Daily ShareChat: New Zealand Windfarms

By Jenny Ruth

Thursday 12th May 2011

New Zealand Windfarms' third quarter operating statistics "again underwhelmed with a relatively low capacity factor and the average prices received was at an alarmingly high discount to underlying wholesale prices," says Andrew Harvey-Green, an analyst at Forsyth Barr.

While third quarter output was up 13% to 22.7 gigawatt hours, that was expected as the extension continues to be built, Harvey-Green says. He estimates capacity was up 27.7%.

"Whilst wind conditions were low during the quarter, we are increasingly concerned that long-run output is going to be materially lower than(the) prospectus output of 153 gigawatt hours and our current assumption of 149 gigawatt hours," he says.

As well as the low output, the average price received of $33 per megawatt hour was about 28% lower than the average Haywards price during the same quarter, after adjusting for the March 26 price spike.

"Wind farms normally receive a discount to the average Haywards price because they are price takers but the third quarter discount is significantly higher than normal," Harvey-Green says.

Still, the discount varies over time, and is sometimes even a premium, so it is too early to adjust his long-term assumption just yet, he says.

Nevertheless, he has raised his forecast net loss for the year ending June to $2.7 million from $2.2 million previously and compared with the $0.1 million net profit forecast in the prospectus.

Recommendation: Hold (downgraded from Accumulate).

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