GNE - Genesis Energy

[Bobdn]

[QUOTE=penn;517356]... well done Bobdn...QUOTE]

We'll see ;)

The only thing I really care about is what happens on 1 December with the Com Com and Chorus. I have a lot of ground to make up there.

[Joshuatree]

Please correct me if I am having a senior moment, but I thought the 1:15 loyalty bonus came from existing government shares and did not increase the number of shares on issue?

In any case, I assume that there are people waiting to sell as soon as the 1:15 has been received so there may be some selling pressure shortly after the first anniversary of listing.
You're right trainee and Dingo; thanks.

[bull....]

that adx line is starting to rise from below, sometimes it is an indication of a strong trend to come, time will tell

[brend]

that adx line is starting to rise from below, sometimes it is an indication of a strong trend to come, time will tell

definitely

added last week at $2.11 after taking some profit from WYN.

This was before the announcement fml...

[Bobdn]

I borrowed 200k against my house and bought 92500 at $2.16. I fixed the amount at 5.89% for 3 years and the bank was also nice enough to give me $1500 cash for taking the loan out.

Because the dividend is fully imputed, does that mean I can claim any interest back on the loan? I'll check with an accountant.

[Beagle]

Yes you can claim the interest as the loan was specifically raised for investment and income generating purposes. Brave move.

[Bobdn]

Thanks roger. Yes reckless I know.

[Beagle]

The old saying "fortune favours the brave" springs readily to mind :)

[brend]

I borrowed 200k against my house and bought 92500 at $2.16. I fixed the amount at 5.89% for 3 years and the bank was also nice enough to give me $1500 cash for taking the loan out.

Because the dividend is fully imputed, does that mean I can claim any interest back on the loan? I'll check with an accountant.

just out of interest did you compare the cash inflows (dividends) against cash outflows (interest) ? was it positive or negative?

[couta1]

I borrowed 200k against my house and bought 92500 at $2.16. I fixed the amount at 5.89% for 3 years and the bank was also nice enough to give me $1500 cash for taking the loan out.

Because the dividend is fully imputed, does that mean I can claim any interest back on the loan? I'll check with an accountant. Even if it had no imputation credits you could still claim the interest, you did what I did to buy Chorus shares, Ouch, I think you've made a better choice:cool:

[robbo24]

I borrowed 200k against my house and bought 92500 at $2.16. I fixed the amount at 5.89% for 3 years and the bank was also nice enough to give me $1500 cash for taking the loan out.

Because the dividend is fully imputed, does that mean I can claim any interest back on the loan? I'll check with an accountant.

At the end of the 3 years, what are your target gains in terms of divvies and capital gains in light of the interest you're paying?

:D:D:D:D:D:D:D:D:D:D

I'm just flicking through the risks section of the GNE prospectus for entertainment.

:D:D:D:D:D:D:D:D:D:D

[Bobdn]

It's positive, even without off setting the interest. Of course this assumes 16 cents a share dividend.

Now, I haven't received chorus dividends for over a year so bad things can happen. I miss my 25.5 cents per chorus share desperately.

Edit: re Brends post. Interest is 5.89% net dividends 7.4%

[bull....]

Those are net yields mate. I don't know about the others but in Genesis case its fully imputed so you need to divide the net yield by 0.72 to account for the 28% full imputation credit attached so I get a gross yield of 10.19% at $2.18. Even at closing price today of $2.21 based on a gross dividend of 22.22 cents incl of imputation credits that's still over 10% (10.05%) and that's only paying out 80% of forecasted profit and there's no need to build new generation capacity for many years. Plenty of rumours in the market about capacity for special dividends and why not !! We know the government like special divvy's, see recent example of whopping AIR special divvy of 10 cps, that was really tasty, what chance of a repeat with GNE :)

Roger gross yields above mean dividends should easliy cover your loan

[Harvey Specter]

It's positive, even without off setting the interest. Of course this assumes 16 cents a share dividend.

Now, I haven't received chorus dividends for over a year so bad things can happen. I miss my 25.5 cents per chorus share desperately.

Edit: re Brends post. Interest is 5.89% net dividends 7.4%One potential issue is that imputation credits are not refundable. So if you have no other taxable income, the imputation credits may be carried forward, not refunded.

[brend]

lets hope hes holding the shares in an individual name with other income (PAYE), not a trust with no other income :/

[Bobdn]

That describes me exactly. I could have bought a rental property I suppose but at least this way I get a similar return but don't have to worry about tenants turning the property into a meth house.

[couta1]

It's positive, even without off setting the interest. Of course this assumes 16 cents a share dividend.

Now, I haven't received chorus dividends for over a year so bad things can happen. I miss my 25.5 cents per chorus share desperately.

Edit: re Brends post. Interest is 5.89% net dividends 7.4%
Your net interest will be 3.95% after you take 33% off 5.89% assuming your on the top tax rate so plenty of fat left over with 3.45% to spare.

[Bobdn]

Cool, thanks for the info Couta

[Beagle]

Roger gross yields above mean dividends should easliy cover your loan

Not my loan, (I'm mortgage free) but yes Bobdn should be well covered.

One potential issue is that imputation credits are not refundable. So if you have no other taxable income, the imputation credits may be carried forward, not refunded.
Absolutely correct.

That describes me exactly. I could have bought a rental property I suppose but at least this way I get a similar return but don't have to worry about tenants turning the property into a meth house.
Dead right but there's no harm in spreading it around a bit mate. That's another advantage of investing in shares as opposed to placing your trust in some stranger renting one's grossly over-priced house. I think HNZ has a similar gross divvy this year with better prospects for dividend and SP growth IMHO. I am tempted to gear-up on HNZ but probably won't because I'm a conservative old number cruncher :)

[Harvey Specter]

Dead right but there's no harm in spreading it around a bit mate. That's another advantage of investing in shares as opposed to placing your trust in some stranger renting one's grossly over-priced house. I think HNZ has a similar gross divvy this year with better prospects for dividend and SP growth IMHO. I am tempted to gear-up on HNZ but probably won't because I'm a conservative old number cruncher :)I think thats good advice. There is a few good yeild stocks which would make this a good strategy, HNZ being one of them. I wouldn't put all my eggs in one basket on a leveraged investment - you might end up with Couta and end up holding onto Chorus :0

[Bobdn]

Yes, good advice. My intention was to split it between BP (nyse) and genesis. BP has always been so good to me but in the end the slightly lower dividend and slighty more complicated tax arrangements put me off.

Of course, Harvey, couta even with a few hiccups, still has more money than most on this forum. And unlike, I don't know 99.99 per cent of people here is actually willing to set out in honest detail losses and triumphs which makes for much more interesting reading.

[Harvey Specter]

Of course, Harvey, couta even with a
few hiccups, still has more money than most on this forum. And unlike, I don't know 99.99 per cent of people here is actually willing to set out in honest detail losses and triumphs which makes for much more interesting reading.I bought Chorus a few times on the way down, and am only now in the positive (likewise DIL but was always in the positive there due to a much earlier purchase). Not nearly as much on the line as him though.

[Bobdn]

I'm still down on chorus. I may have to take a sedative on 1 December before the announcement 😍

[penn]

Someone wants their money out of Genesis, I'ts getting mighty close to my buy at $2.10.

[bull....]

Someone wants their money out of Genesis, I'ts getting mighty close to my buy at $2.10.

yes i have noticed someone dumping last few days and very impatient today

[Master98]

morningstar has lift GEN fair value to $2.2.

[horus1]

does the oil price affect gne

[axe]

Shouldn't the oil price affect this share price or is it just Div Yld driving it

You got some good answers last time you asked :)

[penn]

morningstar has lift GEN fair value to $2.2.

Morningster re-rete GEN, sure helped to push the sp down to $2.03 I guess it will creep up before the next dividend, but in the mean-time i'm running out of cash, as I buy into the weakness.

[Bobdn]

Morningster re-rete GEN, sure helped to push the sp down to $2.03 I guess it will creep up before the next dividend, but in the mean-time i'm running out of cash, as I buy into the weakness.


Lucky you. Looks like I blew my load too early. Oh well, no use crying over spilt milk.

[BIRMANBOY]

LOL yes supporting a SP can be a lonely and thankless task. :eek2: I'm constantly amazed at how weakness in a SP can be a quicksand of unknown depth. I'm waiting for 1.95 but who knows when that will be.
Morningster re-rete GEN, sure helped to push the sp down to $2.03 I guess it will creep up before the next dividend, but in the mean-time i'm running out of cash, as I buy into the weakness.

[Beagle]

Just so you guys know, Craigs recently reduced its rating to Sell with a 12 month price target of $2.07. I don't have a copy of the report but they cited increased competition in the retail sector as their main concern and Gen is most exposed apparently.
Happened a little while ago and explains the recent SP weakness. I think the SP has already adjusted. Disc I hold a modest amount.

[bull....]

probably selling down cause of the oil price fall, even though they are hedged looking further out it probably isnt as favourable

[penn]

I spent an hour this morning trying to figure out how much the US$150m note issue at
3.64% per annum for 11 years and 3.69% per annum for 12 years. would reduce costs of short term borrowing but as i am cr@p at maths I don't think it will make a drop in the bucket. :)

[couta1]

Good long term hold especially with the divvy and all those free shares to come:cool:

[penn]

Well this is one I did get right (I know there haven't been that many) Disc- Holding 29k shares at $1.55 with bonus ones to come:cool:
Sorry2say couta1 but this quote - almost made me run for the hills and buy Hnz! ;)

[couta1]

Sorry2say couta1but this quote - almost made me run for the hills and buy Hnz! ;)
Gee thanks your all heart, anyways im not complaining as im 31% up on purchase price at todays close;)

[rbel038]

Just so you guys know, Craigs recently reduced its rating to Sell with a 12 month price target of $2.07. I don't have a copy of the report but they cited increased competition in the retail sector as their main concern and Gen is most exposed apparently.
Happened a little while ago and explains the recent SP weakness. I think the SP has already adjusted. Disc I hold a modest amount.

I switched to mercury in auckland after i had a door knocker come and take $30 off my monthly bill (much lower day rate and reduced cents kWh). I assumed things must be heating up in auckland

[bull....]

i think this is genesis hedging policy on oil 50-75% ist 12mths then 25-50% next yr the balance is sold on the spot market for every 5usd movement in spot price oil this equates to 2million impact on ebitdaf.

So a rough and speedy assumption would be the balance of 1st yr unhedged oil sales times the 2m impact at the current spot price would be the impact on ebitdaf. Of course it doesnt take account of any cost saving inititives they may have made at kupe or if they ramp up production ( sell more volume to get the same revenue )

[bull....]

nice bounce of the rising trendline at just above 2

[Beagle]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11386480

Wholesale power prices on the rise with the threat of drought.
I would think Gen are well positioned with their geothermal production to make hay while the sun shines from this situation.
Good to see power demand increasing too.

[Jantar]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11386480

Wholesale power prices on the rise with the threat of drought.
I would think Gen are well positioned with their geothermal production to make hay while the sun shines from this situation.
Good to see power demand increasing too.
Genesis, GNE, Geothermal? I think you mean Contact, CEN or Mighty River MRP.

Genesis has the Huntly Gas fired combined cycle plant and the older coal fired units, along with Waikaremoana, Tongariro and Tekapo hydro plant.

[Beagle]

Yep, half asleep this morning...still on holiday time. I meant their gas fired production but yeah the other generators will benefit from the higher wholesale prices too.

[bull....]

genesis probably underperforming others because of there oil business

[fish]

genesis probably underperforming others because of there oil business
you are probably right but is it really justified?
gen went into kupe to secure long-term gas
They have done very well out of it and will continue doing so
The high oil price was just a bonus
A dry summer and improving demand is driving up electricity demand and we should see improved thermal generation and profits

[Beagle]

you are probably right but is it really justified?
gen went into kupe to secure long-term gas
They have done very well out of it and will continue doing so
The high oil price was just a bonus
A dry summer and improving demand is driving up electricity demand and we should see improved thermal generation and profits

I'm with you mate. Against a backdrop of a prolonged period of low interest rates the dividend yield is highly attractive.

[fish]

I'm with you mate. Against a backdrop of a prolonged period of low interest rates the dividend yield is highly attractive.
projected dividend for 2015 is 16 cents plus imputation credits makes 21 cents or 10% gross yield to me so bought some more last few days.
Hydrolakes below seasonal average so should be need for more thermal generation from the massive reserve genesis has at huntly.
cheaper fuel.
Long-term low interest rates.
Increased electricity demand
growing population and no new large generation likely to be built for a long-time
so the bigger picture is looking very good

[Snow Leopard]

...cheaper fuel...


Consider the [negative] impact on Genesis having long term contracts on Gas...

Best Wishes
Paper Tiger

[couta1]

Consider the [negative] impact on Genesis having long term contracts on Gas...

Best Wishes
Paper Tiger
I prefer to look more at the current decade than worry about things that could become a problem light years away the threat of a Labour/Greens Govt returning is a bigger threat in the medium term for ALL power companies:eek2:

[Snow Leopard]

I prefer to look more at the current decade than worry about things that could become a problem light years away the threat of a Labour/Greens Govt returning is a bigger threat in the medium term for ALL power companies:eek2:

It is a current problem, as you should well know as you claimed elsewhere that you do the research.

Best Wishes
Paper Tiger

[couta1]

It is a current problem, as you should well know as you claimed elsewhere that you do the research.

Best Wishes
Paper Tiger
Not a problem I'm worried about personally so I'll leave the worrying to you (Not sure if Tigers worry or not) Cheers

[Beagle]

Consider the [negative] impact on Genesis having long term contracts on Gas...

Best Wishes
Paper Tiger

Consider the positive impact on Genesis of having secure long term gas supply at a fixed price. Pretty handy in a dry year, (of which there seem to be many), I would have thought :)

[Bobdn]

Edit: going quietly rather than storming out :)

[fish]

Consider the [negative] impact on Genesis having long term contracts on Gas...

Best Wishes
Paper Tiger

I did say cheaper fuel rather than gas.
Some of the Huntly generators can use coal.
I am not privy to the gas supply contracts.I guess the increased demand will mean genesis will be buying on the spot market if cheaper than coal.
However if genesis can expect to pay 16c dividends plus imps in an average year with expected reduced demand and we now have increased demand but reduced hydro please consider the likely result
You have to consider the implications also to other power companies.
Your posts about mrp are very positive-and they have done well-but will this continue in a dry year-last time I looked at mrp it looked as if they had no flexibility and relied on hydro from the taupo catchment and some geothermal.How will they fare in a dry year with increased demand?
My choices of power companies are cen and gen because they imho have the best flexibility of low priced generation.
Low energy prices should stimulate the economy and coupled with a growing population will increase demand.
Time will tell and I will sit back and be patient.
disclosures-I am writing this in an air-conditioned room-now indispensable for me- and have substantial shareholdings in nzo(big mistake in hindsight),cen,gen and chorus-a lot bought at $1-40 to $1-70-my gut feeling was that the commerce commission was very wrong and chorus would achieve a better more reasonable price.
Hopefully I am learning from my mistakes but I don't have time to personally research as much as I would like.
best wishes

[Bobdn]

When does Genesis produce its next Quarterly Report? Must be soon. Hope they haven't lost too many more customers.

[Traderx]

When does Genesis produce its next Quarterly Report? Must be soon. Hope they haven't lost too many more customers.

Hi, market share stats are publicly available here:

http://www.emi.ea.govt.nz/Reports/Dashboard?reportName=D_R_MC&category=Retail&reportDisplayContext=Dashboard

GNE cust nos slightly down to 525K

[Bobdn]

Hi, market share stats are publicly available here:

http://www.emi.ea.govt.nz/Reports/Dashboard?reportName=D_R_MC&category=Retail&reportDisplayContext=Dashboard

GNE cust nos slightly down to 525K

Thanks for link, that's an excellent dashboard.

[couta1]

Just broke through upper Bollinger band;)

[Baa_Baa]

Just broke through upper Bollinger band;)

What 'timeframe' and 'Std Dev period' settings are you using? A default setting is usually 20, 2 which puts the upper band at $2.20 currently. TIA.

[couta1]

What 'timeframe' and 'Std Dev period' settings are you using? A default setting is usually 20, 2 which puts the upper band at $2.20 currently. TIA.
Yep 20,2 and its now at $2.21, I just extrapolated off yesterdays close:cool:

[Beagle]

Yep 20,2 and its now at $2.21, I just extrapolated off yesterdays close:cool:

You've done alright out of these puppies, looks good. Ultra low interest rates for the foreseeable future = very happy GNE dividend hounds :)

[couta1]

You've done alright out of these puppies, looks good. Ultra low interest rates for the foreseeable future = very happy GNE dividend hounds :)
That deserves a Woof Woof :cool:

[bull....]

2.20 looks like resistance in the rising triangle, a breakout should lead to 2.40?

[Bobdn]

Roger mentioned that an analyst predicted a $2.45 price I think. Hope so.

I bought in at 2.16, topped up in a dip at 2.04. Have way to much GNE.

[Beagle]

Roger mentioned that an analyst predicted a $2.45 price I think. Hope so.

I bought in at 2.16, topped up in a dip at 2.04. Have way to much GNE.

Yep, long term Govt stock rates are at record lows and with little prospect of them increasing in the foreseeable future brokers appear to be starting to rework their discounted cash flow models using significantly lower risk free rates which is having quite an effect on their valuations. That broker went from $2.05 to $2.45 using the new models factoring in recent increases in real electricity demand and some aspects of increased wholesale pricing.
Went on to say that lower risk free rate of 4.4%, (ironically a rate that makes using Benjamin Graham's valuation formula very easy) will have a positive impact on all their valuation's.
Companies reporting strong first half results in February are in for very positive valuation increases.

[percy]

2.20 looks like resistance in the rising triangle, a breakout should lead to 2.40?

We are on our way!!! But I think this train will go past the $2.40 station,,...Toot Toot.!

[dingoNZ]

My top pick of the power co's is GNE, set it as having the most upside and by far the most room to trim costs going forward

[Beagle]

We could put forward the motion of getting rid of Jenny at the first ASM, that would remove some unnecessary costs :D

[Bobdn]

Thanks for the info roger, interesting.

[Poet]

This will be helping the share price (not sure why GEN hasn't released this themselves)
https://www.nzx.com/companies/NZO/announcements/260058

[Beagle]

This will be helping the share price (not sure why GEN hasn't released this themselves)
https://www.nzx.com/companies/NZO/announcements/260058

Sounds great.

[bung5]

We could put forward the motion of getting rid of Jenny at the first ASM, that would remove some unnecessary costs :D

Lets get serious about that. I'm in

[fish]

This will be helping the share price (not sure why GEN hasn't released this themselves)
https://www.nzx.com/companies/NZO/announcements/260058
There will be no shortage of gas for increased electricity generation to meet the increased demand now evident.
Kupe is big.
Genesis is so well placed-producing gas through kupe and burning it at huntly

[tim23]

Roger - getting rid of Shipley might be good, ex Politicians on boards not usually good - think TTK (Sowry), PGG (Ruth Richardson), Lombard (Graham, Jefferies) and the list is probably bigger than my memory!

[horus1]

The future for electricity in this country is not thermal but local generation. Read articles from overseas about new technology.

[fish]

The future is uncertain and hydro is so cheap that it will remain the dominant form of generation for decades followed by geothermal.
Local generation is unlikely to beat the cost-effectiveness of our present generation and distribution to affect the sp of genesis for a very long-time.
Increased electricity charges of recent have not been the result of generation but that of lines companies and transpower upgrades
Thermal peaking stations are here to stay and plentiful gas will fuel it.
There has been major problems with local generation overseas- redundancy,not producing power when needed,big subsidies etc.

[Jantar]

......
There has been major problems with local generation overseas- redundancy,not producing power when needed,big subsidies etc.
And the fact that it is cheaper to move electricity from where it is generated to where it is needed than it is to move fuel to local generation.

[Beagle]

There will be no shortage of gas for increased electricity generation to meet the increased demand now evident.
Kupe is big.
Genesis is so well placed-producing gas through kupe and burning it at huntly

Yep, all the broker DCF models had Kupe running out of gas, (IIRC about 12 years from now ?), and dividend's reducing because of that. Now it appears gas reserves could be dramatically more plentiful, (read extremly durable long term supply) than previously thought. I think this is exceptionally good news for GEN.

Yep guys I'm no fan of ex pollies on boards or to senior management positions...almost invariably they're "soft appointments" and bring little genuine business acumen to the table.

[GTM 3442]

Yep guys I'm no fan of ex pollies on boards or to senior management positions...almost invariably they're "soft appointments" and bring little genuine business acumen to the table.

Some bring a history of failure. . .

[bung5]

Is Jenny up for Re-election in October at the AGM?

[percy]

Is Jenny up for Re-election in October at the AGM?

Hope so.!!!!!

[Beagle]

Quarterly report is out on the NZX site. Looks pretty good to me. Significantly increased wholesale prices, customers steady, LPG up. Recent signs of potentially substantial life extension at Kupe auger well for the company.

[bull....]

looks good, oil sales well up and with a large proportion hedged at $99 a barrel for current 12mths should make some good dough

[Beagle]

I added more this morning. Fundamental thesis is with ultra low interest rates, and a pending significant upgrade to Kupe reserves I see this company being able to pay its extremely high fully imputed dividend yield, (about 10% gross) for perhaps as long as 20 years or even more !!! ( Note current broker DCF models have Kupe ceasing to be cash flow positive in 2027) I think that given the testing referred to recently in this thread that cease date is WAY too pessimistic.

[Bobdn]

Hmmm, would have been good to see it adding customers

[bung5]

Hmmm, would have been good to see it adding customers

I'm of the understanding the flow of customers leaving has turned around of late.

[Bobdn]

I'm of the understanding the flow of customers leaving has turned around of late.

Customers are down compared to this time last year, see first line of report. I'm not really seeing a turn around in this. Not sure why the report has been seen so positively.

[fish]

Customers are down compared to this time last year, see first line of report. I'm not really seeing a turn around in this. Not sure why the report has been seen so positively.
Its not tiny fluctuations in customer numbers that are important.
What really matters is how much electricity they generate and what price they sell.
Have a look at the current electricity demand,hydro storage and inflows,and the current price-its hot ie prices are now in the red zone on wits free to air.
Genesis will currently be creaming profits.
I would imagine they are going through a lot of coal and gas at huntly and making mega profits.

[Snow Leopard]

Its not tiny fluctuations in customer numbers that are important.
What really matters is how much electricity they generate and what price they sell.
Have a look at the current electricity demand,hydro storage and inflows,and the current price-its hot ie prices are now in the red zone on wits free to air.
Genesis will currently be creaming profits.
I would imagine they are going through a lot of coal and gas at huntly and making mega profits.

What REALLY matters is the price you sell something for LESS the total cost of supplying it.

So just to ask a (difficult) simple question: How much of what Genesis sell is at a price related to the spot price of electricity?

Best Wishes
Paper Tiger

[Bobdn]

Its not tiny fluctuations in customer numbers that are important.
What really matters is how much electricity they generate and what price they sell.
Have a look at the current electricity demand,hydro storage and inflows,and the current price-its hot ie prices are now in the red zone on wits free to air.
Genesis will currently be creaming profits.
I would imagine they are going through a lot of coal and gas at huntly and making mega profits.

Ok, I'll keep the faith.

[fish]

What REALLY matters is the price you sell something for LESS the total cost of supplying it.

So just to ask a (difficult) simple question: How much of what Genesis sell is at a price related to the spot price of electricity?

Best Wishes
Paper Tiger

Thanks for that question PT.
I am not privy to the commercially sensitive answer.
It varies every 1/2 hour according to the demand and prices offered by the generating companies.
I suspect you actually know more than I do.
What I do know is there is a fixed cost to start and run a generator at huntly and then a variable price according to the price of fuel and how much is burnt.
The demand for electricity is high ,the current spot price is very high.Hydrolakes are lower than average so more thermal generation is required.
Genesis have the most thermal generation which can meet this increased demand.
If fixed costs are say $50 and the market price is $75 profit is 25.If price is $200 profit is 6 times that figure.
I see the spot price is still over 200 so genesis should be creaming it.
I wish I knew the full answer to your question-anyone know the actual current figure?

[Snow Leopard]

You seem to be floundering and apologies for carping on but you are missing the point.

Genesis is a Gentailer: Generator & Retailer.

A lot of what

Genesis the Generator

sells is [effectively] sold to

Genesis the Retailer

and they sell it to their customers (at say $0.26KWh [$260 MWh]) no matter what the spot price. So that cancels out.

Best Wishes
Paper Tiger

PS. It can get complicated if you want it too :ohmy:

[Traderx]

You seem to be floundering and apologies for carping on but you are missing the point.

Genesis is a Gentailer: Generator & Retailer.

A lot of what

Genesis the Generator

sells is [effectively] sold to

Genesis the Retailer

and they sell it to their customers (at say $0.26KWh [$260 MWh]) no matter what the spot price. So that cancels out.




Best Wishes
Paper Tiger

PS. It can get complicated if you want it too :ohmy:


You are very correct, however GNE along with CEN have the most flex in their portfolio to generate extra in high spot price I.e be long exposed to spot. Prices averaged 200 ish today and GNE will be trading off vol vs margin to good effect at these levels, well above srmc of the thermal plants.

Rule of thumb is GNE does well in low storage inflows scenario.

[Jantar]

..... PS. It can get complicated if you want it too :ohmy:
LOL. Much more complicated than even you can imagine. Of that $0.26 per kWh, over half goes to Transpower and the network (lines) company. Their actual transfer price from Genesis the Retailer to Genesis The Generator is likely to be in the range of $0.07 to $0.09 per kWh and the actual energy cost that Genesis the Retailer receives from the retail customer would be around $0.12 per kWh.

I don't know all of Genesis' conection charges, but I do know that their Tekapo station pays almost $0.09 per kWh direct to Transpower for HVDC charges. Its actually a veriable charge based on their peak injection, but South Island wide works out to close to $8.90 per MWh.

[horus1]

Distribution charges are 23%, and transmission charges are 7.4%.This is as quoted by the Commerce Commission.
Your note is an example of the misinformation put out by generator/retailers to cover up the excessive margins being charged to small customers

[Jantar]

Distribution charges are 23%, and transmission charges are 7.4%.This is as quoted by the Commerce Commission.
Your note is an example of the misinformation put out by generator/retailers to cover up the excessive margins being charged to small customers
Oh dear. I have the exact data available to me and it is NOT mis-information. Could you please supply a link to that claim by the Commerce Commision?

[Beagle]

You are very correct, however GNE along with CEN have the most flex in their portfolio to generate extra in high spot price I.e be long exposed to spot. Prices averaged 200 ish today and GNE will be trading off vol vs margin to good effect at these levels, well above srmc of the thermal plants.
Rule of thumb is GNE does well in low storage inflows scenario.

There's been a lot of dry summers in recent years...this one looks like a real stunner for GEN to make super profits from generation.

[Bobdn]

All this is far too complicated for me. I think I might be the Forest Gump of investing. I do understand that GNE is paying a net dividend of 7% and that's a lot more than my ANZ serious saver pays.

[bull....]

I do understand that GNE is paying a net dividend of 7% and that's a lot more than my ANZ serious saver pays.

thats the main thing which will cause the share price to keep going up - with term deposit rates set to fall it looks even more attractive

[horus1]

Look on their website under distribution regulation.

[Jantar]

Look on their website under distribution regulation.
OK, A seach for "distribution regulation" produces 10 pages of news items, but nothing that looks remotely like your claim.
Going to their Regulated Industries Tab, then to Electricity also shows nothing resembling your claim.

Going to my company's database and looking at our Transpower and Network invoices shows the data I gave is correct.

[Snow Leopard]

Leaving the argument between the industry insiders aside, all I am trying to do is temper some peoples expectations that the current high spot prices equates to massively larger profits for Genesis.

Do Your Own Research as usual.

Best Wishes
Paper Tiger

[horus1]

I introduced Transmission pricing . I know what I am talking about. Look at the CC recent announcements on regulation of line cos. Your figures on the split of pricing are wildly out.

[Jantar]

If you did indeed introduce the TPM then I know you, and you know me from when I worked for Transpower. So perhaps you need to review TP's pricing disclosure https://www.transpower.co.nz/about-us/industry-information/revenue-and-pricing Their charges for FY 2014 were $661 m for AC charges and $145 m for DC charges, a total of $806 m.
Compare this to various companies' wholesale revenue. Contact are the only company that reports wholesale income as a seperate item, and reported $742 m wholesale revenue and paid $596 Transmission charges. MRP reported Line charges of $431 m with total energy sales (retail) of $1672 m. Thus they paid 26% of their electricty income (not just kwH charge) as transmission costs, and they have no HVDC charges to consider.

So Transpower's charges are greater than the wholesale income of any of the larger generators and certainly much more than the 7% you claim. Perhaps you are just looking at the line rental part of the TPM, because strangely enough that is around 7%, in which case you didn't introduce the TPM, but may have been on the Working Group that introduced Nodal Pricing.

[Snow Leopard]

So if Transpower revenue was about $800M and NZ (excluding Tiwai) uses about 32,000GWh of electricity a year then Transpower are clipping the ticket (on average) to the tune of

$25,000/GWh or
$25/MWh or
$0.025/KWh.

I assume in that in the real world that Tiwai adds in a few thousand GWh, Transpower clip the ticket on that and thus that cost is actually lower.

Contact sold 8,378GWh of retail+wholesale electricity in FY14 for $2,175M

$0.260/KWh

Contact had a cost of $596M for "Electricity transmission, distribution and levies"

$0.069/KWh (upto 2.5c for Transpower and 4.4c or more not for Transpower).

Presumably similar numbers would come of the works for Genesis et al (to give it some relevance to this thread).

Best Wishes
Paper Tiger

Disc: Fixed charges are amortized, does not cover the cost of generation or other expenses, etc, errors and omissions..., more etc, roll your own, look both ways before crossing.

[fish]

Leaving the argument between the industry insiders aside, all I am trying to do is temper some peoples expectations that the current high spot prices equates to massively larger profits for Genesis.

Do Your Own Research as usual.

Best Wishes
Paper Tiger

Your caution is wise
We could easily get heavy rain and if hydro levels rise spot prices will fall.
I am not intending to say that genesis will make mega annual profits as a result of the current high spot prices but just to alert that current high spot prices are a good sign for current and future profit.
It should also be noted that only a few months ago predictions were that demand would fall.
This has been proven wrong over the past 6 months-but of course who knows the future.
Low interest rates are a big plus for all power companies and is probably the biggest contributer to the rise in share prices.
Personally I feel dry summers are good for CEN and Gen and bad for mrp-but maybe MRP have enough hedging to cover it.
However hedge cover could be more expensive for MRP in the future

[IAK]

"BIG DRY WILL AFFECT ELECTRICITY"
The latest hydro storage data shows 2015 as at 88% of average for this time of year, and with lake inflows very low (http://www.electricityinfo.co.nz/comitFta/ftaPage.hydrology) too, there could be trouble looming. We should be near peak levels now because typically lake in inflows run down from March to September and we are starting out in a worse position that 2001 when we last had trouble on this front.

IMO Genesis will be well positioned to take advantage of low hydro inflows.

[bull....]

with australia dropping interest rates and to drop them again soon and nz to drop interest rates at some stage genesis div yield which is still one of the highest around will become highly attractive.
The company may lose some income from oil and customer count but having the highest fcf of the gentailers they should be able to maintain div payout rato going ahead.

[Harvey Specter]

OCR drop ruled out yesterday. Things will need to get much worse before he does now.

[bull....]

OCR drop ruled out yesterday. Things will need to get much worse before he does now.

thats what the aussies said only a mth ago too, in fact most central banks this year are doing the opposite of what they say because conditions warrant change quickly

[Jantar]

"BIG DRY WILL AFFECT ELECTRICITY"
The latest hydro storage data shows 2015 as at 88% of average for this time of year, and with lake inflows very low (http://www.electricityinfo.co.nz/comitFta/ftaPage.hydrology) too, there could be trouble looming. We should be near peak levels now because typically lake in inflows run down from March to September and we are starting out in a worse position that 2001 when we last had trouble on this front.

IMO Genesis will be well positioned to take advantage of low hydro inflows.
Unfortunately the Witts free to air graphs don't tell the whole story. North Island inflows are extrememly low, but South Island inflows are normal for this time of year. Storage is indeed lower than normal, but still within 1 SD of the median. Contact's Hawea lake is much lower than normal, but again inflows are exactly normal.

So no reason to be concerned about hydrology. The good news is of course that GNE owns the large Tekapo storage lake and so controls Meridian's inflows to some extent.

[Snow Leopard]

NI hydro levels primarily affect two of the major power companies:

Mighty River Power who have a 1000MW of generation along the Waikato - Click >here (http://www.mightyriver.co.nz/Our-Business/Generation/Lake-Levels.aspx)<;

Genesis Energy who have 500MW in the Tongariro & Waikaremoana schemes - Click >here (https://www.genesisenergy.co.nz/rivers-lakes-rainfall)<.

6746
Current snapshot at post time.

Best Wishes
Paper Tiger

[fish]

It is interesting that the mrp quarterly report refers to the 3 big factors currently affecting power prices-Increased demand,diminished hydro,and genesis thermal output-
QUARTERLY HIGHLIGHTS • Geothermal now New Zealand’s second largest electricity fuel source
• ASX FY2016 future prices up $77.66 cents
• Hydro generation down 159 GWh – lowest Q2 production in Company history
Mighty River Power’s quarterly operating statistics for the period ended 31 December 2014 show a decrease in generation volume, down 1% (24GWh) on the pcp due to a continuation of weak inflows across the catchment. Hydro production of 826GWh was down 159GWh (16%) on pcp – almost 200GWh below the Company’s average, making it the lowest second quarter hydro production since the Company was formed in 1999. However, Lake Taupo storage increased by 37% during the quarter, ending the period at 95% of average.

NZ HAS LESS THERMAL GENERATION AND INCREASED DEMAND; ASX FUTURES UP
ASX futures prices have increased across all maturities, reflecting the significant reduction in contracted gas electricity generation in New Zealand, as well as lower coal commitments by Genesis Energy. The reduction of more than 5,000GWh of thermal fuel commitments since 2013 has restored the balance of market supply and demand from an energy perspective. National demand increased by 2% during the period on pcp, meaning electricity consumption was back up to 2011 levels

[fish]

NI hydro levels primarily affect two of the major power companies:

Mighty River Power who have a 1000MW of generation along the Waikato - Click >here (http://www.mightyriver.co.nz/Our-Business/Generation/Lake-Levels.aspx)<;

Genesis Energy who have 500MW in the Tongariro & Waikaremoana schemes - Click >here (https://www.genesisenergy.co.nz/rivers-lakes-rainfall)<.

6746
Current snapshot at post time.

Best Wishes
Paper Tiger

PT-Is it likely that lower NI hydro will have a different effect on the 2 companies bearing in mind the majority of MRP generation normally comes from one catchment.
Genesis in contrast only has a small percentage from NI hydro.They have SI hydro as well.
But the biggest plus currently for genesis is the ability to take advantage of high prices by increasing thermal generation.
Next week looks like being hot and dry for the North and I will watch power prices with interest.

[Jantar]

....But the biggest plus currently for genesis is the ability to take advantage of high prices by increasing thermal generation.
Next week looks like being hot and dry for the North and I will watch power prices with interest.
Based on the last 2 weeks GNE has not been able to increase thermal generation as much as they would like. They have been affected by river heating issues at Huntly that has limited the amount of generation from their older Rankine units. Unless MRP increase the river flows then GNE are unlikely to able to increase thermal generation. Last week they even had their GT (unit 6) running.

[fish]

Based on the last 2 weeks GNE has not been able to increase thermal generation as much as they would like. They have been affected by river heating issues at Huntly that has limited the amount of generation from their older Rankine units. Unless MRP increase the river flows then GNE are unlikely to able to increase thermal generation. Last week they even had their GT (unit 6) running.

Thanks for that info
Do you know if this is a recurrent ongoing problem that needs a solution?
I would imagine that this leaves contact in the best position for dry N.I. conditiond

[Jantar]

Thanks for that info
Do you know if this is a recurrent ongoing problem that needs a solution?
I would imagine that this leaves contact in the best position for dry N.I. conditiond
It happens every year. River heating also affects Contact's Wairakei geothermal station, so they aren't completely safe either. Hopefully the cold spell moving up the country will help keep the Waikato river cool next week as well..

[Snow Leopard]

...
Genesis in contrast only has a small percentage from NI hydro.They have SI hydro as well.
But the biggest plus currently for genesis is the ability to take advantage of high prices by increasing thermal generation...

Genesis has a total generating capacity of about 1640MW.

Tongariro (362MW 22.1%) & Waikaremoana (140MW 8.5%) are thus 30.6% of that total.

Tekapo is a 10.9% (179MW).

Huntly at 500MW (Rakine units) + 400MW + 50.00MW is 58.0%

There is a wind farm as well good for nearly 0.5% on a windy day.

Best Wishes
Paper Tiger

[Snow Leopard]

It happens every year. River heating also affects Contact's Wairakei geothermal station, so they aren't completely safe either. Hopefully the cold spell moving up the country will help keep the Waikato river cool next week as well..

I remember the time when the upstream temperature was above the permitted maximum and Huntly had to stop generating completely, (this was before Unit5 was on tap).
As you say it is more a summer problem and come the deep mid winter they should be good.

Best Wishes
Paper Tiger

[Snow Leopard]

Genesis has a gentailer currently needs to be generating between about 470MW and 720MW, depending on the time of day, to meet it direct customers needs.

Come the winter those figures are more like 620MW to 950MW for same.

These are my guess average figures so:

a/ they are probably wrong a bit and I would appreciate any more accurate numbers;
b/ would be higher or lower depending on the actual day.

Best Wishes
Paper Tiger

[fish]

Thanks PT and Jantar.
I didn't realize tekapo only had 1/2 the capacity of tongariro..Still very useful when the SI is getting the rain.
MRP is really restraining Taupo hydro flow rates.
I suppose this is a tactical move to hold taupo levels well above the minimum as reserve in case of higher electricity prices in the next few weeks

[Bobdn]

Tongariro is a monster, supplying up to 3.5 % of NZ's total electricity needs. It's also an engineering marvel. Here's a link to a great video about the scheme if you haven't already seen it.

https://www.genesisenergy.co.nz/tongariro-power-scheme

[fish]

Sure is an engineering marvel and I liked the attention to the trout spawning stream.
Will have to pay it a visit when I get the urge.

[Jantar]

Sure is an engineering marvel and I liked the attention to the trout spawning stream.
Will have to pay it a visit when I get the urge.
Its well worth the visit. Go to the hatchery like a tourist, then, during the spawing season, visit the little stream that flows into Poutu Intake where you can see some massive trout in their natural surroundings.

[bull....]

OCR drop ruled out yesterday. Things will need to get much worse before he does now.

harvey manufacturing activity just fell massively in january , I think wheeler has a reason to drop interest rates now. making genesis yield even better

[bung5]

Doesn't really help unless your planning on selling.. in which case you don't get the dividend.

[bull....]

Doesn't really help unless your planning on selling.. in which case you don't get the dividend.

everyone has to sell eventually so most people would prefer the price moved higher as well

[BIRMANBOY]

When is your next spawning due Fish?
Sure is an engineering marvel and I liked the attention to the trout spawning stream.
Will have to pay it a visit when I get the urge.

[airedale]

harvey manufacturing activity just fell massively in january , I think wheeler has a reason to drop interest rates now. making genesis yield even better

Hi Bull, what is the dividend yield at today's price?

[IAK]

When is your next spawning due Fish?

June to August

[bung5]

everyone has to sell eventually so most people would prefer the price moved higher as well

Stock prices fall much quicker than they rise . I Should of bought more more when they were at a cheaper price :(

[bull....]

Hi Bull, what is the dividend yield at today's price?

stated aim to pay 16c .16/2.31 = 6.9% net more gross roger showd good figures a while back maybe he can update, I noticed birmanboy does not have genesis on there website for highest div payers any reason?

[BIRMANBOY]

Whoever said comedy was easy....but thanks for the information.:)
June to August

[BIRMANBOY]

That would be because it hasn't happened yet.....it might happen, it could happen it probably will ....but its a projected not historic. As Robbie Burns said...the best laid plans of mice, men and CEO's often go awry.
stated aim to pay 16c .16/2.31 = 6.9% net more gross roger showd good figures a while back maybe he can update, I noticed birmanboy does not have genesis on there website for highest div payers any reason?

[bull....]

they report in the next 2 weeks lets hope its a probably will or we might have to send the ceo fish watching

[BIRMANBOY]

Some people have written entire books on the subject but you have managed to compact them all into one sentence....congratulations:p
Stock prices fall much quicker than they rise . I Should of bought more more when they were at a cheaper price :(

[IAK]

Whoever said comedy was easy....but thanks for the information.:)
Whoops, will read posts more carefully next time. Nevertheless, the trout spawning in the Tongariro tribs is pretty impressive.

[penn]

Some people have written entire books on the subject but you have managed to compact them all into one sentence....congratulations:p

There are of course all those other books that say "I should of sold more when the price was high"

[bung5]

So in the end doesn't half the holders want the SP lower?

[penn]

So in the end doesn't half the holders want the SP lower?

(http://hotcopper.com.au/asx/lmg/)


AGX AGENIX LIMITED 1.6¢ + 45.5%
WWI WEST WITS MINING LIMITED 1.0¢ + 25.0%
HOR HORSESHOE METALS LIMITED 2.6¢ + 23.8%
NML NAVARRE MINERALS LIMITED 2.3¢ + 21.1%
EER EAST ENERGY RESOURCES LIMITED 1.8¢ + 20.0%
DRG DRAIG RESOURCES LIMITED 2.0¢ + 17.6%
LMG LATROBE MAGNESIUM LIMITED 1.4¢ + 16.7%


Here are some low (ASX) SP! and the gains made in a day (yesterday)
My advise to myself, look at the Divie, not the share price fluctuations.

But that is only for me.

[Bobdn]

Writing out loud: what are the implications of the Contact result for GNE?

I feel some low level anxiety coming on ;)

[bull....]

some cen panic flowing over to gne would expect an uptick this arvo?

[huxley]

Not surprising given the cen announcement, all power companies are down today. Happy to hold gne.

[Beagle]

Not surprising given the cen announcement, all power companies are down today. Happy to hold gne.

Me too. I think most of the drop in CEN was due to factors specific to that company not the industry generally. GEN negative SP reaction looks a little overdone relative to the other power companies, (excl CEN).

[IAK]

Me too. I think most of the drop in CEN was due to factors specific to that company not the industry generally. GEN negative SP reaction looks a little overdone relative to the other power companies, (excl CEN).

Agree. I'd say the majority stake holder (the Government) will be looking for capital returns from Genesis, MRP and MELCA.

[huxley]

Just taking a look at the spot prices today, looks good for thermal generation at the moment.

http://www.electricityinfo.co.nz/comitFta/ftapage.main

Agree with above - govt likely to support capital return. I guess dominant risk for gne is aluminium smelter closure?

[Beagle]

Just taking a look at the spot prices today, looks good for thermal generation at the moment.

http://www.electricityinfo.co.nz/comitFta/ftapage.main

Agree with above - govt likely to support capital return. I guess dominant risk for gne is aluminium smelter closure?

Framed up as a special divvy so they can account for it as income in their books and make them look better, (as per AIR N.Z's 10 cps fully imputed special divvy last year).
Yes to your question.

[Harvey Specter]

Framed up as a special divvy so they can account for it as income in their books and make them look better, (as per AIR N.Z's 10 cps fully imputed special divvy last year).
Yes to your question.My understanding is the power companies will be going into period where free cashflows exceed taxable profits. So you have to do a capital return as you have insufficient imputation credits (haven't looked into what their current balance is) to do a fully imputed dividend and unimputed dividends are inefficient.

[bull....]

8cps div is the forecast, headwinds oil price on kupe earnings 12mths time, continue to lose customers so be interesting to see there margin on retail if it held because of there uncompetitive retail pricing or if it fell like contacts, tailwinds cost cutting and high wholesale prices they said they were on track with forecast a while back so would assume that the case?

[Beagle]

My understanding is the power companies will be going into period where free cashflows exceed taxable profits. So you have to do a capital return as you have insufficient imputation credits (haven't looked into what their current balance is) to do a fully imputed dividend and unimputed dividends are inefficient.

Good point Harvey.

[bull....]

nzog say oil production from kupe down in last 6mths less revenue for them so less revenue for genesis as well? unless they had better hedging in place

[Beagle]

nzog say oil production from kupe down in last 6mths less revenue for them so less revenue for genesis as well? unless they had better hedging in place
GNE have some good hedging in place.

[Bobdn]

I fee anxious about tomorrow. Any chance of some consoling words?

[Beagle]

I fee anxious about tomorrow. Any chance of some consoling words?

Have faith, everyone needs electricity and GNE have a well diversified portfolio of generation assets and are doing okay retaining customers. Spot prices for generation are very high.
Feeling better now :)

[huxley]

I fee anxious about tomorrow. Any chance of some consoling words?

Yikes! Apart from the general declining customer numbers and the industry risk with the smelter I'm pretty comfortable with this stock.. I think they are well positioned.

I guess we'll just have to wait and see.. Any predictions?

[Bobdn]

Thanks Roger and Huxley (apart from the comment about declining numbers) that's just what I needed. I think I'll make myself a cup of tea and watch some telly on my power hungry plasma.

[Harvey Specter]

Thanks Roger and Huxley (apart from the comment about declining numbers) that's just what I needed. I think I'll make myself a cup of tea and watch some telly on my power hungry plasma.Vector said volumes were up on the Auckland network - a reversal of previous years (previous years were falling even though number of connections were increasing).

[brend]

Despite highly competitive electricity and gas retail market conditions, Genesis Energy delivered a sound financial performance in the six months to 31 December 2014.
Net profit improved to $68.2 million for the six month period, compared to $19.7 million in the first half of 2013/2014 (FY2014).

Earnings before net finance expense, income tax, depreciation,depletion, amortisation, impairment, fair value changes and other gains and losses (EBITDAF)
increased to $172.8 million from $150.6 million in the comparable period of 2013.

Genesis Energy has announced an interim dividend of 8 cents per share which will be paid on 16April 2015, with a record date of 2 April 2015.

https://nzx.com/files/attachments/208541.pdf

looks good to me

[Bobdn]

Yay, yes sounds good.

[bull....]

not this bit

In summary, the Company is facing headwinds on achieving its 2015 EBITDAF PFI forecast due to lower international oil prices and continued aggressive retail competition. There is some opportunity for these impacts to be offset by sustainable operating cost reductions and the improved wholesale electricity prices currently being experienced.

looks like a downgrade for full yr, but ist half good effort

[Joshuatree]

Followed by" FY2015 PFI est for NPAT of $95.4mill is likely to be met, OR EXCEEDED,(my caps) based on current projections of fair value changes AND

Stay in business capex for the full year is expected to be in the range of $40-$50 million compared to the PFI forecast of $61 mill

The Ci retains its intention to pay atonal div for FY2015 of 16cps in line with the PFI.

GOOD

[bull....]

Followed by" FY2015 PFI est for NPAT of $95.4mill is likely to be met, OR EXCEEDED,(my caps) based on current projections of fair value changes AND

Stay in business capex for the full year is expected to be in the range of $40-$50 million compared to the PFI forecast of $61 mill

The Ci retains its intention to pay atonal div for FY2015 of 16cps in line with the PFI.
GOOD


correct but its thru re valuations of financial instruments not a better operating result, npat this time was boosted by 50% by the same and you must remeber oil is still declining as well as customer numbers going on history of custmer losses of 1000 odd per mth on average that is 6000 less customers again by end yr so they need more volumes of sales or cost cutting to offset

div nice though so still like, but not quite as good as mel

[macduffy]

But wait, there's more!

"The FY2015 PFI estimate for NPAT of $95.4m is likely to be met or exceeded based on current projections of fair value changes."

:)

Yes, I'm a bit behind the play here!

[bull....]

But wait, there's more!

"The FY2015 PFI estimate for NPAT of $95.4m is likely to be met or exceeded based on current projections of fair value changes."

:)

Yes, I'm a bit behind the play here!

so true lol

[Beagle]

Solid result...people need to remember Unit 5 was up for major maintenance in Nov / Dec and less shipments from Kupe aligned with that planned outage.
Great divvy fully imputed. Great stock to hold for dividend income of circa 10% gross.

[sb9]

Mr Market doesn't seem all that content with the result....am happy with divvy :)

[Bobdn]

Yeah, weird. I would have thought there would have been a positive reaction. Oh well. Looking forward to the dividend.

[bmrm]

Mr Market doesn't seem all that content with the result....am happy with divvy :)

Happy too. The dividend has been pretty well priced in so this drop is presumably fear of those 'headwinds'.

[huxley]

Happy too. The dividend has been pretty well priced in so this drop is presumably fear of those 'headwinds'.

Or people expected more than the confirmed 8 cents dividend?
Only had a chance to briefly read, looks good overall. Kupe factor seems to have had had an effect on revenue..
Verdict: happy to hold

[Bobdn]

Gee, did gne go ex dividend today? (Joking)

[Snow Leopard]

It would seem that there have been a few pluses and a few minuses and they almost exactly cancelled out - no real change.

Going forward - much the same.

Best Wishes
Paper Tiger

[Beagle]

But WHAT a yield !! 16/0.72 = 22.22 cps gross. Someone buying today could realistically add back the dividend they're receiving in short order and argue they're effectively investing at $2.19 - $0.08 = net price $2.11. 0.2222 / 2.11 = 10.53% gross plus they have the incredible honour of possibly meeting Jenny Shipley at the ASM in due course :D

[xafalcon]

But WHAT a yield !! 16/0.72 = 22.22 cps gross. Someone buying today could realistically add back the dividend they're receiving in short order and argue they're effectively investing at $2.19 - $0.08 = net price $2.11. 0.2222 / 2.11 = 10.53% gross plus they have the incredible honour of possibly meeting Jenny Shipley at the ASM in due course :D

Ha ha. You're counting the interim div twice.......

0.2222 / 2.19 is still north of 10% = excellent pre-tax return IMO

[Beagle]

Ha ha. You're counting the interim div twice.......

0.2222 / 2.19 is still north of 10% = excellent pre-tax return IMO

Depends upon your perspective. FWIW when I'm buying shares after a profit announcement and within 6 weeks of a dividend ex date I run my yield analysis on the basis that the near term divvy is paid in such a short time frame I treat it as part repayment of the purchase price. This approach isn't strictly correct as I'm foregoing a few weeks interest in my call account at 3.25% but the way I figure this is that amount of interest foregone in my call account is so small I ignore it. I'm usually investing for a few years so look past the immediate divvy. Not claiming this is technically precisely correct, its just the way I do it :)

[Bobdn]

Market knows best! But I still find it interesting that MRP did better today than GNE.

[fish]

Market knows best! But I still find it interesting that MRP did better today than GNE.

Even more so when mrp are suffering from a lack of rain in the taupo catchment that provides most of their generation.
Hydro inflows look like remaining low for sometime.

[xafalcon]

I just saw the SP dip as an opportunity to increase my shareholding at what I believe is a good price prior to a very solid dividend payment.

FWIW my calculation is 0.08 / 2.20 over 2 months = 21.8% anualised after tax (almost).

[BIRMANBOY]

Another option would be to buy after it goes ex-dividend and presuming SP drops by roughly the amount of the dividend, you now have an increased yield % for the next 20 or however long you hold years. If you are buying for dividend yield and drip buying over a long period of time then keeping your average buy in price as low as possible will enhance your return more dramatically over the longer period.
I just saw the SP dip as an opportunity to increase my shareholding at what I believe is a good price prior to a very solid dividend payment.

FWIW my calculation is 0.08 / 2.20 over 2 months = 21.8% anualised after tax (almost).

[xafalcon]

I prefer the additional safety of buying on a dip prior to stock going ex-dividend. 8cps imputed dividend is equivalent to 11cps price movement. So I can tolerate some further significant downwards sp movement without loosing sleep. Plus I want the shorter investment period for power company stocks with the upcoming Tiwai contract negotiations.

Despite some people being of the opinion that NZAS withdrawal will be limited to effecting MEL(CA), I strongly believe all power company shares will become collateral damage. I do not want any exposure to this risk. I will happily buy back in once a decision on this is announced to the market

[kanaka]

GNE & MRP will come under some selling pressure once the holding period has expired for the bonus issue of shares to take effect - this happens on the 16th April and 11th May respectively.
Will be seriously looking at my options when this happens as I believe there is a lot of downside in electricity generation.

[Tomtom]

GNE & MRP will come under some selling pressure once the holding period has expired for the bonus issue of shares to take effect - this happens on the 16th April and 11th May respectively. Will be seriously looking at my options when this happens as I believe there is a lot of downside in electricity generation. Agreed actually though my time line is a little longer.

First obviously I'm very happy with their performance to date in terms of share price, the shares where great value. However I'm wondering what the future will look like for gen-tailers if photovoltaic solar keeps getting cheaper (margin squeeze, shrinking market?) and people keep sticking units on their houses. You have to think that in some way the level of dividends being returned reflects an inability to see the business undertake future endeavours that would ensure growth long into the future.

[fish]

TomTOM

I have no worries here
It will be a tiny minority that go to this expense
Electrcity is cheap and we are all wired to keep using it
Children of today use lots -they don't go outside so much and have tv on most of the time.
I am sitting here with the aircon on-it is on 24 hours a day.Lights on-about to watch the news.Kettle boiling
My solar panels are not even connected up atm-its so much easier to flick a swith and not worry about batteries
I cant wait for my first electric car-when price and range issues are sorted.
The car will be charged at night on very cheap power
I can see internal combustion engines being banned from city centres
population is growing-demand seems to be growing again

[IAK]

TomTOM

I have no worries here
It will be a tiny minority that go to this expense
Electrcity is cheap and we are all wired to keep using it
Children of today use lots -they don't go outside so much and have tv on most of the time.
I am sitting here with the aircon on-it is on 24 hours a day.Lights on-about to watch the news.Kettle boiling
My solar panels are not even connected up atm-its so much easier to flick a swith and not worry about batteries
I cant wait for my first electric car-when price and range issues are sorted.
The car will be charged at night on very cheap power
I can see internal combustion engines being banned from city centres
population is growing-demand seems to be growing again

Agree, can't wait for long-range electric vehicles.
I can't see how solar is going to supply sufficient electricity to power a house and 2 to 3 cars (especially in the winter). Time will tell I suppose.

[shonen knife]

TomTOM

I have no worries here
It will be a tiny minority that go to this expense
Electrcity is cheap and we are all wired to keep using it
Children of today use lots -they don't go outside so much and have tv on most of the time.
I am sitting here with the aircon on-it is on 24 hours a day.Lights on-about to watch the news.Kettle boiling
My solar panels are not even connected up atm-its so much easier to flick a swith and not worry about batteries


lol.........

[kanaka]

Advances in technology especially in heating and lighting mean less usage in electricity. At Auckland Airport they upgraded their lights in the International Terminal to the new technology at a six figure cost which will pay for itself in less than two years through reduced electricity bills

[fish]

Advances in technology especially in heating and lighting mean less usage in electricity. At Auckland Airport they upgraded their lights in the International Terminal to the new technology at a six figure cost which will pay for itself in less than two years through reduced electricity bills
I have nearly completed my upgrade to led lights and highly recommend them.They have come of age and are 'brilliant"
Natiionwide demand still seems to be up last 6 months-possibly a growing population and increased use of electricity as it is so nice and convenient -is having a stonger influence than increased efficiencies.

predicting future demand is speculative

[IAK]

The secret to wide scale uptake of electric cars is to make affordable, long-lasting batteries. No-one's done it yet, but if anyone can, Apple can...

http://www.nzherald.co.nz/apple-inc/news/article.cfm?o_id=437&objectid=11408314

[tobo]

Electric cars and Apple -
Apple's success is in high-margin, niche items. The high priced phone was a bonus because, although high priced for a phone, it is affordable to teenagers as well as wealthy execs. Both groups 'want the best' and can afford it.
The other thing is, apple's batteries in their phones and computers are not twice as good as anyone else's, and I'll bet they are trying their hardest on that.
Long term, I suppose anything's possible, and they have deep pockets. But will they start well above mass transport cars?

[tobo]

LED lights.
Most businesses will need a prod to spend serious capital to completely replace their lights. Most businesses lease, so either the owner pays and builds the cost into lease (and the occupier benefits), or occupier pays and it's not practical to take them with him if he moves premises. All I am saying is that, in spite of the economics making sense, takeup will be gradual. Even today, I am aware of new developments where the developer chooses against LEDs because of the capital cost. (Mmmm, there is going to be a lot of non LED stock going cheap in a few years time.)
And for residential, people are less likely to replace all their lighting - non-rational thinking - a mixture of thinking LEDs are not 'homely' and resistance to spending big money when they don't actually have to. Again. it will happen, but gradually.
Offsetting reduced power demand through LED and efficient appliances, will be the ever expanding heat pump...and I guess electric cars. (Eventually there will be a lot of petrol stations for sale, and carpark buildings will have plug-in points for every car? )

[Zaphod]

Electric cars and Apple -
Apple's success is in high-margin, niche items. The high priced phone was a bonus because, although high priced for a phone, it is affordable to teenagers as well as wealthy execs. Both groups 'want the best' and can afford it.
The other thing is, apple's batteries in their phones and computers are not twice as good as anyone else's, and I'll bet they are trying their hardest on that.
Long term, I suppose anything's possible, and they have deep pockets. But will they start well above mass transport cars?

You're right, Apple's batteries utilise the exact same technology as every other manufacturer, but are often physically larger than other comparative phone brands and shaped to fit around the PCB and other components within the phone.

The real technological breakthroughs in batteries are still be developed. For example, Lithium-Sulphur batteries (still under development) offer 500Wh/kg compared to standard Li-ion batteries which provide 250Wh/kg, with the cost of the former still being rather astronomical compared to the latter. Clearly, there's a lot of hurdles to overcome.

[Zaphod]

Offsetting reduced power demand through LED and efficient appliances, will be the ever expanding heat pump...and I guess electric cars. (Eventually there will be a lot of petrol stations for sale, and carpark buildings will have plug-in points for every car? )

Heat pumps are also helping to offset gas and inefficient electric heater usage during winter, so potentially there are some energy savings being made there too.

[IAK]

More information on Tesla moving into the battery area http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11412363

[Snow Leopard]

GNE to join the ASX All Ordinaries (http://www.asx.com.au/asxpdf/20150306/pdf/42x38tdm05cv94.pdf)

Best Wishes
Paper Tiger

[Beagle]

GNE to join the ASX All Ordinaries (http://www.asx.com.au/asxpdf/20150306/pdf/42x38tdm05cv94.pdf)

Best Wishes
Paper Tiger
And XRO out. Switch to a company with real power, (EPS), behind its SP before all the index trackers affect the price ?

[bull....]

GNE to join the ASX All Ordinaries (http://www.asx.com.au/asxpdf/20150306/pdf/42x38tdm05cv94.pdf)

Best Wishes
Paper Tiger

well that's good news for the weekend

[penn]

And If I can still read this late on a Friday night MRP out?

[Bobdn]

I see the xd date is 31/3 but the record date is 2/4. I assume that that selling on 31/3 would mean that you miss out on the dividend? Just curious. I calculate my net worth at the end of each month (and have done so for the last 6 years) and like the idea of GNE being fully pumped up by the end of the month. Silly I know but whatever floats my boat.

[Beagle]

Not silly mate, its actually good management to keep a close eye on things :) Yes they will trade on 31 March as ex dividend. Anyone selling on 31 March will therefore still be entitled to the 8 cent dividend as they held the share on the last day they traded cum dividend (30 March). As the price on 31 March is likely to closely reflect the loss of 8 cent dividend entitlement, (i.e. drop by close to 8 cents all other factors being equal), for people who like to calculate their net worth at the end of the (month / quarter / year) you should have a section in your spreadsheet for shares like Gen that have shed their entitlement to dividend as at balance date but has yet to be paid. I call my section dividends due. Payment date is not till 16 April....I wish I could be so tardy with paying my power bills, sorry folks I couldn't resist :D

[Bobdn]

Thanks Roger, useful to know.

[IAK]

Looks like power demand is increasing but hydro storage is falling.


Attached is Meridian Energy Limited's monthly operating report for the month ending 28 February 2015.Highlights this month include:

- National storage decreased to 81% of average
- Meridian's February 2015 monthly inflows were 82% of average
- Meridian's Waitaki catchment storage increased from 83% to 84% of average by the end of February 2015
- Electricity demand in February 2015 was 1.0% higher than the same month last year
- Demand in the last 12 months is 1.6% higher than preceding 12 month

[IAK]

From the NBR...Genesis Energy, the partially privatised energy generator and retailer, declined 1.5 percent to $2.28. Solid Energy, the state owned coal miner, may be forced into liquidation, which some in the market are speculating will have a knock on effect and see Genesis move to close its coal-powered Huntly generator.
What a disaster Solid Energy has become. BTW Huntly coal generators have, and are, regularly run on Natural Gas as well as coal sourced from Indonesia.

[bull....]

Genesis Energy and Solid Energy amended and restated the existing
coal supply agreement between them on 16 January 2014. The
amendments are principally to align Genesis Energy’s anticipated
coal demand profile and flexibility requirements. In particular, the
amendments reduce the annual contracted volume of coal, increase
the unit price, increase the total amount of coal supplied (from
1,019 kT after 1 December 2013 to 1,480 kT) and extend the term of

the coal supply agreement by three years to 30 June 2017






Rankine Units – Two 250 MW units (Gas/Coal) with an

additional 250 MW unit in storage




The Rankine Units utilise boiler and steam turbine technology and

are capable of using coal and gas to generate electricity. The two

Rankine Units currently in service were commissioned between

1982 and 1985 and can each generate 250 MW. These units have the

capacity to operate in a range of roles, including Base-load, Hydrofirming

and Peaking.

A Rankine Unit was placed into long-term storage at the end of 2013,

with the intention of lowering the overall overhead and maintenance

costs of the three units, and improving the utilisation of the two

remaining Rankine Units in service. This unit is stored at a level of

readiness that could see it return to service, if required, within 90

days. However, the Company expects a return to three Rankine

Units in active service would be considered only under exceptional

circumstances.

The operation of a fourth Rankine Unit has ceased permanently and

the Company has commenced the decommissioning process.



Don't know why they would be effected cause even if solid energy goes bust receivers will still keep selling the coal to them.

[penn]

Nice end to the week, Bobdn, you would not see an invertment property go up nearly 3% in a day. (could happen, but you would not see it)

[Bobdn]

Hi Penn, yes, nice indeed.

We're still a couple of weeks out from the xd date too. I imagine things could get quite hot from here on in.

[penn]

Think you are right there, I will guess that a lot who were in on the IPO will hold on for their 'free' shares, but they may also try to capture the divie over the next two weeks, by topping-up. (target $2.48?)

[tim23]

Penn - you don't see the investment property being quoted each day though!

[penn]

Mmm I said you would not see it, but also you would not pay a land agent or auctioneer type fees, if you wanted your cash back in a hurry.

[Beagle]

Think you are right there, I will guess that a lot who were in on the IPO will hold on for their 'free' shares, but they may also try to capture the divie over the next two weeks, by topping-up. (target $2.48?)

Original holders would be absolutely mad to sell now after holding all this time. 8 cent fully imputed divvy and 6.66% free bonus shares are both just around the corner.

[fish]

I would imagine a lot of original holders would have topped up -having failed to get their requirements filled.
If I remember correctly the bonus shares are only on the first 2000 shares.
So I would imagine you could sell down to a holding of 2000shares and still get the bonus.
Having said that I agree genesis is looking very well-positioned with cheap fossil fuel,capacity to increase generation substantially more than any other company,a dry year and increased demand

[bull....]

Original holders would be absolutely mad to sell now after holding all this time. 8 cent fully imputed divvy and 6.66% free bonus shares are both just around the corner.

Totally agree and with rbnz saying rates not going up for a long time where else can you get such a big yield return, im sure money from eu,jpy will be looking at this too

[couta1]

I would imagine a lot of original holders would have topped up -having failed to get their requirements filled.
If I remember correctly the bonus shares are only on the first 2000 shares.
So I would imagine you could sell down to a holding of 2000shares and still get the bonus.
Having said that I agree genesis is looking very well-positioned with cheap fossil fuel,capacity to increase generation substantially more than any other company,a dry year and increased demand
In order to obtain the maximum number of 2000 bonus shares on offer you need to be holding 30k shares from the IPO, 2000 shares will only entitle you to 133 bonus shares come April.

[Beagle]

In order to obtain the maximum number of 2000 bonus shares on offer you need to be holding 30k shares from the IPO, 2000 shares will only entitle you to 133 bonus shares come April.

Like you have mate, well done ! I got scaled in both my application and my company, (somewhat cunning applying in more than one name), but topped up in the 180's last year and again in the 220's recently. Happy to hold indefinitely, will be a good dividend earner over the years.

[bull....]

fed keeps low interest rates for longer, money should flow from overseas to nz more now genesis yield very juicy for these offshore people

[robbo24]

So GNE went ex-dividend today, right? Followed by the expected dip in the share price...

How many days until it rebounds? :D

Is it the good old fashioned tradertunity?

[bull....]

nice div today cheers

[stones]

nice div today cheers

Not today...try 16th April my friend

[bmrm]

Not today...try 16th April my friend

Probably identifying that yesterday was ex date...

[macduffy]

Probably identifying that yesterday was record date...

Interim result announcement in February gave 2 April as record date. Shares will therefore now be trading ex div.

[Beagle]

BONUS TIME :D, see announcement today. Must have held in same name since IPO and right through till 16 April and get 1 for 15 free up to a limit of 2,000 free shares. I can think of one shareholder who will be very happy eh Couta1 :)

[bull....]

ex date yesterday meaning since I was holding or even if I sold them yesterday am entitled to the div record date is the 2nd

[huxley]

BONUS TIME :D, see announcement today. Must have held in same name since IPO and right through till 16 April and get 1 for 15 free up to a limit of 2,000 free shares. I can think of one shareholder who will be very happy eh Couta1 :)



Huzzah!! :cool:

[penn]

I still feel that once all the 'loyalty bonus' shares are 'in the bank' there will be a lot of sellers about. (I also wanted to push peb to page 2) ;)

[Jantar]

I still feel that once all the 'loyalty bonus' shares are 'in the bank' there will be a lot of sellers about. (I also wanted to push peb to page 2) ;)
I hope you are right. I may feel a need to top up somewhat. :D

[Beagle]

I still feel that once all the 'loyalty bonus' shares are 'in the bank' there will be a lot of sellers about. (I also wanted to push peb to page 2) ;)

I disagree. People looking to stag and generally make a buck from this float have had ample opportunity to sell and take a very handsome profit on the IPO price for a long time now. Those type of investors are generally impatient and I can't imagine there would be many that could look a circa 50% profit in the eye and say yeah, nah, I'll wait many months for another 6%. I reckon all the profit taking happened ages ago and I'd expect remaining holders to be there based on the solid investment case / fully imputed dividend yield and will simply be pleased to accept their bonus shares and smile, (that's what I'll be doing) :) Recall too that this only applied to retail investors and was subject to a maximum allocation of 2,000 shares if you were fortunate enough to get a full 30,000 shares in the IPO, (not many were).
It'll hardly even be a blip on the radar IMO.

[Bobdn]

I agree. I imagine most investors are in for the long haul.

I see Labour's energy spokesman is recommending the NZ Power idea be dropped. Would certainly make long term holding less stressful.

[Beagle]

So GNE went ex-dividend today, right? Followed by the expected dip in the share price...

How many days until it rebounds? :D

Is it the good old fashioned tradertunity?

Not many :D

[penn]

?
Recommendation GNE
REDUCE
Valuation: $2.00
14 Apr 15 - Downgrade due to price change.
Research by Morurningstar.(on ASX)

I have just sold down 'some' (the shares I bought in January at just over 2.03)
Still hold the ones I purchased at the IPO,
but from experiance sp usually runs counter to the Ms Recc.

Hope to buy more again in the coming weeks.

[Jantar]

?
Recommendation GNE
REDUCE
Valuation: $2.00
14 Apr 15 - Downgrade due to price change.
Research by Morurningstar.(on ASX)
.......
I believe they have undervalued GNE on that recomendation, however I agree that it was overvalued when the SP was over $2:30. Perhaps it is still at the top end of the price path, but with the bonus shares due in only a few weeks GNE should still be a hold rather than a sell. Of course Aussies do not qualify for those so they probably see the shares as worth 7% less than we would.

[Beagle]

So Moaningstar have downgraded = buy signal :)

[sb9]

Divvy in the bank today :t_up:, can't wait for bonus shares.....:)

[sideline]

And back above the 200EMA, $2.26 up .10 as I type. This price action of the past couple of weeks has been surprisingly dramatic, though indicators are pushing hard up from oversold and money flow is strongly positive.
7280
BAA

Baa, where do you get your chart data from? I don't see any recent trading in the 2.10ish range!
I see however that Yahoo have presented the bonus shares as a 16:15 stock split and adjusted
the share price accordingly, which is wrong.
The bonus shares are a straight transfer from the majority shareholder to qualifying minority holders,
no splitting (increase in number of shares) is occurring here.

[Baa_Baa]

Thanks, I'll remove my post.


Baa, where do you get your chart data from? I don't see any recent trading in the 2.10ish range!
I see however that Yahoo have presented the bonus shares as a 16:15 stock split and adjusted
the share price accordingly, which is wrong.
The bonus shares are a straight transfer from the majority shareholder to qualifying minority holders,
no splitting (increase in number of shares) is occurring here.

[Snow Leopard]

Could you explain the PE of 46? am I missing something here?

Price Earning Ratio = Share Price / Earnings Per Share ( PE = SP/EPS )

46 = $2.265 / $0.0492 (FY14 to 30-June-14)

Best you read the financial statements before making any decisions.

Best Wishes
Paper Tiger

[Beagle]

http://www.4-traders.com/GENESIS-ENERGY-LTD-17595957/revisions/

Historic EPS is misleading as it was a shocker of a year last year for all the reasons listed in the IPO documentation.

Consensus broker EPS for 2015 and 2016 is 11 cps. Forward PE at $2.26 is thus 20.5. Hope that clears up anyone's concerns.

[bull....]

genesis continues to bleed customers 3000 so far this yr, 25000 since jan last yr and takes the title of worst customer retention of all power companies mainly benefiting trustpower, todd , flick .

meridian and trustpower have recently announced they are going after Auckland market genesis biggest market and where they are most competitive ( genesis are losing heaps customers in the regions) so if genesis cant defend Auckland I believe the customer loseses will accelerate. I targeted in a post a while back of them losing 6000 by next report so on target I am increasing this to 15000 by dec now because they are failing to reverse the decline.
I sold out after div ex so good luck it may keep going up because of the div but the chickens will come home to roost if this performance continues.

[bmrm]

genesis continues to bleed customers 3000 so far this yr, 25000 since jan last yr and takes the title of worst customer retention of all power companies mainly benefiting trustpower, todd , flick .

meridian and trustpower have recently announced they are going after Auckland market genesis biggest market and where they are most competitive ( genesis are losing heaps customers in the regions) so if genesis cant defend Auckland I believe the customer loseses will accelerate. I targeted in a post a while back of them losing 6000 by next report so on target I am increasing this to 15000 by dec now because they are failing to reverse the decline.
I sold out after div ex so good luck it may keep going up because of the div but the chickens will come home to roost if this performance continues.

I have largely the same outlook, looking to sell out shortly. Did you buy in at IPO? If so, why sell between ex div and receiving the bonus shares?

[bull....]

I have largely the same outlook, looking to sell out shortly. Did you buy in at IPO? If so, why sell between ex div and receiving the bonus shares?

like most people I received very few in the ipo - anyway I see the funds utilised elsewhere as providing a return better than a few bonus shares will provide.

[blackcap]

like most people I received very few in the ipo - anyway I see the funds utilised elsewhere as providing a return better than a few bonus shares will provide.

Those bonus shares still represent roughly a 6.6% return. Not to be sneezed at especially now that its so close.

[percy]

Those bonus shares still represent roughly a 6.6% return. Not to be sneezed at especially now that its so close.

Yes I must agree with you.
A bird in the hand is worth two in the bush.!
Then again, I would most probably enjoy two in the bush!!!! lol.

[bmrm]

like most people I received very few in the ipo - anyway I see the funds utilised elsewhere as providing a return better than a few bonus shares will provide.

So you see a massive risk to GNE/unmissable investment opportunity manifesting in the ~two weeks between ex and the bonus allotment?

[Master98]

I have largely the same outlook, looking to sell out shortly. Did you buy in at IPO? If so, why sell between ex div and receiving the bonus shares?

GEN bonus shares record date is 16/04, if you sell shares after 13/04 then you still entitle to bonus shares i think.Bull could just sold shares after 13/04;)

[bull....]

So you see a massive risk to GNE/unmissable investment opportunity manifesting in the ~two weeks between ex and the bonus allotment?

say I sold on 7/4 somewhere between 2.28 - 2.3 im up because the price is only 2.27 and if make a return with my total funds somewhere else I am up more - most people will only get a couple hundred bucks if the price is even lower after allotment the capital loss negates your bonus share gain , if the price is higher than 2.30 guess I have lost my bonus share gain but only if I did not make more somewhere else with my funds

[Beagle]

My understanding, (please don't shoot me if I am wrong) is that the continuous holding period ended on 16 April), so theoretically the record date for this would be three days before this.

After careful consideration I decided to reduce my position in GNE for a number of reasons.
1. They've just gone ex divvy and its a long time till the next one.
2. They fully imputed this dividend and are unlikely to be able to in the future, (more below on that)
3. They don't seem to be able to stem the tide of customer losses
4. Competition is intensifying, according to one of the major brokers several more retailers are in the processes of setting up shop
5. There is always the possibility that Rio Tinto will simply write off their investment in Tiwai Point, (already written down to nearly nothing) and is essentially at a value ion their balance sheet that almost meaningless to them.
I doubt this will happen while the smelter remains profitable so this would require a catalyst for it to eventuate, such as a major fall in Aluminium prices and or some major capex requirement on the smelter.

Lets unpack point 2 which is the major driver behind my decision making. A company can only impute dividends to the extent that they have a credit balance in their Imputation Credit account. ICA accounts are credited when a company pays tax and are debited when they, amoung other things, attach imputation credits to dividends paid). The significant delay in making payment of the interim dividend till after 1 April put me on enquiry regarding the state of their ICA account and after reviewing their financial I see the ICA account cupboard is basically bare...which explains why they had to delay the dividend till after 31 March...ICA accounts must be in credit as at 31 March each year otherwise the company pays a penalty.

What are the apparent implications for future dividends in terms of the extent to which they can be imputed and what effect on the gross dividend level ?
Leaving aside whether fully imputing the dividend just paid materially compromises their short term ability to impute the final dividend for the year or not the plain fact of the matter is if you're starting with very close to a zero ICA account in the medium term you're not going to be able to impute any more than the tax you're paying. Broker forecasts I posted info for yesterday showed estimated EPS for 2015 and 2016 of 11 cps.
The dividend forecast is for dividends of 16 cps therefore simple logic says they will only be able to attach imputation credits for 11 cents of the 16 cent dividends because that's all the tax that's be paid and all that's available to impute.
So we are likely to see an imputation level of 11/16 or 68.75%.

What does that make the gross dividend ?
Normally one uses the denominator value of 0.72 to account for the 28% maximum imputation credit but we must use a new value of .8075 because of partial imputation .28 x .6875 = .1925. 1-.1925 = .8075 so the gross dividend going forward at the rate of 16 cps if they can maintain that becomes 16 / .8075 = 19.814 cps which on a $2.27 SP = 8.728% gross yield.

Now comes the tough part. remember that this dividend is artificially high whilst Kupe still has resources in it, currently scheduled for expiry in 2027, possible extension with new reserves ?
So given the other factors mentioned above how compelling is this investment given the risks and the fact that the rate of 8.728% gross only lasts for another circa 12 years ?

I have some reservations so have decided to reduce, (not eliminate), my holding. Sorry don't have the usual time to spell check and edit this properly but hopefully people get the gist and this makes sense so people can make their own minds up whether this is an acceptable return or not ?

The way I read the IPO documentation I will still get my 6% bonus on the original shares allocated in the IPO which are still held. I would venture to suggest that one could perhaps take the view that the initial IPO documentation was perhaps slightly disingenuous in that it didn't point out that dividends probably can't be fully imputed over the medium term....

[Beagle]

You're welcome mate. I've been thinking about this for a while so just thought I'd let others know my thinking on the partial imputation.
Just worked out my forthcoming bonus shares and its value...better than anything my wife has given me in the way of a bonus lately, opps am I allowed to say that on here :D

[Harvey Specter]

2. Or they could prepay their tax as at 31 March. Depends how long they will be in a ICA deficit position for.
3. Isn't this cyclical. It was CEN last year as they went through this due to issues with their SAP implementation. Plus not all customers are good customers. I forget whether they are long or short in generation re their retail position (3 IM in 1 year on the same industry is alot to remember!) but doesn't the increase in competition in retail suggest that margins will be low and therefore generation is the place to be (especially if you believe Labours monopoly profits argument)

[Beagle]

Hi Harvey,

I've yet to see any public company prepay their tax for the benefit of shareholders.
I'll admit others probably know this company better than I but by my reckoning two key aspects of GEN is its well diversified generation mix and its ability to sell ostensibly all ? of that on to customers at a retail level. Losing customers does seem to me to be something of a systemic issue...selfish bean counters and other customers always going for the best retail deal :)

Wallace - I wonder when Tesla will start selling their cars here ?...then we're talking !! Would be good for electricity demand and the environment too.
Are they a thing of beauty or watt, pardon the pun :) http://www.teslamotors.com/

[Harvey Specter]

I've yet to see any public company prepay their tax for the benefit of shareholders.I know a few that have done it in the past and at least one yeild play on the NZX has been doing it for years.


Wallace - I wonder when Tesla will start selling their cars here ?...then we're talking !! Would be good for electricity demand and the environment too.
Are they a thing of beauty or watt, pardon the pun :) http://www.teslamotors.com/Cant wait but I'm afraid the isolation tax charged on any import into NZ will make it prohibitively expensive. I think the only one in the country currently (private import) cost over $200k! I think I would take an Audi s4 for that and spend the change on 98 Petrol.

[Beagle]

I know a few that have done it in the past and at least one yeild play on the NZX has been doing it for years.

Cant wait but I'm afraid the isolation tax charged on any import into NZ will make it prohibitively expensive. I think the only one in the country currently (private import) cost over $200k! I think I would take an Audi s4 for that and spend the change on 98 Petrol.

Fair enough but I think the main point stands that in the medium term they can't impute more of the dividend than profit they're paying tax on so that still leaves us with a prognosis of late 8% gross divvy's.
I love the new F Type coupe and am very sorely tempted to get one to be honest. Totally know what you're getting at with the ridiculous premium the Euro manufacturers place on vehicles sold here through official distribution channels, (so absurd to the point its almost certain any future Euro vehicle we buy will be a low mileage demo out of the U.K.) but IIRC one of Elon Musk's main philosophies is to do away with regional pricing anomalies. I think pricing in Australia isn't too dissimilar to the U.S. taking into account exchange rate, shipping costs and local GST and other taxes so there's hope for us. I think the new model 70 Tesla is all that one really needs in term of performance and I think there's planning moves in the wind for a supercharger electric network to empower state highway 1. We live in hope, as I'm sure the Electricity generators do :)

I wonder how many people know electric cars are already feasible for many consumers ? Nissan leaf all electric was $69,995 then got a massive haircut to $39,995 and now you can buy a super low mileage demo for $32,000 with no road user charges till 2020. 160 km official range, probably 100 km's in the real world but still that's far more than ample for most people's daily commute. Extra electricity demand from electric vehicles just coming around the corner so too speak ? Disclaimer: I don't work for or have any association with Nissan New Zealand.

[couta1]

Well I have no intention of selling my 30k shares at IPO price of $1.55, add to that the 2000 free shares to come and that works out at an average of around $1.44 per share so this bird can stay in my hand for a long time to come.

[Master98]

Well I have no intention of selling my 30k shares at IPO price of $1.55, add to that the 2000 free shares to come and that works out at an average of around $1.44 per share so this bird can stay in my hand for a long time to come.

I sold my shares from IPO today as I expect sp will fall following the allotment of bonus shares on 23/04, I sold my MRP shares from IPO just before ex divvy at $3.4 and I glad my decision against current MRP sp.