CHI - Channel Infrastructure Ltd (NZR)

[golden city]

Maybe buying a bit more

[bull....]

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

[golden city]

I am taking a medium term view.

[golden city]

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

[BlackPeter]

Yes. Very surprised

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

Attachment 8179

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

[littletramp]

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

[BlackPeter]

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

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

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

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

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

Discl: holding;

[bull....]

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

all rough and crude analysis but simple for here

[golden city]

I am guessing 70m profit.

[BlackPeter]

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

all rough and crude analysis but simple for here

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

PE is obviously SP / EPS

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

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

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