Forum Archive Index - February 2004

[Charlie Harvey <cd@pl.net>]

Hello Hugh

I don't think there is anything fundamentally wrong with NZX:CEN (Contact).
To the contrary it is an outstanding utility to have tucked in your
portfolio. The local energy market is not showing any odd signals and other
utilities are pretty even this morning (NGC Holdings, Trustpower & Powerco).

The question mark is over the possible disposal of Edison's interest in CEN.
The parent company is calling for closed offers on all Pacific assets.
Bundled into that is the CEN stake. With the US/NZ cross rate making
repatriation of funds even more attractive from the Edison perspective, it
makes sense that CEN is high on the disposal list.

Trouble is other US utilities are similarly poised. They too are sellers in
the region. For example I understand Enron must sell assets in
Australia/Asia. The urgency behind that one is driven by the courts and so
the overall buyer demand is weakened by the generous supply. With other US
utility investors being unlikely buyers it leaves bidding mainly to a few
Malaysian & Australian investment groups.

I'm going to be weighting more of my portfolio in the direction of utilities
over the next two months in anticipation of a bit of a contraction in growth
stocks in the second half. I like NGC & CEN on the NZX plus AGL(Australian
Gas & Light) and ORG(Origin Energy) on the ASX. Also, on the ASX, keep an
eye on developments at PHY(Pacific Hydro) and GDY (Geodynamics).

GDY is involved in HDR (Hot Dry Rock) technology. This makes our NZ
geothermal energy extraction methods look archaic. It's early days but worth
checking out.



All the best

Charles

Discl: Hold NGC & CEN


 

 


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