@MoneyMakers, when you are so bearish why are you here in this forum many times in a day ? Don’t waste time here and move to stock/forum that you are assured of making money.

i am happy to add more petron and HY at bargain prices this morning and prepared to hold them for 6-9 months.

I added more Petron and HY at bargain prices this morning and prepared to hold them for 6-9 months.

Crack spread correct down from USD32/bbl to USD27/bbl over the last few day is considered very normal after the spectacular surge from May. Don't have to cry until the house come down (some said cry father and cry mother). Just keep your mind cool and see the historic numbers below :
(note : Avg crack spread (based on Spore Mogas 92 unleaded (PLATTS) Brent ) for year 2013 to 2022 which are computed by averaging 12-months end closing numbers of each year)
FY2013 USD6.82/bbl
FY2014 USD8.03/bbl
FY2015 USD12.10/bbl
FY2016 USD8.04/bbl
FY2017 USD10.34/bbl
FY2018 USD5.82/bbl
FY2019 USD4.90/bbl
FY2020 USD1.44/bbl
FY2021 USD7.78/bbl
Average 2013-2021 : USD7.25/bbl
--------------------
Q1 2022 USD13.53/bbl
YTDMay22 USD17.67/bbl
Today USD27.43/bbl
You must go to match the earnings of Petron and HY to the respective years' crack value and convinced yourself that these refinaries still made reasonable/good amount of profit during those years when crack spreads were below USD8/bbl most of the time!
Barring any exceptional expenses or loss, Petron and HY only need crack spread of about USD2/bbl to breakeven.
So, no need to cry father, cry mother, cry grandfather and grandmother too !
Stay invested and avoid the trap of manipulators/sharks who are waiting for you to dump.
Numbers can not lie, human being do.

Crack spread correct down from USD32/bbl to USD27/bbl over the last few day is considered very normal after the spectacular surge from May. Don't have to cry until the house come down (some said cry father and cry mother). Just keep your mind cool and see the historic numbers below :
(note : Avg crack spread (based on Spore Mogas 92 unleaded (PLATTS) Brent ) for year 2013 to 2022 which are computed by averaging 12-months end closing numbers of each year)
FY2013 USD6.82/bbl
FY2014 USD8.03/bbl
FY2015 USD12.10/bbl
FY2016 USD8.04/bbl
FY2017 USD10.34/bbl
FY2018 USD5.82/bbl
FY2019 USD4.90/bbl
FY2020 USD1.44/bbl
FY2021 USD7.78/bbl
Average 2013-2021 : USD7.25/bbl
--------------------
Q1 2022 USD13.53/bbl
YTDMay22 USD17.67/bbl
Today USD27.43/bbl
You must go to match the earnings of Petron and HY to the respective years' crack value and convinced yourself that these refinaries still made reasonable/good amount of profit during those years when crack spreads were below USD8/bbl most of the time!
Barring any exceptional expenses or loss, Petron and HY only need crack spread of about USD2/bbl to breakeven.
So, no need to cry father, cry mother, cry grandfather and grandmother too !
Stay invested and avoid the trap of manipulators/sharks who are waiting for you to dump.
Numbers can not lie, human being do.

@TheContrarian, you seriously cut win at this stage ?

@Probability,
What you have so far explained about the hedging effect on qtr to qtr profit are all THEORETICALLY correct. No doubt about it.
I merely want to find out if it is PRACTICALLY the same in HY's case. Would appreciate if you can share the official or substantiated information that HY's is actually adhering to the hedging policy and discipline advocated by you.

Hi Probability,
There were minimum inventory write down or gain during all the qtrs in 2020 and 2021, except Q1 2022. Here are the numbers :
Inventory (write down)/ Gain :
FY2020 - Q1 : $0, Q2 : $0, Q3: $0, Q4: ($28m)
FY2021 - Q1 : ($4m) , Q2: ($10m), Q3: ($1m) , Q4: $1m
FY2022 - Q1 : ($132m)
As such, you can eliminate the impact of inventory write down or gain on the qtrly results except for Q1 2022. Likewise, forex impact were minimum too.
We can now take that the qtr to qtr profit change are largely impacted by crack spread change and the hedging effect (be it crude or refined products hedging). Can you apply the time lag hedging effect to explain the qtr to qtr results ?

Yes, the crack spread i based on is Spore Mogas 92 unleaded (platts) Brent crack spread. Although HY has various refined product mix, the numbers can still be applied as a good reference as profit trend for refinery.
--------------------------------------------------------
Hi John,
(1) Firstly, if am not mistaken the crack spread you had obtained are purely from gasoline alone, excluding any effects from diesel (gasoil) crack spread which is about 40% of their yield. This means the actual refining margin could be slightly different than reported. Nevertheless, we assume these are representative.
(2) Secondly, we must realise that the cost of production is at least $2.5/brl assuming they sell about 10 m barrels per qtr. This would be the break even average crack spread margin we need.
If market average gross crack spread is say $ 3/brl for 2020, the NET crack spread would be $ 0.5/brl.
...............................
(3) The PBT reported are after the inventory gain / loss inclusion which swings wild easily. For just a $ 10/brl change between reporting period (or between buying and market pricing at the qtr closing date), the inventory gain/loss is:
= 3.3 m barrels (inventory) x $ 10 / brl change
= $ 33 m
to see the effects per barrel, simply divide $ 33m over its sales volume of 10m per qtr
= $33m / 10m brl
= $3.3 / brl
We can see from above (2) and (3) figures that the major factor that will be influencing its PBT is the inventory gain / loss and no longer the market crack spread (its simply too low to have any influence)
For 2021, though the margin is much better at say $7.5/brl, the NET refining margin is about $5/brl and its not too big compared to the inventory effects of $3.3/brl by a mere change of $10/brl in crude oil pricing.
In summary at such low refining margin, and volatile crude oil prices during this period (i believe it is the case in 2020 & 2021), its meaningless to derive any link between observed crack spread during this period and the reported PBT respectively.
You need a relatively bigger crack spread and much stable crude oil pricing to really see the effects on bottom line.
-------------------------------

Posted by Johnzhang > Jun 7, 2022 10:43 PM | Report Abuse
I would very much appreciate if you can try to explain the relationship of the quarterly results below using the time lag effect of hedging and crack spread . For me it is just too complex.
FY2020 Pre-tax profit - Q1 :($124 m), Q2 : $0 , Q3: $152m, Q4 : $227m
FY2021 Pre-tax profit - Q1 : $34m, Q2 : ($80m) , Q3: ($56m), Q4: $230m
FY2022 Pre-tax profit - Q1 : $85m

The month end crack spread figures are as below (in the order Jan to Dec) :
FY2020: 5.99, 4.91, (5.22), (3.35), (0.91), 2.36, (1.00) , 1.77, 4.54, 2.82, 1.51, 3.92 (Avg 1.44)

FY2021: 3.51, 6.39, 7.05, 7.34, 5.82, 7.08, 9.71, 7.56, 7.61, 12.83, 7.28, 11.21 (Avg 7.78)
FY2022: 12.42, 13.33, 14.85, 21.01, 26.69. (YTD may avg 17.67)

@Probability,
You have made it simple enough for some of us to understand the hedging effect. Thanks for your effort.
Hedging is indeed meant for covering the risk of an actual position going the opposite way due to time lag of 2 related transactions (ie timing of purchasing of crude and selling the refined products).
I fully agree to the basis put forth by you PROVIDED HY is consistent and discipline in its hedging policy in the manner illustrated by you. Imprudent hedging may results permanent losses or opportunity losses. I try to play devil's advocate in finding out if HY is indeed prudent before I decide to increase or shift my position in this counter.

I would very much appreciate if you can try to explain the relationship of the quarterly results below using the time lag effect of hedging and crack spread . For me it is just too complex.
FY2020 Pre-tax profit - Q1 :($124 m), Q2 : $0 , Q3: $152m, Q4 : $227m
FY2021 Pre-tax profit - Q1 : $34m, Q2 : ($80m) , Q3: ($56m), Q4: $230m
FY2022 Pre-tax profit - Q1 : $85m

The month end crack spread figures are as below (in the order Jan to Dec) :
FY2020: 5.99, 4.91, (5.22), (3.35), (0.91), 2.36, (1.00) , 1.77, 4.54, 2.82, 1.51, 3.92 (Avg 1.44)
FY2021: 3.51, 6.39, 7.05, 7.34, 5.82, 7.08, 9.71, 7.56, 7.61, 12.83, 7.28, 11.21 (Avg 7.78)
FY2022: 12.42, 13.33, 14.85, 21.01, 26.69. (YTD may avg 17.67)

All data above are published and can be verified.
Thanking you in advance for your effort.
------------------------------------
Probability Posted :
The below is to help one understand, why i simply just see the difference in crack spread to derive the hedging loss between months
......................................
say in Feb 22' , the below was the pricing:
Crude: 100 $/brl
Avg refined oil: 108 $/brl
Crack spread: 8 $/brl (hedged, meaning they buy crude & sell prod forward - non physical)
in Mar 22' (when physical transaction takes place):
Crude: 105 $/brl
Avg refined oil: 125 $/brl
Crack spread: 20 $/brl
Hedging loss/gain on Crude: 105 - 100 = 5 $/brl
Hedging loss/gain on Refined oil: 108 - 125 = - 17 $/brl
Net hedging loss / gain = - 17 + 5
= - 12 $/brl
The above value is the same as Crack Spread in Feb 22' - Crack spread in Mar 22' : 8 - 20
= - 12 $/brl
Both way you derive the same figure
Posted by probability > Jun 7, 2022 9:29 AM | Report Abuse X
example, say gross margin as per actual crack spread chart is as per below:
Dec 21': 7 $/brl
Jan: 8 $/brl,
Feb: 8 $/brl
Mar: 20 $/brl
Q1 gross profit: 3.5m brl/month x ( 8 + 8 + 20)
Q1 profit after hedging loss gain: 3.5 m brl/mth x ( 7 + 8 + 8)
Apr: 24 $/brl,
May: 24 $/brl
June: 30 $/brl
Q2 gross profit: 3.5m brl/month x ( 24 + 24 + 30)
Q2 profit after hedging loss gain: 3.5 m brl/mth x ( 20 + 24 + 24)
why worry on hedging loss / gain? Its just the effects of lagging 1 month trailing 3 months profit

The land belongs to WCE’s 40% controlled associate , Bandar Rimbayu.?
https://newswav.com/A2206_4Pwe2v?s=A_Wv1Ot4t

@Probability , this is what I think too . That means HY is locking in refining margins ( ie crack spread) at the rate they are happy about in Q1 2022 . As crack spread continues to rise , derivative loss from this refining margin contracts suffer huge losses as evidenced in fair value change of financial derivative in Q1 QR.
In this connection, refining margin derivative loss may still be very substantial for Q2 as crack spread has soared much higher since the closing of the 1st Q.
Correct me if I have misunderstood it.
———————-
Probability posted :
I see its simply hedging of margin hng33


Refinery Margin Swap
.....................

A commodity swap which allows a refiner to hedge against a narrowing spread between crude oil prices and the prices of its refined products. Therefore, the right to profit from a potential widening of the spread is given up. This swap can effectively lock in a margin (known as a crack spread) by paying the floating price of a refined oil product and receiving the floating price of a crude oil input plus the crack spread.

The refinery margin swap is also known as a crack spread swap.

@hng33,
I am not sure at all if HY only hedged it’s raw material ie crude oil as you claim. If you look at the financial account, you will notice that HY uses 4 types of derivative instruments:
1. Forward priced commodity contracts
2. Commodity swap contracts
3. Commodity options contracts
4. Refining margin swap contract .
Among them , 3 and 4 has the highest losses that put through to P&L for Q12022.
I am a layman in derivative . But I think the refining margin swap contracts are for the purposes of locking in refining margins (crack spread) . As crack spread surge month by month it give rise to huge ‘losses’ in this derivative.

Petron’s hedging is a lot more straightforward. They only have commodity swap contract which is essentially used to hedge against price swing in a given commodity like crude .

@Stockraider,
With due respect , this seem to be an unsubstantiated information spreading from one to another. I treat this as speculation until it is confirmed by HY . It doesn’t help at all to speculate this and that which eventually cloud the clarity every investors are looking for .
———/——————

Stock raider posted :
The key from this Rm 132m write down of Russian crude as i say due to msia govt discourage Russian Crude & shell disallow Russian crude loh!

But the point is the big exceptional losses of Rm 132m is due to massive losses of russian crude of USD 80 purchase compare to the salvage disposal price to china parent at USD 7 mah!.

This is another major red flag investor should aware mah!

@OTB, thanks for your compliment. My arguments are indeed layman . Nothing special.

@OTB, may I suggest that Ahahah should also check how far forward the derivative contracts are entered into. If 25% of revenue for 12 months forward are hedged at any one time it is equivalent to 3 months revenue hedged at any one time.

@MM,
I do wish some are foolish enough to believe you and dump their shares . I am waiting for bargain buy .
—————————
Current crack spread unsustainable @ wont last beyond Q2

So huge collapse coming..will be fast&furious b’coz low floating shares

Syndicate run few big sell orders - easily 20% drop daily / 50% drop 1week

I think the 25% hedging only cap the refining margin when crack spread moved higher than the hedged rate . It is only Opportunity loss not real loss . Assuming the proportion of hedged and open position is really 25/75, the derivative loss proportion to Gross profit should rightly be smaller than 25/75. But this is not the case shown in the financial accounts. They is something else we don’t understand.
———————————
Hengyuan hedging position is limit to 25% of each month revenue. Therefore, if crack spread is leap up three time higher, its 25% hedging position will incur loss, but balance 75% revenue will reap handsome spot profit. Off course, the extend of 75% revenue gain will offset partly by 25% hedging loss, resulting hengyuan still able to reap at least 40% revenue enjoy current crack profit margin.

@hng33,
You only write down if the stock value fall below realizable value . Since Russia oil is at discount upon purchase , I don’t see any valid justification to do so. Moreover , HY only supply a portion of the refined products to shell. HY has many other customers too.
—————————————/
Shell on 3 Mar declare termination tie to use any Russian oil, but Hengyuan may already order Russian crude ahead. Since Hengyuan have 5 year supply contract with Shell, it need to write down these crude and source from other crude supplier to meet 17% shortfall. The 17% crude source from Russian can be already in store tank or on shipment, Hengyuan need to sell these crude oil outright later without refine it to process fuel/gasoline/diesel.

These is one off case, its will NO repeat in next Q.

Remark: from hengyuan last year annual report, it source about 17% crude from Russian

Only when we have a fair bit of understanding on HY's hedging policy , I think it is very hard for outsider like us to project its net profit vis a vis crack spread.

I have compared the P&Ls' of HY from 2016 to 2021 and noticed that the single item in the yearly P&L that swing the nett profit wildly is OTHER OPERATING (LOSSES)/GAIN.
Q12022 ($339 mil) - note : one qtr alone !
FY2021 ($552 mil)
FY2020 $308 mil gain
FY2019 ($61 mil)
FY2018 ($8 mil)
FY2017 $81 mil gain
FY2016 ($6 mil)
In the account, it explained this is related to net fair value losses/gain on derivative instruments.
Questions 1 : Why such wild swing starting FY2020 only ? It was a lot more stable and minimum before FY2020. Here, I am asking if there is element of imprudent hedging policy by the management ?
Question 2 : What market development in crude or refined product led to the wild swing from FY2020 and Q1 2022 in particular ?
Although hedging thru derivative instruments are meant to protect profits, there is element of taking a position with risk . The impact can be huge if hedging is excessive and in wrong position.
Would like to hear your professional view.

If my suspicion above is correct, that means HY cost of sales will be lower and GP will be higher for this batch of stock to be sold in Q2 2022.

Regarding the inventory write down amounting to $132 mil, some of you link it to Russian oil purchase. Does anyone really have substantiated information on this ? Is this just guessing ?
It could also simply be Brent crude contracted at peak price of around USD120 in 2nd half March and written down to around USD103 which is the Brent crude price at the close of the qtr (31/3/2022). This is mark to market principle most company adopt.
Total write down was RM132 mil or USD31 mil. The mark to market of USD17/barrel (120-103) is equivalent to about 1.82 mil barrels of crude stock which is about 2.5 weeks of inventory.

I reckon Petron’s strong show today demonstrated the power of retail investors . KYY who made millions in HY in 2017/18 must remember that was the many retail investors who made it possible for him. Without the trust , conviction and support from retail investors , he can forget about the past glory day . So, be humble and credible at all time.

@OTB,
Thanks for your inputs. I think probability yesterday's posting on the hedging effect indicates that HY adopt a rolling one month hedging. As they square off previous month contracts new contracts are entered into. That means they continue to hedge one month forward. If crack spread on the uptrend from April to June qtr (which seem to be the case), isn't HY chasing the tail ?
I agree that HY shall make explosive profit from hedging gain when crack spread stay plateau or dropping over any particular qtr. Those robust qtr(s) will come on assumption that the hedging policy stay the same throughout.

@Probability,
In latest QR note A18 , It is declared as below :
Financial instruments that were outstanding as at reporting date as as below :
Refining margin Swap Contracts ; Notional amount USD291mil (about RM1.22 billion) with nett liabilities of RM294.3mil (RM339.5 - 45.2). I suppose this is a one month rolling balance as your advocated.
Can you comment on this position and what is the implication to Q2 results as crack spread has gone higher compare to reporting date?
Thanks in advance.

@Probability,
Fair enough.
Not worth to base on 3rd party articles to make multiple negative statements on Petron that can not hold water and can not be defended by yourself. These 3rd party articles , like many others, are not gospel .
You may continue to share good things (substantiated material) about HY in HY's forum only and let Petron's forum in peace .
It is an ethical issue.
Happy investing.
---------------------------------------------------------------
Posted by Probability on 2/6/2022 :
@Johnzhang, i had provided the links to articles made by FutureEyes and Davistslim who had independently derived these information and also substantiated their claims by referencing to annual reports and news, including AGM queries.
I have no interest to further convince you otherwise as it neither brings benefit to the stock (PetronM) nor myself.
You can maintain your stance & beliefs - i have absolutely no issues.

Many retailers no longer trust what KYY say. How can HY break new high without the trust, conviction and support from majority retail investors or traders? Can you count on local and foreign institutions to push HY's price to frenzy high like 2017/18 ? I have my reservation.

The main hedging loss in Q1 2022 is in Refining Margin Swap Contracts which is tied to rising crack spread from about USD11 early Jan 2022 to about USD15 as at 31/3/2022. (pls refer to note A18 in QR for the breakdown of the various types of hedges and their respective position)
As at today, crack spread has surged passed USd32 . If it continue to stay high or go higher , I suppose Refining Margion swap contracts will suffer huge hedging losses that will offset the operating margin like we see in Q1. Can any financial accountant comment ?

The higher crack spread go in Q2 means higher hedging losses and lower nett profit On the contrary, HY’s derivative gain will be explosive when crack spread collapse. That is on the assumption that HY’s hedging policy remain unchanged throughout. You will notice this scenerio in Q12022, FY2021 and FY2020 results.

@probability,
Can you substantiated your claim below ?
I am wary of just hearing 3rd party claim.
Based on the following official/substantiated information in annual reports, they don't seem to match to what you said.
Per regulation, all related party transactions have to be declared in the annual accounts. The transaction with its parent company is of no exception as it is related party in nature.
For easy reference, I have worked out the following based on annual report 2018 to 2022:
The related party purchases made as percentage of revenue for 2018-2022 were as below :
2021 16.5%
2020 12.0%
2019 10.3%
2018 10.8%
There is also related party sales. The % of related party sales/Revenue are :
2021 22.0%
2022 22.0%
2019 21.6%
2018 21.9 %
The related party business mentioned in the above were transactions with a sister company in Malaysia, ie Petron Fuel International Sdn Bhd. There is also another related party , Petron Singapore trading Pte Ltd and the transaction only appeared in 2021 and the amount was insignificant relative to revenue.
Interestingly, the related party sales is higher than purchases and between the same party.
There is no related party transaction with its parent company as high as 70% as you claimed!
I think we have to be credible in what we claim by substantiating with official data. Third party claim to be taken with a pinch of salt. We all know 3rd party often post certain information to influence readers with vested interest in mind and I am no difference. I have made know in this forum that I have interest in both Petron and HY in about equal proportion. I have no interest to be biased against HY or in favour of Petron. I am only interested to get the facts right and make reasonably good investment decision.
Thank you.
------------------------------------------------------
Posted by Probability on 1/6/2022 :
@Johnzang, when petronM reports barrels sold, it includes outsourced (70%) refined oil from their parent company to directly sell at their petrol kiosks

@OTB,
Thanks for sharing the information. I am just curious if yourself have come across any official information or published/substantiated information from PetronM itself pertaining to the proportion of Fuel Oil yield ? I have not been able to find any such official/published information. As such, I shall take this information from third party with a pinch of salt for the time being.
One thing is very clear to me that the "alleged" disadvantage of >30% Fuel Oil of negative spread in all the past years has not made Petronm less profitable. i have substantiated the numbers in past 2 days posting in this forum.
Thank you.
-----------------------------------------------------

OTB posted on 1/6/2022 :
@Johnzhang,
Please read this link.
https://klse.i3investor.com/web/blog/detail/Insight1/2018-02-03-story1...
I learn it in Petronm forum.
Thank you.

People remember KYY recent flip flop stance on many counters and very scared to be tricked by him. Without conviction from retail investors, I guess it is an uphill task to break the the last price record in 2017/18.

He was very doubtful of HY’s profitability just recently. Now he changed his mind after seeing an unexpectedly poor results. Flip flop again and that won’t go down well with people!

KYY just recently cast a lot of doubt on Hengyuan’s profitability. Now he changed his mind even after seeing unexpectedly poor Q1 results.

@Probability,
Your statements on (a) Petron's refining capacity is less than 1/4 of HY and (b) Petron's produces more than 30% Fuel Oil yield at negative crack spread (hitting -ve USD15/barrel) hard to hold water!
Your statements gave misleading impression that Petron's is less than 1/4 of HY's size and Petron's is much less profitable than HY. All these somehow do not match to the financial data published .
Let me provide recent comparative data for clarity :
Petron's Sales volume and Revenue :
Q1 2022 -7.7 mil barrels, RM3,800 mil
2021 - 26.3 mil barrels, RM9,183 mil
2020 -28.5 mil barrels. RM6,462 mil
(Petron's sales and production in 2020 and 2021 are lower than pre-covid years due to movement control orders)

HY's Sales Vol and Revenue :
Q1 2022 10.6 mil barrels, RM4,952 mil
2021 36.3 mil barrels, RM12,006 mil
2020 35.1 mil barrels, RM7,176 mil
From the above you can see that Petron is 73-81 % of HY's Sales vol and 76-90% in term of HY's revenue !

In term of profitability vis-a vis crack spread :
Petron's NPAT :
Q12022 - RM106.4 mil ,
2021 - RM238.5 mil ,
2020 - (13.3 mil)
HY's NPAT :
Q12022 - RM 47.5 mil,
2021 - RM83 mil ,
2020 - RM251 mil
Avg crack spread :
Q12022 - about USd14 ,
2021 -about USD8.3 ,
2020 -aboutUSD1.70
(Crack spread based on Spore mogas 92 unleaded (Platts) Brent crack Spread)
You can see that Petron outperformed HY in Q12022 and FY2021 when crack spread improved to healthy level. Whereas HY did very well in 2020 when crack spread was extremely low for that year.
In my earlier post, i have also presented the 5 years and 10-years average EPS and Dividends of petron and HY. Petron stand up well.
-------------------------------------------------
Probability wrote :
See the chart in 2016 annual report:

2) Refinery margin in a quarter (based on its regular throughput per day of 48k although its max daily capacity is 88k). Management also told us in AGM that its refinery currently running at around 60% (I use AR report throughput which is more conservative).

@krish52, the 1st reward is 45sen dividend already proposed. I think the share price has yet to considered this proposal. Once the resolutions are passed (and money is considered in pocket) , the share price shall go higher from where it is now .
After insurance sales and the corresponding 45sen dividend, what next to expect? This is something all investors have to think about .

Press down the price also no use lah. Just too few willing to let go their share .

To me PetronM being an integrated petroluem player having above 80% of sales in domestic market has its advantage and consistency. It is simpler to understand too.
Apart from refining margin (determined by crack spread), it also enjoy retail/distribution margin .
Dividends are consistent and added up a lot more than HY in the past years, This matters a lot to long term investors.
I have about equal exposure in petron and HY. Intend to shift higher weightage to petron.

@ probability,
I would also like to get clarification of your below statement on petronM refining capacity .
It is definately NOT true that petronM is less than 1/4 of HY. PetronM's refining capacity at Port Dickson is 88,000 barrels/calender day which translate to 32.1 mil barrel per year.
HY's production Q1 2022 was 10.6 mil barrels. Average 2017-2021 (5 years) was 36 mil barrels/year
PetronM's Q1 2022 was 7.7 mil barrels. Average 2017-2021 (5 years) 32.3 mil barrels/year.
NO doubt petronM is smaller, but not as small as you mentioned.


Probability posted :
As i had detailed many times you must see HY as a refinery processing 10.7 million barrels per quarter whereas PetronM refinery at less than 1/4 of HY capacity, i.e about 2.5 m barrels. Reason being PetronM is a simple refinery which produces more than 30% Fuel Oil with crack spread hitting negative - 15 USD/brl .

@Probalility,
You mentioned that PetronM is a simple refinery that produces >30% Fuel Oil yield at negative crack spread. For the benefit of all readers, can you clarify what is the Fuel Oil product you refer to ?
Per annual reports , PetronM's refining crude to gasoline, diesel, LPG and aviation fuel and all these products are enjoying high positive crack spread.
It also appear to me that the so called Fuel Oil negative crack spread did not affected profitability of PetronM at all. NPAT Q1 2022 after charging RM230 realised and unrealised derivative loss was RM106.4 mil (39.4 cent/share). Without the derivative loss, NPAT would have been $281.2 mil ($1.04/share)
I wonder what is the significant of Fuel Oil negative crack spread ?

Historical performance comparision :
EPS Q1 2022 - Petron 39.3 sen , HY 15.82 sen
EPS 2017-2021 (5 year average) - petron 76.44 sen, HY 88.52 sen
EPS 2012-2021 (10 years average) - petron 52.56sen , HY 19.73 sen.

Dividend 2017-2021 (5 years total) Petron 82 sen, HY 6 sen
Dividend 2012-2021 (10 years total) Petron 152sen , HY 6 sen

In the case of HY, high crack spread may not translate to high profit as evidenced in Q1 2022 results due to overwhelming derivatives losses which no one can practically foresee. Hedging thru derivative tools supposed to protect margin from higher the normal crack spread in q1 2022. That certainly not the case we see.

The euphoria of getting multi shipment of discounted Russian crude may be overplayed.
I suspect, the purchase of Russian Crude is done thru' HY's parent company in China and the benefit of the discount may have been fully reaped by the parent company . That is how foreign parent company use the transfer pricing strategy to siphon profit out .

As at 31/3/2022 closing, The nett Derivative Liabilities (ie derivative asset - detivative liabilities) for petronM and HY are as below :
PetronM : (RM52.06 mil)
HY : (RM407.32 mil)
Can any financial accountant help to explain what is the impact of subsequent qtr P&L ?

Can any

@Abba84, I have said enough in the past 1 year and the numbers are out there . I have nothing more to say. Hahaha..

We don’t know what are their positions in commodity swap and Crack Spread Swap for Q2. Huge hedging losses in Q2 is still possible if bet on the wrong direction.
—————————
Posted by Probability:
no one can predict the future, but now the future is seen - exploding crack, they will capitalize

Let the naysayers continue with their negative attitude as they like to ignore all facts and figures out there. They can’t dictate the market anyway, but the deep pockets manipulators can . The manipulators will eventually want to reap huge gain from share price rally

Let the naysayers continue with their negative attitude and ignore all facts and figures out there. They can’t dictate the market anyway, but the deep pockets manipulators can . The manipulators will eventually want to reap huge gain from share price rally .

@probability, I don’t see any refinery margin swap (derivative) being reported (HRC did). Neither can we confirm if there is a refining contract performed at low margin .
Without the derivative losses amounting to $230 mil or $175 mil after the 24% corporate tax effect, PetronM could have made roughly $106+175 =$281 mil . That’s $1.04 per share per qtr and average crack spread in that qtr was about half of what is now .
Amid less volatile swing in crude price in Q2 and historic high crack spread I am quite sure Q2 will be explosive. I have equal exposure in both Petron and HRC.

Indeed, Q1 2022 results is simply stunning. NPAT from operations (stripping off land sales) is about $111 mil ($11.2 mil Q1 2021) . That is a stunning 890 % increase.
Net borrowing (total borrowing minus Cash) is reduced to $564 mil (from $932 mil a year ago).
Net cash generated from operations is $98.2mil for Q1 2022 alone!
Very soon, bplant will be net cash company.
CPO price realised is $6,030 ! That is simply stunning and probably the highest in the industry.