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  1. #1951
    ShareTrader Legend bull....'s Avatar
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    as waikaka was saying 200 -250 m conversion costs.
    assuming that will add to there already huge debt profile in this current environment. So i see most of there future earnings going to service debt unless they sell of a big part of there land portfolio to repay debt. under this senario nta will plunge as they sell assets and write off the refinery costs and conversion. there have 350m of tax losses to carry forward. import terminal costs they say are 35 - 40 m per year. we dont know there income from being an import terminal yet but im sure it be designed to favour the oil majors.
    there save money on staff costs as an example kwinana is being converted to an import terminal they currently have up to 650 staff they will only need 60 people on conversion and a few more why they transition so heaps of redundancy costs at refining nz as part of the conversion costs probably modelled into the 200 - 250 m .
    as sailor rob says its not a pretty picture and will most likely keep on being what the past has been a erratic stock performer with no reliable income.
    as an import terminal operator most contracts a flexible fee paying arrangement similar to the fee floor arrangement now so they adjust the fee payable to the import terminal operator based on conditions
    one step ahead of the herd

  2. #1952
    Speedy Az winner69's Avatar
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    NZR not one I follow but hadn’t realised that the share price had fallen all way 40 cents odd.
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  3. #1953
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    Quote Originally Posted by bull.... View Post
    as waikaka was saying 200 -250 m conversion costs.
    assuming that will add to there already huge debt profile in this current environment. So i see most of there future earnings going to service debt unless they sell of a big part of there land portfolio to repay debt. under this senario nta will plunge as they sell assets and write off the refinery costs and conversion. there have 350m of tax losses to carry forward. import terminal costs they say are 35 - 40 m per year. we dont know there income from being an import terminal yet but im sure it be designed to favour the oil majors.
    there save money on staff costs as an example kwinana is being converted to an import terminal they currently have up to 650 staff they will only need 60 people on conversion and a few more why they transition so heaps of redundancy costs at refining nz as part of the conversion costs probably modelled into the 200 - 250 m .
    as sailor rob says its not a pretty picture and will most likely keep on being what the past has been a erratic stock performer with no reliable income.
    as an import terminal operator most contracts a flexible fee paying arrangement similar to the fee floor arrangement now so they adjust the fee payable to the import terminal operator based on conditions
    I wouldn't expect much money to come in from land sales. The 2019 AR has freehold land and improvements having a book value of $27m. There's clearly a bunch of "improvements" within this total as there is $55m of accumulated depreciation. The actual land area owned isn't stated but must be available info.

    Marsden Maritime's web page notes it has over 150ha of prime bare land, which is geographically nearby. Their land valuation (excluding land assets within the port JV) but including non-bare land is $20m. Land values in that part of the country aren't like Auckland where a ha of land is in the multi-million dollar price range.

  4. #1954
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    Quote Originally Posted by Scrunch View Post
    I wouldn't expect much money to come in from land sales. The 2019 AR has freehold land and improvements having a book value of $27m. There's clearly a bunch of "improvements" within this total as there is $55m of accumulated depreciation. The actual land area owned isn't stated but must be available info.

    Marsden Maritime's web page notes it has over 150ha of prime bare land, which is geographically nearby. Their land valuation (excluding land assets within the port JV) but including non-bare land is $20m. Land values in that part of the country aren't like Auckland where a ha of land is in the multi-million dollar price range.
    Well said, exactly right.

    And the 'improvements' to the land are exactly whatever the opposite of improvements are, impairments perhaps? A massive rusting pile of tangled steel and concrete with hydrocarbon soaked sand underneath which the decontamination of could take decades and hundreds of millions of $$.

  5. #1955
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    Quote Originally Posted by SailorRob View Post
    Well said, exactly right.

    And the 'improvements' to the land are exactly whatever the opposite of improvements are, impairments perhaps? A massive rusting pile of tangled steel and concrete with hydrocarbon soaked sand underneath which the decontamination of could take decades and hundreds of millions of $$.
    Plenty of investors seem to think this is all good news. Share price has already jumped up 40% off recent lows. Thats pretty substantial if there is no real substance behind this in a positive way for future profitability.

  6. #1956
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    Quote Originally Posted by Maxtrade View Post
    Plenty of investors seem to think this is all good news. Share price has already jumped up 40% off recent lows. Thats pretty substantial if there is no real substance behind this in a positive way for future profitability.
    There is a lot of stuff out there with a lot of companies that investors seem to think is all good news. I wouldn't base any investment decisions around what other investors think or short term price volatility of micro cap companies.

    Could bounce hard from here back to $1 or beyond, or find new lows. Just like a roulette ball.

    Possible that someone knows something, but negotiations still ongoing, costs starting to blow out on the early stage of the terminal development and no real idea of what the costs will be. Definitely no real substance.

    So we don't know the revenue, the timing, the running costs... Nothing.

    17 Operational staff made redundant only weeks ago, now they're desperately trying to hire 9 back. Just a shambles.

    I would say that recent price move would be entirely due to recovering margins. But who knows.

  7. #1957
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    Quote Originally Posted by SailorRob View Post
    There is a lot of stuff out there with a lot of companies that investors seem to think is all good news. I wouldn't base any investment decisions around what other investors think or short term price volatility of micro cap companies.

    Could bounce hard from here back to $1 or beyond, or find new lows. Just like a roulette ball.

    Possible that someone knows something, but negotiations still ongoing, costs starting to blow out on the early stage of the terminal development and no real idea of what the costs will be. Definitely no real substance.

    So we don't know the revenue, the timing, the running costs... Nothing.

    17 Operational staff made redundant only weeks ago, now they're desperately trying to hire 9 back. Just a shambles.

    I would say that recent price move would be entirely due to recovering margins. But who knows.
    Makes sense. Thank you. I guess many traders like to hope for the best, off such low lows any slightly positive outlook they are 'hoping' it has found a bottom and will bounce. I personally lost. a lot of money on NZR. The only stock in my portfolio that I have not done well with. So I am hesitant to buy back in when the fundamentals of the company are not a sound bet. Like you say, a roulette spin, not an educated smart investment. Still hard to sit on the sideline and see the share price moving up when I could be recovering sone losses if I bought back in.

  8. #1958
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    Quote Originally Posted by Maxtrade View Post
    Makes sense. Thank you. I guess many traders like to hope for the best, off such low lows any slightly positive outlook they are 'hoping' it has found a bottom and will bounce. I personally lost. a lot of money on NZR. The only stock in my portfolio that I have not done well with. So I am hesitant to buy back in when the fundamentals of the company are not a sound bet. Like you say, a roulette spin, not an educated smart investment. Still hard to sit on the sideline and see the share price moving up when I could be recovering sone losses if I bought back in.
    Sorry to hear that but glad your other companies have done well. You can't win them all, even the best of the best don't.

    I've posted a lot of material on this thread and have been calling it down from just under $3 - it's just a gong show all around. Just look at the cash flow statements over the last decade and the story will tell itself. Biggest thing is to be bloody careful putting your money where no management or directors have theirs.

    Yes you could be recovering some losses or you could enjoy another ride down with fresh capital. Best thing it to totally forget the past and allocate your money into the best of the 20,000 plus options in the global equity markets, and RNZ is simply not one of them. As I've always said though, it could rip back to over a buck but who knows.

    I've recommended a few things to the beaten down RNZ bulls to try and help them recoup some losses such as blue chip oil and gas last year when they were crushed, Steel and Tube which was my favorite NZ pick when under 70c, ARLP at $2.70 etc but most of the really attractive stuff has ripped very hard and taken away the margin of safety.

    Still some pretty good opportunity in the oil/gas space specially with a 3-5 year time horizon.

    Take a look at Babcock, classic deep value (London stock exchange) Nothing much attractive in NZ IMO. Markel very safe money with a long term outlook, Progressive and Allstate as well. Those as a portfolio worth a look. Berkshire still a buy here but has run pretty hard, pulls back under 250 would be good.

  9. #1959
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    Ahh, NZR my perennial pet loser.

    Do I like a business that is super cyclical, debt ridden, needs huge capital expenditure, is a commodity producer with super uncertain future margins. Not really. But I do like it at the bottom of the cycle.

    Market cap got down to ~$130 million
    Debt is 238 million

    Not too worried about decommissioning cost as turning it into a import terminal means that can just sit as a big rusty, expensive contaminated paper weight.

    Regarding NZR land, pipeline and port facilities being worth peanuts, imagine trying to rebuild the port, pipeline tanks and how much that would cost. I don't even think it would be possible to rebuild those assets under the current RMA environment. No other feasibly way to get oil into Auckland other than RAP so it has a unreal moat. So NZR has a 'hidden' infrastructure business storing and supplying imported oil for the upper North Island (40% of all NZ demand)

    In the 2020 annual report they give a hint with estimated fee income of a tolling facility being $100 million a year. I don't have a feel for operational costs to run the system but suspect it is well less than $100 million. Lets say $50 million to run, conservative price to earnings of 15 (feels cheap for what is essentially a utility/infrastructure business) that means what 750 million for the whole enterprise? At its lowest debt and market cap combined was $368 million.

    Things I am worried about and add significant uncertainty:
    1) Terminal conversion is a big uncertainty but we will wait and see on that one.
    2) Setting tolling fees for the new terminal, I worry that NZR is too influenced by the customer shareholders even though they are less than 50% of shareholders now. Hopefully as Naomi James is from SANTOS rather than appointed from one of the shareholder customers some hard nosed bargaining will be done. Particularly around third party usage of the pipeline, badly negotiated 10 year contracts would be a significant burden if they mess up now.
    3) Govt regulations. Labour seems to be flexing on a whole range of industries, particularly unpopular ones. Hopefully they don't whack NZR with a big stick to win some short term political support.

    Things that would be awesome:
    1) Improving margins that means the plant can generate revenue for a few more years to pay down debt before shelving the plant before its next big expense.
    2) The far out there hope that the Govt decides, like Australia is talking about, that having the capability to refine oil is strategic in a national security sense and put a petrol surcharge on to make it happen or even pay to help maintain the strategic storage.

    Pretty disappointed I started buying in before Covid but don't think that can be held against me. As it got cheaper and had the appearances of an underlying business that can be saved I have been buying more. Suspect it will be a few years before this business gets out of the suck.

  10. #1960
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    Quote Originally Posted by Waikaka View Post
    Ahh, NZR my perennial pet loser.

    Do I like a business that is super cyclical, debt ridden, needs huge capital expenditure, is a commodity producer with super uncertain future margins. Not really. But I do like it at the bottom of the cycle.

    Market cap got down to ~$130 million
    Debt is 238 million

    Not too worried about decommissioning cost as turning it into a import terminal means that can just sit as a big rusty, expensive contaminated paper weight.

    Regarding NZR land, pipeline and port facilities being worth peanuts, imagine trying to rebuild the port, pipeline tanks and how much that would cost. I don't even think it would be possible to rebuild those assets under the current RMA environment. No other feasibly way to get oil into Auckland other than RAP so it has a unreal moat. So NZR has a 'hidden' infrastructure business storing and supplying imported oil for the upper North Island (40% of all NZ demand)

    In the 2020 annual report they give a hint with estimated fee income of a tolling facility being $100 million a year. I don't have a feel for operational costs to run the system but suspect it is well less than $100 million. Lets say $50 million to run, conservative price to earnings of 15 (feels cheap for what is essentially a utility/infrastructure business) that means what 750 million for the whole enterprise? At its lowest debt and market cap combined was $368 million.

    Things I am worried about and add significant uncertainty:
    1) Terminal conversion is a big uncertainty but we will wait and see on that one.
    2) Setting tolling fees for the new terminal, I worry that NZR is too influenced by the customer shareholders even though they are less than 50% of shareholders now. Hopefully as Naomi James is from SANTOS rather than appointed from one of the shareholder customers some hard nosed bargaining will be done. Particularly around third party usage of the pipeline, badly negotiated 10 year contracts would be a significant burden if they mess up now.
    3) Govt regulations. Labour seems to be flexing on a whole range of industries, particularly unpopular ones. Hopefully they don't whack NZR with a big stick to win some short term political support.

    Things that would be awesome:
    1) Improving margins that means the plant can generate revenue for a few more years to pay down debt before shelving the plant before its next big expense.
    2) The far out there hope that the Govt decides, like Australia is talking about, that having the capability to refine oil is strategic in a national security sense and put a petrol surcharge on to make it happen or even pay to help maintain the strategic storage.

    Pretty disappointed I started buying in before Covid but don't think that can be held against me. As it got cheaper and had the appearances of an underlying business that can be saved I have been buying more. Suspect it will be a few years before this business gets out of the suck.

    Waikaka, generally agree but a couple of things;

    There is absolutely no uncertainty around the terminal conversion (unless you mean costs) it is 100% for certain happening and soon.

    They don't have a clue what revenue will end up being or costs really, it's a big guess at the moment, they can say what they would like it to be but that's all...

    Decommissioning costs are still a liability and some may not care about them but if other shareholders do then it will still weigh on the price.

    No margin will ever mean running for a few more years, not even if we were pinned to the ceiling, I'm telling you now and rub it in my face if I'm wrong... The terminal is coming hard and fast. No government support will change that fact unless they nationalised it by force!

    The replacement cost means nothing at all, just its ability to generate cash. Think of the replacement cost of the Refinery... Still worth nothing. CCR cost us 365 in 2015... Whole company worth much less now. Yes the pipeline and Jetty are pristine assets with a real moat but all things considered... what are they really worth.

    Nobody in their right mind would accept ownership of the business for free all things considered, they would be on the hook for the debt, which will be doubled from here and then have to generate enough cash to service it and pay it down and at some point sort the site out...

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