Stock of the Week: Reprise 2: New Zealand Refining Ltd

With low refining rates, massive capital expenditure and plant shutdowns largely behind them and a rising global oil prices, 2011 looks to be a resurgent year for New Zealand Refining Ltd [NZR.NZX].

Back in October NZR was a Stock of the Week because its share price was 30c below what it closed at yesterday and I commented that higher oil prices will see this stock rise (well duh) and it has but the oil price rise has been a significant one. It has been mainly due to a very cold Northern Winter bumping up all sort of petrochemical products so it is unclear just how sustainable the oil price rise will be. Having said that the recent rise is bound to gain some traction even when the Northern ice melts away.

NZR is also subject to the NZ dollar US dollar cross but it looks like the Kiwi has finally started its appropriate ride down (ironically partly due to higher oil prices) to a value that reflects the dire outlook for our economy over the next 3-5 years.

These positive impacts for NZR seem to be conspiring all at the same time and should have a big impact on the fortunes of the company for 2011.

Historically the closing price of $3.91 yesterday is relatively low but you might want to put this on your watchlist if you are thinking of buying NZR and buy on any overall market weakness.

NZR @ Share Investor

Stock of the Week - Reprise: NZ Refining Ltd
Chart of the Week: New Zealand Refining Ltd
Stock of the Week: NZ Refining Ltd

Discuss NZR @ Share Investor Forum
Download NZR Company Reports


Stock of the Week Series

Pumpkin Patch Ltd
Fisher & Paykel Healthcare Ltd
Sky City Entertainment Group Ltd
Reprise 5: Contact Energy Ltd
Reprise 4: Contact Energy Ltd
Reprise 3: Contact Energy Ltd
Delegats Group Ltd
Reprise 2 : Contact Energy Ltd
Reprise: Contact Energy Ltd
Restaurant Brands
NZ Refining
Ryman Healthcare
Mainfreight Ltd
Fisher & Paykel Healthcare
Xero Ltd
Auckland International Airport
Sky City Entertainment Group
Burger Fuel Worldwide
Michael Hill International
Contact Energy Ltd
The Warehouse Group
Fisher & Paykel Appliances
Reprise: NZ Refining Ltd


Recommended Fishpond Reading



Buy The Intelligent Investor & more @ Fishpond.co.nz




c Share Investor 2010

Stock of the Week - Reprise: NZ Refining Ltd

New Zealand Refining Ltd [NZR.NZX] has continued to have a lacklustre financial performance since we last visited back in June of this year. Its half year profit for 2010 was down 26% on the 2009 result.

Since June though the stock has rallied in price from $3.10 - reaching a 52 week low of $2.90 in July - to close yesterday at $3.66 after reaching a high of $3.75 in early October.

NZR management have said themselves that the company remains under pressure from uncertain refining margins and a stagnant oil price, so the only possible reasons for the share price rise are the reinstatement of a dividend and a general improvement of NZX share prices.

The current dividend of 2c is historically low for the company and generally they have been paying a good 10% plus gross yield for most of the last decade.

If you can calculate that the global oil price is set to soar (it will but just when is another question) soon then the current share price is a good place to buy.

Clearly if you see the stagnant financial position continue because of a constant oil price at present levels then the NZR share price will come under pressure if profit does not improve.

Since the share price has increased by more than 15% since June it might be worthwhile selling if you are a short term holder.

Long term investors might seize the opportunity to buy on further weakness.


Stock of the Week Series

Sky City Entertainment Group Ltd
Reprise 4: Contact Energy Ltd
Reprise 3: Contact Energy Ltd
Delegats Group Ltd
Reprise 2 : Contact Energy Ltd
Reprise: Contact Energy Ltd
Restaurant Brands
NZ Refining
Ryman Healthcare
Mainfreight Ltd
Fisher & Paykel Healthcare
Xero Ltd
Auckland International Airport
Sky City Entertainment Group
Burger Fuel Worldwide
Michael Hill International
Contact Energy Ltd
The Warehouse Group
Fisher & Paykel Appliances


NZR @ Share Investor

Chart of the Week: New Zealand Refining Ltd
Stock of the Week: NZ Refining Ltd

Discuss NZR @ Share Investor Forum
Download NZR Company Reports

Warren Buffett: Investing & Life Lessons On How To Get Rich, Become Successful & Dominate Your Personal Finance From The Greatest Value Investor Of All ... Men, Success Principles, Business Advice) by Ashton Marshall

c Share Investor 2010