ZEL - Z Energy.

[ananda77]

No - clearly stated, retail margin pressure = ~ $50m downgrade effect and refinery margin pressure ~ $10m impact.
Z have come out swinging in terms of their position regarding the draft fuel report. http://nzx-prod-s7fsd7f98s.s3-websit...992/307703.pdf
A very brief skim read, (sorry don't have any more time today than that) would tend to indicate Z have conceded some change in key area's is needed including wholesale fuel arrangements.

As stated last week, I suspect there is more to come from retail margin pressure and Govt regulatory pressure than what has already been provided for in the $60m downgrade. Further, the commercial effect of any ground that ZEL may have conceded in their submission is yet to make itself apparent in lower profits going forward.

More here http://www.sharechat.co.nz/article/2...uel-reporthtml

I agree, this squeeze may just be the beginning. Margins must have been high for the last few years. How could the entrance of new players be explained otherwise?

So for now living with a big mistake - 1253 shares at 6.54 - but margins can only go so low. The question is how low?
The Com Com reckons margins should come closer to a 8.3% return on cost of capital. Z is ranking at 23%. So somewhere in there is a point where Z becomes an attractive buy.

[Beagle]

I agree, this squeeze may just be the beginning. Margins must have been high for the last few years. How could the entrance of new players be explained otherwise?

So for now living with a big mistake - 1253 shares at 6.54 - but margins can only go so low. The question is how low?
The Com Com reckons margins should come closer to a 8.3% return on cost of capital. Z is ranking at 23%. So somewhere in there is a point where Z becomes an attractive buy.

ZEL saying today their return on capital employed on selling fuel is just 11%. They go on to say that the fuel study incorrectly includes their profit on retail sales from their stores.
Weekly retail store sales are from memory up 10% year on year to circa $37K per store. ZEL must make a LOT of money from pies, icecreams and coffee and they infer as much from their fuel price study submissions today. Instore retail non fuel sales....that's where customers really are "fleeced".
ZEL will be hoping Jascinda and her team doesn't take any issue with the retail store side of their operations where the fleecing really does go on and that the fuel price study correctly excludes any profit from that side of their operations...but what if the Govt take a view that all aspects of ZEL's operations are one integral business and regulate a maximum return on invested capital ?
I still see plenty of regulatory risk here even after the recent fairly hefty share price correction, risks seem comfortably outweighed by possible returns to me.
$4.50 would be required to get me interested in investing anytime before further clarity is forthcoming on or about 1 November.
ZEL really make "quite a big meal" about the fact that they're a Kiwi company employing Kiwi people and that profits stay in Kiwi hands...a really big patriotic play in their submission on the fuel price enquiry today. I think that carries about as much weight as a butterfly to be quite frank.

[percy]

Perhaps ZEL should now be called a "Consumer Unstable".?...............lol.

[Beagle]

LOL still a consumer staple but obviously subject to regulatory oversight.
Remember when Rob Muldoon capped interest rates at 8% ?...that was a big hit with consumers. Jascinda must be really desperate to regain some political capital after last weeks almost complete self destruction of her credibility, (what sexual assault complaint ?, is there a single person in N.Z. who really believes she knew nothing ?), so the fuel companies better look out, Jascinda is on the warpath !

[winner69]

Fuel Gross Margin $700m. ...Non Fuel Gross Margin $81m

Lots of money in bakery and pies and coffee etc

[ananda77]

$4.50 would be required to get me interested in investing anytime before further clarity is forthcoming on or about 1 November.
ZEL really make "quite a big meal" about the fact that they're a Kiwi company employing Kiwi people and that profits stay in Kiwi hands...a really big patriotic play in their submission on the fuel price enquiry today. I think that carries about as much weight as a butterfly to be quite frank.

...anywhere between 4.50 and 4.75 will be the sweet spot. Hang in there stupid me and do good next time!

[horus1]

I do not think there was a sexual assault. They should have gone to the police. Z needs to be moderated . Do not buy the shares.

[couta1]

The good old Com Com exhibiting their ineptness once again by doing a half baked ,full of errors job. Look for an egg on face backtrack in the not too distant future. Lol

[winner69]

I take it Mr Bennett will come out fighting against this report.

I think it says the oil companies need to do less thinking about resilience and actually spend some money to ensure there is always enough jet fuel (as a minimum)

Whoops - can’t spend too much else divie will be cut

https://www.stuff.co.nz/business/115...should-step-in

[peat]

but who are the people who need the resilience of supply?
and if they wont contribute (which they wont of course) then it can only be through the pricing mechanism that the cost of the infrastructure is apportioned correctly.