CNU - Chorus

[Casino]

Are we witnessing an increased flow of money from market darlings to outcasts? Something I couldn't grasp at the start of the year was the market's seemingly self-contradictory fetish for internet companies and misgivings about fibre.

[bung5]

I tried to value Chorus after the price fell of a cliff and the SP was about $1.40. I couldn't even justify that price and I don't think anything has materially changed since then.

Obviously any value depends on what happens with the Commerce Commission. Maybe there are a few leaks from there that are helping the price rise? Or is it just a gamble that the regulated price will rise?

Chorus is pretty hard to value because so much relies on the future price they can charge for services (which may or may not be regulated), plus the PV of the huge interest-free loans from gummint.

A bit of a risky bet for a utility.

What value method did you use and what revenue numbers? Any consideration for Fibre uptake? I notice all the research reports I have seen had buy recommendation.

The major news that has come out since then was the independent report for FPP and the cost of a replacement network for the copper was very favorable indicating a positive draft in December. I'm also guessing there has been some unofficial indications of what that draft price will be to the big boys.

[bung5]

A bit of a risky bet for a utility.

I also think if Chorus was priced as a utility and the copper price is set to the same or above previous levels it could be trading $4 +

[BIRMANBOY]

[BlackPeter]

What value method did you use and what revenue numbers? Any consideration for Fibre uptake? I notice all the research reports I have seen had buy recommendation.

The major news that has come out since then was the independent report for FPP and the cost of a replacement network for the copper was very favorable indicating a positive draft in December. I'm also guessing there has been some unofficial indications of what that draft price will be to the big boys.

The 20 stock market analysts polled by the Financial Times all have a clear view on CNU, just not the same. The recommendations go from SELL (1 opinion) over UNDERPERFORM (3), HOLD (7), OUTPERFORM (5) through to BUY (4). One of the widest recommendation spreads I have seen so far.

Still - yes the majority is positive, though if you look at the 12 month predictions (range $1.50 to $2.85 with a median of $2.10) it appears we might have already passed the middle line.

Taking this I would rate CNU at current price as "Hi risk, diminishing returns". This company does not pay a dividend, has a huge leverage and is in the hand of a bunch of bureaucrats (ComCom) who care more for their career than for the good of the people, and they are certainly not interested in benefitting CNU share holders.

Not the type of thrill I am after ...

[bung5]

I understand where you are coming from , I guess it depends quite a bit on your perspective. Coming from a large portfolio of ASX explorers my CNU investment seems very low risk :P

[mikeybycrikey]

What value method did you use and what revenue numbers? Any consideration for Fibre uptake? I notice all the research reports I have seen had buy recommendation.

The major news that has come out since then was the independent report for FPP and the cost of a replacement network for the copper was very favorable indicating a positive draft in December. I'm also guessing there has been some unofficial indications of what that draft price will be to the big boys.

I was really just trying to work out DCF and see where it got me. I was looking at it that way because I was trying to understand what impact the repayments of the government loans (in 2025, 2030 and 2035, I think) would have.

I've just looked back through my spreadsheets now and they're a bit of a mess. I think the process all got a bit too hard. It's quite difficult to forecast the composition of their product line and pricing years into the future. Maybe I'll have another look at it.

[Bobdn]

Good one Birdman.

[barleeni]

The 20 stock market analysts polled by the Financial Times all have a clear view on CNU, just not the same. The recommendations go from SELL (1 opinion) over UNDERPERFORM (3), HOLD (7), OUTPERFORM (5) through to BUY (4). One of the widest recommendation spreads I have seen so far.

Still - yes the majority is positive, though if you look at the 12 month predictions (range $1.50 to $2.85 with a median of $2.10) it appears we might have already passed the middle line.

Taking this I would rate CNU at current price as "Hi risk, diminishing returns". This company does not pay a dividend, has a huge leverage and is in the hand of a bunch of bureaucrats (ComCom) who care more for their career than for the good of the people, and they are certainly not interested in benefitting CNU share holders.

Not the type of thrill I am after ...

Seems that there may be some wisdom in your words above, as the recent rampant uptrend has possibly settled around that median valuation of $2.10 as above? I guess it had to stop sometime, Im just wondering if the recent uptrend has overshot the mark and we may see a little bit of a retreat now for the next few weeks?

And to be fair, I think in regards to your comment about stopping the dividends above, it should be mentioned this was a temporary measure. I understand they are required to halt dividend payments up until around mid next year, and after that free to do as they wish, which is only 6 months away potentially?

[BlackPeter]

Seems that there may be some wisdom in your words above, as the recent rampant uptrend has possibly settled around that median valuation of $2.10 as above? I guess it had to stop sometime, Im just wondering if the recent uptrend has overshot the mark and we may see a little bit of a retreat now for the next few weeks?

And to be fair, I think in regards to your comment about stopping the dividends above, it should be mentioned this was a temporary measure. I understand they are required to halt dividend payments up until around mid next year, and after that free to do as they wish, which is only 6 months away potentially?

Sure - anything can happen. It is well possible that people who buy CNU at current prices will be happy in 12 months about their investment (be it due to SP rise, dividend or a mix of both), but it is as well possible that they might be quite unhappy. IMHO option 2 is more likely, but who am I to say.

If we trust for a moment the analysts (and just take the average of their recommendations), than whoever buys now will sit in 12 months still on a share worth $2.10, and they might have received a dividend if ComCom plays it nice (which is in no way guaranteed). If they received a dividend, than it certainly will be less spectacular than the last one CNU paid.

Does this sound like a winner to you?

In my books there are better shares to invest my money currently, however all the best to anybody investing at current prices into CNU.