The threat is still there, 2017 not far away
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But I believe the playing field has tipped heavily towards the generators - demand is growing, concurrently capacity is being retired, and transpower will likely be charging differently, meanwhile Tiwai is still for sale with a huge associated remediation cost
If I was a generator (esp Meridian) I would be playing Rio Tinto at their own game, and bully them into a long term contract at better rates on the threat of walking away
There is no better time for this than when potential new generation capacity is needed to be built = about 2017/2018
So I say the "threat" has actually switched onto Rio - do they want a huge clean-up bill when their commodities are priced so low?
Could Rio even sell Tiwai and who else would be interested in buying it? Lack of buyers?? big remediation costs?? Low aluminium prices. Any talk of selling by Rio sounds like posturing for political purposes.
Could Pacific Aluminium be floated? (if they really really wanted an exit...)
Extremely 'out there' and incredibly difficult to 'sell' in these times... but desperate times (if they are as 'desperate' as Rio is making it sound) call for desperate measures (assuming they did not want to shut it down)
I do not see a Tiwai Pt shut-down currently being acceptable to Rio Tinto shareholders. It would be a direct loss of any residual plant value (probably zero from an accounting perspective, but there would be some real value in the plant) and would also invoke a clean-up bill rumored to be around $500M. With low commodity prices, dividends will already be skinny and a $500M hit would come straight out of the dividend. Much easier to sell this to shareholders when making loads of money - the next boom cycle I reckon
I managed to sell out of MRP, kept a few, but most sold. Managed a good profit, but I am still concerned about their share price. It seems quite ridiculous. I am still holding Meridian as I am a great fan of Hydro generation. I look at wind power, plus geothermal, and wonder how much life the machines have, plus maintenance costs. Maintenance is not cheap, but it is essential. I suspect MRP contract out their maintenance. As everyone associated with maintenance knows, you make profit on what you do not do, not what you do, do. An essential and vital difference. The result is equipment becomes very poorly maintained since forms in triplicate are needed to tighten a nut. AND It takes three months to get it tightened!
The question is how much can the generators get for there product. At the moment they charge Tiwai 4-5 c/kwhr , commercials 7c/kwhr , and domestic 20-25c/Kwhr. with new technology , solar , batteries , and IT giving better control domestic consumers have choice coming at well below 20-25 c/Kwhr so the prices will have to drop or people will leave the networks more and more . Overseas that I what is happening and it will happen here. Read the PWC report out last week. Thus the present share prices are not sustainable as the revenue streams will drop for all of the generator / retailers.
Generators do not charge domestic users 20-25c/kWhr, retailers do. This includes transmission costs that are paid on behalf of consumers to transpower & local lines companies, and the electricity cost includes an element of price averaging and hedging. Then GST is added on top of everything.
In commercial power sales all this is separated out and charged individually at time of use (for the large manufacturing company I work for).
Batteries are years away from having a material effect on retail pricing. Solar is fringe, and the significantly lower NZD has made it 20% more expensive. Both are only an option for those people who can afford to invest thousands of dollars and who plan to stay in their current home for at least 5-10 years and who want to have panels installed on their roof
I do not see the generators revenue stream under any threat, especially with demand growing
The chart doesn't look quite as bad if you convert from USD to NZD - Tiwai cost base very sensitive to USD / NZD rate - aluminium spot in a downtrend but so is USD / NZD - not to downplay the aluminium spot price decline this year but it could be much worse for NZAS / Rio.....
Attachment 7639Yeah nah, it still looks pretty bloody awful in NZD as well. The 2014 party is over and despite NZD decline to USD the Alu spot is soft to weak. This has been going on for ages now, no wonder Rio/NZAS are questioning the viability, but I think they're pretty much stuffed and have to dig in, wait out the price weakness, or suffer an intolerable exit cost.
Jmho.
If you think about it, the retirement of expensive thermal generation capacity at this time makes perfect sense.
The collective generators have gone from an over-capacity situation with a major customer threatening to leave every 2 years, and using this as leverage to keep the price low = negotiating power was with Rio Tinto
Whereas the situation has now become - one of the generators will need to commit substantial capital to build new capacity which would not be required if Tiwai Pt shut down, so the price Rio Tinto pays for electricity must rise, or Rio Tinto can close the plant and pay $500M in clean-up costs when their revenue stream is already under pressure = negotiating power now with generators
You will note that the announcements of plant closure came almost immediately after the latest Tiwai Pt deal was inked. Rio Tinto got blindsided
Very smart positioning if you ask me
On another point ;if ElNino is going to have the impact they say it will; which Generator will benefit the most and which will get the least rainfall?. Im thinking Meridian to get the Southern alps runoff as a plus(as they should get a lot of rainfall) and not sure who is worst placed Mighty River on the Waikato maybe.
I wouldn't be so sure the government won't insist on full site clean-up. Remember how Rio Tinto used the power companies share floats as a lever and threatened to pull out. The government had to stump up $30M (from memory) to get them to stay a little longer. That situation will be at the forefront of politicians minds when RT finally pull up stumps and leave. Payback's a b*tch
Playing hard-ball with the government and essentially blackmailing them was a very short-sighted business decision IMO.
Aside from the question of the clean-up and whether RIO would contemplate the expense, how attractive would a heavy industrial site in Bluff be to a potential purchaser? After all, the smelter's only there because of its relative proximity to Manapouri and its subsidised electricity - and the port, of course. Who might be interested in that site, without subsidised power!
Any new large industrial of that scale is unlikely in NZ again given cheaper costs and scale from doing it in Asia. NZ needs to focus on value add going forward, not commoditisation. Fonterra is a perfect example in that it has lead the race to the bottom as far as milk price has gone (look at historical milk price on a real basis).
I was charged over 30c/kwhr by a retailer owned by a generator. I switched to fickelectric and my bill has been reduced by 15% over 3 months. that is why share prices are reducing. The problem with the Nz electricity market is that there is not enough competition in the generation side and generation and retailing were not separated when the market was set up.Tiwai only has to shut one potline to create problems,and no board will commit to new generation as long as Tiwai is on short term contracts .
I am with a gentailer and my average unit price (controlled & uncontrolled, volume weighted) is just over $0.23/unit incl GST. For the convenience this brings to my life, I find it exceptional value for money
There are a half dozen generators and over 20 retailers. That is plenty of competition. They all want your business, and their switching incentives demonstrate this
Look to the local lines companies for high charges - no competition there. Watch out for comcom to act on this, sometime. This would bring power costs down (but your annual rebate would also disappear)
Shutting one pot line would not create a problem, it would resolve a problem - what generation to build in the next 3 years.
http://www.google.co.nz/about/datacenters/ One of these might go nicely if RIO moves out.
The data centres consume 100% renewable to keep google happy and access to water for cooling is a plus.
Also SIT can train the engineers. :)
Here is an example of the potential.
http://techcrunch.com/2015/06/24/goo...nt-in-alabama/
http://www.nytimes.com/2011/09/09/te...city.html?_r=0
My maths say Google globally doesn't use as much electricity as Tewai.
What was up with today's trading??
Looked like it was in for a good day, and well deserved increase, only to drop below IPO price in the final minutes... any explanations?Attachment 7646
Crikey, I'd hate to know what would have happened to the sp if Tiwai aluminium smelter had closed down.
Disc. Holding for the divs.
Yes, still paying good dividends. :)
Forsyth have put another positive report out on MRP, retain $2.85 price target, with improved profit outlook (EBITDAF up 0.8% to $502m) as a result of strong North Island hydro generation, creating a good start to the year...
Almost back into the $2.30's now..
read in NBR about solar coming . Watch volumes go down over 5 years
Even if it was solar that was 'causing doubt'... why is MRP being hit extremely hard compared to other listed power stocks?
It may be El Nino which usually has a bigger affect on the NI catchments than the SI, although I think from memory it affects them too
I do not see it that way.
Solar is 20% more expensive now than it was 18 months ago since CNY is tied to USD (most panels come from China). Meanwhile retail power prices are static and look like staying that way. So the cost recovery period has extended significantly, meaning solar is much less viable now than 18 months ago. There was no huge uptick in solar installations 18 months ago, so unlikely to be one in the next few years either.
In the unsubsidised NZ market, solar needs all these things to "make it happen"
- homeowner must have significant spare capital
- homeowner must expect to remain in current house for about 6-7 years just to achieve pay-back (cost parity), even longer for "cost saving"
- homeowner must not mind aesthetic deterioration
- homeowner must want solar
- homeowner must have energy supplier that allows grid-tied connection
Solar is a great idea, I am planning an install. But I can do it myself, which vastly improves economics. However the pool of potential customers who tick all the above boxes is small (alot less than the 3% annual electricity usage growth).
I do not see any decrease in electricity usage unless Tiwai reduces/stops production
Down to $2.40. Is it time to PANIC, or buy more????
$2.40 only on intraday and these are relatively small trades - definitely wouldn't make a decision to sell or buy based on that. Stick to the trends, fundamentals and your overall strategy. For example someone today bought 99 shares at $2.415 ($99) and paid $30 fee for the privilege - this is not the type of person to follow in behaviour.
It looks like Contact Energy is being hit too.
Hi Antipodean .
A fund manager or hedge fund that is looking to buy or sell large amounts of shares can do the following . Key in an order to buy/ sell say 100,000 shares . This is one order however it will be released in small parcels to hide the activity .So when you think it is 99 shares and the guy is an idiot ... it could be 99 of 100,000. You will find some books about this if you are interested , Flash Boys comes to mind , although I have not read this.
I bought some at $2.16. MRP then dropped to below $2.00. So how on earth do you spot the bottom of the market, unless you are Madoff. Or is that Madeoff? I suppose I will watch the market and miss the bus.
Does it matter if you don't get in right at the bottom of the market? How much does 16CPS of downside compare against 100+CPS of upside MRP saw from the bottom.
As long as you have rightly a picked a stock that is trading at a current discount to where it will be in the future, set stops where you are comfortable, stick to them and things might go okay :)
There was a poster on here who went in very heavy into MRP @ 1.90. (Belg i think ?)
They are no longer on ST. I assume they no longer on ST because they sold all their MRP @ $3+ and are now a tropical beach somewhere drinking the proceeds. :cool:
Did you still hold your MRP that you get at 2.16 when it went to 3.00?
No. I sold. But not at $3.00. I held on to around 1,000 MRP. But they are now more or less free shares.
I agree with you, spotting the bottom to buy or the top to sell is impossible. But I am very disappointed not to have held off buying until $1.90! Life can be hard.
MornignStar has an accumulate ($2.90) recommendation this a.m.
https://www.nzx.com/files/attachments/223025.pdf
Great stuff I think, what is not so great is why the share price is low given such a strong start and slowing (almost stopped) customer churn... (I think its amazing the share price is below the $3 mark...)
Look forward to hearing other peoples thoughts
https://www.nzx.com/files/attachments/223142.pdf
Another impressive presentation
I have a minor problem about Mighty River. Latest price is around $2.75 per share. Earnings per share appear to be 3.4 cents. So, being particularly stupid, I divided the cost per share by the earnings per share. Leaving out a few decimal places, it came to 81. Surprisingly, that is more years than I have had birthdays. Only a few, it must be admitted, but I have to hold MRP for 81 years for its earnings to have paid back its price.
Price to Earning ratios could be between 15 and 25 say at present. Depends upon the company. But 81???????????
Can anyone explain it to me. I must emphasize that I do not have lots of brain, so a simple explanation would be appreciated.
On a 20 P/E ratio, MRP is worth 69 cents?
You're very right this does not make sense at all, but not as bad as you think either. I will make one correction for you though, 3.4 cents is not correct figure because that is profit attributed to the share after all expenses including non cash, which included impairment, impairment is technically a non cash flow expense and doesn't really affect the running of the business. Impairment was 130 million so add that back into your incoming profits and you actually have about 161 million after tax or 11 cents per share in earnings. For me revenue dropped, profits dropped, so its not quite risk free. They are performing better now but it does not convince me to feel safer here than any other stock.
I could go on the market and find other much better dividend yield stocks available. Tourism Holdings, Heartland, Skellerup, Air NZ and so on. What the market feels is different here is a solid power company that has stability and being partially government owned has a safety towards their regulation bias. Basically people are valuing this as nearly risk free dividend because of its so called solid operating base. I do not feel that way and don't normally express so, but I read your statement and thought it might help you in understanding it more with my views. Hope that helps :)
Estimated current year 'normalised' PEs and long term growth factors for some power companies:
MRP 24.1 6%
TPW 19.2 7.5%
GNE 17.4 4%
MEL 10.7 8%
For MRP I thought underlying earnings for 2015 were 10.5c; MRP's forecast for 2016 indicated (to me) 11.5c, times 24.1 = 2.76
Divide the first number by the second to get the PEG ratio, which some say should be about 1, not much more, and definitely not 4.6
Based on that I sold MRP a week ago at about $2.50, and bought some AIR, TWR and STU - so am not feeling too bright either.
Having a very good run over the past 2 weeks, up over 15%
Quite right Paper Tiger. Most/all the generators appear to work off paying a high proportion of their FCF as their dividend
MRP should continue the march into the 2.90's where I believe its fair value (at this point in time) is.
It might not have the 'yield' Genesis has, and it might not have the 'big' factor Meridian has, but MRP has superior management, some fantastic assets, and to top it off a steady customer base with great cashflow.
And in case you haven't picked it up yet mouse, P/E is not a good judgement for power companies at all
This announcement was interesting. The GM Digital Services role might provide the company with some interesting opportunities for efficiency gains and new innovate products to help customers manage their power utilisation. A similar strategy is being employed by AirNZ.
MRP
11/12/2015 15:08
OFFICE
NOT PRICE SENSITIVE
REL: 1508 HRS Mighty River Power Limited (NS)
OFFICE: MRP: Leadership team changes
Leadership team changes
Mighty River Power today announced changes to its lead team focused on
delivering greater product and service innovation to its customers.
The changes include two new roles on the lead team, Chief Marketing Officer
and GM Digital Services, reporting to Chief Executive, Fraser Whineray.
Mr Whineray said the complementary roles would deliver greater alignment in
becoming a truly customer-centric organisation, with digital at its heart.
"There are a large number of competitors in New Zealand's small market, in
addition to competition from global tech giants. In that context we're a
comparatively small company and therefore must be astute in seizing the
opportunities and responding to the challenges that lie ahead."
He said the leadership changes were based on a review of the optimal
structure to build on the Company's existing strengths.
"I was fortunate to be able to make some relatively modest changes to the
lead team structure in the transition into the CEO role more than a year ago.
We've since refined our approach to how we want to deliver value to our Kiwi
customers and owners, and this structural change is part of contributing to a
broader innovation platform."
The existing roles of GM Customer and GM Strategy & Communications have been
disestablished.
James Munro, the current GM Customer, has decided to pursue new opportunities
outside of Mighty River Power and has elected not to apply for either of the
newly-created roles. He will be leaving Mighty River Power in early 2016. Mr
Whineray thanked James for his significant contribution to the success of the
Company's retail business over the last 7 years.
Mr Whineray said a process for the recruitment for the new roles would begin
immediately and a transition to the new structure is expected in early 2016.
ENDS
For further information:
David Glendining
Head of Communications
T 0272 105 337
Tim Thompson
Investor Relations/Treasury
T 0275 173 470
End CA:00275016 For:MRP Type:OFFICE Time:2015-12-11 15:08:01
Finished on $2.885, up 3.8%?
If its doing this well on such a bad day... can't wait till a good day comes along!
Anyway.. sarcasm aside, what caused it to have such a metric rise? the industry as a whole was fairly mixed...MEL went down 3.8%, GNE down 1.6%, CEN up 1.1%.
Totals traded today:
Volume: 1,469,545;
Value: $4,143,957;
VWAP: $2.820.
Closing Auction:
Volume: 247,156;
Value: $713,045;
VWAP: $2.885.
Totals today excluding closing auction:
Volume: 1,222,389;
Value: $3,430,911;
VWAP $2.807.
A New Years Resolution: teach people not to ignore the facts.
Best Wishes
Paper Tiger
Yes, the exact difference is 2.807 which you have so cleverly calculated rather than the 2.78 that I estimated ("around".) The point I was making is that, although marginally up on the day, it was the final trade that skewed the price. Hardly "ignoring the facts." Sorry to have caused you such angst.
The daily trade graph shows a steady grind upwards throughout the day, with that buying momentum continuing into the session closing auction. The "one 200+K trade" was the session closing auction which was made up of many smaller trades with the SP determined following normal NZX market close price setting rules (NZX actually uses ASX rules). Eye-balling the yesterday's SP graph, shares last traded at $2.78 just after 1.30pm, then quickly moved to $2.83, with final pre-close trades at $2.86
Slightly largish fall in comparison to the others ... wonder the reason behind it? or just the market!
theace...check out the NZX50 3 year chart...that trajectory cannot/will not continue....MRP pay a decent div...all is good....cheers troy...
6 months results to be released 23rd feb
I'm not sure how many times I have to say it, but measuring any electricity company via PE is extremely misleading. I mean you can do it, but it is much better to look at free cash flow, as this is what allows MRP to pay its dividends!
I am looking forward to when they announce something like a 400% increase in full year profit (as this year around there won't be any significant one offs... I hope)
https://www.nzx.com/companies/MRP/announcements/276583
i thought it was a 'modestly positive' report, but clearly Mr Market things the complete opposite...
If they are selling 7% less, that's a BIG loss of sales, and a big problem to turn around (future discounting so lower profits)
Take a look at what happened to GNE a year back when they reported a decline in customers. The SP was hammered.
Today also seems to be a "down day" for the generators across the board, so probably some effect from general market sentiment to this group of stocks as well
I personally don't rate MRP highly in the electricity generator/retailer category, but everyone has a different view on each companies merits
from reading it this morning I recall it saying something along the lines of best quarter for national usage yet their sales were down (as mentioned above) by 7%. That's not just a negative, its a negative in a market where usage was high. One or more of the other gentailers will have better news as someone must have picked up the extra sales.....
They generated less electricity, not sold less. Their sales (retail) while not given would be in line with the demand; i.e. up 0.9%. The difference between generation and retail would be bought off the wholesale market at a price that is down on the previous period, and so a greater mark-up for retail sales.
Not as bad as some would imagine.
Disc: Not holding
Here is a link to the full update:
https://www.nzx.com/files/attachments/228540.pdf
Best Wishes
Paper Tiger
The link Paper Tiger provided seems to indicate they sold less at a lower price (bottom of pg 1).
"ENERGY PRICES DOWN 1.5%; VOLUMES DOWN 7%. A reduction in overall customer sales volumes reflects the highly competitive market across bothresidential and commercial. The average electricity price to customers was $110.94/MWh, lower thanpcp. This was due to additional discounted offers to customers and Mighty River Power absorbingincreases in lines and transmission costs for its customers on fixed-price contracts."
Data on pg 2 seems to back that up
It appears they also bought less electricity from other generators, which makes sense if they sold less
I want you to imagine that I have printed out the update and wrapped it round the hitting end of a baseball bat.
Now read it all, including the bits about the amount of electricity generated and the composition of that generation (this quarter and running total).
Then come to your conclusions.
Best Wishes
Paper Tiger
Disc: I may be back later, with or without the bat.
Can anyone explain why MRP is paying out in dividends 3-4x what they are earning, despite having massive debt. It would appear they are borrowing not for expansion, but to pay dividends.I think paying dividends while owing money makes little sense, as you are borrowing, paying interest, just to pay dividends.Mainly to the Govt as they are major shareholders.
Friday afternoon should be working but I will have a crack.
2015 Cashflow Statement page 29 of the annual report. Operating Cashflow +$309mill; Capital Investments -$103mill; Divs -$260mill $54 mill shortfall $65mill extra borrowings leaves a $11 million increase in cash. One way to look at it is they borrowed 52% for capital investments (54mill/103mill) and paid the dividends out of operating cashflow.
I think with infrastructure companies you hope they aren't skimping on maintenance to pay out big dividends a la Kiwirail. Hopefully we aren't like sir Michael Faye & David Richwhite happy to take what they can get and let the taxpayer pay for it (f**king ars***les)
Not sure what you are trying to say here but it looks wrong. If you are trying to reconcile the income with the operation cashflow then start with the income $47m plus the depreciation $170m then add and subtract operating and investing activities. I'm sure you will see a different picture..
I think their debt is 1.1 billion.Massive enough for me.So in effect borrowing to pay dividends.
Why not pay it off, rather than suffer interest costs on this; dead money.
I know people talk about debt/equity ratio being OK, but is it really good debt??, or just backdoor cashflow for the Govt.
I am involved in a small private company which had debt; various business type shareholders advised paying dividends while in debt, mumbling about debt/equity ratios, I objected and was over-ruled marginally by a vote, but I note the policy was actually changed by fiat by the Directors so no dividends were paid for 5 years, debt was eliminated and the share price has gone through the roof and we now have dividends, and capital for an ambitious expansion, and when interest rates rise one day we won't be nervous.
Once a week in the Herald in the business news the ratio of dividends/earnings is published, and that's where I got the figure from.
You talking to me? I was ONLY using figures from the 2015 cashflow report, not smart enough to reconcile operating cashflow to net profit. There might even be a note in the accounts reconciling this but Paper Tiger is probably one of the few who bothers to read and understand it all.
Aaron - Note 16 on Page 48 of the Annual Report - RECONCILIATION OF PROFIT FOR THE YEAR TO NET CASH FLOWS FROM OPERATING ACTIVITIES
My view this is the most important part of any company accounts - the must read bit to see what really a going on. More important than all the pretty pictures and the warm fuzzy words bit.
Me - quick look at Income Statement and then the Cash Flow Statement and then concentrate on the reconciliation even the two. A few minutes and one has a decent view of what went on.
In F15 MRP generated $309m cash from operations, spent $103m on buying new stuff (investing cash flow) and paid $260m out in dividends. Increased borrowings by $65m to ensure they had a few million in the bank at all times.
Thanks Winner69.
And that is why I may never become a successful investor. To lazy or stupid (or combination of both) to bother reading an annual report and fully understand what it is telling me.
I don't disagree with you on paying down debt as debt equals risk but if you read my post below you will see it can be argued dividends were paid from operating cashflow and borrowings were to partly cover new investment. The argument would be that the new investment will generate returns in excess of the interest rate on debt and possibly the dividend return on equity. This looks like bull**** when you go back to the overseas investments MRP wrote off prior to being offered to the public. The other argument for debt is that we have central banks worldwide whose policy is to raise the price of everything at least 2%-3% annually. Provided interest rates don't get too far ahead of inflation, inflation will take care of the debt over time. Seems wrong but I think everyone is relying on this to continue.
Another thought although it won't apply to 51% govt owned MRP is that a company's balance sheet is "lazy" if it has too little debt. This argument I am not too sure of so stand to be corrected but in some cases private equity buys the shares as dividends are low and the company is not growing so is not highly valued. They then cut jobs and make stock control more efficient and boosting profits. They then borrow to pay massive dividends from the company to themselves and when the balance sheet is no longer "lazy" (i.e. loaded up with debt) they offer the company back to the public through an IPO usually at a price much larger than they purchased it for. (think MYOB and more recently Dick Smith). Why people buy into these I don't know but good advertising and people wearing sharp suits does work.
Should MRP,
be debt free,
there would be,
more for me*
[*FY2015 debt of $1,110m with interest payments of $104m eliminated, would have
raised earnings (and ordinary dividends?) by approximately 5.4cps and
raised reported NTA from $2.37 to $3.18.
The use of the word 'me' is for poetic purposes only and should not be construed as an inducement to buy, hold or even sell MRP.]
Best Wishes
Paper Tiger
Seems expensive debt they have - interest cost 9.4%
Some $300m of the debt is bonds at 6.9% - the rest must be awfully expensive.
With a ROE of 4.6% and a ROIC of 5.1% one could say debt is not 'bad'
What's their cost of capital? Not adding much, if any, value these days if f15 performance is typical.(returns above are after eliminating the $130m impairment charge)
Disc: know stuff all about those type of companies except this cursory glance at their financials.
What is ROIC (I assume return on invested capital or return on assets)
Correct me if I am wrong but with a 5.1% return on assets and interest of 9.4% doesn't that mean any debt is reducing value for shareholders.
As assets are being revalued every year. Should I look at the discount rate used on their DCF model to revalue assets. It all gets confusing for a simple person like myself.
Aaron - ROIC is Return on Invested Capital where Invested Capital is equity (shareholders funds) plus debt. Sometime known as ROCE or Return on Capital Employed.
Some of your comments suggest that you not as 'simple' as you make out. Good to see.
Sounds like a large amount of dead interest money is going out of the loop into the pockets of the lenders, to no gain to MRP; Nothing to lose by getting rid of debt, except the notion that it is always good to have a debt/equity ratio to talk about, and have dividends to talk about. Cut to the chase see the big picture and increase long term shareholder (Kiwisaver?) wealth rather than work your butt off for the bondholder/banker etc paying interest unnecessarily..
Saying you have a manageable debt to equity ratio is a bit meaningless ;debt is for investment, not dividends.Not just talking MRP, but many/most other companies.
But it seems politically incorrect/ not acceptable to the market to not have dividends, which is a bit irrational.
Think about it though; would you borrow money just to pay yourself??
Taken to the extreme, IIRC Hanover Finance directors paid themselves the entire value of the company leaving it with an infinite debt to equity ratio, worked out real well(for some)...