CTX-Caltex- great buying

[JBmurc]

Anyone holding buying CTX atm

-IMHO looks good buying at these levels-52 week high -$28 low-$10 current SP$13.70 now CTX has bounced of its lows looks like a great long term hold.
-10 analysts have as strong to mod BUY atm
-Yeilds 5% divie
-Low P/E-6-7
-Asset backing $9.68

CTX provides investors with the only Australian listed exposure to the petroleum refining and distribution sector. The refining industry is gradually being rationalised resulting in a fundamental shift in the demand- supply equation for transport fuels. Market leader CTX is well placed to benefit from rationalisation as it owns the largest refining capacity. Management has dramatically overhauled the balance sheet while operating efficiency, refinery utilisation and margins have improved. The business is now on a more stable foundation. Refining capacity constraints in the Asian region should ensure relatively attractive refiner margins persist for some time. While we perceive business risk as low/medium CTX is only suitable for investors with above average risk tolerance.

[remy]

cheers for the heads up JB, will keep an eye on this one

[zac]

Do GPG still have a piece of CTX?

[macduffy]

Do GPG still have a piece of CTX?

Don't appear in GPG 2007 Annual Report - Summary of Principal Quoted Investments as at 14 March 2008.
Smallest % shareholding shown here is 5.6% ( GME Resources).

[JBmurc]

this was taken from -Fat prophets-mid 07 when CTX was $24

There's no doubt Caltex has had a successful year. Overcoming first half challenges associated with the implementation of the clean fuels project, the full year result to 31 December broke records across the board, from refining production to market share.

Caltex's full year net profit was $430 million on a replacement cost of sales basis. This method strips out fluctuations in the price of crude, allowing a fair appraisal of the company's underlying performance. The result was a record for the company, comfortably beating expectations and last year's profit of $414 million.

Caltex benefited from a 20 percent increase in the refiner margin compared to 2005, to US$10.13 per barrel. Refining is the core business, contributing over half of gross profit. As such, this margin strength was instrumental to the overall result. Which bodes well for the future, given expectations for refiner margins to remain robust.

Downstream from the refining operation and accounting for a little under half of gross profit is the marketing division, consisting of around 1,800 Caltex service stations. Included in this number are 500 convenience stores, which actually make up around half of marketing's sales. Fuel of course makes up the other half.

Overall, the outlook for the company remains strong. Profit growth should come via increased production efficiency and the impressive growth of the marketing division provides some buffering should refiner margins prove volatile.



then later 07/07

Caltex's (CTX) stock price declined sharply in June following the release of earnings guidance that fell short of the market's lofty expectations, in part due to the strengthening Aussie dollar. This week we look at the result and consider the likely impact of continued Aussie dollar strength on the company's future results.

For the six months to 30 June 2007, the company generated a net replacement cost of sales operating profit (RCOP) of $255 million, matching the six months to 31 December 2006. This replacement cost measure adjusts for the impact of fluctuating crude oil prices, thereby affording a more accurate appraisal of management's performance.



Caltex is comprised of two core divisions, Refining and Marketing. Marketing promotes and sells Caltex products through a network of around 2000 service stations and accounts for around 40 percent of gross earnings.

Although sales volumes increased to 6.7 billion litres from 6.5 billion in the same period last year, increased competition weighed on the division's profitability.

Meanwhile, the larger Refining division, which we will focus on in today's article, purchases crude oil and converts it at the company's two refineries into petrol, diesel, jet fuel and other speciality products.

During the period, Caltex's refineries produced 5.4 billion litres of various fuels. The result fell short of the 5.6 billion litres produced in the prior six months due to planned maintenance shutdowns. For the full year to 31 December 2007 however, the refineries are on target to expand production by 7.8 percent to 11 billion litres.



The extent to which production flows through to earnings is largely determined by the refiner margin. The refiner margin is the difference between the cost of importing a barrel of crude oil and the cost of importing the barrel's equivalent of refined product.

As the chart below shows, while the refiner margin exhibits considerable volatility, the 2004 - 2006 average (as shown by the red lines) has been rising. Although, the margin appears to have stabilised so far in 2007.


Source: Caltex

During the six months to 30 June, the refiner margin averaged US$10.74 per barrel, compared to US$9.76 in the same period last year.

However, the margin is quoted in US dollars. As a result, the deteriorating US dollar reduces the benefits of an expanding margin to the Refining division's Australian dollar denominated earnings.

In fact, Caltex estimates that the stronger Aussie dollar negatively impacted the Refining division's contribution to group earnings by $30 million for the period. Given our expectation of continued US dollar weakness, should we be concerned over Caltex's future profitability?

[JBmurc]

-Annual report-CTX full year 2007 profit after tax =444,000,000 P/E-5.56 yeild-6% NTA-$10 -should have a good day today

[soulman]

Wow JB, you are on a historical here.

I have been burned with CTX, buying in at $23 odd and sold after their result at $15 in late Feb this year. With the full stop loss rule and don't hold to loser, I shoulda (in hinsight) sold at about $19.

After I sold at $15, I watched it drop to $11 within 2 weeks. I would like to pat myself on the back but I blamed myself for not selling at $19 when the sign of troubles were illustrated at a profit update in Dec 07.

For now, the only way for CTX is down. 2 downgrade in succession will be followed by a few more. I see under single digit soon, perhaps $9.50 will be bottom.

Historically, CTX was $1.00 about 5 years ago, so they have been a great investment.

[Sideshow Bob]

Here's a couple for you in the last couple of days:

Investor ire as Caltex runs low on gas
Email Print Normal font Large font April 25, 2008

REFINERY shutdowns and a strong local currency reduced Caltex Australia's first-quarter earnings by a third, setting its already battered shares up for more punishment.

Investors stripped 7% off the market value of Australia's biggest oil refiner yesterday after it reported a 34% dip in earnings to $131 million before interest and tax in the quarter ended March 31.

The sell-off was also fuelled by Caltex's admission that it might fall short of its guidance of flat production growth in 2008.

"Our stated guidance for production to be in line with 2007 is achievable," chief executive Des King told frustrated shareholders at the annual meeting in Sydney. "However, we may consciously choose to reduce production should margins not outweigh the working capital costs."

http://business.theage.com.au/investor-ire-as-caltex-runs-low-on-gas/20080424-28ff.html

Strong $A hits refiner margins: Caltex
Email Print Normal font Large font April 24, 2008 - 11:18AM

Advertisement
Caltex Australia Ltd says a strong Australian dollar slightly lowered average refiner margins in the first quarter of 2007/08 despite strong US dollar margins.

"US-dollar refiner margins for the first three months have been quite strong," Caltex Australia managing director Des King told the company's annual general meeting in Sydney.

"However, the impact of the strong Australian dollar has meant the average margin in (Australian currency) for the first quarter is down slightly compared with the same period in 2007."


http://news.smh.com.au/strong-a-hits-refiner-margins-caltex/20080424-28a8.html

Caltex warns it may have to cut output
Email Print Normal font Large font Scott Rochfort
April 25, 2008

CALTEX has warned that it could be forced to scale back production of its Sydney Kurnell and Brisbane refineries later this year if the continuing US economic slowdown leads to a fall in refining margins.

Despite refining margins continuing to hold up in the first three months of this year, Caltex expressed concerns at its annual meeting yesterday that these margins - and its profits - could easily be eroded during the coming US summer holiday season.

"The real test we are all looking for is when their driving season starts, when they start to use a lot more petrol," said the managing director of Caltex, Des King. He said the US accounted for 20 per cent of world demand for petrol.

http://business.smh.com.au/caltex-warns-it-may-have-to-cut-output/20080424-28eh.html

[JBmurc]

Wow JB, you are on a historical here.

I have been burned with CTX, buying in at $23 odd and sold after their result at $15 in late Feb this year. With the full stop loss rule and don't hold to loser, I shoulda (in hinsight) sold at about $19.

After I sold at $15, I watched it drop to $11 within 2 weeks. I would like to pat myself on the back but I blamed myself for not selling at $19 when the sign of troubles were illustrated at a profit update in Dec 07.

For now, the only way for CTX is down. 2 downgrade in succession will be followed by a few more. I see under single digit soon, perhaps $9.50 will be bottom.

Historically, CTX was $1.00 about 5 years ago, so they have been a great investment.

--Yeah not the best at all should have studyed alot more before taking a position(had spent less than 2hrs on CTX mostly reports) has been a pretty bad week for my ASX holdings last week thanks to CTX & LMP have a stoploss in place for monday hopefully there's rally to make back some of the losses even a dead cat bounce of 1% would be great.

[winner69]

Do GPG still have a piece of CTX?

I think GPG bailed out in mid 2003 about $4-$5 ...... and then saw the share price take off

[JBmurc]

--From Huntleys--

The outlook for the last 2 months of 2008 is based on the combination of an assumed crude price of US$65 per barrel, an A$/US$ exchange rate of 0.65 and an average CRM of approximately US$10 a barrel. Small changes in these key external factors can materially affect RCOP in the November and December and for FY08. The sharp move in the currency is seen as a temporary with expectations of a recovery back to the 0.75-0.80 range in FY09. Our FY08 NPAT on RCOP is reduced sharply – currency losses have been realised – from $365m to $140m. This suggests a loss of $56m in 2H08 after a profit of $196m in 1H08 – January – June 2008. The dividend policy calls for the payout ratio to be 40 - 60% of RCOP after tax. This suggests no final dividend. The outlook for FY09 is clouded. Australia’s GDP is expected to slow to around 2.0%. Pressures will continue to build in the resources sector as the developed economies move toward recession while activity in the BRIC – Brazil, Russia, India China - economies slows. This will impact demand for diesel and jet fuel while demand for petrol/gasoline will also falter. Refiner margins will come under pressure forcing management to look at importing rather than producing petrol/gasoline as was the case in the September quarter of 2008. No change to our FY09 earnings forecast. Fair value is reduced slightly from $19.45 to $18.55. Price triggers adjust accordingly. We reiterate CTX should only be considered by investors with a higher risk tolerance and portfolio weighting should be no greater than index weight.

[Corporate]

I have been buying CTX thanks to a poster named Camden on HC. There is a fundamental shift in this business going on at the moment from a capital-intensive refiner to capital-lite distribution model.

Worth a look for anyone after a long-term investment.

[Joshuatree]

yes been waiting for a dip/ correction to load up on a bunch of cams Investment Grade Stock's Universe.

[Corporate]

yes been waiting for a dip/ correction to load up on a bunch of cams Investment Grade Stock's Universe.

I would highly recommend anyone interested in CTX reading Camden's recent post on HC.

I also bought a small parcel of DTL. I'm not sure they will achieve this years guidance which is heavily skewed towards the second half but I like the company and my purchase is the start of 'averaging in' for a long-term position.

[Joshuatree]

--From Huntleys--

The outlook for the last 2 months of 2008 is based on the combination of an assumed crude price of US$65 per barrel, an A$/US$ exchange rate of 0.65 and an average CRM of approximately US$10 a barrel. Small changes in these key external factors can materially affect RCOP in the November and December and for FY08. The sharp move in the currency is seen as a temporary with expectations of a recovery back to the 0.75-0.80 range in FY09. Our FY08 NPAT on RCOP is reduced sharply – currency losses have been realised – from $365m to $140m. This suggests a loss of $56m in 2H08 after a profit of $196m in 1H08 – January – June 2008. The dividend policy calls for the payout ratio to be 40 - 60% of RCOP after tax. This suggests no final dividend. The outlook for FY09 is clouded. Australia’s GDP is expected to slow to around 2.0%. Pressures will continue to build in the resources sector as the developed economies move toward recession while activity in the BRIC – Brazil, Russia, India China - economies slows. This will impact demand for diesel and jet fuel while demand for petrol/gasoline will also falter. Refiner margins will come under pressure forcing management to look at importing rather than producing petrol/gasoline as was the case in the September quarter of 2008. No change to our FY09 earnings forecast. Fair value is reduced slightly from $19.45 to $18.55. Price triggers adjust accordingly. We reiterate CTX should only be considered by investors with a higher risk tolerance and portfolio weighting should be no greater than index weight.

In the $29 zone atp down re 23% from its 1 year highs in march down re 7% today. Keeping an eye on this for later.

[Joshuatree]

Still watching CTX along with re 400 other stocks. Caltex had put a proposal to Woolworths re acquiring but BP has beaten them to it, bought woolworths 3 .5 billion litre fuels business and entered a strategic partnership with them. A big supply loss and sale to CTX.Anyone holding? S/P only down re 1.3% today so far.