NWF - NZ Windfarms

[mshierlaw]

Annual results are out.

https://www.nzx.com/files/attachments/242541.pdf

It seems to be a tradition to release negative results towards the end of the day, and NWF is in this regard no exception.

Anyway - more power generated at a lower price (we knew that bit already) and a $4.9m impairment assuming lower future power prices (based on MoB numbers) results in a $3.9m loss.

Cash increased despite the $1m one off payment from Windflow only by roughly 600k, this makes you wonder how the next year will go ... but hey, maybe they finally manage to reduce these annoying legal fees (still 433k). Doubt however the latter, given that the resource consent process is still lingering.

So we can do what we always did: hope for more wind, higher power prices and a better board.

But hey - they even talk about the board being prepared to consider a divie for 2017. This will bring the SP into the stratosphere! Hope though the consideration will not be too exhausting for the new board, otherwise they might need to increase the board fees.

Discl: not one of my better investments. This will teach me to invest in environmentally friendly technologies ...

And not a buyer in site on the bids table. Keyword: TAKEOVER.

[BlackPeter]

And not a buyer in site on the bids table. Keyword: TAKEOVER.

Well, technically that's not correct - I still can see two buyers, but I admit the volume is not material.

Not sure about takeover ... Vector didn't made a move so far.

On the other hand - if the consent issues get resolved (which they might in the next half year or so) and the price is still right, they might be interested - a good time window would be for them probably before the board starts to consider dividends .

Just updated my DCF spreadsheet and it comes quite close to the published NTA (even a tick above - 15.7 cents), could justify a takeover offer around 11 cents - 20% above MA100 ?

They certainly could save a lot of money when taking NWF over - remove the board and two of the redundant managers (i.e. 2 out of 3 - Site manager, CEO, GM) and the wind farm is already profitable just for saving board fees and salaries!

Lets wait and see, anyway no other option around ...

Discl: holding - and no insider knowledge at all ... DYOR;

[Jantar]

Well, technically that's not correct - I still can see two buyers, but I admit the volume is not material.....

Hehe.. I won't say which bid is mine.

[blackcap]

I see the AGM is going to be held in Palmerston North on 29 November at 10.30AM with an opportunity to visit the farm at conclusion......

https://nzx.com/companies/NWF/announcements/289967

[BlackPeter]

I see the AGM is going to be held in Palmerston North on 29 November at 10.30AM with an opportunity to visit the farm at conclusion......

https://nzx.com/companies/NWF/announcements/289967

Yep, noticed that as well ... and must say - at l(e)ast something good coming out of the new board! Having the AGM in Palmy is in my view a first, but very sensible step to bring the wind farm closer to the minds of the locals - and make it a "local" company.

Bit more revenue for the local airport and for some of the pubs (and maybe hotels) ... all good!

[Snoopy]

Hedging is more than just an insurance scheme, it is mainly a revenue leveling system that should work to benefit of both parties involved. There are a large number of hedge products available from time to time; forward contracts on the ASX are just one of them, and probably the least used.

I have been looking over the derivative products for the NZ power market, as listed on the ASX

http://www.asx.com.au/products/energ...lectricity.htm

One curious thing. There is mention of prices traded, but no mention of volume traded.

e.g. NZ Electricity Benmore Base Load Monthly (EH) Futures

I would have thought volume traded is just as critical as price, because traders need to know the size of the market they are engaging with. So why is trading volume not recorded?

There is a link on the RH side of that page:

http://www.asx.com.au/documents/prod...-Peak-Load.pdf

This mentions the size of the contacts (between 67MWh to 74MWh, dependent largely on the number of days in the month). But it doesn't mention if there is any limit on the number of contracts traded. So once again it seems the hedging market is opaque.

So how does this ASX based "NZ Power hedging" market work with such (apparently) poor disclosure of market information?

SNOOPY

[JAYAY]

I have been looking over the derivative products for the NZ power market, as listed on the ASX

http://www.asx.com.au/products/energ...lectricity.htm

One curious thing. There is mention of prices traded, but no mention of volume traded.

e.g. NZ Electricity Benmore Base Load Monthly (EH) Futures

I would have thought volume traded is just as critical as price, because traders need to know the size of the market they are engaging with. So why is trading volume not recorded?

There is a link on the RH side of that page:

http://www.asx.com.au/documents/prod...-Peak-Load.pdf

This mentions the size of the contacts (between 67MWh to 74MWh, dependent largely on the number of days in the month). But it doesn't mention if there is any limit on the number of contracts traded. So once again it seems the hedging market is opaque.

So how does this ASX based "NZ Power hedging" market work with such (apparently) poor disclosure of market information?

SNOOPY

My limited understanding of hedging contracts is that they are essential for the large generators eg meridian, contact, mighty river etc especially as it is a cost they can pass on in their retail pricing.
However the benefits for a minnow like NWF are minimal if any.
The big beneficiary would be the hedge fund.
Correct me please if I am wrong.

[Jantar]

.....

I would have thought volume traded is just as critical as price, because traders need to know the size of the market they are engaging with. So why is trading volume not recorded?

There is a link on the RH side of that page:

http://www.asx.com.au/documents/prod...-Peak-Load.pdf

This mentions the size of the contacts (between 67MWh to 74MWh, dependent largely on the number of days in the month). But it doesn't mention if there is any limit on the number of contracts traded. So once again it seems the hedging market is opaque......

SNOOPY

The ASX is not the most common hedging platform for the NZEM. Many participants in that market are not even associated with the New Zealand power industry, but just using at as the TAB of the power industry and betting on what the future prices will be. One of the largest players is deutschebank. Contracts on the ASX are in 0.1 MW parcels, so the size of the contract is simply the number of MWhs contracted. Most hedging in the NZEM is simply company to company CFD contracts where companies with large thermal plant, or base load geothermal plant will want to sell CFDs at their SRMC or slightly higher to justify keeping such plant on load, or to buy CFDs at a price less than their SRMC to justify shutting down such plant for a reasonable length of time.

A small company like NWF would almost always lose money by hedging on the ASX, or by selling CFDs from an intermittent generation source, but could improve their earnings if they can buy CFDs at less than their average cost of energy. NWF's cost of energy is quite high at around $65 per MWh ( I would need to look back at the annual report for the exact figure) so if they could buy say 10 MW of CFDs at around $55 they would reduce their CoE and hedge themselves against the times that wind isn't blowing.

[JAYAY]

http://www.stuff.co.nz/manawatu-stan...ays-researcher

So now we have an "expert" who has no doubt been paid well to come all the way from Portugal to say what some vested interest wants her to say.
Why else would she bother coming here?

[Jantar]

http://www.stuff.co.nz/manawatu-stan...ays-researcher

So now we have an "expert" who has no doubt been paid well to come all the way from Portugal to say what some vested interest wants her to say.
Why else would she bother coming here?

They didn't need to pay someone to come from Portugal; we have our own experts here who can give the same advice. Unfortunately the Windflow turbines used by NWF are worse for low frequency sound than the Vesdas used by the opposition.