sharetrader
Page 192 of 217 FirstFirst ... 92142182188189190191192193194195196202 ... LastLast
Results 1,911 to 1,920 of 2166
  1. #1911
    Banned
    Join Date
    Nov 2018
    Posts
    3,166

    Default

    Quote Originally Posted by Nor View Post
    Well actually we would be having this discussion. In fact those poor results are the reason we're having this discussion.
    Returns have not been generated because the agreements prevent it. Returns are capped and not inflation adjusted. Under a different operating model they could make a profit every year. Cost plus a margin. And/or ownership of the crude and products is another obvious model. Nevermind how much it costs overseas the motorist is not going to put his car on a boat to fill up. We will have to disagree about whether nz has capacity to import all it's requirements in finished form at present. But if it did there would be little point in converting Marsden, may as well just close it down, and nobody would even notice.
    Nor just WOW.

    ANY business can make a 'profit' under an agreement of cost plus a margin. How is this relevant at all? Who is going to sign an agreement like that?

    Look, you could give the refinery away free, to operate under a new structure with NO debt and then negotiate new agreements as both parties mutually agree too, (that's how agreements work) and it would still not be able to generate profit just like most Refineries in the world right now. And I doubt it could over the cycle.

    Profit is a measure of how efficiently the company can import oil and refine and distribute here vs the same company owner being able to send oil to a Asian refinery and ship product here and distribute.

    The oil companies would have no interest in shutting down the Refinery if it was profitable under any agreement. They would change the agreement.

    Your argument is that the oil companies could give Refining NZ an above market fee and then they would be profitable. I'm beginning to think this is a wind up!

    Cost plus a margin!

    While they're at it why don't they start manufacturing cars as well at Refining NZ all we need is an agreement where someone pays us out manufacturing costs plus a margin and we'll be profitable.

    I'll be happy to start a business to manufacture anything of your choice if you'll agree to pay my costs plus a margin, hell forget the margin just pay my costs. Forget the profit at lest we'd generate jobs and would be fun for me.

    Have your lawyer draw something up, maybe you'll supply my capital to?

    Regarding the capacity, I said without the Marsden Point terminal we don't have the import capacity currently, but with it we do. So I mean without the Refinery but using the Jetty and Pipeline we have plenty of import capacity. We have already run the country on full import this year, granted with reduced demand.

    So the option as you say of shutting down the whole operation is not viable, you need the terminal and pipe.
    Last edited by SailorRob; 24-10-2020 at 10:28 AM.

  2. #1912
    Member
    Join Date
    Jul 2020
    Location
    NEW ZEALAND
    Posts
    391

    Default

    My argument is not that the oil companies could give Refining NZ an above market fee. My argument (right or wrong) is that if they chose to, or had chosen to in the past, they could or could have demanded it. Based on limited import capacity.
    If you think that we currently have import capacity taking Marsden into account how do you explain the need to spend millions to convert Marsden to an import terminal?

  3. #1913
    Banned
    Join Date
    Nov 2018
    Posts
    3,166

    Default

    Quote Originally Posted by Nor View Post
    My argument is not that the oil companies could give Refining NZ an above market fee. My argument (right or wrong) is that if they chose to, or had chosen to in the past, they could or could have demanded it. Based on limited import capacity.
    If you think that we currently have import capacity taking Marsden into account how do you explain the need to spend millions to convert Marsden to an import terminal?

    Perhaps they could have held them to ransom like that however they would be holding themselves to ransom as they are the owners too.

    It's like saying that a port or airport can charge above market fees as they are a monopoly, doesn't work for a number of reasons and ultimately the NZ fuel user would be paying - would not go down with regulators.

    'You have to use us so this is what you're going to pay' type of scenario, not impossible I agree but unlikely to be sustainable. Competition if nothing else would soon have sorted that type of behavior out.

    There is sufficient capacity right now to import and supply Auckland and Northland and this is one of the options, the rest of the country can also be supplied now as well however it's not as efficient.

    The explanation of the need to spend more to gain greater capacity is purely a because a good return on invested capital could be earned as with the greater efficiency more market share could be supplied through Marsden Point.

    Often millions is spent on things when sufficient capacity already exists because the new capacity is cheaper. There wasn't a capacity issue before Gull came along for example, the investment from Gull was not because of lack of capacity.

    Look there are too many moving balls to invest here, all speculation.

    And as always look at the insiders!

  4. #1914
    Member
    Join Date
    Jan 2020
    Posts
    119

    Default

    Honestly finding this NZR thread a bit strange. Not my favorite stock but still feel like someone has to do some research on this company rather than just letting the generalisations fly, if I were to para-phrase them they would be something like this:

    1) The company is run for its major shareholder customers, minor shareholders lose out when times are good with a crazy favourable processing fee arrangement
    2) Refining crude on a beach in Northland is not economic or efficient
    3) Profits are plowed back into expensive plant upgrades that destroy capital

    Are all these things correct? Well....... yes but then on the flip side it is damn cheap and:

    1) Despite all these issues the company has returned significant dividends over the years

    Dividend Amount
    2019 Interim dividend 2 cents per share
    2018 Final dividend 4.5 cents per share
    2018 Interim dividend 3 cents per share
    2017 Final dividend 12 cents per share
    2017 Interim dividend 6 cents per share
    2016 Final dividend 6 cents per share
    2016 Interim dividend 3 cents per share
    2015 Final dividend 20 cents per share
    2015 Interim dividend 5 cents per share


    2) While manufacturing is hard, dangerous, dirty and expensive and the major customer shareholders get a sweet heart deal, NZR can still make significant free cashflow. I believe that if we can just keep the company processing for the next few years then see no reason why we cant be expected to return to a period like 2015-2019.

    3) Yes when you do something hard, that needs skilled fabricators, engineers, operators and tangible assets then you have to plow significant earnings back into plant and people. I don't mind this as long as they also return dividends which they have been pretty good at over the years.

    On a separate side note that I shouldn't really bring up, I think it is more important than ever that NZ is self sufficient in some critical things. Over the years NZ govt officials have thrown plenty of cash down the drain at Marsden point primarily because they used to view refining and manufacturing in general as a strategic asset. NZ needs all the high value jobs it can get and internal security of making our own things.


    My summary is that refining is costly, hard and complicated but recent history suggests that NZR has the ability to reward shareholders. Covid is making heaps of uncertainties but I am figuring Mr Market may have overreacted in the case of NZR and that if they can just keep refining for the next few years and things go back to near normal then the price is so cheap that there is little downside.

  5. #1915
    Banned
    Join Date
    Nov 2018
    Posts
    3,166

    Default

    ‘Someone has to do some research on this company rather than let generalisations fly’. This implies that nobody has done the research.

    For me research means;

    Working for the company for 18 years and having met and spoken to every GM over that period and a few board members as well as the leadership team, listening to conference calls and spending time with guys that have followed and invested in this company since I was in primary school. Also having the opportunity to ask hard questions of the GM's and top management at very regular intervals on any topic. I've never been party to any inside information at any time I might add.

    Reading and understanding the book 'The Point at Issue' A deep look at NZ petroleum energy politics from 1955 to 1990.
    Having read and understood every annual report, interim report, presentation, and throughput report over that entire period and having re read the financial statements for the past 13 years very recently.


    Having seen the singapore complex margin each week and generally understanding cracked spreads as well as getting daily reports of what it costs to land a wide range of products at Marsden Point from Asia (for example currently the cost of landing a metric ton of Diesel is $399.25 USD). Most importantly having a close approximation of what it costs NZR to make that same metric ton which includes understanding a lot of moving balls including crude and product rate differentials.


    Having a detailed understanding of CAPEX and the cost of shutdowns.

    Having been through the cash flows for the last 13 years and compiling all that data into one place which examines each dollar in and out over that entire period (this is by far the most important piece of research).

    Having a good idea of the global refining scene in general.

    This is but a small fraction of the research but hopefully you'll see that someone has at least done some research.


    The flip side of it being damn cheap is simply not true, it’s not cheap at all, let alone damn cheap. If it was, I would own it and insiders would be buying too, it’s only worth the present value of what it can generate in the future in cash flow for its owners - which if the last 13 years is anything to go by will be nothing at all.


    The entire point of the current review is because it has generated no return on invested capital over the full cycle, let alone returning its cost of equity. It wasn’t cheap when the last GM told me to buy at $2.17 because it was ‘incredibly cheap at an EV/EBITDA of 3.7’ and it’s not cheap now. When it was over $2 I was desperately trying to borrow shares to sell short and I’m pretty sure I asked Waikaka to lend me shares.



    Sometimes free ain’t cheap. As investors we must think as business owners and conduct our transactions as such. If NZR was offered to us for free, the answer would of course be ‘no thanks’ and therefore the answer is the same if it’s offered at $0.54c a share, this is the point that people are missing.


    ‘Despite all these issues the company has returned significant dividends over the years’


    No it hasn’t returned any dividends over the years, this is a total illusion. The capital, YOUR capital which it has destroyed is FAR more that any dividends it has paid out. Just look at the share price and you will see that! You need to look and see where the dividends have come from. If you were a bond holder then ok, but as an equity holder you own the pot which the dividends are getting paid out of so it’s more important to look at the pot as a whole.


    So from financial year 2009, the surplus cash leftover after CAPEX totals 88 million, they have however paid out a net 303 million over that time (after adding back for the equity raise they did) so where has this cash come from? Take a look at what has happened to the NET debt over that time. The only way this company has posted any ‘profit’ at all is because of depreciation accounting. It’s not real profit at all. I've posted all this in detail before.

    'Refining NZ can still make significant free cash flow'.


    No it can't, it has never been able to over the last 15 years, just a super quick look through the cash flow statements will tell you that. Any free cash it generates in good years is more than taken back in bad ones. So if you want to run it for the next few years in order to position for a good period which may or may not come, who’s paying for until then? Keen to chip in for a large equity raising, or will someone lend us the cash? How do you propose to pay for the large 2022 shutdown, let alone next years?

    'I think it is more important than ever that NZ is self sufficient in some critical things'.


    I totally agree with you, but then taxpayers have to be happy to cough up for this strategic asset.

    On the high value jobs though, how can they be high value jobs if they create no value, no cash flow, no profit? They are nothing of the sort.

    In summary, if you were given all the assets for free with zero debt and the ability to re negotiate contracts in a free and fair way, then you would have been given a suicide pass and you could never make it work as a Refinery and you would be really under the pump to get the Terminal up and going generating enough cash to pay for the demolition of the refinery, so in that case $0.00 is not cheap, so how can $0.54c a share or $170 million be cheap.

    A rusting pile of crap on a pristine Northland beach is a liability not an asset, the Jetty, tank farm and pipeline are world class assets but if you can figure out the CAPEX to run them, the income they will generate and the real cost of scrapping the rest and how and when all this will happen... Then please share! I'm not saying the shares can't pop to a buck in a heartbeat but that's just gambling.

    How about we move to the STU thread, a REAL deep value opportunity, which is actually cheap not just an illusion. No point in flogging a dead horse that is RNZ.








    Last edited by SailorRob; 26-10-2020 at 05:07 PM.

  6. #1916
    ShareTrader Legend bull....'s Avatar
    Join Date
    Jan 2002
    Location
    auckland, , New Zealand.
    Posts
    10,993

    Default

    going off Z commentary today they will only accept nzr as an import terminal
    suggesting they do not like paying fees to nzr any longer than necessary
    there future should be in support of z strategy as a terminal operator lol , so if z going this way and already has good infrastructure in place growth for nzr would be limited to upper north only as a terminal operator?
    one step ahead of the herd

  7. #1917
    Banned
    Join Date
    Nov 2018
    Posts
    3,166

    Default

    Yes that's my understanding too Bull. Terminal for Auckland and Northland, at least to begin with. Need capital to do anymore than that and it will be against stiff competition.

    None of them like paying fees which is why this cash neutral business is rubbish as you at least understand!

  8. #1918
    Member
    Join Date
    Jun 2004
    Location
    Whangarei Area, , New Zealand.
    Posts
    232

    Default

    Nice to see the debt coming down. Every bit counts

  9. #1919
    Banned
    Join Date
    Nov 2018
    Posts
    3,166

    Default

    Quote Originally Posted by Sharp737 View Post
    Nice to see the debt coming down. Every bit counts

    Unfortunately the debt is not coming down at all as you will clearly see next time a balance sheet is released.

    They are just holding that cash for expenses related to the conversion. Not a cent of debt has been paid down.

    If anyone thinks that the company can make money from 'savings realised from the six-week temporary refinery shutdown in July/August' Then I would suggest a much longer shutdown then they will really be pumping the cash.

    No possibility of doing the shutdown early 2022 unless margins went through the roof.

  10. #1920
    Member
    Join Date
    Jan 2020
    Posts
    119

    Default

    Just love the passion SailorRob.

    Ill be honest looks like you know the company inside and out more than I ever will. I cant even get annual reports back past 10 years so wont match your due diligence there.

    And again a lot of your points are valid, things don't end up in the gutter as NZR has without facing some serious structural issues.

    All I would say is what the company is now. Can it generate free cashflow, yes, has Covid19 blown up their world making a bad situation worse.... yes.

    Might there be a puff or 2 left in this filthy cigar butt, I reckon.

    I also like STU well enough, I am up 25% on my holdings, but NZR still has a small spot in my portfolio of unloved companies.
    Last edited by Waikaka; 08-12-2020 at 08:26 AM.

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •