CHI - Channel Infrastructure Ltd (NZR)

[macduffy]

That's a tough one, scamper.

Around 57% is held by the oil companies for strategic reasons. I can't see any of them selling down by dribbling shares out on the market. A complete sell off by one or more is possible but they would surely look to do that via a placement.

Emerald Capital has about 13%. I've never understood this, unless there is some connection with Gull?

That leaves 30% in the hands of other instos and retail investors. NZR was regarded as a pretty reliable income stock until it had to pass dividends a year or so back. Although it has resumed payments it has also warned that it could be on the lookout for "future growth opportunites" which, by implication, might affect it's future payouts. Perhaps we're seeing a reappraisal from "income conscious" shareholders?

[scamper]

And another 10% gone since our posts above, macduffy.
Perhaps the rise from last August to this March is the anomaly, not the recent slide?
Agree the 'income conscious' shareholders may have had enough -- under 3% ain't much for a good kiwi company.

[Pumice]

The NZD sitting around 82c isnt helping. its probably cheaper to import refined product than do it here.

[macduffy]

And another 10% gone since our posts above, macduffy.
Perhaps the rise from last August to this March is the anomaly, not the recent slide?
Agree the 'income conscious' shareholders may have had enough -- under 3% ain't much for a good kiwi company.

I still think it's largely a matter of lack of interest until NZR re-establishes itself as a reliable dividend payer. The involvement by the oil companies rules out any corporate activity in the stock IMO, other than what may follow if another player decides to follow Shell in quitting retailing in NZ. And then, the NZR shareholding would likely follow the buyer of that business to protect supplies, as it did with Shell/Greenstone.

[sharer]

I agree with Macduffy's viewpoint. You're right too scamper, 2.84% yield isn't much encouragement when p/e is about 20.5x, & bank current deposits pay 3%-ish.
To become attractive again we need to see rising dividends and a lengthening record of reliable uninterrupted payouts, which of course might take years to rebuild reputation for some investors.
Major capital changes seem unlikely for reasons outlined by MacD, & i add the thought that the majority tightly held by the major oil companies may eventually stifle this business, or tempt some other big player to startup an outright competitor refinery (somewhere far south maybe, if another big oil find succeeds). Any future attempt by NZR to raise public capital may similarly be stifled, at least until they can show longterm rising yields.
Meantime, perhaps the price needs to fall into the low to middle 300s to revive yields and restore a previous pattern of gradual accumulation by long-holders.
While the business seems very sound and well maintained (updated) the monopoly days are long past. NZR is now bypassed in both directions; fuel is imported for public sale by some, and others export large amounts of crude for refining elsewhere. The interests of ordinary shareholders never dominate, and trustees or other long term investors must increasingly argue about whether they should put the money into TEL or something else instead.
Hmm .. time for a nice cuppa & a snooze.

[moimoi]

I suspect the $400 - $500M they are pondering spending on a "growth project" maybe part of it.

[Pumice]

REL: 1451 HRS The New Zealand Refining Company Limited

MONTHLY: NZR: Throughput and Margin Report March-April 2011

NZRC Throughput and Margins Report for March-April 2011

The Processing Fee for March-April 2011 of NZD 39.6 million was generated
from a record throughput of 7.3 million barrels for the two-month period.

The average Gross Refinery Margin (GRM) generated for the two month period
was USD 5.98 per barrel. The margin was impacted by a 10 day outage of the
hydro-cracker, as emerging maintenance was carried out on the hydrogen
manufacturing unit. This limited the Company's ability to upgrade lower cost
feedstock's into high value products during the period of the outage. All
processing units are back online and operating at near full capacity.

The average exchange rate for the two month period was USD/NZD 0.77.

Year to date:

The Gross Refining Margin 1), on a year to date basis, averages USD 6.22 per
barrel and the exchange rate USD/NZD 0.77. Margins are currently tracking in
the USD 5.50- USD 7.00 range.

Historic Analysis:

Five years history of Throughput, Margins and Processing Fees is attached as
Appendix II and can also be found on the company's website www.nzrc.co.nz.

1) Gross Refining Margin is defined as the typical market value of the
products produced minus the typical market value of the feedstock used,
expressed per barrel of feedstock used. The margin incorporates the cost of
the hydrocarbon used for fuel and incurred as process losses. This may not
be compatible with margins expressed by some parties in which the fuel and
loss is excluded.

[macduffy]

A steady result from NZR with NPAT up 7.5%, interim dividend increased from 2c to 3cps.

Doesn't do a lot though to restore NZR's previous status as a steady high yield income stock, particularly when so many other NZ companies are showing good yields at present. CEO Ken Rivers highlighted the fact that NZR's profits remain hostage to the USD/NZD exchange rate and the impossibility of predicting future movements. This will continue to weigh on the SP, IMO.

[BIRMANBOY]

Putting money into this is a classic case of wasted opportunity..I've emailed them on several occasions with questions ..never replied and the dividend is pathetic.. Whats to like?

[gonzo56]

NZR is a chartist's dream.

Could you elaborate please. =)
Will todays move as a result of CD shock the SP into action and help continue its move north? Or not, what trendline-break price do you have?


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