MEL - Meridian Energy

[macduffy]

I'm planning on stagging Meridean.
Does anyone have any advice on stagging an ipo?? Or know of a book etc.
Is there a strategy for it? I watched the MRP and ZEL ipo's and noticed that it peaks then drops of a little bit at closing. Is there any technical analysis tools that can help determine the peak?

There's no book on stagging as far as I know and if there is I wouldn't be reading it! Actual experience on the day and immediately afterwards will depend on a variety of factors - the strength of demand beforehand; appeal to instos ( and whether or not the issue will be included in the various indices - which affects the degree of "must have" for various index and other funds - almost certainly will make the NZX50 pretty quickly; how satisfied those instos are at the IPO; the tone of comment from the press and brokers; random news events ranging from the political to the economic to the force of nature, etc.

In short, I wouldn't waste my time trying to second guess the market but would decide on a course of action beforehand, eg ride the market up, if it goes up, and sell when the trend reverses. That's if I was going to stag the issue - which I'm not!

And that's not advice, just an observation.

[Wolf]

Cheers Macduffy
I haven't stagged anything before just came into some cash and looking to take a punt before putting it in some other companys for the long term.
I'll have a decent look at those factors.
I'll probably hold and sell the second it dips, not interested in holding.
Agreed Moosie got a full allocation of ZEL and am stoked
Hopefully there's enough of a rise to get something out of it.

[minimoke]

I'm planning on stagging Meridean.
Does anyone have any advice on stagging an ipo??

Not advice but my general approach. First thing is I have to be comfortable that there will be a 15 percent gain on listing. It's not a hard and fast number but I am essentially looking at market sentiment pre listing. There was not enough strength in mrp so I wasn't in. I don't feel there is enough with meridian so I am not in. I plan on running with the market for three days. That means I watch pretty much every trade. I ride the rise over that time and once I get a sense there is a change in momentum I get ready to hit the sell button. A 5 percent dip off the high is about enough to do it.

[amalgam]

IMHO the only reason to stag a IPO is if one is very sure the share is going to rise after the listing

I am not sure there is that much interest in Meridian--its not very difficult to get a full allocation [if u want some]
So why will the share rise after listing?

The only people making money out of these are the brokers--on buying & selling

[macduffy]

IMHO the only reason to stag a IPO is if one is very sure the share is going to rise after the listing

I am not sure there is that much interest in Meridian--its not very difficult to get a full allocation [if u want some]
So why will the share rise after listing?

The only people making money out of these are the brokers--on buying & selling

That would probably be true if we knew that the investment funds etc (instos) were going to get their requirements filled at the IPO. Given the size of the IPO, there's little doubt that Meridian will quickly climb into the NZX50 where a number of funds, particularly index funds, will need to invest to an appropriate level.

[Daytr]

Spot on Iceman, Western World production of aluminium is stuffed. That 16M tons of new production is around 40% of current world consumption. The price ain't going no where until high cost & loss making operations in the West such as Tiwai is shut down. Will tax payers be willing to stump up more to keep this going in the future particularly when the main beneficiary after Southland is MRP is partially publicly owned? There may be a quick buck in this with the yield its offering there may be not, however the Government is irresponsible to float such an asset that is so reliant on another redundant one.

Have been studying various info on Aluminum smelters around the World. My reading of it is:
# Currently there are plans for around 35 new aluminum smelters worldwide
# 25 in Asia, 3 in Middle East, 4 in Europe /East Europe, 2 in Canada & 1 in Argentina
# Total production for all those at full production would be around 16 million tonnes p.a.
# Estimated electricity price in China & India is around USD 40/Mwh
# construction cost of India/China is around 1/3 of the Western World
# the average cost of electricity at the other planned smelters is around USD 20-25/Mwh
# First NZ Capital estimates new electricity contract with Tiwai at USD 39.4/Mwh

My conclusion is that, unless we get around 20% increase in aluminum prices and around 10% drop in FX for NZ$ against USD (both possible), Tiwai has no future. Shadbolt, prepare Southlanders for that happening, sooner rather than later.
BUT, from my reading of it, it will have only minimal impact on Meridian, CEN & MRP. The Labour/Green threat is the real issue here.

I really want to invest in Meridian. Think they have great assets, sustainable future dividends from very positive cashflow, but fear political changes.
For me the question is, do I put my money faithfully into Meridian or do I start liqidating NZ assets and move them off-shore fearing a Cunliffe takeover ?

[CJ]

Spot on Iceman, Western World production of aluminium is stuffed. That 16M tons of new production is around 40% of current world consumption. The price ain't going no where until high cost & loss making operations in the West such as Tiwai is shut down. Will tax payers be willing to stump up more to keep this going in the future particularly when the main beneficiary after Southland is MRP is partially publicly owned? There may be a quick buck in this with the yield its offering there may be not, however the Government is irresponsible to float such an asset that is so reliant on another redundant one.

The Tiwai closure will only have a 2c impact on Meridian so not a real concern. I also read somewhere that Tiwai is about middle as far as costs go, so is by no means the first smelter to be closed.

missed icemand post, nice information, still the dividend and discount is set for the next 12 months so after that dump the stock....but in the mean time the discount stands and so does the dividends...

But if everyone does this, and they all do it just before you, the price you sell at will be lower, eliminating the benefit of the higher yield.

[macduffy]

[QUOTEhowever the Government is irresponsible to float such an asset that is so reliant on another redundant one.
][/QUOTE]

That depends on the assumption that loss of the subsidised Tiwai contract would be detrimental to Meridian as distinct from its effect on the NZ economy. We've seen good arguments made here that it would be the thermal generators such as Genesis that would be impacted as the cheaper Meridian Manapouri (hydro) power became available to the wider market. All depending on completion of the scheduled Transpower upgrades of course.

[Joshuatree]

Martin hawes rates meridian a good income play.

[iceman]

should be nothing stopping anyone else from getting cheap money, I went out and secured 18 months @ 5.6% to purchase Meridian shares.

Same here. Secured 18 months fixed term and interest only at 5.5%. Broker also confirmed my full application had been "reserved". So I will definitely be a Meridian shareholder.