CHI - Channel Infrastructure Ltd (NZR)

[SailorRob]

Yep but without holding periods you can't gauge your performance.

It's really what your entire portfolio including cash is doing each year over a 10 year period vs 'the market' really and I'd imagine very few investors actually know what their performance really is and would be better buying a index fund.

Some nice returns there though.

[Waikaka]

Yep but without holding periods you can't gauge your performance.

It's really what your entire portfolio including cash is doing each year over a 10 year period vs 'the market' really and I'd imagine very few investors actually know what their performance really is and would be better buying a index fund.

Some nice returns there though.

Numbers above were from the last financial year, ie since April 2020.

Only really invested properly in shares since 2013 so don't have 10 years but for what it is worth I returned an average of 11.3% a year during that time. So slightly better than the NZX50 i suppose but plenty of hard lessons like NZR as well which is always valuable.

I have learnt more about the upstream sector than I ever wanted to.

[SailorRob]

Numbers above were from the last financial year, ie since April 2020.

Only really invested properly in shares since 2013 so don't have 10 years but for what it is worth I returned an average of 11.3% a year during that time. So slightly better than the NZX50 i suppose but plenty of hard lessons like NZR as well which is always valuable.

I have learnt more about the upstream sector than I ever wanted to.

That's bloody good going Waikaka. As the NZ50 has produced bugger all apart from expanding multiples. When the weighing machine fires back up you could see some serious outperformance.

[sartis888]

Thanks SailorRob for your informed analysis in Oct 2020.

What are your thoughts on the new CEO and current management?

[macduffy]

Seems fashionable to close refineries these days.

https://www.abc.net.au/news/2021-02-...upply/13139648

[SailorRob]

Thanks SailorRob for your informed analysis in Oct 2020.

What are your thoughts on the new CEO and current management?

No problem thanks for the acknowledgment.

The new CEO is trained as a lawyer and used to run midstream assets for Santos, so that says it all really. She has been brought in to sort the terminal conversion. From what I can see they are trying to look after the best interests of the company and non oil major shareholders, they are not being bullied by the customers. She seems OK I guess. Like many CEO's doesn't seem to know a lot about the financial side - told me the company could borrow money at 1%, so I wonder why we did the bond issue at what was it 5.25%?

The last CEO was a right imbecile, now the CEO at Contact. He told us all to buy shares at $2.15 and told us to get family and friends to as well, when I challenged him he told me that the company was dirt cheap on a EV/EBITDA basis - don't think he understood what that means for a company that spends 100 million a year on CAPEX to tread water.

The other new appointments are obviously all terminal related, our own fancy pants lawyer, a spin doctor, a HR magician, not to mention Frank Boys who is head of looking into the terminal conversion - he was king pin of the Kurnell conversion and would not have come cheap, so I assume they are all good appointments if you're looking at shutting down a Refinery and converting to a terminal.

The rest of the management who are original, well do I need to say more - look at the state the company is in, which was on their watch over many many years.

I think a friend of mine summed it up the best with a facetious quote 'No decisions have been made about the terminal however we've hired anyone and everyone who has got the skills to get one of these over the line'

[dibble]

... terminal related, our own fancy pants lawyer, a spin doctor, a HR magician, not to mention Frank Boys who is head of looking into the terminal conversion
[/I]

"terminal", har har, quite funny given the context. Wonder if Z is doing a terminal analysis too.
Good feedback BTW, thanks.

[sartis888]

Very interesting comments on management, SailorRob.

It seems to be a done deal to convert to an import terminal. It also looks like they have a reasonable team to manage the conversion.

If the conversion is done efficiently, do you think value can be extracted from their valuable jetty and pipeline assets? Although it seems bleak at the moment, there is a high probability that covid vaccines will influence the world positively (can’t get much lower than rock bottom). Airline travel will eventually pick up. So potential upside for NBR?

[SailorRob]

Very interesting comments on management, SailorRob.

It seems to be a done deal to convert to an import terminal. It also looks like they have a reasonable team to manage the conversion.

If the conversion is done efficiently, do you think value can be extracted from their valuable jetty and pipeline assets? Although it seems bleak at the moment, there is a high probability that covid vaccines will influence the world positively (can’t get much lower than rock bottom). Airline travel will eventually pick up. So potential upside for NBR?

Yes it's possible but no way to predict it with current information. Too many moving balls.

Announcement tomorrow will likely say that agreement has been made in principal to convert, and a cost estimate and staffing estimate for the terminal.

There are just so many better investment opportunities out there right now that there is no reason to be speculating on potential upside to NZR, there is still a lot of debt and a huge mess of a refinery to demolish and clean up - the liability for that could go out decades.

NZR as I have said before has the potential to double in a week, but you can double in 30 seconds on a roulette wheel...

[Waikaka]

Quick read through of the presentation and looks like I am going to be the proud co-owner of a import terminal in a few years. Thanks for the bang on foreshadowing Sailor Rob.

Conversion costs of $200 million, decommissioning of $60 million.

Seems like the footprint of an import terminal is a lot smaller than a refinery so frees up quite a lot of tank storage and land.

So many moving parts but ill keep on holding through.

I wonder who will pay for the unneeded extra storage on site, MBIE say it is pretty critical to domestic oil security.

https://www.mbie.govt.nz/assets/c3a1...ember-2017.pdf