New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

Channel Infrastructure NZ Ltd / Equity Bottom-Up

<h2>Refining NZ (NZR) May/June 2021 Operating Statistics</h2>
Refining NZ (NZR) bounced back in the May/June period, requiring a much smaller fee floor top up relative to the March/April period.
Key points
<ul>
<li>Throughput for the period rose, up +34% on the prior year period and +50% on March/April, to ~5.2m barrels.</li>
<li>The gross refining margin (GRM) continues to fluctuate, up +171% on March/April to US$4.07/barrel. The Singapore benchmark margin weakened, down to its lowest level since the same period in 2020 at -US$2.62/barrel. The May/June period marked a fourth consecutive period of declines for the benchmark.</li>
<li>The fee floor top up was NZ$2.9m, a significant reduction on the NZ$18.2m top up required in March/April. The top up contributed to processing revenue of NZ$23.5m, which was flat on both the March/April and prior year period.</li>
<li>RAP throughput remained relatively flat, up +0.1m barrels on March/April to 2.5m barrels for the period. This is 75% of 2019 levels, dragged down by low jet fuel volumes that are currently ~40% of pre-COVID levels. The ongoing headwinds facing the Australasian travel bubble is expected to continue to inhibit this recovery.</li>
</ul>
Investment view
While the ongoing pandemic continues to weigh on current performance, NZR’s release of&nbsp;its Marsden Point Conversion Proposal (MPCP)&nbsp;has provided a clearer path forward. NZR shareholders are due to vote on the proposal on 6 August 2021.
Our rating is OUTPERFORM with a target price of $1.10.
Operating statistic summary
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/219/664/original/image_32753789721626827570294.png?1626827572" class="editor-image img-responsive" data-smartkarma-image-id="219664"></figure>
GRM reported vs. Singapore benchmark 
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Long-term GRM history – note increase in fee floor after NZR reduced capacity 
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/219/666/original/image_93727975641626827611272.png?1626827612" class="editor-image img-responsive" data-smartkarma-image-id="219666"></figure>
Andrew Harvey-Green&nbsp; Director / Senior Analyst, Equities
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.1&amp;permmsgid=msg-f:1705847084743546987&amp;th=17ac62e2b746586b&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ9eTeCUy1E4HRDF45LWbKV92JgtigSkOzzlL2EwYXULfaMLR3VrUE039gdM2Qjobge-D2Uhc0Ket-DbjLzsAto0p1ZlPRo08L9axBsgPSSphBvie9UlMZ9kg9w&amp;disp=emb" class="editor-image img-responsive"></figure>
 M: +64 21 483 541 |P: +64 4 495 8185 | TF: 0800 367 227&nbsp; Level 22, NTT Tower, 157 Lambton Quay, Wellington

Refining NZ (NZR) May/June 2021 Operating Statistics
Refining NZ (NZR) bounced back in the May/June period, requiring a much smaller fee floor top up relative to the March/April period.
Key points

Throughput for the period rose, up +34% on the prior year period and +50% on March/April, to ~5.2m barrels.
The gross refining margin (GRM) continues to fluctuate, up +171% on March/April to US$4.07/barrel. The Singapore benchmark margin weakened, down to its lowest level since the same period in 2020 at -US$2.62/barrel. The May/June period marked a fourth consecutive period of declines for the benchmark.
The fee floor top up was NZ$2.9m, a significant reduction on the NZ$18.2m top up required in March/April. The top up contributed to processing revenue of NZ$23.5m, which was flat on both the March/April and prior year period.
RAP throughput remained relatively flat, up +0.1m barrels on March/April to 2.5m barrels for the period. This is 75% of 2019 levels, dragged down by low jet fuel volumes that are currently ~40% of pre-COVID levels. The ongoing headwinds facing the Australasian travel bubble is expected to continue to inhibit this recovery.

Investment view
While the ongoing pandemic continues to weigh on current performance, NZR’s release of&nbsp;its Marsden Point Conversion Proposal (MPCP)&nbsp;has provided a clearer path forward. NZR shareholders are due to vote on the proposal on 6 August 2021.
Our rating is OUTPERFORM with a target price of $1.10.
Operating statistic summary

GRM reported vs. Singapore benchmark 

Long-term GRM history – note increase in fee floor after NZR reduced capacity 

Andrew Harvey-Green&nbsp; Director / Senior Analyst, Equities

 M: +64 21 483 541 |P: +64 4 495 8185 | TF: 0800 367 227&nbsp; Level 22, NTT Tower, 157 Lambton Quay, Wellington

Refining NZ (NZR): May/June 2021 Operating Statistics