ALD - Ampol Limited

[Paul Ellis]

I thought CTX would get more price uplift from the WOW/Petrol deal - seems pretty good value around current levels but I thought it looked good at $13.00 so who knows???

 

[riverred]

Well, CTX sp rose unexpectedly today. I guess I had hesitated a day too long. After waiting for weeks for the sp to drop below $10.00, when it did so yesterday, I worried about another $1.00 sp drop. Drat! My cautiousness was a hindrance this time.

 

[skc]

Well, CTX sp rose unexpectedly today. I guess I had hesitated a day too long. After waiting for weeks for the sp to drop below $10.00, when it did so yesterday, I worried about another $1.00 sp drop. Drat! My cautiousness was a hindrance this time.

May be a blessing in disguise. Look up the term "sucker rally".

CTX is one of the stocks that I don't really understand the fundamental drivers...

Is it crude oil price? Probably not as they will just jack up the petrol price at the browser to compensate?

Is it overall economic activities that determine how much people drive? May be, but there must be a baseline demand there somewhere?

Is it operational and cost efficiencies? How much of their current refining capacity is utilised? What's the ratio between fix and variable costs?

Is it retail sales? But how much profit is generated from their little stores?

So many questions... any one care to share some answers?

 

[oldblue]

I understand that the key profit factor is "refining margin".

But you'll need someone with a better understanding of the industry to explain it and how it is calculated.

 

[riverred]

To obtain some answers to your questions, try caltex.com.au. There is an FAQ section on the lowest icon in the top right corner of the homepage.

I doubt that you will get those revealingly detailled financial info to strengthen your investment analysis because these are trade secrets to enable CTX to survive in the high-competition-low-margin fuel refining industry.

Of much interest to investors are that:
- the AUD-USD exchange rate plays a significant role in affecting profit.
- non-fuel retail sales margin is 70%.
- fuel retail sales margin is only 3%.

This means that the market is keeping an eye on the exchange rate movements and the outcome of the planned purchase of the Mobil service stations. As the AUD is nearing parity to the USD and while the purchase of Mobil is subject to ACCC review, CTX's sp will understandably drop. This is further exacerbated by the board's caution that 2H will be a tougher year for CTX. Hence, there has not been any div for the last two seasons.

My guess is that the near-term upsides for the sp are likely to be the successful Mobil service stations purchase and a declaration of a good final dividend.

 

[oldblue]

I remember reading some time ago that Caltex was strengthening its position in the Australian refining industry, partly due to the aging and subsequent uncompetitiveness of much of the opposition.
If this is correct, and bearing in mind that refined fuel from Singapore etc is also imported, it seems to me that the refining margin will increase in importance to CTX as it increases supply to other brands.

Again, just a thought that needs some expert assessment!

 

[riverred]

I think that CTX's plans to strengthen its hold on the Australian oil refining industry will need to take into account several factors, including:

- Competition from the huge Indian, Chinese and Korean refiners, some of whose individual annual production is close to Australia's national production.
- The voluminous oil products imported into Australia's eastern seaboard cities from nearby Asian refineries.
- Australian refineries suffering from subtantial disadvantages in regulatory, operating & capital costs.
- The surplus regional oil products are projected to increase from the current 2% to 8% by 2014, before falling rapidly.
- Unlike the Asian countries, Australia doesn't offer excellent investment and taxation incentives for investing into refining infrastructure.
- Despite CTX boasting that its oil products are of premium quality, Australia's fuel regulatory standards actually lag behind those of Hongkong, Japan and Korea. Our standards are about on par with NZ's and Singapore's.

That's not to say that CTX doesn't have its competitive advantages, but we should be realistic about the larger environmental contexts.

 

[McCoy Pauley]

Bad news for Caltex today with the ACCC rejecting an application to approve Caltex's proposed acquisition of 300 Mobil service stations.

http://www.theage.com.au/business/watchdog-blocks-caltex-bid-for-mobil-servos-20091202-k5cz.html

Caltex has issued a release to the ASX to say that they're considering their options in response to the ACCC's decision.

http://www.asx.com.au/asxpdf/20091202/pdf/31mhm8ylr7473g.pdf

Disc - I hold 200 shares.

 

[Taltan]

Taken a real battering lately, now at $8.02. As said on here before I think the biggest issue defining their profits is refining margins. With the $AUD so strong and oil sold in $USD is this why they're not making profits. Also I know they were knocked back by the ACCC.

Is anyone else interested in this one as seems to me it should fix itself at whatever point the $AUD drops to more sustainable levels. I'm weary though because I also don't know much about what CTX do?

 

[McCoy Pauley]

Bought 200 shares when Caltex floated way back when (note to self - will need to find out the float price for the purpose of CGT) and finally sold out my holding this morning, having watched my paper profit fall since the ACCC's decision.

The share price started falling when the new CEO's first decision was to announce that he would scrap the payment of the interim dividend. There was hope that the ACCC would allow the takeover of the Mobil servos to go through but when the ACCC knocked it on the head, that was the death knell as far as the share price went.

The CEO has some grand plans to diversify Caltex's operations (which need to happen) but there's going to be some pain for shareholders until he's managed to complete his grand design.

 

[Miner]

Taken a real battering lately, now at $8.02. As said on here before I think the biggest issue defining their profits is refining margins. With the $AUD so strong and oil sold in $USD is this why they're not making profits. Also I know they were knocked back by the ACCC.

Is anyone else interested in this one as seems to me it should fix itself at whatever point the $AUD drops to more sustainable levels. I'm weary though because I also don't know much about what CTX do?

Hi Taltan

I hope CTX comes better.
I was intrigued to learn that you did not know what Caltex does and have such a good interest on its share price.
I am sure you have seen Caltex petrol pumps in the city you live ?
May be have a look http://www.caltex.com.au/ to know more about Caltex.
Probably it is time that CTX holders should know more about their companies and just not the share price and then grill the CEO to either perform or strip him down from his seat. CTX CEO is the person who predicted oil to reach $200 a barrel by the end of 2009. I wonder why he is getting paid still.

I am a prospective investor of CTX and not a holder. Whenever I thought to invest on CTX the price slumped. Looking their performance or lack of it, strong AUD, low refinery margin May be I wait for $5 to buy it

 

[Taltan]

Miner, My interest is because I think it might be low. Certainly the ACCC knocking them back should not have such a big effect - after all no acquisition that cash can be used elsewhere.

I know what they do on a basic level, they're a top-down oil refiner. What I meant is that unlike a bank, a telco, a miner etc. I'm not familar with what drives their profitability other than refining margins.

I'm not worried that they didn't pay a dividend (more cash for them) or how high their invesntory may get (oil very liquid) so I am just wondering if management ok and the price is just a result of strong $AUD and the ACCC decision.

 

[Miner]

Miner, My interest is because I think it might be low. Certainly the ACCC knocking them back should not have such a big effect - after all no acquisition that cash can be used elsewhere.

I know what they do on a basic level, they're a top-down oil refiner. What I meant is that unlike a bank, a telco, a miner etc. I'm not familar with what drives their profitability other than refining margins.

I'm not worried that they didn't pay a dividend (more cash for them) or how high their invesntory may get (oil very liquid) so I am just wondering if management ok and the price is just a result of strong $AUD and the ACCC decision.

Thanks a lot Taltan

What you said makes more sense.

Caltex operates fuel stations, refineries, makes additives for fuel.

Caltex owns and operates two petroleum fuels refineries with a combined capacity of more than 35 million litres per day, making Caltex the largest refiner of crude oil in Australia. Now here comes the catch. When AUD goes up being a high Australian content the cost of operations for Caltex goes up and hence the profit margin goes down.

Caltex owns and operates 11 seaboard storage terminals and has three joint venture lubricant blending plants around Australia. These JV are with Shell and Mobil.

Caltex operates the largest oil company retail network in Australia. It has an estimated market share of more than 30% of the major transport fuels sold nationally.

The company also manufactures and markets specialty products such as bitumen, gases and waxes. It has presence in more than 60 countries

Vitalgas Pty Limited, a 50:50 joint venture between Caltex and Origin Energy is a retailer of LPG. Vitalgas has about 600 sites across Australia and is one of the major suppliers of LPG to the Australian market with an estimated market share of about 10%.

Interestingly enough Caltex is a brand off shoot from Chevron. It probably buys the crude from Chevron then as a profit centre refines the crude. In dual price transfer policy the profit margin shrinks and we the consumers pay the premium and shareholders get the burnt of low margin.

I am a Miner so please ask other O & G experts in the forum to update you.

I am pretty sure with the spread of your knowledge as demonstrated by your postings , everything I said is already known to you

 

[Taltan]

I am pretty sure with the spread of your knowledge as demonstrated by your postings , everything I said is already known to you

Thanks for the compliments but no I didn't know that much about CTX. What I said came from an accountant's knowledge. I missed out today its gone back to 8.44. Still on the radar, it looks good apart from the fact that the $AUD could hit parity or what you said about Chevron. Anyway thanks for the input

 

[McCoy Pauley]

Thanks for the compliments but no I didn't know that much about CTX. What I said came from an accountant's knowledge. I missed out today its gone back to 8.44. Still on the radar, it looks good apart from the fact that the $AUD could hit parity or what you said about Chevron. Anyway thanks for the input

Yeah, I'm kicking myself I didn't hold on for 6 more hours before pulling the trigger on my sell order.

 

[eddiewouldgo]

G'day all,

Technicaly CTX looks to have turned a long term corner.

High volume blow off lows in December 2009 down to around ~$8 held above the ~$6 lows of a year previous. Yesterday 14/1 we saw good volume to break from congestion at $9.50. Wave 3 underway if you're that way inclined to call the market.

2007/8 - ~$26 to ~$6
2009 - base build
2010/11 - $9 to ?

Fundamentaly CTX has exchange rate risk but the more I hear of USD parity the more I want to be short the AUD.

I have a long position in CTX with a horizon of 12-24 months.

 

[McCoy Pauley]

Really kicking myself I pulled the trigger on the "sell" order and that I didn't buy back in when the price dipped around $8.50 or so a month or so ago.

Very positive report released to the market and the market has responded accordingly.

DYOR.

 

[tminus]

New here, surprise that nothing has been posted in this thread for sometime as the share price has rocketed recently.

 

[Smurf1976]

Interestingly enough Caltex is a brand off shoot from Chevron. It probably buys the crude from Chevron then as a profit centre refines the crude. In dual price transfer policy the profit margin shrinks and we the consumers pay the premium and shareholders get the burnt of low margin.

Possible although if true then Chevron would simply be a middle man to a large extent I'd assume. The "major" oil companies such as Chevron produce only a small share of the world's crude oil, with national companies (Aramco, PDVSA etc) being the major players in crude oil production.

 

[mr. jeff]

hello everyone,
aside from where their profit comes from, has anyone got any theories / thoughts / speculation on where the "great" CEO is headed - anyone hear anything about the potential purchase of BP's refinery in WA? this may be an interesting one if BP is currently trying to raise cash...
Where is all the dividend cash being directed!!!? No Mobil, return the cash!