ZEL - Z Energy.

[sb9]

About 4c impact on overall divvy.

"Z is also updating its dividend guidance for the financial year FY20 to now be in a range of $0.48 to $0.50 cents per share from the previous range $0.48 to $0.54 cents per share."

Its all about yield that matters these days.

[RTM]

Well that explains yesterdays price drop for no apparent reason. Leaky boat.

So does it also explain why the whole market was down yesterday ? Phew, that’s a relief.

[Beagle]

Z energy profit downgrade today see here

WOW...that's a HUGE downgrade at an EBITDAF level. $410m down from $470m previously, (both figures are stated as mid point of expected range).
With Jascinda on the warpath and the fuel price enquiry still not complete I am glad I am out as I was just reflecting yesterday that this companies track record of dividend payments is patchy, (recall how there was a major miss with last year's interim dividend).

Dividends are not as reliable as I had hoped for and there's clearly regulatory risk and in the long term, (albeit at a glacial pace), a headwind from electric vehicles.

[bull....]

its broken below 6 this is bad technically

[BlackPeter]

its broken below 6 this is bad technically

There might be some resistance though around $5.20 ;

[bull....]

There might be some resistance though around $5.20 ;

break below 6 sort of opens up the posibiliites of testing around your figure. esp if competition becomes the norm

[Beagle]

There might be some resistance though around $5.20 ;

I got to thinking, as any good dog does when looking for the next feed, what is a fair value given the well known risks and this profit downgrade.
I think I'd want 12.5% gross yield for all the risk and the knowledge this is in long term very, very gradual decline.
12.5% gross on 49 cents fully imputed = 68.06 cents gross implies $5.44 to get 12.5% gross, but heck, these things often overshoot so this dog is interested in having another bite at $5.20. Worked last year, a real treat

I think the unreliability and vulnerability of this one including regulatory risk and long term electric vehicle systemic headwinds is notable in its characteristics compared to the other 2 very high yielders I follow, AIR and HLG both of whom don't have the regulatory or other long term headwind issues and both of whom offer similar but more reliable yields and have a considerably longer and more reliable track record of paying them. That's why I'd want at least a 1% yield premium with this one, albeit that this sells what effectively amounts to a consumer staple product.

Then again, I got to thinking the other day in a kind of left field way, the way people use aircraft just like a bus these days and people have to buy clothes, maybe AIR and HLG have some element of being consumer staples about them too ?

[winner69]

Z guidance always interesting - up and down and a few confirmations (Apologies, maybe forecasting not as bad as Comvita's)

Below is Z chart for last year or so with guidance noted

[bull....]

Z guidance always interesting - up and down and a few confirmations (Apologies, maybe forecasting not as bad as Comvita's)

Below is Z chart for last year or so with guidance noted

long term trend doesnt look good

[Beagle]

I have noticed with the change in loyalty scheme that Caltex went through that Z has also had to move, (for the very first time), to accepting that fuel discounts can be "accumulated", they call it "stacking".
This process whereby canny motorists can buy just $40 of fuel but accumulate as much as 10 cents per liter discount for later purchase of 50 liters, ($5 discount per time) effectively can be worked, (if one works it hard enough on 10 cent discount days), to give a $5 discount on each $40 fuel purchase = 12.5% discount which with fuel at say $2.15 = 26.9 cents per liter discount.

I expect this new (across the board) accumulation feature to hurt Z's margins permanently going forward as cumulative discounts was previously only available at Caltex branded fuel station's. I expect EBITDAF to come in right at the bottom of the range.

Just adding a bit more. Thing is, the company expects increased competition due to, among other things, the changes to discount and loyalty schemes (read increasing discount pressure from Gull and the other minnows), to affect EBITDAF by $50m this year and half of that has been brought to account in the five months to 31 August.
But its interesting to note that the discount scheme change only came into effect on 1 July so we've only had 2 months of that increased loyalty scheme discounting and there's potentially another 7 months disruption from that to go. While they, I, or anyone else can't be sure how long this additional discounting will continue the risk here is something I think they could be understating but is probably encapsulated within their EBITDAF range. Then there's the regulatory risk which they're obviously not factoring into their forecast at all, at this stage anyway.