MEL - Meridian Energy

[fungus pudding]

hope no one is looking to stag again, IRD sitting in wait for those fools again and to compare with the MRP IPO

Huh? What's going to worry the IRD about a quick sale? Their only concern is whether tax is paid when due.

[Joshuatree]

First NZ Capital research here if anyone hasnt seen it https://www.firstnzcapital.co.nz/public/

[iceman]

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 ?

[BlackCross]

As Mr.Gaynor says the big gainers from these floats are Key's investment buddies.

"The investment banks in charge of selling Mighty River had the potential to earn up to $1,333,334 each if they reached certain price and value targets.
This time around the bankers will be able to earn only up to $750,000 if they reached certain price and value targets.. Commission fees are then paid on top of that...."

http://www.nzherald.co.nz/business/n...ectid=11128967


Brian Gaynor, an executive director of Milford Asset Management, said initial public offers were a "gravy train" for the investment banks.
"Is this too high? They are all too high."
Gaynor said bankers were incentivised to get the highest price possible for the seller but there was little to ensure the price of the shares was not lower a year after the float.
He said that while the Meridian float was bigger, the size of a float did not make much difference to its costs.
"You are still having to go through the same process."
The bankers and brokers involved in the deal will get paid after the sharemarket listing, set down for October 29, despite 40 per cent of the money not due to be paid until May 2015..."

So, who has more incentive to alter the share price. Gaynor or the bankers? Looks like the latter to me.

[iceman]

As Mr.Gaynor says the big gainers from these floats are Key's investment buddies.

"

And poor Gaynor doesn't fit into that eh ? I used to really like Gaynor's articles but recently he's gone really strange and I no longer put much weight on his comments. I was also very close to moving my retirement savings (those out of my day to day control) to his funds but belatedly decided not to because of what I regard as his recent change of tune !

[percy]

And poor Gaynor doesn't fit into that eh ? I used to really like Gaynor's articles but recently he's gone really strange and I no longer put much weight on his comments. I was also very close to moving my retirement savings (those out of my day to day control) to his funds but belatedly decided not to because of what I regard as his recent change of tune !

From what I have observed "The Iceman Self Managed Fund" [TISMF] would have out performed all NZ Funds,including Milford over the last couple of years.Should "TISMF" be able to retain Iceman as Fund manager, this out performance should continue into the foreseeable future.!

[CJ]

First NZ Capital research here if anyone hasnt seen it https://www.firstnzcapital.co.nz/public/

I think he was a MER employee till recently so he will have a lot of knowledge (bias?).

The interesting thing out of the report is what is the correct metric to use - DCF or EV/EBIT (cash or profits)?

I've been focusing on the cash/Dividends

[iceman]

Thanks Joshuatree for posting this link. I hadn't read it. One incredible bit of info in it is that in 2006 Meridian had 365 full time staff and in 2013 they had 827. Sales volumes have been static during this period. Efficiency of Government owned companies right there for all to see !

[bull....]

another thing is retail investors only pay 1.60 if institutions pay 1.80 then potential ipo opening price is 1.20 no wonder they dont want to pay anymore than 1.60 cause it designed to let retail investors make money?

[blackcap]

another thing is retail investors only pay 1.60 if institutions pay 1.80 then potential ipo opening price is 1.20 no wonder they dont want to pay anymore than 1.60 cause it designed to let retail investors make money?

Don't know if it works like that bull.... I think the price will be $1 for both insots and retail investors but retail investors then pay $.60 for the second installment while instos pay $.80. So the opening price will still be $1.00. Because if you buy on market, regardless if you are retail or insto, you then pay the $.80 second installment.
That is how I understand it anyway.