Forum Archive Index - December 2002

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Robert,
 
>
>Any comments or recommendations re BUY/HOLD/SELL for Contact Energy
>and Natural Gas Corp. I'm in Australia!
> 
>

Well, if you wanted to invest in the New Zealand retail gas sector, 
you just about summed it up!

If you choose CEN you get a few electricity power stations and retail 
customers thrown in as well.  CEN is under a perpetual threat of rape 
by majority shareholder Edison Mission Energy from the USA.  This 
ensures a good dividend flow from the company, but means there are 
seasonal threats to put the company on negative credit watch.  

CEN are looking at buying power station stations in Australia as part 
of a vision of long term growth.  So far they haven't found anything 
at the right price.  It is very heartening that CEN should retain 
such management discipline.  The prevailing corporate culture in 
kiwiland is to expand no matter what and see if it is a good idea 
later!  The share price is trading near an all time high for the 
year.  But take off the imminent 15c per share dividend payment and 
it starts to look more reasonable in price.  I'd describe CEN as a 
solid portfolio cornerstone blue chip.   Profit warning for the first 
few months of this financial year, due to weather factors, but this 
should not be of concern to the long term investor.  I'd rate it as a 
moderate BUY/strong HOLD.

NCH is the rump of what was New Zealand's largest energy retailer.  
With the electricity retailing business sold, and the power 
stations on the market NCH is poised for a future as a gas pipeline 
owner and retailer only.  Much of the current run up in price I 
believe is due to the prospect of a capital return rather than any 
inherent sudden strength in the business.  If I held these shares I'd 
be hanging on waiting for my payout, but would I be buying in at this 
late stage?  IMO there are better opportunities elsewhere in the 
market out there.  I'd rate it a HOLD, perhaps a SELL into any price 
spike.

Good to welcome a new poster here Robert.  Maybe you might like to 
give us a snapshot view of the gas market in Australia?

SNOOPY

discl: hold CEN



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