ZEL - Z Energy.

[winner69]

There's a lot of good stuff in there. Well worth the trial price of $2.50 per week, especially with the way the world is at this point !
ZEL faces very challenging times. Just one of those challenges is 23% of volume is Jet fuel. With no international airlines flying here shortly and AIR providing only skeleton international services for freight and 70% demand reduction domestically already, and much deeper cuts to come after todays announcement by the PM...jet fuel demand is set to fall off the face of a cliff. How much fuel will people use if we end up going into lockdown ?

The Refining update the other day was pretty gloomy about demand

http://nzx-prod-s7fsd7f98s.s3-websit...350/319261.pdf

[Beagle]

Big top up payment required by the fuel companies including Z to reach the floor price too. NZR also had a very gloomy outlook whereas ZEL said in their most recent guidance statement they thought skinny refining margins wouldn't persist past the current quarter. More implications for ZEL FY21 profitability ?

[Oliver Mander]

Stuart Williams, head of equities at Nikko Asset Management. Williams said Z Energy's sell-off was “perplexing”, although he noted fuel consumption does fall during a recession.
“If you look across however deep this valley that we are in is, then that is a Great Company with an enduring proposition that presents GOOD VALUE.” he said.

Disc Hold

I cannot for the life of me fathom how anyone who has done a simple analysis of Z is "perplexed" by the fall in share price....

There's a lot of good stuff in there. Well worth the trial price of $2.50 per week, especially with the way the world is at this point !
ZEL faces very challenging times. Just one of those challenges is 23% of volume is Jet fuel. With no international airlines flying here shortly and AIR providing only skeleton international services for freight and 70% demand reduction domestically already, and much deeper cuts to come after todays announcement by the PM...jet fuel demand is set to fall off the face of a cliff. How much fuel will people use if we end up going into lockdown ?

Seriously, the Herald paywall is worth it.
The estimate in the article is based on a 50% reduction in Jet Fuel demand. Likely to be a lot more at Alert level 2 or 3. Beagle, your comment on debt in an earlier post is also valid. Purchase of Caltex (mostly debt) at a time of high margins => high asset values. Margins are now low, therefore asset value not there.
(Disclosure: author of article)

As an aside - I can't work out why people on this thread think fuel prices are too high. May have been true a year or two ago, I seriously doubt it right now. It is a long-run cyclical industry, and, yes times have been good for the last 7-8 years for the petrol companies. But the 15 years before that were garbage. And the next 10 years...well....they are not likely to be great. Only need to look at the state of Z's P&L right now to work that one out.

[dreamcatcher]

Oil on the rebound ............

[whatsup]

Look like the float financials has come back to bite it, is there toooooooo much gearing going on here?

[macduffy]

Perhaps not strictly relevant but I happened to be watching a documentary on the Middle East yesterday. It reminds us that in the first oil shock in the early 1970's, the POO quadrupled - from $3 to $12! Now, that was a shock!

[Marilyn Munroe]

Oil on the rebound ............

I see no evidence of cruise ship captains ramming one another in order to jump the queue at the bunker wharf nor stories of frustrated airline passengers having to wait for their flights while Z rushes fuel from the refinery or tales of queues found the block at service stations.

Whatever is causing oil prices to rise it is not demand.

Boop boop de do
Marilyn

[Beagle]

I cannot for the life of me fathom how anyone who has done a simple analysis of Z is "perplexed" by the fall in share price....



Seriously, the Herald paywall is worth it.
The estimate in the article is based on a 50% reduction in Jet Fuel demand. Likely to be a lot more at Alert level 2 or 3. Beagle, your comment on debt in an earlier post is also valid. Purchase of Caltex (mostly debt) at a time of high margins => high asset values. Margins are now low, therefore asset value not there.
(Disclosure: author of article)

As an aside - I can't work out why people on this thread think fuel prices are too high. May have been true a year or two ago, I seriously doubt it right now. It is a long-run cyclical industry, and, yes times have been good for the last 7-8 years for the petrol companies. But the 15 years before that were garbage. And the next 10 years...well....they are not likely to be great. Only need to look at the state of Z's P&L right now to work that one out.

Jet fuel demand will be just a few percent now. Plenty of price gouging going on. Local Z wanted $1.97 for 91 octane yesterday which is absolutely scandalous for where oil is currently priced. That's how Z are able to meet their previous guidance. Massive price gouging. "Z is for New Zealand". Yeah right.

[macduffy]

I see no evidence of cruise ship captains ramming one another in order to jump the queue at the bunker wharf nor stories of frustrated airline passengers having to wait for their flights while Z rushes fuel from the refinery or tales of queues found the block at service stations.

Whatever is causing oil prices to rise it is not demand.

Boop boop de do
Marilyn

No, it's just that Trump thinks he can broker a deal between Saudi Arabia and Russia to reduce supplies. No mention of USA's production in this arrangement, of course!

[macduffy]

Jet fuel demand will be just a few percent now. Plenty of price gouging going on. Local Z wanted $1.97 for 91 octane yesterday which is absolutely scandalous for where oil is currently priced. That's how Z are able to meet their previous guidance. Massive price gouging. "Z is for New Zealand". Yeah right.

You have reminded us, from time to time that tax is responsible for about half of the pump price. Have you taken that into account?