CHI - Channel Infrastructure Ltd (NZR)

[golden city]

i sold out last week.., good time to buy now.., i am shopping

[Derain]

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


i sold out last week.., good time to buy now.., i am shopping

Changed your mind half way through the week?

[golden city]

i was a big decision last week.., need the money to buy til..., which is good.., now time to get back

[pierre]

SP has been up to 362 this month and back to 330 today. It's the only NZ share in my portfolio of 20 companies to have a downer today. What's the problem with NZR?

[BlackPeter]

SP has been up to 362 this month and back to 330 today. It's the only NZ share in my portfolio of 20 companies to have a downer today. What's the problem with NZR?

Don't think there is any specific problem - just look at the SP pattern - you can nearly deduce based on the graph when they release their 2 monthly throughput numbers.

Remember - they talked about a bit quieter 2nd HY, though the numbers so far don't seem to support that. Outlook for 2016 was quite good (and should be with the new plant).

One thing which might be a (slight) dampener is the rising oil price - cuts into the margin, but I don't think that it will hurt as long as oil stays well below the $60 mark - and that's what the Brent futures indicating.

How do they say: don't panic, but as always - DYOR.

Discl: holding;

[sb9]

Even I got bit perplexed by the recent weakness in sp. Only thing that I an think of is stronger NZD in the past week or so, but that shouldn't be of much concern in my opinion, its only a short term spike. Could be market waiting for next catalyst to drive the price further. Happy holder either way.

[sb9]

Some big parcels traded off market in the last hour or so...

[golden city]

it is healthy trend ..just taking some profit., and will up again..,

[banter]

Singapore complex refining margins have fallen $2 to around $6/barrel in the quarter ending September 30th.
7675
According to NZR
"Singapore complex margins for the period [July August 2015] softened compared with the first half of 2015 to an average of USD 2.52 per barrel"

Does anyone know why there is a difference, and what the SCRM as reported by NZR is likely to be in September / October?

[bull....]

nzr refining use platts data for Singapore refining margin + ther grm uplift

[sb9]

https://nzx.com/companies/NZR/announcements/272159

Some positive initiatives announced to lift margins.

[Joshuatree]

Cheers sb. Love that last bit "lift the refinery's margin by further USD0.90-1.10 per barrel":)

[cdonald]

Cheers sb. Love that last bit "lift the refinery's margin by further USD0.90-1.10 per barrel":)

Will be interesting to see if they hit CAP again this month. If they continue to hit cap for the year it is fantastic for shareholders but it does allude to the fact that the margin improvement projects will be effectively irrelevant and in fact giving a discount to customers (users). I understand that the floor calculation is index linked to inflation etc but the CAP calculation has no such mechanism. Not that I am complaining if NZR make an average margin of $9USD/BBL but if they are/have spent several hundred million dollars to lift margins that they cannot effectively recover from the users then the processing agreements need to have a good shake up.

So, in short, anything over $9USD per bbl is money in the user companies back pockets at the expense of shareholders.

[banter]

I understand that the floor calculation is index linked to inflation etc but the CAP calculation has no such mechanism. Not that I am complaining...
My one reservation with NZR is that any company with increasing expenses and a ceiling on income will eventually, inevitably go broke - assuming inflation of costs.

I wonder if the various 'fairness reports' NZR commissioned considered this.
IMO the ceiling and floor should both be inflation-indexed (or deflation-indexed).

[sb9]

Big off-market trade of 1.5ml shares transacted in the last half hour.

[banter]

"
Singapore (Platts)--28 Oct 2015 414 am EDT/814 GMT


"The Singapore cracking margin against Dubai crude has risen sharply over the last five trading sessions to $5.49/b at close of Asian trade Tuesday, supported by firmer light distillate cracks, Platts data showed.

The refining margin had fallen to a low of $3.05/b on October 9, after earlier rising to a 31-month high of $7.11/b over September 23-25."
- http://www.platts.com/latest-news/oil/singapore/singapore-cracking-margin-firms-in-late-oct-on-27916443


$5 average for Sep/Oct maybe? Should be at or close to cap if so.

[sb9]

Looks like things are in bit of holding pattern atm, just side-way movements. Need another catalyst to push higher, new plant should be operational soon.

[BlackPeter]

Looks like things are in bit of holding pattern atm, just side-way movements. Need another catalyst to push higher, new plant should be operational soon.

I am sure the new plant will help, but even without - just wait for the next throughput and margins report (mid November). I'd expect it to "de-risk" the current financial year ... and so far it looks like the margins are still fine (low oil, reasonable Singapore refining margin, though NZ$ creeping back somewhat).

[sb9]

I am sure the new plant will help, but even without - just wait for the next throughput and margins report (mid November). I'd expect it to "de-risk" the current financial year ... and so far it looks like the margins are still fine (low oil, reasonable Singapore refining margin, though NZ$ creeping back somewhat).

Couldn't agree more.

There's no reason for sp to be where it is currently. Happy to wait and watch.

[cdonald]

Will be interesting to see the thruput report for the Sep/Oct period. I am picking another all time record for thruput (last period was 7.5m) and I think that the base Platts singapore refining margins are higher than what they were last period too. Exchange rates marginally better at 0.6508 for the current period. Could be looking at income circa 70m for the 2 month period. I guess we will know in the next day or two. If we keep on hitting cap the increase in production from new project (must almost be ready to go live) will be pretty magical for the remainder of the year. 2015 might be talked about for many years to come, well done to NZR for keeping the plant up and running in these times of "super profits".

[sb9]

I think the margin throughput report due next weeks will be quite telling as to how the annual results going to be, as their year end is Dec. I'm expecting it to be bullish along with new plant to be commissioned soon. Bring it on!

[Joshuatree]

A snippet from Craigs research on ZEL

"Refining margin gains driven by a strong Singapore margin and efficiency gains
The company has seen significant increase in the GRM received , margins at NZ$11.6 and NZNZ$11.7/bbl in 1 Q16 and2Q16 respectively, this relative to the average NZ$2.4/bbl seen in the pcp.This was on the back of strong margins and record processing volumes, the rebate ZEL received increasing by NZ$15m(c.167%) in total relative to 1H15

While we expect a slight decline over 2H16 as singapore complex margins normalise toward long run averages , this decline should be partially mitigated by an increase in NZR's premium to the Singapore margin as result of the introduction of Te mahi Hou( a $US0.90/bbl benefit) and efficiency gains (US$0.13/bbl)"

[sb9]

Thanks for that JT, precisely the reason why Z increased their profit despite lower sales revenue on the back higher margins.

I expect the sp to rocket upon release of throughput report next week.

[iceman]

Will be interesting to see the thruput report for the Sep/Oct period. I am picking another all time record for thruput (last period was 7.5m) and I think that the base Platts singapore refining margins are higher than what they were last period too. Exchange rates marginally better at 0.6508 for the current period. Could be looking at income circa 70m for the 2 month period. I guess we will know in the next day or two. If we keep on hitting cap the increase in production from new project (must almost be ready to go live) will be pretty magical for the remainder of the year. 2015 might be talked about for many years to come, well done to NZR for keeping the plant up and running in these times of "super profits".

And it is out. You were close but they even bettered your forecast. A great result

[sb9]

Wow that caught me by surprise, wasn't expecting the report out until next week.

Anyway great result overall, Blue skies from here I hope.

[Leftfield]

And it is out. You were close but they even bettered your forecast. A great result

Particularly like Appendix 2 :) Glad I topped up some more this morning (before this announcement - pure luck), and thank you to posters (Golden City, Bull, Sb9 etc ) who first noted NZR's potential some time back.

[Joshuatree]

Snapiti was the one with the foresight and research freely shared to thank imo. Bring Back Snaps, Bring back Snaps....ohh he chose to leave us.......

[Crackity]

Snapiti was the one with the foresight and research freely shared to thank imo. Bring Back Snaps, Bring back Snaps....ohh he chose to leave us.......

Agreed - he could also revisit the PEB thread....I'm still happily holding NZR

[sb9]

Particularly like Appendix 2 :) Glad I topped up some more this morning (before this announcement - pure luck), and thank you to posters (Golden City, Bull, Sb9 etc ) who first noted NZR's potential some time back.

You're welcome left field, good timing with your buy. Should be cracker of a result for this FY and some handsome divvy on top of 5c interim paid out.

[sb9]

Smashed thro' the day since the announcement.

Love that 30,000 on offer at $5.00 (not mine) on trading depth, that's where I'm thinking it'll be in 12-18 months time.

[golden city]

happy holder

[Sideshow Bob]

Small top up today, and close to my largest holding (after MEL). Decided when price was $3.44 but went through at $3.50.

Not too worried when it closes at $3.63! :eek2:

[bull....]

awesome performance :)

[sb9]

Oil dropped further overnight and NZD tracking lower, augurs well for NZR.

[Sideshow Bob]

Has the market finally really woken up to NZR? Up about 40c in the last 2 days - about 12%.

[golden city]

beautiful i love it

[Beagle]

Oil dropped further overnight and NZD tracking lower, augurs well for NZR.

I do think we are in for lower oil and currency for quite some time so provided margin's and processing volumes stay strong shareholders appear to be extremly well positioned.
Disc : Looks like a solid and sustained earnings recovery story so I'm in.

[Crackity]

I do think we are in for lower oil and currency for quite some time so provided margin's and processing volumes stay strong shareholders appear to be extremly well positioned.
Disc : Looks like a solid and sustained earnings recovery story so I'm in.

Its always better to be on time Rog but I think youll get a few drinks before closing time.

[sb9]

I do think we are in for lower oil and currency for quite some time so provided margin's and processing volumes stay strong shareholders appear to be extremly well positioned.
Disc : Looks like a solid and sustained earnings recovery story so I'm in.

I say it's good bet Roger, wait till the new plant is commissioned later this month, more blue skies after that.

[Beagle]

Its always better to be on time Rog but I think youll get a few drinks before closing time.

LOL...you can't be on time to every party but when its a good one I reckon its better to be late than never arrive :)

[iceman]

LOL...you can't be on time to every party but when its a good one I reckon its better to be late than never arrive :)

Welcome aboard mate :). As an aside, a friend who is a petroleum engineer told me yesterday that 30000 jobs have gone Worldwide in the petroleum exploration industries last 12 months. I know many people in that industry that are unemployed or facing unemployment. All points towards the companies believing we are stuck with low prices for a
long time yet

[Leftfield]

"A record glut of oil ( 3 Billion Barrels) is set to continue into next year and maintain pressure on prices, the International Energy Agency said on Friday. "

Source BBC News. http://www.bbc.com/news/business-34808487

[sb9]

After few quite days, this one is on the move too...

[Beagle]

Welcome aboard mate :). As an aside, a friend who is a petroleum engineer told me yesterday that 30000 jobs have gone Worldwide in the petroleum exploration industries last 12 months. I know many people in that industry that are unemployed or facing unemployment. All points towards the companies believing we are stuck with low prices for a
long time yet

Thanks mate and agree 100%. Oil, $Kiwi and other commodities lower for longer is one of my key investment theme's for 2016 and is highly likely to continue into / through 2017 I reckon.

[golden city]

what a good year..,

[cdonald]

might just be the start of things to come Golden City

http://www.hellenicshippingnews.com/asia-pacific-crude-refinery-demand-supports/

Other articles are pointing to $9USD/BBL margins next year too... Running a full year at CAP is unheard of. Running more than a year will be gold buckets... I imagine the refinerys costs will be a bit lower this year as a lot that nasty interest stuff wont have to be paid due to paying down debt.

[vin]

Am I too late to jump on board? :X?

[Crackity]

Am I too late to jump on board? :X?

Well it did start the year at the $2.15 mark so it has had a good rise this year.

However Rog has just bought in about this level so he sees more upside - it will be a good final dividend I think ( I would say at least 10cps ) and the interim of 5cps was unexpected.

A lot of the overseas refineries own the oil they process - the volatility ( $40 to $50 to $40 again) plays havoc with their inventory valuations and it seems they try to increase their margins to compensate.

i have been holding all year and am not tempted to sell yet - don't think I would buy at current levels though...

hope this helps :)

[sb9]

might just be the start of things to come Golden City

http://www.hellenicshippingnews.com/asia-pacific-crude-refinery-demand-supports/

Other articles are pointing to $9USD/BBL margins next year too... Running a full year at CAP is unheard of. Running more than a year will be gold buckets... I imagine the refinerys costs will be a bit lower this year as a lot that nasty interest stuff wont have to be paid due to paying down debt.

Thanks for that link cdonald.

Should be be close to $4 soon once the new plant is underway, which must anytime from now as they've indicated it'll be end of Nov to be commissioned.

I agree with crackity there vin re dipping your toes now, as it had a spectacular in the last few months and am not sure how much more higher it can go? Of course one would hope it keeps going up, I would probably look to get in on any dips(unlikely now). Pls DYOR and depends on your investment objectives too.

[sb9]

Most improved performance: Refining NZ

From the Deloitte top 200 awards last night.

[cdonald]

Nice Award. I am pretty sure we will get a nice announcement this afternoon celebrating the success' of the new project along with the Deloittes award. Extra thru put for December and a strong margin. Oil coys now getting a significant discount on their products coming out of the refinery due to the CAP. Great that the NZD is sitting around 65 rather than 95. This will be a record year for income/profit

[Beagle]

Well it did start the year at the $2.15 mark so it has had a good rise this year.

However Rog has just bought in about this level so he sees more upside - it will be a good final dividend I think ( I would say at least 10cps ) and the interim of 5cps was unexpected.

A lot of the overseas refineries own the oil they process - the volatility ( $40 to $50 to $40 again) plays havoc with their inventory valuations and it seems they try to increase their margins to compensate.

i have been holding all year and am not tempted to sell yet - don't think I would buy at current levels though...

hope this helps :)

Happy to play the oil and currency lower for longer because I really believe the story and can't play it ALL through AIR. New project should boost shareholder returns and this stock adds some much needed diversification to my portfolio.
Should have been on board ages ago but better late than never...

[sb9]

Nice Award. I am pretty sure we will get a nice announcement this afternoon celebrating the success' of the new project along with the Deloittes award. Extra thru put for December and a strong margin. Oil coys now getting a significant discount on their products coming out of the refinery due to the CAP. Great that the NZD is sitting around 65 rather than 95. This will be a record year for income/profit

I think so too, the new plant commissioning should be out soon, just matter of today or Monday.

[Crackity]

I'm going to stick my neck out and predict we hit $4 before Christmas :)

[BlackPeter]

I'm going to stick my neck out and predict we hit $4 before Christmas :)

and you might well be correct ... I don't think I would bet against this prediction.

More interesting question is - how much higher might it go if the current good conditions prevail for some time to come? Currently on a PE of 8.3 - and hey, it is a cyclical business, i.e. a PE of 10 during good times might be all it is worth. This would bring them up to $4.60 ... and if we allow for the improvements with their new plant, they might next year go well somewhere between up to $5,-- and $6,-- . Not sure, whether I would see much more growth potential, but obviously you never know - and obviously it will be a nice dividend stock until oil price and NZ$ (or both) go up again.

Or is there anything else I should consider?

As always - DYOR ...

[Beagle]

Sums it up pretty nicely BP, thanks YDOR.

[golden city]

big volume going today

[Crackity]

big volume going today

all between 4.30 and 5pm too - 2 million in that half hour.....

[Beagle]

MSCI index rebalancing...twice a year, today was one of them.

[Crackity]

MSCI index rebalancing...twice a year, today was one of them.

Aahh - penny drops....

[Yoda]

It would be great to get news of the newCCR plant start up.. Or did i miss it ? Their web site is abit light.

[Yoda]

Refinery’s Te Mahi Hou project goes live
9:58am, 2 Dec 2015 | GENERAL
Refining NZ is pleased to announce Te Mahi Hou is producing on specification gasoline and gasoline production on the old platformer has been stopped. This is a major milestone in the startup of Te Mahi Hou with a number of other milestones to be completed in the coming weeks.


The $365m Te Mahi Hou project was handed over for startup to the operations team on the 25th of November. This puts the project around three weeks ahead of the original completion date of late December 2015.


In the current volatile crude and gasoline price environment, Te Mahi Hou is expected to lift the Gross Refinery Margin (GRM) by approximately USD 0.85-0.90 per barrel and increase operating cash flows by around $50-$55 million. Te Mahi Hou will increase the production of petrol by Refining NZ by around two million barrels per annum, lifting the Company’s share of the New Zealand petrol market from around 55% to 65% percent. Improved energy efficiency as a result of Te Mahi Hou will see the refinery’s CO2 emissions reduce by around 120,000 tonnes per annum.


ENDS


Ok here we have it. I wonder how that will afect the SP today...?

[Yoda]

Refinery’s Te Mahi Hou project goes live
9:58am, 2 Dec 2015 | GENERAL
Refining NZ is pleased to announce Te Mahi Hou is producing on specification gasoline and gasoline production on the old platformer has been stopped. This is a major milestone in the startup of Te Mahi Hou with a number of other milestones to be completed in the coming weeks.


The $365m Te Mahi Hou project was handed over for startup to the operations team on the 25th of November. This puts the project around three weeks ahead of the original completion date of late December 2015.


In the current volatile crude and gasoline price environment, Te Mahi Hou is expected to lift the Gross Refinery Margin (GRM) by approximately USD 0.85-0.90 per barrel and increase operating cash flows by around $50-$55 million. Te Mahi Hou will increase the production of petrol by Refining NZ by around two million barrels per annum, lifting the Company’s share of the New Zealand petrol market from around 55% to 65% percent. Improved energy efficiency as a result of Te Mahi Hou will see the refinery’s CO2 emissions reduce by around 120,000 tonnes per annum.


ENDS


Ok here we have it. I wonder how that will afect the SP today...?

[Joshuatree]

Thanks Yoda .Looks already built in to s/p after nov 12 th announcement when Te Mahi GRM was announced and subsequent s/p jump, by the looks. Steady ahead and up; good for my ZEL too.

[bull....]

top performing bunch those fellas up there

[bull....]

top performing bunch those fellas up there

[Sideshow Bob]

Interesting in the CO2 emissions. Total NZ net emissions is 300 million metric tonnes. So that reduces NZ emissions by 0.04%.

That should get a Christmas card from John Key.

[Crackity]

Full year NPAT for 2015 I'm picking between 140 and 150 million ( normally announced late Jan )

Looking forward to 2016 - if FGE is in the ballpark then with the NZR margin iniatives 2016 will be a good year as well ;)

Energy consultancy FGE sees Singapore hydrocracking margins or complex refining margins, a benchmark for Asia, averaging $6.40 a barrel in 2016, down 80 cents from this year's expected average of $7.20. Read more at Reutershttp://www.reuters.com/article/us-asia-oil-refining-margins-idUSKCN0ST1A720151104#kSIYrrmqkWtVW7uJ.99

[cdonald]

total agree Crackity. Margins for December are staying seasonally high (many a year margins in December have turned negative) but this year has been a cracker (pardon the pun). Next year looking strong and if the usd/nzd continues to hang out around 0.65 it will add another 35mNZD onto the bottom line from this year. (this year average rate is 70c). We should be back up to full dividends before long as the borrowing must be coming into line very quickly. No doubt the pressure will be on in the new year from the unions for a bit of a payrise as management used the "poor us" line last round so I don't think they can play that card again!

[Crackity]

We should be back up to full dividends before long as the borrowing must be coming into line very quickly.

dividend policy I have cut and pasted below....

my estimate is borrowings of circa 198 million at year end looking at the matrix.

198 / 198 + 712 equity ( 910 total ) gives 21.7 per cent. Still sligjtly above their upper range but if the price / exchange rate stays similar then by about the end of april under 20% . After that large fully imputed dividends hopefully ;) :)





declaration and amount of any dividend is at the sole discretion of the Directors at that time and is dependent on many factors including

debt levels relative to Refining NZ's targeted 10-20% gearing (D/(D+E)) ratio,
profitability, cash flow requirements, financial conditions and teax imputation credits.




The aspiration is to pay top quartile NZX50 dividend returns over the investment cycle, specifically:

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.

[golden city]

looking at about 20c dividend at final

[Crackity]

looking at about 20c dividend at final

I like the illumination radiating from your
crystal ball Golden City. Might have to put on some sunscreen;)

[golden city]

why share prices going down., should be up by now?

[dodgy]

why share prices going down., should be up by now?

SHELL

have a happy nite
-dodgy (owner and shareholder - happy to accumulate - great company excellent CEO)

[Crackity]

SHELL

have a happy nite
-dodgy (owner and shareholder - happy to accumulate - great company excellent CEO)

You sure Dodgy? All the Shell NZR shares went to Z with the petrol stations.

also happy owner / shareholder;)

Also agree Mr. Sjoerd Post is doing a fine job as CEO.

[dodgy]

You sure Dodgy? All the Shell NZR shares went to Z with the petrol stations.

also happy owner / shareholder;)

Also agree Mr. Sjoerd Post is doing a fine job as CEO.

Hi Crackity
I understand the nzr/shell relationship went west eons ago but think "petro industry contagion"
Regards and happy punting
-d

[Crackity]

Hi Crackity
I understand the nzr/shell relationship went west eons ago but think "petro industry contagion"
Regards and happy punting
-d

LOL - yeah - that thought normally wakes me about 3 am ;)

[golden city]

shell has nothing to do with nzr anymore....strange reaction

[Jinx]

I guess people are scared/misinformed?

[BlackPeter]

folks, not sure whether I understand the concerns. Sure, markets can always behave irrationally, and some day even this classical example for a beautiful uptrend will end. However - so far I don't see any hint that this some day might be now: We have still an unbroken uptrend with the SP just slightly retreating towards the MA50 (as it did various times before in the last 6 months - actually in May it was even below the MA 50 and the world didn't end).

Just wait for the end of year data and the dividend announcement - this will put some fire back under the SP.

What is the perceived problem?

[bull....]

think the govt looking to put a new tax on oil cargo, not sure if nz refining will pay this or the oil companies

[BlackPeter]

Haven't heard about that, but if they do than the only one who would pay for such a tax is the consumer ... (as always). Can't see how this would be material to NZR's business.

[Yoda]

Does the article from Sharechat have any thing to add to the SP ?

-------


"There's a war going on between Saudi Arabia and the United States. But this war has nothing to do with armies charging through the deserts of the Levant.


This war is all about crushing U.S. oil producers — driving them out of business and making the world safe for the Saudi-led cartel known as the Organization of Petroleum Exporting Countries, or simply OPEC.


The latest salvo in this petrol jihad came last Friday in Vienna, as OPEC held its semi-annual meeting. At that meeting, the cartel decided not to cut oil production.


Instead, it effectively increased production to some 31.5 million barrels per day.


Since that Friday decision, the price of crude oil has been in freefall."

[golden city]

price looks cheap.., have add some more to my position

[golden city]

oil prices keep going down...looks good

[Jinx]

oil prices keep going down...looks good

I'm new to both investing and NZR, but could you please explain how oil prices going down is a good thing for a oil refinery?
Sorry if this is a stupid question, just trying to learn :)

[littletramp]

I stand to be corrected here but simply put- as oil prices go down, usage (demand) goes up. Their (NZR) profit is based on margins applied to volume throughput, not on actual oil prices. Currency also plays a part in the profit calculation for NZR.

[Leftfield]

I stand to be corrected here but simply put- as oil prices go down, usage (demand) goes up. Their (NZR) profit is based on margins applied to volume throughput, not on actual oil prices. Currency also plays a part in the profit calculation for NZR.

Yep I agree, also price movements allow opportunities for increased margins (profit) e.g. by not passing on the benefits of the lower oil prices as quickly as consumers may hope etc. Not nice, but it can happen.

However I suspect the possibility that NZR may be adversely effected by 'climate change' and 'carbon emission' expectations recently entrenched in Paris may hold back the SP??

Disc - Holder

[Crackity]

Yep I agree, also price movements allow opportunities for increased margins (profit) e.g. by not passing on the benefits of the lower oil prices as quickly as consumers may hope etc. Not nice, but it can

Disc - Holder

Well sort of - NZR is a toll processor - that benefit goes to retail companies like Z and their margins have certainly been growing ( aka - the consumer is getting shafted.....) ;)

[Jinx]

However I suspect the possibility that NZR may be adversely effected by 'climate change' and 'carbon emission' expectations recently entrenched in Paris may hold back the SP??

Disc - Holder

Any other guesses at the down trend over the last two weeks?

[Leftfield]

Any other guesses at the down trend over the last two weeks?

General concern over mkt reaction to Fed's rate hike scheduled for today……IMHO back to 'business as usual' in the new year.

[Sideshow Bob]

Te Mahi Hou project article

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11562988

[iceman]

A big gas deal with Vector to boost margins http://www.nbr.co.nz/article/vector-doubles-quantity-gas-available-marsden-point-refinery-b-183216

[dodgy]

Hi All
Happy New Year and may NZR finally achieve anticipated liftoff. Can anyone please inform me what the current applicable offshore refinery margin is. Thanks. We can then extrapolate a future for this co based on the current exchange rate and recent historic throughput - co actuals expected about 20th.
Happy investing in 2016
-dodgy (owner/shareholder/accumulator)

[bull....]

Hi All
Happy New Year and may NZR finally achieve anticipated liftoff. Can anyone please inform me what the current applicable offshore refinery margin is. Thanks. We can then extrapolate a future for this co based on the current exchange rate and recent historic throughput - co actuals expected about 20th.
Happy investing in 2016
-dodgy (owner/shareholder/accumulator)

as of last week I believe it was still at the top end when you add the nzr uplift margin, so should be still tracking the 65c- 70c ,9 column on there matrix

[Marilyn Munroe]

Back in the day when the refinery was a Think Big project the refinery was designed to refine Iranian Sour grade oil. It was built this way becuse we sold mutton and butter in exchange for oil.

It looks like the Iranian oil embargo will be lifted within days. My question is does the refinery still have Iranian Sour cracking capability and will it be able to charge higher toll processing fees because of it?

Boo boop de do
Marilyn

[GR8DAY]

.......these super-low barrel prices must surely be helping NZRs bottom line. Have I got that right?? Add to this Craigs prediction of a 14% plus dividend (at current SP) must make NZR a screeming buy??

[bull....]

.......these super-low barrel prices must surely be helping NZRs bottom line. Have I got that right?? Add to this Craigs prediction of a 14% plus dividend (at current SP) must make NZR a screeming buy??

2017 should see super sized divs , what do craigs have to say about them?

[cdonald]

Back in the day when the refinery was a Think Big project the refinery was designed to refine Iranian Sour grade oil. It was built this way becuse we sold mutton and butter in exchange for oil.

It looks like the Iranian oil embargo will be lifted within days. My question is does the refinery still have Iranian Sour cracking capability and will it be able to charge higher toll processing fees because of it?

Boo boop de do
Marilyn

in short, yes and yes. So should be good for the refinery in general. I expect we will get an update today of the margins for Nov/Dec and a full year earnings report too. From what I understand margins are still well above cap so it should be a pretty stunning result.

[GR8DAY]

......to quote Craigs., " we see several positive catalysts for the stock over the coming 12mnths incl a reinstatement of the dividend policy and an end to the major capital expenditure programme". They are forecasting a dividend yield of 14.3% which has to be one of the best (if not THE best) currently on the NZX. BULL do you know will the low Barrel price be helping or hindering NZR??

[GR8DAY]

......apologies for such a fundamental question but I am new to this sector!

[cdonald]

GR8DAY, this recent news article might help to answer your question
http://www.livemint.com/Money/IeReU6I7t4pwQUv5FMZitN/Singapore-gross-refining-margins-show-strength.html

[GR8DAY]

.....thanks CD, that pretty much answers my question. According to my calculator that equates to a 27% improvement on margins which sounds very healthy for NZR.

[BlackPeter]

......to quote Craigs., " we see several positive catalysts for the stock over the coming 12mnths incl a reinstatement of the dividend policy and an end to the major capital expenditure programme". They are forecasting a dividend yield of 14.3% which has to be one of the best (if not THE best) currently on the NZX. BULL do you know will the low Barrel price be helping or hindering NZR??

Low oilprice is good for NZR - may the golden times continue;)

[Yoda]

This was my best performing stock today apart from OGC, it has held up well against the world turmoil on the int markets of the last few weeks. I feel the oil bubbling up. :-). Last 6 months have seen 3 rises. Due for a slight hike again ?
anyone else taken a slight beating?

[Leftfield]

A recent article on the effect on refinery margins in India caused by lower Oil prices FYI. I hope these benefits also flow to NZR! ;-)

http://www.bloomberg.com/news/articles/2016-01-18/billionaire-ambani-s-reliance-is-gaining-from-30-crude-price

[GR8DAY]

..........good news report just out. All time record processing fee and forecasts beaten by some margin.

[cdonald]

..........good news report just out. All time record processing fee and forecasts beaten by some margin.

First time i can remember them hitting cap for a complete year. That processing agreement might need some tweeking I think in order to get the balance back. Next NR should be a profit guidance for the year as it will have changed a lot.

Great news all round.

[BlackPeter]

Great result ... thought that this will be the start to a nice little rally (it has just started ...). Looking forward to the divvies this year.

As well - given that oil might stay low for some time (courtesy to the house of Saud and now Iran coming online again), thanks to world oil consumption keeping rising (check out the IEC report) - putting pressure on refinery capacity, thanks to the recent refinery improvements which should flow into this years (and coming years) results and the NZD as well at reasonable levels ... We might have a good chance for some more good years to come.

Participating in the 2014 CR for NZR (I think around $1.80 per share) was definitely one of my better investment decisions;)

Discl: very happy holder, but DYOR;

[GR8DAY]

......good call BP. Wish I had become aware of this one a bit earlier on.....thanks CRAIGS! Anyway Im on board at $3.62 and looking forward to a very healthy dividend. Might even average up and buy more........no point having cash in the bank esp. with this sort of yield.

[Beagle]

......good call BP. Wish I had become aware of this one a bit earlier on.....thanks CRAIGS! Anyway Im on board at $3.62 and looking forward to a very healthy dividend. Might even average up and buy more........no point having cash in the bank esp. with this sort of yield.

And therein lies the nub of the issue. Returns on cash are appallingly low and with so much volatility in world share markets where to hide ?...and this is a great place. Studies have shown demand for refined fuel is pretty inelastic and people use it in very similar quantities in good times and bad. Great result, great to see them hit the margin cap for the whole year...oil and currency lower for longer are two of my key investment themes for 2016 and 2017. Long may it continue. Better late than never with this one I reckon.

[bull....]

wickeeeeed report still looks cheap on looking towards 2017 wish I had more money but my portfolio is fully invested

[golden city]

This is my largest holding. Looking forward for the fat dividends

[sb9]

Well, the news keeps getting sweeter and sweeter. I'm picking final divvy of 15-20c for FY16 (on top of interim 5c).

[BlackPeter]

Well, the news keeps getting sweeter and sweeter. I'm picking final divvy of 15-20c for FY16 (on top of interim 5c).

We probably should deal first with FY2015. My guess would be 40% of EPS. Haven't updated the EPS based on the last earnings report, but I think my estimated 46 cents for 2015 should be close enough (given that I assumed them to stay anyway in the cap), this would make a 18 cent divvie, minus 5 cent already paid. Sure - maybe they give us a bit more, but I am as well happy with them repaying their loan.

2016 might look still a bit brighter ... If we assume they stay with their earnings in the cap - say another 46 cents EPS (maybe a bit more - better yields) - and maybe between 23 and say 30 cents divvie (following their divvie policy of 40 to 60% during periods of high investment.

Just my 2 cents ...

Anyway - don't spend it, before you get it & DYOR

[sb9]

Sorry, I meant FY15. Would say it'll be at least 15c final and to throw in an element excitement they might pay a special of 5c. That'll be a total of 25c for the year, sweet!

[Sideshow Bob]

The processing margin was over $210m more than last year.......... that's 67cps.....presumably the vast majority of this should fall to the bottom line??

[BlackPeter]

The processing margin was over $210m more than last year.......... that's 67cps.....presumably the vast majority of this should fall to the bottom line??

Dividends come out of the NPAT, not out of the EBIT. Don't forget that they finished in December last year a major improvement project - and they had as well several smaller investment projects (e.g. CO2 plant) throughout the year. Not sure, how they treat these accounting wise, I hope (and expect) that they use some of the surplus to pay these projects and repay debts. As well - there are some interests to pay on the debts - and they will as well need to pay some taxes;)!

[Sideshow Bob]

Thanks BP. Yes of course tax, interest and some repayments - potentially could repay their capital expenditure faster.

Market likes it, up to $3.83 and nearing 4.5 year highs.

[bull....]

refining margins in Singapore are over $10 at the moment I believe have been for most of the month

[sb9]

Topped (doubled from original) more this arvo on this puppy, can't believe I could get my order filled in at same price as I was trying after they released the margin throughput report exactly two weeks back.

Now wait and watch for nice divvies to flow in when they release FY results.

[golden city]

Looking forward to it. My biggest holdings

[sb9]

My reason to top up was long term, as the divvies will be much bigger than current FY, in 2016 and 2017. Hence wanted to lock in (top up) more at decent price.

With low interest environment to continue for a while, oil staying where it is along with lower currency I guess the prospects for this one are going get better and better.

[golden city]

I have locked in heaps at around 1.90

[sb9]

Good on ya gc, I see this one being close to $5 in 12 months time, in time for next year FY results.

[sb9]

Excerpts from article in NBR few days back by Forsyth Barr Analyst Andrew Harvey-Green:

"The Whangarei-based company is anticipated to pay a total dividend of 19c a share in the 2015 financial year, stepping it up to 35c for 2016, according to a Reuters summary of analyst forecasts."

[Mickey]

Does anyone have a view on what might be causing the sp to decline?

[sb9]

Does anyone have a view on what might be causing the sp to decline?

Wouldn't have a clue apart from general market weakness.

I've topped up couple of days back, down few cents from that which does not bother me much.

Looking forward to the handsome final divvy announcement in couple of weeks time.

[golden city]

Nz dollar is the main caused I guessed

[sb9]

Nz dollar is the main caused I guessed

That's only a short term aberration, just traders causing it to spike up more on back of USD weakening. Even AUD up in past few days.

[Mickey]

Thanks guys. I didn't think it would be much as I did quite a bit of research before buying in at $3.71 the other day. From what I read - everything looked rather rosey. I can tell from the thread that some of you have been with NZR for a long time and I thought I may have missed something.

[sb9]

Thanks guys. I didn't think it would be much as I did quite a bit of research before buying in at $3.71 the other day. From what I read - everything looked rather rosey. I can tell from the thread that some of you have been with NZR for a long time and I thought I may have missed something.

As the famous word goes around on this forum you/we are all "Well Positioned"!!!

[cdonald]

http://www.abc.net.au/news/2016-02-02/oil-petrol-prices-explained/7132934

interesting article out of Aussie. Pretty basic stuff but interesting. Note the line about Caltex making 400m from refining... next week NZR will announce their profits.

Margins still remain above CAP and have done so for 15 months in a row (maybe more). Major increase in production with the new project so a good 2015 year. 2016 wont be so good due to hydrocracker routine shutdown but will still be good. Debt no doubt will be gone before long. I am picking a 15c final. Next year I am thinking 30c divvy...:t_up:

[Jinx]

Margins still remain above CAP and have done so for 15 months in a row (maybe more). Major increase in production with the new project so a good 2015 year. 2016 wont be so good due to hydrocracker routine shutdown but will still be good.

Do you not expect low oil prices to create even more profit in 2016? Cheaper oil = more oil to be refined = more profits?

[cdonald]

no, profit in 2016 will be lower. There are 2 shutdowns in 2016, one coming up in a months time for a couple of weeks (not sure which units) but the major one mid year for 4 weeks is the hydrocracker shutdown. This will reduce thruput to the refinery and reduce the amount of margin it will get. The max margin NZR can make per bbl is $9USD (CAP) which it has been doing for over a year now. In my opinion, oil prices are pretty much irrelevant as NZR is a toll refinery.

[sb9]

I am picking a 15c final. Next year I am thinking 30c divvy...:t_up:

Totally agree, however I'm picking 15c final this year + 5c special just to reward the shareholders for such a great turnaround. Next year should be 30c-35c in total.

[GR8DAY]

......CRAIGS are forecasting a gross yield of 14.3% 12mnths and 24mnths out......that was on a price (then) of $3.40........does this sound right?? (maybe that's including imputation credits?) as they are forcasting a 35c total divi......which doesnt quite gel with the 14.3% (48c) They have a BUY recommendation on NZR. Whichever is right it's still going to be a superior yield. Maybe Im missing something here?

[bull....]

......CRAIGS are forecasting a gross yield of 14.3% 12mnths and 24mnths out......that was on a price (then) of $3.40........does this sound right?? (maybe that's including imputation credits?) as they are forcasting a 35c total divi......which doesnt quite gel with the 14.3% (48c) They have a BUY recommendation on NZR. Whichever is right it's still going to be a superior yield. Maybe Im missing something here?

must be talking gross yield? anyway interesting someone is dumping big time into any buyers, wonder maybe if its not 15cps what will happen.

[littletramp]

Sometimes when an institution needs cash to settle client withdrawls from funds, the easiest way out is to sell shares like NZR where buyers just keep stepping up, albeit at a lower and lower price as you keep selling. It is obviously getting to offer better and better value as the price drops. There are simply not a lot of buyers out there for many of the stocks. The price dropping has no bearing/relationship at all on earnings per share of the company in these circumstances. Just run to the bank for a loan and keep buying.

[sb9]

Sometimes when an institution needs cash to settle client withdrawls from funds, the easiest way out is to sell shares like NZR where buyers just keep stepping up, albeit at a lower and lower price as you keep selling. It is obviously getting to offer better and better value as the price drops. There are simply not a lot of buyers out there for many of the stocks. The price dropping has no bearing/relationship at all on earnings per share of the company in these circumstances. Just run to the bank for a loan and keep buying.

Well put, if one worries about short term aberrations probably equities are not their forte in my opinion, focus on big picture.

[golden city]

I just bought some more

[Joshuatree]

S/He just bought some more.

[macduffy]

It's probably a temporary state of affairs but may have an effect on NZR's throughput in the short term.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11588000

[bull....]

It's probably a temporary state of affairs but may have an effect on NZR's throughput in the short term.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11588000

this affects Z and other oil companies as they sell the end product
Im wondering if the fall in price is because the div wont be as big as some are suggesting? im probably wrong as brokers will know better than me

[sb9]

Seems as though someone wants get out pretty desperate.

[sideline]

Seems as though someone wants get out pretty desperate.

Hi there,
I suppose you are aware of the following article on Bloomberg:
http://www.bloomberg.com/news/articles/2016-02-11/china-turns-a-glut-of-oil-into-a-flood-of-diesel-swamping-asia

It talks about refinery margins sinking by 1/3 in Asia because of increasing exports of Chinese refined product.

[cdonald]

at the end of the day the share price may have changed a bit but the business model is still robust. Singapore complex margins for Jan averaged $10USD per bbl. They have dropped off in Feb to around $7USD bbl so on a 2 month average you are still looking at CAP (when you take into account the uplift that NZR get above the Singapore complex margin.

Great buying at the moment.

[Nasi Goreng]

The chart looks concerning to me and a fall below $3.30 could be even more damaging. We could be looking at a trading range between $3 and $3.30 in the not too distant future.

[Beagle]

Hi there,
I suppose you are aware of the following article on Bloomberg:
http://www.bloomberg.com/news/articles/2016-02-11/china-turns-a-glut-of-oil-into-a-flood-of-diesel-swamping-asia

It talks about refinery margins sinking by 1/3 in Asia because of increasing exports of Chinese refined product.

Thanks for posting and I find that quite interesting because at times in recent weeks I have been able to buy diesel for as little as 68 cents a litre after my corporate card discount. It seems the world is indeed becoming awash with cheap diesel. No argument NZR had a good year last year but what future margins will be is the real question.

[macduffy]

this affects Z and other oil companies as they sell the end product
Im wondering if the fall in price is because the div wont be as big as some are suggesting? im probably wrong as brokers will know better than me

I'm a bit late responding to this post but one could argue that it's immaterial to the retail companies so long as they preserve their margin. It's the refiners such as NZR that suffer if the retailers can buy cheaper elsewhere and put less through refineries such as NZR.

[bohemian]

I wonder why Z share price has fallen so much this week. Could it be that it has a share of NZR which with reduced margin of refining because of Asian competition has indirectly impacted on the Z share price?

[macduffy]

Yes, the retailers hold the majority shareholdings in NZR and to the extent that NZR's profits and dividends are impacted, this will have an effect on Z and others' profitability. I would think it's a question of whether the cheaper refined product from elsewhere will compensate the retailers adequately for the lower dividends that they might receive from their NZR shareholdings.

[sideline]

Yes, the retailers hold the majority shareholdings in NZR and to the extent that NZR's profits and dividends are impacted, this will have an effect on Z and others' profitability. I would think it's a question of whether the cheaper refined product from elsewhere will compensate the retailers adequately for the lower dividends that they might receive from their NZR shareholdings.

HI,
is it really a question of importing product into NZ ???
From my hazy memory I seem to recall that the processing margin NZR can charge to its (shareholding) customers is benchmarked to some
margin in Asia, perhaps Singapore?? Could be wrong though. But if true, lower margins in Asia would impact NZR immediately, no imports required!

[Beagle]

Just chatting to my brother who was down in Taupo on holiday for a week. Gull station just south of Tokoroa, self service is selling diesel for 62.9 cents per litre incl GST They must be importing it landed for under 40 Cpl excl GST to sell it retail for that. Gives a small anecdotal bit of evidence about how cheap the direct imported product is.

[macduffy]

HI,
is it really a question of importing product into NZ ???
From my hazy memory I seem to recall that the processing margin NZR can charge to its (shareholding) customers is benchmarked to some
margin in Asia, perhaps Singapore?? Could be wrong though. But if true, lower margins in Asia would impact NZR immediately, no imports required!

That seems to ring a bell in my hazy memory too, sideline. If so, NZR would be impacted by both the lower refining margin and the lower throughput resulting from direct imports.

[BlackPeter]

That seems to ring a bell in my hazy memory too, sideline. If so, NZR would be impacted by both the lower refining margin and the lower throughput resulting from direct imports.

Yes, NZR's refining margin is linked to the Singapore refining margin (I think Singaproe GRM plus something like $4.50) ... and analysts assume at this stage that the peaks of last year are gone for the foreseeable future:

http://www.dnaindia.com/money/report-refining-margins-may-have-just-peaked-out-1797943

On the other hand ... they still expect "healthy margins" for 2016 ... and it sounds as well, that petrol achieves better prices than diesel (which is good - we use more petrol than diesel). Obviously - analysts can be wrong in both directions.

Global warming can send another storm into the gulf of Mexico and refining margins will be up again.
Any of the war waging idiots in the middle East can bomb some of the local refineries and refining margins will be up.
On the other hand - the world economy and petrol consumption can slow down (not yet, but it might) and refining margins will drop from healthy to pathetic.

Stores with refined product are currently fuller than in previous years (http://www.howardweil.com/docs/Reports/WEEKLY%20REPORTS/REFININGReport.pdf), but this does not necessarily mean that oil merchants start to import huge amounts of refined product into NZ.

From memory - importing refined product into NZ requires specific equipment and tanks at the ports - and this was previously limiting e.g. Gull to import more refined product into NZ. Have not heard that our ports increased these facilities - has anybody else?

As long as lack of port facilities stop an increase of imported refined product is it unlikely that NZR needs to worry about its throughput.

So - I guess what we should expect based on this is a reduced (but still healthy) refining margin in 2016 and a somewhat smaller throughput (I think they scheduled as well some longer maintenance periods this year). EPS probably not as spectacular as expected for 2015, but still healthy ...

Not difficult to see why the markets react as they currently do - with everything else plunging as well. It is the 100 million dollar question whether they overreact and bounce back ... or keep dropping. Might be as well dependant on Mr. markets mood next week ...

[sideline]

Thanks for the confirmation.
Just a note: the article you linked on dnaindia.com is dated 9 Feb 2013

[BlackPeter]

Thanks for the confirmation.
Just a note: the article you linked on dnaindia.com is dated 9 Feb 2013

that's not good - I guess I must have looked at the date (9 Feb) but have overseen the year. Mea culpa.

In a funny sort of way it however confirms what analysts predictions might be worth ... the margins went (against the predictions) steep up in late 2014 and 2015!

[Leftfield]

ODT getting a bit excited about NZR's possibilities and hopes for a 'record profit' to be announced this week.

http://www.odt.co.nz/news/business/373890/record-profit-tipped-nzr

[bull....]

ODT getting a bit excited about NZR's possibilities and hopes for a 'record profit' to be announced this week.

http://www.odt.co.nz/news/business/373890/record-profit-tipped-nzr

couldn't agree more

the refining margin is still tracking good for this year so far was over 10 in jan and has dipped a bit in feb but combined 2 mth period is still looking top of the range if you include over the cap in jan

[sb9]

ODT getting a bit excited about NZR's possibilities and hopes for a 'record profit' to be announced this week.

http://www.odt.co.nz/news/business/373890/record-profit-tipped-nzr

Expect some strong buying today and tomorrow before results are out on Wed.

[BlackPeter]

ODT getting a bit excited about NZR's possibilities and hopes for a 'record profit' to be announced this week.

http://www.odt.co.nz/news/business/373890/record-profit-tipped-nzr

Nothing new .... and predicting a record profit (with full knowledge of their refining margin and throughput in 2015) is sort of a "no brainer".

Not sure either, whether all eyes are now on "the dividend". Much more interesting in my view would be an outlook / prediction of how long the golden years will hold on. So far it looks like the refining margin for this year stays healthy (but early days) though not as outstanding as last year, exchange rate stays favourable and oil price stays low (though likely not as low as it currently is). Now this would be good news - who cares about yesterdays profit ...

Still agree with Left Field that we might have this week some buying ... from the people who buy based on information in yesterdays newspaper ...

[bull....]

check out Caltex results, div up 67% lifted pay - out ratio , 270m share buyback, crm was $16.46 average for the yr

[sb9]

check out Caltex results, div up 67% lifted pay - out ratio , 270m share buyback, crm was $16.46 average for the yr

Thanks for that bull, all to be revealed tomorrow.

[Dej]

Thanks for that bull, all to be revealed tomorrow.

All hath been revealed;



2. Final Dividend


Amount per security: NZ 20 cents per share.


Imputed amount per security: NZ 7.8 cents per share (fully imputed)


Record date: 10 March 2016

[cdonald]

All hath been revealed;



2. Final Dividend


Amount per security: NZ 20 cents per share.


Imputed amount per security: NZ 7.8 cents per share (fully imputed)


Record date: 10 March 2016





Nice... higher than expected. Great result and a confident dividend.

[GR8DAY]

......very happy with that. Was expecting 15/16c so a healthy bonus there. So the ICs bring this up to about 22/24c gross........would that be right??

[Leftfield]

Pretty impressive results. Me happy to hold.

The Directors of the New Zealand Refining Company Limited today announced the Company's financial results for the year to 31 December 2015, details of which are attached. This report, including the results for the previous corresponding year, is consistent with the audited financial statements of the New Zealand Refining Company Limited for the year ended 31 December 2015.

Consolidated Results
1. Results $NZ 000
Revenue from ordinary activities
Current year $446,771
Up 92%
Previous corresponding year $233,019
Profit from ordinary activities after tax attributable to security holder.
Current year $150,771
Up 1417%
Previous corresponding year $9,941
Net profit attributable to security holders.
Current year $150,771
Up 1417%
Previous corresponding year $9,941
2. Final Dividend
Amount per security: NZ 20 cents per share.
Imputed amount per security: NZ 7.8 cents per share (fully imputed)
Record date: 10 March 2016
Dividend Payment Date: 24 March 2016
3. Net Tangible Assets per Security
As at 31 December 2015 $2.53
As at 31 December 2014 $2.08

[bull....]

congrats to management these results and divs above most analysts predictions :t_up:

[sb9]

Totally agree, however I'm picking 15c final this year + 5c special just to reward the shareholders for such a great turnaround. Next year should be 30c-35c in total.

Not a bad call, wasn't it....never mind no special divvy all normal divvy of 20c nevertheless :t_up:

[Sideshow Bob]

Very Nice! :t_up: Happy holder.

[golden city]

Fatter dividends. Very good

[sideline]

Not a bad call, wasn't it....never mind no special divvy all normal divvy of 20c nevertheless :t_up:

I suppose calling it normal dividend expresses confidence by management that they can hold or better this in the future -
nobody wants to lower dividends if they can avoid it.

[iceman]

Yes this is a great result. Cash generation of $265m allows for debt reduction from $315m (2014) to $193m plus significantly increased divie. I hope they continue focusing on getting net debt down to or below $100m and then pump out dividends at a great rate. That's assuming market conditions remain favourable which they should do for awhile yet. Happy holder and accumulating

[bull....]

Yes this is a great result. Cash generation of $265m allows for debt reduction from $315m (2014) to $193m plus significantly increased divie. I hope they continue focusing on getting net debt down to or below $100m and then pump out dividends at a great rate. That's assuming market conditions remain favourable which they should do for awhile yet. Happy holder and accumulating

the new profit matrix in the analyst presentation explains assumptions based on margins and forex
if the dollar falls to 50c they will have no debt next yr how about that! 50cps+ in divs oh that would be nice

[sb9]

the new profit matrix in the analyst presentation explains assumptions based on margins and forex
if the dollar falls to 50c they will have no debt next yr how about that! 50cps+ in divs oh that would be nice
That was a great presentation they put together. Looking forward now to ASM on 4th May in Auckland for further insight into their future plans and developments.

[cdonald]

interesting to see that despite having 2 shutdowns in the 2016 year they are forcasting a record thruput. 2017 will be a cracker year if margins hold up (pardon the pun). Div next year could be around the 40c

[sb9]

interesting to see that despite having 2 shutdowns in the 2016 year they are forcasting a record thruput. 2017 will be a cracker year if margins hold up (pardon the pun). Div next year could be around the 40c

I'm picking total div for next year would be between 35c-40c.

[sb9]

I suppose calling it normal dividend expresses confidence by management that they can hold or better this in the future -
nobody wants to lower dividends if they can avoid it.

Exactly, am actually quite pleased that its normal div as it displays management's confidence in future pay outs.

[golden city]

With this kind of dividends. I can retire haha.

[BlackPeter]

With this kind of dividends. I can retire haha.

Not sure about your retirement plans - but it might pay to keep in mind that NZR is a cyclical stock ... ;)

[golden city]

should be ok for couple years haha.., didn't want to retire completely anyway still so young haha

[sb9]

Wow, some big dumping going on out there after such a stellar results y'day.

[GR8DAY]

......might be something to do with the latest announcement Sb9 re: fuel from water?......American professor reckons he's cracked it......National Radio this morning??? ( I doubt it explains the SP drop but it sounded incredible and also very credible)

[Jinx]

......might be something to do with the latest announcement Sb9 re: fuel from water?......American professor reckons he's cracked it......National Radio this morning??? ( I doubt it explains the SP drop but it sounded incredible and also very credible)

Interesting idea but I think it's probably just a big sell off after a high yesterday

[sb9]

......might be something to do with the latest announcement Sb9 re: fuel from water?......American professor reckons he's cracked it......National Radio this morning??? ( I doubt it explains the SP drop but it sounded incredible and also very credible)

I did extensive google search to find out refining industry outlook, trends and news in light of NZR.

With lower crude oil prices there seem to be huge demand for refining in year 2015 which led increased capacity with new refineries starting in certain parts of world. Which meant that the margins for 2016 may not as high 2015 but nonetheless will be steady.

Sorry gr8day, I couldn't find anything about the topic you mentioned. If you've any links pls do drop them in.

[GR8DAY]

.......That was tongue-in-cheek SB.....no correlation Im sure with SP drop. It was however a genuine interview/article this morning discussing this break through .(with the actual American professor.....who incidentally sounded very humble about the whole thing). I tried myself to find it again on RNZ archives....will keep digging. Basically he was saying that the process is the complete reverse of the current internal combustion engine in that the exhaust gases (CO, CO2 and water) are whats used to produce the energy to propel the car (maybe petrol comes out the exhaust LOL!) ......and all very different to the current Hydrogen fuel cell technology. Sounded truly amazing and hope for the planet that it is commercially viable one day.

[macduffy]

From today's DomPost:

"The head of New Zealand's fuel refinery says motorists are keeping petrol prices high, as he denied the company is rorting custoners........ 'I live in Auckland. Everybody is driving a (Toyota) Prado or better. I've got a BMW X5. ... It's the consumer making it'. Mr Post said."

Won't get much applause from commuters from the outer reaches of Auckland, I wouldn't think!

[Joshuatree]

Int alright but much more research esp on the catalyst. It consumes Co2 and produces oxygen.
Turning water into fuel (http://www.radionz.co.nz/national/programmes/morningreport/audio/201790717/turning-water-into-fuel)

[bull....]

im thinking debt will be under 100m by this time next yr and near zero the following year so what will they do with cash flow then, bigger divs, buy- backs I reckon.
main reason I think the dollar will fall hard at some stage due to dairy issues mainly lower for longer pay - outs and rising debt levels of farmers and Fonterra may cause a shock in nz, Fonterra is moving way to slow in its integrated model

[cdonald]

if you have a look at the analysts presentation there are quite a few future projects being looked at which will take up some capital. I think they will lift the divis to 90% (oil companies like the divies). From what I understand the refinery also likes a bit of gearing so I would imagine that there will always be a bit of debt (50m to 100m) if the debt market is right. Who knows, maybe NZR might join up with MMH and jointly fund the Marsden rail link extension. Said slightly tongue in cheek....

[sb9]

Seems as though divvy hunters are piling on for the last few days before it goes ex-div next week.

[GR8DAY]

...INDEED SB, noticed massive volume thru post close?

[sb9]

...INDEED SB, noticed massive volume thru post close?

Yeah did notice that, almost 200k shares went through post close.

[Jinx]

How is it that the last week before divined record date the price has falling almost every day :confused:

[sb9]

How is it that the last week before divined record date the price has falling almost every day :confused:

Seems as though on big seller wants to offload pretty desperate when stock is trading cum-divvy.

Very light volume though, I would expect it to turnaround by close of day.

[Jinx]

Seems as though on big seller wants to offload pretty desperate when stock is trading cum-divvy.

Very light volume though, I would expect it to turnaround by close of day.

A novice question as most of my questions generally are, but post div a stock price generally falls correct? Meaning we could continue down a further 5-10% :ohmy:

[sb9]

A novice question as most of my questions generally are, but post div a stock price generally falls correct? Meaning we could continue down a further 5-10% :ohmy:

Correct, the price gets adjusted for divvy amount after it goes ex-divvy, however you notice price usually bounces back to previous close as bargain hunters pile on.

The recent weakness I think is some large insto/KiwiSaver fund balancing their funds for March year end I suspect. Happy to be corrected though.

[Beagle]

Currency now close to U.S. 68 cents and oil heading back north. Questions over margins for FY16. Clear break down through the 100 day MA...tailwinds starting to abate ?

[Jinx]

however you notice price usually bounces back to previous close as bargain hunters pile on.



:scared:
Down 2.5%

[Jinx]

Pretty much in free fall at this point, am I missing something?

[Mickey]

Pretty much in free fall at this point, am I missing something?
Other than what SB9 said about oil prices and USD - can't find anything that would indicate NZR's business or financial guidance has materially changed since the report was released. Volume is 232,581 so far today but don't think this represents a major sell-off as far as I can tell. I may look at a top-up tomorrow once new ex-div price is set.

[cyclist]

My suspicion is that part of today's selling pressure is confusion around the new T+2 settlement arrangement. It would have been ex-divi today if it wasn't for that change. I wonder if some haven't woken up yet. The depth looks just what you would expect the day the stock goes ex-divi.

I still haven't really found a good source for reasonably up-to-date Singapore complex margin data - but this fairly recent info still looks promising enough to me (despite the gloomy headline): http://www.businesstimes.com.sg/energy-commodities/asia-pacific-crude-falling-refining-margins-weigh-on-outlook

[sb9]

Currency now close to U.S. 68 cents and oil heading back north. Questions over margins for FY16. Clear break down through the 100 day MA...tailwinds starting to abate ?

I doubt if oil would go north that quickly, whenever there is little murmur re holding supply by OPEC or supporting the price it shoots up accordingly. And I believe it's short term aberration.

As for currency, you only have to look at our own backyard re today's Fonterra's slashing their payout further. With dairy still doldrums I doubt NZD would gain any further than the current level. If it did Mr Wheelner will make sure it stays lower by cutting interest rates if not this Thursday, at least in the next round.

In my opinion, today's weakness is caused by one or two big boys who've a clear mandate to get out at any price. Just my 2 cents.

[sb9]

Other than what SB9 said about oil prices and USD - can't find anything that would indicate NZR's business or financial guidance has materially changed since the report was released. Volume is 232,581 so far today but don't think this represents a major sell-off as far as I can tell. I may look at a top-up tomorrow once new ex-div price is set.

I pity those that selling today to foolishly forgo fully imputed 20c divvy, that's all!!!

[sb9]

My suspicion is that part of today's selling pressure is confusion around the new T+2 settlement arrangement. It would have been ex-divi today if it wasn't for that change. I wonder if some haven't woken up yet. The depth looks just what you would expect the day the stock goes ex-divi.

I still haven't really found a good source for reasonably up-to-date Singapore complex margin data - but this fairly recent info still looks promising enough to me (despite the gloomy headline): http://www.businesstimes.com.sg/energy-commodities/asia-pacific-crude-falling-refining-margins-weigh-on-outlook

I think the next margin/throughput for current period is out next week, that should give us some insight into how they are tracking in light of recent commentary.

[Jinx]

In my opinion, today's weakness is caused by one or two big boys who've a clear mandate to get out at any price. Just my 2 cents.

Seems harder to deny with another 100k parcel just sold :o

[Leftfield]

Seems v strange selling patterns. However, for every seller there is a buyer and with a current P/E of around 7.17 cum divie I'm tempted to buy!!

[freddagg]

Looks cheap to me, I just topped up.

[Sideshow Bob]

Looks cheap to me, I just topped up.

Is it just in response to jump in oil prices?

[golden city]

Just top up more

[sb9]

Just top up more

Haha, knew you'll do that. I'm out of funds hence can't top up , but wish I had some cash available.

[littletramp]

If they can match or better the 20c per share dividend in September 2016, does that mean a 40 cps fully imputed dividend can be received at $3.45 per share if you buy today. A forward P/E of 8.6 and a yield of 11.6%. Is that the correct math?

[Leftfield]

Just top up more

Me to... couldn't resist it.

[cdonald]

My suspicion is that part of today's selling pressure is confusion around the new T+2 settlement arrangement. It would have been ex-divi today if it wasn't for that change. I wonder if some haven't woken up yet. The depth looks just what you would expect the day the stock goes ex-divi.

I still haven't really found a good source for reasonably up-to-date Singapore complex margin data - but this fairly recent info still looks promising enough to me (despite the gloomy headline): http://www.businesstimes.com.sg/energy-commodities/asia-pacific-crude-falling-refining-margins-weigh-on-outlook

So in theory tomorrow should open ex div so less 20 cents? From the information I have on Singapore complex refining margins, they are at around $4USD/bbl for the current week. Remember that NZR were averaging a $4 uplift on those last year before Te Muhi so I still expect the margins to be around CAP. All will be revealed next week though for the jan/feb period so we might see a bit of a boost then. If oil prices continue to rise things look a bit better for NZR with the ability to swap to natural gas at a cheaper rate.

[Jinx]

Just as it looked like NZR was recovering for the day another 100k parcel dropped at 346. What is this madness.

[macduffy]

Just as it looked like NZR was recovering for the day another 100k parcel dropped at 346. What is this madness.

Just two words - or is it one?

Profit-taking.

[sb9]

Currency now close to U.S. 68 cents and oil heading back north. Questions over margins for FY16. Clear break down through the 100 day MA...tailwinds starting to abate ?

Told ya Mr Wheeler is going to look after us....back in 66c range!!!

[Sideshow Bob]

Think all eyes are on the next throughput & margin report. Should be out next week.

[GR8DAY]

.......possibly/probably good buying today??

[bull....]

Singapore feb margins were down from jan depends how good nzr uplift was, still should be good

[sb9]

.......possibly/probably good buying today??

May be not, seems as though the selling pressure is still on by the looks. Wait and see I guess...

[golden city]

As interest rate cuts. People will buying into the dividend story. Nzr will be bound up soon

[sb9]

As interest rate cuts. People will buying into the dividend story. Nzr will be bound up soon
I think once the next margi/throughput is out it'll start moving in my opinion.

[Jinx]

http://www.refiningnz.com/media/104572/tmh_official_launched_-_thursday_10th_march.pdf

"Increase gross refining margins, and lift cash flow $50 -$55 million a year"

[Mickey]

"Increase gross refining margins, and lift cash flow $50 -$55 million a year"

Cool - hope that we see the extra cash flow reflected back into dividend payments.

[Dej]

Just thinking out loud here, I wonder why someone would sell out on the 9th of March (when we opened 20c lower) when the dividend record date is a day later? Weird time to sell out...

[BlackPeter]

Just thinking out loud here, I wonder why someone would sell out on the 9th of March (when we opened 20c lower) when the dividend record date is a day later? Weird time to sell out...

Ex dividend for NZR was March 9th (https://www.nzx.com/markets/NZSX/securities/NZR/dividends). This means - whoever sold NZR shares on that day day sold them "ex" (i.e. without) dividend and kept the dividend for him/herself.

Don't mix this up with the record date (which was March 10 - after closure of stock exchange). If you sell shares on March 9 (during stock exchange hours), than you are (with T+2 settlement) still until March 11 (during stock exchange hours) recorded as owner - i.e. eligible for the dividend recording on March 10.

Confusing, I know ... clear like mud?

[macduffy]

Yes, the current NZX/company practice of quoting "record date" and "payment date" in dividend announcements can confuse those of us who became accustomed to working to "ex div" dates. If buying or selling it pays to check whether shares are being quoted ex or cum div at the time.

[Dej]

Ex dividend for NZR was March 9th (https://www.nzx.com/markets/NZSX/securities/NZR/dividends). This means - whoever sold NZR shares on that day day sold them "ex" (i.e. without) dividend and kept the dividend for him/herself.

Don't mix this up with the record date (which was March 10 - after closure of stock exchange). If you sell shares on March 9 (during stock exchange hours), than you are (with T+2 settlement) still until March 11 (during stock exchange hours) recorded as owner - i.e. eligible for the dividend recording on March 10.

Confusing, I know ... clear like mud?

Thanks for that, definitely slightly cleared the mud!

So they waited till they owned the dividend and then sold the shares. Makes more sense now!

[sb9]

Margin/throughput report for Jan-Feb '16 should be out anytime this week. Will be interesting to see the GRM numbers...

[Sideshow Bob]

Thanks for that, definitely slightly cleared the mud!

So they waited till they owned the dividend and then sold the shares. Makes more sense now!

But the share price was still going down last week, when it was cum-dividend!

[BlackPeter]

But the share price was still going down last week, when it was cum-dividend!

Nobody said that the dividend-status (cum or ex) is the only reason for the share price to move ...

People might have needed money to buy other stuff / stocks, or re-adjusted their portfolios (lots of people had and probably still have over exposure to NZR, given that it was a couple of years ago quite cheap), or trusted their technical analysis skills (follow the herd), or maybe they assumed that electric vehicles take over in NZ within the next x months / years (and nobody need petrol / diesel anymore), or maybe they believe the NZD is shooting for the stars (it might), or maybe they assume(d) that refining margin will drop through the floor. Or maybe they think imputation is a medical term and don't like fully imputed dividends (and lots of them) ...;) - who knows?

[sb9]

Nobody said that the dividend-status (cum or ex) is the only reason for the share price to move ...

People might have needed money to buy other stuff / stocks, or re-adjusted their portfolios (lots of people had and probably still have over exposure to NZR, given that it was a couple of years ago quite cheap), or trusted their technical analysis skills (follow the herd), or maybe they assumed that electric vehicles take over in NZ within the next x months / years (and nobody need petrol / diesel anymore), or maybe they believe the NZD is shooting for the stars (it might), or maybe they assume(d) that refining margin will drop through the floor. Or maybe they think imputation is a medical term and don't like fully imputed dividends (and lots of them) ...;) - who knows?

Classic, love it :D

[BlackPeter]

Jan/Feb throughput report is out:

https://www.nzx.com/files/attachments/232066.pdf

Throughput volume more "average" this time due to supply delays towards the end of February (who would have thought given the current oil glut - but we are obviously sitting at the far end of the civilised world), but still a cracker margin - continuing to stay in the "capped" zone (i.e. saving something in case the margin drops during the year).

Not stellar results, but more than satisfactory I would say.

[bull....]

grm would have been over 9 again if not for the poor operational performance

[sb9]

Jan/Feb throughput report is out:

https://www.nzx.com/files/attachments/232066.pdf

Throughput volume more "average" this time due to supply delays towards the end of February (who would have thought given the current oil glut - but we are obviously sitting at the far end of the civilised world), but still a cracker margin - continuing to stay in the "capped" zone (i.e. saving something in case the margin drops during the year.

Not stellar results, but more than satisfactory I would say.

On track I say...

[cyclist]

Jan/Feb throughput report is out:

https://www.nzx.com/files/attachments/232066.pdf

Throughput volume more "average" this time due to supply delays towards the end of February (who would have thought given the current oil glut - but we are obviously sitting at the far end of the civilised world), but still a cracker margin - continuing to stay in the "capped" zone (i.e. saving something in case the margin drops during the year.

Not stellar results, but more than satisfactory I would say.

Can anyone explain how a margin of US$7.96 ends up in the capped region? There is a comment in the pdf "Note: The GRM for a period may be above or below the Cap of USD 9.00 per barrel due to previous year price updates, which are not subject to the Floor/Cap in the current year", but I don't really understand it.

That aside, I think the key is Singapore margins still in the region of US$5. If they stay around that area, and with a more typical uplift value perhaps later in the year, then still very good.

I wouldn't be surprised to see a bit of a pullback in the share price. Might present a reasonable opportunity for those on the fence.

[Jinx]

With this year looking to be a lower result then last, is there the possibility of a div drop next year?
How can we expect a growing sp with lower performance?

[cyclist]

With this year looking to be a lower result then last, is there the possibility of a div drop next year?
How can we expect a growing sp with lower performance?

The somewhat ironic thing about the FY result is that (except for a possible currency tailwind surprise), it really was as good as it can possibly get. But with respect to dividends, there should a lot of flexibility to raise these in the current year.

Net cash inflow last year of $264m. Most was used for investing activities (mostly Te Mihi I assume) and paying back debt. Dividends (the 5c interim) was a measly $15m. Things can pull back somewhat while still giving plenty of scope for paying out higher dividends.

[sb9]

The somewhat ironic thing about the FY result is that (except for a possible currency tailwind surprise), it really was as good as it can possibly get. But with respect to dividends, there should a lot of flexibility to raise these in the current year.

Net cash inflow last year of $264m. Most was used for investing activities (mostly Te Mihi I assume) and paying back debt. Dividends (the 5c interim) was a measly $15m. Things can pull back somewhat while still giving plenty of scope for paying out higher dividends.

With debt down considerably they should be pretty confident about paying good dividends. And the fact that they paid 25c (5c+20c) normal divvy for the FY16 show their confidence in maintaining the payout at similar levels.

[cdonald]

I expect thruput to be slightly higher than last year (Te Mihi running for a full 12 months). Last years average exchange rate was 70c, we are currently running at a 66.2 average so roughly 5% better. Margins still running at CAP.

Mar/Apr will be down due to hydrocracker top up but the shutdown is only for a couple of weeks (rather than the 6 weeks in 2014). Late ships can cause a bit of havoc sometimes but that is the nature of the beast. Remember May/Jun last year wasnt exactly stella thruput so it will be pretty easy to make it up.

Still looking at a 40c div this year in my opinion

[BlackPeter]

Can anyone explain how a margin of US$7.96 ends up in the capped region? There is a comment in the pdf "Note: The GRM for a period may be above or below the Cap of USD 9.00 per barrel due to previous year price updates, which are not subject to the Floor/Cap in the current year", but I don't really understand it.



Good question - and I haven't found either the formula for applying the cap over monthly results. Might be some algorithm to iron out seasonal variations (ultimately the cap is applied over the full year). I assume that if the average margin over the full year stays below US$9, than we will get back anything which has been paid into the cap.

Still - might be a worthwhile question for the AGM ...

[freddagg]

Can anyone explain how a margin of US$7.96 ends up in the capped region? There is a comment in the pdf "Note: The GRM for a period may be above or below the Cap of USD 9.00 per barrel due to previous year price updates, which are not subject to the Floor/Cap in the current year", but I don't really understand it.

I don't understand it either Cyclist but I sure would like to.

[cdonald]

I don't understand it either Cyclist but I sure would like to.

Just be happy that we are having conversations about CAP rather than FLOOR.

The issue of price adjustments from previous years is a pretty complex one.

[BlackPeter]

The somewhat ironic thing about the FY result is that (except for a possible currency tailwind surprise), it really was as good as it can possibly get. But with respect to dividends, there should a lot of flexibility to raise these in the current year.

Net cash inflow last year of $264m. Most was used for investing activities (mostly Te Mihi I assume) and paying back debt. Dividends (the 5c interim) was a measly $15m. Things can pull back somewhat while still giving plenty of scope for paying out higher dividends.

2015 was certainly a good year for them. However - if the stars stay aligned (oil low, currency low and increased efficiency through Te Mahi Hou paying off), than it is in my view not impossible that they still (slightly) better last years result.

However - this is not what the analysts expect. Consensus EPS for 2016 is 41.6 cts / share (i.e. less than 2015); consensus dividend 27.9 cents / share (i.e. more than last year); This would be at current SP ($3.30) a PE of 8 and a dividend yield of 8.5%; Looks conservative enough for me - and in a way I think that NZR is a good hedge against the dairy market downs.

Time to sell them might be when dairy comes back.

[Mickey]

I see the SP is down to $3.19 this morning. Do other holders see this becoming a bargain price? I suspect that the oil rally is what is putting downward pressure on the SP at the moment as well as the NZUSD rate but I don't think the rally has got much more steam in it. World wide surpluses continue to increase at a rate of 1-2 million barrels a day and higher prices could start to encourage more production, thereby exacerbating the oversupply problem. The current rally seems to be buoyed in the hope that the OPEC meeting in Qatar in April will lead to a production freeze but with Iran not expected to participate - I feel that little will be achieved. I'm picking that there's likely to be a sharp drop in oil in the coming weeks.

[BlackPeter]

I see the SP is down to $3.19 this morning. Do other holders see this becoming a bargain price? I suspect that the oil rally is what is putting downward pressure on the SP at the moment as well as the NZUSD rate but I don't think the rally has got much more steam in it. World wide surpluses continue to increase at a rate of 1-2 million barrels a day and higher prices could start to encourage more production, thereby exacerbating the oversupply problem. The current rally seems to be buoyed in the hope that the OPEC meeting in Qatar in April will lead to a production freeze but with Iran not expected to participate - I feel that little will be achieved. I'm picking that there's likely to be a sharp drop in oil in the coming weeks.

Difficult to predict the future, but given that both Russia and Saudi Arabia produced in February more oil than they agreed to in January, do I think that dropping oil prices might be well in the cards.

Not sure what's happening with the NZR share price - yes, their earnings do have some sensitivity to the oil price, but whether it is $30/bbl or $40/bbl does not make a huge difference for them ($100/bbl does, but this looks now like a faint past ...).

Obviously - a high NZD is more damaging, and as you indicated - this might be the reason for the current rally downwards.

Personally would I see for NZR at this stage more up than further down potential (due to increased efficiencies and my expectations that oil as well as NZD will stay low for years - though maybe not that low).

If these my expectations are correct, than this should make the current weakness an interesting buying opportunity. A forward PE of (now) 7.7 and a dividend yield of 8.7% (plus full imputation) is not to be spit at ...

Obviously - SP dropped now below MA200, which means that herd mentality might drive it first further down (just saying - might be worthwhile to wait for the bottom before pushing the buy button, though easy to miss the bottom as well ...).

Discl: hold;

[Jinx]

Obviously - SP dropped now below MA200, which means that herd mentality might drive it first further down (just saying - might be worthwhile to wait for the bottom before pushing the buy button, though easy to miss the bottom as well ...).

Discl: hold;

Would be predicting downwards pressure at least for the next few months. (with next months margin set to be low as well)

Discl: Happy long term holder, Divs are solid and will continue to be

[cyclist]

Would be predicting downwards pressure at least for the next few months. (with next months margin set to be low as well)

Discl: Happy long term holder, Divs are solid and will continue to be

I was about to say the same thing. I wouldn't be at all surprised to see it fall further. But likely to then rocket back up when interim results / divvies are announced (assuming everything ticks along fairly well and no major shocks on the margin front). I'll be topping up. But aren't feeling any rush to do so yet.

Disc: My biggest holding. I probably should listen to KW, Baa Baa and Hoop a bit more and sell a few when the signs are there, but so far my biggest mistakes have been the things I have sold ...