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Thread: NZR

  1. #41
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    Seems that the reason for the jump was nothing more exciting than an article in the Dominion that highlighted the recent high margins report.

  2. #42
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    No, I think its more than the high margins. Its the fact that the NZ dollar being high is more than compensated for by the margins. You can't suddenly fix neglected oil infrastructure, nor speedily address the demand made by Chinese industrialisation. So its sustainable for the immediate duration.

    In the middle turn, the debottlenecking of the pipeline will produce an annual increased return of about 20% per annum. In Buffett terms it puts a moat around NZR from domestic competition. Who can get a tank farm big enough to service Auckland built under the RMA ? How expensive is it to tanker petrol from New Plymouth or Tauranga when someone can just pump it down a pipeline to Auckland and from there to other areas as required.

    The other moat building exercise is the new low emmission fuels project which will be able to be met without capital raising from debt and cash flows. This will narrow the range of refineries capable of sourcing alternative supplies to Marsden Point which has negotiated margins with Govt prior to agreeing to the upgrade. So will be harder to undercut with the new higher standards fuel in NZ will have to meet.

    The highest cost of the refinery is electricity so the joint venture regarding electricity co-generation using oil or wood chips makes sense in terms of keeping long term costs down.

    Makes for a sound long term put in your bottom draw share, especially with the fully imputed dividends.

  3. #43
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    you can bung on top of that the possibility of LNG imports into Marsden point. More than likely to go on NZR land and be a joint venture.

    Its intersting to note that NZR's market share is actually slipping though due to it running at maximum but the market still growing. But with the new pumps on the pipeline it should be able to shift more product down it even if it is imported into Marsden. They still get a fee per bbl.

    Not too sure about the comments on the project being funded from cash flows... the clean fuel project cost 180m (read NR) and profits for the half year are only 35m (not that bad though).
    Chris
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  4. #44
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    Chris, sorry it was not that clear. Funded by debt and cash flows means that the banks will advance them the funds and that the interest and repayments can be met from cashflow without requiring further capital raising such as a rights issue.

  5. #45
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    Kiwi, I did not say that the price rise was on higher margins - but that it was in response to an article in the Dominion. The article extolled the benefits of the margins etc. The article headlined the company at the top of the business news page and drew it to the attention of the readers. I am always surprised at the good companies, making good profits and capital gains who are left without any mention in the media while some cr appy little outfits gain all sorts of publicity for no better reason than that someone somewhere has a vested interest in pushing the name and the journos don't know enouigh to know that they are being used

  6. #46
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    And the price is now $31 and should rise in expectation of a decent dividend.

    NZR
    16/12/2004
    FORECAST

    REL: 1336 HRS The New Zealand Refining Company Limited

    FORECAST: NZR: NZRC expects Profit of $90-95 mln after tax for 2004

    The Directors of The New Zealand Refining Company have considered forecasts
    of the full year results for 2004 and provide the following information under
    the continuous disclosure rules of the NZX:

    Exceptionally high international refining margins in 2004, high utilisation
    and operational excellence have contributed to a higher projected revenue
    from refining operations to $230-240 mln compared to $154 mln for 2003. This
    is expected to result in an after tax profit of $90 to $95 million for
    2004.The higher earnings will assist in funding the Future Fuels project
    which is on track for commissioning during the third quarter of 2005. The
    total project cost is expected to be $180 mln. To date $100 mln have been
    spent.

    The Directors will make an announcement regarding dividends on 24 February
    2005.

    At this stage a modest increase for the dividend is anticipated and a return
    to more typical trading conditions in 2005 is expected.
    End CA:00109542 For:NZR Type:FORECAST Time:2004-12-16:13:36:24


  7. #47
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    quote: a return
    to more typical trading conditions in 2005 is expected.
    Is this market speak for "take the money and run"? This thing has doubled in a year. I can't post charts. But if I could, it would show a fairly flat line through 2003 and a rapid uptrend that has seen it more than double in price since the end of 2003.

    If a "return
    to more typical trading conditions in 2005 is expected", perhaps now is the time to book the profit and look for other opportunities?
    Marriage isn't a word. It's a sentence

  8. #48
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    good jump in price today but one has to question that even if we do get a $4 divvy this year (which based on the past policies of the oil companies to take their fair share up front) is more than likely to happen then what will happen next year? I suspect that margins might ease a bit and the profits will drop... mind you, this year was a shut down year with the extra costs and loss of production for a month...

    Keep up the good work guys.
    Chris
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  9. #49
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    Ignore the cautions about future profits. I have followed this one as closely as anyone and they ALWAYS issue these cautions. In the past it has been a need to introduce new technology or replace parts of the refinery or something else.

  10. #50
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    craic. Then a fool and their money would have been easily parted back in 99 when it was issued that refinery margins were falling.

    Traditionally refinery margins in the region are stable at around $2/bbl. This year has been an exception due to high demand from China. Check out how many refinerys are being built in China at the moment... heaps of the things.

    In my opinion, the market will turn into an over supply mode over the next 3 years and margins will fall.

    Of course there are things such as the pipeline which will be providing increased thruput soon to help out the poor aucklanders.

    The refinery is pretty cautious with their predictions (you are correct) but I have seen situations where its more benificial for the refinery to turn petrol into oil rather than the other way around.

    Those oil markets are a funny old thing sometimes.
    Chris
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  11. #51
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    NZR has had a great run this year. By my calculations to date this year alone NZR has put on 106.7%

  12. #52
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    Chris, whatever else, this is a monopoly. Where else do you get your fuel and who would buy it? The major oil companies own the refinery - or 70% of it - If they start buying from independant overseas sources then they kill the goose that lays the golden egg.

  13. #53
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    true... but it depends if they have better geese in their flock that they wish to fatten.. especially if the others are 100% owned by them.
    Chris
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  14. #54
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    Chris,

    The reason why NZR did Future Fuels is that there are very few alternative refineries in the region that can meet the new NZ standard. Although you are correct that there are a number of new refineries in china but to a lower standard.

    So Craic is right about a reinforced monopoly. That is the significance of the pipeline as well.

    When they get some co-generational deal to secure reasonably priced long term power then this is a safe long term share to put in the bottom draw.

  15. #55
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    I think it is safe at 15.... not so safe at 30.
    Chris
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  16. #56
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    Back up 100 cps to 3300 cps and this miust be just days before a result is published? They usually pay out end of March beginning of April. Last year the announcement was made on 26 February. Maybe the tea lady is getting in early

  17. #57
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    I think it is more than likely that the tea lady has read the morning newspapers and looked at the BP and Shell articles stating that they have made a killing on the back of high refining margins.

    Not a good start to the year in regards to reliability though... heard that they ran out of juice... and then they had a couple fo oil spills into the harbour too...

    Not that good when the crowd down the road are looking at putting in a coal fired power station. The greenies will be chasing this one I think...

    Chris
    Chris
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  18. #58
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    Just checked a December press release and a divi announcement is planned for 24 Feb:
    "At this stage a modest increase for the dividend is anticipated ..."

    Given that the last four divs have been 50, 60, 60 and 100 cps, but that the share price has doubled, I wonder what "a modest increase" means?

    If it is a similar div to share price proportion that is modestly increased, could we anticipate 210 cps? I rather think not, but good fun dreaming...

  19. #59
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    what was the interium one? I would imagine that they would round it up to around the $3.50 level (total for the year).... they like to pay out 100%...
    Chris
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    Am I a pro trader or just a try hard wanna be...

  20. #60
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    Sept 02 = 100 cps
    Mar 03 = 50 cps
    Sept 03 = 60 cps
    Mar 04 = 60 cps
    Sept 04 = 100 cps
    This is as far as my records go, and if it ain't correct, my records are wrong... [:0]

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