# CNU - Chorus Limited



## System (22 November 2011)

Chorus Limited (CNU) is New Zealand's largest telecommunications utility provider. They maintain and build the Chorus local access network, which is made up of local telephone exchanges, cabinets and copper and fibre cables. It connects around 1.8 million New Zealand homes and businesses throughout the country.

http://www.chorus.co.nz


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## galumay (9 July 2013)

Has anybody else had a look at this company? Only created last year by the demerger from Telecom NZ and the prospects look interesting, yield is attractive, good potential for growth, some potential headwinds with regulation.

The biggest issue I had was the high debt currently being carried, but I struggled to decipher what it really meant given the demerger and structure of the new company.


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## rbgmauq (10 July 2013)

Technically, CNU has been showing support around 2.056 and resistance in the 2.34 price range. The technical indicator at au.stoxline website shows a buy.


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## galumay (10 July 2013)

rbgmauq said:


> Technically, CNU has been showing support around 2.056 and resistance in the 2.34 price range. The technical indicator at au.stoxline website shows a buy.




Thanks, I perhaps should have been more specific, I have no interest in TA, I am looking at the fundamentals of the business and trying to understand the balance sheet with regard to the debt ratio.


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## oldblue (11 July 2013)

galumay said:


> Thanks, I perhaps should have been more specific, I have no interest in TA, I am looking at the fundamentals of the business and trying to understand the balance sheet with regard to the debt ratio.




Hi galumay. Have a look at this article for a sense of the regulatory and business risks that CNU faces.

http://www.stuff.co.nz/business/opi...Any-help-for-Chorus-should-be-well-considered

Disc: I hold a few, courtesy of the split from NZ Telecom.


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## mcgrath111 (21 December 2013)

*(CNU) Chrous Limited*

Hey guys,

I've recently started investing and have chosen mostly blue chip stocks. I did however choose a couple based on comsec recommendations such as CNU.

CNU has dropped significantly due to gov regulation changes in NZ and have cancelled dividends. 

While I consider myself an investor in for the long run, should I cut my loses with this one and put the capital into something with some actual growth potential? <(That's what i'm leaning toward) However can happily wait out downturn, yet it seems a high risk investment. 

-Mike.


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## oldblue (21 December 2013)

This isn't going to help you make a decision on holding/selling, but note that it wasn't a change of govt regulations that has lead to CNU's problems. Rather, it was that the Commerce Commission made an ( adverse to CNU ) ruling which the govt had hinted that it might act to overturn/amend before it discovered that it didn't have political support to do so.

Several solutions to CNU's dilemma are being canvassed including suspending dividends for a period of x years; the introduction of a new cornerstone investor; tweaking of the big High Speed Broadband contract; an equity injection from shareholders, etc. None of these are very palatable to current shareholders. Risk remains high and CNU's shareprice remains under pressure.


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## mcgrath111 (24 December 2013)

oldblue said:


> This isn't going to help you make a decision on holding/selling, but note that it wasn't a change of govt regulations that has lead to CNU's problems. Rather, it was that the Commerce Commission made an ( adverse to CNU ) ruling which the govt had hinted that it might act to overturn/amend before it discovered that it didn't have political support to do so.
> 
> Several solutions to CNU's dilemma are being canvassed including suspending dividends for a period of x years; the introduction of a new cornerstone investor; tweaking of the big High Speed Broadband contract; an equity injection from shareholders, etc. None of these are very palatable to current shareholders. Risk remains high and CNU's shareprice remains under pressure.




Yeah can't agree more.  Recieved a letter saying the current problems,  and think I'll just have to cut my losses.  Poor management lead to a poor result and share price.


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## peter2 (15 March 2015)

Looks like corporate activities have turned the poor outlook around and the price is at yearly highs and near all time highs. 

There is a low sized risk trend continuation setup that is interesting.


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## Gordon7 (28 March 2015)

2 weeks since Peter's post and CNU continues to shape up very well for a break to the upside should it occur. 

Only issue with this one is the light volume on most days and lack of market depth. It could be through the resistance line before you even know it and leaving a Stop order may not get filled at a decent price if at all.



	

		
			
		

		
	
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## peter2 (29 May 2019)

@Gordon7  Where are you? 

Since these posts four years ago, CNU has progressed nicely. I've flagged the date of the posts on the monthly chart (left).  CNU was stuck in a range for more than two years and broke out >4.50 Sept 2018. CNU traded around this level for four months while the world market were falling swiftly. CNU acted much stronger than the market at that time. CNU then rallied with the market.

Recently the price of CNU has fallen significantly. I couldn't find any news to explain this. Is this a buy the dip opportunity?


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## jjbinks (29 May 2019)

Post election dip? but im not sure why either.


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## peter2 (17 September 2019)

Four months later and that dip was only the start of a larger move down. This larger corrective move has brought price back to prior break-out levels 4.50 - 4.75. I marked this area in my earlier post with the green buy zone rectangle. I love it when price follows the plan.

Now that price has reached this level what do you need to see to make it a buy?
I see my 123Low pattern and the 1st blue bar breaking out from the #2 high. This is enough for me to consider an initial purchase. Any subsequent purchase would need to be after price goes through the sloping resistance line I've marked on the chart. A corrective pattern is not really over until this line is broken.

That's my thought process as a chart trader.


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## peter2 (22 November 2019)

Since my last chart post on CNU it's been a very bumpy ride. A bumpy ride is indicative of a corrective pattern. A corrective swing up is generally followed by an impulsive swing down. Price has traded in the sell zone (red rectangle at the 50 - 62% fib pullback zone) and there was supply (daily doji).

Price has to close > 5.50 (above the red zone) before I will relax and "let it ride". Until then I'll be using a tighter exit trigger.


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## Boggo (3 March 2020)

Nice work if you are still holding it @peter2

Was ready to re-enter this as it crossed above $6 but it got a bit erratic so I held off.
The close yesterday and the action above the 6.55 to 6.65 area this morning got me back in.
It does go ex dividend ($0.09) on the 16/03/20.

(click to expand)


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## Dona Ferentes (28 December 2020)

Chorus is a juggernaut back home, owning the majority of telephone lines and exchange equipment in New Zealand. It is also responsible for building 70% of the new fibre optic Ultra-Fast Broadband (UFB) network in the country. By law, the company cannot sell UFB bandwidth directly to consumers, instead it provides wholesale services to retailers.

Chorus reported a little-changed profit of NZ$52 million for the year to June. The company has been facing a few regulatory hurdles in New Zealand recently, the latest one being the proposal to impose levies totalling NZ$15 million a year on the telecommunication sector to fund the regulation of the industry.

I like the Chairman's remark at latest AGM: 







> Let’s not underestimate just how risky UFB was.  It required billions of dollars of investment in fibre well ahead of demand.  Success was in no way guaranteed. These major infrastructure programmes are bloody hard, and most of them end up well over time and well over budget. You have all seen it, be it on city rail projects, the Transmission Gully's of this world, hospitals and so on.



Like many telco's, regulatory constraints have limited profit growth while usage has risen.  Fibre is all go (and the gold standard) and Copper is declining in uptake. The Earnings per share (EPS, left)  and Return on Equity (right) are both showing little improvement







CNU has had a good run but the weight of regulation as a wholesaler, and nimbleness of retail providers, is crimping it. Had a good Covid time, though.
_Three year chart, weekly:



_


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