MCY Mercury NZ ( MRP Mighty River Power)

[Snow Leopard]

Full year out:
Profit up
Divvy 8.8 ordinary + 5 special [cps] fully imputed.
Gungung Kawi looks beautiful in the early morning light.
Hotel breakfast OK, except for Coffee! Why is hotel breakfast Coffee always so bad?

Best Wishes
Paper Tiger

[Fuger]

Full year out:
Profit up
Divvy 8.8 ordinary + 5 special [cps] fully imputed.
Gungung Kawi looks beautiful in the early morning light.
Hotel breakfast OK, except for Coffee! Why is hotel breakfast Coffee always so bad?

Best Wishes
Paper Tiger

Did you ask about the quality of the coffee when you booked the hotel?

[Snow Leopard]

Did you ask about the quality of the coffee when you booked the hotel?

My customer booked this hotel (a Swiss Bel Inn) for me. Never stayed here before.
I have a preferred hotel in most places I go to regularly.
I now have to go to Singapore next week and was mortified that my favourite hotel is fullly booked.
Chose another hotel without the breakfast option, but with a Ya Kun and more close by.

Excellent year for Mercury, but crowing over the name-change (sorry, rebranding exercise), is a waste of words.
Next year probably more normal so a few $ less expected.

Best Wishes
Paper Tiger

[Joshuatree]

Worked out well for you fish, esp with the special divvy.

[macduffy]

Excellent year for Mercury, but crowing over the name-change (sorry, rebranding exercise), is a waste of words.
Next year probably more normal so a few $ less expected.

Yes, not all re-branding works out as expected. You were probably still a cub, PT, when the then NZ Breweries decided to rebrand their local brews (Lion, Red Band, Wards, etc ) as Lucky. Turned out to be distinctly Unlucky and NZB quickly reverted to the old brands. Mercury is a different matter - being a well-established name in power retailing in the big metropolis.

[Marilyn Munroe]

I get the name change to harmonize brands but what is the bee logo all about?

Boop boop de do
Marilyn

[Snow Leopard]

If you can actually it make past all the stupid pictures of what I thought were rats but I am told are actually dogs (see here) then on page 2,594 of the annual report in the accounts (or note 5, if that is easier for you) you will find this little gem:

"No imputation credits are available at 30 June 2017 (2016: $2.1 million) as the imputation credit account has a deficit of $24 million. The imputation credit account is required to have a surplus balance at 31 March each year" (my emphasis)

It is getting increasingly difficult for them to time the tax payments in order to fully impute the dividends, although they are pulling the rabbit/drowned rat/weird dog out of the hat this time.

Best Wishes
Paper Tiger

[fish]

Worked out well for you fish, esp with the special divvy.

Thanks.
I now have the means to start looking at my first electric car.
Mercury subsidise electric bikes-they hopefully will do the same for electric cars sometime in the future.
Also install electric panels-but not yet where I live
Will be delaying purchase until I have time to make good use of the vehicle.

[King1212]

Hi guys..looking to get in...as apart of income stock. Looking at thier juicy fully imputed dividend.

with NZ population increasing, company's initiative of EV charging and solar..plus well managed company, good rain and positive news on Tiwai smelter......MCY is well positioned?

is it a good entry point? Looking forward to hear from the gurus.....

[Snoopy]

So how do we reflect the potential to build this new power station in today's valuation? This will be determined by the 'effective power generating capacity' ( maximum capacity x expected time ultilisation ) of all of the existing generation capacity.

1044MW Hydro (existing) x 0.514 = 537MW (effective)
463MW Geothermal (existing) x 0.940 = 435MW (effective)
100MW Geothermal (theoretical new) x 0.940 = 94MW (potentially effective)

Hence the potential effective new theoretical capacity increase is:

94 / (537+435) = 10%

Since the overall market would have expanded by the time this new station was commissioned, I would argue that this thin air capital generated since EOFY2013 represents an increase in value of 10% based on the underlying worth of the company today. So my final EOFY2016 valuations are:

$2.61 x 1.1 = $2.87 (based on averaged, normalised eps)

$2.45 x 1.1 = $2.70 (based on averaged, normalised ordinary dps)
<snip>

Summary:

I value MCY as worth between $2.70 and $2.87 (ex-dividend). At $2.93 on the market today, I consider MCY to be slightly overvalued. It is nowhere near overvalued enough for me to consider selling though. By contrast if I was buying, I always like to buy in slightly below fair value. My target buy in price, based on a dividend yoeld of 6.5% would be:

$2.49 to $2.65.

Right now, I'm neither selling nor buying.

SNOOPY

discl: hold MCY

Hi King. I wrote the above post in October 2016, before the current weather pattern that was favourable to MCY became obvious.

Hi guys..looking to get in...as apart of income stock. Looking at their juicy fully imputed dividend.

with NZ population increasing, company's initiative of EV charging and solar..plus well managed company, good rain and positive news on Tiwai smelter......MCY is well positioned?

is it a good entry point? Looking forward to hear from the gurus.....

Your points above I agree are all worthy of attention, but just to give them some context:

1/ MCY have no plans to build a new power station in the declared future. That means that free cashflow is likely to significantly exceed earnings. And that points to the likelihood that dividends will not be fully imputed over the next few years.

2/ Population increase should underpin higher earnings in the medium to long term.

3/ Significant night time charging of EVs is a speculative long term earnings driver. Some say EV's are only a stop gap technology before more widespread adoption of hydrogen powered vehicles.

4/ The tie up with 'Trina Solar' I do not see as significant. In NZ, the timing of peak solar generation does not match peak load. So we are still reliant on advances in battery technology to make the use of solar a mainstream profit driver.

5/ Good rain over the last few months is likely a 'weather event'. It might influence a higher one off dividend of a cent or two, but is not a long term value driver.

6/ Tiwai Smelter, along with the parent company's Australian aluminium manufacturing assets are for sale. Tiwai doesn't have the power supply issues that Australia has. It looks economic for now, but it could set power industry earnings back for 5-10 years if it did close. My feeling is that Tiwai won't close. But that doesn't mean there is no risk of it closing. And that smaller chance of closing is still a risk that you should build into your investment equation.

Given all the above, I would suggest that now is not a good time to invest in Mercury Energy. There is nothing wrong with the company, and you can make the argument that it is better managed than ever. However, it looks to me as though all of the good news is already built into the share price. I intend to remain a Mercury Energy shareholder for the foreseeable future. But is has crossed my mind that now might be a good time to reduce my holding a bit.

SNOOPY

discl: have held MCY since it was floated.