Long Term View: New Zealand Refining Ltd

In this series of posts I am going to be looking at stocks listed on the NZX in relation to their returns to shareholders over the life of their listing -what shareholders would now see in their back pockets if they had invested in the company IPO. The calculation of returns includes dividends and tax credits.

New Zealand Refining Ltd [NZR.NZ] has been the best performing stock listed on the NZX in terms of returns to shareholders since its listing in Sept 1961 (we will start at an adjusted 25c per share from available 1989 data to make our comparison) $9.71c in net dividends (excluding the period 1961-1997. No data can be easily found for dividends) and 30% more in tax credits (see chart above) a 10:1 share split in 2005 and a 6:1 split in November 2009 gives NZR a slightly more than 7800% return (see chart below for the share price percentage gain against the average of all NZX indexes - does not include dividends, tax credits and the share split in its calculation) over the nearly 21 year listing of NZR (the period between 1961 and 1989 is excluded because no shareprice or dividend details are available so the return will be higher than stated here), an approximate annual net return just over 371.%.

This is approximately a 2000% better return when compared to the average of all NZX indexes.





Long Term View Series

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AMP Ltd
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Delegats Group Ltd
EBOS Group Ltd
Fletcher Building Ltd
Fisher & Paykel Appliances
Fisher & Paykel Healthcare
Freightways Ltd
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Mainfreight Ltd
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Restaurant Brands Ltd
Ryman Healthcare Ltd
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Telecom NZ Ltd
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The Warehouse Group Ltd


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

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c Share Investor 2010

Allan Hubbard's Statement on SFO probe into Aoarangi Securities

Allan Hubbard, the South Island's richest man, has the Serious Fraud office after him over his Aorangi Securities mortgage company and seven charitable trusts . Mr and Mrs Hubbard's personal assets and bank accounts – have also been placed into statutory management.

While I have no idea of the reasons for the SFO taking this action, they claim it relates to issues over inter-party lending and insufficient documentation.

Here is the statement issued in rebuttal by Mr Hubbard yesterday to his clients:

"I am writing to you following recent action by a Government department.

"I have operated Aorangi Security as a mortgage company for over 30 years and during that entire period interest has been paid quarterly and the clients have suffered no loss of capital and have a prompt return of capital.

"The current position of Aoarangi is approximately as follows:

"Mortgage and loans owing to Aoarangi: $126 million

"Cash at bank: $2 million.

"This adds to $128 million.

"Client desposits $88 million which means a surplus of $40 million.

"The $40 million surplus belongs to myself and family and all our equity has been subordinated to client interest, ie, the Hubbard family stands any loss before clients do.

"The Crown seems to believe that your capital is at risk under my management and have appointed a statutory manager whose job is to realise all the loans and repay you your capital. This will take time as it is not possible for borrowers to repay loans at short notice.

"There are sufficent funds on hand to pay interest due at June 30.

"If for any reason you do not receive your capital back in full and provided it is within my resources I will meet any shortfall.

"I extend my personal apology for what has happened.

"I am sorry that this action was taken by a government offical with little consultation with myself and can only conclude that the government official has been misguided in his action.

"In the past month I have been working on finding a solution to South Canterbury Finance affairs and hope to arrange an agreement with an overseas company, subject to confirmation by June 30 to inject a large amount of capital which would place South Canterbury Finance in a secure position for the future.

"As you will have read in the media in February last I introduced $150 million of assets into South Canterbury Finance to ensure that there was an equity for preference shareholders and that they suffered no loss.

"I don't believe in the history of New Zealand that any person has acted more honourably than myself." Allan Hubbard, June 2010.

On the surface it looks like Mr Hubbard has the figures on his side and that the SFO looks to have moved too early.

Hubbard's South Canterbury Finance has had poor fortune over the last year or so but Hubbard has introduced his own personal money into the company to cover any losses his clients may have incurred had he not.

I am not saying there is no fire where there is smoke but I am at a loss over this scenario when dozens of other finance companies that collapsed over the last 3 years haven't had the same sort of scrutiny.

This move by the SFO is going to have an impact on South Canterbury and there is likely to be a run on funds there as a result.

Simon Botherway, a director from the Securities Commission, has also been embroiled in controversy over a serious conflict of interest with him helping in making the decision to put Mr Hubbard into statutory management and having a brother, Jonathan Botherway, whose company was put into receivership last year by Hubbard's company Canterbury Finance.

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c Share Investor 2010

Chart of the Week: New Zealand Refining Ltd

The aim of this series of charts is to show the divergence - up or down - of the selected individual stock price away from the NZX 50 Index. The chart is a 1 year look to give some relevant background to any recent (two to three months) share price movements.

New Zealand Refining Ltd [NZR.NZ] has had a poor last year share price wise and 2009 half year result.

Over the last two months though the stock has dropped from around $3.80 to close at $3.10 at close of market last Friday. The NZX by comparison has been almost flat.

The current NZR share price is at a 52 week low after being at a high of $7.65 over the same period

If you were a chartist you would say this stock has been over-sold and is ready for a correction.

The company has been affected in the short term by lower refining margins, increased capital expenditure and a suspension of the dividend. This is unlikely to continue for the long-term and the first sign of a resumption in dividend is likely to see this stock surge in price.

Significantly the stock has a $1.92 per share asset backing.

Buy on further weakness or at present levels.


Chart of the Week Series

Mainfreight Ltd
Restaurant Brands Ltd


NZR @ Share Investor

Share Price Alert: New Zealand Refining Ltd 4

Share Price Alert: New Zealand Refining Ltd 3
Share Price Alert: New Zealand Refining Ltd 2
Share Price Alert: NZ Refining Ltd
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Stock of the Week - Reprise: NZ Refining Ltd
Chart of the Week: New Zealand Refining Ltd
Stock of the Week: NZ Refining Ltd

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Download NZR Company Reports

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c Share Investor 2010

John Palmer Tipples on the Shareholder

Air New Zealand Ltd [AIR.NZ] chairman John Palmer has decided to side with the politicians over the great credit card swindle of New Zealand taxpayers.

Good on him for openly declaring his indiscretions but shareholders and taxpayers shouldn't be paying for John's tipples after work.

John reckons:

mini-bar bills are "just part of commercial life".
The professional director said yesterday that he felt sorry for some MPs over criticism received for claiming expenses such as alcohol in hotel rooms.
"I've got a good deal of sympathy for some of them, as someone who travels a fair bit and who does actually have a beer out of the hotel fridge and puts it on the hotel account, and spends a huge amount of time away."
Often hotel rooms were places of work, where staff made progress on decisions with colleagues or guests, Mr Palmer said. "That's just part of commercial life." Read More at Stuff.co.nz
Mr Palmer is also a director of AMP Ltd [AMP.NZ] Rabobank in this part of the world and Chairman of State owned miner Solid Energy.
I would argue that Mr Palmer has breached a line when he considers that shareholders and or taxpayers should be footing the bill for his alcohol indulgence.
Alcohol is definitely personal spending and at minibar prices shareholders are getting an even rawer deal. Have you checked out the price of a minibar Mars Bar recently!
Am I being petty?
Maybe, but I think spending like this shows a contempt for those employing you and paying your wages and a culture of waste, especially evident at Air New Zealand and Solid Energy.
Shareholders in Air New Zealand and AMP should get in contact with the respective investor Centres and let them know they are not happy with John's free spending.
You should be annoyed with John and his attitude. It is your money that he is wasting and as shareholders and taxpayers you deserve much better.
It is indicative of further waste.
Contacts
Air NZ Investor Centre
AMP Investor Centre
Solid Energy

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c Share Investor 2010