Mighty River Power small shareholders - who have seen their shares in the company tumble since listing - realise they're investing for the long term, the company's chairwoman chairwoman Joan Withers says.
She said the proportion of small retail investors had increased since 49 per cent of the company was listed last May and had a wider view of what had happened to the share price in the first nine months.
"Most people who had bought were there for the long term," she said following the release of the company's interim result today.
Mighty River was the first state-owned power company partially privatised last year, increased first-half earnings 3.7 per cent as it clamped down on costs in the worst hydro conditions in the past 14 years.
Net profit climbed 64 per cent to $123.7 million on lower operating costs and one-off gains in the value of financial instruments. Operating costs fell 24 per cent to $107.8 million, with permanent savings achieved in maintenance costs, professional fees and administration expenses.
Shares dropped from the offer price of $2.50 soon after listing and have dipped as low as $1.95 although were trading as high as $2.07 this morning.
Many first-time investors were among the 113,000 attracted to the offer, with 43,000 spending $2500 or less.
Withers said the shares were hit by a "perfect storm."
The Labour-Greens policy - which would introduce a single buyer in the electricity market and affect generator's earnings - was announced about two weeks before the float.
"The market was told the bare bones of the policy but I don't think it factored all of the potential elements of that. So you've seen even post the Meridian float the further effect on the share price."
There was uncertainty about the impact of transmission pricing methodology and the renegotiation of the Rio Tinto's Tiwai contract.
"One might have anticipated the (Tiwai) announcement would have created some certainty and been helpful it made people realise there could be more change in a shorter time frame than there had been.
There had also been a change in investor focus to growth stocks from yield stocks such as utilities in the past year.
Withers said there was not much the company could do about the share price.
"What we're continuing to focus on is the IPO forecast. Barring any detrimental hydrology or one-off catastrophic events we will make that forecast -
that's really as much as we can do."
Mighty River will pay an interim dividend of 5.2c a share, meaning those who spent $2500 in the initial offer will be receive a fully imputed dividend of $52 on March 31. The interim dividend is up 8 per cent on last year, in line with IPO forecasts.
The total dividend for the full year is forecast to be 13c a share, giving a return of 5.2 per cent return on shares bought at $2.50.
Full year net profit is expected to exceed prospectus forecasts by $35 million but when asked whether this could mean a boost in full year dividends, Withers said; "we're very comfortable with where we're at with that dividend forecast."