http://www.stuff.co.nz/business/indu...t-to-float-Key
Who is in???
Printable View
Include me out.
Best Wishes
Paper Tiger
I'm in if they are giving them away, disc-Sad holder of MRP at IPO price:(
The hills are looking good. I better run there :scared:
Chairman Rt. Hon Dame Jennifer Shipley.
That is enough for me.
Count me out too.!
WellI have done well out of MELCA by buying after the issue so hope to do the same with Genesis. I will though, buy a few in the float simply to show support for the decision to sell part of it.
Definitely out!
I think they will be signifantly discounted. Add to that is a reasonable punt that we will have a status quo Government in November. Thought the political risk was too great for the other two so I didnt bother but AIR has done well for me.
Depends on the carrot.
If the price is right....
This is the wonderful thing about IPOs - the punters cannot get enough of it irrespective of how badly burnt they are from previous experience.
This has to be the one where punters finally strike pay dirt, right?
John Key cannot afford to have a bad one so close to the election, surely?
So roll up, roll up!
Fool me once, shame on you, fool me twice, same on me. Fool me three times????
May be in, lets wait till we see some details. They should panda to the Greens with a Convertable Note at a decent yeild. Force them to say they wont allow the note to convert.
Its hard to get excited about this when there are so many other opportunities out there. I think the pricing will be somewhere between "Yay, we are successful" and "God , I hope we can get people interested again" and ultimately it will please no one.....
Never buy a share with an ex politician as a chairman. Been caught out to much and remember Mainzeal. I wonder if the prospectus will admit that loads are declining and solar is economic. Solar costs declining 20% per year and generator prices increasing , means more solar. Watch this govt try and block solar in the next year after the election.Dont touch it
Fair call but they did spend a while below their IPO price.
They will admit loads are falling, the previous two did. They will not admit Solar is economic because it isn't, not yet, not for households anyway (in part because of the need to still build the distribution network to handle peak loads which a home based, grid tied solar install doesn't mitigate).
Solar is clearly economic and battery costs are falling fast.
For some but not (yet) for the normal family house. If you want to talk about solar, we should move to another thread.
This supports the basis of my argument. If you have a contrary, reliable, independent source, post it to a new thread and we can discuss.
Quote:
November 2013 Consumer Magazine reported: “The economics of grid-tied PV don’t stack up – particularly when you include the lack of significant environmental benefits. Our calculations show that most grid-tied PV systems have negative net present value (NPV), which means you’re better off putting your money in the bank.”
Interesting that Vector are doing trials with Sun Genie solar with a storage battery(thanks karen). looks promising.
There scheme is interesting as the use of a high tech battery and high tech software is the next generation. They also have a vested interest in this high tech solution as by shifting the generation to the peak demand via the battery and software, there network investment is reduced (since they have to build in a contingency above peak demand, anything that reduces that peak demand, potentially reduces the need for investment).
And back to Genesis:
http://www.scoop.co.nz/stories/PA140...hare-offer.htmQuote:
Bill English has announced key details:
- The shares will be priced at the start of the offer period, rather than at the end as occurred with the previous share offers.
- The Government expects to sell between 30 per cent and 49 per cent of the shares in Genesis.
- The Government will offer a loyalty bonus scheme to eligible New Zealand retail investors
Also no shares will be offered to US institutions as it creates too much paperwork and hassles under US law.
Solar directly affects this sale.If volume drops Huntly closes retail price drops. I repeat this is a lemon. If you want a lecture on industry economics I can provide it.
Waiting to see what the offer looks like. Didn't go for any of the others but I may well have a punt on this. The government wont want a disappointing final sale = possible bargain.
Will not even be a stag in this one as Treasury advises the government on new technique to maximise price - ie. institutions will get the shares they want as brokers (on behalf of clients) will bid same time as institutions.
Never known a broking house to put their own money on the line on behalf of clients.
Shudder!
wow its gonna be a real money maker this one lol esp since i just got a email to say my power prices are going up heaps
I hear they are getting cheaper and cheaper all the time
Now likely to be way less than $2 when people were talking about $3 bucks a while ago
13.5 - 16.5% gross yeild!!!!!
http://www.nzherald.co.nz/business/n...ectid=11219035
that looks VERY cheap to me.
Not bad + bonus scheme 1 share per 15 owned after 1 years time.
Suddenly quite tempted.
Bill England text to John. "its working like a charm John, they're jumping up and down with excitement already, we can set the price at the upper end for sure and when we publish the details i have a cunning plan; make the small print extra large ! .... they won't even read it!! lol:) Hook (MRP) Line (MEL) and Stinker Genesis :)."
The error is in the definition of forward load. Any line co will tell you it has been falling for a no of years .They have disguised that. Look at the figures for this year . Not Buying
I will be in on this one looks the best of the three to date,MRP was a waste of time for me at $2.50/share
Re. the 15 bonus shares for every 1 held for 12 months, does anyone know if that would apply to people holding shares at end of 12 months, or only purchased on offer and held for the full 12? E.g. if I bought some shares 6 months in, and was holding them at the 12 months record date, would I receive the bonus shares?
After MRP/MEL I won't be touching this with a 10 ft pole on the initial offer
Yes - my exclamination marks can be read two ways:
- Great yeild - buy
- High yeild warning that there is something wrong.
Until we see how the market prices the shares, and therefore the yeild (ie. if the price doubles on listing, the yeild would sound about right), it is hard to tell, but one suggests that government wouldn't leave that much on the table so expect dividends to fall.
Forward load is the future volume of electricity being sold. it is declining per customer by about 2% per year and has been at that level for about 2 to 3 years. The retailers make most of there money of the domestic customers who are the ones with declining load. If you want to see what can happen look at EON a german generation company. The german s had cross subsidies for solar as did the AUstralians but declining costs of alternative electricity sources have meant the same thing will happen here but more slowly . I couldn't see these risks in the prospectus and the statement about the forward volumes was non specific.Bill English said loads were reducing after the Meridian float but shut up very quickly. This is only my opinion and I could be wrong.
The following post on Cameron Slater`s blog today was in response to his blurb about a former Prime Minister promoting David Cunliffe`s lawyer wife opening her legal practice on a company basis recently. Whale Oil were drawing a parallel with accusations made about Minister Judith Collins compromising China visit. viz
"There must become if not already, a real conflict of interest when Cunliffe's wife handles the work for, "all but one of New Zealand's major electricity generators." With the Labour Greens power company regulation policy, surely there is a massive conflict?"
If that quoted statement is true does it have a bearing upon possible policy of a Green/Labour Government ?
What is the max amount of bonus shares you can earn?
is it 2000 or 2000/15=133 or about $200 worth? Hardly an incentive if the later which I think it is.
thats good. If I do invest it will be for between 2 - 30k shares so I wanted to ensure I would get the bonus on all.
I don't think I will read the IS this time till the price is set and the independent reports are out. Someone printed it at work today - it's a big read!
I have changed my mind,and have expressed my interest to my broker.
Should I get them I can a least vote against "the chair's "re election when ever that happens!!! lol.
I noted one commentator predicting a $3.00 + Share Price for Genesis by the end of the year, is this analysis realistic or just a throw away comment with no prospect/
Any details on the scaling of shares through a broker firm (e.g. ANZ)?
Last time for Meridian, I recall the scaling was minimal (10%) for broker applications compared to general offer applications.
Yep she's certainly overdone probably to try and make those of us who bought MRP at IPO price look at this one as being different and tempt them to leave those burns behind and have another go,actually did Derek Handley have anything to do with those adds?:cool: Seriously though this offer could yet be the pick of the 3?
Well this screwed dad is up 8% with a 4.19c div to come with MEL, get it right screwless antler less; mooch:scared::t_up:
Net debt re $994 million int rates going up, resets , cost of loans on the rise.
Re the price range, they could give a wider range as it will be set in stone before any applications are made by the public. THat is completely fair.
It will be interesting to see if they also announce what % will be sold prior to the applications opening. I dont think they will but they should at least give a narrower range.
Does anybody think that given the relatively high dividend yield we should see some big international investors look to jump into this one thereby bidding up the price and driving the yield down.
From my understanding it has an impressive yield due to the blend between its core business and the returns from the kupe gas field. Obviously Kupe only has a finite supply of gas (say 5 years) however this is a long-time in the high returning seeking investment world.
How do the bonus shares work from the companies point of view? Do they just issue more shares (this would dilute the govts holding) or do they hold them back in the IPO?
Does anyone know what the payment date is for these shares in the IPO ? Can't seem to find that info
Page 4
general 11 April
firm brokers 14 April
Chalkie's column about Genesis
http://www.stuff.co.nz/business/opin...de-right-music
I'm not sure if I'll buy in. I've done a back-of-the-envelope valuation which sets a price of $1.43 pre-bonus shares.
Estimate of normalised EBITDAF (excluding Kupe): $230 million
Estimated EBITDAF multiple for electricity assets: 8.2x
Weighted share of 2P reserves at Kupe: ~62 mmboe x 31% = 19.2 mmboe
Estimated 2P reserves multiple for Kupe: $28 per boe
Enterprise value: $2,424 million
Net debt: $994 million
Equity value: $1,430 million
Number of shares: 1,000 million
My rough estimate of share value: $1.43 per share.
Factoring the 1:15 bonus share: ($1.43 x 16 less c.14 cents of dividends not received on bonus share) / 15 = $1.51
Offer share price which gives nil NPV: $1.51 per share
Notwithstanding the above, I suspect Genesis could priced based on electricity multiples being applied to all its earnings (i.e. without taking into account that Kupe contributed one third of EBITDAF in FY13).
Anyone have any thoughts on the above analysis, and in particular on my assumptions three key assumptions (EBITDAF, EBITDAF multiple, 2P reserves multiple)?
Disclaimer: The above analysis is rough and for the purposes of discussion on these forums only. Please do not rely upon it make an investment decision.
Sounds convincing and the proof will be as they say in the pudding. I will however be taking up a small holding as I feel this share offer has some appeal after reading the prospectus.
Is there any advantage of buying these shares through a broker over applying for them directly online?
Not costwise, easier with a broker if you have one (and a FIN number) and he will appreciate it as they get a fee from Genesis ;so may be biased re advice.
Something very wrong about Chalkie's maths..
"BUT wait, there's more. Genesis investors who hold for a year get one bonus share for every 15 they bought, up to a maximum of 2000.
So an investor buying up to 30,000 shares, or $40,500 to $49,500 worth, gets a 6.7 per cent bonus in April next year.
The bonus for Mighty River shareholders was one share for every 25 held for two years, up to a maximum of 200. That's a 4 per cent bonus after a longer holding period for shareholders buying up to $12,500 worth at the $2.50 offer price"
2000 shares.... yet he uses 30,000 shares in the calc ???????!
BUY Genesis Energy
Genesis Energy - widely considered the “ugly duckling” of the power companies - may actually be the only one worth serious consideration as an investment.
The unsuccessful floats of Mighty River Power and Meridian Energy has led the government to seek a lower price - offering investors better value and a “more favourable experience” - on this smaller float.
Genesis Energy also has a less risky business structure, generating electricity from a mix of hydro, wind, gas and coal stations. The earlier floats were too dependent upon cheap hydroelectric stations but in a dry year would need to buy electricity on the wholesale market when prices were high to meet (fixed price) demand from their consumers - significantly depressing profitability. In this same situation, Genesis Energy should be able to meet all of its consumers needs by increasing gas and coal power generation - and selling some of that to the other companies at high wholesale prices. This is a more stable spread of assets that should produce more stable earnings and cashflows.
Genesis Energy also owns 31% of the Kupe joint venture which contributes about one-third of its earnings.
The NZ Government is seeking to sell 30-49% of Genesis Energy. That is 300-490 million shares at a price to be set between 135 and 165 cents per share, raising between $405-809 million. This is less than Mighty River ($1700 million) or Meridian Energy ($2000 million) and a last opportunity for a “successful” float (i.e. the last chance to under-price a relatively small float to give investors a favourable experience).
One company has valued Genesis Energy shares at 325-350 cents per share. That may be more than a little optimistic, but these shares do look under-valued at 135-165 cents.
Investors who buy in the IPO and hold for a year will also receive 1 bonus share for every 15 shares (up to a maximum of 2000 bonus shares), effectively lowering the issue price to 126½-155 cents.
Genesis Energy earned revenues of $2264.8 million in the year to June 2012, with a net profit of $86.4 million. Revenues fell 8.6% to $2070.2 million in 2013, but profits increased 20.9% to $104.5 million.
Revenues for the current year to June 2014 are forecast to decline 1.4% to $2040.6 million with net profits down 60.0% to $41.8 million (4.2 cents per share) and will pay an annual dividend rate of 12.8 cents (i.e. a 6.4 cents interim dividend already paid and a forecast final dividend of 6.4 cents).
In the year to June 2015, revenues are forecast to rise 6.1% to $2165.9 million and profits to recover 128% to $95.4 million (9.5 cents per share). An annual dividend rate of 16.0 cents is predicted.
Like the other power generators, Genesis Energy generates high cashflows, so will pay dividends that exceed its reported net profits. The 2014 dividend will distribute 84% of “free cash flows” (or 306% of net profits) and the 2015 dividend 85% of “free cash flows” (and 168% of profits).
With imputation tax credits that offers a current gross Dividend Yield of 10.8% (at an issue price of 165 cents) or 13.2% (at 135 cents). The 2015 forecast dividend offers a gross Dividend Yield of 13.5-16.5%.
So what are the downsides?
Firstly, this is a no-growth business. The company is able to pay high dividends as the electricity market is not expected to grow in the foreseeable future. So there is no current need to re-invest in new power stations. If that becomes necessary in the future, then the company would need to significantly reduce dividends and/or raise new equity and/or debt capital.
Secondly, Genesis Energy's 31% interest in the $1300 million Kupe joint venture is (like all oil and gas resources) a depleting asset. It currently provides strong cash flows (to pay dividends) but in 10-15 years these cashflows will decline sharply. Replacing that resource would require a very large capital investment in exploration and development.
Thirdly, like all power generators, the company owns and/or relies upon large infrastructure assets subject to “catastrophic events” (i.e. earthquake, volcanic eruption or other disasters). Damage to Kupe infrastructure or the Maui pipeline would disrupt gas supplies to its Huntly Power station and its ability to generate electricity.
Fourthly, there are political risks: Treaty of Waitangi claims could increase costs of water and geothermal resources, reducing operating margins. Claims could also require the return of land used in the business but “the compensation paid to the company may not be sufficient to cover the full extent of the losses incurred”. Government actions, such as a “carbon” tax could also lower operating margins. Higher transmission charges would transfer profits from the power generators to Transpower NZ (100% government owned).
Summary and RecommendationBuy Genesis Energy shares!
At 135-165 cents, Genesis Energy shares do appear under-valued - offering a 2015 gross Dividend Yield of 13.5-16.5% - so we would expect to see the shares re-rated over the next few years. That will produce a high income yield andcapital appreciation for investors.
We do have concerns longer term. This is a no-growth business and, in fact, profits and dividends could drop in 10-15 years as the Kupe profits and cashflows run dry.
Oh you saying you can receive 2000 bonus shares?? I was thinking you only receive bonus shares on a maximum of 2000 held.
Hi, Joshuatree.
Is that your analysis and recommendation of the Genesis float? Or whose?
Cheers
from the Letter from the Crown in the Investment Statement - in several other places as well.Quote:
In addition to a fixed price, New Zealand retail investors will also receive one Loyalty Bonus Share for every 15 Shares purchased during the Share Offer, up to a maximum of 2,000 Loyalty Bonus Shares. These Loyalty Bonus Shares will be available to eligible New Zealand Applicants who hold their Shares in the same registered name for 12 months.
Best Wishes
Paper Tiger
Its a paid sub so I'm being discreet. Something like M***** A******* cheers JT
Thanks, JT.
Here's another (broker's) view:
http://www.stuff.co.nz/business/indu...Genesis-Energy
Watching this. I like the spread of generation assets and gross dividend and bonus share scheme is attractive notwithstanding the eventual run-down of Kupe's reserves. I like the fact that the price will be known before one is asked to invest, (finally they got this right).
Might have a modest crack at this to boost average portfolio dividend yield.
I've studied this one enough and with National looking sure to be returned and Kupe good for a long time yet im going for max allocation needed to obtain 2000 bonus shares so around 30k shares,Im picking around a 10% scaling being applied
Went thru my broker as felt there was little chance of getting a meaningful parcel in the public pool. My understanding is that the maximum scaling thru the brokers will be 20% whereas scaling in the public pool is unlimited but obviously all depends on the final price and subsequent demand on the public pool.
Trying to figure out whether to buy some of these or now. Taking a look at the PE Ratios. Hopefully table attached.
Attachment 5626
What causes the huge drop for Genesis between 2014 and 2015 ?
I am not an accountant....so am unsure what this means.
Thanks for any info.
RTM
The revenue estimates for Genesis look to be very optimistic to me,thats why the PE comes down.
Maybe treat it like a bank bond paying well above mkt int rate. What rating would it get AA-Labour=? with a 6% rise reset in one year.
Pretty sure any investor who holds for a year gets the 1 for 15 whether retail , wholesale, wholemeal, sunny side up or shaken not stirred!!:p
One thing that bugs me with this offer. There's a big lift in the forcasted profit for 2015 compared to 2014.
When they start talking about weather patterns returning to normal, (read a cooler winter) as the basis for a 4%+ increase in generation, one can only imagine that there are other generators out there with spare capacity hoping for the same thing.
Counting on high dividends based on weather normalisation when some would argue climate change, (global warming in old fashioned speak), is with us to stay....hmmm...
Then there's the matter of whether those in charge of corporate governance are there based on their corproate skills or something else...
Filled out the form last night and it said it would send something to my email shortly but nothing yet(24hrs) Has anyone else experienced this or have you received confirmation quickly.
It was through direct broking
Giday C...how did you manage that.Ive spoken to them a few times and they would not give me a firm allocation.Cheers
Not at all, that would be hypocritical of me. I was simply highlighting that it would only take 2,500 applications of 30,000 shares to fill the public pool which I think is too small and could be subject to material scaling. I also went thru my broker for this very reason.
Not sure of my facts,however, I think should you receive a broker's "firm allocation" you can also apply for shares in the public pool.
I hear broker's expect to scale clients allocations.
T the firm allocation is still subject to the scaling rule depending on the level of oversubscription as is the public pool,we don't know what % that could be but I'm guessing around 10%,give the wholesale section at DB a call and tell them how many shares you want allowing for scaling and ask for a firm allocation from them for that number,Percy is correct in that you can apply for shares under both pools and if fact I'm thinking of doing this to ensure I get what I want in case of heavy scaling,you could sell any excess on market and there's bound to be a spike in the price initially