CHI - Channel Infrastructure Ltd (NZR)

[iceman]

I would have liked to join you dodgy but will be overseas. I would very much appreciate a few comments from you after the meeting, if you can be bothered.

Morning Snaps and all
All views have been well canvassed in prior posts, especially my own. We all know about soothsaying, time and time alone will be the judge.
My preference for now is for owner/shareholders to attend the AGM in a few weeks and make their views known, ask the questions and seek the answers. The company wants and needs its owners feedback. If you can, help steer your company. your hard earned money where ever . It's your constitutional right - not only NZR but every co. you put money into.
_dodgy (owner/shareholder)

[Nasi Goreng]

Well both industries profits are dependent on uncontrollable factors and both are highly volatile. Both carry significant debt and I would also say investors in both companies have been wounded over the last few years and may be a little cautious about throwing the farm at them.

In the last 10 years, there has been increased capacity of mega refiners so looking at history of what the share price was based on 10 years ago doesn't stack up. Looking at forecast profit level of $120m and then suggesting that is the new PE and then using that as forward PE for the next few years is risky.

No one is suggesting current share price is over valued. There is upside potential but also downside and that needs to be priced in and even if profits are right up there at the end of the year.

On a side note, funnily enough the share price of both is $2.60 range and OGC's profit for 2014 is where you would like NZR's profit to be for 2015. You asked for an NZ infrastructure company with multiple of 6, well most are in boring industries and deliver similar results year on year... unlike NZR who's results could be like that of a miner.

[bull....]

I read the throughput with interest - particularly the reference to the Dubai spread? I can't get my head around this so will raise after the AGM as to the quantum and effect on profitability. If someone who knows more about this - please enlighten me .
Thanks
dodgy

hey d If you look at analyst presentation pg 9 crude differentials vrs Dubai if this is a basket of oil they buy then the average difference in the spread of the oils against Dubai as represented by the second picture pg 9 then look at pg10 the 1.30 is the margin they make as displayed on pg 9 so then 1.30 + .68+.4+.6+.5 = there nzr margin of 3.48 so the closer the spreads of the basket to Dubai means lower cost for them more margin being the 1.30.

I also think we have been using the wrong margin for Singapore as often quoted in news source as this did not match what they are reporting in throughput reports.
so I believe the correct way would be the margins of the basket of oil they buy quoted in us dollars at Singapore then converted to nzd at nz using there basket of oils gave roughly the margin they quote in the throughput report -- so if I am correct in my thinking ( anyone correct if im wrong ) as of today the Singapore complex is 7.7 + 4.5 ( nzr margin) = 12.2 margin for the day of course each day is different that's why you get the average

[bull....]

I think you should do some more research on the company as the new plant which will be operational offers an increase in throughput.
Average 10 year historical PE for NZR is between 12&13

there matrix on the new plant doesn't take account of oil under $60 from what I can see and they stated a falling oil price decreases the margin they make from the upgrade?
anyway how much of the extra 3mil throughput flows thru to net profit, is the extra throughput guaranteed from customers? with the dynamics of low oil environment the upgrade may not be warranted if comparred to irr vrs the other option all in hindsight of course

[bull....]

z energy report says nz refining made a grm of 13.31 in march - wow huge shame they only get 9, but I guess they are banking plenty of reserve if margin falls

[freddagg]

z energy report says nz refining made a grm of 13.31 in march - wow huge shame they only get 9, but I guess they are banking plenty of reserve if margin falls

Thanks for posting that. Interesting that it comes from Z before NZR

[golden city]

that is good news

[dodgy]

banking plenty of reserve's to make sure they make a $127m profit.
$4 by christmas

Afternoon Snaps
I will stick with the $3 March, your projection gives me a Turkey and a holiday this Christmas. Beats dog for a change.
Have a happy weekend.
-dodgy (owner/shareholder - unlimited patience).

[dodgy]

snaps had the time to review his research this morning(always good to do in case you miss something)
Last 10 years ave P/E has been 14(better than I thought)
Current plant supplies 55% of NZ fuel requirements.
When the new plant is online it will supply 65% of NZ fuel requirements and creating an uplift in margin per barrel of about 95 cents per barrel.
Many on this thread think the current share price has all the good completely priced in.........I say absolutely no way.
Currently with the old plant they are way ahead of target to make an NPAT of $127m.
With low returns coming from most investments and most utility and infrastructure firms trading with PE multiples of 16-18 it is fair to assume, given NZR history, they will eventually trade at a PE of 12-14 again.
So not taking into account the added benefits of the new plant and using a historically low PE of 12 this is what should happen.
$70M NPAT x 12 PE = $2.60 ps
$80m NPAT x 12 PE = $3.10 ps
$90m NPAT x 12 PE = $3.60 ps
$127m NPTA x 12 PE =$4.94 ps

Hi Snaps
I don't disagree with your bullish stance - just the timing and quantum of the share price uplift. !0%+ between now and March isn't to be sneezed at - you can borrow sub 7%p.a. on secured. Bring on the Turkey for Christmas.
Have a sunny weekend.
Regards
-dodgy (owner/shareholder - 90k and looking to increase on dips)

[barleeni]

Currently with the old plant they are way ahead of target to make an NPAT of $127m.

I would say that yes they are on track to make NPAT of circa $127m for the year to date.......... but what makes you think it will be well ahead of $127m? The only variable I can think that would do this is the exchange rate, (the forecast of $127m NPAT is based on an average rate of NZ:USD of $0.75......... which is about right for the year to date, but if anything is showing signs of trending against NZR (?)).

By the way can anyone tell me what happens to / or how long these 'çeiling' credits can be held for? do they lapse at all after a certain period?