A good article from BD today
Heavy inflows in the North Island increased North Island hydro storage by 32% to 172% of the historical average. South Island storage increased less dramatically by 2% to 86% of the historical average for the time of year, as much of the rain would have fallen as snow.
The other major part of the generation equation – gas-fired generation – is also looking more healthy after the Maui full-field outage finished on June 19.
The importance of thermal generation in keeping the lights on was again highlighted by this week's events. The most important of these remain Genesis Energy's gas and coal generators at Huntly, Contact Energy's Stratford gas peakers and Taranaki peakers owned by Todd Energy.
Despite some urging that these be closed down, the simple fact remains the country would be dealing with weekly blackout threats without them functioning.
Energy Resources Aotearoa chief executive John Carnegie said it showed investor confidence is critical to ensure delivery of the capital investment needed to underpin supply.
This is a fact the government recently acknowledged with energy minister Megan Woods refraining from naming a date to stop using gas. This is because investment in gas is needed to keep the system stable for the foreseeable future and getting the timing wrong could have serious consequences
The days of coal fired electricity generation ought not be over. As has been evidenced around the world lately.
Shame we import the filthy stuff from Indonesia rather than keeping kiwis employed digging our own plentiful resource from the ground.
Yes. It seems a real shame to be importing when we have so much of it here.
Agree 100 percent. My understanding is that NZ carbon emissions are minuscule at .0017 percent. Sure we need to do our share but does not make sense importing when we have a great resource in NZ.
Quote from: Minimoke on Jun 24, 2022, 05:41 PMThe days of coal fired electricity generation ought not be over. As has been evidenced around the world lately.
Shame we import the filthy stuff from Indonesia rather than keeping kiwis employed digging our own plentiful resource from the ground.
I was under the impression that NZ coal was better for steel making (higher value) than for burning. IE we sell our more valuable "coking coal" and purchase "thermal coal" from overseas to burn.
Quote from: Plata on Jun 24, 2022, 08:10 PMQuote from: Minimoke on Jun 24, 2022, 05:41 PMThe days of coal fired electricity generation ought not be over. As has been evidenced around the world lately.
Shame we import the filthy stuff from Indonesia rather than keeping kiwis employed digging our own plentiful resource from the ground.
I was under the impression that NZ coal was better for steel making (higher value) than for burning. IE we sell our more valuable "coking coal" and purchase "thermal coal" from overseas to burn.
west cost coal is. But there is loads of coal in Huntly and Southland that is used for energy generation.
https://www.dailymail.co.uk/news/article-10891127/Anthony-Albanese-calls-coal-power-stations-come-online-climate-change-strategy-shock.html
Good news
The Electricity Authority has decided generators can keep an extra $130 million charged on wholesale power prices during the blackout in August last year, while also ruling decisions by Genesis and Contact not to generate power that day were reasonable.
A shortage of power during a period of peak demand on August 9 last year led to power cuts for 34,000 customers.
The market regulator issued its final report this morning on complaints from four power companies alleging Genesis and Contact created an undesirable trading situation causing the blackouts.
An insert from bd today
Despite healthy hydro lake levels and a return to reasonable gas supply, wholesale electricity prices are still well above historical averages, with one sector analyst saying the high international coal prices are driving the market up and may do so for some time.
Recent heavy rain events have pushed hydro levels up to near normal after a dry spell at the beginning of the year.
This lack of stored water had pushed wholesale spot electricity prices up beyond the $200 a megawatt-hour (MWh) mark.
The historical average is closer to $80MWh.
After the rain, prices dropped to around $120MWh, but last week at Haywards, prices increased by 44% from $126/MWh to $182/MWh.
This week on June 28, daily averages were $205.86 at Benmore, $215.73 at Haywards, and $238.48 at Otahuhu.
Greg Sise of consultancy Energy Link said high prices in the spot market and the futures market appeared to be now being driven by coal prices.
Despite New Zealand's relative abundance of cheap, renewable electricity, prices tend to be driven by the most expensive component of the mix. For now, that is coal.
Indonesian coal prices in the past peaked at US$125 (NZ$200) a tonne but are now at about US$260.
Genesis Energy, which is the main user of this coal for generating electricity at its Huntly plant, has said it has a good stockpile of Indonesian coal.
https://www.nzherald.co.nz/nz/transpower-warns-of-grid-problems-if-the-situation-worsens/44QYMZIKLTNXZW2FXAAQI7OWNY/
Just as well we still have Huntly !
From BD today
Genesis Energy says its plans to use biofuel at the Huntly power station could extend its life to post-2040.
The observation is made in submissions on the government's Emissions Reduction Plan which is currently being considered by Parliament's environment select committee.
Genesis said it supports the government's goal of increasing the renewable share of energy consumption to 50% by 2035.
"However, we consider that the current focus may be too siloed in terms of achieving our transition to renewable energy generation and a 100% renewable electricity goal," the submission said.
Like many in the sector, it warned of unintended consequences of a 100% renewable goal including an insecure and unreliable electricity supply. A recent cabinet paper showed while ministers are keen to phase out gas they understand the problems it might cause.
Genesis said in its submission that during winter, NZ typically needs 2,000-5,000 gigawatt-hours (GWh) more stored energy than hydro lakes can provide.
"The thermal plant at Huntly power station fills most of that storage gap today. It is unlikely that our existing renewable infrastructure can serve the expected demand between 2022-25."
What fuel do they mean by Biofuel?
They are trialing some special imported wood pellet to replace coal.
https://www.newsroom.co.nz/genesis-imports-us-wood-pellets-to-fuel-huntly-renewable-energy-trial
Following a decline of about 25% in the past 12 months, shares in narrow-moat Genesis Energy are now reasonably valued, trading at a small premium to our unchanged fair value estimate of NZD 2.50. Genesis shares offer investors an attractive fiscal 2023 dividend yield of 6.6%, mostly imputed for New Zealand residents, and we expect this to remain stable in the midterm. We maintain our fiscal 2022 EBITDA estimate of NZD 438 million, up 5% on last year due to higher prices across all fuels—particularly gas—in addition to good hydro levels and retail customer momentum. We expect EBITDA to remain largely flat in the medium term, with a five-year compounded annual growth rate of 1.5%.
Genesis' lakes finished third-quarter fiscal 2022 with 421 gigawatt hours of hydro storage, 32% above average for that time of year. This sets the generation division up for a strong performance in the fourth quarter, particularly as most of Genesis' hydro lakes are in the North Island where the winter months are the wettest. The Kupe oil and gas field should also have performed well, given strong commodity prices. Our fiscal 2022 EBITDA forecast reflects growth of 5% on 2021.
The ensuing 10 years will see a significant change in the group's power generation with New Zealand aiming to get to 100% renewable power by 2030. The Huntly Rankine coal generation is expected to retire in the medium term and the group is investigating the use of wood pellets which is considered a renewable energy source. Even if successful, we don't think running Huntly on wood pellets would benefit Genesis' earnings in a typical year given pellets are expensive.
Borrowing costs are rising, but we do not expect the impact of higher rates to be material to the earnings outlook overall. In May, Genesis raised NZD 285 million of green bonds paying an interest rate of 5.7%, compared with the firm's average cost of debt of 4.3% in fiscal 2021.
MORNINGSTAR
Craigs see it very differently to Morningstar.
Upside in a GNE transition
Sector preferences updated to GNE, MCY, CEN, MEL and MNW
Key Changes
Ticker Recommendation TP % GNE.NZ Overweight 3.80 5.6 MCY.NZ Overweight 7.01 6.7 CEN.NZ Overweight 8.54 -11.4 MEL.NZ Overweight 5.35 -4.8 MNW.NZ Underweight 6.20 0.0 Source: Craigs Investment Partners
Summary Forecasts
GNE is our top pick based on a relative valuation between its current share price and our revised Target Price. We observe the first sign of GNE's portfolio transition in the form of reduced low margin C&I sales volumes, likely to provide some of the flexibility we've observed in CEN's recent performances. Our long-run forecast includes reduced levels of GNE C&I sales, with mass market volumes to be backed by renewable generation and PPA's delivering an uplift in Target Price to $3.80 (prev. $3.60). MCY is our 2nd pick, TP $7.01 (prev.$6.70), its wind development options expected to be executed as the country electrifies, whilst CEN, TP $8.54 (prev. $9.64) drops to 3rd, as we withdraw previously attributed retail price premiums associated with its geothermal generation expansion, however reserve this right if this can be demonstrated. MEL remains our fourth choice, TP $5.35 (prev. $5.62), its valuation not materially impacted by a Tiwai stay vs substitution outcome (dependant on the re-fix price), and MNW fifth, TP $6.20, unchanged.
Sector demand/supply balance suggests elevated prices for next three years, and a Tiwai 10-year stay scenario is our new base case
This report sets out our new base case assumptions for valuing gentailers, where we expect an extended period of elevated wholesale prices, driven by the present supply/demand imbalance and thermal fuel constraints, followed by a Tiwai 10-year stay decision post-2024. In combination with climate change sponsored electrification these inputs result in a tailwind for gentailer build conditions (c.20TWh needed by 2050). Our revised gentailer forecasts include what we think is a conservative allocation of industrial and transport electrification (c.8-8.5TWh of each), well below sector bodies such as Transpower, EECA, and the Climate Change Commission demand forecasts to 2050 however, supportive of valuations. We also provide analysis on the sector's traditional 10-year bond proxy correlations,
Always good to see how two different "experts" can come up with radically different views.
Makes an amateur like me feel less insecure :D
Quote from: Raven on Jul 06, 2022, 04:51 PMThey are trialing some special imported wood pellet to replace coal.
https://www.newsroom.co.nz/genesis-imports-us-wood-pellets-to-fuel-huntly-renewable-energy-trial
So they need to build a factory here to make the pellets... To make it worthwhile.. wonder if that will happen.
Even if your are kind to Morningstar and call them "experts" and split the difference and call the target price half way between the two @ $3.15 GNE offers a gross yield of ~ 8.5% @ $2.70 that should be resilient no matter what happens in the economy. No question the value of their reserves at Kupe have risen in value dramatically this year.
Quote from: Raven on Jul 07, 2022, 09:40 AMAlways good to see how two different "experts" can come up with radically different views.
Makes an amateur like me feel less insecure :D
I guess there is any easy explanation. NOBODY is able to predict future stock prices (Ben Graham). Anybody who pretends they can do that is clearly not an expert.
1 year ago not many predicted that Russia will follow in Hitlers footsteps and start a war to occupy and subdue neighbouring countries (despite the signs being on the wall). Had a quite significant impact on energy prices, though.
3 years ago not many predicted a devastating pandemic ...
30 years ago nobody expected climate change to be something else than an interesting theorie of some academics in their ivory towers ..
So - how do you expect anybody can predict the future fortunes of GNE which are clearly dependant on the weather, on consumption, on energy prices, on the development of technology, on political decisions (like do we go back to burning coal) and on very human behaviour.
Best guide to the future is the past. GNE have a solid track record of dividend payments going back many years which have been 80% imputed. Gives 8.5% gross yield. Pretty attractive yield, buy 10,000 - 20,000 shares (depending on your power use) and forecast dividends of about 18 cps in FY23 means the dividends will pay for your power.
Quote from: Basil on Jul 07, 2022, 12:00 PMBest guide to the future is the past. GNE have a solid track record of dividend payments going back many years which have been 80% imputed. Gives 8.5% gross yield. Pretty attractive yield, buy 10,000 - 20,000 shares (depending on your power use) and forecast dividends of about 18 cps in FY23 means the dividends will pay for your power.
Well, in the past GNE might have been a reliable dividend payer ...however - SP jumped around like a scared chicken. Have a look for yourself. SP between something like $2.30 and something like $3.90 ... and the yield will be quite different depending at which price the individual shareholder bought.
Sure - SP is currently more at the lower end and might be cheap - or it might not.
High dividend yields are typically not sustainable. Could you think about any reasons why earnings and dividends might drop?
I can: various weather events, uncertain energy prices, political interference with power prices and / or power generation, need to invest in new mega projects sucking up cash flow.
However - what we do know from history is that the future is not foreseeable ... in that regard I agree with your statements :):
Discl: Gentailers (incl GNE) are on my watchlist ... however I typically buy pseudo bonds at the top of the interest cycle ... and while we might be already there I highly doubt it.
some might be interested in how GNE dividend yield has tracked over the years -- as reported no allowance for imputation credits0000gnediv.JPG
Thanks Winner, you do awesome work with your charts !
Would it be possible to overlay the 10 year Govt stock rate if you can find where to get the historical info from ?
Just for you basil but you'll have to settle with a comparison to 5 Year Govt stock (that's what I've been using for modelling GNE)
See the gap between the two is getting narrower over the last few months - why I've been mentioning a share price under $2.50 could happen(increase yield) ..... but then these days punters might be seeing GNE as 'less risky' than it has been in the pass (and accepting lower than expected yields)
No doubt otherw will interpret differently0000gne23.JPG
Thanks for those charts winner. I'm thinking the days of $2.50 are gone. Seems to be firming with good demand.
Quote from: Shareguy on Jul 08, 2022, 08:54 AMThanks for those charts winner. I'm thinking the days of $2.50 are gone. Seems to be firming with good demand.
I'm inclined to agree.
QuoteDiscl: Gentailers (incl GNE) are on my watchlist ... however I typically buy pseudo bonds at the top of the interest cycle ... and while we might be already there I highly doubt it Black Peter.
That's the nub of the issue. Has inflation peaked and have interest rates peaked ? If they haven't I think we are close.
Fixed rates already on way down
The rally continues... 10 year yield is still in an upwards trend yet GNE is matching it? I thought the correlation was supposed to be inverse :o . Are the O&G assets getting some more value prescribed to them or has someone discovered the grounds at lake Onslow are no place for thousands of tonnes of concrete to stand. Very interested to hear how the biofuel trials have gone, if it was successful all they have to do now is figure out how to keep the antiques at Huntley running a few more decades.
I suspect the oil, gas and LPG assets are vastly more valuable than they were as little as 6 months ago as the price of these commodities has really taken off since the Ukraine war. 19 August is the annual result and I'm looking forward to hearing how they're tracking with the biofuel experiment and plans for new renewable generation sources, specifically their plans around large scale solar.
Forbar latest note says
The +NZ$8/MWh increase in our Otahuhu assumption to NZ$101/MWh has a material impact on long-term earnings expectations.
Breakout up through the 100 day moving average today.
Gosh things have changed a fair bit in just one month since the dark days of mid June @ $2.40
Added to the wife's holding last Thursday at $2.735.
Only 3 or 4 months to the next divie.
Looked at CEN and MEL to spread her divie portfolio,but stuck with GNE's superior yield.
Quote from: Basil on Jul 18, 2022, 03:27 PMBreakout up through the 100 day moving average today.
Gosh things have changed a fair bit in just one month since the dark days of mid June @ $2.40
Even if yield drops to 7% gross by Christmas you'd still be happy with the $1 capital gain (shares at 370 odd)
Seems win win buying now eh ....that's cool
I should have backed another truck up at $2.40. Never mind. Got a truck load already so its all good.
Final divvy was paid on 8 October last year so less than 3 months to go to mop the next one up.
Expecting 8.9 or 9.0 cps I am fully subscribed to the dividend reinvestment program so will get more shares @ 2.5% discount so effectively making that dividend a little higher and giving higher compounding income going forward. When I finally hang up my abacus I will switch to cash dividends.
$3.70 is a bold call. I'd be happy just to see it with a $3 handle again.
Looks like a good result.
https://www.nzx.com/announcements/395604
Quote from: Shareguy on Jul 20, 2022, 09:00 AMLooks like a good result.
https://www.nzx.com/announcements/395604
What result?
Which of the reported on indicators do you use to assess their result?
I assume you noticed that this is just the quarterly performance report ... ?
I think you take it as read people can read the headline of an announcement as well as the content LOL
Attachment with full details is here http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GNE/395604/374951.pdf
Must admit I struggle with all the fine detail of these announcements. So many different yardsticks to use its easy to get confused.
It would seem they're on target for their expected EBITDA which (going off memory) is in the low $400's million somewhere. If they weren't they would have updated the guidance in my opinion.
Key things for me vs Q4 2021
Retail netback down 7%
Total generation down 20%
Average price received for generation down 29%
So not amazing, but likely reflective of power prices returning to normal following the dry year we had in 2021 which elevated prices. Coal generation massively down (69%) so likely a scaling back of generation at Huntley in response to lower prices and higher coal prices as well.
Ok performance report. My bad
What I liked is the reduction in wholesale average fuel costs, increased loyality and declining churn in retail. Was positive for numbers.
You would of thought that if they were not going to meet guidance of $430m to $440m Ebitdaf for FY22 then they would of stated. Fy21 was $358M.
Market likes it. $2.85
Renewable generation up 32%
Gas production up 12%
LPG production up 7.2%
This is a biggie..... Weighted average fuel cost - Portfolio $53.41 mwh down a whopping 47.4%, If I interpret that right that means the cost of Generation nearly halved !
Quote from: Basil on Jul 20, 2022, 12:14 PMRenewable generation up 32%
Gas production up 12%
LPG production up 7.2%
This is a biggie..... Weighted average fuel cost - Portfolio $53.41 mwh down a whopping 47.4%, If I interpret that right that means the cost of Generation nearly halved !
Probably explains why the decrease in total generation and price received is not a big deal.
Quote from: Basil on Jul 20, 2022, 12:14 PMThis is a biggie..... Weighted average fuel cost - Portfolio $53.41 mwh down a whopping 47.4%, If I interpret that right that means the cost of Generation nearly halved !
Just an artifact of lower coal generation I'd have thought. By the time you've paid for the carbon credits it's very expensive to turn coal into electricity compared to letting water fall through your turbines. This year the rain gods have been more generous to GNE allowing a cheaper cost of generation (and quieting the commentators complaining about huge coal usage last year).
Fair comment and welcome to the cool people's forum mfd.
I guess all those in Auckland with EV's can feel a bit more smug this winter knowing less Indonesian coal has been burned to charge their vehicles up :)
Genesis powers up with new generator for remote Tuai Power Station
https://www.nzherald.co.nz/business/watch-genesis-powers-up-with-new-generator-for-remote-tuai-power-station/ZR66AO2K57Z7UNE4YOGWKRC44U/
Anyone got any more info on this? I don't subscribe to the N.Z. Herald.
Surprises me that there has not been an announcement on the NZX as this must be price sensitive.
This was the first of three generators to be upgraded at Tuai, with the next two planned for upgrades over the next two summers. In total, after the three upgrades generation will increase from 60 to 66MW, with some efficiencies, a nice little boost, but maybe not worthy of an NZX announcement
Quote from: THESTG on Jul 27, 2022, 12:43 PMGenesis powers up with new generator for remote Tuai Power Station
https://www.nzherald.co.nz/business/watch-genesis-powers-up-with-new-generator-for-remote-tuai-power-station/ZR66AO2K57Z7UNE4YOGWKRC44U/
Anyone got any more info on this? I don't subscribe to the N.Z. Herald.
Surprises me that there has not been an announcement on the NZX as this must be price sensitive.
Genesis Energy has increased the amount of power it pumps into the national grid with the addition of a new Spanish-built generator for its Tuai Power Station, near Lake Waikaremoana.
The upgrade will boost the remote plant's electricity production by enough to power an extra 1000 homes. The first of three new GE built generators for Genesis' 60 megawatt Tuai Power Station was switched on last week after a 19,500 km journey from Bilbao in Spain — two months late due to global shipping delays.
The 26-tonne generator was then delivered by truck 560km from Auckland, finishing at the end of a narrow, winding road from Wairoa.
Up to 55 contractors and staff were involved in removing the old generator, originally installed in 1939, and replacing it with the 2022 model.
The nine-month project was undertaken through various levels of Covid-19 restrictions. Genesis will repeat the exercise next summer and the summer after that as Tuai's other two generators, built in 1929, are also replaced.
Once complete, the upgrade will have cost $32 million and taken seven years in planning, production and installation.
The project will increase Tuai's generation capacity by 6 megawatts and will improve its efficiency, the company said.
Genesis' chief operations officer Rebecca Larking said the project would increase the amount of sustainable generation available to the national grid.
"New Zealand is going to need more renewable electricity as the country moves to a lower-carbon future," Larking said.
Thanks ;D
At 90% capacity factor and 20 cents per kwh sale price that extra 6 MW would deliver around 10 million of extra revenue a year. Not really price sensitive info but would have been nice for a progress announcement or something.
Been pondering the impact of the solar development on GNE overall. My main wondering was how well does the relatively unpredictable output of solar synergise with the rather slow response of Huntleys non-peaker units.
As per the GNE CEO last year, the 250 MW turbines take six to 10 hours to get properly going. I'm not sure how long the 403 MW beast takes to get going but I imagine it is at least an hour. Solar can cut out pretty quickly with fast moving cloud, a large installation would probably only take a few minutes to be fully shaded by a large cloud. This could reduce the output to almost nothing if the clouds are dark and dense. This leads to me conclude that GNE cannot rely on the solar installations to reduce Huntley coal/gas usage without another source of firming. Unless this firming can be achieved with rapidly adjusting hydro output, it will likely be externally sourced (maybe if contact's battery project goes ahead?). If that is the case, I don't see how the solar will offer any added benefit to GNE other than increasing total energy sales. Does anyone know the ramp up time on the 403 MW gas turbine? or the 50 MW peaker?
Quote from: Plata on Jul 28, 2022, 03:47 PMBeen pondering the impact of the solar development on GNE overall. My main wondering was how well does the relatively unpredictable output of solar synergise with the rather slow response of Huntleys non-peaker units.
As per the GNE CEO last year, the 250 MW turbines take six to 10 hours to get properly going. I'm not sure how long the 403 MW beast takes to get going but I imagine it is at least an hour. Solar can cut out pretty quickly with fast moving cloud, a large installation would probably only take a few minutes to be fully shaded by a large cloud. This could reduce the output to almost nothing if the clouds are dark and dense. This leads to me conclude that GNE cannot rely on the solar installations to reduce Huntley coal/gas usage without another source of firming. Unless this firming can be achieved with rapidly adjusting hydro output, it will likely be externally sourced (maybe if contact's battery project goes ahead?). If that is the case, I don't see how the solar will offer any added benefit to GNE other than increasing total energy sales. Does anyone know the ramp up time on the 403 MW gas turbine? or the 50 MW peaker?
Isn't the main benefit of solar (and wind) that their output (when available) allows you to reduce demand on other base generation? In NZ's case this would mean you close the tap a little on the hydro dam outlets and save that water for a future dry spell? I know they have to maintain a minimum flow rate at outlet but presumably that is often less than what is required for the hydro generation? So no synergy, just increased overall sales, etc.
Wind and solar are purely expensive, bonus energy. Huntly and in some part hydro energy, are the reliable energy for base load.
I do hope that Genesis hang on to Huntly, and I have invested in them as I see them as the only true base load energy source this country has. More of a feel good investment and at least a decent dividend payer.
Quote from: Raven on Jul 28, 2022, 04:00 PMIsn't the main benefit of solar (and wind) that their output (when available) allows you to reduce demand on other base generation? In NZ's case this would mean you close the tap a little on the hydro dam outlets and save that water for a future dry spell? I know they have to maintain a minimum flow rate at outlet but presumably that is often less than what is required for the hydro generation? So no synergy, just increased overall sales, etc.
That only works if there are other sources of generation that can rapidly replace solar and wind in the event the sun is gone or the wind stops (which can happen rapidly). What I'm not certain of is the ability of hydro to rapidly ramp up to perform this job. To my knowledge large hydro installations must slowly adjust the flowrate and therefore power produced, which would make them poor candidates for backing up solar.
Quote from: arekaywhy on Jul 28, 2022, 04:10 PMWind and solar are purely expensive, bonus energy
They are actually some of the cheapest energy sources on a cost per kwh produced basis. The problem is they need firming (backup like batteries or peaker plants) to prevent blackouts when they suddenly cut out, which tends to be expensive sadly. In GNEs position, with high spot prices and little capital spare, it makes decent sense to pick a cheap option like solar that can offer significant extra generation with a short build time. The other advantage is GNE could obtain access to a location with room for 500 MW and only fill it partially with panels for now, and incrementally expand it over time. Same can't be said for a new hydro dam.
https://youtu.be/fPmJFfKn4zk?list=PLXUccGn4ptEOiBgyrpEYMIl0xvB4W67qK
This set of videos from Transpower explains how reserve generation works to counteract any loss of generation on the New Zealand system.
Quote from: THESTG on Jul 28, 2022, 04:35 PMhttps://youtu.be/fPmJFfKn4zk?list=PLXUccGn4ptEOiBgyrpEYMIl0xvB4W67qK
This set of videos from Transpower explains how reserve generation works to counteract any loss of generation on the New Zealand system.
Thanks THESTG.
I am onto video 4 :)
EDIT - Crikey, watched all of them. Kind of how I thought it worked. You gotta hate those awful AUFLS.
Just theorising here, particularly in relation to the 30 minute trading cycle in the electricity market for the generators. Is solar actually that unreliable and prone to suddenly cutting out?
Sunrise and sunset are known, so a generator should be able to calculate their generation capacity for any moment of the day with near 100% accuracy on a "clear sky basis". Cloud cover will then reduce that, but again they should be able to make a reasonable estimate and use that as the basis of their supply offer to the market. So is solar really that unpredictable in the next 1 hour? If the forecast is lots of cloud then you only offer "x"% of capacity, etc.
Solar is absolutely unreliable over a timeframe of days or more, but is it that unreliable over a 30-minute forecast period?
Quote from: Raven on Jul 28, 2022, 06:41 PMSunrise and sunset are known, so a generator should be able to calculate their generation capacity for any moment of the day with near 100% accuracy on a "clear sky basis". Cloud cover will then reduce that, but again they should be able to make a reasonable estimate and use that as the basis of their supply offer to the market. So is solar really that unpredictable in the next 1 hour? If the forecast is lots of cloud then you only offer "x"% of capacity, etc.
Solar is absolutely unreliable over a timeframe of days or more, but is it that unreliable over a 30-minute forecast period?
I did not consider using cloud cover forecasts to predict power output. From some quick googling it looks like other solar farms use technology like that, if it is reliable then maybe GNE really can rely on the solar. If they can use Huntley to fill in the gaps of a few reasonably predictable solar farms, cost of generation will plummet. I mean, the cost per kwh from coal vs solar is night and day excuse the pun. Reducing the utilisation of Huntley may also help extend its operational life, but I'm no mechanic.
Quote from: Plata on Jul 28, 2022, 04:27 PMThey are actually some of the cheapest energy sources on a cost per kwh produced basis. ...
http://www.pc.gov.au/inquiries/completed/carbon-prices/report/carbon-prices.pdf
This report delves into other issues around subsidies, however, Box 4.1 on page 123 might interest you.
Does it not strike you as odd that if wind and solar were so cheap, then it should be literally everywhere in the developing world?
Recently the gap between GNE divie yield has been shrinking .... as the chart shows it is now the smallest since GNE floated ..... and much lower than the earlier part of the chart when interest rates were similar to what they are currently
To me it seems that this TINA thing is still alive and well ---- punters buying perceived high yields and maybe not be recompensed for 'risk'
For anybody interested if yields reverted to the last 5 year average a GNE share price of $2.50 is still on the cards
00000gne.JPG
No allowance for imputation credits is something I see as the key debating point.
I'm still not sure about your methodology. At Friday's closing price I have them on a forecast gross yield of 8% inclusive of imputation credits for FY23 plus approx 9 cps divvy in just over 2 months.
That seems pretty attractive to me (4.5% gross premium) for a safe utility when the 10 year Govt stock rate is about 3.50%.
Has been better in years past but is that entirely relevant in a low interest rate environment where lots of people are chasing yield ?
Wished I'd backed another truck up at under $2.50 and not listened to some guy who said they might go as low as $2.20. (Thankfully I have one truck load already)
Basil says ' Has been better in years past but is that entirely relevant in a low interest rate environment where lots of people are chasing yield ?'
Is that TINA still hanging around
There is no alternative to stocks could be said to be under threat from good quality corporate bonds in the mid 5% range.
I can't see it going back to $2.50. They are going to report a large increase in profit due to the high one off costs in Fy21.
Forbar say, We are forecasting modest final dividend increases from GNE (+0.1cps to 8.9cps) and MEL (+0.3cps to 11.5cps). GNE's earnings suggest a higher dividend is possible and we estimate the 17.6cps FY22 dividend represents a 64% free cash flow payout ratio, below the 70% to 90% target range. However, we believe GNE will err on the side of caution as debt headroom is limited and it also needs to factor in declining Kupe earnings after FY26.
Craigs have a target price of $3.80 so upwards and onwards I say.
Good one shareguy
Craig's have GNE target $3.80
Like that ........hope they are right
the first installment ($116.67) of the "cost of living payment" to hit many eligible bank accounts tomorrow.
for many this will be welcomed and already allocated to the rising cost of living
but also, perhaps, a significant sum may find its way into the market.
could provide increased demand for stocks like GNE.
I wish I had thought of that before the close on Friday
Quote from: Shareguy on Jul 31, 2022, 08:16 AMI can't see it going back to $2.50. They are going to report a large increase in profit due to the high one off costs in Fy21.
Forbar say, We are forecasting modest final dividend increases from GNE (+0.1cps to 8.9cps) and MEL (+0.3cps to 11.5cps). GNE's earnings suggest a higher dividend is possible and we estimate the 17.6cps FY22 dividend represents a 64% free cash flow payout ratio, below the 70% to 90% target range. However, we believe GNE will err on the side of caution as debt headroom is limited and it also needs to factor in declining Kupe earnings after FY26.
Craigs have a target price of $3.80 so upwards and onwards I say.
I agree and from a chart point of view there's reasonable evidence that we may be in a new uptrend, e.g. clear and sustained break above 100 day moving average.
This chart sort of says share price 'deserves' to be over 300
Will be well over when they report a number higher than guidance
0000gne.JPG
I really appreciate all your work with charts and images you do Winner, its super helpful, you're a legend ! As the old saying goes, "a picture says a thousand words" and that's a beautiful image !
Quote from: arekaywhy on Jul 29, 2022, 05:50 AMhttp://www.pc.gov.au/inquiries/completed/carbon-prices/report/carbon-prices.pdf
This report delves into other issues around subsidies, however, Box 4.1 on page 123 might interest you.
Does it not strike you as odd that if wind and solar were so cheap, then it should be literally everywhere in the developing world?
That box is dated from 10 years ago, the prices of solar and wind have dropped significantly since then. I imagine there are numerous reasons these sources are not "everywhere in the developing world", but a big factor would probably be that they are intermittent.
Quote from: Shareguy on Jul 31, 2022, 08:16 AMGNE's earnings suggest a higher dividend is possible and we estimate the 17.6cps FY22 dividend represents a 64% free cash flow payout ratio, below the 70% to 90% target range.
I hope they stick to the low end of the pay-out range going forward. Being so constrained by debt really limits GNE's options for growth going forward, not so simple raising capital with the govt owning 50%.
Quote from: Basil on Jul 31, 2022, 01:26 PMI really appreciate all your work with charts and images you do Winner, its super helpful, you're a legend ! As the old saying goes, "a picture says a thousand words" and that's a beautiful image !
Thanks Basil
Charts are useful to highlight things.
Cold and miserable here today so I did a really cool radar chart comparing the investment attributes OCA and SUM to see which is better bet.
A thing of beauty ... which is good as some say investing is more of an art than science.
Don't think I'll post it here ...might be too 'controversial'
Into the 290's the share price goes
Next week we'll be saying 'into the 300's she goes'
Cool
10 year Govt stock rate has fallen a whole 99 basis points since the very recent high of 4.30% (think was in June) Yesterday closed at 3.31%...not sure what it is today but this is supportive of the rally in stocks we saw in July. I think this can go higher and am a happy holder for 8% gross forecast FY23 return (based on current price) and like the highly defensive nature of GNE.
wow, the run since mid June...
Yes $3.00 here we come.
Quote from: Shareguy on Aug 04, 2022, 11:23 AMYes $3.00 here we come.
Amazing what TINA can do
TINA only rationale reason for this excitement around the share price
Wish TINA would work some more magic with Turners...oh hang on a minute, they have their own Tina. ;)
Looking forward to the next divvy, expecting 9.0 cps to be declared on 19 August when they report.
I'm thinking about what I'll be doing when share price gets to $3.70
I expect you will be adding a few scallops to your oysters and chips special luncheons.
Craigs very recently had this to say:-
The analysis suggests that the sensitivity of gentailer stocks to the 10-year government bond
yield has lessened in recent times. Two potential reasons for this could be that investors feel
bond yields have reached a level where they may start to plateau, or possibly that other
factors such as positive sentiment toward electrification is providing a certain amount of
buoyancy to the stocks, resulting in a level of dislocation from historical behaviours. It is
possible that investors are concerned about a recessionary outlook, thus turning to utility
stocks as a defensive strategy, with an expectation that once a recession takes hold bond
yields would likely fall, hence making the gentailer yield more attractive
I NEED to BUY more. A new and VERY thirsty toy is coming...going to need to all my share and then some as well of that lovely black oil out of Kupe.
$3.00 this week all going well. Not long to wait to the result and confirmation of that juicy divi.
$3.00 hit today. $3.50 next? Go you good thing.
Craig's bullish on GNE. Latest note today
Outperform $3.81 and number 1 power pick.
Based on our revised full-year earnings forecasts we reshuffle our sector preference order as follows: GNE remains our top pick based on a relative view of our Target Price to current share price, followed by CEN (previously 3rd), with MEL lifted a place and MCY falling to fourth (downgraded to neutral) due to its strong recent share price performance and accounting for less uplift in mass market pricing than previously estimated..
Expected to support a sustained period of solid earnings for the company.
It's likely some punters will only be interested in divie yields next year .....some say interest rates have already peaked and next year they will be a lot lower than they are now.
Maybe a 6% gross yield will be attractive next year ...especially so if it's coming from a safe utility
On forecast dividends that would give a $3.80/$4.00 share price for GNE this time next year
Seems GNE is a BUY ...a strong BUY at todays price.
don't know if this is Craig's thinking but heck they put a target of $3.81 didn't they ....that's spooky
I think they need to lift the dividend more than the pretty miserable 1-1.5% increases they have been over recent years. Profit will be well up and inflation is running at 7% so I think what would really kick the share price along is a dividend increase commensurate with the inflation rate.
There's really strong growth in EBITDA forecast to be reported shortly so they can afford it. Show me the money !
My understanding of how power companies make money is very limited so I need some educating. Just I've never been inspired enough to learn but have a hefty interest at the moment and they say you shouldn't invest in anything you don't understand.
Seems GNE FY22 EBITAF is going to be about $440m (their guidance and guru analysts in same ball park
To achieve that second half EBITAF going to be about 60% up on last year (pcp)
Just seems to me incredible result -- EBITAF splutters along at $350m/$360m for a few years and then a big spike to $440m
So whats behind this spike? Is it sustainable?
Seems too good to be true - please educate me
00000gne.JPG
Hey basil
That chart in prior post seems to say we should see a decent increase in divie next week
Full year about 21 cents meaning final divie 12 cents plus
But I suppose they'll say we need to hold some back for a rainy day and future developments blah blah
Whose having who on I say
I think it is a mix of falling generation costs, rising sale prices for power and gas as well as the benefit of the carbon credits they stocked up on in the past being realised. Also they took a decent hit a while ago from some dispute about emissions that caused a ~50 million dollar bill, which probably is partially responsible for the sudden jump this year.
GNE FY21 result was $358m EBITDA. It was impacted by $60m in one off costs. $33m was the emissions arbitration that they lost and $27m in fixed price carbon credits.
Is the forecast GNE own guidance of $430m to $440m sustainable?
Craig's say it is and forecasting
FY22. $439m. 17.6 dps
FY23. $441m. 18
FY24. $454m. 18.3
So yes not only sustainable but safe and look at that yield. I think still good buying.
Results on Friday
Genesis swaption with Meridian expires December and I gather Contact are involved somewhere as well
I assume this is some deal where either can got power from the other if need be
Will the expiration of this swaption have any impact on GNE profits?
Yes they will . It will be a key area to look at on Friday as they expire end of 22.
Shareguy - so profit going from 439m this year to 441m and then to 454m in F24
Not very inspiring is it ....but suppose its better than going backwards
Divie forecast F22 17.6 (up from 17.4 in F21) to 18.3 over two years - is only 1.7% pa growth (what's inflation?)
Seems they are treating punters as fools
Just as well punters will be happy with a 6% gross yield next year driving share price over 4 bucks
Ssooo GNE headed for the lofty heights of perhaps 15% SP gain and div yield (say) 6%.
Meanwhile IFT with a div yield of (say) 2% has averaged SP growth over 20% pa over 5 years..... and now has considerable international expertise in 'renewable energy'. (Tilt/Longroad etc)
Which one should we prefer??
Quote from: Left Field on Aug 15, 2022, 08:48 AMSsooo GNE headed for the lofty heights of perhaps 15% SP gain and div yield (say) 6%.
Meanwhile IFT with a div yield of (say) 2% has averaged SP growth over 20% pa over 5 years..... and now has considerable international expertise in 'renewable energy'. (Tilt/Longroad etc)
Which one should we prefer??
I guess both cyclicals, where GNE is basically driven by its properties as pseudobond (basically depending on the markets expectations what interet rates will do), while IFT currently seems to be mainly driven by the markets expectations into the infallibility of the IFT manager.
If you expect interest rates to rise, I would leave my fingers from GNE (or any other power stock) ... if you however believe that Reserve banks all around the world will start to chicken out and drop interest rates again, than GNE might be a good play.
IFT is a bit more complicated ... it all depends on how good the fund managers are in predicting future infrastructure needs as well as investor hype waves.
In the past - they sometimes got it right and sometimes they got it wrong (e.g. NZ Bus and European Airports), but recently they had a nice winning streak with good timing of Z-Energy sell, with Vodafone and with renewables and data centres.
If you believe that their winning streak continues, go in. Just make sure you get out before their winning streak ends. This is the secret key to success for any gambler.
For my personal feeling both are currently somewhere in the two upper quadrants of their SP cycle (which is not a good time to buy a cyclical), and particularly IFT appears to be priced for perfection. I am currently holding neither, but hey - my guess is as good as yours.
GNE a de facto bond and gross yield was ~ 8% last time I looked which was very recently.
I think interest rates will head back down next year and 8% will be very attractive.
Disc Hold.
200 MW of baseload geothermal coming online in next few years from contact alone. Without decent increases in demand this might put a dent in Huntly's utilisation. Really interested to hear how the biofuel trials went this Friday
Yes the outcome of the biofuel trial will be very interesting. However even if "very successful", from the little I have read it may then be a tough job scaling up to commercial supply, etc.
Do I have it right that "biofuel" is firewood?
I think it is some form of processed, compressed wood. Not certain and don't think they have explicitly said.
...just like coal except we cut it down? ...and produce more particulates?
Likely made using low value wood, offcuts and waste products from other industries. Doubt they are growing trees specifically for burning, there is more money in a table and chairs set or new deck than the energy value of the wood itself.
Black pellets are produced from forestry or timber mill waste placed under high pressure; the resulting pellets store more energy than traditional white pellets, are denser for transportation, burn hotter, and like coal they can be stored outside without concern for moisture.
"Black Pellets are produced through a process of torrefaction, during which water content, cellulose sugars, and other volatile organic compounds are removed from the biomass to produce a solid biofuel with characteristics similar to those of fossil coal. The main differences between black pellets and standard wood pellets are that black pellets have a 30% higher volumetric energy density, is less subject to biological degradation, is safer to transport and have water resistant properties.
These factors lower the transportation and logistics costs of the black pellets. Torrefaction is a thermochemical treatment process that involves heating or "roasting" biomass at temperatures of 200-300°C in the absence of oxygen during which the biomass partly decomposes, giving off different types of volatiles. The final product of the process is the remaining solid, which is referred to as black pellets."
Sounds so simple. Apparently surprisingly hard to actually do on a large commercially viable scale.
Quote from: arekaywhy on Aug 16, 2022, 10:38 AMDo I have it right that "biofuel" is firewood?
Genesis imported 4,000 tonnes of Black Pellets biofuel from Alabama for the trial.
so after all that, why are they not just going back to the two step - 1) dig up coal, 2) burn coal...seems a bit simpler and less energy wasted
Quote from: arekaywhy on Aug 16, 2022, 04:31 PMso after all that, why are they not just going back to the two step - 1) dig up coal, 2) burn coal...seems a bit simpler and less energy wasted
Biofuel is "green" technically carbon neutral (ignoring the carbon footprint of making it), unlike fossil coal.
Quote from: Raven on Aug 16, 2022, 04:35 PMBiofuel is "green" technically carbon neutral (ignoring the carbon footprint of making it), unlike fossil coal.
The irony is that over the extremely long haul Coal is probably carbon neutral too
https://en.wikipedia.org/wiki/Coal#:~:text=Coal%20is%20mostly%20carbon%20with%20variable%20amounts%20of,pressure%20of%20deep%20burial%20over%20millions%20of%20years. Problem is nobody wants to acknowledge it came from dead wood and plant matter or cares about what happened so long ago.
I'm looking forward to hopefully hearing an update about their large scale solar plans. 500 MW of solar is the medium term plan if my memory serves me correctly. That's a LOT of solar panels !
Quote from: Basil on Aug 16, 2022, 04:41 PMThe irony is that over the extremely long haul Coal is probably carbon neutral too
https://en.wikipedia.org/wiki/Coal#:~:text=Coal%20is%20mostly%20carbon%20with%20variable%20amounts%20of,pressure%20of%20deep%20burial%20over%20millions%20of%20years. Problem is nobody wants to acknowledge it came from dead wood and plant matter or cares about what happened so long ago.
I'm looking forward to hopefully hearing an update about their large scale solar plans. 500 MW of solar is the medium term plan if my memory serves me correctly. That's a LOT of solar panels !
Absolutely. Burn all the coal we can dig up and we end up with a globe something like 6 degrees warmer than today. From memory - it comes with a close to 100 meter sea level rise, but otherwise whoever survives should be fine. So did the dinosaurs 400 million years ago (when planet earth had these conditions and the coal was not yet in the ground but in the atmosphere). Oops, did they ??
LOL BP, this one is definitely not for you, I think that much is perfectly clear ! Just remember that burning that coal is what's currently helping keep your heater on this winter and your or other people's EV's charged up...don't start me on the irony of that.
The comments made by Contact regarding negotiations with Rio sound encouraging. Looking forward to Friday
Met Craigs lofty guidance. A decent Upgrade for FY23 based on Craigs guidance
A good result
It must be a great result, the front page of the presentation starts with a Beagle with its ears flapping LOL. This is obviously tailor made for me as a classic dividend hounds stock. ;D I need to BUY more .
Presentation here http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GNE/397203/376841.pdf
Annual Report here http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GNE/397203/376840.pdf
I have had a busy day so going through the results today.
Once again another great performance. Guidance at $455m for FY23 (Ebitaf).
Swaption contracts expiring in December 22. Potential for more variability than in previous years.
We are going to just have to wait and see I think.
Good to see the reinvestment plan with its 2.5 percent discount in play.
Unless more gas is found what's in Kupe is going to be more valuable. Look at what's happening with world gas prices.
Looks like the black pellet trial delayed till 23. Customer satisfaction up but still not good.
Happy holder and will put the gas fire on tonight for sure
Ah yes, the typical misleading clickbait stuff news article is up now. Was wondering how long it would take.joke.PNG
We're well insulated from what's happening with power, gas and LPG prices in Europe.
Some of the pricing I have seen on CNBC means European customers are paying north of the $400 per barrel energy prices for their LPG and gas with power not far behind. That's scary.
Against that backdrop, much higher carbon credit prices and inflation of 7.3% its inevitable that customers will have to accept higher prices for energy here. It is what it is. I'm sure they'll run more of those cute T.V. advertisements with the Beagle in it and all will be well. 👍👍 (You'd almost bet money I helped with the creation of that add) :D
Disc - fully subscribed to the shares in lieu of dividend plan so I get more cheap shares and compounding returns going forward.
P.S. I note from the annual report they are hopeful of announcing something material on their large scale solar development plans in FY23 along with the biomass trial and talk in their of Rankine units having a life out to 2040 or maybe longer !
https://www.rnz.co.nz/news/business/473148/genesis-energy-profit-jumps-to-221m-from-33m-in-one-year?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Saturday+20+August+2022
Here's a copy of earnings call. Some interesting stuff here.
https://finance.yahoo.com/news/edited-transcript-gne-nz-earnings-230000593.html
Those coal reserves that were purchased cheap have insulated the power prices big time. Looks like investors to get the benefit too.
Just as well that gas assets not sold. Look at world gas price ....
Am I correct in thinking at todays coal price of ~$380 USD per tonne that GNE has over $340 million USD worth of coal stockpile? $550 million NZD?
Craig's latest. Overweight and number one power pick with increased divi to continue.
Target Price $3.70 (prev. $3.81), O/W retained
Our Target Price is based on our forward DCF valuation (WACC 8.0%, Tg 3.0%, average RFR 4.2% (prev. 4.1%)) resulting in $3.70 (prev. $3.81). We retain an Overweight recommendation. Key risks include regulatory change, wholesale and retail competition, and project development risk. Our sector preferences are unchanged, and in order of GNE, CEN, MEL all Overweight,
Plata yes you are correct. The gas reserves are worth a fortune as well.
Quote from: Plata on Aug 19, 2022, 04:31 PMAh yes, the typical misleading clickbait stuff news article is up now. Was wondering how long it would take...
yeah those rich pricks, how dare they make a prophet *cough*
Looking at slide 33 of the results presentation, it shows that "Retail Purchases" of electricity costed an average of $151 per MWh while generation costs via thermal are shown to be $96 per MWh. Is that thermal price not reflective of the current market price of coal? Why pay more buying on market vs increasing thermal generation?
https://www.cnn.com/2022/08/23/economy/china-coal-reliance-heat-wave-intl-hnk/index.html
Quote from: Shareguy on Aug 24, 2022, 05:30 AMhttps://www.cnn.com/2022/08/23/economy/china-coal-reliance-heat-wave-intl-hnk/index.html
I am sure Russia will sell them plenty of coal if needed
jeez, GNE share price back to 290 ..... NZ govt 10 year a tad off 4%
They said the relationship between the two had broken down ......hmmm
Hope tomorrow a better day for share price
Given GNE has ~18% of its market cap in coal reserves with significant unrealised value if sold at todays prices, I figured I'd have a look to see if it actually makes sense keeping it. The full year results said 900,000 tonnes worth is stockpiled. From memory, Huntley can burn all of that in 2-4 months at full output so while significant in mass and value, it isn't overkill from the perspective of running Huntley.
At todays coal price of ~600 NZD per tonne, the stockpile has a value of ~$540 million NZD.
Coal has an energy content of ~8100 kwh per tonne. If the entire stockpile was consumed by Huntley to make power at 40% efficiency (an assumption), the stockpile would produce ~2930 GWh. If sold at the retail netback of $128 per MWh achieved during 2020 (recent peak netback), that would deliver $375 million NZD in "total netback". Ignoring costs of coal sale, GNE must achieve an average netback exceeding ~$180 per MWh in order to extract equivalent value by burning the coal for electricity.
Unless coal prices rapidly decline or netback rises significantly (over 40%, pretty unrealistic) selling the coal could be a more attractive option and free up significant cash to invest in something that actually has a long term future in NZ. From what I understand, GNE must anticipate it will be able to hold other market players at gun point in an impending dry year in order to deliver superior value by burning it. If this is not the case, is GNE securing the electricity market for ESG reasons? Will be very interesting to see if these market insurance options get much attention...
Good analysis there Plata. I think they are ostensibly looking to sell dry year callable generation optionality, (forget what they have labelled the technical name for it) @ $200+ mwh. How much uptake from other gentailers will be interesting to see.
It's not hard to foresee a truly desperate energy shortage in Europe in their coming winter. I feel sorry for them, already in some countries paying $400 barrel oil equivalent for their gas supplies, (if they can get enough).
Coal could easily go dramatically higher from its already highly elevated level. GNE sitting on a huge stockpile of black gold.
Info on market security options released today.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GNE/397866/377919.pdf
They expect to burn between ~250,000 to 1,100,000 tonnes of coal in 2023? Those swaptions expire soon, probably won't be in force for much of FY2023... big price increase coming soon or are they going to burn it at a loss with respect to the current market prices of coal and electricity?
My understanding is they are determined to only burn the coal if its earnings accretive to do so based on the current market value of coal and carbon credits. The value of their MASSIVE in the money positions they hold on coal prices and carbon credits is not something that will be handed out as a free lunch to other market participants.
https://foreignpolicy.com/2022/08/26/europe-energy-crisis-natural-gas-economy-winter/
Things are looking pretty bleak for the European winter. I note many nations are allegedly building rapid rollout floating LNG terminals to increase import capacity. Obviously there is limited LNG shipping capacity to consider as well, but I struggle to see how the winter will bring anything but hot hot prices down under for anything that burns. Is exporting from Kupe an option? I imagine it would be reputationally advantageous for GNE to run down the Kupe reserve selling it overseas at exorbitant prices, than for them to try impose those same prices on consumers here. Wondering if GNE+WDS or BPT could be prudent, just the thought makes me feel the need to plant some trees.
Good idea Planta.
Quote from: Plata on Aug 30, 2022, 11:03 PMhttps://foreignpolicy.com/2022/08/26/europe-energy-crisis-natural-gas-economy-winter/
Things are looking pretty bleak for the European winter. I note many nations are allegedly building rapid rollout floating LNG terminals to increase import capacity. Obviously there is limited LNG shipping capacity to consider as well, but I struggle to see how the winter will bring anything but hot hot prices down under for anything that burns. Is exporting from Kupe an option? I imagine it would be reputationally advantageous for GNE to run down the Kupe reserve selling it overseas at exorbitant prices, than for them to try impose those same prices on consumers here. Wondering if GNE+WDS or BPT could be prudent, just the thought makes me feel the need to plant some trees.
Not an expert, but as I understand it there is no existing capability or facility to turn NZ gas into LNG for export quantities.
Huntley is burning coal right now, spot price is over $600 per MWh 8)
Edit: Was even higher! All those people cooking dinner huh?
power price.PNG
With an energy crisis in Europe now in full effect surely there are implications for this part of the world ?
I would think GNE shareholders are "well positioned"
Quote from: Basil on Sep 07, 2022, 10:28 AMWith an energy crisis in Europe now in full effect surely there are implications for this part of the world ?
I would think GNE shareholders are "well positioned"
Not necessarily, the gas markets are disconnected as it's so hard to transport. Even in the US which is actively exporting gas to Europe, you can buy gas for something like 10% of what it would go for in Europe. This isn't oil where prices in different countries are kept relatively steady by relatively easy arbitrage. I understand it takes a couple of years to build infrastructure to export gas and there's no way anyone's spending that money with our limited and dwindling supply.
If we have to buy more coal we will presumably be exposed to worldwide trends but Genesis say they have a big stockpile and predict they will burn far less of it into the future.
The truth is NZ electricity consumers are 'well positioned' compared to much of the world.
Quote from: mfd on Sep 07, 2022, 11:05 AMGenesis say they have a big stockpile and predict they will burn far less of it into the future.
Dunno, if this was good luck or good management, eh.
The well respected power analyst at Craig's (Cameron Parker) used to work at Genesis.
I like it even more. Inside knowledge. Craig's number one power pick at $3.71 outperform
Jarden have increased their target price from $2.94 to $3.23
Quote from: Shareguy on Sep 11, 2022, 10:47 AMThe well respected power analyst at Craig's (Cameron Parker) used to work at Genesis.
I like it even more. Inside knowledge. Craig's number one power pick at $3.71 outperform
Jarden have increased their target price from $2.94 to $3.23
Interesting, thanks for sharing. Still trades cum the 8.9 cps 80% imputed FY22 final divvy too.
My biggest holding as I see it as recession proof.
Quote from: Shareguy on Sep 11, 2022, 10:47 AMThe well respected power analyst at Craig's (Cameron Parker) used to work at Genesis.
I like it even more. Inside knowledge. Craig's number one power pick at $3.71 outperform
Jarden have increased their target price from $2.94 to $3.23
Cameron was Genesis's Investor Relations Manager
Part of his job was ".... the framing of results announcements" .......code for making it all sound good.
The face Of Craig's in Mark (who loves presenting to crowds of hundreds) also touts energy sector experience before joining the wealth game.
So if Craig's say GNE worth $3.85 it must be worth at least $4 next year
Would be nice but I can't see this getting past the low-mid 3s unless something unexpected happens with interest rates.
Jeez - GNE share price mid 280's. It was over 3 bucks last week ....and heading Craig's target of 360 or whatever it was
What's up
Bond yields are up ;D
Also lets not forget everything is down at the moment. In other news they have released an announcement about the security options https://www.nzx.com/announcements/399469
I am convinced that with the coming world recession there isn't going to be any such thing as a "defensive" stock, including GNE. AT such time, analysing PE, EPS etc is not seeing the wood for the trees. Macroeconomics will consign all those charts and graphs to the dustbin. A lot of "defensive" stocks are on a downtrend already.
The only truly defensive strategy at these times is cash. Sure, you can say that GNE etc will recover and you are getting maybe 7-8% yield in the meantime, but if the market - and your capital - drops 30%, doesn't it make more sense to exit before the proverbial really does hit the fan? There's a perfect storm of stagflation (inflation/no growth) hitting every major economy and sooner or later (starting with Wall Street) sharemarkets will tank. All the signs are there already.
It is hard, psychologically, to sell at levels below what you could have got 6 months ago, and hence most people hang in hoping for things to go up then (they tell themselves) they will sell. Unfortunately in another six months I believe the index will be lower again across the board. If you're sitting on gains or small losses, I reckon it is better to take them now and go on holiday. For the most part I've done that already, except - tragically - for my SKT shares ;)
If you go back to the 1987 Crash and GFC, it is worth while noting the companies whose share price recovered quickly, and then ploughed ahead, were the solid dividend payers.
Today we have power companies and phone companies together with the likes of POT.Solid divie payers.
Looking ahead I note SFF on USX spent $30mil in capital improvements three years ago,then $50mil,and last year $60mil.This year they had upped it to $100 mil.All the time paying increasing divies.
The out look for these companies looks solid.Even SML look to have turned the corner.
Quote from: LoungeLizard on Sep 27, 2022, 03:42 PMI am convinced that with the coming world recession there isn't going to be any such thing as a "defensive" stock, including GNE. AT such time, analysing PE, EPS etc is not seeing the wood for the trees. Macroeconomics will consign all those charts and graphs to the dustbin. A lot of "defensive" stocks are on a downtrend already.
The only truly defensive strategy at these times is cash. Sure, you can say that GNE etc will recover and you are getting maybe 7-8% yield in the meantime, but if the market - and your capital - drops 30%, doesn't it make more sense to exit before the proverbial really does hit the fan? There's a perfect storm of stagflation (inflation/no growth) hitting every major economy and sooner or later (starting with Wall Street) sharemarkets will tank. All the signs are there already.
It is hard, psychologically, to sell at levels below what you could have got 6 months ago, and hence most people hang in hoping for things to go up then (they tell themselves) they will sell. Unfortunately in another six months I believe the index will be lower again across the board. If you're sitting on gains or small losses, I reckon it is better to take them now and go on holiday. For the most part I've done that already, except - tragically - for my SKT shares ;)
It is so easy to draw up a fictive scenario and believe in it ... and make than a lot of otherwise quite senseless moves in order to satisfy this particular scenario.
Fact is - nobody, and I mean NOBODY knows how economy and how inflation will develop from here.
Nobody predicted the breakdown of the Soviet union in 1989, before it happened - and nobody will be be able to predict the date when Putin leaves the stage and what happens afterwards. We just know - at some lucky day he will depart.
Nobody predicted Covid and its impact on the economy ... but I remember a lot of people predicting (after Covid started) that the economy will go into a tail spin. Well, it didn't.
Where I am going here is - while you painted a possible scenario ... it is by no means certain or more likely than a lot of other scenarios, i.e. it might not be appropriate to put all your money on this card.
I'd see all options as open - from hyper inflation like after WWI and WWII in Germany (and in this case cash would be the dumbest possible investment option) over various scenarios with shorter and longer medium inflation through to Putin kicking the bucket tomorrow and everybody taking a deep breath of relief, energy prices rapidly stabilizing and inflation going back to its designated band: Well, clearly a possibility as well,
Now - nobody (NOBODY) knows, which scenario will play out, and given this uncertainty appears the most appropriate strategy diversification. This is some cash, some solid bonds, some gold, some property and some solid shares. GNE clearly falls into the latter category, and if you look into some past disaster scenarios, Gentailers did in the long run always good. They just provide a product people want and need.
While I agree that this might not be the time to put all money into Gentailers (it never is), it clearly is not the time either to take all your money out of them.
Anyway - good luck with your strategy, but better not sell 100% cash as defensive. I know about a number of people who got (financially) killed by this strategy ... and if you really expect a world recession, than hyperinflation is not the least likely follower.
Quote from: BlackPeter on Sep 27, 2022, 04:54 PMIt is so easy to draw up a fictive scenario and believe in it ... and make than a lot of otherwise quite senseless moves in order to satisfy this particular scenario.
Fact is - nobody, and I mean NOBODY knows how economy and how inflation will develop from here.
Nobody predicted the breakdown of the Soviet union in 1989, before it happened - and nobody will be be able to predict the date when Putin leaves the stage and what happens afterwards. We just know - at some lucky day he will depart.
Nobody predicted Covid and its impact on the economy ... but I remember a lot of people predicting (after Covid started) that the economy will go into a tail spin. Well, it didn't.
Where I am going here is - while you painted a possible scenario ... it is by no means certain or more likely than a lot of other scenarios, i.e. it might not be appropriate to put all your money on this card.
I'd see all options as open - from hyper inflation like after WWI and WWII in Germany (and in this case cash would be the dumbest possible investment option) over various scenarios with shorter and longer medium inflation through to Putin kicking the bucket tomorrow and everybody taking a deep breath of relief, energy prices rapidly stabilizing and inflation going back to its designated band: Well, clearly a possibility as well,
Now - nobody (NOBODY) knows, which scenario will play out, and given this uncertainty appears the most appropriate strategy diversification. This is some cash, some solid bonds, some gold, some property and some solid shares. GNE clearly falls into the latter category, and if you look into some past disaster scenarios, Gentailers did in the long run always good. They just provide a product people want and need.
While I agree that this might not be the time to put all money into Gentailers (it never is), it clearly is not the time either to take all your money out of them.
Anyway - good luck with your strategy, but better not sell 100% cash as defensive. I know about a number of people who got (financially) killed by this strategy ... and if you really expect a world recession, than hyperinflation is not the least likely follower.
I agree that no-one has a crystal ball - although using the breakup of USSR and a pandemic as metaphors for why we can't predict an economic downturn is a bit of a stretch. I do think most people can see that the bull run is well and truly over and we are in bear(ish) territory. The NZX index is down 15% over the last year and down 2.5% in only the last month. Wall Street is worse.
The question is what do you do with that information and all the very pessimistic economic indicators in all the major economies. Ignore them? Carry on trading? Whose portfolio is in positive over the last 6 months? Not many of us I would say. And would you say things will be better or worse in 6 months? The odds on they will be worse. So what to do? Sit tight and watch your portfolio decline and engage a bit of cognitive dissonance whereby a 7% divvy is somehow better than losing 20% of your capital?
Many investors make all sorts of sell/buy/sit decisions - based on micro-trends. How much of that is crystal ball gazing to be honest? So why the reticence in analysing macro-trends? I do agree that one needs to diversify much more broadly into all asset classes but the old adage that cash is king during recessionary times is broadly true. Fixed term deposit rates are 4.5% - that's ok in my view and eliminates the very real risk of capital erosion that exposure to the sharemarket presents att his time.
Quote from: LoungeLizard on Sep 27, 2022, 05:45 PMI agree that no-one has a crystal ball - although using the breakup of USSR and a pandemic as metaphors for why we can't predict an economic downturn is a bit of a stretch. I do think most people can see that the bull run is well and truly over and we are in bear(ish) territory. The NZX index is down 15% over the last year and down 2.5% in only the last month. Wall Street is worse.
The question is what do you do with that information and all the very pessimistic economic indicators in all the major economies. Ignore them? Carry on trading? Whose portfolio is in positive over the last 6 months? Not many of us I would say. And would you say things will be better or worse in 6 months? The odds on they will be worse. So what to do? Sit tight and watch your portfolio decline and engage a bit of cognitive dissonance whereby a 7% divvy is somehow better than losing 20% of your capital?
Many investors make all sorts of sell/buy/sit decisions - based on micro-trends. How much of that is crystal ball gazing to be honest? So why the reticence in analysing macro-trends? I do agree that one needs to diversify much more broadly into all asset classes but the old adage that cash is king during recessionary times is broadly true. Fixed term deposit rates are 4.5% - that's ok in my view and eliminates the very real risk of capital erosion that exposure to the sharemarket presents att his time.
Nobody doubts that we are currently in bear territory - but hey, this is just describing the past. Yes, we walked downwards and yes, it is foggy - i.e. we don't know what comes next.
Relevant for investing is where we go from here and - if its a medium sized bear, it might be already at or close to its bottom. If its a mega grizzly, than sure - there might be another 30, 50 or 80% drop ahead of us.
Referring to your remark related to modelling ... the likelihood for these models to deliver useful output diminishes with the complexity of the system you are modelling.
Problem is that for an extremely complex system like the world economy nobody is able to know and capture all input parameters. Even worse - the economy is a level 2 chaotic system (Level two chaos is chaos that reacts to predictions about it, and therefore can never be predicted).
If you want to know more, do some reading about Chaos theory - there are some good books (if you like maths), but there is as well a lot of useful stuff just available through Dr. Google.
So - I have no issues with using models to better understand local problems, in the understanding that any model offers at best some likelihoods for things to happen, however - the larger and more complex these systems you try to predict are, the less useful is the prediction (and yes, this is a direct consequence of the behaviour of chaotic systems).
GNE down 5% today and nearly 25cents since it paid it's 9c dividend. I'll stick my neck out and predict GNE will be around $2.50 (ie lose another 25c) by xmas. If I'm right -and I freely admit that I absolutely may not be - the drop will be nothing to do with GNE as a business and everything to do with global economics. And that drop will only be from the shadow of the bear - if he turns up, all bets are off.
I think GNE's share price will be higher in 13 months time than it is today.
In the meantime I will pick up 3 juicy divies from them.
Quote from: LoungeLizard on Sep 27, 2022, 06:50 PMGNE down 5% today and nearly 25cents since it paid it's 9c dividend. I'll stick my neck out and predict GNE will be around $2.50 (ie lose another 25c) by xmas. If I'm right -and I freely admit that I absolutely may not be - the drop will be nothing to do with GNE as a business and everything to do with global economics. And that drop will only be from the shadow of the bear - if he turns up, all bets are off.
I'll place the bet and start stacking more of this one in my NZ portfolio
Quote from: Plata on Aug 29, 2022, 08:46 PMGiven GNE has ~18% of its market cap in coal reserves with significant unrealised value if sold at todays prices, I figured I'd have a look to see if it actually makes sense keeping it. The full year results said 900,000 tonnes worth is stockpiled. From memory, Huntley can burn all of that in 2-4 months at full output so while significant in mass and value, it isn't overkill from the perspective of running Huntley.
At todays coal price of ~600 NZD per tonne, the stockpile has a value of ~$540 million NZD.
Coal has an energy content of ~8100 kwh per tonne. If the entire stockpile was consumed by Huntley to make power at 40% efficiency (an assumption), the stockpile would produce ~2930 GWh. If sold at the retail netback of $128 per MWh achieved during 2020 (recent peak netback), that would deliver $375 million NZD in "total netback". Ignoring costs of coal sale, GNE must achieve an average netback exceeding ~$180 per MWh in order to extract equivalent value by burning the coal for electricity.
Todays coal price is now ~750 NZD per tonne thanks to a minor coal price rise and a plummeting NZD. The stockpile has a value of up to ~$675 million NZD (obviously some has been burnt since last update, can't be bothered estimating how much). Netback now needs to exceed ~$225 per Mwh to meet replacement cost (not including shipping etc). Based on my periodic checks of Huntley's output I reckon the stockpile is worth more now than it was at the last update despite some being burned.
Quote from: Plata on Oct 02, 2022, 02:06 PMTodays coal price is now ~750 NZD per tonne thanks to a minor coal price rise and a plummeting NZD. The stockpile has a value of up to ~$675 million NZD (obviously some has been burnt since last update, can't be bothered estimating how much). Netback now needs to exceed ~$225 per Mwh to meet replacement cost (not including shipping etc).
"Black gold"
Quote from: Plata on Oct 02, 2022, 02:06 PMTodays coal price is now ~750 NZD per tonne thanks to a minor coal price rise and a plummeting NZD. The stockpile has a value of up to ~$675 million NZD (obviously some has been burnt since last update, can't be bothered estimating how much). Netback now needs to exceed ~$225 per Mwh to meet replacement cost (not including shipping etc). Based on my periodic checks of Huntley's output I reckon the stockpile is worth more now than it was at the last update despite some being burned.
Sounds like a special dividend may be in the making, although the super-profit won't be realised until next winter
Quote from: xafalcon on Oct 04, 2022, 07:38 PMSounds like a special dividend may be in the making, although the super-profit won't be realised until next winter
I would be surprised if they did that. The balance sheet is pretty constrained and I imagine they are counting on some of those realised gains to fund the solar JV. Do they do a special dividend now and put the streak of years of dividend growth in jeopardy? I think they will do whatever they can do keep the dividend steady and climbing, even if it is at a snails pace.
Genesis is approaching a point where a strategic decision needs to be made. Lake Onslow will completely change the electricity market in NZ. If this project is green lit, Genesis's major generation asset is at risk. Initially the risk will be the justification for any costly R&M. Closer to Lake Onslow completion the risk changes to generation revenue loss
Does Genesis transition from gentailer to an energy retailer? Does the government agree to "buy and retire" Huntly once Lake Onslow is operating? Does PowerCo progress? How "hard" will Genesis play their hand in the 10 year period between Lake Onslow green light and Lake Onslow being operational?
It will certainly be an interesting situation to watch unfold. I expect there will be a choppy ride for SP in the near future
You might want to reassess that prediction based on the capacity and reliability of pumped hydro, relative to real base load capacity
Quote from: arekaywhy on Oct 05, 2022, 10:37 AMYou might want to reassess that prediction based on the capacity and reliability of pumped hydro, relative to real base load capacity
Lake Onslow stored capacity 5-7TWh. Lake Onslow generating capacity still to be decided but expected to be 1000-1200MW (ie 130-150% of Huntly capacity). Reliability of hydro is exceptional. Lifespan of hydro is many decades as our current dams demonstrate
Hope we don't run out of electricity today with this polar blast over a lot of the country
Quote from: winner (n) on Oct 05, 2022, 11:01 AMHope we don't run out of electricity today with this polar blast over a lot of the country
Huntley's coal units are not running at all right now (which I have not seen in a while), so it can't be too bad out there. Have the swaptions expired yet?
Quote from: xafalcon on Oct 05, 2022, 09:59 AMDoes Genesis transition from gentailer to an energy retailer?
A recent Chris Lee newsletter suggested the retailer part of most gentailers' business was almost a loss leader for the generator part. So it likely not a goer to be a retailer with no / limited generation to back it up.
Electricity spot price just north of $200,000/MWh
That is not a typo
Just checked its only $123,600.00 now phew
WOW, that is huge !!!!...just shows how poorly prepared the country is for major spikes in electricity consumption. Hopefully the Rankine units are cranking it out now.
Quote from: Basil on Oct 07, 2022, 10:36 AMWOW, that is huge !!!!...just shows how poorly prepared the country is for major spikes in electricity consumption. Hopefully the Rankine units are cranking it out now.
Problem is the design of our electricity market. Companies are not rewarded for providing enough electricity plus a safety buffer, but they are much better paid if there is not enough electricity around.
Any little hiccup and the price shoots to the stars. Follow the money :) ;
Not sure, which ideological blindsided idiot government created this system. Anybody knows?
Probably best not to turn this into a political debate. Let's not go there 8)
Quote from: BlackPeter on Oct 07, 2022, 11:55 AMProblem is the design of our electricity market. Companies are not rewarded for providing enough electricity plus a safety buffer, but they are much better paid if there is not enough electricity around.
Any little hiccup and the price shoots to the stars. Follow the money :) ;
Not sure, which ideological blindsided idiot government created this system. Anybody knows?
Max Bradford (National) is the (ir)responsible minister who implemented the system. Ironically, the power companies warned him at the time that prices would rise as a result, but Max refuted this would happen
And here we are
The problem with the current market is that the amount of generation available is dictated by supply and demand between the generators, retailers and their customers. It is inefficient for an operator like GNE to have all of it's capacity available 24/7 on the off chance a fault occurs and prices spike, IE there is not much incentive for generators to ensure security of supply. Expecting them to do otherwise is a bit naïve, if you were going hiking for 3 days would you pack 9 days worth of food and water? No, you wouldn't.
There is seemingly not much appetite to pay for security of supply. I wonder, is it cheaper for the government to build Onslow or support GNE and CEN to keep thermal capacity on reserve. The interest on the debt to build onslow alone would be in the hundreds of millions yearly, certainly enough to keep a few Rankine units on standby AND pay for the biofuel stockpile if they want to minimize co2.
Quote from: Plata on Oct 07, 2022, 03:29 PMThere is seemingly not much appetite to pay for security of supply. I wonder, is it cheaper for the government to build Onslow or support GNE and CEN to keep thermal capacity on reserve. The interest on the debt to build onslow alone would be in the hundreds of millions yearly, certainly enough to keep a few Rankine units on standby AND pay for the biofuel stockpile if they want to minimize co2.
Thats a very interesting question. One would like to think it has (or will be) addressed in the many studies and assessments done on Onslow and The NZ Battery Project.
Outgoing CEO Marc England opines on the future of Huntly and other things - paywalled
https://www.nzherald.co.nz/business/business-hub-departing-genesis-ceo-marc-england-on-huntly-biomass-and-the-rolling-maul/7HPHZFAZ3VDZDMTJDNMUX7FAR4/
Quote from: Plata on Oct 07, 2022, 03:29 PMThere is seemingly not much appetite to pay for security of supply. I wonder, is it cheaper for the government to build Onslow or support GNE and CEN to keep thermal capacity on reserve. The interest on the debt to build onslow alone would be in the hundreds of millions yearly, certainly enough to keep a few Rankine units on standby AND pay for the biofuel stockpile if they want to minimize co2.
I believe Lake Onslow will go ahead and GNE will be paid to keep Huntly up and running until Lake Onslow is fully commissioned and running. Payment may take the form of government buying Huntly and closing it down. The carbon credits may be part of the deal, or may not be
https://www.stuff.co.nz/business/130143733/electricity-market-isnt-perfect-but-few-markets-are-says-power-regulator
Seems like good news, no new regulation in the near term? Just need Onslow to get the no go 8)
Nice upgrade
https://www.nzx.com/announcements/400532
Quote from: Shareguy on Oct 14, 2022, 08:35 AMNice upgrade
https://www.nzx.com/announcements/400532
Does it lead to a higher dividend ....or will they be as stingy as ever
Quote from: Shareguy on Oct 14, 2022, 08:35 AMNice upgrade
https://www.nzx.com/announcements/400532
Indeed - the 50% decline in carbon emissions is good news
National party say they don't support Onslow. That it does not stack up.
Guess that's the end of that then.
I wonder what Craigs think of the latest upgrade given they have 2023 forecast at $443m and $3.70 target price with outperform rating.
Good news...but what drives this puppy going forward, increased earnings or higher bond rates ?
Looks like a giant tug of war between these two factors to me. I guess if one plays possum at least they avoid getting whipsawed by this crazy market and paying too much brokerage trying to chase it.
Guru analysts at Craigs say relationship with 10 year govt is broken so lets concentrate on earnings
I have no idea if this ebidaf thing and subsequent multiples mean anything but heck plenty of upside if you look at how it trends v share price
GNE profits flat for years but taking off this and next year
0000gne.JPG
Quote from: Shareguy on Oct 14, 2022, 09:02 AMNational party say they don't support Onslow. That it does not stack up.
Guess that's the end of that then.
It's easy to oppose something when not in power. But with no other viable decarbonisation options at lower price points, there isn't much choice.
Quote from: winner (n) on Oct 14, 2022, 10:36 AMGuru analysts at Craigs say relationship with 10 year govt is broken so lets concentrate on earnings
I have no idea if this ebidaf thing and subsequent multiples mean anything but heck plenty of upside if you look at how it trends v share price
GNE profits flat for years but taking off this and next year
0000gne.JPG
Nice chart mate thanks for posting. If we get down to $2.40 again I won't make the same mistake twice, (looking a gift horse in the mouth).
Well, clearly GNE didn't think 900 kilotons of coal was enough. They now have 975 kilotons.
The upgrade was nice, I don't have a full understanding of how Ebitda translates to FCF but I imagine that unexpected ~50 million from the upgrade will translate mostly into FCF. Will really help GNE to pivot away from Huntley (assuming they don't continue the coal buying spree), they need every dollar they can get to fund this solar development.
In other news, remember a while ago I was wondering how long it takes the big guns at Huntley to starting firing? Well I found all that info and more.
https://www.genesisenergy.co.nz/about/generation/huntly-power-station
Craig's have upped the dividend forecast accordingly. Still number one power pick.
Previously we have assumed dividend distributions increase at c.1.5% pa, maintaining a payout at the bottom end of GNE's 70-90% of free cash flow range. Provided GNE can deliver on FY23 expectations we lift our FY23 dividend from 17.9cps to 18.1cps (a 3% lift on FY22). Headline Net debt/EBITDA also benefits from the lift in FY23 earnings with GNE's forecast gearing metric fitting comfortably within its 2.4-3.0x target range through to FY25.
FY23 guidance update
FY23 EBITDA updated to c.$500m, +10% on prev. c.$455m, due to favourable market conditions
GNE has released its 1Q23 Performance Report accompanied by an upgrade to its FY23 EBITDA guidance to c.$500m, from the c.$455m set at its full year result in August.
The primary driver of the upgrade has been much higher inflows into hydro catchments, resulting in renewable generation up 37% to 1,063GWh and enabling GNE to dial back its flexible yet high-cost thermal plant. Lower levels of thermal generation and carbon emissions (emissions down 51% on the pcp) have reduced GNE's portfolio generation costs to $34/MWh, down 47% or $29/MWh, providing a $60m positive impact to gross margin.
In addition to backing away its high-cost thermal plant, GNE has been able to purchase what electricity it needs for resale at a much lower wholesale price, $75/MWh vs $157/MWh in the pcp, with its total retail electricity sales pricing also increasing $10/MWh (most of this increase coming from SME and C&I), notwithstanding slightly lower residential and C&I
Quote from: Shareguy on Oct 19, 2022, 03:37 PMCraig's have upped the dividend forecast accordingly. Still number one power pick.
Previously we have assumed dividend distributions increase at c.1.5% pa, maintaining a payout at the bottom end of GNE's 70-90% of free cash flow range. Provided GNE can deliver on FY23 expectations we lift our FY23 dividend from 17.9cps to 18.1cps (a 3% lift on FY22). Headline Net debt/EBITDA also benefits from the lift in FY23 earnings with GNE's forecast gearing metric fitting comfortably within its 2.4-3.0x target range through to FY25.
FY23 guidance update
FY23 EBITDA updated to c.$500m, +10% on prev. c.$455m, due to favourable market conditions
GNE has released its 1Q23 Performance Report accompanied by an upgrade to its FY23 EBITDA guidance to c.$500m, from the c.$455m set at its full year result in August.
The primary driver of the upgrade has been much higher inflows into hydro catchments, resulting in renewable generation up 37% to 1,063GWh and enabling GNE to dial back its flexible yet high-cost thermal plant. Lower levels of thermal generation and carbon emissions (emissions down 51% on the pcp) have reduced GNE's portfolio generation costs to $34/MWh, down 47% or $29/MWh, providing a $60m positive impact to gross margin.
In addition to backing away its high-cost thermal plant, GNE has been able to purchase what electricity it needs for resale at a much lower wholesale price, $75/MWh vs $157/MWh in the pcp, with its total retail electricity sales pricing also increasing $10/MWh (most of this increase coming from SME and C&I), notwithstanding slightly lower residential and C&I
Thanks. What is Craigs latest SP guidance? I realise they are very bullish on GNE. Looking at recent gentailers SP movements, MEL is looking very attractive
Our current sector preferences in order are:
GNE – [Overweight, TP $3.44]. Offers an attractive cash dividend yield and will play an important role in New Zealand's electrification and decarbonisation. Expected to be the markets dry-year reserve through to the late 2020's or an alternative solution is developed. Its 46% ownership in the Kupe gas field asset has been retained, following a strategic review in FY21, helping to underpin dividends at current levels through to the late-2020's. Carbon exposure remains a headwind for GNE however the cost of carbon is hedged below market (at c.$25-35/NZU) through to FY29 and its PPA strategy (Future-gen) is aimed at displacing baseload thermal.
CEN – [Overweight, TP $8.30]. Expected to benefit from the execution of its 168MW Tauhara geothermal generation development (plus recently added 51MW Te Huka project) and displacement of its high-cost thermal plant which is currently under strategic review. Its balance sheet is strong and distribution policy flexible enough to maintain sustained dividend distribution growth. Some earnings constraint is associated with the 100MW support contract to keep Tiwai in market until Dec-24.
MEL – [Overweight, TP $5.25]. Has demonstrated an ability to capture near-term earnings growth despite value transfer to prevent a Tiwai exit. Balance Sheet in good shape to support future generation projects whilst future earnings are likely to support dividend distributions returning to historic levels - at this stage we hold MEL's dividend at c.80-90% of FCF. MEL has been working towards deleveraging Tiwai's negotiating power in 2024 through execution of demand side replacement initiatives. Post-2024 Tiwai operation negotiations
Forbar say today that Genesis is on a forward 2023 PE of 10.6
Must be a mistake
2022 actual EPS 21.24 divi 17.6 PE 12.4
2023 fcast EPS 25.5 divi 17.9 PE 10.6
Quote from: Shareguy on Oct 20, 2022, 03:38 PMForbar say today that Genesis is on a forward 2023 PE of 10.6
Must be a mistake
2022 actual EPS 21.24 divi 17.6 PE 12.4
2023 fcast EPS 25.5 divi 17.9 PE 10.6
Do you mean forbar made a fubar......
Huntley is almost completely offline, only outputting 3 MW as of 11:30 am. If this continues I think there could be opportunity for a further upgrade, or at least a result at the top of the guidance range.
https://www.1news.co.nz/2022/11/06/wind-farm-powering-half-million-homes-to-be-built-off-taranaki-coast/
For reference, there is currently ~1040 MW of wind capacity connected to the grid. It is hard to see how all of these renewables projects being proposed/constructed at the moment make sense without quite strong power demand growth. Power demand has been pretty flat over the last few years, are they expecting an EV boom?
Quote from: Plata on Nov 07, 2022, 12:19 PMhttps://www.1news.co.nz/2022/11/06/wind-farm-powering-half-million-homes-to-be-built-off-taranaki-coast/
For reference, there is currently ~1040 MW of wind capacity connected to the grid. It is hard to see how all of these renewables projects being proposed/constructed at the moment make sense without quite strong power demand growth. Power demand has been pretty flat over the last few years, are they expecting an EV boom?
Would make sense, wouldn't it?
Add to that Tiwai point likely will stay and that the business case for this green hydro project gets better by the day.
Never good to assess investments just with a firm view into the rear mirror.
Quote from: BlackPeter on Nov 07, 2022, 12:22 PMWould make sense, wouldn't it?
Add to that Tiwai point likely will stay and that the business case for this green hydro project gets better by the day.
Never good to assess investments just with a firm view into the rear mirror.
For sure, I just wonder if there is a risk of overbuild if Onslow does not go ahead (my expectation) and EV demand growth is weaker than expected. Worth remembering that contact has ~200 MW of geothermal baseload coming online in the next few years as well, which will more than offset the loss of their co-gen plant at Fonterra. It will certainly be interesting to see if GNE green lights the solar and on what basis (hopefully they share that).
Feeling guilty are we?
They overlook GNE shareholders haven't had a decent payrise for many years
https://www.rnz.co.nz/news/business/478672/household-power-bills-driven-up-by-retailers-paying-excessive-dividends-union
just a bunch of socialists looking around for the next "excessive" profit easy target since Cindy deflected personal criticism with that perennial story
Quote from: winner (n) on Nov 14, 2022, 09:09 AMFeeling guilty are we?
They overlook GNE shareholders haven't had a decent payrise for many years
https://www.rnz.co.nz/news/business/478672/household-power-bills-driven-up-by-retailers-paying-excessive-dividends-union
I am sure I recall when they listed, they stated their dividend policy was to increase it each year "in line with inflation" or words very similar to that effect. In a recent governance presentation, they made quite a meal of the fact that dividends have gone up every year but very "conveniently" overlooked the fact that they have fallen well below the rate of inflation especially in recent times.
Quote from: Basil on Nov 14, 2022, 10:50 AMI am sure I recall when they listed, they stated their dividend policy was to increase it each year "in line with inflation" or words very similar to that effect. In a recent governance presentation, they made quite a meal of the fact that dividends have gone up every year but very "conveniently" overlooked the fact that they have fallen well below the rate of inflation especially in recent times.
Yep basil - dividend has increased at 1.2% pa since 2016 .....maybe better check the trusty inflation calculator to see how much they haven't kept that promise.
But then 2023 is going to be our year eh.
Looked at Mornngstars TSR data just now - since late 2019 Total Shareholder Return (inc reinvested divies) has been -11% - pathetic investement last 3 years
Quote from: winner (n) on Nov 14, 2022, 11:32 AMYep basil - dividend has increased at 1.2% pa since 2016 .....maybe better check the trusty inflation calculator to see how much they haven't kept that promise.
But then 2023 is going to be our year eh.
Looked at Mornngstars TSR data just now - since late 2019 Total Shareholder Return (inc reinvested divies) has been -11% - pathetic investement last 3 years
Grinds my gears a bit when Julie Anne Genter and her "rocket scientist" "all things ESG is all that matters", colleagues say we're making excess profits.
Things are definitely looking up for FY23 mate, ~ $500m EBITDA for one thing and then there's the new Beagle advertisement. It's a sign eh....This must be the "purrfect" dividend hounds' stock ;) https://www.youtube.com/watch?v=GxJfh9Y8PIU
How to wake up beagles
https://twitter.com/_B___S/status/1591294471895126017?s=20&t=Wr6eBx4ODqZCMgbPFnxTqA
Quote from: winner (n) on Nov 14, 2022, 12:25 PMHow to wake up beagles
https://twitter.com/_B___S/status/1591294471895126017?s=20&t=Wr6eBx4ODqZCMgbPFnxTqA
LOL that really made my day mate...too funny...I almost split my sides laughing ;D ;D ;D .
Look at the speed of him when there's a feed involved ROFL
Quote from: Basil on Nov 14, 2022, 01:18 PMLOL that really made my day mate...too funny...I almost split my sides laughing ;D ;D ;D .
Look at the speed of him when there's a feed involved ROFL
Wouldn't want to miss out on those dividend feeds eh
That target price in the high 300's that Craigs had seems like it really was just wishful thinking
Can't see the share price getting anywhere near 370/380 or whatever it was ....looks like I've been sucked in again
Shouldn't get carried away with excitment with things I don't really understand
Maybe that's Winner code speak for you've sold out ?
https://www.marketscreener.com/quote/stock/GENESIS-ENERGY-LIMITED-17595957/consensus/
Interestingly of the 5 analysts with compiled data on Market screener the highest recorded target is $3.20 so I guess go figure on Craigs target eh ?
Average is $2.86. For what it's worth it seems there's not much dividend growth forecast for the next 3 years...18 cents for FY23, FY24 and FY25. If they maintain 80% imputation that's 8.5% gross yield but on their history to date, you'd have to concede the chances of future dividends growing at the same rate as inflation is very slim. Best bet here is this is a bond proxy and if we can get on top of inflation and interest rates start to come down in 2024 we could potentially see this just north of $3 again. In the meantime, 8.5% gross yield is not too shabby for a utility company. Just remember to wake me up at dividend feed time 😉
Jeez ...what Craigs up to - early October they were saying GNE 370 and now you suggesting they say 320
Must have realised that the correltion with govt stock isn't broken after all.
Probably print a 288 target next
Latest note I can see is October. Target $3.44
FY23 EBITDA guidance raised to c.$500m, +10% (prev. c.$455m)
GNE has released its 1Q23 Performance Report accompanied by an upgrade to its FY23 EBITDA guidance to c.$500m, from the c.$455m set at its full year result in August. The primary driver of the upgrade has been much higher inflows into hydro catchments, resulting in renewable generation up 37% to 1,063GWh and enabling GNE to dial back its flexible thermal plant. Lower levels of thermal generation and carbon emissions (emissions down 51% on the pcp) have reduced GNE's portfolio generation costs to $34/MWh, down 47% or $29/MWh, providing a $60m positive impact to gross margin. In addition, GNE has been able to purchase what electricity it needs for resale at a much lower wholesale price, $75/MWh vs $157/MWh in the pcp, with its total retail electricity sales pricing also increasing $10/MWh (most of this increase coming from SME/C&I). We update our forecasts, with the key changes being the increased hydro generation in FY23, refresh of our market pricing, along with an uplift in realised oil price, with our earnings uplift more than offset by the shift in RFR (4.7% vs 4.2% prev.) to determine a revised Target Price of $3.44 (prev. $3.70). GNE remains our preferred gentailer, Overweight retained.
Forecast updates include increased hydro, small uplift in dividends
Our revised forecasts include a lift in FY23 hydro generation by 450GWh to c.3,150GWh (prev. 2,700GWh), with our FY23 EBITDAe +$61m to $504m. Updated market pricing that include elevated winter ASX futures and a lift in the near-term oil curve increases our FY24/25 EBITDAe by $21m/$16m. We continue to assume no swaption/MSO premium renewal for GNE post CY22. Provided GNE can deliver on FY23 expectations we lift our FY23 dividend from 17.9cps to 18.1cps (a 3% lift on FY22). Headline Net debt/EBITDA also benefits from the lift in FY23 earnings with GNE's forecast gearing metric fitting comfortably within its 2.4-3.0x target range through to FY25.
Target Price $3.44 (prev. $3.70), O/W retained
Our Target Price is based on our forward DCF valuation (WACC 8.4% (prev. 8.0%), Tg 3.0%, average RFR 4.7% (prev. 4.2%) resulting in $3.44 (prev. $3.70). We retain an Overweight recommendation. Key risks include regulatory change, wholesale and retail competition, and project development risk. Our sector preferences are unchanged, and in order of GNE, CEN, MEL (Overweight), whilst MCY (Neutral) and MNW (Underweight) are under review, given recent share price depreciation.
Key Changes
TP
3.70 to 3.44
-7.0%
Source: Craigs Investment Partners
Forecasts And Ratios
Source: Craigs Investment Partners
355 440 504 451 438 11.6 9.5 8.0 8.9 9.3 17.4 17.6 18.1 18.4 18.7 6.5 6.6 6.8 6.9 7.0
Year End
2021A
2022A
2023F
2024F
2025F
Fbar $2.85. Still a great divi stock. I have noticed with analysts, they generally follow the price up or down. More and more often they seem very similar to each other. One broker I spoke to said that there is great rivalry between the analysts at different firms. They put out these research notes so there's a lot of pressure to be right. The broker said that he has noticed that few stick their necks out these days.
Craig's analyst was ex GNE so you would think he would have a good handle on this.
Quote from: Plata on Nov 07, 2022, 12:19 PMhttps://www.1news.co.nz/2022/11/06/wind-farm-powering-half-million-homes-to-be-built-off-taranaki-coast/
For reference, there is currently ~1040 MW of wind capacity connected to the grid. It is hard to see how all of these renewables projects being proposed/constructed at the moment make sense without quite strong power demand growth. Power demand has been pretty flat over the last few years, are they expecting an EV boom?
1040MW of wind capacity does not equal 1040MW of generation. Actual wind generation ranges from <100MW to approx 650MW. Wind has the most uncertainty of generation output of all the renewables. Hydro water can be held in storage, the sun always rises and sets at known times (clouds add some uncertainty), but the wind only blows over turbines at somewhat random times, maximised around the equinoxes
Bottom line. To cover this uncertainty of especially wind generation, significant overcapacity must be built with geographic separation. OR, storage is added (in which case Lake Onslow is a no-brainer)
Quote from: Shareguy on Nov 15, 2022, 05:49 PMFbar $2.85. Still a great divi stock. I have noticed with analysts, they generally follow the price up or down. More and more often they seem very similar to each other. One broker I spoke to said that there is great rivalry between the analysts at different firms. They put out these research notes so there's a lot of pressure to be right. The broker said that he has noticed that few stick their necks out these days.
Craig's analyst was ex GNE so you would think he would have a good handle on this.
Thanks for sharing the analysts views.
Maybe with Craigs analyst its a case of familiarity bias...which I guess is a form of confirmation bias ?
https://www.valuewalk.com/familiarity-bias-investing#:~:text=Familiarity%20bias%20is%20the%20preference%20of%20the%20individuals,not%20want%20to%20take%20the%20path%20never%20taken.
I agree it's a great yield for a utility company but we need to keep in mind the run down in the Kupe reserves over time and the lifespan of Huntly.
Quote from: xafalcon on Nov 15, 2022, 05:53 PM1040MW of wind capacity does not equal 1040MW of generation. Actual wind generation ranges from <100MW to approx 650MW. Wind has the most uncertainty of generation output of all the renewables. Hydro water can be held in storage, the sun always rises and sets at known times (clouds add some uncertainty), but the wind only blows over turbines at somewhat random times, maximised around the equinoxes
Bottom line. To cover this uncertainty of especially wind generation, significant overcapacity must be built with geographic separation. OR, storage is added (in which case Lake Onslow is a no-brainer)
From memory wind energy tends to have a capacity factor of 40-50%, so while output may range from 0 to 1040 MW the average generation output will end up closer to 500 MW at best. That is equivalent to 2 Huntley Rankine units running 24/7 in energy production terms, or equivalent to the capacity of all large scale wind farms currently in operation (https://www.transpower.co.nz/system-operator/live-system-and-market-data/consolidated-live-data). I think that makes it a pretty significant development if they actually build it. Throw in 200 MW of geothermal under construction from CEN and something like another GW of solar/wind projects underway as well, I still reckon there could be an oversupply situation in the near future if electricity demand does not grow much.
Your right that Onslow would be a good solution in terms of firming/backing up this form of generation, but I am not convinced that it makes financial sense to spend 4 billion+ on such a large battery. A cheaper, smaller Onslow that can be upgraded overtime as needed would be more ideal. Would you still support Onslow if the cost was 10 billion? Megaproject cost overruns can get pretty bad...
I think that smaller storage projects make more sense, in combination with distributed storage and managed demand using peoples electric vehicles to manipulate demand and supply. This method will also mitigate the need for the massive transmission line upgrades that the media has been yapping about of late.
In terms of where GNE fits into all of this, I have been considering whether or not they have spare capacity on their balance sheet to do a project on top of the 500 MW solar JV. Debt went up in the last report, but to my understanding the majority of that was due to a one off and the coal buying spree they went on. Payout ratio last year was ~75% and guidance for this year is higher, if we assume the incremental dividend increases continue this year payout ratio could fall under 70%. It won't take long at this level of retention to save up enough for a small project or larger JV. Assuming Onslow gets rejected, I would not be surprised if GNE adds mention of a battery storage project in their next report. There is also the castle hill windfarm consent (expires 2023), it is for ~1000 MW of capacity so a bit too big to do alone. Maybe a JV?
Quote from: Plata on Nov 15, 2022, 07:44 PMFrom memory wind energy tends to have a capacity factor of 40-50%, so while output may range from 0 to 1040 MW the average generation output will end up closer to 500 MW at best. That is equivalent to 2 Huntley Rankine units running 24/7 in energy production terms, or equivalent to the capacity of all large scale wind farms currently in operation (https://www.transpower.co.nz/system-operator/live-system-and-market-data/consolidated-live-data). I think that makes it a pretty significant development if they actually build it. Throw in 200 MW of geothermal under construction from CEN and something like another GW of solar/wind projects underway as well, I still reckon there could be an oversupply situation in the near future if electricity demand does not grow much.
Your right that Onslow would be a good solution in terms of firming/backing up this form of generation, but I am not convinced that it makes financial sense to spend 4 billion+ on such a large battery. A cheaper, smaller Onslow that can be upgraded overtime as needed would be more ideal. Would you still support Onslow if the cost was 10 billion? Megaproject cost overruns can get pretty bad...
I think that smaller storage projects make more sense, in combination with distributed storage and managed demand using peoples electric vehicles to manipulate demand and supply. This method will also mitigate the need for the massive transmission line upgrades that the media has been yapping about of late.
In terms of where GNE fits into all of this, I have been considering whether or not they have spare capacity on their balance sheet to do a project on top of the 500 MW solar JV. Debt went up in the last report, but to my understanding the majority of that was due to a one off and the coal buying spree they went on. Payout ratio last year was ~75% and guidance for this year is higher, if we assume the incremental dividend increases continue this year payout ratio could fall under 70%. It won't take long at this level of retention to save up enough for a small project or larger JV. Assuming Onslow gets rejected, I would not be surprised if GNE adds mention of a battery storage project in their next report. There is also the castle hill windfarm consent (expires 2023), it is for ~1000 MW of capacity so a bit too big to do alone. Maybe a JV?
You are missing the point. Wind generation is intermittent and uncontrollable. Wind generation peaks in spring and autumn vs the winter demand peak. Of all the renewables, wind is the most reliant on other generation sources to "fill in the generation gaps"
I have never seen more than 700MW of wind generation reported on WITS. Eye balling 12 months of data, indicates about 400MW average = 30%
Green electricity is quickly becoming the new black gold, compounded by the Ukrainian war and Russian trade sanctions. NZ is perfectly located to leverage this by becoming a massive green energy source. Our economy will boom if we as a nation embrace this golden opportunity.
The size of Lake Onslow is the key to this. Lake Onslow is the absolute cheapest storage option (1000 times cheaper than battery storage), and suitable for longer term storage (batteries = days, pumped hydro = months-years)
Quote from: xafalcon on Nov 16, 2022, 12:41 PMI have never seen more than 700MW of wind generation reported on WITS. Eye balling 12 months of data, indicates about 400MW average = 30%
Green electricity is quickly becoming the new black gold, compounded by the Ukrainian war and Russian trade sanctions. NZ is perfectly located to leverage this by becoming a massive green energy source. Our economy will boom if we as a nation embrace this golden opportunity.
The size of Lake Onslow is the key to this. Lake Onslow is the absolute cheapest storage option (1000 times cheaper than battery storage), and suitable for longer term storage (batteries = days, pumped hydro = months-years)
It makes sense that the live viewer never shows wind at max output since these farms are all over the country, pretty unlikely they would all get perfect conditions simultaneously. Individual windfarms can and do get quite close to max output every now and again depending on how spread out they are.
The great thing about Onslow is its low price per unit of storage, I'm just concerned about the expense. The interest payments alone on the debt required to finance the project would be hundreds of millions annually.
It would be a great solution to the intermittency of wind and solar. I'm not convinced it is the best solution, or the most deserving of the money out of all the places the government could spend it. Getting maximum value from Onslow is reliant on the interisland cable and transmission grid throughout the country, both of which are expected to need billions of dollars of upgrades if power consumption grows as forecast. I think a smaller, cheaper, ideally expandable Onslow combined with a scaled down Huntley and use of vehicle-to-grid (EV charges when excess power, EV sells back to grid when insufficient power) could have a better cost benefit ratio and make progress on solving more aspects of the energy problem we face.
A lot of this stuff should be evaluated in the upcoming Onslow study and might indicate that it is a great idea, but based on the details I have read so far I am not convinced that building it is a "no-brainer".
Has GNE worked its way back, (with recent share price declines), into contention as a safe defensive BUY ?
Craigs reckon 18.1 cps in dividends and if they maintain their long term track record of 80% imputation that works out to 18.1 / 0.776 = 23.32 cps gross / $2.61 = 8.94% gross yield. Almost 9% for a safe utility company that's recession proof. Pretty attractive yield. Safe harbour for a modest portion of one's funds in a choppy market ?
Jantar understands the market best but he is not on this site as far as I know.
The spot electricity market is not a real market - it's a cartel - wind is often priced at 0.01 - WITS trading website has live data 8)
Quote from: Crackity on Nov 22, 2022, 10:27 PMJantar understands the market best but he is not on this site as far as I know.
The spot electricity market is not a real market - it's a cartel - wind is often priced at 0.01 - WITS trading website has live data 8)
Yes, Jantar would be an extremely valuable addition to this forum.
Quote from: Crackity on Nov 22, 2022, 10:27 PMJantar understands the market best but he is not on this site as far as I know.
The spot electricity market is not a real market - it's a cartel - wind is often priced at 0.01 - WITS trading website has live data 8)
Your information re wind pricing is correct, but (without context) misleading and spot electricity market is not a cartel (unless you say they have secret price agreements, which would be possible but illegal), but an auction comparable to the auctions we have every day at start and end of stock exchange hours.
Every generator offers their capacity for the coming 30 min timeslot and consumers defining the demand. Highest price within the group of cheapest offers determines the market price which everyone pays (and gets).
Wind always goes with 0.01 into the auction (given that the generators can't guarantee it for the next 30 minutes), however it is paid the market rate which is determined by the highest offer still accepted to fill the required demand.
Quote from: Basil on Nov 22, 2022, 07:16 PMHas GNE worked its way back, (with recent share price declines), into contention as a safe defensive BUY ?
Craigs reckon 18.1 cps in dividends and if they maintain their long term track record of 80% imputation that works out to 18.1 / 0.776 = 23.32 cps gross / $2.61 = 8.94% gross yield. Almost 9% for a safe utility company that's recession proof. Pretty attractive yield. Safe harbour for a modest portion of one's funds in a choppy market ?
There have been a number of high volume trades over the past few days. I believe the current SP is triggering these. GNE recently upgraded their guidance, and all this rain will reduce the need to run Huntly, maximising GNE returns on hydro and possibly another upgrade. The dividend yield is already impressive and I understand GNE are still increasing their connections and unit pricing. Add in their EV partnership with ChargeNet, and it does look good
Only fly is Lake Onslow. An update is due on this next month
Thanks. New Genesis add about their partnership with Chargenet is pretty cool although I could be biased due to the breed of dog involved :D
https://www.youtube.com/watch?v=GxJfh9Y8PIU 5 unlucky possums lol...she's pretty cute too.
Jeez, GNE share price could head into the 240s tomorrow ..or next week
Getting closer to the long term reasonable 'risk adjusted yield' and subsequent share price.
Hope so Winner.
I've been watching this with both slight concern and temptation. Somewhat underwater on my latest foray into this one but c'est la vie. Could the relative underperformance of GNE over the last month be explained by an Onslow go ahead verdict being known by the select few? If that was the case you would expect a pure wind play like NWF to be much better off right, yet share price pretty muted... puts a hole in that theory. Is GNE just seen as the dog of the gentailers and so gets punished the most? Or maybe it is because of coal prices rising ~20% in last week or so?
isNoCoalTheGoal..PNG
From what I observed today all the movement was right at the close for reasons unknown..
A lot of so called ethical or ESG funds can't invest into GNE despite the obvious irony that in many dry years sanctimonious electric car users are relying on coal fired generation to charge their cars up.
Yes end of month rebalancing.
Interesting article. https://www.goodreturns.co.nz/article/976521083/excess-dividends-in-the-electricity-sector-the-other-side-of-the-argument.html?utm_source=GR&utm_medium=email&utm_campaign=GoodReturns+Market+Report+for+30+Nov+2022
Normal service has resumed this morning. Gross yield 8.85% @ $2.60.
Quote from: Basil on Nov 30, 2022, 09:15 PMInteresting article. https://www.goodreturns.co.nz/article/976521083/excess-dividends-in-the-electricity-sector-the-other-side-of-the-argument.html?utm_source=GR&utm_medium=email&utm_campaign=GoodReturns+Market+Report+for+30+Nov+2022
so...do they mean that the "problems" are all the actual
features of our electricity generation set up?
QuoteOf note, we have the fourth-highest renewable electricity percentage in the OECD. While we could improve further, this is still something to be proud of, particularly as the world grapples with the huge challenges of hitting Net Zero by 2050.
New Zealand is aiming to achieve 100 per cent renewable electricity by 2035,
As I understand it the last few percent are going to be extremely expensive to achieve. The root issue as I see it is you have a bunch of ideologists in power at present who seem incapable of taking a pragmatic approach. The issue with wind and solar as I see it is if the wind isn't blowing and / or the sun isn't shining who provides backup base load generation and at what cost ?
Quote from: Basil on Dec 01, 2022, 12:19 PMAs I understand it the last few percent are going to be extremely expensive to achieve. The root issue as I see it is you have a bunch of ideologists in power at present who seem incapable of taking a pragmatic approach. The issue with wind and solar as I see it is if the wind isn't blowing and / or the sun isn't shining who provides backup base load generation and at what cost ?
YES. Plus Huntly located close to NZ largest consumers. National say they cant see project stacking up. Onslow a huge expense to achieve what, being able to say fully renewable. Good to see National coming out confirming oil and gas exploration ban will also be gone.
https://www.stuff.co.nz/national/politics/130434710/national-confirms-end-to-offshore-oil-and-gas-ban-if-elected-in-2023
https://businessdesk.co.nz/article/opinion/10-reasons-why-project-onslow-is-a-bad-idea
Just completed another buy. Now one of my largest holdings on the NZX.
Merry Xmas
To all
Craig's latest
Still number one pick. Outperform $3.38
In this report we explore the additive value of each gentailer's development pipeline through to 2050. We find the valuation exposure to demand growth averages c.22% across the sector (MCY 23%, MEL 15%, GNE 12%, CEN 10%, and MNW 47%), with key drivers being 1) the current state of each portfolio, or whereabouts in their respective investment cycle each participant is, and 2) their respective exposure to wind development, which in our view is the technology of choice for new grid-scale generation. We reiterate our view on long-term wholesale prices, detailing our preference for c.$80/MWh (real), as included in our valuations, versus some commentary calling for +$100/MWh. GNE and MCY, in our view, are both currently undervalued by the market, and our top picks. We think the phase out of GNE's thermal plant and covered fuel/carbon position is not fully recognised, particularly as it will be replaced with 'green' PPA's. Likewise with MCY, its premium retail position (post-TPW acquisition) backed by a rapidly expanding renewable energy portfolio and consented pipeline is yet to be fully valued.
We update our valuations to include only minor adjustments to underlying operations and re-calibrate our capital expenditure assumptions across the group. GNE remains our top pick, with MCY now placed second (upgraded from Neutral to Overweight, given our TP relative to current share price). We upgrade MEL, due to the room to move on mass market pricing we observe in the portfolio, with CEN now our fourth choice (prev. 2nd). We are Overweight on all of the big four gentailer's and retain a Neutral recommendation on MNW.
Macro headwinds continue to impact share price performance
A significant headwind facing the sector is the reduced attractiveness of the gentailer dividend yields compared to fixed income alternatives. Recent tightening in NZ's monetary cycle has led to spread contraction between gentailer yields and the NZ 10Y government bond yield (c.250 bps below historical levels on average). Term deposit (TD) rates have also soared since the RBNZ started to lift the OCR, with all major banks in NZ now offering a 1Y TD rate above 5% (+300 bps YTD). Although the present headwinds may cause a shift in assets from value stocks to fixed income, we expect the gentailer's will prove more resilient than in previous changes to bond yields (or other fixed income), dependant on your view of the economic cycle, and are likely to benefit from potential growth opportunities from electrification trends over the medium-term, whilst maintaining a defensive quality should a sharp economic decline unfold in CY2023.
Valuation exposure to demand growth averages c.22% for the sector (MCY 23%, MEL 15%, GNE 12%, CEN 10%, and MNW 47%), with a key driver of the level of exposure brought about by the current state of the portfolio, or whereabouts in their respective investment cycle each participant is (we assume post-2025 to allow for completion of assets currently under construction), and their respective exposure to wind development, which in our view will be the technology of choice for long-term grid scale generation.
GNE and MCY, in our view, are both currently undervalued by the market, and our top picks. We think the phase out of GNE's thermal plant and covered fuel/carbon position is not fully recognised, particularly as it will be replaced with 'green' PPA's. Likewise with MCY, its premium retail position (post-TPW acquisition) backed by a rapidly expanding renewable energy portfolio and consented pipeline is yet to be fully valued.
We favour a long-term price path averaging c.$80/MWh (real). We think long-term wholesale prices are more likely than not to reflect the efficiency gains in renewable energy cost curves relating to wind settling out at a Levelised Cost of Energy (LCOE) of c.$50-65/MWh, plus firming of $15-25/MWh. Our long-term price path flowing into valuations arrives at c.$80/MWh versus some commentary calling for $100-110/MWh.
Our updated yield analysis points to headwinds from the reduced attractiveness of the gentailer dividend yields compared to fixed income alternatives. However, we expect that gentailer's will prove more resilient than previous changes in bond yields (or other fixed income), and are likely to benefit from potential growth opportunities due to electrification trends over the medium-term, whilst maintaining a defensive quality should a sharp economic decline unfold in CY2023
At least some guru analyst has come out with something I've been harping on about for a while. This is where the talk of the 220/230 share price comes from
Guru from Craig's says ' A significant headwind facing the sector is the reduced attractiveness of the gentailer dividend yields compared to fixed income alternatives. Recent tightening in NZ's monetary cycle has led to spread contraction between gentailer yields and the NZ 10Y government bond yield (c.250 bps below historical levels on average'
Could say punters seduced by perceived higher yields but taking on increased risk in return
Quote from: winner (n) on Dec 23, 2022, 08:54 AMAt least some guru analyst has come out with something I've been harping on about for a while. This is where the talk of the 220/230 share price comes from
Guru from Craig's says ' A significant headwind facing the sector is the reduced attractiveness of the gentailer dividend yields compared to fixed income alternatives. Recent tightening in NZ's monetary cycle has led to spread contraction between gentailer yields and the NZ 10Y government bond yield (c.250 bps below historical levels on average'
Could say punters seduced by perceived higher yields but taking on increased risk in return
There's also the Onslow decision hanging like the Sword of Damocles...
Quote from: winner (n) on Dec 23, 2022, 08:54 AMAt least some guru analyst has come out with something I've been harping on about for a while. This is where the talk of the 220/230 share price comes from
Guru from Craig's says ' A significant headwind facing the sector is the reduced attractiveness of the gentailer dividend yields compared to fixed income alternatives. Recent tightening in NZ's monetary cycle has led to spread contraction between gentailer yields and the NZ 10Y government bond yield (c.250 bps below historical levels on average'
Could say punters seduced by perceived higher yields but taking on increased risk in return
Brokers picking about 18cps in dividends and if they're imputed at 80% like they always have been that's ~ 23 cps gross and on a closing price of $2.58 that's 8.9% gross on a quasi "
perpetual" bond.
10 year Govt stock at about 4.3% last time I looked so a 460 basis points premium.
Maybe investors are not silly and realise you'll get a lot more bang for your buck, (capital gain), on a perpetual quasi bond when interest rates come down in a recession than you will on 10 year Govt stock. Markets are always forward looking and are anticipating the reduction in interest rates with the pending recession.
I see one of the brokers has chosen Genesis in their share pics for 2023. However the brokers did not do that well in 2022 with their pics. Hopefully this year will be better.
Thought this was interesting
https://www.stuff.co.nz/timaru-herald/news/130826835/tekapo-power-schemes-improvements-push-past-40m-mark
Interesting article for sure. Pretty cool that whole Tekapo power system.
Tekapo open day sounds interesting for people into that sort of thing.
In the good old days before OSH got involved with the risks of rock falls we did the Doubtful sound cruise that included a bus trip down into the underground depth's of the Manopouri power station...that was pretty cool. Now the numb-nuts at OSH say it's too risky and you might get squashed by a rock. ::) so they exclude the power station visit from that trip. Trip is so cool though even without the Manopouri power station visit https://www.viator.com/tours/Te-Anau/Doubtful-Sound-Wilderness-Day-Cruise-from-Manapouri/d22016-2264P28?tsem=true&mcid=42482&supci=708981324&supag=35857402966&supsc=aud-537214857358&supai=294113995139&supap=&supdv=c&supnt=d&suppm=www.learnitwise.com&pref=02&gclid=EAIaIQobChMItN3u8reb_AIVB4VmAh2oLwPxEAEYASABEgL9QPD_BwE
Thought this was interesting from a recent newsroom article.
Rio Tinto had belatedly realised in a world of rising carbon prices, where smelters around the world averaged 12-13 tonnes of CO2 for every tonne of aluminium produced, that renewably powered Tiwai's relatively-small two tonnes of CO2 was quite a selling point.
And meanwhile, aluminium prices have risen from a March 2020 low of US$1,480/tonne up to a peak of nearly $3,500/tonne earlier this year, before settling around $2,400 – providing more healthy returns on the company's Tiwai investment.
"Historically, US$2,400 might seem a bit elevated, but right now around 50 percent of smelters around the world are underwater, losing money, just with the cost pressures," Blenkiron says.
https://www.newsroom.co.nz/tiwai-pt-smelter-owner-looks-to-build-its-own-renewable-power-generation
Quote from: Shareguy on Jan 03, 2023, 10:24 AMThought this was interesting from a recent newsroom article.
Rio Tinto had belatedly realised in a world of rising carbon prices, where smelters around the world averaged 12-13 tonnes of CO2 for every tonne of aluminium produced, that renewably powered Tiwai's relatively-small two tonnes of CO2 was quite a selling point.
And meanwhile, aluminium prices have risen from a March 2020 low of US$1,480/tonne up to a peak of nearly $3,500/tonne earlier this year, before settling around $2,400 – providing more healthy returns on the company's Tiwai investment.
"Historically, US$2,400 might seem a bit elevated, but right now around 50 percent of smelters around the world are underwater, losing money, just with the cost pressures," Blenkiron says.
https://www.newsroom.co.nz/tiwai-pt-smelter-owner-looks-to-build-its-own-renewable-power-generation
Aluminum's all-time high was actually around $4,100/tonne in March in the aftermath of Russia's invasion of Ukraine. It has been unnaturally volatile this year. Most predictions seem to be that it has further to fall before it settles at around 2000/t. which is more inline with it's five year norm. If that comes to pass and how that sits with Tiwai and Rio, who knows? Will Rio be back with its corporate hand out... now that's a safer bet. ;)
Quote from: Hectorplains on Jan 03, 2023, 12:16 PMAluminum's all-time high was actually around $4,100/tonne in March in the aftermath of Russia's invasion of Ukraine. It has been unnaturally volatile this year. Most predictions seem to be that it has further to fall before it settles at around 2000/t. which is more inline with it's five year norm. If that comes to pass and how that sits with Tiwai and Rio, who knows? Will Rio be back with it's corporate hand out... now that's a safer bet. ;)
I got to thinking this morning that all this smooth talking by the new CEO of Tiwai point smells a lot like cheap talking public relations B.S. to this old hound's nose. Does a leopard change its spots ? At the end of the day I think we all know that if the price of Aluminum falls back below about $U.S.2,000 Rio Tinto will be back to its old tricks. I'm happy to have quite a few in my portfolio but I'm disinclined to get too big in GNE.
Coming into an interesting zone
(https://s3.tradingview.com/snapshots/b/b2I7mbro.png)
Quote from: Hectorplains on Dec 23, 2022, 11:17 AMThere's also the Onslow decision hanging like the Sword of Damocles...
I see Lake Onslow differently. I would expect the government will buy out the Huntly power station when Lake Onslow is running, in exchange for GNE keeping it available right through to the bitter end. And the purchase of Huntly will probably include an option to buy into the Lake Onslow project in some form
But with Labour now "trimming" their policies to avoid annoying voters before the election, the whole Lake Onslow project may get put on the backburner
From vague recollection the Lake Onslow project even if approved is about a 15 year timeframe away from completion which isn't all that much different from what Genesis are talking about with Huntly possibly running until about 2040, running another ~ 17 years.
I think the real concern with GNE at this point is what next after Kupe? O&G provides a fair bit of cash to support the dividend, they don't have too many years left to boost other income sources to supplement this shortfall. Adding more compression wells can help to an extent but ultimately that just depletes it faster.
Quote from: xafalcon on Jan 11, 2023, 04:08 PMI see Lake Onslow differently. I would expect the government will buy out the Huntly power station when Lake Onslow is running, in exchange for GNE keeping it available right through to the bitter end. And the purchase of Huntly will probably include an option to buy into the Lake Onslow project in some form
But with Labour now "trimming" their policies to avoid annoying voters before the election, the whole Lake Onslow project may get put on the backburner
Onslow's purpose is for New Zealand to be on 100 percent renewable energy. I can't see any flavour of Government pouring billions into Onslow AND then buying out Huntly to have as a backstop. Onslow seeks to solve the problem of storage lakes dry years and the irregular supply of renewable energy sources such as wind, and therefore mitigates any need for Huntly. I do agree that this is likely to take a back seat until after the election, and neither National nor Act have shown any enthusiasm for a back to future, modern time 'Think Big' project.
Quote from: Basil on Jan 11, 2023, 04:32 PMFrom vague recollection the Lake Onslow project even if approved is about a 15 year timeframe away from completion which isn't all that much different from what Genesis are talking about with Huntly possibly running until about 2040, running another ~ 17 years.
The estimation is a four to five years build, and then two years to fill the reservoir - so more like 7 years. Yes, it may be wise to double that and add one more, if you look at how so many big projects run wildly overtime, Transmission Gully anyone. However; the intent is for long before 2040.
Carbon emissions aside, you also have to look at the cost of running Huntly. When all four of the Rankine units are running they burn through an impressive 10,000 tonnes of coal a day. While Genesis is fortunate to have a stockpile... replenishing that with foreign coal, at todays prices, would be hugely expensive.
Coal's had a massive year for sure on the back of countries trying to sure-up energy supplies given the obvious issues presenting from the war. With the current climatic conditions I doubt GNE have made any sales under their new (forget the name so just call it energy insurance options) scheme which they're understood to be looking for contracts based on a coal replacement cost basis, (north of $200 mwh).
Its hard to imagine even when the war ends European countries are going to embrace 'mother" Russia's gas supplies very quickly again so I guess we can expect elevated coal prices for quite some time to come.
Just as well Unit 5 and 6 can run on gas.
I believe the Rankine's (despite extreme amounts of rainfall in recent months) provide valuable outage insurance over the medium term.
For what its worth I just have a pretty modest ~ 4% portfolio position for yield. I don't follow it closely and don't worry about the end of Kupe or Huntly sometime around 2040 or hopefully a bit later. If I live long enough to see both those things happen I will have had a fair innings.
Europe wind power generation is building and Industrial gas consumption is down some 28% or something...
Oil price is cap is working apparently with no idea how this complex issue is managed,
Is it time to install new water collection cylinders for pools and drinking water in light of the complete shambles that could be future water management.
And also look to install at somepoint in the next decade some solar power collection technologies even though it is expensive if NZ fails to develop or sustain security of power to the retail and industrial consumers.
Solar is on it's way.
https://www.meridianenergy.co.nz/news-and-events/meridian-to-build-renewable-energy-park-at-marsden-point
"Meridian has purchased 105 hectares of land adjacent to the Marsden Point oil refinery for the Ruakaka Energy Park, which will house a battery energy storage system (BESS) at least 100MW in capacity, as well as a utility-scale solar farm."
I also see the Rankins as a brought and paid for insurance policy. Sure Coal is dirty and expensive but a lot of people don't realise that two of the four turbines run on gas. 3 and 4 are gas and coal combination. A trial was recently done on 4 to run on gas only.
According to the Genesis AGM New Zealand's renewable electricity supply,
already one of the highest in the world with approximately 82% of supply
coming from hydro, wind or geothermal.
As we can all see many countries are re starting coal mines, building new coal fired generation and doing whatever they can to keep their countries in power. Pledges made will not be met.
Their own analysis shows that commitments by those in the sector to build
more renewables will lift the level of renewable electricity generation to 96% -
98% by 2030. But, as we also know, the country's supply is at risk when the
wind doesn't blow, the rain doesn't fall, and the sun doesn't shine.
I just don't see Onslow going ahead, when we have Huntly already and more importantly close to the largest market. Sure this government will probably go ahead with funding the next stage at great cost to save face, but I have no doubt it will be shelved.
Also from the AGM presentation
"The release of the Government's Emissions Reduction Plan set the direction of
climate action for the next 15 years with targets that impact every sector of
the economy. We were pleased to see the ERP reflect the electricity sector's
call to abandon the target of 100% renewable electricity by 2030 and instead
focus on a 50% renewable energy target. A 50% renewable energy system
represents much less carbon than a 100% renewable electricity system on its
own"
The demand for electricity is not going to go away anytime soon, with demand set to grow with the conversion to batteries.
Sure Kupe is a risk, which is providing approx 16 percent of Ebitda (last year) and is forecast to slowly decrease over time.
I predict National overturning the exploration ban and shelving Onslow and accepting that we are already world leading in renewables and accept a lower target. Keeping the Rankins as a back up plan makes total sense.
Im betting on Genesis being around for a long time which is why it's one of my largest holding on the NZX.
So if Huntly 3 and 4 can run on gas, that means out of the total Huntly 1-6 950MW capacity, only about 250 out of the 950 MW is lost if they want avoid using coal
Capacity (MW)
Huntly 1-4 Coal/Gas steam turbine 500
Huntly 5 Gas combined-cycle 400
Huntly 6 Gas/Diesel open-cycle 50
Although I expect the choice of which to run is not simply a one-dimensional decision purely based on avoiding coal - start-up from cold/warm, maintenance, and it sounds like they already have coal paid for (sunk cost).
But it does seem a realistic conclusion that that Huntly may carry on for some time.
The Meridian Battery farm (to be supported by a 130MW solar farm in a few years time) is only 100 MW peak and 200 MWh (2 hours) energy storage according to Meridian website info.
Quote from: Hectorplains on Jan 11, 2023, 08:15 PMOnslow's purpose is for New Zealand to be on 100 percent renewable energy. I can't see any flavour of Government pouring billions into Onslow AND then buying out Huntly to have as a backstop. Onslow seeks to solve the problem of storage lakes dry years and the irregular supply of renewable energy sources such as wind, and therefore mitigates any need for Huntly. I do agree that this is likely to take a back seat until after the election, and neither National nor Act have shown any enthusiasm for a back to future, modern time 'Think Big' project.
I expect the government to purchase Huntly to retire it
Without some certainty of the end of life value of the asset during the Lake Onslow build, there would be massive incentive for GNE to abandon R&M. But with a guaranteed buy out, conditional on keeping it available until the bitter end, there would be a good outcome
To my knowledge Huntley 4 is gone, cannibalized for spare parts or sold. Huntley 3 is brought out when needed but needs a few days warning, only Huntley 1&2 are in regular operation. I really wished they sold some of the coal stockpile when prices were at historical highs (they have fallen more than 50% from peak). I think Huntley has been extremely quiet that last few months, keenly interested to see what cash flow looks like at the next report.
I don't think Onslow will go ahead but it can't be summarily dismissed yet either. Genesis obviously feels the same as they scurry around with exploring difficult alternatives like wood pallets (https://www.newsroom.co.nz/genesis-imports-us-wood-pellets-to-fuel-huntly-renewable-energy-trial) for Huntly. It remains a risk.
There's a lot of noise about dividend yield. Does the current GNE yield of 6.6% stack up for where this is at? Well, it's a helluva lot better than Mel (3.3%) or Cen (4.5%) or MNW (4.6%) but when a 1 year term deposit at a major bank is now at 5.25%...I'm not so sure. I'm not holding GNE.
I mean sure if you think you will be able to get 5%+ in a bank long term then GNE is probably a pretty bad investment on a risk/reward basis. I don't think interest rates will stay high for more than a few years, and if I am right when they begin to fall the valuations of "safe" businesses with good cash generation will increase. One only needs to think back to the GNE of 2020 Christmas time to see what people will pay for yield and safety when TINA comes out to play. If I'm wrong then so be it, at least I will be getting paid.
Quote from: Plata on Jan 14, 2023, 04:45 PMI mean sure if you think you will be able to get 5%+ in a bank long term then GNE is probably a pretty bad investment on a risk/reward basis. I don't think interest rates will stay high for more than a few years, and if I am right when they begin to fall the valuations of "safe" businesses with good cash generation will increase. One only needs to think back to the GNE of 2020 Christmas time to see what people will pay for yield and safety when TINA comes out to play. If I'm wrong then so be it, at least I will be getting paid.
All the big banks (https://www.interest.co.nz/saving/term-deposits-1-to-5-years) are paying 5.20 - 5.30% for 1,2,3,4 and 5 year terms.
GNE dividends are 80% imputed and have been for years. Assuming 18 cps for FY23 yjr forumla for 80% imputation is divide by 0.776. 1 - (0.28 x 80%)
18 / 0.776 = 23.196 cps gross / 265 = 8.75% gross yield. Its also worth noting GNE dividends have grown a little every year since it listed.
At $2.60 its a 8.92% gross yield
Fbar says today
December 2022 was great for GNE and MCY, not so good for CEN
December was the second month renewable generation exceeded 95% due to GNE not running Unit 5 for significant periods. The resulting wholesale electricity prices were the lowest in more than a decade (OTA averaged NZ$19/MWh and Benmore [BEN] NZ$13/MWh). Instead of running Unit 5, GNE sold its Kupe gas in the wholesale gas market and bought electricity cheaply from the market, a decision we estimate boosted its December 2022 EBITDAF ~+NZ$8m. In addition, GNE and MCY benefitted from strong North Island hydro generation being +44% above average
Thanks for sharing. Nice to see them making hay while the sun shines, so to speak, with all the extra rain in recent months. I'm hoping to see some progress on their large scale solar plans this year.
That's a great hustle by Genesis! Very happy holder!!
I take it this is an excellent update from Genesis
And confirms it's OK to be currently priced with more than the historical 'risk' that was built in
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GNE/405633/387332.pdf
Quote from: winner (n) on Jan 23, 2023, 08:37 AMI take it this is an excellent update from Genesis
And confirms it's OK to be currently priced with more than the historical 'risk' that was built in
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GNE/405633/387332.pdf
Kupe gas and LPG sales are well down - on both the previous quarter and for the same time last year. Sounds like it was expected though, dismissed rather glibly in one sentence as, "Kupe production was down, impacted by scheduled maintenance in November and lower production over the Christmas period."
Quote from: Hectorplains on Jan 23, 2023, 09:15 AMKupe gas and LPG sales are well down - on both the previous quarter and for the same time last year. Sounds like it was expected though, dismissed rather glibly in one sentence as, "Kupe production was down, impacted by scheduled maintenance in November and lower production over the Christmas period."
Sales of Kupe products that aren't made now, are still in the ground. It's not like they have evaporated. They will be made and reported in the future. The lions share is natural gas, which isn't directly tied to international prices as it is "stranded" in NZ. So no big losses as a result if not extracting and selling while international NG prices were high. Different story with oil, but we are only talking kT per quarter
The key take-away for me was the huge increase in H1 renewable generation, and the significantly higher than average hydro storage levels (meaning Q3 should also be good)
Overall GNE looking very solid, and the market likes it
Quote from: xafalcon on Jan 23, 2023, 10:12 AMvery solid, and the market likes it
LOL, GNE is up .36% or 1cps... But as you say solid rather than exceptional.
Quote from: Hectorplains on Jan 23, 2023, 11:02 AMLOL, GNE is up .36% or 1cps... But as you say solid rather than exceptional.
Was +3 when written, and currently +2
Anyway, let's see what the price is at market close
Potentially more upside if Lake Onslow gets the chop under the lefts new leader
Quote from: xafalcon on Jan 23, 2023, 11:13 AMWas +3 when written, and currently +2
Anyway, let's see what the price is at market close
Potentially more upside if Lake Onslow gets the chop under the lefts new leader
It's odds on that Onslow is now dead in the water - so to speak.
All fingers on the East Coasts forestry 'slash' issue are pointing to a wood pallet solution. Meanwhile Genesis are experimenting with wood pallets to fuel Huntly. (https://www.newsroom.co.nz/genesis-imports-us-wood-pellets-to-fuel-huntly-renewable-energy-trial)...or maybe I'm joining up too many dots.
Chart starting to look interesting. Breakout above the 100 day MA.
Strong margins and lower costs with significantly higher than average levels of hydro storage.
Pleasing to see further increases in market share in the retail space. SP has been slowly increasing last few weeks. Note bond yields have decreased.
In a article from business desk today
Fbar anticipate Project Onslow will be shelved in favour of smaller, better located and lower cost/lower risk options."
Onslow decision was put on hold last year maybe to give a new leader a graceful exit.
Looks alright but not all roses. The ever diminishing O&G assets have contributed a higher % to revenue this year vs last year, with electricity sales revenue down on last year? Makes me wonder, if cost of generation is around $80 per MWh and they sell it for $280 per MWh to residential customers... the economist in me would ask why they aren't trying to steal some customers by offering some deals? Wouldn't want to start a price war I suppose...
Early talk about Labour shelving non urgent projects suggests lake Onslow is dead in the water.
GNE reacting to that new reality and the much lower 10 year risk free rate, making quasi utility "bonds" more attractive. Clear break up through 100 day MA could see this crack through $3 resistance soon. Happy to take a "dogged" approach to holding this for reliable income long term.
Interesting article I thought
https://www.nzherald.co.nz/business/john-carnegie-the-need-for-energy-diversity/ILRSHJLOPJHS7I7ZPUJ5VWOHCQ/
Quote from: Basil on Jan 23, 2023, 09:13 PMEarly talk about Labour shelving non urgent projects suggests lake Onslow is dead in the water.
GNE reacting to that new reality and the much lower 10 year risk free rate, making quasi utility "bonds" more attractive. Clear break up through 100 day MA could see this crack through $3 resistance soon. Happy to take a "dogged" approach to holding this for reliable income long term.
Perhaps Onslow not completely dead just yet?
https://www.stuff.co.nz/environment/climate-news/131106241/power-companies-dont-have-green-interests-at-heart--watchdog
How long are the current lot in power going to be there?
Pretty sure National have ruled this out.
Quote from: Basil on Feb 03, 2023, 12:18 PMHow long are the current lot in power going to be there?
Pretty sure National have ruled this out.
Be a bugger then if Luxon stuffs up big time and losses the election that was his to win.
Quote from: winner (n) on Feb 03, 2023, 12:43 PMBe a bugger then if Luxon stuffs up big time and losses the election that was his to win.
Chatted with him a few times after AIR annual meetings. A very affable, likeable and clever guy.
One risk I see is he is fairly new to politics and maybe some of the extensive numbers of new Māori media participants Labour trained up with their special $30m funding for new journalists (only if you were the right colour) might have an agenda against him and he might struggle to deal with their potential overt provocations. It's going to be a fiery election campaign that's for sure!
Agree. We now have a contest that could go either way. Hopefully our new PM shelves it sooner than later.
Quote from: Shareguy on Feb 03, 2023, 02:24 PMAgree. We now have a contest that could go either way. Hopefully our new PM shelves it sooner than later.
"It" is the key to NZ Inc taking a large step change forward in energy management and development of green energy products and industries. Not to mention the transition from fossil fuels to electrical process heat and transport
While it now appears likely that "it" will be canned, this would/will be a very short-sighted decision. NZ consumers, from households to large industrial users will pay considerably more for energy with no end in sight, ultimately leading to more industry off-shoring and NZ's continued slide down the prosperity index
"It" will not divide the pie into smaller pieces, rather the pie is made much much larger and grows generation revenue. Average $/kWh will decrease, but kWh will increase significantly and more than offset this
Change will come to the NZ electricity market at some point. Industry can continue to emulate Kodak or make the change to a progressive "Apple/Tesla/Microsoft" model. I would prefer GNE to lead this rather than trying to hang on to the old-world model and slowly fade away
A lot spent on Onslow already. Won't look good if it's canned.
https://www.odt.co.nz/regions/central-otago/more-spent-lake-onslow-option
Quote from: xafalcon on Feb 05, 2023, 10:29 AM"It" is the key to NZ Inc taking a large step change forward in energy management and development of green energy products and industries. Not to mention the transition from fossil fuels to electrical process heat and transport
While it now appears likely that "it" will be canned, this would/will be a very short-sighted decision. NZ consumers, from households to large industrial users will pay considerably more for energy with no end in sight, ultimately leading to more industry off-shoring and NZ's continued slide down the prosperity index
"It" will not divide the pie into smaller pieces, rather the pie is made much much larger and grows generation revenue. Average $/kWh will decrease, but kWh will increase significantly and more than offset this
Change will come to the NZ electricity market at some point. Industry can continue to emulate Kodak or make the change to a progressive "Apple/Tesla/Microsoft" model. I would prefer GNE to lead this rather than trying to hang on to the old-world model and slowly fade away
It sounds like you made up your mind. It sounds to me however more like a religious statement rather than the outcome of a scientific analysis.
Do you have any hard data supporting your statement?
Which problems is Lake Onslow going to solve?
What other solutions could be used to solve these perceived problems?
What would be the costs and what the risks?
... and, given that this is a GNE thread - what would be the benefits and risks to GNE if this goes ahead? Are you suggesting that GNE should risk shareholder funds for the (by you) perceived greater good?
Aren't we already on track with existing projects for late 90% range renewable generation by 2030?
Quote from: Basil on Feb 05, 2023, 12:09 PMAren't we already on track with existing projects for late 90% range renewable generation by 2030?
Yes we are Basil. As long as they go ahead.
Thought this was interesting.
Everybody knows there will need to be some over-build in order to get to the 100% renewable target.
Megan Woods, Sep. 2019
From ICCC report: overbuild would increase electricity
price for households by 14% and for industry by 39% Morphed into: "getting the last few % to 100%
renewable electricity would be expensive"
ICCC Original briefing: seek means to achieve 100% renewable electricity generation in a "normal hydrological year" by 2035
Later 100% renewable electricity downgraded to an "aspirational goal" because of supposed high cost to get the last few % renewable electricity.
https://cdn.auckland.ac.nz/assets/business/about/our-research/research-institutes-and-centres/energy-centre/summerschool/2021presentations/day2-m-taylor.pdf
Off to a good start with Solar with a new site with 52MW capacity that will be up and running next year
https://www.nzx.com/announcements/406302
Kind of cool that in the summer months when it's generating the most it will be supplying to the load required for irrigation in Canterbury when it's needed the most. Looks like a good fit to me.
Video here https://www.nzherald.co.nz/business/genesis-energy-buys-canterbury-site-for-solar-power/P7P4PIVCKH4RJX2HJMMGQYPTTQ/
Quote from: BlackPeter on Feb 05, 2023, 11:29 AMIt sounds like you made up your mind. It sounds to me however more like a religious statement rather than the outcome of a scientific analysis.
Do you have any hard data supporting your statement?
Which problems is Lake Onslow going to solve?
What other solutions could be used to solve these perceived problems?
What would be the costs and what the risks?
... and, given that this is a GNE thread - what would be the benefits and risks to GNE if this goes ahead? Are you suggesting that GNE should risk shareholder funds for the (by you) perceived greater good?
You have clearly misunderstood what "scientific analysis" means. Burying your head in the ground is not scientific analysis!!!
Fact. The cheapest source of electricity is solar power
Fact. The second cheapest source of electricity is on-land wind power
Fact. Solar power does not work at night
Fact. Wind power does not work when the wind isn't blowing
Fact. Solar power plants can be built closer to demand centres (than existing large hydro assets)
Fact. Wind power plants can be built closer to demand centres (than existing large hydro assets)
Fact. Energy storage is needed to compliment Solar and wind generation to fill in the generation gaps
Fact. Pumped hydro at Lake Onslow is the absolute cheapest energy storage option available by orders of magnitude (battery is 100x more expensive per kWh)
Fact. Pump hydro storage works for short and long term energy storage (batteries are only good for short term storage)
Fact. Pumped hydro at Lake Onslow is the longest asset life time energy storage (similar to hydro = 50-100 years)
There are many more facts I could reel off, but these will do for now
Putting these facts together we get
Build wind and solar plants in the north island, the further north that relevant conditions of nature allow. This will significantly reduce average transmission losses.
Fill Lake Onslow during the periods where NI wind and/or solar is making good power. Generate from Lake Onslow when NI wind and/or solar is not making good power
Build any new energy hungry industry in the SI where it does not require a specific geo-location eg hydrogen generation, data centres, aluminium smelter etc
Lake Onslow provides dry-year protection as a secondary benefit
The major risk is that Lake Onslow does not get green lighted asap
The risk to GNE is not aligning with this (continuing to resist by putting up weak and irrelevant arguments as other generators are currently doing). GNE own the transition key = Huntly. GNE should be proposing to keep Huntly fully available during construction of Lake Onslow, in return for government buy-out (and retirement) when Lake Onslow is in operation. GNE could also angle for the right of operation of Lake Onslow as part of the deal, replacing returns generated by Huntly with $ from arbitrage on energy stored in Lake Onslow
Quote from: xafalcon on Feb 08, 2023, 10:36 AMYou have clearly misunderstood what "scientific analysis" means. Burying your head in the ground is not scientific analysis!!!
Fact. The cheapest source of electricity is solar power
Fact. The second cheapest source of electricity is on-land wind power
Fact. Solar power does not work at night
Fact. Wind power does not work when the wind isn't blowing
Fact. Solar power plants can be built closer to demand centres (than existing large hydro assets)
Fact. Wind power plants can be built closer to demand centres (than existing large hydro assets)
Fact. Energy storage is needed to compliment Solar and wind generation to fill in the generation gaps
Fact. Pumped hydro at Lake Onslow is the absolute cheapest energy storage option available by orders of magnitude (battery is 100x more expensive per kWh)
Fact. Pump hydro storage works for short and long term energy storage (batteries are only good for short term storage)
Fact. Pumped hydro at Lake Onslow is the longest asset life time energy storage (similar to hydro = 50-100 years)
There are many more facts I could reel off, but these will do for now
Putting these facts together we get
Build wind and solar plants in the north island, the further north that relevant conditions of nature allow. This will significantly reduce average transmission losses.
Fill Lake Onslow during the periods where NI wind and/or solar is making good power. Generate from Lake Onslow when NI wind and/or solar is not making good power
Build any new energy hungry industry in the SI where it does not require a specific geo-location eg hydrogen generation, data centres, aluminium smelter etc
Lake Onslow provides dry-year protection as a secondary benefit
The major risk is that Lake Onslow does not get green lighted asap
The risk to GNE is not aligning with this (continuing to resist by putting up weak and irrelevant arguments as other generators are currently doing). GNE own the transition key = Huntly. GNE should be proposing to keep Huntly fully available during construction of Lake Onslow, in return for government buy-out (and retirement) when Lake Onslow is in operation. GNE could also angle for the right of operation of Lake Onslow as part of the deal, replacing returns generated by Huntly with $ from arbitrage on energy stored in Lake Onslow
Quite Trumpesk post - very sad. You start with a collection of common places (which don't help to support your argument), forget to even mention any realistic alternative and continue with a number of unproven statements hiding under your first mentioned common places. Your "skills" might be useful for the GoP. I hear they have a vacancy ...
Just wondering what you mean with the four letters "F-a-c-t" you spread so liberally over you condescending post? Are you using alternative facts?
Clearly - you can't mean "a thing that is known or proved to be true.", given that some of the lines marked with "fact" are clearly wrong, while most of the others are irrelevant for your argument.
QuoteFact. The cheapest source of electricity is solar power
As an absolute and unmodified statement this is not a fact, but plain wrong. Solar (as other renewables) got cheaper over time and in 2021 solar was called by somebody the cheapest
renewable source of energy ... however - nobody (not even you) is able to predict how this looks next year or in a decade or two ... and yes, there are the non renewables as well.
At that stage wind, geothermal or generating electricity from waves and the tide might be cheaper.
The future price will depend on a lot of factors we can't control (like development of technology, sourcing of rare earths).
QuoteFact. Solar power does not work at night
Fact. Wind power does not work when the wind isn't blowing
Lets face it ... while these (and many of your other) statements are highly condescending, they don't add anything to your argument (in case you have one). BTW - Ever head about power transmission? The sun shines always somewhere ...
But lets look at your last three facts:
QuoteFact. Pumped hydro at Lake Onslow is the absolute cheapest energy storage option available by orders of magnitude (battery is 100x more expensive per kWh)
Quite non-sensical comparison. Show me a study where they looked at sensible alternatives (like e.g. hydrogen - storage) and compare investment, maintenance costs and environmental costs for say the next one hundred years (typical life for a storage lake).
Ever looked into hydrogen? Did you?
QuoteFact. Pump hydro storage works for short and long term energy storage (batteries are only good for short term storage)
Fact. Pumped hydro at Lake Onslow is the longest asset life time energy storage (similar to hydro = 50-100 years)
As indicated - the comparison with batteries is non sense, and your claim (not fact) about the long term storage is plain untrue. If you don't use the water in your storage lake, it won't be there forever and it might disappear (leak) faster than from a battery. This is what water does - it disappears in the ground (leakage) and into the air (evaporation). Ask a scientist :P ;
Your last fact again is quite non sensical. Of course you need to compare comparable investment cycles, and some possible solutions will need a very high up front investment (like hydro storage or geothermal) and others (like hydrogen storage) will need less of that. We got your quasi religious statements for Lake Onslow without you providing any evidence at all.
Do you want to show us a comprehensive comparison including at least geothermal, including hydrogen technology, including decentralised power storage (like e.g. in EV batteries) .... ?
Did you ever look at a risk assessment and thought about what it means to put all your eggs into one hydro storage lake? Just tell us, what a nice little earth quake would do to your hundred year investment?
Quite funny that you want to teach me the scientific method. Allow me to give you at least one hint: It has nothing to do with blind faith ... but lots to do with thinking, considering alternatives, sharing relevant facts and getting them reviewed.
You want to show us that you can do better?
I have GNE & MEL.
Adding onto MEL as its sp has the potential to be double what it is today in 5 years' time due to industry and company specific dynamics.
GNE is ok as a yield play but it does not have MEL potential imo.
Genesis have wind turbines
Whatever I find this fascinating.
Giant Wind Turbines Keep Mysteriously Falling Over. This Shouldn't Be Happening.
https://www.popularmechanics.com/technology/infrastructure/a42622565/wind-turbines-falling-over/
Quote from: winner (n) on Feb 08, 2023, 02:36 PMGenesis have wind turbines
Whatever I find this fascinating.
Giant Wind Turbines Keep Mysteriously Falling Over. This Shouldn't Be Happening.
https://www.popularmechanics.com/technology/infrastructure/a42622565/wind-turbines-falling-over/
Didn't read the link, but just picture giant wind turbines falling over. Clearly - this should not happen :worried: !
Quote from: BlackPeter on Feb 08, 2023, 02:47 PMDidn't read the link, but just picture giant wind turbines falling over. Clearly - this should not happen :worried: !
The taller he turbine the more epic the tumble they say
It seems the tallest to topple was taller than the sky deck (upper observation deck: 220m) of the Auckland Sky Tower.
Our tallest at about 160m seem to be the Siemens Gamesa machines also mentioned in the article.
Just got this reply from National Party Energy spokesperson on Onslow.
Good afternoon ....
The National Party does not support a Government built pumped hydro scheme, but if the private sector wants to build it we would not stand in their way.
Regards,
Stuart Smith
cid1285506410*image001.jpg@01D8C6C2.BF3F6E70
MP for Kaikoura
Spokesperson for Energy & Resources, EQC and Viticulture
Quote from: BlackPeter on Feb 08, 2023, 12:18 PMQuite Trumpesk post - very sad. You start with a collection of common places (which don't help to support your argument), forget to even mention any realistic alternative and continue with a number of unproven statements hiding under your first mentioned common places. Your "skills" might be useful for the GoP. I hear they have a vacancy ...
Just wondering what you mean with the four letters "F-a-c-t" you spread so liberally over you condescending post? Are you using alternative facts?
Clearly - you can't mean "a thing that is known or proved to be true.", given that some of the lines marked with "fact" are clearly wrong, while most of the others are irrelevant for your argument.
As an absolute and unmodified statement this is not a fact, but plain wrong. Solar (as other renewables) got cheaper over time and in 2021 solar was called by somebody the cheapest renewable source of energy ... however - nobody (not even you) is able to predict how this looks next year or in a decade or two ... and yes, there are the non renewables as well.
At that stage wind, geothermal or generating electricity from waves and the tide might be cheaper.
The future price will depend on a lot of factors we can't control (like development of technology, sourcing of rare earths).
Lets face it ... while these (and many of your other) statements are highly condescending, they don't add anything to your argument (in case you have one). BTW - Ever head about power transmission? The sun shines always somewhere ...
But lets look at your last three facts:
Quite non-sensical comparison. Show me a study where they looked at sensible alternatives (like e.g. hydrogen - storage) and compare investment, maintenance costs and environmental costs for say the next one hundred years (typical life for a storage lake).
Ever looked into hydrogen? Did you?
As indicated - the comparison with batteries is non sense, and your claim (not fact) about the long term storage is plain untrue. If you don't use the water in your storage lake, it won't be there forever and it might disappear (leak) faster than from a battery. This is what water does - it disappears in the ground (leakage) and into the air (evaporation). Ask a scientist :P ;
Your last fact again is quite non sensical. Of course you need to compare comparable investment cycles, and some possible solutions will need a very high up front investment (like hydro storage or geothermal) and others (like hydrogen storage) will need less of that. We got your quasi religious statements for Lake Onslow without you providing any evidence at all.
Do you want to show us a comprehensive comparison including at least geothermal, including hydrogen technology, including decentralised power storage (like e.g. in EV batteries) .... ?
Did you ever look at a risk assessment and thought about what it means to put all your eggs into one hydro storage lake? Just tell us, what a nice little earth quake would do to your hundred year investment?
Quite funny that you want to teach me the scientific method. Allow me to give you at least one hint: It has nothing to do with blind faith ... but lots to do with thinking, considering alternatives, sharing relevant facts and getting them reviewed.
You want to show us that you can do better?
Sad reply, full of rubbish and untruths. You have simply illustrated your lack of knowledge and understanding
GNE market announcement yesterday reinforces my comments and destroys yours !!!
PS. Insults don't make you correct
Well done Genesis
Wellington Curtain Bank has received the best start to 2023 ever – a $15,000 donation from the amazing team at Genesis Energy!
This gets us closer to our goal of $150,000, ensuring that we can continue to help Wellington families in need. Find out more: wellington-curtain-bank.raisely.com
Always nice when companies donate our money to charity for us isn't it winner? You would think they would donate $15k retail price worth of power, that way the headline is the same but the true cost is much less. On to the solar, I am glad to see them finally make a move and think it will synergise well with their existing assets, especially the 50 MW peaker at huntley. I am ever so slightly concerned at just how much capacity is under development/consideration right now, technological progress/uptake is a hard thing to predict and it has a strong influence on national power consumption trends. Lets hope not too many people are overestimating power consumption growth when making the final call on all these upcoming power stations.
Fbar latest. Expecting upgrade
Outlook commentary should be positive from GNE and MCY, less so from CEN
We were a little surprised that neither GNE or MCY upgraded FY23 guidance when releasing their 2Q23 operating statistics given the record hydro conditions. With another strong operating month behind both of them, and firming wholesale electricity prices (low prices were an issue in 3Q23) we expect positive outlook commentary from both companies and a guidance upgrade is a strong possibility.
Price slowly on the up.
Phenomenal amount of rain in recent weeks and months. Don't think much coal will be burned anytime soon lol
Quote from: Shareguy on Feb 10, 2023, 11:48 AMFbar latest. Expecting upgrade
Outlook commentary should be positive from GNE and MCY, less so from CEN
We were a little surprised that neither GNE or MCY upgraded FY23 guidance when releasing their 2Q23 operating statistics given the record hydro conditions. With another strong operating month behind both of them, and firming wholesale electricity prices (low prices were an issue in 3Q23) we expect positive outlook commentary from both companies and a guidance upgrade is a strong possibility.
Price slowly on the up.
Yes, I see plenty of reasons for SP to continue rising.
Massive rainfall, with more to come by the sound of it. All lowering the generation cost/MWh
Increasing customer numbers
EV plan tied up with Chargenet, by far and away the biggest EV charging network in NZ
Interest rates peaking, then declining
Monday fortnight should be a good day
https://www.odt.co.nz/regions/central-otago/cyclone-may-impact-fate-lake-onslow
Tunnels here there and everywhere.
How to take a $7 bil project to $20 bil..?
Central and local Govt have a gargantuan sized job to fix the infrastructure damaged by the Cyclone.
It's time to leave the nice to have but non essential projects on the shelf where they belong.
So we have Rio Tinto promoting green Aluminium. I don't think NZAS is going to close anytime soon.
https://www.aumanufacturing.com.au/rio-to-supply-its-first-export-green-aluminium-the-green-future-is-here
Quote from: Shareguy on Feb 17, 2023, 09:14 AMSo we have Rio Tinto promoting green Aluminium. I don't think NZAS is going to close anytime soon.
https://www.aumanufacturing.com.au/rio-to-supply-its-first-export-green-aluminium-the-green-future-is-here
Sounds likely they will stay, but will depend on electricity pricing. Rio also has a 100% renewable electricity aluminium smelter in Iceland, so Tiwai isn't the one and only
But the green revolution is something that is real and growing. NZ should leverage the renewable electricity as a commercial advantage for power hungry industry to locate into the south island. I have been saying this for some time
I also think Lake Onslow would be a huge net benefit to NZ Inc, and neutral to the generators (beyond the initial shock period). GNE should be ideally placed to negotiate a very nice deal with the government
https://www.nzherald.co.nz/business/genesis-completes-biomass-trial-for-huntly/5PVBCVC47RASTHBEP5KOHNP4CM/
Looks encouraging.
Quote from: Basil on Feb 22, 2023, 02:47 PMhttps://www.nzherald.co.nz/business/genesis-completes-biomass-trial-for-huntly/5PVBCVC47RASTHBEP5KOHNP4CM/
Looks encouraging.
Great news. Fontera and others will be interested in this.
It's good they trying things. The sooner we ditch coal the better.
This bit in stuff article was a bit of a negative on the trial.
While the pellets contain a similar amount of energy to coal, Huntly had to use roughly 25% more wood to achieve the same amount of electricity generation.
I reckon gas would be a better transition fuel for nz and the electricity grid.
I read in the Uk they will eventually try to use hydrogen for heating their boilers instead of gas from around 2026.
That would be a good path for NZ if hydrogen could become commercially viable
Rather than ditch our gas infrastructure
I own some santos shares on asx. They seem to be selling plenty of gas going off their report today.
More good news....maybe
From FB today
We also expect Port of Tauranga (POT) will be removed from the S&P/NZX 20 index as it has failed the liquidity requirements. We pick that Genesis Energy (GNE) will replace POT. Official outcomes of the review will be announced close of market, Friday, 3 March 2023, with an effective date close of market Friday, 17 March 2023
Quote from: Perky on Feb 22, 2023, 03:35 PMIt's good they trying things. The sooner we ditch coal the better.
This bit in stuff article was a bit of a negative on the trial.
While the pellets contain a similar amount of energy to coal, Huntly had to use roughly 25% more wood to achieve the same amount of electricity generation.
I reckon gas would be a better transition fuel for nz and the electricity grid.
I read in the Uk they will eventually try to use hydrogen for heating their boilers instead of gas from around 2026.
That would be a good path for NZ if hydrogen could become commercially viable
Rather than ditch our gas infrastructure
I own some santos shares on asx. They seem to be selling plenty of gas going off their report today.
Existing gas infrastructure is not suitable for hydrogen.
A great result as expected. Increased dividend ...again.
Increased guidance
FY23 EBITDAF has been updated to around $515 million from around $500 million, subject to hydrological conditions, gas availability, and any material adverse events or unforeseeable circumstances
Genesis enjoyed strong customer growth, gaining 10,273 customers to reach a total of 481,285, an increase of 2.2%. Residential churn also declined by 1ppt to 12% from the same period in FY22.
The company delivered H1 EBITDAF of $298 million, an increase of 42% from $210 million in H1 FY22. The revaluation of long-term contracts has resulted in a Net Profit After Tax (NPAT) of $145 million, a 72% increase on the same period last year
Interim Dividend of 8.8 cps, 100% imputed with a record date of 23 March 2023 will be paid on 6 April 2023.
Previous dividend imputation was 80%
Smart move by GNE to use the natural resource already in our backyard that already connects to Huntly ...I wonder if they had to ask the 51% owner if this was ok?
Chief financial officer James Spence said Genesis had, however, made what he described as a "difficult decision" to invest in new wells that will increase gas production from the Kupe gas field, offshore from Taranaki.
"We are acutely aware of the sensitivity of investing in the well at Kupe," he said.
"We do however, see that gas is an absolutely critical fuel, at least for the short term to medium term in providing thermal backup in an increasingly intermittent system. Others will have different views on that," he said.
Spence said Genesis believed the additional gas from Kupe would displace coal in the generation mix, meaning carbon emissions would be lower they would be without the investment.
Analyst reaction Jarden said it was a solid first half with a healthy upgrade. It set a target share price of $3.31 (shares were trading at $2.86 early Monday afternoon) and retained its 'overweight' rating. "Dam levels were 133% above average at the end of the half year, which bodes well for the start of 2H23E," it said.
"Key risks are regulation, less-than-optimal management of the exit of NZ Aluminium Smelters from New Zealand, an increasing carbon price outlook, and increased costs for thermal fuel."
Dividend up a "whopping" 1.1% when inflation is 7.2%.
Quote from: Basil on Feb 27, 2023, 05:56 PMDividend up a "whopping" 1.1% when inflation is 7.2%.
Yes, but at least it's an increase and don't forget 100 percent imputed. Last divi only 80 percent. EPS was $0.138
Perhaps the reason why the market did not appear too excited today. Sentiment may change.
Quote from: Basil on Feb 27, 2023, 05:56 PMDividend up a "whopping" 1.1% when inflation is 7.2%.
Don't be so glum! In gross terms the dividend is up ~7.1% by my calculations. Interesting they opted for 40% ownership on the new solar plant, and they seem keen to kick castle hill down the road a few more years. Pretty good result, cashflow really strong. I was initially thinking the cashflow was strong because they were turning coal into cash but it seems that they have maintained the coal inventory, haven't looked to deep into it yet though.
https://www.cnn.com/2023/02/27/energy/china-new-coal-plants-climate-report-intl-hnk
Craigs number one Gentailer
Record 1H23 result, full year FY23 guidance +3% to c.$515m
GNE delivered a record 1H23 EBITDA of $298m (CIPe $290m), +42% on the pcp and has declared an interim dividend of 8.8cps (8.7cps 1H22), fully imputed, payable on 6 Apr-23. FY23 EBITDA guidance has been upgraded +3% to $515m from $500m. The key driver of GNE's performance has been strong hydro inflows resulting in c.70% of its generation production coming from renewables (1H22, 46% RE) and less need for its high-cost thermal plant. GNE has been able to back its thermal plant away from a $50-70/MWh spot market resulting in lower portfolio fuel and emission costs. Retail customer numbers have grown over 1H23 (+2.5%) whilst netbacks increased across all fuels. Negative impact (c.-$11m of gross margin) has been incurred from a planned outage at Kupe, curtailing production volumes for the half in addition to an observable decline in the field. We update our forecasts for FY23 hydro generation and retail pricing, with our earnings uplift offset by the recent shift in RFR (4.7% vs 4.2%) to determine a Target Price of $3.38 (no change). GNE remains our preferred gentailer, on valuation grounds, Overweight
Quote from: Plata on Feb 27, 2023, 10:01 PMDon't be so glum! In gross terms the dividend is up ~7.1% by my calculations. Interesting they opted for 40% ownership on the new solar plant, and they seem keen to kick castle hill down the road a few more years. Pretty good result, cashflow really strong. I was initially thinking the cashflow was strong because they were turning coal into cash but it seems that they have maintained the coal inventory, haven't looked to deep into it yet though.
Good result no debate there and great its 100% imputed.
All I am saying is there's two ways to look at their dividend track record.
1. Impressively they've increased the dividend every year since they listed in 2014. Sounds great at face value right?
2. Despite initially promising that their dividend policy was to increase it at a similar rate to inflation, every single year since they listed they have increased it at a rate lower than inflation so in real terms one's dividend has declined every single year.
Quote from: Basil on Feb 28, 2023, 08:44 AMGood result no debate there and great its 100% imputed.
All I am saying is there's two ways to look at their dividend track record.
1. Impressively they've increased the dividend every year since they listed in 2014. Sounds great at face value right?
2. Despite initially promising that their dividend policy was to increase it at a similar rate to inflation, every single year since they listed they have increased it at a rate lower than inflation so in real terms one's dividend has declined every single year.
Good point. Did not realise they stated that. Not many companies on the NZX have such a good record of increased dividends as GNE.
Will be interesting to see if they get included in the S&P/NZX20 this week. Should be some big funds buying in.
Things change. Providing a company made this kind of "promise" in good faith, based on the global economic situation at the time, I am happy to give them a bit of slack if it becomes no longer doable down the track.
Quote from: Basil on Feb 28, 2023, 08:44 AM2. Despite initially promising that their dividend policy was to increase it at a similar rate to inflation, every single year since they listed they have increased it at a rate lower than inflation so in real terms one's dividend has declined every single year.
Provided GNE can deliver on FY23 expectations Craigs lift FY23 dividend from 17.9cps to 18.5cps (c.5% lift on FY22, 100% imputed, c.9% gross yield)
Quote from: Basil on Feb 28, 2023, 08:44 AMGood result no debate there and great its 100% imputed.
All I am saying is there's two ways to look at their dividend track record.
1. Impressively they've increased the dividend every year since they listed in 2014. Sounds great at face value right?
2. Despite initially promising that their dividend policy was to increase it at a similar rate to inflation, every single year since they listed they have increased it at a rate lower than inflation so in real terms one's dividend has declined every single year.
Could that be because they started the dividend off at too greater % pay-out of cashflow, such that they had insufficient growth capital to beat inflation? I don't know about the post IPO times, but at least in the last 5 years they have had a few 90%+ dividend payout years. Doesn't leave much to work with.
Excellent result and I do appreciate that they need to reinvest in the business for the future.
As others have noted the 100% imputation does soften the blow with a 1% dividend increase.
I keep this up to date more out of morbid fascination than anything else becuase the conclusions I draw from are at odds with the market.
Punters either see GNE as less 'risky' than the past or if not less 'risky' punters are prepared to take on more 'risk'
Could also be saying that GNE share price is over priced at the moment ..... but then I take solace from knowing that if/when interest rates fall the share price will most probably go up (hoprfully)
0000gnespread.JPG
If they pay what Craigs forecast at 18.5 cps and if its fully imputed that's 18.5 / 0.72 = 25.69 cps and on a share price of $2.90 that's a gross yield of 8.86%, a little more than 400 basis points above the gross yield of 10 year Govt stock. Seems about right to me.
In my opinion Craigs might be a bit optimistic given the boards long established pattern of just adding 0.1 cps to the interim and final dividend each year.
Just as well GNE increased FY profit guidance else chart would have looked worse than it does
No worries if H223 going to be less than pcp - all good on the western front
profit growth over years rather cyclical
000gneprofit.JPG
This lady makes sense to me.
https://i.stuff.co.nz/opinion/131380164/josie-pagani-how-to-pay-to-fix-our-broken-infrastructure
Quote from: Shareguy on Feb 22, 2023, 06:10 PMMore good news....maybe
From FB today
We also expect Port of Tauranga (POT) will be removed from the S&P/NZX 20 index as it has failed the liquidity requirements. We pick that Genesis Energy (GNE) will replace POT. Official outcomes of the review will be announced close of market, Friday, 3 March 2023, with an effective date close of market Friday, 17 March 2023
Any update on this?
Quote from: xafalcon on Mar 04, 2023, 11:59 AMAny update on this?
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZXO/407811/390079.pdf
posted over on politics but JOISE has a point...
but the GOVT cant possible do anything radical...
but Radical is maybe in a fast change world what is needed...
NEW ZEALAND OIL & GAS SIGNS EXTENSION TO KUPE GAS SALES AND THE KUPE JV COMMITS TO A DRILLING RIG
• New Zealand Oil & Gas signs an extension to the Gas Supply Agreement with Genesis Energy for supply of gas from the Kupe field
• Three-year extension from 1 October 2023 for delivery into the New Zealand gas market at a fixed price
• The Kupe Joint Venture signs a drilling contract with Valaris for drilling the KS-9 well
New Zealand Oil & Gas Limited (ASX:NZO, NZX:NZO) is pleased to announce that it has executed an extension of its Gas Supply Agreement with Genesis Energy Limited. The agreement has been extended for three years from 1 October 2023 and covers all New Zealand Oil & Gas' 4% interest in gas production at the Kupe field. The price reflects market conditions. The agreement is subject to regulatory approval.
The Kupe Joint Venture has also executed a drilling rig agreement with Valaris Limited to use the Valaris 107 jack-up rig for the Kupe KS-9 infill well, the same rig that originally drilled up the field (then called the Ensco 107). We currently expect drilling in the second half of CY2023, subject to final regulatory approvals and rig availability.
Chief Executive Andrew Jefferies said "Great to see a plan come together. Committing to the rig to drill KS-9 at the Kupe field and extending our sales relationship with Genesis Energy, the long- standing high-quality buyer of our gas. This gas will be vital to avoid disruption and energy price inflation due to the forecast decline in New Zealand's gas production capacity. Gas that is vital for industry, heating showers, cooking salmon, and providing reliable power, supporting renewable generation. Gas is a three-letter word for transition."
For further information please contact the Group on:
Quote from: Hectorplains on Jan 23, 2023, 11:36 AMIt's odds on that Onslow is now dead in the water - so to speak.
All fingers on the East Coasts forestry 'slash' issue are pointing to a wood pallet solution. Meanwhile Genesis are experimenting with wood pallets to fuel Huntly. (https://www.newsroom.co.nz/genesis-imports-us-wood-pellets-to-fuel-huntly-renewable-energy-trial)...or maybe I'm joining up too many dots.
Stuff joining the dots now too. (https://www.stuff.co.nz/environment/climate-news/131372927/slash-and-burn-why-we-should-use-all-that-unwanted-wood)
Good..... but distance and transport came to mind.
"Forests are generally not where dairy factories are." Etc....
Find an economical viable solution to that....maybe as the article suggested; smaller plants nearer to where the raw fuel is.
It's a positive step.
Will it or won't it ...um
https://www.stuff.co.nz/business/131433446/ministers-about-to-decide-which-way-to-flick-the-switch-on-lake-onslow
Quote from: Shareguy on Mar 12, 2023, 05:38 PMWill it or won't it ...um
https://www.stuff.co.nz/business/131433446/ministers-about-to-decide-which-way-to-flick-the-switch-on-lake-onslow
We already know who is for and against, but I found it interesting that the public poll in the article was 73% in favour last I checked.
Not surprised government have agreed to fund next stage of Onslow would of got plenty of grieve from all the millions spent so far. Also to look at alternatives........
It's gone up, now $16b. Decision put off to after election where it will finally be thrown out (my prediction)or sooner if National get in.
Phase one investigations show a pumped hydro scheme at Lake Onslow would take approximately seven to nine years to build, with an estimated building cost of $15.7b.
Work would continue on this option which had originally been costed at $4b.
A detailed business case is expected to be developed by the end of 2024, followed by a final investment decision, which is expected to take a further two years.
https://www.nzherald.co.nz/business/price-tag-on-proposed-pumped-hydro-scheme-rises-above-15-billion/6RMIFV6QJFHTBHWR5GAD25LLMI/
Not a fan of Onslow but was at least heartened by the time...4 years to even pick up the shovel, up to 9 years to build (if I've got that right, not sure if the 9 is inclusive/exclusive of the further study and investment decision). So I suppose divvies unimpacted by onslow for quite a long time and it does draw me more towards GNE for my generator exposure given the high yields and residual kupe assets. I like and hold contact but sorta want my yields to be higher to compensate for whatever happens in 10 years.
I dont think anyone believes in the costs or timetable. I also worry that a lot of new renewable infrastructure wont get built if it looks likely to proceed and that might have a lot of unintended consequences, something the Gov specialises in.
Good gig for the consultants tho
With Onslow now costed at $15.7b, and "Officials have estimated the total construction costs of the alternative plan would be a bit cheaper, at about $13.5b, but would have "significantly higher ongoing operating costs"."
I kind of feel things are being set up for Onslow to go ahead. Still, all so far in the future, new technologies, advances in biomass, etc.... I guess they have to keep going with the project studies. Doing nothing not really an option.
You could argue that continuing on this path of Onslow as an option will stifle investment in baseload renewables, as these will be most disadvantaged by Onslow being built. Could create a very lucrative market for GNE in the next decade if baseload supply growth stagnates and both baseload and peak demand increase. Lets face it no one builds hydro anymore, all baseload renewables of the modern age have been geothermal. Geothermal has no off button, no storage nothing. The more solar we build, the worse the business case for geothermal gets as the day time prices become more and more depressed. But thats good for keeping huntley profitable right? Can we get a few more solar farms pretty please GNE?
Good article in business desk this morning. "Onslow is dead"
If all the hurdles were crossed, it would take seven to nine years to build.
In other words, there will be two more elections before a final decision is made. The National party has reiterated its opposition to Onslow, calling it a waste of money.
Onslow is dead
Opponents of the scheme have always said it was too risky, spending too much money on one hydro scheme that was too far away from electricity demand, and it was chilling other investment.
While Woods was clearly keeping the option open, critics said the timeline, cost and risks outlined in the announcement were effectively a death sentence.
"We are delighted it is dead," said Paul Ridley-Smith, the chair of Manawa Energy.
He said no "sensible" government would put so much money into what was a risky project that might not work to deal with the dry-year issue.
Quote from: Shareguy on Mar 17, 2023, 06:30 AMGood article in business desk this morning. "Onslow is dead"
If all the hurdles were crossed, it would take seven to nine years to build.
In other words, there will be two more elections before a final decision is made. The National party has reiterated its opposition to Onslow, calling it a waste of money.
Onslow is dead
Opponents of the scheme have always said it was too risky, spending too much money on one hydro scheme that was too far away from electricity demand, and it was chilling other investment.
While Woods was clearly keeping the option open, critics said the timeline, cost and risks outlined in the announcement were effectively a death sentence.
"We are delighted it is dead," said Paul Ridley-Smith, the chair of Manawa Energy.
He said no "sensible" government would put so much money into what was a risky project that might not work to deal with the dry-year issue.
A few comments
There will be 2 more elections (plus this years) before it is built. The decision to build would be made 2024/25
On a time-corrected basis, more money was spent on the Clyde dam, which is also a similar distance from demand. Today, nobody claims this was a bad investment
Lake Onslow is primarily intended to remove wholesale price spikes, assist grid stability and allow for massive expansion of intermittent renewable generation (Solar, wind). The dry-year function is a secondary benefit, a kind of added bonus if you like
Be careful reading too much into what "critics" and "opponents" have to say. A critic/oponent is against the project, so will amplify any problems and gloss over any advantages
All the generators except Genesis have been critical of Lake Onslow, as it will trim their super-profits. It doesn't take a genius to see this is the real reason for their comments
With a large majority of the public (73%) seemingly in favour of Lake Onslow proceeding, I would not write it off regardless of who wins this year's election
Yes I agree it still could go ahead, nothing surprises me much these days. Labour would need to win the next 3 elections or National changes it's view. Was $4b now close to $16b so what's the real cost in 10 or 15 years time if it started...$20b.
From memory Contacts last geothermal project cost $800m and generates power and is close to biggest markets.
I think most people will look at this as a dead duck and only going to the next stage to save face.
Not sure we're the 73 percent of people in favour of this project came from and if they really understand the cost to NZ and to them and their children to achieve this. NZ is already one of the highest sustainable suppliers of electricity in the OECD.
Analysis shows that commitments by those in the sector to build more renewables will lift the level of renewable electricity generation to 96% -98% by 2030.
But, as we also know, the country's supply is at risk when the
wind doesn't blow, the rain doesn't fall, and the sun doesn't shine.
We also are seeing other countries developing coal fired power stations at a great rate.
It seems ridiculous that we are attempting to spend so much money to be able to claim 100%. Australia alone exported 178 million tonnes of coal last year.
Would love to see the odds at the TAB of this project going ahead.
I'm picking that holders will continue to enjoy one of the highest dividends on the NZX for a very long time indeed.
https://www.nzherald.co.nz/business/steven-joyce-governments-16-billion-lake-onslow-folly-shouldve-gone-to-the-policy-bonfire/ASIUHGX5JJAGPECRQPNOFUT4IQ/
What intrigues me as a bean counter with the number crunching of cost estimations like this is how they make these cost estimates and always seem to get them so wildly wrong? How does $4 Billion become four times that amount at $16 Billion?
If they're not making a final decision until 2026 and the scheme has a 7–9-year construction timeframe, (let's just call it 10 years and be done with it because time overruns seem almost as common as cost overruns), what we're talking about here is most of the construction phase being done in the 2030's and some of it not until 2036.
Sure, you could estimate the cost of materials and earthmoving now and add some sort of estimate of how the prices might move over the next 13 years based on inflation cost estimates in the construction sector but why didn't that sort of estimation process happen in the first place with the $4 Billion estimate?
Given the estimated cost has already quadrupled how can we even have the slightest confidence that $16 Billion will even be remotely in the ballpark?
It is possible the final cost could quadruple again to $64 Billion and load vast amounts of debt onto our nation's balance sheet and nobody is held accountable?
I think its time to kick this wildly expensive Greenie ideology to the kerb and focus on the basics of getting our roads, mental health facilities and hospitals up to scratch....oh,... and some more police walking the streets wouldn't go amiss with the rampant increase in violent crime.
Lets get real here, we're already doing our bit as a Nation and have one of the highest renewable generation percentages in the OECD and maybe everyone's forgotten about the 1 Billion new trees campaign https://www.awslegal.co.nz/one-billion-trees-programme-what-does-it-mean-for-you/
One ultra expensive "battery" is not going to make one jot of difference while China continues to thumb their nose at the rest of the world with its emissions.
Enough is enough, let's look at more affordable options.
Quote from: Basil on Mar 25, 2023, 10:14 AMWhat intrigues me as a bean counter with the number crunching of cost estimations like this is how they make these cost estimates and always seem to get them so wildly wrong? How does $4 Billion become four times that amount at $16 Billion?
If they're not making a final decision until 2026 and the scheme has a 7–9-year construction timeframe, (let's just call it 10 years and be done with it because time overruns seem almost as common as cost overruns), what we're talking about here is most of the construction phase being done in the 2030's and some of it not until 2036.
Sure, you could estimate the cost of materials and earthmoving now and add some sort of estimate of how the prices might move over the next 13 years based on inflation cost estimates in the construction sector but why didn't that sort of estimation process happen in the first place with the $4 Billion estimate?
Given the estimated cost has already quadrupled how can we even have the slightest confidence that $16 Billion will even be remotely in the ballpark?
It is possible the final cost could quadruple again to $64 Billion and load vast amounts of debt onto our nation's balance sheet and nobody is held accountable?
I think its time to kick this wildly expensive Greenie ideology to the kerb and focus on the basics of getting our roads, mental health facilities and hospitals up to scratch....oh,... and some more police walking the streets wouldn't go amiss with the rampant increase in violent crime.
Lets get real here, we're already doing our bit as a Nation and have one of the highest renewable generation percentages in the OECD and maybe everyone's forgotten about the 1 Billion new trees campaign https://www.awslegal.co.nz/one-billion-trees-programme-what-does-it-mean-for-you/
One ultra expensive "battery" is not going to make one jot of difference while China continues to thumb their nose at the rest of the world with its emissions.
Enough is enough, let's look at more affordable options.
Agree 100 percent. We need to get this lot out. What have they achieved?
Because of this ridiculous project the generators are not going to commit and spend money on new projects. The whole thing is an expensive joke at the taxpayers expense. Woods is out of her depth.
And the new police minister . Oh dear.
1/6th of the remaining Kupe reserves were consumed 2022H1 to 2023H1. It contributed around 10% of the EBITDA of the latest half. Won't be long now before it is all gone. Anyone know what the cost to decommission the field might be? Could they use it as a storage facility?
Shareholders who elected to receive shares in lieu of dividend have done well with new shares to be issued at $2.6077 on 6 April v a closing market price today of $2.80. In addition, as this dividend is fully imputed there's more grunt to the net dividend allocated to buy shares. Very nice.
Must admit this pretty decent ~ 7.4% discount to today's closing market price had this hound scrambling to make sure I had set myself up for shares in lieu of divvy...phew, thankfully I have.
Pretty sure the Kupe field has a long tail and there's going to be another well drilled to extend its life.
Quote from: Basil on Mar 30, 2023, 09:25 PMShareholders who elected to receive shares in lieu of dividend have done well with new shares to be issued at $2.6077 on 6 April v a closing market price today of $2.80. In addition, as this dividend is fully imputed there's more grunt to the net dividend allocated to buy shares. Very nice.
Must admit this pretty decent ~ 7.4% discount to today's closing market price had this hound scrambling to make sure I had set myself up for shares in lieu of divvy...phew, thankfully I have.
Pretty sure the Kupe field has a long tail and there's going to be another well drilled to extend its life.
Talking of Kupe. Great news yesterday that Beach got consent to drill. Explains the share price increase.
Quote from: Shareguy on Mar 31, 2023, 11:54 AMTalking of Kupe. Great news yesterday that Beach got consent to drill. Explains the share price increase.
Well spotted mate. Didn't seem to make the mainstream media. Consent given for up to two development wells at Kupe.
https://business.scoop.co.nz/2023/03/29/beach-energy-given-go-ahead-to-drill-development-wells/
Another positive article for Onslow
https://www.stuff.co.nz/opinion/300843117/josie-pagani-is-there-a-cheaper-power-project-option-rather-than-writing-a--157b-iou
Quote from: Shareguy on Mar 31, 2023, 04:14 PMAnother positive article for Onslow
https://www.stuff.co.nz/opinion/300843117/josie-pagani-is-there-a-cheaper-power-project-option-rather-than-writing-a--157b-iou
Very smart lady but she's no wily old cynical grey haired bean counter that's for sure.
This could never be built on time or on budget. More likely somewhere in the early - mid 2040's and $40 - $60 Billion would be my best guess.
Quote from: Shareguy on Mar 31, 2023, 04:14 PMAnother positive article for Onslow
https://www.stuff.co.nz/opinion/300843117/josie-pagani-is-there-a-cheaper-power-project-option-rather-than-writing-a--157b-iou
I assume you are ironic? Article worthwhile reading and provides excellent points of why not to continue with it ...
Quote from: BlackPeter on Mar 31, 2023, 05:12 PMI assume you are ironic? Article worthwhile reading and provides excellent points of why not to continue with it ...
Unfortunately the author of the article has no idea what she is talking about. The article is not worth the paper its written on. Josie should stick to her areas of knowledge
The NZ public do appear to want this project to proceed. And it will be needed to support Nationals renewable energy announcement today
Quote from: xafalcon on Mar 31, 2023, 05:42 PMUnfortunately the author of the article has no idea what she is talking about. The article is not worth the paper its written on. Josie should stick to her areas of knowledge
The NZ public do appear to want this project to proceed. And it will be needed to support Nationals renewable energy announcement today
Well, she still raises a number of worthwhile points why not to continue with this project. Are you sure you read the article?
Quote from: BlackPeter on Mar 31, 2023, 05:49 PMWell, she still raises a number of worthwhile points while not to continue with this project. Are you sure you read the article?
Yes, I read it.....
Kindly list the worthwhile points, I must have missed them
I did read a lot of rubbish in her article
See post #338. Have you got any idea what the final cost is really going to be or the completion date? (Obviously that's a rhetorical question, nobody knows that). Why should we indulge the Greenies Utopian ideology when our mental health system, hospitals and roads are arguably in the worst state they've been in decades? Shall we just keep loading tens and tens of billions more debt on the nation's balance sheet without consideration for a real cost benefit analysis? How can we do that analysis when nobody has a real handle on the true final cost?
It's only another $69m for consultants to scope out some more info. As the author points out where is the $16b going to come from.
National says no and suggests the private sector may build it, if it stacks up. right.
https://www.newsroom.co.nz/lake-onslow-battery-losing-its-charge
Quote from: Basil on Mar 31, 2023, 07:18 PMSee post #338. Have you got any idea what the final cost is really going to be or the completion date? (Obviously that's a rhetorical question, nobody knows that). Why should we indulge the Greenies Utopian ideology when our mental health system, hospitals and roads are arguably in the worst state they've been in decades? Shall we just keep loading tens and tens of billions more debt on the nation's balance sheet without consideration for a real cost benefit analysis? How can we do that analysis when nobody has a real handle on the true final cost?
Lake Onslow is not a "greeies Utopian ideology". It is an enabler of renewable energy generation expansion. Without significant energy storage, NZ will quickly reach the maximum limit of intermittent renewable energy generation. This is due to grid instability. Australia and California are prime examples of this limit being reached. A big battery acts as a sink for excess generation and releases it during periods of shortage
Renewable wind and solar energy is now the cheapest source of energy. NZ is ideally placed in the roaring 40's and has some of the highest wind efficiency in the world. Solar has many suitable farm locations, especially when combined with sheep. If NZ wants to attract more foreign businesses, we need cheap electricity (electricity is the worlds new black gold)
Your comment about not knowing final cost is applicable to any project. How much will Dunedin's new hospital cost? How much will Auckland's new harbour crossing cost? How much will NZTA's next Road cost? Best estimates are what we use, and this has been refined to $16B.
NZ has very low government debt when compared with other 1st world economies. World interest rates are still comparatively low against historical levels. Construction costs will never be cheaper than now. It is time for central government to embark on am infrastructure catch-up, funded by debt. Future inflation will reduce the debt
The positive for GNE, is that it should be able to negotiate a buy-out of Huntly in exchange for keeping it available during construction and filling of Lake Onslow. And the high electricity returns will therefore continue for the next decade
Quote from: xafalcon on Apr 01, 2023, 08:51 AMLake Onslow is not a "greeies Utopian ideology". It is an enabler of renewable energy generation expansion. Without significant energy storage, NZ will quickly reach the maximum limit of intermittent renewable energy generation. This is due to grid instability. Australia and California are prime examples of this limit being reached. A big battery acts as a sink for excess generation and releases it during periods of shortage
Renewable wind and solar energy is now the cheapest source of energy. NZ is ideally placed in the roaring 40's and has some of the highest wind efficiency in the world. Solar has many suitable farm locations, especially
when combined with sheep. If NZ wants to attract more foreign businesses, we need cheap electricity (electricity is the worlds new black gold)
Your comment about not knowing final cost is applicable to any project. How much will Dunedin's new hospital cost? How much will Auckland's new harbour crossing cost? How much will NZTA's next Road cost? Best estimates are what we use, and this has been refined to $16B.
NZ has very low government debt when compared with other 1st world economies. World interest rates are still comparatively low against historical levels. Construction costs will never be cheaper than now. It is time for central government to embark on am infrastructure catch-up, funded by debt. Future inflation will reduce the debt
The positive for GNE, is that it should be able to negotiate a buy-out of Huntly in exchange for keeping it available during construction and filling of Lake Onslow. And the high electricity returns will therefore continue for the next decade
Excellent summary - thank you.
Quote from: xafalcon on Mar 17, 2023, 08:06 AMA few comments
On a time-corrected basis, more money was spent on the Clyde dam, which is also a similar distance from demand. Today, nobody claims this was a bad investment
I understand there's far more to it than just the construction cost of the dam, buying out people's land under the public works act is obviously another huge cost as well as all the earth works and stabilization of hillsides which must have been massive.
That said, this article clearly states the construction cost was tendered out and came in at $102.6m, in 1982
https://mightyclutha.blogspot.com/2009/03/clyde-dam-shocking-facts.html
I put that figure into RBNZ's inflation calculator and that's worth $460.75m in today's dollars.
That's just 2.8% of the $16 Billion of the guesstimate (which I assert is little more than a wildly speculative guess and has already quadrupled from earlier guesses and there is no way to be sure it won't quadruple again).
Have you got any evidence to back your claim up that Clyde is more expensive in today's dollars?
As to whether anyone says today it was a bad investment or not I quote you from the article I linked
Quote2009, May 2. Clyde high dam: "The single most monstrous environmental sin over the last 30 years." - Michael Cullen, Radio NZ, speaking of his biggest regrets after retiring from the Labour Party. Labour inherited the dam fiasco from the Muldoon government in a snap election in July 1984, called by Muldoon after he had lost the confidence of parliament and New Zealanders. Unfortunately, Labour persevered with the ever-more problematic Clyde dam, and after National became the government in 1990, the 'monstrous environmental sin' was completed.
I was pleased to catch up on the news last night that the National Party are proposing as their energy policy to concentrate on fast tracking resource consents for wind, solar and geothermal. One wind powered site took 8 years to gain consents and only 2 years to build. I am all for not riding roughshod over people's rights but surely a 12-24 month consenting time should allow all affected parties to have their say including rights of appeal?
I recently read we were 96% renewable energy this summer with the good hydrology. I like National's approach.
P.S. I assert that we have been propping up the smelter at Bluff, owned by offshore interests with Rio Tinto with absolute bargain basement priced electricity from Manapouri for decades. They use between 12-13% of the nation's generation capability and its obviously all renewable.
Why are we cow-towing to offshore interests and selling them electricity at screaming bargain rock bottom rates and proposing to support them further by building a hideously expensive "battery"?
I reckon, just complete the integration of the high voltage lines from Manapouri into Transpower's national grid if it hasn't been done yet, (yes I understand there are transmission losses), then tell Rio Tinto to "go forth and multiply somewhere else" and build some more solar, wind and geothermal. Then for back up dry year generation capacity, spend a tiny fraction of what Lake Onslow would cost on a new wood pellet production facility that will power up Genesis's Rankine units in an environmentally friendly way through to 2040.
There's more than one way to skin a cat and my contention is we can't afford a "Rolls Royce" solution now our nation's balance sheet is stretched by the tens of billions in Covid support recently borrowed. Hospitals and roads have to be built, hideously expensive battery storage systems don't when there are completely acceptable and vastly cheaper alternatives. I assert it's as simple as that.
Quote from: xafalcon on Mar 31, 2023, 06:45 PMYes, I read it.....
Kindly list the worthwhile points, I must have missed them
I did read a lot of rubbish in her article
You clearly missed the point of the article, but maybe her writing style (and humour) is just too difficult for some people to understand.
She makes fun out of the ridiculously high price, makes clear that it will (as any think big project) take much longer to complete than planned, she identifies huge risks and points to the lack of any plan B (if these risks eventuate) ...
Show us only one point where you think she said Lake Onslow is a good idea.
Solar and wind are intermittent over a period of hours and days. Sure there is seasonal variation but so what. Much smaller and cheaper batteries (Eg storage AT the generation sites) that can store a day or twos worth of output are more than enough to smooth out the intermittency. And for the small % of the time where it is not enough, Huntley can roar to life. We are on track for 85%+ renewable energy without this intervention, there are better ways to spend the money even when you only care about reducing co2 emissions.
I still think that 16 billion would be much better spent getting EV Vehicle-to-Grid tech set up and subsidising EVs. Main benefits include adding grid energy storage AT THE LOAD, allowing grid load management (reducing need to upgrade infrastructure), reducing CO2 emissions. Onslow is an ok solution to a small part of the problems we face, there are better ones.
Craig's latest note has GNE as number one pick. Again. Has also been added to their bakers dozen.
GNE – [Overweight, TP $3.45]. Offers an attractive cash dividend yield and will play an important role in New Zealand's electrification and decarbonisation.
FY23 EBITDA guidance raised to c.$515m in Feb-23 (prev. c.$500m), with the earnings uplift expected to be used to pay down debt rather than distributed, however dividends are currently 100% imputed (prev. 80%).
Solar capex is expected to commence in FY24 along with necessary well drilling at Kupe ($75m total, $15m FY23, $60m FY24) that will underpin production through to FY28.
Swaption contracts expired in Dec-22, with back-up generation held in the portfolio or as designated dry-year risk cover through to the end of the decade (Figure 7). PPA's are expected to grow from c.455GWh FY23 to c.1,755GWh by FY30 (inc Tauhara).
Relying on water inflow levels going back to 1932....Ya think the climate has changed "a bit" since then!...what a joke.
https://www.interest.co.nz/business/120699/susan-harris-worries-lake-onslow-20-project-will-become-casualty-climate-change-it
Quote from: Basil on Apr 11, 2023, 03:18 PMRelying on water inflow levels going back to 1932....Ya think the climate has changed "a bit" since then!...what a joke.
https://www.interest.co.nz/business/120699/susan-harris-worries-lake-onslow-20-project-will-become-casualty-climate-change-it
Well worth a read. Thanks for posting. Unbelievable but why am I not surprised.
Forbar say Kupe is worthless in latest note
Genesis Energy's (GNE) 46% ownership of the Kupe oil & gas field is increasingly hard to justify and we have formed the view that selling it for nothing is a better outcome than retaining ownership. The strategic rationale for owning Kupe no longer exists and the arguments for not owning it continue to grow, including sustainability and attractiveness to investors, single asset risk, and decommissioning risk. If GNE was able to sell Kupe (which is not straight forward), we estimate it would benefit from a ~+5% value uplift. GNE has shown interest in selling Kupe, but price has been the sticking point. Whilst a Kupe sale would be a positive catalyst, timing is uncertain and the commitment to sell is also uncertain. NEUTRAL.
Quote from: Shareguy on Feb 27, 2023, 05:22 PMAnalyst reaction Jarden said it was a solid first half with a healthy upgrade. It set a target share price of $3.31 (shares were trading at $2.86 early Monday afternoon) and retained its 'overweight' rating. "Dam levels were 133% above average at the end of the half year, which bodes well for the start of 2H23E," it said.
"Key risks are regulation, less-than-optimal management of the exit of NZ Aluminium Smelters from New Zealand, an increasing carbon price outlook, and increased costs for thermal fuel."
I think Jarden do the most thorough research on the sector and GNE, certainly the most thorough I have read. Certainly, that huge research note they did on 1 April that a good bloke shared with me was very insightful. Happy holder and fully subscribed to the DRIP plan.
Craigs also have a very different opinion. Forbar also say big upside if Kupe divested.
Got to post the good and the bad. People can make up there own mind I guess.
In what upsidedown world is there an "upside" if they divest from Kupe?
A world where analysts sitting behind a desk throw a bunch of highly speculative long term price guesses regarding the future value of oil, gas and LPG into their spreadsheet and more guesses on field decommissioning costs and its spits out a negative net present value answer.
GNE recently reviewed the whole Kupe thing and decided to keep it and I am pleased they did.
Beech energy as highly experienced operators on the Kupe field recently committed to a further drilling program at significant capex to extend the life of that field. I would have thought they would have done a comprehensive field and case study analysis, (far deeper than a desktop one Forbar analysts have done) before committing to more development work costing tens of millions.
Happy holder of GNE for the yield.
Not to mention they didn't share the discount rate they were using to calculate NPV. Without that it seems more of a publicity piece than actually useful research.
https://www.newsroom.co.nz/lake-onslow-hydro-wont-be-ready-until-late-2037
The project has a 50 percent chance of being completed and commissioned by the end of 2037. While it would be operational at that stage, it will take another one to three years to fully fill the basin and reach the five terawatt hours of storage.
Quote from: Shareguy on Apr 14, 2023, 07:06 PMhttps://www.newsroom.co.nz/lake-onslow-hydro-wont-be-ready-until-late-2037
The project has a 50 percent chance of being completed and commissioned by the end of 2037. While it would be operational at that stage, it will take another one to three years to fully fill the basin and reach the five terawatt hours of storage.
Rule of thumb for these projects is: multiply cost and timeframe with 2 and take the next larger unit of time :) - but obviously, only if everything goes to plan.
Wondering, by when hydrogen technology is up and running - I understand the EU plans to use that in large style before the end of this decade, which would be 2030 (they plan to import (and use) 10 M tonnes H2 by 2030, which would be equivalent to the energy storage of 66 Lake Onslaws).
But hey - NZ is often ways behind the ball, isn't it? Lets better wait another 10 years and put all our eggs into one single and expensive storage lake and wait for the "big one" to crush all of them. $15B (or make that $30B according to above rule) down the drain and then we will need some energy storage. This is clever.
Hydrogen seems to be the next go to energy, But it too has its problems if we start burning too much.
"while hydrogen doesn't emit fossil gas when it burns, it does cause higher emissions of nitrogen oxides, a pollutant tied to the formation of smog and to negative health impacts. Utility regulators should think through the implications of increasing emissions of nitrogen oxides in disadvantaged communities, where many power plants are located, as part of utility proposals to convert power plants to run on hydrogen,
Elevated levels of nitrogen dioxide can cause damage to the human respiratory tract and increase a person's vulnerability to, and the severity of, respiratory infections and asthma. Long-term exposure to high levels of nitrogen dioxide can cause chronic lung disease."
I wonder if there is anything that we can use / burn that will not cause us problems in some way? If wind and solar are intermittent.
Sadly the nature of the beast is that pretty much anything we do has environmental impacts, some are just more problematic than others. I would wonder though, is a bit of NOX any worse than what burning diesel, petrol, coal or even gas puts out? I imagine it would be comparable to gas in terms of harm. If burning hydrogen on an industrial scale like at huntley, since the byproduct mixture is less complex (just water, air and nox more or less?) it could be easier or even economical to recover the nox from the waste gas.
At $10,000 per house for a basic solar system you could put a system on the roof of every house in N.Z. for about $25 Billion (assuming 2,5m homes in N.Z.), almost certain to be cheaper that the real cost of the Lake Onslow project. National Solar could be up and running on every rooftop in a few years not sometime in the 2040's. If the Govt gave interest free repayable loans spread over 10 years people could pay the Govt back with their power savings.
Not only does the Govt get the capital cost repaid to them over the next decade but this is actual new environmentally clean generation that works much of the time now, not back up generation in a dry year in the 2040's sometime. (Useless most of the time).
Chatted with a friend yesterday with his newly installed fancy Tesla Powerwall system. Even on a really cloudy day it was making 1.3 kw's of power and powering everything in his home and pumping more than half a KW into the Tesla Powerwall battery for evening use. Admittedly his fancy system cost him $27K including the expensive Tesla 13 kw/hr battery.
If I can come up with an idea like this in 5 minutes, why does this sort of common sense somehow escape the Muppets in power ?
I think Genesis are on the right track with solar.
FY23 Q3 Performance Report
21/4/2023, 9:41 am MKTUPDTE
Favourable wholesale conditions continued in FY23 Q3 resulting in lower emissions and portfolio generation costs. Customer churn remained low, while netbacks increased across electricity, gas and LPG.
Malcolm Johns, Chief Executive said, "Genesis supported our customers through the Auckland floods and Cyclone Gabrielle. High hydro levels contributed to a 44% reduction in generation emissions, relative to the same period last year. During a busy quarter, we progressed key strategic initiatives, including a successful biomass trial and securing our first solar site."
Genesis' FY23 Q3 Performance Report is attached.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GNE/410273/393010.pdf
Great move Genesis.
https://www.stuff.co.nz/business/money/131445943/genesis-energy-forgives-debts-of-women-abused-by-partners
Surprising, (given the Government have no ownership in that company) move by the Govt subsidizing N.Z. Steel to the tune of $140m to help reduce carbon.
Wondering what the implications might be for Govt majority owned Genesis to replace their remaining Rankine units with Unit 5 type, or more modern gas powered and far more carbon friendly turbines or co-investment with Genesis in a wood pellet production facility to extend out the remaining Rankines lifespan to 2040 using environmentally friendly low emission wood pallets ?
FB thinking GNE to enter the NZX20. Will be interesting
We pick that there will be no changes to the benchmark S&P/NZX 50 indices nor the S&P/NZX 10 index in the upcoming S&P/NZX June 2023 quarterly index review. However, we pick that Port Of Tauranga (POT) will be removed from the S&P/NZX 20 index due to failing liquidity requirements for that particular index, with Genesis Energy (GNE) the likely replacement. Official outcomes of the review will be announced close of market Friday, 2 June 2023, with an effective date close of market Friday, 16 June 2023.
Quote from: Basil on May 22, 2023, 05:07 PMSurprising, (given the Government have no ownership in that company) move by the Govt subsidizing N.Z. Steel to the tune of $140m to help reduce carbon.
Wondering what the implications might be for Govt majority owned Genesis to replace their remaining Rankine units with Unit 5 type, or more modern gas powered and far more carbon friendly turbines or co-investment with Genesis in a wood pellet production facility to extend out the remaining Rankines lifespan to 2040 using environmentally friendly low emission wood pallets ?
Funny, thinking the same thing. Heard an interview with Hoskins this morning asking the same thing with green leader James Shaw re Genesis and Fontera basically saying are they next. Shaw said that there is plenty of money left in the green fund and that negotiations were going on (would not confirm though with who)
My thoughts,If they can blow $130m on Bluscope to cut coal usage by half then would it not make sense for the government to fund a state of the art torrid pellet facility utilising slash.
Thought GNE might get back down to $2.60 again with bond yields increasing. Thursday will be interesting. Then again going into NZX20 might well be the reverse.
Fbar latest
We have increased our FY23 EBITDAF forecast +NZ$2m to NZ$522m, +NZ$7m ahead of GNE's guidance. The main positive (and driver of the near-term earnings upgrade) were strong months (3Q23 and April 2023) from a hydro perspective and we have lifted our hydro generation assumption +90GWh (+3%). FY23 will be a record hydro generation year, we estimate ~+800GWh (+29%) higher than average and +420GWh higher than the previous record set in FY17.
Thoughts what will be the consequences of entering the NZX20 if it happens. How many funds will be buying. As bond yields decrease will we see the share price back over $3
Not sure what impact possible NZX20 inclusion might have ?
Not sure if they are any major index tracking funds required to buy in or not ?
Possibly some effect,
I hold for safe yield and am more interested in them building out their renewable energy pipeline over the medium to long term of solar and wind and I think as they do this and gradually look to replace Kupe and Huntly over the next decade or two they will attract more attention from ESG funds.
The only indexed ETF following the NZX20 is https://kernelwealth.co.nz/funds/nz-20 with a fund size of 37 million according to https://www.morningstar.com.au/investments/security/fund/24492 . So I would think the inclusion will be largely irrelevant in terms of passive buying, might encourage more buyers/liquidity though?
Quote from: mcdongle on Apr 16, 2023, 10:26 AMHydrogen seems to be the next go to energy, But it too has its problems if we start burning too much.
"while hydrogen doesn't emit fossil gas when it burns, it does cause higher emissions of nitrogen oxides, a pollutant tied to the formation of smog and to negative health impacts. Utility regulators should think through the implications of increasing emissions of nitrogen oxides in disadvantaged communities, where many power plants are located, as part of utility proposals to convert power plants to run on hydrogen,
Elevated levels of nitrogen dioxide can cause damage to the human respiratory tract and increase a person's vulnerability to, and the severity of, respiratory infections and asthma. Long-term exposure to high levels of nitrogen dioxide can cause chronic lung disease."
I wonder if there is anything that we can use / burn that will not cause us problems in some way? If wind and solar are intermittent.
From the UK
https://www.theguardian.com/environment/2023/jul/13/uk-poised-to-drop-plans-for-hydrogen-to-replace-natural-gas-in-homes#:~:text=Controversial%20UK%20government%20aspirations%20to,the%20energy%20minister%2C
GNE posted this today
Continued strong hydro conditions in FY23 Q4 drove lower carbon emissions and reduced portfolio generation costs. Customer numbers continued to grow, with 3,779 customers gained in the quarter.
Malcolm Johns, Chief Executive said, "Genesis continued to perform well through the final quarter of the year. We know that the current hydro conditions will eventually change but it was pleasing to see that Genesis can respond to market conditions to reduce carbon emissions and generation costs."
Huntly Unit 5 Outage
Genesis' Huntly Unit 5 combined cycle gas turbine remains unavailable, following a forced outage on 30 June. An investigation has revealed a failure of one of the unit's three circuit breakers. Specialist parts, including some from overseas, are required for repair. The unit is currently expected to be returned to service by 31 August 2023.
High hydro storage, alternative plant availability and wholesale electricity market conditions have combined to mitigate the financial impact of the outage to date.
Updates on the return to service of the unit will be provided through the Transpower Planned Outage Coordination Process (POCP).
With high hydro storage was thinking we might get another upgrade. Thinking the outage has stoped that.
So the tax payer is helping NZ Steel and now Fonterra getting a helping hand with reducing coal usage.
Is GNE next....
https://www.rnz.co.nz/news/country/494089/government-partners-with-fonterra-to-cut-coal-use-and-halve-manufacturing-emissions
I expect GNE will report ~$502 million in EBITDA before the impact of derivatives. Derivatives added ~$30 million last half. Key assumptions are ~10% opex cost increase, kupe costs and emissions revenue remain the same as the first half.
We shall see how things went this half... I wonder if insurance will cover the unit 5 outage.
Quote from: Plata on Jul 20, 2023, 06:56 PMI expect GNE will report ~$502 million in EBITDA before the impact of derivatives. Derivatives added ~$30 million last half. Key assumptions are ~10% opex cost increase, kupe costs and emissions revenue remain the same as the first half.
We shall see how things went this half... I wonder if insurance will cover the unit 5 outage.
Yes it's going to be a great result I think. Forbar are at $522m. Share price has been going backwards yet inflation, interest rates and bond yields are showing signs that they're on the way down. This is normally positive for the share price.
However plenty of hydro storage keeps the lid on gas prices
The price of gas fell in June 2023, averaging NZ$8.4/GJ, down -7% mom and -55% on June 2022.
Don't think outage will be a insurance claim taking into account the age of the plant.
Watching with interest.
Carbon capture an option for Huntly power station owner Genesis?
https://www.stuff.co.nz/business/132616380/carbon-capture-an-option-for-huntly-power-station-owner-genesis
A bit of speculation going on. Interesting.
Looks like they brought a Rankine out of storage, 677 out of 750 MW capacity right now. Good to see it still works.
Kupe could have a billion barrels more oil, says geologist
https://www.nbr.co.nz/investment/kupe-could-have-a-billion-barrels-more-oil-says-geologist/?utm_source=ActiveCampaign&utm_medium=email&utm_content=NBR+HEADS+UP%3A+ABC%2C+it+s+easy+as+deliverable+policy%3A+ECEs+want+to+see+results&utm_campaign=NBR+Newsletter%3A
The geologist is Mark Webster of exploration consultancy Kauri Oil & Gas.
"Oil industry consultant concerned Genesis could sell its 46% stake without understanding its value."
Is this a consensus view? Kauri Oil & Gas tend to have a 'positive' outlook on NZ oil but one would think/ hope Genesis would know what they are doing.
Interesting. Thanks for posting. Seems like speculation. There might be more, but could be less.
Even Forbar have changed their view on Genesis and say good buying at moment.
I see the gas side being very valuable for some time.
Interest rates declining should also be a positive here. Then there's the rain......
Likewise; I'm positive (for now).
NZX Update:
Further investigation into Genesis' Huntly Unit 5 combined cycle gas plant outage has indicated that return to service is now expected in late May 2024, as circuit breaker components are manufactured internationally.
High hydro storage, alternative plant availability and wholesale electricity market conditions have combined to mitigate the financial impact of the outage to date. Genesis is actively pursuing options to return the unit to service earlier and has material damage and business interruption insurance cover in place.
The financial impact of this event, based on current market conditions, plant and fuel availability, and mitigating factors is estimated to be in the range of $20 million to $30 million.
Craig's Cam Parker thinks it might be worse
• GNE – Genesis continues to hover around the $2.70 level despite news on Friday that a prolonged unplanned outage of its 400MW combined cycle gas turbine at Huntley ("e3p") will extend until May 2024 due to a problematic parts replacement exercise (via Japan)....hydrology over the next 12 months will ultimately determine the extent of the financial impact of the outage but GNE's initial modelling suggests FY24 EBITDA will be impacted by c$20-30m net of insurance. Cam Parker notes that if hydrology and financial contracts (to cover lost volume) are unfavourable the impact could rise to c$50m.
SP getting a battering today. Is this the market absorbing the impact of Huntley being offline or something else. I'm tempted to buy in at these levels though - currently $2.56.
Quote from: LoungeLizard on Aug 11, 2023, 02:13 PMSP getting a battering today. Is this the market absorbing the impact of Huntley being offline or something else. I'm tempted to buy in at these levels though - currently $2.56.
Something else:
Or maybe something else as well as;
Geneva, August 10, 2023 Rebalances which will take place as of the close of August 31, 2023.
MSCI GLOBAL SMALL CAP INDEXES - GENESIS ENERGY - Deletion
MSCI GLOBAL MICRO CAP INDEXES - TOURISM HOLDINGS - NEW ZEALAND RURAL LAND - Additions
I'm already pretty loaded up with these but a decline like this from index rebalancing is a hard opportunity to pass up... I would like to know the extent of their insurance though regarding the unit 5 outage. If we get some more extreme weather on the dry side later this year/next year the spot market might get pretty tight. I don't think GNE can cover peak demand of its customers even with unit 5 so without it could leave us in a tricky situation in the future. Thankfully the hydro lakes are very full...for now.
GNE has room to run down yet IMO.
GNE_2023-08-13_13-57-36.png
FWiW based on long term correlation of GNE yield /share price and NZ Govt Stock the current share price 'should' be about 240/245
On this basis been overpriced for some time but then sentiment been positive so no worries
Quote from: winner (n) on Aug 13, 2023, 03:15 PMFWiW based on long term correlation of GNE yield /share price and NZ Govt Stock the current share price 'should' be about 240/245
On this basis been overpriced for some time but then sentiment been positive so no worries
I imagine that metric would not look so bad if you measured based on free cash flow yield rather than dividend yield. The GNE of years past had a much higher payout ratio than we have seen in more recent times, so I question if it is really apples to apples to use that metric now. Perhaps the modest premium it currently trades at is pricing in a little bit longer of low payout ratio later returning to 90%+ as Kupe peters out.
I'm thinking great buying at these levels. Have been accumulating.
Disc: Now one of my larger holding.
Quote from: winner (n) on Aug 13, 2023, 03:15 PMFWiW based on long term correlation of GNE yield /share price and NZ Govt Stock the current share price 'should' be about 240/245
On this basis been overpriced for some time but then sentiment been positive so no worries
What the dividend hounds will do if it gets down there. I'll be in the front row.
https://www.youtube.com/watch?v=DNKfucd0HYo
Quote from: Basil on Aug 14, 2023, 06:13 PMWhat the dividend hounds will do if it gets down there. I'll be in the front row.
https://www.youtube.com/watch?v=DNKfucd0HYo
7 cents lower or 12 cents lower in like a robbers dog, but not all over it like a rash now. Why quibble over a few cents? Seriously though, the TA on this is terrible, despite propects of increasing Div%, I wouldn't :o touch it until the TA was positive, and by then, I could end up getting more at a higher price than now! :o
Certainly, the way this has been falling you'd almost think huntley had broken down :o
I'm expecting 9 cps final divi, fully imputed as per HY23. Not long to wait.
Quote from: Basil on Aug 14, 2023, 06:13 PMWhat the dividend hounds will do if it gets down there. I'll be in the front row.
https://www.youtube.com/watch?v=DNKfucd0HYo
Nice to see you back on the beat, Basil!
Anything under $2.50 is a great buy, IMHO. Trying to pick where the charts will go is best left for TA wizards and waiting for it to hit bottom - whatever that may be - risks getting caught in the bounce back which I fully expect to happen when the dividend is announced, if not before.
Anyone else taking advantage? Under $2.50
NZX has NTA at $2.28.
I'm interested but in my experience a share in the lead up to experiencing an index inclusion or exclusion usually goes on to hit its peak or low as the case may be, (at least in the short term), at the time of the index event therefore on the balance of probabilities I foresee the best time to buy as being when it gets excluded from the MSCI small company index on 31 August.
Not saying it isn't deep value already because I think it is, but with 10 year Govt stock over 5% the whole market is facing headwinds in my view. I think it's also helpful to know from the net yield perspective if they are going to continue to fully impute the dividends or whether they will revert to the usual 80% imputation rate and we'll get further evidence of that when they report on the 24th next week.
I'd also like to know a bit more about how the forthcoming Kupe drilling is hoped to extend the life of the field and how their solar plans are advancing.
started to hover up a few today based on divi yield and a juicy divi payment just round the corner.....will continue to buy up prior to exclusion date from index as fundies are forced to sell.
Chart updated from below, price to land IMO between covid low and replicated RVGI Value (2.21 - 2.385).
GNE_2023-08-18_16-24-46.png
The MSCI deletion was announced before trading on the 11th of August. GNE is down nearly 8% since that announcement. I expect price to be suppressed for next month or two, it is likely unit 5 outage will stain the FY24 guidance. Not sure exactly what type of equipment they are trying to bring in to fix unit 5, but what I've been told is the backlogs in a lot of industrial/manufacturing equipment are expected to be cleared by the end of this year. You'd hope that their ETA for return to service is conservative and it is back a lot sooner. A bit beyond belief how spineless the share price has been, we could be getting to 10% gross yield depending on imputation imminently.
Morningstar which I consider relatively conservative, valued them a hold at $2.60 in April stating 'Strong Momentum Continues'. That was before Unit 5 issues I believe and before the MSCI deletion though.
Yield is starting to look a lot more attractive at these levels.
Quote from: Plata on Aug 18, 2023, 07:55 PMThe MSCI deletion was announced before trading on the 11th of August. GNE is down nearly 8% since that announcement. I expect price to be suppressed for next month or two, it is likely unit 5 outage will stain the FY24 guidance. Not sure exactly what type of equipment they are trying to bring in to fix unit 5, but what I've been told is the backlogs in a lot of industrial/manufacturing equipment are expected to be cleared by the end of this year. You'd hope that their ETA for return to service is conservative and it is back a lot sooner. A bit beyond belief how spineless the share price has been, we could be getting to 10% gross yield depending on imputation imminently.
Sitting just above 2 year lows now. Unit 5 has spooked the market horses. They're saying that they've covered the loss of generation with the three Rankine units they've drafted into service, utilising the gas that Unit 5 would've burnt. How much more expensive is this option?
I would say most of that 30 million dollar expected loss comes from the reduction in efficiency. The rankine units are 1980s models compared to unit 5 from the 2000s. The other thing to remember is the third rankine unit is not maintained to the same standard as the other two, and is much more likely to fail. I would hope that failure risk is part of that 30 million too. There might be a little bit of missed opportunity $$ built into the 30 million as well (from reduced possible max output), but I think that amount is probably quite limited given how little I have seen them run unit 5 + rankines 1 and 2 at full power recently.
Here is NZ energy policy review from international Energy Agency.
https://iea.blob.core.windows.net/assets/124ce0b0-b74e-4156-960b-bba1693ba13f/NewZealand2023.pdf
Here is the National Party current energy policy
https://assets.nationbuilder.com/nationalparty/pages/17710/attachments/original/1680204411/Electrify_NZ.pdf?1680204411
Here is the Labour Party's current policy
https://d3n8a8pro7vhmx.cloudfront.net/nzlabour/pages/18628/attachments/original/1599690526/Clean_Energy_-_Factsheet.pdf?1599690526
Interesting article on GNE's solar plans in the print edition of the Herald today. Sorry, couldn't readily see it on the online platform.
Answers my questions on solar. Plans are afoot for 500MW of solar capacity. It would seem they now have 4 sites and plans and consenting is progressing.
Average renewables production in the last 5 years from their assets has been 44%, last year due to extreme hydrology was 65%.
Plans are for 68% renewables generation by 2025, and 81% by 2030. The 2025 target looks quite ambitious. to me, nonetheless they are heading in the right direction and on track to replace Kupe outputs with cleaner generation as Kupe declines. Allays a lot of my concerns about Kupe running down and the effect that has on their capability to pay strong dividends over the long term.
Interestingly they noted Solar is cheapest and quickest to generation of any of the other types of renewable generation available. Biomass was mentioned again for Huntly but not in any detail.
Quote from: Basil on Aug 19, 2023, 03:15 PMInteresting article on GNE's solar plans in the print edition of the Herald today. Sorry, couldn't readily see it on the online platform.
Answers my questions on solar. Plans are afoot for 500MW of solar capacity. It would seem they now have 4 sites and plans and consenting is progressing.
Average renewables production in the last 5 years from their assets has been 44%, last year due to extreme hydrology was 65%.
Plans are for 68% renewables generation by 2025, and 81% by 2030. The 2025 target looks quite ambitious. to me, nonetheless they are heading in the right direction and on track to replace Kupe outputs with cleaner generation as Kupe declines. Allays a lot of my concerns about Kupe running down and the effect that has on their capability to pay strong dividends over the long term.
Interestingly they noted Solar is cheapest and quickest to generation of any of the other types of renewable generation available. Biomass was mentioned again for Huntly but not in any detail.
Yes interesting article. Why have they not updated shareholders directly I wonder. There was new information. As you say they have a plan which looks good and makes sense.
Solar has been coming down in cost dramatically the only curve ball in NZ is the "sun"
Quote from: Shareguy on Aug 19, 2023, 04:16 PMYes interesting article. Why have they not updated shareholders directly I wonder. There was new information. As you say they have a plan which looks good and makes sense.
Solar has been coming down in cost dramatically the only curve ball in NZ is the "sun"
why is sun an issue in NZ, last time I checked the sun came up every day and has done for a while, solar power is generated from solar radiation(different to sunlight) which means even on a white cloudy day you still get plenty of generation.
It is heavy grey cloud that is problematic for solar power generation.
Quote from: snapiti on Aug 20, 2023, 05:27 PMwhy is sun an issue in NZ, last time I checked the sun came up every day and has done for a while, solar power is generated from solar radiation(different to sunlight) which means even on a white cloudy day you still get plenty of generation.
It is heavy grey cloud that is problematic for solar power generation.
Yes agree. My point is they don't call us the "land of the long white cloud"for nothing.
Online version of the article I talked about on the weekend. Paywalled
https://www.nzherald.co.nz/business/power-play-genesis-to-spend-600m-on-becoming-nzs-biggest-solar-provider/QOMIEJWVRFGX3JKL3XFYZLLK74/
Link
https://uksnackattack.co.uk/genesis-forms-600m-joint-venture-to-become-largest-solar-provider-in-new-zealand
Quote from: THESTG on Aug 21, 2023, 02:00 PMLink
https://uksnackattack.co.uk/genesis-forms-600m-joint-venture-to-become-largest-solar-provider-in-new-zealand
In terms of perspective. World wide IFT is a larger renewable energy provider with 2.0 gigawatt present capacity and a pipeline of 40 gigawatts v GNE with .05 GW in the Lauriston development.
Looks like a result as expected except for holding divi same as FY22. Payout ratio 56 percent of free cash flow.
A case of higher costs, less thermal generation so a hit to revenue but the rain has saved the day with generation costs considerably lower.
Actual EBITDAF $523m Compared to own forecast $515m. Against FB $532m. Craig's $522m
Actual Dividend 17.6 cps against FB 17.8 cps And Craig's 18.5 cps. Great it's fully imputed
However higher own forecast than consensus for FY24. EBITDAF is expected to be around $430 million subject to hydrological conditions, gas availability, and any material adverse events or unforeseeable circumstances.
Good to see progress with big plans for solar and
Huntly battery opportunities
• An engineering feasibility study has been completed for a large
grid-scale battery at Huntly. Genesis is considering investment
7,100 opportunities, with a decision likely in 2024.
7,000
• A battery would support wider market flexibility but is also important
6,900 for Genesis' portfolio optimisation as we transition from baseload
thermal to more intermittent renewables.
6,800 6,700
• Huntly Power Station currently has grid connection capability of
Daily Peak MW
1200MW.
Good to see lower debt against FY22
Overall steady as expected.
It'll be interesting to see what the analysts make of this print and outlook.
I'm a little underwhelmed with it to be honest.
Might share a few thoughts later when I have some more time.
Huge decrease in dividend/FCF
This won't please investors as the dividend is the only return they get. SP has decreased markedly in the last 12M, meaning dividend only replaces loss of capital = no real return on investment, for some it will be another loss
In a year with inflation running at 7% and bank deposits running at 6%, I would have expected a decent lift in dividend
Yeah, it was a really HUGE call lowering the final divvy from 8.9 cps last year to 8.8 cps this year with their EBITDAF where it printed and inflation where it is. Sends a very, very strong signal about their need to conserve cash for massive capex on solar going forward for the rest of this decade. I note the dividend 5 years ago was 16.9 cps so its risen 4 % in the last 5 years and inflation according to RBNZ is up a total of 20.5% so a 16.5% decline in the real value of the annual dividends over that timeframe..
Maybe that's what we can "look forward" to in the next 5 years as well during a lengthy period of very high capex?
No question some investors will be disappointed with the dividend held the same as last year.
Dividends as percentage of FCF
FY23 56%
FY22 70%
Makes sense to conserve cash given the capex going forward. What's a couple of pips anyway. Dividend is still attractive and fully imputed with DRP option.
Good news that greenhouse gas emissions 64 percent lower than FY21.
Huntley operating on 95 percent gas in FY23. Large coal pile remains.
I'm on conference call so will report anything interesting.
Quote from: Basil on Aug 24, 2023, 11:48 AMYeah, it was a really HUGE call lowering the final divvy from 8.9 cps last year to 8.8 cps this year with their EBITDAF where it printed and inflation where it is. Sends a very, very strong signal about their need to conserve cash for massive capex on solar going forward for the rest of this decade. I note the dividend 5 years ago was 16.9 cps so its risen 4 % in the last 5 years and inflation according to RBNZ is up a total of 20.5% so a 16.5% decline in the real value of the annual dividends over that timeframe..
Maybe that's what we can "look forward" to in the next 5 years as well during a lengthy period of very high capex?
Building solar turns capex into revenue in a 12 month period (or less). No lengthy infrastructure build timeline like other forms of electricity generation. So it's unlikely that high CAPEX for building solar will be a 5 year constraint on dividend in its own right. So maybe something else is being factored in
I'm all for investing for future growth, but this throttling of dividend payment without a rising SP is OTT.
There is a reason that GNE was dropped from the MSCI index, and that reason was unlikely to be arbitrary and capricious.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GNE/416938/401163.pdf
I am somewhat disappointed with the print and outlook and very disappointed with the dividend and what it signals about their ability to pay dividends going forward.
Firstly, excluding the remarkable hydrology which we all knew about already and looking at the result, I note operating expenses up a whopping 11% to $330m and forecast to grow substantially again in FY24.
The rundown in Kupe output is faster than I was expecting. The circa $65m development well is just stay in business expenditure but in my view in analogous to a Beaver trying to stem the losses from a badly leaking dam and the ongoing fast rundown in Kupe concerns me in terms of their ability to maintain the dividend.
The outlook is obviously affected by the hopefully one off outage at Unit 5 so normalizing that its $450-$460m which I suppose is okay but doesn't suggest they have any ability to grow the dividend especially against a tidal wave of future capex with solar which i note is forecast to cost ~ $1.5m per mw/hr to build and they have over 700mw/hr's under consideration...so we're talking over $1 Billion. Not insurmountable by any means with the depreciation, depletion and amortization this year circa $255m, well up on last years $215.8m, see page 35.
Also noting eps was down 13% from 21.2 cps to 18.5 cps this year (page 35) and its hard to imagine it won't decline even more substantially again in FY24 with the outlook for EBITDAF being circa $100m lower.
Talking about the dividend, its a very, very big call to reduce the final divvy from 8.9 cps last year to 8.8 cps this year, (notwithstanding the imputation difference) keeping the annual divvy at 17.6 cps. To my mind this sends a very powerful signal that they are focused on investing in capex to replace generation capacity / energy capacity they will lose as Kupe runs down fairly quickly over the next 7-10 years.
The main reason I invest in GNE is as a dividend stock so some questions present.
1. Can they continue to fully impute future dividends given dividends and eps are very, very close ? Maybe.
2. Can they maintain the current dividend given significant solar capex in future years and a further decline in likely eps this year ? Perhaps, but possibly not.
3. Can they grow dividends in the future in line with inflation....I think that's extremely unlikely.
The above got me thinking about a review of how their dividends have grown in the last 5 years. Leaving aside the difference in imputation rates because that's too hard to call going forward.
I note in 2018 they paid 16.9 cps and this has very gradually risen to 17.6 cps in 2022 and stayed the same in 2023. So, in five years the dividend has grown a "whopping" 4%. Comparing this to the RBNZ inflation calculator over that timeframe inflation has been 20.5% in total so in real inflation adjusted terms the dividends have declined 16.5% in value. Hmmm When this listed in 2014, one of the foundational principles was that they were going to grow dividends in line with inflation. I think they have failed so miserably they have decided they no longer want to even try.
As I see it, the prospect of this income erosion happening again, (dividends declining in real terms quite materially) in the next 5 years as they embark on a major solar build program is very high so although the current yield is okay, it's at the lowest margin to the 10 year risk free rate in many years and in real terms I think the value of future dividends is highly likely to decline materially. So, is this a stock I want to be invested in long term anymore?
Disappointingly there is no news advancing the biomass trail I could see in terms of extending the Rankine units useful life.
With the imminent exit from the MSCI small companies index at the end of this month...what is the catalyst for this to go higher in the next week ? I can't see anything whereas on the other hand as analysts digest the outlook for GNE and the index exclusion takes effect in the short term at least, I expect further share price weakness.
Disc: I reduced my stake this morning. If the price is right on the index exit, (I would need to see it no higher than high $2.30's) I might replace some or all those sold this morning. I also note a LOT of woke stuff in the presentation about people and planet...
Looks like the market is a little underwhelmed with the result.
My two cents worth is that it is devilishly difficult to consistently pick winners in the current environment - if ever - and so a diverse/balanced portfolio is crucial to even out the highs and lows. So some exposure to the energy market is probably sensible, and for me Genesis is the pick of the bunch, the issues noted notwithstanding.
Normally when companies say that they are "investing for growth" and pay little or no dividends, then that is a red flag for me, but in GNE's case they do have to pivot towards renewable energy sources and that doesn't come cheap. Their investment in solar will eventually save money, so if dividends remain static for a time then that's broadly acceptable in my opinion.
That said, although I wouldn't go so far as to sell, I won't be adding to my modest holding in the near term either, unless the SP dips further.
Craig's thought the result was good. Analyst pointed out
New CEO only been in the roll for a few months...cautious
That dividend would of disappointed some, however final dividend of 8.8cps (8.9cps FY22), fully imputed (prev. 80% imputed)
The ceo said the board had decided to hold the divi steady in order to pay down debt while preserving capital for future investment.
Will be interesting once the latest research notes come out. I'm picking that after the rebalance is over and interest rates start to recede that the share price will climb back up. In the meantime the dividend's keep coming for a relatively safe stock.
I think in the context of the wider NZX this was a good result and reasonable guidance.
The last few posts have all been very good and raised some valid points.
I don't think much has changed - the result was good enough and the div change makes no material difference to me but added up the difference for GNE can be utilised where it is needed elsewhere for the benefit of the company and it's shareholders.
The price is down somewhat in recent times and I mentioned earlier the yield is looking attractive. My thoughts for some time have been that when the share[rice drops to a rather arbitrary $2.40 I may consider a buy in. I may wait to check the effect of the fund exclusion may have on the share price. Worldwide market sentiment over the coming months may also cause the price to drop.
The further it drops the 'higher' the yield is on a cost basis percentage.
Basil mention that the current yield is okay, it's at the lowest margin to the 10 year risk free rate in many years.
I've plotted the difference between the yield and the 10 year rate on chart below for you. I've used gross dividend and taken tax off both....so difference after tax.
I see the difference as a measure of risk .....a risk factor in holding GNE shares
For the first year or so post IPO investors seemed to demand a 5% risk premium. Then through to 2020 they seemed happy with a 4% risk premium. since then that risk premium has drifted down to about 3%. Since lising the average has been just under 4%
So have punters recently seen GNE as less risky' than previous ...or have they just been content on getting a 'decent' dividend without considering risk. Good question.
Reading the results announcements, commentaries and comments on this thread you'd have to think there is a lot more 'risk' now in how GNE is going to perform in the future. Does this mean the risk oremium should be higher than around the current 3%?
If so GNE is currently 'overpriced'. If the premium/difference reverted to say 4% then that indicates a share orice of about $2.20/$2.25.
The saving grace iof course if 10 year rate falls. If it fell to say 3% and risk premium stayed about the same GNE share price could go over $3.
Conclusion: I reckon GNE is currently 'overpriced' at $2.50.....but long term even if the dividends don't increase that much in next few year if interest rates fall (so they say bit I'm not certain they will) there is a buffer. Maybe the story is be happy with dividend and hope for gains from interest rate falls sometime in the future.
I still think pricing GNE on yields is a better approach than using other multiples. Dividend yield and all that it entails the driver of the GNE share price
Interesting to see what happens next month or two .....and the impact of this stupid index rebalancing
Craig's latest
Still number one power pick
GNE – The shares closed 3.5% lower yesterday, albeit after Genesis delivered record EBITDA of $524m for FY23 (CIPe $522m) on the back of a wet year where GNE was able to back away costly thermal electricity production (incl. emissions) and purchase electricity from a lower priced spot market for resale. The surprise in the result was the opex inflation +11% on the pcp to $330m which will no doubt become a focus point for new CEO Malcolm Johns. GNE declared a final dividend of 8.8cps leaving the total dividend flat on FY22 at 17.6cps despite the 25% yoy increase in cash flow. Cam Parker still expects small growth in the dividend going forward (at c1.5%pa) ... and maintains the overweight rating ... albeit his DCF driven TP falls 8% to NZ$3.05 reflecting the rise in interest rates.
"Cam Parker still expects small growth in the dividend going forward (at c1.5%pa)"
The mind boggles as to what he's basing this on? It would only have cost GNE $2m to follow the historical long entrenched pattern of increasing the final dividend by a smidgeon, (usually 0.1 cps) each year. That they chose not to do this in a year of remarkable, perhaps once in a lifetime hydrology, is truly significant.
So instead of reducing debt by (from memory $68m they could have reduced it by $66m instead...WOW that's a "big" difference... (cynicism intended)
But NO, despite operational costs increasing 11% and senior management and staff being happy to put up their hands for inflation rate increases of at least 7%, they wanted to send a message loud and clear that shareholders should NOT expect dividend growth while they are reinventing themselves with solar.
It smacks of arrogance but to my mind sends a coded message that shareholders are the sacrificial lamb here and as long as they are benefiting people and the planet we should be happy with what we get. Later yesterday I mused...what else do you really expect from a company controlled by this woke government?
To my mind it also signals that the race to replace generation and energy from Kupe and the Rankine units as they come towards their end of life in the long term is an extremely serious one and there are no guarantees whatsoever that solar outputs and returns from same will match the returns these aging assets currently confer.
I also noted the new CEO is engaging in a major rethink of their long term strategy with this to be announced in late November. Its hard not to think that the new CEO will have a laser focus on trying to grow and dividend growth is not even on the radar at least in the medium term, in fact it could very well be the sacrificial lamb and the current level may be under threat.
All that said, I freely acknowledge we all have different objectives with investing. Many younger investors will no doubt be delighted to accept the same or some reduction in dividends and see the company transform itself into one where renewable generation is to the forefront over the next decade or so. Each to their own.
Quote from: Basil on Aug 25, 2023, 04:35 PM"Cam Parker still expects small growth in the dividend going forward (at c1.5%pa)"
The mind boggles as to what he's basing this on? It would only have cost GNE $2m to follow the historical long entrenched pattern of increasing the final dividend by a smidgeon, (usually 0.1 cps) each year. That they chose not to do this in a year of remarkable, perhaps once in a lifetime hydrology, is truly significant.
So instead of reducing debt by (from memory $68m they could have reduced it by $66m instead...WOW that's a "big" difference... (cynicism intended)
But NO, despite operational costs increasing 11% and senior management and staff being happy to put up their hands for inflation rate increases of at least 7%, they wanted to send a message loud and clear that shareholders should NOT expect dividend growth while they are reinventing themselves with solar.
It smacks of arrogance but to my mind sends a coded message that shareholders are the sacrificial lamb here and as long as they are benefiting people and the planet we should be happy with what we get. Later yesterday I mused...what else do you really expect from a company controlled by this woke government?
To my mind it also signals that the race to replace generation and energy from Kupe and the Rankine units as they come towards their end of life in the long term is an extremely serious one and there are no guarantees whatsoever that solar outputs and returns from same will match the returns these aging assets currently confer.
I also noted the new CEO is engaging in a major rethink of their long term strategy with this to be announced in late November. Its hard not to think that the new CEO will have a laser focus on trying to grow and dividend growth is not even on the radar at least in the medium term, in fact it could very well be the sacrificial lamb and the current level may be under threat.
All that said, I freely acknowledge we all have different objectives with investing. Many younger investors will no doubt be delighted to accept the same or some reduction in dividends and see the company transform itself into one where renewable generation is to the forefront over the next decade or so. Each to their own.
Yes, that needs to be said - we all invest for different reasons and time-frames. Not a one-size-fits all. In the short term GNE may not appeal to some as divvy's go back in real terms. If one has a longer lens then it is acceptable that GNE has to future proof the business and it would be irresponsible (risky) to continue to pay increasing dividends when it's assets need replacing/modernising.
As a dabbler in SKY (yeah, I know) then I see that as a cautionary tale of a business which paid massive dividends for too long (I remember getting a 32c special dividend!) and didn't look up and see the digital asteroid about to hit it. Not that GNE is any real danger, but renewables will pay an increasing part of the future energy landscape and investing in them now, will pay dividends (literally) later.
Quote from: LoungeLizard on Aug 25, 2023, 05:22 PMYes, that needs to be said - we all invest for different reasons and time-frames. Not a one-size-fits all. In the short term GNE may not appeal to some as divvy's go back in real terms. If one has a longer lens then it is acceptable that GNE has to future proof the business and it would be irresponsible (risky) to continue to pay increasing dividends when it's assets need replacing/modernising.
As a dabbler in SKY (yeah, I know) then I see that as a cautionary tale of a business which paid massive dividends for too long (I remember getting a 32c special dividend!) and didn't look up and see the digital asteroid about to hit it. Not that GNE is any real danger, but renewables will pay an increasing part of the future energy landscape and investing in them now, will pay dividends (literally) later.
Well said my friend but the question in my mind is will the investment in renewables pay dividends in due course that are larger or smaller than those from the legacy assets? For me that's the unknown $64,000 question. That said, I do agree they can't simply do nothing. I leave the feel good lower emissions stuff to others...nice feelings about generation being more environmentally friendly doesn't pay for the thousands of liters of diesel I burn in my boat every year, opps, is that a Freudian slip and does that make me a bad high emissions dog lol :-[
On another subject poking a bit of fun at myself I told myself this morning that I had been on the keyboard here too much this week and to take a break for today and the weekend. That didn't work out to well did it lol Oh well, there's always a chance for a fresh start tomorrow.
Shareprice down to 240 .....getting closer to 220/225
Quote from: winner (n) on Aug 25, 2023, 06:38 PMShareprice down to 240 .....getting closer to 220/225
If it gets down to those levels then that's a buy in my book. Even at $2.40 it's very tempting but it looks as though it will fall further. The vultures are circling...
Quote from: Basil on Aug 25, 2023, 05:57 PMWell said my friend but the question in my mind is will the investment in renewables pay dividends in due course that are larger or smaller than those from the legacy assets? For me that's the unknown $64,000 question. That said, I do agree they can't simply do nothing. I leave the feel good lower emissions stuff to others...nice feelings about generation being more environmentally friendly doesn't pay for the thousands of liters of diesel I burn in my boat every year, opps, is that a Freudian slip and does that make me a bad high emissions dog lol :-[
On another subject poking a bit of fun at myself I told myself this morning that I had been on the keyboard here too much this week and to take a break for today and the weekend. That didn't work out to well did it lol Oh well, there's always a chance for a fresh start tomorrow.
Well, I've got a diesel campervan with a Greenpeace sticker on it, so we're all hypocrites mate! ;D
Fbar out with latest.
Sell sell sell
GNE also surprised by holding the FY23 dividend flat to FY22, sending a signal it is likely to be more cautious going forward. Earnings cuts and dividend cuts has resulted in a -31cps reduction in our target price to NZ$2.65. With an uncertain near-term outlook and a strategy update pending, we drop our rating a notch to NEUTRAL from OUTPERFORM.
I think maintaining the dividend is going to hinge on how well they can stop OPEX inflation. A few years ago opex was going down. If they can get back to that then there should be enough FCF left after dividends to deal with the solar needs. Don't forget that most years around 40 million gets raised via DRP as well. At 50/50 split with FRV Solar that would be around 1 Lauriston solar farm per year. Regarding that solar farm, I'm impressed with the capacity factor they are expecting. Normally I thought NZ solar hung around 13% but they seem to reckon they will get 20%. Looking at the financials it doesn't look too bad, if we assume all of the solar output is used to replace thermal generation, based on recent years thermal gen cost of $96/MWh Lauriston should deliver around 7-8 million a year in generation cost savings. Probably looking at 7-9% return p/a on the asset cost. Nothing special, but necessary none the less.
I have reconsidered my thoughts on the dividend.
The increased imputation credits outweigh the lack of any slight ($0.001) increase in the final dividend. So rather than having a tax bill attributable to incomplete imputation (effectively decreasing my dividend), Genesis has already paid my tax bill so I get to keep all the dividend. This is a better result than a typical $0.001 increase in the final dividend
Yes, I would have liked a bigger dividend to reflect the excellent year the company had. But the debt reduction will improve future earnings
Good points above.
I've spent most of the day digesting the annual report and brokers reports on GNE.
My thoughts in summary:
GNE to me is almost like a game of two halves, followed by a rematch with lower earnings after that.
The last 9 years since it listed in 2014 and next 9 look very different to me.
When this listed in 2014, the end of Kupe and the Rankines was far off into the future it could almost be overlooked. 9 years on the end of the effective level's of generation from these assets is a reality that's now brought into stark relief by GNE themselves stopping the dividend growth sending a very powerful signal about the future.
Sure GNE will say they have a vital role to play in the economy transitioning into a sustainable future...but they would say that and have too. The reality is there is enormous new solar and wind generation planned by GNE's peers (16,000 GW's in the pipeline of renewable generation from the industry) so GNE's solar is only a very small part of that and they only have a 60% interest in that JV.
Looking ahead to the next 9 years, we have Kupe running down right down into the very tail end of its useful life and so much new solar and wind generation in progress it appears the Rankine's output will be extremely limited around the same time as Kupe dramatically tails off.
Crucially, from my perspective as someone in the near term who is entering retirement, I am not convinced GNE can maintain its current dividend rate past the current decade. Nor am I convinced they can maintain the current 100% imputation rate and expect a reversion to a lower level. (The imputation account is empty)
The Rankine's appear set to play only a very, very limited baseload back up generation role in the 2030's. Likewise, as noted above, Kupe will be seriously tailing off by the turn of this decade and I note their infill gas well this year only replaces approx one year of production capability.
Assuming the strategic review due to be enunciated in late November doesn't signal a major step up in capex and winding down of the dividend, (I am not convinced this is a very safe assumption), I agree with one brokers view that dividends are flat (at best) for the rest of this decade and then transition to a lower level thereafter. One brokers view is a level of 16 cps is sustainable thereafter...I am not sure I agree it's that high. I think it's safer to assume 14 cents.
I am not convinced at all that they will build sufficient renewable generation in time to give returns commensurate with the gradual wind-down of Kupe and the Rankine units.
Using a discount dividend valuation model fair value to me if the 10-year Govt stock risk free rate was 4.0% is $2.45 + near term dividend of 8.8 cps = $2.54.
With the 10-year risk free rate currently situated at just north of 5% I see a spot value today of $2.28.
Assumptions underlying this are 17.6 cps dividends with 80% imputation through to FY30 and 14 cps thereafter with 80% imputation.
8.5% required rate of return on dividends in the long term with normalised risk-free rate, currently 9.5% gross.
Elephant in the room is will the new CEO embark upon such new capex as to threaten the sustainability of the dividend in the near term ?
I note one broker has a DCF valuation of $2.20 which isn't far off my value but then goes on to use a blended average of various valuation methodologies including peer group comparisons which in my view may not be relevant due to the limited life of legacy assets.
Disc: Recently sold 90% of my shares.
As far as GNE goes I think a number of investors are concerned about the dividend cut. At the end of the day though it's fully imputed as against last year and is bugger all. What's a pip. It's the step change after 10 years and I understand that. Is it the new ceo wanting to be cautious as often is the case, or the start of dividend cuts to replace old ageing assets. It's human nature to be cynical I guess.
A payout ratio of 59 percent below their own target of 70-90 percent of free cash flow. Plus the DRP reduces cash payments by 22 percent. A good balance sheet with FY24 with possible add back of unit 5 impact from insurance of $20m to $30m.
However is this the start of something much bigger. As you point out the rankines are coming to the end of their life.
My understanding is that resource consent expires in 2037. I note the interim ceo Tracey Hickman said in Feb 23 that there is a possibility to extend to 2040.
At the moment I see three major risks one is the smelter the other is Onslow and with the current outage how confident are we that the rest of the rankines are not going to have some sort of issue before replacement renewables are on line.
We also have increased costs up 11 percent this year ($31m) and set to rise ($45m) in 2024.These should level out I think. Carbon price out look who knows. They have a large pile of coal purchased at good prices that has not been utilised due to the rain.
As far as Kupe gos. We are going to need gas for some time. I see this as being very valuable. Who knows the field may have larger or smaller reserves.
Genesis have a solar 500MW target by 2026. Indicative costs are NZ $1.5m/MW. My understanding is that the new solar/wind generation will gradually replace the Rankins. Possible grid scale battery also.
I don't expect much is going to happen until the update in November. By then we will hopefully have some clarity on the smelter and a very good chance of a national government which will be the end of Onslow.
As far as the share price is concerned much has to do with bond yields and interest rates as investors have been attracted to the yield for a relatively safe majority government owned stock. Lately bond yields and interest rates have been going up. As soon as they start coming down the share price should head back up.
If the smelter does not sign up one would think that Genesis is going to have some very cheap hydro for some time. Certainly will be no need to burn coal. One thing for sure is they have a large retail base to feed.
This re balance will be over soon so will be interesting to see what affect that will have.
I have been a holder since it listed and have enjoyed a steady stream of new shares. Will continue to add on weakness as part of a balanced portfolio.
Good post Shareguy. I think its FY27 for implementation of the 500 MW of solar but GNE's share is only 60%, 300 MW's. Is this peak capacity and how much does it produce on average across the seasons taking into account the limited daylight hours ? Keep in mind Rankine can potentially 24/7, 365 days a year so that's a LOT of generation to replace. I don't know enough about average daily outputs from a 60% share of 500 mw's of peak capacity but by comparison Huntly has a peak output of over 1200 mw's and only a third of that is unit 5 so that's a lot of Rankine capacity to replace, about 800 mw's at peak load if they are all working.
Kupe's outputs will steadily tail off over the next decade....no way to materially change that outcome. Eventually unless the Govt allow more exploration we will have to import LPG and Gas at hugely elevated prices to those currently prevailing. I suppose some "rocket scientists" in the Green party will count that as a win.
No question GNE was great value when they listed at $1.55 and original IPO investors have done very well and enjoyed great yield over the years but legacy nonrenewable generation is basically half used up now as I see it and that must be factored into one's valuation thinking now, in my view. Pretty sure they abandoned their formal 70-90% dividend payout ratio a while back and there's no formal new policy now. Might review and refresh my memory on that tomorrow.
As you suggest, not long until the index exclusion this Thursday. It will be a big test for the share price to see how local investors try and soak up international selling pressure as it exits the MSCI small company index. Closed at a new multi-year low today and I very much doubt that's the end of this correction. Might grab a few of the ones I sold back if it goes very close to my revised fair value of $2.28.
Quote from: Basil on Aug 28, 2023, 04:09 PMThe reality is there is enormous new solar and wind generation planned by GNE's peers (16,000 GW's in the pipeline of renewable generation from the industry) so GNE's solar is only a very small part of that and they only have a 60% interest in that JV.
That's one mighty large intermittent generation pipeline, when we consider that current generation capacity is approximately 9GW
1800 times more generation than present???
What will it all be used for? And how will it be moved around the country without "thousandss of new pylons"?
And where are all the solar panels and wind turbines going to be located? Assuming half the capacity is solar, that's 16 billion solar panels covering 2.9 million hectares (zero gaps between panels)
Apologies for the typo, its 16,278 MW's in total of new solar, wind and geothermal under review (not GW's) and consideration / current development at various stages, by all industry participants according to a broker report. They give a full breakdown by company, location and type of project including where in many cases...far too extensive to post here and any more info would be a breach of copyright. Not all of this will pass the rigorous cost benefit analysis by these companies by any means especially with the much higher cost of capital and debt these days but I think a fair bit of it will over the next decade or so.
GNE's total share of that is only ~ 700 mw's and its JV stuff so they only have 60% of that, approx 420 mw's about 2.9% of the total that's under consideration / development across the country. There's so much in the pipeline this underpins my thinking that the role of the Rankine units past this decade is extremely limited. Factor in Kupe's role in the 2030's is also very limited, very late-stage field outputs and this underpins my thinking about a much lower dividend in the 2030's and beyond.
Glad you pointed this out because on looking at this again I gleaned some other important information.
Of the various forms of renewable energy under consideration / development its broken down into the following types.
Geothermal 607 mw's generating as estimated 5100 GW / hr's of output per annum (assuming this runs 24/7 365 days a year that's a conversion of 8.4
Solar 9027 mw's generating an estimated 15,763 GW / hr's of output, average output / peak capacity relative to Geothermal only 21%
Wind 6.644 mw's generating estimated 22,870 GW/hr's, average output relative to geothermal of 41% (Makes sense, the wind can blow 24/7 at times).
Extending this to GNE's solar and what does 60% of 700 mw's of solar sort of replace in terms of baseload generation?
60% of 700 = 420 mw's of peak output x 21% average output = the same as 88 mw's of equivalent base load generation, albeit only generated intermittently.
Obviously, this isn't going to come anywhere near to replacing the earnings as the Rankines and Kupe tail off. Happy with my workings today.
There is definitely risk to the dividend, but do wonder if 14 cps is a bit extreme. Even if you assume they issue another 250 million shares via DRP that still has dividend outgoings below where they are now. Hopefully opex does not continue to inflate so badly and they actually achieve all the efficiencies they are hoping for with this technology spend.
One thing to consider is the ~1900 GWh worth of coal inventory. This inventory + some other fuel is on books at $157.5 million (at cost or todays value, whatever is lower). They have said in the report that they do not foresee any more coal purchases, if this is true then this will be another source of cash flow in the coming years. I'm thinking they are going to run on gas a lot more going forward to realise the Kupe cash flows sooner.
We still have three rankines. Avg steam turbine plant retirement age in USA is ~50 years, some higher some lower. It is highly probable at least one rankine makes it well into 2030. I expect this decade will see continued declines in rankine utilisation, this may extend their operating life further especially if they avoid doing lots of heating/cooling cycles (associated with peaking operation).
NIWA says a very cold night ....chance of 0° or less high in most of country
Even Auckland / Northland mentioned .......and Southland only 'warmer' place over night.
No doubt grid under pressure ....again
Good posts there Basil
Seems a lot of what you say points to GNE being more 'risky' now than the last few years.
As I said earlier based on historic 'risk premiums' GNE currently has been over priced ...punters have been content with getting a perceived good yield.
If that 'risk premium' reverts to average then share price about $2.20 on cards.....and could go even lower if yield went back to IPO levels
Updated this chart for you
A2B00589-23C0-4EE8-AF52-6ADB13CC0872.jpeg
Very interesting chart Winner, thanks for sharing. Notable that the yield premium was much larger in the early years compared to now which doesn't make sense when you consider the average age of nonrenewable generation assets was a lot younger back then.
Plata, thanks for your views, appreciated. I don't think extreme is the right adjective to describe my estimate of dividends next decade, too conservative maybe but I'd rather err on the side of conservatism given we're talking about forecasting dividends in the next decade.
There's no question in my mind that one or possibly two Rankine units will play a role as baseload backstop generation for some of the 2030's, and remaining tail end production from end-of-life Kupe output will help too but my view is these are very minor roles compared to their generation and production currently. There's so much new generation in the pipeline from others, and Kupe is tailing off pretty quickly.
I really don't think there's any magic wizardry the new CEO can weave. You can't make a silk purse out a sow's ear. The board either cuts dividends soon and makes an even more massive investment in solar and wind, (might be what they announce end of November as part of their long-term strategy review), or they cut about the turn of the decade to reflect substantially decreased outputs from legacy assets going forward. My view is I am very confident of my thesis that the current dividend rate is not sustainable long term and that's central to forming my view of valuing GNE.
That is fair. I do question the relevance of other generation projects to GNE cutting the dividend given GNE has never had the most output yet has the most customers even after the trustpower acquisition to my knowledge. I think if the other operators thought output = customers we would not be seeing deals like contacts Tuahara 650 GWh contract being offered, lord knows GNE won't be paying the equivalent retail netback CEN could achieve.
IMO, the vast majority of output in progress right now is intermittent, and much of it is solar. It has been repeatedly demonstrated overseas that absent of reactive changes in demand or of non-intermittent supply, spot market volatility is greatly increased to the downside during times of high wind or during the middle hours of every single sunny day with enough solar (see "duck curve"). Pretty sure that some Haiwain and Californian grids have experienced negative spot prices regularly at midday, although those are extreme cases. IMO with so many customers vs GNE max output AND the high degree of adjustability (ramp up/wind down rankines, unit 5, 6), GNE is highly advantaged by this stampede of renewables. The most recent result was buoyed by significant spot market purchases at good rates due to excessive hydro output depressing prices. I expect a similar outcome once solar starts to make a meaningful % of day time power output. GNE either has to buy power from the spot market or other big players, or make it themselves with Huntley to meet the demands of its customers. Anything that increases the supply of power is an absolute good for GNE IMO, so long as it is predictable enough to give huntley time to spin up.
Despite this, I do agree that the dividend being cut is very much on the table in the medium-long term. I think the next couple of years will be the decider as to whether or not that happens. If OPEX inflates another 10/11% in FY25 it will probably be all over before they even get the chance. But my current position (in more ways than one) is that the dividend will not be getting cut any time soon.
Good points Plata and yes I have noted the timing of generation from my friends flash new solar system with Tesla Powerwall and they're very different to peak electricity demand times in the evenings! Gosh...more than $30,000 for a really good home solar system, not cheap!
Worth remembering, we will see a significant ramp up in EV charging demand over the 2020's and 2030's and maybe instead of cheap night nates to charge like we have now it ends up being flipped on its head and there's cheap rates during the day at times of maximum solar generation?
With regard to retail customers its possibly worth noting that based on the change to internal transfer pricing in FY23 to $125 per Mw/hr GNE lost money on retail. I presume this transfer pricing change has something to do with the future pricing of the new offtake agreement for geothermal coming into effect in 2025.
I think Winner has made a great point about the declining premium to the 10 year Govt stock rate, but also I wonder if it wasn't too good in the past, (and not just for GNE), and more relevant now is consideration of what GNE's gross yield might be on a sustainable basis going forward, say 14 cps 80% imputed = 18.04 cps gross / $2.40 = 7.5% relative to the other gentailers current yield?
Anyway...that's enough far-reaching pondering about the 2030's for me, (might not even get there with my health lol). One thing right in front of us, it's going to be very interesting to see where this settles as the index exit takes effect on Thursday.
I am looking to nibble a few I think they're still, despite the issues raised, a decent add to an income portfolio. However, I think I'm probably a bit late if it comes into effect 31st I would expect all those effected have had time to sell out of their positions by now and other factors may be holding the price lower for the moment. I'm not certain we'll see huge volumes on the last day? Has anyone purchased a share coming out of an index before and has any experience with how it goes? I can't say I ever have before.
T
Quote from: Glenorchy on Aug 29, 2023, 06:41 PMI am looking to nibble a few I think they're still, despite the issues raised, a decent add to an income portfolio. However, I think I'm probably a bit late if it comes into effect 31st I would expect all those effected have had time to sell out of their positions by now and other factors may be holding the price lower for the moment. I'm not certain we'll see huge volumes on the last day? Has anyone purchased a share coming out of an index before and has any experience with how it goes? I can't say I ever have before.
To my knowledge the extent of MSCI Small cap ownership of GNE is pretty limited. Expecting some big off market trades at around current prices or a very large volume closing auction. Lets not forget when this happened with CEN and the clean energy index something like 70 million nzd moved in the closing auction at a higher price than what it opened at.
Quote from: Basil on Aug 29, 2023, 10:25 AM1. Worth remembering, we will see a significant ramp up in EV charging demand over the 2020's and 2030's and maybe instead of cheap night nates to charge like we have now it ends up being flipped on its head and there's cheap rates during the day at times of maximum solar generation?
2. With regard to retail customers its possibly worth noting that based on the change to internal transfer pricing in FY23 to $125 per Mw/hr GNE lost money on retail. I presume this transfer pricing change has something to do with the future pricing of the new offtake agreement for geothermal coming into effect in 2025.
1. I think that will definitely play into it to some extent, I reckon that solar buildout will be much more aggressive than EV uptake this decade though. Quite hard to guestimate how that battle will play out.
2. That was an interesting little fact, took me a bit to find it in the report. I'm very doubtful GNE is paying anywhere near $120 per MWH for the CEN power given thermal costs ~96 per MWh inclusive of carbon credits (for which they are hedged to the eyeballs). Do you think this metric is important? I was thinking that GNE is probably incentivised to move profits away from retail into wholesale given all the depreciable assets are there?
I agree the rate of new solar generation is likely to outstrip new EV demand for quite some time. I don't think there's going to be a massive EV uptake until they're the same price as ICE cars.
Maybe they are transfer pricing it based on where they see a normal year, fair value average generation cost, normalizing their in the money carbon hedges and pitching it at a level that gives a certain percentage return on generation assets, say 8%? I guess saying they are losing money on retail is one way of justifying higher charges and I note one of the brokers said they'd lagged the market with price increases last year. I guess GNE customers can expect price increases.
Quote from: Basil on Aug 29, 2023, 08:10 PMI agree the rate of new solar generation is likely to outstrip new EV demand for quite some time. I don't think there's going to be a massive EV uptake until they're the same price as ICE cars.
I think you'll find that the uptake of BEV/PHEV has been quite substantial since the CCD/CCS legislation. A definite spike, the stats are available.
What's more, the low end is priced well into the range of average ICE/Diesel vehicles, a number are under $50k, some even lower, and with the discounts on that, they are an attractive proposition. Used imports are even lower priced, even with low mileage.
Things have moved swiftly towards conversion of the national fleet of used and new cars. This will likely continue as the incentives are compelling, however both National and ACT have said they'll can at least the CCD. ACT want both CCD and CCS canned.
Anecdotally, since buying a PHEV (a very nice used very low mileage BMW300e), my running costs have absolutely plummeted. Last time I checked, I got 1100-1200km per tankful of petrol, which was under $100 to fill up, currently about 3-4 weeks between fills. It's been a truely eye opening experience to have bought into the electric. My electricity bill has gone up a bit, but nothing like what it would have cost to fill my petrol tank weekly prior.
The truely surprising thing is, on electric mode, apart from being silent which is pretty cool, the power delivery is way more impressive off the low-mid range than even the turbo'd 2.0l. Go figure. Instant torque and power, it's quite a different experience.
I do like my new (used) car, it's been the best vehicle for money that I've ever bought. Luxury sedan at a ridiculously low import price, including government discount, and massively less cost to run.
Head out of sand is the best way to explain my experience.
Quote from: Basil on Aug 28, 2023, 06:29 PMApologies for the typo, its 16,278 MW's in total of new solar, wind and geothermal under review (not GW's) and consideration / current development at various stages, by all industry participants according to a broker report. They give a full breakdown by company, location and type of project including where in many cases...far too extensive to post here and any mo
Somewhat more realistic figures
But.....
Current generation capacity is 9GW, of which 2GW is thermal
The idea that 16GW of extra capacity is being considered is still OTT. Given intermittent generation up-time is approx 25%, but limited to daylight (solar) or concentrated in spring & autumn windy periods (wind). The only true baseload renewables are hydro and geothermal (which is not zero carbon)
So what fills in the solar and wind generation gaps? Lake Onslow is the obvious answer, but the blue team have stated they will stop this project. Leaving only chemical batteries (extremely expensive) or gas. So gas is the only viable option, making GNE ideally placed with both gas supply and gas generation consented and permitted
National have also stated they will re-allow gas prospecting offshore. This may attract some prospecting activity, but probably will not (as NZ has now proven to be a risky political area to drill oil/gas wells). However I believe that electricity generation will be the last major industrial gas user in NZ, for the purposes of electricity security. So not all 2GW of thermal generation will be retired, probably just the 750MW of coal, once the coal stockpile is gone and the biomass takes the Rankines to their end of life
Increasing intermittent generation also needs to be backed up by "secure" generation to avoid the lights going out in non-windy winter evening demand peaks. Chemical batteries could fulfil this function, but are very costly
So there is really only 750MW of generation to replace (which the already planned extra geothermal will do), some time in the 2030's. Plus natural growth through electrification of transport and process heat
It looks like about half of the 16GW would be needed (based on 25% up time)
It would be interesting to compare the build cost for this 8GW of wind and solar against the $16B cost if Lake Onslow. I reckon it would be cheaper to build Lake Onslow, and get a better result as well....
But we will probably never find out
Good post xafalcon and its funny you suggest that only about half of the proposed projects will actually get built as I was thinking the same.
GNE are talking about $1.5m per mw/hr capex for solar so assuming half of the total planned in the industry gets built in due course that about 4.5 GW/hr's and assuming an average cost the same as GNE's that's $6.8 Billion.
Going purely off memory here which may not be right, I recall one report estimated wind at $2.9m Mw/hr, roughly twice the cost of solar but it has roughly twice the effective production envelope so if half = 3.3 GW/hr's gets built that's about $9.6 Billion.
In total ironically enough that's about the same $16 Billion last reported estimated cost of Lake Onslow but it must be remembered that Lake Onslow is a battery for emergency dry years whereas the wind and solar is actual generation all the time within the limitations of course of when the sun shines and the wind blows.
My biggest concern with Lake Onslow is that the original budget of $4B was quadrupled recently and who is to say the real cost is not going massively more than $16 Billion?
I guess you could say the same about the solar and wind projects planned by the Gentailiers but at least they are evaluating them around, hopefully, thorough cost benefit analysis whereas I think Lake Onslow as a back up is more ideologically driven around CO2 reduction.
Buzz- Sounds like you are enjoying your BMW, good for you. Couple of thoughts on what you posted. Yes you can now pick up a cheap small EV hatchback made in China for under $50K and grab the $7K incentive before its gone but apples for apples you can also pick up a very similar sized cheap small ICE powered Chinese made hatchback for about half that price e.g. https://www.trademe.co.nz/a/motors/cars/mg/3/listing/4215797955
We had a good look when we replaced, my wife's vehicle that got waterlogged in the Auckland weather events earlier this year and found the price was double further up the scale to go electric. We picked up the multi award winning best in class medium SUV the Kia Sportage diesel as a demo for a little under $40K. The equivalent EV was $79,990 plus on roads less the incentive, about $73K on the road.
Very recently I read we just surpassed the 2% mark for the National Fleet, this after 13 years of availability of EV cars. Sure they will get cheaper and battery technology will improve too but on the other hand both main political parties are saying expensive road user charges are coming for EV's from 1 April next year and maybe plug-in hybrids too and the current incentives for these sorts of vehicles look like they might have a short remaining life.
Zooming out and looking at the big picture for context, If the amount of solar and wind generation I've talked about above gets built over say the next decade, after adjusting for 20% effective output from solar and 40% from wind that's the equivalent of 4,462 Mw's of new capacity, albeit intermittent generation but still's that's equal to more than 5 times the maximum output from our biggest hrdro station at Lake Manapouri and that's assuming Manapouri runs at 100% capacity all the time, which it doesn't.
I think if half this solar and wind gets built, we are going to be "swimming" in excess intermittent generation capability.
Craigs said this morning as part of bakers dozen
GNE – Bashed this month (-11%), drops out of MSCI today. Final DPS 8.8cps ,21 Sept. Wait for rebound.
I'm waiting....
Not sure its going to get down to my price or Winners.
Quote from: Basil on Aug 31, 2023, 03:24 PMNot sure its going to get down to my price or Winners.
Just a bit of irrational exuberance today
Patience is required Basil.
No worries...I am taking a last minute, so to speak, very "dogged" approach.
fortune favours the brave, been hovering them up this week, add a nice divi collect just around the corner.....even got some more @ $2.415 this morning
A couple of corrections to your reply Basil (I hope you don't feel picked upon [not my intention], I just think it's important that we all understand what the facts actually are)
$1.5M/MW (not $1.5M/MWh, big difference). I assume it's actually MWp, but this is only an extrapolation of how solar generation is usually described
Lake Onslow primary function is (and was always) daily energy arbitrage, not dry year coverage (a very useful secondary function that is due to the sheer size of lake Onslow 5TWh). The media for some reason seem fixated on dry year coverage, so I'm guessing this is where you picked it up. But if you read the reports, it's primary function (like all other pumped hydro batteries) is daily energy arbitrage. This is why the electricity generators are so opposed to it. = Buy electricity during sunny/windy/wet periods when wholesale price is almost zero and use it to pump uphill. Then generate and sell power when wholesale price is high - morning and evening peaks
This allows more intermittent generation in the grid, as the big battery soaks up any excess power and makes up for power shortages, thus stabilising the grid
Quote from: xafalcon on Aug 31, 2023, 05:30 PMA couple of corrections to your reply Basil (I hope you don't feel picked upon [not my intention], I just think it's important that we all understand what the facts actually are)
Thanks for putting it like that
$1.5M/MW (not $1.5M/MWh, big difference). I assume it's actually MWp, but this is only an extrapolation of how solar generation is usually described
Not sure and there's no way I'm diving back into those reports to read through them again.
Lake Onslow primary function is (and was always) daily energy arbitrage, not dry year coverage (a very useful secondary function that is due to the sheer size of lake Onslow 5TWh). The media for some reason seem fixated on dry year coverage, so I'm guessing this is where you picked it up. But if you read the reports, it's primary function (like all other pumped hydro batteries) is daily energy arbitrage. This is why the electricity generators are so opposed to it. = Buy electricity during sunny/windy/wet periods when wholesale price is almost zero and use it to pump uphill. Then generate and sell power when wholesale price is high - morning and evening peaks
This allows more intermittent generation in the grid, as the big battery soaks up any excess power and makes up for power shortages, thus stabilising the grid
Effectively that would undermine the returns in the whole sector so yes, its clear why all the Gentailiers are against it. With the polls where they are as it's not on National's radar, it's looking increasingly unlikely Onslow will see the light of day anytime soon.
Surprising strength in GNE's share price today consider it was MSCI small companies index exit. I'm honestly not worried I didn't buy any back, I'd prefer to invest in companies with a good yield and very strong prospects of dividends increasing over time, not decreasing. I still have a "nursery" sized stake so I'll see what they have to say at the investor day in late November and go from there.
Hey Basil .....we still might get that 220/230 price
After last weeks bit of enthusiasm back on track I reckon
Back out the forthcoming 8.8 cps fully imputed dividend and yesterday's net effective close was $2.425 - 0.088 = $2.337, pretty close to your target buy in price mate. Tempted?
I find it quite bizarre that the price rallied so strongly on the day of the MSCI index close last week and yet in the days immediately preceding that and yesterday it's in the very low $2.40's. Not sure what to make of recent share price movements but I couldn't resist buying a modest portion of the ones I sold recently in the high $2.50's back in the low $2.40's yesterday. Now just playing "possum in the headlights" and see what happens.
10 year Govt stock back about 5% and with US 10 year treasuries up 9 bps overnight it looks like we're headed to as high as 5.2% on our 10 year in the short term. Where to from here is anyone's guess... Probably no hurry to buy back any more.
I expected it to drop slightly lower than $2.40 on the days immediately prior the index exit. It might still though. Nonetheless, I feel the dividend is still attractive at these lower levels.
https://www.stuff.co.nz/national/crime/300973129/men-charged-with-stealing-99k-of-electricity-after-investigation-into-cannabis-operation
I wonder if we are going to get any of this back...
"Back out the forthcoming 8.8 cps fully imputed dividend and yesterday's net effective close was $2.425 - 0.088 = $2.337, pretty close to your target buy in price mate. Tempted?"
I was tempted enough to buy some of the ones I sold a while back in the high $2.50's at that above price recently. Like others I thought under $2.40 might have been on the cards. I thought it somewhat interesting in today's announcement that they anticipate Unit 5 being back on stream several months earlier in January 2024 and yet losses after insurance deductible are now estimated at the midpoint of the previous guidance range $20-$30m ($25m), despite being back in operation a lot earlier. That suggests losses could have been much higher than the top end of previous guidance if this outage had of run its full course.
Who knows what they will say with their investor day future strategy review announcement in late November 2023. I would have loved to go to the annual meeting on Friday October 13 to ask the directors point blank if they understand that most investors but this stock for the dividend and to seek an assurance that the current dividend level is safe but disappointingly this is the same morning as Barramundi's annual meeting and I have far more capital invested in BRM shares and they put on a very nice lunch after their annual meeting. I guess I could waste some time and send in a question online to the GNE board before the meeting but every time I have done this with every other company, they never answer it.
Apparently one of contacts 100 MW peaker plants shredded itself and is out of action for all of 2024 and probably more. It will be good to have our biggest fast starter online for the upcoming winter. I hate to think what spot prices will be like at peak times if its anything other than a wet winter... lets hope GNE can cash in.
Genesis Energy Limited (NZSE:GNE) Stock Goes Ex-Dividend In Just Four Days (or 2 now).
https://simplywall.st/stocks/nz/utilities/nzx-gne/genesis-energy-shares/news/genesis-energy-limited-nzsegne-stock-goes-ex-dividend-in-jus
$2.4258 VWAP on 492,708 volume 21st Sept - Good start for a good DRP price ;D
$2.421 VWAP on 448,636 volume 22nd Sept
Waiting for the green arrow.
GNE_2023-09-22_15-51-40.png
Quote from: Plata on Sep 21, 2023, 06:27 PM$2.4258 VWAP on 492,708 volume 21st Sept - Good start for a good DRP price ;D
$2.421 VWAP on 448,636 volume 22nd Sept
Not the best close for old genesis... $2.41 VWAP on 674,620 volume 25th Sept. Looking like a DRP strike price of ~$2.35.
Quote from: Plata on Sep 25, 2023, 06:45 PMNot the best close for old genesis... $2.41 VWAP on 674,620 volume 25th Sept. Looking like a DRP strike price of ~$2.35.
Excellent
Close 239 ...back to 2017 prices
The 220's still on the cards I reckon
Quote from: winner (n) on Sep 26, 2023, 08:14 AMClose 239 ...back to 2017 prices
The 220's still on the cards I reckon
Any insights into timeframes to 220's?...
GNE very interest rate sensitive because people buy it for the yield.
US 10 year treasuries hit a 15 year high overnight our time and N.Z. 10 year rate is also at a 15 year high.
While even higher highs can't be ruled out, (implying further downward pressure on interest rate sensitive shares so their yields move correspondingly higher), I suspect we are somewhere near the bottom for GNE with the caveat that dividends don't get reduced as part of their long-term strategy refresh to be announced at an investor day in late November.
From a chartists perspective the TA doesn't give any confidence. I still have a few, (<2% portfolio position). I'm disinclined to increase it unless Winner's prediction of $2.20's comes true.
Quote from: Ricky Bobby on Sep 26, 2023, 02:03 PMAny insights into timeframes to 220's?...
When punters become more risk adverse and 'demand' a higher premium to 10 year Govt stock .....like getting closer to the long term average premium ...or could be when 10 year rate goes up further
Might even be a double whammy (both of those factors) so don't rule out $2.00 .....say over the next few weeks
Could be
Thanks fellas! Yeh I have a small position, but thinking of adding a few more, if the price is right!
Quote from: Ricky Bobby on Sep 26, 2023, 02:28 PMThanks fellas! Yeh I have a small position, but thinking of adding a few more, if the price is right!
Some say long term you can't go wrong at these levels .....they say interest rates go lower some time ......equals greater share price.... One day might be $5/$6 ..or even higher
Good day today for share price eh
The 10 year relationship is interesting and makes sense. It is interesting that this relationship exists yet the share price and 10 year yields don't seem to move in lock step with each other day to day. I wonder, is the correlation stronger between the NZ 10 year yield and GNE, or the US 10 year yield and GNE. I suspect it is the latter. Regardless, both NZ and US have steadily become more indebted since GNE listed back in the day. Could this shrinking risk premium simply indicate that compared to 2014, the riskiness of GNE has increased slower than the riskiness of NZ/US govt bonds?
I always thought valuation best practice was to use govt bonds as the risk free rate, surely if GNE was being valued on its cash generation, changes in the risk free rate day by day as govt bond yields fluctuate would be shown in the share price day by day. Why isn't this the case?
Maybe oil prices cranking up again and the value of their LPG and Gas in Kupe also has something to do with it. Massive reserve coal stockpile too.
The last time it hit 2.20 ish was WB 23rd March 2020 and it was all over the place that week, the 10year was 1.120%.
Open 2.21
High 2.58
Low 1.99
Close 2.32
The last time it wicked this low intraday was Fri 17th June 22 when it hit 2.40 the 10year was 4.268%.
Today it wicked to 2.385 the 10Year was 5.240%
So, the relationship between 10year and price is not fixed linear, perhaps more just a drag on price.
I see National is going to stop any further spending on Onslow in first 100 days
https://www.national.org.nz/100dayplan?utm_campaign=20231001_100dayplan2&utm_medium=email&utm_source=nationalparty
Disc: Now my second largest holding
Watching CNBC this morning I was really surprised to see a huge move down in the Utilities index, down 5.3% in a single day at one point, think it closed about 4.7% down for the day (11% in the last week).
Higher 10 year treasuries that we've been talking about are spooking the market. I think it's the speed of the increase that's really worrying investors. US ten year rate started Sept at 4.07% and closed today up another 12 bps at a 16 year high of ~ 4.7%, the highest yield since the GFC.
That said the yield on their Utilities index as a whole is only 3.8% so you can understand why it's under pressure with their 10 year rate nearly a full 1% higher.
GNE's yield gives it the most defensive attributes in this sector however we have their new strategy to be announced in an investor day late next month and the new CEO might take a whole new approach to using earnings considering the long-term prognosis for Huntly and Kupe. In the medium term GNE also carries a LOT of debt and when that gets repriced that's going to hurt.
Overall, I am remaining cautious with GNE and await further details of the new CEO's strategy.
Quote from: Basil on Oct 03, 2023, 10:12 AMOverall, I am remaining cautious with GNE and await further details of the new CEO's strategy.
I'm curious what strategic initiatives such an organisation can implement that will make a meaningful difference. Options including either a local or overseas acquisition which would require a CR and/or extra debt, or some new technology that may require a lot of time to be financially meaningful. Turning around an organisation of this size could be like trying to turn around the QE2.
Quote from: Ferg on Oct 03, 2023, 04:42 PMI'm curious what strategic initiatives such an organisation can implement that will make a meaningful difference. Options including either a local or overseas acquisition which would require a CR and/or extra debt, or some new technology that may require a lot of time to be financially meaningful. Turning around an organisation of this size could be like trying to turn around the QE2.
There is no way they will do any acquisitions. Why bother? They have a capital partner for solar dev, and even doing that to its fullest extent is out of the question due to the realities of debt and cashflow. Time to gaze into my crystal ball...
They said FID for the 45 MW solar plant was FY2024H1. I don't think it is a coincidence there is a strategy update within FY2024H1. They made this into a big deal by keeping us waiting, I don't think they would do this unless they were waiting for a few things to fall into place to announce all at once so that they seem bigger than they actually are. They will announce at least another 100 MW worth of late stage solar projects with FIDs in FY2025, and a battery storage project with FID being made FY2024H2 or FY2025H1.
Understood and thanks for that. I don't see adding additional generation capacity as anything overly strategic or exciting....IMO that should be BAU. If population +/- usage is growing at x% per year, then they would need to add at least x% capacity each year to maintain market share, assuming similar utilisation rates & yields. To me that's not strategy; it's more like tactics.
Maybe I am expecting too much from what is essentially a cash cow.
I just looked up their generation capacity and I see it is currently 1,652MW. Adding another 150MW over the next 2 years is adding 9% capacity. But that includes Huntly which I believe is not fully utilised (I don't know enough about this). Taking Huntly out of the equation, the 150MW is an increase of 21% which is a bit more meaningful. Do we have any stats on the utilisation rates of Huntly? e.g. is it used say 10 or 20% of the time?
Its likely all about messaging.
Hey market,
Look at us, we just announced 2-5 renewable projects in one day, please value us like meridian ;D
kind regards,
genesis.
The utilization on the Rankine's varies a lot. The third rankine isn't really an active service unit, more for emergencies. If you just look at the two active service units I think long run output is sub 50% of capacity (500 MW). Unit 5 does all the work, whenever I look it is almost always on near full output. You could argue that the solar stuff comes under strategy given GNE hasn't made any investment in renewables for years and years. Stretching its balance sheet to do so now and in the future is arguably a change in long term goals for the company. Your right the solar stuff is minor in the grand scheme of output. Where I suspect it will be more pronounced is in average generation cost. Cost of solar power per kWh is almost certainly going to be sub $0.07 which is a significant saving from using unit 5 to get that power. I'm not sure how bad daily operating expenses are for a solar farm but I've seen numbers of $0.04-$0.10 per kWh when you factor in all expenses such as interest on debt etc, and split the capex across all energy generated over the 25+ assumed lifetime.
Quote from: Ferg on Oct 03, 2023, 04:42 PM..... Turning around an organisation of this size could be like trying to turn around the QE2.
Probably an oil tanker. :)
I've been on the QE2's sister ship Queen Victoria twice... she turns on a dime.
Interesting posts.
Price closed on $2.40. Seems to still be edging down.
At the time of posting the S & P is down by 0.6%. May have an effect on our market tomorrow.
May yet reach the lower 'targets' during the next month for those interested in stocking up.
Quote from: Ferg on Oct 03, 2023, 04:42 PMI'm curious what strategic initiatives such an organisation can implement that will make a meaningful difference. Options including either a local or overseas acquisition which would require a CR and/or extra debt, or some new technology that may require a lot of time to be financially meaningful. Turning around an organisation of this size could be like trying to turn around the QE2.
Quote from: Onemootpoint on Oct 04, 2023, 02:10 AMProbably an oil tanker. :)
I've been on the QE2's sister ship Queen Victoria twice... she turns on a dime.
No you haven't (been on a zister zhip to the QE2 that is - because there never was a zister zhip to the QE2),
The zister zhip to the 'Queen Victoria' is commonly known as zhe 'QE' for 'Queen Elizabeth'
https://en.wikipedia.org/wiki/MS_Queen_Elizabeth
launched on 5th January 2010.
The zhip known as the QE2 eez this one.
https://en.wikipedia.org/wiki/Queen_Elizabeth_2
Launched 20th September 1967, out of service 27th November 2008.
"Queen Elizabeth 2 retired from active Cunard service on 27 November 2008. She had been acquired by the private equity arm of Dubai World, which planned to begin conversion of the vessel to a 500-room floating hotel moored at the Palm Jumeirah, Dubai. The 2008 financial crisis intervened, however, and the ship was laid up at Dubai Drydocks and later Mina Rashid. Subsequent conversion plans were announced in 2012 and then again by the Oceanic Group in 2013, but both plans stalled. In November 2015, Cruise Arabia & Africa quoted DP World chairman Ahmed Sultan Bin Sulayem as saying that QE2 would not be scrapped and a Dubai-based construction company announced in March 2017 that it had been contracted to refurbish the ship."
"Queen Elizabeth 2 reopened in Dubai as a floating hotel on 18 April 2018 following an extensive refurbishment."
Given the actual position of the QE2 today, Ferg's analogy is even more apt than he theenks it eez.
RB
P.S. And for those of us vith longer memories than that, (like old pilots), the real Queen Elizabeth was zees one
https://en.wikipedia.org/wiki/RMS_Queen_Elizabeth
Of the 94 million paid out as dividends, 20 million was returned via DRP. That is enough to pay off 75% of the current solar project at 40% ownership 1.5 million per MW as guided by GNE.
DRP at $2.36 nice.
Craig's list of current value ideas includes Genesis Energy (GNE) –
The company's share price has been soft since it reported its results in August. While we acknowledge that there were a few aspects of the result which were modestly softer than market expectations (including a flat dividend), we see the weakness relative to its peers as overdone.
In August, GNE was removed from the MSCI small-cap index. This created additional technical selling pressure which we expect to ultimately subside. Certainly, the exposure to thermal generation (mostly gas with coal back up) will restrict some investors, but NZ's continued shift to renewable generation does create supply risk during periods of adverse hydrology (dry-year risk). The solution will likely point to a degree of thermal capacity, which we believe GNE is best placed to supply. On the ESG point, we note GNE has science-based targets in place and a strategy to displace its own thermal plant with both PPA's and some organic renewable development – 46% ownership of Kupe is likely a bigger detractor on this.
Overall, with good progress on its Future-gen strategy, potential to provide dry-year risk cover, and an attractive yield (~10%), GNE presents as an attractive complementary exposure to our core electricity sector holdings in portfolios. However, a new management team and GNE's current strategic review (more information expected in November.
Overweight $3.05
Quote from: Red Baron on Oct 06, 2023, 09:34 AMGiven the actual position of the QE2 today, Ferg's analogy is even more apt than he theenks it eez.
Touché :)
well it and other might get ... actually take a beating apparently...
https://www.nzherald.co.nz/business/stand-off-why-the-nzx-may-be-next-in-line-for-double-digit-correction/UUZJJWA5AJEVZIG6A6BWFCMZAI/
Just posted this in 'bonds'.
Quite relevant here. Many have discussed this here and other gentailers.
Power generation is the future though isnt it... a country cant operate without power..
For those into this sort of thing there's lots of feel good ESG stuff in today's annual meeting speech's here http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GNE/419909/405046.pdf
I remain with an impending sense of concern that the current level of dividend is going to be the "sacrificial lamb" in Malcolm John's new refreshed strategy to be announced in an investor day on 30 November.
No idea if this is good or bad
But did note head count up by 78 on a year ago ...no wonder earlier announcement said they are dispensing with the services of a few hundred ....... Staff just a consumable eh
And injuries are up as well
Marked PRICE SENSITIVE so must mean something
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GNE/420285/405498.pdf
I like how he is streamlining the business and looking for operational efficiencies, but we have the 10 year Govt bond rate continuing to climb inexorably higher and it's difficult to see how a company with no growth prospects can make headway with its share price against that very strong headwind so I am taking some brokers forecasts of fair value at just over $3 with a grain of salt.
From Market Wrap today ....a bit ominious
Brokers Forsyth Barr, in a research note, said the electricity sector appeared to have "defied gravity" over the past two years.
"Our analysis suggests the risk of a negative share price reset is rising with a growing risk of earnings downgrades – from 2027 onwards – and the return of a risk on environment favouring cyclical stocks over defensive yield stocks," it said.
Yes the relationship with interest rates historically is clearly broken. Can only assume share price holding up due to the strong growth. Going forward will that continue.
Fbar latest note favours both GNE and CNE at neutral. Suggests large drops from here and suggests the other electricity stocks are way over valued underperform.
November will be interesting. Stripping out costs can only go so far. They have a lot of staff and have increased this year. Interest rates and bond yields look higher for longer. It's pleasing that retail numbers continue to increase. Restructuring costs short term then there is Kupe.
Unless there is a substantial cut to the divi (which there might be)I see this as good buying.
Quote from: Shareguy on Oct 20, 2023, 07:47 PMYes the relationship with interest rates historically is clearly broken. Can only assume share price holding up due to the strong growth. Going forward will that continue.
Fbar latest note favours both GNE and CNE at neutral. Suggests large drops from here and suggests the other electricity stocks are way over valued underperform.
November will be interesting. Stripping out costs can only go so far. They have a lot of staff and have increased this year. Interest rates and bond yields look higher for longer. It's pleasing that retail numbers continue to increase. Restructuring costs short term then there is Kupe.
Unless there is a substantial cut to the divi (which there might be)I see this as good buying.
GNE's yield is significantly higher than the others which confers a degree of protection from the steep rise in worldwide bond rates but if they go much higher...
As you can see in this link, The Kupe field is in pretty steep decline, see the grey image in this link which shows the value of "boie" (barrels of oil equivalent)
https://www.offshore-technology.com/data-insights/oil-gas-field-profile-kupe-conventional-gas-field-new-zealand/?cf-view
That's not to say the field estimates might not get revised again, but the well currently being drilled at significant cost is only expected to add ~ 1 year of life to the field at the current production rate.
With the Rankine's also having a somewhat limited life I see GNE as a pure yield stock. Of course, the new CEO will say we have to invest for the future of the company and the environment with renewable generation, but he has to say that given the limited life nature of the some of GNE's assets. I would see any cut in the dividend as a clear sign the directors and management believe the current rate is unsustainable in the long run.
BusinessDesk making the most of that Forbar report with long story this morning. Pretty dismal they are with phrases like 'share prices have defied gravity recently" and "underlying assumptions about growth are on shaky ground" and "heroic assumptions " and "downgrades likely" etc etc
I updated my model of GNE divie yield v 10 year Govt rate yesterday. Current 10;year Govt rate 5.55% and heading to 6% (?)...... if GNE share price reverted to that historical relation it says a share price of about $2.00/$2.05
Things could turn pretty quick
Hey Basil, it worries me when you say ' With the Rankine's also having a somewhat limited life I see GNE as a pure yield stock. Of course, the new CEO will say we have to invest for the future of the company and the environment with renewable generation, but he has to say that given the limited life nature of the some of GNE's assets. I would see any cut in the dividend as a clear sign the directors and management believe the current rate is unsustainable in the long run."
I think you might be right
Heading to 6%?
Maybe. Massive U.S. treasury issuance going on with quantitative tightening and that's set to continue into 2024 and is sure to cause treasury rates all around the world to stay at elevated level's. I think we're stuck with historically high bond rates for the foreseeable future.
Need those quick start gas units.
https://www.interest.co.nz/economy/124862/after-winters-close-shaves-transpower-warns-more-concerns-ahead-due-unreliability
"The Dividend remained strong"...that's what the directors said when everyone was expecting it to go up.
Reading between the lines I think it's now crystal clear the chances of it going up in the foreseeable future is basically nil so while staff and management get wage increases shareholders dividends don't despite being promised dividends would match inflation when this floated. Increases in the past have never matched inflation and it would appear the best shareholders can hope for is they stay the same in the future, (a decrease of the inflation rate every year in real terms). Meanwhile it appears that GNE is about to enunciate a new warm and fuzzy strategy that truly embraces all the wonders of ESG going forward.
Hmmm... ::)
F22 EBITDAF was $440m and F23 was $524m but they say F24 is going to be about $430m
Jeez that's going backwards and everybody is talking growth
No wonder share price in 230's .....(heading to $2 .)
Or have I missed something vital?
But I suppose if they reduce emissions as well it will be OK
Quote from: winner (n) on Oct 24, 2023, 03:42 PMF22 EBITDAF was $440m and F23 was $524m but they say F24 is going to be about $430m
Jeez that's going backwards and everybody is talking growth
No wonder share price in 230's .....(heading to $2 .)
Or have I missed something vital?
But I suppose if they reduce emissions as well it will be OK
Much bigger ESG goals than that. They really rave about people and the planet and how Aotearoa needs them to invest heavily in climate friendly projects. Even have a fabulous intern program for Māori cadets too. These guys have huge ESG ambitions. The raves about ESG achievements are going to more and more pronounced in the years ahead. Makes you feel all warm and fuzzy inside and want to go and cuddle a tree eh ;) .
I think you'll find EBITDAF has grown overtime, of course not very strongly. The share price right now is just a story of interest rates IMO, other than the breakdown of unit 5 nothing unusual and negative has occurred in the last year or two that couldn't have been foreseen years ago (and so in theory be priced in). I'm of the opinion that interest rates will come down in the next few years, and while I don't know when they will peak out, I imagine it will be a good day to hold GNE when they do.
While I am concerned about operating cost inflation, these have been assuaged somewhat by the recent layoffs announcement. Letting 200 people go from a business of 1300 is significant and marks the first time in recent history the number of staff will meaningfully decrease. Whether or not the current and planned investment in 'productivity enhancing technology to deliver operational cost efficiencies' is realised, knocking out $10 million in people costs is a good start.
Couple of the senior management team also let go recently. Agreed, refreshing to see streamlining of a business.
My core thesis with the massive issuance of new treasuries by the US due to quantitative tightening and huge fiscal deficits, worldwide, long term treasury rates could stay elevated for quite some time and could in fact be the new normal. Further, if / when they do eventually come down all stocks will benefit, not just income stocks.
GNE in trouble with iwi for their alleged mismanagement of Lake Waikaremoana...alleging overfilling for profit to 130% of rated capacity and destruction of precious walkways, campgrounds and toilets causing pollution, and lake front area's. Paywalled
https://www.nzherald.co.nz/nz/lake-waikaremoana-stoush-tuhoe-claim-genesis-management-far-more-destructive-than-gabrielle/KUQOV2N7VBACNFHT6QE6INMZUQ/
Quote from: Basil on Oct 25, 2023, 09:55 AMCouple of the senior management team also let go recently. Agreed, refreshing to see streamlining of a business.
My core thesis with the massive issuance of new treasuries by the US due to quantitative tightening and huge fiscal deficits, worldwide, long term treasury rates could stay elevated for quite some time and could in fact be the new normal. [Further, if / when they do eventually come down all stocks will benefit, not just income stocks.
.....
Basil ...the new norm ....could even say the old norm ...oldies know this eh ....yo7ngsters think rates are always below 2%
A bit like this crayon drawing
IMG_5532.jpeg
Yeap, US 10 year rate averaged around the current level for large parts of the latter decades last century too. Probably is the new normal.
Craigs say
The key positive identified was the staff reductions which he saw equating to "repeatable cost savings of c.$12-16m pa (excluding simplification investment). A much-needed initiative in our opinion and likely to be viewed favourably by the market. More information to be provided at Genesis' Investor Day in November."
My feeling is that the increased capex is a good thing as they are spending it on renewables which will be important for making Genesis a more attractive investment proposition for fund managers in the future.
There is no doubt that interest rates (bond yields) will continue to impact on these type of dividend yield stocks but to be honest they impact on all equities in some way or another. We have now reached an interest rate peak in NZ and we aren't far away from the peak in the US as well and so from here these stocks will actually pick up again when interest rates are cut.
Overweight $3.05
I think it's important to note that the Craig's analyst used to work for Genesis
Price to land between RVGI replicated and Covid Low, as expected, bullish divergence indicates trend change between price and RVGI, price to bounce to underside of existing trend line say $2.53 before Xmas.
Disc: don't hold, merely an academic exercise.
GNE_2023-10-25_12-51-02.png
Quote from: Shareguy on Oct 25, 2023, 12:34 PMCraigs say
The key positive identified was the staff reductions which he saw equating to "repeatable cost savings of c.$12-16m pa (excluding simplification investment). A much-needed initiative in our opinion and likely to be viewed favourably by the market. More information to be provided at Genesis' Investor Day in November."
My feeling is that the increased capex is a good thing as they are spending it on renewables which will be important for making Genesis a more attractive investment proposition for fund managers in the future.
There is no doubt that interest rates (bond yields) will continue to impact on these type of dividend yield stocks but to be honest they impact on all equities in some way or another. We have now reached an interest rate peak in NZ and we aren't far away from the peak in the US as well and so from here these stocks will actually pick up again when interest rates are cut.
Overweight $3.05
I think it's important to note that the Craig's analyst used to work for Genesis
Is that analyst biased then?
He's certainly bullish eh
Quote from: winner (n) on Oct 25, 2023, 01:41 PMIs that analyst biased then?
He's certainly bullish eh
Biased, not sure. He certainly should be a lot more knowledgeable than others.
I notice that Jarden also have outperform at $3.01.
Its depressing but unfortunately, this market doesn't care one iota about brokers theoretical share price forecasts. It's just a relentless grind down for the market as a whole. NZX50 (inclusive if all dividends paid) is down exactly 10% since 1 August, (less than 3 months), just down, down, down, (4.2%, then 2.2% then 3.6% this month to date) month after month after month. https://www.goodreturns.co.nz/article/976522397/interest-rates-earnings-guidance-squeezes-shares-down.html?utm_source=GR&utm_medium=email&utm_campaign=GoodReturns+Market+Report+for+25+Oct+2023
Shareholders of GNE really need some clarity over what's the sustainable level of dividend going forward? 30 November investor day can't come soon enough.
I can't measure its worth to me until I know that, so I am happy to sit on the sidelines in the meantime. The extent of wokeness in the annual report rival's HGH so that makes me extremely cautious about their intentions. If they announce they are going to become a certified B Corp company or have intentions to aim for that in the future, run for the hills !
Interest rates have trended down for the last 500 years. I don't see that suddenly changing. Regarding US treasuries, some would say the US has a debt problem, but others would say it doesn't matter. If a large debt raising gets poor interest and sends yields spiking, it is just going to flow onto interest rates in all other parts of the US economy and reduce the need for the FED to tighten or raise. I agree the ESG crap is becoming bothersome, I seriously doubt some of the programs they are spending money on have a meaningful impact on the share price.
If OPEX does not meaningfully reduce in the coming years they will have to reduce capex to strictly SIB of ~60 mill just to tread water debt wise if we stay around the 430 ebitdaf mark. OPEX was 299 in FY22. FY24 375 guided. dividend absolutely will be cut if they fail to do this imo.
What do y'all think
Gosh there's a lot there Plata and I'd have to look at all that in the cold light of day when a lot less tired but my overarching thesis is this. They simply cannot reduce capex to strictly stay in business level's in the medium term as they have to reinvest in expensive solar to replace generation capacity being lost through Kupe field depletion and eventually from lower Rankine utilization.
Looking at their balance sheet it's hard to see them raising a lot more debt to fund the solar, especially at current interest rates. I don't see how the dividend is sustainable in the medium term?
I think its crystal clear that it's not going up after the board signaled that by keeping in the same despite a record EBITDA result this year. Think about this. It would only have cost them $12m to do the customary positive adjustment to the dividend in FY23 and they could easily have afforded that and still reduced debt nicely, but the board wanted to send a message loud and clear. Stating "the dividend remained strong"...reading between the lines, really begs the question, for how much longer?
https://www.rnz.co.nz/news/business/500965/genesis-energy-working-with-small-businesses-to-move-away-from-fossil-fuels
This is why we need an unlike button
Quote from: Basil on Oct 26, 2023, 10:26 AMhttps://www.rnz.co.nz/news/business/500965/genesis-energy-working-with-small-businesses-to-move-away-from-fossil-fuels
Makes you wonder why they don't just stick to their knitting eh. The generation and retailing of electricity. Also makes me wonder how many other staff and resources they use pursuing other woke ESG initiatives. Hopefully most of them will get culled with the removal of 200 staff. Plenty of dead and useless old wood in this Government department, opps sorry, listed Govt controlled company.
https://www.genesisenergy.co.nz/about/news/genesis-and-nzgif-to-help-industry-switch-from-fossil-fuels
GNE will own and maintain the heat pump, which was financed at least 50% by NZGIF. One would presume that means this nursery will be a GNE customer for the foreseeable future with their giant heat pump pulling somewhere in the order of 200 KW periodically throughout the day. Seems alright to me.
Capital Change Notice Relating to Dividend Reinvestment Plan
Genesis Energy Limited (Genesis) provides the attached capital change notice pursuant to NZX listing
rule 3.13.1.
Additional shares have been issued to correct a processing error. A further 865,290 ordinary shares
have been issued to a major shareholder under Genesis' Dividend Reinvestment Plan (DRP), dated 14
February 2018, in respect of the 2023 Final Dividend.
Overseas shareholder?
Anyway, didn't help the price. Maybe they sold them straight into the market ;o)
Week closes at 232
Spooky if price did fall to my model value ...today 210/215
Quote from: winner (n) on Oct 27, 2023, 06:34 PMWeek closes at 232
Spooky if price did fall to my model value ...today 210/215
I presume your model is based on the assumption the dividend stay's the same ? What if it doesn't?
Quote from: Basil on Oct 27, 2023, 10:10 PMI presume your model is based on the assumption the dividend stay's the same ? What if it doesn't?
Dividend down .... Expected share price down
But bond rates falling to 2% would save the day .....cool eh
Very hard to invest in a commercial enterprise majority owned by the Government.
Craig's analyst who used to work for Genesis has after all these years decided that he has been wrong, and has added a 20 percent discount to their target price in latest note.
In this note we update our valuation methodology for GNE to include its historical trading discount vs. our DCF valuation. We think it is likely to continue trading on this discount without a clear transition away from its thermal assets. GNE will play a critical role in providing NZ's future energy security needs over the medium-term but we think the market is ignoring the long-term portfolio transition that we include in our DCF
Included in GNE's TP, we overlay a c.20% discount to its DCF spot valuation, representing the average discount it trades on compared to its peer groups EV/EBTIDA multiple (CEN/MEL/MCY.
Disappointed to say the least that after all these years he suddenly says the discount is warranted. Neutral $2.39 TP
Disc. Have sold over half my holding for a number of reasons.
Quote from: Mos on Oct 29, 2023, 06:34 PMVery hard to invest in a commercial enterprise majority owned by the Government.
No shareguy .....that guru analyst from Craig's is still right ...just the market is wrong ......stupid market.
Suppose could apply to many punters own thinking .......keep saying XYZ is worth more but market doesn't see it that way
Hey shareguy, have u invested back into other energy stocks/ providers or something different? Have got small amount of these as diversification in the portfolio.
Quote from: Ricky Bobby on Nov 08, 2023, 08:11 AMHey shareguy, have u invested back into other energy stocks/ providers or something different? Have got small amount of these as diversification in the portfolio.
No already have long term holdings in CEN and MCY. Needed funds to pay bills and am also looking at adding to existing position and adding to Discovery funds.. Still holding GNE but my conviction is not as strong as to risk/reward hence the sale.
I note Jarden are still bullish on GNE holding target price at over $3 and some say Jarden are the best.
Quote from: Shareguy on Nov 08, 2023, 06:45 AMCraig's analyst who used to work for Genesis has after all these years decided that he has been wrong, and has added a 20 percent discount to their target price in latest note.
In this note we update our valuation methodology for GNE to include its historical trading discount vs. our DCF valuation. We think it is likely to continue trading on this discount without a clear transition away from its thermal assets. GNE will play a critical role in providing NZ's future energy security needs over the medium-term but we think the market is ignoring the long-term portfolio transition that we include in our DCF
Included in GNE's TP, we overlay a c.20% discount to its DCF spot valuation, representing the average discount it trades on compared to its peer groups EV/EBTIDA multiple (CEN/MEL/MCY.
Disappointed to say the least that after all these years he suddenly says the discount is warranted. Neutral $2.39 TP
Disc. Have sold over half my holding for a number of reasons.
IMO, it is irrelevant what ANY analyst says about share prices. It is the market that decides what the SP is on any given day
You say for years Craig's had a higher valuation on GNE. Did that increase the SP? No
Now that Craig's have lowered their valuation, will that affect SP? I don't think so. All it shows me is that Craig's have decided to skew their valuation based on a perceived historical relationship between SP and DCF. Will this difference continue in the future? Or is it skewed by current circumstances?
Remember, these analysts are like weather forecasters. Using imperfect models to simulate a dynamic situation. But unlike the weather, the sharemarket has a large psychological component that simply isn't rational and therefore can't be modelled
Quote from: xafalcon on Nov 08, 2023, 09:27 AMRemember, these analysts are like weather forecasters. Using imperfect models to simulate a dynamic situation. But unlike the weather, the sharemarket has a large psychological component that simply isn't rational and therefore can't be modelled
NZ analysts tell you yesterdays weather and even then don't always get it right...
Arie Dekker I rate - the rest nah
Quote from: Shareguy on Nov 08, 2023, 06:45 AMCraig's analyst who used to work for Genesis has after all these years decided that he has been wrong, and has added a 20 percent discount to their target price in latest note.
In this note we update our valuation methodology for GNE to include its historical trading discount vs. our DCF valuation. We think it is likely to continue trading on this discount without a clear transition away from its thermal assets. GNE will play a critical role in providing NZ's future energy security needs over the medium-term but we think the market is ignoring the long-term portfolio transition that we include in our DCF
Included in GNE's TP, we overlay a c.20% discount to its DCF spot valuation, representing the average discount it trades on compared to its peer groups EV/EBTIDA multiple (CEN/MEL/MCY.
Disappointed to say the least that after all these years he suddenly says the discount is warranted. Neutral $2.39 TP
Disc. Have sold over half my holding for a number of reasons.
They have an Investor Day coming up on the 30th, at which they've have said they'll release the outcomes from the Operations Review which has been running for more than 6 months. Hopefully, that will put some clarity around where they're going. I don't think John's public ponderings about the possibility of using hydrogen to run a key Huntly unit were particularly helpful.
Quote from: Shareguy on Nov 08, 2023, 06:45 AMCraig's analyst who used to work for Genesis has after all these years decided that he has been wrong, and has added a 20 percent discount to their target price in latest note.
In this note we update our valuation methodology for GNE to include its historical trading discount vs. our DCF valuation. We think it is likely to continue trading on this discount without a clear transition away from its thermal assets. GNE will play a critical role in providing NZ's future energy security needs over the medium-term but we think the market is ignoring the long-term portfolio transition that we include in our DCF
Included in GNE's TP, we overlay a c.20% discount to its DCF spot valuation, representing the average discount it trades on compared to its peer groups EV/EBTIDA multiple (CEN/MEL/MCY.
Disappointed to say the least that after all these years he suddenly says the discount is warranted. Neutral $2.39 TP
Disc. Have sold over half my holding for a number of reasons.
Good way to flush your credibility down the toilet in my opinion.
To my mind, you either believe the underlying assumptions underpinning your DCF valuation, (remembering a DCF valuation is just based on a whole set of assumptions about future cash flows from various parts of the business), or you don't. Some time back I suggested that the fact he used to work there could lead to unconscious bias which is very difficult to eradicate from your brain. As you know, I have been very cautious on his assumptions because of this.
Average of the 5 analysts covering it is here https://www.marketscreener.com/quote/stock/GENESIS-ENERGY-LIMITED-17595957/finances/ but will not include the very latest downgrade you've highlighted.
As discussed previously this is a pure yield stock and anyone hoping for growth is somehow overlooking the steep decline in Kupe outputs and the Rankine's limited life. GNE faces a very difficult and extremely capital-intensive task to try and replace the generation capacity they will lose in the medium term.
The consensus analyst view is there is no longer any prospect of dividend growth in the years ahead. Two questions remain unanswered to my mind.
Will future dividends be cut and if so to what extent?
Will future dividends be fully imputed or only partially imputed and if the latter to what percentage? (Note there is nothing in the kitty in terms of the imputation credit account)
I'm out and staying out. I really don;t like the prospects for dividends in the year ahead and their ESG culture is very woke.
Quote from: Basil on Nov 08, 2023, 10:22 AMGood way to flush your credibility down the toilet in my opinion.
To my mind, you either believe the underlying assumptions underpinning your DCF valuation, (remembering a DCF valuation is just based on a whole set of assumptions about future cash flows from various parts of the business), or you don't. Some time back I suggested that the fact he used to work there could lead to unconscious bias which is very difficult to eradicate from your brain. As you know, I have been very cautious on his assumptions because of this.
Average of the 5 analysts covering it is here https://www.marketscreener.com/quote/stock/GENESIS-ENERGY-LIMITED-17595957/finances/ but will not include the very latest downgrade you've highlighted.
As discussed previously this is a pure yield stock and anyone hoping for growth is somehow overlooking the steep decline in Kupe outputs and the Rankine's limited life. GNE faces a very difficult and extremely capital-intensive task to try and replace the generation capacity they will lose in the medium term.
The consensus analyst view is there is no longer any prospect of dividend growth in the years ahead. Two questions remain unanswered to my mind.
Will future dividends be cut and if so to what extent?
Will future dividends be fully imputed or only partially imputed and if the latter to what percentage? (Note there is nothing in the kitty in terms of the imputation credit account)
I'm out and staying out. I really don;t like the prospects for dividends in the year ahead and their ESG culture is very woke.
Exactly, a loss of credibility. To say after all this time that a 20 percent discount is warranted is a joke.
Quote from: xafalcon on Nov 08, 2023, 09:27 AMIMO, it is irrelevant what ANY analyst says about share prices. It is the market that decides what the SP is on any given day
You say for years Craig's had a higher valuation on GNE. Did that increase the SP? No
Now that Craig's have lowered their valuation, will that affect SP? I don't think so. All it shows me is that Craig's have decided to skew their valuation based on a perceived historical relationship between SP and DCF. Will this difference continue in the future? Or is it skewed by current circumstances?
Remember, these analysts are like weather forecasters. Using imperfect models to simulate a dynamic situation. But unlike the weather, the sharemarket has a large psychological component that simply isn't rational and therefore can't be modelled
Agree with what you say but for me I have found analyst reports and target prices extremely beneficial. It allows you to confirm an opinion and over time has made and saved me a lot of money. The brokerage fees are well worth it in my opinion to get that research.
Lake Onslow pumped hydro is officially cancelled according to the National-ACT coalition agreement. Terrible decision for NZ Inc, but as a shareholder I expect to be rewarded as future profits are no longer in jeopardy
Quote from: xafalcon on Nov 24, 2023, 05:18 PMLake Onslow pumped hydro is officially cancelled according to the National-ACT coalition agreement. Terrible decision for NZ Inc, but as a shareholder I expect to be rewarded as future profits are no longer in jeopardy
Actually - I think this is great news for NZ. Lake Onslow was the remaining dinosaur of the "Think Big" projects. Questionable return if everything would go to perfection (which it never does), and zilch return if some of the many risks eventuate.
Just put all your money into one big project and wait for the next earthquake to wipe it away ...
Quote from: BlackPeter on Nov 24, 2023, 05:31 PMActually - I think this is great news for NZ. Lake Onslow was the remaining dinosaur of the "Think Big" projects. Questionable return if everything would go to perfection (which it never does), and zilch return if some of the many risks eventuate.
Just put all your money into one big project and wait for the next earthquake to wipe it away ...
You clearly have not read the various papers analysing the cost:benefit and risk profile. And it's not just NZ data and analysis - pumped hydro is being constructed worldwide, wherever topography allows, almost always at much greater cost/GWh storage than Lake Onslow offered
I wonder what NZ would be like now, if our forefathers didn't have the belief 100 years ago that hydroelectricity was a good idea, or 60 years ago that geothermal was worth pursuing. Both were very expensive options, but have proven to be invaluable to our economy
Lake Onslow had the same potential to transform our economy as we wean our dependence off fossil fuels (coalition agreement also allows offshore oil and gas prospecting and development, which I think is a good idea)
Anyway, it doesn't matter now. Our children will look back and lament the lost opportunity
Who mines coal in NZ...
are coal mines back?
https://www.cnbc.com/2023/11/24/rare-earth-discoveries-mean-coal-mines-could-have-a-future.html
Quote from: xafalcon on Nov 24, 2023, 06:58 PMYou clearly have not read the various papers analysing the cost:benefit and risk profile. And it's not just NZ data and analysis - pumped hydro is being constructed worldwide, wherever topography allows, almost always at much greater cost/GWh storage than Lake Onslow offered
I wonder what NZ would be like now, if our forefathers didn't have the belief 100 years ago that hydroelectricity was a good idea, or 60 years ago that geothermal was worth pursuing. Both were very expensive options, but have proven to be invaluable to our economy
Lake Onslow had the same potential to transform our economy as we wean our dependence off fossil fuels (coalition agreement also allows offshore oil and gas prospecting and development, which I think is a good idea)
Anyway, it doesn't matter now. Our children will look back and lament the lost opportunity
Couldn't agree more. This is a huge loss going forward.
Quote from: xafalcon on Nov 24, 2023, 06:58 PMYou clearly have not read the various papers analysing the cost:benefit and risk profile. And it's not just NZ data and analysis - pumped hydro is being constructed worldwide, wherever topography allows, almost always at much greater cost/GWh storage than Lake Onslow offered
I wonder what NZ would be like now, if our forefathers didn't have the belief 100 years ago that hydroelectricity was a good idea, or 60 years ago that geothermal was worth pursuing. Both were very expensive options, but have proven to be invaluable to our economy
Lake Onslow had the same potential to transform our economy as we wean our dependence off fossil fuels (coalition agreement also allows offshore oil and gas prospecting and development, which I think is a good idea)
Anyway, it doesn't matter now. Our children will look back and lament the lost opportunity
Amazing how many logical falacies you can pack into 3 paragraphs. You demonstrate an amazing amount of ignorance mixed with a handful of red herrings.
Ever wondered what it means if we put all our eggs into one basket and the big one destroys them all? Remember - its overdue and Lake Onslow is not far away from the fault line. This damage alone would set us back more than a generation.
EQC would not cover for the generational damage :) ;
Your statements re hydroelectriricity and geothermal are so far off the point that its hardly worthwhile mentioning. Sure - some past projects and ideas have been implemented and are useful - and others are not, but this does not mean that any new idea or project is sensible or useful. Classical logical fallacy.
Maybe you should listen to fergs link about logical fallacies, and than come back if you have anythng relevant to say :);
https://stocktalk.co.nz/index.php?topic=69.msg15176#msg15176
Just the interest costs alone on the supposed 16 billion dollar budget would likely exceed 600 million per annum.
Assuming the upper range output of 2000 MW (assuming this for charging and discharging), if it ran constantly at 2000 MW for both charging and discharging in arbitrage operation it could do about
17.5 million MWh of charging/discharging. So 8.75 million MWh charging, 8.75 million MWh discharging. So only 8.75 million MWh worth of arbitrage. Even with those generous assumptions it would still need to make ~$69 per MWh arbitrage profit just to pay the interest, that's without any other opex. The idea that this could compete with other energy sources that have LCOEs of $80-120 per MWh, how is it going to pay for itself.
Quote from: Plata on Nov 25, 2023, 10:31 AMJust the interest costs alone on the supposed 16 billion dollar budget would likely exceed 600 million per annum.
Assuming the upper range output of 2000 MW (assuming this for charging and discharging), if it ran constantly at 2000 MW for both charging and discharging in arbitrage operation it could do about
17.5 million MWh of charging/discharging. So 8.75 million MWh charging, 8.75 million MWh discharging. So only 8.75 million MWh worth of arbitrage. Even with those generous assumptions it would still need to make ~$69 per MWh arbitrage profit just to pay the interest, that's without any other opex. The idea that this could compete with other energy sources that have LCOEs of $80-120 per MWh, how is it going to pay for itself.
I'm not sure why you have chosen to ignore basic considerations
Extra baseload peak electricity must come from somewhere. If not Lake onslow, then it must be coal, since NZ is running out of gas, and geothermal is reaching its limit (and is very capital intensive). Let's work on 1000MW, and assume 90% carbon capture combined cycle
Construction cost (today) $4.7B (10 years time = way more)
Operation cost (today) $150/MWh (10 years) more
Carbon cost $0.05/MWh
Using your 8.75M MWh, and current operation cost ($150/MWh), annual operation cost is 1.75B
$16B - $4.7B = $11.3B / $1.75B = 6.46 years to reach cost parity. From this point, arbitrage of pennies makes it feasible
In reality, we already have the situation where wholesale prices fall to zero when renewables are in surplus. And typically wholesale prices are $170/MWh otherwise. When that arbitrage is applied to your 8.75M MWh, that's $1.5B pa.
Pumped hydro has a 100 year life expectancy, because it's just reversible hydro technology)
This is why pumped hydro is being deployed wherever topography reasonably allows
It's not just me talking it up, it's happening around the world, and the economics stack up
Quote from: BlackPeter on Nov 25, 2023, 09:57 AMAmazing how many logical falacies you can pack into 3 paragraphs. You demonstrate an amazing amount of ignorance mixed with a handful of red herrings.
Ever wondered what it means if we put all our eggs into one basket and the big one destroys them all? Remember - its overdue and Lake Onslow is not far away from the fault line. This damage alone would set us back more than a generation.
EQC would not cover for the generational damage :) ;
Your statements re hydroelectriricity and geothermal are so far off the point that its hardly worthwhile mentioning. Sure - some past projects and ideas have been implemented and are useful - and others are not, but this does not mean that any new idea or project is sensible or useful. Classical logical fallacy.
Maybe you should listen to fergs link about logical fallacies, and than come back if you have anythng relevant to say :);
https://stocktalk.co.nz/index.php?topic=69.msg15176#msg15176
The big one. Is that all you have? Well, the big one hasn't taken out any of our power plants yet. And if you look at the fault line through the SI, you will see it is nowhere near Lake Onslow. If the big one comes, it's just as likely to take out Huntly, with the same generation capacity. Not to mention many other critical infrastructure items
If you haven't got a good set of facts to put up, which you haven't so far, your comment is meaningless
And keep your insults to yourself. I think your comment is ignorant, but I don't come out and say it. Rather, I put up fact based evidence to counter comments that don't pass the sniff test
Quote from: xafalcon on Nov 27, 2023, 12:20 PMThe big one. Is that all you have? Well, the big one hasn't taken out any of our power plants yet. And if you look at the fault line through the SI, you will see it is nowhere near Lake Onslow. If the big one comes, it's just as likely to take out Huntly, with the same generation capacity. Not to mention many other critical infrastructure items
If you haven't got a good set of facts to put up, which you haven't so far, your comment is meaningless
And keep your insults to yourself. I think your comment is ignorant, but I don't come out and say it. Rather, I put up fact based evidence to counter comments that don't pass the sniff test
Oh, sorry - I assumed you are vaguely familiar with the discussion. Appears I was wrong.
Here is a nice summary of the top reasons why it was not a good idea, but I didn't wanted to warm up a discussion which came already to a sensible conclusion:
https://businessdesk.co.nz/article/listed-companies/10-reasons-why-project-onslow-is-a-bad-idea
(paywalled)
In summary the article shows that it would come ways to late (even if it goes to plan), it is ways to dear (even if we don't assume for the typical cost rises of such projects), there is no proof it can be done at all (i.e. significant realisation risk - pay the money and get nothing) and it is competing with much better and cheaper solutions and would kill these off. Pouring all our money into Lake Onslow would stop any sensible investments into renewable energies in NZ.
Sorry, you missed that :) - or do you like to fund dinosaurs?
And the earth quake risk I mentioned ... again, you have no relevant argument. I am sure 20 years ago nearly everybody in Christchurch or Rolleston would have laughed at me if I would have mentioned the Earthquake risk. They don't laugh anymore, don't they?
Putting a generational investment for the whole country (Lake Onslow would consume several decades of our energy investment funds) into one single and earthquake prone place in NZ would be the top of irresponsibility.
Look, in 2010 everybody would have said there is no need to earthquake strengthen the Christchurch Cathedral ... hey, it stood there already for more than 100 years without incident, didn't it? I am wondering how people did assess this risk after February 2011?
Your examples for things which didn't happen are as relevant as a drink driver claiming that he came safe home last time. I do hope that our politicians are behaving a bit more responsible than that and, it looks like the new government demonstrates a bit more brains and responsible behaviour than gambling all our money into one single high risk low return project like Lake Onslow
forget all this stuff and DRILL DRILL DRILL...
well anyway ... there is hope apparently...
https://edition.cnn.com/2023/11/26/tech/ai-climate-solutions/index.html
Quote from: xafalcon on Nov 27, 2023, 12:07 PM$16B - $4.7B = $11.3B / $1.75B = 6.46 years to reach cost parity. From this point, arbitrage of pennies makes it feasible
I guess with such great financials we can expect to promptly see multiple pension funds offering to build it and make the big bucks. We can both pull numbers out of the air all we like but I don't see the point in trying to forecast the potential arbitrage opportunity for a 2000 MW plant in a 6000 MW market for the next 10-100 years. I don't think Onslow will always be a stupid idea, I just think it is a stupid idea for now (i.e. it is unlikely to be economic in the next 5 years, why start construction now?)
Quote from: Waltzing on Nov 27, 2023, 05:51 PMforget all this stuff and DRILL DRILL DRILL...
well anyway ... there is hope apparently...
https://edition.cnn.com/2023/11/26/tech/ai-climate-solutions/index.html
Or DIG DIG DIG the black stuff ...Reg Dev Fund could be well spent
The Genesis of the future is now a very different investment than the Genesis of today,"
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GNE/422667/408594.pdf
Long version
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GNE/422667/408595.pdf
Beside all the good environment stuff is this going to make shareholders richer
Quote from: winner (n) on Nov 30, 2023, 08:40 AMBeside all the good environment stuff is this going to make shareholders richer
Should have read to the end
As a consequence, total FY24 dividends have been guided at 14.0 cents per share. The Company will aim to maintain dividends in real terms and grow where appropriate.Jeez, big cut in divie
Share price stating with a 1 soon
Buy side is starting to come back... I guess they needed to do something with Kupe not being around forever?. To move the share price they need to invest in the future?.. am a bit gutted re divided cut... easier than a capital float?
At 230c then 14c = 6.07 % dividend yield, fully imputed and likely to rise over the years. Competes well with GNE bonds which you can buy for an non imputed yield of 6.5%'ish.
Quote from: kiwi2007 on Nov 30, 2023, 12:07 PMAt 230c then 14c = 6.07 % dividend yield, fully imputed and likely to rise over the years. Competes well with GNE bonds which you can buy for an non imputed yield of 6.5%'ish.
Yeah, not the end of the world is it? Shareholders can't have it both ways - maintain a juicy dividend whilst completely re-orientating the business towards a more sustainable future. Doing nothing whilst technology is changing all around you isn't going to work - just ask SKY shareholders!
Quote from: winner (n) on Oct 27, 2023, 06:34 PMWeek closes at 232
Spooky if price did fall to my model value ...today 210/215
Dividend falling from 17.60 to 14 ...model update says if yield reverted to about average $1.85/$1.90 is on the cards
The 'spread' between gne yield and 10 year Govt has never been so small .....if price stays around $2.30 it would be a sign that punters seeing GNE as less 'riskier' (from an investment point of view) now than it has ever been in the past.
Todays update I would say that is not the case
I predicted a big dividend cut and sure enough...
I've heard the whole dividends will grow in line with this, that and the other before. Hand me a Tui.
No saying full imputation or not.
Very glad I sold out.
Quote from: Basil on Nov 30, 2023, 04:29 PMI predicted a big dividend cut and sure enough...
I've heard the whole dividends will grow in line with this, that and the other before. Hand me a Tui.
No saying full imputation or not.
Very glad I sold out.
Yes Basil ...you have talked about the risks and how the dividend prob wasn't sustainable....and so it turned out to be.
And this 'aim to maintain dividends in real terms and grow where appropriate.'is just talk ......can't imagine all the plans will actually go as planned (cost esp) .......and history not on their side as divie growth since listing been ~1% pa.
Like you all I can see share price downside from here .....but one day when price seems more realistic could be a good buy again.
But no doubt those who bought in at IPO will still be happy even though facing a pay cut
They promised the exact same thing with dividends when they listed, as I am sure you can recall mate
They should have said we really mean it this time eh
Mr Basil brush you sure have been questioning there ability to maintain divi.......can't believe I got the opportunity to bail at $2.36 this afternoon, which is about break even including DRP shares.
Can see GNE being dropped from many divi portfolios as the current yield on offer does not support current SP.
Shall revisit under $2
I'll stick my neck out here and say that I don't see the SP getting anywhere near $2. If the news was so bad, we'd have seen a slide today, but the SP ended up not budging a cent. I really don't see Institutions bailing as they think long term and a return of 6% in the meantime is acceptable. $2.31 is the 12 month low, and it may be seen as a buy at those levels. Will be interesting to see how rating agencies view it.
Yes the divi has been cut. I think some were expecting a lot worse. Still the largest in the sector according to GNE presentation. Makes sense to fund renewables and battery at Huntly. Big focus on costs.
They state EBITDAF is expected to be around $500m in FY25 and in the mid-high $500 millions between FY26 and FY28. Operating Expenditure is forecast to be lower than current levels by FY28. Stay-in-Business capital expenditure is expected to be around $70 million per annum for FY25 to FY27.
Would like to no more on who and where the biomass is coming from. Turbine 5 possibly on hydrogen is interesting.
I think it's going to be well received.
So 14 cps it is and given they are paying out a lower percentage of profit investors will be hoping its 100% imputed so that's 14/0.72 = 19.44 cps gross.
As mentioned earlier today, history has shown you can take their aim to maintain this in real terms with a grain of salt, they said the exact same thing when they listed and frankly, they never even tried.
Better to assume they add 0.1 cps to each 7 cps for the next few years and make their usual token effort...until, wait for it....the next reset. Sure 19.44 / 237 = 8.2% gross, (if its fully imputed) and you get the feel good factor if you are into that sort of thing, of supporting the transition towards being much more renewable but I think Winner highlighted an important factor today, the risk of substantial cost blow outs with new projects.
Let's get real, it's almost impossible to predict what the real eventual cost of these new projects will be, but one thing is for sure, it will be a heck of a lot more than they think it currently might be so the risk is there of shareholders being the sacrificial lamb yet again and there being another dividend reset down the road.
I don't think it is fair to assume these massive cost blowouts you speak of. Especially for the solar, one of the benefits of doing the JV is the partner has a lot of recent projects completed under its belt so you would hope that they are reasonably accurate on cost forecasting. I would ask why are people not upset contact isn't paying out 100% of FCF? I think anyone could see that a company paying out near or even above in some cases 100% of FCF as dividends isn't exactly giving itself much ability to grow anything other than debt. I'm glad they are finally doing something about it and glad I won't have to receive unimputed crap going forward. It seems nobody was very surprised by the numbers today, will be interesting to see how the sp fairs as people dig into the meat and bones.
All this reminds me of back in 2006 when Telecom slashed their dividend. Mum and dads, fund managers, pension funds etc etc were gutted and saw the Telecom share price collapse ...it was no longer seen as good yielding safe stock to have
The share price more than halved over the next few years ......took 5 years to bottom out. Share price only started to recover when dividend yield got into high teens. In 2011 ......been trending up since then.
I see this happening with the GNE share price ...maybe not halving but going through a decent fall ....and after a few years possibly recovering.
But maybe this time it's different ....... Yield chasers are more understanding these days and the share price will start to go up again
"This time it's different" is the most dangerous phrase with investing I know of.
I totally agree and I remember my parents had a holdings in telecom at the time and were weighing up selling but held onto them......that was a slow grind downwards from $8 to $2......I learnt a lot from that
It all started to go wrong when they stopped using "Spot" the very cute Jack Russell Terrier in their advertising. Gosh those adds were so cool.
GNE use a Beagle in their adds. They need to get that Beagle to do cool tricks and get more animated, that might help the share price
As reported in Businessdesk: The way Genesis Energy tells it, the company suffers from two perennial problems that cause its share price to underperform its peers. One is that it doesn't have a clear growth story. The other, more deeply entrenched problem, is what its new chief executive Malcolm Johns calls an "ESG discount", where the market punishes the only electricity producer in the country that still uses coal to make power for doing so.
Is there any evidence to support this assertion? I've not seen any signs of a 'morality' factor in the pricing of any NZX stock. Perhaps all the coal smoke is blinding me to it?
There's no question a legacy issue that precludes some funds who apply stringent ESG criteria to their investment protocols from considering GNE.
As to the possible effect on the share price I think that's conjecture as if the price was higher the yield will be lower and that would count many yield investors out, especially now with the much-reduced forward dividend outlook.
Quote from: Hectorplains on Dec 01, 2023, 10:39 AMAs reported in Businessdesk: The way Genesis Energy tells it, the company suffers from two perennial problems that cause its share price to underperform its peers. One is that it doesn't have a clear growth story. The other, more deeply entrenched problem, is what its new chief executive Malcolm Johns calls an "ESG discount", where the market punishes the only electricity producer in the country that still uses coal to make power for doing so.
Is there any evidence to support this assertion? I've not seen any signs of a 'morality' factor in the pricing of any NZX stock. Perhaps all the coal smoke is blinding me to it?
Is at all the "trending" ethical funds staying away because of their dirty energy? For The younger generation coming through this is highly important and are the biggest takers on the more ethical funds. I can see what they are trying to do. Same here with the wine business... story and environmental impacts are really important. boomers unfortunately not around for ever...
Outstanding eenterview vith Genesis' chief executive Malcolm Johns.
https://www.rnz.co.nz/national/programmes/ninetonoon/audio/2018917675/genesis-shifts-approach-to-renewable-energy-large-battery-planned-at-huntly
Questions 'vright on the mark' and Johns doesn't dodge any. Essential leestening vor Genesis Energy zhareholders
RB
Looks like the talk of GNE's decline is exaggerated. SP up to 2.39.
Update on my model re correlation between GNE dividend yield and 10 year NZ Govt stock. Correlation since listing pretty strong and statistically the changes in 10 year rate accounts for 60% of changes inbGNE yield (ie share orice)
Updated because of significant reduction in GNE dividend
Since listing the difference between tax paid returns of both has been a fraction under 4% points. I see this as what the market sees as the 'risk factor' in holding GNE shares ...but over the last couple of years the difference has shrunk a bit as punters seem to see less 'risk' in GNE.
So let's assume the difference should 3.5% points
GNE at $2.38 the other day before announcing reduced dividend the difference was 3.55% points ...could say price about right
But with the reduced dividend that 'fair price' for GNE drops to $1.86
Think we all agree that GNE is a rates sensitive stock ...so below is what 'fair price' is at announced reduced dividend and difference to 10 year Govt of 3.5% points (tax paid) -
10 year Govt 4% gives GNE fair price $2.10
10 year Govt 3% gives GNE fair price $2.36
10 year Govt 2% gives GNE fair price $2.70
Of course all those GNE prices above become lower if the 'risk factor' reverts to its historical average of about 4% points
Model worked well for me over the years when assessing where GNE share price is heading so I will stick with it.
So model says lots downsides coming up ...........and it does seem that GNE has become more risky if late .......sustainability of dividend, new strategy, execution risk etc etc
Anyway that's my reasoned view of the current situation,
Quote from: BlackPeter on Nov 27, 2023, 12:55 PMOh, sorry - I assumed you are vaguely familiar with the discussion. Appears I was wrong.
Here is a nice summary of the top reasons why it was not a good idea, but I didn't wanted to warm up a discussion which came already to a sensible conclusion:
https://businessdesk.co.nz/article/listed-companies/10-reasons-why-project-onslow-is-a-bad-idea
(paywalled)
In summary the article shows that it would come ways to late (even if it goes to plan), it is ways to dear (even if we don't assume for the typical cost rises of such projects), there is no proof it can be done at all (i.e. significant realisation risk - pay the money and get nothing) and it is competing with much better and cheaper solutions and would kill these off. Pouring all our money into Lake Onslow would stop any sensible investments into renewable energies in NZ.
Sorry, you missed that :) - or do you like to fund dinosaurs?
And the earth quake risk I mentioned ... again, you have no relevant argument. I am sure 20 years ago nearly everybody in Christchurch or Rolleston would have laughed at me if I would have mentioned the Earthquake risk. They don't laugh anymore, don't they?
Putting a generational investment for the whole country (Lake Onslow would consume several decades of our energy investment funds) into one single and earthquake prone place in NZ would be the top of irresponsibility.
Look, in 2010 everybody would have said there is no need to earthquake strengthen the Christchurch Cathedral ... hey, it stood there already for more than 100 years without incident, didn't it? I am wondering how people did assess this risk after February 2011?
Your examples for things which didn't happen are as relevant as a drink driver claiming that he came safe home last time. I do hope that our politicians are behaving a bit more responsible than that and, it looks like the new government demonstrates a bit more brains and responsible behaviour than gambling all our money into one single high risk low return project like Lake Onslow
Ahhh, businessdesk. A mouthpiece for businesses - in this instance read "the generators". I wonder if they wanted Lake Onslow to go ahead???
Taking your points from the article (I couldn't read as paywalled"
Too late. Rubbish. Timing would be about right - refer to GNE strategy released recently = NZ good to 2035
Too costly. Refer to my previous post. When calculations are done correctly ( ie include an alternative baseload/peaker construction and running cost) the pay back is sub 10 years. That's a good investment return
Can't be done. Hundreds to these pumped hydro plants have been built. Onslow is no different. The only change I would make is above ground pipework = cheaper, easier access, avoids subterranean geological problems that may be identified (like Clyde dam)
Onslow would stop renewable investment in NZ. Ridiculous statement. Onslow does not create electricity, it only stores electricity. Additional electricity for NZ must come from somewhere, and renewables are the cheapest option. Solar cheapest, then wind. But solar MUST be timeshifted by approximately hours maximum (via storage) and wind generally needs to be timeshifted over longer periods (weeks-months)
The big one. I have already answered this red herring, and won't waste further time on it other than to say it applies to EVERYTHING in NZ but hasn't stopped any projects so can't be the show stopper it is made it out to be
Intermittent generation (solar and wind) needs either storage or backup with additional baseload/peaker capacity). The "additional" will have to be coal (or biomass per GNE) as there is no other viable option. That's $4B per 1000MW just to construct, running cost is additional and ongoing
And for good measure, I'll throw this in (again). Pumped hydro is booming worldwide because it is reliable, long lasting, proven and the economics stack up favourably. Perhaps you hold the view that somehow, NZ is different. Reality check - it isn't any different
Now, instead of replying with a handful of generalisations and biased "reporting" references, why don't you specifically explain why it was so different to every other pumped hydro plant in the world? And how this makes it non-viable.
Quote from: winner (n) on Dec 03, 2023, 08:57 AMUpdate on my model re correlation between GNE dividend yield and 10 year NZ Govt stock. Correlation since listing pretty strong and statistically the changes in 10 year rate accounts for 60% of changes inbGNE yield (ie share orice)
Updated because of significant reduction in GNE dividend
Since listing the difference between tax paid returns of both has been a fraction under 4% points. I see this as what the market sees as the 'risk factor' in holding GNE shares ...but over the last couple of years the difference has shrunk a bit as punters seem to see less 'risk' in GNE.
So let's assume the difference should 3.5% points
GNE at $2.38 the other day before announcing reduced dividend the difference was 3.55% points ...could say price about right
But with the reduced dividend that 'fair price' for GNE drops to $1.86
Think we all agree that GNE is a rates sensitive stock ...so below is what 'fair price' is at announced reduced dividend and difference to 10 year Govt of 3.5% points (tax paid) -
10 year Govt 4% gives GNE fair price $2.10
10 year Govt 3% gives GNE fair price $2.36
10 year Govt 2% gives GNE fair price $2.70
Of course all those GNE prices above become lower if the 'risk factor' reverts to its historical average of about 4% points
Model worked well for me over the years when assessing where GNE share price is heading so I will stick with it.
So model says lots downsides coming up ...........and it does seem that GNE has become more risky if late .......sustainability of dividend, new strategy, execution risk etc etc
Anyway that's my reasoned view of the current situation,
Im interested in what your correlation coefficient is? And the time-scale of your data analysis?
I'm also interested if you have looked at correlation between SP and any other government bonds (eg USA, UK, JPN, AUS) or composite rates of G7 etc. Asking this as NZ govt 10Y is pretty irrelevant on a world stage, and GNE investors (excl NZ govt = silent and not actively buying or selling so are irrelevant to SP) are primarily not located in NZ
Quote from: xafalcon on Dec 03, 2023, 11:09 AMIm interested in what your correlation coefficient is? And the time-scale of your data analysis?
I'm also interested if you have looked at correlation between SP and any other government bonds (eg USA, UK, JPN, AUS) or composite rates of G7 etc. Asking this as NZ govt 10Y is pretty irrelevant on a world stage, and GNE investors (excl NZ govt = silent and not actively buying or selling so are irrelevant to SP) are primarily not located in NZ
Monthly data since GNE listed ....Rsq is .61 ...though reducing lately
Only done v NZ 10 year but points re global action noted. Not so keen as to do all that detail ...suits me as it is.
As I've said before I know very little about how this industry works so it's only a numbers game to me.
Craig's did a similar exercise a while ago and concluded ...
The analysis suggests that the sensitivity of gentailer stocks to the 10-year government bond yield has lessened in recent times. Two potential reasons for this could be that investors feel bond yields have reached a level where they may start to plateau, or possibly that other factors such as positive sentiment toward electrification is providing a certain amount of buoyancy to the stocks, resulting in a level of dislocation from historical behaviours. It is possible that investors are concerned about a recessionary outlook, thus turning to utility stocks as a defensive strategy, with an expectation that once a recession takes hold bond yields would likely fall, hence making the gentailer yield more attractive
Quote from: winner (n) on Dec 03, 2023, 11:55 AMCraig's did a similar exercise a while ago and concluded ...
The analysis suggests that the sensitivity of gentailer stocks to the 10-year government bond yield has lessened in recent times. Two potential reasons for this could be that investors feel bond yields have reached a level where they may start to plateau, or possibly that other factors such as positive sentiment toward electrification is providing a certain amount of buoyancy to the stocks, resulting in a level of dislocation from historical behaviours. It is possible that investors are concerned about a recessionary outlook, thus turning to utility stocks as a defensive strategy, with an expectation that once a recession takes hold bond yields would likely fall, hence making the gentailer yield more attractive
Craigs Back office, "hmm oh jeez guys why isn't our dividend model working that accurately anymore, ya reckon its the EVs? Ya reckon its forward bond yield expectations?", "na mate I reckon its
POSITIVE SENTIMENT, people are finally waking up and realizing electricity is the next big thing", "did any of you fellas read the latest GNE investor preso?", "Na mate just went to the presentation in person for the free food and to try find some new clients", "yeah I bet there isn't any indication of an underlying change in the company that could explain things in there", "for sure mate, only a sharsies user would read em".
hmmm.PNG
Quote from: Plata on Dec 03, 2023, 12:25 PMCraigs Back office, "hmm oh jeez guys why isn't our dividend model working that accurately anymore, ya reckon its the EVs? Ya reckon its forward bond yield expectations?", "na mate I reckon its POSITIVE SENTIMENT, people are finally waking up and realizing electricity is the next big thing", "did any of you fellas read the latest GNE investor preso?", "Na mate just went to the presentation in person for the free food and to try find some new clients", "yeah I bet there isn't any indication of an underlying change in the company that could explain things in there", "for sure mate, only a sharsies user would read em".
hmmm.PNG
Impressive chart eh Plata
They might have to change the scale next time to make 14 cents look relatively good ...maybe even leave the labels off
One way of looking at things .....as explained to me years ago by a real investment manager (not a broker guru etc)
Say for an investment country risk is the 10 year Govt rate ...now 5.9%
GNE bonds trading at say 6.7% ........the difference to 10 year govt is 1.7% points ....we could say this the 'company risk'
GNE divie yield (gross) at moment is 8.2% ......difference to bond rate is 1.5% points and this basically is the 'equity risk premium'...the additional 'risk' of holding shares over bonds.
A week ago that 'equity risk premium' was 3.6% points
So the equity risk premium has been slashed since that announcement ...must have been impressive and as Plata says punters have REAL POSITIVE SENTIMENT at the moment ..like almost nothing can go wrong
Winner me ol mate, I think a lot of people love the whole, we're part of a project that's going to deliver real ESG benefits to N.Z. Probably why the SP hasn't fallen, yet.
For mine with the 10 year risk free rate about 5% I'd want at least a 4% premium on that for equity risk.
Assuming 14 cps is fully imputed, (not certain it will be), that's 14/0.72 = 19.44 cps / 0.09 = $2.16. I not favorably inclined to consider GNE again unless it falls to that level. I remain of the view that GNE have no reasonable handle on the real cost of their transformation project, so execution risks are VERY high.
Yeah there are new risks etc. But I don't really understand why you would focus on dividend yield instead of FCF yield especially given the declining payout ratio we are seeing. Why look at the derivative when you could look at the source, why use a less informative metric? Does the relationship just not hold at the FCF yield level or something? If they cut the dividend entirely would you expect the shareprice to become 0?
Quote from: Plata on Dec 03, 2023, 01:34 PMYeah there are new risks etc. But I don't really understand why you would focus on dividend yield instead of FCF yield especially given the declining payout ratio we are seeing. Why look at the derivative when you could look at the source, why use a less informative metric? Does the relationship just not hold at the FCF yield level or something? If they cut the dividend entirely would you expect the shareprice to become 0?
The last is obviously a silly question but to answer your earlier ones, I don't trust the woke board. They have blatantly lied to investors when they listed that dividends will be maintained in real terms and never even tried to honor that commitment. It's all about their woke ESG agenda, (they are a quasi-Government department after all), and I think it always will be. Let me ask you a question. They have never tried to honor their commitment to keep dividends the same in real terms before so what on earth gives you the confidence to think they will now ?
I think the second they raised the dividend up over 80% of FCF that goal was dead. You can't expect them to grow anything when all they can do to grow is buy a few trees and a few refurbished turbines before the kitty is empty.
I don't really care what they say about the dividend, I don't really care about the dividend. I'm glad they have cut it, capital loses as kupe runs out + tax on unimputed dividends sounds shit for lack of a better word. I invested in this because of the low price to FCF ratio and the safety compared to other companies with similar ratios. I don't expect FCF generation to plummet going forward, so don't see how I can go too wrong holding.
I don't agree with this idea that the executive suite are dragging investor returns down with esg stuff, the majority of esg stuff gne has done so far has clear value to the company (the largest expense being the forestry carbon credit hedge).
I think the real worry with GNE is the never ending OPEX growth. Its all very well to say in 2028 it will be all sorted but they are really just kicking the can down the road. What in Gods name are they doing with all this "technology investment". Last I checked all their apps are done and released, and they are outsourcing backend to gentrack and someone else. What are they doing?
QuoteI don't really care what they say about the dividend, I don't really care about the dividend. I'm glad they have cut it, capital loses as kupe runs out + tax on unimputed dividends sounds shit for lack of a better word.
This is where you and I are very different. I'm semi-retired looking to gradually move into full retirement in the years ahead so I am investing to replace income I will lose in that transition. 8% gross is not without its merits if I believe it will go up in line with inflation, (I don't) because the company has not
earned my trust.
One possible reason for the board to spin investors this growing dividend in line with inflation yarn and expect us to believe them is...wait for it...not a single current board member was there when GNE listed! It's quite possible they're not even aware we've heard this "fairy tale" before.
On the whole woke thing, maybe have a read of their last few annual reports, they're chock-a-bloc full of woke ideals the company is chasing.
I'm sure they'll find many more wonderful woke ways to spend any excess free cash flow over and above what dividends they pay in the years ahead. No matter what their free cash flow is one thing I am very confident of with this lot, the very best you can possibly hope for is they do keep their word and do increase dividends in line with inflation this time....but I don't trust a board that have spun me this B.S. for years with every dividend decision they've made. If they can't keep their word on dividends, how can you trust their EBITDA forecasts for the next few years or their attempts to control opex? As you say, what is this extra tech investment this year? ($25m from memory).
The real worry is not just their recent inability to control opex. There's plenty else to worry about. How do you know for sure their guesses on the future capex for this transformation are not wildly inaccurate?
Have you ever known a Govt department or quasi govt department to be able to accurately forecast huge construction projects many, many years hence? Just as a case example reminder, remember how the Lake Onslow battery project was originally costed @ $4 Billion and then some years later the capex cost was estimated to have quadrupled to $16 Billion? No wonder it has been canned! How do you know for sure GNE's capex estimates aren't wrong by some similar order of magnitude and that the level of execution risk with their so-called transformation project is therefore not off the charts?
Trust us, we are a large majority Govt owned company with truly wonderful ESG objectives, what could possibly go wrong lol.
Quote from: Basil on Dec 03, 2023, 04:02 PMThe real worry is not just their recent inability to control opex. There's plenty else to worry about. How do you know for sure their guesses on the future capex for this transformation are not wildly inaccurate?
Have you ever known a Govt department or quasi govt department to be able to accurately forecast huge construction projects many, many years hence? Just as a case example reminder, remember how the Lake Onslow battery project was originally costed @ $4 Billion and then some years later the capex cost was estimated to have quadrupled to $16 Billion? No wonder it has been canned! How do you know for sure GNE's capex estimates aren't wrong by some similar order of magnitude and that the level of execution risk with their so-called transformation project is therefore not off the charts?
Trust us, we are a large majority Govt owned company with truly wonderful ESG objectives, what could possibly go wrong lol.
Installing grid scale batteries on flat ground at a preestablished grid connection site sounds pretty hard to screw up, and there are many similar projects as precedent in NZ and AU to base costs off of. Similar story with solar, experienced JV partner etc etc. Those two initiatives make up the vast majority of their committed/semicomitted spending, hence I am not too worried about big cost overruns on those projects. I think if they went 4 or even 2 times over budget on that stuff it would call into question the competence of the entire executive and upper engineering management.
I'd go along with a correlation between Govt stock yield and SP of companies like GNE, but as we all know correlation is not causation. One does not always follow the other.
If divvy's were cut because a company was failing then yes, shift your money to a safe haven. But that's not the case with GNE. As Plata points out, FCF and core metrics are solid and mostly unchanged - they have just decided to use some of that FCF to safeguard the business and - hopefully - make it even more profitable down the line. That's what a prudent Board would, and should, do.
If you focus entirely on dividends then yes, it is bad news, but if you are long term holder then over time GNE is still a good, safe stock to hold. And the yield is still 6% in the meantime. That's why the SP hasn't plunged on the announcement and I still don't think it will. If I'm wrong and it does, I for one, will be adding.
There are plenty of companies that have wasted millions on woke initiatives (WHS, anyone?) but this isn't the case with GNE. Solar, wind and battery storage technology aren't woke initiatives - renewable energy is the future. GNE are future proofing the business and, given their mix of assets, I reckon they are still the best buy in the sector.
Suppose they don't want to go from 'Genesis Magic" to "Genesis Malaise" by not improving, growing, and elevating what matters, ie not thinking of the future.
The second law of thermodynamics states that "The arc of the universe bends toward chaos; entropy in a closed system always increases; things left to their own devices naturally deteriorate over time." In other words, we don't want Genesis to let "entropy" get the better of them.
I respect your point of view LoungeLizard but for the sake of clarity I'm not saying replacing dirty generation assets with renewables is woke. I am referring to all their other woke projects. Have a read of their 2022 annual report, its choc-a-bloc full of B Corp type projects and statements with modest disclosure on costs, and all the usual claims that by embracing B Corp type policies this is great for all stakeholders.
Maybe I am just deeply cynical and jaundiced by all the endless ESG stuff we get these days in the name of benefiting all stakeholders and simply hanker for the good old days and companies that focus their ideals on pure capitalism or very close to pure profit objectives. The ol Greed is good, greed is right Gordon Gekko speech in Wall Street, I am sure you know the one. Perhaps that's to my disadvantage but I don't think so. A little bit of ESG is okay in my book, heck even Turners had a photo in their annual report of some staff participating happily in a pink shirt day. I get it that they need to embrace employees with all types of sexual tendencies, heck they have 700 staff so there's bound to be all types in there, and they need to feel included, but some companies take things much too far with Synlait being the best example but GNE in my opinion is not all that far behind.
Anyway, ESG debate aside as that's a can of worms that can be debated forever and a day, I have made the call that their promise about future dividend growth simply cannot be trusted because they have a very long track record of complete B.S. in that respect in the past and I'm going to stick with my assumptions around that. If the share price gets to a point where it offers a 9% yield, (about $2.16) I am happy to have another look at GNE but otherwise I'm quite happy to leave it.
" Greed is good, greed is right Gordon Gekko speech in Wall Street"
a traders rule book to live by....
https://www.youtube.com/watch?v=VVxYOQS6ggk
Quote from: winner (n) on Dec 03, 2023, 11:55 AMMonthly data since GNE listed ....Rsq is .61 ...though reducing lately
Only done v NZ 10 year but points re global action noted. Not so keen as to do all that detail ...suits me as it is.
As I've said before I know very little about how this industry works so it's only a numbers game to me.
Craig's did a similar exercise a while ago and concluded ...
The analysis suggests that the sensitivity of gentailer stocks to the 10-year government bond yield has lessened in recent times. Two potential reasons for this could be that investors feel bond yields have reached a level where they may start to plateau, or possibly that other factors such as positive sentiment toward electrification is providing a certain amount of buoyancy to the stocks, resulting in a level of dislocation from historical behaviours. It is possible that investors are concerned about a recessionary outlook, thus turning to utility stocks as a defensive strategy, with an expectation that once a recession takes hold bond yields would likely fall, hence making the gentailer yield more attractive
Thanks for posting this. It's good to better understand others perspectives and the reasoning behind them
Another variable that is present for foreign investors (a large chuck of GNE holdings excl NZ govt) is exchange rate. NZD has been appreciating lately against many other currencies. This increases foreign investor returns even with a static SP, and amplifies returns when SP increases
The opposite was happening over the previous 18 months. So maybe this has an influence on the decreasing SP?
Have you investigated this variable? I would imagine that USD would be the main determinant due to reserve currency status
Quote from: Plata on Dec 03, 2023, 04:19 PMInstalling grid scale batteries on flat ground at a preestablished grid connection site sounds pretty hard to screw up, and there are many similar projects as precedent in NZ and AU to base costs off of. Similar story with solar, experienced JV partner etc etc. Those two initiatives make up the vast majority of their committed/semicomitted spending, hence I am not too worried about big cost overruns on those projects. I think if they went 4 or even 2 times over budget on that stuff it would call into question the competence of the entire executive and upper engineering management.
Based on long established price trends for solar panels and lithium batteries, the price is only going in one direction - downwards, by 5-10%pa
So risk is more likely to be "coming in under budget". No problem if it's GNE capital (battery), but in JV (like GNE solar) it risks overpaying via higher energy cost payments
Overall I expect that the JV will bring more benefits (esp experience) than negatives
I fully agree that both grid scale batteries and solar are mature technology with minimal project cost risk
Apparently electricity prices are going to rise as El Nino bites in the first half of 2024
Is that good for GNE
Power demand to drive tecnology is only going to increase... is there enough water, wind and sun to automate society... just how many wind and solar systems are going to be needed to get to NET Z.
https://www.cnbc.com/video/2023/12/06/ai-and-big-tech-could-make-the-water-crisis-worse.html
The steep ESG discount slowly unwinding .......share price handing to 3 bucks ......and probably even higher when the new strategy is seen to be working
Quote from: winner (n) on Dec 05, 2023, 02:25 PMApparently electricity prices are going to rise as El Nino bites in the first half of 2024
Is that good for GNE
Prices below the cost of thermal have demonstrated a positive effect on FCF. Have prices above the cost of thermal done the same? Naturally you would think if market price got above thermal cost they could make some extra coin selling excess capacity into the market. Yet in the last dry year 2020/2021 that never eventuated despite Huntley burning a HEAP of coal at low coal prices. So who knows really, I never really unpacked what went wrong that year. Might be worthwhile.
Quote from: Plata on Dec 12, 2023, 07:03 PMPrices below the cost of thermal have demonstrated a positive effect on FCF. Have prices above the cost of thermal done the same? Naturally you would think if market price got above thermal cost they could make some extra coin selling excess capacity into the market. Yet in the last dry year 2020/2021 that never eventuated despite Huntley burning a HEAP of coal at low coal prices. So who knows really, I never really unpacked what went wrong that year. Might be worthwhile.
There is no E in Huntly......
Part of GNE strategy reset was to stop being the generator that automatucally steps in to fill the energy gap when the wind isnt blowing and the hydrorology is bad. So the past will no longer be a guide to the future
Now, GNE will sell future supply options to the other generators so they can cover their own dry year risk. The cost will include coal stockpile holding costs, CO2 emissions costs, generation costs and a margin.
Price will presumably increase like an aeroplane ticket, so an "emergency" spot purchase could be very lucrative for GNE
I'm not sure how this will affect the current Max Bradford electricity market pricing mechanism, which produces perverse outcomes in a commercial market like we have now (it was different when the government owned all the power generators, the market pricing mechanism was better suited to this situation)
If other generators choose not to pre-purchase their thermal supply options, GNE will only supply their own customers. I'm assuming the other generators were fully informed in confidence when the strategy was being developed, as their silence has been deafening
There is a good presentation by Malcolm John's on the Sharesies YouTube channel, posted about a week ago. It gives me confidence that company value will rise once the (share) market understands the changes (Huntly is a NZ electricity necessity that must be funded by all generators, and the deployment of solar JV and self funded battery storage at Huntly) and sees them in action
Quote from: xafalcon on Dec 12, 2023, 08:17 PMThere is no E in Huntly......
Part of GNE strategy reset was to stop being the generator that automatucally steps in to fill the energy gap when the wind isnt blowing and the hydrorology is bad. So the past will no longer be a guide to the future
Now, GNE will sell future supply options to the other generators so they can cover their own dry year risk. The cost will include coal stockpile holding costs, CO2 emissions costs, generation costs and a margin.
Price will presumably increase like an aeroplane ticket, so an "emergency" spot purchase could be very lucrative for GNE
I'm not sure how this will affect the current Max Bradford electricity market pricing mechanism, which produces perverse outcomes in a commercial market like we have now (it was different when the government owned all the power generators, the market pricing mechanism was better suited to this situation)
If other generators choose not to pre-purchase their thermal supply options, GNE will only supply their own customers. I'm assuming the other generators were fully informed in confidence when the strategy was being developed, as their silence has been deafening
There is a good presentation by Malcolm John's on the Sharesies YouTube channel, posted about a week ago. It gives me confidence that company value will rise once the (share) market understands the changes (Huntly is a NZ electricity necessity that must be funded by all generators, and the deployment of solar JV and self funded battery storage at Huntly) and sees them in action
Great post xafalcon. Agree Huntly is a NZ necessity. Other providers need to pay for the insurance of having them on call.
Yes interesting post but as you say, the silence from the other Gentailiers is deafening which got me wondering how do you see this playing out xafalcon ?
Suppose we're in winter next year and Transpower signals an imminent supply crisis coming up and the other Gentailers haven't kowtowed to GNE's demands and purchased the cover, what then ?
Surely GNE can't allow blackout's ? Does it then demand a punitive rate for spot generation like $500 mw/hr?
Please paint me a picture of how this play's out, I'm curious.
GNE SP up nearly 7% since the announcement of the strategy reset. Some were predicting the SP would plunge to $2 but the market obviously saw things differently. GNE, imo, remains the best of the sector in terms of yield, value and growth prospects. I would not be surprised at all if the SP is around $3 in 12 months time.
I'm no expert on the electricity spot market (lucky we have one or two here) but it would seem to me that it operates like any other market, in accordance with supply and demand. We have seen extraordinary spot rates from time to time in periods of peak demand and low supply, so I don't see the fundamentals of that market changing, unless the Government intervenes in a very heavy handed way, which is unlikely.
GNE will be in a strong position during future "energy-gap" periods, and together with their increasing investment in a mix of renewable assets (which will ultimately generate a greater return) I see it's medium-long term prospects as being very healthy.
The so called 'ESG discount' unwinding nicely
As such target is about 320/330
Even more if interest rates fall quite a bit from current levels
Quote from: Basil on Dec 13, 2023, 09:13 AMYes interesting post but as you say, the silence from the other Gentailiers is deafening which got me wondering how do you see this playing out xafalcon ?
Suppose we're in winter next year and Transpower signals an imminent supply crisis coming up and the other Gentailers haven't kowtowed to GNE's demands and purchased the cover, what then ?
Surely GNE can't allow blackout's ? Does it then demand a punitive rate for spot generation like $500 mw/hr?
Please paint me a picture of how this play's out, I'm curious.
I doubt the other generators would say much about it, but GNE likely would have. The lack of mention of their market security options announced ages ago in more recent updates is slightly embarrassing and so I would imagine they would have mentioned literally any success if there was any to discuss.
As per transpower website they cannot compel generators to provide power. But I imagine there is an implied compulsion to prevent them to avoid political and consumer fury.
As for a "punitive rate"... In the last dry year the demand for thermal was so high that the third rankine had to be pulled out of storage to assist. So we had tight supply and significant excess capacity being sold into the market for a prolonged period of time. Yet EBITDA that year was only ~430 million from memory. If GNE has the ability to charge punitive rates going forward, I would ask what was different the last dry year that prevented them doing it then. Perhaps at the time they did not want the negative publicity from "holding the market to randsom". Are the happy to do that now?
Quote from: winner (n) on Dec 13, 2023, 07:19 PMThe so called 'ESG discount' unwinding nicely
As such target is about 320/330
Even more if interest rates fall quite a bit from current levels
Somewhat amusing the second the Craig's guru throws in the towel and slaps the discount on it things start going the other way. Will be interesting to see where she ends up, I'm picking this ends up in the 2.70s for most of the Dec-Feb period. Certainly feeling increasingly smug about that DRP purchase recently.
Assuming 100% imputation credits. $3 would be a gross yield of only 6.5%
Current yield at today's closing price is 7.7%
Not much of a premium on 10 year Govt stock or risk premium for execution risk.
John's talks a big game. Talk is one thing, executing on time and budget and getting forecasted generation and acceptable prices from assets is another.
Aluminum price under a fair bit of pressure...what happens to returns if the smelter at Tiwai point is closed ?
This is not without risks.
Price/yield over the last few months seems pretty well correlated to much of the bond market.
Quote from: Basil on Dec 13, 2023, 08:54 PMAssuming 100% imputation credits. $3 would be a gross yield of only 6.5%
Current yield at today's closing price is 7.7%
Not much of a premium on 10 year Govt stock or risk premium for execution risk.
John's talks a big game. Talk is one thing, executing on time and budget and getting forecasted generation and acceptable prices from assets is another.
Aluminum price under a fair bit of pressure...what happens to returns if the smelter at Tiwai point is closed ?
This is not without risks.
Except that if the pivot to renewables goes well, together with a continuing premium for Huntly, GNE could be a vastly more profitable organisation in the coming years, meaning that the yield will, over time, shift upwards along with the SP. That's the holy grail - a good yield plus a sustained lift in the SP. In the long term, I think that scenario is highly likely.
Quote from: Basil on Dec 13, 2023, 09:13 AMYes interesting post but as you say, the silence from the other Gentailiers is deafening which got me wondering how do you see this playing out xafalcon ?
Suppose we're in winter next year and Transpower signals an imminent supply crisis coming up and the other Gentailers haven't kowtowed to GNE's demands and purchased the cover, what then ?
Surely GNE can't allow blackout's ? Does it then demand a punitive rate for spot generation like $500 mw/hr?
Please paint me a picture of how this play's out, I'm curious.
As I said in my post, I don't even know how the new strategy will work with current electricity market pricing mechanism (which heavily favours non-combustion generators)
If this is truly an El Nino period, the first signs of "how it will play out" will become evident late summer/early autumn. Hydro storage in SI is already below average, and average wind speed falls through summer. If rainfall is below average, as El Nino would cause, hydro storage would fall quite quickly until minimum safe storage levels are hit. This is when we would start observing the new strategy in action
Would GNE actually follow through on it's proposal? Unknown. Would the government step in and direct a publucly listed company to generate more power? Maybe, they own 51%, but it would set a terrible president. Would the government initiate a review of the electricity market? Probably. Is this actually what GNE wants to achieve? Probably. Do I have any inside information? No
Quote from: Plata on Dec 13, 2023, 07:41 PM
I doubt the other generators would say much about it, but GNE likely would have. The lack of mention of their market security options announced ages ago in more recent updates is slightly embarrassing and so I would imagine they would have mentioned literally any success if there was any to discuss.
As per transpower website they cannot compel generators to provide power. But I imagine there is an implied compulsion to prevent them to avoid political and consumer fury.
As for a "punitive rate"... In the last dry year the demand for thermal was so high that the third rankine had to be pulled out of storage to assist. So we had tight supply and significant excess capacity being sold into the market for a prolonged period of time. Yet EBITDA that year was only ~430 million from memory. If GNE has the ability to charge punitive rates going forward, I would ask what was different the last dry year that prevented them doing it then. Perhaps at the time they did not want the negative publicity from "holding the market to randsom". Are the happy to do that now?
Thanks, I appreciate your thoughts. The highlighted bit is why I asked the question. They've tried this before and the other Gentailiers have snubbed them. I think they will have to play hard ball.
Bit late but MorningStar
-Narrow-moat-rated Genesis Energy announced at its investor day that it will accelerate investment to transition to 95% renewable energy by 2035, with the investment partly funded by a 20% cut to dividends. We support the strategy, with greater investment better offsetting longer-term earnings headwinds from the depletion of Kupe and closure of thermal power stations. After lowering the dividend, the firm still offers a solid 5.9% yield at current prices, with management guiding to Consumer Price Index-like growth in dividends.
Management reaffirmed guidance for EBITDA of NZD 430 million in fiscal 2024 and provided guidance for about NZD 500 million in fiscal 2025, representing growth of 16%. This growth is expected to be driven by retail cost savings, higher Kupe production volumes following recent drilling, the start of the Tauhara geothermal and Lauriston solar power purchase agreements, and improved LPG retail margins. Management also provided guidance for EBITDA to be over NZD 550 million from fiscal 2026 to 2028, with up to NZD 100 million per year coming from new assets.
In total, Genesis plans to invest about NZD 1.1 billion on new renewable generation and storage assets by 2030. We lift our medium to longer-term EBITDA forecasts by 15% to 20% and double our capital expenditure forecasts to reflect the firm's new investment plans. These changes result in our fair value estimate rising 4% to NZD 2.70 per share. At current prices, the stock screens as slightly undervalued.
Currently, Genesis augments its hydro and thermal generation with power purchase agreements from third-party renewable generators. Under the new plan, the firm will also build wind and solar farms on its own and in joint ventures. While solar is typically less attractive in New Zealand because of significant cloud cover, solar farms are cheap and quick to build.
From theredbaiter
New Zealand needs to take a good look at Alberta, a Canadian province that has gone full tilt converting its energy supply to renewables.
Yesterday, with extreme cold and no wind the Alberta govt had to issue an emergency alert telling everyone to stop using heaters and charging their electric cars. (see attached graphic) The alert also asked drivers not to heat their engines as is customarily done to stop petrol/ diesel engines from freezing solid overnight.
No matter whether your car is an EV or ICE model, it doesn't matter because you can't drive it anyway. No power for electric, and your ICE car's engine is frozen solid. So just sit isolated in your home and freeze like the good little caveman/ woman that Mr Trudeau wants you to be.
Alberta is home to more than three quarters of the wind and solar built in Canada in 2022. It is on track to meet its target of generating 30 per cent of its total electricity from renewable sources by 2030.
Shortly after the attached alert was issued, Saskatchewan Premier Scott Moe put out a tweet, saying his province was providing 153 megawatts of power to Alberta to help them during the shortage.
"That power will be coming from natural gas and coal-fired plants, the ones the Trudeau government is telling us to shut down (which we won't)," Moe wrote
https://theredbaiter.com/2024/01/15/events-in-alberta-are-a-warning-for-nz-govts-renewables-push/
Thermal plants are not as infallible as you might think. Remember the Texas cold snap? Or looking locally, one need only look to GNE's resource consent for Huntley to see what might happen if things get a bit warm in the river... Good thing they built that cooling tower right?
Quote from: Plata on Jan 16, 2024, 05:19 PMThermal plants are not as infallible as you might think. Remember the Texas cold snap? Or looking locally, one need only look to GNE's resource consent for Huntley to see what might happen if things get a bit warm in the river... Good thing they built that cooling tower right?
And to put some perspective into your comment
Solar plants are 40% up time, but output is variable due to clouds. Average 50% output = 20% overall
Wind plants are 80% up time, but output is variable due to wind speed varying greatly. Average 35% output = 28% overall
Thermal plants are 95% (plus) up time, but output is potentially limited for a few days each year. Average 98% output = 93.1% (plus) up time
Note also the CCGT lessens the likelihood of river temps ever being a problem
So, yeah, Thermal isn't infallible. But it's the closest to infallible that we have
The Texas situation was not a failure of plant, it was exceptional and unexpected demand with insufficient generation backing due to the widespread nature of the unprecedented weather so Texas couldn't import their shortfall. How often does it snow very heavily in Texas???
Huntly has never had an "e"
Quote from: xafalcon on Jan 16, 2024, 07:52 PMAnd to put some perspective into your comment
Solar plants are 40% up time, but output is variable due to clouds. Average 50% output = 20% overall
Wind plants are 80% up time, but output is variable due to wind speed varying greatly. Average 35% output = 28% overall
Thermal plants are 95% (plus) up time, but output is potentially limited for a few days each year. Average 98% output = 93.1% (plus) up time
Note also the CCGT lessens the likelihood of river temps ever being a problem
So, yeah, Thermal isn't infallible. But it's the closest to infallible that we have
The Texas situation was not a failure of plant, it was exceptional and unexpected demand with insufficient generation backing due to the widespread nature of the unprecedented weather so Texas couldn't import their shortfall. How often does it snow very heavily in Texas???
Huntly has never had an "e"
Maybe you should look at the whole picture. While some renewables produce power with less reliability (like e.g. wind and solar panels) than burning carbon, other renewables do have outstanding reliability (hydro, geothermal).
As well ... given that you seem to be a proud propagator for pumping more carbon into the atmosphere ... maybe you should consider as well the costs of increasing extreme weather events (like storms, floodings, droughts) and the costs of a rising sea level. While these effects might be quite reliable (you burn and they happen), they do carry a high cost for all of us.
Always look at the big picture.
Maybe I'm mistaken but I recall reading about multiple thermal plants in Texas going offline during that event due to the extreme cold. Does the CCGT not require cooling? Or are you referring to the efficiency difference between it and the rankines?
Quote from: BlackPeter on Jan 17, 2024, 12:33 PMMaybe you should look at the whole picture. While some renewables produce power with less reliability (like e.g. wind and solar panels) than burning carbon, other renewables do have outstanding reliability (hydro, geothermal).
As well ... given that you seem to be a proud propagator for pumping more carbon into the atmosphere ... maybe you should consider as well the costs of increasing extreme weather events (like storms, floodings, droughts) and the costs of a rising sea level. While these effects might be quite reliable (you burn and they happen), they do carry a high cost for all of us.
Always look at the big picture.
My comment was in the context of hydro being constrained due to dry weather, as is the situation at present and aligns with high river temperatures that OP noted. But I did not make that clear.
Hydro has a lower output than thermal (very high efficiency but fuel constrained every year [except last] at this time)
Geothermal is below hydro and averages about 80-85%. But is very capital intensive, there is very limited scope to expand, and CO2 emissions are significant. So does contribute to the environmental issues you are concerned about
My comment was clearly related to the suggestion that thermal is not a super-reliable source of electricity. Nowhere did I make any assertion that more thermal was a good idea, or that I supported thermal over any other source of electricity. And you may recall my past support for Lake Onslow, so I'm clearly a supporter of renewable electricity.
Always look at the context of what is written, otherwise you risk going off on an irrelevant tangent
Quote from: Plata on Jan 17, 2024, 05:42 PMMaybe I'm mistaken but I recall reading about multiple thermal plants in Texas going offline during that event due to the extreme cold. Does the CCGT not require cooling? Or are you referring to the efficiency difference between it and the rankines?
Yes CCGT converts more chemical (gas) energy into electricity, so heat losses (to the river) are lower per KWh generated, when compared to the rankines burning gas or coal
Basically the GT part does not require any cooling, and uses the waste heat in the exhaust to heat water to turn a steam turbine
The market seems to like GNEs Q2 Performance Report.Customer numbers up 4500 and a few strategic goals ticked off. GNE definitely back in favour again.
Quote from: LoungeLizard on Jan 22, 2024, 12:42 PMThe market seems to like GNEs Q2 Performance Report.Customer numbers up 4500 and a few strategic goals ticked off. GNE definitely back in favour again.
The market is a funny beast. Personally I liked GNE more when the SP was below $2.40, but hey - I guess this premium is the price for buying a popular stock. Still looks cheap compared to MCY and MEL (based on dividend yield as well as EPS).
Discl: holding some ...
Market hasn't unwound that ESG discount ...the penalty for doing bad stuff
Without that share price would be about 330/340
So looking good from here ......only one way to go for share price and that's up
Quote from: BlackPeter on Jan 22, 2024, 02:06 PMThe market is a funny beast. Personally I liked GNE more when the SP was below $2.40, but hey - I guess this premium is the price for buying a popular stock. Still looks cheap compared to MCY and MEL (based on dividend yield as well as EPS).
Discl: holding some ...
Damn market eh? How's an investor supposed to accumulate when the SP keeps going up? Oh well, just have to take those gains I guess.. (sigh).
Quote from: winner (n) on Jan 22, 2024, 02:14 PMMarket hasn't unwound that ESG discount ...the penalty for doing bad stuff
Without that share price would be about 330/340
So looking good from here ......only one way to go for share price and that's up
I'm having difficulty keeping up with your predictions. On 3rd December you said your newly revised calculations were predicting a fall to $1.86
Just 6 weeks later and the SP has risen from 230's to 250's, and now you're predicting more increases?
The way I view SP movements over the past few months are
The SP decline
- unprecedented selling volumes (biggest since listing) as GNE was removed from an index fund
- SP fell in response, probably leading to selling by other investors, creating a feedback loop
- interest rates have held up longer than expected, creating highish return / low risk options for those who wanted them
The SP turn around
- realisation setting in that even a slightly reduced GNE dividend is still better than the other gentailers
- new strategy, if executed, seems like a viable way forward, and addresses their carbon emissions by making it a NZ electricity issue rather than GNE specific
- interest rates are expected to fall quickly and considerably across the western world
- alternative high return options are disappearing (I put $1M into BNZ 1 Yr TD @ 6.25% before Christmas, but that rate is now gone)
- people are getting a better understanding of how important electricity generation is to fight climate change, more people realise how electricity demand will increase 50% over the next 10 years. So generators are strongly placed to increase earnings
- Lake Onslow has been stopped. A short-sighted decision that we will come to regret. But the outcome is very positive for the generators, and especially so for baseload generators like GNE
I do expect SP to continue grinding upwards over the next 4 months, maybe to $2.85. Then get a second wind as RBNZ starts cutting the OCR, rising to the $3.10 range
Just my $0.02 worth.....
Quote from: xafalcon on Jan 22, 2024, 03:12 PMI'm having difficulty keeping up with your predictions. On 3rd December you said your newly revised calculations were predicting a fall to $1.86
Just 6 weeks later and the SP has risen from 230's to 250's, and now you're predicting more increases?
The way I view SP movements over the past few months are
The SP decline
- unprecedented selling volumes (biggest since listing) as GNE was removed from an index fund
- SP fell in response, probably leading to selling by other investors, creating a feedback loop
- interest rates have held up longer than expected, creating highish return / low risk options for those who wanted them
The SP turn around
- realisation setting in that even a slightly reduced GNE dividend is still better than the other gentailers
- new strategy, if executed, seems like a viable way forward, and addresses their carbon emissions by making it a NZ electricity issue rather than GNE specific
- interest rates are expected to fall quickly and considerably across the western world
- alternative high return options are disappearing (I put $1M into BNZ 1 Yr TD @ 6.25% before Christmas, but that rate is now gone)
- people are getting a better understanding of how important electricity generation is to fight climate change, more people realise how electricity demand will increase 50% over the next 10 years. So generators are strongly placed to increase earnings
- Lake Onslow has been stopped. A short-sighted decision that we will come to regret. But the outcome is very positive for the generators, and especially so for baseload generators like GNE
I do expect SP to continue grinding upwards over the next 4 months, maybe to $2.85. Then get a second wind as RBNZ starts cutting the OCR, rising to the $3.10 range
Just my $0.02 worth.....
The 186 was based on 10 year Govt stock v divie yield trends ....... Reflecting if punters wanted to retain the risk premium that had 'demanded' since listing they would want to ay 186.
Never mind risk off now so that doesn't apply any more...happy to take a lower yield
Then there's this 'ESG discount' that's been holding back the share price. Now they've said they won't be bad boys with the new strategy that ESG discount is going to unwind ....ie GNE valued in line with their peers and that's where the 330/340 comes in.
Yep it'll should start grinding up to that level ...and if rates drop quite a lot go even higher.
Can't lose from here I reckon .....nice punters are keen on this ESG stuff at moment and prepared to get a lower divie yield
BIG increase in resi netback, and somehow they even managed to increase resi volume. HUGE increase in wholesale netback too seemingly. chaching.
If the divvy is fully imputed, (they have a very poor ICA situation so there is no guarantee whatsoever it will be), 14 cps = 19.44 cps gross = 7.7% gross yield at $2.52. If its 80% imputed as most of its dividends have been since it listed that works out to 18.04 cps gross = 7.16% Gross. Frankly I'd feel more comfortable to try and build a case for investment with 80% imputation as that's far and away the most common level at which imputation credits have been attached but 7.16% is not especially attractive.
The directors have a long-proven track record of being completely "full of B.S" when it comes to stated intentions to move the dividend in line with inflation, they never have and probably never will. There's a lot of execution risk as they try and build out generation capacity to replace aging assets such as Huntly and Kupe.
The shares have risen slightly off recent lows due to, in my opinion:
1. Much lower bond yields in recent months
2. A sense that at least there is some plan to replace aging assets.
3. A better prospective ESG profile going forward.
The shares look fully priced to me for where the 10 year bond yield is today (4.7%) only a 3% premium (2.46% premium at 80% imputation). These are record ever low premiums to the 10 year rate.
My view is the future of the share price will be closely related to the bond yields, and it's very unlikely that this bond proxy will see its premium to the ten year reduce below current level's. Some experts think the fall in the 10 year rate has done its dash for a while, and I think we will probably see the shares stagnate around the current level. and probably retrace a little of their recent recovery if the next dividend is only 80% imputed. We'll find that out next month.
Talk of recovery into the high $2's and even low $3 range...I'm sorry but that makes no sense to me whatsoever.
Quote from: Basil on Jan 22, 2024, 09:48 PMIf the divvy is fully imputed, (they have a very poor ICA situation so there is no guarantee whatsoever it will be), 14 cps = 19.44 cps gross = 7.7% gross yield at $2.52. If its 80% imputed as most of its dividends have been since it listed that works out to 18.04 cps gross = 7.16% Gross. Frankly I'd feel more comfortable to try and build a case for investment with 80% imputation as that's far and away the most common level at which imputation credits have been attached but 7.16% is not especially attractive.
The directors have a long-proven track record of being completely "full of B.S" when it comes to stated intentions to move the dividend in line with inflation, they never have and probably never will. There's a lot of execution risk as they try and build out generation capacity to replace aging assets such as Huntly and Kupe.
The shares have risen slightly off recent lows due to, in my opinion:
1. Much lower bond yields in recent months
2. A sense that at least there is some plan to replace aging assets.
3. A better prospective ESG profile going forward.
The shares look fully priced to me for where the 10 year bond yield is today (4.7%) only a 3% premium (2.46% premium at 80% imputation). These are record ever low premiums to the 10 year rate.
My view is the future of the share price will be closely related to the bond yields, and it's very unlikely that this bond proxy will see its premium to the ten year reduce below current level's. Some experts think the fall in the 10 year rate has done its dash for a while, and I think we will probably see the shares stagnate around the current level. and probably retrace a little of their recent recovery if the next dividend is only 80% imputed. We'll find that out next month.
Talk of recovery into the high $2's and even low $3 range...I'm sorry but that makes no sense to me whatsoever.
I realise from your posts that you are very negative towards GNE. That's fine, everyone has their reasons. And looking at GNE as a pure dividend yield stock suits your narrative
But this is, IMO, an extremely blinkered perspective. Because you are ignoring the following
Electricity generation will need to increase 50% in the next 10 years due to electrification of as much as possible. Hence any company in the generation business has a golden opportunity to significantly increase their income and profitability
With the demise of Lake Onslow, thermal has taken on a major role to supply baseload when renewables are deficient. GME has over 1000MW of thermal, fully consented and with carbon credits. No new significant thermal sites will get consent. When the country needs thermal power, it will come from Huntly
GNE is the largest retailer of electricity in NZ, and continues to grow both customer numbers and netback. Their quarterly reports contain this evidence for all to read
The new strategy, if executed, will allow GNE to grow renewable generation and provide significant battery sourced peaking output in close proximity to 50% of the countries population
For these reasons, and a bunch of lesser importance others, I believe that GNE has the greatest upside of all the gentailers
EV sales worldwide are already tanking. With the removal of the incentives and the application of road user charges I predict they will fall off the face of a cliff here. I seriously doubt your theory generation will need to increase by 50% in the next 10 years or anywhere even remotely like that percentage. Electricity demand growth to date has been extremely muted and I expect it will stay that way for the foreseeable future.
GNE have had no success with their earlier attempts to engage with the other industry participants in their swap-option deals on Huntly. I see no compelling reason to think it will be different going forward and I note the new CEO's most recent attempt to jawbone others into action drew absolutely no response whatsoever from them. The silence was deafening...again.
Retail share has come and gone over the years and I doubt that GNE is in a position to grow numbers in a meaningful way in the future which gets me back to this is a no growth yield stock, or bond proxy, pure and simple.
It's clear I think the yield is not by any means compelling at the current share price, and frankly, woefully inadequate at the target prices you are suggesting.
I like companies and directors that do what they say they are going to do, not talk a bunch of crap. All GNE promises before on dividend growth were lies so only a fool would take them seriously this time.
Further, there is no guarantee there will not be another "dividend reset" in the future if the directors decide with the increased need for capex they need to retain a higher percentage of earnings.
There is nothing in the kitty in terms of the imputation credit account so some people might be investing thinking that the recent 100% imputation credit level will continue. Someone with an understanding of these things like me needs to highlight that risk which I have done.
Maybe this does stack up compared to the other Gentailiers, but I don't care, I don't own any of them as I don't think they are a good buy either.
I think people "bottom fishing" for beaten down yield stocks have a better choice...one I will highlight in due course after I have executed to purchase a decent sized position.
When the CEO guy talks about GNE share price being punished for using coal etc (the ESG discount) he's probably saying the divie yield should be closer to it peers
Maybe say 6%pa ....ie a share price of $3.05 (if divie 80% imputed)...hey presto the ESG discount is about 20%,as boss man said
GNE yield would then be more in line with its peers. As per NZX yield of it peers are -
CEN 5.8%
MNW 5.4%
MCY 4.7%
MEL 4.3%
Quote from: Basil on Jan 23, 2024, 01:30 PMEV sales worldwide are already tanking. With the removal of the incentives and the application of road user charges I predict they will fall off the face of a cliff here. I seriously doubt your theory generation will need to increase by 50% in the next 10 years or anywhere even remotely like that percentage. Electricity demand growth to date has been extremely muted and I expect it will stay that way for the foreseeable future.
GNE have had no success with their earlier attempts to engage with the other industry participants in their swap-option deals on Huntly. I see no compelling reason to think it will be different going forward and I note the new CEO's most recent attempt to jawbone others into action drew absolutely no response whatsoever from them. The silence was deafening...again.
Retail share has come and gone over the years and I doubt that GNE is in a position to grow numbers in a meaningful way in the future which gets me back to this is a no growth yield stock, or bond proxy, pure and simple.
It's clear I think the yield is not by any means compelling at the current share price, and frankly, woefully inadequate at the target prices you are suggesting.
I like companies and directors that do what they say they are going to do, not talk a bunch of crap. All GNE promises before on dividend growth were lies so only a fool would take them seriously this time.
Further, there is no guarantee there will not be another "dividend reset" in the future if the directors decide with the increased need for capex they need to retain a higher percentage of earnings.
There is nothing in the kitty in terms of the imputation credit account so some people might be investing thinking that the recent 100% imputation credit level will continue. Someone with an understanding of these things like me needs to highlight that risk which I have done.
Maybe this does stack up compared to the other Gentailiers, but I don't care, I don't own any of them as I don't think they are a good buy either.
I think people "bottom fishing" for beaten down yield stocks have a better choice...one I will highlight in due course after I have executed to purchase a decent sized position.
On EV sales I fully agree with you, in the short term. The RUC's are too high for passenger vehicles, because NZ has never had a meaningful number of non-petrol cars (unlike Europe), so they were just lumped in with 3.5T trucks, and marginally lower than 6T trucks. That will change in a year or so as government brings petrol cars onto RUC's. Meanwhile EV prices will continue to fall. So sales will likely nose-dive for a year, then rebound
But process heat is where the most of the massive increase in electricity demand will come from. I suggest you google it. This change is mandated by the law, companies must do it, end of story
I like that you used my previous comment in your response. Time will tell if your swaption pessimism is well founded or otherwise. The past may not be a good guide on the future as electrification accelerates
Nobody can challenge your obvious hatred of GNE, and since you say you don't and won't ever hold this stock, which makes me wonder just why the heck you are so vocal on this tread??? It seems personal
I'm not saying that only positive posts should be made. Or that you should be a shareholder to comment. Problems should rightfully be raised and debated
You do seem quite hung up on imputation credits. 80% was fine for me since the beginning. There was some bonus 100% imputation, which was nice. But it was never suggested this was the normal. From my perspective imputation is well down the list of priorities, and I carry forward plenty of IC's every year
You also seem very unhappy about previous comoany comments on dividend indexing. GNE has paid a handsome dividend to me every 6 months. Much more than I have received from other gentailers, which you also dislike. Dud you disagree with selling 49% all those years ago?
I look forward to hearing which dividend stocks you buy into. You'll need to move quickly as first downward moves on 12M TD by a major bank were made yesterday. And we all know they are pack animals, always moving in harmony with eachother (although it's not anticompetitive, or cartel behaviour per our ineffective comcom)
I've shared how I see it for the sake of some objectivity on this thread. There's no hate as you suggest, neither have I said I would never own it again. Please don't put words in my mouth. In a nutshell what I am saying is if the price moves materially higher from here, the dividend yield gets even more modest than it already is. It seems you are perfectly happy with the modest yields in this sector and on term deposits. I invest to beat the market, not to get an average market return. I note the NZX50 which includes all dividends paid is still well down on where it was 3 years ago in January 2021. Each to their own approach.
Quote from: Basil on Jan 24, 2024, 08:43 AMI've shared how I see it for the sake of some objectivity on this thread. There's no hate as you suggest, neither have I said I would never own it again. Please don't put words in my mouth. In a nutshell what I am saying is if the price moves materially higher from here, the dividend yield gets even more modest than it already is. It seems you are perfectly happy with the modest yields in this sector and on term deposits. I invest to beat the market, not to get an average market return. I note the NZX50 which includes all dividends paid is still well down on where it was 3 years ago in January 2021. Each to their own approach.
You call it objectivity. Others may call it differently
I'm not seeing you ever owning GNE because, as you said
- the dividend % of SP is too low at current SP and woefully inadequate at higher SP
- you are worried about imputation credits
- you don't like companies that change their financial plans (aka talk a bunch of crap about dividend indexing)
- you are concerned GNE may change dividend policy again
- you don't believe swaption will happen
- you don't believe GNE will grow their customer numbers
- you don't see significant 10Y electricity growth
That's a pretty long list of reasons why you wouldn't. And some of them are pretty hard or impossible to overcome
Anyway. Have a read of CEN report today. Note national electricity demand growth figure. Average at 3%, then calculate over 10Y. Gives a figure of 35% demand growth over 10Y. And this is without any process heat electrification, before Glenbrook electric arc furnace is commissioned, assumes zero population growth, and tiny EV market penetration. Maybe that 10Y 50% demand growth I spoke of wasn't as outrageous as you thought. Just sayin'
And I do like to have a diversified investment portfolio. I obviously have shares, and term deposits, and a few rental properties, and I also have a small solar power farm, and a small drystock farm. The returns are acceptable to me, and there is essentially zero capital risk. I am happily retired in my mid 50's
Each to their own approach
Fonterra Edendale process heat conversion from coal to electricity
https://www.stuff.co.nz/climate-change/350157942/goodbye-coal-fonterras-southernmost-factory-shifts-electricity
This is the same technology that Synlait Dunsandel installed a few years ago, and is expected to be used at other dairy sites (fonterra and others) that are located near to HV transmission lines
Ah you bet me to it ;D . 20 MW is nothing to sneeze at.
Quote from: Plata on Jan 26, 2024, 07:58 PMAh you bet me to it ;D . 20 MW is nothing to sneeze at.
Correct, is is a significant amount of energy. When compared against NZ current average daily peak usage of 6GW (summer 5GW, winter 7 GW), it's 0.33%
This is a perfect example of why process heat electrification over the coming decade will have such a significant effect on electricity demand and generation
For example. Dry summer with windless days. The milk still needs to be processed every day (unlike aluminium). Hence the importance of thermal backing (= Huntly), for the foreseeable future. And as the annual electricity usage (GWh) increases, the % of (hydro) storage effectively decreases. And the only alternative longer term (days or weeks) energy storage is coal and gas
Here is the Transpower CEO talking about winter electricity security, further development of the grid, and thermal generation as the backstop
https://www.rnz.co.nz/news/national/508244/rolling-power-cuts-may-hit-this-winter
Genesis a bit peeved Supreme Court allowing activist Smith (presumably with blessing of the Iwi Forum) to continue
From BusinessDesk-
Genesis Energy said it was disappointed by the supreme court's ruling. A full trial would consume extensive time and resources that could be channelled into building more renewable generations.
"The supreme court has, in effect, disregarded the fact that all the defendants have complied with their climate change obligations under the laws of NZ." Genesis did not believe the lawsuit would accelerate the measures or the commitments of the seven companies supporting NZ's transition to a low-carbon future.
Quote from: winner (n) on Feb 07, 2024, 01:13 PMGenesis a bit peeved Supreme Court allowing activist Smith (presumably with blessing of the Iwi Forum) to continue
From BusinessDesk-
Genesis Energy said it was disappointed by the supreme court's ruling. A full trial would consume extensive time and resources that could be channelled into building more renewable generations.
"The supreme court has, in effect, disregarded the fact that all the defendants have complied with their climate change obligations under the laws of NZ." Genesis did not believe the lawsuit would accelerate the measures or the commitments of the seven companies supporting NZ's transition to a low-carbon future.
Costs would be payable if the litigation was shown to be without merit, which it will be if the companies are acting within the law
It is "interesting" that Z energy is included, but Mobil, gull, npd, BP, challenge are not. It is "interesting" that fonterra is included, but tatua, synlait, OCD, westland are not.
Genesis huge drop in half year profit ...down $107m to $38m
But they say they are a forward looking company so all hunky dory
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GNE/426614/413103.pdf
I am sure shareholders are thrilled to take a 20% reduction in dividend because they are helping to save the planet and at the same time investing in renewable generation to replace dirty and aging capacity. They get a 7.7% gross yield as their reward, (for as long as 100% imputation remains).
Quote from: Basil on Feb 22, 2024, 10:21 AMI am sure shareholders are thrilled to take a 20% reduction in dividend because they are helping to save the planet and at the same time investing in renewable generation to replace dirty and aging capacity. They get a 7.7% gross yield as their reward, (for as long as 100% imputation remains).
Heel boy, heel!
Most of the earnings and cost pressure come from the issues as stated - low hydro levels, Huntley being out of commission etc. GNE have already flagged that as they transition to renewables dividends were likely going to be under pressure. If you have bought into the plan to future proof the business then todays figures aren't a surprise or concerning.
Personally I see nothing wrong with a 7.7% gross yield in a transitionary period. By the looks of things the market - Institutions in particular - are not concerned either. SP is unchanged.
I presume the transition period you refer to is their FY35 plan, so 11 years of 20% dividend sacrifices, ouch ! Gosh that's quite some "transitionary period" as they "hope" to replace dirty aging assets with shiny new clean ones that they "hope" they can generate the same level of generation output and profitability from.
Just as well they said the reset dividend is going to match inflation going forward and you can hope this really is the case because...oh no...hang on a minute they have spun that B.S. before and never even ever made an honest attempt to match the rate of inflation in any year they have existed. Surely a Govt majority owned company wouldn't lie to you again. I guess you could hope they mean it this time when they say dividends will be increased in line with inflation going forward. In the meantime you hope they can maintain 100% imputation credits and hope they don't have to do another dividend reset due to capex cost blowouts. Just as well hope is a great basis upon which to invest eh mate ;) You'll have to forgive the old dog mate and his deep cynicism when it comes to this one...Beagles pet hate is when they promise him more dog food each year and then management and staff eat it themselves instead.
What's up ...GNE share price down to 244 after being above 250 for some time
7c fall at open but it's Divi day (7c Supp 1.235 Imp 2.722)
HALFYR: GNE: Genesis meets expectations in challenging environment
Guidance
FY24 EBITDAF is expected to be around $430 million subject to hydrological
conditions, gas availability, and any material adverse events or
unforeseeable circumstances.
As previously announced, Huntly Unit 5 has returned to service. The
financial impact of this event is estimated to be in the range of $20 million
to $25 million EBITDAF and is included in EBITDAF guidance.
Operating expenditure is expected to be around $380 million. Capital
expenditure in FY24 is expected to be around $145 million.
As stated at Investor Day on 30 November 2023, FY25 EBITDAF outlook remains
around $500 million. This is subject to hydrological conditions, gas
availability, and any material adverse events or unforeseeable circumstances.
GNE share price down ...down below 240
I thought that when expectations that rate cuts were coming soon the share price would be heading up ...not down
Hydro lake levels are trending downward, increases chance of tight supply later in the year. Genesis has not done that well in the recent past when this was the case. Now days they say that was because they didn't want to hold people to ransom with thermal prices, but now days they also say they are not being fairly compensated for their thermal backup. Guess we will see what happens this year. Probably also doesn't help that rates are more widely expected to be higher for longer these days. Don't forget dividend too.
Didn't think this would get this low, the other generators have held up alright. Anyone got any theories or is this just random price wander?
Quote from: Plata on Apr 27, 2024, 03:22 PMDidn't think this would get this low, the other generators have held up alright. Anyone got any theories or is this just random price wander?
According to MorningStar
Hydro generation fell 24% in the fiscal year to date due to reduced rainfall, largely reverting to a normal year. This forces the firm to rely more heavily on its costly gas- and coal-fired power stations, with the total cost of generation rising 56%.
Earnings are expected to improve on investment in renewable power generation and storage, cost-out initiatives, roll-off of unfavorable gas contracts and higher retail margins. Solid oil prices should also help.
Quote from the business desk. 3 days ago.
———-
Forsyth Barr says ongoing problems at the Kupe gas field appear to be overly weighing on Genesis Energy's share price.Genesis reported on Monday that production at Kupe remained curtailed, with an ongoing drilling programme to lift gas extraction being delayed.
————-
Another dividend stock that has disappointed.
Again I hold and hope for improvements.
It'll be interesting to see if they honour their promise to keep the measly new much lower 14 cps annual dividends adjusted each year in line with inflation. I seriously doubt it. They never have honored their original promise in this regard since they listed so we should believe they will this time because of what ? They have never even owned up to the last lot of lies about dividend inflation adjustments before. A leopard does not change its spots. Also, their ability to impute dividends and to what extent is about as clear as mud. Highly likely to keep disappointing shareholders is how I see GNE.
A few months ago I listened to the CEO of Genesis doing an interview on the Sharies podcast platform.
I recall being surprised how most of his discussion was about reducing carbon. All the green investment they were doing to meet NZ's targets. No mention of how this investment was to be funded or how it would effect dividends.
Plenty of gleeful talk about the need for Huntley to produce less and more as a back up. No talk about the cost of having their major asset sitting idle or at least producing less.
It felt more like listening to an interview with an environmentalist rather than a CEO of a company discussing how to maximise share owner's profits.
It's easy to forget that GNE is majority owned by the Govt so has to do their bidding on ESG matters whether it makes commercial sense or not.
The other thing is some leaders get to a certain age and then their focus shifts to all being about leaving a legacy. I suggest there's a very real chance that's the case here.
Quote from: Bob50 on Apr 27, 2024, 05:22 PMA few months ago I listened to the CEO of Genesis doing an interview on the Sharies podcast platform.
I recall being surprised how most of his discussion was about reducing carbon. All the green investment they were doing to meet NZ's targets. No mention of how this investment was to be funded or how it would effect dividends.
Plenty of gleeful talk about the need for Huntley to produce less and more as a back up. No talk about the cost of having their major asset sitting idle or at least producing less.
It felt more like listening to an interview with an environmentalist rather than a CEO of a company discussing how to maximise share owner's profits.
It doesn't sound like you actually listened to the interview, or you wouldn't be making comments like this.....
"Green" funding = comes from Kupe income
Dividend effect = remove Kupe contribution
Huntly = has no "e", never has
Huntly idle cost = discuss with other generators and government to obtain "payment for availability of asset"
Quote from: xafalcon on Apr 29, 2024, 09:30 AMHuntly = has no "e", never has
Quite a bit of "P" though
Quote from: Plata on Apr 27, 2024, 03:22 PMDidn't think this would get this low, the other generators have held up alright. Anyone got any theories or is this just random price wander?
It's all about the gas IMO. If you follow Transpower website you will see that GNE isn't running unit 5 (CCGT) very hard, and is using the Rankines. This doesn't make sense commercially
Either unit 5 isn't working properly after the repair, which I think is unlikely. Or Kupe gas output is not meeting expectations, which is more likely
Continuous disclosure rules require substantive information to be released to shareholders. I think there is an element of concern there may be a negative update around the corner, which is weighing on SP
But there is plenty to be optimistic about - a large solar farm coming on-line Q1 2025 = very low cost electricity generation, and battery storage at Huntly providing daily arbitrage opportunities
Lets see what NZO has to say about Kupe in their quarterly report update due out tomorrow.
May as well post here as well
GNE current yield after tax 5.66% v 10 year Govt at 3.35% .....difference of 2.31% points
Since listing that difference has been 3.9% points but there is a case to say last few years is more relevant and difference is say 3.0% points
So to maintain that 3.0% points difference GNE would be a post tax yield of 6.35% ....implying a share price ofvabout $2.00
Here's the updated chart of the difference between Govt 10 and GNE divie yield
Some would say that the difference is a reflection of 'risk'. Seems punters see GNE less 'risky' than in the past and are prepared to accept what's on offer. (My view is that GNE is still relatively 'risky')
Some will say this 'analysis' is a load of codswallop ..sobeit but it has served me well over the last couple of years iand avoiding the temptation to take a punt on GNE and avoided capital losses.
IMG_5779.png
Headliner investment newsletter reported that the freshly drilled well had not restored production as expected. $75m I think that drill program cost. Kupe in steep decline and running out quicker than expected.
I think the next field reserve review will come as a major disappointment.
Unit 5 being throttled back for a very good reason.
Very high 10 year Govt stock rate also a factor and I think there are very
serious questions as to whether the much lower dividend is really sustainable.
GNE's best days are behind it is how I see it.
GNE always talk about growth
Talk not reflected in the chart showing EBITDAF
Wouldn't surprise me if divie was reduced again
The cost of coal generation with rankines at the cost of replacement at the moment is consistent with that of gas in unit 5. I wouldn't read too much into unit 5 vs rankine usage given this. The gas field issue is a concern in terms of kupe funding all the capex projects. Reducing the coal stockpile will also improve cashflow in the short term, makes no sense keeping so much coal on standby if none of the other market players are paying for it.
QuoteAt Kupe, the KS-9 well was brought online in the quarter and
its performance is under investigation.
That's all it seems NZO said about the new well in their latest quarterly update here http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZO/430280/417543.pdf
Quote from: xafalcon on Apr 29, 2024, 09:44 AMIt's all about the gas IMO. If you follow Transpower website you will see that GNE isn't running unit 5 (CCGT) very hard, and is using the Rankines. This doesn't make sense commercially
Either unit 5 isn't working properly after the repair, which I think is unlikely. Or Kupe gas output is not meeting expectations, which is more likely
Continuous disclosure rules require substantive information to be released to shareholders. I think there is an element of concern there may be a negative update around the corner, which is weighing on SP
But there is plenty to be optimistic about - a large solar farm coming on-line Q1 2025 = very low cost electricity generation, and battery storage at Huntly providing daily arbitrage opportunities
Latest update is that gas supply is too tight and GNE will be importing more coal. Also, government is in discussions with generators, resources minister giving credit to GNE and Huntly, and stating this is a whole of power industry problem
It seems that GNE is getting some traction to get their role as generator of last resort recognised. Next step is to get it (the coal stockpile and potentially Huntly thermal assets) funded by all generators
Quote from: xafalcon on May 08, 2024, 07:23 AMLatest update is that gas supply is too tight and GNE will be importing more coal. Also, government is in discussions with generators, resources minister giving credit to GNE and Huntly, and stating this is a whole of power industry problem
It seems that GNE is getting some traction to get their role as generator of last resort recognised. Next step is to get it (the coal stockpile and potentially Huntly thermal assets) funded by all generators
Long overdue IMO - esp since long-term dry-year risk unsolved by Onslow, still prob waiting on final Tiwai decision also.
Quote from: xafalcon on May 08, 2024, 07:23 AMLatest update is that gas supply is too tight and GNE will be importing more coal. Also, government is in discussions with generators, resources minister giving credit to GNE and Huntly, and stating this is a whole of power industry problem
It seems that GNE is getting some traction to get their role as generator of last resort recognised. Next step is to get it (the coal stockpile and potentially Huntly thermal assets) funded by all generators
Behind the paywall article in the Herald yesterday said gas was running out 30% quicker than they expected. I drew the conclusion the ~ $75m they spent on the expansion well @ Kupe gave very disappointing results. A really big negative for GNE is how I see that.
https://www.1news.co.nz/2024/05/08/genesis-energy-to-fire-up-coal-imports-amid-dwindling-gas-supply/
Indonesian coal to charge up EV's...when there used to be a coal mine in Huntly just down the road...oh the irony...you'd struggle to make this sort of thing up unless you were the script writer for Fawlty Towers.
GNE share price slowly but steadily creeping down to $2
NZ 10 year sill quite high
and just to top it all off no one is allowed to cook breafest tomorrow beteen 7 and 9 ...
no sneaking out to your local cafe for coffe and cooked scrambled eggs bacon and toast ...
https://www.nzherald.co.nz/nz/weather-power-cuts-possible-on-one-of-coldest-mornings-of-2024-auckland-in-for-frosts-subzero-temperatures-around-nz/LGNYJYUSLZA7VD7BOFRXICDRMU/
A future made in Australia will need Australian gas. We will need affordable gas to support energy reliability for households and businesses as we move to a more renewable grid. We need gas to support Australian manufacturing and Australian industry, and tens of thousands of Australian jobs in the manufacturing sector.
Our region needs our gas to warm their homes and cook their meals. And to power the great cities of Asia. We need gas.....
Madeline King today
Jeez - the Ozzie's get it - money talks and ......
Oh my gosh ... Gas ... yup and europe is even powered by it...
now dont boil your jug this morning between ....
https://www.nzherald.co.nz/business/editorial-genesis-coal-gas-call-nz-needs-sensible-energy-power-supply-approach/ZY5PG4IBA5B6PKADDAIXPFCVK4/?lid=gf6zk70pmrrx Paywalled
Excerpt: But we aren't able to guarantee a winter without potential blackouts yet. Gas has been a solution to fill the gap but supplies are falling. Genesis chief executive Malcolm Johns says gas production has dropped about 30 per cent faster than expected.
Glad my heat pump is working between 7 - 9 a.m. today but the system is starting to look like it's under considerable strain now. Just as well we can rely on those Rankins burning coal to keep the heaters on.
Quote from: Basil on May 10, 2024, 10:54 AMhttps://www.nzherald.co.nz/business/editorial-genesis-coal-gas-call-nz-needs-sensible-energy-power-supply-approach/ZY5PG4IBA5B6PKADDAIXPFCVK4/?lid=gf6zk70pmrrx Paywalled
Excerpt: But we aren't able to guarantee a winter without potential blackouts yet. Gas has been a solution to fill the gap but supplies are falling. Genesis chief executive Malcolm Johns says gas production has dropped about 30 per cent faster than expected.
Glad my heat pump is working between 7 - 9 a.m. today but the system is starting to look like it's under considerable strain now. Just as well we can rely on those Rankins burning coal to keep the heaters on.
They are burning diesel ATM, that shows how tight the market is
Better start looking seriously for more generation because when all light vehicles in NZ are electric we'll need another 20% .
Quote from: kiwi2007 on May 10, 2024, 06:12 PMBetter start looking seriously for more generation because when all light vehicles in NZ are electric we'll need another 20% .
Electricity demand will grow about 50% in the next 10 years with transport and process heat moving to electric. Does NZ Inc have a workable plan? Nope. And that extra demand will need backing (with thermal, hydro or geothermal, since nuclear is a non-starter), but the cheap backing-option (Lake Onslow) was canned by the current lot. So expensive chemical batteries will probably be the quick answer. But hey, no worries, the consumer will pay
Quote from: xafalcon on May 11, 2024, 09:34 AMElectricity demand will grow about 50% in the next 10 years with transport and process heat moving to electric. Does NZ Inc have a workable plan? Nope. And that extra demand will need backing (with thermal, hydro or geothermal, since nuclear is a non-starter), but the cheap backing-option (Lake Onslow) was canned by the current lot. So expensive chemical batteries will probably be the quick answer. But hey, no worries, the consumer will pay
Interesting - while Europe is already using hydrogen and planning to significantly ramp up green hydrogen in the years to come are here in NZ still some backward looking groups whining about the loss of an extremely expensive and high risk dinosaur solution like Lake Onslaw which had no plan B at all.
Put all your eggs into one really expensive and risky basket - and if this basket breaks, than just keep whining.
Its not surprising that NZ is typically 30 to 50 years behind the rest of the civilised world, no matter whether we are talking productivity (we trail the OECD), removal of toxins from the environment (remember the leaded petrol saga - while everybody had it removed we still where whining about lack of NZ specific data) - last civilised country in the world removing that it. We are far behind the rest of the world in modern banking solutions - but hey - we are in the top three world wide in the per capita production of rubbish! But back to sutainable energy storage ...
So yes, we need to work on increasing sustainable energy storage. Storing gas (even hydrogen) is easy, well understood, easy to diversify and can be done where the energy is needed. You can even start with LPG and (if you plan instead of just whinging) whenever you are ready you can swap from LPG to green hydrogen. The process to produce green hydrogen is easy.
Sure - storing water is not rocket science either, but suggesting to invest basically all our energy investments for the next decades into one huge artificial lake sitting very close to the soon to be expected big one is just ridiculously dumb, nearly as dumb as stopping gas exploration 6 years ago. Oh - oops - both ideas came from the same source, didn't they?
Oh dear ...
I would like to nominate your you BP for that post as the best post of the week on here. Well said.
No worries, Julie Anne Genter and her other greenie extremists think wind turbines and solar will solve all our problems...opps hang on a minute...there's been very little wind lately and despite bright sunshine, oh my goodness, what do you know, one grid emergency after another. She and her ilk should just move to the Chatham Islands and stay there.
Quote from: BlackPeter on May 11, 2024, 11:26 AMThe process to produce green hydrogen is easy.
Easy process, yes. Economic, no. Green hydrogen production, storage, and distribution is prohibitively expensive. Estimates as to when it will be more viable vary but 5 to 10 years seems to be the consensus. Have we got that long?
Quote from: Hectorplains on May 11, 2024, 02:57 PMEasy process, yes. Economic, no. Green hydrogen production, storage, and distribution is prohibitively expensive. Estimates as to when it will be more viable vary but 5 to 10 years seems to be the consensus. Have we got that long?
I assume you realise that there is no difference in storing and distributing any hydrogen from green hydrogen - and hydrogen is now used for some time in Europe and even more in China. Google it. No issues at all.
Production is neither difficult nor expensive - you only need DC and water.
Of course is the anti everything lobby telling you that hydrogen is expensive to produce. Thats' what they do. If you question the price argument however you find that they mean it is more expensive to produce hydrogen, than it is to just drill a hole into the ground and extract natural gas from the earth. Well, of course - but I heard we don't want to burn hydrocarbons anymore? So - better lets compare apples with apples, shall we?
The main issue with hydrogen production is that the energy efficiency is only something like 70 to 75%.
Lost energy.
However - ever did the calculations on Lake Onslow?
Efficiency to pump water into the Lake is roughly 90%. However - you need to turn it back into electricity, which gives you overall (best case) only 81%. However - you will keep much of the water for weeks and months in the lake. You wasted the power to pump it in, and than you loose the water through evaporation - which makes Lake Onslow look pretty sad (and much more expensive) in comparison to hydrogen storage.
Your time argument is as well quite weak, given that the discussion started with somebody whining that we didn't pour all our money into Lake Onslow.
How long do you think it would have taken to bring that monster into operation? Make a plan, create a business case, go through years of resource and environment court hearings (and yes, there are plenty of very valid arguments against it - I would not want to live downstream of a huge wall of water in the case of an Earthquake ...), ah yes - and start to build it. Ask Fletcher Building how often they deliver mega projects like that in time and under budget. I doubt they can give you one successful example, but plenty of time and cost overruns.
I recon a decade would be pretty optimistic, better make it two - and if you get your earthquake (I hear the big one is overdue), than you start without any money left from square one. Great game, hey its just time and money, isn't it?
So, yes - it might take 5 to 10 years to create in NZ a green hydrogen economy. Sure - but this would be faster and much more flexible than one big and risky Lake Onslow water storage "solution".
I agree it would be nice to have a solution earlier than that, but this lost time goes on the account of the last inept government. NZ actually has enough natural gas to bridge the demand until we have a sustainable solution - its just that our past genius Labour Green government stopped 6 years ago any new search and drilling, which means we are now run out of options. Thanks Labour.
Tough, but hey - elections do have consequences. And we now have to pay for 6 years Labour / Green.
Quote from: BlackPeter on May 11, 2024, 06:10 PMI assume you realise that there is no difference in storing and distributing any hydrogen from green hydrogen - and hydrogen is now used for some time in Europe and even more in China. Google it. No issues at all.
Production is neither difficult nor expensive - you only need DC and water.
Of course is the anti everything lobby telling you that hydrogen is expensive to produce. Thats' what they do. If you question the price argument however you find that they mean it is more expensive to produce hydrogen, than it is to just drill a hole into the ground and extract natural gas from the earth. Well, of course - but I heard we don't want to burn hydrocarbons anymore? So - better lets compare apples with apples, shall we?
The main issue with hydrogen production is that the energy efficiency is only something like 70 to 75%.
Lost energy.
However - ever did the calculations on Lake Onslow?
Efficiency to pump water into the Lake is roughly 90%. However - you need to turn it back into electricity, which gives you overall (best case) only 81%. However - you will keep much of the water for weeks and months in the lake. You wasted the power to pump it in, and than you loose the water through evaporation - which makes Lake Onslow look pretty sad (and much more expensive) in comparison to hydrogen storage.
Your time argument is as well quite weak, given that the discussion started with somebody whining that we didn't pour all our money into Lake Onslow.
How long do you think it would have taken to bring that monster into operation? Make a plan, create a business case, go through years of resource and environment court hearings (and yes, there are plenty of very valid arguments against it - I would not want to live downstream of a huge wall of water in the case of an Earthquake ...), ah yes - and start to build it. Ask Fletcher Building how often they deliver mega projects like that in time and under budget. I doubt they can give you one successful example, but plenty of time and cost overruns.
I recon a decade would be pretty optimistic, better make it two - and if you get your earthquake (I hear the big one is overdue), than you start without any money left from square one. Great game, hey its just time and money, isn't it?
So, yes - it might take 5 to 10 years to create in NZ a green hydrogen economy. Sure - but this would be faster and much more flexible than one big and risky Lake Onslow water storage "solution".
I agree it would be nice to have a solution earlier than that, but this lost time goes on the account of the last inept government. NZ actually has enough natural gas to bridge the demand until we have a sustainable solution - its just that our past genius Labour Green government stopped 6 years ago any new search and drilling, which means we are now run out of options. Thanks Labour.
Tough, but hey - elections do have consequences. And we now have to pay for 6 years Labour / Green.
Yes hydrogen is simple, DC plus water. I'm not sure why you lobbed "only" on the front of DC, as generating that's where all the cost issues lie. Hydrogen was one of the options looked at by Genesis for Huntly and my understanding is that it was rejected. Regardless of the politics, if we want the power to stay on, and in early May we're already been hit with outage warnings, Huntly will be burning coal... and will now do so for many years to come.
Once these are operating they may be of interest to NZ.?
https://www.rolls-royce.com/innovation/small-modular-reactors.aspx
I wish Lorraina but hey don't forget we are pure & green apparently !!!
Quote from: Hectorplains on May 12, 2024, 11:25 AMYes hydrogen is simple, DC plus water. I'm not sure why you lobbed "only" on the front of DC, as generating that's where all the cost issues lie. Hydrogen was one of the options looked at by Genesis for Huntly and my understanding is that it was rejected. Regardless of the politics, if we want the power to stay on, and in early May we're already been hit with outage warnings, Huntly will be burning coal... and will now do so for many years to come.
Not quite sure what your point is - are you?
And no, DC is neither expensive nor complicated to generate ... just take AC and a diode :) ; I suppose science was not your strongest subject at school?
Anyway - yes, its a sad joke that the reckless decisions of our past Labour / Green government made the country dependant on burning dirty Indonesian coal instead of burning clean natural gas which we otherwise would have had.
GNE $15-20 mill Downgrade on lower Kupe production
https://www.nzx.com/announcements/431437
Lower than expected production is estimated to result in a $15m to $20m reduction in FY24 EBITDAF versus previous guidance of around $430m. Normal FY25 financial planning is underway and will include an assessment of updated Kupe production levels and reserves.
Yep, the soothsayers on here were quite correct - kupe gas production/reserves just isn't as reliable as it used to be and this is probably a sign of things to come. GNE are right to move to solar and wind whilst still having Huntley and maybe battery storage. SP likely to take a hit this morning, but at these prices, long term, GNE is a good buy imo.
NZO announced this morning that they are delisting from the NZX. The majority of their assets are now Australian and Indo.
Hopefully GNE will be up for purchasing the 4 percent holding that NZO would of had in the Kupe land for the planned solar farm.
This move by NZO also signals that they are not interested in any future cash out flows investing in NZ.
Ouch that's $75m down a rat hole with no result and worse, it's been reported elsewhere that gas production is 30% lower than where they expected it to be. Kupe is in very steep decline and the next field reserve update is set to be a real shocker. Unlikely they will throw another $75m at it in my opinion. Obviously, this affects all future year's earnings as well as the current one.
That said, I think their ongoing advertising campaign is brilliant. I see some real genius there and the latest one on T.V. hits all the right notes, (and not just because it has a cute Beagle in a jumper)...but the use of cute animals is well known to be effective in advertising if done with genuine creativity which is definitely the case here. I am sure at a retail level their advertising will be very good for growing market share...on the other hand at a generation level, things do not look so good. I could be interested if there's a big pullback to $2.00 but is the new lower dividend rate safe with Kupe running out of puff so quickly ?
Still producing plenty of high grade oil. The field will be around for years to come.
As the release noted, GNE is working on the future field forecast reserves and will let the market know soon
GNE share price still tracking down to $2.00
Not surprising
To my mind, another dividend reset in the years ahead has an air of inevitability about it, now that Kupe production is confirmed to be in steep decline. No doubt that future announcement will be embellished with very generous sized portions of feel good ESG enunciations, so a tablespoonful of sugar helps the medicine go down.
GNE's best days are behind it when their main assets Kupe and Huntly had a heck of a lot more residual life in them than they currently do. In due course I expect this to eventually go under the IPO price. Wouldn't surprise me at all to see the share price to retreat in line with future dividends paid so total shareholder returns in the next few years are zero or very close to it.
I'm not buying the creative greenwashing talk that solar will replace the generation of legacy polluting assets.
GNE's marketing is brilliant though so maybe retail customer growth will slow the deterioration of this company down.
It's definitely not for me again, not even if it goes under $2. Very pleased i sold out at ~ $3.90 in early 2021. The mistake I made was buying back in at a lower price, (a mistake I fixed quite a while ago).
It was interesting to note the new 20 year deal with the smelter, (including the effective creation of a reserve battery supply in dry years at zero cost to the taxpayer), that really boosted the other power companies share prices quite a lot had no impact whatsoever on GNE's share price. It would seem to me in some ways the huge new quasi battery reserve supply the new deal created, somewhat undermines the effective value of Huntly.
Sub 200 still on cards ...not far away
one heck of a yo yo the last week or so
Looks like that correlation to the 10Y that someone kept mentioning has turned up :) Not getting too far off that IPO price, which interestingly was about 10 years ago.
First earnings downgrade for F25 .... Ebitdaf previous $500m now down to $460m
At least $460m is higher than the $450m guidance for F24 so thats good
Still expect reduced divie sometime and share price <$2
https://api.nzx.com/public/announcement/433539/attachment/421617/433539-421617.pdf
I expect to see a big reserves reduction at Kupe and LOTS of Indonesian coal being burned to charge up people's electric vehicles. I remain deeply skeptical their plans around solar in the medium term will replace aging legacy assets. I see their generation capacity as being in a slow systemic decline. How I see it is the extent to which they can slow that decline will determine whether there's yet another dividend reset in the years ahead.
I also note the directors never honored their original pledge at the time of the IPO to move dividends up in line with inflation which really undermines their credibility around new claims that they will move the reset dividend rate in that manner going forward. There's better places to invest your capital is how I see it.
Piece in BusinessDesk today
When the facts change - the end of the golden weather for gentailers
Market events in recent times indicate that investors may be starting to realise the golden run for major generator/retailers as cash cows with ever-increasing dividends may be coming to an end.
And
Contact is not the only gentailer facing these pressures. All must build more generation to keep market share. This costs money, lots of money.
https://businessdesk.co.nz/article/opinion/when-the-facts-change-the-end-of-the-golden-weather-for-gentailers
It does seem gentailers not much of an investment these days ....if I was holding at moment I'd be hoping the much touted rate cuts might give me a good exit point early next year when share price should go up
Quote from: winner (n) on Jul 16, 2024, 09:18 AMPiece in BusinessDesk today
When the facts change - the end of the golden weather for gentailers
Market events in recent times indicate that investors may be starting to realise the golden run for major generator/retailers as cash cows with ever-increasing dividends may be coming to an end.
And
Contact is not the only gentailer facing these pressures. All must build more generation to keep market share. This costs money, lots of money.
https://businessdesk.co.nz/article/opinion/when-the-facts-change-the-end-of-the-golden-weather-for-gentailers
It does seem gentailers not much of an investment these days ....if I was holding at moment I'd be hoping the much touted rate cuts might give me a good exit point early next year when share price should go up
One of these complex future pointing systems which are impossible to predict - and lets face it, the author does not even mention all of the input parameters.
So - what do we know?
- Electricity consumption likely to increase (EV's, heatpumps, A/C units, population growth)
- Electricity supply getting more erratic with increase of renewables (dependant on the weather ...)
- Conservative politicians likely to allow market forces to play their thing - resulting in higher prices and less reliable power
- Progressive politicians likely to regulate towards the common wealth, resulting in higher prices and more reliable power
- Climate impacts will make supply more unpredictable
> should all point to higher electricity prices.
One joker is obviously increased local supply (like cheap small solar panels which can be connected to the grid). Possible in many countries, but not yet in backward looking NZ.
I can't see how anybody can predict on this base how the earnings of Gentailers will develop - however, one thing we know: Gentailers produce a product which is in demand ... and at the end they can charge at least a fair price, otherwise they just stop doing what they do. Which results in a rather reliable earnings and dividend stream, which is rated higher while interest rates are lower (comparison to bonds).
Which means its probably a good idea to hold them while interest rates go down ... but dance close to the exit. Less joy to stay at this party when interest rates are rising again.
It's a complete mine field. If the lakes are low then they need to buy electricity off the spot market at hight prices. Who wins out of the current NZ generators?
All roads lead to investing in gas producers who are in the hot seat over the green energy transformation.
Poor NZ consumers will have to pay the higher prices and Industry will not expand as the cost of energy is too high.
NZ will end up importing Gas and Coal.
It's a disaster in the making for NZ. Years and years of under investment in the energy sector is starting to come home to roost.
The CEO of NZO said that the Kupe drill has resulted in a better understanding of the rock structures and they are taking a 'closer look' at options to extend the life of the field.
That's drill speak for we stuffed up but don't want to admit it. No worries, throw another $75m at another hole...what could possibly go wrong ?
Quote from: Basil on Jun 27, 2024, 10:09 AMI expect to see a big reserves reduction at Kupe and LOTS of Indonesian coal being burned to charge up people's electric vehicles.
WOW, massive review and reduction in Kupe reserves from 225.8 units last year to only 124.3 units this year. $64m write-down in the value of Kupe as reserves have nearly halved in the last year.
Dividend sustainable ? You be the judge. http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GNE/436601/425263.pdf
Gross yield at 14 cents assuming that rate is sustainable as well as full imputation credits = 8.6% @ $2.26.
Huge jump in operating costs expected for FY25 on top of the jump last year but it's all going according to plan if you believe John's. Not for me, I don't believe their plan for growth from FY27 is plausible.
A non story really but Genesis owned company upset punters
https://businessdesk.co.nz/article/markets/frank-energy-pulls-ad-after-complaints-about-body-shaming
Genesis-owned power company Frank Energy has pulled a TV ad that featured a woman in a hazmat suit shaving the backs of bald men after viewers complained it made fun of men with specific body characteristics.
Prob paywalled
Bloody hell!
So Genesis buy 65% of Chargenet for $64m
Seems average cost if the 400 charging stations is $250,000
No doubt the future is charging exorbitant amounts for punters to charge up EVs
https://announcements.nzx.com/attachment/428617.pdf
See our mate Bruce Sheppard is one of the shareholders in Chargenet
Good on him
Had a good chuckle at this bit. Rather conveniently talking just about pure operational cost and not mentioning the extra capital cost and the horrendous depreciation rate of EV's or the range anxiety that goes with them.
QuoteEven with road user charges and a mix of at home and public charging, running an EV is still more cost effective than an ICE car.
Quote from: Basil on Oct 02, 2024, 05:56 PMHad a good chuckle at this bit. Rather conveniently talking just about pure operational cost and not mentioning the extra capital cost and the horrendous depreciation rate of EV's or the range anxiety that goes with them.
Just wait for the tsunami of cheap Chinese EV's which will hit our shores soon. Costs are lower than comparable ICE's - and certainly much cheaper and better than the Tesla cr*p and undercutting as well the
European competition.
Here are some models they sell already in Australia:
https://www.carsguide.com.au/ev/advice/chinese-electric-cars-top-five-electric-vehicles-from-china-82842
Not sure about range anxiety either with more than 600km with one charge.
Had a good chat with Todd Hunter a few months back when updating my Holden.
He warned me off EV's. He said Turners are the official trade in agents for Tesla and the residual values he's seeing on them and other EV's is showing these vehicles up as having horrendous depreciation rates and overall ownership costs that are shockingly high, vastly higher than hybrid or even ICE vehicles. Advised me to stick to Japanese or Korean.
Anyway...back to GNE. I suppose as a yield proposition they might get a bounce if the RBNZ cuts by half a percent next week...but so might a lot of other high yield stocks and I think GNE's dividend history with the recent significant cut, is quite a shocker, (pardon the pun). Just as well shareholders know they can replace old legacy generation assets with shiny new environmentally friendly ones, and they can be absolutely 110% sure there won't be yet another dividend reset ;)
Quote from: BlackPeter on Oct 02, 2024, 06:05 PMJust wait for the tsunami of cheap Chinese EV's which will hit our shores soon. Costs are lower than comparable ICE's - and certainly much cheaper and better than the Tesla cr*p and undercutting as well the
European competition.
Had my Tesla for about 18 months now, no complaints. Saved roughly $6k in petrol costs so far. Drive it into the ground and in 15 years it will have largely paid for itself, RUC included. Also not sure that range anxiety is a real concern for people living in Auckland.
Quote from: raW tent Buffer on Oct 03, 2024, 08:25 AMHad my Tesla for about 18 months now, no complaints. Saved roughly $6k in petrol costs so far. Drive it into the ground and in 15 years it will have largely paid for itself, RUC included. Also not sure that range anxiety is a real concern for people living in Auckland.
Glad you like your Tesla, but to really appreciate its virtues you probably need to look not just at your honeymoon period with the car (I guess, which new car has a lot of problems in the first 18 months)?, but you need to look at depreciation, repair costs (yes - cars do have accidents), accidents caused by SW faults, car fires caused by design faults and - of course - the inevitable battery replacement costs.
But whatever the outcome - we probably should discuss this on a different thread before we outstay the welcome of the GNE thread dwellers :) ;
GNE share price still languishing in low 200's
Can't find any compelling investment case for GNE
Quote from: winner (n) on Oct 04, 2024, 02:16 PMGNE share price still languishing in low 200's
Can't find any compelling investment case for GNE
Maybe languishing in the low 200's
is the investment case?
I mean, at such a low price, the gross yield is 9.1%?
Quote from: LoungeLizard on Oct 04, 2024, 02:55 PMMaybe languishing in the low 200's is the investment case?
I mean, at such a low price, the gross yield is 9.1%?
High current yield maybe a signal of the future risks ....and cut in divies
Interesting to see how GNE and MNW have tracked almost identically to each other over the last 10 years until July this year.
Quote from: winner (n) on Oct 04, 2024, 03:04 PMHigh current yield maybe a signal of the future risks ....and cut in divies
Yep, there's a few challengers for sure - Kupe being the main one atm - but I'm probably in the minority (again) who thinks that there's more upside than downside for GNE in the next 2-3 years. The pivot to renewables will start to pay off, Huntley is always going to be needed, and even if the divvy is cut further you'll probably still be getting 7% in the meantime as things sort themselves out. They've been increasing client numbers so that's an encouraging sign too.
disc. a relaxed hold.
Quote from: LoungeLizard on Oct 04, 2024, 03:42 PMYep, there's a few challengers for sure - Kupe being the main one atm - but I'm probably in the minority (again) who thinks that there's more upside than downside for GNE in the next 2-3 years. The pivot to renewables will start to pay off, Huntley is always going to be needed, and even if the divvy is cut further you'll probably still be getting 7% in the meantime as things sort themselves out. They've been increasing client numbers so that's an encouraging sign too.
disc. a relaxed hold.
Nothing in life is certain with the exception of death and taxes. However in this case ... I am holding some GNE as well and think that the chance for them to maintain (or appreciate) their price is better than the chance for further drops.
I guess how bad can things really turn for a generator given a lack of generation capacity and dropping interest rates (the pseudo bond effect)?
For what it's worth the the spread/difference between GNE yield and NZ 10 year Govt is close to the long term average ....implying that the current GNE share price is about 'right' on a risk adjusted basis.
Good to know but that raises the old chestnut issue of whether the current dividend is maintainable. Some recent large solar farm consents for other gentailers, for example this huge one in Northland that will power half of all the homes in Northland https://www.rnz.co.nz/news/national/529428/consent-granted-for-large-solar-power-station-at-ruakaka-in-northland make me think that not only is there a question as to whether GNE's solar plans are capable of replacing earnings from aging legacy assets but also whether there might be a surplus of this sort of renewable energy production in the future, including wind, when what's really needed is the baseload consistent generation that the likes of the Rankine units produce now. With the Rankine units having a maximum apparent remaining life of ~15 years (2040), perhaps that doesn't concern some people, but Kupe is running out FAR more quickly than they thought so the earnings from that will need replacing a heck of a lot sooner than that. The other thing is just as well major new solar and battery farm projects never go over budget eh ;)
I get it that the new CEO Malcolm John's wants to get stuck into all things ESG and leave a legacy but how has focusing on all things ESG worked out for Synlait and Heartland...
Put another way, when GNE originally listed on the NZX, Huntly and Kupe still had so much life left in them it didn't register as a concern. Now, anyone coming in would do well to consider if the future dividends are maintainable in the long run or not.
Basil ...good thoughts there
Also what's overlooked is the current dividend is less than what is back in 2016..... hasn't really been much in thee way of pay rises for the long term holder (prob holding for the income)
I note Genesis have sold a wind farm to NZ Windfarms.
From Nzz Windfarms -
NZ Windfarms (NZX Code: NWF) is delighted to announce that it has acquired Hau Nui wind farm from Genesis Energy
It's just as well there's huge growth in one part of GNE's business...it's just that it's the wrong part...salaries and wages. Their annual human resources operating costs are growing at a remarkable rate, vastly above the rate of inflation.
https://www.nzherald.co.nz/business/genesis-sells-hau-nui-wind-farm-to-nz-windfarms/IX77K7SQLNHZPG3RZHQC2HGBAE/
Tells you nothing about the sale price or economics but I reckon GNE was a price taker, rather than a price maker on that deal. NWF have all the I.P. to run that farm and develop it with new units so are best placed to benefit and GNE was something of a silent partner. Silent partners usually get the short straw.
P.S. End of day reporting
NZ Windfarms increased 1.2c or 9.68% to 13.6c after buying the 8.65MW Wairarapa Hau Nui wind farm from Genesis Energy. Five of the 15 turbines are not currently operating but will be refurbished. The company upgraded its full-year operating earnings (ebitdaf) guidance to $4.5m-$6m, from $3m-$5.5m, because of extra generation from the existing Te Rere Hau wind farm near Palmerston North.
My comment. That speaks for itself in terms of who got the better end of that deal.
Genesis joins a MSCI Index on Nov 25th
That should stop share price falling to 2 bucks
Msci Micro cap index. No idea how much buying that creates?
Quote from: Basil on Nov 11, 2024, 12:18 PMMsci Micro cap index. No idea how much buying that creates?
From Dr. Google:
QuoteMSCI USA Micro Cap Index (USD) | msci.com. The MSCI USA Micro Cap Index is designed to measure the performance of the micro cap segment of the US equity market. With 1,134 constituents, the index represents approximately 1% of the free float-adjusted market capitalization in the US.
Given that I don't see why the proportions should be different for non US stocks, 1 % of GNE's free float would be something like 1% of 500m shares (the other 500m belong to the crown) - i.e. 5m shares.
That would be (again very roughly) 1 months normal trading volume.
I think this is material, unless some other index funds would concurrently sell, but hey - who is smaller than micro?
PS: All done on the back of an imagined envelope - i.e. somebody might want to check these numbers.
They say for every winner there's a loser
Genesis the winner this index change ...Accordant the loser
Seems rather amusing
Our market to the US is what a sprat is to a whale.
Also when a stock just squeezes into an index that means it's allocation is very small because its based on market cap.. e.g When Turners went into the NZX 50 it's weighting was 0.4% not the face value 2% 50 stocks if weighted equally would have. Just anecdotes, I have no idea what the number would be but I would wager it's a lot less than the number you suggested BP
Quote from: BlackPeter on Nov 11, 2024, 01:23 PMFrom Dr. Google:
Given that I don't see why the proportions should be different for non US stocks, 1 % of GNE's free float would be something like 1% of 500m shares (the other 500m belong to the crown) - i.e. 5m shares.
That would be (again very roughly) 1 months normal trading volume.
I think this is material, unless some other index funds would concurrently sell, but hey - who is smaller than micro?
PS: All done on the back of an imagined envelope - i.e. somebody might want to check these numbers.
That's about the index, rather than funds that track the index. MSCI segments investable markets (e.g. NZ) into three tiers, with the largest companies at the top:
Standard (Large+Mid) - top 85%
Small Cap - next 14%
Micro Cap - 1% dregs
Last I looked into this, I couldn't find any index funds or trade volume tied up with MSCI Micro Cap. Basically Micro Cap inclusion is saying, these companies are inconsequential in size, but with enough share market liquidity to consider investing in.
Now the major problem is how to keep the thermal units fuelled for when they are needed, while Genesis is focused on increasing shareholder value.
In July, Jarden mooted the idea of splitting Genesis into two parts to unlock value. "The intent was to highlight to investors the inherent renewable value in the entity that, if valued similar to its peers, alone would have been worth circa 25% more than what the combined entity was trading at," Jarden said.
In a note this week, Jarden looked at the Gen35 strategy and concluded Genesis "is on track to monetise its entire fleet, unlocking synergies between the 'two parts'," referring to its thermal plant and its renewable fleet. Most importantly, the company is positioning the 1,204 megawatts (MW) of thermal capacity as part of the country's longer-term solution, and not as a stranded asset. "We view Genesis as a compelling investment with more than 50% upside potential."
Excerpt from BusinessDesk today......lucky I subscribe eh 8)
Looks like they are breaking out into an uptrend in this environment of falling interest rates. A safe divvy hounds stock?
We have enjoyed GNE's divies for years,and expect to enjoy them for years to come.
More choices of fuel for Huntley has made GNE's future look a lot more positive.
Quote from: Playa on Feb 14, 2025, 03:27 PMLooks like they are breaking out into an uptrend in this environment of falling interest rates. A safe divvy hounds stock?
Impeccable timing Playa.
Quote from: Playa on Feb 14, 2025, 03:27 PMLooks like they are breaking out into an uptrend in this environment of falling interest rates. A safe divvy hounds stock?
You asked so here's my opinion. Safe in that they can pay a dividend, yes. Unfortunately, the promise they made at the time of the IPO to grow dividends in line with inflation has proved to be a worthless empty one. They never really tried to properly match dividends to inflation over the years before the huge recent downward dividend reset, which also came with the promise of matching inflation going forward. Hmmm, how credible is that current promise when directors treated their previous undertaking in that regard with utter contempt...
Frankly, who knows there won't be another major downward dividend reset in the years ahead, all in the name of growing their ESG friendly generation portfolio? One thing you can be sure of with them being a quasi Government department, (Govt controlled company), the already quite excessive woke policies will only get worse over time. Go woke go broke, look how excessive wokeness has worked out for Synlait and Heartland over the long haul.
I was an investor for many years and did okay-Ish but I'm not coming back. I've had enough of empty promises and nauseous amounts of excessive ESG grandstanding.
Make what you want to,but looks to me as though Playa is right.
https://nz.finance.yahoo.com/quote/GNE.NZ/chart/
https://nz.finance.yahoo.com/quote/GNE.NZ/chart/
Quote from: lorraina on Feb 19, 2025, 05:27 PMMake what you want to,but looks to me as though Playa is right.
https://nz.finance.yahoo.com/quote/GNE.NZ/chart/
https://nz.finance.yahoo.com/quote/GNE.NZ/chart/
Actually - both of them (Basil and Playa) can be right at the same time.
1) Pseudo bonds (like Gentailers) always go up when interest rates drop, but ...
2) Basil just said, that they are playing their hand not the best they could, didn't he?
Discl: holding some of them (GNE) in my essentials portfolio ... Come Trump, Putin, Xi or Hurricane - people always will need power.
GNE back to 2018 numbers and Covid low area, has exited stage right from down channel, IMHO - DEI + ESG bureaucracy has and will retard profits, the only upside is the fast track approcvals for new generation if such a proposal exists.
GNE_2025-02-20_09-28-34~2.png
Quote from: Cod on Feb 20, 2025, 09:34 AMGNE back to 2018 numbers and Covid low area, has exited stage right from down channel, IMHO - DEI + ESG bureaucracy has and will retard profits, the only upside is the fast track approcvals for new generation if such a proposal exists.
GNE_2025-02-20_09-28-34~2.png
I think there are other forces at play.
Cooperation between generators on keeping Huntly fueled and operating is being forced by regulatory threat. Just look at transpower reports to see how much thermal vs hydro is in play atm. Very atypical for a hydro system that is still at 90% of historical capacity
Work on KS9 isn't finished
Gas prospecting is happening in NZ again, with a significant find near Turangi. Note that GNE is not participating in this, but would likely be a purchaser if anything comes of it, as gas is a limiting factor which drives coal consumption instead
TCC is on borrowed time, and was due to decommission in 24/25. It is being kept available as an additional option. But gas is a limiting factor until Methanex up-sticks and leave NZ (likely selling their gas entitlements for good returns). But when TCC finally closes, GNE will be the last (thermal) man standing = IMO, a very key position to hold
Big battery project will be a step up in profitability through minimal construction cost and daily arbitrage of 2-400MWH (0.2-0.4% of total NZ daily use)
Domestic wood waste pellets production close to green light
Meridian has already called in 1 of their 3 permitted "demand reductions" from NZAS, in the first year of a 20 year contract. They are up against a wall, and in a weak negotiating position for the next 19 years
The politicians are dead-scared of the lights going out. They also know that heavy regulation will inhibit new generation investment, and that thermal backing is the only true option for NZ. GNE may be able to negotiate something with the government to keep their plant available as a contingency
Hmmmmmmmmmm.?
Current
EBITDAF $216.5 m
Forecast.$460 m
Adding a few more to the wife's holding this morning..
https://api.nzx.com/public/announcement/447134/attachment/437985/447134-437985.pdf
Still up to their age old tricks of not matching inflation. Dividend up from 7 to 7.13 cps, up 1.85% while the latest reported inflation for the year top 31 December was 2.2%. As predicted, a leopard does not change its spots and this pattern has existed ever since the IPO.
That said, the gross yield is not too shabby at 8.50% but mark my words, it will decline in real terms over time and there remains the very real prospect of another substantial dividend reset in the years ahead.
https://www.rnz.co.nz/news/business/542584/genesis-energy-half-year-profit-almost-doubles-thanks-to-high-wholesale-prices
The right link this time.
Quote from: Basil on Feb 21, 2025, 10:44 AMhttps://api.nzx.com/public/announcement/447134/attachment/437985/447134-437985.pdf
Still up to their age old tricks of not matching inflation. Dividend up from 7 to 7.13 cps, up 1.85% while the latest reported inflation for the year top 31 December was 2.2%. As predicted, a leopard does not change its spots and this pattern has existed ever since the IPO.
That said, the gross yield is not too shabby at 8.50% but mark my words, it will decline in real terms over time and there remains the very real prospect of another substantial dividend reset in the years ahead.
CPI = 2.2%, or 0.55% per quarter. Dividend is for proceeding 6 months
Last time I checked, 0.55% x 2 = 1.1%, and 1.85% >> 1.1%
You are still banging on about something from 2014. Let it go and move on!
It's 2025, and surprisingly, things and people and business practises at genesis have changed over time
All your predictions of impending doom about genesis in the last couple of years have come to exactly nothing. They are still fully imputing their dividends, they are selling more firming options than ever, they are still generating lots of electricity, and it seems the other major generators are seriously considering chipping in to keep the Rankines running and the fuel stockpile funded. That's all of your gripes I can remember, beside the old chestnut from 2014 about inflation adjusting dividends
You seem to gloss over anything positive, such as these recent changes. Full ownership of Ecotricity, 65% ownership of Chargenet, Solar farm now on-line, big battery project underway, imminent TCC retirement, other generators support for Huntly thermal
You hate them, we know that. You won't invest in them, that's your choice. But FFS stop your consistent unsubstantiated denigration. Here's and idea, bring some new facts to the table to back up your pessimism, so we can all consider the underlying rationale for your still downbeat outlook
See page 11 of the presentation. Dividend 1H FY24 was 7.0 cps, and 1H FY25, a year later is 7.13cps, up 1.85%, lower than the inflation rate.
2 years ago the share price was $2.88 so its down 20% over that timeframe so that makes me...Yeap, you guessed it, correct. A 20% capital loss is more than you have received in dividends in the last 2 years. My two biggest holdings, HLG up 50% in the last 2 years and TRA up 85% by comparison...but you think you know best. Hmmm
You've conveniently glossed over the rampant cost increases in the business, the extremely rapid decline of Kupe, the major dividend reset and questionable investment in Charge net which if I recall correctly was not supposed to be eps accretive, (why bother if it isn't ?). EV sales have fallen off a cliff.
Others are rolling out bigger solar farms more quickly than GNE. Sure, they might be able to run the Rankins of pallets but for how much longer?
Sure, you have more knowledge of the electricity industry than I have but where's that got you? Into a value / dividend trap is where, in case you are wondering.
Yeap, they're trying to make the most of old near to end of useful life assets, but you can't stop the tide going out is how I see it and I've been right so far. I sold most of mine a while back at over $3, some at $3.90, and as noted above, reinvested very profitably elsewhere so what would I know...
Oh, and for the record, I also called Spark a dividend trap at ~ $3 when all sorts of keyboard warriors and even analysts were saying it was worth at least $4. I wonder how they're feeling today...
GNE said last year that a ESG discount was holding back the share price
That discount still present
They really saying divie yield shoukd be in line peers
If so share price should be about $3.50
Good luck with that. Its clear the market doesn't think the current yield is sustainable long term. Market underwhelmed with today's result too, down 8 cps, (there's goes the divvy + some down the toilet right there) to $2.28. This at a time when interest rates are falling quickly. Hmmm
Quote from: Basil on Feb 21, 2025, 05:21 PMGood luck with that. Its clear the market doesn't think the current yield is sustainable long term. Market underwhelmed with today's result too, down 8 cps, (there's goes the divvy + some down the toilet right there) to $2.28. This at a time when interest rates are falling quickly. Hmmm
Hmm - not quite sure I understand the argument. If interest rates are falling (and yes, they do) - shouldn't that lift the SP of a pseudo bond?
Quote from: BlackPeter on Feb 21, 2025, 05:31 PMHmm - not quite sure I understand the argument. If interest rates are falling (and yes, they do) - shouldn't that lift the SP of a pseudo bond?
Quite right mate, but its not. Just like Spark's dividend is not sustainable, (much more obvious in that case which is one of the key reasons its under the pump in a big way).
Quote from: Basil on Feb 21, 2025, 06:17 PMQuite right mate, but its not. Just like Spark's dividend is not sustainable, (much more obvious in that case which is one of the key reasons its under the pump in a big way).
Not quite sure, though, whether it is fair to compare GNE with Spark.
Spark is basically a gutted corpse of a once profitable company left to the vultures after a long and now finished pillage. Their NTA is laughable (15% of SP), and the stuff they do own is basically losing value by the day. Communication technology ages fast - and museums don't need that much outdated communication equipment.
GNE on the other hand is one of the pillars of our energy infrastructure with NTA close to its current SP - and things like hydro don't lose value after a handful of years or decades - most of this stuff will still generate into the next century. Still remember a visit at the Lake Colerige Powerstation some years ago (yes, MNW, but same story) - and most of the equipment looked like 80 to 100 years old, but in good shape, humming and making money. Try that with a Switch exchange from that time :) - oh, oops, in NZ they used to have the telephone girls, didn't they?
So, sure - they might need to invest into more renewables, but even a solar farm has a life span of several decades - and wind (if properly done) - is comparable to water ... and cheap.
Spark has at $2.88 a forward PE of nearly 16 coming with negative EPS growth. Looking at their market position - its getting easier and easier for competitors to wiggle in and eat their lunch, and they do.
GNE on the other hand has a forward PE of 14.4 and that coming with a forward CAGR of +6.6 (or a 10yr backward CAGR of +9.6).
Sure - they might invest in future a bit more then the analysts predict, but personally I prefer long term investments into a growing company with a moat, providing an essential service rather than a company without substance and easily replaced by any newcomer.
GNE provides stuff people need - and they do have a moat (its not so easy to build a new hydro power station - and I am rather confident, that we will use Huntley as well for some time to come). SPK on the other hand did sell their moat and distributed the gains. They can't eat their cake and have it too.
A pity "the market" has GNE wrong.!!!.....lol.
Hey Basil .....did you see Metcury full-year dividend guidance is unchanged at 24c per share. This is expected to be the 17th consecutive year of ordinary dividend growth.
Jeez 17 years of dividend growth ...puts GNE to shame eh.biggest
MCY's yield needs to improve a lot.
Still only 60.5% of GNE's.
GNE's puts MCY's to shame....................[And all the other power companies].....lol.
ps.Been that way for years too.
From ASB site.just now.
Company..........PE.........Yield Net %
CEN...................31.08.........4.43%
GNE....................14.58.........6.38%
MCY...................28.94........3..86%
MEL....................34.54.........3.66%.
Quote from: lorraina on Feb 25, 2025, 05:29 PMMCY's yield needs to improve a lot.
Still only 60.5% of GNE's.
GNE's puts MCY's to shame....................[And all the other power companies].....lol.
ps.Been that way for years too.
From ASB site.just now.
Company..........PE.........Yield Net %
CEN...................31.08.........4.43%
GNE....................14.58.........6.38%
MCY...................28.94........3..86%
MEL....................34.54.........3.66%.
The ESG discount the GNE people talk about (lament) is obvious eh lorriana
They want to see similar yields from a higher share price.
Current share price the best yield.
Lot higher share price the better my share portfolio looks.
It is known as a win win situation....Heads I win,Tails I win................lol
Percy ... inflation is beaten I'm told but power company tells me power bill going up by $10 a week
Will need to buy about 1,700 GNE shares just to cover the increase power bill.
In the past year we spent $1,579.49 on power.
At today's closing price of $2.22 and 14 cps dividend we need 11,282 GNE shares to cover our bill.
With the slightly increased divie, I doubt we will need many more shares to cover our cost of power.
Now I have not accounted for the Govt's winter help for us aged,as it is being misappropriated by going straight into the deep dark hole, which is the wife's bank a/c....lol
Went out to Lauriston this morning to have a look at GNE's Solar Farm.
Pretty impressive.Lovely sunny day too.
What I did notice is the huge number of irrigation irrigators close by.And they use a lot of power.
Most probably fair to say the site is "well positioned".
Quote from: winner (n) on Feb 26, 2025, 04:55 PMPercy ... inflation is beaten I'm told but power company tells me power bill going up by $10 a week
Will need to buy about 1,700 GNE shares just to cover the increase power bill.
Tech correction has me searching long and hard for alternatives.
I suppose holding a net hedge position, (holding enough so the annual expected dividends cover your annual expected power bills), makes a lot of common sense for retired investors? 9% gross yield at $2.20 + 7.13 cps back in a few weeks. Not too bad I suppose as much as I dislike their endless ESG grandstanding... I guess sometimes you have to swallow a dead rat if an investment makes a fair bit of common sense even if you're not overly attracted to the company... I suppose as you are right on the cusp of retirement it's only natural to start hedging some of your expected costs.
And the bonus is if you buy before the 19th you receive the divie on 10th April....
GNE 19 Mar 25, NZDT Interim 7.130c 1.258c 2.773c 10 Apr 25, NZST NZD.
Quote from: lorraina on Mar 13, 2025, 04:51 PMAnd the bonus is if you buy before the 19th you receive the fully imputed divie on 10th April....
GNE 19 Mar 25, NZDT Interim 7.130c 1.258c 2.773c 10 Apr 25, NZST NZD.
In fact you will receive 3 dividends in the next 13 months.
Quote from: lorraina on Mar 13, 2025, 04:51 PMAnd the bonus is if you buy before the 19th you receive the divie on 10th April....
GNE 19 Mar 25, NZDT Interim 7.130c 1.258c 2.773c 10 Apr 25, NZST NZD.
No more power bills for me, ever again.
OK Power covered with GNE.
Insurance.Covered with TWR.
Now onto your motoring.
Have you enough TRA shares for their divie to cover the cost of selling your car and upgrading to a new car every year or two.?
lol.
Quote from: lorraina on Mar 15, 2025, 08:08 PMOK Power covered with GNE.
Insurance.Covered with TWR.
Now onto your motoring.
Have you enough TRA shares for their divie to cover the cost of selling your car and upgrading to a new car every year or two.?
lol.
OK - so, which stock do I need to buy to cover our rates? They are currently going up like a rocket ...
Well that's an easy one.
You want to cover rates on your PROPERTY,therefore you need income from a PROPERTY company.
KPG covers retail,build to rent and property development.
Gross yield 8.6 %....Net yield 6.08 %.
The one that is causing me a problem is how to cover Basil's boating expenses.?
SAN with a net yield of 2.07% may only cover one days boating.
Do not think the pension would cover it either.
Quote from: lorraina on Mar 16, 2025, 10:18 AMThe one that is causing me a problem is how to cover Basil's boating expenses.?
SAN with a net yield of 2.07% may only cover one days boating.
Do not think the pension would cover it either.
Boating can be very expensive, that's for sure. Perhaps a port would be appropriate? POT 3.3% or NPH 4.6%?
Quote from: lorraina on Mar 16, 2025, 10:18 AMWell that's an easy one.
You want to cover rates on your PROPERTY,therefore you need income from a PROPERTY company.
KPG covers retail,build to rent and property development.
Gross yield 8.6 %....Net yield 6.08 %.
The one that is causing me a problem is how to cover Basil's boating expenses.?
SAN with a net yield of 2.07% may only cover one days boating.
Do not think the pension would cover it either
You'd be right about the pension. not covering it. Thankfully, Tina, Todd and I are great mates. My #1 investment. Turners bought me a new car last year, covers all the running costs of that and the boat as well 8)
Bought some more GNE at $2.15 today. No matter what happens overseas with the trade war people are going to continue to use power and GNE is on a gross yield of 9.25%. With the RBNZ almost certainly cutting interest rates tomorrow and again on 28 May, that's a highly attractive yield for a very defensive stock in a falling interest rate environment.
nice defensive play, a sign the hound is wise and is getting closer to retirement age......lol.....my pick is you are a little early on this one.
I am torn every day I wake up knowing some of my portfolio is getting beaten up yet rubbing my hands together gladly awaiting opportunities to splash out with my 60% cash position. Some buys will be aggressive some will be defensive.
I will take pride if I can buy some GNE at a discount to the hounds entry point.
GNE's dividend will be paid tomorrow the 10th.
Only shareholders will receive it...lol
Quote from: Basil on Apr 08, 2025, 03:42 PMBought some more GNE at $2.15 today. No matter what happens overseas with the trade war people are going to continue to use power and GNE is on a gross yield of 9.25%. With the RBNZ almost certainly cutting interest rates tomorrow and again on 28 May, that's a highly attractive yield for a very defensive stock in a falling interest rate environment.
How did you ever manage to reconcile this with your deep seated hatred of all things genesis? The yield has not changed (its decreased in fact, as you delightedly pointed out previously and you predicted it to fall again), OCR was always going to fall fast, people and businesses were always going to need more and more electricity. Add to this your huge concerns about the dividend CPI indexing uncertainty hasn't changed, ESG concerns remain, ongoing imputation credit levels. You wouldn't touch this investment, and tried to shoot down anyone who differed from your world view. Even when numerous relevant metrics were tabled, you "knew better"
Now you've not only purchased, but topped up with a stock you were never ever going to touch for love nor money for so many perceived reasons. Irony at its finest. Have a slice of humble pie
The crazy thing is, the underlying risk profile appears to have deteriorated in the last quarter on several fronts, but I'm sure you're fully across this......
Hatred is a strong term. Yes, I have reservations and concerns about GNE but we are very close to the bottom of its price history in recent years and they are very defensive, and I think all my reservations are now priced in, especially with interest rates headed materially lower over the next year.
QuoteThe crazy thing is, the underlying risk profile appears to have deteriorated in the last quarter on several fronts, but I'm sure you're fully across this......
Not sure if you have noticed what's going on with the risk profile of technology and momentum names in the last few months and in particular in the last week, especially overseas...stock and sector risk is a relative thing to other sectors and other markets. Maybe if you had north of 40 years investing experience, you'd understand that better.
Maybe, rather than being critical you could actually add some value here and you could enlighten us with your thoughts on what is a better defensive play on the NZX at present. I'm fully on board with TRA and HLG so no point suggesting those two.
Beagle whilst I understand your need to put your capital in a safe haven with good yield, I would have thought now is a very risky time to do that.
You could have purchased GNE at a lower price a few times not so long ago, so I would have thought paying above recent lows during a risky time for capital is not as smart as you usually are.
It's very close to recent multi year lows to be fair. Additionally, its only very recently become clear the OCR is going to go well below where economists thought it would settle. Global events could quite conceivably throw our economy back into recession according to official GDP numbers. In reality, apart from the boom times in some primary sectors, many parts of our economy have yet to exit the recession they've been in for years. 2.0%- 2.5% OCR potentially on the cards for 2026, maybe even less. Nobody would have been thinking that 2 weeks ago. Also, for context, this was funded by selling some of my Barramundi shares at 71 cents several weeks ago, (down 13% since then). Also FYI - Cash is currently ~ 40% of my portfolio.
FB say Sector offering good value and an attractive yield
All of the electricity stocks are offering good value at present. Dividend yields are attractive relative to bonds and are expected to grow (with the possible exception of GNE in the short term) as new generation developments are commissioned. MCY is the most attractive investment on a relative basis and will be a key beneficiary of expected rain.
Quote from: snapiti on Apr 09, 2025, 06:28 AMnice defensive play, a sign the hound is wise and is getting closer to retirement age......lol.....my pick is you are a little early on this one.
You're right Snapper, I am getting closer to retirement age. I think your second post along similar lines was probably unnecessary mate, given the highlighted comment above, but for the record, my average entry price is $2.14. Happy to see how it goes and let the share price do the talking.
Very nice divvy hitting the account this morning! Energy sector is going to get some attention while things are so turbulent I recon.
Quote from: Ricky Bobby on Apr 10, 2025, 12:07 PMVery nice divvy hitting the account this morning! Energy sector is going to get some attention while things are so turbulent I recon.
Yeap, just over $6,600 should cover this year's energy bills at least twice over :)
https://www.nzherald.co.nz/business/companies/energy/huntly-power-unit-may-stay-operational-until-2035-genesis-confirms/LGRKYZQYKVEZPG4QWRP7XV4HSY/
Astute observers of TA would have noticed a very nice uptrend forming for GNE.
I watched this the other day, https://www.nzherald.co.nz/business/markets-with-madison/markets-with-madison-behind-port-of-auckland/5PGPF7J4ATJYY3YOW4TKXJ2SYY/ Markets with Madison, ports of Auckland. From memory, a coal shipment arrives for GNE every 10-14 days. Importing heaps this year to keep the heaters running after super low inflows into catchment area's for all other Gentialiers. I think the Rankines are showing their worth. Other interesting snippets from that interview were that roll-on-roll off volume down 40% showing vehicle importation down heaps. Despite this Turners market report the other day said dealer to public sales, again from memory up just on 7% in April. Shows the value of Turners buying nearly all their stock in N.Z. and if imports are down that much, Turners market share must be growing very strongly indeed. Its hard for other dealers to compete with the marketing brilliance of Tina !
Anyway...back to GNE...very pleased indeed with my recent acquisitions at close to multi year lows. Share price should get another good boost when the RBNZ drops interest rates by 50 bps on 28 May. Headed back to the $2.70's ?
GNE slight uptrend channel in place but bumping against ATL AVWAP indicators assuming neutral posture waiting for direction -- Earnings Wednesday 20th Aug 25 will determine direction of travel.
GNE_2025-05-21_10-33-55.png
https://nz.finance.yahoo.com/quote/GNE.NZ/chart/
I note RSI is currently 61.45.
Quote from: lorraina on May 21, 2025, 11:39 AMhttps://nz.finance.yahoo.com/quote/GNE.NZ/chart/
I note RSI is currently 61.45.
Not overbought then ...yet?
https://www.nzherald.co.nz/business/companies/energy/genesis-energy-begins-150m-grid-scale-battery-project-at-huntly/USEE7ALGURHIHDKYXZGM7NRLK4/
Using A.I. to reduce customers power bills by 10% ! one mention of A.I. and the shares start moving...or is it the 8.5% yield looking increasingly attractive in a lower interest rate environment ? https://www.nzherald.co.nz/business/companies/energy/genesis-says-ai-trial-cuts-energy-use-by-10-in-off-peak-times-with-smart-hot-water-control/NNKSFOF7GJHR3EICRJXSUWOWRQ/
$2.14 looking like a good entry price now eh Snapiti.
I notice that GNE PGW et al all have the same feature, End of 22 high, falling until mid of 24, stabilizing, beginnings of rise to now, exiting of down channel or wedge. OCR rates falling, NZ10yr bond stable. Perhaps the tides have turned, and all boats are being lifted.
REIT's starting to break higher too. I hold plenty of KPG and ARG.
Quote from: Basil on Jul 08, 2025, 03:34 PMREIT's starting to break higher too. I hold plenty of KPG and ARG.
Yes, exactly. The task at hand IMHO is to not sell when one has a modicum of profit but to hold for the rest of the cycle, for people who have come this far the risk is to sell off too quick.
Apologies for off thread comment.
Genesis bosses bemoan the so-called ESG discount applied to the Genesis share price (relative to other sector shares). They often said that it will be unwound because they going more 'green'
That ESG discount probably still more than 30%
One day it might disappear and share price will go to $3.50 plus
Quote from: winner (n) on Jul 09, 2025, 10:14 AMGenesis bosses bemoan the so-called ESG discount applied to the Genesis share price (relative to other sector shares). They often said that it will be unwound because they going more 'green'
That ESG discount probably still more than 30%
One day it might disappear and share price will go to $3.50 plus
I thought there were still ongoing concerns regarding Kupe? Or has it been priced in already? I think the recent lows were at least partially related to Kupe reportedly running out sooner than expected?
Quote from: winner (n) on Jul 09, 2025, 10:14 AMGenesis bosses bemoan the so-called ESG discount applied to the Genesis share price (relative to other sector shares). They often said that it will be unwound because they going more 'green'
That ESG discount probably still more than 30%
One day it might disappear and share price will go to $3.50 plus
The irony with ESG and being a "socially responsible investor" https://theimpactinvestor.com/what-is-esg/ is that without the baseload generation capability of Huntly, (notwithstanding it burns coal), society at large would be facing widespread brownout's at times of peak load in Winter. We can't have that as how would the sanctimonious virtue signaling greenies charge their EV's 😉
Pretty easy to make the case that extending the life of the Rankine units to 2035 and perhaps beyond is the "socially responsible" thing to do which is of course exactly what the various Gentailiers are banding together to do. But because it burns coal that's bad for the environment so GNE doesn't fit into nice little neat and tidy ESG boxes that some institutional investors create for themselves.
Maybe the artificially contrived do-gooder institutions therefore leave more money on the table for those that can invest with their heads without the artificial constraints of non-sensical ESG restrictions ? Nothing to much wrong with 8.5% gross yield in the current environment and still a pretty decent premium on 10 year Govt bond rates some ~ 4% south of there.
Had a look at these today for the first time in ages. Seems like the story is basically unchanged with ever expanding OPEX despite the layoffs they did a while back. Was surprised to see what looks like record netback achieved this year making such little difference to EBITDA etc. I'd be very interested to know how they are able to keep extending the life on the boilers and rankines. What happens if the boiler fails earlier than expected? Would they be insured against that?
Looks good for all 3 Rankine units to keep going until at least 2035. I bought more today for the safe 8.4% gross yield.
https://api.nzx.com/public/announcement/456084/attachment/448687/456084-448687.pdf
Yep, more upside than downside with GNE at these prices, and with that dividend. Best buy in energy sector IMO.
Quote from: Basil on Aug 04, 2025, 10:44 AMLooks good for all 3 Rankine units to keep going until at least 2035. I bought more today for the safe 8.4% gross yield.
https://api.nzx.com/public/announcement/456084/attachment/448687/456084-448687.pdf
Same here 8)
Interesting article FYI.......clearly something needs to change
https://newsroom.co.nz/2025/08/01/a-less-known-way-that-keeping-hold-of-the-gentailers-can-bring-down-power-prices/
Quote from: Left Field on Aug 04, 2025, 02:40 PMInteresting article FYI.......clearly something needs to change
https://newsroom.co.nz/2025/08/01/a-less-known-way-that-keeping-hold-of-the-gentailers-can-bring-down-power-prices/
Ze article has a zerious omission: NZAS and Tiwai Point. Vhile NZAS vas 'counting down to leave', eet looked like NZ vas going to have plenty of power zupply. Zhis eez vhy new power ztations vere not built vor circa ten years. Nothing to do vith 'capital leakage'. Indeed both Mercury and Contact have had no problem vunding their new power station roll out, despite paying 'high dividends'.
Ze article also leaves out zomething particularly relevant vor Genesis shareholders. Namely investors outside of ze gentailers are villing to pay vor grid scale generation: FRV(Australia) who have built ze Lauriston Solar Farm een Christchurch own 60%, vith Genesis owning ze other 40%. Yet Genesis have contracted control of 100% of ze generation output.
RB
Have bought into two companies today. What peeves me off is all the 1, 2 and 3 little parcels going through. I have 100 frigging little transactions to full up my blo.dy statements. I don't mind small amount, but 100, fair go ASB give me a break. And that is my moan for the day.
GNE still pressing the top of the rising channel.
GNE_2025-08-14_18-15-18.png
Hit an intraday high of $2.415 today which is a new 12 monthly high for GNE. Investors positioning themselves ahead of what is almost certainly an interest rate cut by the RBNZ next week.
Quote from: seaweed on Aug 14, 2025, 05:34 PMHave bought into two companies today. What peeves me off is all the 1, 2 and 3 little parcels going through. I have 100 frigging little transactions to full up my blo.dy statements. I don't mind small amount, but 100, fair go ASB give me a break. And that is my moan for the day.
Good old sharsies at it again. Sometimes I wish they'd have their own stock exchange index with their 1x buys at $2.
Quote from: Cod on Aug 14, 2025, 06:17 PMGNE still pressing the top of the rising channel.
GNE_2025-08-14_18-15-18.png
What do you think. Should we push that channel back up to $3. More bang for your buck than the other power companies. CEN used to be my favorite a few years back in the late 5s and early 6s, remember that, and overseas buyers pushed it up to $10 or $11 in a short time, something to do with clean energy or something like that. Those were the days, we made some good money on that CEN. Have bought 5 blocks of GNE from 2.27 on 9/6/25 to today. Even at 2.60 it still has a yld of about 5.4%.
Assuming 14.5 cps dividends for FY26 and assuming they're fully imputed that's 8.4% gross yield at $2.40. FY25 final divvy is not far away
https://api.nzx.com/public/announcement/457450/attachment/450417/457450-450417.pdf
Plenty in there to chew over. Market doesn't seem to like something in there, perhaps the EBITDAF outlook for FY26 of $430-$460m against a prior market consensus off market screener of just over $500m but I note (from memory on a brief skim read of this), ~ $60m investment in digital initiative capex for FY26, which I think has to be expensed under the new accounting rules so that might explain most of the difference.
I did note EPS exceeded DPS for the first time in many years.
Looking ahead to FY26 for GNE as an income stock, I think dividends will be ~ 14.6 cps fully imputed = 20.28 cps Gross. On $2.35 that's a gross yield of 8.63% (8.85% if you take advantage of the DRIP at a 2.5% discount).
If you get a bit creative and treat the pending FY 25 final divvy as part return of the purchase price and use the DRP scheme the gross yield for FY26 income becomes ($2.35 - 0.0717) = $2.2783 Net Invested. 20.28 / 227.83 = 8.9% 8.9 % with DRIP discount of 2.5% = 8.9 / 0.975 = 9.13% Gross. I think its worthwhile noting that they have the intention of broadly moving the dividend up in line with inflation each year, although they do have a recidivist habit of failing that target. e.g. This year 14.3 cps / 14.0 cps = 2.1% increase against an official inflation increase of 2.7% for the year ended 30 June 2025. I will certainly be hitting the board up about this failure to meet the dividend inflation increase at the annual meeting, depending where its held, either online or in person.
Anyway...up to 9.13% Gross yield depending on how you view the pending final divvy and DRIP scheme plus increases in future years that represent the majority of inflation is a very solid yield in a falling interest rate environment.
Initiatives around firming options for Huntly, Rankine life extension and renewables look solid to me. Not sure how much credibility to attach to their targeted EBITDA of mid to late $500m's by FY28. Time will tell.
P.S. Before today's result the average of 5 analysts view was outperform with a price target of $2.64. Analysis of a company like this is really something I prefer to leave to professionals with relevant industry experience and I think an average view takes out any one analysts bias in respect to certain ESG matters, such as the use of coal to backstop N.Z's energy needs. It will be interesting to have another look on Market Screener and see the average view once all analysts have updated in about a week's time. In the meantime, here's their current view. https://www.marketscreener.com/quote/stock/GENESIS-ENERGY-LIMITED-17595957/consensus/
Quote from: Basil on Aug 26, 2025, 11:40 AMhttps://api.nzx.com/public/announcement/457450/attachment/450417/457450-450417.pdf
Plenty in there to chew over. Market doesn't seem to like something in there, perhaps the EBITDAF outlook for FY26 of $430-$460m against a prior market consensus off market screener of just over $500m but I note (from memory on a brief skim read of this), ~ $60m investment in digital initiative capex for FY26, which I think has to be expensed under the new accounting rules so that might explain most of the difference.
I did note EPS exceeded DPS for the first time in many years.
Looking ahead to FY26 for GNE as an income stock, I think dividends will be ~ 14.6 cps fully imputed = 20.28 cps Gross. On $2.35 that's a gross yield of 8.63% (8.85% if you take advantage of the DRIP at a 2.5% discount).
If you get a bit creative and treat the pending FY 25 final divvy as part return of the purchase price and use the DRP scheme the gross yield for FY26 income becomes ($2.35 - 0.0717) = $2.2783 Net Invested. 20.28 / 227.83 = 8.9% 8.9 % with DRIP discount of 2.5% = 8.9 / 0.975 = 9.13% Gross. I think its worthwhile noting that they have the intention of broadly moving the dividend up in line with inflation each year, although they do have a recidivist habit of failing that target. e.g. This year 14.3 cps / 14.0 cps = 2.1% increase against an official inflation increase of 2.7% for the year ended 30 June 2025. I will certainly be hitting the board up about this failure to meet the dividend inflation increase at the annual meeting, depending where its held, either online or in person.
Anyway...up to 9.13% Gross yield depending on how you view the pending final divvy and DRIP scheme plus increases in future years that represent the majority of inflation is a very solid yield in a falling interest rate environment.
Initiatives around firming options for Huntly, Rankine life extension and renewables look solid to me. Not sure how much credibility to attach to their targeted EBITDA of mid to late $500m's by FY28. Time will tell.
P.S. Before today's result the average of 5 analysts view was outperform with a price target of $2.64. Analysis of a company like this is really something I prefer to leave to professionals with relevant industry experience and I think an average view takes out any one analysts bias in respect to certain ESG matters, such as the use of coal to backstop N.Z's energy needs. It will be interesting to have another look on Market Screener and see the average view once all analysts have updated in about a week's time. In the meantime, here's their current view. https://www.marketscreener.com/quote/stock/GENESIS-ENERGY-LIMITED-17595957/consensus/
That sounds good to me. I would buy another 50,000 but eggs in basket and all that stuff, will buy more FSF instead, when it slides back a bit this afternoon.
MSCI rebalnce today. Many of the larger stocks took a bit of a hit. Hopefully normal business resumes tomorrow.
GNE Divie Yield 8.5% Gross and 5.7% after tax (at 33%) v NZ Govt 10 Yr yield of 2.9% after tax. So the spread/difference is 2.8% points.
The spread has been trending down since the IPO. If the spread is a proxy for perceived risk than that implies GNE is seen as 'less risky' these days by punters .
The spread has averaged 3.3% the last few years. We could say that on a 'risk adjusted' basis that GNE is currently about fair value (if anything slightly over valued.
Another observation is that the possibly to the lament of GNE management the ESG discount still prevails. Like other sector players with significantly lower yields. One thing going for us is that yield gets closer to the likes of CEN etc the GNE share price will be a lot higher.
Chart shows how that spread has moved over the years
0000gne CHART.png
Updated this
Suppose one could say that GNE is a steady performer profit wise
That transcends into a dividend that hasn't grown much over the years .... even though we got a pay rise this year ....but didn't cover the extra cost of the power bill lol
0000gne CHART1.png
Thanks for the charts Winner.
Interesting times. With recent cost increases, high fixed charges etc a mate of mine made the decision to scrap their gas water heater and gas range top to go all electric ( est 3 yr pay back.)
His longer term plan is to go all Solar/battery.
I suspect a lot of consumers will be re thinking their utility accounts these days.
Full imputation credits no longer a risk as EPS now exceeds DPS and is forecast to stay that way.
Forsyth Barr forecasting as follows:
FY26 EPS 17.6 cps DPS 14.5 cps
FY27 EPS 20.2 cps DPS 14.8 cps
FY28 EPS 22.3 cps DPS 15.1 cps
I think under John's leadership the company has achieved quite a bit in the last year, the most notable of which is the Huntly firming options:
GNE highlight
Quote- Delivered 10-year Huntly Firming Options (HFOs) signed with Meridian, Mercury and Contact for 150 MW, subject to regulatory review.
- Delivered Gen35 strategy acceleration with credible pathway to mid-to-upper $500m EBITDAF by FY28.
- Delivered the Lauriston solar farm operational; Edgecumbe and Leeston progressing to FID.
- Delivering stage 1 BESS, construction of the 100 MW/200 MWh Huntly Battery Energy Storage System ('BESS'), due for completion in Q1 FY27, with feasibility work underway for a second 200 MWh stage.
- Delivered full acquisition and delivered integration of Ecotricity; majority stake in ChargeNet secured.
- Delivered retail simplification, completed, improved customer satisfaction and brand equity.
- Delivered strategic fuel reserve established at Huntly Power Station (HPS) with 600 kt of coal.
- Delivered hot water control trial and LED bulb distribution, delivering scalable demand flexibility.
- Continuing biomass supply chain development to support long-term coal displacement at HPS.
Market has been caught off guard with ~ $60m digital investment in FY26. The company is stating this is necessary to drive EBITDAF growth going forward.
My comment is its worth remembering that up until very recently tech spend like this could be capitalized and amortised over its useful life. Some mandatory changes to accounting rules are a bit of a nonsense.
My view is that its common knowledge there's a lot of solar and wind generation going into the market over the next ~ 5 years from all the generators and Huntly is going to be badly needed when the wind doesn't blow and the sun doesn't shine. The concern I have is beyond FY35, how much life is left in those Rankine units ? My thinking. GNE a great and pretty safe retiree's dividend yield investment, especially for those like me who don't think they will have much life left in them after FY40 lol
Quote from: Left Field on Aug 27, 2025, 10:15 AMThanks for the charts Winner.
Interesting times. With recent cost increases, high fixed charges etc a mate of mine made the decision to scrap their gas water heater and gas range top to go all electric ( est 3 yr pay back.)
His longer term plan is to go all Solar/battery.
I suspect a lot of consumers will be re thinking their utility accounts these days.
As one company told a customers who queried the high power bill 'just put more clothes on'
Quote from: winner (n) on Aug 27, 2025, 10:22 AMAs one company told a customers who queried the high power bill 'just put more clothes on'
I hear this frequently with my wife...complaining about the cold while walking around bare feet and not dressed in winter attire. I'm often inclined to suggest to her to put more clothes on rather than turning up the heater as we don't own a power station...but I have to keep checking myself on that comment seeing as GNE divvies pay the annual power bill several times over lol
P.S. Forgot to mention earlier. Forsyth Barr price target for GNE is $2.60.
Quote from: Basil link=msg= :P 32604 date=1756247615I hear this frequently with my wife...complaining about the cold while walking around bare feet and not dressed in winter attire. I'm often inclined to suggest to her to put more clothes on rather than turning up the heater as we don't own a power station...but I have to keep checking myself on that comment seeing as GNE divvies pay the annual power bill several times over lol
P.S. Forgot to mention earlier. Forsyth Barr price target for GNE is $2.60.
Most guys generally suggest to their wives to get more clothes off :)
There's been some very satisfactory developments in the energy market this week with the Govt supportive of the current structure, calling for a LNG import terminal and other Gentailiers recently buying into the whole Huntly firming options deal which is supportive of overhauling and maintaining the third Rankine unit.
Its seems to me at $2.35 GNE has been a little overlooked in the race to secure safe and reliable yield as interest rates decline at pace. Noting forecasts of 14.6 cps fully imputed, 20.28 cps gross for FY26 and a commitment to increase that in line with inflation which adds an extra positive twist to the current forecast yield of 20.28 / 235 = 8.63%, (8.85% gross if you take advantage of the shares in lieu of dividend scheme at a 2.5% discount).
Average of 5 analysts see fair value of $2.56 and that will be before the recent positive developments in the industry. https://www.marketscreener.com/quote/stock/GENESIS-ENERGY-LIMITED-17595957/consensus/
Opportunity knocks ? I'll try and wade all the way through the annual report, (pretty bulky document) over the next week or so and share any extra insights I come across. ~ 7% portfolio position which I might take up a little bit higher if the share price stays where it is and the RBNZ cut 50 bps next week.
Probably a bit overlooked and I have probably have most of the shares I really want in GNE already is how I am perceiving this one at present.
I think their advertising with the family and the cute Beagle is pretty good stuff. Not brilliant like Tina and Turners original advertisements, but a solid 8.5 out 10 effort. Bonus marks for using a very cute Beagle lol
Slowly making my way through the annual report. Highlights so far, the headline revenue and profit growth numbers look solid to me. Taxable EPS is sufficient so it appears to me that full imputation is no longer in question so should be 100% going forward. Its not immediately clear to me how John's is planning on lifting EBITDA from late $400m's to mid to late $500m's over the next three years but they are having an investor day next month and talking a lot more about that and capital allocation. Hopefully that sheds some much needed light on their future plans.
The adorable Beagle add is apparently # 5 most popular advertisement.
Sorry, not much more to add at this stage. Hopefully some of you got in at $2.35 as I see its finally broken above $2.40 today.
Not sure what to make of GNE going their own way with future solar plans rather than J.V, (NZX release today)...I guess they see that as more capital efficient... the market seems to like it.
Seeing good motion here now. If we compare other high yielding defensive stocks like KPG, ARG, SPG to GNE over the last 6 months we can see a significant divergence has occurred diverg.JPG with GNE not receiving quite the same uplift as the other names. If it had, share price would be ~$2.8 now. Are the drivers behind the property stocks rise over this period less impactful to GNE?
The joint venture dissolving is interesting. I wonder if it has anything to do with the govt announcing they are on board with capital raising. Perhaps GNE will ask the govt to move to 100% DRP participation, the extra capital from that would probably be enough to get going on some of their solar projects, maybe even a staged castle hill windfarm.
Quote from: Plata on Oct 08, 2025, 12:44 PMAre the drivers behind the property stocks rise over this period less impactful to GNE?
The short answer is yes. With lower interest rates the REITS benefit with lower funding costs, (swap rates have fallen heaps which form the basis for their funding costs), lower capitalization rates leading to increased NTA, increased economic activity leading to more occupancy and better demand for commercial space and increased rent per sq meter which leads to earnings and dividend growth which the market pays a higher multiple for because of lower interest rates. Lower interest rates creates a virtuous flywheel circle of value creation for REIT shareholders.
GNE will also benefit as well from lower funding costs, higher economic activity boosting demand for power and higher profits and dividends. I think analysts are awaiting details from their investor day next month and there is likely to be revisions upwards to their average price of $2.56 in due course. $2.80 is not out of the question at all but good things take time.
Quote from: Basil on Oct 08, 2025, 01:12 PMThe short answer is yes. With lower interest rates the REITS benefit with lower funding costs, (swap rates have fallen heaps which form the basis for their funding costs), lower capitalization rates leading to increased NTA, increased economic activity leading to more occupancy and better demand for commercial space and increased rent per sq meter which leads to earnings and dividend growth which the market pays a higher multiple for because of lower interest rates. Lower interest rates creates a virtuous flywheel circle of value creation for REIT shareholders.
GNE will also benefit as well from lower funding costs, higher economic activity boosting demand for power and higher profits and dividends. I think analysts are awaiting details from their investor day next month and there is likely to be revisions upwards to their average price of $2.56 in due course. $2.80 is not out of the question at all but good things take time.
I'm not confident on this (been a while since I looked) but both GNE and the property companies tend to use interest rate hedging to similar degrees. Are the funding costs really going to drop that much faster for the property companies to justify this divergence?
Also, I'd question whether changes in ARG or KPG NTA have much bearing on share price compared to dividend yield vs the prevailing interest rate.
I can't speak for the other points, no idea :-[
My feeling is that at least in the short term e.g. 1 year, the property stock price movement is predominantly driven by interest rate vs dividend yield spread and if this is the case, the same should apply to GNE making it potentially undervalued at this time.
I agree GNE is undervalued. Said as much in post # 813 above. Sorry I don't have the time to do a deep dive into their respective interest rate hedging policies.
Nice
https://www.nzx.com/announcements/460566
GNE share price behaving in line with its correlation with the 10 Govt bond rate
Currently spread between divie yield and 10 year rate is 2.7% (with imputation and after tax). This is slightly below the average of the last 4 years.
GNE share price went over $2.50 early last year. Back then 10 year rate was 4.7% ...it's now just below 4%. (GNE over priced back then)
GNE still trading at that so called 'ESG discount'. Getting rid of that would reduce the divie yield and the spread to the 10 year rate which essentially issaying the market sees Genesis less 'risky' as in the past. Of course we'd get good capital gains eh.
Recent profit upgrade was comforting but to me nothing to really write home about
That ESG discount they talk about
The average of CEN,MEL,MCY and VCT gross yields is 5.13% (NZX data)
GNE gross yield is 8.07% - could say the ESG discount is about 36% ... quite significant
Another way of looking at is if GNE traded at a 5.13% the share price would be $3.90 which is about 55% higher than now.
GNE undervalued or is it more 'risky' than its peers to 'deserve' that premium. Interesting debate
Admission - I know very little about NZX listed power companies. I do have some GNE mainly as a dividend play.
Noticing that average yield of the other 4 power companies dividend yield is just over 5% gross I wondered what have been the share price returns over the years.
In the table below
A bit mixed .... seems if you want decent capital gains you need to pick the right one at the right time
Probably need to see how dividends have increased to make any real judgement if these stocks are solid long term holds.
IMG_6255.png
Maybe the discount stems from GNE having lower quality assets. The rankines and CCGT make money now, but the value of these is impacted by alot of factors that just dont matter (at least directly) to something like a hydro station. For example, say gas prices continue to spike, netback on CCGT generation will likely decline.
I think it is undervalued at the moment but I think some level of discount is definitely justified.
Using Manawa purchase price as baseline... Genesis hydro (assuming rankines, gas, retail are worth 0) is undervalued.
Power companies dividends bit skinny (except GNE) so I had a look at Total Shareholder Return over 5 years - ie capital gain plus dividends but not allowing for imputation credits
Total returns over the last 5 years have been
CEN 7.3% pa
MCY 7.2% pa
MEL 4.0% pa
VCT 6.5% pa
GNE 6.0% pa
Don't seem that good ... must have picked the wrong start sate lol
Pretty sure I recall Jarden did some research a while back and came out with fair value based on their renewable assets only of close to $3 per share if you value them the same as their peer group. Maybe the dirty coal ESG discount means Mr Market is ascribing a negative value to the Rankine units and Kupe ? Even if that's not the case I don't think there's much value ascribed to these "uncool" assets by the Market and not sure that their somewhat limited remaining life to 2035-2040 is really all that much of a concern. I like the gross yield of just over 8%. That's a solid yield in a low, (and headed lower), interest rate environment.
I think the latest government announcements and reading the agm info pave the way for a cr to transition to a greater renewable position to replace the rankines and CCGT as well as reducing debt.
Craigs latest note say that GNE the most capital constrained and continue with 20 percent discount to spot valuation excluding Kupe.
Interesting article on the problems the Dutch are having with their grid moving to renewables.12000 companies waiting for permission to use more electricity. In some cases people will have to pay to feed their solar electricity to the grid.
https://www.bbc.com/news/articles/cn40y9yxkgvo
Interesting. https://www.nzherald.co.nz/bay-of-plenty-times/news/foresta-welcomes-government-support-for-wood-energy-as-kawerau-plant-planned/27GBMHMWPRE2RFAQGBIJ52WTOA/
I reckon they will come in at top end of the new guidance if not above it, absent any dry spells. Spot pricing environment looks like it has been very favourable the last few months and thermal contribution to energy mix has consistently been below 10%, bodes well.
Solid price rises for retail customers this year too.
Genesis Energy has acquired the rights to develop an advanced stage, 271MWp solar farm development near Rangiriri in Waikato. The acquisition is conditional on vendor deliverables expected to be completed by Q2/Q3 FY26.
The site is strategically positioned near Auckland and Transpower's planned new 220kV substation at Glen Murray, providing optimal grid connection and market access and is located close by Genesis's 200MWh battery at Huntly Power Station currently under construction.
The Rangiriri project will be funded through Genesis's balance sheet with an opportunity for future capital recycling. This aligns with Genesis's capital management plan to develop new renewable generation on balance sheet and leverage third-party capital at a future date post-development.
With the addition of this high-value site, Genesis now has a pipeline of advanced-stage solar options totalling c700MWp, allowing credible delivery of the Gen35 objective of building up to 500MWp of solar to improve the value of Genesis's three hydro generation sites and displace gas generation, in particular, over summer months.
IGP New Zealand Limited, trading as Pioneer Green Power, an international solar farm developer, is the vendor of the site.
The Commerce Commission has this morning published a final determination authorising MEL, CEN, and MCY to enter into the 10-year Huntly Firming Options agreement with Genesis. This outcome was generally expected, given the ComCom's draft decision was to grant authorisation back in late September, but it is helpful to have it confirmed. Genesis had required the certainty of an authorisation by November 2025 in order to make Rankine Unit 2 operational by winter 2026. $50m of capex is required for the Rankine's in FY26 specifically ... NZers (and Aucklanders in particular) can now rest assured there will be no black-outs next winter
Quote from: Plata on Oct 29, 2025, 07:07 PMI reckon they will come in at top end of the new guidance if not above it, absent any dry spells. Spot pricing environment looks like it has been very favourable the last few months and thermal contribution to energy mix has consistently been below 10%, bodes well.
Interesting that the new upgraded guidance is after the cost of a ~ $60m one-off technology spend in FY26 https://www.nzherald.co.nz/business/companies/energy/commerce-commission-clears-huntly-power-deal-to-secure-electricity-supply/AJEARTIHWRAIVGQKXLRYFR5C5E/
Analysts have been wondering how they get to late $500m's EBITDA in FY28. Not having a $60m one-off tech cost repeating is one way and the Huntly firming option deal just agreed to, is another. 8.1% prospective gross yield for FY26 is a very satisfactory yield and don't forget it is forecast to increase a bit each year although for reasons best known to the company directors, never quite seems to really be at the rate of inflation as promised.
Crickey there's a lot in there in the attachments to try and wrap your head around. https://www.nzx.com/announcements/463396
I had a listen to this interview with Malcolm John's and thought he came across very well.
https://craigsip.com/news/exec-talks-series-malcom-johns-genesis-energy
I bought a few more for the gross yield of just on 8.2% today. Taking the DRIP at a 2.5% discount boosts the gross yield to 8.45% which is very good in a low interest rate environment. People are always going to use electricity and I think GNE are well positioned. GNE are pretty boring but sometimes a bit of boring is a good thing. Cash at call is returning almost nothing now, might as well be very close to fully invested, maybe have a rainy day PF allocation of 5% to cash.
Quote from: Basil on Nov 26, 2025, 05:41 PMCrickey there's a lot in there in the attachments to try and wrap your head around. https://www.nzx.com/announcements/463396
I had a listen to this interview with Malcolm John's and thought he came across very well.
https://craigsip.com/news/exec-talks-series-malcom-johns-genesis-energy
I bought a few more for the gross yield of just on 8.2% today. Taking the DRIP at a 2.5% discount boosts the gross yield to 8.45% which is very good in a low interest rate environment. People are always going to use electricity and I think GNE are well positioned. GNE are pretty boring but sometimes a bit of boring is a good thing. Cash at call is returning almost nothing now, might as well be very close to fully invested, maybe have a rainy day PF allocation of 5% to cash.
My biggest take from this morning's announcement is.........Unit 7?
Might as well dust off the plans for Rodney Power Station.
To me it also suggests that they may have a solution for LNG supply security, especially if Kupe is running dry. I'd like to know more on this as I thought the Kupe reserves were a big source of uncertainty that affected the stock price.
Even the Aussies are building gas turbines again in the face of overwhelming solar and batteries. The current gas peaking plants and CCGTs over there in service are also running a lot more compared to 2-3 years ago.
GNE close at $2.43 today ...sliding back into the $230's?
Market wrap had this about the current sentiment with gentailers -
"The flurry of investor days has probably left the question with investors of, it's great you've got all of these generational investment plans, but what are the returns on them, and the companies have been a lot quieter on what those returns are," Goodson said.
"I think that is the concern that is nagging at investors."
I had a look at the agenda for GNE's Taupo investor days. Day 1 kicked off with Maori prayers and Day 2 there was a field trip that included a chance to meet with local IWI leaders and learn about the cultural significance of the lake. Bet analysts were absolutly thrilled to partake in those aspects of this 2 Day event.
Quote from: winner (n) on Nov 27, 2025, 06:54 PMGNE close at $2.43 today ...sliding back into the $230's?
Market wrap had this about the current sentiment with gentailers -
"The flurry of investor days has probably left the question with investors of, it's great you've got all of these generational investment plans, but what are the returns on them, and the companies have been a lot quieter on what those returns are," Goodson said.
"I think that is the concern that is nagging at investors."
I think the dirty little secret that nobody wants to talk about is that the huge amount of investment required to get into the high 90% range of renewable energy generation by 2035 is going to be passed onto customers with much higher energy prices over the next decade. Good example over the Tasman where Australian energy prices are up more than 30% in the last year.
John's sounds very confident GNE will earn mid to high $500m EBITDA by FY28. Expect price increases every year.
Quote from: Basil on Nov 28, 2025, 06:51 AMI think the dirty little secret that nobody wants to talk about is that the huge amount of investment required to get into the high 90% range of renewable energy generation by 2035 is going to be passed onto customers with much higher energy prices over the next decade. Good example over the Tasman where Australian energy prices are up more than 30% in the last year.
John's sounds very confident GNE will earn mid to high $500m EBITDA by FY28. Expect price increases every year.
I broadly agree with this, I expect prices to continue to rise. But I do want to point out that 30+% rise in the Australian index is really an artifact of what sounds like some very messy rebate and relief fund systems. The underlying increase is actually 5% over the year, which is still comfortably higher than inflation.
The issue is that we have crossed the threshold where urban properties are starting to be better off installing solar+battery systems and disconnecting from the grid. The cost of the components has come down so much in recent years, I think most homes would save money disconnecting and going solar+battery if it was self-installed then electrician certified (even accounting for opportunity cost). For now all the margins and install costs for getting someone like Harrisons to do it are stopping widespread disconnection, but every year the components get cheaper and power prices go up, it could seriously undermine the demand growth most of these development pipelines hinge upon. I don't expect it will weigh too heavily on GNE though, it helps in a way that the rankines aren't expected to survive past 2040 so won't be stranded assets.
I've got a few of these already, but hopefully we see some $2.30s action and maybe I'll need a few more 0_o
Quote from: Plata on Nov 30, 2025, 05:13 PMThe issue is that we have crossed the threshold where urban properties are starting to be better off installing solar+battery systems and disconnecting from the grid. The cost of the components has come down so much in recent years, I think most homes would save money disconnecting and going solar+battery if it was self-installed then electrician certified (even accounting for opportunity cost
I'm not convinced. Banks have been offering 1% loans for new green initiatives for several years now e.g. ANZ good energy loan for up to $80,000 https://www.anz.co.nz/personal/home-loans-mortgages/loan-types/good-energy/ and yet only 3% of houses have rooftop solar systems. If the numbers really did work even at 1% finance the uptake rate would be higher.
The only friend I know that's had a go endured a 4 year fiasco with two companies going under during the process and a failed invertor and failed battery. A lot of the equipment comes out of China and from what I have seen, there can be a lot of problems getting the system to work and then reliability issues thereafter.
A full off grid system also requires a really big battery system and a decent back up generator and the appropriate peak load switching equipment. A full family sized off grid system is not cheap by any means, I hear some talk of around $40K with a proper sized diesel generator backup system and there's ongoing maintenance with annual servicing of the generator and invertor's don't last all that long and are expensive to replace. Lithium ion batteries don't last forever either and when you start factoring in replacement of them every 10 -15 years or so, the numbers look even less convincing.
Quote from: Plata on Nov 30, 2025, 05:13 PMThe issue is that we have crossed the threshold where urban properties are starting to be better off installing solar+battery systems and disconnecting from the grid. The cost of the components has come down so much in recent years, I think most homes would save money disconnecting and going solar+battery if it was self-installed then electrician certified (even accounting for opportunity cost). For now all the margins and install costs for getting someone like Harrisons to do it are stopping widespread disconnection, but every year the components get cheaper and power prices go up, it could seriously undermine the demand growth most of these development pipelines hinge upon. I don't expect it will weigh too heavily on GNE though, it helps in a way that the rankines aren't expected to survive past 2040 so won't be stranded assets.
I've got a few of these already, but hopefully we see some $2.30s action and maybe I'll need a few more 0_o
Is it one of the major attractions that you actually stay connected to the grid and can sell your excess energy back?
The main gist of what I'm saying is that what we are seeing is inflation in power prices, and deflation in the cost of self-generated power. While it isn't the case now, those two trends can't go on forever without something breaking.
Quote from: entrep on Dec 01, 2025, 02:48 PMIs it one of the major attractions that you actually stay connected to the grid and can sell your excess energy back?
Yeah if you have no use for the power it helps the economics to sell it, but these days you can have it just dump into a load of choice like hot water cylinder. Skipping those daily charges can save $700+ p/a, so it isn't always clear cut.
Became a holder today. Seems like a safe defensive stock with good yield to hold into what I think will be an uncertain 2026. Also making higher highs and lower lows.
Welcome on board Entrep. Forbar forecasting 14.5 cps in dividends in FY26 (14.8 and 15.1 cps for FY27 and FY28 respectively), fully imputed, that's 14.5 / 0.72 = 20.14 cps gross giving a gross yield at $2.38 of 8.46% capable of being increased to (8.46 / 0.975) 8.67% for those who takes shares in lieu of dividend at the 2.5% discount. I think that's an attractive and defensive yield especially in a low interest rate environment and also because the yield increases a bit each year so I recently added a few more. Its good pragmatic risk management to have some of your portfolio in defensive investments.
I've gone over the investor day documents again and I think there is a moderate chance they capital raise to fund castle hill wind farm in the next 2 years. They are spending money on getting connections to the site. They also mentioned equity raising as a possible funding source, which is a new occurance and obviously related to the government announcement saying they are up for it. Those docs were released on the 26th nov, same day as the OCR cut and unexpected commentary suggesting no further cuts. I'm temped to buy more of these but I can't figure out why the share price has deteriorated like this. The other gentailers have also taken a hit for the most part, yet property stocks which are similarly OCR sensitive have not.
Taking a look at the NZX release, Genesis have a Chief Corporate Affairs Officer "Master of Ceremonies for the Investor Day", a Group Communications Manager, and an Investor Relations Manager. What do these people do all day - surely there are only so many sausage rolls to round up?
Quote from: Mos on Dec 03, 2025, 08:54 PMTaking a look at the NZX release, Genesis have a Chief Corporate Affairs Officer "Master of Ceremonies for the Investor Day", a Group Manager Communications Manager, and an Investor Relations Manager. What do these people do all day - surely there are only so many sausage rolls to round up?
They kicked off the first day with a Karakia....bet analysts were impressed with that and it must have taken a ton or organizing. Even more "impressive" the second day field trip included meeting with local Iwi to learn about all the cultural values they held about the lake. These things take a LOT of organizing you know. ::) and must have super impressed the analysts that attended.
Quote from: Basil on Oct 03, 2025, 10:57 PMAverage of 5 analysts see fair value of $2.56 and that will be before the recent positive developments in the industry.
Consensus of 5 analysts is now $2.55, post the investor day. 1 cent taken off for being far too woke ?
Forsyth Barr noted in its report, changes to the minimum lake level methodology at Tekapo will allow more effective hydro generation and have lifted their EBITDAF calculation by $8m as a result and are now forecasting FY26 EBITDAF at $501m, $16m above the top of GNE's own forecast range.
Keep in mind this years result is affected by a $60m one-off technology upgrade so the outlook for FY27 and FY28 EBITDAF is quite plausible to be in the late $500m range.
Lets see how this price fall plays out. If it drops another 10 cents I think I will be seriously tempted to go pretty BIG on this on a ~ 9.1% gross yield (calculated as such based on taking advantage of the 2.5% DRIP discount at $2.27).
Commercial Power prices have dropped significantly in the last month(dams are full!)Prob seeing that come through with the softening share price?
Forbar;
The lakes are full to the brim
All of the main South Island hydro catchments are currently spilling water following continued strong inflow. NZX Energy is reporting hydro lakes are at 97% of maximum and 155% of average, the highest since June 2023. GNE is the main beneficiary from current conditions as it benefits the most from being able to switch off its thermal generation and lower its generation costs.
Quote from: Basil on Dec 03, 2025, 09:33 PMThey kicked off the first day with a Karakia....bet analysts were impressed with that and it must have taken a ton or organizing. Even more "impressive" the second day field trip included meeting with local Iwi to learn about all the cultural values they held about the lake. These things take a LOT of organizing you know. ::) and must have super impressed the analysts that attended.
Don't forget they doubled "community contributions" to nearly $6 million. People really are quite generous when it is other peoples money being given away... Although maybe it distracts the residents of Huntley from thinking about that coal boiler plume :o
Quote from: lorraina on Dec 04, 2025, 03:19 PMForbar;
The lakes are full to the brim
All of the main South Island hydro catchments are currently spilling water following continued strong inflow. NZX Energy is reporting hydro lakes are at 97% of maximum and 155% of average, the highest since June 2023. GNE is the main beneficiary from current conditions as it benefits the most from being able to switch off its thermal generation and lower its generation costs.
Keeping the thermal plants cold is likely helpful for extending their lives too, less component wear and less thermal cycles.
Forbar say capital raise likely mid year
Get it done and dusted before the election
Not so sure about that. Very good profit upgrade last week that's received no comments on here. Making HEAPS of EBITDA, no need for more capital I reckon.
Quote from: Basil on Jan 26, 2026, 11:10 AMNot so sure about that. Very good profit upgrade last week that's received no comments on here. Making HEAPS of EBITDA, no need for more capital I reckon.
Didn't Genesis say they have $800m/$900m of 'unfunded' Capex in the plans
Not sure mate. Lots of EBITDA and cashflow between now and their 2035 Gen35 ambitions that's not being paid out as dividends.
More than that Winner. The current government agreeing to support any cap raise has opened the door. Both FB and Craig's suggest that Genesis stands out as the most capital constrained.
From FB
In its 2Q26 release, it republished its development pipeline, which highlights ~NZ$1bn of 'progressed growth opportunities' and a further ~NZ$1bn of 'discretionary growth opportunities' that are unfunded. While some of the projects could be progressed without GNE capital and there is no immediate need for additional capital (the first of these projects are a few months from a final investment decision), we anticipate GNE will want to raise equity before mid-2026 due to the proximity of the November 2026 election.
At the end of the day any equity raise would be well supported and a high probability of investors doing ok I suggest.
I'm sure both brokers are champing at the bit, (trying to fly a kite?), to push this idea to gain investment banking and / or underwriting fees. Time will tell if their thesis holds water. For what its worth I hold a fairly modest 5% portfolio position for yield. I'll consider any possible future capital raise on its merits.
The Genesis dividend is now less than when it listed. It did slowly rise from 15.5 cents in 2015 to 17.7 cents in 2023 and its now down to 14.3 cents (been varying imputation rates over that time)
With this talk of $800m or more 'unfunded' capex and capital raises you'd have to think that even the current 14 cent dividend is in danger and there is a possibility of the divie going lower.
Suppose we still have to hope the bemoaned ESG Discount that GNE has disappears over time. Average yield of CEN/MCY/MEL/VCT is 5.14% (v GNE8.11%) and if GNE share price traded in line with sector average it would be $3.86. The ESG Discount is thus 36%.
Whatever it could be interesting to see how market reacts if a sizeable capital raise is forthcoming in coming montsh
Speaking of unfunded capex, $400m raise: https://www.nzx.com/announcements/467920
Seems like a big discount on the rights offer. My favourite line: " Genesis delivered total shareholder return of over 13% across calendar year 2025, reflecting both dividend yield and share price appreciation. "
Even if GNE is a questionable investment, atleast raises like this and Contact's are good for NZ inc.
Presentation is here https://api.nzx.com/public/announcement/467920/attachment/462823/467920-462823.pdf
Quote from: Basil on Feb 23, 2026, 09:54 AMPresentation is here https://api.nzx.com/public/announcement/467920/attachment/462823/467920-462823.pdf
Like the slide that shows 6% pa EBITDAF growth next 6 years ...should underpin a good dividend even with more shares out there
Impressive chart indeed - EBITDAF going from say $500m in F26 to say $700m in F32
But on a per share basis it remains at about 46 cents/ 47 cents. That's allowing for this capital raise and future DRP shares
Does this imply dividend in F32 will still be about what it is today? and if the dividend yield remains much the same the share price will still be around what it is today -- for 6 years
Screenshot 2026-02-23 141904.png
Yeah looks like the number of shares to be issued adds 17% to the quantum already on issue. Gearing is coming down though so on a net profit basis this could still be EPS accretive but not by much. Seems to be mostly about meeting ESG goals. Lot of new generation coming to the market in the next few years by GNE and all the other Gentailiers. I guess we just have to hope that the demand is there for all the new supply.
"Wonderful" how the dividend went up by 2.38% and inflation has been 3.1%. Every year since they listed and they promised to keep their dividends in line with inflation and every year including after the dividend reset they have fallen short.
I guess we have no choice as to whether to apply for new shares in the pro rata issue as they're priced at only $2.05. I'm not enthusiastic as this seems mainly about ensuring a surplus of ESG friendly generation to meet ESG and socialist agenda's. I guess I shouldn't have been surprised given this is a Govt controlled company trading as basically a type of listed Government department.
Quote from: winner (n) on Feb 23, 2026, 02:29 PMImpressive chart indeed - EBITDAF going from say $500m in F26 to say $700m in F32
But on a per share basis it remains at about 46 cents/ 47 cents. That's allowing for this capital raise and future DRP shares
Does this imply dividend in F32 will still be about what it is today? and if the dividend yield remains much the same the share price will still be around what it is today -- for 6 years
They discussed dividend policy during the 10.30 investor conference call. Current thinking is - status quo until FY28, then a review into moving to FCF basis. The directors will make that call in FY28, based on performance of recent/imminent generation & storage projects and overall company performance. So it appears they are considering a change, albeit 2 years away
The takwaway i got, was they are in a development and transition phase FY26-27.
The dilution is a one-off event, not ongoing. Post-raise you have roughly 1,300 million shares (up from ~1,107m). That's ~17% dilution. But the EBITDAF growth from ~$500m to ~$700m is ~40% over six years. The dilution doesn't eat all of it.
Rough per-share EBITDAF:
FY25 actual (pre-raise): $470m / 1,107m = ~42.5 cps
FY26 (post-raise): $505m / 1,300m = ~38.9 cps
FY28: ~$550m / 1,300m = ~42.3 cps
FY32: ~$700m / 1,300m = ~53.8 cps
Quote from: winner (n) on Feb 23, 2026, 02:29 PMImpressive chart indeed - EBITDAF going from say $500m in F26 to say $700m in F32
But on a per share basis it remains at about 46 cents/ 47 cents. That's allowing for this capital raise and future DRP shares
Does this imply dividend in F32 will still be about what it is today? and if the dividend yield remains much the same the share price will still be around what it is today -- for 6 years
Screenshot 2026-02-23 141904.png
Quote from: entrep on Feb 23, 2026, 03:17 PMThe dilution is a one-off event, not ongoing. Post-raise you have roughly 1,300 million shares (up from ~1,107m). That's ~17% dilution. But the EBITDAF growth from ~$500m to ~$700m is ~40% over six years. The dilution doesn't eat all of it.
Rough per-share EBITDAF:
FY25 actual (pre-raise): $470m / 1,107m = ~42.5 cps
FY26 (post-raise): $505m / 1,300m = ~38.9 cps
FY28: ~$550m / 1,300m = ~42.3 cps
FY32: ~$700m / 1,300m = ~53.8 cps
You have to allow new shares issued under DRP - nearly 20,000 last year
that's another 130,000 plus shares through to F32 (6.5 years)
Good catch, that meaningfully closes the gap. Revised share counts:
Post-raise: ~1,300m
DRP issuance ~20m/year × 6.5 years: ~130m
FY32 total: ~1,430m
Revised per-share EBITDAF:
FY25 (pre-raise): $470m / 1,107m = ~42.5 cps
FY26: ~$505m / ~1,320m = ~38.3 cps
FY28: ~$550m / ~1,360m = ~40.4 cps
FY32: ~$700m / ~1,430m = ~49.0 cps
You're looking at roughly six years to get from 42.5 cps to 49 cps on a per-share EBITDAF basis. That's only about 2.4% per annum growth, not 6%.
The headline EBITDAF chart showing $470m to $700m looks great, but a huge chunk of that growth is being absorbed by the equity raise and ongoing DRP dilution. The per-share story is considerably less exciting.
That said, the dividend should still be fully imputed and the board has flagged moving to a more market-aligned (presumably growing) policy post-FY28. But the critique that this is substantially a stand-still on a per-share basis for several years has real validity.
Quote from: winner (n) on Feb 23, 2026, 04:00 PMYou have to allow new shares issued under DRP - nearly 20,000 last year
that's another 130,000 plus shares through to F32 (6.5 years)
I will participate in the raise because:
Reduces prominence of thermal assets potentially increasing earnings multiple even if EBIDAF/share stays static
At 20.1 cps gross dividend p/a, placement price $2.15, gross yield = 9.3%
At rights issue price $2.05, gross yield = 9.8%
Dividend seems pretty secure, I think in the volatile environment we are in the risk/reward here is reasonably compelling.
It is kind of tragic in some ways though that they didn't just rebase the dividend to a lower level a few years back. Imagine if all this development had been done on retained earnings, debt and DRP. Too many NZX companies are too beholden to dividend hunters, to the detriment of all.
Quote from: Plata on Feb 23, 2026, 10:44 PMIt is kind of tragic in some ways though that they didn't just rebase the dividend to a lower level a few years back. Imagine if all this development had been done on retained earnings, debt and DRP. Too many NZX companies are too beholden to dividend hunters, to the detriment of all.
The gentailers would have been crazy to commit a penny of capital while NZAS were playing their "we're leaving" games. If NZAS closed down operations, the market would have been 25% oversupplied with the generators
existing plantOnce the 20 year contract was signed, the new generation plants were committed. As any sensible business would do. It just takes some time for the new plants to be constructed
In FY24 and FY25 plus H126 Genesis have paid $400m in dividends (5 of them)
How much the capital raise - $400m
Surely not getting shareholders to fund dividends ...hmmm
Must be hard juggling the purse strings at Genesis (and other power companies)
Retail only getting 8% of what asked for.
Wow, glad I didn't bother.
Quote from: entrep on Feb 24, 2026, 11:38 AMRetail only getting 8% of what asked for.
Yep, I've picked up a few hundred, via Invest Direct 7.65% of my applications, commissions aren't the full standard $29.90 thankfully. Think I'll end up consolidating into one holder entity rather multiple holders.
Question to BUY today on market for dividend, or think there's a day or two to get some more shares before they go ex the rights entitlement.
With all the power companies tabling results this week, I wondered how the market compared their relative SP performances over the last 5 yrs.....
(I'll leave it to you to add in the dividend yields.)
ps I was tempted to add IFT into the comparison but maybe a bit unfair.
Wow, interesting chart - thanks!
Quote from: Left Field on Feb 25, 2026, 07:19 PMWith all the power companies tabling results this week, I wondered how the market compared their relative SP performances over the last 5 yrs.....
(I'll leave it to you to add in the dividend yields.)
ps I was tempted to add IFT into the comparison but maybe a bit unfair.
It really depends on when an investors entry point was (or their weighted average SP). For example, if an investor bought in mid-2024, the result would be quite different - GNE with a solid increase, CEN about flat, MEL & MCY showing a reasonable decrease
But no doubting the fact that GNE has underperformed on SP, especially following their exit from index funds (mid 2023 from memory) where sustained share transaction volumes were the highest in their history
Rights Offer
Record date 7.00pm NZDT, Monday, 2 March 2026
Rights Offer opens Wednesday, 4 March 2026
Rights Offer closes Tuesday, 17 March 2026
Shortfall Bookbuild for Rights Offer Friday, 20 March 2026
Settlement on the ASX Tuesday, 24 March 2026
Settlement on the NZX Wednesday, 25 March 2026
New Rights Offer shares allotted and
commence trading on NZX and ASX Wednesday, 25 March 2026
Payment of any premium achieved in the
Bookbuild Tuesday, 31 March 2026
I'm looking at buying some shares, tired of having the bill constantly being raised. Collecting some dividends may ease the pain.
The change in the lower user rates is upping my bills a fair amount.
I think this could drift down very close to the offer price of $2.05 and I think its a BUY at very close to that level.
Barring political risk I fail to see how you can go too wrong below $2.30 and at $2.15 and below it seems like really compelling value for a defensive utility like this. Over 8% gross yield already and with good scope for increases once they put capital raise money to work, even now I doubt payout ratio is close to 100% so some scope for that to push higher once they are done building. I'm calling low $2.10s as the bottom and if it goes below that I'll probably take a maximum portfolio weighting here.
Seems we are losers here even if we take up the rights
Going well when share price about $2.40. Take rights and average about $2.36 from where we were
And now talk of ongoing share price settling 210/220
And with increased number of shares expect dividend on per share basis to be cut ...maybe gross current 20 cents odd to something like 16 cents
OK still a great yield but over last few weeks lost nearly 10% of our capital over a few weeks
Or have I got it all wrong.
Quote from: winner (n) on Mar 05, 2026, 09:03 AMSeems we are losers here even if we take up the rights
Going well when share price about $2.40. Take rights and average about $2.36 from where we were
And now talk of ongoing share price settling 210/220
And with increased number of shares expect dividend on per share basis to be cut ...maybe gross current 20 cents odd to something like 16 cents
OK still a great yield but over last few weeks lost nearly 10% of our capital over a few weeks
Or have I got it all wrong.
Genesis has a fixed dividend policy of ~14.6 cps through FY28. The board reconfirmed this alongside the raise. They're not cutting DPS. The whole point of raising equity is to fund growth that supports (and eventually grows) that dividend. More shares, yes, but the per-share dividend stays the same.
At $2.21 that's a 6.6% gross yield. At $2.05 on your rights shares, it's 7.1%. Both are attractive.
On the capital side, remember part of the drop from $2.40 is the 7.30 cps ex-dividend adjustment, not a "loss." The rest is the market pricing in dilution, which is normal post any equity raise.
The way I'd think about it: you're being offered shares at $2.05 that the institutions just paid $2.15 for in the placement where retail only got a 7% allocation, in a company guiding to $490-520m EBITDAF this year and targeting $650-750m by FY32. The short-term pain is real but the medium-term setup at these prices is actually pretty decent.
From entrps's post - Genesis has a fixed dividend policy of ~14.6 cps through FY28.
We'll see how that pans out eh
Quote from: entrep on Mar 05, 2026, 09:27 AMGenesis has a fixed dividend policy of ~14.6 cps through FY28. The board reconfirmed this alongside the raise. They're not cutting DPS. The whole point of raising equity is to fund growth that supports (and eventually grows) that dividend. More shares, yes, but the per-share dividend stays the same.
At $2.21 that's a 6.6% gross yield. At $2.05 on your rights shares, it's 7.1%. Both are attractive.
On the capital side, remember part of the drop from $2.40 is the 7.30 cps ex-dividend adjustment, not a "loss." The rest is the market pricing in dilution, which is normal post any equity raise.
The way I'd think about it: you're being offered shares at $2.05 that the institutions just paid $2.15 for in the placement where retail only got a 7% allocation, in a company guiding to $490-520m EBITDAF this year and targeting $650-750m by FY32. The short-term pain is real but the medium-term setup at these prices is actually pretty decent.
I suggest you read their dividend policy, which they affirmed as remaining current until FY28. It is neither fixed, nor related to cps
Guidance figures for GNE are biased lower by their assumed thermal generation proportion of their committed energy sales (retail, commercial, industrial), and the need to forecast fuel purchase costs in the future. With TCC now decommissioned, no other gentailer has these considerations, except through their 50MW HFO's and a few peaking plants which are immaterial. GNE now carries all the firming and thermal baseload uncertainty, and budgets accordingly. Dryish years it will come out close to budget, wettish/windyish years it will exceed budget
When there is plenty of rain and wind, GNE buys off the wholesale market to supply their customers rather than running their thermal plants. This has played out in FY26 with all the rain that has fallen, with $30M upgrades in Q1 & Q2. It is looking like Q3 will be similar, as last week was the first week where renewable generation fell below 96% (to 95%) for the last 6 months. Wholesale prices have trended upwards recently so any Q3 improvement will be smaller and may not meet the threshold of a notified upgrade
But shares at $2.05 are definitely on my list of bargains. The recent SP weakness is common for GNE, which often sees an outsized reaction to perceived negative news. Personally i see the capital raise as their most positive action since they redirected Kupe revenue into new renewable generation projects a couple of years ago
Quote from: xafalcon on Mar 05, 2026, 11:03 AMI suggest you read their dividend policy, which they affirmed as remaining current until FY28. It is neither fixed, nor related to cps
Guidance figures for GNE are biased lower by their assumed thermal generation proportion of their committed energy sales (retail, commercial, industrial), and the need to forecast fuel purchase costs in the future. With TCC now decommissioned, no other gentailer has these considerations, except through their 50MW HFO's and a few peaking plants which are immaterial. GNE now carries all the firming and thermal baseload uncertainty, and budgets accordingly. Dryish years it will come out close to budget, wettish/windyish years it will exceed budget
When there is plenty of rain and wind, GNE buys off the wholesale market to supply their customers rather than running their thermal plants. This has played out in FY26 with all the rain that has fallen, with $30M upgrades in Q1 & Q2. It is looking like Q3 will be similar, as last week was the first week where renewable generation fell below 96% (to 95%) for the last 6 months. Wholesale prices have trended upwards recently so any Q3 improvement will be smaller and may not meet the threshold of a notified upgrade
But shares at $2.05 are definitely on my list of bargains. The recent SP weakness is common for GNE, which often sees an outsized reaction to perceived negative news. Personally i see the capital raise as their most positive action since they redirected Kupe revenue into new renewable generation projects a couple of years ago
Maybe there's a more detailed policy I haven't read, but Genesis's own interim report and investor presentation both use the words "fixed dividend" and "14 cents per share in real terms as at 2023" through FY28. Happy to be corrected if there's a separate policy document that says otherwise.
Agree on $2.05 being a bargain and the capital raise being a net positive. The market's reaction to dilution is creating the entry point. Taking up rights plus oversubscription feels like the right move here.
Quote from: entrep on Mar 05, 2026, 11:31 AMMaybe there's a more detailed policy I haven't read, but Genesis's own interim report and investor presentation both use the words "fixed dividend" and "14 cents per share in real terms as at 2023" through FY28. Happy to be corrected if there's a separate policy document that says otherwise.
Agree on $2.05 being a bargain and the capital raise being a net positive. The market's reaction to dilution is creating the entry point. Taking up rights plus oversubscription feels like the right move here.
Their official dividend policy is on Genesis' web site, under investor centre in the dividend section
Yes, im also applying for additional shares above my pro-rata allocation of approx 12,500 shares. There will be a bunch of inelligible shareholders, so the pool could be quite large. However i expect many eligible shareholders will apply for additional shares
Some of the SP weakness will be shareholders selling to fund their pro-rata allocation. I sold a small quantity at $2.38 to fund the final part of my additional shares application, and will simply re-purchase on market with any money returned
Our dividend policy
In determining dividends payable to shareholders, Genesis will comply with the solvency test specified in the Companies Act.
Under ordinary business circumstances, the dividend to be declared is determined by reference to Genesis':
- working capital requirements;
- medium-term fixed asset expenditure programme;
- investment in new business opportunities; and
- risk profile, taking into account the sustainable financial structure for the business and considering predictions of short and medium-term economic and market conditions.
Subject to the above circumstances that, from year to year, may affect the quantum of dividend paid, it is Genesis' intention to maintain dividends in real terms and grow where appropriate.
Genesis Energy intends to pay dividends semi-annually, typically in April and October of each year.
They're full of it. Never in their history have they ever correctly matched the dividend increase to the rate of inflation. Its always been less. As for growing it in real terms, yeah, a whole herd of pink pigs might fly by my office one day.
What does return to market rates after FY28 mean ?
See footnotes from recent half year announcement.
Market rates what ? compared to others in the sector ?
I think those buying for the income need to sit down and have a good long think about what their average income from GNE might be over the next 10 years. Sorry, but to me, the medium term future of dividends appears to be about as clear as mud
I thought they just rang up the Minister of Finance and asked how much they wanted this year. ;D
Quote from: Basil on Mar 05, 2026, 02:14 PMThey're full of it. Never in their history have they ever correctly matched the dividend increase to the rate of inflation. Its always been less. As for growing it in real terms, yeah, a whole herd of pink pigs might fly by my office one day.
What does return to market rates after FY28 mean ?
See footnotes from recent half year announcement.
Market rates what ? compared to others in the sector ?
I think those buying for the income need to sit down and have a good long think about what their average income from GNE might be over the next 10 years. Sorry, but to me, the medium term future of dividends appears to be about as clear as mud
Agree with your thoughts Basil
The FY26 divie will probably be around 14 cents a share again - they could risk pissing off shareholders by reducing it could they
Come FY27 the divie will be 12 cents - wonder what share price will be in a years time under that scenario
Based on paying out about 38% of EBITDAF at best - probably will only be able afford $160m payout
Quote from: Basil on Mar 05, 2026, 02:14 PMThey're full of it. Never in their history have they ever correctly matched the dividend increase to the rate of inflation. Its always been less. As for growing it in real terms, yeah, a whole herd of pink pigs might fly by my office one day.
What does return to market rates after FY28 mean ?
See footnotes from recent half year announcement.
Market rates what ? compared to others in the sector ?
I think those buying for the income need to sit down and have a good long think about what their average income from GNE might be over the next 10 years. Sorry, but to me, the medium term future of dividends appears to be about as clear as mud
You will never ever ever touch this company was your position for ages. All the same tired, irrelevant and just plain incorrect reasons, how this was a bad company to invest in, that you previously documented in this thread. Then you buy in??
Here's a suggestion for you. They have an investor contact listed. Why dont you call him and educate yourself? Or ask questions at the annual results presentation? I use both of these to drill down into various areas of the business
Like most other investors, i do my own research. And my conclusion is different to yours
Lot of heat in this thread so let me try to bring some light with the actual numbers.
The cut that already happened
Before arguing about future dividends, let's acknowledge the elephant in the room — Genesis already slashed the dividend in FY24. It went from 17.6 cps in FY23 down to 14.0 cps in FY24. That's a 20.5% cut. That's the "reset to 14 cps in real terms as at 2023" they keep referring to. It already happened.
Is Basil right that they've never matched inflation?
On the historical record, largely yes. From FY17 to FY23, dividends went from 16.6 to 17.6 cps — roughly 6% total growth over six years, call it 1% per annum. NZ cumulative CPI over the same period was somewhere around 20-25%. Not even in the same postcode.
Post-reset, it's closer but still slightly short. FY25 grew about 2.1% vs CPI of roughly 2.5-3%. FY26 is tracking about 1.2% growth vs CPI of about 2-2.5%. Better than before, but the "real terms" promise still isn't being perfectly delivered. So the pink pigs comment is harsh, but the track record backs it up. Fair point Basil.
Will the dividend drop to 12 cps in FY27?
No factual basis for this. The logic of "38% of EBITDAF divided by 1,300m shares" has a fundamental problem — dividends aren't paid from EBITDAF, they're paid from cash flow. Operating free cash flow was $183m in H1 alone, annualising to roughly $366m. That comfortably covers approximately $188m in total dividends at the current per-share rate on the enlarged share count.
Genesis has explicitly committed to the fixed policy through FY28. They literally just reaffirmed it during the equity raise two weeks ago. The Crown — which owns 51% — just backed a $400m raise. They're not going to support that and then accept a dividend cut 12 months later. The entire point of raising equity rather than just leveraging up was to fund growth WITHOUT cutting the dividend.
What does "return to market rates after FY28" actually mean?
This is where Basil has a genuine point, and I'll give credit where it's due — the post-FY28 outlook really is unclear. The exact footnote from the investor presentation says the Board's expectation is that Genesis "may return to a more market-aligned policy beyond this period, although that will be a decision for the Board at that time."
Other NZ gentailers typically pay 70-90% of free cash flow. If Genesis shifts to a similar approach post-FY28, it could go either way. If the growth programme delivers and EBITDAF hits the $650-750m FY32 target with generation costs dropping from $82 to $60/MWh, free cash flow should be substantially higher and could support higher dividends. But if they're still in heavy capex mode, a payout ratio approach could mean a lower per-share number even on higher earnings.
So "clear as mud" post-FY28? Honestly, that's fair. Nobody knows what "market-aligned" means in practice until we get there.
The bottom line
"Never matched inflation" — mostly true on the historical record, and even post-reset it's been slightly short.
"Dividend dropping to 12 cps in FY27" — no factual basis, policy is committed and cash flow covers it.
"Post-FY28 is uncertain" — fair point, genuinely ambiguous.
"Capital raise is positive" — agreed, it funds real growth with Crown backing.
Through FY28, the dividend at roughly 14.5 cps is about as secure as any equity dividend gets — Crown backing, explicit policy, strong cash flow coverage. After FY28 is genuinely uncertain, but if the growth investments deliver, the direction should be upward not downward.
At $2.05 via the rights offer you're getting about a 7.1% fully imputed yield for the known policy period. The actual risk isn't the FY26-28 dividend. The real question is whether the $2bn growth programme delivers the earnings to support whatever comes after that.
Quote from: entrep on Mar 05, 2026, 09:27 AMGenesis has a fixed dividend policy of ~14.6 cps through FY28. The board reconfirmed this alongside the raise. They're not cutting DPS. The whole point of raising equity is to fund growth that supports (and eventually grows) that dividend. More shares, yes, but the per-share dividend stays the same.
At $2.21 that's a 6.6% gross yield. At $2.05 on your rights shares, it's 7.1%. Both are attractive.
My understanding is that the dividend will go up a bit this year, in FY27 and FY28, not by as much as inflation, it never does but its likely to go up a bit.
Average of 4 analysts covering it is FY26, 14.68 cps, FY27 14.93 cps, FY28 15.15 cps. https://www.marketscreener.com/quote/stock/GENESIS-ENERGY-LIMITED-17595957/finances/
They now seem to be making enough to cover the full imputation credit so grossing those up for full imputation credits that becomes (rounded) 20.4 cps 9.1% gross yield for FY26 at $2.25, 20.7 cps 9.2% gross for FY27, 21 cps 9.3% gross for FY28. I still think its anyone's guess after that as they're giving no real insight as to what it could be.
At the issue price of $2.05 those gross yields become FY26 9.95%, FY27 10.1%, FY28 10.24%. Is it a dividend trap though ?....that's the real question and I have no insight as to the answer. Disc: Modest 4.5% portfolio position.
Basil, those forecasts - average of 4 analysts covering it is FY26, 14.68 cps, FY27 14.93 cps, FY28 15.15 cps.
I'd hazard a guess they came up with those before the cap raise
When account for new shares I'd say they'll go down to 12 / 13 cents odd
You could be right mate but that's not my read on it. They seem committed to maintaing their present dividend policy of promising to increase dividends in line with inflation, while based on their long term track recod, skimming a bit off the inflation rate each year until FY28. After that its anyone's guess ?
For me how well they achieve the transition to new generation infrastructure, and consequently the drop in their generation costs is going to in large part determine where the 3 - 4 year value of the shares sit.
winners post 898 above might sit with it but simply wall street indicating alert of drop in average of analysts PT drops from $3 to $2.63, on doubts of future EPS etc. At same time CEN went the other way. umh ?
For me a long time to go to assess the merits of GNE, gut still says it might be a value BUY at times over the next few years. Got an underlying dividend yield to prop the SP up to some extent for all the ups and downs, it is what it is, not the gem of gentailers but maybe where the value in the sector sits, and to be seen in a few years time ???
Quote from: Basil on Mar 06, 2026, 07:37 AMYou could be right mate but that's not my read on it. They seem committed to maintaing their present dividend policy of promising to increase dividends in line with inflation, while based on their long term track recod, skimming a bit off the inflation rate each year until FY28. After that its anyone's guess ?
One thing is the final divie for F26 will be as expected ....they wouldn't dare cut it so soon after a cap raise would they
Doing a "heartland" has terrible optics, I agree. I think most retail investors are blissfully unaware of the risks of another dividend reset, others might be thinking even if the gross yield declines to 6-7% in due course at least that's now mostly from renewable resources so the chances of yet another reset are lower. Others might feel good about the improved ESG profile of GNE going forward. Maybe the dirty coal discount comes off the share price in the years ahead ?
Yield has always been high (esp relative to other in sector) because the market perceives Genesis as a 'risky' investment
Like you Basil unsure what to do with rights ....don't see much upside so probably will give it a miss and just suffer the loss of wealth that has occurred over the last week or so.
Probably partaking a no brainer for the likes of xafalcon with his 27,500 entitlement ...got to keep the love and commitment going.
Everyone's talking about AI energy demand (and I 110% believe this is coming in the next 5-10 years max) as a tailwind for utilities globally. But how realistic is this for Genesis specifically? NZ has a heavily regulated electricity market: regulated lines charges, an Electricity Authority focused on competition and affordability, and a government that's politically sensitive to power prices. Even if data centre demand materialises here, Genesis can't just pass through higher wholesale prices the way an unregulated generator might. So is the real play here simply that more demand underwrites their ~$2bn generation pipeline and gives them volume growth, rather than pricing power? Or am I being too cautious?
Vast amounts of new generation coming through from all the Gentailiers. Hard, (impossible ?) to know if returns on capital are going to be acceptable in the future.
The whole Gen35 thing seems ESG / Kupe generation replacement motivated. Suppose we just accept the high yield for the next few years and then try and convince ourselves we should feel are warm and fuzzy inside when the yield is lower because we've been supporting more environmentally friendly generation.
Is 6-7% possible future yield okay if through wonderful new ESG generation you feel all warm and fuzzy inside and get to have metaphorical cuddles with polar bears ? I suppose the yield is pretty safe from all the ructions going on in the middle east, that's one good thing.
But is this just a metaphorical possum in the roof of my portfolio ? I don't know but I sure feel like one stuck in the headlights lol
https://www.youtube.com/watch?v=GkncjNn-ygE
Does Operating Cash Flow or EBITDAF drive Dividend decisions at Genesis
EBITDAF (for all its sins) is a proxy for Operating Cash Flow. I reckon that's the key guide as to where divies might go in the future'
I threw these numbers together to get a feel for how things go. Might enlighten some.
I reckon they can afford $180m in dividends in F26. This implies they might be able to squeeze another 7.5 cents as a final dividend
Going forward they better perform a lot better or else 14 cents is unlikely
Observation- EBITDAF is a bit up and down eh
Screenshot 2026-03-06 102245.png
Gosh if you put a value on the Kupe field at current spot prices for oil and gas it would be worth quite a lot more than last month.
AI:
What We Know�
27.9 million shortfall shares to be sold in the bookbuild
$48.1 million in oversubscription demand from retail shareholders
Market price: $2.22
Rights price floor: $2.05
The earlier placement cleared at $2.15 (when market was ~$2.34 ex-div)
Likely Bookbuild Range: ~$2.12–$2.18�
Why not much lower than $2.12:
Strong retail oversubscription demand ($48.1m) puts a floor under the price
The placement cleared at $2.15 just a few weeks ago
Only 27.9m shares — not a huge amount to clear
Why not $2.22 (full market price):
Institutional bidders will demand some discount to participate
That's how bookbuilds work — there has to be a reason for institutions to bid
Scaling�
You'll likely get scaled back. The $48.1m in retail oversubscription alone nearly covers the $57m shortfall, before any institutional bids. Don't expect to get everything you applied for.
Bonus 17 cents good stuff - more than a years dividend lol
I didn't need any more GNE shares ...had enough so didn't participate ..but heck I've been diluted I'm told but don't think I'll notice
Thanks Genesis
Shortfall bookbuild completed at $2.22 per share. Those like Winner and I that chose not to participate will get a bonus dividend of 17 cents per eligible share. Happy with that.
Too high for my liking, wish I didn't participate now. Curious to know what the scaling will be like. Must be massive that high.
Retail fxxed over as usual...
WHAT THE DATA TELLS US�
The full picture across the entire $400m raise:
Institutional Placement (February): $2.15 per share — retail shareholders received approximately 7% of the allocation they applied for
Rights Offer (March): $2.05 per share — full entitlement available to eligible shareholders (80% total take-up including the Crown)
Shortfall Bookbuild (March): $2.22 per share — retail shareholders received 100% of their applications with no scaling, at the maximum permissible price
Read that table carefully. The cheaper the shares, the more institutions got. The most expensive shares went entirely to retail.
THE BOOKBUILD MECHANICS — WHAT ACTUALLY HAPPENED�
~27.9m shortfall shares available after 80% rights take-up
Retail had applied for $48.1m in oversubscription (~21.7m shares at $2.22)
That left only ~6.2m shares for institutions
Institutions bid the price to $2.22 — the absolute maximum permitted (equal to the Mar 19 closing price)
But institutions barely took any shares because the offer document gave retail priority
So institutions set the price but didn't bear the cost. They effectively priced the auction for retail and then stepped aside. Whether this was deliberate gaming or just how the math worked out, the outcome is the same — retail paid the highest price of any participant in the entire capital raise.
THE CONTRAST IS DAMNING�
February Placement ($2.15):
Market price: ~$2.34 (ex-div adjusted)
Discount to market: ~8%
Retail allocation: 7% of what they asked for
Institutions: got the lion's share at a good discount
March Bookbuild ($2.22):
Market price on day of announcement: ~$2.15-$2.20
Effective premium to market: +1% to +3%
Retail allocation: 100% of what they asked for
Institutions: barely participated
Retail got scraps when shares were cheap, and full bags when shares were expensive.
IS IT "GAMING" OR JUST BAD LUCK?�
Honestly, probably a bit of both:
The legitimate explanation:
The stock was genuinely at $2.22 on March 19
Geopolitical events (Middle East tensions) hammered markets over the weekend
By Monday March 23, the stock had dropped to $2.15-$2.20
Terrible timing, not manipulation
The structural problem:
The bookbuild mechanism allows institutions to set the price without bearing proportional risk
One institution bidding $2.22 on a small volume can set the clearing price for ALL retail oversubscribers
The offer document prioritises retail allocation — but at whatever price institutions set
This creates a perverse incentive: institutions can push the price up knowing retail absorbs the cost
The cynical read:
Jarden (the underwriter) runs the placement AND the bookbuild
Their institutional clients got $2.15 in February with priority allocation
Those same institutions then set the bookbuild at $2.22 for retail
Jarden earns fees on the total raise — higher bookbuild price = more money raised = more fees
I can't prove manipulation, but the structure is inherently tilted against retail.
THE SILVER LINING (SMALL)�
Non-participating shareholders get $0.17 per right in surplus proceeds
If you took up your rights at $2.05 AND got additional at $2.22, your blended average across the whole raise is still reasonable
The stock should find support around $2.15-$2.20 once the capital raise dust settles
MY HONEST TAKE�
Were retail investors treated fairly? No. The structure systematically disadvantaged them — underfed at $2.15, overfed at $2.22. The mechanics may have been "by the book," but the outcome is exactly the kind of thing that erodes retail trust in capital markets.
Should you panic? No. If you bought at $2.05 (rights) and $2.22 (oversubscription), your blended cost is probably around $2.10-$2.12 depending on proportions. The investment case hasn't changed — you're still getting ~6.6% yield with a credible growth story. The $2.22 stings right now but will matter less in 12 months if the stock moves toward $2.30-$2.50.
Should the process be reformed? Absolutely. NZSA should push for bookbuild mechanisms that don't allow institutions to set prices for retail without taking proportional allocation. This is a known structural problem in NZ capital markets.
Might put today's regular dividend and my bonus 17 cps dividend towards an EV.
Quote from: Basil on Mar 25, 2026, 12:55 PMMight put today's regular dividend and my bonus 17 cps dividend towards an EV.
Zhis vun, Evie, might zuit you Basil. She has been out of ze ad campaigns vor a vhile zo could be vor zale? A volly of Vraser Vineray, 2CEOs back?
https://www.youtube.com/watch?v=ODAZLJMuSe8&t=86s
RB
Maybe I am just too early to do my paperwork ... but here is a dumb question:
Do we need to pay taxes on the shortfall bookbuild premium payment? It's not a dividend, isn't it, and we didn't even sell a share (i.e. its not a sales profit either)?
Anybody knows?
Its crystal clear to me its a capital repayment and non taxable. The fact that RWT was not deducted tells you all you need to know.
Quote from: Basil on Mar 25, 2026, 12:55 PMMight put today's regular dividend and my bonus 17 cps dividend towards an EV.
Have you received your "bonus" 17cps, yet .?
Wife's is not showing up in her a/c this morning.
Divie went through OK.
Yes it came through yesterday.
Quote from: Basil on Apr 01, 2026, 12:04 PMIts crystal clear to me its a capital repayment and non taxable. The fact that RWT was not deducted tells you all you need to know.
cheers - all good.
Quote from: lorraina on Apr 01, 2026, 12:32 PMHave you received your "bonus" 17cps, yet .?
Wife's is not showing up in her a/c this morning.
Divie went through OK.
Have two different accounts, and both got their payments yesterday (ANZ as well as ASB). Maybe just a slower bank?
Thanks for your reply.
Wife has a Westpac Savings a/c but it is not accessible online.
I get her balance via an ATM.
Quote from: lorraina on Apr 01, 2026, 03:18 PMThanks for your reply.
Wife has a Westpac Savings a/c but it is not accessible online.
I get her balance via an ATM.
I find it very hard to believe that a Westpac account is not accessible online...
But wait there's more.
Wife can not use a computer,and I can not use a cell phone..
Quote from: lorraina on Apr 01, 2026, 03:18 PMThanks for your reply.
Wife has a Westpac Savings a/c but it is not accessible online.
I get her balance via an ATM.
If it's significant I might be inclined to proactively inquire of Westpac, don't give them cause for alarm, but I understand there maybe currently a few more international led banking expectations being imposed on the banking systems and some things may not function quite as seamless as they once did. It maybe somehow flagged as different to a standard dividend would be and now being a non transactional account as recipient uses a savings account it maybe set aside for some sort of review before release. Ultimately it maybe best to let Westpac go through their processes, yet wouldn't hurt to ensure they are aware of it being a normal legitimate transaction received. In past a few horror stories arise internationally where caution seems to be paranioa on bank staff part and leaves long term clients effectively shut out of the banking system totally, hope NZ Banks don't replicate. FATCA AML isn't a one and done thing as I had once hoped.
Quote from: lorraina on Apr 01, 2026, 03:18 PMThanks for your reply.
Wife has a Westpac Savings a/c but it is not accessible online.
I get her balance via an ATM.
So ATMs still exist ...thought they were a relic of the past
Quote from: lorraina on Apr 01, 2026, 03:18 PMThanks for your reply.
Wife has a Westpac Savings a/c but it is not accessible online.
I get her balance via an ATM.
All accounts are accessable on line if you have access set up correctly.
Quote from: winner (n) on Apr 02, 2026, 07:44 AMSo ATMs still exist ...thought they were a relic of the past
RBNZ doesn't think so ....
https://newsroom.co.nz/2026/03/03/reserve-bank-drifts-out-of-its-lane-again/
Miserable summer weather with too much rain is a tailwind for GNE with all the extra water displacing thermal generation and EBITDAF guidance range for FY26 is raised by $25m. Participants in the recent capital raise at $2.05 will be happy. Auckland branch of shareholders association is running a company visit to Huntly power station on 13 May. For health and safety reasons only 20 participants. I put my hand up really quickly because ever since I was a kid I have wanted to go for a tour through there and was very fortunate to get a spot on the list. CEO and other company representatives will be there. Very limited Q&A time but I will be curious to know the economics of the new BESS battery system, and have always wondered how long a life they can eek those Rankine units out for with sparing use and lots of TLC. Should be a very interesting day. Good to go into a company visit like this after a profit upgrade, happiness all round.
QuoteFY26 Q3 Performance Report and Updated Guidance
23/04/2026, 08:30 NZST, MKTUPDTE
Genesis Energy delivered a strong operating performance during the third quarter ended 31 March 2026 and continues to execute well against its Gen35 strategy. Strong operational performance was supported by above-average storage levels throughout the quarter. National lake levels are currently sitting at 117% of average (as at 21 April 2026), providing strong momentum heading into Q4.
Q3 FY26 Performance highlights
• Hydro generation of 745 GWh, up 264 GWh on pcp, supported by favourable hydrology and above-average storage levels through the quarter.
• Thermal generation of 236 GWh, down 716 GWh on pcp, as Unit 5 remained largely offline due to market conditions and disciplined fuel management, with available gas redirected to higher-value industrial customers.
• Total customers of 491,532, down 6.6% on pcp, reflecting ongoing portfolio optimisation as Genesis prioritises margin quality over volume.
• Electricity netback of $173/MWh, up 11.2% on pcp, driven by improved pricing outcomes and a continued focus on margin quality, including portfolio optimisation and value-over-volume strategies.
• Total electricity sales of 1,380 GWh, down 94 GWh on pcp, primarily reflecting lower customer numbers and a deliberate shift toward higher-value segments.
• The coal stockpile remains high at >1 million tonnes, with supply chains stable and replacement coal not currently impacted by export restrictions, supporting security of supply.
• Kupe production impacted by unplanned outages, with underlying performance otherwise in line with operator expectations.
Strategic progress
Genesis continues to make progress on its Gen35 strategy, including:
• Advancement of battery energy storage system (BESS) at Huntly, with Stage 1 nearing commissioning and Stage 2 reaching FID.
• Continued progress across the solar development pipeline, including construction commencement at Tihori (Edgecumbe) and further advancement at Leeston and Rangiriri.
• Tariki Gas Storage preliminary economic evaluation completed, with technical studies and joint venture discussions progressing.
• Progress on digital transformation programmes, including billing and CRM platform upgrades through release 2 and 3.
• Agreement with Natures Flame executed to validate project economics and support ongoing development of Biomass
• Ongoing development of customer flexibility and electrification initiatives, including growth in EV plan customers
These initiatives support Genesis' transition to a more flexible, lower-emissions generation portfolio while enhancing customer offerings.
Customer portfolio
During the quarter, Genesis completed the integration of Frank into the Genesis brand, consolidating its retail offering under a single brand and simplifying the customer proposition.
The reduction in customer numbers reflects Genesis' targeted rebalancing of supply and demand, with a continued focus on improving margin quality across the portfolio. This approach is beginning to unlock value through improved unit economics and more efficient allocation of energy resources.
Outlook and guidance
Genesis Energy has updated its FY26 normalised EBITDAF guidance to $515 million–$545 million, from $490 million–$520 million. All other FY26 guidance remains unchanged.
The guidance update is driven primarily by strong cost discipline, improved hydrology and more favourable wholesale market conditions, supporting reduced thermal generation and lower fuel and carbon costs.
This guidance remains subject to hydrological conditions, gas availability and pricing, plant reliability, and no material changes to market conditions.
Bit bored on a cold Friday so I updated the GNE Divie yield v 5 Year Govt stock correlation
10 Year still up at 4.7% - which implies GNE share price should be about $2.15/$2.20 if 'fairly priced'based on the historical spread
Could also mean punters see GNE 'less risky' now or even the ESG discount unwinding
Be interested to see where the share price goes over the next few months
I had the full GNE immersive experience this week and I think its about fairly priced. I've heard the full story and I think it deserves a lower risk premium which explains why the share price is where it is.
As 10 Year NZ Govt gets closer and closer to 5.0% by the hour it seems the GNE share price starts to fall
Spooky as eh possums
Craigs have released a comprehensive paper outlining that based on valuing GNE's hydro assets at the same multiple as its peers, you're almost getting all GNE's other assets for free. I had a good read through this today and they make some excellent points and the research looks sound.
If I recall correctly a couple of years ago Jarden opinioned along similar lines.
Craigs outlined the execution risk of creating so much generation to displace legacy generation assets in the next 6 years.
Their price target is $3 but I note they are the outlier with the consensus price target at $2.58.
Interestingly in Craigs view dividend growth can recommence after the fixed period that we're currently in subject to inflation adjustments, from FY29 onward.
I am not entirely convinced and think their debt will be pushing up towards the top end of the comfort zone as the development of their full suite of ~ $2 Billion of new renewable assets reaches a conclusion in FY32.
That said, its an interesting one from a dividend hounds perspective because not only do they have the highest yield by a country mile compared to the other Gentailiers, its appears they can maintain this in the medium term after they roll out their full suite of new renewable assets and then money made from legacy assets for as long as they last is cream on top of what looks like a fairly tasty cappuccino.
I've rethought my investment thesis and come to the initial conclusion that this will probably remain a sound dividend hounds investment for the foreseeable future despite the relatively limited life of GNE's legacy assets.. I'm a real doubting Thomas about Craigs estimate of 21 cps dividends in FY32 but I believe its plausible they could maintain their current trajectory of nearly matching annual inflation adjustments for future dividends from their current lower base.
Its still a mystery to me why the board promises they will match inflation adjustments but never quite gets there. This pattern goes right back to when they were first listed. Its puts me off a bit however I think they're a sound hold here. Time will tell if they can get back to $3. I have serious reservations about that and my gut tells me the consensus analyst target price of $2.58 seems far more plausible. I'd be very happy for GNE to prove me wrong of course.
Noting too, the chart looks pretty good and it busted out to a fresh 1 year high last Friday. A long way to go to get back to its glory days of $3.90 though.