LPC

[Scuffer]

[quote=Snoopy;201699]Why do you say that Scuffer? I have never heard of a coal ship having to 'wait for coal' in port.

Well its a common occurence as the big fella said they have no room to store coal so if the reqired coal is not already sitting taking up space the ship has to wait until solid energy gets it there then it is loaded from train to ship. When Pike comes on line the logistical nightmares will begin they are short of storage space remembering that access is still needed for the bulldozers and other coal loading machinery the whole problem appears to me to be the differing grades and quality of coal that is required a lot of this has to be blended before loading. Pike are going to increase the load out to around 4 million tons a year across the wharf thats some amount even with new purpose built equipment not the old inherited Brit stuff that LPC brought in.

[Fanny 22]

never mind the old inherited plant from Brit ,lets not forget most of the load out system was designed to load wood chip!!.So at the moment it is maxed to its limit needs serious capital chucked in this direction if they want to meet solid energy and pike rivers tonnages in next 12 months(I can see Hutchisons Peaking out the bush)

[Scuffer]

I just love your dress sense big fella were can I get an outfit like that is it LPC company issue or do you have your own tailor, your not the CEO are ya in disguise trying to mislead poor investors into not buying in so ChCh holdings can lux up on the cheap.

[Fanny 22]

I just love your dress sense big fella were can I get an outfit like that is it LPC company issue or do you have your own tailor, your not the CEO are ya in disguise trying to mislead poor investors into not buying in so ChCh holdings can lux up on the cheap.

Well Scuffer these attacks are getting a bit personel anyhow I can see you have good dress sense.In my hay day it fitted quiet well as for it being LPC issue could you imagine a work force climbing around the wharfs looking like that,I dont think so lets face it most of them would have the same figure. I probably knocked a few of them around ring in my hay day.The fabric could be quiet good because it would save money on the refective gear they are required to wear and what about the stretchy fabric one size fits all save a lot money there ( worth looking at)No Im not the CEO in wolfs clothing

[Scuffer]

Well Scuffer these attacks are getting a bit personel anyhow I can see you have good dress sense.In my hay day it fitted quiet well as for it being LPC issue could you imagine a work force climbing around the wharfs looking like that,I dont think so lets face it most of them would have the same figure. I probably knocked a few of them around ring in my hay day.The fabric could be quiet good because it would save money on the refective gear they are required to wear and what about the stretchy fabric one size fits all save a lot money there ( worth looking at)No Im not the CEO in wolfs clothing

Easy Big boy just having a bit of fun don't take it personal, but I like your humour, I hope your not insinuating that my dress sense is alluding to me being a menace some on this site would say I was, but I'm a lover not a fighter your obviously the latter, because you are definitely not the tealady at LPC.

[Steve]

I wonder if Port Otago will have to consider selling its shareholding to give money back to the council to enable it to contribute its share to Dunedins new stadium?

Not even considered as an option, according to a recent article in the ODT...

[Snoopy]

LPC do have 3 container cranes which have trouble working efficiently in the congested area available because the container terminal is too small as for the land through the hill they only bought that to free up space in the terminal.They need to expand to the east which means upgrading CQ1 & CQ2 wharfs to container crane specs, huge money is needed here which is just one reason they need someone like Hutchisons to jump in. Then they might be able to work two large container vessels more efficiently at the same time.

Fanny 22, for those who don't know what we are on about, the Port of Lyttelton has an 'inner port' where all the smaller ships go and an 'outer port' sheltered by an artificial breakwater which is where the deeper draft larger ships are moored. The outer port goes by the name of 'Cashin Quay' . 'Cashin Quay' is one long stretch of dock length to look at. But in reality it is divided into four berths CQ4 and CQ3 (the existing container terminal berths), CQ2 and CQ1 which is currently used for outshipping bulk loads of coal.

I can't see any need to revamp CQ1 as particularly with the the increased coal coming through I think it will be needed as a full time coal berth. There certainly are plans to upgrade CQ2. Chairman Sundstrum told us in the FY2007 annual report, on page 11, that quote:

"We are half way through a $90m reinvestment in the port and have completed a number of significant works while others remain to be started; most notably the oil berth and the rebuild of Cashin Quay Number Two wharf."

I guess if they are halfway through, that means around $45m is yet to be spent.

Next we learn from the half year 2007/2008 interim report p4 that:

"Work is well underway on a $10million to upgrade the oil berth, strengthening it and ensuring it meets the needs of current and future vessels."

So how much is the Cashin Quay 2 update going to cost - $10m?

If you return to the FY2007 annual report under the financial report note 16 you will see that LPC have a $110m borrowing facility. $62m of this had been drawn down on last annual report date. There is plenty of headroon there to borrow in full for the cost of rebuilding the oil berth and upgrading Cashin Quay 2 without the need to go the shareholders for more equity. Contrary to what you say Fanny 22, IMO LPC do not need Hutchisons or anyone else to 'jump in' and fund a Cashin Quay 2 upgrade.

Well what about the coal another area which needs major up grading, theres the storage problems when Pike River finally come on stream there's barely enough room to stock pile Solid Energy's coal now. Then to actually achieve the load out figures that will be required to load and turn the ships around this will require huge investment another good reason you need someone like Hutchisons on board.

Fanny 2, the best year for loading out coal was FY2006 with 2,505,100 tonnes of coal dispatched (p17 FY2006 annual report). However the best month was June 2006 in which I quote:

"approximately 357,057 tonne of coal shifted from wagon through the stockpile and onto six vessels."

Multiply that by 12, less a couple of weeks for a maintenance shutdown, and we are looking at potentially moving 4 million tonnes of coal per year. That is with the existing set up 'as is'. Now if we look back to the November 2007 press release, where the effects of Pike River Coal coming on board are described:

---------

INCREASING COAL VOLUMES FOR LPC

Coal volumes at Lyttelton Port of Christchurch (LPC) are expected to increase by up to 1.3 million tonne per annum, over the next three years, thanks to a new agreement between Solid Energy Limited and Pike River Coal Limited.

The 18-year agreement will begin late 2008 and the full financial implications for LPC will be advised once they have been fully determined.

------------

Add that extra 1.3m tonnes to the maximum tonnage achieved so far (2.5m tonnes in FY2006) and we get 3.8 million tonnes. That is well within the capacity of what the current plant has done already - on a monthly basis - with no changes. Consequently I dispute your suggestion that a 'huge investment' will be needed, and that the search for some large equity partner (like Hutchison) is on.

SNOOPY

[Snoopy]

For those that haven't caught up with it yet, my latest essay on the performance and prospects of 'Lyttelton Port of Christchurch' may be found here.

http://forum.sharechat.co.nz/showthread.php?t=1969

If you conclude that the review is a bit negative and that LPC is fully priced, then you'd be right.

I haven't put much effort into looking at LPC over the last two years. That's because it has been 'in play'. With the company commissioning Crighton Anderson to do a full valuation report in 2006 as a result of the CCHL takeover offer, there seemed little point in trying to outdo or even equal a professional team of beavers on the case. However, times have moved on even if the business performance hasn't. There are of course good reasons why LPC has 'apparently not done that well' that are fully discussed in my reference.

But two years ago, as now, the real value in LPC is not on a 'stand alone basis', but how it can fit into a 'great southern ports' alliance, with 15% shareholder Port of Otago Limited. Still, on a stand alone basis, both coal and containers are looking good for FY2008 and there has been a small profit upgrade. But with a new labour agreement and work yet to commence of Cashin Quay 2, expenses are rising as well.

On a stand alone basis the highest price I can jusify is around $2.10 (based on a prospective PE of 20). LPC closed up again at $2.35 today.

SNOOPY

discl: hold LPC, but not planning to buy more

[Scuffer]

Congratulations Snoopy, I've just had a quick read of your gleanings on LPC you must be a substanial shareholder and over a long period of time to focus on them as you have done, your hard work helps other traders on their decisions on LPC and has certainly helped me, I sold out last year with a tidy profit I've thought about climbing back in for the long term but am apprehensive as yet. CCHL are tinkering behind the scenes in my opinion and it could be the wrong decision. I agree with you though that we need to consolidate the ports through out NZ, that would put us in a stronger position with shipping companies, similar to the way things tick in Australia.

[Snoopy]

Congratulations Snoopy, I've just had a quick read of your gleanings on LPC you must be a substantial shareholder and over a long period of time to focus on them as you have done,

'Substantial shareholder'? Well, in my own terms I guess I am. But I don't think there is any possibility of cracking that 5% threshhold that the NZX considers 'substantial'! I can't claim to be in there for a long period of time either as my first LPC shares I only bought six years ago and my 'average holding period' would be only 3.5 to 4 years.

your hard work helps other traders on their decisions on LPC and has certainly helped me, I sold out last year with a tidy profit I've thought about climbing back in for the long term but am apprehensive as yet. CCHL are tinkering behind the scenes in my opinion and it could be the wrong decision.

I have focussed more on LPC than some of my other investments. That is partly out of necessity because the wider media coverage of this company is so dismal. I guess even the brokers feel there are so few free float shares available to the public the LPC company isn't worth covering in any substantive way. Of course that is cold comfort to the 1700 or so shareholders that are left, and those former shareholders who still take an interest in the company. So I hope my analysis has been helpful to others as well as your good self.

You are right to be wary of CCHL. They may yet try to scoop up the company before the merger talks with POL get underway, thus shutting small shareholders out of any restructuring premium. Of course they would need POL's co-operation to be able to do this. The more resolute POL is, the better we small shareholders have a chance of hanging on. If POL capitulates it is 'game over' for the rest of us and we could be forced to sell an a minimal if any premium to current market prices.

SNOOPY