Curious Snoopy me ol mate. Why are you holding GNE given your above post ? Disc: I am unimpressed by the most recent quarterly report. Customer retention has again emerged as a serious issue. Sold late last week.
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Curious Snoopy me ol mate. Why are you holding GNE given your above post ? Disc: I am unimpressed by the most recent quarterly report. Customer retention has again emerged as a serious issue. Sold late last week.
Customer retention has raised my eyebrows slightly but it is certainly no where near as bad (losses wise) as it has been in recent times, so I am not to concerned.
For me it is all about the cash flows when it comes to valuing gentailers, and these were ok, but not good and certainly not great.
But I am just not sure of how many other companies can give me 16.4 cents per share, 80% franked (which I see as sustainable), per year return with relatively low risk, and likely to increase above the rate of inflation over the coming short-medium term (dividend wise).
Disclosure: Been holding since IPO, makes up around 10% of my portfolio, average holding cost is $1.40, might sell if it got to $2.30 - $2.40
TJ - You're probably okay in the short / medium term but as Kupe starts running down their ability to pay dividends at that rate starts to become questionable.
I prefer HLG at present due to the prospect of a strong uplift in profit this year and I see their 30 cps fully imputed as sustainable for at least as long as GNE. (Acknowledge each company has its own peculiar issues to deal with going forward but note HLG trades cum a 16.5 cps fully imputed divvy and GNE trades ex its final divvy).
I also calculate the yields as follows and note the HLG yield is significantly higher.
GNE Gross yield (16.4 / .776) / 1.96 = 10.78% gross
HLG (30 / 0.72) / 3.00 = 13.89% gross.
Tiwai Point is a major over-hanging risk to the sector too so GNE is certainly not a low risk investment in my view.
Just my 2 cents worth but each to their own :)
Roger-Thats a viewpoint I would like to test.
Clearly its one thats shared by many in the market and one believed by you.
My view is that we are on the cusp of a big change in Transportation and the type of fuel used.
Its one now shared by Volkswagon.
Did you know that each model Tesla s contains 200kg aluminium ?
Do you really think that Rio Tinto will close a profitable Tiwai pt and pay $300m approx clean up costs?
More likely a negotiating ploy in my opinion.
I was in auckland on Friday and the vehicle fumes were sickening.
City vehicle fumes are as bad as smoking to the body
Then we have the ability of the Gentailers to manipulate pricing by closing down so called inefficient units-like CEN did recently.No one can actually call this market manipulation because the pretext is prevention of global warming.
We have an expanding population who love electricity and spend less time outside.
Your statement about kupe neglects the fact that its a bigger field than initially thought and reserves have been upgraded.It wont be running short in the next 20 years
I also sold out of GNE earlier in the year. Low growth with little prospect of that changing midterm plus the risk of assets becoming stranded from new technology, smelter closing etc etc..
If you're just after income then GNE still an option but it was no longer a fit for me so it got cut .
Just my opinion, good luck to holders.
The demand for electricity is falling by about 2% a year. The costs of alternatives are falling by 15-20% a year . The obvious package is solar, electric vehicle , and use you the Electric Vehicle to feed back into the grid with peer to peer trading. Overseas the days of bulk generation and especially coal fired stations is dead . we are 65% non co2 and the Govt wants to get to 90% . Not a pretty picture.
All the facts and figures: http://www.mbie.govt.nz/info-service...ergy-quarterly
and government forecasts (bit dated probably around 2012/13):http://www.mbie.govt.nz/info-service...ty-insight.pdf
Thanks for this and all the other points of view-clearly reflected in the current market price.
Interesting that residential use electricity is down 5% but agriculture farming and fishing is up 10%.Probably explains why Contact seems to be concentrating on bigger customers.
Some of the residential fall in demand will be due to warm winters-the last was the warmest on record.No guarantee this will continue.Agree that some residential use will be reduced due to domestic solar.Not convinced that this will grow significantly for many years.Certainly its the way I would like to go but I want others to prove the technology is cost-effective first.
I am still feeling the gentailers need to be part of my diversified portfolio and the dividends will reduce the risk of keeping my investments this way.
They can manipulate the market and close/reduce operating thermal stations to force the price up.
Hi Fish,
Reserve upgrade is something I have already factored in but oil production still tails off quicker than I would like, LPG and gas production is good for the foreseeable future.
Customer retention is something that bugs me. They keep losing market share and I expect this trend to continue as the incumbent gentailers get their share eroded by new retailers with highly efficient cost structures.
On the electric car front, it will be many years before we even get to 2% of the national fleet as electric cars, (something the Govt is actively promoting through the exemption of road user chares until as a nation we hit that target).
Cost and adequate range are still major barriers and I think they will be for quite some time. VW have been badly burned by their fiasco with diesel engines...you'd expect them to be keen to change direction wouldn't you !
On the Tiwai thing, who can say, its a very small and old mill for Rio Tinto, and aluminium prices could go anywhere like any other commodity. The impact on wholesale and retail pricing if Rio elect to shutdown this operation would be very significant.
Profit is declining this year and my instinct says it will continue to decline further out. Maybe one to hold for dividend yield but its not safe dividend yield and there are better alternatives in my opinion as I outlined above.
For me, I will leave the debate there.
Thanks roger-I respect your opinion and contribution.
I wonder if anyone else has looked at genesis customer retention and the effect it will have on cashflow.The new efficient retailers have to buy their electricity and some kind of hedging to stop them going bust in a dry year.That must cost-and the like of genesis are likely to benefit from that cost.
My biggest investment is with contact and I am not concerned at the loss in customer numbers as they are really reducing the cost to generate and hence netback and free cash flow looks really good.
Have not worked it out with Genesis and would appreciate opinions(keeping in mind Ecclesiates 12 !)