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quote:Over 50% upside seen in NZ Refining Co
While refining margins have been strengthening for the past few years, the analysts at CSFB have taken a number of factors into consideration and as a result see potential share price upside in excess of 50% to New Zealand Refining Company’s (NZR.NZ) current share price.
Price elasticity of demand has been low recently, the analysts point out and this has driven changes to their refining margin forecasts with the outlook seen as generally improving.
CSFB new mid-cycle refining margin forecast for the Asia Pacific region has risen by 40% to US$3.50/bbl, while FY05 forecasts have been increased by 60% to US$4.00/bbl.
Incorporating the new Singapore refining margins into earnings forecasts sees FY05 profit expectations rising by a whopping 277% and FY06 by 121%.
The company’s valuation rises 86% to NZ$32.00 and its target by 80% to NZ$34.70, not bad for a stock that closed yesterday at NZ$22.25.