The spread can change as much as 25cents a month. The Saudis' manipulation of prices for energy will end after the first week of November. Thereafter the spread should increase.
Stifel Nicolaus notes, "We are initiating with a Hold rating and fair value of approximately $14.00 to $17.00 given its peer group. We are forecasting distributions over the next twelve months of $1.56 and FY13 of $1.28. We note our fair value is highly sensitive to the propane-to-propylene spread and our estimates could prove conservative should the spread come in stronger than currently forecasted."
maybe yes...maybe no.....my guess is they are at about .35 cent spread right now given crude pricing, and that gets them about $1.35 on the div....they were promosing 2.00....that's about 12.5% yield at current 10.50 price...and seems to me they IPO'd at 17 on that $2.00 buck divy which was 11.75%....so while it's certainly reflecting a discount....it's not aggregious....of course, if we get a crude rebound...also, they suck at IR...I've callled 'em three times and no response and I own a bunch a shares here recently purchased in the mid 10's...they can go negative on earnings if spreads don't hold....this is an odd duck...also, I have no way of figuring their derivatives out as they are as opaque as they come....so it's hard to say what the impact of those is on their costs....spreads could be a lot worse if their costs are locked in higher....
They said in the 10-Q that spreads were down to $.30/lb. Of course, it is very difficult to determine spreads because we are not fully aware of the price they are paying relative to market prices for propylene and propane.