Powering up the stock market

By PAULA OLIVER

A big year for Taranaki electricity company Powerco is about to get even bigger, with indications that it will fill a top 40 position when it lists on the Stock Exchange today.

About 13 per cent of the lines company's total stock has been open to public and institutional investors over the past two weeks, and shares are expected to begin trading today at between $1.30 and $1.50.

Chief executive Steven Boulton said yesterday that the listing capped off a huge year for Powerco that included a merger with Palmerston North's CentralPower and internal restructuring.

"Most organisations in New Zealand take on one of those changes sometime in their organisational life, but we've taken on all three, in parallel," he said. "So it's been a big year."

New Plymouth-based Powerco is a lines and gas pipes operator, with 175,000 connections spread between Taranaki, Manawatu and Wairarapa.

Today's listing comes about after two shareholders, infrastructure investor Infratil and power company Alliant, decided to opt out of the company to pursue interests in power generation and retaining.

Powerco management say the company's growth could lie in managing water, wastewater or telecommunications assets, where its experience in maintaining infrastructure is likely to be seen as valuable by other parties. Road management is also possible.

The company's major shareholder will continue to be the New Plymouth District Council, with a 47 per cent stake.

Its involvement could be crucial to Powerco's hopes of moving into water or wastewater management.

An $18.8 million profit after tax is forecast for the 2001 year, which would leave earnings per share at 8.4c.

Chairman Barry Upson expects the stock to be viewed as a high-dividend investment early on, rather than a growth stock.

"The board and management hope to change that around over the next couple of years, but certainly, based on existing businesses, the revenue is relatively consistent," he said. "You don't get the variations on income that you do with some other companies on the Stock Exchange."

A dividend of 140 per cent of profit is planned for the March 2001 year, and it is likely to be closely followed by a 125 per cent payout the following year.

The high dividends are possible, Mr Upson says, because of Powerco's tax arrangements.