CHI - Channel Infrastructure Ltd (NZR)

[Bikeguy]

Seems the green hydrogen option is firming up…

[Bikeguy]

Since the change in business model this stock has gone very strongly, the golden goose on the horizon surely seems green aviation fuel supplied through the pipeline?

[Sideshow Bob]

https://www.nzx.com/announcements/419993

Channel Infrastructure (CHI) has today released its operational update for the three months ended 30 September 2023 (Q3 2023), combined with an update on the conversion project.

HIGHLIGHTS

Terminal and pipeline throughput

• 20 import shipments received and discharged during the quarter (2023 YTD: 56).
• Terminal and pipeline throughputs were strong at c.838 million litres in Q3 2023, up 17 million litres on the previous quarter and 16% higher than Q3 2022.
• The increased throughput continues to be driven by a strong aviation demand recovery, with jet throughput up c.57% on the previous corresponding period (Q3 2023: 314 million litres; Q3 2022: 200 million litres).
• For the nine months ended 30 September 2023, total throughput was 2,470 million litres, tracking slightly above the Envisory (formerly Hale & Twomey) fuel demand outlook for 2023.
• A summary of Quarterly Terminal and Pipeline Throughputs by fuel type since commencement of import terminal operations on 1 April 2022 is included as Appendix I.

Conversion project

• c.45 million litres of jet private storage capacity was successfully commissioned in September 2023, (part of the 100ML of private storage currently contracted) and as a result on-site jet fuel storage has more than doubled through the import terminal conversion.
• Conversion costs remain within budget ($200-220 million of conversion costs and $45-50 million for private storage) with c.$189 million spent to 30 September 2023 (30 June 2023: $170 million), including c.$36 million of private storage costs (30 June 2023: $30 million).
• Net borrowings increased to $315 million as at 30 September 2023 (30 June 2023: $295 million).
- ENDS -

[Sideshow Bob]

https://www.nzx.com/announcements/420208

Analyst preso - http://nzx-prod-s7fsd7f98s.s3-websit...208/405427.pdf

Channel Infrastructure today released details of its refreshed strategy, as it outlined the opportunities it sees for the Company’s future.

Channel Infrastructure Chair, James Miller said “Over the past two years Channel Infrastructure has successfully executed on its plan set by the Board and Management back in 2021. This has enabled us to recommence dividend payments and deliver a total shareholder return of almost 86% over the past two years.”

“Channel Infrastructure is now well positioned with strong and stable cash flows, a highly capable team, and uniquely strategic assets which provide the key fuel supply route to Auckland. With the world-class conversion of the refinery to an import terminal, and commissioning of additional jet fuel storage at Marsden Point last quarter, it is the right time to refresh our strategy to ensure we are identifying and pursuing the best opportunities for the business as we help fuel New Zealand’s future to 2050 and beyond.”

“We will assess the growth opportunities ahead of us against our disciplined investment criteria of delivering returns above our Weighted Average Cost of Capital, underpinned by customer contracts, and the Board is committed to maintaining stable dividends, while targeting credit metrics consistent with a shadow BBB+ credit rating.”

Channel Infrastructure CEO, Rob Buchanan said “Having delivered a successful import terminal conversion, our vision is now to become a world-class energy infrastructure company. Channel will invest to support the long-term resilience of our infrastructure and to be a supply chain partner of choice for our customers. This in turn will enable us to pursue growth opportunities both within and beyond the Marsden Point gate.”

“Marsden Point is a highly strategic location and, combined with our assets, means we are a unique part of New Zealand’s fuel import system. There just isn’t another site in New Zealand like it, and it will be key to executing our future strategy.”

“As we look to deliver resilient infrastructure solutions to meet New Zealand’s changing fuel and energy needs, Channel will continue to pursue opportunities at Marsden Point which have the added value of providing increased resilience for New Zealand’s fuel supply chain. We are currently developing a proposal to support the Government with respect to its strategic diesel storage objectives as well as our customers with the incoming minimum fuel stockholding obligations from 2025. Over time, the Company has an ambition to unlock opportunities beyond Marsden Point, where we can partner with new and existing customers on their fuels infrastructure needs and deploy our world-class capabilities to provide resilient infrastructure for New Zealand’s changing fuel needs.”

“It is New Zealand’s decarbonisation pathway that presents the most exciting longer-term opportunity for Channel Infrastructure. While New Zealand’s demand for petrol will likely decline over time, the country will continue to need a resilient diesel supply chain to fuel its heavy transport and agriculture sectors. Further, the aviation sector still has a long way to go to transition to lower-carbon fuel solutions. New Zealand’s air connections play a crucial role to the economy through both our tourism and export industries, and we are ready to leverage our critical role in the liquid aviation fuel supply chain to ensure we are part of this journey.”

“We see this as key to Channel’s future success, and this is why, alongside our wider strategy refresh, our team is taking a deep look into what the decarbonisation pathway for aviation might be in the future. Based on our work to date, liquid sustainable aviation fuel is emerging as the lowest cost route to lower aviation emissions for medium to long haul travel, and we continue to work on how we can play our part to help solve this critical challenge for New Zealand’s future.” Rob Buchanan added.

“We have already achieved significant progress on our ESG scorecard. Sourcing all our electricity requirements from renewable sources under our new electricity supply contract from January 2024 would mean that from 2024 we will be largely Scope 1 and 2 emissions-free. We continue to see being a good neighbour and citizen as a top priority in our strategy, with the key workstreams around reducing environmental impacts and continued engagement with the community we operate in.” Rob Buchanan said.
Channel Infrastructure has also today reconfirmed its FY23 guidance, announced a new storage contract (c$9 million of additional revenue across 10 years from 2024 with minimal incremental growth capex) and confirmed it is considering a retail senior bond to replace the listed subordinated notes.

Accompanying this announcement is a presentation to analysts, which is also now available on the Channel Infrastructure website and the delayed webcast of the presentations will be available on channelnz.com in the next few days.

- ENDS -

[Sideshow Bob]

https://www.nzx.com/announcements/420210

Channel Infrastructure NZ Limited (Channel Infrastructure) is considering an offer of up to $75,000,000 (with the ability to accept oversubscriptions of up to an additional $25,000,000 at Channel Infrastructure’s discretion) of 6 year, unsecured, unsubordinated, fixed rate bonds (Bonds) to investors resident in New Zealand and institutional investors.

[Bikeguy]

I genuinely feel for the long term investors of NZR, I know the pain of being locked in (not wanting to crystallise a loss) on a company that slides downhill from higher entry points. However the model CHI now operates is a strong stable one built on fundamentals that only have upside. No one is going to develop a competitive infrastructure the likes of what CHI have, and there will never be another pipeline built. On top of benefitting from the soon to be legally required fuel holding capacity’s this company is going to develop green hydrogen with its Australian partner.
My feelings are that the petroleum companies are not going to look to sell their controlling interests in CHI, rather reward themselves with some decent dividends while continuing to control their supply.