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13-02-2016, 05:34 PM
#1151
Member
I wonder why Z share price has fallen so much this week. Could it be that it has a share of NZR which with reduced margin of refining because of Asian competition has indirectly impacted on the Z share price?
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13-02-2016, 05:50 PM
#1152
Yes, the retailers hold the majority shareholdings in NZR and to the extent that NZR's profits and dividends are impacted, this will have an effect on Z and others' profitability. I would think it's a question of whether the cheaper refined product from elsewhere will compensate the retailers adequately for the lower dividends that they might receive from their NZR shareholdings.
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13-02-2016, 07:40 PM
#1153
Member
Originally Posted by macduffy
Yes, the retailers hold the majority shareholdings in NZR and to the extent that NZR's profits and dividends are impacted, this will have an effect on Z and others' profitability. I would think it's a question of whether the cheaper refined product from elsewhere will compensate the retailers adequately for the lower dividends that they might receive from their NZR shareholdings.
HI,
is it really a question of importing product into NZ ???
From my hazy memory I seem to recall that the processing margin NZR can charge to its (shareholding) customers is benchmarked to some
margin in Asia, perhaps Singapore?? Could be wrong though. But if true, lower margins in Asia would impact NZR immediately, no imports required!
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13-02-2016, 08:23 PM
#1154
Just chatting to my brother who was down in Taupo on holiday for a week. Gull station just south of Tokoroa, self service is selling diesel for 62.9 cents per litre incl GST They must be importing it landed for under 40 Cpl excl GST to sell it retail for that. Gives a small anecdotal bit of evidence about how cheap the direct imported product is.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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14-02-2016, 09:06 AM
#1155
Originally Posted by sideline
HI,
is it really a question of importing product into NZ ???
From my hazy memory I seem to recall that the processing margin NZR can charge to its (shareholding) customers is benchmarked to some
margin in Asia, perhaps Singapore?? Could be wrong though. But if true, lower margins in Asia would impact NZR immediately, no imports required!
That seems to ring a bell in my hazy memory too, sideline. If so, NZR would be impacted by both the lower refining margin and the lower throughput resulting from direct imports.
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14-02-2016, 11:58 AM
#1156
Originally Posted by macduffy
That seems to ring a bell in my hazy memory too, sideline. If so, NZR would be impacted by both the lower refining margin and the lower throughput resulting from direct imports.
Yes, NZR's refining margin is linked to the Singapore refining margin (I think Singaproe GRM plus something like $4.50) ... and analysts assume at this stage that the peaks of last year are gone for the foreseeable future:
http://www.dnaindia.com/money/report...ed-out-1797943
On the other hand ... they still expect "healthy margins" for 2016 ... and it sounds as well, that petrol achieves better prices than diesel (which is good - we use more petrol than diesel). Obviously - analysts can be wrong in both directions.
Global warming can send another storm into the gulf of Mexico and refining margins will be up again.
Any of the war waging idiots in the middle East can bomb some of the local refineries and refining margins will be up.
On the other hand - the world economy and petrol consumption can slow down (not yet, but it might) and refining margins will drop from healthy to pathetic.
Stores with refined product are currently fuller than in previous years (http://www.howardweil.com/docs/Repor...NINGReport.pdf), but this does not necessarily mean that oil merchants start to import huge amounts of refined product into NZ.
From memory - importing refined product into NZ requires specific equipment and tanks at the ports - and this was previously limiting e.g. Gull to import more refined product into NZ. Have not heard that our ports increased these facilities - has anybody else?
As long as lack of port facilities stop an increase of imported refined product is it unlikely that NZR needs to worry about its throughput.
So - I guess what we should expect based on this is a reduced (but still healthy) refining margin in 2016 and a somewhat smaller throughput (I think they scheduled as well some longer maintenance periods this year). EPS probably not as spectacular as expected for 2015, but still healthy ...
Not difficult to see why the markets react as they currently do - with everything else plunging as well. It is the 100 million dollar question whether they overreact and bounce back ... or keep dropping. Might be as well dependant on Mr. markets mood next week ...
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"Prediction is very difficult, especially about the future" (Niels Bohr)
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14-02-2016, 02:43 PM
#1157
Member
Thanks for the confirmation.
Just a note: the article you linked on dnaindia.com is dated 9 Feb 2013
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15-02-2016, 08:11 AM
#1158
Originally Posted by sideline
Thanks for the confirmation.
Just a note: the article you linked on dnaindia.com is dated 9 Feb 2013
that's not good - I guess I must have looked at the date (9 Feb) but have overseen the year. Mea culpa.
In a funny sort of way it however confirms what analysts predictions might be worth ... the margins went (against the predictions) steep up in late 2014 and 2015!
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"Prediction is very difficult, especially about the future" (Niels Bohr)
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22-02-2016, 09:41 AM
#1159
ODT getting a bit excited about NZR's possibilities and hopes for a 'record profit' to be announced this week.
http://www.odt.co.nz/news/business/3...fit-tipped-nzr
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22-02-2016, 09:48 AM
#1160
Originally Posted by Left field
couldn't agree more
the refining margin is still tracking good for this year so far was over 10 in jan and has dipped a bit in feb but combined 2 mth period is still looking top of the range if you include over the cap in jan
one step ahead of the herd
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