Sunday, November 7, 2010

Vector Ltd: Share Price chasing fibre network success

Vector Ltd [VCT.NZX] is not a sexy stock. It is an electricity lines company run largely by so,so management appointed under a quasi local government regime, with a small public shareholding.

What has been sexy though is the share price rise over the last two months. (see two month chart above) The stock has risen from just over $2.05 back in September to finish at $2.43 at close of business last Friday. Just under 20%.

Its full year result to June 2010 was a good one but the stock price didn't take off until mid September (see 6 month chart below) and it has been going northwards since.

Much speculation has been made as to whether VCTs bid to become a player in the roll-out of a taxpayer funded fast internet fibre laying programme and the management of that network with Vector branded internet customers providing additional income for the company but the jury is still out as to whether the company will be a player and even if they are just how profitable such a network might be for them.

This market speculation, I think, is the reason behind the share price rise. It isn't warranted and even when the facts come out about who the winners and losers will be in the battle for taxpayer moola to install and manage "fast broadband" it will be sometime before we see if it will be a money spinner for anyone.

Vector @ Share Investor

Long Term View: Vector Ltd
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c Share Investor 2010

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