Stock in Focus: Contact Energy (CEN.NZX)
Contact Energy shares were up after holding its Capital Markets Day presentation, where they said operating earnings (EBITDAF) would increase from $550m currently to $815m in 2027. Driven by increased geothermal output from Tauhara, Te Huka and Wairakei and uplift from Tiwai recontract.
We are Buy-rated on Contact as our NZ renewable energy exposure, offering an attractive dividend especially from 2025 onwards. CEN is trading on undemanding multiples compared to renewable energy peers, and pays a healthy gross dividend yield of ~6.0% (net dividend yield 4.5%).
New Zealand
The New Zealand market (NZX50, +0.9%) was up on Tuesday as the debt ceiling agreement in the US eased market jitters the last couple of weeks.
Smartpay was the best performer up +10.3% after reporting a +300% increase in net profit +62% increase in revenue on strong Australian terminal growth.
Sky City shares were up (+1%) after appointing an independent expert to monitor legal compliance at its Adelaide casino – we see worse case priced-in and risk-reward value in SKC.Metro Performance Glass reported another weak result with net loss of $10.5m, due to a $10m impairment charge against its goodwill due to lower construction activity forecast. Operating earnings doubled from last year (which was impacted by Covid restrictions) to $11.8m. Remain HOLD on the challenging outlook
Losing my Edge
A few things happen: stock in the Dutch East India Company practically collapses, and what was a solid blue-chip company for over a hundred years becomes virtually worthless. The guilder devalues a lot more, too.On the other hand, Britain’s currency starts to become worth more and the pound ends up being the reserve currency for the next hundred years or so.
Imagine you are a stockholder in 1650 (one hundred years + before collapse). You couldn’t conceive of this happening! It’s sort of almost impossible to describe just how powerful the Dutch East India company was: it’s like all the S&P 500 companies merging to create a kind of mega-corporation. And yet it too collapsed. Worth remembering the second law of thermodynamics: entropy. What goes up must come down.