Forum Archive Index - February 2003

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Pat Fields wrote:

>
>
>The only one that I just can't assess is NZR.  I think
>that high NZD (I heard that NZR had not no currency
>hedging at all in place!!) plus the Kyoto Protocol are
>not particularly good for them - however, how much effect
>they may have on NZR's earnings, I can't tell.  Even if
>the high NZD is temporary, I don't really know if they
>are competitive, and oil companies can and do source
>refining services from overseas - NZR does not have a
>captive market, even when the oil companies here do have
>a stake in NZR.
>
>How achievable is a 17%-18% yield for NZR this year on
>the basis of last year's earnings?  Any comments?
>
>

I haven't studied this company in detail Pat, so my comments are 
necessarily superficial.

Never held shares in NZR myself.  However,  I know that a year or so 
back a broker recommended a family member get out because of upcoming 
high capital expenditure that would be required on the petrol 
refining plant.

I know NZR are what I would call a 'sandwich business' that has no 
control on their input costs ( raw oil ) and their output prices are 
closely controlled by their oil cartel customers so prospects for 
generating wealth from within NZR in itself do appear limited.   

Neverthelss that yield of 17% is very attractive, but is it 
attractive enough if you take into account the risks?  Perhaps others 
might like to comment.

SNOOPY




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