MEL - Meridian Energy

**kiora** · 19-01-2021, 01:11 PM

Originally Posted by Jantar

What the smelter are asking for isn't discount, but merely a fair transmission cost. Tiwai pay much more than any other user in NZ on a MW per km basis, a total of 7% of the entire county's transmission costs, yet they are only 640 km (4 circuits, each 160 km) in length compared to the more than 12,000 km of Transpower's transmission lines in NZ .

In fact a complete new set of transmission lines from Manapouri to Tiwai could be built for what Tiwai pays in just over 5 years transmission costs.

Transpower and the EA are looking at a new TPM (Transmission Pricing Methodology) that would reduce the cost to Tiwai to bring them into line with what the rest of the country pays.

But but but was it $0.05 /kw?
Surely they can find some other industry to pay more than this?
https://www.stuff.co.nz/business/119...ranspower-bill

**dobby41** · 19-01-2021, 01:20 PM

Originally Posted by kiora

But but but was it $0.05 /kw?
Surely they can find some other industry to pay more than this?
https://www.stuff.co.nz/business/119...ranspower-bill

Now's the time to work on that replacement industry.
One idea was datacentres with a cable from south to Aus - but they take time to get built - time they now have.
Build the industries and next time the smelter comes calling tell them the new price or bu***r off.

**Jantar** · 19-01-2021, 01:27 PM

Originally Posted by kiora

But but but was it $0.05 /kw?
Surely they can find some other industry to pay more than this?
https://www.stuff.co.nz/business/119...ranspower-bill

Yes, the energy price was $0.051 per kWh. It is the transmission price you mentioned that I replied to. Most people fail to understand that the energy price and the transmission price are charged separately for large industries.

**Hoop** · 19-01-2021, 02:26 PM

Originally Posted by peat

yeh definitely coming back to fair value now with a PE of 103

/sarcasm.

Originally Posted by Norwest

You would think MEL was an tech company with amazing growth ahead looking at that PE ratio... until you wake up and realize its a boring gentailer.

Measuring MEL's PE Ratio and comparing it to "average" all market PE Ratios is not very meaningful. MEL has high non cash costs such as depreciation which makes the PE Ratio much higher than the "norm".
It's best to value MEL by other metrics or if you must use PE Ratio and try to make it meaningful..follow MEL's PE history so to compare then to now and every year in between to see the changes in its valuation.. then once you have that historic PE data, allowances have to be made as interest rates are now considered to be the primary driver for PE Ratios and affects the valuation.. I didn't say it was easy.

Is it over valued ?..I'm too busy to crunch the numbers.
Disc: have no MEL

**winner69** · 19-01-2021, 03:02 PM

Hoop's busy so I puled some numbers from Morningstar database

the 2021 NPAT is a forecast.

Need to bear in mind that the NPAT/EPS used by NZX includes abnormals and normalised EPS was a bit higher (lower PE)

Interesting forecasts seems to have profits declining over the next few years.... I know very little about this sector so can't comment if right

However the numbers - based on Hoops comments PE is still probably a bit high

**JohnnyTheHorse** · 20-01-2021, 03:41 PM

Back to where things were just before Xmas! Relentless selling today - pull up a 15min chart and look how it has just be steadily down with zero breather. Still expecting a bounce that can be played before the end of the day.