CHI - Channel Infrastructure Ltd (NZR)

[bull....]

great report, margins still good , price still consolidating

[barleeni]

I am surprised that the share price seems to still slowly be drifting down from its $2.70 highs (I know I was pessimistic at that price, but I hadn't expected a downward trend).

The USD exchange rate has been shifting in NZR's favour since the exceptional Nov/Dec 14 report, which is a good thing, we have just had another great 2 month processing report for mar/apr..... with all signs pointing in the right direction. Is the softening related to the rice of oil do we think?

[golden city]

half year profit update coming soon .. should boost up share prices

[bull....]

nzd down to 72 should fall to 70 when they lower interest rates and grm looks like it is still holding up this mth , should get update on maintenance finish next week ?

[biker]

Chevron (Caltex) selling down their 11.4% holding tonight at $2.32-$2.36.
Have applied for a bundle.
Will be interesting to see what the market thinks tomorrow.

[Joshuatree]

Thanks for that Biker ; very int esp their timing!. What brokers are handling it?

[biker]

Craigs for one, not sure who else.

[Sideshow Bob]

Craigs for one, not sure who else.

yep, just spotted an email from Craigs. I have been looking at this for a while and decided here is the opportunity.

[golden city]

no announcement on this

[Crackity]

Well some people will take a quick profit regardless of the fundamentals....it will open lower than today's close....

[bull....]

I have noticed someone or somebodies has been selling none stop into any buying recently so I bet it is because they knew? and will buy into the placement?

http://www.afr.com/street-talk/deutsche-seeks-bids-for-chevrons-11pc-stake-in-nz-refining-company-20150527-ghaupl

also chevron recently sold out of Caltex as well - buying opportunity?

[Beagle]

Hmmmm....IIRC Mobil didn't support the recent capital raise for the major capex, Chevron selling out and Z talking about importing more refined product to boost margins...what are these majors telling minority shareholders most importantly by their actions and secondly by their official statements. Disc, I don't hold. The rise and rise of the mega Asian refineries causes me too much concern and looks like its too attractive to the major fuel suppliers here too. Trouble just over the horizon for this stock ?

[bull....]

Hmmmm....IIRC Mobil didn't support the recent capital raise for the major capex, Chevron selling out and Z talking about importing more refined product to boost margins...what are these majors telling minority shareholders most importantly by their actions and secondly by their official statements. Disc, I don't hold. The rise and rise of the mega Asian refineries causes me too much concern and looks like its too attractive to the major fuel suppliers here too. Trouble just over the horizon for this stock ?

nzr only supply a set % of market so all the oil companies need to import refined petrol as well, as nzr presentations show they are more competitive at certain prices so why would oil companies import more refined fuel if it is less competitive.

z and bp supported the upgrade , Caltex and mobil didn't and both want out of nz , z and bp are the dominant players so that tells you what they think

anyway nzr will be back in the nz50 sometime after this positive I would say

[pierre]

This is probably a sign that Caltex will be exiting the NZ fuel market sometime soon. Next news will be a sale of their retail outlets to Z or BP is my guess.

[cdonald]

Sorry in advance but not having a good day for maths. With the 11% now becoming free flow shares in regards to NZ50 requirements, is that enough to get us over the line to be included in that category? If we are now to be included in the NZ50, what are the implications for fund managers etc and who will be dropping out of the top 50.

Back to fundimentals, margins still over $9 USD/bbl and exchange rate coming down nicely too. Going to be one interesting half year report!

[bull....]

http://www.scoop.co.nz/stories/BU1505/S00916/refining-relationship-expected-to-continue.htm


about chevron and nz50 inclusion

[BlackPeter]

Sorry in advance but not having a good day for maths. With the 11% now becoming free flow shares in regards to NZ50 requirements, is that enough to get us over the line to be included in that category? If we are now to be included in the NZ50, what are the implications for fund managers etc and who will be dropping out of the top 50.

Back to fundimentals, margins still over $9 USD/bbl and exchange rate coming down nicely too. Going to be one interesting half year report!

Possible they might get in. Obviously we don't know yet, whether the 11% sold are sold as block or whether they now add to the liquidity. If they do, than the "free" liquidity would rise to $370m .... and there are currently smaller cap companies in the NZX50 (e.g. SKL, NZX itself and MPG, but I am sure there are others as well below the 370m).

[freddagg]

My order has come through at $2.33 but was scaled 20% unless my broker mis-heard my verbal order

[bull....]

lot of demand apparently

[Joshuatree]

I got a little more than i asked for but split it with our trust. Was so close to pulling the trigger and buying some @ re $2.51.:huh::t_up:
Do Caltex really want out of NZ? They are out of refining in Aus now and are namely a retailer.

[Joshuatree]

Back trading @ $2.43 atm.

[Sideshow Bob]

My order has come through at $2.33 but was scaled 20% unless my broker mis-heard my verbal order

i got all mine....but my broker does look after me. :p

[Joshuatree]

Closed at $2.44 ;high of $2.46 and low $2.38. Other than Craigs, 643,194 shares traded.

[BlackPeter]

Usually I find you posts spot on Rodger but I believe it is a new dawn for NZR not trouble over the horizon.
New more competitive plant on stream soon
More favourable oil price outlook.
Spread between nymex and brent closing (very good for NZR).
NZD now 71 against the USD.
Actual world fuel use on the increase and quite a few smaller and older refineries have shut down since the mega Asian refineries started 2-3 years ago.
Hope you are wrong for a change as snaps has a sh** load and is still buying on this dip

Here's the latest Platt's report of singapore refinery margins.(anything over $4.50 is very healthy and currently $5.60)

http://www.platts.com/latest-news/oil/singapore/singapore-cracking-margin-firms-to-above-5b-recovering-27426816

Wait for all those silver tops(over 60's) to start buying once a divi is confirmed(early next year) and my valuation of $3.90 by March 2016 will be very close.

Hi Snaps, this seems to be a share where our valuations seems to be aligned ... just - don't be too greedy with buying into the present dip. Would be nice if you could leave some cheap shares for your fellow share holders;).

[dodgy]

Usually I find you posts spot on Rodger but I believe it is a new dawn for NZR not trouble over the horizon.
New more competitive plant on stream soon
More favourable oil price outlook.
Spread between nymex and brent closing (very good for NZR).
NZD now 71 against the USD.
Actual world fuel use on the increase and quite a few smaller and older refineries have shut down since the mega Asian refineries started 2-3 years ago.
Hope you are wrong for a change as snaps has a sh** load and is still buying on this dip

Here's the latest Platt's report of singapore refinery margins.(anything over $4.50 is very healthy and currently $5.60)

http://www.platts.com/latest-news/oil/singapore/singapore-cracking-margin-firms-to-above-5b-recovering-27426816

Wait for all those silver tops(over 60's) to start buying once a divi is confirmed(early next year) and my valuation of $3.90 by March 2016 will be very close.

Good morning Snapiti
We are both in the same camp and I will be more than happy with my guestimate of $3 by end March 2016. I didn't get more at Craigs but picked a few on market @ $2.41 -theft!!
Regards
-dodgy (owner/shareholder)

[cdonald]

and one day later they announce they are back up and running 4 weeks faster than last year $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

The 2 shutdowns were completely different. Hydrocracker last year happens about once every 3 years (know as C block shutdown). Hydro cracker is the money making unit in the refinery. This shut down was a lot smaller than the one last year. Of interest though, the 600T crane is now being shifted off so most of the big equipment for new project is in place. Not long now to they flick the switch on that which will put thru some more volume. Things are looking mighty positive down there at the moment.

[Beagle]

Usually I find you posts spot on Rodger but I believe it is a new dawn for NZR not trouble over the horizon.
New more competitive plant on stream soon
More favourable oil price outlook.
Spread between nymex and brent closing (very good for NZR).
NZD now 71 against the USD.
Actual world fuel use on the increase and quite a few smaller and older refineries have shut down since the mega Asian refineries started 2-3 years ago.
Hope you are wrong for a change as snaps has a sh** load and is still buying on this dip

Here's the latest Platt's report of singapore refinery margins.(anything over $4.50 is very healthy and currently $5.60)

http://www.platts.com/latest-news/oil/singapore/singapore-cracking-margin-firms-to-above-5b-recovering-27426816

Wait for all those silver tops(over 60's) to start buying once a divi is confirmed(early next year) and my valuation of $3.90 by March 2016 will be very close.

I have the upmost respect for your posts too Snapper.

Why do you think some of the N.Z. oil companies are getting so snappy, (sorry mate couldn't help myself), and watering down / exiting their investment ?

[bull....]

awesome shut down finished, money making time

[Nasi Goreng]

From Chevron's recent earnings Q1 earnings presentation, a few interesting observations which align with the sale.

Their biggest priority is to grow cashflow by increasing production and delivering on key projects (a few of which in Aus, Gorgan LNG, natural gas find etc. all upstream), reducing spend and asset sales.

Q1 profit for Chevron was down 43% on previous year which has got to hurt. Downstream operations (refining) increased significantly due to better margins and represented 28% of total profit. Sale of Caltex Australia netted them $3.6B in cash and a gain of $1.6B which will flow through to Q2 results.

Not sure about the validity of Caltex Australian refinery and how it compares to others in the region but the decision to shutdown BP's Bulwer Island facility was made this time last year due to low margins. I wonder if they would have made that decision at current margins?

Now would seem as good a time as ever to get rid of refineries while margins are high. It helps them to get rid of an asset which can either grow cash balance or give them opportunity to raise cap-ex for future projects which could be more profitable and in line with core business.

For this recent sale in NZ, it aligns with sale of Caltex Aus and 11% stake seems small fry compared to what was raised there.

Disc: bought back in a couple of weeks ago... wish I had waited.

[Joshuatree]

" Chevron said its decision to sell the holding doesn't affect its arrangements under its processing agreement with the refinery." nzherald
I guess thats a possible worry, the future where Caltex and others can import ALL their fuel from cheaper offshore Asian refineries. In the meantime this cycle looks sweet.

[Joshuatree]

Thanks Snap re port infrastructure; another barrier/cushion.Meanwhile share price nearly back to before the placements; def a vote of confidence.:t_up:

[Sideshow Bob]

I confess I am helping with the share price recovery this morning

And us new shareholders ex Chevrons sell down thank you for it!! :p

[Beagle]

As you suggest Snapiti, after the oil, gas and LPG price collapse makes sense to sure-up the ship and as others have suggested this sale is small fry compared to their exit in Australia.
Good too see you have the courage of your convictions to snap up some more :) Good comments on limited port infrastructure, POA certainly under really close scrutiny in regard to any further possible expansion.
So many variables with this one...I'd imagine the low oil price is really helping with refinery margins...but for how long and is AIR a better way to play this ? but the currency is coming down with a thud so that sure helps NZR shareholders, not AIR. As long as all your ducks continue to line up and keep quacking with the wind you'll be happy.

[barleeni]

This past week has been a terrible one for my portfolio, not helped by the Chevron offload. Fortunately I see that the exchange rate continues to work in NZR's favour. I would have loved to have been able to pick up some shares at $2.32 or whatever it was. Question in regards to the bookbuild as im not really sure how they work........ I assume that Craigs would have negotiated the price of $2.32, then they on-sell the shares at a premium to that and they keep the change? and does everyone Craigs sell to buy at the same price or is it negotiated individually? Or does Craigs just charge Chevron a flat fee and Chevron effectively gets the price paid by the individuals taking up the bookbuild?

Lastly.... when do the shares procured by individuals via the bookbuild become tradable on the NZX (i.e. will we see some offloading on the NZX soon for those who just wanted to make a quick buck??)

[bull....]

z energy in trading halt pending major acquisition - Caltex or mobil? or nz refining ?

[Joshuatree]

Int questions. Me being a smaller client I'm a price taker but i think large ones can negotiate within a narrow price band. Im pretty sure i can sell my shares just like any other ones I've bought ,straight away, don't have to wait 3 days like some as I'm a client of Craigs. Craigs make a standard commission on the sale to clients of up to 1% on top of any other fees/prices they've negotiated with Chevron if any. Pretty competitive amongst brokers to get these oneoffs .

[barleeni]

Regards the Z energy trading halt notice, I read significant transaction - not acquisition..... maybe they are selling their NZR stake also??

[barleeni]

Cheers Joshuatree, good to know. I guess we shall wait to see if their is a softening in S/P due to those extras being on the market now.....


Int questions. Me being a smaller client I'm a price taker but i think large ones can negotiate within a narrow price band. Im pretty sure i can sell my shares just like any other ones I've bought ,straight away, don't have to wait 3 days like some as I'm a client of Craigs. Craigs make a standard commission on the sale to clients of up to 1% on top of any other fees/prices they've negotiated with Chevron if any. Pretty competitive amongst brokers to get these oneoffs .

[bull....]

http://www.bloomberg.com/news/articles/2015-05-31/z-energy-halted-in-australia-pending-acquisition-transaction

acquisition according to bloomberg

[Joshuatree]

Good pickup on the ASX bull. Im assuming the NZR shares all went to little investors like me so maybe retailing outlets like caltex that someone else suggested.?

[bull....]

buying Caltex I believe

[pierre]

This is probably a sign that Caltex will be exiting the NZ fuel market sometime soon. Next news will be a sale of their retail outlets to Z or BP is my guess.

You read it here first!

[Joshuatree]

Yes credit to you pierre.I didn't scroll back through the threads far enough to find who had said it. Potentially very good for Z. I hold both.

[bull....]

z buys 9% more of nzr big vote confidence

https://www.nzx.com/files/attachments/214153.pdf

[Crackity]

Only a notional buy - these were the shares that were sold by Craig's last week at 2.32 to 2.34....
Legal advice would be to put this disclosure notice in to NZX

[bull....]

good news as that means the traders got bugger all and 2.45 want be here for long.......I am finding it a very addictive buy price

wouldn't surprise to see price head down to that issue price

[Crackity]

Not totally convinced Snaps - have a look at page 2 of the announcement - have tried to cut and paste it here but my fingers too big or the phone too small!

[winner69]

Not totally convinced Snaps - have a look at page 2 of the announcement - have tried to cut and paste it here but my fingers too big or the phone too small!

Correct crackity, its all to do with the Chevron deal. Chevron are still the owner of the NZR shares until settlement tomorrow. As part of Z's agreement with Chevron they are deemed to have an interest in the NZR share as well.

Have no power or control over them, just a deemed inteerst

[Crackity]

Yes - I think you are right - another notice should follow - lawyers need feeding!

[biker]

really........ could this have not been done via the legal takeover documents.....ie cheron/caltex interest in NZR excluded from the deal....simple

winner and crackity if you are correct we would expect to see another SH notice from Z very soon that says they do not have that extra 9% anymore ?????????????????????????????????

Well, maybe. Its really covered in today's announcement but certainly, come Thursday they wont own them. Settlement for the block trade is tomorrow and that takes care of it. The notice of change in major shareholding is just a two day 'patch' to cover the regulatory requirements.

[Crackity]

$4.45 I have a shed load for you Snaps!

[winner69]

really........ could this have not been done via the legal takeover documents.....ie cheron/caltex interest in NZR excluded from the deal....simple

winner and crackity if you are correct we would expect to see another SH notice from Z very soon that says they do not have that extra 9% anymore ?????????????????????????????????

I would think so

[winner69]

This makes it clear as mud .... but read slowly

Just a technicality

[biker]

........

.......we would expect to see another SH notice from Z very soon that says they do not have that extra 9% anymore ?

And there it is.


SSH: NZR: SSH Notice - Chevron New Zealand

Disclosure of ceasing to have substantial holding
Section 279, Financial Markets Conduct Act 2013

To: NZX Limited
and
To: The New Zealand Refining Company Limited

Date this disclosure made: 3 June 2015
Date last disclosure made: 27 May 2015
Date on which substantial holding ceased: 3 June 2015

Substantial product holder(s) giving disclosure
Full name(s): Chevron New Zealand
Summary of previous substantial holding
Class of quoted voting products: Ordinary Shares (NZX code: NZR)
Summary for Chevron New Zealand
For last disclosure,--
(a) total number held in class: 35,534,905
(b) total in class: 312,576,453
(c) total percentage held in class: 11.37%
For current holding after ceasing to have substantial holding,--
(a) total number held in class: 0
(b) total in class: 312,576,453
(c) total percentage held in class: 0%

[dodgy]

was crunching the numbers today re NZR going into the NZX 50.
now free market float is larger due to big shareholder sell down the numbers stack up for inclusion....yeh.
However part of the rules for inclusion say that any stock that has been excluded for lack of liquidity(NZR was excluded for these reasons but market cap is big enough) must wait 3 full trading quarters before they can be considered............... bummer.
patience

Good evening Snaps
My $3 March 16 is looking about right now.
Regards
-dodgy (owner/shareholder/accumulator)

[barleeni]

ForBar picks that for the NZX June 2015 quarterly index review NZR will enter the NZX benchmark indices at the expense of PEB. The official announcement will be out Wednesday 10th June. I guess we don't have too long to wait until we find out if that is correct......


was crunching the numbers today re NZR going into the NZX 50.
now free market float is larger due to big shareholder sell down the numbers stack up for inclusion....yeh.
However part of the rules for inclusion say that any stock that has been excluded for lack of liquidity(NZR was excluded for these reasons but market cap is big enough) must wait 3 full trading quarters before they can be considered............... bummer.
patience

[golden city]

price goes life again.., trending to the last high

[Crackity]

$4.45 you get all mine Snaps!

[cdonald]

Lots of off market volume going thru over the last few days. Would this be institutes buying from Craigs to get quota?

[golden city]

i think it is institutes accumulate ready for half year report and benefiting from the new construction next year

[bull....]

ForBar picks that for the NZX June 2015 quarterly index review NZR will enter the NZX benchmark indices at the expense of PEB. The official announcement will be out Wednesday 10th June. I guess we don't have too long to wait until we find out if that is correct......

maybe this is why volume high, craigs people selling for profit to instos - if the case at least its soaks up the overhang

[Crackity]

The New Zealand dollar could fall as low as US60c against the greenback this year following today's official cash rate cut, a market strategist says.

Of course it may not - in fact if a market strategist makes a statement like this it normally does the opposite ....but at 60c USD the Nzr profit matrix looks pretty healthy.....

[bull....]

guess they will need to put up a new matrix in there half yr presentation to take account of the lower nz dollar

also maybe lower oil prices heading into second half - I believe a lot of refiners have put of maintenance first half so when they are forced to do maintenance second half there will be heaps more oil supply.

[golden city]

like it..., sounds very good., had accumulated reasonable amount so far..

[cdonald]

looks like Mr Market is finally waking up to what is going on...

[golden city]

Should be on the way to high soon

[golden city]

share prices could reach 3 dollar soon ..by the look of it

[dodgy]

Good morning Snaps and all,
Very well thought out analysis Snaps. I had raised the BOC plant in an earlier post then confirmed with the CEO that the commercial significance was not huge in the overall scheme of things. All good. My only reservation with your view is I think P:E should fall closer to 10.
WE WILL GET THERE - KEEP THE FAITH.
Regards
-dodgy (owner/shareholder - Still accumulating with an expected a 10% sp appreciation - still $3.00)

[golden city]

striking.., looks good

[Hoop]

thanks dodgy....have a look at the historical PE.....for me that is the best way of predicting the future PE as certain stocks get valued differently....in the last 10 years the PE has range between 12-18 so I think it is fair and reasonable to assume a 14 PE.

However confusion can range supreme as sum analyst report PE prior to tax and some after tax.
All in all a very under valued stock and on target to hit 45c EPS for full year 2015.

TA agrees with you Snapiti...Its looking like NZR had a 4 month breather and is ready to move up again..

Mass buy signals fired at $2.49 ..At that time last week the $2.49 buy in seemed risky as the 4 month downtrend looked to be still operating...but TA said buy buy buy.

The new break to a new high today further confirms the possibility that the 7 year primary downtrend ended in November 2014...Alway at the back of an investors mind with primary downtrends are the corrective shorter term sucker rallies...............with these recent breaks this 7 month old rise looks less and less like a long sucker rally and more and more like a beginning of a new long term uptrend

http://i458.photobucket.com/albums/qq306/Hoop_1/NZR%2018062015.png (http://s458.photobucket.com/user/Hoop_1/media/NZR%2018062015.png.html)

[Hoop]

thanks hoop...crickey if the fundamentals and TA both have a green light we are destined to test $3 soon.:eek2:

Yeah...The rectangle pattern break today gives a TA target of $3.04...TA target prices are not resistances they are a rule of thumb mathematical lines in the sand which say that there's a 70% chance NZR will reach this price..

Resistances alter the probability and TA target and Fibonacci boffins will no doubt apply all sorts of complicated formulaes to exact a more "effective" probability figure.

I like to apply the KISS method... In NZR case there is an old historic resistance at $2.90 and another larger historic resistance at $3.20 ..so TA target of $3.04 looks 70% obtainable. :)

[dodgy]

Settle down you two - Snapiti and Hoop,
Be happy with my guesstimate and ecstatic if I am light.
Regards
-dodgy (owner/shareholder - forever hopeful with this one)

[dodgy]

sorry dodgy here's more good news for you....latest weekly report on Singapore refinery margins shows we are still close to the high's of the year.
Report issued 2 days ago.....page 6
page 8 also shows the Brent -WTI differentials remain very low which is very very good for NZR
http://www.howardweil.com/docs/Reports/WEEKLY%20REPORTS/REFININGReport.pdf

Hi snapiti
Thanks for that - appreciated. Without your reference I would be still be looking with no experience in this area. If I am too slim come March 2016 I will deserve a good whacking with a wet fish.

Have a good weekend
-d

[dodgy]

hope you are to slim then you can get whacked with crayfish and oysters.
I could be a few months early with my $3.90 by march 2016 call as divi's won't start up again until mid 2016 unless they give us a token small one to celebrate an incredible turn around at full year 2015 due Feb 2016.
Reinstating divi will find many keen investors especially if interest rates are still low.
Happy to stick with the call and looking forward to 40-45c EPS for full year 2015.


Sounds good to me snapiti.
Div a cert for Feb 16 then share price ramp up.
-d

[bull....]

What a week - as hoop nice chart mentioned breakout of the long term downtrend has occurred this week which will encourage long holders to enter ( I mentioned a while back about the consolidation occurring so now this has broken to the upside as well which gives a short term price target of 2.90 which by the way is the 23.3% fib retracement level, it by no means alters the long term trend it is only a short term target.)

As for fundamentals - as of april they had 264m debt and had paid of 50m in 4mths so im picking 175m - 197m of debt at yr end which equates to a gearing of just over 20% this could be even better if throughputs run at max all yr.
Margins remain high so should be on course for max profits potential this yr so divs starting mid 2016 is my pick.

As snapiti says it is cheap if things stay as is now the falling dollar is insurance against the margins falling as well.

2015 yr 145m profit, 175m - 197m debt no divs going forward the next 2 yrs opens up the possibility of huge divs esp 2017 my pick based on current environment over 50c/share possible on a over 90% payout ratio

of course it can all change at a moments notice due to the many varibles but the stars certainly seemed aligned at the moment.

[Crackity]

The Company’s return to profitability represents aremarkable turnaround in 12 months. However, we areconscious that year-end borrowings have pushed gearingto 33% when our targeted ratio, outlined in the Company’sdividend policy, is 10-20%

From the 2014 annual report - as noted Bull the pay down of debt so far this year has been exceptional. I'm picking no interim for the 2015 year but I am going to stick my neck out and forecast 5 to 10 cps for the final div assuming the current operational performance stays the same....expecting a nice cheque early 2016

[dodgy]

Snaps
I have only ever guestimated a March16 div as a few cents . And that will do just fine - any more "fab".
-d

[dodgy]

heres a great link to show the historic price spread between WTI and BRENT.
Page 12 shows quarterly diff since 2010.
note how high they were till mid 2014.

http://www.howardweil.com/docs/Reports/WEEKLY%20REPORTS/WeeklyMacroUpdate.pdf

Me thinks with the spread at about $4 and our $ at 68 they might need a bigger vault for all the profits.

Goodafternoon snapiti and all,
I must be one confused soul ! My understanding is that NZR does not purchase any feedstock but is purely a tolling operation. Oil purchases being the responsibility of the end user with the only accrued advantage being to the end user because with lower input costs stored product, ie capital tied up, is reduced (the cost of funding the product). NZR gains mainly from exchange rates and refining margins. Maybe they also charge storage on site.
Am I correct or what is the answer?
Regards
- dodgy (owner/shareholder - no longer accumulating - holding for the appreciation and dividend stream).

[cdonald]

Dodgy, you are correct. NZR is a tolling refinery. To my knowledge they dont charge for storage (being that everything they have there is to be processed for the toll fee). They do make considerable income from the RAP (Refinery Auckland Pipeline). 30% of the Singapore complex refining margin is retained by the "users" to compensate for the fact that they bear the cost of the inventory.

The press releases from the refinery are somewhat confusing for most of us when they start talking about the spread between Dubai and Brent (snapti I am not too sure why you have posted the link to WTI vs Brent). To the best of my knowledge (which is a bit hazy these days) I think that the Singapore complex refinery margin (the benchmark) is priced of a crude basket based on Dubai pricing. The advantage that the NZR has is 40% of its feedstock is based of crudes that use Brent oil as a marker. Dont get confused though, the refinery does not put brent crude thru its units, it is merely a marker crude ie a crude that other ones are priced against.

So when the refinery talks about the dubai/brent differential they are only doing this to justify an uplift over the singapore complex refining margins.

Some links for reading
https://www.argusmedia.com/Methodology-and-Reference/Key-Prices/Dubai-Crude

[cdonald]

Very good post cdonald
Yes you are right NZR does not buy the oil.
You are also right about the Dubai Brent spread and the only reason I use WTI is I can not find any info that keeps us up to date with the spread price between Dubai and Brent plus the fact that the price of Dubai and WTI are very correlated.
Please post a link that shows the spread between Dubai and WTI if anyone can find one.
It can all be a bit hazy but if you follow the spread price plus the Singapore crack price you will get a fair idea of the margins NZR are currently getting and well ahead of their through put announcements.
Just out today the report on last weeks Singapore margins

http://www.howardweil.com/docs/Reports/WEEKLY%20REPORTS/REFININGReport.pdf

Bottom of page 6 shows the margins are still extremely healthy.

yup, margins still appear to be doing pretty well so we should have 6 great months under the belt and the prospect of early start up of the project too.

will do a bit more digging around in regards to the chart for dubai/brent but here is a starting point if someone has got some time to go searching

http://www.cmegroup.com/trading/energy/crude-oil/brent-dubai-swap-futures.html

[barleeni]

Things are certainly going very favourably for NZR, oil prices seem to be levelling out now at a good number, and the USD exchange rate is better than could have been assumed, we are about to tick over 6 months into the financial year and I think its safe to assume the 2 month period for May/June should have throughput at a GRM of $9, possibly a few credits in the bank too.

But....... the results of the last period (March/April) as fantastic as they were saw absolutely no market reaction (I think the results were fully expected and hence fully priced in). Hence, im almost thinking now that 90% of people will have forgotten that these upcoming results will be heavily effected by the shut at the beginning of the period, I expect the total invoiced for the upcoming period to be circa $43 mill vs. $62 mill for the previous period.......... so I do wonder if we will see some weakness in the shareprice after these upcoming results. Might be an opportunity to top up???

I guess we find out in about 2 weeks.

[golden city]

looks like it will push cross 3 dollar mark

[bull....]

looks like it will push cross 3 dollar mark

don't you love it when charts and fundamentals are in alignment

[dodgy]

looks like it will push cross 3 dollar mark

Hi golden city,
"keep your powder dry" for March 16
regards
-dodgy (owner/shareholder - happy bunny)

[percy]

"The smell of money" was too strong for me on Monday.
I brought a few at $2.74.
Thank you my friend ........ for alerting me to the possible HUGE dividends next year..

[couta1]

"The smell of money" was too strong for me on Monday.
I brought a few at $2.74.
Thank you my friend ........ for alerting me to the possible HUGE dividends next year..
I remember you had the same sentiment over at Turners, either you lost the scent or the printing press stopped working, can happen to any company aye:cool:

[percy]

I remember you had the same sentiment over at Turners, either you lost the scent or the printing press stopped working, can happen to any company aye:cool:

My noise can smell money correctly.still in perfect working order.
My post on Turners thread No.1075 when I sold.......23.5% gain in a matter of months,plus a divie...
now watch NZR chart catch up with my nose.
ps.My nose still "smells the money" on a share you recently sold..!!!

[dodgy]

"The smell of money" was too strong for me on Monday.
I brought a few at $2.74.
Thank you my friend ........ for alerting me to the possible HUGE dividends next year..

Good evening percy
Forget Coutas attitude, maybe he could read back through this thread as many have extolled the fundamentals of this stock. No person on this planet does all right all the time. March 16 a div may be paid but my feeling, if, is a modest one. Later in year 16 this could well improve.
Regards
-dodgy (owner/shareholder - right only occasionally)

[couta1]

Good evening percy
Forget Coutas attitude, maybe he could read back through this thread as many have extolled the fundamentals of this stock. No person on this planet does all right all the time. March 16 a div may be paid but my feeling, if, is a modest one. Later in year 16 this could well improve.
Regards
-dodgy (owner/shareholder - right only occasionally)
Hey dodgy its not an attitude its called having a sense of humor which I know Percy can appeciate:cool: Disc-Have held this stock a couple of times for a short period of time. PS-Cheers Percy for the original tip on HNZ but ive taken my nose elsewhere for the meantime.

[percy]

Hey dodgy its not an attitude its called having a sense of humor which I know Percy can appeciate:cool: Disc-Have held this stock a couple of times for a short period of time. PS-Cheers Percy for the original tip on HNZ but ive taken my nose elsewhere for the meantime.

I trust my nose..!!!
It comes with a proven history....................... lol.
ps.Off to RBD asm tomorrow morning at 11am.They would not give us foul for lunch would they? Don't think my nose could take it.!

[iceman]

"The smell of money" was too strong for me on Monday.
I brought a few at $2.74.
Thank you my friend ........ for alerting me to the possible HUGE dividends next year..

Yes good to have you onboard on this one. There have been some very good posts on this thread recently describing the situation for NZR. The fundamentals for NZR are looking extremely strong with the lower NZ$/USD exchange rate, new plant and improved margins and the very fast down payment of debt. It is all pointing to very strong dividends for 2016 & 2017 and a significantly higher SP

[bull....]

oil down nearly 4% overnight and nzd heading to 67 bring on the new profit matrix

[dodgy]

Hey dodgy its not an attitude its called having a sense of humor which I know Percy can appeciate:cool: Disc-Have held this stock a couple of times for a short period of time. PS-Cheers Percy for the original tip on HNZ but ive taken my nose elsewhere for the meantime.

My error
-d

[Schrodinger]

Im liking the trend here

[cdonald]

for those of you who havnt done it already, have a look at the ten year share price graph for NZR. Bearing in mind that the 6th months that we have just had will probably be a record performance for NZR even with a shutdown chucked in. I dont think Mr market has a clue what is about to happen!

[Joshuatree]

Yeehaa:t_up:; thankyou to Snaps,Chevron and Craigs

[Hoop]

for those of you who havnt done it already, have a look at the ten year share price graph for NZR. Bearing in mind that the 6th months that we have just had will probably be a record performance for NZR even with a shutdown chucked in. I dont think Mr market has a clue what is about to happen!

Really?
Mr Market has had the clues to date..~+85% increase since last September with improving fundamentals...recording a higher high and and a higher low (Possibly a new primary uptrend) See the TA good news to buy.. chart 18th June 2015 post #912 (http://www.sharetrader.co.nz/showthread.php?468-NZR/page61)..Ok the 10year chart shows a long term (5 year) resistance level around the 2.95/3.00 mark..This 2.95/3.00 happens to be the recent breakout trader price target so it won't surprise me if it has another breather around this level..I would assume that there is a good chance that 3.00 resistance would eventually break (next low risk buy in point) as the market has signaled that NZR is in a new uptrend so I'm rather confused about your opinion about NZR market being clueless..could you give your reasons why as I'm interested.......please (asked nicely:)))

Shareprice $2.93 up 8c at time of posting

[biker]

Really?
Mr Market has had the clues to date.......I'm rather confused about your opinion about NZR market being clueless..could you give your reasons why as I'm interested.......please (asked nicely:)))........



I assumed cdonald meant the market is still failing to recognise the upside potential of the share price which has touched $6 in the past. ( his view, not mine)


Originally Posted by cdonald
for those of you who havnt done it already, have a look at the ten year share price graph for NZR. Bearing in mind that the 6th months that we have just had will probably be a record performance for NZR even with a shutdown chucked in. I dont think Mr market has a clue what is about to happen!

[Hoop]

I assumed cdonald meant the market is still failing to recognise the upside potential of the share price which has touched $6 in the past. ( his view, not mine)


Originally Posted by cdonald
for those of you who havnt done it already, have a look at the ten year share price graph for NZR. Bearing in mind that the 6th months that we have just had will probably be a record performance for NZR even with a shutdown chucked in. I dont think Mr market has a clue what is about to happen!

Yeah...but the 7 year primary downtrend from over $8 ended in November 2014..Mr Market "knew" NZR fundamental times were changing for the better..

Note to Buy & Holders ...a long time between drinks with this baby ...eh;)...sorry could'nt resist

[cdonald]

Really?
Mr Market has had the clues to date..~+85% increase since last September with improving fundamentals...recording a higher high and and a higher low (Possibly a new primary uptrend) See the TA good news to buy.. chart 18th June 2015 post #912 (http://www.sharetrader.co.nz/showthread.php?468-NZR/page61)..Ok the 10year chart shows a long term (5 year) resistance level around the 2.95/3.00 mark..This 2.95/3.00 happens to be the recent breakout trader price target so it won't surprise me if it has another breather around this level..I would assume that there is a good chance that 3.00 resistance would eventually break (next low risk buy in point) as the market has signaled that NZR is in a new uptrend so I'm rather confused about your opinion about NZR market being clueless..could you give your reasons why as I'm interested.......please (asked nicely:)))

Shareprice $2.93 up 8c at time of posting

My point being that historically we are still at a very low point on the long term share price graph despite the income and potential profit for the 6 month period likely to be at a record high. Despite the market being fully informed of NZR's main income stream in the form of thruput reports every 2 months the graph shows that the market still has knee jerk reactions when the half yearly and full yearly financials come out.

So yes we have come off a very low bottom but we are merely just touching the bottom of the long term trend at $3. We will no doubt see what happens when half yearlies are released in a few short weeks.

[Hoop]

thanks cdonald, a good argument.....Yep its still possible this 85% rise is a long term sucker rally within a very long term bear market cycle..breaking the $3 resistance will help confirm and consolidate this new uptrend within that very long term scenario maybe we will know in a few weeks

[barleeni]

thanks cdonald, a good argument.....Yep its still possible this 85% rise is a long term sucker rally within a very long term bear market cycle..breaking the $3 resistance will help confirm and consolidate this new uptrend within that very long term scenario maybe we will know in a few weeks

We just hit $3 Hoop, not as long a wait as you thought!

[golden city]

hitting my targets..for now.., i looking at 3.60 to 4 dollar end of the year

[bull....]

:t_up: took some profit reached my target price stellar run - why because margins have declined substantially last 2 weeks down 40% I reckon from highs so my guess for nzr margin is it is running at about 6 from now your probably hear about it at half yr if stays low for second half.
will maintain a small position now just in case goes higher may buy back if goes lower

[golden city]

as the nzd also going down heaps too., so i didn't think the margin will go down that much

[bull....]

hi gc you are correct but if you look at there profit matrix lower margin still has effect on profits which would mean longer to pay of debt if it becomes normal margin even with lower dollar.
gotta remember things change super quick in refining with lots of varibles

[golden city]

it looks like it will strike 3.20

[Schrodinger]

:eek2:
All aboard the NZR express..

[Crackity]

I boarded a few stations back and am awaiting sandwiches and a nice cuppa

[golden city]

looks strong support above 3 dollar

[Crackity]

3 of my favorite things Snaps!

[Hoop]

We just hit $3 Hoop, not as long a wait as you thought!

Hmmm... I expected it to touch the resistance level then have a breather..a technical theoretical viewpoint.

From this Technical theoretical point of view I am focusing on just 2 technical things..

1..the target price (TP) around the 2.95 area...where some shorter term traders may sell to realise a quick profit and stall the upward trend of the shareprice..... remember the TP is not a resistance point its only a price point that is reached 70% of the time after a breakout...you could have 60% at a higher price etc...it's a statistical point of view..
2..A very old resistance area at around $3.00 which is also a psychological price point for some investors ...Chartists assume Mr Market has a long memory and expect prices to hestitate around resistance levels, but we don't lose any sleep if the shareprice behaves differently and rockets on upwards..we just accept that the resistance point has lost strength or buyer demand is too strong or both (in theory S&R areas wax and wane in strength. In practice investors watch the depth data of a share to see the variable movements of the degree of strength of each support and resistance points...some S&R points die, other S&R price points are born).

The NZR depth table (not very accurate concerning Market strength after the market is closed and being a friday close as well) shows no visible resistance at 3.00 area and a small support at 2.75...On the chart this 2.75 area was the recent resistance line break that reforms as a support line so Theory (Chart) and Practice agree..

When I use depth tables I think 3D ..a fluid motion with price/volume bulges (S&P points) ebbing and flowing every single moment of the trading day and when the bulge ebbs away (less selling pressure) there's an opportunity for the price to break through without added demand pressure...Looking at the Friday's close depth and not seeing any such bulge at $3.00 could give the NZR price an opportunity to break through past $3.00 theoretical (charted) resistance to create a $3.00 support without much increase to buyer demand.

Lets watch the depth at work next Monday and see what happens...

[Sideshow Bob]

And us new shareholders ex Chevrons sell down thank you for it!! :p

thank you you again Chevron! :t_up::lol::lol::lol::lol::laugh:

[bull....]

Asia oil refining margins hit 2015 low, Mideast supply to drag http://www.cnbc.com/id/102805613

Asia oil refining margins hit 2015 low, Mideast supply to drag
Thursday, 2 July 2015 10:03 PM ET
SINGAPORE, July 2- Rallying oil refining margins have ground to a halt in Asia. Currently at a 2015 low, they could drop another 20-30 percent this quarter, led by declining profits in diesel as supply from the Middle East adds to a global glut. But they have almost halved this week to $5.60 with supply of refined products from traditional importers in the Middle East...
Source: Reuters | By: Jessica Jaganathan and Seng Li Peng

[golden city]

that is no good..down half margin

[bull....]

Guess the main point from margins falling is that debt will take longer to pay off which means dividends wont occur to longer in the future. see there profit matrix at an exchange rate of 65c and margins at $6 the npat halves from where we were 2 weeks ago - the point being margins have a much higher weighting than the exchange rate.

NZR did state at there annual meeting that they were forecasting weaker margins in the second half so at this early stage they may be right also they stated 2018 as likely for divs to resume - guess the high margins in the 1st half got us all excited and looked like we could bring all those forecast forward. anyway like ya still say snaps no need to panic yet the margins change everyday lets wait and see what the trend in margins does in the months ahead.

[cdonald]

Asia oil refining margins hit 2015 low, Mideast supply to drag http://www.cnbc.com/id/102805613

Asia oil refining margins hit 2015 low, Mideast supply to drag
Thursday, 2 July 2015 10:03 PM ET
SINGAPORE, July 2- Rallying oil refining margins have ground to a halt in Asia. Currently at a 2015 low, they could drop another 20-30 percent this quarter, led by declining profits in diesel as supply from the Middle East adds to a global glut. But they have almost halved this week to $5.60 with supply of refined products from traditional importers in the Middle East...
Source: Reuters | By: Jessica Jaganathan and Seng Li Peng

Just to add some NZR context onto this. Singapore complex margin of $5.60 USD = NZR margin of around $8.60 per bbl. In jan/feb we ran at CAP at an average exchange rate of .75 so in NZD terms the margin in JAN FEB was $12NZD/bbl. If we convert the $8.60 using May/Jun avg of .72 we get $11.95NZD/bbl so not that different. If we convert it onto Jul exchange rate it puts it up around $13NZD/bbl.

Other thing to consider is NZR was not the only one to delay shutdown, a lot of the refinerys around the area are looking to do shut downs now that the margins have eased a bit which will then put upward pressure back onto products again. Most important thing to remember though is the margins are averaged out over a 2 month period so day to day swings, whilst interesting, are somewhat misleading.

Project start up in November will also add another $1USD to margins so in theory Singapore complex margins can fall to around $4 after the project is done as the NZR uplift should make up the difference. Anything above $9 goes back to the oil companies.

[bull....]

Just to add some NZR context onto this. Singapore complex margin of $5.60 USD = NZR margin of around $8.60 per bbl. In jan/feb we ran at CAP at an average exchange rate of .75 so in NZD terms the margin in JAN FEB was $12NZD/bbl. If we convert the $8.60 using May/Jun avg of .72 we get $11.95NZD/bbl so not that different. If we convert it onto Jul exchange rate it puts it up around $13NZD/bbl.

Other thing to consider is NZR was not the only one to delay shutdown, a lot of the refinerys around the area are looking to do shut downs now that the margins have eased a bit which will then put upward pressure back onto products again. Most important thing to remember though is the margins are averaged out over a 2 month period so day to day swings, whilst interesting, are somewhat misleading.

Project start up in November will also add another $1USD to margins so in theory Singapore complex margins can fall to around $4 after the project is done as the NZR uplift should make up the difference. Anything above $9 goes back to the oil companies.

Hi I might be wrong but I thought this was how it was worked out too, but when I compared the historical figures which they used in the article ( I got the data from a source ) against announcements by NZR it never matched the quoted figures from Singapore the analysis of comparison seemed to show a difference of $2 from stated Singapore complex margin so I worked out current of there quoted 5.60 - 2 = 3.60 + nzr margin of 3 to 4 = 7.6 us so get slightly less than you - anyway my point was mainly divs will be delayed by a margin decline

[dodgy]

Fairly broad and a little misleading this statement bull........with such a favorable kiwi $ and the margins running at the highest levels for sometime I would of thought margins would have to decrease significantly and for an extended period of time for divies payments to be pushed out further than year end 2015. This would not even take into account the uplift in profit from the new plant.

Good afternoon Snapiti and all
You know where I stand on divs and S/P.
Regards
-dodgy (owner/shareholder and expectant)

[bull....]

Fairly broad and a little misleading this statement bull........with such a favorable kiwi $ and the margins running at the highest levels for sometime I would of thought margins would have to decrease significantly and for an extended period of time for divies payments to be pushed out further than year end 2015. This would not even take into account the uplift in profit from the new plant.

don't think its misleading you know the analyst report profit matrix shows at a margin of 6usd and exchange rate of 65c it is 70mil npat at current margin of 9usd and 65c its 165m so if the current decline in margins remains that is a huge decrease in profits still profitable company though but there stated divs is when gearing is down to 10-20% so less profit longer to reach the target - you have to roll with changing environment and adjust your forecasts
the new plant adds less than 1 dollar also lower oil price means less margin from new plant as shown in there presentations

anyway who knows price may keep going up suits me im still got some but rolling my expectations back on when divs might come now if low margin remains

[BlackPeter]

Consensus target price went this weekend up from $3.40 to $ 3.71 (with a spread from $3.15 to $ 4.90):

http://www.4-traders.com/NEW-ZEALAND-REFINING-COMP-6492074/consensus/

Probably not yet the right time to panic and sell, but who knows ...

[percy]

Consensus target price went this weekend up from $3.40 to $ 3.71 (with a spread from $3.15 to $ 4.90):

http://www.4-traders.com/NEW-ZEALAND-REFINING-COMP-6492074/consensus/

Probably not yet the right time to panic and sell, but who knows ...

I sold my small holding this morning,as I realised I did not fully understand the variables of the business.
However it is always nice to make a profit from a mistake?? Not like me to hold for just a week.Usually buy to hold forever.

[golden city]

hard to say this time.., greek crisis could expand

[dodgy]

hard to say this time.., greek crisis could expand

Good afternoon golden city
Keep your powder dry. Maybe the analysts quoted have been following this forum!
Regards
-dodgy (owner/shareholder - dry powder carrier)

[Hoop]

Good afternoon golden city
Keep your powder dry. Maybe the analysts quoted have been following this forum!
Regards
-dodgy (owner/shareholder - dry powder carrier)
Since nearly all NZ Analysts recite Fundamental Analysis (FA) in their reports, I would be very surprised and concerned if our Top (Guru) Sharetrader Fundamental Analysts posted views were different.

[golden city]

looks like the share price keep going up//..maybe good news coming half year results

[dodgy]

Since nearly all NZ Analysts recite Fundamental Analysis (FA) in their reports, I would be very surprised and concerned if our Top (Guru) Sharetrader Fundamental Analysts posted views were different.

Tongue in cheek
-d

[bull....]

simple really........you are going to see the best 6 monthly report in more than a decade from NZR in August and fairly sure NZR will be in the NZX 50 come end of Sept.......then we are not far away from benefiting from new plant margins and through puts.........lots of tails winds.
You also have a reserve bank hell bent on lowering interest rates to lower our $......... as we know this is very good for NZR.............. of course like any investment there are risks.

6mthly will be awesome but may contain a warning that the second half may not be as good as the first

[bull....]

hi snaps I still own nzr shares sold some at 3 so more than happy if it keeps going higher my posts now are a reflection on realities in the market place nothing more.

[golden city]

striking to 3.80 soon i think.., after breaking 3.09 point

[bull....]

striking to 3.80 soon i think.., after breaking 3.09 point

3.70 next for me and yes broke thru resistance

[golden city]

can the snow ball keep rolling

[bull....]

I forgot to mention snaps I had to sell some at 3 because I borrowed against the house lol so I had to reduce the margin the longer you hold less profit for me more for bank

[BlackPeter]

I forgot to mention snaps I had to sell some at 3 because I borrowed against the house lol so I had to reduce the margin the longer you hold less profit for me more for bank

Glad it worked out for you ... however would not generally recommend this practise. Can easily go the wrong way - and there are lots of examples in history when it did.

[bull....]

Glad it worked out for you ... however would not generally recommend this practise. Can easily go the wrong way - and there are lots of examples in history when it did.

Totally agree - very high risk strategy - you can lose more than you own if it goes wrong

heres a link if don't understand the risks of margin trading http://www.investopedia.com/university/margin/margin4.asp

or perhaps ask some Chinese stock market players how there margin accounts are fairing

[golden city]

Oil prices keep falling

[bull....]

looks like the price hit fib projection resistance at 3.15 see if can hold above 3 sold some more at 3.15 was way over brought in my opinion short term

also Chinese stocks plummeting again doesn't help I will post some margin figures on week end to show Singapore refinery margin against nzr margin see what I mean about decline last week

[golden city]

3.26 is the resisitant

[golden city]

still got chance to break it over

[bull....]

3.26 is the resisitant

the next fib projection resistance after 3.15 anyway only stating facts not fiction

[bull....]

SRM
NZRM
DIFF


2013
Jan/Feb
8.48
4.18
-4.3



Mar/Apr
7.3
5.03
-2.27



May/Jun
7.21
6.84
-0.37



Jul/Aug
6.09
6.05
-0.04



Sept/Oct
5.12
2.95
-2.17



Nov/Dec
5.35
1.82
-3.53


2014
Jan/Feb
6.53
3.86
-2.67



Mar/Apr
6.06
-2.84
-8.9



May/Jun
5.71
3.48
-2.23



Jul/Aug
4.32
6.75
2.43



Sept/Oct
5.78
7.54
1.76



Nov/Dec
6.24
9.98
3.74


2015
Jan/Feb
7.61
9.91
1.39



Mar/Apr
8.39
8.77
0.38



May/Jun
8.15





July/Aug





the srm is the total

[bull....]

srm is the total refinery margin from Singapore as reported in that press release a few posts back compared to nzr margin as reported have analysed over 10yrs data and nzr margin mirroers this by brtween 1 - 2 dollars over the course of a yr so is pretty aucrate.

anyway what I was saying yes full 6 mths is fantastic but the current margin this mth is less than 6 so if you mirror that to nzr then they will be running similar around 6-7 in my opinion

[bull....]

nzr quote platts data for Singapore reefing margin at what you say above 3.64 + 3 - 4 still shows what im saying the margins have fallen off of late

[Nasi Goreng]

I based my investment on avg margins of around $6-7 (profit around $60-80m). This last 8 months have provided super-normal profits which is great for debt repayment but I see that as a bit of a bonus for NZR.

Lower debt = lower interest payments which will give better profits next year on same margins.
New Plant = better margins next year
Lower Kiwi = better margins

I'm happy to sit back and own this for the long term unless something significantly changes.

[bull....]

I based my investment on avg margins of around $6-7 (profit around $60-80m). This last 8 months have provided super-normal profits which is great for debt repayment but I see that as a bit of a bonus for NZR.

Lower debt = lower interest payments which will give better profits next year on same margins.
New Plant = better margins next year
Lower Kiwi = better margins

I'm happy to sit back and own this for the long term unless something significantly changes.

nice to see some realistic sensible comment as cant expect margins to stay at max for ever all I was trying to say was if margins fall they still profitable but divs might be delayed as it will take longer to pay of debt

[Nasi Goreng]

I personally would rather see them retire as much debt as possible then pay from 2017. That view is not shared by the oil companies though so I would expect them to be pushing for dividend asap. Either way, its all good.

[bull....]

http://www.platts.com/latest-news/oil/singapore/singapore-cracking-margin-falls-to-six-week-low-27540024

[bull....]

https://www.nzx.com/companies/NZR/announcements/266973

8.12 I got 8.55 achieved pretty close

[Joshuatree]

Good one bull. Our processing fee for the half year is bigger than for the whole of last year ; partly due to shutdown / upgrade i guess . Sure has been in a sweet spot but for how much longer; will the momentum continue margin wise.

[cdonald]

good uplift still over Singapore margins of $4.31/bbl and nice to see that still another few million of cap to play with. Pretty high thruput for the 2 month period with a shut down in it too... They are certinally trying to make hay while the sun shines. Looking forward the singapore margins are a bit weaker but the NZR uplift and cap carried forward mixed with upgrade and lower NZD will no doubt produce a bumper year for NZR.

[Nasi Goreng]

Lots of demand after recent pullback. Where were these buyers 2 months ago?

Holding and looking forward to 'half price' plant upgrade :-)

[bull....]

might be a double top at 3.15
nzr margins running at around average of 6 - 6.5 I reckon this mth

[cdonald]

http://www.tradearabia.com/news/INTNEWS_286295.html

Interesting last line in the article from reuters. "Asian distillate markets have started showing fatigue ... with Asian complex refining margins falling sharply to near breakeven levels," Energy Aspects said. - Reuters.


I am not too sure what break even means but it dosnt sound positive. NZR uplift largely driven by brent dubai crack which still seems fairly healthy so I am picking 5 - 6 for the month but not too sure what the medium turn future will bring. The last 12 months has been great.

[bull....]

margins fell under 5 I believe last night, seems most cracks are falling everywhere but seem to be holding up most in the us

[psychic]

Meanwhile, elsewhere:

http://www.bloomberg.com/news/articles/2015-07-23/oil-producers-ugly-duckling-refineries-just-turned-into-swans

[Leftfield]

Thanks psychic…. I like the conclusion, "Refiners are benefiting from a double whammy of lower crude oil prices and strong demand,” Hamza Khan, head of commodity strategy in Amsterdam at ING Bank NV, said July 20. “As long as the oil price remains depressed and economies strengthen, refinery margins will exceed expectations.”

[Joshuatree]

Hey Snapiti; you're valued too;where in the wide world are you?:huh:

[Joshuatree]

Would someone in the Sharetrader community please tell me what happened to snaps?.Did he just disappear removing all threads; did he say anything ,was he banned? Thanks in advance

[Crackity]

Would someone in the Sharetrader community please tell me what happened to snaps?.Did he just disappear removing all threads; did he say anything ,was he banned? Thanks in advance

Not banned but he is no longer a member if you have a look at the member list section - hopefully he reconsiders and rejoins

[Joshuatree]

Cool thanks. It is funny when someone just disappears like that when you've got used to them as part of your coffee club so to speak. Was browsing briefly through the membership list. So many ghosts/hibernations/departures/quiet observers etc out there one wonders what life has brought /taught to them. Impermanence is a floating anchor.

Meanwhile highest vol of shares in year traded today;s/p drifting down landing on $3 today after hitting allow of $2.92. CEN cash gathering maybe.

[sb9]

Yeah, definitely miss snapiti's valuable input.

I think instos buying up before the index changes, as its widely rumoured that NZR might be part of NZX 50.

Noticed recently that 4 traders target price is revised to $4.08 on the back of weakening nzd.

[golden city]

good time to buy now

[Crackity]

Cool thanks. It is funny when someone just disappears like that when you've got used to them as part of your coffee club so to speak. Was browsing briefly through the membership list. So many ghosts/hibernations/departures/quiet observers etc out there one wonders what life has brought /taught to them. Impermanence is a floating anchor..

Thoughts like that are best thought with a single malt in hand Josh:)

[cdonald]

good time to buy now

Not too sure it is a good time to buy yet. I expect the mid year results to be amazing but no doubt they will be dampend a bit by the chairmans report saying something like "dont expect dividends soon as margins are now $3 and we have to pay off debt"

So in a nut shell, first six months great, second six months, okay...

interesting article on the dubai-brent swap pricing and also China now being a major player etc. http://www.scmp.com/business/markets/article/1844785/china-switch-african-oil-may-lead-saudi-price-cut

Long term outlook I think is great but short term I think a little bit rocky.

[bull....]

margins running around 5-6 this mth, I sold remaining of mine at 3.15 so will re-enter some stage closer to div time if the chance arises good fortune to holders

[sb9]

Any clues bull, as to what we might expect tomorrow's HY announcement.

Fairly decent volumes through at around $3 mark in the last few weeks, inclusion in NZX 50 on the cards?

[bull....]

hi sb9 I would expect nothing other than a fantastic result.

I will be looking for comment about any guidance on divs and margins second half

[sb9]

Thanks bull, I reckon too it'll be a stunner.

Looks like buyers are pouring in now.

[bull....]

great result as expected

dividend so soon is a surprise considering there stated objectives in presentations - major shareholders must have twisted there arm lol

[Joshuatree]

Divs back , 5c for starters NPAT $65.2 mill :t_up:. Snapiti come back and take a bow.

[golden city]

Unexpected dividends

[Carpenterjoe]

Well done holders, big well done Snaps.

[Nasi Goreng]

EPS of 20.9c (I wish they would report that in commentary). Very good result which is in line but amazing to what forecasts would have been 12 months ago. Definitely makes H2 exciting.

I'm a bit disappointed about dividend of 25% of NPAT, I think it's currently much better reducing company debt than in my bank account which was their strategy. Anyway, I will take it :-)

[bull....]

debt reduction would have been smarter I think too, if margins decline they not pay a div again? and it will take longer to pay of debt now to if margins decline

[golden city]

Valued it 4 dollar plus

[sb9]

Cracking result and back to paying divvy...all positive momentum :t_up:

Yeah gc, it'll be $4 plus by Christmas I reckon...

[Sideshow Bob]

Great result. Agree with Nasi, but will take it. Fully imputed - lovely!

[cdonald]

First 6 months of the year were great. Next six months are looking pretty average in regards to margins. Exchange rate will be helping NZR a lot at the moment but I understand that the majors want their divvies which is of course what this stock is about. Hopefully they can keep some momentum going and pay another one in 6 months time.

[Crackity]

This is the revised profit matrix from the half yearly report - quite useful for future reference.....

a happy holder at the moment.....

[cdonald]

I am picking the 88/274 box for the end of the Year. Probably more like 95/267 but you didnt have that one there.. Average margins of $5.50USD/BBL ($4usd/bbl uplift over singapore complex) and an average exchange rate of .65. Not too sure if plant will need to be slowed down for tie ins in a few weeks time but no doubt I will see the flare if need be.

[Crackity]

I am picking the 88/274 box for the end of the Year. Probably more like 95/267 but you didnt have that one there.. Average margins of $5.50USD/BBL ($4usd/bbl uplift over singapore complex) and an average exchange rate of .65. Not too sure if plant will need to be slowed down for tie ins in a few weeks time but no doubt I will see the flare if need be.


Yes indeed - and operating cash flow of $129.8 million for the half year is a nice figure.

I'd be happy with full year net profit after tax of $95 million and borrowings down to $267 million. This would also give operating cash flow for the year of circa $196 million or so.

[sb9]

Big turnover today...

[golden city]

yes..surprised me...looks like the bottom out

[cdonald]

http://af.reuters.com/article/commoditiesNews/idAFL4N1112KH20150826

Hopefully the thruput announcement in a couple of weeks wont come as a surprise to those of you that read this thread.

[sb9]

Anyone here know if NZR is to be included in NZX 50, understand some index changes are happening end of this month being today.

[golden city]

nzr looks alive again.., targeting 3.49

[golden city]

new high for a while has be broken., looking good

[Sideshow Bob]

Wild ride for oil continued overnight. Up quite substantially.

[golden city]

Nzd drop heaps in contrast

[bull....]

cracks are down

[sb9]

Big blocks of trade going through today....gotta be included in NZX 50.

[golden city]

It looks pretty solid

[golden city]

upward momentum has firmly setup.., will see next week

[sb9]

Yes gc, look out for those index changes to be announced shortly. Good volumes through this week, only explanation is Instos buying in, I think.

[golden city]

i had accumpulated heaps too haha

[sb9]

Another THL, eh gc....;)

[golden city]

yes..., thl is good company.., but the explosive upward trend is lack of nzr

[golden city]

the prime time for thl is gone.., ..thl is more like a dividend stock now

[sb9]

Also remember goes ex-div on Tuesday, so one more day on Monday to get the divvy.

[sb9]

https://nzx.com/regulators/NZXO/announcements/269691

Here it is, NZR in and PEB out of NZX 50.

[BlackPeter]

https://nzx.com/regulators/NZXO/announcements/269691

Here it is, NZR in and PEB out of NZX 50.

cool - definitely a better time to hold NZR than PEB :t_up:

[golden city]

what are the benefits to be included in nzx 50..?

[macduffy]

what are the benefits to be included in nzx 50..?

Index funds are based on index weightings, eg NZX50, so fund managers are pretty much compelled to buy those stocks and to adjust their holdings as prices move. Other non-index funds often keep fairly close to the index, rather than risk badly under-performing!

[golden city]

doing good...ex dividends

[sb9]

Expect more activity this week and next week before the index changes take place on end of 18th Sep trading day. Might see testing that $3.50 mark in the medium term. With OCR cut almost certain and NZD tracking lower by month, its all looking good.

[golden city]

3.50 is well and truly on its way

[barleeni]

Expect more activity this week and next week before the index changes take place on end of 18th Sep trading day. Might see testing that $3.50 mark in the medium term. With OCR cut almost certain and NZD tracking lower by month, its all looking good.

and we should also expect to see the throughput report for july/august released on Monday (or perhaps Tuesday Wednesday?). This might also see some SP movement, not sure what to expect actually, I don't think we will see $9 GRM margins though?? lower??? anyone?? $7.50??

[sb9]

and we should also expect to see the throughput report for july/august released on Monday (or perhaps Tuesday Wednesday?). This might also see some SP movement, not sure what to expect actually, I don't think we will see $9 GRM margins though?? lower??? anyone?? $7.50??


Yeah, latest throughput should be out early next week. Not sure about margins though. may be down little bit, I suspect.

[cdonald]

and we should also expect to see the throughput report for july/august released on Monday (or perhaps Tuesday Wednesday?). This might also see some SP movement, not sure what to expect actually, I don't think we will see $9 GRM margins though?? lower??? anyone?? $7.50??

I am picking margins of around $5USD/bbl exchange rate of $0.66 but thru put will be very high due to recent shutdown etc

[banter]

August Singapore complex refining margins seem to be about $USD5 per barrel http://www.koreaherald.com/view.php?ud=20150910001212
Recent NZR uplift-over-Singapore around $USD4 per barrel.

Total margin $9 per barrel?

[bull....]

August Singapore complex refining margins seem to be about $USD5 per barrel http://www.koreaherald.com/view.php?ud=20150910001212
Recent NZR uplift-over-Singapore around $USD4 per barrel.

Total margin $9 per barrel?

I'm in cd donalds camp 5 - 7 total margin includes nzr uplift

[golden city]

looking good.., breakout

[sb9]

Expect flurry of trading over next few days, 18th being the last day before NZX 50 index changes take affect.

Plus the throughput/margin report should be out anytime now.

[sb9]

https://nzx.com/companies/NZR/announcements/270233

All time-record throughput of 7.52ml barrels and Margin USD 7.66 per barrel. Excellent result :t_up:

[bull....]

https://nzx.com/companies/NZR/announcements/270233

All time-record throughput of 7.52ml barrels and Margin USD 7.66 per barrel. Excellent result :t_up:

excellent result I'm glad they read this thread and have lifted throughputs considerably lol , there uplift was huge

[Dej]

At 1.03 billion, based solely on PE ratio valuation (conservative 15), they need an NPAT of 68 million to support there valuation.

From last report they easily made that in the last 6 months, and with increased throughput and a good margin, surely this is undervalued based solely on earnings?

[cyclist]

excellent result I'm glad they read this thread and have lifted throughputs considerably lol , there uplift was huge

Indeed. Can anyone suggest why such a good uplift figure, or point me in the direction of how it is calculated?

Add in the US$ level, and things are still looking quite tidy.

[banter]

Processing fee effectively maintained at $9 per barrel, as NZR 'spent' 2.3m of the $7.8m ceiling-and-floor reserve. Still 5.3m in reserve.

Good chance then that NZR will be dancing on the ceiling (https://nzx.com/files/attachments/218917.pdf) (have a close look at pp 1-2), with an effective PF for the whole year of $9 per barrel or pretty close to it.

Gearing should be down to 20-25% by year's end, allowing NZR to pay a div of 40-60% of earnings, in line with their policy.
If they 'only' choose 40%, that means a 15cps final div. 25c if they go for 60%, and 20c with a 50% payout.

Many variables next year, but if Te Mahi Hou is successful, it will add $.9-$1.1 per barrel to the 'uplift', and 3m extra barrels a year processed.
NZR have other uplift initiatives planned from 2015-2018 which could add another 60-80c per barrel uplift.

Figures given below show an estimate of results for 2016 with PF = $9 and ER = .66 (currently .635).

Te Mahi Hou implementation failure is a current risk.

Figures all sourced from NZR.




15 e

16 e


MBPD 4
0.117

0.125


PF $USD
9

9


ER
0.68

0.66


Op. days/yr

347

347


Scale factor
0.7

0.7


RefiningRev
374.9

413.5


Pipeline etc

63.0

64.3


Total rev
438

477.8







Income
438
478


exp 3
225
229.5


int 2
1.5
10.6


EBT
211
238


tax
59
67


NPAT 4
152
171







eps after tax
0.486
0.547


eps before tax
0.676
0.759


div payout % 5

40%
75%


net div cps
0.195
0.410


ret. Earns
91.3
42.8


bank debt
198.0
106.7


Gearing
21%
11%


Gross yield
8%
17%



NOTES
1) 'Matrix' https://www.nzx.com/files/attachments/218917.pdf p21 confirms 147 NPAT and 198m borrowings, with $9cap PF and ER .65
2) 252m assumed at 5%, being 269 at 30/6/15, and 191 at year end, averaged less 0.5m saving from platinum lease back arrangement
3) Exp per h115 report
4) Agrees with matrix estimate of 147 - H2 ER .65; PF 9
5) See note, matrix h12015, "..we are conscious that year-end borrowings have pushed gearing to 33% when our targeted ratio, outlined in the Company’s dividend policy, is 10-20%, and that further investment is required to successfully complete TMH."
Dividend policy (NZR website)
During periods leading up to and including major capital expenditure the dividend pay-out expressed as a percentage of NPAT will be in the 40-60% range unless otherwise advised by the Directors.
During periods of modest capital expenditure and optimum debt levels, the dividend pay-out percentage will be above 60% unless otherwise advised by the Directors.

[BlackPeter]

looks like we are "well positioned";) ... or is this assessment only for banks and retirement homes appropriate? Anyway - result is not too bad for a predicted "weaker" 2nd half (as per analyst presentation).

Discl: happy holder :t_up:

[sb9]

We're very well positioned on this one, I reckon $4 by Christmas..

[golden city]

well underway...looking good.., for big dividends next year

[Joshuatree]

banter thanks for sharing that, appreciate it.

[golden city]

time to invest in trilogy til..., consolidation has finished .., up trend start soon

[kiora]

time to invest in trilogy til..., consolidation has finished .., up trend start soon

Why here & not on Trilogy thread ? Are you in on it?

[golden city]

Yes. . just bought some today...looking at for long time

[kiora]

Yes. . just bought some today...looking at for long time

Better late than never :)

[Sideshow Bob]

thank you you again Chevron! :t_up::lol::lol::lol::lol::laugh:

i continue to give thanks! :p

[golden city]

well done til.., nzr consolidate soon

[banter]

I reckon $4 by Christmas..
There seems to be a link between the NZR share price and EPS. No surprises there.

Historically the price seems to track the previous year's eps more closely than the present year's, and much more closely than the following year's. The price is guided more by the past than the present, and not much by the future.

This table looks at the year's high and low share price from 2006-2016. I estimate 2016 eps at around 45-55 cps.
say 50c.




2006

2007
2008
2009
2010
2011
2012
2013
2014
2015
2016 e


yr high

8.15
8.14
8.35
7.66
4.46
5.2
3.32
2.81
2.29
3.35



yr low
5.71
6.06
5.5
3.58
2.9
2.72
2.19
2.03
1.58
2.12



eps- prev yr


0.48
0.4

0.45
0.08

0.21
0.123
0.1165
-0.018
0.032

0.45



eps-curr yr
0.48
0.4
0.45

0.08
0.21
0.123
0.1165
-0.018
0.032
0.45

0.50




Looking at 2015 (in green - 3.2c / 45c e) the best fit is 2010 (8c / 21c), though 2010 had higher prev year's earning and lower current year ones. In 2010, the price ranged from $2.9 - $4.46.

You might expect 2015 then to have lower lows (yes, 2.12) and higher highs (not yet - only 3.35).

Looking at 2016, 2007 and 2008 (all in blue) match well. The price range was 5.5 - 8.35.
By this stage of the year, with 8 months' data in, and some floor / ceiling payments 'in the bank', the 2015 profit figures are firming up.

There look to be more reasons for the NZR share price to go up than down.

Here's a chart showing the same thing using previous year's EPS.7609

[sb9]

Great stuff Banter, looking at 45 eps for current year, even if were to apply a nominal 10 pe that gives you a price of at least $4.50.
I'm sure the industry pe multiple is slightly higher may be 11-12, someone can confirm that. So $4 by Christmas is very very conservative estimate in my opinion.

[Leftfield]

Excellent post Banter. Much appreciated (Disc- Happy holder.)

[Hoop]

Quality post Banter

[golden city]

did we get dividends tomorrow or thursday?

[Joshuatree]

Its EASY to find on NZX(below chart); as payable 24/9

[golden city]

i was thinking., the recording dates always 2 days earlier than they shows.., was thinking the pay day same

[sb9]

Expect more activity this week and next week before the index changes take place on end of 18th Sep trading day. Might see testing that $3.50 mark in the medium term. With OCR cut almost certain and NZD tracking lower by month, its all looking good.

Well there we've it, closed at $3.50 y'day didn't take that long to break through $3.50 (9 trading days to be precise since posting) and mu gut feel its not done yet. Next target $4.00 by Christmas.

[golden city]

I am targeting 5 dollar early next year

[sb9]

Might well hit that mark gc, with Te Mahi to be commissioned soon and one more rate cut prospect (along with Fed raising rates), NZD tracking lower for longer, there's further room for this pup to track higher.

[sb9]

Is that you gc @ $5 on offer on market depth, love your confidence mate

[golden city]

not me.., I have no plan to sell at this stage.., still accumulating

[sb9]

Happy holder...divvy in the bank, more to come for the year end :t_up:

[golden city]

Didnt see my yet

[sb9]

Have you updated your bank a/c details for direct credit? I think Computershare does their registry.

[golden city]

forgot to update that ****.., have to wait for cheque....can't use the money yet...

[golden city]

price cmming down fast..

[gmatt]

NZR seems to have been hit harder than most over the last few days ........ any specific reason? ........ or is it a good time to buy more!!

[sb9]

Yeah IFT sale of ZEL perhaps, any correlation?

[Sideshow Bob]

NZR seems to have been hit harder than most over the last few days ........ any specific reason? ........ or is it a good time to buy more!!


Was trading under $3 in late August, so had a pretty hard run through September. Maybe the change in the makeup of the NZX50 pushed it along, and now that has dried up?

[golden city]

profit taking i guessed

[sb9]

Big players taking some money off table to invest in ZEL I think.

Will keep a close watch on any lower traction might pick up more....as far as I'm concerned story hasn't changed much.