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Nawar Alsaadi

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  • Canexus Corporation Positioned For A 30% Rebound [View article]
    Jason,

    Thanks, glad the idea is of interest. As to your question, there is certainly no difference between the TSX and OTC beside the liquidity matter you have highlighted.

    Regards,
    Nawar
    Apr 21 09:21 PM | 1 Like Like |Link to Comment
  • How To Profit From Keystone XL's Indefinite Delay [View article]
    JFF7, yes there is room to add additional unit trains, room to develop their salt caverns (two already almost fully developed + room for 12 more) and there is the prospect of rising condensate handling (as back-haul on trains transporting bitumen). It is my believe however that CUS will partner with an experienced industry partner should it decide to expand those businesses, possibly a 50/50 joint venture. It is also worth noting that NATO as is has been valued between $500m and $700m, a 50/50 venture could net them $250m to $350m, and they would still be able to capture much of the future upside.

    Regards,
    Nawar
    Apr 21 03:37 PM | Likes Like |Link to Comment
  • How To Profit From Keystone XL's Indefinite Delay [View article]
    Prudent, here is the definition from Investopedia:

    "A provision, written into a contract, whereby one party has the obligation of either taking delivery of goods or paying a specified amount."

    http://bit.ly/1d7lFed

    Thus in the case of Canexus the bitumen producers either have to utilize the booked train capacity or pay for it throughout their 3 to 5 years contract. Those contracts are considered very low risk since the provider of the service is guaranteed to be paid regardless of the actual transported volume.

    Regards,
    Nawar



    Apr 21 03:03 PM | Likes Like |Link to Comment
  • How To Profit From Keystone XL's Indefinite Delay [View article]
    John, you make an excellent point. I also would like to add the KXL delay could boost the Board confidence in the likelihood of NATO being fully contracted, hence increasing their confidence in future cash flows, which should reduce the impetus to adjust the dividend.

    While the some analysts have been predicting a dividend cut, it is far from being a done deal. Also, it is worth stating that a truly harmful dividend cut is when the dividend is cut due to fundamental permanent deterioration in business, but in the case of Canexus any cut will be temporary in nature as cash flows are expected to approach a record in 2015 while capex will decline by over 90%.

    Regards,
    Nawar
    Apr 21 12:23 PM | Likes Like |Link to Comment
  • Canexus Corporation Positioned For A 30% Rebound [View article]
    Prudent, "take or pay" means the customer has to pay for the contracted capacity whether they use it or not. So for example, if an oil sands producer contracts with Canexus for two trains a week for 3 to 5 years, they would have to pay for this capacity even if they don't use it.

    Regards,
    Nawar
    Apr 21 11:41 AM | 1 Like Like |Link to Comment
  • How To Profit From Keystone XL's Indefinite Delay [View article]
    Mkarpoff, for a review of Canexus' dividend sustainability, please review this this excellent article by Canadian Small Cap:

    http://seekingalpha.co...

    Regards,
    Nawar
    Apr 21 09:52 AM | Likes Like |Link to Comment
  • Keystone pipeline decision delayed again, likely until after November elections [View news story]
    How To Profit From Keystone XL's Indefinite Delay

    http://seekingalpha.co...

    Regards,
    Nawar
    Apr 21 09:15 AM | Likes Like |Link to Comment
  • How To Profit From Keystone XL's Indefinite Delay [View article]
    Small Cap, thank you for the informative comment. Just one slight correction the remaining free capacity at NATO is 30% to 40%. Also, it worth adding that TD mentioned in a recent report that an additional 20% will be signed next month with a refinery partner, I presume with the delay at KXL, contracting will be accelerated and operating at 100% capacity by Q4/2014 is a given.

    Regards,
    Nawar
    Apr 21 09:12 AM | Likes Like |Link to Comment
  • Will Canexus Cut Its Dividend? [View article]
    That's a shame. By all means, I very much appreciate the great input you have provided, don't be a stranger!.

    Regards,
    Nawar
    Apr 19 09:55 PM | Likes Like |Link to Comment
  • Will Canexus Cut Its Dividend? [View article]
    John, indeed bitumen is safer to transport through rail than light oil. As for HCL, you are correct that HCL is most effective in carbonate rich formations. According to SLB almost two-thirds of the world’s remaining oil reserves are contained in carbonate reservoirs: https://www.slb.com~/media/Files/reso...

    In Canada Salve Point and the Duvernay are prime candidates, right now Salve Point (which is close to our unloading facility at NATO) is where most of the demand is coming from (average well consumes a massive 15000 cubic meters of HCI (http://bit.ly/1nhSKwG), when the Duvernay picks up that would be an additional source of local demand, but as you have indicated HCI is used through out the drilling and fracturing process in different concentrations, thus any growth in the O&G industry does translate into increased HCI demand. It is also worth noting that HCI is also used in food processing, pharmaceuticals, water treatment .. etc among other uses, thus overall economic growth leads to higher overall demand.

    In terms of supply, while the phasing out of fluorocarbons as a source of supply has been positive, the industry is adding incremental capacity (mainly chlorine burners) thus while I am bullish on HCI pricing long term 2014 will remain quite weak; and even longer term I apply only $30m EBITDA for the Chlor-Alkali segment, despite a much higher EBITDA number in the past ($50m 2011 and 2012).

    By all means, I view the chemical business as a background story to NATO right now, NATO could generate $60m in EBITDA in 2015, and once the salt caverns are developed, condensate handling volume is increased we could move to $80m in EBITDA in 2016, this is a massive number in comparison to their historic chemical business of $120m.

    Regards,
    Nawar
    Apr 19 09:44 PM | Likes Like |Link to Comment
  • Will Canexus Cut Its Dividend? [View article]
    You state the following: "The North American paper business is a dying business.", couple of comments:

    - Was the paper business thriving when you were bullish on Canexus a year ago?.
    - Sodium Chlorate is used in packaging and tissue bleaching as well, and I doubt toilet paper is going out of business anytime soon.
    - Neither me nor the author are pricing any growth in Canexus' chemical business, and this is despite the strong growth in the HCI market, yet the company NAV is still substantially higher than the current stock price.

    As finally for your comments about your energy names having no relation to KXL, all oil producers in Canada compete for the same pipeline space, a bottleneck for oil sands producers does impact none oil sands producers. Canexus is uniquely positioned to capitalize on the scramble for rail transport in the coming years, even if CUS was to rally by 10% on Monday it would still be a great buy.

    By all means Chris, as the author mentioned, it is healthy to hear an opposing point of view, this in the end is what makes a market, please keep researching and sharing all adverse developments and information that comes your way.

    Regards,
    Nawar
    Apr 19 07:02 PM | 1 Like Like |Link to Comment
  • Will Canexus Cut Its Dividend? [View article]
    Thanks for the link, this is why it is great that Canexus is converting 60% of its Chlorine into Hydrochloric acid, which has much higher margins and is enjoying a growth in demand. Also, I presume if some producers' Chlorine is not being transported, this has to be positive for prices.

    Regards,
    Nawar
    Apr 19 06:43 PM | Likes Like |Link to Comment
  • Canexus Corporation Positioned For A 30% Rebound [View article]
    Haole, there is a good discussion around Canexus' dividend in this article:

    http://bit.ly/1mmoCjy

    I fully agree with the article, I don't believe a dividend cut is a done deal at CUS. The way, I usually invest is buying something if it is already cheap enough rather than wait for it to get cheaper; it is true if the dividend was to be cut, the stock will swing down and could offer a better entry point, but considering the fundamentals, any such move will be temporary, and wont change the investment thesis around NATO and the chemical business. Basically I don't wish to miss a 30% to 40% upward move from current levels because of a possible dividend cut and a possible associated short term down swing.

    Regards,
    Nawar
    Apr 19 02:49 PM | 2 Likes Like |Link to Comment
  • Will Canexus Cut Its Dividend? [View article]
    Chris,

    I have to say I that I disagree with your analysis. The Sodium Chlorate market is an oligopoly, and prices are not as volatile as you seem to claim. Two weeks ago, I had drinks with the M&A guy at the world 2nd largest pulp company, and he was complaining about the inelastic pricing nature of Sodium Chlorate in North America.

    Chlor-Alkali is a different story for sure, but you can’t argue with the fact that the Asian producers are running at a loss, and the Canadian dollar is a tailwind for Canexues. Also, when you look at current oil prices, you can’t but assume a considerable jump in demand for Hydrochloric acid. Not to mention, both Axiall and Olin (which are quite well covered by US analysts) are arguing for a bottoming in Chlor-Alkali prices.

    Finally, even you admit that the Brazilian business is quite stable, thus with only Chlor Alkali (20% of EBITDA) quite volatile, I would attribute a certain stability to CUS cash flows.

    Most importantly, you seem to be ignoring the elephant in the room: Keystone has just has been delayed indefinitely. This is a game changer for CUS, and will insure the NATO facility running at full capacity for several years, not to mention the potential for further expansion, possibly in collaboration with an industry player.

    I saw from your well written articles that you were quite bullish on Canexus a year or two back at the $8/$9 level. Certainly no one is calling for a move to such a level anytime soon, considering the dilution since, NATO bad’s execution and a weaker chemical pricing, but a move to the $6 to $7 range is perfectly achievable.

    As for your comments on oil stocks, I have a been a bull on Canadian energy for many years, and have owned sizable positions in the sector, but you can’t argue that the negative news on KXL and the recent negative news on Northern Gateway won’t put a damper on things, expect money to move out of the sector over the next few months as the transport bottleneck issues come back to the forefront. A partial reason for that 50% upward move you mentioned was a prevailing optimism about KXL being approved in May. Longer term though Canadian energy is the place to be, but short term the likes of Canexus and Gibson is where money is going to go.

    One final note, I know the author of this article, and he is one of the smartest analysts around, he is not relaying on banks for his work on CUS, even though he is referring to their work in his analysis. I have seen his DCF and valuation work on the company, and I would consider his DD and work quality top notch.

    Best of luck,

    Regards,
    Nawar
    Apr 19 10:02 AM | 1 Like Like |Link to Comment
  • Keystone pipeline decision delayed again, likely until after November elections [View news story]
    This delay will have a very favorable impact on the bitumen by rail players, most specifically Canexus (TSX: CUS) and Gibson Energy (TSX:GEI), here is my write up on Canexus from earlier this month:

    http://seekingalpha.co...

    Regards,
    Nawar
    Apr 19 01:17 AM | 2 Likes Like |Link to Comment
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