CHI - Channel Infrastructure Ltd (NZR)

[gamerice]

What do you guys think? Seems to be on a little rally as of late.
Is this related to the upcoming half year report? I remember someone mentioning the half year report is due out within the next two weeks. Got a link for that announcement?

[Captain Ramjet]

well the half year ends on 30th June according to their website so I guess it makes sense that the report should be out very shortly.

After paper trading for a while with TA Im gonna put some money where my brain is and see what happens. My reasons for this are:

1) Around the 14 July the share price rose above the 20 day moving average on relatively strong volume

2) The 50 day moving average line was crossed soon after

3) A pattern of higher highs and higher lows seems to have developed

4) The resistance level of 6.80 has been well and truly broken

I plan to exit when the 20 day moving average drops below the share price trend line. I guess I should have some kind of stop loss but Im still new to this game and havent quite got that figured out yet.

Anyway comments from any TA traders are welcome as this is the first TA trade Ive done and all my knowledge is only from books and paper trading so far.

Cheers

Ramjet

[Captain Ramjet]

Well I got in at 7.40 and we'll see where it goes from here. Good article from Stuff that says the cash keeps flowing


NZ Refining's margins so high it may give money back
17 August 2006

By SIMON LOUISSON


NZ Refining says its margins have been so high in four of the first six months of this year it may have to return money to its customers, who happen to be the world's major oil companies.

NZR today reported it received an average margin of $US9.60 ($NZ15.14) per barrel of oil processed in the May-June period.

It made a record margin of $US10.79 for the previous two months against $US6.21 in January-February.

The May-June margin compared with $US8.78 received in the year ago period and was almost three times the $US3.27 margin of two years ago.

NZR's main customers, who are also NZR's major shareholders, have an agreement that NZR's margins must be capped at $US9.00 a barrel over the year.

The cap is calculated at the final margin at the end of the year for each individual customer.

NZR is a turnpike operation collecting a margin fee for processing customers' crude oil into petrol, diesel and other refined products.

Its main shareholders include BP (23.6 per cent), Mobil, owned by Exxon Mobil, (19.2 per cent), Shell (17.1 per cent) and Caltex, half owned by Chevron, (12.7 per cent).

NZR reported processing fees of $68 million in May-June but that would have been $7.2m higher had the cap not been in place and that amount will be recouped if margins drop in the second half year.

Throughput for the May-June (two-month) period was 6.325 million barrels compared with 6.89m in the year ago period.

Throughput for the six-month period ending June 30 was 2.6 per cent below plan due to the timing of a maintenance shutdown of NZR's hydrocracker.

Chief executive Jerome Kerrigan said refining margins had begun to trend down in the July-August period.

"The crude prices have been dropping and the product prices have been dropping as well," he told NZPA.

While crude oil prices have shot up dramatically in the past three years, a shortage of refining capacity around the world has added to the soaring cost of petrol.

As well, a shortage of refining capacity for high quality (lower polluting) petrol had also contributed. Refiners, such as NZR, able to process oil to high standards could charge a premium.

Mr Kerrigan said the bubble for product quality was starting to disappear. Australia had taken time to get its clean fuel projects on line but it was now on stream.

NZR upgraded its Marsden Point refinery for lower sulphur diesel two years ago and lower benzine petrol last year.

"You still have high margins because of the tight refining situation.

"The total demand is still there overall. There is still a pinch on total refining capacity worldwide to the extent that in the US any announcement of any refinery upset tends to create ripples through the market.

"It's basically on a balance so any outage anywhere will start tipping on the side of pushing prices back up again."

NZR supplies three-quarters of New Zealand's petrol products. All NZ's petrol retailers bar the independent Gull are NZR shareholders.

NZR's shares more than quadrupled in value over the last three years to $7.35 today.

[Placebo]

quote:Originally posted by Captain Ramjet

well the half year ends on 30th June according to their website so I guess it makes sense that the report should be out very shortly.

After paper trading for a while with TA Im gonna put some money where my brain is and see what happens. My reasons for this are:

1) Around the 14 July the share price rose above the 20 day moving average on relatively strong volume

2) The 50 day moving average line was crossed soon after

3) A pattern of higher highs and higher lows seems to have developed

4) The resistance level of 6.80 has been well and truly broken

I plan to exit when the 20 day moving average drops below the share price trend line. I guess I should have some kind of stop loss but Im still new to this game and havent quite got that figured out yet.

Anyway comments from any TA traders are welcome as this is the first TA trade Ive done and all my knowledge is only from books and paper trading so far.

Cheers

Ramjet

Ramjet, when our resident TA Guru phaedrus returns he will weep for joy at this post...

[Captain Ramjet]

Ive read a couple of posts by Phaedreus but hadn't seen any from him for quite a while so assumed he must be off spending his fortune amassed by using his TA prowess.

If he wishes to add to my education then I more than welcome it although I hope he keeps the weeping to a minimum as, frankly, watching a grown man cry makes me somewhat uncomfortable

[scamper]

following TA indicators with discipline cuts out tears. rules for getting in, rules for getting out -- no blood, sweat or tears.
problem is, some puppies have no discipline...

[Happy Camper]

This Happy Camper is pondering setting a stop-loss for NZR. To my mind $7.50 seems a good number.

That was after-all the 52-week high for NZR until just a couple of days ago.

Probably the only thing holding me back is an awareness that the half-year announcement is due out any day now, and there could be some "nervous nellies" sweating on the result. I feel that by setting my stop-loss at just 2.09% below todays close puts me at risk of being ejected from the game prematurely.

Perhaps I should just wait and set my stop-loss in a few weeks time? $8.00 might seem like a good number then?

Any suggestions will be gratefully taken on board.

Cheers

[Bilo]

This is a great investment share. Low PE good dividend yield. A stop loss at $7.50 (97% of the high) could well throw you out prematurely. The interim dividend should be between 10c and 20c if history is anything to go by.

I notice (ex Bloomberg today re Western Refining and Giant) that refineries are selling in the USA for between USD11k & USD19k per refined barrel. My quick calculations placed a value on NZR of about NZD2.5Bn at USD15K/b compared to market cap of NZD1.8Bn. Does this mean that despite the stella rise over the last few years the refinery is still undervalued?

At this level NZR refining margin should be heading further north - pity about the now publicly disclosed refining margin limit.

[craic]

I've had these from 135 cps and I expect 1000cps in the not too distant future. The dividends have long since paid for the purchase and, regardless of where the oil comes from, it has to be refined. Don't worry about margins on the block - the pump controls the profit.

[gamerice]

I am cautiously nervous, crude price on bloomberg dropped below 70 USD, that must not be a good sign, right?

IMHO the only reason for the recent surge is the imminent release of the Annual result.

hope i am wrong!!!