Originally Posted by
Snoopy
I am following your example RGR367. Despite getting a better deal than the institutions, I don't believe this offer will be an out of the ball park hit for small shareholders. In the medium term, I am expecting downward pressure on the CEN share price because of rising interest rates. Ten year rates at 2.5% within a couple of years I think is likely. But to an extent my own modelling takes this into account (my base investment case is for a 4.5% gross dividend yield).
What finally swung me over the line was the vision beyond the new Tauhara station. The effective rebuilding of the Wairakei with 167MW 'Geofuture' project, and the obvious careful attention to the cost effectiveness of each project in relation to competitor's developments (Capital Raise Presentation, slide 10). 'Geofuture' is not specifically labelled on that chart. But I am pretty sure it is the next geothermal 'cab off the rank' once the three competitors wind projects are built. Neither 'Geofuture', nor the benefit of the mooted North Island battery project are part of the forecast EBITDA lift from Tanhara alone.
The development pipeline is based around a geothermal field Contact know well and they have the in house team to carry out such projects when and if required. So I think execution risk is low.
I talked to my contact at Jarden's during the week who was very cagey. They are involved in the offer and so are under a blackout period for personal customer advice. However, I was told that prior to the offer proposal and investment window opening, Contact was their preferred investment in the gentailer sector.
Taking everything into account, including the somewhat unappealing alternative of a 1% term deposit, I think there are enough reasons to give this offer a good go.
SNOOPY