ZEL - Z Energy.

[Beagle]

Interesting they cut EBITDA guidance by an amount in line with my expectations but dividend guidance is cut by nearly 20% from a mid point of 49 cents previously to 40 cents. That's a bit surrpiseing, I would have thought 42-44 cps. Perhaps the size of the dividend guidance cut signals the lack of confidence they have about their business model as a result of pending legislative changes ?

Serious dividend cut could also be as a result of capex requirements I was previously alluding too, $2m for new fuel price display signs and ~ $9m for expanded jet fuel capacity at their Wiri storage facility.

Too early to have a think about whether 40 cents is the new benchmark to think about in terms of future years dividends but the new EBITDA guidance is a fresh multi year low that won't surprise me if its very sticky.

I feel sad for shareholders. I don't have much confidence in Mike Bennetts for reasons I won't go into.

$4 on the cards now.

[bull....]

pe looks very high

[couta1]

Heading for $4.50 as a few of us thought it would.

Way too optimistic by the looks, yep $4 Beagle. PS-Glad I bailed on a bad trade at $4.98. PPS-Put a cheeky bid on at $3.80

[BlackPeter]

Way too optimistic by the looks, yep $4 Beagle. PS-Glad I bailed on a bad trade at $4.98. PPS-Put a cheeky bid on at $3.80

Wow - already 80 cents already down. Your $3.80 might not be that cheeky anymore ; I guess if this was the last downgrade from them, than you get the shares for a reasonable price. If it is not - who knows?

[bull....]

retail margins impacted forecast the most , i would say they are still uncompetitive on retail pricing so expect more pain to come as they l;ower pricing to sustain volumes

[couta1]

Looks like that $4.01 was a good entry unless we get Instos dumping once the news is digested.

[Maverick]

Yes , I think Beagle deserves full marks for his warnings on this one since their first downgrade.

maybe they should rip out their tanks and convert those prime highway locations into retirement villages.

[couta1]

Very good quick 30c trade for those who bought at the low and offloaded about now.

[Beagle]

Thanks guys.

I think the most interesting thing about the size and timing of this downgrade is that with previous guidance they said as long as retail margins don't deteriorate we're comfortable maintaining guidance.

Quite obviously the bulk of this current downgrade represents a further deterioration in expected retail margins over the peak summer driving period and perhaps represents a new even more intensely competitive environment than the company has ever previously experienced.

I think its highly likely things get even worse from here and annualising even the last quarter this year as the new normal for FY21 has serious implications for EDITDA and dividends payable going forward.

This continues to look like a classic dividend yield / apparent value trap to me. AVOID.

[Beagle]

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.