Refining margin is strengthening further, its possible diesel crack spread hit above 48 USD/brl by tomorrow

HY refining margin is pegged with international pricing.
They are free to buy crude and sell refined products internationally.

That is why their 10 year POA agreement with Shell retails Malaysia is based on Means of platts Singapore (MOPS) where the margins are quoted in USD.

HY direct beneficiary of weakening MYR

Diesel at 46% yield, at today's crack USD 46/brl

www.tradingview.com/symbols/NYMEX-GZ1!/

Gross margin from Diesel alone

= (10.7 million barrels/qtr x 46% yield) x (46 USD/brl) x (MYR 4.64/USD)
= 1050 million MYR ....


PBT = 970 million
PAT = 737 million
EPS = 2.45

Currently 1 USD = 4.64 MYR
.............

With such weakening of MYR against USD, HY would be save haven for the long term

you only need average 12 USD/brl margin going forward:
..........................................


Gross margin using above hypothetical margin (considering reversal to mean under long term scenario)

= (10.7 million barrels/qtr ) x (12 USD/brl) x (MYR 4.64/USD)
= 595 million MYR ....


PBT = 515 million
PAT = 391 million
EPS = 1.31 per qtr

Diesel at 46% yield, at today's crack USD 46/brl

www.tradingview.com/symbols/NYMEX-GZ1!/

Gross margin from Diesel alone

= (10.7 million barrels/qtr x 46% yield) x (46 USD/brl) x (MYR 4.64/USD)
= 1050 million MYR ....


PBT = 970 million
PAT = 737 million
EPS = 2.45

Currently 1 USD = 4.64 MYR
.............

With such weakening of MYR against USD, HY would be save haven for the long term

you only need average 12 USD/brl margin going forward:
..........................................


Gross margin using above hypothetical margin (considering reversal to mean under long term scenario)

= (10.7 million barrels/qtr ) x (12 USD/brl) x (MYR 4.64/USD)
= 595 million MYR ....


PBT = 515 million
PAT = 391 million
EPS = 1.31 per qtr

Sabotage warnings as damage appears on Baltic pipelines
Crude Oil Natural Gas

59min ago

A series of leaks on natural gas pipelines running from Russia to Europe under the Baltic Sea have stoked intrigue, with authorities warning damage spotted on the Nord Stream 1 and 2 pipelines appears consistent with sabotage.

A drop in pressure on the unopened Nord Stream 2 pipeline was first detected by Denmark's energy agency on Monday, with Swedish maritime officials reporting a series of leaks on the Nord Stream 1 pipeline several hours later.

Politicians and regulators indicated the damage appeared deliberate, stopping short of pointing fingers directly at Moscow.

German officials said it appeared the leak was the result of a "targeted attack" and that it "could not be excluded" that Russia was to blame.

Denmark leaned in a similar direction, with the head of the country's energy regulator telling local media that mechanical failure was due to a large hole rather than a crack, with an accident unlikely due to design specifications of the pipelines.

"It is too early to conclude yet, but it is an extraordinary situation… There are three leaks, and therefore it is difficult to imagine that it could be accidental," Danish prime minister Mette Frederiksen said.

Russian officials took a similar line, with a Kremlin spokesperson telling local wires that "obviously the pipe has been damaged somehow. What the cause was, before the results of the investigation appear, no version can be excluded".

Adding to fears of sabotage, a series of unidentified drone and aircraft sightings have been made near Norway's North Sea oil and gas platforms in recent days, prompting authorities to make an unusual statement urging operators to remain vigilant.

In 2017, the OIL PRICE was consistently below 52 USD/brl, but why did the margin improve and deliver exceptional earnings?

what matters is the CONSTRAINT ON THE REFINING CAPACITY not the oil price

thats why Diesel margin is spiking....

Lower oil price will drive demand for gasoline too later as more light vehicle owners decides to drive to work....

Q3 - Rock bottom EPS analysis

(using lowest possible average crack spread during the period - as if it was this level every single day of 90 days in a quarter)
.........................

Using extreme conservative scenario where 50% of HY throughput is hedged where they will only reflect hedge margin at extra low 10 USD/brl, with the balance free to capture market margin

1. Diesel at 46% yield, cracks USD 39/brl

www.tradingview.com/symbols/NYMEX-GZ1!/

2. Jet fuel at 7% yield, cracks USD 29/brl

www.tradingview.com/symbols/NYMEX-ASD1!/

3. Gasoline at 35% yield, cracks USD 7/brl

www.tradingview.com/symbols/NYMEX-D1N1%21/
www.tradingview.com/symbols/NYMEX-SMU1!/

3. Rest of product yield at 12%, using Mogas 95 cracks USD 7/brl

Gross profit from (Hedged) portion:
..............................

= (10.7 million x 50%) x (10 USD/brl) x (MYR 4.5/USD)
= 240 million MYR .....(1)



Gross profit (UN-HEDGED) portion:
............................

Refining margin/brl:

= (0.46 x 39) + (0.07 x 29) + (0.35 x 7) + (0.12 x 7)
= (17.9 + 2.0 + 2.5 + 0.8)
= US $ 23.2 / brl

Gross profit:
= (10.7 million x 50%) x (23.2 USD/brl) x (MYR 4.5/USD)
= 558 million MYR ......(2)



Total gross profit (1) + (2)
= 240 + 558
= 798 million MYR

PBT = 718 million
PAT = 545 million
EPS = 1.81

one should use net liabilities on above derivation, but it still yields approximately same results

using the below figures, one can determine that 90% of the hedging is done on gasoline.

HY was simply brilliant to capture the excellent margin of Diesel from market while had protected them self from downside slide on gasoline margin

...........

say x is the fraction of Gasoline that is hedged out of total barrels y , and ( 1 - x) is the faction of Diesel hedged, being the two major refined products


the change in liabilities between 31/12/2021 and 31/03/2022 is (339 - 187) = 152 million must be contributed by:

(Fraction of Gasoline hedged) * (change in crack spread of gasoline) * (total barrels of all products hedged) + (Fraction of Diesel hedged) * (change in crack spread of Diesel) * (total barrels of all products hedged)

x* (14.84 - 11.21)*y + (1-x)*(33.17-11.70)*y = 152 million...(1)

same way, the change in liabilities between 31/12/2021 and 30/06/2022 is (1751 - 187) = 1564 million must be contributed by:

x* (31.57 - 11.21)*y + (1-x)*(56.12-11.70)*y = 1564 million...(2)


Using Equation (1) & (2), you can determine x, and it comes to 0.90, i.e 90% of the barrels hedged are gasoline.



..........

31/12/2021
Gasoil crack spread: USD 11.703
Mogas92 crack spread: USD 11.210
Jet-fuel crack spread: USD 10.456
Refining margin swap contracts Notional value: USD 280,487,000
Assets: RM 19,663,000
Liabilities: RM (187,074,000)

31/03/2022
Gasoil crack spread: USD 33.169
Mogas92 crack spread: USD 14.845
Jet-fuel crack spread: USD 22.131
Refining margin swap contracts Notional value: USD 291,009,000
Assets: RM 45,186,000
Liabilities: RM (339,510,000)

30/0620/22
Gasoil crack spread: USD 56.125
Mogas92 crack spread: USD 31.578
Jet-fuel crack spread: USD 41.964
Refining margin swap contracts Notional value: USD 226,945,000
Assets: RM 261,065,000
Liabilities: RM (1,751,332,000)

using the below figures, one can determine that 90% of the hedging is done on gasoline.

HY was simply brilliant to capture the excellent margin of Diesel from market while had protected them self from downside slide on gasoline margin

...........

say x is the fraction gasoline that is hedged out of total barrels y , and ( 1 - x) is the faction of diesel hedged being the two major refined products


the change in liabilities between 31/12/2021 and 31/03/2022 is (339 - 187) = 152 million must be contributed by:

x* (14.84 - 11.21)*y + (1-x)*(33.17-11.70)*y = 152 million...(1)

same way, the change in liabilities between 31/12/2021 and 30/06/2022 is (1751 - 187) = 1564 million must be contributed by:

x* (31.57 - 11.21)*y + (1-x)*(56.12-11.70)*y = 1564 million...(2)


Using Equation (1) & (2), you can determine x, and it comes to 0.90, i.e 90% of the barrels hedged are gasoline.



..........

31/12/2021
Gasoil crack spread: USD 11.703
Mogas92 crack spread: USD 11.210
Jet-fuel crack spread: USD 10.456
Refining margin swap contracts Notional value: USD 280,487,000
Assets: RM 19,663,000
Liabilities: RM (187,074,000)

31/03/2022
Gasoil crack spread: USD 33.169
Mogas92 crack spread: USD 14.845
Jet-fuel crack spread: USD 22.131
Refining margin swap contracts Notional value: USD 291,009,000
Assets: RM 45,186,000
Liabilities: RM (339,510,000)

30/0620/22
Gasoil crack spread: USD 56.125
Mogas92 crack spread: USD 31.578
Jet-fuel crack spread: USD 41.964
Refining margin swap contracts Notional value: USD 226,945,000
Assets: RM 261,065,000
Liabilities: RM (1,751,332,000)

once Q3 results out, i3investors would be able to see through HY like an x-ray...

all speculators can simply shut the fcuk up permanently after that


Posted by Sslee > Sep 25, 2022 7:49 AM | Report Abuse

Dear King_trader_shadow,
Another week to go before end of Sept and I am sure HRC Q3 will be another very profitable quarter.

Mamy people misunderstood HRC Refining margin swap contracts and keep repeating false alarm that q2 reported unrealised loss of (assets- liabilities) of over 1.4 billion will be realised in q3 without giving a thought that unrealised loss is based on 30/6/2022 and most likely the refining margin swaps contracts is for maybe over 12 months:
On 30/06/22
Gasoil crack spread: USD 56.125
Mogas92 crack spread: USD 31.578
Jet-fuel crack spread: USD 41.964


On HRC share price.
"In the short run, the market is a voting machine. In the long run, it is a weighing machine.”
“Markets can stay irrational longer than you can stay rational/solvent."

I hold some HRC, C24 and C26. My C24 almost free for me as I sold part of it at RM 0.20 to get back my capital hence I can afford to wait for q3 and q4 result.

As for you you need to decide for yourself what is best for you.

By end of Sept 2022, you are free to fill in Gasoil, Mogas92, Jet-fuel crack spread and make your guesstimate what will be Refining margin assets and liabilities for Q3 end 30/09/22.

31/12/2021
Gasoil crack spread: USD 11.703
Mogas92 crack spread: USD 11.210
Jet-fuel crack spread: USD 10.456
Refining margin swap contracts Notional value: USD 280,487,000
Assets: RM 19,663,000
Liabilities: RM (187,074,000)

31/03/2022
Gasoil crack spread: USD 33.169
Mogas92 crack spread: USD 14.845
Jet-fuel crack spread: USD 22.131
Refining margin swap contracts Notional value: USD 291,009,000
Assets: RM 45,186,000
Liabilities: RM (339,510,000)

30/0620/22
Gasoil crack spread: USD 56.125
Mogas92 crack spread: USD 31.578
Jet-fuel crack spread: USD 41.964
Refining margin swap contracts Notional value: USD 226,945,000
Assets: RM 261,065,000
Liabilities: RM (1,751,332,000)

30/09/2022
Gasoil crack spread: USD___
Mogas92 crack spread: USD___
Jet-fuel crack spread: USD___
Refining margin swap contracts Notional value: USD___
Assets: RM___
Liabilities: RM_____

MALAYSIA DATA: DIESEL output at 8-month high, LNG nears record!

9 Sep 2022

Quantum Commodity Intelligence – Malaysia’s output of diesel reached an eight-month high in July and LNG topped 3 million mt for only the second time on record, as producers responded to soaring prices for both products.

Diesel production grew 3.9% to 1.24 million tonnes, up around 2.5% on the year to its highest level since November 2021, according to data from the Malaysian Department of Statistics.

And liquified natural gas (LNG) ticked up 1.4% to just over 3 million tonnes for only the second time on record going back to 2009.

Both diesel and natural gas markets have tightened this year sending prices soaring, especially in Europe following the war in Ukraine.


..............


Diesel at 46% yield, at today's crack USD 44.9/brl

www.tradingview.com/symbols/NYMEX-GZ1!/

Gross margin from Diesel alone

= (10.7 million barrels/qtr x 46% yield) x (44.9 USD/brl) x (MYR 4.55/USD)
= 1005 million MYR ....


PBT = 925 million
PAT = 703 million
EPS = 2.34

Currently 1 USD = 4.57 MYR
.............

With such weakening of MYR against USD, seriously HY would be save haven for the long term

you only need average 12.7 USD/brl margin:
..........................................


Gross margin using above hypothetical margin (considering reversal to mean under long term scenario)

= (10.7 million barrels/qtr ) x (12.7 USD/brl) x (MYR 4.57/USD)
= 621 million MYR ....


PBT = 541 million
PAT = 411 million
EPS = 1.37 per qtr

the fundamental issue that Fed is tackling is - inflation

1) what is the root cause of inflation?

It should be obvious that its the high oil price..


2) why is oil price high while demand is low?

its because oil producers do not want to increase output and reduce price especially saudi who wants to benefit on its only income source using present opportunity despite US persuasion'

so, eventually the Saudi has to give in....i.e increase production / reduce price..

there is a plan for russian oil price cap too to help (this could be a big game changer)



3) what happens when oil price comes down?

increase pressure for higher utilization at the refinery to meet higher demand for gasoline

refinery margin would strengthen



Posted by Vicky > Sep 25, 2022 9:49 AM | Report Abuse

As mentioned earlier Fed continuation to increase interest rate will slash economy growth. Oil utilisation will also reduce perhaps down to USD80/barrel or more. Even Saudis or Russia wants to maintain USD90 & above in not true. The demand is less. They produce less as well to maintain price but in terms of volume they are unable to break even. How long they can reduce volume ? Dr. Doom predicted it will be a long recession as inflations are 40 years high. So reduce your oil portfolio and spread to customer staples where even recession customer still need to use. Do not be carried away by so-called unqualified gurus. Save your money and prepare to re-enter during market massive slump. Oil once a while will rebound a bit but it is time to reduce portfolios. Check history of oil prices during recession. Tqvm

its a one time event where the increase in profit from gross margin in a single qtr easily offsets the loss on derivatives

while rise in profit from gross margin is recurring every single qtr


Posted by gemfinder > Sep 25, 2022 1:57 PM | Report Abuse

Hy a lot of loans in usd... sure kena

Can Europe replace oil imports from Russia?

The fact that a large share of Europe’s crude oil imports are by ship rather than pipeline means that in principle, replacing Russian oil will be easier than replacing Russian gas. However, three major bottlenecks should be considered:

i) Intra-European oil infrastructure: if Russian oil supplies stop, it will be challenging to re-route crude oil and oil products inside the EU. The infrastructure is designed for east to west flows, and moving crude oil and products eastwards might entail abnormal movements of crude, including via rail, truck and river barge.

ii) Refineries: certain European refineries are optimised to use Russian oil and will be less efficient if producing with a different quality of crude. Iraqi and Iranian crude come closest to Russian crude. Particularly vulnerable are six large refineries along the Druzhba pipeline (in Poland, Germany, Czechia, Austria, Hungary and Slovakia). In 2019, these refiners were subject to a stress test as flows were disrupted because of contamination of oil. They passed the test using strategic reserves, crude stored onsite and re-routed seaborne deliveries. But these outages lasted only two months. If it is not possible to feed these refineries, slack will have to be taken up in alternative refineries to meet final product demand. While port refineries are still vulnerable to a drop from such a large supplier, they are typically better placed to: a) accept different crude types, and b) accept consignements from new suppliers.

iii) Replacing Russian refining capacity: beyond crude oil supply, the EU must also consider replacing Russian refining capacity that produces diesel, naphtha and fuel oil. European refiners could try to compensate for this by increasing refinery throughput. To replace lost Russian diesel supply, for example, European refineries would have to raise runs by about 10 percentage points, taking them to almost 90% of total capacity of 15-16 mb/d. It would be the highest utilisation rate this century.

my simple question & guidance:

1) what made you buy HY in the first place? and what has changed now for you to seek advise now if to hold or not

if the thesis behind buying remains the same then just hold on, else dispose

i think you should hold on to HY as long as russian oil restriction is in place, but its your choice at the end


2) why do you think a person wants to bash u? LOL...

I think none of the promoters wants to bash anyone here as long as they justify their opinion

in fact none of the promoters here talks about share price movement but mostly on earnings only

so, is your opinion on earnings have changed now? If not...then no one is going to bash u...

Amazing...Q3 may double up the dividend.


Posted by Sslee > Sep 24, 2022 9:34 AM | Report Abuse

WTI USD 78.74 per barrel
Brent crude USD 86.71 per barrel

LOW SULPHUR GASOIL CRACK SPREAD (1000MT) FINANCIAL FUTURES (CONTINUOUS: CURRENT CONTRACT IN FRONT)NYMEX
45.971
D
USD
−0.399
(−0.86%)

With cheaper crude oil price but diesel crack spread at USD 45.971 per barrel is that bad news for HRC?

Currently 1 USD = 4.57 MYR
.............

With such weakening of MYR against USD, seriously HY would be save haven for the long term

you only need average 12.7 USD/brl margin:
..........................................


Gross margin using above hypothetical margin (considering reversal to mean under long term scenario)

= (10.7 million barrels/qtr ) x (12.7 USD/brl) x (MYR 4.57/USD)
= 621 million MYR ....


PBT = 541 million
PAT = 411 million
EPS = 1.37 per qtr

MALAYSIA DATA: DIESEL output at 8-month high, LNG nears record!

9 Sep 2022

Quantum Commodity Intelligence – Malaysia’s output of diesel reached an eight-month high in July and LNG topped 3 million mt for only the second time on record, as producers responded to soaring prices for both products.

Diesel production grew 3.9% to 1.24 million tonnes, up around 2.5% on the year to its highest level since November 2021, according to data from the Malaysian Department of Statistics.

And liquified natural gas (LNG) ticked up 1.4% to just over 3 million tonnes for only the second time on record going back to 2009.

Both diesel and natural gas markets have tightened this year sending prices soaring, especially in Europe following the war in Ukraine.


..............


Diesel at 46% yield, at today's crack USD 44.9/brl

www.tradingview.com/symbols/NYMEX-GZ1!/

Gross margin from Diesel alone

= (10.7 million barrels/qtr x 46% yield) x (44.9 USD/brl) x (MYR 4.55/USD)
= 1005 million MYR ....


PBT = 925 million
PAT = 703 million
EPS = 2.34

if your petrol price is half of what it used to be, tendency is higher to drive and make a long trip or got to office instead of working from home..

especially if you are outside malaysia...these countries feels the pinch unlike malaysia who is subsidized

yes indeed, higher demand --> greater crack spread


Posted by UlarSawa > Sep 24, 2022 12:54 PM | Report Abuse

Not everything is about crackspread meh. Haiyoh. Correct?

LOWER the OIL PRICE ---->> HIGHER the DEMAND for refined products

GREATER the REFINERY MARGIN

simple common sense..

MALAYSIA DATA: DIESEL output at 8-month high, LNG nears record!

9 Sep 2022

Quantum Commodity Intelligence – Malaysia’s output of diesel reached an eight-month high in July and LNG topped 3 million mt for only the second time on record, as producers responded to soaring prices for both products.

Diesel production grew 3.9% to 1.24 million tonnes, up around 2.5% on the year to its highest level since November 2021, according to data from the Malaysian Department of Statistics.

And liquified natural gas (LNG) ticked up 1.4% to just over 3 million tonnes for only the second time on record going back to 2009.

Both diesel and natural gas markets have tightened this year sending prices soaring, especially in Europe following the war in Ukraine.


..............


Diesel at 46% yield, at today's crack USD 44.9/brl

www.tradingview.com/symbols/NYMEX-GZ1!/

Gross margin from Diesel alone

= (10.7 million barrels/qtr x 46% yield) x (44.9 USD/brl) x (MYR 4.55/USD)
= 1005 million MYR ....


PBT = 925 million
PAT = 703 million
EPS = 2.34

Amazing...Q3 may double up the dividend.


Posted by Sslee > Sep 24, 2022 9:34 AM | Report Abuse

WTI USD 78.74 per barrel
Brent crude USD 86.71 per barrel

LOW SULPHUR GASOIL CRACK SPREAD (1000MT) FINANCIAL FUTURES (CONTINUOUS: CURRENT CONTRACT IN FRONT)NYMEX
45.971
D
USD
−0.399
(−0.86%)

With cheaper crude oil price but diesel crack spread at USD 45.971 per barrel is that bad news for HRC?

This is a very important news that enable us to ascertain HY is responsive enough with the market changes and had maximized their Diesel yield while reducing Gasoline when crack spread for these had gone on opposite directions.

Currently 1 USD = 4.57 MYR
.............

With such weakening of MYR against USD, seriously HY would be save haven for the long term

you only need average 12.7 USD/brl margin:
..........................................


Gross margin using above hypothetical margin (reversal to mean long term scenario)

= (10.7 million barrels/qtr ) x (12.7 USD/brl) x (MYR 4.57/USD)
= 621 million MYR ....


PBT = 541 million
PAT = 411 million
EPS = 1.37

Posted by probability > Sep 23, 2022 5:07 PM | Report Abuse X

MALAYSIA DATA: DIESEL output at 8-month high, LNG nears record

dont get confused with derivative fair value changes thats get reported in OCI as one time effects with recurring gain from currency strengths

10% rise in gross profit due strengthening USD, easily wipes out this derivative effect in a single quarter

and the gross profit is a permanent recurring event

need some common sense before you open your mouth


Posted by qqq3333 > Sep 23, 2022 10:33 PM | Report Abuse

by kebling98 > 20 minutes ago | Report Abuse

If you read annual report, they mentioned strong USD is not good to profit. Don't simply talk to favour your interestlah
==============

lol.............the AR says 10% rise in USD results in 130 million rgt loss in P/l...................note 4............. goes to show rubbish in rubbish out. .................... outsider know more than the Company/ the CFo eh?

yes, its good for those who are short-sighted, traders, trend followers and the uninformed to sell cheap to those who grasp what is being said

you comeback when the trend changes if the informed sells you cheap later


Posted by kebling98 > Sep 23, 2022 9:56 PM | Report Abuse

Haiyoh market sentiment so bad mah. Share price sure down lah. Q3 profit maybe so good also useless lah. No need promote everyday lah. What data also useless lah. Is downtrend! Downtrend!

HY no longer affected by their inventory gain/loss due to their hedging policy (it gets reported only on OCI but not on P&L)

again, all those linking oil price to refinery is absolutely incorrect

in fact, lower the oil price, the better the margin of refinery

@greatwall, yes as can be seen from above gross profit calculation

crack spread are in USD as per international supply & demand dynamics

LPG yield can be found here:

https://klse1.i3investor.com/blogs/2017/2022-09-02-story-h1627801128-HENGYUAN_How_to_calculate_its_refinery_margin_Why_share_price_hesitatin.jsp

god knows how much more they can increase both Diesel & LPG yield!

MALAYSIA DATA: DIESEL output at 8-month high, LNG nears record!

9 Sep 2022

Quantum Commodity Intelligence – Malaysia’s output of diesel reached an eight-month high in July and LNG topped 3 million mt for only the second time on record, as producers responded to soaring prices for both products.

Diesel production grew 3.9% to 1.24 million tonnes, up around 2.5% on the year to its highest level since November 2021, according to data from the Malaysian Department of Statistics.

And liquified natural gas (LNG) ticked up 1.4% to just over 3 million tonnes for only the second time on record going back to 2009.

Both diesel and natural gas markets have tightened this year sending prices soaring, especially in Europe following the war in Ukraine.


..............


Diesel at 46% yield, at today's crack USD 44.9/brl

www.tradingview.com/symbols/NYMEX-GZ1!/

Gross margin from Diesel alone

= (10.7 million barrels/qtr x 46% yield) x (44.9 USD/brl) x (MYR 4.55/USD)
= 1005 million MYR ....


PBT = 925 million
PAT = 703 million
EPS = 2.34

...

Check out LPG yield of HY in 2020....

MALAYSIA DATA: DIESEL output at 8-month high, LNG nears record!

9 Sep 2022

Quantum Commodity Intelligence – Malaysia’s output of diesel reached an eight-month high in July and LNG topped 3 million mt for only the second time on record, as producers responded to soaring prices for both products.

Diesel production grew 3.9% to 1.24 million tonnes, up around 2.5% on the year to its highest level since November 2021, according to data from the Malaysian Department of Statistics.

And liquified natural gas (LNG) ticked up 1.4% to just over 3 million tonnes for only the second time on record going back to 2009.

Both diesel and natural gas markets have tightened this year sending prices soaring, especially in Europe following the war in Ukraine.

Europe has been scrambling to find alternative supplies of natural gas after political tensions with its biggest supplier – Russia – ratcheted up after the invasion.

But Europe will have to compete with Asia for LNG supplies this winter.

Fuel oil was the only other oil product to increase in July, up 14.5% from June to 172,000mt.

Malaysia’s output of gasoline fell 2.6% to 580,000mt in July, down 3% from a year earlier.

Naphtha was 16% lower at 259,000mt, down 21% from last July.

And jet fuel production fell 11% to 243,000mt, down 34% from a year earlier.

https://www.qcintel.com/article/malaysia-data-diesel-output-at-8-month-high-lng-nears-record-8378.html

Germany Seizes Control of Russian Refineries but Has No Oil to Refine

https://www.youtube.com/watch?v=ZRZBVeNi76w

https://www.bbc.com/news/business-62924071

In a similar move in April, Germany took control of subsidiaries of Russian gas giant Gazprom.

On Friday, the German government handed control of the PCK Schwedt refinery in Brandenburg to the national energy regulator, along with stakes in two other refineries in the south of the country.

Diesel at 46% yield, at today's crack USD 44.9/brl

www.tradingview.com/symbols/NYMEX-GZ1!/

Gross margin from Diesel alone

= (10.7 million barrels/qtr x 46% yield) x (44.9 USD/brl) x (MYR 4.55/USD)
= 1005 million MYR ....


PBT = 925 million
PAT = 703 million
EPS = 2.34

expect crack spread to strengthen further tomorrow

before blindly comparing with gloves...

have you done the maths, what level of margin needed by HY to obtain an EPS of RM 1? and whats the current margin?

do you know despite current relatively good margin no one is investing further on refineries as it takes years to built and successfully commission?

do you know when the sanction on russian oil will take effect and when it will be aborted?



Posted by Phoebe > Sep 21, 2022 4:17 PM | Report Abuse

Buy and hold for 1 year? Super profit? I think this is exactly the reason HY cannot go up. TGlove plunce from RM 9 to 70c? Everyone has been bitten once. Scared of 2nd bite. I know many will says that glove and refinery is different. You cannot built refinery in 3 months. That is very true. But do remember super profit is not forever. Also, all the earning is meaningless if it is not distributed out to shareholder. Supermax earns billions and have cash of RM3billion which translate to cash per share of RM 1 but yet it is selling less than 70c. You pay 70c and in the piggy bank have RM1 waiting for you. This is excluding other asset. So why is nobody buying it?

Dont't believe..from John Lennon

https://www.youtube.com/watch?v=Dr2efHjt5Cs

when you invest on HY
.....................

you dont need to look into oil price..

you dont need to look into their hedging contracts...

you dont need to look into Other Comprehensive Income statement...

you dont need to study their management..

you dont need to see if its red chip or blue chip...

you dont need to see if any sifu recommends or not...

you dont need to believe in probability..

....

all you ever need to monitor is the fcuking 'crack spread'

nothing else matters

its so damn simple..we dont need to believe in anything else

To all naysayers that are of the opinion HY price will go down further, even to the level like MM said - RM 3, and it will never rise, you may certainly be correct. Not disputing this at all...

However, the above has no connection with the below facts that remains true:

.........

For those who cannot comprehend high level maths and pure logics, below is the minimum EPS going forward if today's current margin of Diesel maintained (assuming all other refined products barely breaks even with cost feed crude. i.e ZERO crack spread):
.........................


Diesel at 46% yield, cracks USD 45/brl

www.tradingview.com/symbols/NYMEX-GZ1!/

Gross margin from Diesel alone

= (10.7 million x 46%) x (45 USD/brl) x (MYR 4.5/USD)
= 996 million MYR .....


PBT = 916 million
PAT = 696 million
EPS = 2.32

For those who dont like very detail maths, minimum EPS going forward if today's current margin of Diesel maintained (all other refined juts breaks even with cost. i.e zerp crack spread):
.........................


Diesel at 46% yield, cracks USD 45/brl

www.tradingview.com/symbols/NYMEX-GZ1!/

Gross margin from Diesel alone

= (10.7 million x 46%) x (45 USD/brl) x (MYR 4.5/USD)
= 996 million MYR .....


PBT = 916 million
PAT = 696 million
EPS = 2.32

when you invest on HY
.....................

you dont need to look into oil price..

you dont need to look into their hedging contracts...

you dont need to look into Other Comprehensive Income statement...

you dont need to study their management..

you dont need to see if its red chip or blue chip...

you dont need to see if any sifu recommends or not...

....

all you ever need to monitor is the fcuking 'crack spread'

nothing else matters

its so damn simple, only the less educated could think other wise

confirmed..

Posted by probability > Sep 20, 2022 7:23 PM | Report Abuse X

expect crack spread to strengthen up tomorrow

expect crack spread to strengthen up tomorrow

you can use whatever lowest figures for crack spread of gasoline, diesel and jet fuel based on the crack spread chart

you will never be able to obtain EPS below the record EPS of 2017

Hi guys, just a reminder on below info. Do not blindly dispose using herd mentality. The crack spread of all products presently are way higher than what i used on below derivation.

We can wait for 1 month for our salary, 2 months is not that long.. NTA will shoot up by RM 4 by Q3 results along with below EPS.

........

Q3 - Rock bottom EPS analysis

(using lowest possible average crack spread during the period - as if it was this level every single day of 90 days in a quarter)
.........................

Using extreme conservative scenario where 50% of HY throughput is hedged where they will only reflect hedge margin at extra low 10 USD/brl, with the balance free to capture market margin

1. Diesel at 46% yield, cracks USD 39/brl

www.tradingview.com/symbols/NYMEX-GZ1!/

2. Jet fuel at 7% yield, cracks USD 29/brl

www.tradingview.com/symbols/NYMEX-ASD1!/

3. Gasoline at 35% yield, cracks USD 7/brl

www.tradingview.com/symbols/NYMEX-D1N1%21/
www.tradingview.com/symbols/NYMEX-SMU1!/

3. Rest of product yield at 12%, using Mogas 95 cracks USD 7/brl

Gross profit from (Hedged) portion:
..............................

= (10.7 million x 50%) x (10 USD/brl) x (MYR 4.5/USD)
= 240 million MYR .....(1)



Gross profit (UN-HEDGED) portion:
............................

Refining margin/brl:

= (0.46 x 39) + (0.07 x 29) + (0.35 x 7) + (0.12 x 7)
= (17.9 + 2.0 + 2.5 + 0.8)
= US $ 23.2 / brl

Gross profit:
= (10.7 million x 50%) x (23.2 USD/brl) x (MYR 4.5/USD)
= 558 million MYR ......(2)



Total gross profit (1) + (2)
= 240 + 558
= 798 million MYR

PBT = 718 million
PAT = 545 million
EPS = 1.81

Cost of Hedging Reserve at above mark-to-market pricing was 100 million gain at end of Q1.

As such for Q3 results, NTA will increase RM 4 assuming closing of Q3 (30th Sep) is at above crack spread level...

Q3 - Rock bottom EPS analysis

(using lowest possible average crack spread during the period - as if it was this level every single day of 90 days in a quarter)
.........................

Using extreme conservative scenario where 50% of HY throughput is hedged where they will only reflect hedge margin at extra low 10 USD/brl, with the balance free to capture market margin

1. Diesel at 46% yield, cracks USD 39/brl

www.tradingview.com/symbols/NYMEX-GZ1!/

2. Jet fuel at 7% yield, cracks USD 29/brl

www.tradingview.com/symbols/NYMEX-ASD1!/

3. Gasoline at 35% yield, cracks USD 7/brl

www.tradingview.com/symbols/NYMEX-D1N1%21/
www.tradingview.com/symbols/NYMEX-SMU1!/

3. Rest of product yield at 12%, using Mogas 95 cracks USD 7/brl

Gross profit from (Hedged) portion:
..............................

= (10.7 million x 50%) x (10 USD/brl) x (MYR 4.5/USD)
= 240 million MYR .....(1)



Gross profit (UN-HEDGED) portion:
............................

Refining margin/brl:

= (0.46 x 39) + (0.07 x 29) + (0.35 x 7) + (0.12 x 7)
= (17.9 + 2.0 + 2.5 + 0.8)
= US $ 23.2 / brl

Gross profit:
= (10.7 million x 50%) x (23.2 USD/brl) x (MYR 4.5/USD)
= 558 million MYR ......(2)



Total gross profit (1) + (2)
= 240 + 558
= 798 million MYR

PBT = 718 million
PAT = 545 million
EPS = 1.81

Q3 - Rock bottom EPS analysis

(using lowest possible average crack spread during the period - as if it was this level every single day of 90 days in a quarter)
.........................

Using extreme conservative scenario where 50% of HY throughput is hedged where they will only reflect hedge margin at extra low 10 USD/brl, with the balance free to capture market margin

1. Diesel at 46% yield, cracks USD 39/brl

www.tradingview.com/symbols/NYMEX-GZ1!/

2. Jet fuel at 7% yield, cracks USD 29/brl

www.tradingview.com/symbols/NYMEX-ASD1!/

3. Gasoline at 35% yield, cracks USD 7/brl

www.tradingview.com/symbols/NYMEX-D1N1%21/
www.tradingview.com/symbols/NYMEX-SMU1!/

3. Rest of product yield at 12%, using Mogas 95 cracks USD 7/brl

Gross profit from (Hedged) portion:
..............................

= (10.7 million x 50%) x (10 USD/brl) x (MYR 4.5/USD)
= 240 million MYR .....(1)



Gross profit (UN-HEDGED) portion:
............................

Refining margin/brl:

= (0.46 x 39) + (0.07 x 29) + (0.35 x 7) + (0.12 x 7)
= (17.9 + 2.0 + 2.5 + 0.8)
= US $ 23.2 / brl

Gross profit:
= (10.7 million x 50%) x (23.2 USD/brl) x (MYR 4.5/USD)
= 558 million MYR ......(2)



Total gross profit (1) + (2)
= 240 + 558
= 798 million MYR

PBT = 718 million
PAT = 545 million
EPS = 1.81