MEL - Meridian Energy

[Joshuatree]

Tiwai Pt deal done with Meridian (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11491049&ref=rss) no paywall barrier here.

[mouse]

Much ado about nothing. Exactly how much is Tiwai paying for the electricity??

[Joshuatree]

Weird statement mouse.Im expecting it to be good for my Meridian shares.

[horus1]

My guess is 4 - 5 cents a unit. I pay 25. It was 3

[mouse]

Weird statement mouse.Im expecting it to be good for my Meridian shares.

This is from the ODT.
Contact Energy has also put out a statement saying it has signed a deal with Meridian Energy to supply 80 MW of energy to the smelter.

So it seems that some of the power will come from Contact. Maybe another power company is also involved, besides Meridian and Contact?

[Hoop]

240 up 15c

[Joshuatree]

MEL up 6.22%:t_up:
GNE up 3.51%
CEN up 3.3%
MRP up 3.26%
TPW up 2.17%

[cyclist]

Well, that was the shortest party I have ever attended. Was buying some more and frantically lowering my bid, but was too slow. Got swept away at $2.29 before my change to $2.26 was acknowledged. Damn!

Looks like some were keen to use this to exit. I think overall it is a good positive announcement - certainly better than the alternative (shutdown)!

[Joshuatree]

Yes it was a low risk way to make quick buck esp after our Poll re Tiwai gave nz the guidance :cool: No selling from me though; hopeful longer term holder here.S/P still up re 3.56% but spread with other Gentailers decreasing atp.

[Hoop]

Well, that was the shortest party I have ever attended. Was buying some more and frantically lowering my bid, but was too slow. Got swept away at $2.29 before my change to $2.26 was acknowledged. Damn!

Looks like some were keen to use this to exit. I think overall it is a good positive announcement - certainly better than the alternative (shutdown)!

Yes it is still a bullish event.
MEL broke out on Friday It is common to see a throwback to the break out point. It gives traders a second chance to buy in...
Its a little unusual to see this event happening on the same day...It shows maybe some of those Friday punters and some frustrated investors that got locked in are now gone...226 low is gone too...Have to be quick..eh?

EDIT the lunchtime crowd may make MEL an interesting watch

[sb9]

Now that Tiwai is out of way (for now at least), I'm hoping we can expect some announcement re capital return along with FY results. Thoughts?

[IAK]

Now that Tiwai is out of way (for now at least), I'm hoping we can expect some announcement re capital return along with FY results. Thoughts?

Well the Smelter hasn't closed so according to Brian Fallow $625m should be returning to share holders over the next 5 years or so.

Meridian pencils in $625m capital return http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11404245

[bull....]

24c/share capital return over 5 yrs would roughy be 5c per yr in special divs if that the case final div 6c + 3.5 special?

[Bjauck]

MEL up 6.22%:t_up:
GNE up 3.51%
CEN up 3.3%
MRP up 3.26%
TPW up 2.17%

MEL down 3.02%
GNE down 3.39%
MRP down 3.13%
TPW down 1.01%
CEN watch this space...

The stock market giveth; the stock market taketh. Smelter gives way to CEN share scramble.

[sb9]

I think the sell off is party due to big instos offloading to make room to part take in Contact sale...

[Joshuatree]

Yes what a difference a day makes. Rod Oram saying this morn GNE is a beneficiary of Tiwai decision ,opp there?. Re $1.8 billion needs to be found in a couple of days so selloffs allover alright.

[bull....]

lot of money 1.8billion but some will go to aussie insto.s so might be a good day to pick up some bargains

[sb9]

Does anyone here been offered any shares as part of placement thro' a broker outfit?

[noodles]

Does anyone here been offered any shares as part of placement thro' a broker outfit?
First NZ have offered me shares. I have ordered some. I may be scaled back.
I receive excellent service from my broker at First NZ.

[Joshuatree]

Yes I have bunch on order thru CRAIGS super excellent service. There is commission added to the price.Its happening fast(all done by today/tomorrow is what I've heard) sb9 so one needs to decide if its for them and IF interested act fast.

[IAK]

According to NBR Meridian have got a better power supply deal with TAS. "Meridian likely to pocket up to $25 million from Tiwai smelter deals".

[macduffy]

Meridian shareholders will be pleased to see that RIO's aluminium operations were one of their better performers this half.

http://www.asx.com.au/asxpdf/20150806/pdf/430btjnqw0bwth.pdf

I hold.

[xafalcon]

A good dividend for shareholders

https://nzx.com/files/attachments/218775.pdf

[bull....]

excellent result and excellent dividends - you would think the current price should track north too over time with such a good div yield available and te - wai point uncertainty gone now.

[sb9]

Excellent result, very pleasing divvy :t_up:

[Hoop]

Hmmm..up 10 to 229 is this knee jerk stuff at opening? .....back of the envelope stuff I can see all the net profit + most of the revalued assets figure = the Divvy + special
Awaiting Snoopy and Winners expert FA

dropped back to +7 ...

Disc:..got heaps

[Traderx]

MEL
Underlying NPAT $209m
Market Cap $5792M
PE 27.71

GNE
Reuters consensus EPS 8.21
SP $1.76
PE 21.43

GNE positive, opex uplift from HLY closure, removal of gas overhang from Solid energy out clause (my intepretation)
GNE negative, have become a discounting retailer, likely biggest target of upstart entrants, carbon costs increasing, seem to have limited power plant development appetite/capability. Kupe decline

MEL positive - chance to build windfarms again on thermal plant closure, australia toehold expansion, TPM review, Tiwai short term uplift
MEL negative - Tiwai risk will never go away, will need to run a more conservative storage position after thermal closure, margin of safety well reduced (or will need to pay for more cover)

Thoughts?

[Harvey Specter]

Traderx - SnoopDog will probably give you a better explanation but I think the different is that MEL is a low cost provider with long asset lifes whereas GNE is a high cost provider with short asset life's and a gas field with a terminal value of $0. Still think PE of 27.71 is abit high but with term deposits at under 4% (locked away for 4 years!), the steady dividends from both is holding them up.

[bull....]

if transmission review changes charges according to use instead of subsidising the nth mel will benefit as will ti wai
also there aust stuff adds a element of possible growth compared to others

[xafalcon]

I will be interested in comments on lack of full imputation credits in MEL divvy. CEN divvy had none at all. A lot has been said of GNE having a potential imputation shortfall. Next Tuesday will be revealing.

[Harvey Specter]

I will be interested in comments on lack of full imputation credits in MEL divvy. CEN divvy had none at all. A lot has been said of GNE having a potential imputation shortfall. Next Tuesday will be revealing.I missed that in the original announcement. Final dividend only imputed to 55% and the special dividend unimputed. No comment otherwise so I assume the 55% imputed is the new normal for them?

[Hoop]

I missed that in the original announcement. Final dividend only imputed to 55% and the special dividend unimputed. No comment otherwise so I assume the 55% imputed is the new normal for them?
My above post #1278 will probably answer why the lack of full imputation credits

[Traderx]

Hi folks

It seems to me the that big question we as investors in the NZ Gentailers must grapple with is the believability of a few key ratios.

As we know most Gentailers are paying out dividends at much higher levels than their NPAT. They now talk a lot about free cash flow and reference back their dividends to proportion of free cash flow rather than proportion of NPAT.

Meridian in the period just ended had depreciation and amortisation of $239m and stay in business capex of merely $65m. From this gap they pay out vast divvies.

To me this is both an engineering and an accounting question. I don't believe "stay in business capex" is a IFRS/GAAP etc measure so we should be pretty cautious I would have thought. Do you think an event such as the realisation of the Tekapo canal remediation works would have been forecast by the financial accountant who came up with this years "stay in business capex" number?

Given the nature of MEL's assets when things go wrong in an engineering sense they tend to be very large things. Do you think therefore we should rely more on the depreciation line or the stay in business capex line when thinking about how much real $$ we made in the year and the relativity between that and divvies?

[Snoopy]

To me this is both an engineering and an accounting question. I don't believe "stay in business capex" is a IFRS/GAAP etc measure so we should be pretty cautious I would have thought. Do you think an event such as the realisation of the Tekapo canal remediation works would have been forecast by the financial accountant who came up with this years "stay in business capex" number?


Traderx you make some valid points. But for those that don't know, the Tekapo canal remediation project was carried out by Genesis Energy, because Genesis Energy bought that bit of the network from Meridian a few years ago.

SNOOPY

[Jantar]

....... Do you think therefore we should rely more on the depreciation line or the stay in business capex line when thinking about how much real $$ we made in the year and the relativity between that and divvies?

This is an issue I have had many times with bean counting people who are trying to work out a SRMC for various types of plant. Accounting practice requires hydro stations to have a depreciation figure next to them. In reality, hydro stations do not depreciate at all. The electrical plant has a design life of around 30 years before refurbishment. Mechanical plant around 50 years. So it looks like a 2 - 3 % depreciation figure would be valid.

But the real cost of hydro stations are the dams and civil works, and these have a life of hundreds, or even thousands of years. The overall effect is that hydro stations have a negative depreciation rate. But try and explain that to the bean counters.

[PSE]

Hi folksIt seems to me the that big question we as investors in the NZ Gentailers must grapple with is the believability of a few key ratios.As we know most Gentailers are paying out dividends at much higher levels than their NPAT. They now talk a lot about free cash flow and reference back their dividends to proportion of free cash flow rather than proportion of NPAT.Meridian in the period just ended had depreciation and amortisation of $239m and stay in business capex of merely $65m. From this gap they pay out vast divvies.To me this is both an engineering and an accounting question. I don't believe "stay in business capex" is a IFRS/GAAP etc measure so we should be pretty cautious I would have thought. Do you think an event such as the realisation of the Tekapo canal remediation works would have been forecast by the financial accountant who came up with this years "stay in business capex" number?Given the nature of MEL's assets when things go wrong in an engineering sense they tend to be very large things. Do you think therefore we should rely more on the depreciation line or the stay in business capex line when thinking about how much real $$ we made in the year and the relativity between that and divvies?Hi Trader X this is a good question and one we have explained at length especially on the GNE thread, it is very important for investors to understand that as Jantar says the hydro stations do not depreciate or have an extremely long life.The accounting needs to follow the technical reality and it seems at this point it still does not.I think the Tekapo canal has always been an issue, but now GNE's issue. A great point in MEL's favour is that it is pure hydro and wind, I don't think they have any problems like Tekapo with their other assets.So in the case of MEL unless someone knows about any other problem assets, I am not familar enough with the portfolio but I reckon free cash flow should really be considered profit in the MEL case (allowing for mechanical and electrical depreciation as Jantar recommends. Still not cheap enough to interest me.

[PSE]

Electrical should be depreciated at a 30 year life, as the skills required to achieve the 60 year life have been obliterated in the holocaust that was corporotisation of the electricity system.We have loads of accountants now but no engineers, we have gone from world leading to third world.

[mouse]

Electrical should be depreciated at a 30 year life, as the skills required to achieve the 60 year life have been obliterated in the holocaust that was corporotisation of the electricity system.We have loads of accountants now but no engineers, we have gone from world leading to third world.

Financial Assistance Disclosure Notice. It seems Meridian have $1,443,594 worth of incentives to hand out to Key People. Look at the list. Not an Engineer amongst them. In fact, does Meridian even have a Chief Engineer on the staff? I find it pretty frightening that a major engineering company does not seem to have an engineer in top management.

[xafalcon]

Financial Assistance Disclosure Notice. It seems Meridian have $1,443,594 worth of incentives to hand out to Key People. Look at the list. Not an Engineer amongst them. In fact, does Meridian even have a Chief Engineer on the staff? I find it pretty frightening that a major engineering company does not seem to have an engineer in top management.

MEL is not alone, this seems to be the current HR fad in business - having a senior management team comprised of high EQ people who build a cross-functional staff which theoretically produce a better combined output. I do not subscribe to this theory, because certain personality types generally align with certain occupations. It simply discourages the pioneering engineers & scientists from pushing their boundaries because they are often high IQ with lower EQ, which currently limits their likelihood of promotion.

To me, "HR" appears analogous to "Y2K". Both seem to be much more closely aligned with preserving their role than improving business outcomes

[horus1]

Meridian is a cash generation machine , no development plans ,. It seems to me that the shutting down of Otahuhu and huntly coal meens Tiwai will shut at least one potline in 2 years. I couldn't agree more about the lack of engineers in top management, they generally like building value not destroying it . The key to value is the forward price and volume path ;the cost of new generation is falling hence the value of Meridian will fall in the next 5 years. Stay away.

[bull....]

I would think now that energy prices around the world a falling big time any major decisions around solar , lng, batteries etc ill be delayed now so he future of power companies and oil companies looks pretty good now for the for seeable future

[IAK]

I'm all for distributed generation but I just can't see how solar could provide sufficient power to run a household and 2-3 ev's esp. in a cold, wet winter.

Wind and solar are rising, but energy revolutions don't happen quickly or smoothly. on.wsj.com/1HZPye2

[sb9]

17ml traded so far pre-market...

[bull....]

big pre market crossing

[Joshuatree]

I was discussing with a friend who has switched his portfolio from growth to income recently, Meridian being one stock he has bought in big. The question can the ComCom force the gentailers to lower their charges despite being 51% govt owned, i think yes he said no. So i looked up ComCom and got this

"The Commission is an independent Crown entity established under section 8 of the Commerce Act 1986.The Commission is not subject to direction from the government in carrying out its enforcement and regulatory control activities. The Commerce Commission's purpose is to achieve the best possible outcomes in competitive and regulated markets for the long-term benefit of New Zealanders."

So in theory all it takes is complaint from you or me or anyone for them to decide whether to do a review on the pricing of power. So maybe more risk in our plain vanilla power companies then thought?

[xafalcon]

The comcom would be unlikely to take this action as it's outside their scope. The market has competition. End of story

The lines companies are a different story. They are monopolies in their own geographic region(s). They are also making huge profits. Two reasons why they are potentially in the firing line

[Hoop]

I was discussing with a friend who has switched his portfolio from growth to income recently, Meridian being one stock he has bought in big. The question can the ComCom force the gentailers to lower their charges despite being 51% govt owned, i think yes he said no. So i looked up ComCom and got this

"The Commission is an independent Crown entity established under section 8 of the Commerce Act 1986.The Commission is not subject to direction from the government in carrying out its enforcement and regulatory control activities. The Commerce Commission's purpose is to achieve the best possible outcomes in competitive and regulated markets for the long-term benefit of New Zealanders."

So in theory all it takes is complaint from you or me or anyone for them to decide whether to do a review on the pricing of power. So maybe more risk in our plain vanilla power companies then thought?

I think the market is in the process of self correcting as the prices are not increasing..there's more competition out there now, especially this year..
A couple of Charts below reproduced from the "If National Wins...." thread shows a price downtrend from 2008 onwards ..If there was anytime ComCom should've intervened it would've been 2007...The partial float has seen better market efficiencies and a sudden drop in pricing.....Why should ComCom be called in?

DISC:- I Hold MEL

http://i458.photobucket.com/albums/qq306/Hoop_1/Electricity%20NZ%20Chart.png (http://s458.photobucket.com/user/Hoop_1/media/Electricity%20NZ%20Chart.png.html)

[bull....]

The comcom would be unlikely to take this action as it's outside their scope. The market has competition. End of story

The lines companies are a different story. They are monopolies in their own geographic region(s). They are also making huge profits. Two reasons why they are potentially in the firing line

agree plenty of competition around for power companies, power companies are only increasing profits thru efficiencies in operations and capex spend decline.
the lines companies are already being looked at - I like the user pays system there looking at between nth and sth island but guess im a bit biased being a mel shareholder but then again why should they subsidise nth island users?

[Joshuatree]

Thanks guys for your opinions. On another point ; I'm hearing this years ELNino has been predicted with a % of certainty to cause extreme dry and wet areas. Am i right thinking Meridian will be a beneficiary with its southern alps catchment and The Waikato river catchment may be the the worst for MRP?

[Rossimarnz]

Hi Joshuatree. I am no meteorogist but in the North Island I thought the drought impacts of an El Nino event were located on the east coast and Waikato would be unlikely to experience a significant drought event. I think the same principle applies in the South Island but am not entirely sure on how this effects the Southern Alp catchments.

Anyone named Jim Hickey care to comment?

[Jantar]

....
Anyone named Jim Hickey care to comment?
Not Jim Hickey, but as I near retirement age I have returned to University part time, and this is my field of research. Just something that is totally different to electricity trading, yet is still mildly related.

Yes, you have it right. An El Nino usually means more westerly winds, and in turn that usually means wetter in the west and drier in the east. It doesn't always happen that way though, and there have been some El Niños that have presented very dry conditions all over. I believe I have found the reason for that and have a paper being published later this year that may go someway to explaining that.

My call is that this summer is likely to be very wet in Meridian's catchments early on, but will swing to dry sometime in February.

[Joshuatree]

Thanks Rossi and Jantar ,i was really hoping you'd respond:). Indifference elsewhere it seems. Will do some more sleuthing e.g. how much of the rainfall falls on the west side and how much will get over the peaks to the east of the Alps

[Rossimarnz]

I think the winter snowfalls in the Southern Alps are the more significant event as far as southern hydro storage is concerned as much of the storage capacity is infact generated by snowmelt rather than rainfall. Again happy to stand corrected.

[Jantar]

I think the winter snowfalls in the Southern Alps are the more significant event as far as southern hydro storage is concerned as much of the storage capacity is infact generated by snowmelt rather than rainfall. Again happy to stand corrected.
There is a bit of a disagreement in the scientific world over the issue of snowmelt. The latest published paper (Kerr, 2013) gives only a 3% contribution to the South Island's mean annual streamflow. Different catchments do act differently and other papers give numbers from 10 to 30%. I personally use a base figure of 15% for the hydro catchments and modify that according the amount of estimated snow accumulation over winter, to arrive at the amount of water stored as snow that should be relaesed for generation over spring and summer.

Rainfall is still much more significant than snowmelt.

[Harvey Specter]

Rainfall is still much more significant than snowmelt.Surely snowmelt is just stored (or deferred) rainfall? It just time shifts it from winter to spring/summer?

[Jantar]

Surely snowmelt is just stored (or deferred) rainfall? It just time shifts it from winter to spring/summer?
Yes it is. What is important is:
How much is actually stored?
When will it be released?
What rate will it release?
Will any add to glacial accumulation? (we'll see it years to decades later)
Will there be carry over to the following year? (happens around 50% of the time)

The amount of snowmelt that is added to the streamflow is taken as lost flow until it actually melts.

[BlackCross]

Todays Craigs Investment Partners 2015 investor day presentation;

https://www.nzx.com/files/attachments/222545.pdf

[IAK]

Nice dividend in the bank today.

[sb9]

Nice dividend in the bank today.

My thoughts too :t_up:

[LAC]

My thoughts too :t_up:

Was wondering why my balance looked rather "strange" this morning. :t_up: Where to spend it now....that's the question. Definitely heading out for fine dinning tonight to make up my mind:)

[Nasi Goreng]

Nice dividend in the bank today.

It is a very nice dividend stock. I only wish I had bought more at IPO but things looked a lot more uncertain then than they do now.

My biggest concern for the mid term is Tiwai but on the flip side, I wonder if in 10-15 years there will be 100,000 electric cars driving around NZ.

[LAC]

The divies would have covered the cost of the stock by then....hopefully:)

[Joshuatree]

Snippets from Craigs Excellent 23 page report on electricity companies



MEL will be losing c. 200MW of swaption cover post CY18, but has c. 80-90MW of year round offsetting generation as a result of the modified Tiwai renegotiation contract that has just occurred. With modified hydro dispatch and no increase in load over the next few years MEL should be able to continue without any extra cover.

MEL had above average inflows(but lower than its pcp) however materially benefitted from increasing prices

MEL is strongly positioned with Pukaki around 136% of average and manapouri at 111%

Impact of El nino . Meridian should see 10% plus inflows into Manapouri, with the rest of its dams above average inflows.ElNino should also drive irrigation demand now representing c 3% of total demand in NZ.

Taking changes into account MEL has an increased FY16 EBITDA from $618 mill to $624 mill due to better than expected start to year and most likely biggest beneficiary of El nino
Target price $2.59


MEL continues to show strength in the face of weaker hydro conditions
Retail sales were also up 5.9% against its pcp offsetting some of the wholesale price softness. Wecalculate that the September energy margin was flat against a very strong pcp, this leaving thequarter up c. NZ$9m (+3.6%) on 1Q15.
El Nino.........MEL’s and CEN’s assets fare relatively well with average or above inflows, and 20.000000%)]as these two firms control c. 64% of]the country’s hydro capacity this means that overall generation is likely to remain at normal level or even be slightly elevated.



Meridians Hydro Ohau A,B ,C
Benmore
Aviemore

Waitaki
Manapouri

3 Windfarms sth island 1 in North
MEL generates re 30% of NZ electricity

]We expect Meridian to benefit from a potential change in the Transmission Pricing Methodology(TPM) in FY18/19, allowing it to grow earnings ahead of its peers.


We expect that MEL should fare well, with its hydro generation positioned in regions that are likely to see greater than normal rainfall over the spring period ]the summer period relativelyneutral. In particular, Manapouri is predisposed to the favourable conditions. Managementanalysis finds that an El Niño event causes a statistically significant increase of c. 10% in these dams
While the company is indicating a heightened expectation that the rest of the year will be wetterand cooler than average, it still notes the continued possibility of dry conditions still occurring even under dry conditions. Overall we see the event as a positive for MEL.

[trader_jackson]

Snippets from Craigs Excellent 23 page report on electricity companies



MEL will be losing c. 200MW of swaption cover post CY18, but has c. 80-90MW of year round offsetting generation as a result of the modified Tiwai renegotiation contract that has just occurred. With modified hydro dispatch and no increase in load over the next few years MEL should be able to continue without any extra cover.

MEL had above average inflows(but lower than its pcp) however materially benefitted from increasing prices

MEL is strongly positioned with Pukaki around 136% of average and manapouri at 111%

Impact of El nino . Meridian should see 10% plus inflows into Manapouri, with the rest of its dams above average inflows.ElNino should also drive irrigation demand now representing c 3% of total demand in NZ.

Taking changes into account MEL has an increased FY16 EBITDA from $618 mill to $624 mill due to better than expected start to year and most likely biggest beneficiary of El nino
Target price $2.59


MEL continues to show strength in the face of weaker hydro conditions
Retail sales were also up 5.9% against its pcp offsetting some of the wholesale price softness. Wecalculate that the September energy margin was flat against a very strong pcp, this leaving thequarter up c. NZ$9m (+3.6%) on 1Q15.
El Nino.........MEL’s and CEN’s assets fare relatively well with average or above inflows, and 20.000000%)]as these two firms control c. 64% of]the country’s hydro capacity this means that overall generation is likely to remain at normal level or even be slightly elevated.



Meridians Hydro Ohau A,B ,C
Benmore
Aviemore

Waitaki
Manapouri

3 Windfarms sth island 1 in North
MEL generates re 30% of NZ electricity

]We expect Meridian to benefit from a potential change in the Transmission Pricing Methodology(TPM) in FY18/19, allowing it to grow earnings ahead of its peers.


We expect that MEL should fare well, with its hydro generation positioned in regions that are likely to see greater than normal rainfall over the spring period ]the summer period relativelyneutral. In particular, Manapouri is predisposed to the favourable conditions. Managementanalysis finds that an El Niño event causes a statistically significant increase of c. 10% in these dams
While the company is indicating a heightened expectation that the rest of the year will be wetterand cooler than average, it still notes the continued possibility of dry conditions still occurring even under dry conditions. Overall we see the event as a positive for MEL.






Can someone update what they have said on MRP? (over on that forum or send me a private message? thanks)

[bull....]

cheers for the update J, can you comment if craigs comment on the future of electricity markets in nz in there report and who might be well positioned if there is change in the future?

[Joshuatree]

Craigs research snippets . Craigs research is now excellent imo and worth being signed up for. No more from me.

A continuation in demand growth. TRanspowers forecast demand growth 1.1% to 1.7% to 2019 and then 0.9%- 1% thereafter

Generally strong Op performance for Gentailers 1 Q 16

Contact and Meridian above average inflows into Sth island Dams during El Nino

Total returns forecast for companies 21%to 27%,TPW top MEL at the low end.

2019 forward prices reaching $81/MWH Dec 2019 (currently re $76/MWH

As a result it is our continued belief that NZAS will wait for the pending TPM outcome to make aclosure decision, the expected benefit to the company (under the current proposed options)ranging between NZ$ 52-56m. If there is a negative decision, the company is likely to shut Tiwai.More certainty on the TPM outcome is unlikely prior to June 2016.

Regulation has come a long way
The company(MRP) highlighted how far the sector has come over the last 18 months from a regulatorystandpoint. The EA has made significant ground in reforming the transmission pricingmethodology, attempting to resolve the historical HDVC issue and NZAS’ concerns.
Labour is now in a better dialogue with companies, starting to move thinking away from a single-buyer proposal, while the Greens have formally moved away from the policy. Signal likely to remain blurred as to whether Huntly should stay open or close


The most topical discussion point at the moment is whether Genesis will or will not close Huntlyat the end of CY18. This we believe is moot as what Genesis has in effect done is moved dry yearcapacity from a buyers market to a sellers market. The general view is that Meridian or MRPcould require dry year cover in CY19 and will be encouraging Genesis to keep the coal plant open.This assumes that MEL and MRP don’t have other ways of removing the risk.



MEL will be losing c. 200MW of swaption cover post CY18, but has c. 80-90MW of yearround offsetting generation as a result of the modified Tiwai renegotiation contractthat has just occurred. With modified hydro dispatch and no increase in load over thenext few years MEL should be able to continue without any extra cover.
, MRP has lost the extra cover from Southdown, but this was never going to be material in MRP’s outlook. It has the ability to remain under hedged, where it currently sits, and would nevertheless be able to over earn in a tight volatile market, where NI becomescapacity constrained, due to its Taupo storage asset.
While a closure of Huntly reduces Genesis capacity, it will just need to reduce some ofits fixed price C&I exposure (as it has done in the past) to bring it back in balance
So who hurts if it is not the gentailers? It is the C&I customer. If this customer isn’t willing to pay up for FY19+ contracts, then there is no reason for Huntly to remain open and certainly norational new build to take place either
The risk is that the forward signal is getting blurred, this potentially murky due to the keyindustry risk of Tiwai shutting sooner than later. In MRP’s recent strategy day the companyhighlighted the conundrum that faces CY19 using the following matrix:

[xafalcon]

Annual shareholder meeting today? Anyone going?

[Onion]

Craigs research is now excellent imo and worth being signed up for.

What is the cost of "signing up"? Do you have to subscribe to their fund management services?

[Sideshow Bob]

What is the cost of "signing up"? Do you have to subscribe to their fund management services?


basically if you are a customer, they give you ( or you ask) for a log in to their website.

[bull....]

went to the agm, good stuff glad to see there presentation and thoughts on future tech, getting close to breaking out of the consolidation.

[bull....]

went to the agm, good stuff glad to see there presentation and thoughts on future tech, getting close to breaking out of the consolidation.

[Onion]

Was there something significant in Meridian's monthly operating report to spark a 3% lift in SP today? Any other reason that anyone can shed light on?

[xafalcon]

All generators incl MEL have been sold off over the past few days for no apparent reason (except CEN). Today all the generators are up. Probably just pre-Christmas book balancing

[mouse]

Problems in China. A price war with oil. Saudi leading that war. Zero interest rates for ordinary bank depositors in UK for example.
Query, what is the influence on the SP of our generator stocks? All ideas welcome. Sell? Hold? Buy?

[Hoop]

Some TA sell signals appearing as they always do when a stock is testing its support boundaries..Chartwise MEL is holding up OK at this moment considering the global equity storm..
However MEL hasn't much more room to work with..dropping below $2.25 would probably sound off the air raid sirens.
At time of posting MEL is $2.28 down 1.5c

EDIT: ...Disc I have no shares in MEL..


http://i458.photobucket.com/albums/qq306/Hoop_1/MEL%2007012016.png (http://s458.photobucket.com/user/Hoop_1/media/MEL%2007012016.png.html)

[horus1]

Great graph , thanks

[xafalcon]

Problems in China. A price war with oil. Saudi leading that war. Zero interest rates for ordinary bank depositors in UK for example.
Query, what is the influence on the SP of our generator stocks? All ideas welcome. Sell? Hold? Buy?

My thoughts (definitely not any sort of a recommendation)

NZ generators SP will initially get caught in the current market sell-sell-sell sheep-mentality and be sold down, but less than most other stocks. Then the SP will rise as people remember they are very high yielding defensive stocks with captive markets, partial government ownership and tangible assets.

The timeframe for this to play out is more hazy to me, which makes buy/sell decisions more difficult. Currently I'm holding GNE & CEN. And I won't be buying anything until volatility decreases

[mouse]

It's as if I have a slow puncture. Not much noise, but the tyre slowly loses pressure.
Finding the leak is of course a problem. It might be the valve. Or anything. Should I take the shares to the local garage for repair?

[Yeshiva]

Hi all

i have a question in relation to solar power.

If solar power becomes more common (because panels are cheap and batteries become more efficient and cheap), which of the gentailers will be hurt the worst, and who will do ok?

I understand that a bit of solar energy/battery uptake is not a bad thing for some gentailers because it means that the peak demand gets smoothed out and there is less need to bring on stream the more expensive fossil fuel burning stations.

Thoughts?

[Snoopy]

Hi all

i have a question in relation to solar power.

If solar power becomes more common (because panels are cheap and batteries become more efficient and cheap), which of the gentailers will be hurt the worst, and who will do ok?

I understand that a bit of solar energy/battery uptake is not a bad thing for some gentailers because it means that the peak demand gets smoothed out and there is less need to bring on stream the more expensive fossil fuel burning stations.

Thoughts?

Maybe Genesis Energy would be best off? Because Genesis Energy are already building a solar power network!

SNOOPY

[Hectorplains]

Hi all

i have a question in relation to solar power.

If solar power becomes more common (because panels are cheap and batteries become more efficient and cheap), which of the gentailers will be hurt the worst, and who will do ok?

I understand that a bit of solar energy/battery uptake is not a bad thing for some gentailers because it means that the peak demand gets smoothed out and there is less need to bring on stream the more expensive fossil fuel burning stations.

Thoughts?

This is well worth a read: http://www.infratil.com/assets/imported/nzx/Infratil-Update-Newsletter-December-2015-226958.pdf

[xafalcon]

Hi all
I understand that a bit of solar energy/battery uptake is not a bad thing for some gentailers because it means that the peak demand gets smoothed out and there is less need to bring on stream the more expensive fossil fuel burning stations.
Thoughts?

Peak demand does not coincide with significant solar generation. That is the inherent problem with solar - a significant mis-match between supply times and demand times

[horus1]

With batterys the load can be shifted to maximise value and security of supply Is not required. Value is lost by all in the industry.IFT Do not cover batteries

[trader_jackson]

Battery technology needs replacing more often than one may think, I have not done the numbers, but the capital outlay is likely large, and often (say every 4 or 5 years before the batteries simply don't hold sufficient charge). Therefore batteries will probably cost more than the extra revenue gained from 'storing' energy for selling at a higher demand time in the day, not to mention other issues such as overheating and storage etc.

Obviously a company like Tesla could come along and try 'revolutionize' battery technology, but this is likely to be many years away before battery technology significantly improves.

[Harvey Specter]

Obviously a company like Tesla could come along and try 'revolutionize' battery technology, but this is likely to be many years away before battery technology significantly improves.Tesla will
Guarantee the battery for 10 years.

But read the fine print - that will be on a deminishing storage level per year. Will be interesting to see what they are guaranteeing after 5 and 10 years.

[mouse]

I think that the way the battery storage system could work is for the battery to perform a double function, such as powering a motor car plus backing up the house battery supply. That system would charge all batteries overnight plus during slack periods of the day. Also it would assume electric cars would normally be garaged at home during the evening.
What is never discussed is the cost of maintenance. Petrol engines today require very little maintenance. Battery maintenance could be more expensive than petrol!

[xafalcon]

Battery storage is only chosen if absolutely necessary due to huge up-front cost eg PV + battery installation is really only viable when there is no economic local electricity reticulation.

In NZ with no PV solar subsidy, simple grid-tied is the only viable option. Still has a 5-10 year ROI. Most solar generation between 10am-4pm, shorter in winter. Peak load 6-9am & 5-8pm ish. Minimal to zero peak demand off-setting

Current battery technology lacks energy density (it's called a power wall because that's how big it is) and cost still too high. Lithium based batteries aren't the answer because lithium is a very scarce element that is expensive to extract = high cost now and as demand increases, so will the price. Aluminium based batteries are sounding more viable, but still experimental. Potential good news for NZ generators because Tiwai Pt aluminium is very pure

[Jantar]

I think that the way the battery storage system could work is for the battery to perform a double function, such as powering a motor car plus backing up the house battery supply. That system would charge all batteries overnight plus during slack periods of the day. Also it would assume electric cars would normally be garaged at home during the evening......
And that is part of the problem with EVs. Peak demand in winter is from 5:00 pm to 8:00 pm. Plug in an electric vehicle when you get home at 6:00 pm and it adds to that peak demand and lengthens the duration of the peak. An extra 10 KW of demand per EV for 8 hours certainly won't help with smoothing the peaks.

[Joshuatree]

Lithium not so scare and production prices will drop alot.Lithium is being produced @ re $2000 tonne at ORE(evaporation based) but haven't reached nameplate yet. LIT will be producing even cheaper Li from waste rock Micas but still to prove this up in any decent scale.

[Harvey Specter]

And that is part of the problem with EVs. Peak demand in winter is from 5:00 pm to 8:00 pm. Plug in an electric vehicle when you get home at 6:00 pm and it adds to that peak demand and lengthens the duration of the peak. An extra 10 KW of demand per EV for 8 hours certainly won't help with smoothing the peaks.
You will have the option to smart charge so only charge one night time tariffs start. Not an issue of battery life is 300km (as unlikely to have used that during the day) but current 80km range batteries could be an issue if you needed to pop out again at night.

[xafalcon]

Lithium not so scare and production prices will drop alot.Lithium is being produced @ re $2000 tonne at ORE(evaporation based) but haven't reached nameplate yet. LIT will be producing even cheaper Li from waste rock Micas but still to prove this up in any decent scale.

Production cost and sale price are different. The combination of exponential demand growth and relative rareness of commercial deposits make for the perfect price spiral storm

From Wiki "According to the Handbook of Lithium and Natural Calcium, "Lithium is a comparatively rare element, although it is found in many rocks and some brines, but always in very low concentrations. There are a fairly large number of both lithium mineral and brine deposits but only comparatively few of them are of actual or potential commercial value. Many are very small, others are too low in grade"

http://www.cnbc.com/2014/03/19/ that relates to Tesla's new factory and the effect of lithium supply/demand on the economics
http://www.fatprophets.com/Member%20Area/Product%20Landing/Report%20List/Report%20Page/~/media/F24518E4522D4A76A78F4B8F26C07121.ashx (http://www.google.co.nz/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiJrMzqzafKAhXIFqYKHTq4D5MQjRwIBw&url=http%3A%2F%2Fwww.fatprophets.com%2FMember%2520 Area%2FProduct%2520Landing%2FReport%2520List%2FRep ort%2520Page%2FArticle%2520Page.aspx%3Fid%3D577af1 a7-306f-4fe3-86e9-d10a668d5967%26product%3DAustralasian%2520Mining%2 6pt%3Dpaid&psig=AFQjCNE7ewCoDn3Uepe65taczLjSu1V6Lw&ust=1452802489764482)

https://encrypted-tbn2.gstatic.com/images?q=tbn:ANd9GcTSXHJwA6HLdKNp-dLOrR8aAOn0y4uvrYKAoN0D7uX3kPzzJ4DPmg

[horus1]

I have 6 kw of solar going in and it is economic.I am going up to 10kw .Installed ourselves. With batteries in the future it will have a better payback. I know others who have solar and batteries and that has very good payback. All you people in the industry have your head in the sand. The costs are dropping fast for all technologies for alternatives to centralised electricity. On a macro scale look at the research funds being applied from the paris conference ,look at fuel cell cars and the affect they have on provision of electricity, .The risks are to high. In 10 years time most remote rural lines will be redundant. NZ has and is following the wrong policies at a macro level.

[mouse]

I have 6 kw of solar going in and it is economic.I am going up to 10kw .Installed ourselves. With batteries in the future it will have a better payback. I know others who have solar and batteries and that has very good payback. All you people in the industry have your head in the sand. The costs are dropping fast for all technologies for alternatives to centralised electricity. On a macro scale look at the research funds being applied from the paris conference ,look at fuel cell cars and the affect they have on provision of electricity, .The risks are to high. In 10 years time most remote rural lines will be redundant. NZ has and is following the wrong policies at a macro level.

Hope you are wrong. But I think you are partly right. Most Country Domestic electricity users may well be breaking even at least with solar power. But town dwellers, with a fairly low line charge, may not break even so easily. I have a solar water heating system which is 25 years old and still performs brilliantly. Thermo-syphon design. Major rural electricity user, such as dairy farms, may hit major cost problems on line charges. But solar may not be an option due to cost.

[IAK]

I'm hoping that my dividends will have more than paid off my electricity shares (all purchased at IPO) before solar/batteries disrupt this industry. It may be similar to Sky TV, despite the advent of Netflix, Neon etc., it still seems to be hanging in there (atm anyways).

[IAK]

The future? Perth now has rooftop solar as the largest supplier of electricity.

"Solar energy set to boom with arrival of cheap battery technology" http://www.abc.net.au/news/2016-01-04/solar-energy-set-to-boom-with-arrival-of-cheap/7065812

Disc. Holder Melm MRP, GNE & CEN.

[trader_jackson]

Did you see what MRP did today?

They want an entry into "the future"

https://www.nzx.com/companies/MRP/announcements/276528

[xafalcon]

NZ Herald today had a tiny article on Tiwai Pt, saying First NZ Capital had issued a report saying that Rio Tinto were likely to keep the plant open due to improving economics. Does anyone have a copy of that report, and can they post it up for all to read? Clearly very important for the whole NZ generators sector, but since MEL supply the bulk, more relevant in this thread

TIA

[bull....]

looks like meridian were right in there presentation we don't need to worry about solar taking over the world anytime soon - confirmed by the biggest energy company in the world

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11580074

[bull....]

is the best performing stock in this sector , needs to break above 2.40 for more blue sky

[xafalcon]

Interesting article in todays NBR on Tiwai Pt. Opinion suggests that likely electricity transmission cost reduction will push Tiwai into top 25% of Rio Tinto assets and cement a long term future in NZ. The article also suggests that even at current electricity pricing the plant is likely to stay open. Worth reading if you have access to NBR

[bull....]

Interesting article in todays NBR on Tiwai Pt. Opinion suggests that likely electricity transmission cost reduction will push Tiwai into top 25% of Rio Tinto assets and cement a long term future in NZ. The article also suggests that even at current electricity pricing the plant is likely to stay open. Worth reading if you have access to NBR

china has in the last few mths cut supply of aluminium this is supporting aluminium prices too at the moment

[sb9]

Interesting article in todays NBR on Tiwai Pt. Opinion suggests that likely electricity transmission cost reduction will push Tiwai into top 25% of Rio Tinto assets and cement a long term future in NZ. The article also suggests that even at current electricity pricing the plant is likely to stay open. Worth reading if you have access to NBR

Couldn't find that, could you post the link pls.

[xafalcon]

We get the NBR printed version, it's on page 3

[sb9]

Oh ic, might only be in the print version then. Surely didn't find it in the online version.

[horus1]

What a cross subsidy. You take 14% of the countries energy and pay nothing for transporting it even though the transmission system had extensive assets built just for the smelter.The domestic consumers will pay for the smelter costs of transport. The EA is politically directed.

[xafalcon]

What a cross subsidy. You take 14% of the countries energy and pay nothing for transporting it even though the transmission system had extensive assets built just for the smelter.The domestic consumers will pay for the smelter costs of transport. The EA is politically directed.

Not quite the situation.

Current electricity "transport" costs across transpower grid is averaged and levied on all users on a per unit basis

Proposed new system is "user pays", where "transport" cost across the part of the grid actually used are levied to a particular user.

So Tiwai is only charged their share of transporting and maintaining the manuapouri to bluff section of the grid. They would no longer get charged for maintaining and expanding the grid elsewhere

Sounds fair to me, and allows the generators to increase their unit price to Tiwai

[horus1]

The problem is that much of their electricity comes from the north and the reinforcement around Dunedin, invercargill and Clutha is for that .I know because I was part of designing and building it.

[xafalcon]

Manapouri was built to supply Tiwai Pt. It generates more power than Tiwai uses. In this situation it seems completely fair they are only charged for building/maintaining their share of the manapouri-bluff grid

[Jantar]

The problem is that much of their electricity comes from the north and the reinforcement around Dunedin, invercargill and Clutha is for that .I know because I was part of designing and building it.
South flow energy with the Lower South Island (LSI) is not an issue. It was before Clyde was built, but hasn't constrained within the LSI in southflow for a very long time. The LSI upgrades and the SPS at Roxburgh is to allow more energy export from the LSI. I know because I was also part of planning for this work. I suspect we have come across each other in past.

[boysy]

Results this week what are people thinking divi wise ? Chance of special divi etc ?

[bull....]

Results this week what are people thinking divi wise ? Chance of special divi etc ?

at the annual meeting the management commented some shareholders are not happy about special divs as they are fully taxed so they may consider buy back.
be interesting to see what they decide

[xafalcon]

at the annual meeting the management commented some shareholders are not happy about special divs as they are fully taxed so they may consider buy back.
be interesting to see what they decide

The results of share buy-backs are always difficult to quantify - CEN is a great example right now. On paper buy-backs are a more efficient way to return capital to shareholders, but shareholders must sell shares to realise the return and there is a cost involved in selling. But a dividend is something every shareholder receives an immediate benefit from. For me, I would take the dividend every time, even if imputation credits are not available

[Sideshow Bob]

at the annual meeting the management commented some shareholders are not happy about special divs as they are fully taxed so they may consider buy back.
be interesting to see what they decide

Also likely to make it problematic given the government own 51.02%. So then would have to acquire some from them, or otherwise increase their proportion of the company.

But if fully taxed, their major shareholder wins both ways!! ;)

[xafalcon]

Also likely to make it problematic given the government own 51.02%. So then would have to acquire some from them, or otherwise increase their proportion of the company.

But if fully taxed, their major shareholder wins both ways!! ;)

Nobody is forced to sell - shares would be bought-back on-market.

MRP did this a year or two back.

[Harvey Specter]

Nobody is forced to sell - shares would be bought-back on-market.

MRP did this a year or two back.His point was the govt shareholding would increase above 51%. Not really a major in my opinion and would give them the ability to raise some quick cash if they ever needed to.

[sb9]

I think market is pricing in good outcome tomorrow.

[boysy]

Yep a strong end to the day still below recent highs though

[Snoopy]

The results of share buy-backs are always difficult to quantify - CEN is a great example right now. On paper buy-backs are a more efficient way to return capital to shareholders, but shareholders must sell shares to realise the return and there is a cost involved in selling.


xafalcon, what you say about the immediate realisation of a return is correct. But all remaining shareholders do benefit from the buyback. Beacuse as shares are bought back and cancelled, that means the profit in the future will be shared out between a smaller number of shares that remain on issue IOW eps increases for those shareholders that remain. And that means should a remaining shareholder decide to sell at a later date he/she should get a higher price than they otherwise would have, because of the buy back.

SNOOPY

[macduffy]

Yes, but I think the falcon's point was that a buy-back doesn't provide the immediate benefit - cash in the pocket - that a dividend does. I would add that it sometimes becomes difficult to appreciate that a buy-back has really had a beneficial effect on the shareprice, due to the influence of other, especially market, causes/conditions.

[xafalcon]

xafalcon, what you say about the immediate realisation of a return is correct. But all remaining shareholders do benefit from the buyback. Beacuse as shares are bought back and cancelled, that means the profit in the future will be shared out between a smaller number of shares that remain on issue IOW eps increases for those shareholders that remain. And that means should a remaining shareholder decide to sell at a later date he/she should get a higher price than they otherwise would have, because of the buy back.

SNOOPY

I understand the theory of buy-backs being better than special dividends. But the theory cannot be proven one way or the other - there is no "control group" against which to compare the 2 options.

The slight increase in regular dividends as a result of cancellation of 0.001% (hypothetical example) of shares on issue is so tiny it is inconsequential.

So it comes down to the increase in SP (less brokerage required to realise the gain in SP) v's a special dividend (less any tax liability). If shares aren't sold immediately, interest (or other investment returns) must also be factored. Note that I'm not saying all shares must be sold, just enough to maintain a constant dollar value investment, the same as holding all shares after a special dividend

But I also can't prove that special dividends are the better option. However an old saying springs to mind "a bird in hand is worth two in the bush"

But I have watched MRP and CEN work through buy-backs. With the SP falling part way through the buy-backs, which goes against the theory. IMO market sentiment was a much more powerful force. Hence my preference for a special dividend

[Harvey Specter]

xafalcon, what you say about the immediate realisation of a return is correct. But all remaining shareholders do benefit from the buyback. Beacuse as shares are bought back and cancelled, that means the profit in the future will be shared out between a smaller number of shares that remain on issue IOW eps increases for those shareholders that remain. And that means should a remaining shareholder decide to sell at a later date he/she should get a higher price than they otherwise would have, because of the buy back.

SNOOPY


I understand the theory of buy-backs being better than special dividends. But the theory cannot be proven one way or the other - there is no "control group" against which to compare the 2 options. A buyback is only good for remaining shareholders if they shares are purchased at a discount to intrinsic value (is that the term Buffet uses?). If above that, it is a transfer of wealth to those who sell from those who hold.

[boysy]

Thoughts on the results ?

[sb9]

Thoughts on the results ?
Divvies keep flowing....:t_up:

[bull....]

Thoughts on the results ?

nice steady ship

[Joshuatree]

Yeah, in fact most results so far showing Corporate NZ doing well:)

[Snoopy]

I understand the theory of buy-backs being better than special dividends. But the theory cannot be proven one way or the other - there is no "control group" against which to compare the 2 options.


With respect xafalcon, if Contact buys back:
"up to 25 million ordinary shares for an aggregate purchase price of up to NZ$100 million"

that means that the most shares Contact can buy is 25 million at $4 each. Now we know that Contact has always paid more than $4. So by inference they will not be able to buy as many as 25m shares. But just to keep things simple for this example (because the actual number of shares bought back is yet unknown and currently unknowable), let's say they did manage to buy back 25m shares.

Before the buyback 733,358,872 shares were on issue. After the buyback that means there will be:

733,358,872 - 25,000,000 = 708,358,872 shares left

The number of shares cancelled amount to:

25m/733m = 3.4% of the total.

However, the company has the same underlying assets and liabilities that are now apportioned out between fewer shares. So the underlying value of each remaining share must rise by 3.4%

3.4% x $5.07 (closing price on 15th October, when buyback announced) = 17c, once the buyback has fully concluded.

This is not a theory. It is a mathematical fact, and the increase in underlying value of the shares you have left cannot be disputed.

Now if we go to the market, there are many influences on the CEN share price. Because the share price has moved by a lot more than 17c, even though the buyback is not yet complete, these other factors are more than outweighing the effect of the buyback. But that doesn't mean the buyback will not increase the underlying value of the share by 17c.



The slight increase in regular dividends as a result of cancellation of 0.001% (hypothetical example) of shares on issue is so tiny it is inconsequential.


Straw man. Cancelling 3.4% of shares on issue is not inconsequential.



So it comes down to the increase in SP (less brokerage required to realise the gain in SP) v's a special dividend (less any tax liability). If shares aren't sold immediately, interest (or other investment returns) must also be factored.


The buyback is an event over several months. The 17c total share value change should accrue over those months. But the daily actual underlying value change depends on the number of shares bought back. The shares bought back are not announced until after they have been bought back. So you can't reduce the number of shares you hold as the buyback progresses, because you don't know in advance when those shares are going to be bought back. The buy back is not a one day event. So it is not possible to sell all the shares you want to sell 'immediately' to compensate.



But I also can't prove that special dividends are the better option. However an old saying springs to mind "a bird in hand is worth two in the bush"


The special dividend is a bird in the hand. The underlying increase in share value is also a bird in the hand if you choose to sell the number of shares needed to compensate.



But I have watched MRP and CEN work through buy-backs. With the SP falling part way through the buy-backs, which goes against the theory. IMO market sentiment was a much more powerful force. Hence my preference for a special dividend


What you have watched is other factors on the market affecting the value of the shares. You implication that all other influences on the share price will stop just because a buyback is in place is not realistic.

SNOOPY

[Snow Leopard]

...The number of shares cancelled amount to:

25m/733m = 3.4% of the total.

However, the company has the same underlying assets and liabilities that are now apportioned out between fewer shares. So the underlying value of each remaining share must rise by 3.4%
...

Actually there is $100M less equity in the form of, effectively, more borrowings (and thus an ongoing interest payable liability).

Best Wishes
Paper Tiger

[Snoopy]

Actually there is $100M less equity in the form of, effectively, more borrowings (and thus an ongoing interest payable liability).

Best Wishes
Paper Tiger

Quite correct PT. But adjusting for that will not affect the basic argument that I am outlining.
I probably should have said the "same underlying business", rather than the wording I used to make my point more clearly.

SNOOPY

[xafalcon]

And with respect to you Snoopy.

You are mixing underlying value with market value

Underlying value is the theory behind a buy-back being better, and I don't dispute the theory. The maths works out every time

Market value is what someone is prepared to pay for a share at a point in time. It is not a 1:1 relationship with underlying value. The two can be and often are totally disconnected. This is a fact that is demonstrated by the market in every transaction

Now you can always sell your share(s) at market value and spend the money on whatever you want. But you can't always sell your share(s) at their underlying value. This is also a fact that cannot be disputed

Through the buy-back the market value of CEN decreased from 500 to 450 while the underlying value has increased.

So was the buy-back a success? Hard to say definitively, but it feels pretty poor to me

SP has decreased by approx. 10% and a 13.6cps special dividend was not dished out

Market forces have totally swamped the buy-back effect. Same thing happened with MRP.

This is why I would take the special dividend every time. In this example 13.6cps is 13.6cps, it comes in a cheque that can be spent on whatever whenever, and isn't subject to unpredictable market forces

The inconsequential increase in dividends (based on interim & final F15) is 26cps x 3.4% = 0.88cps extra annual dividend. Under $100 on a hypothetical $50k investment held for a year. Peanuts (a pun, just for you Snoopy) :)

[GTM 3442]

Yes, but I think the falcon's point was that a buy-back doesn't provide the immediate benefit - cash in the pocket - that a dividend does. I would add that it sometimes becomes difficult to appreciate that a buy-back has really had a beneficial effect on the shareprice, due to the influence of other, especially market, causes/conditions.

Spare a thought for all those loyal Blackberry shareholders who hung on through the repeated buy-backs, to be left with. . . . nothing.

Personally, if my company has spare cash washing about, I'd much rather they gave it to me.

[Snoopy]

Through the buy-back the market value of CEN decreased from 500 to 450 while the underlying value has increased.

So was the buy-back a success? Hard to say definitively, but it feels pretty poor to me

SP has decreased by approx. 10% and a 13.6cps special dividend was not dished out


xafalcon, all sorts of things have happened during the period of the buyback. After the buyback has run its course, then the value of the share will be 17c higher than it otherwise would have been. The fact that the share price has fallen due to factors unconnected with the buyback is irrelevant to the buyback.

SNOOPY

[xafalcon]

xafalcon, all sorts of things have happened during the period of the buyback. After the buyback has run its course, then the value of the share will be 17c higher than it otherwise would have been. The fact that the share price has fallen due to factors unconnected with the buyback is irrelevant to the buyback.

SNOOPY

We will disagree on this one, but I really do appreciate your perspective

I note that MEL decided on a special dividend which I would be happy with if I still held my MEL shares.......

[blackcap]

And with respect to you Snoopy.

You are mixing underlying value with market value

Underlying value is the theory behind a buy-back being better, and I don't dispute the theory. The maths works out every time

Market value is what someone is prepared to pay for a share at a point in time. It is not a 1:1 relationship with underlying value. The two can be and often are totally disconnected. This is a fact that is demonstrated by the market in every transaction

Now you can always sell your share(s) at market value and spend the money on whatever you want. But you can't always sell your share(s) at their underlying value. This is also a fact that cannot be disputed

Through the buy-back the market value of CEN decreased from 500 to 450 while the underlying value has increased.

So was the buy-back a success? Hard to say definitively, but it feels pretty poor to me

SP has decreased by approx. 10% and a 13.6cps special dividend was not dished out

Market forces have totally swamped the buy-back effect. Same thing happened with MRP.

This is why I would take the special dividend every time. In this example 13.6cps is 13.6cps, it comes in a cheque that can be spent on whatever whenever, and isn't subject to unpredictable market forces

The inconsequential increase in dividends (based on interim & final F15) is 26cps x 3.4% = 0.88cps extra annual dividend. Under $100 on a hypothetical $50k investment held for a year. Peanuts (a pun, just for you Snoopy) :)

But in your scenario would CEN not have decreased to 450 - the amount of the dividend all other things being equal? I mean a stock going ex div loses that much off its share value/price and then the other market gyrations take force. Much of a muchness I know but a buy back can work well if the cash is used to buy back shares that are "underpriced" by increasing the underlying EPS. I mean a dividend is nice, I like dividends do not get me wrong but I always ask myself... i gave my money to this set of directors/Ceo to do something for me (ie invest in the share(, so why do I want it back again?

[xafalcon]

But in your scenario would CEN not have decreased to 450 - the amount of the dividend all other things being equal? I mean a stock going ex div loses that much off its share value/price and then the other market gyrations take force. Much of a muchness I know but a buy back can work well if the cash is used to buy back shares that are "underpriced" by increasing the underlying EPS. I mean a dividend is nice, I like dividends do not get me wrong but I always ask myself... i gave my money to this set of directors/Ceo to do something for me (ie invest in the share(, so why do I want it back again?

I assume you mean ".....decreased to 486.4 - the amount of the special dividend ....."

Looking at the CEN special dividend last year, the SP rose by an amount similar to the special dividend when it was announced. And then the SP dropped back broadly in line with it's previous level after the dividend was paid.

If a companies directors believe they can get the best results for shareholders using less capital, I support the XS capital being returned the shareholders

"Underpriced" is about as subjective a descriptor as you can use in regards to SP. In almost all trades, one party believes the share is overpriced and so they sell and the other party believes it is underpriced and so they purchase.

Buy-backs generally don't significantly increase EPS, as the above example illustrates (3.4% of 26cps = 0.88cps per annum, or under $100 on a hypothetical $50k investment held for a year)

[sb9]

Pretty strong run from this boring gentailer, looks like to be back in favour with market.

[bull....]

is the best performing stock in this sector , needs to break above 2.40 for more blue sky

target highs 2.70 if 2.35 - 40 holds

[IAK]

target highs 2.70 if 2.35 - 40 holds

Won't belong before MEL overtakes MRP, despite being $1.00 cheaper at IPO.

Disc. Holding both.

[RTM]

Won't belong before MEL overtakes MRP, despite being $1.00 cheaper at IPO.

Disc. Holding both.

So what is the conclusion from this ?
That MRP was first off the block and therefore "fairly" priced for the taxpayer.
And that the pitch was then queered by Labour so that a fair price was not reached and the Government gave them away to get it done ?
Have Labour said what they will do with respect to power, if anything, if they win the election ?

[IAK]

So what is the conclusion from this ?
That MRP was first off the block and therefore "fairly" priced for the taxpayer.
And that the pitch was then queered by Labour so that a fair price was not reached and the Government gave them away to get it done ?
Have Labour said what they will do with respect to power, if anything, if they win the election ?

Yep, the govt got MRP sale about right, but MEl was sold off too cheap because of Labour/greens policy. I read yesterday that the Green's are considering buying the Gentailers back.

[sb9]

Touched $2.50 just now, is that all time high? Certainly remember it being in 240s but not sure if its hit $2.50 though?

[LAC]

I think there was 2.52 at some point

[IAK]

I think MELCA hit $2.20 odd (which didn't include the $0.50 installment), this would have taken to about $2.70.

[Nasi Goreng]

Its interesting that Meridian are raising up to $100M through bonds...

Seems crazy when they paying out $72M in dividends (nearly 3c per share) per year over the top of what they actually make after tax.

[Harvey Specter]

Its interesting that Meridian are raising up to $100M through bonds...

Seems crazy when they paying out $72M in dividends (nearly 3c per share) per year over the top of what they actually make after tax.Debt is cheap. With the OCR forecast to drop further, they might get this off the line at a record low yeild. And that just results in an increase return on Equity.

[sb9]

Interesting to note in NBR today

"Electricity retailers raise prices despite talk of fierce competition"

And the two retailers mentioned in that article are Meridian who already raised prices by 2% and MRP doing the same.

[Nasi Goreng]

I get the rationale. I still think its dumb but hey, if they get to pay out more bonus dividends, who cares right?

[Sideshow Bob]

target highs 2.70 if 2.35 - 40 holds

Nice rise today and pushing higher....

[bull....]

looking good

[Joshuatree]

CRUNCH TIME FOR TIWAI POINT TRANSMISSION DECISION .Or will it just be a blip; a time to load up on some Gentailers?

Read more » (http://sendy.tarawera.co.nz/l/QQMrKma8h6MjbHw96gBRew/BMlAEzTh8pVTmESPhc3vhQ/YjpxKufA89271ZEZ7lwaRy1w)

[mouse]

Todays Press, Wednesday, 16 March 2016, front page, reports that the dairy farmers in the Ashburton Area use almost as much power as Tiwai Point. What now? All views welcome.

[Jantar]

Todays Press, Wednesday, 16 March 2016, front page, reports that the dairy farmers in the Ashburton Area use almost as much power as Tiwai Point. What now? All views welcome.
The South Island load profile has changed dramatically over the past few years. Summer time used to be a time of light demand for the south island. Now we see mid afternoon loads in summer approaching those of winter, and a totally different shape to the load profile. The big issue to Transpower is that this new demand is north of the lower South Island line constraints, and if Tiwai did close with only one years warning, then the extra power available in the lower South would be unable to be sent to where the demand is further north. It could take up to 5 years to complete a satisfactory upgrade to those lines.

[Harvey Specter]

Todays Press, Wednesday, 16 March 2016, front page, reports that the dairy farmers in the Ashburton Area use almost as much power as Tiwai Point. What now? All views welcome.And people think water is free. Add in cost of electricity and the cost of the irrigation schemes (if you dont have a good bore) and the cost adds up. Less intense farming will reduce that power load a bit but will ramp up again if/when the milk price increases again.

I've talked to farmers and in some situations, they prefer irrigation to actual rain as they prefer the control.

[xafalcon]

I've talked to farmers and in some situations, they prefer irrigation to actual rain as they prefer the control.

Many farmers refer to rain as "money falling out of the sky"

Who wouldn't want to be in control of such a substance

If capital cost of irrigation wasn't an issue, there would be a lot more of it

Irrigation economics only stack up in a few areas of NZ which allow lower intensity dry stock land to become high intensity, or where consumer vegetables are cultivated

[xafalcon]

The South Island load profile has changed dramatically over the past few years. Summer time used to be a time of light demand for the south island. Now we see mid afternoon loads in summer approaching those of winter, and a totally different shape to the load profile. The big issue to Transpower is that this new demand is north of the lower South Island line constraints, and if Tiwai did close with only one years warning, then the extra power available in the lower South would be unable to be sent to where the demand is further north. It could take up to 5 years to complete a satisfactory upgrade to those lines.

I know you are in the industry, so can you please explain why getting power out of the lower SI is so tough (I understand the cook st cable limitations)

When I travel to Shanghai, I see pylons carrying bundles of 5 conductors below each insulator. In NZ the most I have seen is a pair, but generally only a single conductor. The height of the conductors and horizontal/vertical spacing between them seems the same in China & NZ.

So why can't more conductors be added to existing pylon insulators to quickly, simply and relatively cheaply increase capacity?

[dobby41]

I know you are in the industry, so can you please explain why getting power out of the lower SI is so tough (I understand the cook st cable limitations)

When I travel to Shanghai, I see pylons carrying bundles of 5 conductors below each insulator. In NZ the most I have seen is a pair, but generally only a single conductor. The height of the conductors and horizontal/vertical spacing between them seems the same in China & NZ.

So why can't more conductors be added to existing pylon insulators to quickly, simply and relatively cheaply increase capacity?

More could be added but that doesn't happen overnight.
Pylons might need upgrading (the cable is pretty heavy).
You don't build these things with 5 conductors when you only need 1 - waste of capital

[Harvey Specter]

Many farmers refer to rain as "money falling out of the sky"True for some. It was a cropping farm I was talking to and the rain was creating major complications with his harvest. He wanted the rain the previous 2 months, not the current month.

[Jantar]

I know you are in the industry, so can you please explain why getting power out of the lower SI is so tough (I understand the cook st cable limitations)

When I travel to Shanghai, I see pylons carrying bundles of 5 conductors below each insulator. In NZ the most I have seen is a pair, but generally only a single conductor. The height of the conductors and horizontal/vertical spacing between them seems the same in China & NZ.

So why can't more conductors be added to existing pylon insulators to quickly, simply and relatively cheaply increase capacity?

Between the lower South Island and Waitaki River stations there are three circuits. Two of them are quite big with two conductors (called duplex) beneath each insulator, and one is quite small and only has a single conductor beneath each insulator. The meatier circuits connect Roxburgh to Clyde, Cromwell and on to Twizel, while the smaller one goes from Roxburgh to Livingston then to Waitaki, with a split off north to Islington.

The ROX-CYD-TWZ circuits were upgraded last year to help alleviate existing constraints, but not to allow for any new ones. If Tiwai was to close then a whole new double circuit, both duplexed, would be needed from Roxburgh to Waitaki and on to Islington.

Duplexing existing circuits isn't as easy as simply hanging another cable beneath the insulator. the towers need to be strengthened for increased wind and snow loading, the insulators need to heavier to cope with the extra weight, and the tension to get the correct sag needs to be adjusted.

[cyclist]

To help visualise what Jantar is saying, here is a map showing the geographical layout of the network: https://www.transpower.co.nz/sites/default/files/plain-page/attachments/transmission-map-nz.pdf

And here is a single line diagram showing the circuits and their ratings: https://www.systemoperator.co.nz/sites/default/files/bulk-upload/documents/SIPS6%20For%20Web.pdf

[xafalcon]

Thanks for the extra details guys. I'm always keen to learn from those more knowledgeable than I am.

[xafalcon]

Between the lower South Island and Waitaki River stations there are three circuits. Two of them are quite big with two conductors (called duplex) beneath each insulator, and one is quite small and only has a single conductor beneath each insulator. The meatier circuits connect Roxburgh to Clyde, Cromwell and on to Twizel, while the smaller one goes from Roxburgh to Livingston then to Waitaki, with a split off north to Islington.

The ROX-CYD-TWZ circuits were upgraded last year to help alleviate existing constraints, but not to allow for any new ones. If Tiwai was to close then a whole new double circuit, both duplexed, would be needed from Roxburgh to Waitaki and on to Islington.

Duplexing existing circuits isn't as easy as simply hanging another cable beneath the insulator. the towers need to be strengthened for increased wind and snow loading, the insulators need to heavier to cope with the extra weight, and the tension to get the correct sag needs to be adjusted.

What are the impediments and economics for adding another pole to the HVDC from Benmore to Haywards? I'm assuming it will be useful at some point in time regardless of Tiwai

[Marilyn Munroe]

What are the impediments and economics for adding another pole to the HVDC from Benmore to Haywards? I'm assuming it will be useful at some point in time regardless of Tiwai

I once asked a big cheese at Transpower if Tiwai closed would they extend the Southern terminal of the HVDC from Benmore to Manapouri? He said no as there would be sufficient AC transmission capacity from Manapouri to Benmore.

I dont know much of the technical stuff but wouldn't an electron generated at the bottom of the South Island be puffed by the time it got to the area of greatest NZ demand(Auckland Isthmus/Waikato)?

Boop boop de do
Marilyn

[boysy]

Anyone make any sense of the huge off market trades of circa 30M shares ?

[sb9]

Anyone make any sense of the huge off market trades of circa 30M shares ?

Gosh your ears must be burning...look at my post under 'black monday' thread.

[dobby41]

I dont know much of the technical stuff but wouldn't an electron generated at the bottom of the South Island be puffed by the time it got to the area of greatest NZ demand(Auckland Isthmus/Waikato)?

Yes - there are a lot of losses along the way.

[xafalcon]

And the games begin (or continue)

https://nzx.com/companies/MEL/announcements/279685

Looks like the word got out earlier than the announcement

[sb9]

And the games begin (or continue)

https://nzx.com/companies/MEL/announcements/279685

Looks like the word got out earlier than the announcement

True, look at the gentailers they're all having good run today along with previous good days.

[Harvey Specter]

And the games begin (or continue)

https://nzx.com/companies/MEL/announcements/279685

Looks like the word got out earlier than the announcementGame is right. A three month extension on something they have had 2 years to plan for and there is a secnd deadline now 9m after.

MEL should have just said the contracts the contract as it makes a mockery of deadlines if they just keep getting rolled over.

[xafalcon]

Excuse the pun, but in my opinion MEL should have simply pulled the plug.

Give 12 months notice of ceasing to supply

Transpower would then set about upgrading transmission lines and towers to ship the power north which they must do sooner or later anyway.

Rio Tinto would most likely come grovelling back in 6 months once remediation cost implications on their balance sheet must be realised

The only way to beat a bully like Rio Tinto is to bully back. Most of us learnt that in the school yard. Time for MEL board of directors to "man up" and accept that Rio Tinto contract uncertainty is actually an ongoing liability

[mouse]

Excuse the pun, but in my opinion MEL should have simply pulled the plug.

Give 12 months notice of ceasing to supply

Transpower would then set about upgrading transmission lines and towers to ship the power north which they must do sooner or later anyway.

Rio Tinto would most likely come grovelling back in 6 months once remediation cost implications on their balance sheet must be realised

The only way to beat a bully like Rio Tinto is to bully back. Most of us learnt that in the school yard. Time for MEL board of directors to "man up" and accept that Rio Tinto contract uncertainty is actually an ongoing liability

Amen & Amen. (I needed ten characters).

[sb9]

Bit of action today with punters piling on before it goes ex-div tomorrow.

[thestg]

I can not see the point. It has gone up 8c today - tomorrow it will be ex-div open 7.5 cents lower. Why pay an extra 8c today to collect the div of 7.5c tomorrow then pay tax on the div?

[couta1]

I can not see the point. It has gone up 8c today - tomorrow it will be ex-div open 7.5 cents lower. Why pay an extra 8c today to collect the div of 7.5c tomorrow then pay tax on the div? Exactly and it will probably go down by more than 7.5c over the next week, the time to buy was last week or before, not today.

[percy]

Exactly and it will probably go down by more than 7.5c over the next week, the time to buy was last week or before, not today.

I think the best time to buy them was when I brought them;at issue.

[janner]

I think the best time to buy them was when I brought them;at issue.

Smug prick :-)))

But could not argue about that :-)))

[bull....]

I think the best time to buy them was when I brought them;at issue.

lol yes indeed 95c was a good buy too I believe

[percy]

Smug prick :-)))

But could not argue about that :-)))

You certainly have a way with words.
Right to the point!...
Best post so far this year.!!!!.lol.

[janner]

You certainly have a way with words.
Right to the point!...
Best post so far this year.!!!!.lol.

Possibly due to being able to read books :-)))

Almost a lost art..

[janner]

You certainly have a way with words.
Right to the point!...
Best post so far this year.!!!!.lol.

Right to the point..

Who could argue with yours..

This time.. Hindsight is a great teacher ..

[mshierlaw]

I think the best time to buy them was when I brought them;at issue.

Ah yes ... but if you had sold MELCA on high & bought MEL after everyone stumped up the extra 50 cents you would have made another killing.

Predicted this .... but not big enough cojones to do it myself.

[boysy]

Going from strength to strength following the ex divi date. Guess the US pushing out raising interest rates and the same at the rbnz means a flight to lower risk yield plays.

[fish]

Going from strength to strength following the ex divi date. Guess the US pushing out raising interest rates and the same at the rbnz means a flight to lower risk yield plays.

I was thinking the same but chose to buy more Genesis yesterday pm but couldnt understand why there are some big sellers-genesis pays such a high divi

[macduffy]

I was thinking the same but chose to buy more Genesis yesterday pm but couldnt understand why there are some big sellers-genesis pays such a high divi

A bit of window dressing of annual/half year investment returns by someone, perhaps? 31st March was looming!

[sb9]

Wow close of 2.70 for the day, would this be one day higher than MRP?

[boysy]

Certainly seems to be plenty of interest for boring old mel was holding for the divi but the cap gain is now many times greater than anticipated.

[mouse]

Wow close of 2.70 for the day, would this be one day higher than MRP?

Yes.......

[bull....]

target highs 2.70 if 2.35 - 40 holds

we hit it and it still looks good, like I say way back on this and other threads meridian was the best power company stock to invest in:)

[bull....]

http://www.stuff.co.nz/business/money/78665820/customers-told-to-weigh-up-potential-benefits-and-costs-before-installing-solar-power-systems.html

story on solar power for the home and if its worth it

[Hectorplains]

https://www.nzx.com/files/attachments/233660.pdf

Looks good after a quick glance over. They've done well to grow residential customers by 1%. I thought this might be where they took a hit, as they seem to be less aggressively targeting that market than others.

[boysy]

Good to see the powershop numbers increasing in Australia. Should get our interim divi overnight tonight as well.

[bull....]

breaking new highs meridian holds customers while other majors are losing them

[mouse]

Any suggestions as to why Meridian has lost 12 cents today? It seems a trifle excessive.

[bull....]

Any suggestions as to why Meridian has lost 12 cents today? It seems a trifle excessive.

the price target I mentioned off 2.70 has proven to be tough resistance, gave a false break out the fall back under 2.70 was a warning , im out now will re enter someday

[Tomtom]

Any suggestions as to why Meridian has lost 12 cents today? It seems a trifle excessive. So should I be standing around with my hands in my pockets or filling my boots?

[mouse]

Lost ten cents today. It seems to be getting into a habit. Suggestions please.

[macduffy]

Lost ten cents today. It seems to be getting into a habit. Suggestions please.

The market's waiting for winter to arrive to boost power consumption. Turn your heaters and heat pumps on!

;)

[Harvey Specter]

The market's waiting for winter to arrive to boost power consumption. 8013Winter is coming

[bull....]

winter hasn't come for many yrs where I live

[dobby41]

My understanding is that power consumption during Summer is approaching that of winter due to the prevalence of Air Con

[mouse]

My understanding is that power consumption during Summer is approaching that of winter due to the prevalence of Air Con

Which is why there is so much advertising pushing of Heat Pumps. The desire is to obtain peak demand on more days, thus increasing profits. Electric Vehicles will add to the load.

[sb9]

281 now, gotta love this boring old gentailer...

[boysy]

Up to 282 market likes the EA announcement out this morning. Was lucky enough to top up this morning at 275 and thought I overpaid

[cyclist]

I found the link in the announcement didn't work. Here is an alternative link: http://www.ea.govt.nz/dmsdocument/20716, or go here for the the full list of briefing documents: http://www.ea.govt.nz/development/work-programme/transmission-distribution/transmission-pricing-review/consultations/

On page 34 of the first link (actual page number xxxiii), there is a nice graph showing before and after annual transmission charging. Meridian is the most affected, with a reduction from around $95m to approx $40m. Will allow them to compete more aggressively if that occurs. As expected, NZAS charges also reduce, which increases their chances of staying around. Aucklanders (via Vector) get hammered.

(Haven't read any of it. Just looked at the pretty pictures in isolation. Conclusions may be wrong).

[Harvey Specter]

A bit of a naive view I know but I though network costs were pass through cost to the consumer. And given the charges apply equally to each property regardless of retailer, then its not as if any retailer gets an advantage out of this. The benefit/detriment of this is born by the consumer isn't it? Or is this because prices rise when costs increase but for some reason, don't seem to reduce when costs reduce, even though we are meant to be a fully competitive market economy.

[cyclist]

I think that is true overall. But consider Meridian selling into Auckland as an example, with reference to the graph I previously mentioned. All the retailers will be passing through the higher vector transmission costs to the end consumer, but Meridian's generation related transmission costs are lowering considerably relative to the other gentailers. The large majority of those lower costs I expect will also be passed through, and in doing so Meridian will be able to offer a more competitive package without impacting their profitability. You would hope that will translate into additional subscriber numbers, and they may also keep a little of the savings for themselves.

[IAK]

Maybe it will give the market some certainty over the future of Tiwai Aluminium Smelter.

One of the biggest beneficiaries of the overhaul would be Rio Tinto's Tiwai Point aluminium smelter in Southland, with annual charges projected to drop by $21 million. From Stuff Business... http://www.stuff.co.nz/business/money/80053038/electricity-authority-review-a-mixed-bag-for-household-power-bills

[sb9]

More on today's announcement from Mr Hickey...

http://www.interest.co.nz/news/81632/electricity-authority-proposal-new-transmission-pricing-system-would-raise-power-bills

[Joshuatree]

$50 mill savings for Tiwai according to southland times. A definite stay it thats the case imo.

[bull....]

that 2.70 level again proves tough to beat

[sb9]

that 2.70 level again proves tough to beat

Seem to have done a bit of U turn since that announcement last week

[bull....]

2.70 again will it bust through and hold this time

[bull....]

could be breakout this time if we can hold above 2.70 weekly and hold above 2.70 next week new highs hopefully

[bull....]

http://www.stuff.co.nz/business/industries/82451890/unison-networks-defends-price-hike-for-consumers-with-solar-panels

solar less competitive now

[bull....]

breakout from consolidation suggests 2.90 -3 if it pans out

[sb9]

breakout from consolidation suggests 2.90 -3 if it pans out

287 now, is that all time high??

[RGR367]

287 now, is that all time high??

No, but 2.875 was to be exact actually. But worry not, it will surpass that soon enough.

[sb9]

No, but 2.875 was to be exact actually. But worry not, it will surpass that soon enough.

Agree, think its not too long before it hits the $3 mark. And in due course might surpass MCY (MRP) price and that would make it best of three gentailers sold down by govt in terms of capital gain.

[IAK]

Steady as she goes. Final dividend of 8.4 cents per share, 90 percent imputed, 5 percent increase in total ordinary dividends for the year of 13.5 cents per share plus a special dividend of 2.44 cents per share. Bill will be happy.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11699807

https://www.nzx.com/companies/MEL/announcements/287751

[sb9]

Steady as she goes. Final dividend of 8.4 cents per share, 90 percent imputed, 5 percent increase in total ordinary dividends for the year of 13.5 cents per share plus a special dividend of 2.44 cents per share. Bill will be happy.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11699807

https://www.nzx.com/companies/MEL/announcements/287751

Just going along doing its business without much fuss, might breach that magic $3 mark today by the looks....what a great blue chip investment if you're in right from IPO.

[bull....]

yes great investment and still even at $3 div yield is very good compared to bank deposits

[RGR367]

Finally broken the $3 mark and now at 3.03.

[silu]

I'd have never guessed to double my money in 3 years on this whilst collecting dividends along the way.

[RTM]

I'd have never guessed to double my money in 3 years on this whilst collecting dividends along the way.

Yes, me to.
And who are the losers in this process ? The previous owners of Meridian. They gave it away. And the profits are now being whisked off to wherever on the world the new shareholders might live.

[mshierlaw]

I'd have never guessed to double my money in 3 years on this whilst collecting dividends along the way.

With a net 42c dividend to date from the IPO date (incl upcoming) this 2 bagger is nearly a three bagger. Thanks JOHN & BILL, got anything else to sell?

[Gizzajob I can do that]

With a net 42c dividend to date from the IPO date (incl upcoming) this 2 bagger is nearly a three bagger. Thanks JOHN & BILL, got anything else to sell?

And a big thank you to Labour and the Greens for driving the price down :t_up:

[sb9]

And a big thank you to Labour and the Greens for driving the price down :t_up:

Hey, don't forget all of $1.50 IPO price was not paid in one go, $1 first and $0.50 in 18 months time and you got full dividends in between...must be bargain of the decade!!!

[Stranger_Danger]

Yes, me to.
And who are the losers in this process ? The previous owners of Meridian. They gave it away. And the profits are now being whisked off to wherever on the world the new shareholders might live.

Exactly. This is my largest holding and I haven't sold a share yet, although it IS getting very pricey at these levels.

At IPO this was an absolute gift, almost free money which is highly unusual in financial markets, and best of all, unlike most IPO's worth having, you were able to get a large percentage of whatever number you asked brokers for. This really was a present to the rich pr****, wrapped up and hand delivered by the actions of the Labour and Green parties at the time.

It is almost enough to make me vote for them..... Almost.

[bull....]

breakout from consolidation suggests 2.90 -3 if it pans out

hit the target now selling off due to rising bond yields worldwide makes the yield only slighty less attractive

[silu]

Anyone else tempted to partially sell off if it goes below $2.70?

[RGR367]

Anyone else tempted to partially sell off if it goes below $2.70?

Not to sell but I'll get hit as I'm buying at that price.

[sb9]

Just like that another divvy comes into bank a/c....nice :)

[mouse]

Closing today, 11 November, at 2.455. I wonder why? Has anyone any idea why? It seems only the other day Meridian was $3.10 almost. To lose sixty cents in a couple of months seems a little careless.

[Stranger_Danger]

Closing today, 11 November, at 2.455. I wonder why? Has anyone any idea why? It seems only the other day Meridian was $3.10 almost. To lose sixty cents in a couple of months seems a little careless.

It is seen as a bond proxy - all such stocks are getting slammed.

The thing is, I don't really see it as a bond/fixed interest proxy, not totally, anyway.

If I buy a bond issued in recent times, all I'll get is the coupon. If it turns out interest rates have been artificially low, I'll suffer a capital loss, unless I hold to maturity.

If I invest in a term deposit, I'll receive a significantly lower yield, despite all the talk of what interest rates may do in future, with no prospect of capital gain.

Unless I buy Meridian at a stupidly high price, I'm likely to receive a far higher yield with some prospect of capital gain.

It was getting expensive at $3 and I wish I'd flicked a few, but I'm closer to buying than selling at today's price.

[IAK]

Wow, electricity demand down 3.5% on last November. Lack of irrigation use reduced November 2016 demand to the lowest November month total in 7 years.
So plenty of water around but reduced electricity demand.

[horus1]

It may be that you are starting to see the uneconomic,???, solar having an affect. Alot is going in. Doesn'
t that make some transmission unnecessary.???

[sb9]

Big turnover for the day, more than 8ml shares traded so far...

[Marilyn Munroe]

The has been chatter on other gentailer threads regarding the current heavy rains and the prospect of them easing the current hydro storage situation in the South Island.

Most of the water Meridian uses comes from spill over of West Coast rain into the headwaters of the Southern Alps. Meridian watchers please remember this misquotation from George Bernard Shaw's play Pygmalion;

"The rain on the plain is rarely Meridians gain."

Boop boop de do
Marilyn

[horus1]

so why is the spot price not dropping fast. this is price fixingand should be investigated by the commerce commission.

[stoploss]

so why is the spot price not dropping fast. this is price fixingand should be investigated by the commerce commission.
I think he is saying the bulk of the rain falling is not in the Meridian catchment area . So at the moment there is no extra water in the lakes to increase generation and therefore reduce the spot price.

[boysy]

quite right if you view the past 7 days rainfall noting particularly in meridians catchment areas the rainfall pails in comparison to the rest of the south island.

http://www.metservice.com/maps-radar/local-observations/cumulative-rainfall-7-days

This being said the next forecast rain band over sunday evening through monday mid day looks set to saturate meridians catchment.

http://www.metservice.com/maps-radar/rain-forecast/rain-forecast-3-day

Additionally it would appear as though the lake levels from which meridian generate have been rising marginally of late.

https://www.meridianenergy.co.nz/about-us/our-power-stations/lake-levels

[fish]

quite right if you view the past 7 days rainfall noting particularly in meridians catchment areas the rainfall pails in comparison to the rest of the south island.

http://www.metservice.com/maps-radar/local-observations/cumulative-rainfall-7-days

This being said the next forecast rain band over sunday evening through monday mid day looks set to saturate meridians catchment.

http://www.metservice.com/maps-radar/rain-forecast/rain-forecast-3-day

Additionally it would appear as though the lake levels from which meridian generate have been rising marginally of late.

https://www.meridianenergy.co.nz/about-us/our-power-stations/lake-levels

Looks like you are right.
I was wrong posting on the CEN forum that I felt Meridian was suffering because they have not generated much power this year-there could be other reasons and its a complexity I havnt studied.
How do you think Meridian is doing this year?

[boysy]

You have to wonder if the lower generation has been more than offset by higher spot prices over the last 6-8 weeks. This being said it looks as though significant rainfall is set to fall over meridians catchment areas for the next 2 or 3 days which should further boost lake levels over the next week or so.

http://www.metservice.com/maps-radar/rain-forecast/rain-forecast-3-day

The spot pricing also seems to have reverted to $100/MWh. As long as meridians catchment in the south island keeps rising I take it the heavy lifting re power generation will revert back to MEL from the thermal stations up north.

http://www.em6.co.nz/em6/faces/pages/login.jspx

[boysy]

Decent rainfall experienced across MEL hydro catchments in the past 7 days, looks like a fair dump over the next few days also

http://www.metservice.com/maps-radar/local-observations/cumulative-rainfall-24-hours

http://www.metservice.com/maps-radar/rain-forecast/rain-forecast-3-day

Seems to be flowing through to the lakes levels being higher

https://www.meridianenergy.co.nz/about-us/our-power-stations/lake-levels

[Wsp]

Hydro lake levels update
https://www.energylink.co.nz/sites/default/files/HydroWatchWeekly_20170727.pdf

[arc]

mel announcement

Meridian's retail sales volumes in July 2017 increased by 14.3% compared to July 2016

[Sideshow Bob]

Went passed the White Hill windfarm Sunday. First time I can recall all of the turbines going at the same time.

[boysy]

First time in a while the inter island flow is the South Island sending power north. Seems to align with storage in the southern lakes picking up in light of the continued rain over the hydro lakes in the south over the past few weeks.


http://www.em6live.co.nz/PlanningRegion.aspx?planningregion=lni

[bull....]

some parties might be looking at buying smelter

[Hoop]

some parties might be looking at buying smelter

I think it has been "for sale" for a long time now..any more details available Bull?

[bull....]

I think it has been "for sale" for a long time now..any more details available Bull?

yes i heard glencore and some other party were sniffing it out that is rio pacific aluminium assets which include nz smelter

[Hoop]

Thanks Bull..I'll put an google alert on it...