MEL - Meridian Energy

[CJ]

Some interesting comments re CEN and MRP. As noted in my previous post, Meridian would be less effected than other re tiwai but more from Labour/Greens.

http://www.kiwiblog.co.nz/2013/09/en...re_prices.html

[Daytr]

Aluminium production in the Western World is a dead duck, so why would you even contemplate buying into a major supplier to a smelter that should & quite likely could be closed. I have traded base metals professionally for 15 years in Australia & one of my customers had a large stake in an ali smelter & they could have locked in a price of around $2800/ton at the time. I told them to hedge the bejeebers out of it & then sell their stake as China just keeps ramping up cheap production & the Mid/East is doing the same as they want to diversify away from oil & create middle management jobs & use their cheap energy to do so. There are also other countries in Asia & South America looking to emulate what the Mid/East is doing & what NZ did in the 1970s to absorb excess power created by the bigger than required hydro power stations. The idea was then bigger was better & perhaps it was, however now it doesn't make sense at all & not really sure it even did back then. Its obviously a political hot potato due to the jobs that would be lost etc & reminds me of the car assembly industry in Australia that has also been subsidized by the tax payer for far too long. Rio has written off something like $30Bln on their aluminium assets around the world. When they bought them we (commodity trading desk) thought they paid double what the should have, but infact it was more like triple. National is not listening to the public on many fronts & imo have lost sight of what average Joe NZer wants & there is a chance they could be turfed out at the next election particularly if the Greens & Labour form a coalition & you can bet the Maori parties would join them as well. So to make a quick buck the IPO has to show a quick profit otherwise you could be sitting on a lame duck imo. Mighty River has hardly been a stellar investment & I think this one has far more complications than MRP, again just my opinion obviously.

[percy]

Demand for power even without Tiwai must be on a strong growth curve with all the new power conections required for irrigated dairy farm conversions alone. No dought the new City of Christchurch will need a bit as well .

I believe there are a lot more South Island farming areas using irrigation for crops, and there are a huge number of dairy farm conversions going on for the foreseeable future .They use thousands of dollars of electricity a month/week to run.
I also agree with you, that the new City of Churchurch will put demands on generators.
Meridian will find themselves "well positioned" to supply these customers.

[percy]

Comparing with Z which also has little growth in the forseeable future but is a good yield play. Currently up re 8.3% up since listing. I guess it depends on the Instos and how keen they are to take up. Anyone heard anything? cheers JT

Haven't heard anything.
I had cash sitting at the bank.Emergency fund to last us a year if needed.
Decided not to have any emergencies for the next year,so have put two thirds of it in Meridian and one third in ZEL.[brought at issue]

[CJ]

Aluminium production in the Western World is a dead duck, so why would you even contemplate buying into a major supplier to a smelter that should & quite likely could be closed.

Because if they do close, they can sell that same electricity into the market at a higher price.

This will require Transpower to build extra transmission lines.
It will also result in expensive generators closing so the spot rates will reduce but the effect on Meridian will be less than the other power cos since its costs are low.

[CAM]

Because if they do close, they can sell that same electricity into the market at a higher price.

This will require Transpower to build extra transmission lines.
It will also result in expensive generators closing so the spot rates will reduce but the effect on Meridian will be less than the other power cos since its costs are low.

Thats my thinking as well. Havent looked at the likely sell prices of electricity though.
If Tiwai closed and they could only sell half the power but got twice the price.... leave them pretty much even???

[troyvdh]

surely at the end of the day (I hate that) it aint a case of all in but perhaps just a wee bit.....buy a few...to add diversity...to what you have already....Sure as hell JK does not want a repeat of the last gummit IPO....the debate however is fantastic....

[CJ]

does anyone know if they will offer a divi reinvestment plan with the first few dividends.

i don't know but a DRiP is inconsistent with the govt requirement to maintain 51% as they will want the cash! not further shares to maintain that %

[percy]

surely at the end of the day (I hate that) it aint a case of all in but perhaps just a wee bit.....buy a few...to add diversity...to what you have already....Sure as hell JK does not want a repeat of the last gummit IPO....the debate however is fantastic....

At the beginning of the night I think you are maybe you a right !

[percy]

surely at the end of the day (I hate that) it aint a case of all in but perhaps just a wee bit.....buy a few...to add diversity...to what you have already....Sure as hell JK does not want a repeat of the last gummit IPO....the debate however is fantastic....

At the beginning of the night I think you are maybe right !