For anyone interested in hearing some information from the horses mouth, Meridian held an investor call yesterday. You can listen to it here https://www.meridianenergy.co.nz/investors
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For anyone interested in hearing some information from the horses mouth, Meridian held an investor call yesterday. You can listen to it here https://www.meridianenergy.co.nz/investors
Hope never to check either of them myself, but he showed all the balls of a gelding when he folded to Rio's "Bluff"
if you think the smelter wont close , good opportunity? rates are not going higher anytime soon
Just listened to the investor presentation....Well worthwhile if you have the time.
I was impressed by Neal Barclay.
As an aside, but nevertheless interesting, everyone asking questions was male.
Thanks, long time lurker!
Cliff notes of the call:
- Meridian not going to "bend over" and take a hit for the rest of the market (those were the CEO's words not mine).
- Sounds like Meridian do pretty extensive modelling to determine the financial position of the smelter and they believe it is cash flow positive at the current Alu prices.
- Big lump of CAPEX ($63M) required to continue operation of one of their pot lines. Meridian seem quite skeptical at the quantum of CAPEX required and to a lesser extent the timing.
- Around $110M of spend by Transpower required on lower south island grid improvements to allow the power to get out of Southland (this impacts both Manapouri and the Clutha stations). Then an additional $150M required to upgrade the HVDC link. Timing would be ~3 summers for lower south island upgrades and 5 years for HVDC upgrades. During this time the effect on all south island generators would be quite heavy with the stations further south effected the most.
My take is this is just posturing by Rio Tinto to get a better deal. They are not going to shut down a factory that makes money. Time will tell (lets see how well this post ages!).
https://www.marketscreener.com/MERID...933/consensus/
Analysts fair value of $4.28 before this latest announcement by Rio Tinto. I think its clear the risk profile has changed and MEL will cop the most "treatment" if Rio Tinto pull the plug as it will take many years to divert the power north. Time will tell. $5 looks full value to me in this current landscape of heightened risk and uncertainty.
k14 - Keep posting mate, I'm liking the effort you make to share your point of view. I agree its unlikely that Rio will pull the pin but what is clear is that they want a better deal which will cost someone a lot of annual earnings, probably MEL. Rio seem very unhappy about transmission pricing and I don't think Transpower's review of their pricing model is helpful enough. Despite Labour's massive surplus I don't think they are of a mind to be helpful either.
Normally I would say site make good costs would make a favourable resolution more likely but if they're up for ~ $60 capex to overhaul one of the pot lines, then that's also a factor that makes the outcome less certain.
Good to see Rio Tinto back for their regular top up of corporate welfare. Nice work if you can get it. Govt really needs a long term plan to reduce the effectiveness of this negotiating tactic.
FWIW, MoaningStar downgrades big time, cites Tiwai effect.
Moaning Star Ratings 23/10/2019
$ at posting MS $Value Reco % diff $ diffGNE $ 3.07 $ 2.40Reduce 22% $ 0.67MCY $ 5.04 $ 3.90Reduce 23% $ 1.14MEL $ 5.00 $ 3.70Sell 26% $ 1.30TPW $ 8.40 $ 6.30Reduce 25% $ 2.10
Market doesn't like uncertainty. So from now, till March when the review is out, the SP for the power shares ain't looking too bright. If going purely for the div, I would rather opt for HLG.
I don't put much stock in moaning-blackhole but the point is that its highly likely that most of the true professional analysts will be downgrading for the significant extra risk and all the gentailiers have enjoyed an exceptional run.
Holders that paid near $5.50 are in for a whole lot of pain, capital loss will make divvies look miserable (Been there done that) PS-If it looks and smells overcooked then it is overcooked.
Like some other share at $18 eh mate...oh wait, that share pays no divvies to ease holders pain :p
Anyway...aside from the fundamental change in the risk landscape its well worth noting that CEN, GNE and MEL have all broken down through their 100 day moving averages. For what its worth TPW and MCY haven't.