Contact Energy - CEN Chart

[craic]

As a CEN shareholderfor several years, I have watched my inv. in that company slowly drop away to the point where I, for one, consider them a second rate badly managed outfit. I dumped the shares last week and now have the pleasure of watching that little pile growing in SKC. I am a customer and quite happy to remain because I have an efficient logburner right beside the water heating and endless firewood. In winter the power bill drops right down because the fire boils all the water and heats the house. Just to put some icing on the cake, Unison, the power lines people have announced that we can expect a cheque for $125 in a week or so, a refund to all customers in this area. This is the second or possibly the third annual refund they have made. Come and live in sunny Hawkes Bay Where its winter time and the living is easy.

[CJ]

The only proviso I would add is that CEN will still be constrained by competition in the degree to which they can reduce the discount. That won't be entirely at their discretion now that consumers are becoming used to shopping around for their electricity. CEN will be well aware of that from their recent heavy losses and as prices increase, consumers will become ever more prone to switch.

Butt their big discount encourages the customers they want (electronic payers who pay in full) and penalise those they dont want (late payers or those that pay manually).

[macduffy]

No argument there, CJ.

I was only qualifying the point about CEN being able to reduce the discount "entirely at their discretion". I don't see the market being that compliant to Contact's whim these days!

[troyvdh]

...OK...I do have a "thing" about this company....none the less....could anyone who has sold CEN in recent times state why...most sales appear to have been made on mimimal value/volume...CEN is paying nigh on 5 % tax paid..better tha banks et al...the SP is at historic lows...do folk believe that "things" ..can indeed get worse....cheers

[fish]

...OK...I do have a "thing" about this company....none the less....could anyone who has sold CEN in recent times state why...most sales appear to have been made on mimimal value/volume...CEN is paying nigh on 5 % tax paid..better tha banks et al...the SP is at historic lows...do folk believe that "things" ..can indeed get worse....cheers

IMHO unlikely to get much worse-annual report is out soon and I suspect results will be poor-wet year,cheap electricity prices,plus loss of customers .
once this is out i expect we will see a turn around.
Look at power prices for august compared to previous months-http://www.electricityinfo.co.nz/comitFta/ftapage.mainp
As I found out on monday they have gone from being the most expensive to the cheapest for good payers-check out your own power prices at powershop . Plus fly-buys.
Hydrolakes and input haves recently fallen below normal and demand up.

So I feel potential downside is small-perhaps 20 cents a share-upside in next year is tremendous .

[Jay]

Hope you are right fish.

I changed to them about a year ago when they were offering fixed price for 2 years I think it was at prices cheaper than our previous suppler by quite a bit - saving around $250 pa (- we are not big electricity users) and now with a 22% discount - have taken up that "offer" as well.

[craic]

From 570cps down to 500cps in one year. How can a 4.99% dividend be seen as good value? as one poster suggests. You lose 70 cents and gain 25 cents per share in a year.

[macduffy]

Grossed up with imputation credits gives a yield - presumably historic - of 7.05% for CEN, according to the DomPost. Not a bad return in today's conditions.

I'm taking a similar view to fish in that the downside appears limited, with potential for good capital gain if a few ducks fall into line. Potential renewed interest from Origin adds a speculative element.

[craic]

My figures come from DirectBrokings "detail" and the simple one-year graph on the same site. Dividend is given as 4.99% and the capital drop of 70 cps over one year shows the share as a dog in todays conditions. They would need to pay a dividend of up around 30% for the holder to break even.

[macduffy]

Fair enough, craic. But that's history now and what's important is CEN's prospects going forward. ( Can't believe I wrote "going forward" - hate that term!)

Different views are what make the market!