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  1. #101
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    Quote Originally Posted by 777 View Post
    Are they not in the process of selling off a pile of land which would give them the ability to pay out the higher dividend?
    Apologies if this has already been posted http://www.stuff.co.nz/business/indu...-land-for-sale

  2. #102
    percy
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    Quote Originally Posted by karen1 View Post
    Apologies if this has already been posted http://www.stuff.co.nz/business/indu...-land-for-sale
    Thank Karen1.

  3. #103
    IMO
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    Market Analysis ,at the risk of the wrath of the financial markets Authority(who've effectively outlawed him and his paid sub "Market Analysis for doing the same with MRP according to James Cornell) has a Dont Buy research note in his newsletter

    "Paying unsustainable high divs to inflate the D/Y in an attempt to make shares look attractive to inexperienced investors could be misleading and deceptive conduct""
    Last edited by Joshuatree; 26-09-2013 at 01:56 PM.

  4. #104
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    Thanks too karen. That land worth re $20 million 777.

  5. #105
    percy
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    Quote Originally Posted by CJ View Post
    Profit is distorted by non cash items - mainly depreciation on revalued assets.

    They are paying out less than 100% of free cash flows, which is the amount of cash they have after doing all the required maintenance.
    I think a look of people are over looking this important fact.

  6. #106
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    I’ve decided not to invest in Meridian.

    The forward electricity demand growth in the sector is low at 1.2% p.a and the market is presently over supplied with capacity and probably will continue to be so for a few years. It is likely that Meridian will trade in a tight range as CEN has done so for the last four years and MRP will probably do so for the same reasons.

    The wild card here being if Genesis is floated inclusive with the Huntly coal fired units or whether they are mothballed and retained by the government as emergency reserve, much like Whirinaki was. A mothball announcement would be a better time to buy the sector.

    Meridian may have some degree of forward growth through a small level of build abroad or through acquisition, but with the dividend policy they intend, this will be limited.

    The IPO is occurring at a time of average hydrology, and I don’t believe that the IPO valuation and incentives out way simply waiting for a better entry point during dryer low storage events, although this could be some time away or even a year or two.

    That’s not to say that the Meridian asset portfolio is not exceptional and that as a dividend play, this stock may suit those looking for low risk income which provides better return potential than a fixed term deposit, provided a trading range does not become a point of stress.

    I’ve simply decided that there are much better value investment opportunities within the NZ50 at present and I can accept greater risk for greater return within my portfolio.

  7. #107
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    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

  8. #108
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    Quote Originally Posted by percy View Post
    I think a look of people are over looking this important fact.
    Quote Originally Posted by CJ View Post
    Profit is distorted by non cash items - mainly depreciation on revalued assets.

    They are paying out less than 100% of free cash flows, which is the amount of cash they have after doing all the required maintenance.
    I guess its my normal view that depreciation is an expense which if not incurred now , will have to be at some point, so as to allow the business to continue, and this would mean that a high short term yield (greater that profits) is only gobbling up the future - however as I understand it what you're saying is this may not be a concern with these very long lasting assets (hydro stations).
    For clarity, nothing I say is advice....

  9. #109
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    Fair point, peat. It's sometimes all too easy to dismiss depreciation as "not affecting cash profits/cash flow" and overlooking the need to replace assets sometime down the track.

  10. #110
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    Quote Originally Posted by peat View Post
    I guess its my normal view that depreciation is an expense which if not incurred now , will have to be at some point, so as to allow the business to continue, and this would mean that a high short term yield (greater that profits) is only gobbling up the future - however as I understand it what you're saying is this may not be a concern with these very long lasting assets (hydro stations).
    pretty much. Especially in an environment where there is no growth so you are only maintaining, not growing your asset base so free cashflows will be high. CEN has said the same so expecting their yeild to increase in the next few years too.

    My current thinking is:
    - this will be a good income share going forward, based on an entry price of $1.60
    - Greens/Labour policy is a risk so you really need to weigh up their change of getting in and if so, the chances that they implement as proposed. There are a number of other, easier options which would provide good results.
    - Tiwai not a major risk as Transpower will come through with the required cable. However, as the expensive generators decommission, the spot prices will be lower so less margin, but still more than the other companies. Upside potential if the smelter ramps up again as I think the new contract for discount power is for a lower quantity, the any increase will be at a higher price.

    You will have to hold on for 18 months to benefit from this as true price (solely looking at yeild) is looking more like $1.80, which the instos and buyers after IPO will be paying. The stag wont be there as the IPO discount is locked in for the instalment receipt period.
    Free delivery worldwide with Book Depository http://www.bookdepository.co.uk

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