Warm winds blow TrustPower's way

SHARE OF THE WEEK

Friday 23rd April 2004

When a company announces it expects its assets to have increased by $420 million you would think investors would get more than six lines in a Stock Exchange release.

Not so from TrustPower - although its shareholders are not likely to mind much: The value of their shares has more than doubled in the last 12 months amid surging power prices and attention moving to alternative fuel sources.

But the lack of detail in the company's recent asset revaluation release does make it difficult to come up with an overall valuation for the shares.

The Mt Maunganui-based company is a generator and retailer with 34 hydro-generation sites spread from Bay of Plenty to Southland. It also owns the largest windfarm in the country, near Palmerston North.

TrustPower has grown rapidly through acquisition. Last year the company had $1 billion of assets, indicating the recent revaluation equates to a near 50% gain in electricity generating assets. Sales totalled $663 million last year, up from $428 million in the 1999/2000 year. After-tax profit was $47 million, up from $1.3 million the previous year.

First NZ Capital has downgraded its rating on the stock from outperform to neutral due to the recent relative share price movements. Since April 1, it notes, TrustPower's share price has risen 16.9%, while the NZ50 gross index has increased 0.4%.

The brokerage has a 12-month target of $3.84 compared with last week's high of $4.20.

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