MEL - Meridian Energy

[couta1]

haha its sustainable dividend that counts , are you confident hlg div will be sustainable thru most economic conditions? They have paid an average of 30.25cps over the last 16 yrs and then add your imps to that. PS-That includes the GFC of 2008.PS-Check out the PE of MEL.

[bull....]

They have paid an average of 30.25cps over the last 16 yrs and then add your imps to that. PS-That includes the GFC of 2008.

i would argue that nz didnt really have a lasting gfc it was more like a blip

[couta1]

i would argue that nz didnt really have a lasting gfc it was more like a blip Your clutching at straws, its track record speaks for itself.

[bull....]

Your clutching at straws, its track record speaks for itself.

i dont dis agree hlg is well run and has done well and i personally treat it as a tradeable cyclical stock. in times like today i prefer sustainable. i will be sleeping soundly if things blow up and im sure the que's at the op shops will be bigger than hlg under these condions.

[IAK]

haha its sustainable dividend that counts , are you confident hlg div will be sustainable thru most economic conditions?

there is a reason hlg div yield is so high its called risk

dont forget only today and tomorrow to hoover up the gne div

Why not hold both? I'm 65:35 Mel to Hlg. Sleeping great :)

[couta1]

Why not hold both? I'm 65:35 Mel to Hlg. Sleeping great :) With around 30% of my portfolio in HLG I haven't noticed any effect on my normal 5-6hr sleep pattern.Lol

[boysy]

https://i.stuff.co.nz/timaru-herald/news/111680806/west-coast-storm-deluge-raises-south-island-hydro-lake-levels

[bull....]

With around 30% of my portfolio in HLG I haven't noticed any effect on my normal 5-6hr sleep pattern.Lol

yes sleeping very well knowing mel is out performing hlg lol

[sb9]

Director buying on market.

https://www.nzx.com/announcements/332859

[couta1]

yes sleeping very well knowing mel is out performing hlg lol You must be joking, my HLG holding is up 50% at the moment with a 20c fully imputed divvy to come in a few weeks. PS-Thats without adding all the other mega divvies I've had over the last two years.Lol

[bull....]

You must be joking, my HLG holding is up 50% at the moment with a 20c fully imputed divvy to come in a few weeks. PS-Thats without adding all the other mega divvies I've had over the last two years.Lol

its the hlg yoyo effect , be waiting for the return yo i will

[couta1]

its the hlg yoyo effect , be waiting for the return yo i will Me too so I can buy more.

[boysy]

Meridian well placed heading into winter Pukaki looks to be 98% full while across the various catchments MEL appear to be at 95% full. With MEL being long generation any further spike in wholesale prices will feed straight through to the bottom line ...

[Sideshow Bob]

Reads pretty well

https://www.nzx.com/announcements/333224


Highlights this month include:
▪ In the month to 5 April 2019, national hydro storage increased from 81% to 105% of historical average
▪ South Island storage sat at 109% of average and North Island storage at 67% of average on 5 April 2019
▪ Meridian’s March 2019 monthly total inflows were 136% of historical average
▪ Meridian’s Waitaki catchment storage at the end of March 2019 was 107% of historical average
▪ Storage in Meridian’s Waiau catchment was above average at the end of March 2019
▪ National electricity demand in March 2019 was 3.6% higher than the same month last year
▪ Meridian made calls on load under the Genesis Swaption in March and early April 2019
▪ March 2019 was New Zealand’s second equal warmest March on record. It was a dry month for many locations, although extremely heavy rainfall occurred in the western South Island on March 25-27. Drier
than normal soils were present across large parts of the country at the end of March
▪ New Zealand Aluminium Smelter's load during March 2019 was below the contract level of 622MW
▪ Meridian’s retail sales volumes in March 2019 were 21.4% higher than March 2018


Would be getting more inflows now also.

[bull....]

Reads pretty well

https://www.nzx.com/announcements/333224


Highlights this month include:
▪ In the month to 5 April 2019, national hydro storage increased from 81% to 105% of historical average
▪ South Island storage sat at 109% of average and North Island storage at 67% of average on 5 April 2019
▪ Meridian’s March 2019 monthly total inflows were 136% of historical average
▪ Meridian’s Waitaki catchment storage at the end of March 2019 was 107% of historical average
▪ Storage in Meridian’s Waiau catchment was above average at the end of March 2019
▪ National electricity demand in March 2019 was 3.6% higher than the same month last year
▪ Meridian made calls on load under the Genesis Swaption in March and early April 2019
▪ March 2019 was New Zealand’s second equal warmest March on record. It was a dry month for many locations, although extremely heavy rainfall occurred in the western South Island on March 25-27. Drier
than normal soils were present across large parts of the country at the end of March
▪ New Zealand Aluminium Smelter's load during March 2019 was below the contract level of 622MW
▪ Meridian’s retail sales volumes in March 2019 were 21.4% higher than March 2018


Would be getting more inflows now also.



yep
Meridian’s retail sales volumes in March 2019 were 21.4% higher than March 2018 all those air cons going

[Beagle]

Looks very good. MEL are well positioned for peak winter demand. Very interesting how demand for February and March is up so much especially retail demand !!

[sb9]

Divvy in the bank a/c y'day.

[boysy]

Looks like MEL should be the winner of the generators today at least. Interesting comment re GNE swaption in there ann today - I read that to mean MEL are profiting from GNE pain ....

Makes great sense to use swaption when wholesale prices spike as they have.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MEL/281407/234377.pdf

[boysy]

https://www.energylink.co.nz/sites/default/files/HydroWatchWeekly_20190418.pdf

Good storage continues to be held in MEL's catchment - i suspect they will continue to call on the swaption with GNE while they can arbitrage the difference on the cost of the swaption vs current wholesale cost of power. With MEL long generation and the southern hydro catchments near full it could be a very profitable period for MEL while the other generators struggle ......

[bull....]

on fire new highs coming , $5 anyone?

[couta1]

on fire new highs coming , $5 anyone? No thanks I'll leave it for you, planet SPK more attractive at current prices.

[boysy]

Good demand at these levels, being long generation this time of year with near full lakes can’t be a bad thing either. MEL will likely be the beneficiary of any further gas outages .... should be a cracker full year result in a few months

[RTM]

From Friday’s Herald...
“ The electricity sector is playing chicken with politicians as the review of electricity prices approaches its formal end. ......power companies have taken heart the fact that the review said they are not profiteering, so they feel stronger regulations won’t hit them. Some politicians are not of the same view.”
I’m not at all sure we have heard the end of this.
Disc. Hold all the power companies. About 15% of my portfolio all up.

[Beagle]

Retail power prices are apparently 20% lower than the OECD average and well under Australia's average.
Not sure you have a lot to worry about RTM although I note some retailers are still working the old high discount scheme which is really nothing more than high penalties for late payers. MEL the first to move to transparent retail pricing so good on them ands wins some brownie points for sure.
FWIW I have about 13% in this sector split relatively evenly now between MEL, CEN and GNE.

[boysy]

Next 2 weeks could be interesting based on the latest out of the Pohokura field.

OMV sees delay with Pohokura well intervention campaign

https://mobile.offshoreenergytoday.com/omv-sees-delay-with-pohokura-well-intervention-campaign/

Key takeaway from article as per below article was posted on the 24th April.

“Between now and mid-May, OMV anticipates about 18 days of offshore production outages – comprising of intermittent outages for approximately six days followed by a continuous shutdown of about 12 days during decoupling of the rig and platform.”

Wouldn’t want to be on flick for the next few weeks ....

[RTM]

Retail power prices are apparently 20% lower than the OECD average and well under Australia's average.
Not sure you have a lot to worry about RTM although I note some retailers are still working the old high discount scheme which is really nothing more than high penalties for late payers. MEL the first to move to transparent retail pricing so good on them ands wins some brownie points for sure.
FWIW I have about 13% in this sector split relatively evenly now between MEL, CEN and GNE.


I hope you are right Beagle. I'm not sure how valid it is to compare NZ vs Australia as we are mostly from renewables, whereas Australia relies heavily on coal. Labour/Greens has missed out on the CGT......they will have to provide something tangible to their people.

[horus1]

Nz is only 65% non CO2 which is the important bit.

[macduffy]

Nz is only 65% non CO2 which is the important bit.

For the benefit of us non-scientific types, horus, could you expand a bit on the non CO2 part of NZ's renewable generation. Presumably, it's the geothermal part? If so, would a portion of this discharge escape naturally into the atmosphere if it wasn't captured for power generation? Is the "intensity" of it's CO2 less than that of equivalent coal or other fossil fuel generation?

[horus1]

Its the coal, gas , and geothermal bits. You cannot get away with saying it would escape anyway because that doesn't appear to be true. The 65% is real and when CO2 taxes are applied at a decent level it means electricity prices will go up substantially.
Watch fuel cells which are coming , that is storage of electricity and is the end of the present grid based system, that togethe with solar and batteries make the electricity Industry one which is facing massive technological change ,with reduced margins.

[Baa_Baa]

Its the coal, gas , and geothermal bits. You cannot get away with saying it would escape anyway because that doesn't appear to be true. The 65% is real and when CO2 taxes are applied at a decent level it means electricity prices will go up substantially.
Watch fuel cells which are coming , that is storage of electricity and is the end of the present grid based system, that togethe with solar and batteries make the electricity Industry one which is facing massive technological change ,with reduced margins.

Like any entrenched industry though, they are best positioned to evolve their product to the market demand which I expect our energy companies to do, firstly evolve to EV's, supporting Solar, and after that evolve to Hydrogen. In any event it will take a few decades and the incumbents are always best positioned to manage the evolution. What we aren't seeing is fundamental or massive sector disruption except in minor capacities such as innovative retail models.

[horus1]

Have a look overseas ,massive disruption. Read what Shell said about DG and the electricity Industry. It is called head in the sand and technological disruption. The listed generators are paying too high dividends, as well prices for energy are to high except for Tiwai. . I wont buy any.

[Marilyn Munroe]

The Benmore spillway is operating.

Usually at this time of year generators are trying to retain every drop for winter peak demand and low inflows until the spring thaw.

Won't someone think of the shareholders and the dividends flushed away.

Boop boop de do
Marilyn

[boysy]

Hydro catchments all but full across meridians portfolio - I suspect it’s not just the benmore spillway which is currently operating as per lake level report below.

https://www.meridianenergy.co.nz/who-we-are/our-power-stations/lake-levels/

[Beagle]

My goodness that's a LOT of water for this time of year...shareholders appear to be well positioned.

[Tomtom]

OCR tail wind?

[boysy]

Test that bond proxy theory tomorrow .....

[boysy]

tested and closed higher though quite the trading range during the day - hydrology looks very good for this time of the year - look at lake pukaki 100% full and almost 3 meters above the 5 year average for this time of the year .... while Manapouri and Te Anau are also 100% full though this is usually the case this time of year. All in all you would expect MEL to be best placed to run hard heading into winter particularly with elevated wholesale prices and being naturally long generation compared to the retail arm ....

https://www.energylink.co.nz/sites/default/files/HydroWatchWeekly_20190502_0.pdf

https://www.meridianenergy.co.nz/who-we-are/our-power-stations/lake-levels
https://www.meridianenergy.co.nz/who-we-are/our-power-stations/lake-levels

[RTM]

Test that bond proxy theory tomorrow .....

Have a look what happened with CEN today !

[boysy]

CEN playing a bit of catch up i suspect ....

[Beagle]

Bond proxy thing seemed to work fine today except for GNE, their turn tomorrow ?

[percy]

Share price rising with the lake levels.
sp $4.26

[IAK]

Share price rising with the lake levels.
sp $4.26
We are well positioned lol 😀

[percy]

We are well positioned lol ��
Must be ESP,as I was thinking exactly the same......................lol

[bull....]

15% gain in retail volumes from last yr , huge

https://www.nzx.com/announcements/334404

[Jaa]

15% gain in retail volumes from last yr , huge

https://www.nzx.com/announcements/334404

That means they will have less surplus to sell at the current relatively high wholesale prices (page 9). Swings in customer numbers and generation volumes tend to net out over a time period of a few years.

Keep your eye on national electricity demand, an increase of 0.3% for the month and 0.8% for the last 12 months is steady but below population growth.

[boysy]

Look at the electricity they are buying under the swaption contract and what they are selling this at .... in short they continue to do very well from both their own and other generators power ....

[boysy]

Looks like all three main hydro catchments will be spilling today as they sit at or near 100% storage - with plenty more rain forecast to fall in the next few days also .... the rain gods appear to be smiling on shareholders ....


https://www.meridianenergy.co.nz/who-we-are/our-power-stations/lake-levels/

[Onion]

Looks like all three main hydro catchments will be spilling today as they sit at or near 100% storage - with plenty more rain forecast to fall in the next few days also .... the rain gods appear to be smiling on shareholders ....


https://www.meridianenergy.co.nz/who-we-are/our-power-stations/lake-levels/

To be sung (Tina Turner-like) to the tune of "Proud Mary":

Big wheel keep on turning. Proud MEL keeps on churning. And we're rolling, rolling. Rolling on the river

[bohemian]

Can somebody tell me why the price keeps going up, I know about the lake levels and OCR but isn't MEL basically a dividend stock. Am I missing something.

[winner69]

Can somebody tell me why the price keeps going up, I know about the lake levels and OCR but isn't MEL basically a dividend stock. Am I missing something.

You answered your own question ... a dividend stock

[couta1]

Can somebody tell me why the price keeps going up, I know about the lake levels and OCR but isn't MEL basically a dividend stock. Am I missing something. Some things cant be explained other than irrational exuberance IMO stocks like this and CNU are hugely overpriced and just waiting for a big thumping. PS-Even the divvy yield is currently nothing special. PPS- Best left alone, once again IMO.

[Onion]

Some things cant be explained other than irrational exuberance IMO stocks like this and CNU are hugely overpriced and just waiting for a big thumping. PS-Even the divvy yield is currently nothing special. PPS- Best left alone, once again IMO.

Well I'm glad I didn't sell a year or so ago when I thought the SP was getting a bit crazy. In the last year the shares have risen by about what I paid for them at IPO.

[couta1]

Well I'm glad I didn't sell a year or so ago when I thought the SP was getting a bit crazy. In the last year the shares have risen by about what I paid for them at IPO. Everyone wants a bargain even the poor sucker left without a chair to sit on once the music stops.

[boysy]

Good news for MELs Aussie generation

https://www.smh.com.au/business/the-economy/morrison-win-sparks-sharp-lift-in-wholesale-electricity-prices-20190520-p51p7t.html

We think our market is broken just look at what aussies are paying for their power. Mel spokesmen quoted in the article as per below.

Ed McManus, chief executive of electricity retailer Powershop and generator Meridian Energy, said it was time the energy industry and the government repaired their relationship and create stable policy.

“There is an opportunity for Scott Morrison to reset the agenda,” Mr McManus said.

“There is also an opportunity for politicians and industry to work together to solve the issue of combined energy and environment policy, in a way that allows Australia to both decarbonise and get energy prices down.”

I wonder if MEL are looking to purchase other Australian energy assets - clearly huge scope to grow profitability in Australia as the green alternative to all other power companies more so thank NZ one would think ....

[Beagle]

Power companies are trading on yield. Interest rates lower for longer = higher prices for power companies. Also longer term power futures have moved up materially in the last year and profits are also up. I would have said $3.30-$3.50 a year ago as the trading range but time has moved on, along with profits and long term power generation futures and with it the share price. Those wanting yesteryear prices probably won't be owning the gentailiers in the foreseeable future so will miss out on good reliable safe yield, its as simple as that. Nothing wrong whatsoever with the gross yields of MEL, GNE and CEN in my opinion even at the current share prices, happy holder of all 3.


Some things cant be explained other than irrational exuberance IMO stocks like this and CNU are hugely overpriced and just waiting for a big thumping. PS-Even the divvy yield is currently nothing special. PPS- Best left alone, once again IMO.

See above posted early March. Important to understand that we have moved into a situation where interest rates are the lowest in our lifetime and are likely to stay at ultra low level's for the foreseeable future. If you have a look at the bond market yields for safe senior debt you'll see yields typically around 3%.
Against this backdrop the gross yield of a company like MEL which by my estimate inclusive of partial imputation credits is about 5.5%, (given its safe renewable utility status) makes an excellent bond proxy and will see many investors chasing very safe reliable yield doing quite well. I don't share your view on this one and am a happy holder of this GNE and Contact. The price of these utility companies is perfectly logical as risk averse investors chase solid dependable very low risk returns that will safely weather any possible exogenous shocks or any possible recession.

[couta1]

See above posted early March. Important to understand that we have moved into a situation where interest rates are the lowest in our lifetime and are likely to stay at ultra low level's for the foreseeable future. If you have a look at the bond market yields for safe senior debt you'll see yields typically around 3%.
Against this backdrop the gross yield of a company like MEL which by my estimate inclusive of partial imputation credits is about 5.5%, (given its safe renewable utility status) makes an excellent bond proxy and will see many investors chasing very safe reliable yield doing quite well. I don't share your view on this one and am a happy holder of this GNE and Contact. The price of these utility companies is perfectly logical as risk averse investors chase solid dependable very low risk returns that will safely weather any possible exogenous shocks or any possible recession. Not for me I dont like the PE ratios and I can get a far superior yield from my HLG holding.

[RTM]

Not for me I dont like the PE ratios and I can get a far superior yield from my HLG holding.

Yes, the yield for HLG may be better, however I certainly would be concerned about my capital compared with the power companies. But then, i'm not a fan of retail companies. To many variables that are hard for them to control, let alone the fashion component.

Having said that, I'm not buying any at the moment having got into them at much lower prices.

[couta1]

Yes, the yield for HLG may be better, however I certainly would be concerned about my capital compared with the power companies. But then, i'm not a fan of retail companies. To many variables that are hard for them to control, let alone the fashion component.

Having said that, I'm not buying any at the moment having got into them at much lower prices. I'm not concerned at all using their track record as a measuring stick and they are the best of breed in their operating space. PS- I would buy these under $3.40.

[Beagle]

Not for me I dont like the PE ratios and I can get a far superior yield from my HLG holding.

I don't see it as a one or the other situation mate. I hold both.

[couta1]

I don't see it as a one or the other situation mate. I hold both. You know how big my HLG holding is I dont need to hold both.:D PS-Diworsification is not for me and has cost me serious coin over the last few years.

[boysy]

Comparing MEL to HLG you have to be joking couta - I get that you don’t like boring utilities but HGL will never be used as a bond proxy

[winner69]

One thing about the MEL share price is that it always seems to be trending up ......hardly any dips along the way

On monthly prices over the last 5 years there only seems to be about 16 months when the share price hasn’t increased

That’s pretty good

[couta1]

Comparing MEL to HLG you have to be joking couta - I get that you don’t like boring utilities but HGL will never be used as a bond proxy You cant compare the companies but you can compare dividend yield, capital gain and express an opinion on the current share prices. Lol

[Beagle]

As discussed they are very, very different companies. You're getting paid quite a bit more with HLG but taking on quite a bit more risk doing so.

[sb9]

Wow didn't check sp for a while, $4.42 who would've thought.

[couta1]

Wow didn't check sp for a while, $4.42 who would've thought. Probably no one I imagine.

[Baa_Baa]

Wow didn't check sp for a while, $4.42 who would've thought.

Sometimes it's difficult to comprehend how market sentiment shifts when they get nervous about growth, or how much money can flow into 'safe' yields when it does.

One wonders whether buyers are even considering yield on their purchase price, versus sector safety as a place to hide their wealth until things turn around. Or how long it might be until it does, or even whether it does. Might explain why some of the so called safe yields have become so over-priced, it beggars belief that buying now they can actually yield an acceptable return on investment, although they still do relatively versus other 'safe' yields like pure bonds or bank deposits.

All this while some companies are smashing growth out of the park. It's all relative, usually based on our fear, or better put, our aversion to risk.

[boysy]

some interesting comments from the recent morningstar recommendation - via ASB securities

Meridian is Thriving in FY19; Lifting FVE to NZD 3.50

Narrow-moat-rated Meridian Energy's earnings are tracking comfortably above last year. For the 10 months to April 2019, we estimate EBITDA is up a high-teens percentage on the previous corresponding period. While part of the improved performance is due to increased rainfall, which we don't overly focus on, Meridian is pushing through electricity price increases to large customers. We expect this to continue, leading us to upgrade medium-term forecasts. We increase our fair value estimate 9% to NZD 3.50. At current prices around NZD 4.40, the stock is overvalued.

In contrast to the past couple of years, the South Island is experiencing above average rainfall in fiscal 2019 while the North Island has been drier than usual. Underwhelming inflows to North Island catchments combined with gas supply issues pushed wholesale electricity prices higher, while major South Island generators such as Meridian have been producing copious amounts of low-cost hydroelectricity. This is the perfect mix for maximising earnings. Meridian's hydro generation in the fiscal year to date is tracking 10.7% above the prior corresponding period. On May 10, North Island storage sat at just 61% of historical average for this time of year, while South Island storage was 113%. This suggests favourable conditions will continue. However, we don't worry too much about variable rainfall. Our valuation is based on long-term rainfall averages.

Another positive for earnings this fiscal year is that high wholesale prices allowed Meridian to exercise its option with Genesis Energy profitably. Meridian contracts with Genesis for the right to buy electricity at a fixed price from the flexible gas and coal-fired Huntly power station. Being 100% renewable, this is a risk mitigation strategy to protect Meridian in dry years, when it doesn't produce enough power to supply its customers. But it can also provide extra profit when wholesale prices are high.

------------------------------------------------------------

Assuming they hit the EBITDA morningstar are expecting the divi could see a nice bump, storage continues to look good and as thought MEL using that profitable swaption at a fixed cost - wonder how much this fixed cost swaption is costing genesis

[boysy]

MELs hydro catchment due to get a battering of rain over the next few days - In light of lakes being full will be interesting to see how much power is sent north over the HVDC.

https://www.meridianenergy.co.nz/who-we-are/our-power-stations/lake-levels/

Looks like MEL will be running hard into the end of the FY should be a cracker of a result

[bull....]

Rooftop solar industry veterans say Australia has become a dumping ground for poor-quality solar products and some are questioning the regulatory oversight of household rooftop solar installers and products.

https://www.abc.net.au/news/2019-05-27/australias-obsession-with-cheap-solar-derailing-market-insiders/11139856?section=business

just as we thought waste of money

[Beagle]

MELs hydro catchment due to get a battering of rain over the next few days - In light of lakes being full will be interesting to see how much power is sent north over the HVDC.

https://www.meridianenergy.co.nz/who-we-are/our-power-stations/lake-levels/

Looks like MEL will be running hard into the end of the FY should be a cracker of a result

I am signed up to MEL as a customer so will crank up the heat pump a bit and try and help out their overfull lakes situation. Might help with a few gallons of water lol

[boysy]

Thanks beagle manapouri and te anau ~ 40cm above the main operating range with plenty more rain to come - looks like SI producers are sending as much power north as possible on the HVDC - such a divergence between the current hydro catchments in the NI and SI (NI sitting at around the 1%ile ie 2nd driest April/may on record while SI hydro sitting at the 75%ile -23 wettest on record).the weather gods are certainly looking kind to MEL at present ....


https://www.energylink.co.nz/sites/default/files/HydroWatchWeekly_20190523.pdf

[boysy]

More of the same overnight with more rain manapouri now 47cm over its main operating range while te anau is 79cm over its main operating range with plenty more rain forecast over next 48 hours. It’s clear MEL will produce as much power as it can as per HVDC flows north ....

Meanwhile Pukaki which is 25cm below being nominally full will get a hammering over the next 48 hours. I suspect the final two months of the year will be absolute rippers in terms of generation.

https://www.meridianenergy.co.nz/who-we-are/our-power-stations/lake-levels/

http://www.em6live.co.nz/PlanningRegion.aspx?planningregion=lni

[boysy]

Lakes continue to rise

Pukaki full

Manapouri now 70cm over main operating range

Te Anau now 116cm over main operating range

And it’s still raining - look at the price differential between Southland $4 mwh and northland at $97 mwh ...

https://www.meridianenergy.co.nz/who-we-are/our-power-stations/lake-levels/

[fish]

[QUOTE=boysy;761112]Lakes continue to rise

Pukaki full

Manapouri now 70cm over main operating range

Te Anau now 116cm over main operating range

And it’s still raining - look at the price differential between Southland $4 mwh and northland at $97 mwh ...

This is why it pays to have generation in the NI-starting to rain now and heavy rain predicted imminently

[boysy]

Those lakes in the NI are very low - will be interesting to see how much rain makes it into the lakes as the ground is so dry .....

[warren]

Seems to me this company is absolutely blue Hen!
1.Giant non replaceable hydro stations worth Billions today and with unlimited life spans ----doesn't get much better!
2.Cash income to die for!
3.Infrastructure in place!
4.Growing demand for the product!
5.Giant stable partner in ownership!
6.Dividends that are reliable and double what one can get in the bank---wow!

Roll on $10 ---He's coming

[couta1]

Seems to me this company is absolutely blue Hen!
1.Giant non replaceable hydro stations worth Billions today and with unlimited life spans ----doesn't get much better!
2.Cash income to die for!
3.Infrastructure in place!
4.Growing demand for the product!
5.Giant stable partner in ownership!

Roll on $10 ---He's coming Hey Warren you given up on being an OCA evangelist and decided to join bull on the power company crusade?

[warren]

Hey Warren you given up on being an OCA evangelist and decided to join bull on the power company crusade?
Hello Mr Couta
Never was---just liked blue Hens as did Patrick Hogan (now worth 100 Million) and time will prove it --substantial investor in both and patiently waiting for $2 and $10 for its coming!!

[fish]

Those lakes in the NI are very low - will be interesting to see how much rain makes it into the lakes as the ground is so dry .....

This winter will be very interesting.
The winter rains have started after the driest summer possible
I am hoping the lakes fill quickly-Taupo is surrounded by mountains so most rain will fall on the highest areas and if heavy should quickly fill the rivers.
South Island power prices could fall dramatically in the next few weeks.

[boysy]

I suspect MEL will simply push cheap hydro to the NI during off peak times I suspect the major loser in this scenario will be NI coal and gas generators .....

[boysy]

For those wanting to know

Lake Pukaki > 100% full

Manapouri - 104cm above main operating level.

Te Anau - 140cm above main operating level.

Great storage position to be at the start of winter that much is clear ...

https://www.meridianenergy.co.nz/who-we-are/our-power-stations/lake-levels/

[Beagle]

For those wanting to know

Lake Pukaki > 100% full

Manapouri - 104cm above main operating level.

Te Anau - 140cm above main operating level.

Great storage position to be at the start of winter that much is clear ...

https://www.meridianenergy.co.nz/who-we-are/our-power-stations/lake-levels/

WOW, there's full and then there's really FULL !!

New Logo and all that Jazz https://www.meridianenergy.co.nz/new-look?utm_source=email&utm_medium=emailing&utm_campaign=ALL-Meridian-brand-launch-MAI_2019

[boysy]

And it continues to rain Beagle

https://www.energylink.co.nz/sites/default/files/HydroWatchWeekly_20190530.pdf

noting this was as of as yesterday - with plenty more rain falling since this time - NI 2nd driest on record that bit is telling ....

Pukaki - 99% nominally full
Manapour - 126% nominally fulli
Te Anau - 163% nominally full

[Beagle]

Hydro Spill - Estimated spill at the Mararoa Weir was 201.6 cumecs. Cranking my heat pump up is not going to solve that wastage lol

[winner69]

Mate sent this photo of Benmore spillway. Like full

Suppose good for Meridian .....not knowing how they make money (maybe too much water is bad?)

[bull....]

on fire new highs coming , $5 anyone?

50c to go lol people snapping up there income before rates go to zero

[Onion]

50c to go lol people snapping up there income before rates go to zero

It hasn't quite got there yet but...

$4.50 is a nice round 3 times the initial cost of the shares.

[bull....]

mthly report out demand and inflows up ..all great
https://www.nzx.com/announcements/335995

[IAK]

It hasn't quite got there yet but...

$4.50 is a nice round 3 times the initial cost of the shares.
Plus good dividends too. My heartfelt thanks to Bill and John.

[RTM]

It hasn't quite got there yet but...

$4.50 is a nice round 3 times the initial cost of the shares.

Yes...the tax payer really missed out there. Nice work Sir John et al.

[boysy]

Interesting to note the wholesale average price MEL and charging customers up 20% from last year must be helping the bottom line - expect a fantastic full year result ....

[warren]

Yes...the tax payer really missed out there. Nice work Sir John et al.

Everyone knew it was a $5 stock (maybe much more actually). Have you stood on those gigantic dams --one after another--calculate the cost of building them today? (although the greenies would rule it out) so that makes them priceless!! Have you heard the greenies scream re burning coal and gas for electricity. Have you seen the growth of anything electric. Have you flown over our cities at night?
Yep we all knew it was a $5 stock but --Hey --Governments have to win votes--it's the biggest weakness of Democracy so this went out at $1 down and 50 cents later, the Rowling scheme went out the door, Social Security special tax for old age pensions went out the door, we still try to run a military when it should have gone decades ago --why --It wins votes!! Go Meridian I say .

[Onion]

It hasn't quite got there yet but...

$4.50 is a nice round 3 times the initial cost of the shares.

It got there!

[Snoopy]

Interesting to note the wholesale average price MEL and charging customers up 20% from last year must be helping the bottom line - expect a fantastic full year result ....


One weather event winter does not a cash cow make. If the wholesale price trend flips, then next years result could be very different. The incremental value of MEL shares over FY2019 should be priced on what one year special dividend shareholders might expect.



Everyone knew it was a $5 stock (maybe much more actually). Have you stood on those gigantic dams --one after another--calculate the cost of building them today? (although the greenies would rule it out) so that makes them priceless!! Have you heard the greenies scream re burning coal and gas for electricity. Have you seen the growth of anything electric. Have you flown over our cities at night?
Yep we all knew it was a $5 stock. <snip politics> Go Meridian I say .


The problem with this kind of logic Warren, is that if the MEL share price shot up to $100 you would still be buying. Because there is no limit to how valuable you consider those hydro dam assets. There isn't the significant demand increase in electricity that you think is there -yet. Electric vehicles are still a sideshow, with the growth of double cab fossil fuelled utes dwarfing any growth in the electric car market. The winding down of power intensive industry in NZ more than accounts for any growth in domestic electricity consumption.

I agree that dams of the scale that Meridian own are unlikely to be built again. I say that not only because the rise of the green movement have increased the value of rivers in their natural state. But also because the best sites have already been developed.

The cap on the value of these dams will be determined by the cost to build alternative generation and storage. Despite recent advances in battery technology, it is very difficult to argue that the most cost effective 'industrial scale battery' today is a lake. But lakes are a finite resource, and other batteries are getting better and cheaper. Once the price of controlling a lake exceeds the price of alternative battery technology, then usage rights of lakes and their associated downstream turbines and dams will cease to increase in value. At that price point, the likes of MEL will be priced like a true utility again. And that means in 2019 dollars, taking today's share price and dividing it by a factor of two. Talking to a respected broker who is managing a share portfolio for an aged relative, he is advising his clients to reduce their MEL holding. He sees MEL as the most overvalued company in an overvalued sector, but is not advising clients to sell out completely.

Let's end on a point of agreement though. At some point I agree MEL will be worth $5 per share. But the year in which that happens will probably start with the digits 21.. !

SNOOPY

[warren]

Hello Snoopy.
What an excellent and interesting report. I actually agree with all you say. What I am hinting at is the appalling decision to sell this magnificent share for $1 down and fifty later!!!!! There was never ANY doubt to me that is was a dead cert $5 dollar share and everything about it has proved me right so far!
Assets, green sustainable operations, good corrupt free management, dividends , product demand.
No I don't envisage $100 but $10 ------- yes for sure .

[bull....]

on fire 4.74 might be 5 by next week lol

[bull....]

maybe by tomorrow jumped another 10c as i was typing lol

[sb9]

on fire 4.74 might be 5 by next week lol

Could well by end of this week, touched high of $4.85 and currently $4.79.

[boysy]

Wild ride up 5% at some stage just goes to show how illiquid this 11b co can be with a couple of hundred $ of value moving the MC by $500m ....

[sb9]

Not far from $5, currently at $4.90 with strong bidding.

[bull....]

Not far from $5, currently at $4.90 with strong bidding.

$5 wow by xmas will it be the $6? party lol

[Tomtom]

$5 now.

Crazy - and it also makes sense in the wider context of scarcity of quality and anticipated OCR direction. Part of me says this is a new economic reality of living in an asset bubble...but more of me says this situation will end in tears.

Disc: Happy long term shareholder looking forward to many years of divs.

[percy]

I guess we are all enjoying it.
A word that comes to mind is TINA [there is no alternative].
Dangerous,however I think the music will continue playing, until interest rates start to go up.

[bull....]

$5 now.

Crazy - and it also makes sense in the wider context of scarcity of quality and anticipated OCR direction. Part of me says this is a new economic reality of living in an asset bubble...but more of me says this situation will end in tears.

Disc: Happy long term shareholder looking forward to many years of divs.

the reality for oversea people in a lot of countries is negative returns so even at $5 the yield looks pretty good but gne looks fab at 6% still

[warren]

I guess we are all enjoying it.
A word that comes to mind is TINA [there is no alternative].
Dangerous,however I think the music will continue playing, until interest rates start to go up.

Hello Percy. I am certain of only 2 things at present.

1. The world, including little NZ, has NEVER EVER seen pension funds like it --Trillions of $ close by in Aussie, why even over $90 billion in little NZ. These must have a home and they are growing faster than ever. Cullen fund, Kiwi-saver, SSRS, ACC Investment Fund. Geez wasn't Cullen a genius! (43 billion when I last looked)

2. Any share returning close to 7% with huge rock solid assets and a classy market is gonna get no rest in its share price I can guarantee us that .

[percy]

Hello Percy. I am certain of only 2 things at present.

1. The world, including little NZ, has NEVER EVER seen pension funds like it --Trillions of $ close by in Aussie, why even over $90 billion in little NZ. These must have a home and they are growing faster than ever. Cullen fund, Kiwi-saver, SSRS, ACC Investment Fund. Geez wasn't Cullen a genius! (43 billion when I last looked)

2. Any share returning close to 7% with huge rock solid assets and a classy market is gonna get no rest in its share price I can guarantee us that .

Agree with both of your points.

[RTM]

…….. until interest rates start to go up.

And that is the interesting point. When that happens....how quickly will markets drop ? Will they drop ? If one plans to move to cash.....will "we" be able to sell ?
The last few years has in general been so so easy as markets have been steadily climbing. About the only mistake one could make is not being in !

[Gonzo]

I wonder what a southern alpine fault rupture might do to the manapouri power station

[Jantar]

I wonder what a southern alpine fault rupture might do to the manapouri power stationNot very much. The fault as far south as Manapouri is quite deep and would have little effect. Here is a simulation of the main fault rupturing west of Te Anau and south of Milford sound the progressing north. Manapouri is hardly affected, Clyde and Roxburgh feel it a bit harder, but the Ohau and Waitaki stations are hit hard.

https://www.youtube.com/watch?v=uGWbjYy3to0

[RTM]

I wonder what a southern alpine fault rupture might do to the manapouri power station

Yeah….but I think I'll worry more about increasing interest rates !

[warren]

Hello again Percy . I see I am wide of the mark!! Sorry about that! So Up to Date Corrections!

1. Kiwisaver fund total is 60 billion NZ $ (NZ Herald Sat 29/06/19).

2. ACC fund doubles to $24.6 billion

3. Cullen Fund 40.3 billion

4. Australian Pension scheme $1.9 Trillion (USA)

And folks wonder why Blue Hen shares are growing in price !!

[stealthmaster]

52 day high is 5.030 but asb securities 5 days graph does not show this high, does asb securities graph lag? Or error
with asb securities?

[bull....]

52 day high is 5.030 but asb securities 5 days graph does not show this high, does asb securities graph lag? Or error
with asb securities?

if you want to look at a better chart go to big charts and type in nz:mel

[stealthmaster]

looking like start of big increases in gentailers today

[NADZAB]

Can some give background on why CEN has a significantly higher SP than all the other sector comparable companies MCY MEL TPW GEN?

[777]

Can some give background on why CEN has a significantly higher SP than all the other sector comparable companies MCY MEL TPW GEN?


If you and I had an equal value houses and you divided it into 2 shares and I divided mine into 4 shares then each of your shares would be twice the value of mine. Houses still worth the same though.

[stealthmaster]

https://www.odt.co.nz/business/pressure-interest-rate-cuts-mounts?fbclid=IwAR1_Wd8bpr3xLtC53LEqgZSTw2HASBhyHG w-G0a3O90ZRSQXjJZVkkA5uRk

"We've changed our OCR call and now expect the Reserve Bank to cut the OCR by 50 basis points, to 1%, by the end of the year,"

Looks like OCR cut coming August & November, yield shares set to rise again

[Joshuatree]

If you and I had an equal value houses and you divided it into 2 shares and I divided mine into 4 shares then each of your shares would be twice the value of mine. Houses still worth the same though.

Yes and check out their mkt caps NADZAB and work out the numbers of shares for each, its GNE btw.

MEL mkt cap $11.9 billion
MCY $6.2 bill
CEN $5.5 Bill
TPW $2.27 bill
GNE $3.57 Bill

[JAYAY]

Are these figures for real. P E 50, EPS .095, Yield 5.1%. (5.1% of $4.80 = .24 c)
How can this be?

Fundamental

P/E
50.000


EPS
$0.095


NTA
$1.720


Gross Div Yield
5.130%


Securities Issued
2,563,000,000

[Sideshow Bob]

Are these figures for real. P E 50, EPS .095, Yield 5.1%. (5.1% of $4.80 = .24 c)
How can this be?

Fundamental



P/E
50.000


EPS
$0.095


NTA
$1.720


Gross Div Yield
5.130%


Securities Issued
2,563,000,000




These are off the NZX, right?

Without referring to annual reports...….MEL would pumping out huge free-cashflows (EBIT - tax + depreciation - change in working capital - capex). This would account for their dividend % compared to the EPS, and the PE ratio (which would be say $4.80/$0.095).

NTA would be based on the book value of their assets, and largely irrelevant. Not sure what the depreciation rate would be but those dams should be there for a long, long time - with not a huge amount of capex. Gives a value of about $4.4b for their assets - the replacement value would be much, much, much more than that.

[stealthmaster]

double rate cut causing big increases?

[stealthmaster]

Looks like this going over $5 soon!

[sb9]

Looks like this going over $5 soon!

Yes, it was always on just matter of when not if.

[couta1]

Looks like this going over $5 soon! Chasing yield at any cost is a recipe for a severe skunking at some point. PS-Learnt this lesson myself a few times.

[Joshuatree]

Go the chasers, triple bag plus holder here sitting comfortably.

[Beagle]

Chasing yield at any cost is a recipe for a severe skunking at some point. PS-Learnt this lesson myself a few times.

I don't think a case of any cost mate. 10 year Govt stock rate is only ~ 1.2% and interest rates around the world are looking like staying ultra low for as far as possibly foreseeable, perhaps more than a decade. In that context ~ 5% gross yield from an ultra low risk utility is pretty good.

[couta1]

I don't think a case of any cost mate. 10 year Govt stock rate is only ~ 1.2% and interest rates around the world are looking like staying ultra low for as far as possibly foreseeable, perhaps more than a decade. In that context ~ 5% gross yield from an ultra low risk utility is pretty good. Not for me I'm very happy with my only current divvy stock being HLG with avg price of $3.50.

[Beagle]

Not for me I'm very happy with my only current divvy stock being HLG with avg price of $3.50.

I am getting this strong sense of Deja vu...so had a look back and sure enough we've discussed this before, see posts 1805 and 1806. We'd both be forgiven for having forgotten though, there's been a heck of a lot going on since May.

[couta1]

I am getting this strong sense of Deja vu...so had a look back and sure enough we've discussed this before, see posts 1805 and 1806. We'd both be forgiven for having forgotten though, there's been a heck of a lot going on since May. Groundhog day mate and yep a lot has gone on, still a 13% plus gross divvy yield is worth comparing more than once.

[winner69]

Chasing yield at any cost is a recipe for a severe skunking at some point. PS-Learnt this lesson myself a few times.

Hey Couts me ol mate ...you and I seem to be only stupid ones in not partaking in this free lunch.

Never mind

[Baa_Baa]

Hey Couts me ol mate ...you and I seem to be only stupid ones in not partaking in this free lunch.

Never mind

Not the only ones. All I see is a dividend trap at these prices. One big shock to the markets, SP falls big time, locked in foreeeevvvvver. Should've never sold my IPO's but that's ancient history, need to focus on the now.

[macduffy]

Not the only ones. All I see is a dividend trap at these prices. One big shock to the markets, SP falls big time, locked in foreeeevvvvver. Should've never sold my IPO's but that's ancient history, need to focus on the now.

In that event, ie one big shock to the markets, a low-risk, dividend paying utility will be one of the better places to be to sit out the downturn. I'm still holding all my gentailers at IPO costs - no attraction in risking negative interest rates on cash!

:cool:

[Rabbi]

In that event, ie one big shock to the markets, a low-risk, dividend paying utility will be one of the better places to be to sit out the downturn. I'm still holding all my gentailers at IPO costs - no attraction in risking negative interest rates on cash!

:cool:
In a downturn all stocks get trashed but some more than others. I would speculate HLG would plunge more than the gentaliers, as you don't necessarily
need new clothes, but you need to use power just to survive. A recession also has more people not going out spending, which has them staying home using up power, so yes,
Utilities are probably a pretty safe haven. You could sell now and sit on the capital game, but then you haven't got the income stream from the dividends coming in.
In this game you can't have your cake and eat it too.

[boysy]

Going to be a cracker of a result next week, how much will the divi go up is the question ....

[bull....]

Going to be a cracker of a result next week, how much will the divi go up is the question ....

$5 must be breached its lagging mcy now after leading for long time

[Beagle]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12261429

[RTM]

Great result. 2019 Dividend up 11% on 2018. Exactly what we need.
One wonders where Jacinda could get the biggest bang for her buck ?
The Electricity Industry or the Fuel Industry ?
Once of my biggest concerns for our investments there is that the industry suffers from some Government regulation.
RTM

[percy]

Great result. 2019 Dividend up 11% on 2018. Exactly what we need.
One wonders where Jacinda could get the biggest bang for her buck ?
The Electricity Industry or the Fuel Industry ?
Once of my biggest concerns for our investments there is that the industry suffers from some Government regulation.
RTM

Yes a cracker.

[couta1]

Great result. 2019 Dividend up 11% on 2018. Exactly what we need.
One wonders where Jacinda could get the biggest bang for her buck ?
The Electricity Industry or the Fuel Industry ?
Once of my biggest concerns for our investments there is that the industry suffers from some Government regulation.
RTM Taxcinda is sniffing the wrong fuel she needs a zap to bring her to her senses.

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MEL/339726/306154.pdf

Couta1 mate, you only need look at the first page...wet you appetite for something ?:D
Winner69 will be very pleased with page 2 with MEL winning some diversity and inclusion award.
I am amazed I had to scroll through so many pages of stuff to get to the real meat, which of course if the earnings.
Very solid result, very happy with the safe dividends.

[bull....]

awesome result now you know why mel is new white gold not a2 milk

[couta1]

Yes Beagle that's a great shot and the only page I need to look at as a non holder.

[couta1]

awesome result now you know why mel is new white gold not a2 milk A true shorters slant there bull, which one has given the most return over the last few years. PS-A2 is great buying currently whereas MEL is not.

[Beagle]

Gross yield 5.56% inclusive of imputation credits based on SP of $4.77.
Look through yield on a medium term basis treating near term dividend as a partial return of capital 5.71%

[King1212]

Bought again on the dip..great! With record profit... expansion n growth on Oz market... electric cars on the horizon n nz population getting more and more...no brainier to hold this stock

[Beagle]

A true shorters slant there bull, which one has given the most return over the last few years. PS-A2 is great buying currently whereas MEL is not.

Doesn't have to be one or the other mate. Two very different kettles of fish. I own MEL and have been a happy holder for quite some time and believe their current share price is good value in this risk averse world. They will be paying investors 5.7% even if we go deep into a GFC MK2. That point isn't lost on risk averse investors looking for a diversified well balanced portfolio of quality stocks.

[couta1]

Doesn't have to be one or the other mate. Two very different kettles of fish. I own MEL and have been a happy holder for quite some time and believe their current share price is good value in this risk averse world. They will be paying investors 5.7% even if we go deep into a GFC MK2. That point isn't lost on risk averse investors looking for a diversified well balanced portfolio of quality stocks. You saying I'm not balanced Beagle, well actually your right I'm very undiworsified. PS-Im very balanced and diversified on my skis mind you.

[dobby41]

and diversified on my skis mind you.

I would have thought you'd want both skis going in the same direction.
Certainly you'd want a lot of alignment.

[Beagle]

Bingo, first close above $5 ! Onward and upward.

[percy]

Hallelujah...!!!
This is what happens when you are :"well positioned."
And a lovely divie on 16th October.

[King1212]

Keep growing....if they do well in OZ...this company will be the keeper the rest of your life!

[IAK]

Wow $5.25 - Bull was on the money. Feeling pretty good topping up last week at $4.67. I've said it before, and I'll say it again, my heart-felt thanks to John and Bill for flogging off the family silver. :)

[percy]

Wow $5.25 - Bull was on the money. Feeling pretty good topping up last week at $4.67. I've said it before, and I'll say it again, my heart-felt thanks to John and Bill for flogging off the family silver. :)

I also thank The Labour Party, and Winston, for talking the IPO price down...............lol.
BINGO.!.Closed at 5.33...

[winner69]

I take it this report is all good and Meridian still making heaps of money

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MEL/341031/307752.pdf

[King1212]

Retail sales is 19.1%higher than last year..great!

[percy]

Retail sales is 19.1%higher than last year..great!

That's incredible.

[macduffy]

Retail sales is 19.1%higher than last year..great!

So which retailers have lost market share?

[Beagle]

So which retailers have lost market share?

Hopefully not CEN or GNE because I have those as well lol
...but seriously, I understand the prepaid operators that price based off spot wholesale rates have been hurt by the high wholesale power prices.

[boysy]

Slide 5 gives you a fair bit of detail

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MEL/341031/307752.pdf

Would imagine prepaid/wholesale operators are not very present in the SME or corporate sales volumes which explain the bulk of the change

[RTM]

"Electricity Price Review panel delivered its final report and recommendations to the Minister in late May, response is imminent "

From their Investor presentation.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MEL/341852/308815.pdf

This might be interesting.

[dzhang1510]

"Electricity Price Review panel delivered its final report and recommendations to the Minister in late May, response is imminent "

From their Investor presentation.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MEL/341852/308815.pdf

This might be interesting.

So basically whatever the minister's decision is, could lead to big benefits for meridian?

[RTM]

So basically whatever the minister's decision is, could lead to big benefits for meridian?

I'm more worried about some kind of regulation of the power prices...which will not be beneficial for shareholders.
Watching with interest.
They have already signalled they are prepared to dabble in business....e.g. capping directors fees.

[Beagle]

Got my hard copy of the Meridian annual report today.
Picture says a thousand words, front cover has a young boy happily walking his dog along a trail in some native bush somewhere. I think this might be my most economical read of all time. Not sure there's any point in reading any further, cover says it all...and oh, yeah, that's right, just one minor other detail, share price up more than 53% so far this year, (Winner reckons these emoji's are the best)
:t_up: :t_up: :t_up: :t_up: Flew over some of their dams on the way to Queenstown a few weeks ago. I reckon they'll be there still pumping out the megawatts long after I start pushing up daises. People always need power even in a deep recession and they know what happens if they don't pay for it.

[macduffy]

But wasn't Meridian fortunate to be allocated the nice renewable electricity producing assets, enabling them to trumpet their virtue marketing-wise! Don't mention that, like the rest of the gentailers, they become dependent on someone else's dirty coal/gas turbines to keep customers happy when the rain doesn't rain and the wind doesn't blow. Not to worry though, wise investors cover all bases by holding a few of them all!

Disc: Holding a few of most of them.

:)

[Beagle]

Dog gone it, you're right ! Got those dirty emitters GNE and CEN too :blush:.
Oh wait, what's going on...their share prices have been going gangbusters too :t_up:

[percy]

Yes power will be used for some years.Just have to worry about all those Aucklanders causing power black outs as they try and charge their electric cars overnight.
I was at Barrington Mall a few weeks ago and ran into an old book supplier,who asked me whether I was nervous about the share market.
I asked him if he thought the Mall could operate without power.,and all the people around us would stop using their phones.
He laughed,as did I.

[Lewylewylewy]

People need power during recession, but businesses need less. Over exposure to an aluminum smelting business could be a risk to profit during a recession. Also, losing such a contract could be considered a risk to a retirement income based on such a stock. That said, please correct me if im wrong (i don't really follow the power companies), isn't MEL the only one on the nzx with foreign growth interests?

[Beagle]

I thought the final report on electricity was quite benign for the power companies, especially Meridian who were by far the most reasonable and abolished the so called prompt payment discounts, (which are nothing but thinly disguised excessive late payment penalties), some time ago.
Big tick for the ESG for Meridian as far as I am concerned as not only are they 100% environmentally friendly they were the first by a long way to recognise the social harm these late payment penalties impose on society, especially on customers least able to afford it and struggling to pay their power bills, and abolished them ages ago at a cost of ~ $5m per annum. Onward and upward. Interest rates to plumb fresh 100 year lows for the foreseeable future in my opinion.

[winner69]

I’ve no idea whether this is good or bad ...but it all looks extremely good

They call it blind investing taking a punt on these sort of companies

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MEL/342592/309708.pdf

[sb9]

And in the meantime another juicy higher divvy than last year just hit bank a/c.

[RTM]

https://www.nzx.com/announcements/343047

Might be a bit more power becoming available ? Supply / Demand.....price of power might go down a bit.
My new SolaHart water heater not looking quite so smart maybe.

[boysy]

Sounds like a bit of gamesmanship from rio Tinto the current price of aluminium is up about US$200 since the 2015 low when the smelter last had a go at the government and meridian from memory.

If the government upgraded the powerlines and HVDC cable north MEL could send the power north...

[Sideshow Bob]

the current price of aluminium is up about US$200 since the 2015 low when the smelter last had a go at the government and meridian from memory.


And currency outlook is more favourable….

[bull....]

tanking the price of all gentailers , anyway if they close the smelter it will be years away as they wind it down.

[Sideshow Bob]

I think the remediation costs are the scary thing for Rio/Sumitomo if they shut - last estimated at $256m.

Cheaper to keep it running......

[Beagle]

I think the remediation costs are the scary thing for Rio/Sumitomo if they shut - last estimated at $256m.

Cheaper to keep it running......

I have heard $300m mentioned before. I think the share price movements are quite an overreaction but I am content with my existing positions in the gentailiers so won't add more.

[couta1]

Still needs to fall $1 or more before it's near fair value.

[100101]

At least john key isnt around to give the smelter lads $30 million. MEL would make a sh&t load more profit selling to the public anyway.

[RTM]

At least john key isnt around to give the smelter lads $30 million. MEL would make a sh&t load more profit selling to the public anyway.

Don't forget the overall power supply for NZ industries and households will increase pretty significantly. Is it 15% ? So for those holding a basket of power companies (me) the overall return from the power companies would likely drop over time.

[bull....]

if they close the smelter just means no more wind farms etc will need to be built for quite a while as natural growth chews up the excess over time.

[trader_jackson]

It is about time the power sector got a rude awakening... valuations were getting to crazy high levels and seems like Mr Market forgot that the power sector in NZ is not 'risk free'.

[Joshuatree]

[QUOTE=boysy;775564]Sounds like a bit of gamesmanship from rio Tinto the current price of aluminium is up about US$200 since the 2015 low when the smelter last had a go at the government and meridian from memory.

Yep its rinse and repeat threat, bluffing, lower the prices or we may close sorta spin, same old ,same old tired tactics.

[percy]

Time to get building the transmission line from Manapouri to Roxborough.
Last I heard it would take one year planning and two years building.

[Sideshow Bob]

Time to get building the transmission line from Manapouri to Roxborough.
Last I heard it would take one year planning and two years building.

And three years for resource consent...….

[bull....]

And three years for resource consent...….

probably even longer when you add in IWI looking for koha

[Jantar]

Time to get building the transmission line from Manapouri to Roxborough.
Last I heard it would take one year planning and two years building. Manapouri to Roxburgh is not as a big an issue as Roxburgh to Benmore, Those lines are already at their limit.

[Marilyn Munroe]

There are are already existing AC transmission lines between Manapouri and Benmore. Transpower just need to build a DC station at Manapouri, change the type of wire on the towers, and develop switch-in/switch-out capability at Benmore.

Boop boop de do
Marilyn

[JAYAY]

[QUOTE=boysy;775564]Sounds like a bit of gamesmanship from rio Tinto the current price of aluminium is up about US$200 since the 2015 low when the smelter last had a go at the government and meridian from memory.

Yep its rinse and repeat threat, bluffing, lower the prices or we may close sorta spin, same old ,same old tired tactics.

Yep, that's how I see it too. Even if Rio Tinto does pull the plug Meridian will surely win as the Govt. will want to fast track the required transmission lines in order to see power prices fall and generation capacity be able to cope with the ever increasing demands for electricity. Megan Woods'4.5 wind farms per year won't be required.

[Beagle]

https://www.stuff.co.nz/business/117809038/tiwai-smelter-closure-back-in-governments-court-as-rio-tinto-pleads-for-price-drop#comments

[Lewylewylewy]

Id love to know what the cost of electricity is, which should include amortization of assets, transmission, etc.

If I were Rio, I'd have calculated the cost benefit of moving the plant elsewhere, and started negotiations a long time ago, so i could actually move the plant if there were better offers elsewhere. Assuming it's currently profitable, which it probably is, otherwise other plans would already be in motion, I imagine the opportunity cost of shutting it down to open somewhere else outweighs keeping it running for another epoch.

I imagine it's fairly expensive to leave a plant like that unoperational, and I would guess it'd be near impossible to sell.

My guess is that rio will either keep it running for several years while another plant can be built elsewhere, or just put up with it, which is more likely.

Good time to buy power shares imo.

[percy]

Crikey ....back up over $5.00.!

[boysy]

Catchments full to bursting - Pukaki alone is up over 7m in the past month. You would expect MEL should have no problems generating through summer though works to the HVDC cable will limit output north - to what extent this will impact production is yet to be seen ....

https://www.meridianenergy.co.nz/who-we-are/our-power-stations/lake-levels

[sb9]

Wow this really powering ahead now, currently $5.74 and heading to $6 soon...

[Onion]

Wow this really powering ahead now, currently $5.74 and heading to $6 soon...

Lots of rain and concerns about a Tiwai smelter shutdown are presumably receding too.

[bull....]

Lots of rain and concerns about a Tiwai smelter shutdown are presumably receding too.

the sell off over twai concerns provided a great opportunity to buy , over $6 soon i reckon

[Manukatana]

woa, im glad i sold my other shares to buy more MEL shares yesterday ^^ good return today.
what happened ?!?

[King1212]

Official cash rate stays...corona virus fear investors to other sectors.. investors felt MEL, GNE, CEN.MCY....are the best as reliable dividend payer stocks....

[BlackPeter]

... and here is the third review in my wee pseudo random analysis how good analyst predictions are. Bear with me, at some stage I publish as well an overview ...

In January 2019 the peak MCY share price was $3.63 and analyst consensus for January 2020 was $3.54 - i.e. the analysts expected the MCY share price to slightly drop. Buying recommendation was (consistent with their price prediction) a "weak hold" (4.6/10).

Peak MCY share price in January 2020 was actually $5.34 (i.e. 47% up on the peak January 2019 price and 51% above their consensus prediction), i.e. share price went up significantly despite the analysts forecasting a drop.

Looking at their buy recommendation - MCY outperformed the NZX50 over the last 12 months by more than 15% - that's clearly better than a "weak hold".

Looks like the analysts got both predictions wrong - this is another 0:2 against the analysts with an overall hit rate for them so far of 1:5;

Not flash.

[Beagle]

Jarden, thought to have the finest analysts in the country just two days ago upgraded Synlait to the late $8 range somewhere, I forget, was about $8.80 from memory.
Lets not forget that professional analysts have the ability to meet with senior management and one would have hoped they did so before playing their Pied Piper tune and leading their clients over the cliff.

DYOR.

On the subject of MEL, everyone appears now to be thinking the smelter risk no longer exists and I don't think that's a 100% safe assumption at this stage.

[Sideshow Bob]

J

On the subject of MEL, everyone appears now to be thinking the smelter risk no longer exists and I don't think that's a 100% safe assumption at this stage.

Exactly. It will close or be sold at some stage, but how many times will Rio cry wolf??

But Rio has done a bit of damage with their latest escapade over the dross. Had a very lucky escape with the recent flood, and people are seriously unhappy.

https://www.odt.co.nz/regions/southland/rio-tinto-behaviour-outrageous-environment-minister

[ados_nz]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12311284

[Tomtom]

Had a quick skim, looks like a positive interim result. However today seems to be a day voting machines and not scales. :)

[Timesurfer]

Election year, jobs are on the line. Should get whatever they want.

[ados_nz]

Anyone have reasoning behind the current sell off (aside for tiwai fears?)

[Joshuatree]

My broker has put out a hold and target price $4.81 valuation awaiting the taiwan decision fwiw.

[BlackPeter]

My broker has put out a hold and target price $4.81 valuation awaiting the taiwan decision fwiw.

What exactly is the Taiwan decision? I didn't realize our network reaches that far ... :p;

I suppose you mean Tiwai?

[Beagle]

What exactly is the Taiwan decision? I didn't realize our network reaches that far ... :p;

I suppose you mean Tiwai?

LOL I wondered if Rio Tinto had shifted their head office for a minute there :)

[Joshuatree]

LOl blimp spell czech. Yes Tiwai.

[macduffy]

Jokes aside, we're told that Tiwai is one of only two plants worldwide that produces the high quality aluminium used in aircraft etc. If so, I can't see the industry allowing Tiwai to close - someone else will pick it up and run it using the S. I. hydro electricity.

Disc: Holding.

[King1212]

Dang...I was researching since when Mel invested power supply in Taiwan.....good laugh of the day JT...

[ados_nz]

-18% in 5 days :scared:

[Beagle]

-18% in 5 days :scared:

Is the market now suggesting the chances of Rio Tinto walking away from Tiwai point and worrying about the site clean-up costs at some later date are very real ?

Could they even refuse to do the site clean up and effectively say sue us if you want too ?

Contagion effect on all power companies ?

[bull....]

with aluminium prices falling and likely to fall further due to weak world demand makes the smelter even less viable now. maybe why all gentailers heading down

[dobby41]

Could they even refuse to do the site clean up and effectively say sue us if you want too ?

They probably could but it wouldn't be a good look for all the other sites where they try and push their environmental credentials.

[cyclist]

They could potentially mothball the plant. a.k.a kick the cleanup can down the road for a while.

[macduffy]

Whatever the reason, MEL is one of the few stocks showing a price rise today - so far.

As you were...…….I spoke too soon!

:blush::blush:

[Marilyn Munroe]

Spilling at Benmore Aviemore & Waitaki today.

Boop boop de do
Mariyn

[black knat]

Also into the Pukaki River from the lake today. The Pukaki River can be dry for years at stretch.

[Jerry]

There was a good editorial article in the NBR last November 'Rio Tinto must take us for mugs.' https://www.nbr.co.nz/analysis/rio-tinto-must-take-us-mugs

[fish]

There was a good editorial article in the NBR last November 'Rio Tinto must take us for mugs.' https://www.nbr.co.nz/analysis/rio-tinto-must-take-us-mugs

Times have changed.If aluminium demands drop and prices fall dramatically eg if coronavirus pandemic keeps progressing they could mothball the plant .

[Joshuatree]

X div on Monday. Mkt not worrying about tiwai because departure(staged) is built into the s/p or market is calling Rios Bluff:D

[Joshuatree]

Having said that power companies off their highs today CEN gone into the red atm.

[Sideshow Bob]

X div on Monday. Mkt not worrying about tiwai because departure(staged) is built into the s/p or market is calling Rios Bluff:D

$250m+ in remediation costs, and also Rio have to get Sumitomo on board - they own 20%.

[NADZAB]

If you buy MEL on Monday 30th do you receive dividend?

[Joshuatree]

Today was the last day to buy cum (with)divi. Ex dividend means without dividend on the date specified. The mkt or anybody didnt seem interested in buying for the div, i guess because of the Tiwai decision by the end of march unless they extend maybe.

[Beagle]

$250m+ in remediation costs, and also Rio have to get Sumitomo on board - they own 20%.

Rio might take the view that the costs and timing of same are quite different than many might imagine. In any event we have seen massive shut down's of vehicle production from many manufacturers and demand for aluminium must be very weak.

[blackcap]

Rio might take the view that the costs and timing of same are quite different than many might imagine. In any event we have seen massive shut down's of vehicle production from many manufacturers and demand for aluminium must be very weak.

Going to be a big hit to the EV community too when there is no more money for subsidies and other such nonsense. People will now also not have the money to buy virtue signalling modes of transport.

[fish]

Going to be a big hit to the EV community too when there is no more money for subsidies and other such nonsense. People will now also not have the money to buy virtue signalling modes of transport.

Maybe not.I suspect more people die from air pollution in cities than corvid-19 will.
Also we do not buy EV because its a virtue signal but because we perceive virtues such as acceleration,quietness,no fumes,less costs to run etc

[blackcap]

Maybe not.I suspect more people die from air pollution in cities than corvid-19 will.
Also we do not buy EV because its a virtue signal but because we perceive virtues such as acceleration,quietness,no fumes,less costs to run etc
There are many that do not buy for a virtue signal, but a lot of the Tesla buyers are exactly that. Its a look at me kinda thing. Time will tell. EV sales were already plateauing before Covid-19 so this will put the brakes on even more. I do see decreased demand for electricity in the next few years. Interesting times for the Power shares.

[Joshuatree]

And there are many buying EV's and plug ins etc etc because they are fact based people who are deeply concerned about the SOH of their planet and are leading by example.The more one sees them on the road the more it starts a conversation and starts others thinking for example, but I believe this is a subject for the appropriate thread.

[mcdongle]

Rio might take the view that the costs and timing of same are quite different than many might imagine. In any event we have seen massive shut down's of vehicle production from many manufacturers and demand for aluminium must be very weak.

https://www.marketscreener.com/NORSK-HYDRO-ASA-1413211/news/Norsk-Hydro-Aluminium-surplus-to-balloon-as-producers-resist-output-cuts-30263732/

[Joshuatree]

GENERAL: MEL: Smelter to reduce consumption during COVID-19 (https://online.asb.co.nz/ost/078F413D1AC97029FFC246C0C9532BAE/companyannouncements/showannouncement/nzx/mel?issuercode=mel&number=350981&ispdf=false)

Rio Tinto had
advised Meridian that it will provide the market with an update on its review
by the end of the first quarter in 2020.

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MEL/350981/320003.pdf

Here's a link that works. Isn't it the end of the first quarter in 2020 today ?

[macduffy]

Yes, but note:

“NZAS has advised us this possible reduction is not related to the wider Strategic Review currently being conducted by the smelter’s owner Rio Tinto,” adds Barclay.

[Joshuatree]

Think it must be RIO's first Qtr results which was on the 17 th april last year.

[ados_nz]

Possibly a time zone thing...? Perhaps an update post market close today.

[tobo]

Meridian falling hard today. Currently down 6%
Now I see all the power companies down somewhat.
Just regular fluctuation of perceived long view or just simply that buyers have really dried up.

[dreamcatcher]

Meridian falling hard today. Currently down 6%
Now I see all the power companies down somewhat.
Just regular fluctuation of perceived long view or just simply that buyers have really dried up.

Just a few punters scooping a 30c extra dividend knowing tomorrow SP will raise again......... then game can start afresh

[Joshuatree]

MEL went x divi on the 30th march.

[dreamcatcher]

MEL went x divi on the 30th march.

Correct....... I was referring to the quick daily up/down SP fluctuations

[Cyclical]

Correct....... I was referring to the quick daily up/down SP fluctuations

Yep, did it again today too, up 31c at one point before ending back down at the opening price.

[Rowdy Flat]

Yep, did it again today too, up 31c at one point before ending back down at the opening price.


It's not happening to MEL solely. CEN up at $6 until 2pm - then finished at 5.71 (down 6 on the previous day.)

[dreamcatcher]

Yep, did it again today too, up 31c at one point before ending back down at the opening price.

Well done........... with the divvies the Power-Boys pay prices will never stay down for long

[Joshuatree]

Been manipulated for a while with often the largest vol right at the end of day.

[nztx]

Been manipulated for a while with often the largest vol right at the end of day.


Yes - it seems so - definitely a pattern of large parcels unloaded in past 5 days - 1st 2nd 3rd 6th & 7th -- all have bundles of between 500k & 700k shares dropped into the market around 4.55pm - 5.00 pm

And a parcel of 2.86 million dropped around 4.55 pm on 31 March too

does anyone have access to trades through the day back before 31 Mar to see if similar trading patterns before then ?

[horus1]

Does this point to anything we can spot

[nztx]

Another 468,000 shares unloaded with a 5.00pm timestamp on 8 April from the daily NZ graph
with mostly small rats & mice hitting the deck during the rest of the day

[RTM]

Another 468,000 shares unloaded with a 5.00pm timestamp on 8 April from the daily NZ graph
with mostly small rats & mice hitting the deck during the rest of the day

Quite a contrast between Meridian and Truspower.

https://www.nzx.com/announcements/354423

and

https://www.nzx.com/announcements/354422

Ill leave others more knowledgeable than me to comment further.

Jantar ? Horus ?

[k14]

Quite a contrast between Meridian and Truspower.

https://www.nzx.com/announcements/354423

and

https://www.nzx.com/announcements/354422

Ill leave others more knowledgeable than me to comment further.

Jantar ? Horus ?
Trustpower are screwed because the RCPD incentives are gone. RCPD stands for Regional Coincidental Peak Demand. This is the method Transpower uses for calculating the distribution networks annual connection charges. The distribution companies usually rebate the companies which own the smaller stations which generate directly into the distribution networks. This is quite lucrative for the companies that own these smaller stations as they can time their generation to reduce the distribution networks peak demand and hence reduce their bill to Transpower.

Meridian have no generators connected to distribution networks (usually referred to as an embedded generator), all of their stations are connected to the transmission grid hence no benefits lost by the dissolution of RCPD. Trustpower is the opposite, most of their generation is embedded. Hence, they will loose a revenue stream.

In addition, Meridian get a massive benefit from the changes in HVDC cost allocation. Currently this is 100% paid for by the owners of South Island power stations. The majority (i'm guessing ~90%) of Meridians generation comes from the SI and hence any changes in this give them a major benefit too. Contact is roughly neutral, Genesis looses a wee bit, Mercury loose a lot (currently they have no SI assets).

Hopefully the above makes sense. The document is incredibly complex (156 pages) and haven't had time to digest it in full yet.