Been pointed out to me that our $ has been too high for some years and Rio go quiet when $NZ is below 60c , like now.
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Been pointed out to me that our $ has been too high for some years and Rio go quiet when $NZ is below 60c , like now.
Tiwai aside the gentailers are a few of the reliable divvy payers left. Could even these come under threat with the regulator/Govt forcing down power prices to help out people struggling to pay there bills especially with autumn /winter heading our way.?
Agreed. Nothing is safe in a depression. People are going to need to learn to live a simple life off whatever welfare they're entitled too and chew up as little capital as they can get away with.
https://www.stuff.co.nz/business/120...nz-in-lockdown
You'd think the free cash flows (of which the gentailers pay almost all of it out via dividends) of the entire sector would be hit... dividends already looking stretched for some gentailers, and probably now going to be under serious pressure to even maintain them at prior years levels... yet they are still priced (near) perfection in my view... MCY for example last year paid out $209m in dividends of its $237m free cash flow (over 89% of its free cash flow was paid out), and even after falling a firth since the heights of the mid 5's, is currently on a 3.7% yield... aka priced to pretty close to perfection... and if Free Cash Flow falls 10% this year, if MCY is to increase its dividend by a few percent, it will be paying out basically all its FCF (which surely is not prudent!). Time for the power sector to get a bit more realistically priced, eg go back to where it was around 2017.
Why are all the generators down so much??
aluminium prices at new lows in free fall at the moment , demand for aluminium in general and from NZ as its used in cars and aircraft is poor must be really weighing on rio mind.
As said peak dividends from power companies has been , maybe even lower dividends to come as demand is down for power usage and probably wont reach back to previous levels for quite some time , if rio stays they will cough up profits to them. they are expensive now on fundamentals against this negative environment.
Meridian have not even wiped out one year of share price appreciation... They were $3 start of 2019 ($4.20 currently). Were they incredibly undervalued then, or are they overvalued now?
Safer *relatively* yeah, but the current happenings will result in a measurable reduction in demand for power (people think that people in their homes using heatpumps makes a difference, but it doesn't, industry uses the vast bulk). Also big question mark in the short term on Tiwai
Yes, but if I'm not mistaken, the price that retail consumers pay per kwh will be quite a lot higher than the price that industrial and commercial consumers pay, so the overall revenue for the power co might not be so different. In any case, the lock down will only be a month (or two), then back to more normal demand patterns.
Tiwai? anyone's guess, but I expect the govt won't want another thousand jobs gone in the short term so will probably be highly motivated to reach an agreement
Plus the 2,260 jobs created indirectly.
Tiwai uses enough electricity to power 776,000 homes!