Forum Archive Index - April 2000

[Chris Darby <darby@ak.planet.gen.nz>]

I too have been watching CEN for buy signals but am not entirely 
convinced.  Other matters to consider with CEN's weakness as I see it 
include;

- general international weakness of electricity/gas utility stocks and 
Edison particularly.
- ongoing privatisation of this sector in E Europe has big players 
focussed elsewhere.
- lots to choose from on the NZSE, eg FEG, TPW, TLT, IFT, NCH/NCNRA.
- NCH capital raising of $366 by 4:5 rights issue requires institutions 
to reweight their  energy portfolio.  This will be out of the way early 
next week.
- uncertainties resurfacing about longevity of the Maui gas supply.  As 
little as 5 years say some analysts.  Pohokura discovery appears less 
certain and last years much lauded E Coast discovery has disappeared from 
the headlines.  This all has implications for CEN's gas assets, esp. 
Huntly and Otahuhu gas generation plants.
- the sector shakeout in NZ is almost complete and strategic stakes are 
nailed home.
- how long and how far reaching will the Government enquiry be.

All said, I still consider CEN cheap.  Just got to balance it with the 
reasons I guess.

Regards, 
Chris   

>Osbert Sun wrote:
>> 
>> I suppose that you all have read the article in NZ Herald this morning
>> about the intention of Edison Mission to increase its holdings in
>> Contact Energy. Yes the recent sell-down in CEN shares has provided a
>> golden opportunity for Edison Mission to seek control of the company
>> as it has always intended. For a company with quality assets, dominant
>> market position, and long term prospects such as Contact Energy, the
>> current share price doesn't really do its justice. Yesterday's large
>> trading in CEN was related mainly to oversea's funds existing their
>> positions. CAH and Fletcher camp suffered the same fate if anyone
>> cares to observe. Well enough said about CEN. I guess the focus of the
>> day will be FRO. An interesting day ahead?
>> 
>> Kind regards,
>> Osbert Sun
>
>Hi Osbert,
>
>If Edison try to get the remainder of the shares, the price might go
>up.  Edison are not swimming in cash.  What if the unthinkable happens
>and they have to flick some/all of their shares?  What does that do to
>the share price?  I dunno, the fundamentals are moderate to good, but
>while some traders love a bit of volatility, uncertainty and guessing
>games, i'm not sure I do.  I do concede tho that the current share price
>is low and attractive if you are prepared to ride out the prospect of it
>falling further.
>
>Cheers,
>Phil

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