Morningstar

Morningstar, Inc.

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Our AUD 3.00 fair value estimate is unchanged despite lowering our 2019 replacement cost NPAT forecast by 7.5% to AUD 242 million, including on an equity basis Viva Energy REIT and Liberty Oil earnings contributions. The cause of the decline is a relapse in refiner margins to historically low levels. However, we don’t think such low levels are sustainable and our long-term forecasts stand. Viva Energy shares fell 9% last week in sympathy with peer Caltex’s disappointing earnings guidance, and at…

No-moat Viva Energy’s share price has taken tentative steps toward a recovery following a rout precipitated by a corrected dysfunction in the Coles alliance, and exacerbated by the collapse of regional refining margins. At AUD 2.30, the shares are 35% above December AUD 1.70 lows, although they remain below 2018’s AUD 2.50 IPO price and even further below our unchanged AUD 3.00 fair value estimate
Regional refining margins fell sharply from the second half of 2018 because of an oversupply of…

We make no change to our AUD 3.00 fair value estimate for no-moat Viva Energy. This is despite lowering our 2019 EPS forecast by 20% to AUD 0.13 from AUD 0.16. We don’t see long-term implications in the drivers, with Viva still only in the early stages of implementing strategies to improve retail price competitiveness following the previously discussed re-jig of the Coles Express agreement
Viva says its retail business continues to struggle with challenging trading conditions impacting retail…

<p>We make no change to our AUD 3.00 fair value estimate for no-moat Viva Energy. Our fair value didn’t anticipate the Coles impasse with associated volume degradation would persist. Viva and Coles have allowed common sense to prevail and rearranged their Coles Express retail alliance. Viva Energy will take full responsibility for retail fuel pricing and marketing, while Coles Express will remain responsible for operating the stores and provide the convenience offering. Viva will now collect the…</p>

<p>We make no change to our AUD 3.00 fair value estimate for no-moat Viva Energy. The company has again downgraded fiscal 2018 earnings guidance due to weaker-than-expected regional refiner margins. But we hold to our longer-term view, including assumed reversion of the refiner margin to a midcycle USD 9.00 per barrel in real terms. Viva says the actual refiner margin for December was just USD 3.30 per barrel, driven lower due to gasoline cracks falling on excess regional supply. Consequently, the…</p>

Australia

Viva Energy Group Limited markets petroleum products. The Company focuses on making, importing, and delivering the fuels, lubricants, chemicals, and bitumen. Viva Energy Group serves the mining, aviation, and marine industries in Australia.

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