No one seems to be posting any more on the thread entitled "who's in for the Mighty River Power float. Any investors want to blog about ongoing prospects for MRP?
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No one seems to be posting any more on the thread entitled "who's in for the Mighty River Power float. Any investors want to blog about ongoing prospects for MRP?
MRP price expected face pressure with the looming of meridian ipo, but actually last couple weeks the price seems strongly recovered from all-time low $2.16, bought few more at $2.17, interesting to see what's going on when meridian ipo started, decided to buy into all up coming SOE ipo.
Divvies being paid on Monday, funny to see a little uptrend over last week to $2.30.
Can't complain too much, it's exactly what people calculated it would be at the IPO and then some.Quote:
The Board has declared a fully imputed final dividend of 7.2 cents per share (cps), in line with the IPO forecast and paid less than five months after listing. This brings total dividends declared in FY2013 to $168 million (or 12cps), which represents a gross dividend yield of 6.7% on the IPO price of $2.50.
For the coming financial year, FY2014, the Board remains comfortable with our IPO forecasts of significant growth in EBITDAF, reflecting the earnings contribution from the new Ngatamariki geothermal plant. The forecasts at the time of the IPO also anticipated an 8.3% increase in fully imputed full year dividends from 12cps to 13cps for FY2014. Based on our share price on 20 September, this represents a gross yield of 8.1%.
Annual report is what it is: https://www.nzx.com/companies/MRP/announcements/241788
With the Dividends today and the amount of MRP shares I've collected at 2.17. At the current share price I've finally broken even on my initial IPO investment if I sold tomorrow. Pretty happy at the moment hopefully once meridian is done the price may hold at 2.30 for awhile *fingers crossed*
MRP has just announced a share buyback. Who picked that one?
http://www.mightyriver.co.nz/Media-C...k-program.aspx
Was far far away from my thoughts. Desperate times call for desperate measures eh ! First they hint at dividend increases....and now this. All in an attempt to elevate the SP prior to Meridian float. Wow. Not complaining tho...as have a few.
What happens to the shares they buy ? Are they retired ? Or can they be sold again should the money be needed in the future ? Or used for staff bonuses ?
Will also reduce the 'bonus share' liability on those retail holders who sell. Incremental, but still saves a few bob.
Another thought.......who will they buy the shares from ? Major holder is the government. 50:50 government and market ? Or just market ? If just market....then ratio of Government owned shares to public will alter. How would they determine price to buy from Government ?
It is an onmarket buy back so only from the Market, not the government I would have thought. Even if the Govt did sell, there is a market price.
I wonder what will happen if the Govt creaps up to say 55% due to the buy backs - will it offload onto the market or hold shoudl there be a future capital raising so that they can be diluted back down to 51%?
Maybe they can buy them back over time with this strategy ? :t_up:
Green Party co-leader Metiria Turei said five months after the listing of MRP shares, promising a golden opportunity for 'mum and dad' investors, the company was buying them back at a loss for investors.
"If Mighty River Power has $50m laying around, its priority should be cutting electricity prices for families and businesses."
You can not be serious. Shows how economically inept the greens really are.
Let's hope she doesn't notice AirNZ's $1B cash surplus lying around!
Not really Air NZ cash that $1b .... most of it prepaid travel .... still have to spend a lot of that cash to fly the travellers to wherever
Zonks ago AIR raved about that $1b we have in the bank ... we wont go broke and all that stuff .... then the govt bailed them out eh
Ah so --- does AIR make most of its money from investing all this money then?
Yes but if they did 1% per year ...
I actually thought the 2% referred to the full shareholding, not just the non govt shareholding. Unlikely they will buy the full 25m as they have only allcoated $50m - I assume they wont let it drop to $2 per share before buying.
Forgive me but why not repay debt? Call me old fashioned but paying off debt is always number one in my business dealings.
If the company has more money than it knows what to do with, then as a shareholder, I'd rather that they just gave it to me. I like money, and I'll gladly take it off their hands.
A share buyback means that someone else gets the money, and that I can only get some money if I sell my shares. That seems perverse to me.
Ask all those Blackberry shareholders. . .
Things could turn for AIR without a doubt, but as a company it is in the strongest shape it has been for a long time and especially so compared to other airlines. AIR are buying back their shares as well as investing in new more efficient equipment to lower overheads while simultaneously allowing them to expand into new markets.
But regardless of this, the point is that any cash that cannot be spent by the company effectively to is being ploughed back to the shareholders via a buyback which makes perfect sense. We now have Labour claiming (as per the TV3 news tonight) that MRP are taking a further $50m from the pockets of taxpayers to try and increase the SP back to its listing price and intimated that they are doing so at the behest of the Government. What a load of bollocks.
Yes, it's politics. Labour/Greens have done everything possible to sabotage this float, which has lessened the price the taxpayer receives. That includes Parker completely discarding his analysis of electricity retailing and going along with their nonsense proposal purely in pursuit of power. They are quite delighted that they have managed to destroy the value of the power companies. Frightening stuff.
I think anyone who thinks that this buyback by MRP is not politically motivated and driven and timed is very naïve.
Who appoints the board ? The shareholders. Who was the only shareholder when the current board were appointed ? The government.
They will do anything they can to try to support the Meridian float. And they need to....to get the best return for the crown.
What a money go round.
Disc. Hold MRP, wavering on whether to purchase Meridian or not.
I agree whole-heartedly.
This is an excellent signal to buy more.
MRP have timed this well, knowing that a lot of short-term-thinking people/institutions will likely be selling MRP to go for Meridian thus dropping the price further (now counteracted my MRP actively scooping them up).
MRP's board know so much more than anybody else regarding their own Company's future.
If the board believes the Company's share price and true value is $2.75/share now (as the institutions do) and $3.00/share in 6 months after positive announements, then buying around $2.20 gives an 80c/share return over 6 months = 74%/annum ROI. Far better return than repaying debt.
If enough people sell MRP to buy Meridian, you might find MRP complete this buy-back in less than a month... and then they'll announce another one.
Also, I get to increase my %age ownership of MRP and my dividend by 2%, for free.
Peter Lynch (One up on Wall Street) is a big fan of share buybacks, which I agree with on the whole.
The funds used are excess cash?? but what I'm not quite sure on is what is meant by being held as Treasury Stock, does this mean for example there were 100 shares in total, they buy back 10 to be held in Treasury Stock, does this not mean that there is still 100 shares and therefore the value is still the same, so how has "you and me " as shareholders gained anything . I must be missing something - probably are :-)
Disc: Not a holder at present - made a small profit on the ipo though.
All this talk of government/board conspiracy reminds me of the old, now non-pc saying about N's and woodpiles. I'm not sure that there's a woodpile here, let alone an n! Just good balance sheet management and a bit of fortuitous timing!
QUOTE[
The funds used are excess cash?? but what I'm not quite sure on is what is meant by being held as Treasury Stock, does this mean for example there were 100 shares in total, they buy back 10 to be held in Treasury Stock, does this not mean that there is still 100 shares and therefore the value is still the same, so how has "you and me " as shareholders gained anything . I must be missing something - probably are :-)
QUOTE=Jay;432118]Peter Lynch (One up on Wall Street) is a big fan of share buybacks, which I agree with on the whole.
It has the same status as "nominal" capital used to have in the days when companies had a nominal, as distinct to actual, issued capital. No effect until it is re-issued for cash or other consideration. Meanwhile, shareholders benefit from proportionately bigger shares of the pie!
A company can hold upto 5% of its shares as treasury stock. If it buys more than that, it must cancel them.
The shares lose all their rights while held as treasury stock so no dividends or voting etc so that is why you benefit.
The benefit to the company in holding treasury stock is they can sell them again easily without needing to do reissue/capital raising, as would be the case if they cancelled the shares.
Yes ditto to what balckcap said Thanks CJ
Plenty of water up there at the moment - guess MRP is not at risk of drought for the time being.
Wow...$2.16 today. Lots of water in the lake !
Wonder where the price might be if they weren't trying to support it ! ?
Hope they leave more on the table with Meridian for the punters.
Wow...$2.16 today. Lots of water in the lake !
Wonder where the price might be if they weren't trying to support it ! ?
Hope they leave more on the table with Meridian for the punters.
With a buy back underway, once this stock comes out from under its current selling pressure and starts to climb, it will soon settle into an upward trend, IMHO.
I'm watching daily with an expectation it will head north before it drops to $2.
BC
Is the weakest ever price explained by people selling MRP to rebalance their portfolio in light of the Meridian float or is the market sufferring fatigue from power company floats generally...and this on the day the American's announce they've sorted their B.S. for a while.
Doesn't bode well for the future of MRP's price in my opinion.
If people lose money on Meridian the Government will have to do a Macca's deal to float Genesis. (Buy one share get one free), or here's a novel idea, float the thing at a realistic price earnings multiple instead of being so bloody greedy.
The buyback does not add that much support on a daily basis but over time it will soak up weaker hands. IMO the weakness is more to do with funds looking to swap to MEL and freeing up funds rather than over-allocating to power companies.
My guess is MRP will be $2.30 by the end of October.
MRP looks as if it is a well run company. It supplies electricity to the North Island. Its Geothermal generators run 24/7, supplying the base load. The Hydro dams on the river supply additional power when required. They are switched on and off.
A further factor for MRP is that it is not reliant on the Cook Strait Cable. Nor very long cable lengths to supply its customers.
Anything under $2.25 must be a 'buy'. Why it went to $2.17 today is beyond me.
The hog is trying to get this straight.
MRP is "well run". Opinion.
Supplies energy to NI. Yes.
Geothermal 24/7. Yes.
CS cable. Yes.
How does the above lead one to the conclusion that $2.25 is good value?
$2.15 close today says Mr Market disagrees with you.
The hog presumes you were lining up to soak up anything under $2.25 today?
I'll be buying MRP on the way up from around $2. Better value IMHO than the over-marketed, over-hyped Meridian.
BC
Factor in the latest poll shows a change of government will happen next year!
As a maintenance engineer, at least in my previous life, I have to weigh up how close the customers are to the supply chain. Each extra link in the chain provides an additional concern. The fact that MRP is not reliant on the Cook Strait Cable becomes important, plus the very long DC link for Meridan is important. All links need maintenance and can fail. MRP equally relies on the Grid. But it is shorter. So less reliance on it.
Which brings me to Hanmer. I was in the Hot Pools. Chatting to a few Maori chaps from Timaru. Who were working maintaining the link. They have a good head for heights. To stop being 'Racist' the Company decided to employ a Whitey to also do the job. The Maoris were suspected of hunting Wild Pigs in the Firms Time. So Whitey went with them.
He got to the top of the pylon, onto the arm. Then froze. Could not move. So they tied him onto the cross arm and sent for the Fire Service to rescue him. They used a very long rope. The Rope Went to the ground. A few chaps down below were holding the rope.
The frozen chap relaxed a bit. Help was on its way.
My Maori Mate then,
Pushed Whitey off the arm. He dropped say 5 metres and he was then lowered to the ground.
What could the Fire Service Do?
Today, of course, we would need Health & Safety to advise.
I have now bought another lot of MRP to balance my power stations. Two thirds North Island, one third South Island.
Enjoy the Week-end. Mouse.
mmm....probably a stupid question...why does the Direct broking site display transactions at 3.50 ..yes I should know...
Accidently I now have 3.600 shares in MRP at a price of $8,400 and 3,600 shares in Meridian for $3,600 down and $1,800 in the future. So 3,600 shares in Meridian for $5,400. The question now is which will make more cash, which will perform better. I think dividends received have to be included so I will try to update this every six months.
MY VIEW is that MRP is a better long term investment than Meridian.
I'm in the same boat currently holding 3000 MRP shares. 2000 from IPO(2.50) and 1000 at 2.16. 3000 shares at 7160.00.
4750 MELCA shares 4750 with 2375 due in 18 months total 7125.00.
Weather experts think its going to be pretty dry in the south this summer. However Lakes are pretty full at the moment, might be an opportunity to top up MELCA if it stays dry. I think any hope of MRP going further down is over thanks to the buy back.
Although I really don't care about weather right down. What I care most about is that the w**ker Cunliffe doesn't get in Government.
Your figures for dollars invested are far better than mine to compare profitability. I am sure that all investors have to have cash in the power generators. Plus that we need to have both South Island and North Island companies.
I THINK that it is better to have more invested in the North Island. The reason for this is,
1/. Meridian have to maintain their canal systems but MRP have the Waikato River maintained mainly free of charge.
2/. MRP are much closer to their customers than Meridian, who have to get their electricity across the Cook Strait. Which all adds hazards and costs.
3/. I THINK, without any coherent reason, that Geothermal generators will have a longer life and less trouble than windmills. BUT, it should be remembered that MRP are using their Geothermal as 'base load', in other words generating with them 24/7, whilst Meridian hope the wind blows!
4/. The point about the Geothermal generators is they are working 24/7. Thus they are earning their keep. The Meridian windmills may never earn their keep. They seem to lose cash overseas. But we might be windier in NZ. Mighty River seem to have made a good choice about investing in base-load generators.
......MIGHTY RIVER HAS TO BE THE SAFER "BET" AT THE MOMENT (price underpinned by the Share Buy-Back Scheme)
Weeellll! Mighty River still way below issue price. Meridian given away, but only a small upwards move of ten cents.
So where are we?
Plus Where is Govt., who propose to sell Genesis Energy. Which Rod Oram said this morning, on the National Programme, is now unsellable. Who will buy? Plus we have the problem of threatened political interferance.
The other factor is that Genesis has some? coal fired power stations. How do you abandon them? I live in Christchurch and thankfully have not seen a coal fired power station in years. Rod Oram suggested that Meridian could buy-back the Twizel dam which Genesis own.
But Genesis? We wait for John Key. Electricity shares could take a year at least to settle into a predictable price range. I cannot hazard a guess.
MRP are down 12% since listing,while MELCA are up 11%.
I would be selling my loser, and be buying more of my winner if I held both.
[As you would expect I only hold MELCA].lol.
The share price is telling me that MRP are in the wrong part of the country to supply the huge increase in power usage that irrigators in Canterbury,South Canterbury ,North and South Otago, The Mackenzie Basin,and other parts of the South Island,will place on Meridian.
I often wonder if the Govt will abandon further sales, seeing as things haven't exactly gone smoothly to date. The upcoming referendum and its predictable showing of public opinion could be the easy out that they need.
I have them at being $10,977,530.01 through their buy back so fair way yet.
The announcement on the 29th of October said that:
"The Crown, which holds 51.76% of Mighty RIver Power's shares, has advised the Company that it does not wish to participate as a seller into the share buyback."
https://www.nzx.com/companies/MRP/announcements/243006
Was the crown selling shares to the MRP buy back before this date??
It say's the buyback is at 8.30am so are they off market trades? and if so from who?
The demand for electricity is in the North Island. Which is where MRP is located. 40% of their output is Geothermal, the base load. Hydro is switched 'on' and 'off' as required. It deals with peak periods.
Huntly is worse than useless to my mind, it is a liability. How much I do not know. They firstly have to mothball it, then they have to demolish it and maybe even clean up the site? How much that lot will cost is pure guess-work.
The best thing Govt can do is sell off the bits of Genisis. Meridian would then buy Twizel and reduce their dividends for a few years.
The Phillipine Typhoon, winds of 200 mph, demonstrates that our power lines are a bit of a problem in a blow. Hence it is better to have short lines to the major customers. My experience was of Typhoons in HK. For six years. They could be severe.
With the huge growth in the number of irrigators they are doing their best.!!
As will a rebuilt Christchurch.
A very positive out look for Meridian,being at the right place at the right time.
I've been surprised to see MRP sink back down to the 2.16/2.17 range. Seems this afternoon buyers were pilling in trying to get some at 2.165. Got a small parcel at that price. Hopefully over time the buy back will push the price to 2.25+ for some gains.
I'm waiting for the DJIA/S&P500 to suffer a sharp correction before coming in on bluechip utilities like MRP. I like the stock and the buyback will no doubt lift the shareprice at some point, but Equity markets have had such a climb lately, they are looking easily spooked. Note this week's impact of the DJIA and S&P 500 running out of steam on the ASX, and that's with a falling Aussie $.
I'll be buying when global market sentiment takes MRP below $2.
They're both heading that way . Who needs a pesky tenant when you can sit back and watch the River go By (not dry):)
Why the sudden price weakness in MRP and MELCA??
Can't be political because the Nats increased its vote in the last poll.
http://www.roymorgan.com/findings/52...4-201311140325
And MRP is the biggest loss maker in my NZ portfolio. I'm a pretty upset citizen and shareholder.
I think its uncertainty, part political. Other polls suggest Labour Could be a threat. I know sophs who have sold and are putting their money into Aus whilst exchange rate is good. Instos could be doing the same.
|How to value a power company is the problem. Is it what they can charge the customer?
Or is it the replacement value of the complete generating system, including canals, dams and generating plant.
Or is it the actual cost of building the plant 30 years ago, plus running costs.
People were caught over exactly this issue with Telecom. Who thought they had some Divine Right to print money. Govt then changed the rules and the share price collapsed.
One thing is certain, both MRP and Meridian are long term holds and will pay good dividends for years to come. Sit tight and collect the dividends.
I of course agree with Belgarion.
Depends on what you are valuing it for. For operating business, always value cash flow as cost (original or replacement) is irrelevant.
Comcom shouldn't get involved since not a monopoly.
Regulated industries you need to consider the RAB (regulated asset base) and regulated return.
We can love them or hate them but the fact remains that the Commerce Commission has a statutory role to oversee competition in regulated industries - of which the electricity industry is one of the major ones. Investors in this industry - that includes me - should do so with their eyes wide open!Quote:
Comcom shouldn't get involved since not a monopoly.
The simple facts are that if power prices are 'regulated' then the power companies can switch off their highest priced generators. As has happened, where Govt had to pay to install a gas fired emergency generating set some years ago. So eyes wide open, but every developed country has to have a very reliable electricity supply.
To achieve this Electricity Generation should probably be run by the State. With our private enterprise model, a profit squeeze will lead to a systematic reduction of generating capacity.
No. Not saying that at all. The Regulator has to be very careful because if demand is depressed today, and the Regulator holds prices down, then generation plant will be closed down. Shut. Dismantled. The Government will then have to pick up the pieces and provide State Subsidies. So, Regulation can only be very light, or possible disaster follows. With all the various electricity generators there should be sufficient competition to make prices reasonable. Eyes Wide Open, but in my opinion situation is not a problem at all. Also remember electricity prices can track up, but also track down. As can share prices. Supply and Demand.
Looking at the charts, both MRP and TPW look to be priced more for a Buy than for a Sell, but I've been working other sectors for a while and admit that I'm out of touch with this one.
Apart from the increasing threats of a Labour/Green shift in policy and impact on company profitability, does anyone have a DCV or other comparison of the value of investing in these two companies?
TPW vs MRP.
Edit: Nevermind, I've found some good work by Snoopy and others in the Trustpower thread:
http://www.sharetrader.co.nz/showthr...&highlight=TPW
If anyone knows MRP's position better than anyone, it is MRP's own Board of Directors.
They have decided there is no greater return (given a corresponding risk profile) they can achieve for their business (and shareholders) than buying their own shares back. Obviously because they consider them as cheap.
They announced they would buy up to 25 million shares or up to NZ$50 million worth and commenced 15-Oct-2013 to be complete by 14-Oct-2014.
Friday close just gone completed 1 month of buying back and I have been tracking it.
So, in round figures, at close of trading Friday 15 Nov 2013:
Amount of shares bought back: 6.84 million
Amount spent in doing so: NZ$15 million
Average $/share bought back: $2.19
If they do buy back all they have declared, they will likely reach the NZ$50 million mark well before 25 million share mark as I cannot see the shares dropping below NZ$2 and if so then not for long.
This means that after 1 month MRP are 30% of the way through the buy back process. Given the daily volumes traded on the market, MRP's buying has not been very aggressive to-date in my view, but so long as the shares stay around this price or lower and they maintain their current buying rate, they will complete the process before 31-Jan-2014. Nine months ahead of the deadline.
Draw your own conclusions, but if the board think the current price is a bargain, then it probably is.
A view you are well entitled to Belgarion. I am a self-confessed conspiracy theorist but don't think govt politics have too much part to play in MEL's buy-back decision, at least on this occasion.... Mind you, I haven't put my money where my mouth is and bought under $2.23 .... yet. :-)
The hog suggests posters here consider the electricity market in California, as a data-point in the context of energy markets, free markets, and state intervention.
Also, if anybody here does not understand the concept of Moral Hazard, then they would, respectfully, be well-served to look it up and give it some consideration, but it is not straight forward. Ask BenB.
Politics and economy is not, as some would have everyone believe, a simple issue, but it *is* often boiled down in the media so even the most simple of people can think themselves informed, and even on occasion, an expert (which leads them to sometimes start posting here!).
Depends on what morals have moral hazard!
Politics and economy are easily understood. When short of a bob or two, mint a few more. For banknotes, run the printing press. If things really get tough, sell the Country bit by bit. Tell the electorate you are spending the cash on Schools and Hospitals. Avoid telling the electors how you intend to pay to staff and run places. Economics is really simple, Get a Good Bubble Going.
Has anyone got a valuation on MRP?
I had a go at finding the eps growth
EPS-
2010- 6.04c
2011- 9.08c
2012- 4.84c
2013- 8.19c
2014 forecast- 11.46c
Average EPS growth- 26.38%
Or if I ignore 2010/2011- 54.57%
I must have done something wrong? EPS doesn't seem to be a relevant way of finding a value for MRP. Neither does Dividend yield. 26 is also a bloody high PE.