CHI - Channel Infrastructure Ltd (NZR)

[SailorRob]

Luckily for me, busy living life rather than worrying about the ups and downs of share prices. Really healthy buying, holding and forgetting about it.

My business case is simple. RAP, jetty, Port and land have an intrinsic value. Shame the refinery is a big rusty paper weight but I didn't pay for it when I was buying in the ~40c range. Gonna cost a bomb to remediate all the crap they have buried around the place.

Shame I bought some before Covid blew everything up but pleased I bought more as the investment case got stronger (with the price getting cheaper) and now happy to hold a boring infrastructure asset for 10 years and see what happens. I thought I was buying a gutter stock that might run the refinery for another 5 years to get the last puffs out but oh well.

Def not buying at these prices but happy to top up if it gets around 50c again.


Nothing has intrinsic value unless it can produce profit and that profit needs to be in relation to the capital employed to produce that profit.

Further to us as investors we need to consider what we pay for our share of that capital and how this profit relates to what we pay.

All I asked for was a investment hypothesis clearly explaining how as an equity owner you will see cash generated over and above all expenses and distributed to you, and the risks involved with that hypothesis. Now nobody owes me that explanation but as share holders you owe it to yourselves.

Now the truth is that nobody can provide that case as it doesn't exist.

To make it simple, lets assume the shares are free. So you are getting the equity free right now. i.e share price zero. No explain how you wring money out of it??

[Snoopy]

For Petrol it's 10 ppm maximum for both NZR production and for any fuel sold in NZ. We follow European regulations.

Desulphurisation of petrol is pretty simple and cheap to do, for diesel its more complicated.

We spent 180 million dollars in 2006 to upgrade processing to meet new Sulphur requirements for diesel (under 10 ppm) and benzine in petrol.


That (10ppm) is pretty good when Australian refineries have been allowed to pump out premium petrol -with 50ppm of sulphur- and regular petrol -with 150ppm of sulphur-. I can quite understand why the Australian government wants to tidy the sulphur content of their fuel up. But if Australia thinks the best way to secure improved fuel standards is to subsidise their two remaining fuel refineries, this would suggest to me that low sulphur fuel is not readily available in the Asia Pacific region on the open market.

So what standard of fuel will be available to us once Marsden Point Refining shuts down? Or is price the only measuring stick standard from now on?

SNOOPY

[Dotbond]

https://www.nzta.govt.nz/roads-and-rail/highways-information-portal/technical-disciplines/air-quality-climate/vehicles/fuel-quality-regulations/

[Snoopy]

https://www.nzta.govt.nz/roads-and-rail/highways-information-portal/technical-disciplines/air-quality-climate/vehicles/fuel-quality-regulations/


Ah thanks for that. The most recent standards for diesel and petrol are as follows:

2009 - Reducing sulphur in diesel to 10ppm allowing Euro 5/V diesel vehicles
2018 - Reducing sulphur in petrol to 10ppm

I guess imported fuel will have to meet this standard as well. So the question is can we source a supply to that standard?

https://rentar.com/best-crude-oil-world-crude-oils-better-others/

The four best quality oils found in the world are pumped out of Malaysia (Tapis, Kikeh, Miri Light, Kimanis)

"the only crude oils in the world that is close to as light as Tapis Crude oil is found in the Gulf States and in Minnesota."

So it looks like there are sources for light and low sulphur fuels that we could tap into?

SNOOPY

[Dotbond]

Sorry double post

[SailorRob]

Yes we can, remember a lot of NZ's fuel is imported now. It's no problem at all to source low sulphur fuels.

[Waikaka]

Nothing has intrinsic value unless it can produce profit and that profit needs to be in relation to the capital employed to produce that profit.

Further to us as investors we need to consider what we pay for our share of that capital and how this profit relates to what we pay.

All I asked for was a investment hypothesis clearly explaining how as an equity owner you will see cash generated over and above all expenses and distributed to you, and the risks involved with that hypothesis. Now nobody owes me that explanation but as share holders you owe it to yourselves.

Now the truth is that nobody can provide that case as it doesn't exist.

To make it simple, lets assume the shares are free. So you are getting the equity free right now. i.e share price zero. No explain how you wring money out of it??


No point over scienceing it, Profit = cashflow - operating expenses

What someone else has paid to build it doesn't affect my profitability cause you gave NZR to me for free. When it becomes an import tolling facility they have indicated revenue of $95 million and expenses of $35 million. So profit of 70 million right?

Conversion cost of 220 million, existing debt of $235 million so that is combined $445 million. $445million/$70 million = 6.3 years to pay of all existing debt and terminal conversion fees.

Ignore all the land that could be repurposed, catalytic scrap and possibility of extra revenue and I still see plenty of intrinsic value.

[SailorRob]

No point over scienceing it, Profit = cashflow - operating expenses

What someone else has paid to build it doesn't affect my profitability cause you gave NZR to me for free. When it becomes an import tolling facility they have indicated revenue of $95 million and expenses of $35 million. So profit of 70 million right?

Conversion cost of 220 million, existing debt of $235 million so that is combined $445 million. $445million/$70 million = 6.3 years to pay of all existing debt and terminal conversion fees.

Ignore all the land that could be repurposed, catalytic scrap and possibility of extra revenue and I still see plenty of intrinsic value.

Waikaka, this is unreal.

I did not give you NZR free... I gave you the EQUITY for free.

Profit = Revenue minus ALL expenses. Cash flow is irrelevant.

You're using EBITDA for your figures!! What's next community adjusted EBITDA as in We works case?

It's not hard to see how people have been so burned by this 'investment'. The figures you present are just from glossy presentations, have you thought about them in the context of all previous glossy presentations from this company?

As I said nobody can present a simple investment case. I'm all for not over complicating it Waikaka but using EBITDA in a company like this, lets get real.

I want to see CASH generated in the bank and paid out to me as a share holder...

[Waikaka]

Waikaka, this is unreal.

I did not give you NZR free... I gave you the EQUITY for free.

Profit = Revenue minus ALL expenses. Cash flow is irrelevant.

You're using EBITDA for your figures!! What's next community adjusted EBITDA as in We works case?

It's not hard to see how people have been so burned by this 'investment'. The figures you present are just from glossy presentations, have you thought about them in the context of all previous glossy presentations from this company?

As I said nobody can present a simple investment case. I'm all for not over complicating it Waikaka but using EBITDA in a company like this, lets get real.

I want to see CASH generated in the bank and paid out to me as a share holder...

I tried to make it simple as you requested, yes I used company figures what other ones should I make up for a 'quick' business case and cashflow is def not irrelevant.

Yes there are all the tax credits, ongoing costs to maintain facilities and future one off costs and depreciation slice it up a million ways to complicate things but honestly I am not an accountant.

There is an underlying value to the infrastructure assets that remain. People will want to use them for many years aka the RAP is the only cost effective way to get oil into Auckland. It has a huge moat as no one could build a new pipeline. People will pay me to use it and then I will make a profit.

It was a good price in the 40's, it is not a good price now. In 5 years I suspect it will be giving me a return, nothing to lose sleep over.

Honestly there is a lot to dislike about the refinery. Past losses have been truly spectacular but when I walked past the stock it is and was broken down and beaten up, I invested a little to see what will happen in 5 years.

Yes they have lost money in the past, building and running an expensive refinery but honestly history doesn't matter much to me. Is there a decent chance it will make a profit in the future my vote is yes.

Hit me up in 5 years if they haven't paid a dividend and ill owe you a beer.

[SailorRob]

I tried to make it simple as you requested, yes I used company figures what other ones should I make up for a 'quick' business case and cashflow is def not irrelevant.

Yes there are all the tax credits, ongoing costs to maintain facilities and future one off costs and depreciation slice it up a million ways to complicate things but honestly I am not an accountant.

There is an underlying value to the infrastructure assets that remain. People will want to use them for many years aka the RAP is the only cost effective way to get oil into Auckland. It has a huge moat as no one could build a new pipeline. People will pay me to use it and then I will make a profit.

It was a good price in the 40's, it is not a good price now. In 5 years I suspect it will be giving me a return, nothing to lose sleep over.

Honestly there is a lot to dislike about the refinery. Past losses have been truly spectacular but when I walked past the stock it is and was broken down and beaten up, I invested a little to see what will happen in 5 years.

Yes they have lost money in the past, building and running an expensive refinery but honestly history doesn't matter much to me. Is there a decent chance it will make a profit in the future my vote is yes.

Hit me up in 5 years if they haven't paid a dividend and ill owe you a beer.


Yep some good points. Definitely do not ever use company provided figures (not this one anyway) for any analysis. The maintenance and ongoing consistent 'one offs' will be the killer. You don't need to be an accountant to know there are many more costs involved in a venture like this than simple operating costs which will be very low.

Yes the pipeline and jetty are valuable and irreplaceable but this requires a lot of context, depends what you pay for them and how they are financed along with all the other fishhooks etc..

Is there a decent chance it will make a profit in the future my vote is yes. And you could well be very right but this isn't investing, casting votes based on good chances, but it sounds like you know that it is speculating and there is nothing wrong with that.

They could pay a dividend within the next 5 years but this is meaningless if it's not distributed out of real profit. That's just like increasing your mortgage to create cash in your bank - totally pointless.

There is a good chance it will produce a profit in the future, but how far out that is, how certain it is and how much it will be and how consistent, nobody knows.

Every year it goes without a profit, it has to generate even more profit in future to make up for that time.

If you're paying 130 mil for the company then it has to generate say 7 to 10 million clear profit each year for you at least. If it doesn't this year then you'll need the 7 you're missing added to future profits which just ain't going to happen.

[Sharp737]

Well SailorRob, I do agree with you with company provided figures. The ones given (when they are given) are very how shall I say it? Hmmm very lacking in detail shall we say. Have to admit that, very almost deceptive to some degree at times. That's just my observation anyways. Definitely lacking transparency in my view

[Nor]

See on the news ships are skipping New Zealand ports particularly Nelson. What will happen if tankers bringing refined products probably on a just in time basis do that? Country grinds to a halt.
Actually I've heard that during the depression cars used to be fitted with devices on the running boards that produced gas from coal and the cars ran on that. That could be the solution - retro fitted running boards and Coal.

[Sideshow Bob]

Results out

HY2021 Financial Results - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/377525)

[Sideshow Bob]

Lender Consent and Terminal Conversion Funding Confirmed - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/377523)

Lender Consent and Terminal Conversion Funding Confirmed

19/8/2021, 8:30 amMKTUPDTEThe New Zealand Refining Company Limited (“Refining NZ” or the “Company”) announces that the Company’s lenders have granted their consent for the Company to transition to and operate as an import terminal. They have also agreed to extend and increase the Company’s debt facilities to fund conversion costs.

The extension and increase in debt facilities comprises:
• An extension of the $25 million facility maturing in September 2021 to March 2023; and
• Two new facilities of $15 million each have been added, with maturities of December 2022 and March 2023, to assist with the costs associated with the conversion to an import terminal.

This brings Refining NZ’s total available debt facilities to $410 million (including the Company’s $75 million subordinated notes on issue), with an average tenor of over four years. Refining NZ’s net debt as at 30 June 2021 was $230 million. For further information on debt facilities maturity refer to Appendix I.

The Company has confirmed with its banks that no dividends will be paid before December 2022 and afterwards will not be paid until the Company’s Net Debt to EBITDA is below 4.5x. This is consistent with the expectation that dividend payments would recommence 1 to 2 years after conversion as outlined in the Conversion Proposal approved by shareholders on 6 August 2021.

The debt facilities and lender consents are subject to conditions including the Company reaching an agreement with its customers in relation to the Terminal Services Agreement (as contemplated in the Explanatory Booklet issued on 5 July 2021) and a Final Investment Decision by the Refining NZ Board to proceed with the conversion.
ENDS

[whatsup]

With todays ann of a Ampol take over of Z Energy and them supplying their product into Z, what is the future now of NZR with the loss of the Z market ?

[hogie]

With todays ann of a Ampol take over of Z Energy and them supplying their product into Z, what is the future now of NZR with the loss of the Z market ?

Z owns a big portion of NZR so I think Mr Market sees that as a positive :)

[whatsup]

Z owns a big portion of NZR so I think Mr Market sees that as a positive :)

Yes but now ZEL/Ampol will be purchasing their petrol direct from Aust and with the loss of that market it will mean a much smaller demand for NZR from Singapore once they close down Marsden Point!

[hogie]

Yes but now ZEL/Ampol will be purchasing their petrol direct from Aust and with the loss of that market it will mean a much smaller demand for NZR from Singapore once they close down Marsden Point!

I'm unsure how much "petrol" NZR actually supplied to the local market ... more aviation fuel ...

The pipelines are all in place, perhaps Ampol sees potential utilisation of the existing NZR infrastructure to get sharper margins on their refined product.

[SailorRob]

I'm unsure how much "petrol" NZR actually supplied to the local market ... more aviation fuel ...

The pipelines are all in place, perhaps Ampol sees potential utilisation of the existing NZR infrastructure to get sharper margins on their refined product.

Yeah exactly right. Much more efficient distribution. Nothing changes with NZR.

[whatsup]

Yeah exactly right. Much more efficient distribution. Nothing changes with NZR.

Could be, TWT ( time will tell ) !

[ralph]

I see the sp having a very steady incline for a while ,Basically doubling steadily in the last six months and reached the 1 $ this week very promising !:D

[Waiuta]

I wonder if the pursuers of ZED are taking a position?

[Sharp737]

Wow, look at the refining margins now, they are going ballistic

https://www.neste.com/investors/market-data/refining-margins#171fe49c

Ah well...

[Nor]

So predictable.

[SailorRob]

Wow, look at the refining margins now, they are going ballistic

https://www.neste.com/investors/market-data/refining-margins#171fe49c

Ah well...


Incredible... How much of these mega margins would the C Block Shut soak up should we stay running? And how long will they last? And how have we fared over the whole 15 year cycle?

If it was in the interests of the Equity owners to stay running we would.

BUT all is not lost. We have a cash offer for your 365 million dollar investment of 2015. 3 million dollars from a Pakistani refinery.

How's that for a return on investment?

Did anyone actually think that the 356 million dollar investment would return a net profit after tax and all expenses including interest and maintenance of circa 10% or 36.5 million dollars ON ITS OWN plus the return from all the other assets?

If anyone did please get in touch I have some things to sell you.

[Nor]

Such pessimism. Is the whole workforce like that.

[ralph]

Such pessimism. Is the whole workforce like that.
Its quite common when one has stopped on to long and resentment builds' :pseen it so many times ,got to move on.

[SailorRob]

Its quite common when one has stopped on to long and resentment builds' :pseen it so many times ,got to move on.

No pessimism at all here, just realism which unfortunately you guys don't seem to have, even though I have painted it out very clearly for a couple of years now. There is no room for emotion in investing.

Unfortunately a lot of people have lost a lot of money here and I have been warning them for a long time.

For me on the other hand this company has been exceptional.

Instead of my warnings and analysis over the years (which you can look back and see track record of) you could instead turn to such poetic words of incredible financial wisdom from ralph himself;


Ralph 14/05/21 A very interesting and sensible post agree with most of it and I definitely think the government will have to keep the refining capacity going ,no matter how P .C .they are ,the future is not really...

Ralph 26/05/21 This is a definite loser for the past whilst the covids displacement of the airways has been rampant as /if the vaccines change life to summat like normality it should continue to trend up .
AS will other covid ravaged stocks of course

When not studying English literature you can be sure ralph is hitting the accounting books, I recommend having a look through their other posts - a lot of wisdom there.

[Nor]

Its quite common when one has stopped on to long and resentment builds' :pseen it so many times ,got to move on.

Probably hoping for their big redundancy payment.

[SailorRob]

Probably hoping for their big redundancy payment.


No hope involved.

This is why we have contracts and legislation... You may be aware redundancy is ranked before equity interests, a very long way above dividends. Ultimately unsecured credit but realistically secured by the pipeline and jetty which the REAL owners of the company won't want to part with.

The ultimate truth is it's secured by ExxonMobil's balance sheet.

[ralph]

Apogies if we touched a raw nerve there Sailor bob ,& you are entitled to get a bit ****ty as is your way .I am sure if you hang on long enough you will get your just deserts as we all will plus a nice redundancy payment for thee .
Should pay for your English lessons seeing as its so Important to you :eek2:

[ralph]

Apogies if we touched a raw nerve there Sailor bob ,&amp; you are entitled to get a bit ****ty as is your way .I am sure if you hang on long enough you will get your just deserts as we all will plus a nice redundancy payment for thee .<br>Should pay for your English lessons seeing as its so&nbsp; Important to you&nbsp;<img src="images/smilies/w00t.gif" border="0" alt="" title="Eek2" smilieid="42" class="inlineimg">
P.s I do appreciate your in depth insight and info on nzr it does not mean I have to agree with your conclusions or opinions though ,and as you say we must keep sentimentality out to get a true perspective

[Waikaka]

Redundancy provision from note 20 of 2020 annual report:

"An organisational restructure was undertaken in 2020 to reduce the workforce by around 25% with circa 90 employees leaving the Company either through redundancies, retirements or resignations from November 2020 through to April 2021 (refer to note 1). The total cost of there structure was $5.6 million, recognised in wages, salaries and other benefits in the year ended 31 December 2020. Redundancy payments totaling $1.2 million were paid out prior to 31 December 2020, with the balance of $4.4 million to be paid in the first quarter of 2021."

Doesn't seem like huge redundancy payments to me.

[SailorRob]

Redundancy provision from note 20 of 2020 annual report:

"An organisational restructure was undertaken in 2020 to reduce the workforce by around 25% with circa 90 employees leaving the Company either through redundancies, retirements or resignations from November 2020 through to April 2021 (refer to note 1). The total cost of there structure was $5.6 million, recognised in wages, salaries and other benefits in the year ended 31 December 2020. Redundancy payments totaling $1.2 million were paid out prior to 31 December 2020, with the balance of $4.4 million to be paid in the first quarter of 2021."

Doesn't seem like huge redundancy payments to me.

Yeah that was just the first small round.

Since then they have changed the policy to give all staff a minimum 6 Months wages in redundancy no matter what is contracted (so a form of retainer as well).

It won't be huge money in the grand scheme for the company but staff will be well looked after, all redundancies will be between 26 weeks and just over a years pay. Not sure what is considered huge.

Basically for 3 Months last year, spending was aggressively reduced however now Grant R is being given a good go as has been the case for many years.

[SailorRob]

Apogies if we touched a raw nerve there Sailor bob ,&amp; you are entitled to get a bit ****ty as is your way .I am sure if you hang on long enough you will get your just deserts as we all will plus a nice redundancy payment for thee .<br>Should pay for your English lessons seeing as its so&nbsp; Important to you&nbsp;<img src="images/smilies/w00t.gif" border="0" alt="" title="Eek2" smilieid="42" class="inlineimg">
P.s I do appreciate your in depth insight and info on nzr it does not mean I have to agree with your conclusions or opinions though ,and as you say we must keep sentimentality out to get a true perspective

Of course you don't have to agree but the cash flow statement doesn't lie.

[kiora]

How far behind the UK is NZ ?
Hope we have those ships organized
https://play.stuff.co.nz/details/_6274416044001

[Nor]

In perpetuity.

[RTM]

https://www.nzherald.co.nz/northern-advocate/news/online-petition-to-save-marsden-pt-oil-refinery-has-almost-16000-signatures/5XSO5WI4EATJCIURFFOSXKNYJI/

Don't worry SailorRob....Chris Leitch is looking out for you !
Cheers
RTM

[Nor]

Better to keep the jobs there for the young guys coming on than give people near retirement a windfall.

[SailorRob]

https://www.nzherald.co.nz/northern-advocate/news/online-petition-to-save-marsden-pt-oil-refinery-has-almost-16000-signatures/5XSO5WI4EATJCIURFFOSXKNYJI/

Don't worry SailorRob....Chris Leitch is looking out for you !
Cheers
RTM

Bloody hell, print money and forcibly nationalise industry. What part of Africa did he get this idea from!

[RTM]

Bloody hell, print money and forcibly nationalise industry. What part of Africa did he get this idea from!

Thought you would enjoy that !

[SailorRob]

Better to keep the jobs there for the young guys coming on than give people near retirement a windfall.

Shame for young guys coming in for sure, but we moved away from that model in 1984 as we approached bankruptcy and a 20% currency devaluation.

I'm 23 years out from retirement age but those approaching aren't really getting a windfall, just a years pay really.

If we want jobs for all then the easy answer is to ban all use of earth moving equipment effective tomorrow morning and at the same time set up a massive shovel and barrow factory in every town.

[RTM]

Shame for young guys coming in for sure, but we moved away from that model in 1984 as we approached bankruptcy and a 20% currency devaluation.

I'm 23 years out from retirement age but those approaching aren't really getting a windfall, just a years pay really.

If we want jobs for all then the easy answer is to ban all use of earth moving equipment effective tomorrow morning and at the same time set up a massive shovel and barrow factory in every town.

I wouldn't get to fixated on the retirement age SailorRob. You can retire whenever you like. Just takes a wee bit of planning.
I was 57 from memory. Never regretted it for a moment and I loved my job. So far so good !

[ralph]

True RTM, Sailor get fixated with the share price that's going up again ,if it keeps going up you could retire early also !

[SailorRob]

I wouldn't get to fixated on the retirement age SailorRob. You can retire whenever you like. Just takes a wee bit of planning.
I was 57 from memory. Never regretted it for a moment and I loved my job. So far so good !

Exactly! That's why I said retirement age instead of retirement.

I'm only fixated on retirement age from the perspective of wondering why anyone would plan to work until 65...

[SailorRob]

True RTM, Sailor get fixated with the share price that's going up again ,if it keeps going up you could retire early also !

I did think I'd made it pretty clear that I don't fixate on stock prices but rather what the business is doing.

With this one it is only of interest to me in the way a train wreck would be as the only shares I own are those the other poor holders have been forced to give to me through dilution.

As soon as I able to I will be selling them, hopefully to you.

[ralph]

I did think I'd made it pretty clear that I don't fixate on stock prices but rather what the business is doing.

With this one it is only of interest to me in the way a train wreck would be as the only shares I own are those the other poor holders have been forced to give to me through dilution.

As soon as I able to I will be selling them, hopefully to you.
:t_up: you will not be retiring early on what I give you for them, but certainly they are getting more valuable and worth fixating on at the moment, & even train wrecks can have good value for other reasons than ever driving the train again.

[Wai Wai]

Sailor Rob will join ACC who have been the only real seller since about 44cents Early Christmas presents to the perceptive buyers

[SailorRob]

Sailor Rob will join ACC who have been the only real seller since about 44cents Early Christmas presents to the perceptive buyers

Sold the last of my holdings at $2.93 and $2.75.

I can't sell the ones you guys gave me yet but will be as soon as I can.

With combined debt, current equity value (market) and new debt, there will be a combined 750 million of capital that needs feeding.

I've asked many times for anyone to explain to me how they will generate the 75 million EBIT (real profit not pretend profits like for the last 15 years where tiny depreciation schedules have shown profits but obviously that was all smoke and mirrors) in order to feed this invested capital.

Nobody owes me any explanation but you owe it to yourselves.

In mid July I asked;

How about a detailed analysis of the documents regarding the terminal conversion and subsequent operation and then an informed investment hypothesis clearly explaining how as an equity owner you will see cash generated and distributed to you as well as highlighting all risks, specifically critiquing the figures presented, paying particular attention to CAPEX and the fact that no agreements have actually even been reached...

I doubt I will see this as it's easier to just jump on for the ride as it looks like it's not going to stop - just like it did as it approached $4...


Obviously this must be after the debt holders are satisfied.

The truth is guys, nobody in the world can answer this question... Nobody could even come up with a wild guess as to how this could be achieved.

Come on, someone please just shut me up and show me how I'm wrong.

In the meantime don't be suckers, the share price can do anything in the short or medium term. This is what speculation is.

The share price could go to $2, hell lets say back to $4... Doesn't change a single thing I've said, except that it would be even more impossible (if there is such thing) to justify returns on that EV.

[SailorRob]

Original post 6th October 2020


The safest way to play it is to buy one of the Oil/Gas ETF's, either FENY, XLE or VDE. They both hold over 100 companies but weighted to the majors. You need a 3-5 year time horizon and to be able to thrive on volatility. They currently have yields of 6/8%.

I am personally investing in ExxonMobil the creme de la creme. You can buy it now at the March lows, yielding over 10%. This is just truly unbelievable. This is the blue chip of blue chips, recently the biggest company in America. You can get their dividend history since 1922 from their website. They have raised the dividend every year for 25 years. Counter cyclic capital allocators. Some good interviews with the CEO recently on CNBC (or you-tube).

I'd take a bet with any NZ fund manager that XOM would destroy their performance over the next decade. As well as the NZ50 and SP500...

For Midstream EPD is the best of the best, currently yielding over 11% and extremely safe.

Closer to home this is well worth a watch. https://www.livewiremarkets.com/wires/if-you-aren-t-long-energy-now-you-probably-never-will-be.

For a bit more risk and potentially much more reward, Occidental Petroleum. Lots to unpack here but a massive opportunity alongside Buffett and Icahn. Icahn is currently buying the very warrants he created, on the open market in massive volumes.

For Coal, ARLP, or David Einhorns CCR.

My advice - unless you really know what you're talking about, keep it simple and you cant go wrong.

Happy to help with more information.

R


One year on.

Refining NZ + 45% No dividend

Occidental Warrants + 407%

CCR + 715% Plus dividends

ARLP + 350% Plus dividends

XOM + 88% Plus Dividends

VDE +105% Plus dividends

EPD + 49% Plus dividends

[Rawz]

Original post 6th October 2020




One year on.

Refining NZ + 45% No dividend

Occidental Warrants + 407%

CCR + 715% Plus dividends

ARLP + 350% Plus dividends

XOM + 88% Plus Dividends

VDE +105% Plus dividends

EPD + 49% Plus dividends


Nice one SailorRob. What does your crystal ball say for oil to Oct 2022?

[SailorRob]

Nice one SailorRob. What does your crystal ball say for oil to Oct 2022?

Absolutely no idea and nor does anyone is the truth. I had no idea back then either, all I was reasonably sure of was that buying at those prices I would do reasonably well over the next 3 to 5 years. What actually happened was total luck, or at least how quickly.

What I can say is that oil demand hasn't come close to peaking and there has been huge pull back of capital from the industry, shale was never profitable and won't get fresh money thrown at it, OPEC probably doesn't have the capacity they say, ESG narrative hurts production... All should be bullish for prices... But often what is obvious proves to be wrong!

I think the space is still cheap but if and when oil drops back, they will take a hammering. Need to be able to withstand that and hold on for the next few years.

[ralph]

Absolutely no idea and nor does anyone is the truth .
Absolutely correct no one is using a crystal ball and, the 1 year price change is 54.39% the six month change is 70% so pretty good for nzr in the nzx if you had your crystal ball .
And every commodity in the nzx would have better returns in different markets especially dividend returns in the U S markets ,as we all know .
So any stock in the nzx could be downramped with this method of comparing to The U S markets ,

[SailorRob]

Absolutely no idea and nor does anyone is the truth .
Absolutely correct no one is using a crystal ball and, the 1 year price change is 54.39% the six month change is 70% so pretty good for nzr in the nzx if you had your crystal ball .
And every commodity in the nzx would have better returns in different markets especially dividend returns in the U S markets ,as we all know .
So any stock in the nzx could be downramped with this method of comparing to The U S markets ,

Good on you Ralph.

Absolutly no idea whay you're on about.

While we're on crystal balls though... I'll guess that the original estimate of costs involved in terminal conversion will double (to begin with) and there will be some other costs come out as well.

Dividends forecast for year X will be pushed out to some other time in the future.

Remeber the further out into the future these streams of cash flow are... The less they are worth today. For every year you have to wait, you need to earn more in the future in order to have had a sufficent return from here.

Sometimes free ain't cheap.

[Yeet_Shares]

I assume we are just waiting for the ZED Ampol deal to complete before the final decision.....

[SailorRob]

I assume we are just waiting for the ZED Ampol deal to complete before the final decision.....

That's not what I've been told and I haven't followed the 'deal' closely but my understanding was that the Z deal was contingent on the final decision first. I.e. the Z deal wasn't going ahead until the refinery was officially killed.

I asked about the delay and was told that it's just due to final negotiations with customers taking longer than expected and should be announced shortly...

The ultimate line in the sand is the mid year shutdown which we can't run beyond and it isn't being planned for. So 6 Months before that, roughly the end of the year.

[Yeet_Shares]

Finally board approved and confirmed for all. Refinery closure and conversion to a terminal April 2022

[Sideshow Bob]

Refining NZ announces equity raising - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/383713)

The New Zealand Refining Company Limited, to be renamed Channel Infrastructure NZ Limited (Channel Infrastructure) upon commencement of import terminal operations from April 2022, announces that it plans to raise approximately NZ$43.5 million to fund Private Storage Services.

On 22 November 2021, the Company announced that it had executed long-term agreements to provide dedicated private storage to grow Channel Infrastructure beyond the shared Import Terminal System (ITS), with further opportunities under negotiation.

Private storage is a complementary growth opportunity, which provides customers with increased product supply scale and flexibility. The contracted private storage capacity will require an initial capital commitment of c.$30 million, and is expected to result in incremental revenue of c.$50 million (real) on a fixed rental basis over a 10 year term, with high EBITDA conversion. This capacity will be progressively made available following required works from the commencement of terminal operations through to early 2023.

Management is actively engaged with customers on additional private storage opportunities which could require a further capital investment of up to c.$25 million and deliver additional revenue of up to c.$60 million (real) over a 10-year term. The Company is working to agree these additional private storage services prior to the commencement date of ITS services under the Terminal Services Agreements.

The planned NZ$43.5 million equity raise will be used to fund contracted Private Storage Services and those under negotiation.

Capital Raising

Refining NZ will undertake the equity raise through an underwritten NZ$38.5 million placement of new shares (Placement) and a non-underwritten $5 million Share Purchase Plan (SPP), with the ability to accept oversubscriptions at Refinery NZ’s discretion (the Offer).
The $38.5 million Placement will be conducted during the course of today. The approximately 47.0 million new shares to be issued under the Placement will be issued at a price to be determined throughout the bookbuild process today, subject to an underwritten floor price of $0.82 per share. A trading halt has been granted by NZX to facilitate the Placement.

The underwritten floor price represents a discount of:

• 6.8% to the last close on 26 November 2021 of $0.88; and
• 8.5% to the volume weighted average price of Refining NZ shares traded on the NZX during the five days up to, and including 26 November 2021, of $0.896.

The Placement is underwritten by Forsyth Barr Group Limited.

The SPP will allow all eligible shareholders with a registered address in New Zealand on the record date to apply for up to NZ$15,000 of new shares in Refining NZ. The issue price of the new shares under the SPP will be the lower of the Placement price and a 2.5% discount to the volume weighted average price of Refining NZ shares traded on the NZX during the five trading days up to, and including, the end of the SPP offer period.

Refining NZ intends to raise NZ$5 million under the SPP, although we have the ability to accept additional applications above that amount at our discretion. The SPP has been structured to be as fair as possible to all existing shareholders and enables almost all shareholders to participate through either the Placement or the SPP (except where restricted due to legal constraints), and should scaling be required under the SPP, it will be by reference to existing shareholdings on the record date.

The SPP offer opens on 2 December 2021, with the offer document also being available from that date.
The new shares issued under the Offer will rank equally in all respects with Refining NZ’s existing ordinary shares on issue.
For further information in respect of the Offer, please refer to the investor presentation that accompanies this NZX announcement.

[hogie]

Refining NZ announces equity raising - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/383713)

The New Zealand Refining Company Limited, to be renamed Channel Infrastructure NZ Limited (Channel Infrastructure) upon commencement of import terminal operations from April 2022, announces that it plans to raise approximately NZ$43.5 million to fund Private Storage Services.

On 22 November 2021, the Company announced that it had executed long-term agreements to provide dedicated private storage to grow Channel Infrastructure beyond the shared Import Terminal System (ITS), with further opportunities under negotiation.

Private storage is a complementary growth opportunity, which provides customers with increased product supply scale and flexibility. The contracted private storage capacity will require an initial capital commitment of c.$30 million, and is expected to result in incremental revenue of c.$50 million (real) on a fixed rental basis over a 10 year term, with high EBITDA conversion. This capacity will be progressively made available following required works from the commencement of terminal operations through to early 2023.

Management is actively engaged with customers on additional private storage opportunities which could require a further capital investment of up to c.$25 million and deliver additional revenue of up to c.$60 million (real) over a 10-year term. The Company is working to agree these additional private storage services prior to the commencement date of ITS services under the Terminal Services Agreements.

The planned NZ$43.5 million equity raise will be used to fund contracted Private Storage Services and those under negotiation.

Capital Raising

Refining NZ will undertake the equity raise through an underwritten NZ$38.5 million placement of new shares (Placement) and a non-underwritten $5 million Share Purchase Plan (SPP), with the ability to accept oversubscriptions at Refinery NZ’s discretion (the Offer).
The $38.5 million Placement will be conducted during the course of today. The approximately 47.0 million new shares to be issued under the Placement will be issued at a price to be determined throughout the bookbuild process today, subject to an underwritten floor price of $0.82 per share. A trading halt has been granted by NZX to facilitate the Placement.

The underwritten floor price represents a discount of:

• 6.8% to the last close on 26 November 2021 of $0.88; and
• 8.5% to the volume weighted average price of Refining NZ shares traded on the NZX during the five days up to, and including 26 November 2021, of $0.896.

The Placement is underwritten by Forsyth Barr Group Limited.

The SPP will allow all eligible shareholders with a registered address in New Zealand on the record date to apply for up to NZ$15,000 of new shares in Refining NZ. The issue price of the new shares under the SPP will be the lower of the Placement price and a 2.5% discount to the volume weighted average price of Refining NZ shares traded on the NZX during the five trading days up to, and including, the end of the SPP offer period.

Refining NZ intends to raise NZ$5 million under the SPP, although we have the ability to accept additional applications above that amount at our discretion. The SPP has been structured to be as fair as possible to all existing shareholders and enables almost all shareholders to participate through either the Placement or the SPP (except where restricted due to legal constraints), and should scaling be required under the SPP, it will be by reference to existing shareholdings on the record date.

The SPP offer opens on 2 December 2021, with the offer document also being available from that date.
The new shares issued under the Offer will rank equally in all respects with Refining NZ’s existing ordinary shares on issue.
For further information in respect of the Offer, please refer to the investor presentation that accompanies this NZX announcement.

A further dilution of shares eh? :t_down:

[bull....]

A further dilution of shares eh? :t_down:

and more capital spending reducing the odd,s of any dividend for years lol ..... just more of the same nzr

[ralph]

I do not think they have any option to pay for the future conversion unless ampol will pay, It should pay out over the ten years ,as it says private storage is a growth opportunity.

[Yeet_Shares]

I do not think they have any option to pay for the future conversion unless ampol will pay, It should pay out over the ten years ,as it says private storage is a growth opportunity.

I don't believe this capital raise is for the conversion as the conversion loan is already been sorted. This money is for an additional business opportunity associated with private fuel storage. RNZ will be able to charge fuel companies or government to store statutory minimum fuel supplies.

[Nor]

Seems to be the ones who never stop winning are the engineering companies.

[ralph]

Totally growth opportunity

I don't believe this capital raise is for the conversion as the conversion loan is already been sorted. This money is for an additional business opportunity associated with private fuel storage. RNZ will be able to charge fuel companies or government to store statutory minimum fuel supplies.

[SailorRob]

I do not think they have any option to pay for the future conversion unless ampol will pay, It should pay out over the ten years ,as it says private storage is a growth opportunity.

Thanks for that analysis Ralph.

'It should pay out as they say it's a growth opportunity'. Wonderful. I guess that's it then, lets pile in. What could go wrong?

What happened to the last growth opportunity, a 365 million dollar opportunity?

[ralph]

Thanks sailor you need to channel your energies into this new Infrastructure growth opportunity .

[Waiuta]

This seems odd when they have all that capacity for storage anyway. Surely this could be repurposed? I wonder if some of this capital raise is going towards rather large redundancy payments.

[SailorRob]

This seems odd when they have all that capacity for storage anyway. Surely this could be repurposed? I wonder if some of this capital raise is going towards rather large redundancy payments.

It will be going towards god knows what.

Redundancy payments, I'd estimate around 20 million.

Most staff are getting 6 Months pay and the maximum would be just over 12 Months

[hogie]

Anyone taking part in the share placement?

[Waiuta]

Not for me, pride is the only reason I'm still holding.

[waikare]

Anyone taking part in the share placement?

Yep brought only a few 4200, trying to average down my losses a bit.

[SailorRob]

Anyone taking part in the share placement?

This was a joke I presume?

[ralph]

Someone has to be taking part ,not us I hasten to add:D

[ronaldson]

Unusual announcement today re the result of the SPP. Doesn't say if fully subscribed by shareholders, nor if scaled. To raise $5m, which is not a lot in context, at the strike price of $0.83 only needs just over 6m shares to be subscribed. These announcements are usually self congratulatory, and this one is plain vanilla.

[SailorRob]

Unusual announcement today re the result of the SPP. Doesn't say if fully subscribed by shareholders, nor if scaled. To raise $5m, which is not a lot in context, at the strike price of $0.83 only needs just over 6m shares to be subscribed. These announcements are usually self congratulatory, and this one is plain vanilla.

Agreed. Very surprising as the quantity of retail suckers is usually unlimited.

[waikare]

Unusual announcement today re the result of the SPP. Doesn't say if fully subscribed by shareholders, nor if scaled. To raise $5m, which is not a lot in context, at the strike price of $0.83 only needs just over 6m shares to be subscribed. These announcements are usually self congratulatory, and this one is plain vanilla.

5/12/2021, 8:30 am OFFER
The New Zealand Refining Company Limited (Refining NZ) (NZX:NZR) is pleased to announce that its $5 million Share Purchase Plan (SPP) closed oversubscribed. The SPP forms part of the equity raising announced on 29 November 2021 to fund growth through private storage services.

The SPP received strong shareholder support, with Refining NZ receiving applications totalling approximately $9.5 million. Refining NZ has elected to accept all additional applications of approximately $4.5 million, bringing the total amount accepted under the SPP to approximately $9.5 million.

Refining NZ has now raised approximately $48.5 million in new equity, including the $39 million placement of new shares undertaken on 29 November 2021.

The settlement and allotment of the new shares issued under the SPP is expected to occur on 17 December 2021, with NZX trading in the new shares to commence on the same day. The new shares rank equally with existing Refining NZ shares on issue.

[ronaldson]

Yes, clarification at last. Perhaps they read the Share Trader Forum posts too!

[SailorRob]

All those new shares to try and eventually pay a dividend to, not to mention the CEO's lot in '23

[ralph]

All those new shares to try and eventually pay a dividend to, not to mention the CEO's lot in '23
That's not going to become a realty for a long time ,at least until the storage is up & operating making profits

[SailorRob]

Could not agree more. Every year that passes without a dividend, you need a bigger future one to make up for it.

[Sideshow Bob]

Refining NZ and FFI to study green hydrogen - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/384805)

efining NZ and Fortescue Future Industries (FFI) have today signed a Memorandum of Understanding (MOU) to study the feasibility of production, storage, distribution, and export of industrial-scale green hydrogen from Marsden Point.

The MOU with FFI is part of the ongoing work already signalled by Refining NZ on identifying repurposing opportunities for Marsden Point, once refining operations cease and Refining NZ makes its transition to Channel Infrastructure from April 2022. Work on the study will begin early in 2022.

Commenting, CEO Naomi James said:

“Channel Infrastructure’s vision is to be New Zealand’s leading independent fuel infrastructure company, and that means investigating potential opportunities in addition to our core business of operating the fuel import terminal. The potential of green hydrogen to support New Zealand’s energy transition is huge if commercial and technical challenges can be solved, so we are delighted that FFI has chosen to partner with us to investigate what might be possible in years to come.”

The study, which will be undertaken in phases covering both commercial and technical feasibility, will investigate whether the Marsden Point site and facilities that will not be required for the import terminal, might be suitable for green hydrogen production.

- ENDS -

[Wai Wai]

NZR is the cheapest listed infrastructure asset on NZX
Fill your boots before it gets swallowed up

[SailorRob]

NZR is the cheapest listed infrastructure asset on NZX
Fill your boots before it gets swallowed up

Wai Wai, for those not as clued up as you, could you please run us through the basic numbers?

How much debt will the entity carry? What do you anticipate net profit to be and in which year?

How do you see conversion costs playing out? And ongoing costs for actual demolition of existing plant?

How many cents per share dividend do you expect and in which year? After the dilution from recent issue and issuance of managments shares?

What's happening with Wiri in 2025?

How do you define cheap, you mean based on the discounted future cash flows the 'asset' will provide to the equity?

Thanks in advance.

[RTM]

Refining NZ infrastructure support Govt's biofuel mandate
https://www.nzherald.co.nz/northern-advocate/news/refining-nz-infrastructure-support-govts-biofuel-mandate/XVGMF7HOV7HGHAXIVRYU4XA6QU/

Future sounds rosy !
🤪

[Waikaka]

Wai Wai, for those not as clued up as you, could you please run us through the basic numbers?

How much debt will the entity carry? What do you anticipate net profit to be and in which year?

How do you see conversion costs playing out? And ongoing costs for actual demolition of existing plant?

How many cents per share dividend do you expect and in which year? After the dilution from recent issue and issuance of managments shares?

What's happening with Wiri in 2025?

How do you define cheap, you mean based on the discounted future cash flows the 'asset' will provide to the equity?

Thanks in advance.

Happy to help again,

Total conversion costs might be ~$200-220m over 5-6 year period, ~70% expected to be spent in 2022.

Dividends might restart as soon as late 2023/24.

It is cheap because it has an irreplaceable deep water port, land, refinery to AKL pipeline and tanks that will all generate revenue and have an intrinsic value. The business model is now a lot more stable and well and truly makes it an infrastructure company.

While conversion costs and other variables may change I am still fairly confident that in 5 years it will be paying me dividends.

[Wai Wai]

Sailor Rob
Todays announcement and presentation should answer most of your questions
Fill your boots while ACC remains the only seller (as they have been from about 44cents upwards)

[SailorRob]

Sailor Rob
Todays announcement and presentation should answer most of your questions
Fill your boots while ACC remains the only seller (as they have been from about 44cents upwards)

I've been away sailing. Haven't read it yet. Has maths changed since I've been gone, or is one and one still two?

As you correctly pointed out, Waikaka didn't answer a single question. I will study the announcement and give a full rundown over the next few days.

Management will be happy they've been buying so many shares.

Oh wait.

[Nor]

I see a shortage of diesel is predicted due to the Russia Ukranium business. I mean Ukrainian. Who are we counting on to be nice enough to prioritise our supplies? Is this shut down irrevocable now? By which I don't mean shareholder votes etc but has actual destruction started?

[SailorRob]

I see a shortage of diesel is predicted due to the Russia Ukranium business. I mean Ukrainian. Who are we counting on to be nice enough to prioritise our supplies? Is this shut down irrevocable now? By which I don't mean shareholder votes etc but has actual destruction started?

I shut down the last Crude distillation unit last night. So we're no longer boiling oil. As I type we're pumping out the last levels and flushing etc. One unit is still running and will be dead within 24 hours. The 'destruction' has not started but soon reactors will have their caytalyst unloaded etc. We're about 2 months away from actual physical destruction, cutting up etc.

[Nor]

OK. There is a lot of comment in the news that globalisation is dead.

[mcdongle]

I shut down the last Crude distillation unit last night. So we're no longer boiling oil. As I type we're pumping out the last levels and flushing etc. One unit is still running and will be dead within 24 hours. The 'destruction' has not started but soon reactors will have their caytalyst unloaded etc. We're about 2 months away from actual physical destruction, cutting up etc.

So oil crisis tomorrow then..... :)

[Oakwood]

Guess we can update this thread to 'the company formerly know as NZR' now known as CHI. Hopefully that puts a line in the sand for the sub $1 prices!

[SailorRob]

Guess we can update this thread to 'the company formerly know as NZR' now known as CHI. Hopefully that puts a line in the sand for the sub $1 prices!

If you believe in the company then sub $1 prices are what you should pray for. You're purchasing future cash flows for less.

[tommy_d]

I shut down the last Crude distillation unit last night. So we're no longer boiling oil. As I type we're pumping out the last levels and flushing etc. One unit is still running and will be dead within 24 hours. The 'destruction' has not started but soon reactors will have their caytalyst unloaded etc. We're about 2 months away from actual physical destruction, cutting up etc.
are you Jon P?? or someone else?

[SailorRob]

are you Jon P?? or someone else?

Someone else! Sad times out there at the moment.

[Sideshow Bob]

Conversion project update.

Q1 Conversion Project Update - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/390514)

Maybe someone needs to change the thread name....??

[850man]

I shut down the last Crude distillation unit last night. So we're no longer boiling oil. As I type we're pumping out the last levels and flushing etc. One unit is still running and will be dead within 24 hours. The 'destruction' has not started but soon reactors will have their caytalyst unloaded etc. We're about 2 months away from actual physical destruction, cutting up etc.

Moth balling rather than destruction seems a better move to make. Reliance on imported refined product is going to bite us all. A sensible government will no doubt reconsider the ban on oil and gas exploration, that's not exactly worked well for the environment has it with NZ now importing and burning coal like never before

[Sideshow Bob]

Question, it what was NZR were still refining, how would the current fuel situation have impacted on them??

[Bobdn]

Question, it what was NZR were still refining, how would the current fuel situation have impacted on them??

I'm no expert, but I'm guessing (and happy to play along) that with the NZD down massively and refining margins up massively, they be making money hand over fist. But I'm happy to be corrected.

[cyclist]

Was wondering the same thing today. Super profits would be my guess too: https://www.reuters.com/business/energy/asia-oil-refiners-rake-record-profits-tight-global-supplies-2022-04-28/

Should'a, could'a, would'a.

(But they would only then blow it on the next "make work for the boys" scheme).

[SailorRob]

Was wondering the same thing today. Super profits would be my guess too: https://www.reuters.com/business/energy/asia-oil-refiners-rake-record-profits-tight-global-supplies-2022-04-28/

Should'a, could'a, would'a.

(But they would only then blow it on the next "make work for the boys" scheme).

Correct, massive profits. However their fee was capped at a ceiling so couldn't have exposure to the full market margins we're currently seeing.

And correct they would just blow it again.

[Waikaka]

Been a real lesson with this one.

Bought in before Covid and had my teeth kicked in as demand for refined product plummeted.

Despite some reservations bought all through the Covid dip, capital raise and turmoil involved in the closure of the refinery operations. I do appreciate SailorRob throwing acid. Kept me on my toes as felt pretty lonely for a while in this particular gutter. Pretty much all out now with some modest gains. Seems fully priced for what income it can be expected to generate.

Particularly disappointed they closed the refinery. Cyclical businesses should never make critical decisions at the bottom of the cycle.

Weird thing is in my line of work if you mess up there are consequences. From your boss, peers or even subordinates. While not a fan of ad hominem criticism it is worth mentioning that by employing someone as CEO who was the head of strategy at Arrium, when that strategy drove the company bankrupt in 2016 negatively affecting their 10,000 workers, who has continued to push to have the refinery operation closed while playing down the possibility of current sky high refining margins. You would think perhaps an apology or recognition of the lost potential earnings that the shareholders now miss out on, the effect on local community and NZ balance of trade but I figure once you get high enough in the food chain it doesn't matter if you make a bad decision. Which is a shame for us all.

Pretty glad to out of it really. Strange cyclical business, boiling oil is clearly hard mahi and a thankless task that deserves more recognition and personally now is a time to have dry powder at the ready.

[SailorRob]

Been a real lesson with this one.

Bought in before Covid and had my teeth kicked in as demand for refined product plummeted.

Despite some reservations bought all through the Covid dip, capital raise and turmoil involved in the closure of the refinery operations. I do appreciate SailorRob throwing acid. Kept me on my toes as felt pretty lonely for a while in this particular gutter. Pretty much all out now with some modest gains. Seems fully priced for what income it can be expected to generate.

Particularly disappointed they closed the refinery. Cyclical businesses should never make critical decisions at the bottom of the cycle.

Weird thing is in my line of work if you mess up there are consequences. From your boss, peers or even subordinates. While not a fan of ad hominem criticism it is worth mentioning that by employing someone as CEO who was the head of strategy at Arrium, when that strategy drove the company bankrupt in 2016 negatively affecting their 10,000 workers, who has continued to push to have the refinery operation closed while playing down the possibility of current sky high refining margins. You would think perhaps an apology or recognition of the lost potential earnings that the shareholders now miss out on, the effect on local community and NZ balance of trade but I figure once you get high enough in the food chain it doesn't matter if you make a bad decision. Which is a shame for us all.

Pretty glad to out of it really. Strange cyclical business, boiling oil is clearly hard mahi and a thankless task that deserves more recognition and personally now is a time to have dry powder at the ready.


Incredible post Waikaka. Well done to you.

I agree about being fully priced regarding the income it can be expected to generate and taking the debt load into consideration and the cost of the eventual demolition which nobody is talking about but a HUGE liability. My employee grant shares cleared into my name post redundancy on the 31st May and I dropped them like a bad habit.

I still have slides from the presentation given by the big shot who was brought over from Australia, forecasting what margins going forward from Covid were going to be. I stated directly to the CEO 10 days ago that in order to correct the predictions made by this guy, I would have to print the slide with the prediction chart on a A3 piece of paper and then turn it the wrong way around, so as to give me enough room in the vertical direction to plot the difference between his prediction and current reality of the highest margins in recorded history.

What you say regarding recognition or apology is bang on the money, and is the strong feeling from the workforce. It's not going to happen... But where are the shareholders? They should be demanding it. Why are the shareholders not asking why in 2013/14 they were sold the expansion project for $365 million, all the fancy bloody advisors and consultants telling us what a great idea... Now that investment has been turned to dust in a very short space of time. ZERO consequences ZERO accountability.

The CEO is a lawyer and in my opinion was specifically brought in to get the Refinery shutdown. The decision was made before Covid. As I've said to her, she could not have done a better job if her job was to shut down the Refinery and get the terminal up and running.

It's been a good run for me. I started there in 2003 and am now on the decommissioning team until early next year but am redundant from my old job. The company has treated us as well as you could hope for under the circumstances. But everything you said is on the money. Nobody from management or the board has had skin in the game the entire time I've been there. Look at who took up, or more to the point didn't... the latest rights offer or whatever it was to staff below market price. 15k and the top man can't take it up? If I was the CEO then I'd be saying well if you can't stump up 15k to invest in the company you are running, we have a big problem.

Well done Waikaka and I appreciate your acknowledgement of my acid throwing, I wish I had it thrown on me with all my investments as the most important thing is to be told the downside or why you might be wrong as we can all see the things we like or we wouldn't be invested.

Cheers mate.

[Muse]

Been a real lesson with this one.

Bought in before Covid and had my teeth kicked in as demand for refined product plummeted.

Despite some reservations bought all through the Covid dip, capital raise and turmoil involved in the closure of the refinery operations. I do appreciate SailorRob throwing acid. Kept me on my toes as felt pretty lonely for a while in this particular gutter. Pretty much all out now with some modest gains. Seems fully priced for what income it can be expected to generate.

Particularly disappointed they closed the refinery. Cyclical businesses should never make critical decisions at the bottom of the cycle.

Weird thing is in my line of work if you mess up there are consequences. From your boss, peers or even subordinates. While not a fan of ad hominem criticism it is worth mentioning that by employing someone as CEO who was the head of strategy at Arrium, when that strategy drove the company bankrupt in 2016 negatively affecting their 10,000 workers, who has continued to push to have the refinery operation closed while playing down the possibility of current sky high refining margins. You would think perhaps an apology or recognition of the lost potential earnings that the shareholders now miss out on, the effect on local community and NZ balance of trade but I figure once you get high enough in the food chain it doesn't matter if you make a bad decision. Which is a shame for us all.

Pretty glad to out of it really. Strange cyclical business, boiling oil is clearly hard mahi and a thankless task that deserves more recognition and personally now is a time to have dry powder at the ready.


agree with Sailor Rob - this is an *outstanding* post...one for filing away...
"Cyclical businesses should never make critical decisions at the bottom of the cycle" - gold
and the lack of accountability too

[SailorRob]

What the hell is going on with this company's share price??

There are now 373 million shares on issue... so with recent trading around the $1.20 mark, this is an equity value of 450 million dollars!

Revenue is going to be 100 million... so that's nearly 5 times REVENUE. What in the hell are people thinking? This is one of the most expensive companies in the world before we even get into margins or capital structure. Let alone PROFIT which I cannot find any information about in the 162 page Terminal document...

Facebook is trading at 3.7 x times sales for god's sake, with 3 billion daily users and profitability and growth that you need to see to believe.

So do people think margins on this dog are going to be near double Facebook at 50% or something? As a 50% margin on 100 million of revenue would give you 10x earnings on a highly levered capital structure. wouldn't excite me, and that would have margins far far higher than any Fuel terminal Business in the world. I don't think so.

Before this latest bond issue, net debt was around 200 million - they say then will pay some down with the bond issue but how much? And then how will the massive staff redundancy cost be paid as well as the 200 to 250 million that's getting spent over 5 to 6 years on the conversion and then 50 million (YEAH RIGHT) for future demolition? Where is all this cash coming from, oh wait I know, the 200 million extra debt they can take on through pre approved lending facilities.

Let's call it 450 million, that's an invested capital base of 900 million now... and 100 million in Revenue is gonna feed that beast adequately with rising rate expectations all the time? Wowzer. OK.


So after the conversion is complete we have (if all goes according to plan which with this lot it NEVER does) we have interest expenses on 450 million, latest bond issue already 5.8%, let's say 6% average across it all - that's nearly 30 million in interest. They say 35 million OPEX (will be more) so 100 minus 35 minus 30 is 35 left. Now for CAPEX, they said 5 to 10, well hell which one is it? Now it's up to 12. Depreciation is 15 so let's call it that... we got 20 million left. But we haven't paid down any debt yet or any tax (which supposedly there won't be any for a while) But let's go with 20. Doesn't seem much now does it.

So, tell me why the management, who have seen ALL the financial detail of how this little scheme is going to be conducted and are party to all the intricacies of the contracts as well as everything else than we may not be... Why haven't they participated in the Equity raise below market level, why have they bought no bonds? Lord knows we're paying them enough to invest just a little 15k, no?


Some of my workmates who received shares as compensation are clutching onto them like a first born child. These are the lads who watched this company look them in the eye (like a dog can look you in the eye while it takes a dump on your carpet) and tell them that the $365 million CCR project was a great idea. It was turned to dust in 5 years flat. These guys have seen cost blowouts and the effects of the worst management in corporate New Zealand history make screw up after screw up for decades. They could sell this junk now and buy any one of hundreds of world class companies that are currently on sale throughout the world... I watched one put a sell order in at $1.22 when the bid was $1.21 and I kept my mouth shut which is exceedingly difficult for me, but I was thinking damn SMASH that bid as fast as you can.. like break that god damned mouse.


It seems to me the price is trading up due to the oil price and high pump price - punters must think that it's good for the company?


Hell I can't predict what the share price will do as I cannot predict people's stupidity but I sure can tell you what this mutt is worth.

[Maxtrade]

What the hell is going on with this company's share price??

There are now 373 million shares on issue... so with recent trading around the $1.20 mark, this is an equity value of 450 million dollars!

Revenue is going to be 100 million... so that's nearly 5 times REVENUE. What in the hell are people thinking? This is one of the most expensive companies in the world before we even get into margins or capital structure. Let alone PROFIT which I cannot find any information about in the 162 page Terminal document...

Facebook is trading at 3.7 x times sales for god's sake, with 3 billion daily users and profitability and growth that you need to see to believe.

So do people think margins on this dog are going to be near double Facebook at 50% or something? As a 50% margin on 100 million of revenue would give you 10x earnings on a highly levered capital structure. wouldn't excite me, and that would have margins far far higher than any Fuel terminal Business in the world. I don't think so.

Before this latest bond issue, net debt was around 200 million - they say then will pay some down with the bond issue but how much? And then how will the massive staff redundancy cost be paid as well as the 200 to 250 million that's getting spent over 5 to 6 years on the conversion and then 50 million (YEAH RIGHT) for future demolition? Where is all this cash coming from, oh wait I know, the 200 million extra debt they can take on through pre approved lending facilities.

Let's call it 450 million, that's an invested capital base of 900 million now... and 100 million in Revenue is gonna feed that beast adequately with rising rate expectations all the time? Wowzer. OK.


So after the conversion is complete we have (if all goes according to plan which with this lot it NEVER does) we have interest expenses on 450 million, latest bond issue already 5.8%, let's say 6% average across it all - that's nearly 30 million in interest. They say 35 million OPEX (will be more) so 100 minus 35 minus 30 is 35 left. Now for CAPEX, they said 5 to 10, well hell which one is it? Now it's up to 12. Depreciation is 15 so let's call it that... we got 20 million left. But we haven't paid down any debt yet or any tax (which supposedly there won't be any for a while) But let's go with 20. Doesn't seem much now does it.

So, tell me why the management, who have seen ALL the financial detail of how this little scheme is going to be conducted and are party to all the intricacies of the contracts as well as everything else than we may not be... Why haven't they participated in the Equity raise below market level, why have they bought no bonds? Lord knows we're paying them enough to invest just a little 15k, no?


Some of my workmates who received shares as compensation are clutching onto them like a first born child. These are the lads who watched this company look them in the eye (like a dog can look you in the eye while it takes a dump on your carpet) and tell them that the $365 million CCR project was a great idea. It was turned to dust in 5 years flat. These guys have seen cost blowouts and the effects of the worst management in corporate New Zealand history make screw up after screw up for decades. They could sell this junk now and buy any one of hundreds of world class companies that are currently on sale throughout the world... I watched one put a sell order in at $1.22 when the bid was $1.21 and I kept my mouth shut which is exceedingly difficult for me, but I was thinking damn SMASH that bid as fast as you can.. like break that god damned mouse.


It seems to me the price is trading up due to the oil price and high pump price - punters must think that it's good for the company?


Hell I can't predict what the share price will do as I cannot predict people's stupidity but I sure can tell you what this mutt is worth.

You hit the nail on the head. 100% agree with your perception. Punters are incorrectly correlating higher barrel and pump prices to think that means the company will make more profits, which is a mistaken assumption. There seems to be a bit of a bounce from lows, FOMO watching the SP going up so following like sheep buying in to not miss out. However fundamentally that is a poor decision. Likely to see on the first publicised negative news in relation to the company a rapid retracement again in the share price. As you have stated 5 x revenue, lacking profits, oil industry facing overall massive challenges ahead with climate hurdles etc. Seems like many have just been gambling hoping others are seeing a recovery in SP off the lows. But no real reason it should be or that SP has 'recovered' 150% in the last year! In it's own bubble likely to pop any time this year. Staying completely clear of! As soon as punters start selling and are happy to take their huge profits off recent years rally from 0.4's to 1.2, SP could very quickly fall sharply. Don't get caught snoozing on this one. Have stop losses set for sure! And as they trigger, house of cards.

[Maxtrade]

punters seem to be gambling rather than investing these days. FOMO seeing a recovering SP bounce off its lows. Following like sheep to not miss out. 150% rally off previous lows in last year! They cant see the sector and company still has huge issues and stock has been over bought. 5 x revenue with the hurdles oil faces with climate and restrictions, no thanks. Profitability!?? Higher barrel and pump prices don't mean the company is all of a sudden profitable. Foolish 'investing'. When profits start getting taken off the table, house of cards in the works. Definitely have your stop loss set for this one. Because when she drops, will be sharp.

[Sideshow Bob]

"A Sustainable Future".....

Investor presentation (nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com) (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CHI/394769/374012.pdf)

[golden city]

Great update. With dividends comming soon and very good cashflow with no tax for nine years

[SailorRob]

"A Sustainable Future".....

Investor presentation (nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com) (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CHI/394769/374012.pdf)


Yeah... So going to average 105 mil revenue and will max out the credit card at 375 mil. Each will likely be worse but at face value..

105 mil to service 800 million enterprise value.

Good luck.

[Sideshow Bob]

Half Year 2022 Results - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/397585)

Channel Infrastructure (CHI), New Zealand’s largest fuel infrastructure business based at Marsden Point in Northland, has today released its financial results for the six-months ended 30 June 2022 (H1 2022).

The financial results reflect discontinued operations of the refinery for the three-months ended 31 March 2022 (Q1 2022) and the continued operations of the import terminal for the three-months to 30 June 2022.

Operational Highlights

• Completed refinery shutdown safely and to plan, despite the challenges of COVID in the community
• First quarter of terminal operations successfully completed with 19 import shipments discharged
• Jet demand at highest level since 2019; demand is currently above 50% of pre-COVID levels and continuing to recover as borders open and aviation capacity returns
• Conversion project tracking to plan and budget, with decommissioning of the plant 70% complete and the highest-risk phase of the project over
Financial Highlights
• Strong EBITDA margin from continuing operations of c.66%, demonstrating improved financial performance under the new operating model
• Significant cash flows funded two-thirds of conversion spend in H1 2022
• Net assets up 5% from $1.33 to $1.40 per share
• Successful retail bond issue completed in May 2022, and bank refinancing well underway to reset cost of capital
• Performance tracking in line with FY22 guidance, and FY23 EBITDA now expected to be at the top end of guidance
• Strong cash flow increases confidence in return to dividends in March 2023

Commenting, CEO Naomi James said: “These financial results reflect the transition to Channel Infrastructure on 1 April, and the stable earnings and cashflows that come with our long-term customer contracts. Performance is in line with FY22 guidance and FY23 EBITDA is now expected to be at the top of the guidance range. Our strong cash flow increases our confidence we will return to dividends in March 2023.”

“We have successfully completed our first quarter of import terminal operations and, following the opening up of New Zealand’s borders, we have seen jet fuel demand rapidly recover to over 50% of pre-COVID levels. The most complex and risky part of the conversion project with the transition from refinery to terminal operations is now behind us, and the project remains on-plan and to budget.”

“Work is progressing on a number of growth opportunities, alongside our partners, to support New Zealand’s fuel security and decarbonisation, by using our highly strategic assets to deliver long-term shareholder value. With significant underutilised capacity at our site, we are well positioned for the future.”

Strong EBITDA and cash flow supports return to dividends for FY22

Revenue from continuing operations was $29.8 million reflecting the first three-months of terminal operations. On 1 April, the long-term Terminal Services Agreements with customers bp, Mobil and Z Energy commenced, with fixed and minimum fee components, which allows time for a recovery in jet fuel demand from COVID impacts. The strength these contracts provide is reflected in the fact that over 90% of total revenue from continuing operations was fixed or underpinned by “take-or-pay” fees. Import terminal operating costs were $10.1 million reflecting energy and utilities (23%), labour (23%) and site operations, and other (54%).
The strong EBITDA margin of c.66% and operating cash flow generation1 of c.$41 million allowed Channel to fund two-thirds of conversion spend in H1 2022.

Continuing operations ($m) H1 2022
Revenue 29.8
EBITDA 19.7
Net Profit Before Income Tax 7.8
Net Debt 215.3
Net Assets 522.4

Refining operations ceased in March 2022, and in the last three-months of operation generated revenue of $69.0 million, and an EBITDA of $26.5 million.

Net Debt increased from $183.6 million as at 31 December 2021 to $215.3 million as at 30 June 2022 as the refinery’s shutdown, decommissioning, and workforce transition were completed, with $63 million spent in H1 2022. Net assets increased by 5% (from $495.5 million as at 31 December 2021 to $522.4 million as at 30 June 2022) to $1.40 per share.

Successful first quarter of terminal operations with jet fuel recovering to above 50% of pre-COVID levels

Channel discharged 19 import shipments in Q2 2022 and a total of c.593 million litres was delivered to the Auckland market through the Marsden Point to Auckland Pipeline, with the balance of c.85 million litres delivered to Northland via the Truck Loading Facility adjacent to the Terminal.

Diesel demand remained strong in H1, reflecting wider economic activity, and petrol demand showed a rapid recovery from lockdown impacts, albeit remained slightly below pre-COVID levels due to high pump prices. Petrol demand has now recovered to pre-COVID levels. As expected, jet fuel demand has recovered with the reopening of the borders and aviation capacity returning and is now at the highest level since 2019 – currently at above 50% of pre-COVID levels. Airline capacity constraints are currently limiting the rate of recovery of aviation. Nonetheless, the potential exists for jet demand to recover faster than previously expected with all border restrictions lifted.

Significant progress on carbon targets

In April, Channel Infrastructure published its first Sustainability Report, which provided a summary of its sustainability performance to date and outlined the Company’s ambitious targets for the future. During H1 2022, we have made significant progress towards these targets.

The extensive workforce transition program continued throughout the period with significant workforce changes occurring after the refinery shut-down in March. Channel Infrastructure set an ambitious target for at least 90% of employees seeking new employment securing a job or retraining within six-months of leaving the Company. This is on-track with greater than 90% of staff who have left in Q2 2022 having found their next opportunity, and only five still looking for their next opportunity.

Channel Infrastructure is targeting Net Zero scope 1 and 2 emissions by 2030. The shut-down of the refinery saw a 98% reduction in 2019 emissions (over one million tonnes of CO2 per annum). The business has also seen an 85% reduction in electricity consumption and now has no natural gas requirements – reducing thermal generation demand and supporting New Zealand’s wider efforts to decarbonise. CO2 emissions fell to c.27 ktCO2 in Q2 2022 compared to 222 ktCO2 in Q1 2022 with further reductions expected in H2 2022.

Our environmental remediation work remains a priority, with ongoing environmental management at Marsden Point continuing to remediate legacy groundwater hydrocarbons; the flush out and decontamination and cleaning of plant and equipment ready for demolition and recycling and removal of materials is ongoing, and included in the decommissioning and terminal plans and budgets.

Conversion project remains on-plan and to budget

Channel Infrastructure successfully commenced operation of New Zealand’s largest fuel import terminal at Marsden Point on 1 April 2022, following the safe shutdown of the refinery in March. Two months of intensive site works was completed after closure to permanently decommission the refinery assets. The process of plant decommissioning is now approximately 70% complete, and the plant has been dismantled internally with only the shells and structures remaining. The highest-risk phase of the project is now behind us.

Over the next nine-months decommissioning works will continue to ensure the main refinery process plant and remaining tankage facilities are in a safe state for at least 10-years. Concurrently, Channel will continue terminal upgrades to provide additional jet fuel storage, to improve tanker unloading capacity and to upgrade its fire-fighting and secondary containment systems.
Conversion costs are tracking to plan, with project spend to the end of July of $84 million2. Of the total budget, more than half has already been spent or committed, reducing the risk of inflation on project costs.

Focused on Growth Opportunities

Channel Infrastructure’s highly-strategic assets opens up many growth opportunities with the significant industry change, and New Zealand’s decarbonisation ambitions.

As previously announced, work is underway to convert a number of tanks to increase storage capacity for customers, with further opportunities for additional tank conversions should they be required to meet fuel storage requirements. With increased fuel storage at Marsden Point, we have the opportunity to support New Zealand’s fuel security now, and as the Government looks to implement its expected fuel stockholding policy.

This week, Marsden Point received the largest refined product ship to ever visit New Zealand. As the largest fuels import terminal in the country, Channel Infrastructure is the only location in New Zealand capable of receiving product tankers of this size, offering customers significant freight savings, and our significant tankage capacity enables the storage and distribution of the fuels on board, to where customers need it most.

Conversations continue with customers on meeting their requirements to support the importation of BioFuels ready for the incoming BioFuels Mandate policy, and the study with Fortescue Futures Industries (FFI) investigating the commercial feasibility of green hydrogen production is nearing completion.

Channel Infrastructure recently opened a Request for Information process to secure long-term low-cost electricity supply, which will be an important opportunity to reduce electricity costs which make up one-quarter of terminal operating costs. The Maranga Ra onsite solar project provides a unique opportunity to establish renewable capacity, at significantly lower-cost than the market is currently delivering. With resource consents already in place at Marsden Point, and available transmission capacity, the project can be developed much faster than most other solar projects being proposed.

Focus on diversifying funding sources and aligning cost of funds with an infrastructure business

Net debt increased to $215.3 million as the conversion activities were delivered in H1 2022, and debt is expected to peak around the end of 2023. Existing debt facilities of $375 million are sufficient to fund the remaining conversion costs, with c.$160 million of liquidity headroom available at 30 June and no significant near-term maturities.

Channel Infrastructure is focused on diversifying its funding sources and improving funding competitiveness, with the objective of lowering its cost of debt, consistent with an infrastructure business. In May, $100 million of unsecured retail bonds were issued. Bank refinancing is well progressed to align with the infrastructure business profile. The currently drawn bank debt is fixed, providing funding cost certainty and protection in the increasing interest rate environment.

Performance in line with FY22 guidance and FY23 EBITDA tracking towards top end of guidance range

Looking forward performance is tracking in line with FY22 guidance, Channel Infrastructure will continue to benefit from the stable earnings that the import terminal operating model provides. Import terminal fees commenced from 1 April and are expected to contribute c.$75 million for the 9-months of the terminal operation. Total operating costs3 are expected to be c.70 million for 2022, with $53 million spent to the end of June (including $43 million on discontinued operations, and $10 million on continued operations). As the conversion project progresses, we expect borrowings to increase, and average to c.$220 - $230million.

Looking beyond 2022, Channel Infrastructure is now expecting FY23 normalised EBITDA, from continuing operations, to be at the top end of its guidance range of $76 - $84 million. Channel Infrastructure will benefit from the Producer Price Index (PPI) indexation from 1 January 2023 as all fees earned under terminal services agreements and private storage agreements (making up c.90% of total revenue) will be subject to indexation based on 12 monthly inflation to 30 September 2022, pro-rated for nine-months. PPI for the nine months ended 30 June 2022 was 6.6%, which implies an additional c.$7 million of revenue. Electricity remains a key cost to the business, and therefore, management remains focused on work to reduce electricity costs, to maximise earnings from the business.

Strong cash flows increase confidence in return to dividends in March 2023

The Board confirms its dividend policy pay-out of 60-70% of Free Cash Flow (being adjusted net cash generated from operations less maintenance capex)4 which supports achieving target Net Debt of 3x to 4x EBITDA, consistent with an investment grade rating. The first opportunity for a dividend will be in March 2023 after the FY22 financial results, provided net debt is below 4.5x EBITDA.

The Company expects net debt to be below 4x EBITDA at year end, and, indicatively, Free Cash Flow (excluding growth capex and conversion costs) from the terminal in May and June of c.$9 million would equate to a FY22 dividend of c.6cps at the mid-point of the dividend pay-out range.

Conference Call

Channel Infrastructure's Chief Executive Officer, Naomi James, and Chief Financial Officer, Jarek Dobrowolski will give a presentation on the company's financial and operational performance for H1 2022 via a webcast commencing on Thursday 25 August 2022 at 11:30am NZT.

Participants need to pre-register for the conference by navigating to Link.

Footnotes
1. Operating cash flow from operations excluding one-off conversion costs.
2. Includes private storage of c.$4 million. Overall conversion project budget includes $200-220 million of conversion costs and $45-50 million for private storage over approximately four years, as well as $50-60 million of demolition costs longer-term.
3. Operating costs associated with continuing and discontinued operations, excluding one-off conversion costs.
4. The Board reserves the right to adjust the payout ratio or expected timing for the recommencement of dividends should the timing, costs or revenue associated with the conversion (including new services such as Private Storage Services) or the import terminal business change. The dividend policy will be subject to the Board’s due consideration of the Company’s medium term asset investment programme; a sustainable financial structure for Channel Infrastructure, recognising the targeted investment grade rating; and the risks from short and medium term economic and market conditions and estimated financial performance. It is the intention of the Board to attach imputation credits to dividends to the extent that they are available.

- ENDS -

[Lease]

Yeah... So going to average 105 mil revenue and will max out the credit card at 375 mil. Each will likely be worse but at face value..

105 mil to service 800 million enterprise value.

Good luck.

It shouldn't look that way. For 2023 FY, normalised EBITDA at around $80m, minus $18 finance cost, $25m depreciation, come to net profit $37m. Market cap at $503M. PE ratio is around 13.5. Not very expensive.

[SailorRob]

It shouldn't look that way. For 2023 FY, normalised EBITDA at around $80m, minus $18 finance cost, $25m depreciation, come to net profit $37m. Market cap at $503M. PE ratio is around 13.5. Not very expensive.


Ahh I see where I have gone wrong.

I have been thinking that Channel Infrastructure would not be able to achieve up there with the highest profit margin of any company in the world.

Here I was thinking that Apple, one of the most profitable companies in the world could punch out 26% when US corporate profits are already the highest in recorded history, Google could do 25.9%, these absolute paragons of high margin profitability... when this pales in comparison to Chanel Infrastructure with their incredible management team they can smash out margins some 38% higher than Apple and Google.

The net profit margin for the SP500 in aggregate is around 12.5%, this is off the charts historically... These are the very best companies on the planet, but damn the world has not seen channel infrastructures 2023 results. Capitalism is about to be set on fire by these guys.


Now I understand why there has been so much insider activity, them all fighting over the equity raise, everyone taking full allocation and then filling their boots on the open market. And funny that, selling off a piece of a business with profit margins 30% higher than Apple, for what was it, 83c cash a share, when the equity is priceless. Those big oil boys are crazy for not injecting that equity.


Profit is a story. Cash is cash. Look at the history of profits (claimed) vs cash produced...

[Lease]

Ahh I see where I have gone wrong.

I have been thinking that Channel Infrastructure would not be able to achieve up there with the highest profit margin of any company in the world.

Here I was thinking that Apple, one of the most profitable companies in the world could punch out 26% when US corporate profits are already the highest in recorded history, Google could do 25.9%, these absolute paragons of high margin profitability... when this pales in comparison to Chanel Infrastructure with their incredible management team they can smash out margins some 38% higher than Apple and Google.

The net profit margin for the SP500 in aggregate is around 12.5%, this is off the charts historically... These are the very best companies on the planet, but damn the world has not seen channel infrastructures 2023 results. Capitalism is about to be set on fire by these guys.


Now I understand why there has been so much insider activity, them all fighting over the equity raise, everyone taking full allocation and then filling their boots on the open market. And funny that, selling off a piece of a business with profit margins 30% higher than Apple, for what was it, 83c cash a share, when the equity is priceless. Those big oil boys are crazy for not injecting that equity.


Profit is a story. Cash is cash. Look at the history of profits (claimed) vs cash produced...

Well, if you don't believe what they are saying, that's another thing. For me, their saying is quite logical: they have 10-year contracts on hand, jet fuel demand is on steady recovery. CHI's revenue is more predictable. They no longer have expensive manufacturing cost of sales, headcount cut by 80%. Overall, their revenue is stable and possible increase due to jet fuel demand up, expenses are vastly down. So financial metrics they have given make sense to me.

By the way, there are plenty of listed companies net profit margin over 30%, TSM, V, NVO, just name a few.

[SailorRob]

Well, if you don't believe what they are saying, that's another thing. For me, their saying is quite logical: they have 10-year contracts on hand, jet fuel demand is on steady recovery. CHI's revenue is more predictable. They no longer have expensive manufacturing cost of sales, headcount cut by 80%. Overall, their revenue is stable and possible increase due to jet fuel demand up, expenses are vastly down. So financial metrics they have given make sense to me.

By the way, there are plenty of listed companies net profit margin over 30%, TSM, V, NVO, just name a few.


Yes there are, but my point is that they are in an extremely small elite group. If you look at the percentage of listed companies with those kind of margins you will find that it is very small indeed.

If you want to discuss what they are saying vs reality and what they have said in the past vs what has actually happened, put aside a few days and we'll get into it. I've worked for them for 20 years and read pretty much everything they have said in that time.

A couple of things to start us off.

1. What did they say Refining margins would be this year and for the next 5 years?

2. What did they say the results would be of borrowing and spending $365 million dollars to build the CCR plant?

3. What are they saying demolition costs will be and when, and how is this factored into these 'profits'

4. Did they use the word 'Profit' in the context of the terminal one single time in the 160 page terminal conversion proposal document. Hint - NO they did not.

Actually let's make this easier and tell me one single thing that has involved a few million or more any time in the last 10 years that has gone as they have said it would, or even just not been a complete disaster.


And I'd like to know why they hocked off this incredible situation at 83 cents and didn't eat their own cooking.

Maybe this will all work out but look at the track record. Nobody can predict 2023 earnings let alone expenses.

[Lease]

Yes there are, but my point is that they are in an extremely small elite group. If you look at the percentage of listed companies with those kind of margins you will find that it is very small indeed.

If you want to discuss what they are saying vs reality and what they have said in the past vs what has actually happened, put aside a few days and we'll get into it. I've worked for them for 20 years and read pretty much everything they have said in that time.

A couple of things to start us off.

1. What did they say Refining margins would be this year and for the next 5 years?

2. What did they say the results would be of borrowing and spending $365 million dollars to build the CCR plant?

3. What are they saying demolition costs will be and when, and how is this factored into these 'profits'

4. Did they use the word 'Profit' in the context of the terminal one single time in the 160 page terminal conversion proposal document. Hint - NO they did not.

Actually let's make this easier and tell me one single thing that has involved a few million or more any time in the last 10 years that has gone as they have said it would, or even just not been a complete disaster.


And I'd like to know why they hocked off this incredible situation at 83 cents and didn't eat their own cooking.

Maybe this will all work out but look at the track record. Nobody can predict 2023 earnings let alone expenses.

I can see your point. But it is a different company, not only a different name, its CEO, CFO, Chairman, Non-executive directors, are all new. Majority of staff(80%) are gone. And they have a new business activity and new business model. The company is completely rebranded. It's not appropriate to judge them by using old refining company's performance.

As far as I can see their new business model, I'm convinced CHI can make profit and pay dividend to shareholders.

[SailorRob]

I can see your point. But it is a different company, not only a different name, its CEO, CFO, Chairman, Non-executive directors, are all new. Majority of staff(80%) are gone. And they have a new business activity and new business model. The company is completely rebranded. It's not appropriate to judge them by using old refining company's performance.

As far as I can see their new business model, I'm convinced CHI can make profit and pay dividend to shareholders.


In this game, never ever be convinced of anything. That's what will get you destroyed. It's not what you don't know that will hurt you, it's what you know for sure that just ain't so.


You may be convinced but why aren't the directors and Senior managers? Spend a little time and tell me who of the board and senior management own shares bought with their own money, or who participated in the equity raise? I bailed up the CEO and asked her why the General Manager hadn't participated and why she put up with it. Her reply was oh he's building a house. This is slightly better than the reply I got from the 5 minute CEO, Mike Fuge, who told us all to buy shares at $2.35 and tell our families and the community to buy as they were drastically undervalued, I asked him how many he had bought and he said 'oh I'm building a fence at home'. Hard to believe but I have over 20 witnesses.


Believe me nothing has changed, same culture same spending same waste. Many of the same directors, CFO new as old one walked. CEO only here to do transition, wait till her shares vest. New name, oh ok well that's a big deal...

As soon as the new money cleared the spending spree continued, new gardens, new projects, the 20 million Jet tank conversion, 40 million dollar fire system upgrade, new talk of the solar farm... The massive debt pile that will grow bigger by the day. Have you seriously considered the cost involved in demolishing the Refinery? Instead of taking their number for granted have you checked to see what these jobs have cost overseas?


The Refinery made a 'profit' and paid a dividend most years. Totally meaningless, it was all make believe in the end. Someone on here once pointed out the dividends they'd received while ignoring the share price going from $4 to 40c...


What are the returns going to be from this vast amount of money currently getting spent? It's not about making a profit, it's about making an appropriate return on capital in real hard cash after all expenses including properly measured capital expenses not just operating.

I'd like to know why the company was hocked off at 83c too if you don't mind.

[ronaldson]

Nevertheless, the share price has had a run-up to $1.40 accompanied by heavy buying/selling. Wonder when/where the balance will be struck while we wait for the next instalment?

[SailorRob]

Nevertheless, the share price has had a run-up to $1.40 accompanied by heavy buying/selling. Wonder when/where the balance will be struck while we wait for the next instalment?

A truly phenomenal run. Since the equity raise, it's outperformed global indexes by some 60%. Probably in the top half of the top 1% in the world.

Costs are blowing out in spectacular fashion for the conversion work, between 40 and 90% for the big stuff along with delays. No chance the planned capital spend is anywhere close to what's been budgeted. This is not news to anyone who follows the capital projects of any company like this anywhere in the world.

CEO's shares vest next year so any bad announcements will likely be left until those shares have been dumped, difficult to do whilst following all the rules but once you're not CEO anymore you can do as you like.

[Nor]

I reckon the shareholders should be concerned about having such a negative presence on the payroll. Can't see it can be of any benefit.

[SailorRob]

I reckon the shareholders should be concerned about having such a negative presence on the payroll. Can't see it can be of any benefit.

Oh you will see alright Sport, you will see. Just keep buying the stock and relax.

[Nor]

Sounds like you're outside the tent pissing in.

[SailorRob]

Sounds like you're outside the tent pissing in.


I am shareholders friend and ally not enemy.

Everything I have said on this thread since pre Covid is of public record. Go back and have a look and see what the track record is like.

Now, of all the public companies in the world that have embarked on major capital projects and budgeted on and announced cost estimates, how many have not updated forecasts?

How many companies that said something will cost 200/250 million 18 Months ago, can still do the job for what they said. And most of them are not at the end of the world having to deal in Pacific Pesos and long freight runs with weak relationships with suppliers.

[Nor]

Shareholders friend, by encouraging them not to be?

[Charlie]

Probably need to updare the name of thread to CHI.....??

With jet fuel on the increase with return of tourism, and increasing flights , looks like this one is good to have along side AIR and THL .
I used to have these at $2.55, and back in today. I looked at is 6 months ago, and it dropped off my radar.
HEEEaps of buys v sellers at the mo,

[Nor]

Probably need to updare the name of thread to CHI.....??

With jet fuel on the increase with return of tourism, and increasing flights , looks like this one is good to have along side AIR and THL .
I used to have these at $2.55, and back in today. I looked at is 6 months ago, and it dropped off my radar.
HEEEaps of buys v sellers at the mo,
Nah keep this thread, don't want to lose all the history.

[Charlie]

Nah keep this thread, don't want to lose all the history.
Didnt think you would lose the history, just get an update on the name . No problem if you know it, but newbees wont find it . ...
Anyway, another good day. Even with all the bear news everywhere else, it still has climbed ove4 the last few months , with a small amount of volatility compared to some.

[Nor]

Didnt think you would lose the history, just get an update on the name . No problem if you know it, but newbees wont find it . ...
Anyway, another good day. Even with all the bear news everywhere else, it still has climbed ove4 the last few months , with a small amount of volatility compared to some.
I didn't think about changing the thread name even though that is what you said. Good idea though. I'm sure there is someone you could contact about it. I don't know how though as I don't use the full site and haven't had to email them since getting my email address verified and didn't save.

[percy]

I didn't think about changing the thread name even though that is what you said. Good idea though. I'm sure there is someone you could contact about it. I don't know how though as I don't use the full site and haven't had to email them since getting my email address verified and didn't save.

Send the friendly VINCE a PM.

[Sideshow Bob]

https://www.nzx.com/announcements/402188

Channel Infrastructure (CHI) is pleased to announce that it has now fully refinanced its bank debt, reducing funding costs. This, together with the successful bond issue in May 2022, diversifies funding sources, extends tenor and supports lowering Channel Infrastructure’s cost of capital to align with an infrastructure business.

Channel Infrastructure has refinanced $205 million of bank debt, achieving tenor spread across 3 to 5 years. Total available debt facilities are now $380 million with no maturities within 12 months and an average tenor of 3.6 years. The Group’s net debt as at 31 October 2022 was $230 million, resulting in total headroom of $150 million which provides sufficient capacity to fund the remainder of conversion costs and investment in private storage. It is expected that debt will peak at around $100 to $120 million above current levels in the next 12-18 months.

The refinancing programme has reduced the Company’s cost of bank debt. Financing costs are now expected at the lower end of previous guidance at c.$16 million in 2023 (previous guidance $15 million - $18 million), equivalent to an effective interest rate across all debt of 5 to 5.5%. Channel’s fixed rate bonds and interest rate swaps provide significant funding cost certainty for 2023, in a rising interest rate environment.

CEO Naomi James said “With the refinancing of our bank debt, we have lowered our cost of funding, reflecting the reset of our business model to an infrastructure company with stable earnings and cashflows.”

“We thank ANZ and BNZ for their support through our transition and welcome ASB, CCB and Westpac to our banking group. This refinancing programme has established Channel Infrastructure’s strong presence in both bank and bond markets, which will support future growth plans and provide opportunity to continue to lower the Company’s cost of capital.”

“With our funding costs largely fixed and terminal revenue indexed at PPI, we are strongly placed in the current environment to deliver strong and stable earnings and cash flow from our business, supporting a return to dividends for shareholders next year.”

[Wai Wai]

Take a look at all of this Sailor Rob....
17/11/2022, 12:13 pm MKTUPDTEChannel Infrastructure (CHI), New Zealand’s largest fuel import terminal business based at Marsden Point in Northland, has today provided an update on its FY2023 financial guidance. Key highlights include:
• Following the 8.4% increase in Producers Price Index announced today, 2023 revenue is now expected in the range of $125 million to $128 million (previous guidance: $116 million to $120 million).
• Additional terminal services revenue contracted which is expected to deliver c.$4 million revenue in 2023 (and c$25 million over the 5-year contract term).
• 2023 EBITDA guidance increased from $76 - $84 million to $82 - $86 million increasing the indicative dividend range from 8 –11 cents per share to 9 –11 cents per share.
Channel Infrastructure CEO Naomi James commented: “Channel Infrastructure's long-term contracts provide protection and benefit in the current inflationary environment. With the benefit of the PPI indexation on revenue more than offsetting the inflationary impacts we are seeing in our cost base, and the continued execution of our growth strategy with additional private storage contracted, we have today increased our FY23 earnings and dividend guidance. Conversion costs continue to track to plan.”
Updated 2023 financial guidance
Ahead of the transition to a new business model, Channel Infrastructure disclosed detailed 2023 forecasts to provide insight to shareholders on the financial profile of the new business going forward. Channel Infrastructure has today updated this 2023 financial guidance to reflect the Producers Price Index (PPI), contracting of electricity supply and additional terminal services revenue, and latest operating and capital expenditure forecasts.
Channel Infrastructure terminal services and private storage fees are subject to Producers Price Index “All Industries – outputs” indexation (PPI). Today Statistics New Zealand announced the PPI for the 12-months ended 30 September 2022 was 8.4%, which, pro-rated for 9 months to 6.3%, confirms the take or pay level under the Terminal Services Agreements at $106.3 million in 2023 ($6.3 million above the 2022 annualised take or pay fee equivalent).

In addition to the private storage already contracted and currently being commissioned through to mid-2023, Channel Infrastructure has contracted additional terminal storage revenue, expected to be c.$25 million over the next 5 years. This contract further adds to Channel’s revenue and earnings base and is in addition to the private storage agreements that have been announced to the market previously. This contract is another important step towards our positive future as a new business that is delivering on our focused growth strategy, supporting customers with their fuel needs and contributing to New Zealand’s decarbonisation efforts and domestic fuel security. Capital works (comprising tank and linework modifications) with an estimated cost of c.$7 million will be required, with revenue of c.$4 million expected in 2023 as this work is undertaken and additional storage capacity is commissioned.
Fuel throughput in 2023 is expected to grow from 2022 levels with the continuing recovery in jet fuel demand, while remaining below the take-or-pay fee level under the Terminal Services Agreements.
Operating and capital expenditure guidance has been updated to reflect higher electricity prices expected in 2023 compared with 2022, expected activity levels and resourcing requirements, with jet demand and storage capacity increasing next year, as well as cost inflation across a number of areas.

Depreciation guidance has also increased reflecting the continuing investment in terminal upgrades and private storage capacity.
As announced on 11 November 2022, this year’s refinancing programme has reduced the Company’s cost of funds, with financing costs now expected at the lower end of previous guidance at c.$16 million in FY2023 (previous guidance $15 million - $18 million), implying an effective interest rate of 5 to 5.5%. Channel’s fixed rate bonds and interest rate swaps provide significant funding cost certainty for 2023, in a rising interest rate environment. Based on current conversion project and private storage capex phasing, it is expected that in the next 12 to 18 months debt will peak at around $100 to $120 million above current levels of $230 million.
With the increase in EBITDA expectations for 2023, based on the Company’s capital allocation framework and dividend policy of returning 60-70% of normalized free cash flow to shareholders, the indicative dividend range for FY23 increases from 8 to 11 cents per share to 9 to 11 cents per share.
- ENDS -
Authorised by:
Chris Bougen
General Counsel and Company Secretary

[RTM]

https://www.nzherald.co.nz/business/flight-disruption-warning-fuel-companies-say-aviation-gas-shipment-not-up-to-scratch/RMEWL5WMABENTDKF5JEEUPFNRA/

"Flight disruption warning: Airlines face rationing after aviation fuel shipment not up to scratch"

Didn't take long for an issue to arise.

[GTM 3442]

https://www.nzherald.co.nz/business/flight-disruption-warning-fuel-companies-say-aviation-gas-shipment-not-up-to-scratch/RMEWL5WMABENTDKF5JEEUPFNRA/

"Flight disruption warning: Airlines face rationing after aviation fuel shipment not up to scratch"

Didn't take long for an issue to arise.

It will be fine, no problem at all. . . . . they'll just dip into the 60-day Strategic Reserve

[RTM]

It will be fine, no problem at all. . . . . they'll just dip into the 60-day Strategic Reserve

Ah..thats good to know...thanks .

[Charlie]

Ok, so bad fuel.... I think that deserves a 4% SP rise...:t_up:

[FTG]

It will be fine, no problem at all. . . . . they'll just dip into the 60-day Strategic Reserve

It may be mandated at 60 days, but do you know what the actual reserve level (# of days) is at the moment?

[SailorRob]

It may be mandated at 60 days, but do you know what the actual reserve level (# of days) is at the moment?

Even the 60 days mandated is smoke and mirrors, it's all 'paper' fuel stored overseas and multiple parties each own derivative contracts on it.

The actual reserve? Keep an eye on the airport and you'll soon find out. Very very little.

[SailorRob]

Take a look at all of this Sailor Rob....
17/11/2022, 12:13 pmMKTUPDTEChannel Infrastructure (CHI), New Zealand’s largest fuel import terminal business based at Marsden Point in Northland, has today provided an update on its FY2023 financial guidance. Key highlights include:
• Following the 8.4% increase in Producers Price Index announced today, 2023 revenue is now expected in the range of $125 million to $128 million (previous guidance: $116 million to $120 million).
• Additional terminal services revenue contracted which is expected to deliver c.$4 million revenue in 2023 (and c$25 million over the 5-year contract term).
• 2023 EBITDA guidance increased from $76 - $84 million to $82 - $86 million increasing the indicative dividend range from 8 –11 cents per share to 9 –11 cents per share.
Channel Infrastructure CEO Naomi James commented: “Channel Infrastructure's long-term contracts provide protection and benefit in the current inflationary environment. With the benefit of the PPI indexation on revenue more than offsetting the inflationary impacts we are seeing in our cost base, and the continued execution of our growth strategy with additional private storage contracted, we have today increased our FY23 earnings and dividend guidance. Conversion costs continue to track to plan.”
Updated 2023 financial guidance
Ahead of the transition to a new business model, Channel Infrastructure disclosed detailed 2023 forecasts to provide insight to shareholders on the financial profile of the new business going forward. Channel Infrastructure has today updated this 2023 financial guidance to reflect the Producers Price Index (PPI), contracting of electricity supply and additional terminal services revenue, and latest operating and capital expenditure forecasts.
Channel Infrastructure terminal services and private storage fees are subject to Producers Price Index “All Industries – outputs” indexation (PPI). Today Statistics New Zealand announced the PPI for the 12-months ended 30 September 2022 was 8.4%, which, pro-rated for 9 months to 6.3%, confirms the take or pay level under the Terminal Services Agreements at $106.3 million in 2023 ($6.3 million above the 2022 annualised take or pay fee equivalent).

In addition to the private storage already contracted and currently being commissioned through to mid-2023, Channel Infrastructure has contracted additional terminal storage revenue, expected to be c.$25 million over the next 5 years. This contract further adds to Channel’s revenue and earnings base and is in addition to the private storage agreements that have been announced to the market previously. This contract is another important step towards our positive future as a new business that is delivering on our focused growth strategy, supporting customers with their fuel needs and contributing to New Zealand’s decarbonisation efforts and domestic fuel security. Capital works (comprising tank and linework modifications) with an estimated cost of c.$7 million will be required, with revenue of c.$4 million expected in 2023 as this work is undertaken and additional storage capacity is commissioned.
Fuel throughput in 2023 is expected to grow from 2022 levels with the continuing recovery in jet fuel demand, while remaining below the take-or-pay fee level under the Terminal Services Agreements.
Operating and capital expenditure guidance has been updated to reflect higher electricity prices expected in 2023 compared with 2022, expected activity levels and resourcing requirements, with jet demand and storage capacity increasing next year, as well as cost inflation across a number of areas.

Depreciation guidance has also increased reflecting the continuing investment in terminal upgrades and private storage capacity.
As announced on 11 November 2022, this year’s refinancing programme has reduced the Company’s cost of funds, with financing costs now expected at the lower end of previous guidance at c.$16 million in FY2023 (previous guidance $15 million - $18 million), implying an effective interest rate of 5 to 5.5%. Channel’s fixed rate bonds and interest rate swaps provide significant funding cost certainty for 2023, in a rising interest rate environment. Based on current conversion project and private storage capex phasing, it is expected that in the next 12 to 18 months debt will peak at around $100 to $120 million above current levels of $230 million.
With the increase in EBITDA expectations for 2023, based on the Company’s capital allocation framework and dividend policy of returning 60-70% of normalized free cash flow to shareholders, the indicative dividend range for FY23 increases from 8 to 11 cents per share to 9 to 11 cents per share.
- ENDS -
Authorised by:
Chris Bougen
General Counsel and Company Secretary


Just seen your post, oh I looked alright.

[FTG]

Even the 60 days mandated is smoke and mirrors, it's all 'paper' fuel stored overseas and multiple parties each own derivative contracts on it.

The actual reserve? Keep an eye on the airport and you'll soon find out. Very very little.

Thanks for being more direct SR. I was probably being a little too subtle with my rhetorical question.
Yes, I gather actual reserve levels, held in NZ are frankly, woeful. All it would take is a black swan event somewhere on the supply chain and NZ Inc would be deep crap, in short order.

[Waikaka]

Ok, so bad fuel.... I think that deserves a 4% SP rise...:t_up:

CHI just tolls the product coming through. They didn't buy it and they don't need to work out how to move it on. All of that is on Z Energy who brought it in. In fact the testing out fit (IPL) who check the oil quality is 100% owned by CHI so probably make a teeny tiny bit on all the follow up testing.

[SailorRob]

Thanks for being more direct SR. I was probably being a little too subtle with my rhetorical question.
Yes, I gather actual reserve levels, held in NZ are frankly, woeful. All it would take is a black swan event somewhere on the supply chain and NZ Inc would be deep crap, in short order.


Correct. I must admit, part of me would like to see it just so that the public realise. I would not want to see it come to civil disorder and loss of basic services that many of our population rely on but that would all happen so quickly it would be terrifying.

No doubt Dr Woods would chug a pie or two and get it all sorted in no time though.

It really was something to behold seeing her turn up to the refinery in her chauffeured ministerial V8 Diesel to wax lyrical to us about all things green. For those of us relying on the Cafe that day for lunch I can tell you following minister Woods, it was like the place had been ram raided by a pack of starving delinquent youths.

[Nor]

Sometimes I look at our leaders and think "is that someone I would follow over the top?"

[Sideshow Bob]

It really was something to behold seeing her turn up to the refinery in her chauffeured ministerial V8 Diesel to wax lyrical to us about all things green. For those of us relying on the Cafe that day for lunch I can tell you following minister Woods, it was like the place had been ram raided by a pack of starving delinquent youths.

Haha, classic!! :lol:

[SailorRob]

https://www.rnz.co.nz/audio/player?audio_id=2018870194&fbclid=IwAR2R6keyVU5S3KbkcmKrifCl4IAZJTQYQz9En8P71 XvPG7IoBYlbhpm4P9o

Great interview with David, he knows his stuff, used to be my boss.

The company has issued a gag warning to all staff regarding the Jet saga.

The very first thing they did post shutdown was deliberately remove some small but extremely critical componentry which made no sense at all except to make sure that it could never be started again, which is what they feared would be ordered once the inevitable stuff up happened that has just happened...

If a jet falls out of the sky the share price could hit $3

[SailorRob]

Sometimes I look at our leaders and think "is that someone I would follow over the top?"

I'd happily follow minister woods as it would be like the most effective human shield ever. Would take an intercontinental ballistic missile to harm me if I was behind that.

[kiora]

"The need for greater fuel resiliency Last year, the Government reduced the cost of fuel and sought to assure the public there was adequate supply. Coincidentally, the Government was considering the country's fuel supply resilience after Refining NZ transitioned Marsden Point Oil Refinery to an import terminal. As a result of its review, the Government announced a range of initiatives in November aimed at strengthening that resilience. The initiatives largely adopted the Ministry of Business, Innovation and Employment's (MBIE) policies, proposed last year, of maintaining 28 days' cover for diesel and petrol and 24 days’ cover for jet fuel at normal consumption levels. The Government has not been heavy-handed on this issue to limit costs to the industry and consumers. While the initiatives are an improvement on the status quo, mainly because they mandate importers (from July 1, 2024) must hold a specified amount of fuel onshore, they are only a marginal improvement as it is based on the national average of what they currently already hold. However, it does mean that the Government plays a greater role in maintaining an appropriate level of fuel in NZ rather than leaving it to fuel suppliers, which is a good thing."
https://businessdesk.co.nz/sponsored...1059-446239310

[whatsup]

I wonder how many posters were alive in the 1980's when the P M introduced " car less days " as an answer to cronic fuel shortage at that time I wonder how much fuel spare there would be in N Z if every motorist in a panic mode fueled up their vehicles , two/three weeks, we really could be leaving us in dire straites.

[Nor]

And another of his, Maximum Retail Price. 🛡️

[Nor]

Actually I'm wrong it was Warren Freer a Labour minister in 1974 who attempted MRP.

[nizzy]

I wonder how many posters were alive in the 1980's when the P M introduced " car less days " as an answer to cronic fuel shortage at that time I wonder how much fuel spare there would be in N Z if every motorist in a panic mode fueled up their vehicles , two/three weeks, we really could be leaving us in dire straites.

Ha, my first job on leaving uni was Carless Days in the Ministry of Energy (which needs to come back..). A daft policy but great education in human behaviour. Govt of the day rejected simple rationing as an option (ie individual gets an allocation and uses it how they want). Carless Days sounded simple but in practice complex and invasive. You chose the 2 days of the week you wouldn't drive. Trouble was everyone has different travel needs, for some no problem, for many a real challnege. It collapsed under the sheer weight of exemptions.

[Sideshow Bob]

https://www.nzx.com/announcements/407275

Highlights
• Safely and successfully transitioned from refinery to terminal operations on 1 April 2022
• Conversion project remains to plan and to budget - with some 65% of the budget either spent orcommitted, the project is significantly de-risked
• Reset cost of funding with successful retail bond issue completed in May 2022 and bankrefinancing completed in November 2022
• Transition to import terminal delivers first profit in three years
• New fuel demand outlook confirms stronger demand forecast for Channel Infrastructure over thelong term
• Return to dividends for shareholders, with a fully imputed final dividend of 5 cents per share and afully imputed special dividend of 2 cents per share (for 9 months of terminal operations)

Key Financial Results, including for the 9 months of import terminal operationsF
Y 2022Continuing operations EBITDA $57.5m
Net Profit before tax $23.1m
Dividend declared – final 5 cps Dividend declared – special 2 cps
Discontinued operations EBITDA $24.0m
Net Profit before tax $2.4m

[kizame]

This company is never really talked about much on here but look at this weekly chart, yes it is a recovery stock, but wow why would you not be involved?

Sorry for some reason it only wants to upload a thumbnail.

[SailorRob]

This company is never really talked about much on here but look at this weekly chart, yes it is a recovery stock, but wow why would you not be involved?

Sorry for some reason it only wants to upload a thumbnail.


Learn to read financial statements.

[Bikeguy]

Is there something wrong with the latest financials from this company?
Thank you

[SailorRob]

Is there something wrong with the latest financials from this company?
Thank you


In what respect do you mean?

[Bikeguy]

Learn to read financial statements.

Apologies, I thought by above you were meaning there is something obvious in the financial statements?

[SailorRob]

Apologies, I thought by above you were meaning there is something obvious in the financial statements?


Well yes there is. They are accurate and show clearly what the situation is.

https://www.sharetrader.co.nz/showthread.php?468-CHI-Channel-Infrastructure-Ltd-(NZR)&p=963144&viewfull=1#post963144

[SailorRob]

You'd think if the CFO walked off the job (must be due to stress from counting all the profit) and they had to get the old CFO back as an emergency measure, that this would trigger a NZX announcement.

You would think...

[corpr8raider]

You'd think if the CFO walked off the job (must be due to stress from counting all the profit) and they had to get the old CFO back as an emergency measure, that this would trigger a NZX announcement.

You would think...


This one https://www.nzx.com/announcements/409353 ?

[SailorRob]

This one https://www.nzx.com/announcements/409353 ?

That's it. Thought odd if hadn't been announced.

Counting all the cash is tough.

[Bikeguy]

Seems the green hydrogen option is firming up…

[Bikeguy]

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

[Sideshow Bob]

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

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

HIGHLIGHTS

Terminal and pipeline throughput

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

Conversion project

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

[Sideshow Bob]

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

Analyst preso - http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CHI/420208/405427.pdf

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

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

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

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

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

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

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

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

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

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

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

- ENDS -

[Sideshow Bob]

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

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

[Bikeguy]

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

[waikare]

Received letter today from Karl Barkley & Daniel Reurich Mosgiel (Dunedin) not dated but postmarked 18/04/24, regarding Channel Infrastructure (CHI) Advocating "The Reinstatement of Marsden Oil Refinery.

Suggesting voting for the author's of the letter and particular Resolutions, for the meeting scheduled for Wellington the 30th of this month.
As to date I have not received any voting paper or advise relating to the meeting, I also checked Computershare NZ and was unable to locate any voting forms.

Can anybody sheed some light on this please.

[Sideshow Bob]

Received letter today from Karl Barkley & Daniel Reurich Mosgiel (Dunedin) not dated but postmarked 18/04/24, regarding Channel Infrastructure (CHI) Advocating "The Reinstatement of Marsden Oil Refinery.

Suggesting voting for the author's of the letter and particular Resolutions, for the meeting scheduled for Wellington the 30th of this month.
As to date I have not received any voting paper or advise relating to the meeting, I also checked Computershare NZ and was unable to locate any voting forms.

Can anybody sheed some light on this please.

I think this is one of your guys here.....

https://www.odt.co.nz/regions/southland/bid-restart-marsden-pt-oil-refinery

15061

[Nor]

My first impulse was to check it's date thinking it might have been delayed in the mail 6 months or more.

[ronaldson]

That train left this particular station a long time ago.

Fuel storage capacity at Marsden Point ( and possibly/probably elsewhere) has in fact been purposefully boosted in conjunction with the closure and dismantling of the refining capability, and represents an income stream for Channel Infrastructure. Despite NZ First campaigning for a review ( to gather the votes of Messrs Barkley, Reurich and the like) actual reinstatement is totally not credible. And the supply chain is at risk whether you are importing crude product for refining or importing the already refined components.

Whether the status quo is carbon efficient on a wider basis could be debated but it certainly means NZ itself generates lower emissions.

[waikare]

I think this is one of your guys here.....

https://www.odt.co.nz/regions/southland/bid-restart-marsden-pt-oil-refinery

15061

Thanks Sideshow, Nor I can clearly see the postmark on the envelope 18 Apr 24.

[percy]

https://sendy.tarawera.co.nz/l/J6oLVth2f3f6IXNYvUBQEg/tg3n2rd7NUfXqYbInmaTIw/HqFj763mIX7vms3OguJ892s0rQ

Looks as though there are or will be good opportunities ahead for Channel .

[Bikeguy]

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

This MOU must be close to decision (proceed/dismiss) soon…CHI discussing it like they just have seems to indicate positive?

[Nor]

Thanks Sideshow, Nor I can clearly see the postmark on the envelope 18 Apr 24.
Yes I had a look, but correct me if I'm wrong as I've now 'filed it' the letter itself has no date.

[percy]

From today's agm.
We have also had a strong start to 2024 driven by strong jet fuel demand, which Rob will talk
about shortly.
In light of this the Board has taken the view to lift 2024 EBITDA guidance to between $92
and $96 million. This is up from $91 to $95 million.

[winner69]

From today's agm.
We have also had a strong start to 2024 driven by strong jet fuel demand, which Rob will talk
about shortly.
In light of this the Board has taken the view to lift 2024 EBITDA guidance to between $92
and $96 million. This is up from $91 to $95 million.

This years $95m pretty good v last year $87m

Plenty of time left in year to raise guidance to over $100m

Going great guns

[Ricky-bobby]

Haha it’s my best performer in the last 3 months! Should of bought more…

[percy]

AGM Presentation;
https://stocknessmonster.com/announcements/chi.nzx-430283/

[percy]

https://www.nzx.com/announcements/430314