CHI - Channel Infrastructure Ltd (NZR)

[sb9]

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

Some positive initiatives announced to lift margins.

[Joshuatree]

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

[cdonald]

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

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

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

[banter]

I understand that the floor calculation is index linked to inflation etc but the CAP calculation has no such mechanism. Not that I am complaining...

My one reservation with NZR is that any company with increasing expenses and a ceiling on income will eventually, inevitably go broke - assuming inflation of costs.

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

[sb9]

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

[banter]

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


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

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


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

[sb9]

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

[BlackPeter]

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

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

[sb9]

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

Couldn't agree more.

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

[cdonald]

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