I've been having another look as to where we stand with NFL for...

I've been having another look as to where we stand with NFL for the coming year.

Looking back to the original prospectus, they were forecasting Palm Oil to be $495 a tonne, and the profit for the 2007/2008 financial year would reduce by about $30 million for every +10% increase in Palm Oil Price

Given that the Palm Oil Price has increased by nearly 70% we could assume the profit would decrease by $200 million


Also the forcast selling price for Biodiesel in the US was 71 cents a litre. This was based on a Crude Oil price of $55 to $60 per BBL. If we assume the Crude Oil price has increased by at least 50%, that is $30 BBL, we can now assume the selling price for Biodiesel in the US is now 90 cents per litre*

A 25% increase in the selling price of Biodiesel would increase their profit by $120 million.


So we are about $80 million down on the original EBIT of $130 million, but we also lose $40 million because the commissioning date has been pushed back by 3 months


Summary: Don't expect a big profit for the 2007/2008 financial year!

BUT: 90 cents per litre is over $US1000 per tonne for Biodiesel.

AND: They now claim they can get $US1000 per tonne for refined glycerine even though they only budgeted for about $US500 per tonne in the orginal prospectus.

SO: Assume we buy Palm Oil at $880 per tonne and sell iBiodiesel at $1000+ per tonne and we can break even on that side of the operation (Assuming $80 million to run Singapore including costs of $20 million to ship the Biodisel to the US)

AND: Offset the Gyclerine price against the Methanol(2) price, gives us $500 tonne x 60,000 tonnes or $30 million profit, which is 10 cents per share



*Both these prices include the $1 per gallon US subsidy and take into account the costs to produce Diesel from Crude Oil, that is why the price only goes up by about 25%

(2) Basis of this is:

600,000 tonnes Palm Oil at $880 per tonne PLUS
60,000 tonnese Methanol at $500 per tonne

Gives

600,000 tonnes Biodiesel at $1000+ per tonne PLUS
60,000 tonnes Gyclerine at $1000 per tonne