ZEL - Z Energy.

[Grimy]

I’m hoping for a bounce in the share price assuming the bubble with Aussie gets announced shortly. Has to be of benefit having extra planes needing the fuel??
Hasn’t responded very strongly to probable divi or likely bubble so far...

I was hoping/expecting the same thing in regard to opening a bubble with Australia. But SP has dropped today, go figure.
I did take the opportunity to get a few more today, as the aviation fuel side of things has to just increase as time goes on.

[Davexl]

I was hoping/expecting the same thing in regard to opening a bubble with Australia. But SP has dropped today, go figure.
I did take the opportunity to get a few more today, as the aviation fuel side of things has to just increase as time goes on.

Got a quite a few today too, just above the 52-week low of $2.65 (and below the 30d mav), looking for the price to chase the Final dividend in mid May.
Hope I'm not too soon?

[Shareguy]

Am I missing something here. All I see is a sunset industry, Smaller players absolutely caning them on price and taking customers away. Z shares in the refinery are worth what... I can also see a large capital raise coming due to the large debt they have which will need to be at a big discount. Can’t understand why they would pay a dividend at all .

[Davexl]

Am I missing something here. All I see is a sunset industry, Smaller players absolutely caning them on price and taking customers away. Z shares in the refinery are worth what... I can also see a large capital raise coming due to the large debt they have which will need to be at a big discount. Can’t understand why they would pay a dividend at all .

Came across this viewpoint from Chris Lee & Associates that I personally found quite encouraging:

"Z Energy might claim they had the worst possible year during 2020.

Regulators were stress testing their profit margins, oblivious it seems to the fact that natural competition was also doing this;

The government was jumping on the bully train, prodding ZEL, without being honest about the fact that more than half what we pay for fuel is tax to them;

Covid19 made us immobile by sending us all home, planes, trains and automobiles (and boats – Ed);

The world has 'suddenly' discovered electricity as an energy source. Seriously?!;

As sales volumes collapsed, and local storage of fuel was relatively full, Z Energy had to send back a tanker of fuel that we no longer required to a market that didn't want it (sales price near $0);

The temporary (months) drop in sales meant the banks and US Lenders stepped in and forced directors to raise new money from shareholders and to suspend dividends (the logical part);

The value of their major shareholding in NZ Refining was falling fast;

Sovereign investment funds were searching for investments in unethical or climate harming industries to sell from their portfolios; and

An important one from me, the Z Energy coffee was still no good!

It would have been hard to design a more difficult year for any company than that.

So, to the credit of all at Z Energy, they quickly recognised the truth of the changes occurring around them, the permanence of some, and set new strategies for what they thought their playing field would look like in the immediate future.

Aspects of the business were downsized. Costs were cut. Forward-looking developments introduced (Z Electric and dual fuel offering for vehicles).

ZEL remains a high cash flow business and sells an essential product, regardless of global debate. You can see how essential it is in the very high volumes of traffic back on our roads.

ZEL has been updating the market more frequently than required with its sales and financial performance and it has been tracking rather nicely for them. So nicely in fact that they opened negotiations with their bankers seeking permission to return to dividend payments sooner than defined in their 2020 agreement.

At that point ZEL agreed no dividends would be paid until after September 2021, one full financial year of stand down, however, the banks have agreed to amend the conditions and we expect a dividend to be declared and paid in May (estimated at 12-14 cents per share plus any imputation credits).

Clearly the company is in a stronger financial position than both they and their bankers anticipated. You cannot criticise either party for this inaccuracy; making any business predictions in the immediate aftermath of our first Covid19 lockdown was a fool's errand (witness the predictions of falling house prices!) so taking a conservative stance was entirely appropriate.

To not pay dividends is to store shareholders' money, which is a good behaviour either in the face of financial disruption (Covid19) or high-quality investment opportunities. Thereafter a director might consider paying dividends.

The additional capital raised from shareholders last year ($350m) settled the nerves of the banks (all lenders). They do not now need additional capital for the business, so paying a dividend is evidence that capital, sales and profit margins are all under good control by the company.

ZEL bondholders should also be pleased with the situation because the bond trustee exercised his/her discretion during the negotiations by demanding that the company set aside (hold with a bank) the $150 million required to repay the ZEL040 bond in November. They have done so.

Whichever way you look at this ZEL management deserve applause for their reactions to 2020's combination of negative pressures and their week-to-week business management that has delivered this early financial reward to shareholders.

Investors have experienced both how unexpected risks can emerge and negatively impact an investment's rewards and then the value of good governance and good management in setting a new path for success."

[blackie]

wrong quote posted

[blackie]

Am I missing something here. All I see is a sunset industry, Smaller players absolutely caning them on price and taking customers away. Z shares in the refinery are worth what... I can also see a large capital raise coming due to the large debt they have which will need to be at a big discount. Can’t understand why they would pay a dividend at all .

everywhere you turn in the south island a new unmanned NPD station is popping up

[Rawz]

everywhere you turn in the south island a new unmanned NPD station is popping up

Can't buy a coffee, pie, ice, news paper etc from a unmanned station thou.

My limited understanding on EVs and the grid is that if everyone had an EV and went home each night and plugged in their car to charge there 1) wouldnt be enough power and 2) the grid wouldnt be able to handle the load even if we had the power.

Lot's more copper and other precious metals need to be mined to build the EV revolution.

Z is 100% in a sunset industry but that sun is setting very slowly

[Shareguy]

Thanks for the info, some valid comments. Will add to my watch list.

[Teatree]

Sorry guys I bought more today which always means the price will drop.

[bull....]

looking at the charts doesnt inspire confidence , its been range bound between 2.65 - 3.30 for 1 year. yesterday was a push down under the bottom of the range. while needing a little while to confirm generally a break down in this type of pattern would suggest prices heading to 3.30 - 2.65 = .65 therefore 2.65 - .65 = 2 as the target area for pattern confirmation. lets see if it pans out. lots of fundamental reasons are around to support the pattern. people buying for div should read up on what a div value trap stock is.