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2022-09-09 20:46 | Report Abuse
@ular..ask him to repost..we are here to listen all naysayers...loud and clear
2022-09-09 20:11 | Report Abuse
ok, exactly as i thought earlier..ok great! :)
2022-09-09 20:05 | Report Abuse
By sslee's way of query, i was thinking he was stressing the point that COHR is not of any concern till the time the actual physical market transaction takes place along with the hedge crack closure in futures..
@sslee was that the message? or is it a sincere query?
2022-09-09 19:59 | Report Abuse
@upshare, i totally understand these. I was trying to answer sslee but i was not sure what was his question..
2022-09-09 19:50 | Report Abuse
the unrealized losses shown on COHR are purely future hedging losses IF the mark to market spot price of the refined products on June 30th remains.
Its derive to show the probable future at that point in time. This his nothing to do with P&L and thats why the placed in OCI
2022-09-09 19:47 | Report Abuse
@sslee, i did not really understand your query above.
I am perfectly inline with Zhuge's statement above.
Does the below simplified statement not answer your query?
........
The Cash Flow Hedge (CFH) in OCI shows the hedging gain / loss for the hedged position which are closed, but the corresponding physical market transaction (change in ownership of the goods) is yet to take place to deliver the available market gross profit which is then offset by this hedging gain / loss on CFH to give the P&L exactly as it has been hedged initially.
The Cost of Hedging Reserve (COHR) on the other hand shows the hedging gain / loss for all the balance hedged position (yet to be closed) from the notional amount (refining margin swap contract RMSC), where the corresponding physical market transaction will take place within the maturity period (next 24 months) assuming the hedging positions are closed as per current spot rate.
As such, COHR is a highly hypothetical figure that changes significantly as per the market spot price of the commodity (mark-to-market) when the financial reporting period is closed.
2022-09-09 19:23 | Report Abuse
Truth cannot be suppressed very long, the earlier one investigates and verify what is the truth the more upper hand one will have
the longer one waits the higher the odds are for others to find out ahead of you..
....
HEDGE ACCOUNTING & how it is reported on OTHER COMPREHENSIVE INCOME (OCI)
https://www.youtube.com/watch?v=w5P_M9fWqGg
The above simple example for ORANGES can be viewed as CRUDE OIL for HY where the hedging is done with the intention of going LONG (the higher the future price, the higher the gain)
For refined products hedge, it is for going SHORT, the higher the future price, the greater the loss.
The net effect of the above two is what reported by HY under their OCI.
The Cash Flow Hedge (CFH) in OCI shows the hedging gain / loss for the hedged position which are closed, but the corresponding physical market transaction (change in ownership of the goods) is yet to take place to deliver the available market gross profit which is then offset by this hedging gain / loss on CFH to give the P&L exactly as it has been hedged initially.
The Cost of Hedging Reserve (COHR) on the other hand shows the hedging gain / loss for all the balance hedged position (yet to be closed) from the notional amount (refining margin swap contract RMSC), where the corresponding physical market transaction will take place within the maturity period (next 24 months) assuming the hedging positions are closed as per current spot rate.
As such, COHR is a highly hypothetical figure that changes significantly as per the market spot price of the commodity (mark-to-market) when the financial reporting period is closed.
............
Now that the refined oil products price (gasoline) had significantly retreated from the peak of 30th June, if it remains the same till end of Sept, Q3 will report huge gain on OCI
If prices of refined products relative to crude (the crack spread) are back to Q1 22, 30th Mar level, cost of hedging reserve shall be exactly back to the figure reported in Q1 22 results for Q3 22.
2022-09-09 18:38 | Report Abuse
the OCI section is used to measure - 'how good is the person doing the hedging for HY'?', i,e how much good foresight he has on the future in capturing maximum margin vs mediocre margin
of course, we know the person who had hedged 18 million barrels with good margin with maturity over next 2 years at the end of 2021 could not have predicted Putin's move on capturing Ukraine and subsequently EU reacting by sanctioning oil...
nevertheless its mainly hedged on gasoline which is relatively at very low margin presently...
OCI will show by next qtr - Q3 results that this guy who had hedged is not really that bad after all...coz the negative figures on OCI will turn to positive like it was at end of Q1 22
2022-09-09 18:10 | Report Abuse
not probably return to profitable, but certainly profitable as per the hedge values..
all those hedging losses you see are just opportunity for gretaer profit that will be probably lost...if the extraordinary crack spread margin end of June 22 maintains indefinitely..
Posted by UlarSawa > Sep 9, 2022 5:58 PM | Report Abuse
Now ular know already. Oil specialist keep cakap crackspread margin drop then HY recoup the hedging losses and probably will turn into profitable lah. Like this interpret lah. Very simple mah. Why write so long long essay macam mau attend ACCA exam ini macam leh. Haiyoh. Correct?
2022-09-09 17:40 | Report Abuse
dont runaway ular, only need UPSR level to understand above...seriously
but i agree stockraider cannot understand forever
2022-09-09 17:34 | Report Abuse
i am confident if you go through the youtube video shared above even half sleep you will understand....
2022-09-09 17:24 | Report Abuse
Truth cannot be suppressed very long, the earlier one investigates and verify what is the truth the more upper hand one will have
the longer one waits the higher the odds are for others to find out ahead of you..
....
HEDGE ACCOUNTING & how it is reported on OTHER COMPREHENSIVE INCOME (OCI)
https://www.youtube.com/watch?v=w5P_M9fWqGg
The above simple example for ORANGES can be viewed as CRUDE OIL for HY where the hedging is done with the intention of going LONG (the higher the future price, the higher the gain)
For refined products hedge, it is for going SHORT, the higher the future price, the greater the loss.
The net effect of the above two is what reported by HY under their OCI.
The Cash Flow Hedge (CFH) in OCI shows the hedging gain / loss for the hedged position which are closed, but the corresponding physical market transaction (change in ownership of the goods) is yet to take place to deliver the available market gross profit which is then offset by this hedging gain / loss on CFH to give the P&L exactly as it has been hedged initially.
The Cost of Hedging Reserve (COHR) on the other hand shows the hedging gain / loss for all the balance hedged position (yet to be closed) from the notional amount (refining margin swap contract RMSC), where the corresponding physical market transaction will take place within the maturity period (next 24 months) assuming the hedging positions are closed as per current spot rate.
As such, COHR is a highly hypothetical figure that changes significantly as per the market spot price of the commodity (mark-to-market) when the financial reporting period is closed.
............
Now that the refined oil products price (gasoline) had significantly retreated from the peak of 30th June, if it remains the same till end of Sept, Q3 will report huge gain on OCI
If prices of refined products relative to crude (the crack spread) are back to Q1 22, 30th Mar level, cost of hedging reserve shall be exactly back to the figure reported in Q1 22 results for Q3 22.
2022-09-09 17:18 | Report Abuse
yes sslee, is simply brilliant :)..
2022-09-09 17:11 | Report Abuse
Truth cannot be suppressed very long, the earlier one investigates and verify what is the truth the more upper hand one will have
the longer one waits the higher the odds are for others to find out ahead of you..
....
HEDGE ACCOUNTING & how it is reported on OTHER COMPREHENSIVE INCOME (OCI)
https://www.youtube.com/watch?v=w5P_M9fWqGg
The above simple example for ORANGES can be viewed as CRUDE OIL for HY where the hedging is done with the intention of going LONG (the higher the future price, the higher the gain)
For refined products hedge, it is for going SHORT, the higher the future price, the greater the loss.
The net effect of the above two is what reported by HY under their OCI.
The Cash Flow Hedge (CFH) in OCI shows the hedging gain / loss for the hedged position which are closed, but the corresponding physical market transaction (change in ownership of the goods) is yet to take place to deliver the available market gross profit which is then offset by this hedging gain / loss on CFH to give the P&L exactly as it has been hedged initially.
The Cost of Hedging Reserve (COHR) on the other hand shows the hedging gain / loss for all the balance hedged position (yet to be closed) from the notional amount (refining margin swap contract RMSC), where the corresponding physical market transaction will take place within the maturity period (next 24 months) assuming the hedging positions are closed as per current spot rate.
As such, COHR is a highly hypothetical figure that changes significantly as per the market spot price of the commodity (mark-to-market) when the financial reporting period is closed.
............
Now that the refined oil products price (gasoline) had significantly retreated from the peak of 30th June, if it remains the same till end of Sept, Q3 will report huge gain on OCI
If prices of refined products relative to crude (the crack spread) are back to Q1 22, 30th Mar level, cost of hedging reserve shall be exactly back to the figure reported in Q1 22 results for Q3 22.
2022-09-09 12:22 | Report Abuse
Truth cannot be suppressed very long, the earlier one investigates and accept the truth the more upper hand - advantage one will have
the longer you wait the more odds are for others to find out
....
HEDGE ACCOUNTING & how it is reported on OTHER COMPREHENSIVE INCOME (OCI)
https://www.youtube.com/watch?v=w5P_M9fWqGg
The above simple example for ORANGES can be viewed as CRUDE OIL for HY where the hedge is going LONG (the higher the future price, the higher the gain)
For refined products hedge, it is about going SHORT, the higher the future price, the greater the loss.
The net effect of both above is what reported by HY under their OCI.
Now that the refined oil products price (gasoline) had significantly retreated from the peak of 30th June, if it remains the same till end of Sept, Q3 will report huge gain on OCI
If prices of refined products relative to crude (the crack spread) are back to Q1 - 30th Mar level, cost of hedging reserve shall be exactly back to the figure reported in Q1 22 results for Q3.
2022-09-09 12:22 | Report Abuse
exactly...money is right in front of their eyes....but they chose to see OCI instead of P&L...
Posted by Zhuge_Liang > Sep 9, 2022 12:19 PM | Report Abuse
The earning is so strong and PER is so low.
This is a life time opportunity to win in a big way.
I think should not aim for peanut profit like many day traders.
2022-09-09 12:10 | Report Abuse
oh i see..5.96 also got..not bad..
Posted by UlarSawa > Sep 9, 2022 12:09 PM | Report Abuse
Not really leh. Ular TP PE 1.5 - 2.0 leh. That is 4.20 to 5.96 leh Mana ada so bias so much leh. At the middle ground leh. Haiyoh. Correct?
2022-09-09 12:06 | Report Abuse
i totally agree all those spam postings is really irritating with name calling
Ularsawa is way more decent but TOTALLY BIASED on the pessimist side..hehe
but nvmind...strong resistance can be strong support later!
2022-09-09 11:31 | Report Abuse
yes, ular.. i have given up now on fighting with anyone...once you kmow they are not at your level or sincere...you should stop..
will continue posting my banners on the accounting principles and refinery hedging..whenever the forum gets flooded with nonsense...
slowly i shall gain more people who can understand these..lets see :)
Posted by UlarSawa > Sep 9, 2022 11:26 AM | Report Abuse
You cant convince kakijudi one with crackspread alone leh. No matter how hard you are trying pun no one bother leh. Bcos kakijudi only see harga saham only leh. Win or lose the judi is more important leh. Haiyoh. Correct?
2022-09-09 11:23 | Report Abuse
@sslee,
as long as one never understand these hedging principle and accounting of these in OCI...those pessimist will never get convinced other wise
suggest, instead of talking about hengyuan...we talk about these accounting terms and hedging principles..
it will be useful for other stock investment too
2022-09-09 11:18 | Report Abuse
Hengyuan is Garbage stock!
Its going bankrupt!
EPS will drop badly!
The management is con man!
It has no fundamentals!
Its cash flow is bleeding!
share price not worth more than RM 4!
one certainly cannot prove anyone's assertion out of thin air on the above as incorrect...
even if HY payout their Q2 earnings of RM 2 as dividend end of this month, one can still continues shouting the same repetitively...
and..no more earnings projection from me..no promotion
However,
try spending some time learning the above accounting definitions i had shared and typical refiners crack hedging practise, and then give a second thought and see....
its not that difficult to see
2022-09-09 09:19 | Report Abuse
2021 annual report page 132
............................
Cash flow hedge reserve and cost of hedging reserve:
The cash flow hedge reserve is used to record gains and losses on derivatives that are designated and qualify as cash flow hedges and that are recognised in other comprehensive income. Amounts are reclassified to profit or loss when the associated hedged transaction affects profit or loss.
The cost of hedging is seen as cost of achieving the risk mitigation inherent in the hedge. It is incurred to protect the Company against unfavourable changes in price. The changes in the cost of hedging is initially recognised in other comprehensive income and removed from equity and recognised in profit or loss in the same period that the hedged cash flows affect profit or loss.
2022-09-09 09:19 | Report Abuse
What is refining margin Hedging?
.............................
In order to mitigate their exposure to crack spread price volatility, many refiners hedge the crack spread by purchasing crude oil futures or swaps and simultaneously selling refined products futures or swaps as the results allows the refiner to lock-in or fix the refining margin.
https://www.mercatusenergy.com/blog/bid/72741/an-introduction-to-crack-spread-hedging#:~:text=In%20order%20to%20mitigate%20their,or%20fix%20the%20refining%20margin
2022-09-09 09:18 | Report Abuse
Cash flow hedge (CFH) are simply ineffective (loss/gain) hedge portions of the RMSC which has been liquidated (settled) as of 30th June and awaiting respective physical market transaction to take place to offset these hedging losses.
Only when physical sales & purchase of the commodity takes place it can be reflected on P&L statement.
Reference:
'When does Cash Flows Hedge Reserves (under OCI) gets transferred to P&L?'
https://www.youtube.com/watch?v=arCSncmfB8k
2022-09-09 09:17 | Report Abuse
HEDGE ACCOUNTING & how it is reported on OTHER COMPREHENSIVE INCOME (OCI)
https://www.youtube.com/watch?v=w5P_M9fWqGg
The above simple example for ORANGES can be viewed as CRUDE OIL for HY where the hedge is going LONG (i.e, the higher the future price, the higher the hedging gain)
For refined products hedge, it is about going SHORT, the higher the future price, the greater the hedging loss.
The net effect of both above is what reported by HY under their OCI.
2022-09-09 02:16 | Report Abuse
HEDGE ACCOUNTING & how it is reported on OTHER COMPREHENSIVE INCOME (OCI)
https://www.youtube.com/watch?v=w5P_M9fWqGg
The above simple example for ORANGES can be viewed as CRUDE OIL for HY where the hedge is going LONG (i.e, the higher the future price, the higher the hedging gain)
For refined products hedge, it is about going SHORT, the higher the future price, the greater the hedging loss.
The net effect of both above is what reported by HY under their OCI.
Now that the refined oil products price (gasoline) had significantly retreated from the peak of 30th June, if it remains the same till end of Sept, Q3 will report huge gain on OCI
2022-09-09 02:15 | Report Abuse
HEDGE ACCOUNTING & how it is reported on OTHER COMPREHENSIVE INCOME (OCI)
https://www.youtube.com/watch?v=w5P_M9fWqGg
The above simple example for ORANGES can be viewed as CRUDE OIL for HY where the hedge is going LONG (the higher the future price, the higher the gain)
For refined products hedge, it is about going SHORT, the higher the future price, the greater the loss.
The net effect of both above is what reported by HY under their OCI.
Now that the refined oil products price (gasoline) had significantly retreated from the peak of 30th June, if it remains the same till end of Sept, Q3 will report huge gain on OCI
2022-09-08 23:22 | Report Abuse
sad...hope the durian planted there cannot taste as great as our malaysian made musang king!..
2022-09-08 23:01 | Report Abuse
omg... musang king is growing there? very sad...
2022-09-08 22:41 | Report Abuse
What is refining margin Hedging?
.............................
In order to mitigate their exposure to crack spread price volatility, many refiners hedge the crack spread by purchasing crude oil futures or swaps and simultaneously selling refined products futures or swaps as the results allows the refiner to lock-in or fix the refining margin.
https://www.mercatusenergy.com/blog/bid/72741/an-introduction-to-crack-spread-hedging#:~:text=In%20order%20to%20mitigate%20their,or%20fix%20the%20refining%20margin.
2022-09-08 22:38 | Report Abuse
2021 annual report page 132
............................
Cash flow hedge reserve and cost of hedging reserve:
The cash flow hedge reserve is used to record gains and losses on derivatives that are designated and qualify as cash flow hedges and that are recognised in other comprehensive income. Amounts are reclassified to profit or loss when the associated hedged transaction affects profit or loss.
The cost of hedging is seen as cost of achieving the risk mitigation inherent in the hedge. It is incurred to protect the Company against unfavourable changes in price. The changes in the cost of hedging is initially recognised in other comprehensive income and removed from equity and recognised in profit or loss in the same period that the hedged cash flows affect profit or loss.
2022-09-08 22:37 | Report Abuse
1. Cash flow hedge reserve (CFH), &
2. Cost of hedging reserve (COHR)
...............
The figures of the above reported in OCI of HY Q2 results, was purely to do with the effects of the Refining Margin Swap Contract (RMSC) that HY had entered.
Cash flow hedge (CFH) are simply ineffective (loss/gain) hedge portions of the RMSC which has been liquidated (settled) as of 30th June and awaiting respective physical market transaction to take place to offset these hedging losses.
Only when physical sales & purchase of the commodity takes place it can be reflected on P&L statement.
Reference:
'When does Cash Flows Hedge Reserves (under OCI) gets transferred to P&L?'
https://www.youtube.com/watch?v=arCSncmfB8k
Whereas, Cost of hedging reserve (COHR) is simply the following:
Forward looking Mark-to-market estimate of the difference between the fixed price (hedged) and the future spot price multiplied by the notional quantity and discounted back to a present value based on a reasonable discount rate determined by the producer.
If one understands the above, it shall be perfectly clear why both (CFH & COHR) are not reported in P&L statement.
Think about it - if its a real loss they will surely reflect it as and when its known on P&L instantly
2022-09-08 17:03 | Report Abuse
yes, uncle Koon got fixated with gasoline crack spread and got spooked by its dive recently...
the fact is even in 2017, reason for spectacular EPS is mainly due to Diesel
Posted by UlarSawa > Sep 8, 2022 4:46 PM | Report Abuse
No matter how high the crackspread no one want to believe it anymore. After 2017 goreng until charchoal lah. History lah. Orang cannot forget the painful incident lah. Even Uncle Koon also dont believe it anymore leh. Haiyoh. Correct?
2022-09-08 16:43 | Report Abuse
wah ular...where got tipu..Q2 EPS you no see meh?
Posted by UlarSawa > Sep 8, 2022 4:42 PM | Report Abuse
Crackspread pun cracked already leh. Dont use crackspread anymore lah. No one believe after 2017 lah. Tipu pun dont tipu twice lah. Suiyee pun panlai already lah. Haiyoh. Correct?
2022-09-08 16:15 | Report Abuse
Big Frog masked by Gloves...thats why they cant see it! LOL...
2022-09-08 14:05 | Report Abuse
the company is paying Dividend without anybody forcing them to do so...
they are surely not doing this to goreng the share price
it just simply means the future prospects of earnings is good
2022-09-08 13:06 | Report Abuse
Unrealized Cost of Hedging Reserve (COHR) , loss / gain: (A-M) x V
A = hedged crack spread value, 12.7 USD/brl
V = barrels volume of refined products hedged, 18 million
M = Marked to Market pricing of the hedged refined product at end of reporting period (mark to market)
Since at the end of June 22', the avg crack spread of the refined products, e.g gasoline at 31.6 USD/brl, the opportunity lost for the period of hedging is
Unrealized Cost of Hedging Reserve (COHR):
= (12.7 - 31.6) USD/brl x 18 million barrels
= - 338 million USD or MYR 1,490,267,000
...
Now lets see what happens when say at end of Sept 22, Gasoline crack drops to its usual average of 5.7 USD/brl
Unrealized Cost of Hedging Reserve (COHR):
= (12.7 - 5.7) USD/brl x 18 million barrels
= 90 million USD or gain of MYR 395,000,000
2022-09-08 13:05 | Report Abuse
worth spending 5 min to understand though the english is quite difficult to grasp. After 3 minutes into the overview, the main part comes and its easy to understand.
'When does Cash Flows Hedge Reserves (under OCI) gets transferred to P&L?'
https://www.youtube.com/watch?v=arCSncmfB8k
2022-09-08 13:04 | Report Abuse
as predicted, Diesel Crack exploded to 55 USD/brl...
https://www.tradingview.com/symbols/NYMEX-GZ1!/
2022-09-08 13:04 | Report Abuse
Rock bottom EPS analysis
.........................
let us assume as extreme conservative scenario where 50% of HY throughput is hedged where they will only reflect hedge margin at 10 USD/brl, with the balance free to capture market margin
1. Diesel at 46% yield, cracks USD 50.36/brl
2. Jet fuel at 7% yield, cracks USD 38.40/brl
3. Gasoline at 35% yield, cracks USD 7.77/brl
3. Rest of product yield at 12%, using Mogas 95 cracks USD 7.77/brl
Gross profit from (Hedged) portion:
..............................
= (10.7 million x 50%) x (10 USD/brl) x (MYR 4.45/USD)
= 238 million MYR .....(1)
Gross profit (UN-HEDGED) portion:
............................
Refining margin/brl:
= (0.46 x 50.4 ) + (0.07 x 38.40) + (0.35 x 7.77) + (0.12 x 7.77)
= (23.18 + 2.70 + 2.72 + 0.93)
= US $ 29.5 / brl
Gross profit:
= (10.7 million x 50%) x (29.5 USD/brl) x (MYR 4.45/USD)
= 702 million MYR ......(2)
Total gross profit (1) + (2)
= 238 + 702
= 940 million MYR
PBT = 840 million
PAT = 638 million
EPS = 2.12
2022-09-08 13:03 | Report Abuse
Fair estimation:
...............
Even if we assume the RMSC covers complete Gasoline production capacity of 35% yield x 10.6 million, 3.7 million barrels, you are securing the below gross profit after hedging losses or gain.
= 3.7 million x 12.7 USD/brl x 4.45 ex
= 209 million MYR.....(1)
No matter what the figures are reported on CFH & COHR, they are purely trying to show the ineffectiveness / effectiveness of the hedging but the profit contribution remains the same.
The CFH shows how much 'opportunity for greater profit than 209 million / per qtr' is confirmed loss while COHR shows potential loss if the scenario prolongs indefinitely for the balance notional value.
For every negative value on CFH & COHR that will take place, there will be equally higher gross profit in future physical market transaction where after deducting the hedging loss anticipated, you will report the same 209 million for gasoline per qtr.
For the balance refined products diesel, jet fuel and others (10.7 - 3.7 = 7 million barrels per qtr) , you have the following:
1. Diesel at 46% yield, cracks USD 50.36/bbl
2. Jet fuel at 7% yield, cracks USD 38.40/bb
3. Rest of product yield at 12%, using Mogas 95 cracks USD 7.77/bbl
Gross refining margin/brl:
= (0.46 x 50.4 ) + (0.07 x 38.40) + (0.12 x 7.77)
= (23.18 + 2.70 + 0.93)/ (0.65)
= US $ 41.2 / brl
Gross Profit :
= (7 million barrel sales per qtr) x ( US $41.2/brl) x (MYR 4.45/USD)
= 1.283 Billion MYR........(2)
Total gross profit after hedging gain / loss: (1) + (2)
= 1.483 Billion MYR
EPS will be exceeding RM 3 per QTR
The above is what we will obtain going forward if the Diesel & Jet Fuel margins are stable around there. The hedging losses reported on page 8 (438 million) are the effects of monthly hedging of Diesel & Jet fuel as all refinery does (refer my article on Q2 results prediction earlier) and this is expected to become zero as crack spread stabilizes from month to month.
2022-09-08 13:03 | Report Abuse
Posted by Sslee > Sep 8, 2022 7:27 AM | Report Abuse
2021 annual report page 132
Cash flow hedge reserve and cost of hedging reserve:
The cash flow hedge reserve is used to record gains and losses on derivatives that are designated and qualify as cash flow hedges and that are recognised in other comprehensive income. Amounts are reclassified to profit or loss when the associated hedged transaction affects profit or loss.
The cost of hedging is seen as cost of achieving the risk mitigation inherent in the hedge. It is incurred to protect the Company against unfavourable changes in price. The changes in the cost of hedging is initially recognised in other comprehensive income and removed from equity and recognised in profit or loss in the same period that the hedged cash flows affect profit or loss.
2022-09-08 13:02 | Report Abuse
HY delivered the best ever EPS (at almost half of its market cap)....
and yet, purely due to GROSS MISPERCEPTION on the meaning of the below two clauses, it has market thinking HY earnings will revert back to its earlier earnings.
1. Cash flow hedge reserve (CFH), &
2. Cost of hedging reserve (COHR)
...............
The figures of the above reported in OCI of HY Q2 results, was purely to do with the effects of the Refining Margin Swap Contract (RMSC) that HY had entered.
Cash flow hedge (CFH) are simply ineffective (loss/gain) hedge portions of the RMSC which has been liquidated (settled) as of 30th June and awaiting respective physical market transaction to take place to offset these hedging losses.
Only when physical sales & purchase of the commodity takes place it can be reflected on P&L statement.
Reference:
'When does Cash Flows Hedge Reserves (under OCI) gets transferred to P&L?'
https://www.youtube.com/watch?v=arCSncmfB8k
Whereas, Cost of hedging reserve (COHR) is simply the following:
Forward looking Mark-to-market estimate of the difference between the fixed price (hedged) and the future spot price multiplied by the notional quantity and discounted back to a present value based on a reasonable discount rate determined by the producer.
If one understands the above, it shall be perfectly clear why both (CFH & COHR) are not reported in P&L statement.
Think about it - if its a real loss they will surely reflect it as and when its known on P&L instantly.
2022-09-08 11:40 | Report Abuse
simple answer, cash flow'
it takes longer time for profit to be realized into cash due to hedging
Posted by UlarSawa > Sep 8, 2022 11:36 AM | Report Abuse
Why need to borrow more money leh. One simple question. Why need to issue 5bil notes if all arectaken care off. Why. Why. Why. Haiyoh. Correct?
2022-09-08 11:36 | Report Abuse
@ular, check on cash flow hedging reserve....as potential risk mitigation plan, they need to take necessary measures
2022-09-08 11:34 | Report Abuse
cash flow hedges needs to paid BEFORE money is collected from physical sales transactions...and cost of hedging reserve is high
who knows it can persist if gasoline crack spread shoot up above 31 USD/brl again
to protect themself from potential cash flow issues its good to keep more cash
Posted by UlarSawa > Sep 8, 2022 11:29 AM | Report Abuse
If everything is ok why need to raise 5bil notes leh. Haiyoh. Correct?
2022-09-08 11:33 | Report Abuse
payable is taken care of receivables ma..
Posted by UlarSawa > Sep 8, 2022 11:28 AM | Report Abuse
Then trade payable almost 4bil how. Haiyoh. Correct?
2022-09-08 11:11 | Report Abuse
I finalized realized MM is the man... just so in tune with Bursa investors
2022-09-08 10:48 | Report Abuse
@ular, have you gone through this?
Reference:
worth spending 5 min to understand though the english is quite difficult to grasp. After 3 minutes into the overview, the main part comes and its easy to understand.
'When does Cash Flows Hedge Reserves (under OCI) gets transferred to P&L?'
https://www.youtube.com/watch?v=arCSncmfB8k
Stock: [HENGYUAN]: HENGYUAN REFINING COMPANY BERHAD
2022-09-09 21:25 | Report Abuse
yes Ular..i agree with you, but sometime this qqq3 simply pluck things from thin air and annoy people...thats why..
ask him to refute more decently... sure people no attack him i think..