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Thread: ZEL - Z Energy.

  1. #1401
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    Quote Originally Posted by Beagle View Post
    https://www.msn.com/en-nz/money/news...cid=spartandhp

    A word of caution with this one and anyone tempted to bottom pick or trade it. Balance is usually right when he says earnings downgrades come in three's.
    The only safe trade was off the open at $4.01 which I didnt take.

  2. #1402
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    Yes, would have loved to pick some more up at $4.01. Still 10% yield at 40c Divi. Hard to say. I live right next door to one and it is busy all the time, more so than the Gull down the road.

  3. #1403
    ShareTrader Legend Beagle's Avatar
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    Quote Originally Posted by couta1 View Post
    The only safe trade was off the open at $4.01 which I didnt take.
    That's not a safe trade mate. This could easily go into the early- mid $3's or even significantly worse next year. Impossible to overstate the risks of pressure on fuel margins. If the Government get just one tenth of their estimated 18-32 cent, (mid point is one tenth is 2.5 cents per liter) reduction in margins ZEL's profit will be absolutely decimated as they only make 3.5 cents per liter after all costs and tax. Even if the Govt get one twentieth (1.25 cents per liter average) of their estimated savings at a retail price level, this is devastating for ZEL's operational profitability.

    The potential for further significant falls in EBITDA for FY21, just from annualising the forecast margin in Q4 to a full year effect for FY21 is bad enough...then you start factoring in further margin compression from regulatory changes and this could get extremely ugly next year.

    I haven't got a new price target...my nose is telling me to "STAY OUT" no matter how cheap this appears to be.

    Might work out a no growth PE of 10.0 on real after tax earnings on EBITDA of $300m and see what that suggests is fair value. Can't use a yield model as its anyone's guess what future dividends will be.

    Okay lets go there. My very early seat of the pants estimate of EBITDA for FY21 is just $300m with the expected tighter margins in Q4 FY20 annualised for full year effect in FY21 and some extra additional pressure to margins from the fuel price study, wholesale market transparency and premium fuel pricing display.

    In FY19 there was $195m of costs below the EBITDA line so that implies about $105m before tax, ~ $75m after tax = 19 cents per share for FY21.
    Pretty clear this is at very best a no growth company so put a no growth PE of 10 on that and you can get to $1.90 as fair value pretty easily if things keep going south like I think there's a good chance they will.

    There is potential for this stock to head quite materially south from here in the foreseeable future.
    Last edited by Beagle; 13-12-2019 at 12:31 PM.
    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

  4. #1404
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    Quote Originally Posted by Beagle View Post
    That's not a safe trade mate. This could easily go into the mid $3's or even worse next year. Impossible to overstate the risks of pressure on fuel margins. If the Government get just one tenth of their estimated 18-32 cent, (mid one tenth is 2.5 cents per liter) reduction in margins ZEL's profit will be absolutely decimated as they only make 3.5 cents per liter after all costs and tax. Even if the Govt get one twentieth (1.25 cents per liter average) of their estimated savings at a retail price level, this is devastating for ZEL's operational profitability.

    The potential for further significant falls in EBITDA for FY21, just from annualising the forecast margin in Q4 to a full year effect for FY21 is bad enough...then you start factoring in further margin compression from regulatory changes and this could get extremely ugly next year.

    I haven't got a new price target...my nose is telling me to "STAY OUT" no matter how cheap this appears to be.

    Might work out a no growth PE of 10.0 on real after tax earnings on EBITDA of $300m and see what that suggests is fair value. Can't use a yield model as its anyone's guess what future dividends will be.
    I think your mixing up your trading with long term holding there Beagle, in at $4.01 and out just after 11am at $4.30 ish would have been the way to go(Like a rat up and down a drain pipe)

  5. #1405
    Speedy Az winner69's Avatar
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    Anybody bother to listen to the conference call.

    Whatever a 20% drop in earnings in F20 is a bit of a disaster

    Think management have been sucked in by their own glossy presentations and forgotten the basics of selling what is a commodity.
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  6. #1406
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    At this rate of earnings decline earnings won’t be much more when they were pre Caltex

    Wasn’t there zillions in synergies they were going to capture.
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

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    Quote Originally Posted by winner69 View Post
    At this rate of earnings decline earnings won’t be much more when they were pre Caltex

    Wasn’t there zillions in synergies they were going to capture.
    As recently as May last year, see page 4, (they were describing themselves as among other things a "Growth Company"), and not just in this presentation either. http://nzx-prod-s7fsd7f98s.s3-websit...097/300554.pdf

    Some of the "creative talk" in their presentations is very corrosive to senior management's credibility. I take whatever they say with 101 grains of salt now...

    Suppose the new CEO of SKY thinks they're going to turn themselves around into a growth company too. How's that working out for them so far...
    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

  8. #1408
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    Quote Originally Posted by Beagle View Post
    As recently as May last year, see page 4, (they were describing themselves as among other things a "Growth Company"), and not just in this presentation either. http://nzx-prod-s7fsd7f98s.s3-websit...097/300554.pdf

    Some of the "creative talk" in their presentations is very corrosive to senior management's credibility. I take whatever they say with 101 grains of salt now...

    Suppose the new CEO of SKY thinks they're going to turn themselves around into a growth company too. How's that working out for them so far...
    Need to ramp up the coffee, pies and sweet sales methinks

    That’ll solve the earnings problem
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  9. #1409
    ShareTrader Legend Beagle's Avatar
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    Last time I checked store sales were up a whopping 10% so without that...
    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

  10. #1410
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    ZELBonds.JPG

    only a third of a billion (approx.) to service on the NZDX

    interim bal sheet says over a whole billion.
    For clarity, nothing I say is advice....

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