qqq3,

Absolute rubbish. Everyone loves money but money is not everything in the world. The human race have been taught this by parents and teachers. I dont know about you, but where I come from, good manners is very important.

You have just discredited yourself.

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Posted by qqq3 > Apr 2, 2018 07:51 AM | Report Abuse

Please remember this , John

Good manners do not produce profits
Only the correct bets produce profits

at least in the stock market world.

3iii,

Naughty statement with an ulterior motive.

We all know that more people lose money than earn money in share market, not just hengyuan. You are trying to be cunning and twist things to support your own prior statements.

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Posted by 3iii > Apr 2, 2018 07:44 AM | Report Abuse

John_Lee

There are more losers than winners in Hengyuan since this stock was promoted here in June 2017.

Do you disagree with this statement?

qqq3,

Don't find fault for the sake of finding fault lah. OTB came up with a strategy for his subscribers to make money on hengyuan. Had they followed that specific strategy, they are still making money now, correct?

If they didnt follow his strategy but combined with their own strategy, and then they they lose money, then it is not OTB's fault isnt it?

It looks like the 2 of you have some personal conflicts. Am an outsider. Am just stating a 3rd party's point of view.

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Posted by qqq3 > Apr 2, 2018 03:24 PM

John...go ask him and his subscribers and search his conscience and tell us whether that is what is what happened.........

JayC,

Tapis oil is extracted from the Tapis oilfield located off Terengganu and is loaded in the Kerteh Oil Terminal.

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Posted by JayC > Apr 2, 2018 11:19 AM | Report Abuse

also the most expensive oil in the world is tapis oil from sabah

happy888,

I think that's just a kiasi statement by Kenanga. It is like saying:

- a manufacturer who may not get product orders after building a new factory
- an IT company who may not get users after completing a new software
- a contractor who may not get projects after purchasing new excavators and machineries

You get my drift. There is always risks in businesses. But a good management team would have assessed their risks prior to embarking on their capital expenditure to match market demands and needs.

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Posted by happy888 > Apr 1, 2018 07:58 AM | Report Abuse

Kenanga Research highlighted in a Jan 18 report that there is a risk of impairment in FY19 should Vahana fail to secure a charter within 12 months of the Aryan's delivery given that financing banks will only release funds to Eversendai upon confirmation of a charter contract

qqq3,

I am not an OTB subscriber. But he has said this so so so many times that I have already known it by heart. He recommended to buy at RM5+. Sold at RM17+. At RM14+ and RM12+, buy back 50% of previous shareholding.

By that, initial capital and some profits are already in the bag. Now play with profit only. Which is why even if share price is 0, he will still profit from hengyuan.

You describe yourself as super intellectual and all, and also super like to comment on everyone one. But you dont read what pple write. And yet you want to comment so much like so smart.

Read. Read properly. If your objective is to find fault with others and make yourself look superior, you will only see what you want to see. Read and understand ok, qqq3.


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Posted by qqq3 > Apr 1, 2018 06:11 PM | Report Abuse

OTB.....highly unlikely that , net net, you make money on Hengyuan considering you have been issuing buy calls on Hengyuan all the down from HY $15 to now.....but that is only me speaking.

3iii,

You call yourself an expert in psychology. You must know why you are such an unpopular person.

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Posted by 3iii > Apr 1, 2018 03:54 PM

I face huge problems in any forum

Emil,

Anything can happen in this world. You need to determine your risk appetite to see if the share market is suitable for you.

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Posted by emil > Mar 29, 2018 08:35 PM | Report Abuse

An possibility the north Sabah deal collapse due to technical reasons thus may caused limit down

Alex,

There is no such thing as a 'true valuation'. 3iii says 'sometimes you just know' what it is.

And... 3iii is never wrong. Never. Never ever. Never, never, never.

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Posted by Alex™ > Mar 29, 2018 05:43 PM | Report Abuse

Btw, recent inclusion of HRC and PetronM in the MSCI index, and the post-effect of Trump's tariff trick will temporarily blur the true valuation of both stocks.

Investor48,

Some are lecturers.

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Posted by Investor48 > Mar 29, 2018 05:33 PM | Report Abuse

Does it matter?
Just trust yourself and don't be easily influenced by 'fake news'
Many are storytellers here

From now til nearer to the next call warrant expiry, we'll probably see our IB agents planted here going quiet. Clap clap clap...

3iii,

Are you promoting guessing in investing? *facepalm*

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Posted by 3iii > Mar 29, 2018 12:57 PM | Report Abuse

Sometimes in investing, you do know.

You do not need a weighing machine to know this person is obese.

3iii,

How do you know this when you have not done up a proper FCF?

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Posted by 3iii > Mar 29, 2018 12:49 PM

Given the huge capex of Hengyuan for this FY2018, its FCF is most likely in the negative.

omightycap, this seems like an arbitrary exercise. Please don’t scare less knowledgeable member here like this. This 5 minute work spent by you may have negative repercussions on non-financial savvy members. Be responsible. Valuation should not be done like this

3iii,

Why not a normalised 2017 results with effects of Q3 2017 taken away?

Always remember, recent info are the strongest for forecasts and projections. The further away the info from now, the less weightage should be placed upon it. That's basic statistics.

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Posted by 3iii > Mar 28, 2018 03:54 PM | Report Abuse

It is better to be conservative and prudent in your valuation.

Use the years 2015 or 2016 earning as your benchmark.

Don't use 2017 earnings.

Ricky Yeo,

From your reply, it is likely that you have not been following Hengyuan closely. Anyway, here are some info to share with you.

1. There are 2 phases in this 2018 major upgrade exercise. Phase 1 costing US$135m is to allow the refinery to economically produce Euro 4M Mogas for RON 95. Our government has set a deadline of 1 October 2018.(Note: Euro 4M Mogas for RON 97 has already been implemented in Malaysia in 2015).

Phase 2 costing US$25m involves replacing major components of the catalytic cracker.

2. Neither Shell nor Hengyuan has been delaying maintenance. You can't do that with a refinery. Minor maintenance have been carried out from time to time. For example, in Q2 2017, there was a 3 week downtime due to a minor turnaround maintenance.

All refineries are also subject to a statutory turnaround maintenance every 3 years.

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Posted by Ricky Yeo > Mar 28, 2018 03:30 PM | Report Abuse

major upgrade at 800mil posted some interesting question. Since for the past 10 years, the company never had such a big capex, does that mean Shell has been delaying maintenance hence required such a big upgrade now? Possibly but unlikely. If that isn't the case, does this 800m is anyway related to the assets already in place. Upgrade can really mean 'adding things' on top of existing assets, which is more of a growth capex than maintenance capex.

3iii,

Where did you find the 'extended from 2 months to 2.5 months'? You are coming up with stories again!

There is a delay in the fabrication of the equipment. The fabrication process is in the making now. Meanwhile operations are still ongoing at the plants. Once the new equipment are ready, it will be fitted onto the plant. You need to understand how this upgrade exercise is being done and not come up with your version of cerita dongeng. Please be a responsible member of i3.

Even if there is a delay from 2 to 2.5 months, how does that cause the capex to increase? You commission your supplier to fabricate a part, if they are slow in delivery, you pay them more?

Ricky Yeo,

RM800m for 2018 major upgrade lah.

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Posted by Ricky Yeo > Mar 28, 2018 01:11 PM | Report Abuse

That would depends what that 800m is used for. If it is anything other than normal maintenance, 200m will still run every year and gets higher.

Ricky Yeo,

What i meant was you cant have RM800m in 2018 and then still continuously incur RM200m every year thereafter.

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Posted by Ricky Yeo > Mar 28, 2018 12:58 PM | Report Abuse

Hengyuan depreciation is sitting at RM200 mil a year, is that amount for capex ridiculous?

3iii,

Re 2018 upgrade exercise.

I quote you: "In 2018, the management has guided that its capex will be 800 m RM. (I think this may be on the lower side of the actual estimate.)"

Is this not an irresponsible claim? You are making an unsubstantiated claim. This is a big exercise. Hengyuan is a big company. They have a competent management team. They have done their budgeting for this exercise and they have duly disclosed this in their quarterly reports (see Capital Commitments note).

This is a technology transfer from the parent company in China whom has done it. But you, 3iii, know better?

3iii,

Re capex.

RM200m per annum for maintenance? That sounds ridiculous. What is your basis for this? Historical data certainly does not support this.

Please do not say that it is capital investment. They are already doing a major exercise in 2018. Why would there still be RM200m incurred every year thereafter? You are finding excuse to increase cash outflow.

3iii,

Re normalised earnings.

Management of hengyuan did not say 2017 was an exceptionally profitable year. They specifically said Q3 2017 was. Don't misrepresent what was said. That's irresponsible.

To achieve normalise earnings, see David_Tan's calculation. He listed all 8 quarters of 2016 and 2017, then removed the highest and lowest quarters. That's good statistical practice to eliminate outliers.

kcchongnz,

I agree with qqq3’s view. I do think that your build-1st-pay-later concern is conservative. It may not be the usual business syle in Malaysia but it is not exactly an alien concept elsewhere. We can’t go do business in other countries and expect the customers to play by our game.

There will always be risks in business. What is important is the business planning and execution.

Average of 5 days before expiry date on 30th March

I dont think hengyuan can up up up next few days. Looks like we need to be a little patient and wait for CG to expire. I checked Macquarie’s website. Their settlement price is calculated based on closing prices of 23rd, 26th-29th March.

https://www.malaysiawarrants.com.my/education/faq

Tom,

Cause Tan KW does not adopt your kind of approach and attitude.

Anyways, lets not continue with this argument. I was just communicating with OTB. I have no intention to engage you. You already have enough hatred and ill intentions here to keep your panties twisted.

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Posted by Tom > Mar 27, 2018 09:49 PM | Report Abuse

Tan KW 转了一堆中文文章，你怎么不去举报他啊，lol
还是你身为华人不过不懂中文，觉得中文很cheap啊？

Tom,

You are doing yourself a big disservice with your attitude here. It’s a shame.

Gator,

RM4.20 is not something created by 3iii. RM4.20 is THE value of hengyuan. 3iii's mango tree cannot be wrong.

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Posted by gator > Mar 27, 2018 06:05 PM | Report Abuse

So the 4.20 is from 3 eyes ka?

Investor48,

Or you can grow a mango tree, write a valuation figure on each mango and pluck one.

Do make sure your mango seed is sourced from 3iii's mango tree.

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Posted by Investor48 > Mar 27, 2018 06:02 PM | Report Abuse

Thanks John_Lee
Finally, I understand he is just the kiasu type.

I have been burning candles for many nights but still can't find the answer for 4.20.
Ini math memang manyak susah lah...macam PHD punya standard leh.

Ok..Ok..I give up lah...just use INSTINCT/FEELING loh..

Investor48,

3iii can talk theory only. When talk theory, no need to think about how to apply. Being the type who goes around finding fault with others, whenever someone comes up with another perspective, he can use a different theory to suit his argument. It is much harder to twist and turn with cold hard numbers. By that, he can always be the winner.

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Posted by Investor48 > Mar 27, 2018 04:42 PM | Report Abuse

@3iii

I have been waiting for your enlightenment on how you come out with 4.20.

Tom & sam336,

I am not an OTB subscriber but I know pple who are. I have also seen his postings in i3. Your personal attack on him is not fair. You paid your subscription fee and he gave you some stock buying guides. When the shares were making money, I am sure you were praising him to high heaven. But then you did not take profit and when the share price fell, you curse him. Where's the logic?

Some stock guides he gave did not make money. And you curse him as well. Nobody can be 100% correct and OTB's value is that he makes more good calls then bad calls. That is fair. Furthermore, what is happening in the global market now is beyond anybody's control.

If you pay some fee and expect a 100% hit rate to make you rich, then you are living in fantasy. Based on your actions (which as an outsider I feel is of bad taste), the share market is not your cup of tea. You should re-consider your investment options.

Tom,

Would appreciate if you could communicate in English or BM so as to promote the spirit of inclusiveness for the benefit of i3 community members who are not fluent in Mandarin. I know that there is Google Translate but Iets keep things muhibbah and promote our Malaysian culture of mutual respect and understanding.

Note: I am aware that I am not the 1st person to make this request.

Thank you.

Feet,

You sound so confident over a matter you have no understanding of. Please read up on interim dividend and final dividend.

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Posted by feet > Mar 25, 2018 09:09 PM | Report Abuse

FY17 had ended, meaning there won't be final dividend anymore. wake up

Emil,

If hengyuan falls to RM2.50, corporate raiders will eat up the company, liquidate it and make big money without having to break a sweat. The owners are not stupid. In fact, at present crack spread, its shares will be mopped up long before it even reaches that price.

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Posted by emil > Mar 25, 2018 08:52 PM | Report Abuse

US China War Trade has just begun, the consequences and ugly impact will cause another 1997 Asian Financial Crisis .......... better sell all and exit stocks markets. Don’t be surprise HY goes back to origin RM2.50

Aboveall,

Please check your data.

Shandong Hengyuan Petrochemical Company Ltd is a China state owned entity. It is a China Top 500 Manufacturing Enterprises (2017 ranked 353th) and China Top 500 Enterprises In Petroleum & Chemical Industry (2017 ranked 50th).

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Posted by Aboveall > Mar 24, 2018 08:33 PM | Report Abuse

To all newbie, you are lucky my flight to Frankfurt is delayed so let me give more info, don't listen to sifu here, all got own agenda...I hav been giving out warning on Iwc , Jaks, csl on many occasions. Hengyuan is a very small company in China, may be top 30000 also not in the list ! May b top 1000 in shangdong, it has a very small out of date refinery in shangdong, about 1/3 the size of shell PD ! Dutch Shell had helped them to produce euro 5 diesel, later they request shell to transfer the know how to produce the euro 5 but their refinery is not easy to upgrade, instead Dutch offer them to take over PD shell with condition shell will transfer the euro 5 know how.........later you will see the huge transfer of euro 5 technology from shell to henguan costing billions of ringget ...euro 5 technology only few EEC countries can produce... even US can't match the

3iii,

Does that mean you have projected your FCF and that’s how you derived your RM4.20 valuation? Post and share lah. Community living, 3iii.

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Posted by 3iii > Mar 25, 2018 07:30 AM

Using your projected FCF, derive your own valuation for Hengyuan.

3iii,

You have always championed the notion that valuation must be backed up by substantial facts. How did you value hengyuan at RM4.20? You must have done up your valuation computation as the valuation is value specific. Please share.

I hate to think that you plucked RM4.20 from a mango tree.

3iii,

How did you arrive at RM4.20 valuation? Please share your calculation.

Thanks

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Posted by 3iii > Mar 23, 2018 07:39 PM | Report Abuse

My fair value for Hengyuan $4.20 per share.

Go! Go! Go! Sendai!

I read many are afraid that next week's results will be bad because of huge impairment loss. With the 2 announcements made this week, wouldnt it mean that equipment usage will increase? Then assets planned for impairment dont have to be impaired now, isnt it?

traderman,

You are NOT a good person.

Many people are losing their hard earned money today and yet you make fun of them. A person who finds joy in the misery of others is despicable.

You should be ashamed of yourself.

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Posted by traderman > Mar 23, 2018 02:45 PM | Report Abuse

break below 8.0 d ... you all still dream 19.2 ? hahahaha

gator,

I agree. 3iii’s presence and action here is not normal behaviour of an investor with vested interest. I am suspicious of his motive.

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Posted by gator > Mar 22, 2018 09:03 PM

If you have no idea of how to value HY than u surely wouldn't have invested in HY which than begs the Question...

WHY ARE U SO ACTIVE HERE???

3iii!

Game?! You posted 2000+ comments because it is a game?! Pple's hard earned money is involved here and you come up with tonnes of unsubstantiated claims (which you have continuously refused to back-up with proper numbers and calculations) because it is a game to you?

Please have a heart. What has the world come to?

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Posted by 3iii > Mar 22, 2018 11:14 AM | Report Abuse

Please stay calm. Don't get distressed unnecessarily. It is only a game.

3iii,

Then how to know intrinsic value? DCF also you say cannot for hengyuan. If dont know value is RM6 or RM16 or RM26, then how to make decision? Please give us some calculated insight. Cannot be based on theory and then say will go up or will go down, correct? As a sophisticated investor, you always say must got basis.

If you continue to give us theoretical lecture, pple like CharlesT will have no choice but to resort to his Paul The Octopus.

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Posted by 3iii > Mar 22, 2018 11:13 AM | Report Abuse

It is almost impossible to give it a designated PE (unlike PBB).

Don't use PE to value Hengyuan.

Why you guys talk until like Bonescythe got arrested and charged? His blog got shut down only. I do agree with that action as that blog does give the impression that he has ulterior motives in writing

stockraider and qqq3,

The most common measure in determining the ability of a company to pay it's interest expense is via calculating the Interest Coverage Ratio.

That is determined via using (Earnings Before Interest & Tax)/(Interest Expense).

The larger the ratio, the better.

Kcchongnz and qqq3,

I hope I can help with your interest expense debate:

(The other one, which to me is abnormal, by re-allocating the interest cost of RM32m, to the cash flows from financing activities. Interest cost, unlike borrowings, is usually under operating activities and will lower CFFO, and I do not see the logic of putting it under financing activities.)

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This is a non-issue actually. It is just a matter of presentation on the statement of cash flows. Below is taken from MFRS 107:

"Interest paid and interest and dividends received may be classified as operating cash flows because they enter into the determination of profit or loss. Alternatively, interest paid and interest and dividends received may be classified as financing cash flows and investing cash flows respectively, because they are costs of obtaining financial resources or returns on investments."

Posted by 3iii > Mar 20, 2018 04:06 PM | Report Abuse

How do I analyse and value a company?

Questions 1 to 7 sieve out the GREAT businesses.
If you find such a business, then go on and determine its intrinsic value. If not, don't bother with the valuation: look for another stock to analyse.

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3iii, thanks for the list of stock selection criterias.

Please share how you derived your intrinsic value of hengyuan. Being a sophisticated investor, I believe that you have a calculated value. You seem very confident in your valuation of hengyuan that the stock price is presently still too high. I would like to understand better.

Posted by 3iii > Mar 20, 2018 11:58 AM | Report Abuse

On the contrary, if you refer to my old posts, you will discover I have shared on this many times already.

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3iii, would you care to post an article on your valuation along with suportings and calculations pls. By that, readers will be able to share their opinion on your work. You are active in commenting other pple's articles, so let us have an opportunity to read your lines of thoughts

Kcchongnz,

This is a good article. I agree that Sendai is not the best company to invest in. The business model used by their management is also probably not the most ideal.

But to be fair to Sendai, they are in an industry and geographical area where their current balance sheet status is the norm. Slow payments from customers is a norm. But as long as they are collectible, the company will continue to make profit. Like you said, income statement and cash flow in the long term are the same. Besides, those who choose to do business there also take into account that the margin is a bit higher to factor in business risks there.

Sendai is in a business where cash is needed to roll the business. Customers slow in payment, suppliers also get paid late. But the payables are usually not an issue because suppliers to the industry also understand the industry and had already expected that payments will be slow. They also mark up their margins to factor in the risk.

Cash tied up in inventory in this business is acceptable. They are not a trading company that stocks up with the hope to resell at a profit. Their inventories are project related and are bought in accordance to project requirements.

Investors should only invest in this counter if they comfortable with the company's strategy of doing business in an environment and location where many other companies choose not to venture into.