sale.

http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10506900

[Yossarian]

It is a done deal!

Airport law doesn't apply to Vector deal, Cullen says

12:34PM Tuesday April 29, 2008

Finance Minister Michael Cullen says Vector's Wellington electricity network is not on sensitive land and doesn't come under the same sale criteria as Auckland International Airport.

Vector is seeking approval for a $785 million deal to sell the network to Hong Kong-based Cheung Kong Infrastructure Holdings (CKI).
The sale is subject to conditions, including the approval of Vector's shareholders and the Overseas Investment Office, which will report to ministers.

Dr Cullen told reporters today that unlike the airport, Vector's network could not be described as a strategic asset because sensitive land was not involved.

"Sensitive land is defined in the Act, it borders reserves, or foreshore and seabed, or whatever it maybe.

"We can't just say we think this is sensitive land because it's Wellington," he said.

The Government changed the rules on foreign ownership to block the sale of the airport to a foreign bidder, but Dr Cullen said Vector was not in the same category.

We have to obey the law and the law is quite clear - this doesn't involve sensitive land," he said.

"I can't change the law on that, it would require legislation."
Asked whether it concerned him that Wellington's electricity network would be in foreign hands, he replied: "It's been in foreign ownership twice before. I think that's sufficient answer to that question."

Vector is optimistic the deal will be approved. It stands to make a profit of about $195 million from the sale.

http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10506900

he's got a cheek...

[Dr_Who]

This article just clearly shows how ignorant and xenophobic some of us are. Must be the same people that vote for NZ First party.

Fran O'Sullivan: Vector deal stirs up the fear-mongers

http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10506979

[BRICKS]

This article just clearly shows how ignorant and xenophobic some of us are. Must be the same people that vote for NZ First party.

Fran O'Sullivan: Vector deal stirs up the fear-mongers

http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10506979


AS a not a great deal of action happens in NZ at any one time the local vocals love the chance to slag off to there hart's content, IF any had money they would invest but looking at NZX t/o they are fully BROKE..

[Dr_Who]

You are perfectly right BRICKS.

The ones that have no money to invest are usually the ones that makes the most noise. NZer's love their darling properties so much that there is little money left to invest in the equities market making NZ assets cheap for foreigners to buy. These so called naggers should put up or shut up. Lets see them put their money where their mouth is.

[Dr_Who]

Was thinking...

If Cheung Kong is successful at buying the welly assets, then it paths the road for corporate activity in VCT. T/O value for VCT is over $3 based on the welly asset sale.

If there was a good firm offer on the table for the trust that will return alot of cash back to the public, then it is in the best interest for the trust to consider it and announce it.

Just some brain storming and assumption. Any views?

[Bilo]

Was thinking...

If Cheung Kong is successful at buying the welly assets, then it paves the road for corporate activity in VCT. T/O value for VCT is over $3 based on the welly asset sale.

If there was a good firm offer on the table for the trust that will return alot of cash back to the public, then it is in the best interest for the trust to consider it and announce it.

Just some brain storming and assumption. Any views?

Cheung can borrow money at less than 1pc. Any kiwi has to pay more like 10pc hence we give away our crown jewels. This government has to fall back on political solutions to try to halt the mess they have created by stuffing up the financial systems. As B Gaynor says - Kiwis can't afford to pay for their own assets. Without the politics (central, local, trust and board) Vector would soon be worth way north of $3.

I am nearly out - have to free up some more funds for NZO and don't want to part with PRC.

[AMR]

Cheung can borrow money at less than 1pc. Any kiwi has to pay more like 10pc hence we give away our crown jewels. This government has to fall back on political solutions to try to halt the mess they have created by stuffing up the financial systems. As B Gaynor says - Kiwis can't afford to pay for their own assets. Without the politics (central, local, trust and board) Vector would soon be worth way north of $3.

I am nearly out - have to free up some more funds for NZO and don't want to part with PRC.

Are you quite sure about that? They will be paying off their HKD (effectively USD due to the peg) loan in NZD...and the NZD looks like it has turned the corner. Bounced off the 7850 mark 3-4 times already. If the kiwi falls significantly they could be stung with a large forex loss.

[Dr_Who]

Cheung has a global divesified asset portfolio, so they are naturally hedged and currency flutuattion is not so important in the short term.

I see VCT as a T/O target once the precendent is set with the successful sale of the welly asset. Maybe National being in govt will start the ball rolling?

[upside_umop]

I dont quite see how it would be a take over target.
Most of the shares are controlled by one trust...makes relatively unattractive imo.

[CJ]

I dont quite see how it would be a take over target.
Most of the shares are controlled by one trust...A trust that wont let go no less. Their grip on 75% of shares is the reason for their funding issues.

[macduffy]

A trust that wont let go no less. Their grip on 75% of shares is the reason for their funding issues.

Precisely. The company still sees itself as a glorified "Auckland Power Trust". I'm not too sure why the rest of us are hanging in there, minority interests aren't going to be given much weight at decision time.

[BDLBOM]

Perhaps the councils have a better chance of getting the trust wound up under a National Government.
Any thoughts?

[Sideshow Bob]

Any money from winding up the trust I believe would get returned to ratepayers. With the general & impending pain for many households, it may be a popular move.

[BDLBOM]

Would a winding up mean that the market would be flooded with VCT shares?
hiawatha

The beneficiaries would all end up with a parcel of shares. Some would probably sell but the major beneficiaries are the Ak City Council and the Manukau City Council who would probably hang on to them. If they did sell it would be to a single entity. I don't think the market would be flooded.

[CJ]

The beneficiaries would all end up with a parcel of shares. Some would probably sell but the major beneficiaries are the Ak City Council and the Manukau City Council who would probably hang on to them. If they did sell it would be to a single entity. I don't think the market would be flooded.
Correct me if I am wrong but aren't the councils capital beneficiaries and the rate payers income beneficiaries. Since they would be winding up early, the councils would have to compensate the income beneficiaries. In theory they could do this in cash (rather than shares) but would have to borrow to do so.

[BDLBOM]

Correct me if I am wrong but aren't the councils capital beneficiaries and the rate payers income beneficiaries. Since they would be winding up early, the councils would have to compensate the income beneficiaries. In theory they could do this in cash (rather than shares) but would have to borrow to do so.

You are right. The councils - Auckland, Manukau and Papakura are capital beneficiaries. I am a little unclear what their options are regarding the assets. The AECT website is not clear on this. Presumeably they could do what you suggest. Perhaps they could continue the role of the trust just didtributing dividends.

[CJ]

You are right. The councils - Auckland, Manukau and Papakura are capital beneficiaries. I am a little unclear what their options are regarding the assets. The AECT website is not clear on this. Presumeably they could do what you suggest. Perhaps they could continue the role of the trust just didtributing dividends.

I think they would use the dividends for their own purposes just like the AIA dividends. In theory this should lower rates, in practice ...

[kura]

You are right. The councils - Auckland, Manukau and Papakura are capital beneficiaries. I am a little unclear what their options are regarding the assets. The AECT website is not clear on this. Presumeably they could do what you suggest. Perhaps they could continue the role of the trust just didtributing dividends.

The councils are capital beneficiarys in some 70 years time, there has allready been a court case (councils wanted a cap on dividends ) that directors have the right to declare dividends as they see fit.

If you valued the councils capital interest on a DCF type basis, I doubt if you would end up with a very big % of Vectors total value, the biggest chunk of value belongs to ACET, (consumers)

One thing I could never understand, was why VCT ended up with such a complicated ownership structure, when most other local "power boards" just gave their shares to consumers outright, on converting to a company.

[Dr_Who]

With the Labour govt's strategy to centralise strategic assets by buying back Rail and maybe other assets, do you think the Trust will privatise VCT? VCT sp at these levels it would be wise for the Trust to privatise it.

[zac]

The premptive rights the council's have to the assets in 70 yrs. probably constrains any restructuring of the ownership in the near future. From memory they are in the courts trying to get their hands on the the cash cow sooner. They would certainly oppose any change of ownership.

[Dr_Who]

Li-Ka Shing is on a shopping spree in Aussie.

I am sure if VCT was up for sale, he would be in there bidding for it.

Hong Kong giant tracking our power assets


GIANT Hong Kong infrastructure and retail conglomerate Hutchison Whampoa is keen to ramp up investment in Australia through an increased number of container port assets and participation in the privatisation of the NSW electricity sector.

http://www.theaustralian.news.com.au/story/0,25197,23725978-643,00.html

[Dr_Who]

Com Com accepts Vector proposal

Friday, 30 May 2008

The Commerce Commission has accepted a settlement proposal from Vector as an alternative to regulatory control being imposed on its electricity distribution business.

In August 2006, the commission announced its intention to declare control over the electricity distribution services of Vector, having decided that Vector's pricing strategy was inefficient and not cost-reflective.
Some consumer groups were being significantly overcharged while others, including Auckland residential consumers, were being undercharged, the commission said.


In response, Vector made an administrative settlement proposal to the commission in Octob er 2006, updating it in January 2007.
Following consultation with interested parties on Vector's proposal, the commission said today that it had now concluded Vector's settlement proposal was consistent with the objectives of the regulatory regime.


"The commission considers that Vector's administrative settlement addresses the concerns identified by the commission, but with significantly lower compliance costs than would be the case if regulatory control was imposed," commission chairwoman Paula Rebstock said.


"Vector has initiated rebalancing in its pricing strategy so that consumer groups that were being significantly overcharged have seen their prices reduce. This tariff rebalancing programme will be completed by March 2009."

http://www.stuff.co.nz/4565846a13.html

- NZPA

[Steve]

With the shareprice showing a distinct lack of excitement... :confused:

[BDLBOM]

Will the deal with the regulator make much difference now that the Wellington network has been sold?
hiawatha

I don't think it will make any difference and I think you will find that the "settlement" that has been reached will be virtually the staus quo as at August '06 when dipstick Rebstock blundered in.

[Dr_Who]

Looks like VCT is starting to move again. A couple of large trades recently.

disc: shareholder

[Dr_Who]

Vector says profit forecast still good


12:45PM Wednesday June 04, 2008


The country's largest electricity and gas distributor, Vector, said today it remained comfortable with analysts' predictions of full year profit from $150-165 million.


Vector said it expected June year earnings before interest, tax, depreciation and amortisation (Ebitda) of $632-642m.

http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10514308

[moimoi]

What was the point of the time and expense of todays special meeting.??

Given that the 75.1% shareholder was voting yes, and the resolution only required a 50% majority....could we not of canvassed the opinion of the majority shareholder and then flagged the requirement for a meeting.?

A simple letter outlining that AECT had voted yes would have sufficed.??

Seems an irrelevant waste of time, money and energy!!

cheers
Moi.

[whatsup]

Its called demoracy

[CJ]

Its called demoracyThey could have held it in their carpark. There really was no point in anyone turning up. A waste of money just to follow procedure.

[Dr_Who]

They could have held it in their carpark. There really was no point in anyone turning up. A waste of money just to follow procedure.

I agree. The Trust should either be abolished or VCT privatised. Why even bother having it listed if it is runned like a private firm?

[CJ]

Even if the result was a foregone conclusion, every shareholder had the right to stand up and harangue the meeting.
hiawathaDid anyone actual bother to vote? Apparently over 99% accepatnces but that could just be 2 votes. AECT and one M&D investor rejecting the offer.

[Dr_Who]

Did anyone actual bother to vote? Apparently over 99% accepatnces but that could just be 2 votes. AECT and one M&D investor rejecting the offer.

I have a chunk of VCT, but threw the voting forms in the bin. Dont see a point wasting time when it is a foregone conclusion.

[moimoi]

exactly CJ....what may have been vaguely interesting was the % of votes excluding AECT...and the % of non voters.

With the now reduced gearing level of 50% the stock has hardly stormed off to the races today has it.?

With current global inspiration for infrastructure assets...why they are selling is a mystery...their didn't appear to be anything cheap about BG's bid for Origin.

So why is VCT's performance so insipid?

cheers
Moi

[BDLBOM]

With current global inspiration for infrastructure assets...why they are selling is a mystery...their didn't appear to be anything cheap about BG's bid for Origin.

So why is VCT's performance so insipid?

cheers
Moi[/QUOTE]

I wouldn't mind betting they have something in Auckland lined up to buy that they are not letting on about yet.
They have dropped enough hints that selling Wgtn networks puts them in a better position to exploit other opportunities.

[macduffy]

[QUOTE=moimoi;207087]exactly CJ....what may have been vaguely interesting was the % of votes excluding AECT...and the % of non voters.

With the now reduced gearing level of 50% the stock has hardly stormed off to the races today has it.?

With current global inspiration for infrastructure assets...why they are selling is a mystery...their didn't appear to be anything cheap about BG's bid for Origin.

So why is VCT's performance so insipid?


There's a big difference between the attractiveness of the Wellington lines network, where the return is regulated by govt., and the gas assets that attract BG to Origin.
Besides, VCT really did need to reduce its gearing and the Wellington asset was the odd one out and therefore the most likely to be sold. The current SP performance is more likely reflecting the present state of the market and pessimism about the economic outlook.

:cool:

[Steve]

Even if the result was a foregone conclusion, every shareholder had the right to stand up and harangue the meeting.
hiawatha

Not to mention consume ones share of the tea & buscuits... ;)

[Dr_Who]

No surprises, but still nice to see it go through.

VCT
16/07/2008
ASSET

REL: 0831 HRS Vector Limited

ASSET: VCT: Overseas Investment Office approves purchase

Vector is pleased to advise that the Overseas Investment Office has approved
the application of Wellington Electricity Distribution Network Limited, which
is 50% owned by Cheung Kong Infrastructure Holdings Limited (CKI) and 50%
owned by Hong Kong Electric Holdings Limited (HKE), to purchase Vector's
Wellington electricity network.

This follows Vector shareholder approval at the special meeting held on the
16th June. Settlement date is expected to be on or about 24th July 2008.

Vector will work closely with CKI and HKE to ensure a smooth transition.

ENDS

[Dr_Who]

VCT holding very nicely compare to the rest of the market. You also get a good dividend.

This whole market is getting slam dunk, even the resource and oilers are getting a fair share of the body slam.

[tsb]

Proceeds of the Wellington lines due in 24 th June - Is the end of year for Vector at the end of June!! - with divi in August. Feels that its dropping into place

[Arbitrage]

It has been a long time coming, but maybe the worm has turned.... but slowly.

[Dr_Who]

It has been a long time coming, but maybe the worm has turned.... but slowly.


A good solid company with good solid earnings, giving good solid div, even through the tough times. VCT is my long term portfolio play.

The question now is, what are they gonna do with the cash?

[Jim]

I've been accumulating this monopoly asset for my nest egg. Good solid dividend as demanded from the Auckland Energy Trust cannot be wrong.

[Neon_Spork]

With current global inspiration for infrastructure assets...why they are selling is a mystery...their didn't appear to be anything cheap about BG's bid for Origin.

So why is VCT's performance so insipid?

cheers
Moi

I wouldn't mind betting they have something in Auckland lined up to buy that they are not letting on about yet.
They have dropped enough hints that selling Wgtn networks puts them in a better position to exploit other opportunities.[/QUOTE]

I don't believe they were ever making any money from their Wellington network. Maintenance costs were too high. I think if they hadn't managed to sell the network it could have turned out to be a real problem for them.

[Dr_Who]

I don't believe they were ever making any money from their Wellington network. Maintenance costs were too high. I think if they hadn't managed to sell the network it could have turned out to be a real problem for them.

It is interesting that CKI paid a premium for the Welly assets. Hmmmm... I am wondering maybe CKI has other plans to expand in NZ and not just the Welly assets? I am to guess that CKI would be interested in taking out VCT if it were for sale?

[POSSUM THE CAT]

Dr Who it defeats the commerce commision from saying you are ripping of one lot of customers to subsidise the other lot of customers. Both companies will now be able to charge according to their own circumstances. VCT was accused of charging customers more in Wellington than Auckland Customers. So probally better to have two seperate owners.

[macduffy]

[QUOTE=Neon_Spork;215660]I wouldn't mind betting they have something in Auckland lined up to buy that they are not letting on about yet.


Any ideas on what those other Auckland investments might be?

[Dr_Who]

JUST BEAUTIFUL! :):)

American Psycho, where are you? ROFL!

VCT
01/08/2008
BUYBACK

REL: 1515 HRS Vector Limited

BUYBACK: VCT: Vector board announces intention to undertake share buyback

Vector's Board advises that it intends to undertake an on market buy back of
up to 25,000,000 of its ordinary shares, with any shares acquired initially
held as treasury stock.

Vector expects that formal notice of the commencement of the buy back, and
the details of the period during which it will be undertaken, will be given
following the release of Vector's annual results on 27 August 2008.

Vector Chairman Michael Stiassny said the board is committed to providing
attractive total returns to its shareholders within acceptable risk
parameters.

"Vector's board currently believes its shares are undervalued by the market
and therefore represent an attractive risk-return proposition for its
shareholders."

Mr Stiassny said Vector will continue to maintain a strong balance sheet to
fund capital expenditure for security of supply and on-going growth
initiatives.
Disc: Shareholder

[tsb]

ok - what will they buy back at everyone would like to know

[moimoi]

I am assuming not, but, will the 25m shares held as treasury stock still attract a dividend.?

or will there be a little more for us fleas after the buyback.?

cheers
Moi.

[macduffy]

I am assuming not, but, will the 25m shares held as treasury stock still attract a dividend.?

or will there be a little more for us fleas after the buyback.?

cheers
Moi.

Would think not.
If it did, accounting-wise the div would be paid back to the company and would find its way back to revenue!

;)

[shasta]

Would think not.
If it did, accounting-wise the div would be paid back to the company and would find its way back to revenue!

;)

Those "treasury" shares would be bought back & cancelled, i'd assume.

NZO also did this recently.

[macduffy]

Those "treasury" shares would be bought back & cancelled, i'd assume.

NZO also did this recently.

Hi shasta

I can't be sure of this but I was under the impression that "treasury" shares weren't actually cancelled, but remained "dormant", as it were. Then avaiable to be reissued without any further approvals needed.
Perhaps someone could clarify?
Either way, they won't be getting a div.

[Deev8]

I can't be sure of this but I was under the impression that "treasury" shares weren't actually cancelled, but remained "dormant", as it were. That's right. They often come back "into circulation" when executive share options are exercised.

[beacon]

what a stupid waste of sales proceeds in this environment ...

[trendy]

That's right. They often come back "into circulation" when executive share options are exercised.

That's the only reason for share buyback schemes is to buy back the significant dilution created by the executive stock option proceeds. Also used if the management and board have no idea how to increase growth.

My view is that excess cash should be paid out as dividends regular or specials. I put more value on a company that has increasing dividend growth e.g. increasing dividend payout growth greater than the rate of inflation.

[POSSUM THE CAT]

Any chance of them making a bid for some of Powerco

[moimoi]

Any chance of them making a bid for some of Powerco

any chance of them teaming with IFT and the NZ Super fund to buy CEN,,,,,,since BG aint keen on them via its origin takeover...??

[tsb]

My impression was that the proceeds of the sale was to pay off debt (which they probably need to) and to help fund the Broadband work. Perhaps there is boodle to come from the National Party's borrowing for the broadband too - so maybe we don't hear too much until after the election.

Perhaps a higher company worth may assist future borrowing and what better way to do it than to announce a buyback, especially if the "trust" does not get involved.

The increase in the share price sure was quick but is still below the issue price - I am hopeful of about $2.50 due to either the divi announcement or that and the buy back price.

Watching with interest and my pot in hand.

[Deev8]

My view is that excess cash should be paid out as dividends regular or specials. I put more value on a company that has increasing dividend growth e.g. increasing dividend payout growth greater than the rate of inflation.I agree that a special dividend, or return of capital to shareholders is often the best use of cash in circumstances like this. The worst use being a poorly-judged acquisition.

[shasta]

I agree that a special dividend, or return of capital to shareholders is often the best use of cash in circumstances like this. The worst use being a poorly-judged acquisition.

I agree a special dividend/capital return should be paid, but only if VCT is debt free.

Otherwise why not reduce all debt, & be in a enviable position to leverage an acquistion down the track when they may be able to pick over the ruins of a bear market. :rolleyes:

[BDLBOM]

They have dropped enough hints that selling Wgtn networks puts them in a better position to exploit other opportunities.[/QUOTE]

Hello hello - BBI's stake in Powerco up for sale. Gets interesting.

[Dr_Who]

Alot of opportunities to pick up cheap companies in this market. I am sure VCT is having a look at some. There are still alot of cash in the kitty even with share buyback.

[Deev8]

I agree a special dividend/capital return should be paid, but only if VCT is debt free.That might be unique - I don't have an issue seeing any company reducing its level of debt, but I don't think that I have ever seen a debt-free utility company.

[Dubdee]

Debt is the cheapest form of capital a company can raise therefore debt is a "good" rather than a "bad" form of capital from a shareholder perspective.

The problem with debt is that it is a fixed obligation which cannot be turned off. There is interest to service and repayments to be made. The trick is setting the percentage debt makes of your capital needs. Where the entity has very stable revenues, such as utility companies, they can handle relatively high levels of debt as their cash revenues are very stable. They still have to maintain enough cashflow "Freeboard" to keep their heads above water in all events , as is the case now with massive expansions of lending margins and reluctance of many lenders to lend at all! This means that net operating cashflow needs to be a good multiple of interest and other debt service charges.

So paying down debt is the last choice to be made for someone like Vector unless they predict a significant fall in operating cash flow. Buying accretive investments is the first choice, but lacking these opportunties reducing the number of shares via a buyback makes sense if the share price is depressed.

[Dr_Who]

:):):):)

VCT
27/08/2008
FLLYR

REL: 1008 HRS Vector Limited

FLLYR: VCT: Vector financial results announcement 08

Vector Limited

Reporting Period: 12 months to 30 June 2008
Previous Reporting Period: 12 months to 30 June 2007

NZ$000s

Revenue from ordinary activities
Reporting Period (continuing activities): 1,182,012
Reporting Period (discontinued activities): 147,255
Reporting Period (total): 1,329,267
Previous Reporting Period (continuing activities): 1,145,783
Previous Reporting Period (discontinued activities): 161,358
Previous Reporting Period (total): 1,307,141

% Change (based on total): +1.7%

Profit/(loss) from ordinary activities
Reporting Period (continuing activities): 141,792
Reporting Period (discontinued activities): 22,635
Reporting Period (total): 164,427
Previous Reporting Period (continuing activities): 196,994
Previous Reporting Period (discontinued activities): 36,311
Previous Reporting Period (total): 233,305

% Change (based on total): -29.5%

Net profit/(loss) attributable to security holders
Reporting Period (continuing activities): 141,792
Reporting Period (discontinued activities): 22,635
Reporting Period (total): 164,427
Previous Reporting Period (continuing activities): 196,994
Previous Reporting Period (discontinued activities): 36,311
Previous Reporting Period (total): 233,305

% Change (based on total): -29.5%

Final Dividend
Reporting Period: Amount per security, 6.7500 cents; Imputed amount per
security, 2.8929 cents
Previous Reporting Period: Amount per security, 6.5000 cents; Imputed amount
per security, 3.2015 cents

Record Date
Reporting Period: 11 September 2008
Previous Reporting Period: 29 August 2007

Dividend Payment Date
Reporting Period: 18 September 2008
Previous Reporting Period: 4 September 2007

Interim Dividend
Reporting Period: Amount per security, 6.5000 cents; Imputed amount per
security, 3.2015 cents
Previous Reporting Period: Amount per security, 6.5000 cents; Imputed amount
per security, 3.2015 cents

Record Date
Reporting Period: 31 March 2008
Previous Reporting Period: 30 March 2007

Dividend Payment Date
Reporting Period: 10 April 2008
Previous Reporting Period: 10 April 2007

Comments
Audited financial statements and supporting information attached.

This report has been prepared in a manner which complies with generally
accepted accounting practice and gives a true and fair view of the matters to
which the report relates and is based on audited financial statements.
Previous reporting period results are also audited.

Approved by resolution of the Board of Directors

Vector result robust

- Revenue $1329.3m, up 1.7%
- EBITDA $640.0m, up 5.7%
- NPBT $231.5m, up 1.3%
- Reported NPAT $164.4m
- Strong focus on driving efficiencies in costs and capital expenditure

- Total dividend for FY08 13.25cps (13 cps previous corresponding
period)

Vector Limited (VCT) announced an annual result today of $164.4 million Net
Profit after Tax for the year ended 30 June 2008, which is at the upper end
of analysts' previous forecasts.

Vector's underlying business performance continued to grow over the last
financial year, with group EBITDA rising by 5.7 % to $640 million, and group
revenue increasing by 1.7 % to $1,329 million.

Net Profit before Tax has risen 1.3 % to $231.5 million.

The 2007 comparative NPAT of $233.3 million is restated under IFRS, and was
inflated by one off tax adjustments as previously disclosed to the market.

"This is a very robust result," said Vector Chairman Michael Stiassny.

"It is due to a concerted effort over the past year to streamline the
business by removing inefficiencies, cutting costs and concentrating on those
operations that meet our criteria for growth."

Shareholders will be paid a fully imputed dividend of 13.25 cents per share,
compared with the 13 cents per share dividend for the previous period.

In addition, Vector's board has announced this morning that its previously
disclosed buy-back of up to $25 million ordinary shares will begin on 1
September 2008 running to 27 August 2009.

"Our core businesses have made increased contributions, increased revenue,
and have reduced costs," said Vector Group Chief Executive Officer Simon
Mackenzie.

Growth in electricity earnings, increased gas transmission volumes, firmer
LPG prices and continued growth in technology revenue over the last year all
contributed to the result.

Total revenue increased from $1,307 million to $1,329 million, driven
primarily by increases in electricity volumes and connections in Auckland, as
well as a CPI price increase.

Vector's cost efficiency programme during the year contributed to a reduction
on 2007 in operating expenditure of $15 million prior to one off redundancy
costs.

This was also assisted by a significant reduction in gas purchases and
associated costs of sales of $15.9 million.

Operating cash-flows decreased by 7.4 % to $331 million, driven mainly by
increased net interest paid, increased level of cash tax payments, and a
reduction in creditors.

Vector has made significant progress in its four areas of key focus,
Operational Excellence, Operational and Capital Expenditure Efficiency,
Regulatory and Customer outcomes and Disciplined Growth. In particular
Vector:

- agreed to divest the Wellington electricity network after unsolicited
approaches and a strategic review concluded it's static growth and lack of
network overlap did not fit with Vector's strategy
- retained its BBB+ investment grade rating from Standard and Poor's
- standardised and simplified its field contracting model, with
contractors required to work across electricity, gas and telecommunications
networks, instead of specialising.
- re-organised and further strengthened its executive team
- successfully refinanced in the midst of a global credit crisis

"Vector is now in a much stronger position both financially and operationally
in all of its core businesses to take advantage of future disciplined growth
that may eventuate," said Mr Mackenzie.

Mr Mackenzie said telecommunications remained a key area of focus for Vector,
given the announcement of broadband infrastructure funds.

Vector is strongly placed to deliver this much needed infrastructure, but
would only proceed if its usual commercial criteria and risk profile were
satisfied.

ENDS

[Crypto Crude]

DR WHO,
Good result out today...
Congratulations to you, I remember ages ago you stood up to a few of the big guns here on this thread... they were telling you, that you were mad to be buying sub $2 (when you were clearly told your strategy was all wrong)... Your response was pretty much---> Yeah 'im happy to buy all the way down'..... making it an even more defiant move on your part.....
some of your positions are already up 40%...
:cool:
.^sc

[brettdale]

Hehehe, my poor brain is going to be sore, digesting all of that.

[Dr_Who]

Hehehe, my poor brain is going to be sore, digesting all of that.


I assume you are also a VCT shareholder.

The only thing you need to digest is all the extra money you gonna have in your bank account from capital gains and nice healthy dividend. :):D

[BDLBOM]

Yet another dicision on a whim by this mad woman Rebstock.
What on earth was Lianne Dalziel thinking about when she reappointed Rebstock for a second term?

[peat]

Is this the completion of the abc corrective after the 5 wave down?
It forms a perfect bearish gartley with (a) completing at 61.8% retracement of wave 4 and (c) just over 72.8%.
There is divergence on the oscillator (Chande Momentum Oscillator)

[dumbass]

Hey DA, I'd be interested in your comments on my post in the Vector thread in NZX. Or anyones of course but you being the EW man.
The thing that worries me is the impulsive nature of the (a) and (c) waves of the correction and the corrective nature of the (b) wave. Can (a) and (c) have an impulsive nature

hey peat , good work , text book elliot wave with nice internal count.

Corrections can have an impulsive nature. This looks like its maybe a zig-zag correction and counts as 5-3-5.
commonly A=C and it will complete in the area of the preceding 4th wave of one lesser degree, (dotted line).
Gartley too helps the case .

A word of caution though that the alternate count is a 1-2-3 however this will be void if price closes below 2.14 as it would have 4th wave overlapping in wave 1 territory.

[peat]

closed below 2.14
new lows coming up according to this EW analysis.

[POSSUM THE CAT]

I thought they were doing a special dividend as well. Was I mistaken

[peat]

I cant see any mention of a special dividend announcement in recent times -but they have started their 25 million share buyback and I guess its quite a good time to do that.... they seem to be buying between 50 adn 200 thousand shares most days....

FA seems good to me and of course utilities are defensive stocks
TA (my sort of TA - not Phaedrus's) says sell....

[Dr_Who]

One of the best performing stocks in the very depressed market. Also gives great div.

[fish]

One of the best performing stocks in the very depressed market. Also gives great div.

Very true
A stock I feel lucky to hold
Thanks to the buyback

[Dr_Who]

Great to see directors voted not to increase their fees.

Lets see if this economy will affect their bottom line or not. I fear even VCT will be impacted in this recession. :confused:


disc: shareholder

[BRICKS]

Great to see directors voted not to increase their fees.

Lets see if this economy will affect their bottom line or not. I fear even VCT will be impacted in this recession. :confused:


disc: shareholder

INSTEAD of 25% rise this time they will make it 30% next TIME..

[Dr_Who]

Anyone still holding VCT? This has been a good and steady performer with good div yield. I am still a shareholder. Great for the long term portfolio.

[Yossarian]

yep, good defensive stock (if a bit boring!)... a stand out performer this year!

[PLK]

can any1 tell me what VCT is doing with the 785M from selling wellington network?

if they use it to pay down debt, will it be generate more cash flow compare to keep wellington network with 785M more debt and the interest cost and maintaining cost??

just what ex actually have them done with that cash so far, just sitting in the bank??

[Dr_Who]

can any1 tell me what VCT is doing with the 785M from selling wellington network?

if they use it to pay down debt, will it be generate more cash flow compare to keep wellington network with 785M more debt and the interest cost and maintaining cost??

just what ex actually have them done with that cash so far, just sitting in the bank??

Without going through the numbers and looking at the announcements, I think they used it to reduce debt and share buyback. VCT reduce revenue from Welly asset will offset paying high interest rates back prior to the sale. In this environment it is prudent to keep debt as low as possible.

[peat]

so down slightly definitely is the new up ;+)

I still think it would have been better to short than long since my post just over 3 months ago tho - as it would have given more profit opportunity

But will concede that relatively its doing ok. Remember tho, theres a constant buyer out there at the moment
They have bought nearly 4 of the 25 million planned in the year long buyback scheme

Head and shoulders forming ??

[Yossarian]

no, they have completed the buy back so that buyer is done (having bought only 3.5m out of a potential 25m)

[BDLBOM]

Volumes have not been that great and there have not been any announcements to affect SP or have I missed something.
Any ideas why SP has suddenly gone up the last couple of days.
Could it be something to do with Vector being in line for a deal re Govt initiative re broadband?

[tsb]

I thought the buy back was continuing - see their 04/12/08 notice


Vector Limited - Announcements


Vector Limited has provided the following notice to shareholders in accordance with s
65(2A)of the Companies Act:


Share buy-back notice to Vector Limited shareholders

This notice to shareholders is issued in accordance with the requirements of section
65(2A) of the Companies Act 1993 ("Act").

On 27 August 2008, Vector Limited ("Vector") announced that it would undertake an
on-market buy-back of its ordinary shares over a 12 month period, commencing on 1
September 2008. Vector advised that it would acquire up to 25,000,000 shares.

In accordance with the requirements of section 65(2A) of the Act, Vector advises that
between 5 September 2008 and 28 November 2008, it purchased a total of 3,875,884 ordinary
shares (approximately 0.39% of Vector's issued capital at the commencement of the
buy-back programme) at a total cost of $8,119,246. The average price paid for shares
acquired was $2.09 per share.

All of the shares acquired under the buy-back are currently held as treasury stock.

As the shares acquired under the buy-back were purchased on-market via an independent
broker, the identity of the sellers of the shares is not known to Vector.


I guessthe buy back - low interest rates and 2009 broker picks all contribute to it being a nice comfortable share

[Yossarian]

i thought i got a letter saying it was finished... maybe it was just an update. cheers

[fish]

A healthy rise in sp today -?due to clarification of its dividend policy -
Company Announcements




Vector Limited - Announcements




Vector Limited today announced that it has clarified its dividend policy.

The policy contains a target dividend payout of 60% of free cash flows.

The reference to free cash flows is being clarified by the inclusion of the following
definitions:

‘Free cash flows’ means net cash flows arising from operating and financing activities
less replacement capital expenditure outflows.

‘Replacement capital expenditure’ means expenditure incurred to replace existing assets
to enable the network to maintain a similar level of operational performance.

This clarification reflects past practice and will not result in any change to dividend
payments.

A copy of the dividend policy is available at:

http://www.vector.co.nz/investor-relations/dividend-policy

ENDS

[Dr_Who]

Another very nice result from VCT. :)

I am still a shareholder of VCT.

VECTOR REPORTS STEADY HALF YEAR PERFORMANCE

Vector Limited has produced a steady interim result for the six months to 31
December 2008 and is well positioned to cope with future economic
uncertainty.

Group Chief Executive Officer Simon Mackenzie said the results are in line
with the company's expectations and the board has recommended an interim
dividend of 6.5 cents per share, payable on 14 April 2009, which is at the
same level for the comparable period.

Mr Mackenzie said Vector is well positioned for the future and financially
strong enough to take advantage of opportunities that arise, however he
stressed that the company would not be complacent given the current economic
environment.

"The continued uncertain business environment in New Zealand means we are all
navigating uncharted waters. Despite this the board and management remain
cautiously confident that the company's end of year financial results will be
above analyst's current expectations.

"Beyond that, we can only speculate how the economic conditions will impact
the business, however the board believes that actions taken over the last 18
months have strengthened the company's position in the first six months of
the current financial year and will continue to do so."

Mr Mackenzie said net profit after tax (NPAT) from continuing operations was
$90.8 million, compared to $77.4 million in the prior year. This is an
increase of $13.4 million. The continuing operations result excludes the
results from the Wellington network in both periods and excludes the gain on
sale. The company settled the $785 million sale of its Wellington network in
July 2008 and as a result realised a gain on the sale of $202.9 million

This gain combined with the result from continuing operations and the 23 days
of operation of the Wellington business in the current period, resulted in an
NPAT from total operations of $296.4 million as compared to the $90.7 million
reported last year.

Earnings before interest, income tax, depreciation and amortisation (EBITDA)
have increased from $281.5 million to $313.2 million and revenue from
continuing operations was down from $611.2 million to $609.5 million.

He said the company's balance sheet has been considerably strengthened by the
repayment of $560 million of debt, with a further repayment of $200 million
of fixed interest rate bonds scheduled for 4 March 2009. At the same time,
the company has renegotiated banking facilities totalling $275 million during
the period. In addition, it recently announced a senior banking facility for
a further $50 million.

Mr Mackenzie said the company has seen a number of trends occurring as a
result of the current economic conditions.

Overall electricity consumption on the Auckland networks has declined 1%,
with residential consumption down 0.23%, consumption by large commercial and
industrial customers was down by 2.35% while consumption by small industrial
customers increased by 0.35%.

The rate of growth on new electricity connections has reduced 21% and new gas
connections by 18% compared to the same period last year.

Throughput on the Auckland gas distribution network was down 3%, with a 4%
reduction on large industrial customers' consumption. The non-Auckland
distribution network throughput was in line with the same period last year.

"Gas transmission throughput declined 15.3% following reduced demand from
thermal electricity generators in the last quarter of 2008 as a result of the
increase in hydro lake levels.

"In our LPG business, bulk and on-sellers sales volumes were down 27.3% with
sales volumes to residential customers down 12.2%, resulting in overall sales
volumes decreasing by 18.3% against the previous comparative period. This
decrease also results in a reduction of costs," Mr Mackenzie said.

However, OnGas continues to connect new residential customers to LPG, growing
total customer numbers by 11% over the same period last year.

Mr Mackenzie said Vector will continue to strongly focus on its core business
- driving costs out of its operations through greater efficiency, reviewing
capital expenditure and focusing on delivering better outcomes for its
customers.

He said a significant part of the company's business, electricity and gas
distribution are subject to regulation by the Commerce Commission and
continue to be a key area of focus for the organisation.

"The Commerce Commission has commenced work on resetting the second term of
electricity price regulation which remains a significant area of focus for
Vector. The current volatility in global capital markets and economic
conditions will present significant challenges for the Commission when it
determines how it will set price paths.

"Entering the price setting process, Vector continues to experience cost
pressures such as tight capital markets which are keeping the cost of
available funding high. Capital and operating costs continue to rise due to
factors such as the weakening New Zealand dollar and infrastructure service
costs."

Mr Mackenzie said in addition to regulatory challenges, another key focus for
the company is the reliability and security of the transmission and
generation segments of the electricity industry.

"The vulnerability of the electricity transmission network was exposed
recently, when Transpower faults on the national grid resulted in Vector
being instructed by Transpower to cut electricity supply to some customers.

"Vector supports the Government's recent announcement on transmission
investment and clearing roadblocks to enable Transpower to proceed with
critical investment in its transmission network.

"Additionally investment in electricity generation is needed, so we can be
confident of a secure and reliable supply of energy into our networks and to
our customers.

"Another key focus over the next period will be the Government's broadband
initiative. We have already had discussions with the Government outlining how
Vector can deliver a cost effective, quality fibre broadband service in a
short timeframe. We believe the Government must stay on track with its bold
vision to deliver a first world, high speed broadband service to New
Zealanders."

He said Vector is well placed to deliver this infrastructure and coordinate
with other network investors nationally if the arrangements meet the
company's investment criteria.

[fish]

Earnings before interest, income tax, depreciation and amortisation (EBITDA)
have increased from $281.5 million to $313.2 million and revenue from
continuing operations was down from $611.2 million to $609.5 million.

He said the company's balance sheet has been considerably strengthened by the
repayment of $560 million of debt, with a further repayment of $200 million
of fixed interest rate bonds scheduled for 4 March 2009. At the same time,
the company has renegotiated banking facilities totalling $275 million during
the period. In addition, it recently announced a senior banking facility for
a further $50 million.

Looks to me vct should make big savings on interest-should be a substantial increase in net profit next year and an increase in dividend

[Dr_Who]

Vector keen on slice of $1.5b pie

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10557494

:):)

[BDLBOM]

More good news for Vector. It looks like the Commerce Commission is due for a shake up. With a bit of luck the anti business Rebstock will be gone.

[Grimy]

Not doing a lot at the moment, but has been drifting down a bit lately. Any thoughts?

[Dr_Who]

I still have my VCT holding I bought 1 yr back below $1.80. Gives great div, better than putting money in the bank at this low rate.

This beast is now a potential T/O target with the new National Govt. If there is a hostile T/O on the table the govt and the council will have to consider it.

[Zorwarrior]

Newbie here everyone:) In terms of the Energy Industry, I have been doing some research on Vector and also believe it would be a good share to hold on to. However, I am not sure at what point I buy some shares. Looking at the price fluctuations, its quite a steady share. So any suggestions? Should I jump in now and hold?

[Dr_Who]

Zorwarrior. Only your broker or your genie in the bottle can answer your question. Who knows where the price will be in the short term.

I tend to think of VCT as an income play for the dividend. VCT is one of those stocks you must have in your long term portfolio. I think weakness in VCT sp is gue to the change in global risks. Investors are selling down some defensive stock and putting it into more risky stocks.

I am guessing Cheung Kong infrastructure that bought VCT's Welly asset can make a play for VCT or the VCT Trust may privatise it if the sp languish at these levels in the future.

[sharer]

There is occasional reference to VCT & their running optic fibre alongside. Do they actually make any significant income from this yet? Could they be a factor in the govt's plans for new broadband scheme?

[Jim]

I think the sp weakness could be due to the coming review of business by the commerce commission. Maybe price control on its electricity and gas network .....

[Grimy]

I still have my VCT holding I bought 1 yr back below $1.80. Gives great div, better than putting money in the bank at this low rate.

Same here. I was able to buy well to have an average of $1.77.
Would be keen to top up at present price, but just wondering why the present price stagnation/slide?

[Arbitrage]

Under the present ownership and regulatory frameworks, I doubt whether Vector will ever really be more than a mediocre company. It can't be a takeover target, if it makes too much profit the government steps in, but then again it can't go bankrupt.
Looks like it will be "steady as she goes" for the foreseeable future.

[macduffy]

Under the present ownership and regulatory frameworks, I doubt whether Vector will ever really be more than a mediocre company. It can't be a takeover target, if it makes too much profit the government steps in, but then again it can't go bankrupt.
Looks like it will be "steady as she goes" for the foreseeable future.

I'll go along with that.

A good steady earner paying a nice dividend in these low interest rate times.

[Arbitrage]

Tax adjusted dividend yield is apparently 5.3%, not adjusted is 6.7%. Book value of the company is about $2.05 per share.

[macduffy]

Tax adjusted dividend yield is apparently 5.3%, not adjusted is 6.7%. Book value of the company is about $2.05 per share.

I'm always a bit diffident about quoting dividend yields because we're often not sure whether they are historical or forecast, if the former whether they will be repeated and if the latter, just who made the forecast, etc.

However, this morning's DomPost lists Vector's div as:

Div yield 6.69% IMP Credits 5.68% Gross Yield 9.56%

[Jim]

On Directbroking site PE is 28.25 while Reuters is 14.11. Who is correct ???

[moimoi]

Under the present ownership and regulatory frameworks, I doubt whether Vector will ever really be more than a mediocre company. It can't be a takeover target, if it makes too much profit the government steps in, but then again it can't go bankrupt.
Looks like it will be "steady as she goes" for the foreseeable future.

Agreed..

what i've been a little surprised at is that the reduction in debt from the sale of the Wellington network has led to zero improvement in market sentiment in the stock.!

[Dr_Who]

Agreed..

what i've been a little surprised at is that the reduction in debt from the sale of the Wellington network has led to zero improvement in market sentiment in the stock.!


That is why the trust structure has to go.

Either the Trust privatises VCT or the govt gets rid of the trust all together by selling the asset to private hands. The current board sitting on the trust are totally useless and must go. I will be pushing for some changes.

[Yossarian]

Annual results out. Solid if boring result (16% increase in NPAT), with a slight increase in dividend.

This is still a good defensive play. By my calcs the gross div is around a 9.5% yield (at $2.05 SP) which is a hell of a lot better than $$ in the bank!

[Dr_Who]

VCT to benefit from the government high speed broadband spending?

VCT is way ahead of TEL is rolling out the high speed cables. The quiet achiever?

[Jim]

I just pick up some very generous from VCT yesterday.WOW !!

[peat]

from a year ago

closed below 2.14
new lows coming up according to this EW analysis.

now 1.89. admittedly went to 2.30 along the way.
it even looks like its breaking the 1.90 zone support area,
next stop 1.75
all in my opinion

[fish]

from a year ago


now 1.89. admittedly went to 2.30 along the way.
it even looks like its breaking the 1.90 zone support area,
next stop 1.75
all in my opinion



I bought some yesterday at 1.89 and am thinking of buying more .
At a 10% yield and good prospects current sp looks a very safe buy.
Am curious as to why the sp is so low-and why you think it will drop to 175 ?

[Dr_Who]

I will buy some of these if they drop below $1.80

[moimoi]

Fish,

regulatory risk.

http://www.stuff.co.nz/business/opinion/2400870/Vector-bonds-or-shares

[fish]

Fish,

regulatory risk.

http://www.stuff.co.nz/business/opinion/2400870/Vector-bonds-or-shares
--Thanks for that-but a sp of 189c compared to the 220c or so when the article you quote was written -indicates either the regulatory risk has dramatically increased in the past 4months -or the market has over-reacted to the risk-

"Given the essential services nature of Vector's business, you could say such out-performance is justified and Vector shares are a safer and likely less volatile bet than many other shares.

But analysts are decidedly lukewarm on the stock. Andrew Harvey-Green at Forsyth Barr values it at $2.14, below the current share price, and his recommendation is "hold".

In February, after the company reported a 17.3% rise in first-half net profit from continuing operations (it sold its Wellington network in July last year for $785m and booked a $202.9m profit), Goldman Sachs JBWere analyst Matt Henry said its "defensive qualities shine" but still rated it a "hold". Similarly, Wade Gardiner at UBS rated the stock "neutral" and had a 12-month price target of just $2.20 when the shares were trading at $2.26. While the yield looked attractive, "other equities appear more so", he said.

A key reason for concern about Vector's value is regulatory risk. Harvey-Green says using the Commerce Commission's current methodology - which is different from the way the company reports its results - its return on assets was 11.8% for the year ended March 2008, up from 8.8% in 2007. That's sufficiently high to raise the possibility Vector will be forced to cut its prices. "

Would be very interested to hear further opinions as I am considering investing further in vct-to reduce the risk profile of my investments as I dont see it likely dropping much more !

[Dr_Who]

I dont see much regulatory risk.

The Commerce Commission has released a draft decision for electricity lines businesses which will apply from 1 April 2010 to 31 March 2015 for non consumer-owned businesses. VCT's return on investment is estimated to be around 9.1%.

The final release is due Nov, hence the market is abit nervous as to the result.

disclosure: shareholder

[macduffy]

So Michael Stiassny is " not happy with our share price. We'd like it to be higher."

Banning cameras and recording devices from the AGM doesn't exactly encourage investors to take an interest in the company.

Disc: Holding VCT.

[Dr_Who]

I couldnt be bothered going to the AGM, but was wondering if there was any metal scanners in the front door. Reminds me of the Tv show Border Patrol.

[Dr_Who]

Vector offers super-fast fibre, with no monthly cap

http://www.nbr.co.nz/article/vector-offers-super-fast-fibre-with-no-month-cap-115519

[Anna Naum]

Vector offers super-fast fibre, with no monthly cap

http://www.nbr.co.nz/article/vector-offers-super-fast-fibre-with-no-month-cap-115519

Great if you live in the middle of the city in an office block.

[fish]

I dont see much regulatory risk.

The Commerce Commission has released a draft decision for electricity lines businesses which will apply from 1 April 2010 to 31 March 2015 for non consumer-owned businesses. VCT's return on investment is estimated to be around 9.1%.

The final release is due Nov, hence the market is abit nervous as to the result.

disclosure: shareholder

I see a director is buying shares-they come with a good dividend .
Has the threat of regulatory risk passed?
Will the vector fibro-optic cables be the basis for the Auckland componement of the government investment in fast broadband ?

[Dr_Who]

I see a director is buying shares-they come with a good dividend .
Has the threat of regulatory risk passed?
Will the vector fibro-optic cables be the basis for the Auckland componement of the government investment in fast broadband ?

Seems like the sp is saying VCT may get the govt super fast broadband cabling contract. Whatever it is, it looks good. I still have my shares and was looking forward to picking up some cheap shares at $1.80, but it doesnt look like it will go to $1.80 anytime soon.

[moimoi]

I see a director is buying shares-they come with a good dividend .
Has the threat of regulatory risk passed?
Will the vector fibro-optic cables be the basis for the Auckland componement of the government investment in fast broadband ?

The week before 2 directors sold on market.

Perhaps getting a bit of buying support for the upcoming divie...

[ENP]

Vector seems to be an on the up company with really good dividend yields, why isn't anyone talking about VCT while telecom is tanking?

[Dr_Who]

http://www.fibretothedoor.co.nz/

I can feel TEL trembling at their knees. :D

VCT shareholders should support VCT bid for fibre contract by filling out an online form.

[CJ]

http://www.fibretothedoor.co.nz/

I can feel TEL trembling at their knees. :D

VCT shareholders should support VCT bid for fibre contract by filling out an online form.I can understand what they are trying to do but is it going to make a difference.

key has already said it will happen so it is just a matter of who wins the contract. That will come down to who provides the Govt the best offer, not how many people fill in a online form which doesn't even recognise that other companies could supply the exact same service. For example, what if Google bid : http://www.google.com/appserve/fiberrfi/

[Balance]

Vector seems to be an on the up company with really good dividend yields, why isn't anyone talking about VCT while telecom is tanking?

Because the posters bought into Telecom, thinking XT will be fixed and the sp will recover. Then, they were hit by the rural broadband plan and are now cursing the government. And yet, everyone but everyone knew the rural plan was coming.

[Dr_Who]

Vector chases $300m rural broadband tender

In a statement today, Vector said it could utilise its existing power line network to provide “fast and efficient fibre deployment” to 42,000 rural households and 17,500 rural businesses in Rodney to the north of Auckland, and areas to the west and south east of the city.

http://www.nbr.co.nz/article/vector-chases-300m-rural-broadband-tender-123979

[Traderx]

This is an under-talked-about stock, too boring perhaps?

Got in yesterday small amount @ $2.09

Gross yield approx 10%, largely recession proof. Possible upside with govt fibre contracts, monopoly.

Downsides: Regulated industries effectively mean no excess profits, majority trust ownership not ideal IMHO and quite a bit of debt on balance sheet so potentially exposed if funding costs increase, rating agencies seem ok with it though.

[Traderx]

Any thoughts on today's regulatory news? Reading the background doc it appears that the comcom has only allowed slight increase in cost of capital calculations (0.5%) till only June 2011 to represent GFC funding issues (not sure if VCT was having too many of those anyway). Not sure of any other implications (its a big and complex doc!).

VCT sound a little disappointed by it on the whole?

Big volume today though and closed at its high up a couple of cents so maybe market thinks its ok?

Cheers

[Dr_Who]

VCT is looking very strong. Anyone know whats up apart from the potential for the govt broadband thingee.

[manxman]

Didn't they just sell a bit of space in their tunnel for $56 million to Transpower?

[Jim]

What is wrong with VCT ? It is dropping quite a bit and the volume was quite large ????? Maybe no growth but the yield is very good and solid

[Traderx]

Ann result out tomorrow, any thoughts out there? Divvy increase?

[Dr_Who]

Ann result out tomorrow, any thoughts out there? Divvy increase?

Steady as she goes, nothing exciting, I would assume.

Vector: we're still in the game
http://www.nbr.co.nz/article/door-shut-regional-bids-rural-broadband-128992

[Traderx]

Up 2% on slightly higher than usual volume so not a bad response from the market, as you said DR Who steady as she goes, slight increase in the dividend, fibre outcome will be interesting and sounds like they are fighting hard on the regulatory front.

The management of this company seems to be focussing on the right things eg costs down, maximising benefits of existing infrastructure and showing a good return to investors.

[moimoi]

Break Out? :-)

[JemT]

It is a shame to see the Commerce Commission causing problems again. The interim report seemed very positive and certainly did not indicate any such actions from the CC. Has anyone made a comparison to some of the Australian energy distribution and infrastructure firms such as Envestra?

[Arbitrage]

This company has always been subjected to government intereference.

[POSSUM THE CAT]

So why would the Govt think people would be interested in partial privatisation of Govt. Companies. They would keep interfering

[Arbitrage]

Simon Power refers to partial privatisation as the "mixed ownership model". However despite the name change, I am sure government interference will continue.

[JemT]

Surely the government interference will persist, as the regulation comes from Vector's position as a monoploy supplier of electricity distribution rather than from its ownership structure.

[CJ]

Simon Power refers to partial privatisation as the "mixed ownership model". However despite the name change, I am sure government interference will continue.surelyl they will only interfere where they aren't the owner of a monopoly.

[moimoi]

Chart wise, which is more likely?

A trundle down to recent support @ $2.35 or a blow thru of the repeatedly knocked on resistence of $2.60.?? :-)

[Aaron]

"2010-2015 default price quality path for electricity distribution"

I got to a 94 page document on the commerce commission website but rather than spend all day reading and trying to understand this, does someone already understand it and can they summarise what sort of return the commerce commission will allow Vector to make and how they work it out.

I guess it would be better spending the time after all submissions have been heard and a final proposal is made as I will have no influence on the process.

[POSSUM THE CAT]

Aaron as Govt wish to control our profits. Should they not just make a takeover offer for the company. Then they expect us to take up shares in a partial float of state owned power companies at top prices & then control the profits. Who would buy there is no future in this. If they wish to control companies profits they should buy them.

[OldRider]

It's a small dilemna for us what to do, we hold some Vector shares, depending on controls placed on
company, selling them is a real possibility. Next step is the problem for NZ, the cash will
probably head off overseas chasing the growth these markets offer,
further adding to the shift which has seen the proportion of NZ
shares in our portfolio halve over the last ten years.

We are told NZ has a shortage of capital and decreasing productivity - go figure!.

[macduffy]

I think we have to just accept the fact that VCT holds a monopoly in its business and that regulation is not only necessary but desirable. After all, no-one else is going to compete with them in building lines to serve the greater Auckland area or VCT's other patches. It then becomes a matter of what is a reasonable return on capital invested and of course that can beome a very political, fraught question.

I hold VCT but will be very wary about investing in any of the other SOE's if/when the govt puts them up for partial sale. They all share that " monopoly or dominant producer" feature and will be subject to the threat of ongoing regulation or govt interference.

[moimoi]

Bizarre trading in this name the last 2 trading days...up and down in rather unusual swings on both days.

Its almost like its been bought up Friday to $2.70 to gobble up stock to short today?

[Jaa]

Look for Vector and other lines businesses to get back into generation and retail if the Labour/Greens electricity reforms become law and frees the lines businesses from their regulatory constraints.

Mad Max's ban on lines businesses building generation over a certain size (recently lifted to 50MW?) never made sense. It was only enacted for idealogical reasons as all of these businesses were community owned and run and therefore by definition inefficient according to Mad Max. They built some of the cheapest, most useful (closest to consumers and thus able to maintain the voltage of local networks and reduce transmission losses) and low impact generation schemes (small reservoirs or run of river hydro) in the country. Most of which were acquired by Trustpower.

From Labour's policy document:

"In particular it will allow lines companies and others to compete more effectively in the retail market. The regulation of lines companies will also be simplified."

From the Green's policy document:

"Today, there are no significant independent retailers and almost no community generation or feed-in options."

From Vector and Horizon Energy's perspective this looks pretty good.

[macduffy]

I'm completely ignorant on the subject but what scope is there for Vector, and other lines companies, to build cost-competitive generation that the current gentailers apparently can't, or won't? Are there potential small-scale hydro sites? - environmentally acceptable? Landfill methane generation perhaps, where the small size acts to discourage the big players?

[CJ]

I'm completely ignorant on the subject but what scope is there for Vector, and other lines companies, to build cost-competitive generation that the current gentailers apparently can't, or won't? Are there potential small-scale hydro sites? - environmentally acceptable? Landfill methane generation perhaps, where the small size acts to discourage the big players?Under current rules, lines companies are not allowed to own generation assets (except for a deminimus of about 50mw I think). Therefore, no scope at all under current rules.

Under Labour/Greens, all bets are off. Suggestions are this restriction will be removed but I cant see how they can be competitive as they have no experience compared to the big Gentailers (other than the fact L/G policy doesn't actually require you to be competitive as you will get a regulated rate of return, I assume based on build cost and opex.)

[macduffy]

Thanks, CJ.

Yes, I know the current rules and the Labour/Greens "plans". What I was getting at was how realistic is it to think that competition from the lines companies can happen under those "plans"? Are there potential plants out there? Will they run into the same problems - environmental mainly, as the gentailers have experienced?

Like you, I'm rather sceptical - but stand to be convinced otherwise!

[CJ]

Economies of scale suggest that small scale plants wont be economically viable but the Labour/Greens policy doesn't rely on that. For example, The Greens could support a large scale solar array on the decommissioned Tiwai site and it would be financially viable on the basis Greens provide it with a guaranteed return of 8% - the fact that the price of that power is uneconomic would be irrelevant. Now obviously (I hope) the Greens wouldn't do that but the point is their model does not require something to be economically viable as NZPower could make it financially viable if it chooses to.

On this basis, small scale plants that the big four think of as too small to worry about may be investigated by a regional lines company (ie. a landfill gas to power generator)

[Jaa]

Thanks, CJ.

Yes, I know the current rules and the Labour/Greens "plans". What I was getting at was how realistic is it to think that competition from the lines companies can happen under those "plans"? Are there potential plants out there? Will they run into the same problems - environmental mainly, as the gentailers have experienced?

Like you, I'm rather sceptical - but stand to be convinced otherwise!

Mighty River's 175MW Southdown power station was designed and built by a joint venture between TransAlta and Mercury Energy which later became Vector not by Mighty River which only acquired it after they were forced to sell by the reforms. Neither had significant generation assets prior to this. This is the type that I mean.

Also almost all of Trustpower's current hydro generation was built by local lines companies with local contractors and local engineers. There are also plenty of economic "run of river" hydro stations that can still be built in NZ with minimal environmental effects, though these would not be more than say 10MW. These can be built more economically and with less local resistance by the local guys than the big companies.

Lastly, Mainpower in North Canterbury a local trust owned lines business has actively looked at and applied for resource consent for new hydro and wind power stations over a number of years:
http://www.mainpower.co.nz/index.cfm/1,472,0,42,html/Benefits-of-Local-Generation

Lines companies have a dual reason to invest in power stations within or close to their distribution businesses. They help maintain the voltage and thus significantly decrease transmission losses.

Of course at the moment, no significant new generation is likely to be needed or built in NZ for quite some time no matter the regulatory regime. Maybe 10 years or more.

[CJ]

though these would not be more than say 10MW. Thanks.

Though 10MW compared to MRP's total of 1700MW, these small scale schemes aren't material in the wider schemes of things and wouldn't even be material for VCT. That is not to say they wont do it as having small scale generation at various points in the network may eliminate the need to do larger scale upgrades to the network (ie. running a small generator during peak times in a certain area may mean that a cable doesn't need to be upgraded from 22kv volts to 110kv or however cables are measured).

[macduffy]

Yes, thanks, Jaa.

The Mainpower website makes interesting reading. I note, though, that they applied for resource consent for the Mt Cass windfarm back in 2007. Presumably, they would have proceeded if approvals had been received?

[Jaa]

Yes, thanks, Jaa.

The Mainpower website makes interesting reading. I note, though, that they applied for resource consent for the Mt Cass windfarm back in 2007. Presumably, they would have proceeded if approvals had been received?

Mt Cass would have been under the cap for lines business generation projects. Mentioned them only to show the willingness of lines businesses to invest in generation if given the chance.

Vector or Orion would probably want to build or buy larger projects to make it worth their while.

[macduffy]

Mt Cass would have been under the cap for lines business generation projects. Mentioned them only to show the willingness of lines businesses to invest in generation if given the chance.

Vector or Orion would probably want to build or buy larger projects to make it worth their while.

Bur Mainpower havn't built the Mt Cass windfarm despite seeking resource consent over five years ago. I wonder if they didn't get the ok; or is a decision pending; or did they decide not to go ahead? Whatever, it doesn't bode well for the likes of Vector or Orion to make the Labour/Greens "policy" a goer.

[macduffy]

Report in the Age re VCT's interest in Aussie assets.

http://news.theage.com.au/breaking-news-business/vector-eyes-australian-acquisitions-20131022-2vyi1.html

[JAYAY]

https://www.nzx.com/companies/VCT/announcements/245073

Further evidence of shonky decision making by the regulator.

[Mista_Trix]

https://www.nzx.com/companies/VCT/announcements/245073

Further evidence of shonky decision making by the regulator.

...Not sure if that's an entirely accurate description. It went to the High court, who has effectively said we don't agree that either of you have proposed correctly. More of a mismatch than bad decision making by the regulator.

If neither the regulator nor the monopoly can come up with an accurate model you cant automatically blame the regulator, that's a bit one sided.

[JAYAY]

“The Court has advised it did not agree with a number of elements of the Commerce Commission’s reasoning process,

In other words Shonky decision making.

[Mista_Trix]

“The Court has advised it did not agree with a number of elements of the Commerce Commission’s reasoning process,

In other words Shonky decision making.

But it didn't agree with Vectors proposals either, shonky Monopoly behaviour ... unlikely.

All I'm saying is its not really that black and white.

[JAYAY]

But it didn't agree with Vectors proposals either, shonky Monopoly behaviour ... unlikely.

All I'm saying is its not really that black and white.

"...an exceptionally high hurdle that the Court considers must be achieved before the Commission’s approach could be overturned.

So why should there be "an exceptionally high hurdle" for vector to jump to get a flawed decision rescinded.

It appears to me it is too easy for the regulator to jump on popular targets such as Vector with flawed decisions.

Given the regulators power it is essential that their decision making process meets a higher standard than has been evidenced.

[Mista_Trix]

"...an exceptionally high hurdle that the Court considers must be achieved before the Commission’s approach could be overturned.
So why should there be "an exceptionally high hurdle" for vector to jump to get a flawed decision rescinded.
It appears to me it is too easy for the regulator to jump on popular targets such as Vector with flawed decisions.

The court agrees that it must first be achieved. Its a monopoly, you cant just casually go changing the rules, if it turned out to be a worse application of judgement it'd take years to overturn with Vector fighting at every twist and turn.

I agree its not perfect for the company, but it operates in a monopoly position, you cant just cry incompetence when Vector try to overturn a decision and the proposal gets rejected by the courts.

[JAYAY]

Well then here is your best condemnation of the regulator.

The international credit rating agency Standard & Poors put Vector's BBB+ credit rating on negative credit watch late last month after it signalled New Zealand's regulatory regime is less stable and a higher risk than in other nations.

[Bjauck]

Investors in Monopoly Infrastructure companies should be able to earn reasonable rates of return for the risks they take on. If ComCom adds to the uncertainty of returns, then investors (shareholders and funders) will expect higher returns before committing funding. The end result will either be inadequate infrastructure and/or (eventually) higher prices paid by the consumers, things I assume the ComCom was not set up to encourage.

[Mista_Trix]

Well then here is your best condemnation of the regulator.

The international credit rating agency Standard & Poors put Vector's BBB+ credit rating on negative credit watch late last month after it signalled New Zealand's regulatory regime is less stable and a higher risk than in other nations.

You might be forgetting that one of the reasons our system is seen as unstable internationally is that its made up of so many disparate bodies that govern different chunks. Its not just the ComCom that has a say but a group who could not by any means be called a collective.

In my opinion this fragmented cluster is where the instability comes from.

[Jim]

I think this is the time to buy into this company. It is under some selling pressure but the yield is very reasonable. Time to accumulate........

[BlackPeter]

I think this is the time to buy into this company. It is under some selling pressure but the yield is very reasonable. Time to accumulate........

had the same idea and did a bit of research. Overall, not a very inspirational company (but what monopoly is?), however analysts (Reuters, Financial Times) seem to think that the shares might be somewhat undervalued. From memory - I thought there was not too long ago some report on a ComCom decision or statement related to Vector (which would be a risk factor, but can't find with Google, i.e. I might be wrong), but overall - it starts to look worth a bite in my books as well.

Just wondering where the recent fall came from ... maybe here are some other people knowing more about the company than we do?

[Hawkeye]

https://www.nzx.com/companies/VCT/announcements/256624

[JAYAY]

From Vector AGM presentation:
"The Commission has in its recent draft decisions reduced the amount of
capital we are able to invest in the network by 18%. It has also reduced the
amount we are able to spend on operating expenditure by 9%."


Those Guys at ComCom really are in a special class of genius.

[JAYAY]

ComCom does it again. Good ole ComCom doesn't want investment in NZ companies.

www.nzx.com/companies/VCT/announcements/256981

[Biscuit]

ComCom's process for decision making is pretty robust though, hard to argue with, and it consults very widely: "On 23 June the Commission released a further process update paper, and a number of expert reports written for the Commission on the choice of the WACC percentile. The reports were prepared by a number of expert advisers and firms engaged by the Commission: Professor Ingo Vogelsang of Boston University, Professor Julian Franks of the London Business School, Associate Professor Martin Lally of Victoria University of Wellington, European economic consulting firm Oxera, and the Australian consultancy Economic Insights"

discl: small holdings in regulated companies

[Balance]

ComCom does it again. Good ole ComCom doesn't want investment in NZ companies.

www.nzx.com/companies/VCT/announcements/256981

Not true - Vector has relentlessly revalued its assets up over the years so that it can keep charging up its prices. Meanwhile, it ploughs back bugger all into line upgrades and cries poverty even while it pays out big dividends. Typical monopoly which needs regulatory overseeing.

[JAYAY]

ComCom's process for decision making is pretty robust though, hard to argue with, and it consults very widely: "On 23 June the Commission released a further process update paper, and a number of expert reports written for the Commission on the choice of the WACC percentile. The reports were prepared by a number of expert advisers and firms engaged by the Commission: Professor Ingo Vogelsang of Boston University, Professor Julian Franks of the London Business School, Associate Professor Martin Lally of Victoria University of Wellington, European economic consulting firm Oxera, and the Australian consultancy Economic Insights"

discl: small holdings in regulated companies

Ha ha, "expert advisers and firms engaged by the commission" says it all.
The outcome depends on who chooses the "expert" advisers and firms.
As any businessman will tell you you only engage the "expert advisers" that suit your purpose.

[Biscuit]

Yes, I guess that is true. Although I suppose the purpose of the Commission is to find a formula that ensures continued investment at the lowest price to the consumer?

[Harvey Specter]

Not true - Vector has relentlessly revalued its assets up over the years so that it can keep charging up its prices. Meanwhile, it ploughs back bugger all into line upgrades and cries poverty even while it pays out big dividends. Typical monopoly which needs regulatory overseeing.revaluations have no impact on the regulated asset base. They may have in the past but not any more.

I wonder if it is the time for the AECT to take this private. That way profits become irrelevant (for those in the AECT area) - ie. any 'profits' gets rebated back to consumers through a lower line charge.

[Biscuit]

From the point of view of AECT, which owns 75% of VCT, it's best if there is co-ownership outside AECT and prices are as low as possible?

[Harvey Specter]

From the point of view of AECT, which owns 75% of VCT, it's best if there is co-ownership outside AECT and prices are as low as possible?Not sure. Higher profit is probably better as the beneficiary aren't the only customers of VCT. Higher profits are redistributed as dividends to beneficiary's, not to all customers which a lower prices would do.

[Biscuit]

That's probably right, and is why VCT complain about the Commission. I've held shares in VCT since 2009 as a very small part of a diversified portfolio. They are unspectacular but safe and the Commission is unlikely to ever change that in my opinion.

[BlackPeter]

interesting market reaction following the ComCom decision - SP up 2% (or 5 cents). Looks like the market is pleasantly surprised?