Contact Energy - CEN Chart

[PSE]

Maybe then an estimated PE for a stable slow growing company should be 15 for purchase and 25 to sell.
This would have had you selling out at $9 or $10 a few years ago before buying back in.

[PSE]

2014 report says they have 5b of plant and equipment but doesn't break down Clyde vs Te Mihi or TCC.
Gives a range of depreciation and then says they adjust the values appropriately from time to time.
Say the hydro is 3b and will last 200 years instead of 100. That's 15m per annum annual profit.
That is rubbish disclosure though. They should say what the assets are how much they are valued how much depreciated and on what basis are values adjusted.
So I can't read the annual report and know what the profit is - that's pathetic.
It amounts to them saying trust me - yeah right I say.

[Snoopy]

2014 report says they have 5b of plant and equipment but doesn't break down Clyde vs Te Mihi or TCC.
Gives a range of depreciation and then says they adjust the values appropriately from time to time.
Say the hydro is 3b and will last 200 years instead of 100. That's 15m per annum annual profit.
That is rubbish disclosure though. They should say what the assets are how much they are valued how much depreciated and on what basis are values adjusted.

I did some background work on the book vs replacement value of the Contact generation assets back in 2013 PSE. See my post 622 on this thread. This was when the Green/Labour power policy, should they come to power, was going to require generators to price power based on original cost of assets, plus an inflation allowance for wearing parts (the turbines)

I see that some generation assets were only depleted at 1% PA in AR2014. The dams? That means a 100 year life.

You are correct in that Contact don't break down individual values of different power stations. But they did tell us how much the new Te Mihi geothermal power station cost. So you can 'work backwards' from there and make some educated guesses to see if those book values for generation assets are fair. In short for Contact Energy, I decided the book values of the generation assets were fair at the time.

SNOOPY

[Snoopy]

I agree with 90% of what you say there Snoopy.
With respect to interest rates, if investors lower their required return due to low interest rates - isn't this just a way of justifying the bubble and the bust?

Good point. I guess the key is not to lower the yield you will accept (in my case I have chosen 6%) too much. You have to keep in mind that at some point interest rates will go up again. However, I do think they are unlikely to hit 7% or 8% in this business cycle or the next one. Deposit interest rates might hit 6%. But I think we are talking three or more years away at the earlies, and not in a hurryt. So there is time to reevaluate your position in the gentailers

SNOOPY

[horus1]

technology is affecting alternative sources of supply and reducing prices fast. the revenue stream is not secure in the medium term and that is important not the cost side.

[PSE]

I did some background work on the book vs replacement value of the Contact generation assets back in 2013 PSE. See my post 622 on this thread. This was when the Green/Labour power policy, should they come to power, was going to require generators to price power based on original cost of assets, plus an inflation allowance for wearing parts (the turbines)

I see that some generation assets were only depleted at 1% PA in AR2014. The dams? That means a 100 year life.

You are correct in that Contact don't break down individual values of different power stations. But they did tell us how much the new Te Mihi geothermal power station cost. So you can 'work backwards' from there and make some educated guesses to see if those book values for generation assets are fair. In short for Contact Energy, I decided the book values of the generation assets were fair at the time.

SNOOPY

Presumably the dams are at 1% and good you did the breakdown to find the asset value but you shouldn't have to, the 5b is probably fine I just don't like the 'trust me' arrogant attitude. This attitude is not unique to CEN it is endemic.
You can work out a cost per MW and look at the stations owned, it would cost far more than 5b to replace the assets that's for sure. If Clyde cost $2b in 1990.
Horus, so what does the islanded NZ grid do in winter when there is no power from the sun?
Hopefully your wishful thinking will keep you warm but for my part I will rely on the electricity grid.

[Jantar]

Contact to supply a portion of Tiwai's demand.

https://www.nzx.com/companies/CEN/announcements/267828

Well 80 MW is not much, but it is locked in for a long time.

[Snoopy]

Technology is affecting alternative sources of supply and reducing prices fast. the revenue stream is not secure in the medium term and that is important not the cost side.

Horus, if more localized power generation is the way to go in the future, like roofloads of solar panels, then what is to stop Contact 'renting' roofspace in Mangere, and opening up the "David Lange Memorial Power Station", a joint initiative with Pacifica people. Contact owns the panels and gets (most) of the benefit.

As I see it the main 'threat' from distributed generation and battery storage is actually to the lines companies, not the gentailers.

SNOOPY

[horus1]

The threat is that anyone can and will do it, Some will leave the grid with solar plus batteries and this will hurt the generators and transmission more than distribution. As well loads are declining due to efficiency .

[xafalcon]

Horus, if more localized power generation is the way to go in the future, like roofloads of solar panels, then what is to stop Contact 'renting' roofspace in Mangere, and opening up the "David Lange Memorial Power Station", a joint initiative with Pacifica people. Contact owns the panels and gets (most) of the benefit.

As I see it the main 'threat' from distributed generation and battery storage is actually to the lines companies, not the gentailers.

SNOOPY

Adequate economically feasible battery storage is 5-10+ years away.

Battery capital cost will be high, limiting uptake in the early years.

Lengthy captial pay-back period will deter many

So IMO lines companies have little to worry about in the foreseeable future.

Retailers will be the most effected parties as grid-tied systems accelerate their proliferation on roof-tops. Displacing daytime domestic energy sales at $0.29/unit, and replacing with commercial sales at lower levels.

Many grid-tied converts will also fall into "low-user" category and receive lower pricing for their electricity supply. A double-bonus