ALD - Ampol Limited

[Muschu]

Chart view FWIW, non log.

May have found a bottom, with a higher low and high.

Red lines resistance.

Green circles possible breakout points.

Thanks kennas and Kymne. I don't know how to interpret a chart. Do the comments above [which I went to a glossary about] suggest that we may be near a buy time but that growth expectations are only modest and that the short-term rewards are more likely to be in the dividends?
And may I ask what FWIW means please?
Thanks. I'm working with chart-knowledge that can only go in one direction...
Cheers
Rick

 

[Sean K]

Thanks kennas and Kymne. I don't know how to interpret a chart. Do the comments above [which I went to a glossary about] suggest that we may be near a buy time but that growth expectations are only modest and that the short-term rewards are more likely to be in the dividends?
And may I ask what FWIW means please?
Thanks. I'm working with chart-knowledge that can only go in one direction...
Cheers
Rick

Support and resitance are points on the chart where a stock stops at, or bounces off. This can occur both horizontally and diagonally on a chart. On the way down, better support is where the stock has found previous resistance on the way up; and on the way up, more resistance is where there was previous support on the way down. When a stock breaks resistance on the way up, this is a good thing, breaking support poor. Stocks will only generally be considered going 'up' if they are making higher lows and highs in the chart. However, there can be short, mid and long term perspectives on this, of course. From the chart commented on previously, there is resistance at 16 and lots more between 19 and 21. Until these are broken, the stock is at risk of trading sideways. As a long term investor in blue chips, you would be less concerned with the shorter term aspects of price movement. However, my personal approach is to keep in something that is at least mid term up, or the money is better in the bank earning interest. In regard to CTX, it is back to where is was in May 05, so it's definately not trending long term up IMO. Mid term it's way down, and will be short term up when it makes some higher highs and lows and breaks those resistance lines. All the best, kennas

 

[gfresh]

I looked a bit at Caltex due to it's attractive P/E and dividend.. however I cannot see it rising strongly due to a few concerns.

The main concern with Caltex I have read in a couple of reports, is that the profit margins for Caltex (and other refiners) is gradually shrinking. While the price of oil is going up, they pay for their oil in $AUD, so the USD/AUD eats into that right now. It's also hard to ratchet up petrol prices equally with oil price rises due to consumer concern, and probably Government pressure.

Strong competition from Asian refineries is making it more difficult for local refineries to compete effectively, which also doesn't help.

With Caltex, apparently it's refinery equipment is starting to get quite old, and will require high expenditure in the near future to keep it up to scratch. This of course may require a lot of costs incurred in maintenance or replacement - not good in a difficult finance market.

Then again, it's got 4 "strong buy" recommendations, and 6 "moderate buy" recommendations (total 10 brokers) which is pretty high.

 

[Muschu]

I looked a bit at Caltex due to it's attractive P/E and dividend.. however I cannot see it rising strongly due to a few concerns.

The main concern with Caltex I have read in a couple of reports, is that the profit margins for Caltex (and other refiners) is gradually shrinking. While the price of oil is going up, they pay for their oil in $AUD, so the USD/AUD eats into that right now. It's also hard to ratchet up petrol prices equally with oil price rises due to consumer concern, and probably Government pressure.

Strong competition from Asian refineries is making it more difficult for local refineries to compete effectively, which also doesn't help.

With Caltex, apparently it's refinery equipment is starting to get quite old, and will require high expenditure in the near future to keep it up to scratch. This of course may require a lot of costs incurred in maintenance or replacement - not good in a difficult finance market.

Then again, it's got 4 "strong buy" recommendations, and 6 "moderate buy" recommendations (total 10 brokers) which is pretty high.

Surely the professional analysts take into account the negatives, as listed above by a number of posters, to SP forecasts. The analyst companies on JNArena ALL have a buy [most very recent] on CTX. Not only that, but they have an average projected target price of over $30. That is a huge move from where they are now at under $14. Do such analyst companies have other agendas at work?
I understand that there is a great deal of expertise on ASF but I am quite puzzled by the discrepency between a number of ASF member opinions and the consistent views of companies that clearly see strong forward growth.
Me no understand...........

 

[gfresh]

For the positives, I was pointing out some of the negatives, and which are pointed out themselves in their 2007 yearly report. Even they state the biggest issues for them are decreased margins (largely due to higher oil prices), maintenance costs, and unfavourable exchange rates (p.6). Will this improve over the course of this year, or in fact be worse?

For those sorts of "target $30" reports.. at the moment, I can see a consensus through commsec (10 analysts, the large names) forecast median EPS for 2008 of $1.378.

On a forward P/E of 10 that's obviously $13.78 (approx current price), which I agree is maybe too low. However, to reach a price of even close to $27.56 thats a ratio of 20. That's a very generous ratio, especially in the current bear market environment. Maybe things will change later on in the year, who knows.

If we are talking short-term, in effect the analysts are stating that 2008 profits are likely to be very much down (-42%) on 2007 from their own estimates. On one hand they are issuing "strong buy" recommendations, yet according to them, net profit will be shrinking this year. There is a contradiction there.

Maybe they have longer timeframes than I am thinking and this is where the difference lies. If we are talking 2-3+ year target then maybe they are looking at longer term factors.

Anyhow, I am just unsure with a few uncertainties out there on this stock. No need to listen to me if you disagree, it's just one opinion. Most of us are just amateurs here.

 

[Muschu]

Support and resitance are points on the chart where a stock stops at, or bounces off. This can occur both horizontally and diagonally on a chart. On the way down, better support is where the stock has found previous resistance on the way up; and on the way up, more resistance is where there was previous support on the way down. When a stock breaks resistance on the way up, this is a good thing, breaking support poor. Stocks will only generally be considered going 'up' if they are making higher lows and highs in the chart. However, there can be short, mid and long term perspectives on this, of course. From the chart commented on previously, there is resistance at 16 and lots more between 19 and 21. Until these are broken, the stock is at risk of trading sideways. As a long term investor in blue chips, you would be less concerned with the shorter term aspects of price movement. However, my personal approach is to keep in something that is at least mid term up, or the money is better in the bank earning interest. In regard to CTX, it is back to where is was in May 05, so it's definately not trending long term up IMO. Mid term it's way down, and will be short term up when it makes some higher highs and lows and breaks those resistance lines. All the best, kennas

Cripes what has happened to CTX today? Is this a sideways movement or is there something else going on?

 

[heredownunder]

Hey! What is with Caltex? Close up nearly 6%. Oil Price up.
Did it just get over sold (shorted) and now trying to make a come back? Are analysts saying it should never have gone through this dip in SP and should be back on the old trend line at $30? Is the SP now forming a consolidation wedge and about to take off again? Cheers.

 

[shadow123]

Any new news on CTX?

Taking a bit of a dip , as expected with the drop in oil price.


Hopefully that gap will be filled sooner than later.

Average 39.9% target price for next 12 months from the big 6.

 

[Smurf1976]

I am an oil bull, think long term price only going one way. Does Caltex have any production assetts or only a oil refiner/retailer?. Without any production assetts a rising oil price would be only negative or at best neutral to Caltex share profitability.

Caltex is a refining and marketing company, not an oil exploration and production company.

I owned CTX when refinery capacity was tight and crude supply exceeded refining capacity but sold out quite a while ago (over a year).

If crude production peaks and declines then that leaves a surplus of refining capacity and makes for a highly competitive industry there, hence I don't see CTX fitting with my long term view of an energy bull market. Same with any other company predominantly involved with buying the resource and processing it (possible medium term exception of gas-fired power plants due to greenhouse issues).

 

[Ken]

CALTEX...

I don't think the market has caught onto how the economy is effecting CTX.

The US dollar is rising.. so this is good for caltex.

And the price of oil is falling so this is even better....

Look at newscorp, aristocrat, boral, and even james hardie... they have all responded well on the charts, yet caltex hasn't.

I think there is an opportunity here if the US dollar continues to strengthen against the Aussie...

The bottom line for CTX will be 20% better off due to currency movement alone, and with falling oil price this will help margins again won't it???

 

[bluecheese101]

Caltex is still falling at the moment despite the strength of the US dollar. However would the recent announcement of a cut in oil supply be a set back for Caltex? Anyone willing to share their thoughts on this?

 

[tommymac]

You would expect a cut in oil supply would increase the cost of oil and lower CTX margin. (All else being equal). However the oil price has not increased as we all know.

Some other information

CTX has increased its debt to >$900m taking its debt/equity ratio to approx 35% (previously 21%). I don't consider this high and it is still well below its available debt facilities of around $1,500m. It has always managed its debt well.

Assuming it continues its current capital expenditure of $1.17/share and the expected EPS of $0.485 (which I got from Aspect Huntley) I calculate the share price at $10-$11. Goldman Sachs agrees with a 12 month share price target of $10.75 indicating it has been oversold.

Funny thing is, I also invested in AWE, an oil producer. This has also been sold off. I'm no longer trying to understand the market, just looking for opportunities and looking to make a profit over a long term.

 

[Smurf1976]

The bottom line for CTX will be 20% better off due to currency movement alone, and with falling oil price this will help margins again won't it???

Don't forget that refined petroleum products (diesel, petrol, kerosene etc) are a market in themselves. It's the gap between the crude oil price and the refined product price that matters to CTX more than the actual prices of either. So it's the price of refining itself rather than the price of crude oil that matters here.

 

[DowJones]

What do people think of Caltex at these sub $7 levels?

I remember buying CTX last year at 20.00 and sold at 22. They have performed terribly since crude shot up earlier this year, hurting their refining margins. But since, Crude has come off, as well as the AUD, which should benefit Caltex.

Their forward EPS shows growth in earnings:

2007 2008 2009 2010
EPS 164.4 50.2 120.0 143.5
DPS 80.0 44.8 66.0 71.0

It also have a dividend yield of 9.1% - does anyone know what is the likelihood of a dividend cut for Caltex?

 

[tab96]

What do people think of Caltex at these sub $7 levels?

I remember buying CTX last year at 20.00 and sold at 22. They have performed terribly since crude shot up earlier this year, hurting their refining margins. But since, Crude has come off, as well as the AUD, which should benefit Caltex.

Their forward EPS shows growth in earnings:

2007 2008 2009 2010
EPS 164.4 50.2 120.0 143.5
DPS 80.0 44.8 66.0 71.0

It also have a dividend yield of 9.1% - does anyone know what is the likelihood of a dividend cut for Caltex?

Hey, I am a bit new to share trading (bought CBA shares... enough said) so feel free to educate if your inclined, but from what I see on the ASX website, 2008 dividends sum to 69c, which at $6.96 gives a dividend yield of 9.91%.

I guess what I am asking is how to you find these growth forecasts and why do they not correspond with the 69c DPS that I see?

I am interested in CTX at the moment, I am also interested in everyones take on their position regarding OPEC lowering production, its better for their margins to have cheap oil, which at the moment it obviously is, but this is likely set to rise. Also with the AU$ appearing to be on the rise since the Fed cut rates, this will likely be worse for CTX from what I understand. But surely a stronger dollar and increase in the oil price (aside from this being induced by OPEC) if sustained, would indicate strengthening economic conditions and would lead to a general rise in the ASX200 and hence CTX...

Any thoughts?

 

[tommymac]

The CTX SP has declined quickly recently.

Is this due to the decision on Mobil on Nov 11 or is there another reason?

I'll be grateful for any comments.

Cheers

 

[clayton4115]

well its definately looking abit sick, ive got a short in at the moment, more it goes down, the more i make.

How much did you get (units)?

 

[tommymac]

well its definately looking abit sick, ive got a short in at the moment, more it goes down, the more i make.

How much did you get (units)?

I've currently got 435 shares with an avg price of $12.084. However I had more but sold when it hit $15 so its not as bad for me as it looks overall. But I do need to make a decision on whether to hold or sell or maybe buy more.

Unless I hear some reason from someone else, I'm going to wait for the decision on Nov 11 before making a decision to sell.

 

[clayton4115]

well looking at the price today and its close, it looks like it has hit support, so there is a good possibility it will recover in price from now, dont know how strong it will hold this level

but the RSI is showing oversold levels.

 

[lenny]

Tommymac or anyone , Can you tell me where you got your information of the announcement on November 11th, Or is this just rumour?

Regards
Lenny