NWF - NZ Windfarms

[flyinglizard]

I just couldn't resist taking the 80% profit @ 23c this morning-I'm out. However, when the honeymoon is over, I'll probably get back in.

I just made my calculation, if the SP jumps to $0.40, the div yield is still above 4%.

[Waikaka]

I just sold as well. Getting a bit pricey for my liking.

60% profit.

[ratkin]

I will stay in for the time being, market is so crazy anything is possible

[Lego_Man]

Is this purely yield purchasing or is there a whiff of takeover/corporate activity in the air?

[mfd]

For those buying for a dividend yield - remember this is obtained from aging turbines currently with no plan to replace them. Unless there is a large capital raise or other activity, the yield will diminish over time and eventually go to zero.

[turnip]

Is this purely yield purchasing or is there a whiff of takeover/corporate activity in the air?

Whatever news is driving the buying it seems only Sharesies investors know about it. Average trade size is a bit over $300, lots of small buy orders and a few larger sell orders.

[wagwan]

For those buying for a dividend yield - remember this is obtained from aging turbines currently with no plan to replace them. Unless there is a large capital raise or other activity, the yield will diminish over time and eventually go to zero.

mfd, assume you've done your research here and read the various Annual Reports over the years?

Assuming that's the case, you'd know that:

• In the last 2-3 years in particular - under new board - reinvestment of free cash in CAPEX and maintenance programme has been consistent and more than sufficient to maintain the current asset base of turbines. Clearly evident in cashflow statements and AR commentary.
• With regular maintenance - which they're getting - a 35-40 year asset life is not unreasonable to assume
• Even without regular maintenance, asset life is estimated at 25+ years
• Given the windfarm was commissioned in 2005, and regular maintenance has been occurring, would expect useful life of the windfarm to be until circa 2040

Regarding the dividend yield, the current board has done what I think is a good job of providing revenue stability through the recently signed VVFPA agreement to Dec 2021.

NWF business model is simple and lean, just need to look at employee numbers, or OPEX in P&L to see that. So, with a solid income hedge in place, I don't see the dividend yield diminishing for some time. There are assets there and a plan in place to generate income from those assets for some years to come.

Result of the above being, crucially, dividend regularity and reliability for at least 12 months.

Past 12 months, likelihood of being able to re-negotiate another VVFPA at a reasonable wholesale rate has recently been supported by Tiwai sticking around, which would expect will support wholesale electricity prices for a few years to come. So, baring a major misstep from MGMT or the board, revenue stability and dividend regularity should be here to stay.

Yes building a new windfarm would be capital intensive and change the ball game. That said, I'd argue that's 10-15 years down the track, so not an immediate issue (10-15 based on ~20 years of useful life left, less a conservative 5-10 years to go through resource consent, capital raising, and construction etc.)

My two cents only, DYOR

[flyinglizard]

mfd, assume you've done your research here and read the various Annual Reports over the years?

Assuming that's the case, you'd know that:

• In the last 2-3 years in particular - under new board - reinvestment of free cash in CAPEX and maintenance programme has been consistent and more than sufficient to maintain the current asset base of turbines. Clearly evident in cashflow statements and AR commentary.
• With regular maintenance - which they're getting - a 35-40 year asset life is not unreasonable to assume
• Even without regular maintenance, asset life is estimated at 25+ years
• Given the windfarm was commissioned in 2005, and regular maintenance has been occurring, would expect useful life of the windfarm to be until circa 2040

Regarding the dividend yield, the current board has done what I think is a good job of providing revenue stability through the recently signed VVFPA agreement to Dec 2021.

NWF business model is simple and lean, just need to look at employee numbers, or OPEX in P&L to see that. So, with a solid income hedge in place, I don't see the dividend yield diminishing for some time. There are assets there and a plan in place to generate income from those assets for some years to come.

Result of the above being, crucially, dividend regularity and reliability for at least 12 months.

Past 12 months, likelihood of being able to re-negotiate another VVFPA at a reasonable wholesale rate has recently been supported by Tiwai sticking around, which would expect will support wholesale electricity prices for a few years to come. So, baring a major misstep from MGMT or the board, revenue stability and dividend regularity should be here to stay.

Yes building a new windfarm would be capital intensive and change the ball game. That said, I'd argue that's 10-15 years down the track, so not an immediate issue (10-15 based on ~20 years of useful life left, less a conservative 5-10 years to go through resource consent, capital raising, and construction etc.)

My two cents only, DYOR

Agree with what you said! My charted accountant wife has reviewed previous 5 years annual report, then bought in heavily with our kids education fund last Oct. She changed her account password and do not allow me to touch it. She said that she may sell it after 5 years.

[mfd]

I agree, the company is doing quite nicely now and have turned things around. I have held in the past and think management are doing quite well with the hand they have.

My point is, when possible yields of 4% are being discussed, it is extremely relevant to consider that the assets generating the yield are not expected to survive the 25 years they would need to pay back your initial investment at that yield.

Furthermore, there will come a time when turbines start to fail and the company runs through the spare parts in stock. You'll be aware the company that built the turbines is no more, so replacement parts could become quite an issue in the future. This could start to eat into the yield.

A good company, and a good buy at the right price, but the finite life of the assets and lack of current plan to build more must be considered. The yield should absolutely be high to reflect this reality.

[flyinglizard]

I assume that NWF has a diminishing 0.5% of dividend yield. I can nearly get back our whole investment after 10 years. This ignores the potentials of NWF capital changes, takeover, merge, or other business activities.


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