CHI - Channel Infrastructure Ltd (NZR)

[sb9]

I'm happy hold as the yield looks pretty good and small correction in Oil and Currency isn't going to affect their long term profitability. The story might be bit different next week with Oil and Currency.

Would look to add more if it drops to unreasonable levels.

[Nasi Goreng]

I'm not holding and this does not look attractive at the moment. If 2015 year is as good as it gets, the use of PE to determine value is wrong or very risky. I think there is a lot of hope and crossed fingers if you are a long term NZR investor and that's why I got out last year. If they can deliver 40cps earnings for the next 7 years, then well done to all holders.

[BlackPeter]

NG - "attractive" is a quite subjective term. Some people find boring dividend earners attractive, and others fall for sexy growth companies who seldom hold their promises. In investment terms I prefer boring.

Maybe it is worthwhile to look a bit deeper into this share:

Average EPS over the last 11 years (i.e. after the big share split): 28,8 cents / share. This would make a long-term PE of 11 (still conservative, given that I didn't include the great results from 2000 to 2004 in this number). Not outrageous, but not bad either if we look at interest rates these days.

As well - the 48 cts per share they earned last year is historically not the maximum ... they have been e,g, from 2004 to 2008 above 40 cps, with a maximum of 67,4 cents. Sure - this was prior to the 2014 cap rise, but than - they used this money to increase their efficiency.

And sure - NZR is a cyclical share - with the last high earning period basically running from 2000 (couldn't find earlier data) to 2008. If you assume that this was a "one-off high" ... and 15 meagre years from here, than you are right. If we look however at another 7 or 8 year half-cycle, than it would be not too wrong to use (at least at the start of the next high - period) the forward PE as value indicator.

[golden city]

Just managed to top up more at 3.06

[Mickey]

Just managed to top up more at 3.06

Good score. I was in a meeting and it was back up to 3.10 when I got back to my computer so sitting on the sideline again. Still pretty good at 3.10 but just waiting to see which way it goes.

[Sideshow Bob]

200 day MA is still about $3.36 and 50 day $3.56.

In the meantime, I'll just console myself with the dividend Thursday.....:sleep:

[BlackPeter]

Wow - what a drop - trading today sometimes even slightly below the $3 mark, though it feels that the resistance around this mark starts to build up.

Just wondering - is there anything the people selling at this price do know, which we don't? Or is this really just the pressure of the SP dropping below the MA 200 and the urge of sellers to follow the other lemmings over the cliff?

Not sure, whether I regret at some stage my decision to hold - but I remember similar drops with other (fundamentally sound and undervalued looking) stocks and always regretted, when I sold out following the TA wisdom.

Graham recommends to buy cheap and sell dear ... maybe I stick with his wisdom - hard enough for me to memorize this bit;)

[RTM]

Wow - what a drop - trading today sometimes even slightly below the $3 mark, though it feels that the resistance around this mark starts to build up.

Just wondering - is there anything the people selling at this price do know, which we don't? Or is this really just the pressure of the SP dropping below the MA 200 and the urge of sellers to follow the other lemmings over the cliff?

Not sure, whether I regret at some stage my decision to hold - but I remember similar drops with other (fundamentally sound and undervalued looking) stocks and always regretted, when I sold out following the TA wisdom.

Graham recommends to buy cheap and sell dear ... maybe I stick with his wisdom - hard enough for me to memorize this bit;)

Well....if it cheers you up at all...I just bought some. And will double up if they hit 270 something, hope I've got it right. Windy/ showery day up here and got a bit bored. Not sure that is the right motivation to buy. Fingers crossed.
Cheers, RTM

[sb9]

Wow - what a drop - trading today sometimes even slightly below the $3 mark, though it feels that the resistance around this mark starts to build up.

Just wondering - is there anything the people selling at this price do know, which we don't? Or is this really just the pressure of the SP dropping below the MA 200 and the urge of sellers to follow the other lemmings over the cliff?

Not sure, whether I regret at some stage my decision to hold - but I remember similar drops with other (fundamentally sound and undervalued looking) stocks and always regretted, when I sold out following the TA wisdom.

Graham recommends to buy cheap and sell dear ... maybe I stick with his wisdom - hard enough for me to memorize this bit;)

I'm holding too and far from thinking of selling. Watching very closely though by which I mean look to add more if it drops to some silly price level.

In the meantime, looking forward to the handsome divvy to come out in couple of days.

[golden city]

Just add more at 3.03

[golden city]

Wait for Thursday bag the dividends Going to add more if stay this price range

[couta1]

Not the best of timing by myself getting in with 35k shares at $3.55 just before the divvy, a classic example of why buying post divvy is often better, a 20c divvy gained for a 50c drop in share price is not a good exchange but having said that I see this share with a 4 in front of it sometime this year so all good:cool:

[Sideshow Bob]

Not the best of timing by myself getting in with 35k shares at $3.55 just before the divvy, a classic example of why buying post divvy is often better, a 20c divvy gained for a 50c drop in share price is not a good exchange but having said that I see this share with a 4 in front of it sometime this year so all good:cool:

hopefully not 40-something cents! :scared:

(Welcome back Couta)

[BlackPeter]

Not the best of timing by myself getting in with 35k shares at $3.55 just before the divvy, a classic example of why buying post divvy is often better, a 20c divvy gained for a 50c drop in share price is not a good exchange but having said that I see this share with a 4 in front of it sometime this year so all good:cool:

Welcome, couta - great to have you back!

And yes - NZR seems to go currently through a less popular phase (and Singapore margins under pressure, how crackity yesterday pointed out to me). Agree however with you that the underlying value should be higher than the current SP. At least you will (in my view) see some more good dividends coming in this year - FT "consensus view" is 28 cents - and they have been last year woefully conservative with this stock.

If they get (after the planned maintenance in April) their throughput back (I am sure, they will) and if the oil price and the Singapore margin and the dollar do not play too crazy games (some ifs, but not that big in my view), than I would see for 2016 a divie in the mid 30'ies (or even up to 40 cents) as well possible.

I think the markets are overreacting to a more average throughput report combined with some margin pressure.

Obviously - this view is based on assumptions about the future economical and oil price development which might be flawed ... DYOR!

[sb9]

Not the best of timing by myself getting in with 35k shares at $3.55 just before the divvy, a classic example of why buying post divvy is often better, a 20c divvy gained for a 50c drop in share price is not a good exchange but having said that I see this share with a 4 in front of it sometime this year so all good:cool:

Seem as though this pup is bit out of favour with market at the moment. I'm picking the payout will be in 30c-40c range for this FY.

[golden city]

35c dividends at least this year

[golden city]

Looks down trend setttled

[golden city]

Anyone received the dividends yet

[golden city]

Price looks to recover from now

[BlackPeter]

Anyone received the dividends yet

Not yet, but my OMCA account is as well in that regard (crediting external payments) typically a bit slow. Wouldn't worry, though - it will come. They say "all good things need time".

[golden city]

Was going to wait for the money to add more shares

[BlackPeter]

Was going to wait for the money to add more shares

Why don't you? I am sure you will have the money with T+2 in your account before you need it - assuming it goes into your trading account and you are sure, that you registered the correct account number.

[Jinx]

Why don't you? I am sure you will have the money with T+2 in your account before you need it - assuming it goes into your trading account and you are sure, that you registered the correct account number.

Seems like there's been a lot of this happening today with the price finally starting to recover

[golden city]

Didn't see it on acc yet

[iceman]

Didn't see it on acc yet

I have just received an electronic advice of the dividend, so you can breath easy GC :-)

[sb9]

Didn't see it on acc yet

Got mine credited into my bank account...suddenly the bank account got bit heavier :D

[Jinx]

https://www.nzx.com/files/attachments/232597.pdf

From reading the report the conclusions I've reached are: 2016 (especially the first half) Is going to mainly about creating more infrastructure, addressing health and safety concerns and making improvements to their environmental plan.
While 2017 will be there year where more growth is born.

Happy holder

[thestg]

Was going to wait for the money to add more shares

Might be a bet cheaper now.
Margin Update 3:28pm, 24 Mar 2016 | GENERAL This is to inform the market that we have experienced operational issues with the hydrocracker unit resulting in the identification of a modest amount of emergent repair. The repairs will be undertaken concurrently with the upcoming shutdown. The estimated impact on processing fee revenue is in the order of NZ$7-$8 million.

[sb9]

Might be a bet cheaper now.
Margin Update

3:28pm, 24 Mar 2016 | GENERAL

This is to inform the market that we have experienced operational issues with the hydrocracker unit resulting in the identification of a modest amount of emergent repair. The repairs will be undertaken concurrently with the upcoming shutdown. The estimated impact on processing fee revenue is in the order of NZ$7-$8 million.

Wouldn't think its such large impact on margin, they're just complying with continuous disclosure clause...I bet its already priced in.

[golden city]

Big fat dividends nice

[golden city]

It is already priced in. Looks like insider trading. It finally tells me why price drop so fast.

[Sideshow Bob]

Indeed GC. Here is the related article

http://www.scoop.co.nz/stories/BU1603/S00823/nz-refining-suffers-8-million-hydrocracker-problem.htm

Even after that news it still finished up for the day.

[bull....]

all quiet here, brent Dubai spread is not good at the moment , cracks under pressure, hydro cracker offline probably wont be a good report next time

[Nasi Goreng]

In the last financial year, I don't remember anything going against NZR at all. It truly was an all stars align year.

This year, spreads seem to be coming under pressure, and a few minor mishaps have occurred, one being a tanker delay which impacted volume, then the issue with the cracker which was quite an expensive mishap.

So to me, it looks like 2015 was maximum profit or close to, this year every mishap will eat into profitability, a long way to go and it looks like spreads under pressure, dollar going higher... The opposite of last year. Can't be good for SP.

[Jinx]

In the last financial year, I don't remember anything going against NZR at all. It truly was an all stars align year.

This year, spreads seem to be coming under pressure, and a few minor mishaps have occurred, one being a tanker delay which impacted volume, then the issue with the cracker which was quite an expensive mishap.

So to me, it looks like 2015 was maximum profit or close to, this year every mishap will eat into profitability, a long way to go and it looks like spreads under pressure, dollar going higher... The opposite of last year. Can't be good for SP.

All true, but the sp is already 23% lower the the peak last year. Which means 2016 being a weaker year is already foretasted into sp. NZR is still a very strong div stock that should produce a decent result after the cracker has been repaired.

[Leftfield]

All true, but the sp is already 23% lower the the peak last year. Which means 2016 being a weaker year is already foretasted into sp. NZR is still a very strong div stock that should produce a decent result after the cracker has been repaired.

Agree..... and they are still paying off debt.... 3.00 seems to be the lower resistance level. Watching the chart closely.

[cdonald]

I wouldnt read too much into the cracker breaking down, it is a normal shut down (cracker tripped a week before shut down which allowed them to plan for extra work if needed). We rented out a house to some of the guys working on the hydrocraker shutdown and they were done and dusted 5 days earlier than originally planned so it looks like the shutdown is going very well. Shut downs are normal planned events.

The crude ship delay earlier on was not great but with the cracker with new catalyst I am sure they will make up for lost ground over the coming weeks. NZD at 69c is still better than last years average of 70c and dont forget we have got a full year of margin uplift from new project.

We might be looking at Mar/Apr margins of $6USD to $7USD bbl but that is still pretty good.

[Nasi Goreng]

Thats a good response CDonald - thanks.

[Leftfield]

Nice to see NZR buying its own shares at the present lows......

For the purposes of Listing Rule 7.12.1 of the NZX Main Board/Debt Market Listing Rules,The New Zealand Refining Company Limited (NZR) advises that the following securitieshave been acquired:




a Class of securityISIN

b Number acquired

c Acquisition price

d Payment

e Amount paid up

f Principle terms of securities

g Percentage of class ofsecurities

h Reason for acquisition

i Authority for acquisition

j Terms of acquisition



Ordinary SharesNZNZRE0001S998,025
$3.14
Cash
Fully paid up ordinary sharesN/A
0.03%
Ordinary shares were acquired to be held byCRS Nominees Limited pending grant toemployees under NZR’s Employee SharePurchase Scheme

[Jinx]

Nice to see NZR buying its own shares at the present lows......


I think its more of an automatic buy for the "Employee Sharepurchase Scheme" so I wouldn't extrapolate too much from this purchase

[freddagg]

all quiet here, brent Dubai spread is not good at the moment , cracks under pressure, hydro cracker offline probably wont be a good report next time

Hi Bull
I am trying to get my head around the variables that affect NZRs margin.
Can you please explain why a narrower spread between Brent and Dubai is bad.

[sb9]

Looks like today's OCR decision adds further pressure to sp with strong NZD in play.

[Sideshow Bob]

Now sub $3.00.

Based on 25cps divvies over the last 12 months, now yielding 8.39%

[couta1]

Has been a disappointing share for me with a $3.55 buy in and a good number of them, got the last divvy and holding long for that reason. Expecting a rise in the SP in the second half of the year.

[sb9]

Has been a disappointing share for me with a $3.55 buy in and a good number of them, got the last divvy and holding long for that reason. Expecting a rise in the SP in the second half of the year.

Yeah, should look better post May/June in my opinion once shut down is complete and operations back in full swing. Until then the downward pressure may continue I'm afraid.

[iceman]

I note there is an important constitutional change on the agenda to be voted on at the AGM. I have received this from the NZSA and urge holders that will not attend the meeting to give their proxies to the NZSA or someone else that will vote for this amendment to the Constitution:

"This resolution is the first step in addressing a long standing NZSA view that the board of NZR is
too large, and that oil company shareholder/customers have had an inappropriate level of control.
Until the Chevron deal was announced (which required their NZR holding to be sold), the four oil
companies had 7 directors between them on a 10 member board. The NZSA view has always been
that they should have one each and that a majority of directors should be independent. Z Energy
and BP have now voluntarily reduced to one and Chevron no longer has any directors. This leaves
only ExxonMobil with two. The board currently has 4 oil company directors and 4 independents.
We understand that ExxonMobil will likely drop to a single director subject to the board
appointing an independent who is suitably experienced in risk/H&R. If this is done, the board will
then have 7 members with a clear majority independent.
The first part of the Constitutional changes allow for this smaller board (currently a minimum of 8)
and the second amendment reduces the quorum to a simple majority of directors , but no less
than three. While this will not in itself complete the changes, it will enable them to be made and
as such NZSA strongly supports the move.
Unlike the earlier items which need a simple majority, this one is a special resolution and requires
75% support from all those voting. Therefore it is important that you either attend the meeting or
appoint a proxy to vote for you.
NZSA will vote all undirected proxies we hold IN FAVOUR of this resolution.
Proxy votes must be received at Computershare by 2pm on Monday 2nd May."

[sb9]

Anyone from ST forum here going to attend the ASM in Auckland today, if so would you be kind enough to drop key snippets from the meeting, thx.

[Jinx]

Despite their best efforts the live stream doesn't work :o
http://www.refiningnz.com/

Edit: Working now

[golden city]

Doesn't look good forecast

[Jinx]

Doesn't look good forecast

The slide from the ASM that showed 2015 as a peak was one thing but they certainly weren't ruling out continuing similar dividends when questioned.

[babymonster]

heard from the radio, NZR CEO is pretty optimistic and suggests that lack of refinery investment around the world and this will help NZR

[Jinx]

SP taking more hits today are people assuming there isn't going to be an interimdividend?
Previously I have been worried about the sp dropping but now I'm considering topping up again, any lower and we'll be hitting early 2015 prices before we had such a stellar year

[Nasi Goreng]

Remember when Caltex sold at was it $2.20? That was with a backdrop of very strong fundamentals. This stock can trade anywhere.

[Jinx]

Remember when Caltex sold at was it $2.20? That was with a backdrop of very strong fundamentals. This stock can trade anywhere.

Sorry for a silly question, I'm a rookie investor, could you further explain this?
Do you just mean that regardless of fundamentals a stock can trade anywhere?

[Nasi Goreng]

If you have a look at the 5 year chart for NZR, its gone from $4.70 down to $1.65, back up to $3.89 and today its at $2.95 and the current trend is down. If you are trading this, then what seems like a low price today would be a bad move if the down trend continues.

Stocks like NZR are more volatile than businesses with consistent profits which means the share price can accelerate very quickly but also fall just as fast. I'm not knocking the business at all, there is the potential for NZR to deliver consistent strong profits going forward which would make todays price cheap but there is also uncertainty out there which is one of the components that makes a market price what it is.

[Jinx]

Exactly the type of educational answer I was after,
Thanks Nasi Goreng :)

[sb9]

Not feeling loved at the moment?

[Mickey]

Not feeling loved at the moment?

Not looking pretty at all.....:scared:

[sb9]

Not looking pretty at all.....:scared:

Only saving grace from today's weakness is its not big volume...but does not augur well with more headwinds in form of strengthening oil prices and stronger NZD.

[golden city]

Looking to add

[golden city]

It looks investor are very concern about forecast this year.

[Mickey]

Looking to add

Someones started buying at 273. My plan was to invest in NZR for a few years so I might pick up a few more - but I'm hanging off until I can see a definite more back up.

[golden city]

I just bought some

[golden city]

Looking to add more. I like it fat dividends

[golden city]

I am keep it as income stock

[Sideshow Bob]

The next throughput and margin update for March/April should be released within the next week or so. Will again be negative due to shutdown through this period.

[sb9]

The next throughput and margin update for March/April should be released within the next week or so. Will again be negative due to shutdown through this period.

Quite right, might see bit more weakness around that time although its currently priced in.

May look to add at that time if its comes within my target price range, until then keeping my powder dry.

[golden city]

It looks right time to take some. Hide in draw for now

[Sideshow Bob]

I am keep it as income stock

I see in the AGM matrix that showed borrowings prior to 2016 interim divvy.

[golden city]

Still I think they will keep the dividend policy. The borrowing is way less than last year

[golden city]

I still seeing 80 to 100m profit this year

[golden city]

Dividends will become 25, to 30c

[misterx]

what about capital. its gone down way too much..

[Beagle]

Just got an e.mail from former well respected poster Crackity. He's piling back in this afternoon at $2.70 - $2.73. Very astute guy so probably bought all he could in that price range so probably the one responsible for turning the market around today.

[Nasi Goreng]

I think it still goes down further but if it gets to $2.50, I will be tempted.

[golden city]

I have clear the lots at 2.73 my friend

[golden city]

2.50 looks impossible

[bull....]

still some cracks under pressure and some contango evident in some products

[golden city]

Any one know what is the Singapore margins now

[couta1]

what about capital. its gone down way too much.. You only lose it if you sell assuming your a long term holder, if you are paper losses are meaningless in the mean time. Agree though it has been a surprising drop and not a nice one.

[Joshuatree]

Just got an e.mail from former well respected poster Crackity. He's piling back in this afternoon at $2.70 - $2.73. Very astute guy so probably bought all he could in that price range so probably the one responsible for turning the market around today.

I don't know why he does it. Some great informative researched posts followed by this sort of ;well basically drivel. Its a shame because it brings in to question all the other posts and i thought some of them were great:confused:.

[kiora]

I don't know why he does it. Some great informative researched posts followed by this sort of ;well basically drivel. Its a shame because it brings in to question all the other posts and i thought some of them were great:confused:.

Because its his hobby:sleep:

[Nasi Goreng]

2.50 looks impossible

Not as impossible as $2.70 was 2 months ago :-)

Really if you look at it, the price has gone from low 200s to high 300s in a period of 16 months or so. Not a great deal has changed in that time, the price went up on optimism of high profits which came to fruition and now it seems to be falling because of uncertainty. At least some dividends have been paid and it looks like more to come so holders have something.

I also can't help but feel that fall of AIR has had an impact on NZR, both cyclicals, high divi payers and both under pressure right now.

[Sideshow Bob]

Any one know what is the Singapore margins now

You ask after you back the truck up and buy more???

[Beagle]

I don't know why he does it. Some great informative researched posts followed by this sort of ;well basically drivel. Its a shame because it brings in to question all the other posts and i thought some of them were great:confused:.

Just reporting what he told me, what's so hard to understand about that ? Some people still remember Crackity well, others have been fortunate to have met him and he's a very nice bloke...

[golden city]

Haha decision need to taking fast sometime when you find out everything might be just too late sometimes

[Sideshow Bob]

Any one know what is the Singapore margins now

https://www.neste.com/en/corporate-info/investors/market-data/refining-margins

[golden city]

Thanks still looking ok

[Hectorplains]

Haha decision need to taking fast sometime when you find out everything might be just too late sometimes

Hmmm? Dangerous philosophy.

[Jinx]

Oil down, Good sentiment in the US last open, big sp drops yesterday.
Can't see today being down.

[Nasi Goreng]

Oil down, Good sentiment in the US last open, big sp drops yesterday.
Can't see today being down.

Well there you go - down 11 for the day. Stocks in free fall have nothing to do with US sentiment or oil and have everything to do with nervous buyers and fearful sellers.

[Jinx]

Well there you go - down 11 for the day. Stocks in free fall have nothing to do with US sentiment or oil and have everything to do with nervous buyers and fearful sellers.

"nothing to do with US sentiment" how do you explain the fearful and nervous people then? If last night there was the best performance recorded on the S&P500 do you seriously think Nzr would be down 11 points? Fair on calling me out for being wrong but every market is connected and every fearful seller and nervous buyer take note of how the US performs

[Nasi Goreng]

I don't want to get into a big debate here but I don't agree with what you are saying.

If the Dow was up or down 300, then yes it tends to impact foreign markets quite a bit and most stocks will rise or fall... but within a market are stocks that are trending higher and some trending lower and they just want to go in that same direction more often than not.

[bull....]

https://www.neste.com/en/corporate-info/investors/market-data/refining-margins

the link is not for Singapore margins so is incorrect, nz refining base there margin on platts data out of Singapore

[couta1]

Well there you go - down 11 for the day. Stocks in free fall have nothing to do with US sentiment or oil and have everything to do with nervous buyers and fearful sellers. True just like Air currently but it will turn in due course.

[sb9]

True just like Air currently but it will turn in due course.

Next week margin/throughput report is key in my opinion.

[golden city]

After reports. Should see something better comming. Next report

[golden city]

Certainly not afraid to add more.

[bull....]

Any one know what is the Singapore margins now

my opinion rough est march/april around 5 has fallen more in may due to excess supplys and weaker product cracks so generally weaker fundamentals could explain weaker share price last week and the expectation of a lower throughput report for march/april.

by my calcs rough and guessing of course npat running around 55 - 60m for the yr so far? well down on last yr

[bull....]

so would look expensive at these prices?

[sb9]

2.50 looks impossible


I think it still goes down further but if it gets to $2.50, I will be tempted.

The way its trending 250 might be a possibility.

[Mickey]

The way its trending 250 might be a possibility.

I've stopped looking. I'm propping myself up with the fact that I'm a long term investor and so I should ignore these price fluctuations and perhaps accumulate a few once it bottoms out and is on its way back up.

[Jinx]

May 2016 = Bulls expected for 2016 = 60,000,000 Net Profit After Tax = sp of ~$2.70
Feb 2016 = Full year annocement for 2015= 150,000,000 npat = sp of ~$3.50
Feb 2015 = Full year annocement for 2014 = 10,000,000 npat = sp of ~$2.60
Feb 2014 = Full year annocement for 2013 = 5,000,000 nlat = sp of ~$2.00

I understand SP doesn't correlate fully with npat but a prediction of 60M npat would mean compared to 2014 or 2015 around this time the sp is ridiculously cheap (600% increase from 2014's profit would mean the sp could be $15, while compared to 2016 profit of 60m would mean theres a 60% reduction in profit = 60% reduction in sp = ~1.40) and when comparing to the last years profit the price looks ridiculously expensive.
The point of this is to show that a reduction or increase in profit doesn't directly correlate to the sp.
A 60m profit is still solid and I'd be expecting another solid interim Div.

Confusing & novice post I know.

[bull....]

May 2016 = Bulls expected for 2016 = 60,000,000 Net Profit After Tax = sp of ~$2.70
Feb 2016 = Full year annocement for 2015= 150,000,000 npat = sp of ~$3.50
Feb 2015 = Full year annocement for 2014 = 10,000,000 npat = sp of ~$2.60
Feb 2014 = Full year annocement for 2013 = 5,000,000 nlat = sp of ~$2.00

I understand SP doesn't correlate fully with npat but a prediction of 60M npat would mean compared to 2014 or 2015 around this time the sp is ridiculously cheap (600% increase from 2014's profit would mean the sp could be $15, while compared to 2016 profit of 60m would mean theres a 60% reduction in profit = 60% reduction in sp = ~1.40) and when comparing to the last years profit the price looks ridiculously expensive.
The point of this is to show that a reduction or increase in profit doesn't directly correlate to the sp.
A 60m profit is still solid and I'd be expecting another solid interim Div.

Confusing & novice post I know.

my 60m profit is a guestimate at this point in time by the end of the yr could be higher or lower who knows so many variables so take it with a grain of salt,

[Jinx]

my 60m profit is a guestimate at this point in time by the end of the yr could be higher or lower who knows so many variables so take it with a grain of salt,

Clearly it's just an estimate but considering I have no idea how to go about estimating I thought I'd run with yours to prove the point that npat and sp should have very little correlation.

2014-2015 there was a 15 times increase in profit, while the sp went from $2.60-$3.50

[Jinx]

We all know it's not going to be the same as last year profit wise, but considering we've seen a 44% decrease from the highs last year its amazing that people are still selling.

[Placemakers]

the Price drop today is the reaction of the release of Financial stability report, no new housing restrictions as expect, so lessen possibility of cut rate next month , NZD went up.

before the release the NZR SP were going up.

http://www.economiccalendar.com/2016/05/10/rbnz-financial-stability-report-reserve-bank-flags-risks-kiwi-rises/

[golden city]

I am guessing 80 to 100m profit

[crabs]

as a long term follower of the ST forums it always amuses me to read threads on companies I am well researched on and see that many who are invested have no idea why the share price is on the move.
To be honest those who are well research in this stock probably sold out, like I did, after collecting the last dividend.
I have no more info than that which can be gained by anyone with access to the internet.
After reaching a huge peak in Jan 2016 Singapore cracking margins fell off a cliff to a 5 year low about 1 week ago...... probably not even break even for NZR.
However they took a huge turn around by the end of last week and is probably why you have seen a little bounce in SP

page 6 of this link tells the story
http://www.howardweil.com/docs/reports/weekly%20reports/refiningreport.pdf

be sure the smartest investors are sure to be well researched and the more researched you are the luckier you get.
Don't be shy in asking probing questions directly to any company you are invested in or are thinking about investing in....I do it all the time. Most companies have an investors liaison officer. Be persistent as well if you think their answers are blurry or evasive.
But do keep in mind due to market laws they can not answer all questions.

[sb9]

as a long term follower of the ST forums it always amuses me to read threads on companies I am well researched on and see that many who are invested have no idea why the share price is on the move.
To be honest those who are well research in this stock probably sold out, like I did, after collecting the last dividend.
I have no more info than that which can be gained by anyone with access to the internet.
After reaching a huge peak in Jan 2016 Singapore cracking margins fell off a cliff to a 5 year low about 1 week ago...... probably not even break even for NZR.
However they took a huge turn around by the end of last week and is probably why you have seen a little bounce in SP

page 6 of this link tells the story
http://www.howardweil.com/docs/reports/weekly%20reports/refiningreport.pdf

be sure the smartest investors are sure to be well researched and the more researched you are the luckier you get.
Don't be shy in asking probing questions directly to any company you are invested in or are thinking about investing in....I do it all the time. Most companies have an investors liaison officer. Be persistent as well if you think their answers are blurry or evasive.
But do keep in mind due to market laws they can not answer all questions.

Good post crabs, welcome to the forum.

[Joshuatree]

Yeah, very useful website you've posted there crabs.

[bull....]

my opinion rough est march/april around 5 has fallen more in may due to excess supplys and weaker product cracks so generally weaker fundamentals could explain weaker share price last week and the expectation of a lower throughput report for march/april.

by my calcs rough and guessing of course npat running around 55 - 60m for the yr so far? well down on last yr

not bad guestimates if I must say lol

[Jinx]

not bad guestimates if I must say lol

Very good stab in the dark'ish
To be honest the result is reasonably ideal considering the shutdown, If they can pull decent margins out for the rest of the year I'd be expecting dividends at about 75% of the ones this year. Not bad at all.

[sb9]

Latest margin/throughout report little worst than I expected with GRM of 1.84 which is third lowest on that table, other two being Mar/Apr '14 - (-2.84) and Nov/Dec '13 - 1.82.

[crabs]

not bad guestimates if I must say lol
yes you can tell you are well researched.
A throughput of 7.5 m barrels is a stellar result (5.8 last time the hydrocracker maintenance was done.)
However $5.72 USD margin is not much more than break even.Interesting they then showed the real costs to margins of maintenance shut down making net margins just $1.84 which will mean a huge operational deficit for the period
I find their statement that Singapore margins remained strong at $3.18 extremely misleading when compared to previous 2 monthly $4.95 and prior to that $6.37.
In fact you have to go back to September 2014 to find a lower singapore margin.
Half yearly is not stacking up to be very good.
But I am with you Bull 50-60m NPAT full year.

[cdonald]

so going ahead after reading this http://www.refiningnz.com/media/105662/performance_update_presentation_-_17th_may_2016.pdf I would expect an uplift of around $3 perbbl over Platts Sing Complex (Nothing can be done about the freight reduction of $1.12/bbl). It is actually a pretty solid result and even though it is not published on the NZR website it is interesting to note that singapore complex margins have recovered a bit in May and production should be up due to cracker getting new life. Not too shabby at all....

[bull....]

http://www.bloomberg.com/news/articles/2016-05-16/ignoring-29-buy-calls-investors-sell-south-korea-s-top-refiner

looking at the chart in the news article of Singapore refining margins ( not exactly the same margin NZR use ) you can see they slumped at the beginning of the year roughly around the same time NZR share price started turning down ( actually all refiners worldwide seem to be going down at the moment ), so clearly the selling has been by informed investors cashing out at the top of the current margin cycle.
who knows where margins will go with any certainty and therefore nzr profits as variables in a stock like nzr change constantly so dividends will be up and down I would imagine like historically?
I only own minute position now

[babymonster]

Mr market doesn't like the ann.

[cyclist]

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 ...

That was from mid March when it was around $3.10. Hmmmm. I fully expected more bad news today, but this was much more dire than I could have guessed.

Again I find myself wondering if they just make this stuff up on a whim. Throughput for the period was still fantastic, despite the shutdown. Surely any costs (labour and materials) for the shutdown are just part of normal opex. So why this massive hit on the margin due to the shutdown? I don't get it. (Put it another way, I can understand why costs during the shutdown and repair period would be higher, but don't understand why the revenue gets discounted by such a big amount). Any suggestions?

[crabs]

That was from mid March when it was around $3.10. Hmmmm. I fully expected more bad news today, but this was much more dire than I could have guessed.

Again I find myself wondering if they just make this stuff up on a whim. Throughput for the period was still fantastic, despite the shutdown. Surely any costs (labour and materials) for the shutdown are just part of normal opex. So why this massive hit on the margin due to the shutdown? I don't get it. (Put it another way, I can understand why costs during the shutdown and repair period would be higher, but don't understand why the revenue gets discounted by such a big amount). Any suggestions?
Hi cyclist I have never seen a report before where NZR broke down the effect of scheduled maintenance as a $ per barrel rate....very unusual. Combine this with the hype rhetoric about margins remaining strong when in reality they have not....... may have shaken the confidence of a few investors.
Also those with long memories will know how the company & companies share price performed last time we had low oil prices that were rising again in value.....it was a disaster for share holders.
From memory last time they had a full year of profit above cap margin it was followed by a loss making year.
Maybe we have not seen the last of the world wide oil refinery over capacity that dogged NZR for several years prior to last year.

[cdonald]

That was from mid March when it was around $3.10. Hmmmm. I fully expected more bad news today, but this was much more dire than I could have guessed.

Again I find myself wondering if they just make this stuff up on a whim. Throughput for the period was still fantastic, despite the shutdown. Surely any costs (labour and materials) for the shutdown are just part of normal opex. So why this massive hit on the margin due to the shutdown? I don't get it. (Put it another way, I can understand why costs during the shutdown and repair period would be higher, but don't understand why the revenue gets discounted by such a big amount). Any suggestions?


The hydrocracker is what they call an upgrade unit ie it upgrades cheaper products into more expensive ones. Here is a good link as to what hydrocrackers do http://www.eia.gov/todayinenergy/detail.cfm?id=9650

So in basic terms, when the hydrocraker is not working the refinery has to export fuel oil (cheap) rather than making jet fuel which is in pretty big demand in New Zealand. Hydrocracker needs to have a catalyst replacement every couple of years hence the need for shut downs. It is at the heart of the refinery. Once Catalyst is replaced the amount of thruput they can put thru increases and then gradually reduces until it is due for replacement again (about 2 years from now).

Hope that helps a bit... To get positive margins while the hydrocracker is down is pretty exceptional for NZR.

[crabs]

The hydrocracker is what they call an upgrade unit ie it upgrades cheaper products into more expensive ones. Here is a good link as to what hydrocrackers do http://www.eia.gov/todayinenergy/detail.cfm?id=9650

So in basic terms, when the hydrocraker is not working the refinery has to export fuel oil (cheap) rather than making jet fuel which is in pretty big demand in New Zealand. Hydrocracker needs to have a catalyst replacement every couple of years hence the need for shut downs. It is at the heart of the refinery. Once Catalyst is replaced the amount of thruput they can put thru increases and then gradually reduces until it is due for replacement again (about 2 years from now).

Hope that helps a bit... To get positive margins while the hydrocracker is down is pretty exceptional for NZR.
excellent informative post.

something else to ponder on..........
I am very surprised, given the effect that the NZD movement has on profit, that NZR do not hedge the currency.
Currently the NZD is trading 12% below the 5 year ave offering NZR a very good opportunity to hedge a % of income at a very beneficial level.

[cyclist]

The hydrocracker is what they call an upgrade unit ie it upgrades cheaper products into more expensive ones. Here is a good link as to what hydrocrackers do http://www.eia.gov/todayinenergy/detail.cfm?id=9650

So in basic terms, when the hydrocraker is not working the refinery has to export fuel oil (cheap) rather than making jet fuel which is in pretty big demand in New Zealand. Hydrocracker needs to have a catalyst replacement every couple of years hence the need for shut downs. It is at the heart of the refinery. Once Catalyst is replaced the amount of thruput they can put thru increases and then gradually reduces until it is due for replacement again (about 2 years from now).

Hope that helps a bit... To get positive margins while the hydrocracker is down is pretty exceptional for NZR.

Thanks cdonald, that is very helpful. So the summary is production is maintained through the shutdown, but giving a lower value product with little local demand - hence the big hit. Seems reasonable as a once every two year event.

[babymonster]

The fall just won't stop. We might looking at 2.30 soon

[Sideshow Bob]

2.50 looks impossible

hopefully not impossible on the upside!

[golden city]

Happy to top up more at this level

[couta1]

The fall just won't stop. We might looking at 2.30 soon Tell me about it, one of my dumber moments buying at $3.55 for the divvy, swapped a 8k divvy for a 37k red arrow, I've got the feeling she's going to be a long wait to break even(If ever) although a few years of divvy at the current rate should do it.

[babymonster]

the future might not be that bad, the oversupply of oil is likely to be continue in 2017, not 16, according to those oil experts

[golden city]

It is a volatile stock. But in longer term. They always pay dividends. So happy to sit there. Especially my cost average is only 1.98

[Hectorplains]

It is a volatile stock. But in longer term. They always pay dividends. So happy to sit there. Especially my cost average is only 1.98

Wow, you must've timed the bulk of your purchase perfectly.

[macduffy]

It is a volatile stock. But in longer term. They always pay dividends. So happy to sit there. Especially my cost average is only 1.98

But not always. My imperfect memory harks back to a period 6 or 7 years ago when NZR passed on paying a divvy. But that's ancient history now!

;)

[crabs]

It is a volatile stock. But in longer term. They always pay dividends. So happy to sit there. Especially my cost average is only 1.98
no divi at all paid in 2014 and only interim of 2 cents paid for the full year in 2013 .
a very dry spell

[cyclist]

The market cracks me up sometimes. Today's little pop has been building for a while with some big gaps in the sell depth and sellers holding firm. But you have to wonder what has changed since the sky was falling at the $2.40 levels a while ago.

My thoughts are that buying at this level will prove to be reasonable once the full year results come out (a long way off), but the half year is likely to disappoint and cause a resumption of selling I suspect.

Disc: Holding and in the black, but annoyed at myself for not selling a few at higher levels.

[golden city]

We might see surprised dividends coming. Because their cash flow still looking good with low debts

[macduffy]

Caltex profit hit by lower margins at their Brisbane refinery.

http://www.theage.com.au/business/energy/caltex-profit-hit-by-margin-squeeze-20160628-gpu6w5.html

[BlackPeter]

The unspecified decline at Lytton was due to "lower first half refiner margins, offset by stronger production volumes", it said.

Read more: http://www.theage.com.au/business/energy/caltex-profit-hit-by-margin-squeeze-20160628-gpu6w5.html#ixzz4CwBVhcyt
Follow us: @theage on Twitter | theageAustralia on Facebook

Interesting, but shouldn't be a surprise for NZR holders - we get the ops/margin reports every 2 months. I'd think this effect is already well priced in. Throughput (no planned shutdown) should improve in the second half ... and margins - I guess we will see (but I am optimistic).

[bull....]

Caltex margin dropped 50% that's big drop in income

[Mickey]

What do NZR investors think the long term outlook is for this share? I'm currently down 33% on capital outlay, which I'm not too worried about if it's going to deliver on divvies. I'm looking at an investment horizon of at least 8-10 years.

[Nasi Goreng]

NZR is a bit of a gamblers stock IMO. It's hard to predict with any certainty that price will go higher or lower based on key drivers being NZD and the margins they make.

I owned the stock last year so did quite a few valuations based on NZD and margins and compared that with the spreadsheet on their investor presentations. Right now, I think SP is fair value based on above but if I wanted to buy, I would wait to see if there was a pull back to maybe $2.20. To get to $3, I think you will need some help from NZD and margins to increase from where they have been.

[Mickey]

NZR is a bit of a gamblers stock IMO. It's hard to predict with any certainty that price will go higher or lower based on key drivers being NZD and the margins they make.

I owned the stock last year so did quite a few valuations based on NZD and margins and compared that with the spreadsheet on their investor presentations. Right now, I think SP is fair value based on above but if I wanted to buy, I would wait to see if there was a pull back to maybe $2.20. To get to $3, I think you will need some help from NZD and margins to increase from where they have been.

Thanks for sharing your view N G

[Hoop]

If using TA and charting it aint no gambling stock to see which way this ugly baby been going.

It's a bear and we have just witnessed the end of the 3rd sucker rally and has broken support 2.43 seemingly on its way down to form another lower low...
Todays 1c rise to 2.43 hits its newly formed resistance line (old support) is a quick pullback to test its breakdown price..It will need buying pressure to break back...Even then you need a higher higher high of 2.70+ before the bear becomes sick..

It didn't matter how well NZR looked 5 months ago..when multiple sell signals go off in quick succession.. it is nearly always not a good sign..TA is waving a very big red flag for you to notice...
Some investors may have stayed in because these multiple sell signals were unusual by occurring at the very top with little decline...but..as soon as the longer term MA200 breaks together with medium support at 3.30...it's sell time (even for the longer term investors)...Quit while your ahead and wait until the bear dies..

EDIT: I forgot to add the new primary downtrend line..which nicely touches the tops of the 3 sucker ralies..this down trend line is very steep..a warning sign to stay clear until it breaks...The trend is your friend or your enemy...you choose


http://i458.photobucket.com/albums/qq306/Hoop_1/NZR%2029062016.png (http://s458.photobucket.com/user/Hoop_1/media/NZR%2029062016.png.html)

[Mickey]

If using TA and charting it aint no gambling stock to see which way this ugly baby been going.

It's a bear and we have just witnessed the end of the 3rd sucker rally and has broken support 2.43 seemingly on its way down to form another lower low...
Todays 1c rise to 2.43 hits its newly formed resistance line (old support) is a quick pullback to test its breakdown price..It will need buying pressure to break back...Even then you need a higher higher high of 2.70+ before the bear becomes sick..

It didn't matter how well NZR looked 5 months ago..when multiple sell signals go off in quick succession.. it is nearly always not a good sign..TA is waving a very big red flag for you to notice...
Some investors may have stayed in because these multiple sell signals were unusual by occurring at the very top with little decline...but..as soon as the longer term MA200 breaks together with medium support at 3.30...it's sell time (even for the longer term investors)...Quit while your ahead and wait until the bear dies..

EDIT: I forgot to add the new primary downtrend line..which nicely touches the tops of the 3 sucker ralies..this down trend line is very steep..a warning sign to stay clear until it breaks...The trend is your friend or your enemy...you choose


http://i458.photobucket.com/albums/qq306/Hoop_1/NZR%2029062016.png (http://s458.photobucket.com/user/Hoop_1/media/NZR%2029062016.png.html)

Thanks for your insights Hoop. Jeez, I feel like a complete novice when I read this TA stuff. I know very little about TA and had based my decision to invest in NZR on fundamentals and in anticipation of lower oil prices (based on everything I was reading at the time) and a falling US dollar. The last 2 haven't quite played out, which is probably why we are seeing reduced margins and a depressed SP. I guess I will have to hope that NZR heads back towards my purchase price at some point in the same way that my CNU shares finally did. In the meantime, hopefully dividends will continue while I play the waiting game. I'm not intending to DCA at this stage but may consider this as an option once the SP finds its bottom. Thanks again.

[cyclist]

If using TA and charting it aint no gambling stock to see which way this ugly baby been going.

It's a bear and we have just witnessed the end of the 3rd sucker rally and has broken support 2.43 seemingly on its way down to form another lower low...
Todays 1c rise to 2.43 hits its newly formed resistance line (old support) is a quick pullback to test its breakdown price..It will need buying pressure to break back...Even then you need a higher higher high of 2.70+ before the bear becomes sick..

It didn't matter how well NZR looked 5 months ago..when multiple sell signals go off in quick succession.. it is nearly always not a good sign..TA is waving a very big red flag for you to notice...
Some investors may have stayed in because these multiple sell signals were unusual by occurring at the very top with little decline...but..as soon as the longer term MA200 breaks together with medium support at 3.30...it's sell time (even for the longer term investors)...Quit while your ahead and wait until the bear dies..

EDIT: I forgot to add the new primary downtrend line..which nicely touches the tops of the 3 sucker ralies..this down trend line is very steep..a warning sign to stay clear until it breaks...The trend is your friend or your enemy...you choose


http://i458.photobucket.com/albums/qq306/Hoop_1/NZR%2029062016.png (http://s458.photobucket.com/user/Hoop_1/media/NZR%2029062016.png.html)

Thanks Hoop. With examples like this, I struggle to understand those on this forum who scoff at TA. As always, thanks for taking the time to produce these sort of posts.

Disc: Still holding. Dammit!

[BlackPeter]

Good technical analysis, hoop - and you are right, it could (and if I look at the current depth) it is likely to go further down. A handful of desperate punters reading this thread (yes, the trading volume looks very very thin) and we are going to test 2.10 (which looks like the next resistance point). My point - any punter selling only a handful of shares will currently skew the picture ... highest bidder currently at 2.38.

Question is - how far further is it going to drop from here? The share moved around $1.80 2 years ago ... and this was when the refinery was writing losses, they had to find the money for their Te Mahi Hou project, the oil price was really high (bad for NZR) and the USD was at crazy levels (bad as well).

At current they make money (predicted EPS for 2016 23cts / share), pay nice dividends (they can afford), Te Mahi Hou is completed and delivers, oil is cheap (good for NZR) and while the BREXIT pushed the USD up again, it is not as high as it used to be.

My point - yes, the SP might further drop as you said (but in my view on low volumes). This means that sellers will find it easy to further smash the price ... but after a turning of the tide it might be quite difficult for them to get back in below their selling price (given that most holders just sit the current dip out - i.e. it will lift on low volumes as well).

Discl: holding and intending to sit it out.

[BlackPeter]

Looks like somebody read my prediction about low volumes and potentially further dropping prices and started to buy in order to prove me wrong. SP still holding (with a slight tick up). Ah well, can't get it always right ;)

[hamish]

From Forsyth Barr - 18 May 2016

Our rating os OUTPERFORM. The medium term outlook for fuel refining is generally positive and NZR has several initiatives that should help its GRM and help it remain competitive with overseas refineries. The market is currently pricing NZR on undemanding GRM and USDNZD assumptions providing investors an attractive entry point

[freddagg]

From Forsyth Barr - 18 May 2016

Our rating os OUTPERFORM. The medium term outlook for fuel refining is generally positive and NZR has several initiatives that should help its GRM and help it remain competitive with overseas refineries. The market is currently pricing NZR on undemanding GRM and USDNZD assumptions providing investors an attractive entry point

And Craigs research out today has it with a target price of $3.65 and a gross dividend yield of 13.4% for 2016.

There"s a lot of negative analysis on this thread but it is not based on fundamentals.

[Hoop]

And Craigs research out today has it with a target price of $3.65 and a gross dividend yield of 13.4% for 2016.

There"s a lot of negative analysis on this thread but it is not based on fundamentals.
If you referring to me and the charts...don't shoot me ..I'm just the messenger :).

Look at it this way.....negative data = negative data analysis....

It doesn't matter if 1000 brokers all sing "Knees up Mother Brown", ignore or dismiss the negative trend and it will burn a hole in your pocket..If the brokers are right then just wait until the tide turns (change of trend)...easy really..eh

[BlackPeter]

Just came around to look through the June 2016 IEA report (https://www.iea.org/oilmarketreport/omrpublic/) and came across the following statement:


Refinery runs in 2Q16 are suffering from deepening outages. Throughput is nearly flat year-on-year, as refiners finally catch up with maintenance postponed from 2015. The seasonal ramp-up to 3Q16 is expected to be the largest on record, surging by about 2.3 mb/d quarter-on-quarter.


This should in my view help NZR. Margins should go up if their competitors need to shut down due to maintenance. Good thing that NZR kept on top of its maintenance schedule and has (as far as I know) no further shutdown planned for this year.

[freddagg]

Just came around to look through the June 2016 IEA report (https://www.iea.org/oilmarketreport/omrpublic/) and came across the following statement:



This should in my view help NZR. Margins should go up if their competitors need to shut down due to maintenance. Good thing that NZR kept on top of its maintenance schedule and has (as far as I know) no further shutdown planned for this year.

Since we have now started 3Q16 I would think a ramp-up in worldwide output would be bad for NZR

[BlackPeter]

Since we have now started 3Q16 I would think a ramp-up in worldwide output would be bad for NZR

Have a look at the link I supplied and check the demand and supply charts (and maybe read the reminder of the summary). What they are talking about is a big ramp up of demand ... and this is good for NZR:t_up:!

[babymonster]

Finally dip my toes today at 2.55

[golden city]

Just bought more yesterday and today

[babymonster]

Just slap more yesterday and today

what do you mean?

[BlackPeter]

Managed to break today through the MA30 as well as the MA50 (and its a while since it last has been above the MA50). Very early days ... but who knows, maybe the tide is turning?

[golden city]

Will we see a jump back to 3. Next week.

[babymonster]

margin was good last month...

[BlackPeter]

margin was good last month...

Yep, throughput and margin report looking good given that the markets expected a subdued first half of 2016: https://www.nzx.com/files/attachments/239754.pdf

Obviously not such a spectacular year as the last one, but if everything holds: low oil price, increasing fuel demand and if the NZD doesn't set up into the stratosphere again, than this might well turn into another "well above average" years. Remember - no planned down times in the second half and all these vehicles THL owns as well as all these new AIR jets need to be fuelled;)

I reckon this report will help to lift the in my view oversold stock price. MA 100 and higher highs - here we come!

Obviously - anything is possible - i.e. DYOR!

[golden city]

Looking solid second half.

[golden city]

With interest rate cut comming. Nzd will back down

[bull....]

tracking I reckon still way down on last yr 30- 60m profit? could be lower if grm doesn't improve

[golden city]

But at current price. It is investable

[cdonald]

That uplift over singapore complex is pretty good, especially in a low oil price market. Singapore margins have increased a bit in July too so the July/Aug result should be pretty good too. Might be a pretty healthy int divy coming up.

[golden city]

nice volume traded today..

[golden city]

Looks 2.60 is the barrier.

[Mickey]

Looks 2.60 is the barrier. Should be broken today. Than recovery time

Mr Market doesn't agree - this morning anyway....

[babymonster]

big dip this morning.. surprised.

[golden city]

Yes. Very surprised

[golden city]

Was thinking. Going to broken 2.60

[golden city]

With Nzd comming down too

[golden city]

Maybe buying a bit more

[bull....]

its overvalued in my opinion at the moment those broker forecasts were way optimistic for this yr anyway

[golden city]

I am taking a medium term view.

[golden city]

When they are heavy in debt with not much future Price still around 2 dollar range. Now Debt reduced. With new project completed. Can't see why price still around this range

[BlackPeter]

Yes. Very surprised

Actually - if you look at the RSI (looking quite overbought), I am not too surprised that the price is coming down again.

8179

I think the more interesting question is - will the price drop below the recent bottom ($2.40) or will it hold above that. I guess in a couple of days we will know - and this might be the indicator, whether the downtrend which hoop some weeks ago correctly identified is bottoming out, or whether it is still intact.

[littletramp]

I'm quite new to this and sold my NZR shares back in May when it became obvious IMHO that last year would not be repeated in 2016. Upon consideration of disclosed info, the 2016 sums to me looked like being a $50 million NPAT from which they had indicated $8million would be spent on Capex and I assumed approx 60% of the $42 million disbursed in dividends between the 312m shares which was a significant reduction from 25 cps that we got last year. A solid company that will benefit from last years performance achieving chunky debt reduction, plant upgrade and capacity etc, and a potentially bright future. One unknown for me was what effect would the Z Energy play of last year have if any. Anyway just followed the price action, got out and it stays on the watch list. Just one man's opinion.

[BlackPeter]

its overvalued in my opinion at the moment those broker forecasts were way optimistic for this yr anyway

Do you want to share with us how you value NZR?

BTW - this is not a trick question ... there are an unlimited number of methods to value stocks ... and they all rely on assumptions which are anybody's best guess.

Here are a handful of methods ...
Grahams formula: (based on 4.3% forward CAGR and EPS 23 cents): $3.86;
current analyst consensus: $3.43
income based on forward PE (12.5 * PE) assuming no growth: $2.87
income based on average PE (16 cents) assuming no growth: $2.00

I guess it depends on where in the earning cycle you see them at current. If you think that they are (after only one good year and after completing a number of quite significant improvement projects) already back in the negative 2 quartiles of the circle, than yes, they currently might be (slightly) overvalued. However - if we assume that their good times (previously a 4 to 5 year period) just started, than I think that the shares are currently quite cheap.

Discl: holding;

[bull....]

pe at 2.50 on 50m npat = 17
pe at 2.50 on 30m npat = 31

all rough and crude analysis but simple for here

[golden city]

I am guessing 70m profit.

[BlackPeter]

pe at 2.50 on 50m npat = 17
pe at 2.50 on 30m npat = 31

all rough and crude analysis but simple for here

So - how does this work? If we take for arguments sake the 50m NPAT you are using as "optimistic scenario" (which is by the way ways below analysts forecast of $71m, but so be it), than we have 16 cts earnings per share (given that NZR issued 312.6m shares).

PE is obviously SP / EPS

This amounts in my books (at a SP of 250) to a PE of 15.6, not of 17 as you state.

If we take your horror scenario of only 30m NPAT, than PE would be at 26 (not 31).

Just help me to understand ... what formula do you use to calculate PE - or did you add some more shares into the mix?

[bull....]

So - how does this work? If we take for arguments sake the 50m NPAT you are using as "optimistic scenario" (which is by the way ways below analysts forecast of $71m, but so be it), than we have 16 cts earnings per share (given that NZR issued 312.6m shares).

PE is obviously SP / EPS

This amounts in my books (at a SP of 250) to a PE of 15.6, not of 17 as you state.

If we take your horror scenario of only 30m NPAT, than PE would be at 26 (not 31).

Just help me to understand ... what formula do you use to calculate PE - or did you add some more shares into the mix?

that's why I say rough shares on issue was off the top of head anyway still looks bad

[BlackPeter]

that's why I say rough shares on issue was off the top of head anyway still looks bad

true - based on your assumptions it does. May I ask how you arrived at the $30 to $50m NPAT band?

[bull....]

true - based on your assumptions it does. May I ask how you arrived at the $30 to $50m NPAT band?

off there profit matrix and few off my assumptions

[BlackPeter]

off there profit matrix and few off my assumptions

fair enough ... so I suppose this is assuming GRM drops back from their current levels and NZD stays high ...?

I guess I didn't manage yet to reliably predict oil and currency market (and I don't know anybody else who did), so yes, might happen.

Personally I think it would be more likely for NZD to drop again (hey, the reserve bank must be good for something) and GRM to keep going up (due to increased demand for refined oil products in the second half), but as indicated - my crystal ball is cloudy ...

[Nasi Goreng]

NZR is incredibly hard to value so we may only know in 3-4 years whether $2.50 at todays date was cheap or expensive. Based on the chart and even todays action, why would you buy now? It certainly looks like its going lower. We haven't seen a capitulation yet, the fall has been very orderly. We may eventually see a price with a $1 in it and even then, it may not be an obvious buy.

[bull....]

anyway deutshe bank has down graded nzr today

[BlackPeter]

anyway deutshe bank has down graded nzr today

This might well explain the drop today. Do you know the reason for the downgrading? I guess so far things appear to go quite well for NZR the last couple of months or so ...

[traineeinvestor]

FNZC also downgraded NZR with a prediction of zero dividend for the current financial year.:scared:

[bull....]

FNZC also downgraded NZR with a prediction of zero dividend for the current financial year.:scared:

if they pay a div then how are they going to reduce debt?

[golden city]

Sounds scary. I don't think they will cut all the dividends. Might be halve the dividends

[BlackPeter]

if they pay a div then how are they going to reduce debt?

Easy .... just look into the earnings matrix you were referring to earlier ...;)

BTW - At last Balance date they had a 41% ratio liabilities to assets ... sure, still above their long term policy, but not really a huge amount of debts compared to other organisations.

I guess one more month to wait and than we all will have new numbers to work with ...

[traineeinvestor]

if they pay a div then how are they going to reduce debt?

They wouldn't - the FNZC forecast is that almost all of the operating cash flow for the current year will go to CAPEX. As much as I like my dividends, if its a choice between getting a dividend and reducing debt, I'm happy to pass on the dividend. However, given last year's dividends and the earlier , more optimistic, forecasts it's a fair bet that there are a number of investors who purchased for yield who are going to be disappointed.

At current prices and expectations, I'm sitting on my shares but would consider topping up if the share price gets closer to the NZD2.00 mark (not a prediction).

[golden city]

even with the downgrade it is from 3.65 to 3.05.., still a big gap of safety

[BlackPeter]

Article in NBR:

http://www.nbr.co.nz/article/market-close-nz-shares-gain-steel-tube-and-xero-advance-while-nz-refining-drops-b-191963


New Zealand Refining was the worst performer (in yesterdays stock market - inserted by me), down 4.3 percent to $2.46. Deutsche Bank has cut its price target to NZ$3.05 from NZ$3.65.

"That drop follows some analysts downgrading the earnings potential going forward for the company," Williamson said. "The company's fortunes lie with the refining margins, and a number of analysts are starting to say it could be the end of the good times in the short term."

The downgrades came after the refinery said it had a gross margin of US $6.26 per barrel in its throughput and margin report for May/June, at the top end of the range, while throughput for the period was 6.8 million barrels.

"The report was quite reasonable, but some analysts are saying margins have now peaked, so it will be interesting to see if they're right or not," Williamson said. "That share price went up pretty quickly and it's come back just as quick - it rallied throughout 2015, and has come back in 2016 - but it is very much a cyclical stock and it can move pretty quickly both ways."

Hmm - some analysts think that the refining margins might go down in the short term. Probably the same analysts who predicted 18 months ago oil never to dip below $100 again ... and who predicted 12 months later that oil will come down below $20;

They didn't mention dividend cuts, though - where was this info coming from?

[golden city]

If they are right. Why they have to downgrade it.

[golden city]

They didn't get it right the first time. Can't trust them the second time

[Nasi Goreng]

They didn't get it right the first time. Can't trust them the second time

Its one thing to say a stock is undervalued, its another to go from a target price of $3.60 down to say $2.20. People would question the value of their broker if such radical price reductions were in place. In my mind, a downgrade is a downgrade and should be seen as one.

[cdonald]

Interesting article on refining margins from another refinery that processes heavy oil (One reason for having hydrocracker).

http://www.livemint.com/Industry/tMg8rwb1NOXknRje49YRBI/Can-RIL-sustain-double-digit-growth-in-gross-refining-margin.html

[macduffy]

Morgan Stanley analyst says "world is heavily oversupplied with gasoline".

http://www.smh.com.au/business/energy/refinery-shutdown-harsh-reality-check-for-oil-bulls-20160725-gqdmuv.html

[BlackPeter]

Touched yesterday the 240 a second time and going today up again with quite healthy trading volumes. RSI hovering somewhere indecisively in no-mans-land.

Obviously - SP well below any MA worthwhile talking about ... but still - I am wondering whether the people who know more about charting than I do (Hoop?) can see anything else in the pattern?

Personally I think we reached rock bottom ... but we will probably need reasonable financials (and a dividend) to get the SP up again. What do others think?

Discl: holding - i.e. biased ...;)

[Beagle]

KW's TA skills save me many thousands with this one. Sold when it dipped under the 100 day MA way back around mid $3 IIRC. Owe it to her not to buy back till its goes up through the 100 day MA line again. Owe her a big bear hug for her advice and knowledge previously freely shared on here. Massive loss to the forum her leaving.

So many variables with this business...happy to trade this one purely on TA signals.

[BlackPeter]

KW's TA skills save me many thousands with this one. Sold when it dipped under the 100 day MA way back around mid $3 IIRC. Owe it to her not to buy back till its goes up through the 100 day MA line again. Owe her a big bear hug for her advice and knowledge previously freely shared on here. Massive loss to the forum her leaving.

So many variables with this business...happy to trade this one purely on TA signals.

Agreed - KW leaving this forum was (actually is) a huge loss for this forum and yes, if I look at the MA 100, than it would have been a good idea to sell at the point in time the share price dropped through it, though there is another short bounce, i.e. just following TA might have resulted in a series of several sub-optimal trades.

MA 200 was a still clearer signal (without bouncing) ... but hey, this all is history, and you only know for sure with hindsight. At least I managed to sell parts of my holding at the peak (~3.70) and I am still with the whole holding ways in the black numbers, i.e. not too miffed.

8191

The question for me is now - did we reach rock bottom already, are we close enough to make selling uneconomical, or is there still lots of potential for further drops? From a fundamental point of view can't I see this share go much further down (obviously, unless the oil market changes substantially, which it may ...).

Who knows, maybe this is my AIR :p;???

I was wondering, whether there are any meaningful TA signals around which could help in making this decision, but I suspect not ... otherwise it would be really easy to predict rock bottom, which it is not.

Anyway - I suspect in 3 to 6 months we all will be wiser ...

[bull....]

Agreed - KW leaving this forum was (actually is) a huge loss for this forum and yes, if I look at the MA 100, than it would have been a good idea to sell at the point in time the share price dropped through it, though there is another short bounce, i.e. just following TA might have resulted in a series of several sub-optimal trades.

MA 200 was a still clearer signal (without bouncing) ... but hey, this all is history, and you only know for sure with hindsight. At least I managed to sell parts of my holding at the peak (~3.70) and I am still with the whole holding ways in the black numbers, i.e. not too miffed.

8191

The question for me is now - did we reach rock bottom already, are we close enough to make selling uneconomical, or is there still lots of potential for further drops? From a fundamental point of view can't I see this share go much further down (obviously, unless the oil market changes substantially, which it may ...).

Who knows, maybe this is my AIR :p;???

I was wondering, whether there are any meaningful TA signals around which could help in making this decision, but I suspect not ... otherwise it would be really easy to predict rock bottom, which it is not.

Anyway - I suspect in 3 to 6 months we all will be wiser ...

the share in a clear downtrend so goodness knows where the bottom is.

fundamentals are terrible for refining at the moment all refiners are suffering, just because oil drop doesn't mean margin automatically improve the fact is all refiners ramped up production so much last yr there is now a glut of gasoline worldwide and demand has dropped as well.

but things move in cycles so will have its day again.

[golden city]

It looks bottom out

[golden city]

Oil price under 40 dollar Again

[Nasi Goreng]

Its fair to say NZR were making supernormal profits last year and just like I learned in economics many years ago, when there are supernormal profits, the market will often create more supply to even things out. I think that is exactly what we have seen over the last 12 months with global refinery margins.

[BlackPeter]

Clearly not the strongest bull yet in the field, but I think the signs are there:

Double Bottom, higher Highs, higher Lows, RSI in bullish territory, passed MA30 and MA50 (not in the pic).

8241

Sure - still some more MA's to go to be saf(-er), but for me this looks like markets think that the worst might be over.

DYOR - and yes, I am holding.

[cdonald]

3c int divi is not too bad. Good to see them managing cash well too. Nice job.

[bull....]

pe at 2.50 on 50m npat = 17
pe at 2.50 on 30m npat = 31

all rough and crude analysis but simple for here

oh no my worst case 30m npat might be on the money

[golden city]

At least dividends still comming

[BlackPeter]

HY results out: https://www.nzx.com/companies/NZR/announcements/287658

and while the results are not flash, they are better than analyst consensus (if we assume the 2nd half goes similar to the first).

Might support the weak SP uptrend, and who knows - if Yellen cranks the US interest rates up (and / or our Reserve bank keeps dropping them), than the second half might even look better than the first?

Discl: holding and not too unhappy ...

[babymonster]

HY results out: https://www.nzx.com/companies/NZR/announcements/287658

and while the results are not flash, they are better than analyst consensus (if we assume the 2nd half goes similar to the first).

Might support the weak SP uptrend, and who knows - if Yellen cranks the US interest rates up (and / or our Reserve bank keeps dropping them), than the second half might even look better than the first?

Discl: holding and not too unhappy ...

doesn't look too good from the pre open

[bull....]

expensive still, I might buy some lower price

[couta1]

expensive still, I might buy some lower price Yeah right, you must be confusing it with Spark. NTA is $2.50

[sb9]

Hmm..was expecting better outcome in terms of divvy, might be lower for longer now...

Disc - Not holding

[Nasi Goreng]

Couta, if I buy a heap of junk for $1000, the NTA is $1000 but its still a heap of junk right?

If you have followed this thread for a while, sentiment a year ago was for whopping dividends for ever more. The market selling down has been a warning and I think it has a lot further to go.

[Beagle]

I am surprised by the extent of the profit drop and the very low level of the dividend. Also they note concerns regarding excess stockpile of product, (I presume this is an international issue with lower growth in China ?) with effects from that expected to continue for some months. Factor into the situation we're now at 73 cents U.S. and I don't think the prognosis in the short term is very good.

[couta1]

Couta, if I buy a heap of junk for $1000, the NTA is $1000 but its still a heap of junk right?

If you have followed this thread for a while, sentiment a year ago was for whopping dividends for ever more. The market selling down has been a warning and I think it has a lot further to go. It's a stock I bought at $3.50 before the last divvy and will just leave it in the bottom drawer, I've learnt many lessons about selling for losses (Many large) only to see the stock recover given time. PS-I don't listen to excess forum noise anymore but follow my Gutometer and that tells me this stock will come right.

[bull....]

Yeah right, you must be confusing it with Spark. NTA is $2.50

funny spark is cheap, nzr is expensive - one chart is going up the other down nta looks like rubbish here

[couta1]

funny spark is cheap, nzr is expensive - one chart is going up the other down nta looks like rubbish here Each to their own, and as far as Spark is concerned your trying to teach your grandmother to suck eggs.

[bull....]

least ones things for sure couta nzr will have its day again nature of the business is the ups and downs of refining

[littletramp]

IMHO there is little mystery to this stock. I bought in last year in early July when it was obvious due to tail winds including exchange rate, margins, output capacity etc, NZR was heading for a great annual result and the share price was on the rise. The technical graph looked great and prospects were bright. I came in at $2.98 and enjoyed being a shareholder during that stellar year of debt reduction, dividend payouts, plant commissioning and all was sunshine. About February/March this year it became apparent that all was not rosy with plant breakdowns, pressure on margins, general selling of the stock and a very soft overall sharemarket that the holding needed to be looked at. I had a feeling of change that the price chart was confirming and so sold, to continue watching from the sidelines. What was hinted at and well signalled has come to pass in the latest annual report. The company certainly appears back on track from the daily operational perspective but the lost profit from the 2 month "hole" can never be regained. I will be looking to buy in again after reviewing the Nov/Dec output report for 2016 if they look on target for another stellar year of debt reduction and dividend prospect without unplanned cap expenditure. They are very capable of achieving this again, but it hasn't happened this year unfortunately. Summary- a cyclical stock.

[Snow Leopard]

Reported NTA is now $2.28, as you would know if you actually read the announcement financials.

Best Wishes
Paper Tiger

[couta1]

Reported NTA is now $2.28, as you would know if you actually read the announcement financials.

Best Wishes
Paper Tiger Well Mr Alley Cat, I did actually read the financials but at the time of posting I used the ANZ securities number which was and still is $2.50 so I took the path of less resistance, which of course is up.

[bull....]

looks like under $2 coming still too much product around

[Mickey]

looks like under $2 coming still too much product around
I expect they'll come back one day (being a cyclical) but for now - I'm resigning them to the bottom drawer. May pick up a few more once they settle and are on the increase but that could be some way off.....

[bull....]

I expect they'll come back one day (being a cyclical) but for now - I'm resigning them to the bottom drawer. May pick up a few more once they settle and are on the increase but that could be some way off.....

yep they will have there day again, I still have a tiny position and will top up when I believe where at a bottom.

[Nasi Goreng]

maybe Caltex did know what they were doing when they sold into an up trend.

[babymonster]

July/Aug data suggests GRM is stable... not a bad sign

[golden city]

Sounds ok to me

[freddagg]

Looking at the profit matrix we are on track for a NPAT of about 24 million which works out at 7.7 cents a share.
Disappointing to me when the GRM is "at the top end of its historical margin range"

[BlackPeter]

Looking at the profit matrix we are on track for a NPAT of about 24 million which works out at 7.7 cents a share.
Disappointing to me when the GRM is "at the top end of its historical margin range"

Well, to put that into perspective ... last year GRM was above $9 (and capped) - and while it is looking reasonable now ($6.20), its was not in the first half of the year (less than $2 in March / April).

The other thing to consider is obviously the currently high USD. Not sure, though we should hope for it coming down anytime soon ... unless the US goes for Trump ;);

Meaning - things could be much better if the stars start to align again ... question is just when this might be.

[golden city]

looks like sp has bottomed out ..

[macduffy]

looks like sp has bottomed out ..

I would hope so. More likely, though, that will depend on a continuing healthy GRF - and the influences thereon.

[cdonald]

http://www.bloomberg.com/news/articles/2016-09-30/opec-deal-a-bad-surprise-in-asia-as-goldman-sees-buyers-squeezed

Interesting article with some good graphs in it. Basically says that refining margins are squeezed. Current Singapore Complex margin is at $5.40ish according to this link and with the NZR uplift of around $4/bbl on top of that it means things are getting pretty close to CAP again.

I for one am pretty happy that NZR has got the uplift over Sing Complex. It wont be the result of last year but it wont be bad either.

[bull....]

im still thinking 30- 40mil npat for the full yr , margins improved last mth but still to much inventories around the world to get back to really good levels yet

[bull....]

https://www.nbr.co.nz/article/nz-refining-hold-independent-petroleum-laboratory-unit-b-195387

might offer a new revenue stream if they expand it into other industries?

[macduffy]

"No longer for sale" usually means either that no one wants to buy it or that the price offered is inadequate. Let's hope that neither is the case here.

[cdonald]

I think its more of a case of looking at what work IPL did for the refinery and how much that work would cost the refinery if they sold it off or outsourced it to a third party. Very sensible decission to keep it part of the refinery and I am pretty sure that ipl is going to be a profitable little unit with future things in the pipeline. I was very suprised to see that NZR was looking to flick IPL off and thank god that the current GM didnt get his way on this one.

[cyclist]

I think its more of a case of looking at what work IPL did for the refinery and how much that work would cost the refinery if they sold it off or outsourced it to a third party. Very sensible decission to keep it part of the refinery and I am pretty sure that ipl is going to be a profitable little unit with future things in the pipeline. I was very suprised to see that NZR was looking to flick IPL off and thank god that the current GM didnt get his way on this one.

Another article that suggests there might be reasonable margins for the Sept/Oct period: http://www.koreatimes.co.kr/www/news/biz/2016/10/123_216377.html


The Singapore gross refining margin applied to Korean companies (edit. Wonder if that is largely similar to what NZR uses?) stood at $7.40 a barrel late last month.

[Yoda]

PE around 7, lots of buyers at the end of today, and up 4 days in a row, comes off a previous support level like sept 12. So have we seen a floor? Maybe another short gain before a pullback.... Bought some but will have a tight stop-loss.
Any TAers see any thing here?

[BlackPeter]

Well, I guess you cold argue that this was a double bottom - and RSI (well, my simplified ANZSecurities version of it) is coming back and might today cross the 30% line. On the other hand - volume is weak ... and I wouldn't read too much anyway into the SP unless it moves above 250 ...

Discl: don't hold

[Yoda]

Well, I guess you cold argue that this was a double bottom - and RSI (well, my simplified ANZSecurities version of it) is coming back and might today cross the 30% line. On the other hand - volume is weak ... and I wouldn't read too much anyway into the SP unless it moves above 250 ...

Discl: don't hold
getting close to that 2.50 BP.:p I have a feeling it might stop at 2.50 to consolidate and carry on up . ..hopefully

[golden city]

Refinery margin is good at the moment

[cdonald]

Refinery margin is good at the moment

Yes, at the moment margins are great. The report out this week will probably not be so pretty though as it will take a 2 month average margin for Sep/Oct. Margins at beginning of Sep were pretty low so I think it will be looking at about $6USD/BBL average for the 2 month period. My guess for November is at CAP though so could be an interesting final divi and a boost for the end of the year. International refining companies are certinally reporting good things at the moment.

[BlackPeter]

getting close to that 2.50 BP.:p I have a feeling it might stop at 2.50 to consolidate and carry on up . ..hopefully

Getting "close to 250" is not the same as "being above 250", and I never said it can't happen. I just indicated that this would be a significant signal from a TA perspective. I still think that this would be the case, but we are not there yet, and even if the markets shoot up this afternoon or tomorrow (hopefully) overjoyed by a Clinton victory, am I not sure whether this would be just a spike of joy or a reliable signal for NZR.

Personally am I at this stage not sure whether I see the fundamentals for NZR to carry this uptrend (if it is one) much further - but hey, the world of refining is murky and unpredictable, i.e. it might (or it might not).

At this stage I think the chances that NZR moves into a sidewards channel between (roughly) 215 and 250 are at least similar to its chances to turn this into an uptrend. If the former is the case than now might be a good time to sell.

Anyway - good luck and DYOR;

[cyclist]

Very encouraging close, given the general carnage elsewhere. Someone gobbled up all was available back up to $2.45 again. Pretty sure the upcoming margin report will surprise to the upside.

[babymonster]

the depth is looking a lot healthier than a few days ago..

[Yoda]

Getting "close to 250" is not the same as "being above 250", and I never said it can't happen. I just indicated that this would be a significant signal from a TA perspective. I still think that this would be the case, but we are not there yet, and even if the markets shoot up this afternoon or tomorrow (hopefully) overjoyed by a Clinton victory, am I not sure whether this would be just a spike of joy or a reliable signal for NZR.

Personally am I at this stage not sure whether I see the fundamentals for NZR to carry this uptrend (if it is one) much further - but hey, the world of refining is murky and unpredictable, i.e. it might (or it might not).

At this stage I think the chances that NZR moves into a sidewards channel between (roughly) 215 and 250 are at least similar to its chances to turn this into an uptrend. If the former is the case than now might be a good time to sell.

Anyway - good luck and DYOR;

Thanks for that, and i did take some out before the end of the election, and will wait and see what happens next . Wow, what will this year bring with Trump at the WH. .?

[BlackPeter]

Thanks for that, and i did take some out before the end of the election, and will wait and see what happens next . Wow, what will this year bring with Trump at the WH. .?

You are welcome ;), and re Trump - I am probably more concerned about what the next 4, 8 or more years will bring with Trump as leader of the once "free world" ... but this is the stuff for some other thread.