Heeding calls from private investors, the refining company's management has now completed the share-split option it announced in August and the new NZRC shares opened for trading on the NZX today.
The old NZRC stock had been the highest-priced in New Zealand for almost four years, had tripled in price during the past 12 months from about NZ$20, and had traded as high as NZ$66 last month.
Analysts expect brisk trading in the new shares, with the greater liquidity and potentially more investors, and by 1pm today New Zealand time NZRC shares were trading at NZ$5.98-6.00.
In late August NZRC reported a June half-year net profit of NZ$61.84 million, up 80% on the corresponding 2004 period, and announced the proposed split the same day. Since then average daily trading has tripled to 9676 shares, while the old shares increased in price by about 22%.
Also, the surge in the company’s shares had made them more expensive relative to their Asian peers. The old NZRC price equalled 15.3 times earnings per share, greater than the 14.1 average for the 22 publicly traded refining companies in the region.
Shares in the country’s only refinery – at Marsden Point near Whangarei – are tightly held, with Exxon Mobil, Chevron, Royal Dutch Shell and BP owning 73% and investment company Emerald Capital holdings another 14%.
But with the split, the number of shares not owned by the big five investors has now climbed to about 31 million. The split, the company’s first, brings the stock close to the NZ$4.71 NZX 50 Index benchmark average.
Splits are generally positive for stocks if they are done at the right time and analysts say this one looks good, given the continuing scenario of high world oil prices and tight global refining capacity.
Also, NZRC recently completed its NZ$180 million Future Fuels upgrade, enabling the refinery to make cleaner (ultra-low sulphur and benzene) fuels in compliance with changes in the nation’s fuel specifications. As well, the company is investigating the feasibility of expanding refining capacity by as much as 20% to meet rising domestic fuel use.
Other energy companies to have split their stocks recently include Austria’s OMV, France’s Total, and the biggest United States refiner, Valero Energy.
