Forum Archive Index - July 2001

["Grant Keymer" <grant@jenlogix.co.nz>]

Hi Peter,

 

You're right, CEN should be getting more attention than it has.  When EME's stand in the market came up a month or so back, I looked at the various options open, and noted advice from various brokers suggesting shareholders should sell as the offer price was close to their current valuation at that time $3.24).

 

Yet, at the same time I noted that the non-executive directors were not selling.  I decided that there had to be more upside in this share if one was prepared to wait a year or two.

Meanwhile, the dividend yield is pretty attractive!  :)

 

All of that was before this cold winter set in, and in fact the pundits at that time were predicting a warm winter.

Talk about get it wrong!

 

Nearly every day this week, as the days have got colder and colder, CEN's share price has risen little by little.

Yesterday it touched $3.10 but got sold down by profit-takers towards the close.

Today a whole bunch of sellers were waiting again at $3.10, but they got cleaned out and we closed at $3.14.

All of which makes me very happy for sure  :D

 

Today I received some updated research from ABN Amro Craigs.  Here are the main points:

• Having reviewed all the companies in the Utilities sector, they have concluded CEN is the pick of the litter
• CEN's long generation position will enable it to significantly profit from the current situation
• There is a genunie asset play with NCH and a "cash rich" CEN maybe a net beneficiary of this situation
• However, a caution was mentioned that the current electricity crisis will be short-lived and it will almost certainly be followed by an extended period of excess capacity, possibly exacerbated by building of new plant in the next 3 or 4 years
• Recommendation BUY, Valuation $3.42

In closing, ABN Amro's research document said:

• Given the low current interest rate environment, CEN's high yield makes it a superb low risk place to park money

If that's not a glowing recommendation, I don't know what is.  :D

 

Disc.  Hold (lots of) CEN

 

Cheers

 
Grant Keymer
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