GNE - Genesis Energy

[BlackPeter]

am I right in assuming that until computershare assign the wife a csn no. there is no way to find out about the allotment?
I went on their site -put in IRD no. and then was stopped in my tracks by csn or GNE no.
This may have been discussed but I gave up trying to look back amongst the old posts(probably somewhere in between the ''What the-shock'' and ''rich vs poor'' posts:)

Little help please..:)

If she gets it we will probably do an off market transfer just to tidy up the somewhat small parcel.

Hi Skid, (off market or other) transfer during the first year of ownership might be unwise - according to my understanding would this mean loosing the bonus shares. Which means, you have plenty of time to wait for the allocated CSN - the only need to rush would be if you want to sell into the early staging bubble ...

[Bobdn]

I got 2398 shares, a lot less than I applied for. Still happy. I'm a Genesis customer so when I pay my power bill from now on I will have a feeling of sort of paying myself, like I do when I pay my Telecom bill.

I've also learnt to be careful what I wish for. I'm a buy and hold investor and I wish I had got more shares but you never know how things are going to turn out.

[Zaphod]

Solar power is the big risk for generator retailers , not line Cos and then batteries arrive and generators are down the tubes. the reason is that line cos are regulated which is a problem at times burt an advantage sometimes. Look at Germany , UK and Australia.

As a supplemental source alongside hydo, wind, gas peaker etc. solar makes great sense, but it is not a replacement for these other types of generation even if economic moderate to long-term storage facilities are developed. Besides which, you will no doubt see generators diversifying into solar.

[skid]

Blackpeter and Skid Trademe opinion forum is ---> if you want to spin garbage like that. On this forum lets keep to the facts.

In terms of line divis--got the facts now -thanx

In terms of the other issue --that was waaaaaay back(when everyone was having a rave:)(but anyone who thinks this float is not a political issue--well nouf said)

[skid]

Hi Skid, (off market or other) transfer during the first year of ownership might be unwise - according to my understanding would this mean loosing the bonus shares. Which means, you have plenty of time to wait for the allocated CSN - the only need to rush would be if you want to sell into the early staging bubble ...


Got it -thanx

[macduffy]

I think we need to differentiate locals and instos. Locals get the bonus shares so instos that are locals also get the bonus shares? As long as you are a NZ resident I thought. But as its limited to parcels of 30,000 shares or less it will not have much sway with a local insto that has say 1 million shares as only 30,000 of them will be eligible. Correct me if I am wrong but this is how I read it.

See p 42 of the Investment Statement.

"Applications under the Institutional Offer and the Participating Iwi Offer have no entitlement to Loyalty Bonus Shares."

[blackcap]

See p 42 of the Investment Statement.

"Applications under the Institutional Offer and the Participating Iwi Offer have no entitlement to Loyalty Bonus Shares."

Thanks Macduffy, that makes sense actually. Cheers for clearing that up for me.

[Harvey Specter]

Solar power is the big risk for generator retailers , not line Cos and then batteries arrive and generators are down the tubes. the reason is that line cos are regulated which is a problem at times burt an advantage sometimes. Look at Germany , UK and Australia.solar is just a normal competitor to a generator. A new gas plan would be 1000x bigger than a years new solar installation.

For the lines company, they have to build for peak demand, yet solar produces during mid demand - it therefor makes the lows lower bit does not shave the peaks. It therefore has to earn the same regulated return but over lower usage, making its prices seem high compared to what you get. Your not going to be happy that your energy purchase has reduced but your lines charge stays constant.

[rbel038]

Gas turbine plants are many times smaller footprint per MW than solar PV if that's what you were saying Harvey. I don't know how many of you in Onehunga have driven past MRP Southdown but it is about half the size of you average Warehouse store and 175MW, quite astonishing comparing that to something similar in capacity such as Wairakei or Te mihi

[whatsup]

Off to a good start now that S Hers know their holding I wonder how many will top up today, instos will I think.

[milt1968]

Refunds should be in/coming in now. Have just received mine.

[Harvey Specter]

Refunds should be in/coming in now. Have just received mine.Same - nice and quick turnaround at least.

[couta1]

Same - nice and quick turnaround at least.
Ditto and very happy with nice blue arrow on portfolio amongst the red ones,up 19% not too shabby

[nissan]

Just got refund now where to invest it ? I only applied in the public pool and only under my name so did not get many .As I am retired it seemed a good income share just what I wanted and I applied for quite a few . Seems as though this Dad will have to look elsewhere.

[noodles]

Just got refund now where to invest it ? I only applied in the public pool and only under my name so did not get many .As I am retired it seemed a good income share just what I wanted and I applied for quite a few . Seems as though this Dad will have to look elsewhere.

I estimate TUA will pay a gross dividend yield of 9.4% this year. You are also buying a hell of a lot more growth than GNE.

[bull....]

I estimate TUA will pay a gross dividend yield of 9.4% this year. You are also buying a hell of a lot more growth than GNE.

but who offers the best growth in share price?

[noodles]

but who offers the best growth in share price?

I think TUA has more upside potential that GNE because it has more growth potential.

I own both stocks but I have more invested in TUA.

[couta1]

I think TUA has more upside potential that GNE because it has more growth potential.

I own both stocks but I have more invested in TUA.
Sold my Tua last year,wish I'd hung onto them but having said that its a very illiquid stock so maybe not the best pick for an older person who may need to get their money out quickly,I wouldn't be buying any at their current prices,GNE may surprise with their share price a year from now,those buying in at $1.55 could be up 30% plus if it goes over $2

[lambton]

Just got refund now where to invest it ? I only applied in the public pool and only under my name so did not get many .As I am retired it seemed a good income share just what I wanted and I applied for quite a few . Seems as though this Dad will have to look elsewhere.

Nothing preventing you from topping up, still appears good value at $1.80 ish.

[skid]

Funny,the wife recieved her FIN no.but no mention of amount of shares (on the public pool) and no CSN no yet.

[Harvey Specter]

Funny,the wife recieved her FIN no.but no mention of amount of shares (on the public pool) and no CSN no yet.
I believe the FIN is set first as a security measure.

[milt1968]

Looks like there are a lot of people are selling off their small/under-allocated parcels. 900k units over 54 sellers

[skid]

I believe the FIN is set first as a security measure.


Just got statement of shares with csn--got the full amount asked for-----just kidding:)--same measely amount as me

[Beagle]

Was good to get the refund back quickly but that only adds to the problem
What to buy, if anything...that's the $64,000 question. Maybe we need a new thread. Yes I think we do...

[Harvey Specter]

Looks like there are a lot of people are selling off their small/under-allocated parcels. 900k units over 54 sellersthat's an average of over 15k shares, much higher than the public pool allocation.

[nissan]

Yes I will buy a wee few more but not a lot considering they will cost me 15-20% more than issue price .So not as good as return .I will also look at TUA )(thanks ) It seems as though a new thread has started . About what to do with the refund that is good I might get a few more ideas. Thanks

[Jaa]

Looking forward, electricity intensity still seems to be dropping.

Vector is a good proxy for electricity demand from Genesis as they bought the old Mercury Energy customers off Vector.

Vector's operational performance for the 9 months to 31 March saw electricity customer numbers up 0.8% but the volume distributed down 0.6%. That is a 1.4% decrease in electricity intensity per existing customer.

Great from a national energy efficiency and thus environmental perspective, not so good for the generators.

[bunter]

Never the less -I feel fortunate to have merited one of the 18 posts from Bunter who kindly pointed out I misplaced an apostrophe and has given me wonderful advice as well:)
You're welcome - here's another post, and some more 'wonderful advice'.

There's no reason to think a thousand-poster's opinions are worth more than those of a 'junior member', if that's the implication.
The opposite, I'd have thought.

There are people out there, with not much money, who will have noted a couple of years ago that some big government floats were coming up, and made a plan to try and benefit from it.

They'll have taken the time to cultivate a relationship with each of the six brokers whom the government announced would be handling these floats.
That doesn't take much, actually.

They'll have opened accounts, maybe established different entities for that purpose.
Maybe even done a trade or two with each.

They'll have applied for firm allocations with each broker for each float and made a point of doing what they said they would do, promptly and with no fuss.
Brokers like reliable clients.

They'll have taken a hit on MRP - but stuck to their plan, and taken up MEL and GEN as well.

And now, only now, will they be feeling good about their investments.
They've been persistent, determined, and filled out lots of way-boring forms.
But the time spent is not great and it's been well paid.

These people are winners.

But you won't find many of them racking up thousands of posts on this forum, complaining about how the rich get richer, and how unfair it all is.
They spend their time doing something called 'work', to make money.
And making smart choices with their money- as above.

There are many ways of getting rich - blind luck, inheritance, sleeping with the right person.
But the commonest and most reliable way is as follows.

Spend less than you make.
Put the difference into income-earning assets.

[Airw0lf]

Looking forward, electricity intensity still seems to be dropping.

Vector is a good proxy for electricity demand from Genesis as they bought the old Mercury Energy customers off Vector.

Vector's operational performance for the 9 months to 31 March saw electricity customer numbers up 0.8% but the volume distributed down 0.6%. That is a 1.4% decrease in electricity intensity per existing customer.

Great from a national energy efficiency and thus environmental perspective, not so good for the generators.


Agree that electricity intensity appears to be flatlining or dropping. However I think you are incorrect in saying Genesis bought the old Mercury Energy retail customers off Vector. If you are referring to the days when Vector got rid of its retailing business, then it was Mighty River Power that took those customers on (MRP's retail arm is called Mercury Energy to this day, for this reason.)

[skid]

You're welcome - here's another post, and some more 'wonderful advice'.



There's no reason to think a thousand-poster's opinions are worth more than those of a 'junior member', if that's the implication.
The opposite, I'd have thought.

There are people out there, with not much money, who will have noted a couple of years ago that some big government floats were coming up, and made a plan to try and benefit from it.

They'll have taken the time to cultivate a relationship with each of the six brokers whom the government announced would be handling these floats.
That doesn't take much, actually.

They'll have opened accounts, maybe established different entities for that purpose.
Maybe even done a trade or two with each.

They'll have applied for firm allocations with each broker for each float and made a point of doing what they said they would do, promptly and with no fuss.
Brokers like reliable clients.

They'll have taken a hit on MRP - but stuck to their plan, and taken up MEL and GEN as well.

And now, only now, will they be feeling good about their investments.
They've been persistent, determined, and filled out lots of way-boring forms.
But the time spent is not great and it's been well paid.

These people are winners.

But you won't find many of them racking up thousands of posts on this forum, complaining about how the rich get richer, and how unfair it all is.
They spend their time doing something called 'work', to make money.
And making smart choices with their money- as above.

There are many ways of getting rich - blind luck, inheritance, sleeping with the right person.
But the commonest and most reliable way is as follows.

Spend less than you make.
Put the difference into income-earning assets.

Your opinions are welcome--I could do without the personal attacks though.(in your original reply)

You have just described the very people (with maybe a few exceptions)who have been scaled the most by the Government,while the fat Institutions (the ones with TONS of money) have creamed it and many have already sold out.

Thats exactly the point I was making in my original post that you responded to with the added bonus advice because I didnt bother with an apostrophe.

You did a fine job of spelling the word whiners--whinge--and whining, in the same post.

Im not going to digress into personal attacks --Others can judge the caliber of your posts for themselves.

[Jaa]

Agree that electricity intensity appears to be flatlining or dropping. However I think you are incorrect in saying Genesis bought the old Mercury Energy retail customers off Vector. If you are referring to the days when Vector got rid of its retailing business, then it was Mighty River Power that took those customers on (MRP's retail arm is called Mercury Energy to this day, for this reason.)

You are right it was MRP that bought Mercury Energy way back when.

If I had to guess I would say industrial and commercial customers are using electricity less intensely and more efficiently. This has been a long term trend for a number of years now.

[Zaphod]

Nice summary of what I did with the exception that I followed overseas trends that show the last of a series of floats is generally the most profitable and the first is generally over priced. Consequently I "pyramided" my asset allocation. Worked out better than an even allocation.

Now that was an interesting observation. Smart move; well done!

[horus1]

Electricity loads are reducing at a rate of about 1.5% per year and much of it is reductions in domestic usage. ask any line company which doesn't have large irrigation loads.

[macduffy]

Electricity loads are reducing at a rate of about 1.5% per year and much of it is reductions in domestic usage. ask any line company which doesn't have large irrigation loads.

I'm not disputing this point but I'm curious as to what are the major drivers of reducing domestic usage in a community of steadily increasing housing stocks and a growing population. Higher electricity prices leading to more judicious use? Generally milder weather? More domestic solar installations? More energy-efficient appliances?

It's probable that all these factors contribute but the relative importance of each could determine whether the decline in domestic demand is a temporary state of affairs rather than a continuing trend.

[skid]

Nice summary of what I did with the exception that I followed overseas trends that show the last of a series of floats is generally the most profitable and the first is generally over priced. Consequently I "pyramided" my asset allocation. Worked out better than an even allocation.

Well done--but you must have had to throw some serious dosh into your applications to end up with what you wanted.:p

[horus1]

The rate of reduction of the load has been steadily increasing for a number of years. Solar has not hit this country yet because of government policies which are effectively discouraging it but with the cost reductions which are occurring solar is comparable with grid generation know and will become cheaper in the future. The electricity industry is similar to the coal industry 20 years ago.

[Harvey Specter]

The rate of reduction of the load has been steadily increasing for a number of years. Solar has not hit this country yet because of government policies which are effectively discouraging it but with the cost reductions which are occurring solar is comparable with grid generation know and will become cheaper in the future. The electricity industry is similar to the coal industry 20 years ago.by discourage, I assume you mean "not subsidise". Otherwise I have no idea what you mean.

[horus1]

No I do not mean" Not subsidise" . I mean put real costs where they should go. If solar had been encouraged in the upper north Island you would not have Transpower building a 400KV line which is already unnecessary and will never be used at that voltage.The cost of that line should have gone into encouraging local small scale, generation. With new technology many of the electricity industries assets become redundant,: e.g . coal fired and gas fired power stations,transmission lines. That is happening in other countries already and will happen here . this govt policies on energy have been short sighted and will be shown with time to be wrong and it will affect the value of publicly listed generator/ retailers.

[Harvey Specter]

No I do not mean" Not subsidise" . I mean put real costs where they should go. If solar had been encouraged in the upper north Island you would not have Transpower building a 400KV line which is already unnecessary and will never be used at that voltage.The cost of that line should have gone into encouraging local small scale, generation. With new technology many of the electricity industries assets become redundant,: e.g . coal fired and gas fired power stations,transmission lines. That is happening in other countries already and will happen here . this govt policies on energy have been short sighted and will be shown with time to be wrong and it will affect the value of publicly listed generator/ retailers.Networks (distribution and transmission) don't give a Sh!t about average use, they have to be built for peak use, which in NZ is at 7pm on a cold winters night (this differs to overseas like US which a lot of aircon during the day).

And unfortunately the sun don't shine at 7pm on a cold winters night.

No wonder VCT, NZs largest distribution company is trying to popularise expensive battery storage for solar to mitigate the need to build line capacity needed only 2-3 hours a day.

[Airw0lf]

You are right it was MRP that bought Mercury Energy way back when.

If I had to guess I would say industrial and commercial customers are using electricity less intensely and more efficiently. This has been a long term trend for a number of years now.

The other factor is the NZ economy is just becoming more service oriented. Consider the fact that pulp and paper operations in the Bay of Plenty (e.g., Norske Skog Tasman) are now much smaller than they used to be. My assessment is that there are improvements in efficiency but also reductions in reasonably significant chunks of load as people scale back operations, go offshore, etc.

[Airw0lf]

Networks (distribution and transmission) don't give a Sh!t about average use, they have to be built for peak use, which in NZ is at 7pm on a cold winters night (this differs to overseas like US which a lot of aircon during the day).

And unfortunately the sun don't shine at 7pm on a cold winters night.

No wonder VCT, NZs largest distribution company is trying to popularise expensive battery storage for solar to mitigate the need to build line capacity needed only 2-3 hours a day.

Yeah exactly, Transpower and the lines companies all have to build for conditions where demand is at its peak and usually assuming available generation locally is concurrently relatively low, otherwise you are running a very real risk of non-supply.

Also to horus1's earlier point about Transpower's 400 kV project - the lines are 400 kV capable is all. They haven't invested in 400 kV transformers and the like which are seriously expensive, they will cross that bridge when they come to it. The cost difference between building brand new 400 kV capable lines vs. brand new 220 kV is probably not that massive either. You basically have to build the towers a bit taller and use better conductors. Some of the major costs in building new transmission don't even relate to the actual steel and concrete, it's things like consenting, landowner access, design and so forth which can be seriously expensive but don't cost that much different whether you are going 220 kV or 400 kV capable.

[macduffy]

The other factor is the NZ economy is just becoming more service oriented. Consider the fact that pulp and paper operations in the Bay of Plenty (e.g., Norske Skog Tasman) are now much smaller than they used to be. My assessment is that there are improvements in efficiency but also reductions in reasonably significant chunks of load as people scale back operations, go offshore, etc.

Thanks, all, for teasing out the reasons for reduced electricity demand - which are largely commercial and industrial factors, it seems. The comment had been made however that domestic demand was falling. Is this correct and if so, what is/are the main reasons?

[Airw0lf]

Thanks, all, for teasing out the reasons for reduced electricity demand - which are largely commercial and industrial factors, it seems. The comment had been made however that domestic demand was falling. Is this correct and if so, what is/are the main reasons?

I don't know very much about what's going on in the domestic space but I do wonder if it's things like efficient appliances, better home heating and insulation (I seem to recall a bunch of EECA subsidies a few years back being offered) having something to do with it. There is also the fact that the last few winters (at least in the upper NI) seem to have been quite warm.

[horus1]

Your information on 400KV vs 220Kv is seriously in error . The difference for an upgraded 220Kv line vs 400KV line is about 500Million. I know I ran it for 15 years.

[Snow Leopard]

Your information on 400KV vs 220Kv is seriously in error . The difference for an upgraded 220Kv line vs 400KV line is about 500Million. I know I ran it for 15 years.

Not sure that I understand what you are claiming here:
The North Island Grid Upgrade cost about $900M.
Are you saying that if they had designed and built a pure 220kV system it would only have cost $400M ?


And when you say that you ran it for 15 years do you mean you were an operator sitting in a control room?

Best Wishes
Paper Tiger

[horus1]

No I was the ceo and an upgrade of a 220KV line to 330KV which was priced and designed would have given plenty of capacity and would have cost 400m not 900 m. Transpower have overbuilt the grid in the last 12 years badly.

[BlackPeter]

No I was the ceo and an upgrade of a 220KV line to 330KV which was priced and designed would have given plenty of capacity and would have cost 400m not 900 m. Transpower have overbuilt the grid in the last 12 years badly.

Transpower CEO for 15 years? To my best understanding the last CEO (Dr Strange) served for 7 years. Is this you?

If yes - why did you allow the "overbuild" to happen?

[horus1]

Read yr history

[BlackPeter]

Read yr history

any proposal where to start?

[Beagle]

It will be very interesting to see if we have another relativly mild winter, (I hope so, I hate the cold) and will be more than happy to have lower power bills. Genesis projecting a return to normal, (cooler) weather conditions and basing their projections on increased generation demand because of this is a key investment risk, but one I note that you can eliminate by matching your level of annual investment income from power generators with your average expected annual power bill. Classic self insurance :)

[MAC]

It will be very interesting to see if we have another relativly mild winter, (I hope so, I hate the cold) and will be more than happy to have lower power bills. Genesis projecting a return to normal, (cooler) weather conditions and basing their projections on increased generation demand because of this is a key investment risk, but one I note that you can eliminate by matching your level of annual investment income from power generators with your average expected annual power bill. Classic self insurance :)

It’s still looking reasonably ok Roger, the next 4 weeks are the key, lower storage during this time can often determine winter profitability for Genesis.

http://www.electricityinfo.co.nz/comitFta/ftaPage.hydrology

[bull....]

Glad I brought more, still looks cheap in my eyes

[Beagle]

It’s still looking reasonably ok Roger, the next 4 weeks are the key, lower storage during this time can often determine winter profitability for Genesis.

http://www.electricityinfo.co.nz/comitFta/ftaPage.hydrology

Thanks, probably the part of my portfolio with the best short term capital gain prospects, pity its the smallest.

[milt1968]

Very happy with how Genesis is going. I want to just leave them but keep going back to check SP. No sell from me in the near future

[bull....]

Very happy with how Genesis is going. I want to just leave them but keep going back to check SP. No sell from me in the near future

im very happy too after tripling up im looking at making a 40% return in 18 mths hopefully if everything falls into place, just like meridian is shaping up to return me 35% for a little over a yr

who says boring old utilities cant make ya lots of money

[milt1968]

MorningStar recommendation just released

$1.60 REDUCE

[lambton]

MorningStar recommendation just released

$1.60 REDUCE

OMG I had better dump. yeah right. Next stop $2 - Like Bull bght plenty on market and looking very pretty.

[milt1968]

Polls are looking good for National at the moment which helps.

[Master98]

MorningStar recommendation just released

$1.60 REDUCE

LOL,MorningStar gave MRP $2.70

[pietrade]

Since Key and National have been at the helm, NZ government overseas debt has nearly tripled since 2008. How's that for governmental incompetence?
See the Reserve Bank Graph -- 11) Government overseas debt has nearly tripled since 2008 at--
http://www.forbes.com/sites/jessecolombo/2014/04/17/12-reasons-why-new-zealands-economic-bubble-will-end-in-disaster/

The picture is worth a 1000 words.

"New Zealand’s government took advantage of the plunging yields on its bonds (which is courtesy of the global QE and ZIRP-driven bond bubble) after the Global Financial Crisis to nearly triple its overseas borrowing:

Overseas Debt

Source: Wikipedia; BENZ

The global bond bubble has provided New Zealand’s government with a low-cost borrowing opportunity that is unlikely to be replicated anytime soon, especially now that the U.S. Federal Reserve is slated to completely taper or end its QE3 bond buying program this year.

12) The New Zealand dollar is overvalued

Hot money inflows (a byproduct of QE and zero interest rate policies) into New Zealand after the financial crisis helped the New Zealand dollar to strengthen by 85 percent against the U.S. dollar:

NZD/USD

Source: XE.com

After its strong appreciation against both the U.S. and Australian dollars over the past decade, the New Zealand dollar is now overvalued by as much as 20 percent according to some estimates. New Zealand’s Finance Minister Bill English stated in February that the overvalued dollar is “a concern” because it risks harming the country’s exporters. If the New Zealand dollar’s overvaluation was to abruptly correct and even overshoot to the downside (a possible result of the Fed’s taper), New Zealand’s central bank may be forced to hike its key interest rate to prevent further declines.

How New Zealand’s Economic Bubble Will Pop

New Zealand’s economic bubble will likely pop as a result of rising interest rates across the yield curve, which would put pressure on the country’s property and credit bubbles. New Zealand’s key interest rate is expected to continue rising after its March hike due to rising domestic inflationary pressures, while longer-term bond yields are likely to rise as a side-effect of the Fed’s taper and eventual Fed Funds rate increase. The popping of Australia and China’s bubbles are two other external factors that have a high probability of contributing to the popping of New Zealand’s bubble.

Here is what to expect when New Zealand’s economic bubble truly pops:

The property bubble will pop
Banks will experience losses on their mortgage portfolios
The country’s credit boom will turn into a bust
Over-leveraged consumers will default on their debts
Stock and bond prices will fall; the New Zealand dollar may weaken
Economic growth will go into reverse
Unemployment will rise"

[ari]

Since Key and National have been at the helm, NZ government overseas debt has nearly tripled since 2008. How's that for governmental incompetence?
See the Reserve Bank Graph -- 11) Government overseas debt has nearly tripled since 2008 at--
http://www.forbes.com/sites/jessecolombo/2014/04/17/12-reasons-why-new-zealands-economic-bubble-will-end-in-disaster/

The picture is worth a 1000 words.

"New Zealand’s government took advantage of the plunging yields on its bonds (which is courtesy of the global QE and ZIRP-driven bond bubble) after the Global Financial Crisis to nearly triple its overseas borrowing:

Overseas Debt

Source: Wikipedia; BENZ

The global bond bubble has provided New Zealand’s government with a low-cost borrowing opportunity that is unlikely to be replicated anytime soon, especially now that the U.S. Federal Reserve is slated to completely taper or end its QE3 bond buying program this year.

12) The New Zealand dollar is overvalued

Hot money inflows (a byproduct of QE and zero interest rate policies) into New Zealand after the financial crisis helped the New Zealand dollar to strengthen by 85 percent against the U.S. dollar:

NZD/USD

Source: XE.com

After its strong appreciation against both the U.S. and Australian dollars over the past decade, the New Zealand dollar is now overvalued by as much as 20 percent according to some estimates. New Zealand’s Finance Minister Bill English stated in February that the overvalued dollar is “a concern” because it risks harming the country’s exporters. If the New Zealand dollar’s overvaluation was to abruptly correct and even overshoot to the downside (a possible result of the Fed’s taper), New Zealand’s central bank may be forced to hike its key interest rate to prevent further declines.

How New Zealand’s Economic Bubble Will Pop

New Zealand’s economic bubble will likely pop as a result of rising interest rates across the yield curve, which would put pressure on the country’s property and credit bubbles. New Zealand’s key interest rate is expected to continue rising after its March hike due to rising domestic inflationary pressures, while longer-term bond yields are likely to rise as a side-effect of the Fed’s taper and eventual Fed Funds rate increase. The popping of Australia and China’s bubbles are two other external factors that have a high probability of contributing to the popping of New Zealand’s bubble.

Here is what to expect when New Zealand’s economic bubble truly pops:

The property bubble will pop
Banks will experience losses on their mortgage portfolios
The country’s credit boom will turn into a bust
Over-leveraged consumers will default on their debts
Stock and bond prices will fall; the New Zealand dollar may weaken
Economic growth will go into reverse
Unemployment will rise"

And the next government is still National! Thank god for democracy!...and what were you saying about Genesis?

[lambton]

Pie trade what has this rant got to do with GNE just now? Should I bail, buy more? Save the world, not me sorry.

[brend]

"

This guy predicts bubbles everywhere and uses the Forbes website as his blog. He generates income when people visit it.

He cherry picked the worse stats nothing more

[horus1]

The P/E in the NZ market are very high . It is a time for caution

[skid]

I think what Pies article has to do with Genesis is the same as it has to do with most shares--which is DYOR on your particular shares,but keep an eye on the outside markets as well,and the New Zealand economy.
Sometimes the ''rock star'' economies can fail (remember Ireland)
If things DO start to unravel,it may be time to bail--Genesis will still be there when you return.
Their aint many choices out there politically and National is best for power companys ATM,but it doesnt mean that there arent things that they couldnt do better.
I dont see any conflict in being happy with my Genesis shares,but still doing what I can to keep National honest.
If there was a way to get a National gov,minus the absurdly stupid TPP agreement with the States they are working on--I would do it in a flash.
Meanwhile as hours says -time for caution(not panic,but caution)

I read in the paper ,they are predicting theres a good chance of another El Ninio this year(which means drier areas ,more dry(drought) and wet areas more wet.)
I believe it said starting in the spring--Im not sure how this would affect Genesis but its good to note.
As time goes on ,it will most likely become more obvious (its all about the movement of warm currents) but if it comes to pass and Genesis's catchments are in dry areas it could affect the bottom line. (forgive my lack of research on the lakes)

[Snoopy]

MorningStar recommendation just released

$1.60 REDUCE

And $1.60 is assuming the smelter will continue.

From p2 of the Morningstar report

"Meridian Energy’s new agreement with the owners of the smelter last year. We have not factored in the
closure of the smelter in our forecast."

But they don't rate the overall electricity market for 3 to 5 years. In analyst terms that means forever!

"Electricity demand is expected to remain anaemic while price increases, other than cost pass-throughs,
are likely to be limited. Because of this, top-line growth is likely to remain subdued during the next
three to five years."

SNOOPY

[BlackPeter]

MorningStar recommendation just released

$1.60 REDUCE

I normally don't put too much emphasis on Morningstar predictions, however, just looking at the PE predictions for four of our big electricity suppliers:
GNE 44.5
CEN 21.5
MELCA (based on full share price) 17.3
MRP 13.0

Looking at these numbers, I agree (with Morningstar) that GNE might not be the best investment these days in the electricity sector. Remember - what goes up, must come down.

Discl: hold MRP and MELCA; DYOR

[Snoopy]

The take or pay contract from Kupe is a double edged sword for Genesis. The contract secures more than enough gas to keep running Unit 5 at Huntly, and presumably gives certainty to Genesis on the cost of that gas. (According to the investment statement, Genesis actually has so much gas under contract it is negatively affecting their profitability.)

But it also means that in times of low power prices, the margins at Genesis will be squeezed as the marginal cost of producing incrementally more substitutable renewable hydro energy is close to zero. With low power demand and increasing supply (both Mighty River and Contact have brought new geothermal stations on line over the last year) gas and coal fired thermal stations are looking very unattractive over the medium term.


I am interested in finding out the details of the Genesis take or pay contract with 31% owned Kupe, but I am finding the information difficult to pin down.

Page 115 of the Genesis prospectus tells us that the total (Kupe) field production is volumes forecast for natural gas are 22.3PJ (FY2014) and 21.1PJ (FY2015). The implication is that Genesis may 'take or pay' for 31% of that.

On the NZO thread, post 12621 by 'Lord Percy' (interesting aside this is the only Sharetrader post by 'Lord Percy'. Does it belong to our regular Percy, before he was stripped of his title?) where he states:

"Genesis takes NZOG 12 % on a take or pay contract. Vector buys the Kupe LPG on the same basis."

Lord Percy doesn't specify, but the implication of this comment is that Genesis takes NZOGs 12% share of natural gas on a "take or pay basis". Why would Genesis do that if they weren't already fully utilising the 31% of natural gas they are entitled to as a shareholder? This ties in with Genesis taking its full shareholder entitlement of natural gas from Kupe, and some more.

We can therefore infer that Genesis takes at least 31% + 12% = 53% of Kupe natural gas output.

The problem is the Genesis prospectus p37 says that NZ Oil and Gas has a 15% interest in Kupe, not 12% as implied by Lord Percy. Or am I reading that wrong, and NZOG splits their Kupe natural gas share 12 percentage points to Genesis and 3 percentage points for other customers?

Those waters off New Plymouth are still murky for me.

My grand objective is to find out how much gas Genesis have contracted so that I can estimate the total electric power that Genesis's unit 5 at Huntly generates annually effectively 'for free' (at no incremental cost to GNE). I am still some way from my goal as I write this

SNOOPY

[Snoopy]

Page 115 of the Genesis prospectus tells us that the total (Kupe) field production is volumes forecast for natural gas are 22.3PJ (FY2014) and 21.1PJ (FY2015). .


Trawling back via the NZ Herald website, gives the following quote from an article published on Wednesday 29th February 2012.

-----

"However, its take-or-pay contracts for Kupe gas also meant the company paid $65.4 million for natural gas, which it sold to customers at a net loss of $2.2 million."

"We continue to sell surplus gas contracted ... at a loss, given it is more cost effective than using it for generation," said Brantley. (Genesis CEO)

------

I must say I don't understand that last comment. If you have a take or pay contract, then isn't the effective cost of generating electric power with that gas close to zero? Why is selling gas to customers at a loss better than generating electric power with that surplus gas?

SNOOPY

[Harvey Specter]

I must say I don't understand that last comment. If you have a take or pay contract, then isn't the effective cost of generating electric power with that gas close to zero? Why is selling gas to customers at a loss better than generating electric power with that surplus gas?

SNOOPYBecause if they used it to generate power, they would have incurred a bigger loss. I assume they know at what spot rate it becomes more economical to just shut down rather than incur all the other costs as well.

[Snoopy]

Because if they used it to generate power, they would have incurred a bigger loss. I assume they know at what spot rate it becomes more economical to just shut down rather than incur all the other costs as well.


A gas turbine is relatively cheap to start up and shut down, and I imagine even cheaper to run a bit harder when it is normally a baseload unit (like Unit 5) in a state of contant readiness and use. Of course you must be right Harvey. No other explanation makes sense.

But don't you think it odd that you would sign a take or pay contract for natural gas for many years into the future when the margin between making a loss or a profit, by implication, so fine? What does that say about Genesis's management?

SNOOPY

[Snoopy]

Because if they used it to generate power, they would have incurred a bigger loss. I assume they know at what spot rate it becomes more economical to just shut down rather than incur all the other costs as well.


Looking at the FY2013 annual report, p35, "gas revenue" has fallen from $235.8m in FY2012 to $212.5m in FY2013.

Stack those figures up against 'gas purchases and transmission' on the same page and you can get the net loss from gas in each year:

FY2013: $212.5m - $217.2m = -$4.7m
FY2012: $235.8m -$249.4m = -$13.6m

Back on page 17 are the Gas generation outputs for the same years:

FY2013: 2,732GWh
FY2012: 3,041GWh

Of course those outputs do not consider, the amount of gas sold as gas for burning by the customer.

LPG sales in kilotonnes were as follows (from p15):

FY2013: 2,445 kT
FY2012: 2,002 kT

SNOOPY

[brentk]

We can therefore infer that Genesis takes at least 31% + 12% = 53% of Kupe natural gas output.

31% + 12% = 43%

[Snow Leopard]

I am interested in finding out the details of the Genesis take or pay contract with 31% owned Kupe, but I am finding the information difficult to pin down.

...
My grand objective is to find out how much gas Genesis have contracted so that I can estimate the total electric power that Genesis's unit 5 at Huntly generates annually effectively 'for free' (at no incremental cost to GNE). I am still some way from my goal as I write this

SNOOPY

Genesis takes 100% of the Kupe Gas

and

Genesis also has agreements to buy a similar amount of gas from other sources.

Happy Hunting
Paper Tiger

[Snoopy]

31% + 12% = 43%


So someone was paying attention and spotted my deliberate mistake , eh ;-). Thanks for the correction. Although it seems the result has been corrected again by PT to 100%!

I even found a reference to back PT up:

http://www.hydrocarbons-technology.com/projects/kupe/

"Genesis Energy is a major electricity supplier and receives all the produced gas because it needs long-term supplies for its new e3p power-generation project in New Zealand."

e3p is unit 5 at Huntly.

SNOOPY

[Snoopy]

But don't you think it odd that you would sign a take or pay contract for natural gas for many years into the future when the margin between making a loss or a profit, by implication, so fine? What does that say about Genesis's management?


More information from the link below:

http://www.hydrocarbons-technology.com/projects/kupe/

"The development budget for the Kupe project was estimated at NZ$980m (US$594m). NZOG's share is NZ$147m and Genesis Energy is NZ$20m. The total investment, however, reached $1.3bn."

"In October 2005 participants in the Kupe project announced that the development budget would be higher than anticipated. The higher costs were offset by a renegotiated gas supply contract with Genesis Energy and higher worldwide prices for condensate and LPG."

Of course Genesis Energy was government owned in 2005. Could that explain their eagerness to get behind Kupe?

SNOOPY

[Snoopy]

Looking at the FY2013 annual report, p35, "gas revenue" has fallen from $235.8m in FY2012 to $212.5m in FY2013.

Stack those figures up against 'gas purchases and transmission' on the same page and you can get the net loss from gas in each year:

FY2013: $212.5m - $217.2m = -$4.7m
FY2012: $235.8m -$249.4m = -$13.6m


Although the above ties in with Genesis making losses on its gas division, I am not sure it is quite fair. Some of those gas purchases have gone into producing electricity. Electricity produced won't figure in 'gas revenue', but will be in 'electricity revenue'.

SNOOPY

[Snow Leopard]

Although the above ties in with Genesis making losses on its gas division, I am not sure it is quite fair. Some of those gas purchases have gone into producing electricity. Electricity produced won't figure in 'gas revenue', but will be in 'electricity revenue'.

SNOOPY

Unless of course the gas bought to generate electricity is in another category - Fuels consumed possibly?

Best Wishes
Paper Tiger

[Snoopy]

Genesis takes 100% of the Kupe Gas

and

Genesis also has agreements to buy a similar amount of gas from other sources.


I am surprised that Genesis takes all of Kupe's gas, given that Origin Energy is one of the Kupe partners, Origin is the majority shareholder in Contact Energy, and Contact Energy operates gas fired power stations.

In the Contact Energy offer document relating to the 1:9 renouncable share issue dated 28th April 2011, on page 36 the following quote appears:

"Rockgas (Contact subsidiary) has entered into an LPG Sales and Logistics agreement with Origin Energy Resources (Kupe) Limited and Kupe Mining (No.1) Limited for the supply of LPG from the Kupe Production Station Transactions for six months ended 31st December 2010 totalled $21.0m (year ended 30 June 2010 $19.1m). As at 31st December 2010, $3.9m remained outstanding (30th June 2010 $4.4m)"

So it seems even if Genesis takes all of Kupes output now, it wasn't always so.

SNOOPY

[Snoopy]

Unless of course the gas bought to generate electricity is in another category - Fuels consumed possibly?

Best Wishes
Paper Tiger


Have been looking at the Contact Energy report for the same period that expresses things differently, which has thrown me off the scent. Yes PT, fuels consumed does sound likely although that will include coal bought in too. In which case my original calculation, about Genesis making a loss on their gas business stands.

SNOOPY

[Harvey Specter]

Although the above ties in with Genesis making losses on its gas division, I am not sure it is quite fair. Some of those gas purchases have gone into producing electricity. Electricity produced won't figure in 'gas revenue', but will be in 'electricity revenue'.There would be some inter-divisional trading such that gas trading gets revenue and Electricity generation gets a COGS.

[Snoopy]

Looking at the FY2013 annual report, p35, "gas revenue" has fallen from $235.8m in FY2012 to $212.5m in FY2013.

Stack those figures up against 'gas purchases and transmission' on the same page and you can get the net loss from gas in each year:

FY2013: $212.5m - $217.2m = -$4.7m
FY2012: $235.8m -$249.4m = -$13.6m


For a slightly indirect comparison I looked at the CEN annual report for FY2013. Note 3 outlines the LPG revenues for FY2013 and FY2012

2013 (LPG -LPG purchases): $119m - $87m = $32m
2012 (LPG -LPG purchases): $118m - $83m = $35m

Looking at LPG only, Contact is making a very tidy gross margin, over the period Genesis was making losses.

However if you look on the same page and pick out the figures for 'gas', the results for Contact look horrible:

2013 (Gas - Gas purchases, transmission and levies): $92m - $362m = -$270m
2012 (Gas - Gas purchases, transmission and levies): $92m - $391m = -$299m

However, unlike Genesis there is no separate 'fuels consumed' category of expenses. So almost certainly some of the Gas purchases have gone into fuelling Contact's gas fired electricity power stations. The offsetting revenues from those will part of 'wholesale electricity'. So the 'loss' on Gas that Contact has made is not comparable to the Genesis account figures.

It is very frustrating for comparison purposes when companies ostensibly in the same line of business choose to report their accounts rather differently!

SNOOPY

[Snoopy]

Looking at the FY2013 annual report,

Back on page 17 are the Gas generation outputs for the same years:

FY2013: 2,732GWh
FY2012: 3,041GWh


OK, back to my goal.

Much more energy will have been fed into the Gas Power generators to account for the thermal efficiency of principally the Unit 5 gas turbine and line losses getting the gas to Huntly from New Plymouth. I am going to use an overall ballpark system efficency of 40% (quite good) to estimate the energy input from Kupe.

FY2013: 2,732GWh/0.4 = 6830GWh
FY2012: 3,041GWh/0.4 = 7603GWh

After two years 47PJ of gas have been extracted from Kupe. (Genesis Prospectus p38).

That is roughly 23PJ per year.

Now, both PJ and GWh are units of energy. How many Petajoule in 1 GWh? The answer is 0.0036.

So the amount of power used by Genesis, principally in Unit 5, in PJ was

FY2013: 6830GWh = 24.6 PJ
FY2012: 7603GWh = 27.4 PJ

That means that all of the gas output of Kupe (23PJ per year) , and more, is used just to fuel Genesis's electricity generating operations!

SNOOPY

[MAC]

CEN and GNE have different operating models for their gas fired plant.

CEN operate 48% efficiency 100MW LMS100 units at Stratford as peakers with a large percentage of gas procured on market, they make a bit on the ancillary services market also. Stratford is coupled with an underground gas storage field for buffering long/short take or pay and seasonal price fluctuations.

GEN operate a 400MW M701 F class CCGT mostly at full load to keep the efficiency up at 58%, they have an 40MW LM6000 peaker also, but do not have gas storage, their long gas goes to retail.

[Snoopy]

After two years 47PJ of gas have been extracted from Kupe. (Genesis Prospectus p38).

That is roughly 23PJ per year.

Now, both PJ and GWh are units of energy. How many Petajoule in 1 GWh? The answer is 0.0036.

So the amount of power used by Genesis, principally in Unit 5, in PJ was

FY2013: 6830GWh = 24.6 PJ
FY2012: 7603GWh = 27.4 PJ

That means that all of the gas output of Kupe (23PJ per year) , and more, is used just to fuel Genesis's electricity generating operations!


One more adjunct to this calculation.

Unit 5 that runs exclusively on gas is rated at 403MW, or 0.403GW. If Unit 5 has produced all of Genesis's power that means it must have been running at the equivalent of 'flat out' for a certain number of hours, as follows:

FY2013: 2,732GWh / 0.403GW = 6779 hours = 282 days
FY2012: 3,041GWh / 0.403GW = 7546 hours = 314 days.

So it is quite feasible for "Unit 5" to consume all the gas output of Genesis on its own. Whether Unit 5 actually would run flat out like this for so many days of the year is another matter.

SNOOPY

[Snoopy]

GEN operate a 400MW M701 F class CCGT mostly at full load to keep the efficiency up at 58%, they have an 40MW LM6000 peaker also, but do not have gas storage, their long gas goes to retail.


The 40% efficiency that I guessed for Unit 5 (not strictly comparable to your 58% because I was including all teh line losses from when the gas came from the Kupe well head) was just that - a guess. Here is what Geneses say about Unit 5 on their website:

Unit 5 – 403 MW(Gas)

----

Huntly Unit 5 (previously known as e3p; Energy Efficiency Enhancement Project) uses natural gas as its fuel source, and is able to generate up to 403MW of electricity - enough to power approximately 400,000 households. The high efficiency gas -fired unit was commissioned in June 2007. The unit is a high-efficiency combined cycle generator consisting of four major components.

250MW industrial gas turbine made by Mitsubishi Heavy Industries.
HRSG or heat-recovery steam generator.
135MW steam turbine

---------

If they can really recover 135MW from what in the old days would have been waste steam, that is very impressive.

Here is the reference backing up your fiftymid% MAC. From

http://www.power-technology.com/projects/ep3/

"Genesis Energy has completed the new combined cycle gas turbine at its Huntly facility. Known as e3p (Energy Efficiency Enhancement Project), the plant was switched on two months early, in February 2007, and has now been commissioned. The $520m plant has a conversion efficiency of 56% compared with 37% for the existing Huntly power station."

SNOOPY

[Snoopy]

Looking at the FY2013 annual report, p35, "gas revenue" has fallen from $235.8m in FY2012 to $212.5m in FY2013.

Stack those figures up against 'gas purchases and transmission' on the same page and you can get the net loss from gas in each year:

FY2013: $212.5m - $217.2m = -$4.7m
FY2012: $235.8m -$249.4m = -$13.6m

Back on page 17 are the Gas generation outputs for the same years:

FY2013: 2,732GWh
FY2012: 3,041GWh

Of course those outputs do not consider, the amount of gas sold as gas for burning by the customer.

LPG sales in kilotonnes were as follows (from p15):

FY2013: 2,445 kT
FY2012: 2,002 kT


Not quite sure how LPG is treated within the figures. I presume that once the natural gas if liquified, it is technically no longer 'gas'. But then again the amount of gas that is converted into LPG is I guess at the discretion of Kupe ?

Also, I am intrigued to find out if the 2012 year losses with gas was related to a low point in the nearest electricity node at the time (Otahuhu?). I am trying to find some historical figures for the 2012 year but am not having much luck.

Something here maybe?

http://www.emi.ea.govt.nz/Datasets/Browse?directory=%2FFinal_pricing&parentDirectory=%2FDatasets%2FWholesale

Any assistance appreciated.

SNOOPY

[Snow Leopard]

CEN and GNE have different operating models for their gas fired plant.

CEN operate 48% efficiency 100MW LMS100 units at Stratford as peakers with a large percentage of gas procured on market, they make a bit on the ancillary services market also. Stratford is coupled with an underground gas storage field for buffering long/short take or pay and seasonal price fluctuations.

GEN operate a 400MW M701 F class CCGT mostly at full load to keep the efficiency up at 58%, they have an 40MW LM6000 peaker also, but do not have gas storage, their long gas goes to retail.

CEN have not only the Stratford Peakers but also Otahuhu B & TCC which are more base-load orientated.
CEN also have Take or Pay for significant amounts of gas (2013 - 40PJ).

I am lead to understand that the average efficiency of Huntly Unit 5 is in the low fifties.
Unit 6, GEN's peaker is rated at 50MW. The remains of Huntly 1-4 probably comes into play when hydro is short.

In 2013 GEN paid for (but did not necessarily take) 38.6PJ of Gas, using 21.0PJ for generation and selling 5.0PJ retail.

Best Wishes
Paper Tiger

[Snow Leopard]

Not quite sure how LPG is treated within the figures. I presume that once the natural gas if liquified, it is technically no longer 'gas'. But then again the amount of gas that is converted into LPG is I guess at the discretion of Kupe ?

Also, I am intrigued to find out if the 2012 year losses with gas was related to a low point in the nearest electricity node at the time (Otahuhu?). I am trying to find some historical figures for the 2012 year but am not having much luck.

Something here maybe?

http://www.emi.ea.govt.nz/Datasets/Browse?directory=%2FFinal_pricing&parentDirectory=%2FDatasets%2FWholesale

Any assistance appreciated.

SNOOPY

LPG sales and Oil sales appear as Petroleum revenues/production+ in the accounts, separate from the Gas revenue/expenses.

LPG is not liquefied natural gas!

To compare gas use in 2012 with 2013 (see previous post)
In 2012 GEN paid for (but did not necessarily take) 44.1PJ of Gas, using 23.1PJ for generation and selling 5.4PJ retail.

Best Wishes
Paper Tiger

[Snoopy]

LPG is not liquefied natural gas!


The main content of holes I study these days is what falls off the end of the spade at the bottom of the garden, so thanks for the gas lesson PT. Here is some more info from http://www.thegashub.co.nz/FAQs/

-------

Q. What is the difference between natural gas and LPG?

The main difference between natural gas and LPG is that natural gas consists mainly of methane, whereas LPG is comprised of propane, butane, or propylene, either separately or as a mixture. Due to the large proportion of methane, natural gas is lighter than air, so will rise quickly and disperse more easily if there is a gas leak. LPG tends to collect in low points and is more difficult to disperse, which makes it more prone to explode if there is a leak.

------

Of course methane, propane and butane are all part of the same carbon/hydrogen family, the difference between them being only the number of carbon atoms in the carbon chain. Methane is the baby of the family with only one carbon in the chain (if you can have a chain of one !). Being the smallest also means it liquefies at a lower temperature than propane and butane, and it is not practical to liquefy methane at ambient temperatures.

SNOOPY

[Snoopy]

Unit 5 – 403 MW(Gas)

----

Huntly Unit 5 (previously known as e3p; Energy Efficiency Enhancement Project) uses natural gas as its fuel source, and is able to generate up to 403MW of electricity - enough to power approximately 400,000 households. The high efficiency gas -fired unit was commissioned in June 2007. The unit is a high-efficiency combined cycle generator consisting of four major components.

250MW industrial gas turbine made by Mitsubishi Heavy Industries.
HRSG or heat-recovery steam generator.
135MW steam turbine

---------


More on Unit 5 from the FY2013 Annual Report, page 18.

"Unit 5, the combined cycle gas turbine at the Huntly Power Station, went into commercial operation in July 2007. In October 2012, the unit was disassembled for the first time since commissioning for its programmed 50,000 hour major inspection."

The period that Unit 5 operated before the first strip down inspection was for 5 years and 3 months. There are 365 days in a year and each of those has 24 hours. So the number of hours in one year is 8760, which equates to 43800 over five years. The months August, September and October contain 31, 30 and 31 days respectively. That sums to 92 days or 2208 hours. That means the maximum number of hours that Unit 5 could have run is 43800 + 2208 = 46008. Some might say then that the 50,000 hour inspection last year was premature, as Unit 5 was still 5 months shy of that total, assuming it was running 24/7 since installation.

Of course in practice five months on from October 2012 brings us to March 2013 and the start of the colder weather. If GNE had waited until then to inspect the unit and found something amiss, Unit 5 could have been out of action for part of Winter 2013 - not a prospect management would relish. So I quite understand why they did the inspection early.

What this analysis does show though is how dependent Genesis has been on Unit 5. It is probably the most efficient thermal power plant in the country. That means it is a good thing for wider NZ that if any thermal powerplants are being used, this one should be used first. Given Genesis did their first major inspection consistent with the unit being used 24/7 (no surprise as it was designed as baseload generation) we can be fairly sure that Genesis are indeed running this unit very hard, in terms of hours. Whether it runs at 403kW maximum capacity all the time is another question. Anyone know?

SNOOPY

[MAC]

The maximum output of an F class gas turbine is dependent on ambient atmospheric conditions, for an M701F in combined cycle like Unit 5, typically 375MW in the summer, up to 420MW on a frosty winter morning, a little less now that the unit is not new and blade tip clearances are a little wider.

They like to run it at full load so as to achieve around 58% efficiency, noting that it cannot be run lower than 230MW or so for environmental reasons. This may depend though on price and whether they are long or short gas.

[stones]

Who cares - just show me the money!!

[Snoopy]

Who cares - just show me the money!!


Fair point Stones. Perhaps I should explain why I have become fascinated with Unit 5 at Genesis.

According to my sketch valuations of power stations, Genesis will likely be least affected - directly- by any Labour Green lead government. However, I do have a concern that the thermal generation assets, principally Huntly, may become stranded. How could this happen? The rerating downwards of the value of the hydro dams means that electricity from these sources will suddenly become cheaper, for the Labour Green single power buyer to buy. However, the thermal power stations are unlikely to be revalued downwards in the same way. Thus their relative competitiveness will be diminished.

We are already told by Genesis that Huntly is a marginal prospect even at today's power (output) and gas (input) prices. Genesis value their power stations by discounted cashflow analysis, and they now have more competition from new thermal stations commissioned by Mighty River and Contact over the last year. Can Genesis compete on this new playing field? What sort of write down will happen on the Genesis books if they can't? These questions have been playing on my mind and will still be an issue, to a lesser extent, if NZ returns a National lead government.

The information is out there to solve this problem. We know that Genesis just broke even on their gas position in 2012. We know the output they took from Kupe. The power price at the Otahuhu node at that time is unknown to me as I write this but the information is out there. So we can make a pretty good stab at the breakeven price point of Unit 5 when all these figures are assembled.

Many investors bought into GNE on the promise of a high dividend yield. But I think there is a significant risk of no dividend at all within two years, and that largely depends on what happens to Unit 5. You say 'show me the money'? What do you think will happen to the price of your GNE shares if the dividend is cancelled?

SNOOPY

[Snoopy]

The maximum output of an F class gas turbine is dependent on ambient atmospheric conditions, for an M701F in combined cycle like Unit 5, typically 375MW in the summer, up to 420MW on a frosty winter morning, a little less now that the unit is not new and blade tip clearances are a little wider.


OK MAC, thanks for this. It makes sense that Unit 5 can produce more power when there is a colder sink for the waste heat.



They like to run it at full load so as to achieve around 58% efficiency, noting that it cannot be run lower than 230MW or so for environmental reasons. This may depend though on price and whether they are long or short gas.


Unit 5 consists of a 250MW industrial gas turbine made by Mitsubishi Heavy Industries and an HRSG or heat-recovery steam generator. A 135MW steam turbine. Can you expand on what you mean by 230MW or so being the minimum for environmental reasons? Are you hinting there is not enough waste steam to run the heat recovery steam generator at these lower power levels, which in turn will destroy the efficency advantage that Unit 5 normally has over other gas turbines?

You say what happens can depend on whether Genesis are long and short on gas. But since Genesis take all the output of natural gas from Kupe we know they are always long on gas, do we not? Under what scenario could they be short? Or are you referring to Kupe ultimately running out?

SNOOPY

[MAC]

Snoopy,

The maximum output is determined by air temperature, colder airflow into the turbine gives greater output, just the same as an aircraft engine.

The minimum load for all the three F class machines in NZ is limited by NOx and SOx emission levels, as they come down in load NOx and SOx increases to a point where they must stop and hold at a minimum load else they would otherwise breach resource consent conditions.

Genesis have a gas contract with Kupe but not all Kupe gas goes to Genesis, much just goes into the market.

If Genesis retain perfect availability and run Unit 5 at full load for a month they would be short gas, also there is Unit 6 to consider, and gas over burn on the older units if or when required to run in overload conditions during the winter.

regards, Mac

[stones]

Fair point Stones. Perhaps I should explain why I have become fascinated with Unit 5 at Genesis.

According to my sketch valuations of power stations, Genesis will likely be least affected - directly- by any Labour Green lead government. However, I do have a concern that the thermal generation assets, principally Huntly, may become stranded. How could this happen? The rerating downwards of the value of the hydro dams means that electricity from these sources will suddenly become cheaper, for the Labour Green single power buyer to buy. However, the thermal power stations are unlikely to be revalued downwards in the same way. Thus their relative competitiveness will be diminished.

We are already told by Genesis that Huntly is a marginal prospect even at today's power (output) and gas (input) prices. Genesis value their power stations by discounted cashflow analysis, and they now have more competition from new thermal stations commissioned by Mighty River and Contact over the last year. Can Genesis compete on this new playing field? What sort of write down will happen on the Genesis books if they can't? These questions have been playing on my mind and will still be an issue, to a lesser extent, if NZ returns a National lead government.

The information is out there to solve this problem. We know that Genesis just broke even on their gas position in 2012. We know the output they took from Kupe. The power price at the Otahuhu node at thet atime is unknown to me as I write this but the information is out there. So we can make a pretty good stab at the breakeven price point of Unit 5 when all these figures are assembled.

Many investors bought into GNE on the promise of a high dividend yield. But I think there is a significant risk of no dividend at all within two years, and that largely depends on what happens to Unit 5. You say 'show me the money'? What do you think will happen to the price of your GNE shares if the dividend is cancelled?

SNOOPY
And fair point to you to Snoopy. We will all be certainly keeping an eye out on the progress (or otherwise) of GNE. It is one I do hope does progress satisfactorily and we can see the benefit of our investment. I wonder if the government, who is still the majority share holder, and the board will make sure that things work out for GNE but with the election who knows what will happen after that point. I do appreciate the in depth analysis of yours and the others who contribute to this thread but sometimes the detail that comes out can be to me anyway a bit mind boggling.

[axe]

Snoopy,

The maximum output is determined by air temperature, colder airflow into the turbine gives greater output, just the same as an aircraft engine.

The minimum load for all the three F class machines in NZ is limited by NOx and SOx emission levels, as they come down in load NOx and SOx increases to a point where they must stop and hold at a minimum load else they would otherwise breach resource consent conditions.

Genesis have a gas contract with Kupe but not all Kupe gas goes to Genesis, much just goes into the market.

If Genesis retain perfect availability and run Unit 5 at full load for a month they would be short gas, also there is Unit 6 to consider, and gas over burn on the older units if or when required to run in overload conditions during the winter.

regards, Mac


So in the middle of a freezing winter, Unit 5s output is at its peak?

[MAC]

Yes, if dispatched at full load, just when needed.

[Snoopy]

Snoopy,
The minimum load for all the three F class machines in NZ is limited by NOx and SOx emission levels, as they come down in load NOx and SOx increases to a point where they must stop and hold at a minimum load else they would otherwise breach resource consent conditions.


Thanks for this Mac. It does not surprise me that Genesis needs to operate Unit 5 above certain temperatures to ensure all of those NOx and SOx by products of combustion are propertly burnt. It does surprise me this detail wasn't mentioned in the prospectus though, even if there was a more general disclaimer on page 88:

"There is also a risk that Genesis may breach the conditions of its consents or not hold all required consents for its activities. The consequence of such breaches or failure to hold consents can include abatement notices by the relative authority or enforcement orders by the Environment Court requiring that the non compliant or non consented activities cease, remedial work be undertaken or compensation be paid. Breaches of consents or enforcement orders may result in Genesis Energy being prosecuted."

I was aware of the cooling restrictions at Huntly set to avoid overheating the Waikato River that could limit power output at the top end of performance but had no idea about those lower end restrictions. I am indebted to you for pointing this out.

SNOOPY

[Snoopy]

Genesis have a gas contract with Kupe but not all Kupe gas goes to Genesis, much just goes into the market.


The above statement is superficially not consistent with the reference below Mac.

http://www.hydrocarbons-technology.com/projects/kupe/

"Genesis Energy is a major electricity supplier and receives all the produced gas because it needs long-term supplies for its new e3p power-generation project (now named Unit 5) in New Zealand."

PT (post 925) even claims that Genesis is contracted to buy more gas over and above the full output of Kupe. But since neither of you gave references, my personal jury is still out on who is right.

Of course it is possible that both PT and you Mac are right if you are are both referring to different time periods? Can you clarify Mac and/or PT?



If Genesis retain perfect availability and run Unit 5 at full load for a month they would be short gas, also there is Unit 6 to consider, and gas over burn on the older units if or when required to run in overload conditions during the winter.


Yes I have previously calculated that Unit 5 could consume the entire natural gas output of Kupe on its own. As well as Unit 6 and the older Huntly based Rankine Units to be operated as boosters there is also the consumer natural gas market that Genesis supplies. This would point to the need for Genesis to have a contracted gas stream over and above the total Kupe output.

SNOOPY

[Snow Leopard]

The above statement is superficially not consistent with the reference below Mac.

http://www.hydrocarbons-technology.com/projects/kupe/

"Genesis Energy is a major electricity supplier and receives all the produced gas because it needs long-term supplies for its new e3p power-generation project (now named Unit 5) in New Zealand."

PT (post 925) even claims that Genesis is contracted to buy more gas over and above the full output of Kupe. But since neither of you gave references, my personal jury is still out on who is right.

Of course it is possible that both PT and you Mac are right if you are are both referring to different time periods? Can you clarify Mac and/or PT?



Yes I have previously calculated that Unit 5 could consume the entire natural gas output of Kupe on its own. As well as Unit 6 and the older Huntly based Rankine Units to be operated as boosters there is also the consumer natural gas market that Genesis supplies. This would point to the need for Genesis to have a contracted gas stream over and above the total Kupe output.

SNOOPY

The best starting point for you Snoopy would be the prospectus, which you have. In there they discuss their gas position and have a nice little table from which I have quoted some figures.

Best Wishes
Paper Tiger

*except when I am not.

[Harvey Specter]

Thanks for this Mac. It does not surprise me that Genesis needs to operate Unit 5 above certain temperatures to ensure all of those NOx and SOx by products of combustion are propertly burnt. It does surprise me this detail wasn't mentioned in the prospectus though, even if there was a more general disclaimer on page 88:Why? THe restriction doesn't stop them running the plant at full capacity and maximum efficiency, only running it at an inefficient level. And as they can control the amount of power they provide from other assets, they will never be forced to dump that electricity on the market.

[Snoopy]

The best starting point for you Snoopy would be the prospectus, which you have.


Yes, I have a digital copy of the GNE prospectus that I can't copy and paste from, and I can't write notes on. It is hardly satisfactory. Asked my broker after the float if I could have a hard copy of the prospectus, but was told they were never even sent one as a broker!



In there they discuss their gas position and have a nice little table from which I have quoted some figures.


My search for that table continues. In the meantime, under gas and LPG customers from p29:

"natural gas volumes have increased from 9.5PJ in 2010 to 17.6PJ in 2013."

From p30
"Genesis Energy sells natural gas to its retail customers in the North Island and uses it for electricity generation at the Huntly Power Station. The company also sells surplus natural gas on the wholesale natural gas market."

From p33
"Genesis has a portfolio of natural gas supply contracts under which it has commited to purchase various volumes of natural gas for differing periods of time, from a number of different suppliers and from different gas fields in the Taranaki region. This diverse portfolio means that Genesis Energy is not reliant on one supplier and or one field for its natural gas supplies and that the gas supply arrangements do not all terminate on the same date. "

"The company has sufficient contracted natural gas to meet the fuel requirements of of its existing Thermal Generation and customers until the end of the decade."

"A feature of Genesis Energy's gas supply contracts is that the company is able to nominate daily and weekly quantities and to adjust the volumes of gas it takes for planned plant outages within minimum and maximum take restrictions. This enables some flexibility for Genesis to manage seasonal , operational and electricity market driven fluctuations of natural gas requirements. In addition it provides Genesis Energy with the flexibility to increase its energy generation levels in times of increased demand and high wholesale prices and to supply other natural gas users through short or long term gas contracts."

<snip>

"Genesis Energy entered into the majority of these arrangements to secure long term gas supply in a period when the company anticipated a scarcity of long term gas supply, growth in electricity demand and the construction by Genesis Energy of new Thermal Generation plant. These outcomes have not occurred to the extent expected and therefore the company has contracted to purchase more natural gas than it requires for the operation of its existing Thermal Generation plant and its retail customers usage (this is called having a 'Long Gas Position' or being 'Long on Gas'."

"Genesis Energy applies a range of measures to manage its Long gas position including:

-electing to burn natural gas instead of coal in its Thermal generation plant
-onselling natural gas to industrial and commercial customers
-offering more Thermal Generation into the wholesale electricity market than it would have done otherwise. and
-continuing to focus on growing retal gas sales volumes"

<snip>

"The financial impact on Genesis Energy of having a long gas position from 1 July 2015 is unknown as it will depend on a range of factors including teh extent of its Long gas position and market conditions at the time."

"Genesis Energy expects that the extent of its Long gas position will reduce between 2015 and 2020 and be eliminated by 2012."

----

Translation:
"We as managers stuffed up our forecast big time. That means in the interests of shareholders we are now wasting NZs natural gas resource, although we live in hope that demand will increase in the future to get us out of our pickle."

I think the above puts to bed any idea that Genesis will ever be short on gas!

SNOOPY

[Snoopy]

Why? The restriction doesn't stop them running the plant at full capacity and maximum efficiency, only running it at an inefficient level. And as they can control the amount of power they provide from other assets, they will never be forced to dump that electricity on the market.

Note my embolding of what you said Harvey. You are making an assumption there that I am not sure is true. Genesis can't store the gas they have contracted to buy from Kupe. Why not just dump gas generated electricity on the market from Huntly? It would be an almost zero incremental cost for them to do that. And if their Tongariro hydro assets are starved of water, they may not have the choice of balancing their production sources that you seem to think they have.

Alternatively if the northern hydro lakes are full they may have to spill them despite have a large volume of take or pay gas that they cannot put into a grid already near capacity. That latter scenario, while it looks unlikely today, coudl be a nasty dark cloud on the electricity production plan at some time in the future.

SNOOPY

[Snoopy]

From Prospectus p33

"The company has sufficient contracted natural gas to meet the fuel requirements of of its existing Thermal Generation and customers until the end of the decade."

"A feature of Genesis Energy's gas supply contracts is that the company is able to nominate daily and weekly quantities and to adjust the volumes of gas it takes for planned plant outages within minimum and maximum take restrictions. This enables some flexibility for Genesis to manage seasonal , operational and electricity market driven fluctuations of natural gas requirements. In addition it provides Genesis Energy with the flexibility to increase its energy generation levels in times of increased demand and high wholesale prices and to supply other natural gas users through short or long term gas contracts."

<snip>

"Genesis Energy expects that the extent of its Long gas position will reduce between 2015 and 2020 and be eliminated by 2012."


A bit more from prospectus page 85 on the pricing of contracted gas.

"Adverse changes in respect of Kupe revenue: Revenue derived by Genesis Energy for the sale of oil gas and LPG produced from the Kupe gas field is linked to external market prices. Changes to these prices, as well as in the international price of oil and methanol and movements in foreign exchange rates could effect Genesis Energy's revenue and profit margin."

My translation:

Genesis has agreed to buy natural gas at a minimum price that ensures the viability of recovering the gas from the ground. Natural gas as such isn't easy to transport, but methane is readily convertible to methanol which is easier to ship about. Thus if the worldwide price of methanol rises above a predetermined level, Genesis will have to pay more for their natural gas to avoid it being sold to a third party for a higher price and an alternative use. As with all global commodities, methanol is priced globally in USD, hence the exchange rate risk clause.

SNOOPY

[Snoopy]

And as they can control the amount of power they provide from other assets, they will never be forced to dump that electricity on the market.

From the prospectus, page 87

"Medium Term Wholesale Electricity market Risks: <snip>. An example would include a sustained period of higher than average water inflows, combined with higher than average temperatures (such as amy occur during the late winter and spring). Conditions in take or pay gas contracts may result in the company burning gas in its Rankine Units from time to time when it would not otherwise choose to do so."

SNOOPY

[Snoopy]

"A feature of Genesis Energy's gas supply contracts is that the company is able to nominate daily and weekly quantities and to adjust the volumes of gas it takes for planned plant outages within minimum and maximum take restrictions. This enables some flexibility for Genesis to manage seasonal , operational and electricity market driven fluctuations of natural gas requirements. In addition it provides Genesis Energy with the flexibility to increase its energy generation levels in times of increased demand and high wholesale prices and to supply other natural gas users through short or long term gas contracts."


More info on production flexibility from prospectus page 102

"Kupe oil,gasand LPG production is driven by long term gas contracts, which provides for fixed annual production levels, although volumes can vary by 10-15% due to a range of factors including natural decline in reserves, actual production rates and shipping schedules."

<snip>

"Genesis on sells some of the natural gas (except for the gas used in the generation of electricity). <snip> The revenue derived by Genesis from the sale of natural gas <snip> is linked to international prices (including in the case of gas, the international price of methanol and the PPI (Producer's Price Index))

SNOOPY

[Snow Leopard]

A bit more from prospectus page 85 on the pricing of contracted gas.

"Adverse changes in respect of Kupe revenue: Revenue derived by Genesis Energy for the sale of oil gas and LPG produced from the Kupe gas field is linked to external market prices. Changes to these prices, as well as in the international price of oil and methanol and movements in foreign exchange rates could effect Genesis Energy's revenue and profit margin."

My translation:

Genesis has agreed to buy natural gas at a minimum price that ensures the viability of recovering the gas from the ground. Natural gas as such isn't easy to transport, but methane is readily convertible to methanol which is easier to ship about. Thus if the worldwide price of methanol rises above a predetermined level, Genesis will have to pay more for their natural gas to avoid it being sold to a third party for a higher price and an alternative use. As with all global commodities, methanol is priced globally in USD, hence the exchange rate risk clause.

SNOOPY

When I suggested that you should start with the prospectus a short while ago I did not intend that you post the entire thing paragraph by paragraph !

Now your "translation" - What?
Consider a different scenario - that if the price of methanol falls then GNE can only on-sell (some of) their long gas at a lower price or not at all.


To be honest I remain baffled by what you are actually trying to achieve here.

Best Wishes
Paper Tiger

"Saya hanya berbicara bahasa Indonesia sedikit" translates as "I only speak a little Indonesian".

[horus1]

good on snoopy. The major risk to all of these generation cos is declining domestic demand because that is where most of the profits are. The demand has been declining for 3 or 4 years now and will continue as a result you have major investments in Transmission and Generation which are uneconomic. e.g. the 400 kv line to Auckland ,$900m , which is not needed but customers still have to pay for

[Snoopy]

When I suggested that you should start with the prospectus a short while ago I did not intend that you post the entire thing paragraph by paragraph !


PT I asked you for some information on where you got the information of the Genesis gas contracts that you posted. You in turn pointed me to the prospectus. I asked for a needle and you gave me a haystack. Can you really be surprised that I am sifting through the straw until I find my needle? Everything I have quoted from the prospectus since is relvant to the gas contracts that Genesis have.



Now your "translation" - What?
Consider a different scenario - that if the price of methanol falls then GNE can only on-sell (some of) their long gas at a lower price or not at all.


Yes that is possible.



To be honest I remain baffled by what you are actually trying to achieve here.


I outlined that to Stones PT, but here is the short version:

We know that Genesis just broke even on their gas position in 2012. We know the output they took from Kupe. The power price at the Otahuhu node at that time is unknown to me as I write this but the information is out there. So we can make a pretty good stab at the breakeven price point of Unit 5 when all these figures are assembled. Once we have the breakeven generation price for Unit 5, we can then monitor the Otahuhu node price for comparative purposes. Nothing is more important than that in knowing how GNE will perform going forwards IMO.

SNOOPY

[Snoopy]

Snoopy stated:
"PT (post 925) even claims that Genesis is contracted to buy more gas over and above the full output of Kupe. But since neither of you gave references, my personal jury is still out on who is right."

The best starting point for you Snoopy would be the prospectus, which you have. In there they discuss their gas position and have a nice little table from which I have quoted some figures.


Got to page 106 in the prospectus and have at last found something! There is a table there that shows "Retail Gas Sales".

FY2011: 4.6PJ
FY2012: 5.4PJ
FY2013: 5.0PJ
FY2014: 6.3PJ (forecast)
FY2015: 6.9PJ (forecast)

The discalimer on the above figures is that they exclude gas sold to wholesale customers comprising large industrial and petrochemical customers.

Further down on that table we see the [gas purchases] and the [gas used in internal generation] which I quote below:

FY2011: 45.8PJ, 27.9PJ
FY2012: 44.1PJ, 23.1PJ
FY2013: 38.6PJ, 21.0PJ
FY2014: 45.7PJ, 23.7PJ (forecast)
FY2015: 44.8PJ, 25.5PJ (forecast)

Further down the table again we have Kupe gas sales

FY2011: 5.5PJ
FY2012: 5.9PJ
FY2013: 5.6PJ
FY2014: 6.9PJ (forecast)
FY2015: 6.5PJ (forecast)

In post 939 PT wrote:
"In 2013 GEN paid for (but did not necessarily take) 38.6PJ of Gas, using 21.0PJ for generation and selling 5.0PJ retail."

Those figures line up with what I have quoted from the table above. However I have a slightly different interpretation to PT. I think the table says that GNE definitely did take 38.6PJ of gas from the ground. This was spread between electricity generation 21.0PJ and retail 5.0PJ. The remaining 12.6 PJ gas was probably sold to industrial and petrochemical industry users.

If I am write about the above, then I would rewrite PTs quote from FY2012 in post 940:
"In 2012 GEN paid for (but did not necessarily take) 44.1PJ of Gas, using 23.1PJ for generation and selling 5.4PJ retail."

as follows:
FY2012 Figures: Total gas taken 44.1PJ, made up of 23.1PJ used for electricity generation, 5.4PJ for retail and 15.6PJ for large industrial and petrochemical users.

SNOOPY

[Snoopy]

Got to page 106 in the prospectus and have at last found something!

Further down the table again we have Kupe gas sales

FY2011: 5.5PJ
FY2012: 5.9PJ
FY2013: 5.6PJ
FY2014: 6.9PJ (forecast)
FY2015: 6.5PJ (forecast)



In my post 934 I noted

----

After two years 47PJ of gas have been extracted from Kupe. (Genesis Prospectus p38).

That is roughly 23PJ per year.

------

The above two years refer to the time between 30th June 2010 and 30th June 2012.

That 23PJ figure does not tie in with the figures quoted from the table above. The best logical reason I can come up with to explain the discrepency is that the sales listed in the table are Genesis's equity accounted share of Kupe sales, not all Kupe sales. Since Genesis owns 31% of Kupe, total Kupe sales past and forecast are as follows:

FY2011: 5.5PJ/0.31 = 17.7PJ
FY2012: 5.9PJ/0.31 = 19.0PJ
FY2013: 5.6PJ/0.31 = 18.1PJ
FY2014: 6.9PJ/0.31 = 22.3PJ (forecast)
FY2015: 6.5PJ/0.31 = 21.0PJ (forecast)

Adding FY2011 and FY2012 I get 36.8PJ, rather lower than the 47PJ listed from p38. However Kupe started production in March 2010 (p37) and the financial year FY2011 started on 1st July 2010, some three months later. So that is one explanation as to why the two figures do not agree.

SNOOPY

[Snoopy]

OK, back to my goal.

Much more energy will have been fed into the Gas Power generators to account for the thermal efficiency of principally the Unit 5 gas turbine and line losses getting the gas to Huntly from New Plymouth. I am going to use an overall ballpark system efficency of 40% (quite good) to estimate the energy input from Kupe.

FY2013: 2,732GWh/0.4 = 6830GWh
FY2012: 3,041GWh/0.4 = 7603GWh

After two years 47PJ of gas have been extracted from Kupe. (Genesis Prospectus p38).

That is roughly 23PJ per year.

Now, both PJ and GWh are units of energy. How many Petajoule in 1 GWh? The answer is 0.0036.

So the amount of power used by Genesis, principally in Unit 5, in PJ was

FY2013: 6830GWh = 24.6 PJ
FY2012: 7603GWh = 27.4 PJ

That means that all of the gas output of Kupe (23PJ per year) , and more, is used just to fuel Genesis's electricity generating operations!


Following comments by MAC I have decided that my well head to output shaft efficiency assumptions for Unit 5 are too low. 50% is a more likely figure than 40%. So repeating the above calculations with that change:

Estimate the energy input from Kupe (or any other gas field that GNE has a contract with).

FY2013: 2,732GWh/0.5 = 5464GWh
FY2012: 3,041GWh/0.5 = 6028GWh

Now, both PJ and GWh are units of energy. How many Petajoule in 1 GWh? The answer is 0.0036.

So the amount of power used by Genesis, principally in Unit 5, in PJ was

FY2013: 5464GWh = 19.7PJ
FY2012: 6028GWh = 21.7 PJ

Also I previously overestimated the amount of gas taken from Kupe. Actual figures (my post 965) were 19.0PJ (FY2012) and 18.1PJ (FY2013). So in both years it looks like Unit 5 consumed the equivalent of all of the output of the Kupe field, and a bit more.

My two errors of judgement in the original calculation have cancelled themselves out and delivered the same result.

SNOOPY

[Snoopy]

Estimate the energy input from Kupe (or any other gas field that GNE has a contract with).

FY2012: 3,041GWh/0.5 = 6028GWh

Now, both PJ and GWh are units of energy. How many Petajoule in 1 GWh? The answer is 0.0036.

So the amount of power used by Genesis, principally in Unit 5, in PJ was

FY2012: 6028GWh = 21.7 PJ

Al Actual figure (gas taken from Kupe my post 965) were 19.0PJ (FY2012)


I want to focus now on FY2012 only, because that is the year we have the best information for.

Trawling back via the NZ Herald website, gives the following quote from an article published on Wednesday 29th February 2012.

-----

"However, its take-or-pay contracts for Kupe gas also meant the company paid $65.4 million for natural gas, which it sold to customers at a net loss of $2.2 million."

-----

That means the break even price of gas taken from Kupe for FY2012 was:

$65.4m + $2.2m = $67.6m

We know the gas taken from Kupe over FY2012 was 19.0PJ. Converting that figure back to GWh I get:

19.0/ 0.0036 = 5278GWh

Of course due to the 50% efficiency of turning gas into electricity, only 50% of the Kupe gas energy comes out as electricity.

That means the break even price of the gas for electricity extracted from Kupe for FY2012 was:

$67.6m/ (5278GWh x 0.5) = $25,600 per GWh

The next question is how does that figure compare with actual Otahuhu node electricity prices for 2012?

SNOOPY

[Snow Leopard]

...Trawling back via the NZ Herald website, gives the following quote from an article published on Wednesday 29th February 2012.

-----

"However, its take-or-pay contracts for Kupe gas also meant the company paid $65.4 million for natural gas, which it sold to customers at a net loss of $2.2 million."

-----

That means the break even price of gas taken from Kupe for FY2012 was:
...

Half year Snoopy, half year!

Best Wishes
Paper Tiger

[bull....]

still looking good me valuation 220 + ( depending on election )

[Snoopy]

Half year Snoopy, half year!


Quite right PT, a February report most likely does refer to a half year result. You score a bonus point for that :-). Unfortunately like all bonus points they have no cash value though :-(. Until that is I get the actual gas breakeven price and from that point all readers of this thread can cash in....

From the Genesis half year result presentation dated 29th February 2012, page 17, gas volumes from Kupe were 3.0PJ. But that is only the Genesis equity accounted share. Total gas taken for the half year was

3.0PJ/ 0.31 = 9.7PJ

the break even price of gas taken from Kupe for HY2012 was:

$65.4m + $2.2m = $67.6m

9.7PJ / 0.0036 = 2690GWh

Due to the 50% efficiency of turning gas into electricity, only 50% of the Kupe gas energy comes out as electricity.

That means the break even price of the gas for electricity extracted from Kupe for HY2012 was:

$67.6m/ (2690GWh x 0.5) = 50,260 dollars per GWh = 50.26 dollars per MWh

The above price is an average figure over the six month HY2012 period.

SNOOPY

[Snoopy]

still looking good me valuation 220 + ( depending on election )


As a shareholder I sure hope you are correct bull. What we do know for sure is that GNE was a bargain at $1.55. But is it still a bargain at $1.85? And is it a better investment than all those other power gentailers out there at their respective market prices? Those are the questions I want to answer before committing any more of my own capital to Genesis Energy.

SNOOPY

[Snoopy]

That means the break even price of the gas for electricity extracted from Kupe for HY2012 was:

$67.6m/ (2690GWh x 0.5) = 50,260 dollars per GWh = 50.26 dollars per MWh

The above price is an average figure over the six month HY2012 period.


Have been poking around in the 'electricityinfo' website. I believe the market information that I am after is contained here.

http://www.electricityinfo.co.nz/comitFta/ongoing_bidoffer.download_monthly_files

However these are all csv files. I was really after something more like a graph. The opening page shows the current price at the Huntly node (HLY) to be $62.08/MWh. If breakeven really is $50.26/MWh, that is good news for we Genesis shareholders.

Looking at the daily price variation

http://www.electricityinfo.co.nz/comitFta/ftaPage.prices?pNode=HLY2201

There is quite a difference over 24 hours. Midnight was $55, dipping down to $31 at 2:30am then steadily rising to $101 at 7:30am. During the day the price drops away to $60 at 4:30pm before spiking to $113 at 6:30pm , whereupon things quieten down gradually till 'midnight rates' return.

But where to get graphical historical information? That is the question!

SNOOPY

[Snoopy]

That means the break even price of the gas for electricity extracted from Kupe for HY2012 was:

$67.6m/ (2690GWh x 0.5) = 50,260 dollars per GWh = 50.26 dollars per MWh

The above price is an average figure over the six month HY2012 period.


Some more benchmark pricing, so we can get a better handle on Genesis going forwards:

From the prospectus, p108

---

"FY2012 onwards is considered most useful for potential investors as there were notable changes in the business with the June 2011 purcahse of the Tekapo Power scheme and the successful development of the Kupe Oil and Gas field which had its forst full year of production in FY2011. The chart shows higher EBITDAF in FY2012 ($387.2m vs $336.4m for FY2013) with average wholesale energy prices above $75/MWh with drier than average conditions driving electricity pricing revenues."

<snip>

"...due to dry weather in the South Island compared with plentiful water and cooler than average temperatures in the North Island. This enabled Genesis Energy to increase utilisation of both North Island hydro stations and its thermal generation assets."

----

I would predict it will be hard for Genesis to match FY2012 going forwards. I find it hard to imagine conditions in the rain fall and the temperatures that would be more favourable. FY2012 I believe should be used as a high water benchmark for Genesis Energy earnings.

Continuing on with comments about FY2013

-------

"A reduction in generation volumes and wholesale electricity prices, both of which were approximately 15% lower than in FY2012, primarily as a return to more average hydrology (neither particularly wet or dry) in the South Island."

-------

Now to page 114 and 115 for some comments on seasonality:

"Demand is typically lower in the warmer months and can increase by up to 30% during winter. A significant amount of Genesis's EBITDAF for FY2014 is forecast in the winter months of May and June. This is due to the seasonal uplift in customer demand and the historical patten of more thermal generation in periods of higher wholesale elctricitry prices."

"Seasonality for FY2014 (last 6 months only as first six months already the past) and FY2015 has been forecast consistent with previous periods."

-------

Since Unit 5 is primarily baseload, the above must refer to the running of the Rankine Units over May/June, as well as Unit 6 as a booster where appropriate.

------

p133

The average Huntly Reference price was only $54.20/MWh in FY2011 cf $85.77/MWh in FY2012. That means Huntly made Genesis Energy next to no money at all in FY2011!

SNOOPY

[cyclist]

NIWA predicts a generally mild winter:

http://www.weatherwatch.co.nz/content/milder-winter-cards-cold-snaps-likely

Relevant I guess to all the generators, but particularly to Genesis with it's gas interests. If this pans out, it may lead to better buying opportunities (for those interested) in the near future.

[Toasty]

Not a lot of interest in the latest results? I like the two different interpretations by our wonderful media.

"Genesis Energy profit beats prospectus"
http://www.stuff.co.nz/business/industries/10428553/Genesis-Energy-profit-beats-prospectus

"Genesis Energy profits fall 53pc"
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11314853

[Xerof]

Not a lot of interest in the latest results? I like the two different interpretations by our wonderful media.

"Genesis Energy profit beats prospectus"
http://www.stuff.co.nz/business/industries/10428553/Genesis-Energy-profit-beats-prospectus

"Genesis Energy profits fall 53pc"
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11314853

yes, Eeyore works at the Herald

[Beagle]

Good result. Beat 2014 IPO forecast by 18% and 2015 IPO forecast confirmed. I suspect that a lot of people like myself who got heavily scaled have limited interest because its such a very small portion of their portfolio but I for one am happy to hold and collect my dividends and bonus shares next year and then we'll see where too from there.

[Toasty]

Good result. Beat 2014 IPO forecast by 18% and 2015 IPO forecast confirmed. I suspect that a lot of people like myself who got heavily scaled have limited interest because its such a very small portion of their portfolio but I for one am happy to hold and collect my dividends and bonus shares next year and then we'll see where too from there.

I was disappointed to get such a small amount. I had hoped to leave them in the portfolio as a non volatile foundation with my Contact bundle and collect dividends. Probably still will but it would have been better to have more of them. The divs and bonus share will be nice though I guess.

[Harvey Specter]

"Genesis Energy profits fall 53pc"
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11314853Looks like we need some price rises then! MEL was significantly down on last year too wasn't it.

:)

[Sgt Pepper]

Looks like we need some price rises then! MEL was significantly down on last year too wasn't it.

:)

Is there any prospect of GNE getting near $2.00 this year, or is it wishful thinking on the part of this novice investor. I would value your opinion

[couta1]

Is there any prospect of GNE getting near $2.00 this year, or is it wishful thinking on the part of this novice investor. I would value your opinion
If National is returned then for sure.

[Leftfield]

Is there any prospect of GNE getting near $2.00 this year, or is it wishful thinking on the part of this novice investor. I would value your opinion

The NZ election outcome just might influence the SP for a little while yet??

[macduffy]

The NZ election outcome just might influence the SP for a little while yet??

Indeed!

Expect the SP's of all the gentailers to bounce around between gossip, "revelations" and opinion polls for the next fortnight, at least.

[macduffy]

Most amusing. The "market" is a bit better informed.

So, it's just a coincidence that GNE - and the other gentailers - are markedly stronger today after the release of opinion polls favouring the return of a National government? Or some other reason?

;)

[Beagle]

My gambling addicted friend tells me Centrebet in Australia have a National Lead Govt at $1.11 and Labour at $6.00. Good move getting rid of crusher Collins, she had the potential to drag the party down into the dumps.

[Beagle]

I had a quick look at the annual report yesterday and being mindful that they beat their profit forecast by 18% this year and have reiterated guidance for 2015 I had another look at the forward guidance on dividends which are forecast at 16 cps fully imputed for the year ahead, (stock presently trades cum final dividend of 6.6 cps also fully imputed.
By my reckoning based on an ex div price of $1.81, (1.875 - 0.066) investors are looking at gross dividends of (16 / 0.72) 22.22 cps incl of imputation credits or a gross yield of 12.28%, (22.22 / 181).

Highlights the enormous free cash flow this well diversified generator is spitting out. I was disappointed in the initial IPO allocation but fixed that this morning :)

[bull....]

should be positive today following election result, Also potentially the one to re-rate the strongest due to having the biggest risk around the election result.
Also as roger says offers the best div yield of the gentailers

[Hoop]

The smart money had given National over 80% probability of winning well before Election Day...so you would think all markets related to NZ would have that risk factor already built in...but that theory...in practice???
Well ...as of Monday morning before opening the NZ$ has already climbed 1% so apparently with the currency markets anyway I guess it wasn't all built in....or ...may be it was built in and we will experience a temporary noise bump this morning which may quickly disapate..HMMMM

Lets see if this forex rise transfers to the NZ Equity markets this morning..the stocks to benefit the most at opening this morning would be the power stocks,,,

Will the stocks be the most expensive for the day at opening???...becareful today guys and girls.... keep your emotions away from your decision making

[Beagle]

OR could it be that those who wait to see how the market reacts will miss the best gains ?

[silu]

I just can't even comprehend how the market is reacting this morning.

[Hoop]

OR could it be that those who wait to see how the market reacts will miss the best gains ?
You never know.. it may just do that
But its looks like it could be a relief rally event ...Relief rallies are short term events..
We will know the nature of this beast within a couple of hours..

A 5min self updating chart is somewhat hopeless thanks to the stupid 20 minutes data delay from to NZX..but it is educational when looking back to it later in the day....sometimes you still see a turning point and have time to react.

http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=NZ%3agne&uf=8&type=4&size=4&sid=15065687&style=320&freq=6&entitlementtoken=0c33378313484ba9b46b8e24ded87dd6&time=2&rand=1887825754&compidx=aaaaa%3a0&ma=5&maval=50%20200&lf=1&lf2=8&lf3=1024&height=981&width=1045&mocktick=1

[Major von Tempsky]

What an enormous waste of time and effort!

Far better to sit on the depth table of offers to buy vs offers to sell (which also gives the recent sales in time order) and jump in at a suitable moment. This is what brokers and professionals do.

[bull....]

I think offshore investors will move in to these stocks now for the yield since the uncertainty of election gone - where else can you get this sort of yield even at 2.80 the yield would only be the same as mrp , melca

[Hoop]

What an enormous waste of time and effort!

Far better to sit on the depth table of offers to buy vs offers to sell (which also gives the recent sales in time order) and jump in at a suitable moment. This is what brokers and professionals do.

Yes MVT we have to do this in NZ because thats one of the only tools we have available with up to the moment data streaming...We have to visualise and keep clicking the depth button..
One day the NZX will wake up and realise we are in the 21st century and present us with no 20 minute delay so instead of manually clicking the mouse on the depth button every couple of seconds, we will have it automated together with our computer with continous instant depth updating together with trending indicators......

Problem is ...old people + stock brokers don't want to see change...thus giving investors a raw deal and lack of tools to make decient decisions....
I suspect this antiquate system will help some impulsive people to lose money today...Hands up those who bought this morning and are showing a loss already

[robbo24]

Yes MVT we have to do this in NZ because thats one of the only tools we have available with up to the moment data streaming...We have to visualise and keep clicking the depth button..
One day the NZX will wake up and realise we are in the 21st century and present us with no 20 minute delay so instead of manually clicking the mouse on the depth button , we will have it automated together with our computer instant updating with trending indicators......
Problem is ...old people + stock brokers don't want to see change...thus giving investors a raw deal and lack of tools to make decient decisions....
I suspect this antiquate system will help some impulsive people to lose money today

Hoop, look up Iguana Spark. NZX/ASX live charts/depth/news etc etc. I hear rumblings they are adding DMI at the request of a very special customer :)

It's what ROBBO24 uses :) VERY cheap relative to the others.

[777]

Yes MVT we have to do this in NZ because thats one of the only tools we have available with up to the moment data streaming...We have to visualise and keep clicking the depth button..
One day the NZX will wake up and realise we are in the 21st century and present us with no 20 minute delay so instead of manually clicking the mouse on the depth button , we will have it automated together with our computer instant updating with trending indicators......
Problem is ...old people + stock brokers don't want to see change...thus giving investors a raw deal and lack of tools to make decient decisions....
I suspect this antiquate system will help some impulsive people to lose money today

I think Hoop, that the reason for no improvement is it gives the brokers an advantage over those that use the internet.

[Hoop]

Hoop, look up Iguana Spark. NZX/ASX live charts/depth/news etc etc. I hear rumblings they are adding DMI at the request of a very special customer :)

It's what ROBBO24 uses :) VERY cheap relative to the others.

Thanks Robbo...great stuff...Ive hooked up for a 14 day trial, it's downloaded and already up and running with one panel on GNE....love the up to the moment graphic data...Even on the 20 min delay interactive chart posted above shows the sell signals were triggered very early after opening..On Iguana it is instant. I will probably subscribe Robbo yes it's a reasonable subscription price and worth the money

With the aid of these types of programs it would've saved many investors heaps of $$$ this morning as many would've mistimed their buy ins (205c) at 10.15am (when those program sell signals started to trigger off) only to watch their GNE stock watch it fall to 197....as at 11.35 Iguana is showing some buy signals returning but the price has flattened out at 200c.
Maybe the lunchtime second wave is being indicated...
NZX for the sake of your customers please get rid of that 20 minute delay

[robbo24]

Thanks Robbo...great stuff...Ive hooked up for a 14 day trial, it's downloaded and already up and running with one panel on GNE....love the up to the moment graphic data...Even on the 20 min delay interactive chart posted above shows the sell signals were triggered very early after opening..On Iguana it is instant. I will probably subscribe Robbo yes it's a reasonable subscription price and worth the money

With the aid of these types of programs it would've saved many investors heaps of $$$ this morning as many would've mistimed their buy ins (205c) at 10.15am (when those program sell signals started to trigger off) only to watch their GNE stock watch it fall to 197....as at 11.35 Iguana is showing some buy signals returning but the price has flattened out at 200c.
Maybe the lunchtime second wave is being indicated...
NZX for the sake of your customers please get rid of that 20 minute delay

Just wait until they add DMI :D:D Intraday madness.

I've been using Iguana Spark for about a year, surprisingly it's hardly even acknowledged out there on the scene!

One of the best things I like about it is the instant depth charts. It's also compatible my triple screen mega-intraday computer :)


Anyway, back to GNE. Keen to share Iguana tricks with ya later Hoop ;)

[Harvey Specter]

Hoop, look up Iguana Spark. NZX/ASX live charts/depth/news etc etc. I hear rumblings they are adding DMI at the request of a very special customer :)

It's what ROBBO24 uses :) VERY cheap relative to the others.AU$175 pm for NZ for those who haven't googled yet. Very cheap if your a day trader.

[Hoop]

AU$175 pm for NZ for those who haven't googled yet. Very cheap if your a day trader.

Hmm didn't see the $150 / month base fee A bit steep ...huh? :(... If it helps you to stop mistimings your trades, and you trade only about 3 or 4 times a month it may still be worth it

[robbo24]

Hmm didn't see the $150 / month base fee A bit steep ...huh? :(... If it helps you to stop mistimings your trades, and you trade only about 3 or 4 times a month it may still be worth it

Don't get addicted to watching the live charts :)

$150 is a pittance compared to what you can gain from the 20 minute advantage to the plebs.

[bung5]

Don't get addicted to watching the live charts :)

$150 is a pittance compared to what you can gain from the 20 minute advantage to the plebs.

Sign up to cmc markets and use their market maker software for free. Think it requires a $100 balance sitting in your account but you can pull that out when your done

[Harvey Specter]

Sign up to cmc markets and use their market maker software for free.Do you see the real market with them or just their fake market.

[blackcap]

Do you see the real market with them or just their fake market.

Their fake market I think. Don't quote me on that but its pretty useless dealing with CFD's. You have to take the ask and its only their asks you are taking.

[Beagle]

Anyway...getting back to Genesis, its certainly been quite a success now for those fortunate / connected enough to get a decent allocation in the IPO and not to forget the extra 6% allocation coming next year for those patient enough to wait the full twelve months.

[bull....]

last chance to get the div today

[hillbillybob]

Hi guys, Ive been out of the country for 6 months and have forgotten how I asked to be paid any divies, who do I call to find this out, I see there is a divie due now, is it the first and how much per share, thanks heaps.

[Baaarney]

Yes, this is the first dividend for new shareholders. 6.6cps is payable on 17 October (ahead of the 6.4cps forecast in the PFI). The 2015 interim dividend is due next April and currently forecast as 8cps. Its all set out at www.genesisenergy.co.nz/investor-centre

You will need to contact Computershare Investor Services at www.investorcentre.com/nz to review or update your shareholder details

While browsing the website I notice that Genesis now have an Investor App for ipads providing reports and updates etc. I shall investigate and see how useful it is

[hillbillybob]

Cheers Baarney, and my div goes to my bank as did the surplus funds from my original share application, so all sorted thanks.

[Harvey Specter]

Edison are covering GEN for some reason. Haven't read the report other than the target price of 2.21. Not sure how that compares to NZ broker reports.

[dingoNZ]

Edison are covering GEN for some reason. Haven't read the report other than the target price of 2.21. Not sure how that compares to NZ broker reports.


Brokers are rating GNE and MELCA as the top gentailer picks, Edison is pretty much inline with em'

[Beagle]

Edison are covering GEN for some reason. Haven't read the report other than the target price of 2.21. Not sure how that compares to NZ broker reports.

Can you post a link ?

[bull....]

Edison are covering GEN for some reason. Haven't read the report other than the target price of 2.21. Not sure how that compares to NZ broker reports.

Matches my original price target 2.20 - 2.50 which I posted around time of listing.

[Harvey Specter]

Can you post a link ?no. I tried to find online but couldn't (i sign up to their email so have to filter out the 99% of reports I have no interest in). Edit: I take that back - it was a link in the email so here it is: http://www.edisoninvestmentresearch.com/serve_pdf.php?d=researchreports&f=GenesisEnergy021014Update.pdf

In my search I did figure out why they cover - the NZX/Genesis paid them to do a report for the IPO so they have just continued the coverage. Not sure if they are still getting paid or if they are now doing it gratis.

[Beagle]

no. I tried to find online but couldn't (i sign up to their email so have to filter out the 99% of reports I have no interest in). Edit: I take that back - it was a link in the email so here it is: http://www.edisoninvestmentresearch.com/serve_pdf.php?d=researchreports&f=GenesisEnergy021014Update.pdf

In my search I did figure out why they cover - the NZX/Genesis paid them to do a report for the IPO so they have just continued the coverage. Not sure if they are still getting paid or if they are now doing it gratis.

Thanks mate, much appreciated. I agree that's its all about free cash flow, the market is well and truly fully supplied with generation capacity for the foreseeable future so cash flow underpins the superb 11.5% gross dividend yield.

[bunter]

Matches my original price target 2.20 - 2.50 which I posted around time of listing.

3.49 here.

[Sgt Pepper]

Matches my original price target 2.20 - 2.50 which I posted around time of listing.

Bull
do you think 2.20-2.50 band is attainable in the next 6-12 months

[lambton]

Craigs have a target price of $2.19 as at 30/9/14 and from this report

"Consensus Estimates
TARGET P RICE
Average NZ$2.04
High NZ$2.25
Low NZ$1.74
RECOM M ENDAT IONS
Buy 3
Hold 4
Sell 1
T o tal 8
FORECAST S (F Y+1)
EPS NZ$0.10
DPS NZ$0.16
Source: Bloomberg Best Est imate
Consensus Mean.
Consensus Target Price data only
includes targets published in the past
3 months.
Consensus Recommendat ion &
Forecast data comprises forecasts
published over the past 12 months."

[bull....]

Bull
do you think 2.20-2.50 band is attainable in the next 6-12 months

I certainly hope so, positive things are best div yield, scope for more cost cutting as they are high comparativly to others, best fcf so with plenty free cash flow scope to raise div more or capital buyback all good for shareholders less favoured option for me is paying of debt quicker. negative currently is that they continue to lose customers since full yr mainly because outside the main centres they have become price uncompetitive, so i would be interested to know there strategy for addressing this? also they dont seem very aggressive in there south island push for customers.

And I think NZ has done its dash with interest rate rises in your time frame as conditions have changed dramatically in the last 3 mths also low interest rates world wide for a long time to come all make there yield very juicy, when nz dollar finds a base i see offshore investors going hard for gne for the yield.

[Beagle]

I certainly hope so, positive things are best div yield, scope for more cost cutting as they are high comparativly to others, best fcf so with plenty free cash flow scope to raise div more or capital buyback all good for shareholders less favoured option for me is paying of debt quicker. negative currently is that they continue to lose customers since full yr mainly because outside the main centres they have become price uncompetitive, so i would be interested to know there strategy for addressing this? also they dont seem very aggressive in there south island push for customers.

And I think NZ has done its dash with interest rate rises in your time frame as conditions have changed dramatically in the last 3 mths also low interest rates world wide for a long time to come all make there yield very juicy, when nz dollar finds a base i see offshore investors going hard for gne for the yield.

Good post. I agree 100%. It wouldn't surprise me if this is the shortest Reserve Bank tightening cycle ever and we see easing late 2015. Dairy looks in real trouble with a wall of milk products and no sign of any early resolution to one of the main problems, Russia's import ban. I've seen plenty of add's on T.V. as I am sure you have from Genesis offering the first month free to new residential customers. Is this enough though if their prices are uncompetitive, i.e. do customers see through this blatant bribe ? Thoughts ?

[Baddarcy]

Just saw this comment in today's announcement. It seems massively positive but the share price hasn't reacted, so i am thinking i have misinterpreted it? I've bolded the key part.

"Genesis Energy Chief Executive Albert Brantley said the five-year contract,
valued at approximately $20 million a year, would result in immediate
operating cost savings of around 10 per cent and was expected to create
longer term value for the Company through administrative and managerial
efficiencies."

[Harvey Specter]

Just saw this comment in today's announcement. It seems massively positive but the share price hasn't reacted, so i am thinking i have misinterpreted it? I've bolded the key part.

"Genesis Energy Chief Executive Albert Brantley said the five-year contract,
valued at approximately $20 million a year, would result in immediate
operating cost savings of around 10 per cent and was expected to create
longer term value for the Company through administrative and managerial
efficiencies."10% of $20m is only $2m so not that significant. However, it does show they are reviewing costs and aiming for efficency (they grouped a number of small contracts together to make one worth biddng for).

[bmrm]

Just saw this comment in today's announcement. It seems massively positive but the share price hasn't reacted, so i am thinking i have misinterpreted it? I've bolded the key part.

"Genesis Energy Chief Executive Albert Brantley said the five-year contract,
valued at approximately $20 million a year, would result in immediate
operating cost savings of around 10 per cent and was expected to create
longer term value for the Company through administrative and managerial
efficiencies."

I read this to mean savings of ~$2million a year, compared to total expenses of $1.7billion. Good news yes, but file under 'drop in the ocean'.

[axe]

I read this to mean savings of ~$2million a year, compared to total expenses of $1.7billion. Good news yes, but file under 'drop in the ocean'.

Not a significant amount, what is it .... 0.2 CPS?? But it is a good look that management is being proactive is keeping costs under controll.

[Beagle]

Yep, its a good look that they are looking for efficiencies. I hold. People need electricity regardless of what other problems are going on in the world and GNE are a well diversified gentailer.

[sb9]

Got the first divvy today thro' direct credit, very happy:t_up:, long it may continue...

[macduffy]

Yep, its a good look that they are looking for efficiencies. I hold. People need electricity regardless of what other problems are going on in the world and GNE are a well diversified gentailer.

I hold a few, too, although articles such as this from today's Age give cause for concern about the long term profitability of the gentailers. Talking about Australia, of course, but has relevance here too.

http://www.theage.com.au/business/network-asset-value-should-be-slashed-by-9-billion-20141016-1170ah.html

[Beagle]

I hold a few, too, although articles such as this from today's Age give cause for concern about the long term profitability of the gentailers. Talking about Australia, of course, but has relevance here too.

http://www.theage.com.au/business/network-asset-value-should-be-slashed-by-9-billion-20141016-1170ah.html

Thanks for the article mate. Australia is a very different market. You might be interested to know I've just been through the exercise on behalf of a good mate who was looking at installing a solar powered system on his north facing roof in Auckland.
Firstly if you live in Queensland you're getting circa 300 days a year sunshine and about 65 days when the system isn't very productive. In Auckland you can just about flip those numbers around the other way.
The system my friend was looking at had an installed cost of just over $20,000, (prices in Australia are cheaper with vastly greater volumes and competition). Based on the research I did, (not off the optimistic projections the salesman provided) Peter could expect power savings of just over $900 per year at current power prices. Now on the face of it that return doesn't look all that inspiring (4.5%) and isn't but it gets a lot worse when you dig behind the numbers.
Firstly the invertors that convert DC power supplied from the photovoltaic cells to AC have a limited lifespan, how limited is anyone's guess and depends upon brand but if you're buying a great N.Z. brand that's extremely well constructed like a Mastervolt invertor you're maybe going to about 10 years, (but not warranted for that long so real lifespan is speculative) from a circa $4,500 invertor.
Amortise the invertor replacement cost and you get an annual cost of $450, halving the power savings to only circa $450 after expected maintenance costs but the real bogey man comes when you start considering how long those photovoltaic cells will last ???? If you have to think about replacing the rest of the system ($15,500), after say 20 years clearly the economics simply don't work in New Zealand at N.Z. prices for the system and power savings.
OTOH if you're paying 32 cents a kwh in Victoria and a solar system could be had for $10,000 then the numbers would look considerably better.

I hope my very recent exercise in looking at the economics of solar power in Auckland helps mitigate your concerns.

In the end I advised Peter to simply buy a good heat pump for his home, for the modest cost of $2,500 he'd save just as much power. I'd say the widespread increase in the use of heat pumps that have become more efficient both in terms of cost and operational efficiency in recent years is more of a concern than solar.

things to consider when looking at a solar power system for your home.
Is your roof facing due north or very close to due north, if not, don't bother.
How long is the warranty on the photovoltaic cells ? If they claim they last for XYZ years why don't they provide a warranty for that length of time ?
Likewise with the invertor brand they've chosen. Are they using a cheap Chineese made invertor and what's the warranty period on that ?
Will the company making the photovoltaic cells and invertor be around a long way down the track when you try and make a warranty claim ?
Are the salesman's extremely pessimistic projections of X% per annum in power price growth realistic ? In Peter's case the salesman tried to claim that power prices would increase at a compound growth rate of 8% per annum for the next 20 years, really ?????

Nice to get that juicy divvy today and offsets a few of those pretty recent grunty winter power bills, a natural hedge if you like :)

[bull....]

Totally agree roger did the same exercise and the economics just dont stack up at the cost you have to outlay in NZ

[macduffy]

Thanks, Roger, I readily admit that I know very little about either the physics or the economics of solar energy! I do, though, have a sneaking suspicion that the technology will evolve, in time, to make it a sufficiently attractive proposition to encourage the gentailers to reduce power prices - thereby reducing profits and dividends - particularly if the newer forms of solar which operate on lower light levels, live up to their promise. Meanwhile, Genesis, Contact etc provide that nice hedge!

[percy]

Thanks Roger,I found your post very enlightening.

[Arbroath]

Thanks Roger,I found your post very enlightening.

Yes - great post Roger. I looked at in New Plymouth where believe it or not we have about the 3/4th highest sunshine hours in NZ. Accepting all the claims made on power savings, life of products the breakeven was 12 years. Now if there were any issues with any aspect that was quickly going to become 15-20+ years and the panels had a useful claimed life of 25 years. Was an easy decision in the end not to go ahead and I started from a mental position of thinking solar was the way forward. Instead I own GNE, MELCA, MRP

[rbel038]

The interesting thought experiment with PV is what would happen if those with a grid tie were able to trade directly onto the spot market during the day, rather than generate for themselves? And then purchase power at spot price after work.

Looking at the sometimes 2-3x premium for $/MWh past 9am it would vastly change the economics of owning PV I would have thought?

[horus1]

rbel038 You are correct. Batteries arrive in 4 years if not sooner and the economics are clear. At the present time it is economic to put it in especially if you do it yourself.It is being installed in ever growing numbers and those putting it in clearly see a case for it.

[RTM]

An alternative approach is to use solar to heat one's hot water. We've purchased a house with this installed and for most of the year we pay nothing for hot water heating which is a major saving. Not sure how this would stack up economically, but sure reducing our power bills significantly. On top of this all our house heating is via an enclosed fire. Live in the far north.


rbel038 You are correct. Batteries arrive in 4 years if not sooner and the economics are clear. At the present time it is economic to put it in especially if you do it yourself.It is being installed in ever growing numbers and those putting it in clearly see a case for it.

[bmrm]

An alternative approach is to use solar to heat one's hot water. We've purchased a house with this installed and for most of the year we pay nothing for hot water heating which is a major saving. Not sure how this would stack up economically, but sure reducing our power bills significantly. On top of this all our house heating is via an enclosed fire. Live in the far north.

This is a great point and something that I have been considering. Heating water directly is much more efficient, and my understanding is solar heating setups have few moving parts and should consequently have a decent lifespan. Considering how much electricity is used to heat water, this is potentially a good alternative to a full solar setup.

[Harvey Specter]

This is a great point and something that I have been considering. Heating water directly is much more efficient, and my understanding is solar heating setups have few moving parts and should consequently have a decent lifespan. Considering how much electricity is used to heat water, this is potentially a good alternative to a full solar setup.I understand the payback for solar hot water heating is alot quick and should be considered in any new build in a sunny area (ie. northland). Economics are similar to heat pump style hot water cylinder which is better for less sunny climates.

[Sgt Pepper]

Still haven't received my dividend payment yet. Should I have by now??

[bull....]

Still haven't received my dividend payment yet. Should I have by now??

perhaps you should ring computershare

[see weed]

Still haven't received my dividend payment yet. Should I have by now??

Just got mine today..Auckland central

[sb9]

Still haven't received my dividend payment yet. Should I have by now??

It might be that you've opted to receive by cheque, in which case it does take few days to arrive by snail mail...good idea to get it changed to direct credit into bank a/c

[bull....]

genesis has not performed as well as mel,mrp as far as price performance goes recently so does this mean it will play catchup soon?

[Sgt Pepper]

It might be that you've opted to receive by cheque, in which case it does take few days to arrive by snail mail...good idea to get it changed to direct credit into bank a/c

Thanks for that. I think i will

[airedale]

It might be that you've opted to receive by cheque, in which case it does take few days to arrive by snail mail...good idea to get it changed to direct credit into bank a/c

Check all of your bank a/c's. Mine went to an a/c I don't usually use.

[airedale]

What was the sweetener offered to those who took up shares in the IPO.?

[Beagle]

1 bonus share for each 15 shares subscribed for in the IPO subject to a maximum of 2,000 bonus shares. (30,000 IPO shares gives you the maximum bonus entitlement) Shares must be held continuously for 12 months to be eligible for the bonus shares and this is only available to retail investors.

[airedale]

Thanks Roger.

[axe]

1 bonus share for each 15 shares subscribed for in the IPO subject to a maximum of 2,000 bonus shares. (30,000 IPO shares gives you the maximum bonus entitlement) Shares must be held continuously for 12 months to be eligible for the bonus shares and this is only available to retail investors.

Yes, and you only have to hold for one year to get your goodies, instead of two with MRP.

[tim23]

And better than MRP max 200 shares I think 1 for 25 from memory?

[xafalcon]

1 bonus share for each 15 shares subscribed for in the IPO subject to a maximum of 2,000 bonus shares. (30,000 IPO shares gives you the maximum bonus entitlement) Shares must be held continuously for 12 months to be eligible for the bonus shares and this is only available to retail investors.

But how many investors got anywhere near the quantity of shares they applied for in the IPO? I applied for 36,000, but only got 3,226 = 215 bonus shares. I thought this was unfair after handing over north of $55k for over a month. Lost interest ate up half the value of the bonus shares that I have to wait a year to receive....... Still, sp increase has been nice

[Toasty]

But how many investors got anywhere near the quantity of shares they applied for in the IPO? I applied for 36,000, but only got 3,226 = 215 bonus shares. I thought this was unfair after handing over north of $55k for over a month. Lost interest ate up half the value of the bonus shares that I have to wait a year to receive....... Still, sp increase has been nice

Same. I applied for $15k. Got the same as you.

Edit: actually only got 2414

[fish]

But how many investors got anywhere near the quantity of shares they applied for in the IPO? I applied for 36,000, but only got 3,226 = 215 bonus shares. I thought this was unfair after handing over north of $55k for over a month. Lost interest ate up half the value of the bonus shares that I have to wait a year to receive....... Still, sp increase has been nice

It is very unfair.
Having been caught out like this before I only applied through a broker-didn't get as many as I wanted but a lot more than you did-and didn't have to pay until I received the shares.

[bull....]

yes was very unhappy with the way they allocated shares for this IPO, hence I wont particpate in IPOs now for fear of not getting a worth while quantity and having my money locked up earning nothing.

[Beagle]

Fair to say everyone who applied through the public pool, (myself included) was very disappointed with their allocation. That needs to be viewed in the context of the fact that the IPO was very attractively priced and was the only gentailer from memory to have a price set, (rather than a book-build pricing structure). There has been the opportunity to top up since the IPO and I have and the gain since the IPO has been good. Bonus shares should be viewed as exactly that, a bonus. Speaking of bonus's, maybe we will see $2 today :)

[bull....]

with the sharp rises for the other power companies reducing there div yield , makes genesis look even more attractive on div yield now - wonder how long before the div yield catchs up with the other power co,s

[Joshuatree]

Is it possible for ComCom to step in and regulate and stuff it up like they have with chorus and Vector?

[Harvey Specter]

Is it possible for ComCom to step in and regulate and stuff it up like they have with chorus and Vector?Unlikely since their is competition with the other generators and retailers.

Potentially there could be some changes in the generation space but nothing as drastic as what Labour/Greens were proposing.

[Beagle]

I think the retail market is reasonably competitive now. I agreed to a 3 year price locked deal with Just Energy earlier this year at 17.9 cents a kwh (power supply in Auckland). I like supporting new small and efficient players as it forces the big companies to be more honest with their pricing. A few years ago when Vector was price gouging on their lines prices we were paying close to 25 cents a kwh.
With deals like that around I see no basis for ComCom to get involved in retail supply pricing. What they did with Vector was correct in my view and is sufficient to protect consumer's from that unrealistic monopoly supplier.

[Joshuatree]

Thanks guys. My memory is getting better and better every day:0 (Glass half full kinda day).

[horus1]

Shouldn't the oil price affect this share price or is it just Div Yld driving it

[Beagle]

Company reiterated their comfort with 2015 IPO guidance at the ASM today. Companies with defensive properties and high dividend yields are in strong demand.
Guidance is for 2015 dividends of 16 cps fully imputed so yield at $2.00 is exactly 8% net or 11.11% gross after accounting for 28% imputation credits. (8/0.72)
I would think the directors are well aware of the current oil price.

[bull....]

Shouldn't the oil price affect this share price or is it just Div Yld driving it

they have hedging in place for a good % of sales, also the nz dollar fall offsets some of the oil price fall so net net it probably isnt a big deal at the moment

[MAC]

Shouldn't the oil price affect this share price or is it just Div Yld driving it

I think they may have a long term take or pay contract for Kupe gas, and contracts for coal, not sure if the imported coal market would be affected, probably not much though surely ?

Who knows where sentiment will wobble thing off too, might add to a buying opportunity at some point if at all.

[bull....]

Japan Mega-Pension Shifts to Stocks

- Japan’s $1.2 trillion public pension fund said Friday it plans to take more aggressive bets by slashing how much money it puts in domestic bonds and ramping up its investments in stocks.
- The dramatic portfolio shift at the Government Pension Investment Fund is aimed at boosting the retirement incomes of the fund’s 67 million participants.
- Under the new allocation guidelines, Japanese stocks and foreign stocks will each take up 25% of the fund’s holdings, up from 12% each previously.
- A one-percentage-point change to its portfolio could mean a shift of more than 1 trillion yen ($9 billion). wsj.

The fund is under pressure to from prime minister Shinzo Abe to shift funds to riskier, higher yielding investments to support the fast aging population, reuters

Could be good for genesis if the fund is looking for income - Genesis has the highest yield on the nzx of stable companies I believe

Maybe ill send them a email to give them a heads up on the opportunity :p

[penn]

Can those depth numbers be right?
13 buyers at $2.17!

[BFG]

Can those depth numbers be right?
13 buyers at $2.17!

Look up "pre-market auction" and "match price"

[Beagle]

Big day for the divvy hounds who will no doubt already be aware that Genesis is only paying out 80% of cash flow and the market is extremely well supported in terms of generation needs for the foreseeable future which leaves open the possibility of dividend guidance being conservatively stated.

[penn]

Ah! Looks like bull.... sent that e-mail to mr Abe.

[bull....]

Genesis offers the best yield of the gentailers at current prices so by my workings to match the average yield of the other gentailers if we are purely looking at yields the share price would need to go over $3 to meet the average of course it doesnt take into account any of the other gentailers increasing there dividends this making the average yield increase.

[bung5]

Genesis offers the best yield of the gentailers at current prices so by my workings to match the average yield of the other gentailers if we are purely looking at yields the share price would need to go over $3 to meet the average of course it doesnt take into account any of the other gentailers increasing there dividends this making the average yield increase.

I think the dividend will decrease once the gas runs out. However that is a long time away .

[bull....]

I think the dividend will decrease once the gas runs out. However that is a long time away .

2028? of top my head and yes would be a loss in revenue but on the other side they wouldnt be left selling gas for a loss in the wholesale market
Actually consensus is for them to increase div to .17c for 2016

[Sgt Pepper]

2028? of top my head and yes would be a loss in revenue but on the other side they wouldnt be left selling gas for a loss in the wholesale market
Actually consensus is for them to increase div to .17c for 2016

Bull

A naive question from a relatively new investor

at the dividend yields shouldn,t the SP be at least $2.50?

[Beagle]

2028? of top my head and yes would be a loss in revenue but on the other side they wouldnt be left selling gas for a loss in the wholesale market
Actually consensus is for them to increase div to .17c for 2016

Honestly who knows for sure if they'll still be here in 2028 ? I reckon just take the divvy yield at face value and enjoy the natural hedge it provides against your power bill.

[bull....]

Bull

A naive question from a relatively new investor

at the dividend yields shouldn,t the SP be at least $2.50?

My opinion of course, Based purely on div yields I would think more than 2.50 to bring into line with other gentailers but that is looking at the company from a very small perspective and I guess will only happen if genesis run there business well.

Things to watch are there market share they have lost a hell of lot of customers in the last year mainly to un competitive pricing in the regions not the main centres ( my gut tells me they did this to fatten there margins to meet propectus forecasts) but i guess jenny shipley would know better than me lol.
Also there operating costs are high so more work is needed on this front, if they can balance these to things there FCF which is already good will be fantastic so maybe we can get our higher share price and even higher divs.

[penn]

Thanks for your thoughts.
-Morningstar Recommendation GNE



- Hold



-Valuation: $1.80



If this goes to Reduce (at the next full moon) Is it likely to have a negative reaction on the SP?

[Tomtom]

Thanks for your thoughts.
-Morningstar Recommendation GNE



- Hold



-Valuation: $1.80



If this goes to Reduce (at the next full moon) Is it likely to have a negative reaction on the SP?



From previous observations when Morninstar reduce their rating the net result is a rise in shareprice. It's interesting to read the analysis but that doesn't negate the need to DYOR. There is always too much temptation for analysts to conform to the prevailing view of other analysts. It's the CARE principal at work.

[Arbroath]

From previous observations when Morninstar reduce their rating the net result is a rise in shareprice. It's interesting to read the analysis but that doesn't negate the need to DYOR. There is always too much temptation for analysts to conform to the prevailing view of other analysts. It's the CARE principal at work.

Morningstar have a shocking track record in my opinion. I've lost count of the number of bad calls they've made. Just recently said NZO was overvalued and whadaya know they do a 15c capital repayment and announce Tui is outperforming. Shares up 10% to now be 30% over MS valuation.

If GNE go to 2.50 MS will have egg on their face yet again. Pretty sure they put about 1.25 valuation on MELCA and where are they now. They also think FRE were only worth about 4.50 from memory and they've got to 5.60 as profit improves - I'd love someone from MS to cherry pick some of their good calls so we could at least give them a fair crack as all I can think of is there bad calls.

[goldfish]

Do the opposite of morningstar and youll be a rich man. They get about 90% wrong from what i can see. Id be embarrassed to work there.

[Arbroath]

Do the opposite of morningstar and youll be a rich man. They get about 90% wrong from what i can see. Id be embarrassed to work there.

Haha. Exactly. My portfolio MS would value about 25-30% less than market currently. So I'm up that 30% as all holdings less than 2 years (AIR, FRE, MELCA, MRP, THL, GNE). MS don't have to account for all there poor calls.

[Kirk]

Does anyone use https://www.macroaxis.com/? Are they any good?

[Beagle]

Plenty of eager punters chasing yield and huge amounts of room for this puppy to run despite recent strong gains. $2.47 still gives a gross return of 9% at 16 cps with full imputation credits, gross divvy 22.22 cps.

[bull....]

Plenty of eager punters chasing yield and huge amounts of room for this puppy to run despite recent strong gains. $2.47 still gives a gross return of 9% at 16 cps with full imputation credits, gross divvy 22.22 cps.

The yield even looks more juicy after European Central Bank President Mario Draghi hinted as to the possibility of further aggressive stimulus measures and hit back at claims of dissent at the Bank last night.

With low rates to remain for a long time wonder how long it the yield on genesis will remain this good

[bull....]

Price
Dividend
Yield









Contact

6.4
0.26
4.06%


Genesis

2.18
0.16
7.34%


Mighty River

2.94
0.14
4.76%


Meridian

2.2
0.13
5.91%


Trustpower

7.52
0.4
5.32%

[Beagle]

Price
Dividend
Yield









Contact

6.4
0.26
4.06%


Genesis

2.18
0.16
7.34%


Mighty River

2.94
0.14
4.76%


Meridian

2.2
0.13
5.91%


Trustpower

7.52
0.4
5.32%



Those are net yields mate. I don't know about the others but in Genesis case its fully imputed so you need to divide the net yield by 0.72 to account for the 28% full imputation credit attached so I get a gross yield of 10.19% at $2.18. Even at closing price today of $2.21 based on a gross dividend of 22.22 cents incl of imputation credits that's still over 10% (10.05%) and that's only paying out 80% of forecasted profit and there's no need to build new generation capacity for many years. Plenty of rumours in the market about capacity for special dividends and why not !! We know the government like special divvy's, see recent example of whopping AIR special divvy of 10 cps, that was really tasty, what chance of a repeat with GNE :)

[couta1]

Well this is one I did get right (I know there haven't been that many) Disc- Holding 29k shares at $1.55 with bonus ones to come:cool:

[Beagle]

Well this is one I did get right (I know there haven't been that many) Disc- Holding 29k shares at $1.55 with bonus ones to come:cool:

Yeah Ha !! I'm very happy for you mate :) Hang on in there and ride this puppy all the way to $2.50+ plus bonus shares !!!!

[couta1]

Thanks Roger, as an aside you will have noticed the Air NZ price on the rise must be time for you to jump back on board?

[Beagle]

Thanks Roger, as an aside you will have noticed the Air NZ price on the rise must be time for you to jump back on board?

Ssssshh, keep it between us but I sinned and bought back in earlier this week, (up 7 cents already). Not sure how they're gaining so much altitude so quickly with big Rodge back on board lol. Looks like I might have got a bit over-concerned with the ebola threat...talked to my pilot mate last week and nobody seems that worried about it...happy to admit I might have got the seriousness of Ebola threat wrong but its early days so just a toe in the water for me. Bought more HNZ, GMT and first buy into MFT this week too so busy week setting my portfolio up for 2015.

[bull....]

My yields were net so ya right Roger gross always looks way better a, anyway the japan pension fund started deploying mony last week i read 50 billion going into us stocks to kick it off with particular emphasis on high yielding big cap stocks so hopefully some of the money trickles down under soon

[Balance]

The semi-annual review of the MSCI Equity Indexes saw the three government-controlled energy generators and retailers climb to records after MRP and Meridian were included in the MSCI Global Standard Index, exiting the MSCI Global Small Cap Index, which Genesis was added to.

[RTM]

Ssssshh, keep it between us but I sinned and bought back in earlier this week, (up 7 cents already). Not sure how they're gaining so much altitude so quickly with big Rodge back on board lol. Looks like I might have got a bit over-concerned with the ebola threat...talked to my pilot mate last week and nobody seems that worried about it...happy to admit I might have got the seriousness of Ebola threat wrong but its early days so just a toe in the water for me. Bought more HNZ, GMT and first buy into MFT this week too so busy week setting my portfolio up for 2015.

Lucky you added the AIR purchase on this thread Roger, well done. No one from AIR will see it here.
Good thinking.

[Bobdn]

Bought today at $2.16.

[penn]

Ha Ha, I hope to buy today at $2.10, But then you have it in the bag and im just fishing.:cool:

[Joshuatree]

Not forgetting the 1 for 15 bonus share for holding for a year. Some dilution of s.p and div.

[theace]

Not forgetting the 1 for 15 bonus share for holding for a year. Some dilution of s.p and div.

When will these (bonus shares) be dished out?

[traineeinvestor]

Not forgetting the 1 for 15 bonus share for holding for a year. Some dilution of s.p and div.

Please correct me if I am having a senior moment, but I thought the 1:15 loyalty bonus came from existing government shares and did not increase the number of shares on issue?

In any case, I assume that there are people waiting to sell as soon as the 1:15 has been received so there may be some selling pressure shortly after the first anniversary of listing.

[dingoNZ]

Please correct me if I am having a senior moment, but I thought the 1:15 loyalty bonus came from existing government shares and did not increase the number of shares on issue?

In any case, I assume that there are people waiting to sell as soon as the 1:15 has been received so there may be some selling pressure shortly after the first anniversary of listing.


I imagine they are currently held in escrow bu the govt, someone correct me if in wrong. But it shouldn't effect the market cap

[xafalcon]

When will these (bonus shares) be dished out?

April 2015

[bull....]

Genesis gained customers in October

[Bobdn]

I was trying to buy for ages at those levels and then got impatient. Hopefully it won't make much difference in the medium term.

Edit: with reference to Penn above

[penn]

Thinks I should have done the same, Up again today! well done Bobdn I can't understand why Mourningstar have this stock as a Hold for us K1w1s, but the Aus listing is a Reduce. Prices today for both match the exchange differential, (only reason I can see it the Taxation treatment) or they have "an agenda"

[Harvey Specter]

Thinks I should have done the same, Up again today! well done Bobdn I can't understand why Mourningstar have this stock as a Hold for us K1w1s, but the Aus listing is a Reduce. Prices today for both match the exchange differential, (only reason I can see it the Taxation treatment) or they have "an agenda"The yield is less attractive to Aussie investors as they cant use the IC's. Makes sense that valuations would be different for a yeild stock (given the hold rating, they obviously aren't expecting the price to increase that much).