i am hoping EPS above RM 1 will do...

the price movement effects will happen once market understands how HY is deriving the earnings...

if market dont understand - we will teach ..he he


Posted by CharlesT > Aug 26, 2022 1:20 PM | Report Abuse

If this Q can make EPS rm2 but cant bring the price back to RM6+...

Then if Q3 of EPS goes back to RM0.20 u think share price then can go back to RM6 ah

ha ha...past bite still lingers...

this is true if the russian oil sanction will be cancelled..

Posted by Mikecyc > Aug 26, 2022 1:11 PM | Report Abuse

Haha I had posted in i3 on August 2020 on Nitrile Gloves Demand vs Supply for 7 Glove Companies , that Supply can meet the Demand in a Year time span starting from September 2020 to August 2021 ….

its very very probable for this TP to come true by Dec 2022, provided the below crack spread maintains till end of the year and russian oil sanction takes place by 5th Dec 2022 as decided by EU.

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

almost certain with the above two conditions

Posted by NoviceJ > Aug 26, 2022 11:35 AM | Report Abuse

If the share prices is @RM18.89 I'm a Very very happy man
Thank you Probability for the clarification

use the below as a very fair guidance

Posted by Johnzhang > Aug 14, 2022 4:15 PM | Report Abuse

Hi probability, Thanks for the explanation.

Total expenses after GP (ie manufacturing, Adm, Dep & Amortisation, Finance) was $95M for Q1 2022, $100M per qtr average for 2021 and $106M per qtr average for 2020. Your $80+100 M = $180M expenses for Q2 is well above the actual in recent qtrs and therefore with huge buffer built-in.

Your estimated GP is $1,056 M
less hedging loss ($100M)
less Expenses ($180M)
-------------------------------------
PBT $776M

Tax $100m @24% ($24M)
Tax $676M @33% ($223M)
-----------------------------------------
NPAT $529M
EPS $1.76

The upside are :
1. lower expenses than the $180M built-in the calculation
2. Higher GP from significantly higher Diesel yield (46 vs 34%) and lower Fuel oil.

The reservation i have if the Management's actual hedging deviate from the model described by you. Let's wait for the QR with much excitement.


We look forward to the exciting QR.

need to deduct manufacturing, s&A cost etc..interest and tax before arriving at PAT and EPS

Posted by NoviceJ > Aug 26, 2022 10:50 AM | Report Abuse

Hope that your forecast profit will come true Base on Probability estimate and if we work out the sum
1417/300=4.72
4.72X4Q=18.89 per year profit
Guess what will the share prices be

It is for certain that HY hedging loss / gain will be neutral soon.. i.e zero.

.....

If not in Q2, it will be in Q3...and then even gain after that.

hedging gain /loss only occurs when a variable is changing such as expansion or contraction of margin (price difference between refined products & feed crude), or the oil price changes...

as long as the change in these variable is not on the same direction continuously indefinitely, the hedging gain / loss will eventually come to a stand still...and reverse when the direction changes

its like the tail catching up with head and going at same speed eventually.

at times the tail speed is slower (hedging loss) and at times faster (hedging gain)...but it can never runaway from the average head speed (the gross profit).

HY Complex refinery margin update - 26/08/22
...........

Diesel: https://www.tradingview.com/symbols/NYMEX-GOC1!/

Jet Fuel: https://www.tradingview.com/symbols/NYMEX-ASD1!/

Gasoline Mogas 92: https://www.tradingview.com/symbols/NYMEX-D1N1%21/
Gasoline Mogas 95 premium: https://www.tradingview.com/symbols/NYMEX-SMU1!/

From above:

1. Diesel at 46% yield, cracks USD 45.95/bbl
2. Jet fuel at 7% yield, cracks USD 34.30/bb
3. Gasoline Mogas 95 at 35% yield, cracks USD (10.00 + 3.96) / bbl
4. Rest of product yield at 12%, using Mogas 95 cracks USD 13.96/bbl

Gross refining margin:

= (0.46 x 45.95 ) + (0.07 x 34.30) + (0.35 x 13.96)+ (0.12 x 13.96)
= 21.14 + 2.40 + 4.88 + 1.67
= US $ 30.1 / brl
.................

Gross Profit at above derived present refining margin

= (10.7 million barrel sales per qtr) x ( US $30.1/brl) x (MYR 4.4/USD)
= 1.417 Billion MYR
...................

wah...after uncle Koon say Hengyuan has very 'Erotic' earnings, you guys started behaving one kind already..LOL!

@TakeProfits, i dont think it will limit up, but it may eventually go up higher than 30%....just keep it for sometime. Sell whenever you feel profit is good enough for you.

Kasi limit up tomorrow!

Fantastic results of PetronM as predicted by Sslee... congrats!!

@Goldberg, thats for Q3 results

Sorry MM, i cant be bothered to explain when i had posted too many information concerning this here earlier...

go ahead say what you want here..np

@BobAexlrod, help me calculate the below with the latest figures from crack spread chart link below: - TQ
.........................................

Diesel: https://www.tradingview.com/symbols/NYMEX-GOC1!/

Jet Fuel: https://www.tradingview.com/symbols/NYMEX-ASD1!/

Gasoline Mogas 92: https://www.tradingview.com/symbols/NYMEX-D1N1%21/
Gasoline Mogas 95 premium: https://www.tradingview.com/symbols/NYMEX-SMU1!/

From above:

1. Diesel at 46% yield, cracks USD 42.98/bbl
2. Jet fuel at 7% yield, cracks USD 34.54/bb
3. Gasoline Mogas 95 at 35% yield, cracks USD (11.35 + 3.84) / bbl
4. Rest of product yield at 12%, using Mogas 95 cracks USD 15.19/bbl

Gross refining margin:

= (0.46 x 42.98 ) + (0.07 x 34.54) + (0.35 x 15.19)+ (0.12 x 15.19)
= 19.77 + 2.42 + 5.31 + 1.82
= US $ 29.3 / brl
.................

Gross Profit at above derived present refining margin of US $29.3/brl

= (10.7 million barrel sales per qtr) x ( US $29.3/brl) x (MYR 4.4/USD)
= 1.379 Billion MYR
...................

A Big Bang? Anticipating the Impact of Europe’s Sanctions on Russian Energy

https://carnegieendowment.org/eurasiainsight/87318

So, if we assume that the total of the current 7.5 million bpd of Russian petroleum exports will be slashed in half, with the other half managing to make its way past the sanctions barriers, the world petroleum balance would be short 3 to 4 million bpd, which is comparable to all of Western Africa’s production or Japan’s consumption. Such a disruption has the potential to exceed the previous oil crises of 1973, 1979, and 1991, and unlike the previous disruptions, it promises to last not just a few weeks or months, but years.

.........

they say YEARS...

The above is very much like i had estimated for Diesel alone.

EU consumes 820,000 bpd of Diesel currently from Russia. Thats 2 million barrels per day capacity of a complex refinery.

I believe EU & US is determined to weaken nuclear power russia and completely move away from dependence on their fuel.

This is marathon, do not give up on Hengyuan easily...

Bear in mind that EU will also likely not import refined oil from countries that buy russian oil, as it effectively means they are still supporting russian oil business.

India had been systematically reducing russian oil intake recently.

@sonyx123, the cause of the recent rise could be either on anticipation of good results for qtr ending June 22' or due to the fact that diesel shortage in EU is benefitting refineries from Asia who are able to sell at good margin and this is expected to be a prolonged phenomenon potentially worsened further when sanction is in full force by Dec 22'.


I believe the latter is the actual reason.

820,000 bpd diesel is imported by EU from Russian despite US exporting as much as possible to EU. Its difficult to fill this gap unless 2 million barrels per day refinery capacity comes up outside Russia.

https://www.google.com/finance/quote/543373:BOM?sa=X&ved=2ahUKEwjs8fv7jNr5AhXNi_0HHY1CDkUQ3ecFegQIFhAg&window=1M

glad to hear that from you John.. lets hope for the best

thanks Zhuge, lets hope results is as expected

Posted by Zhuge_Liang > Aug 23, 2022 4:40 PM | Report Abuse

Good job done by probability.
Thank you for your excellent work

newbird33, every qtr report you will find that figure there

its the hedging contract size for a month throughput (3.5 million barrels)

check all the qtrly report for the last 2 years - its value is proportional to the price of oil / refined products during the period at 3.5 m barrels

Posted by newbird33 > Aug 22, 2022 11:23 PM | Report Abuse

Pls dun be over confident on Hengyuan's results. As at 31.03.2022, it betted USD291M on refining margin swap contracts and has a loss of RM339M. That's why its EPS for Q1 was so low.

@Zhuge, Lets replace the gross profit of 1.37 billion derived above on below simplified EPS calculation of Johnzhang.


Your estimated GP is $1,379 M
less hedging loss ($0M)
less Expenses ($180M)
-------------------------------------
PBT $1200M

Tax $100m @24% ($24M)
Tax $1100M @33% ($363M)
-----------------------------------------
NPAT $813M
EPS $2.71


Johnzhang posted > Aug 14, 2022 4:15 PM | Report Abuse

Hi probability, Thanks for the explaination.
Total expenses after GP (ie manufacturing, Adm, Dep & Amortisation, Finance) was $95M for Q1 2022, $100M per qtr average for 2021 and $106M per qtr average for 2020. Your $80+100 M = $180M expenses for Q2 is well above the actual in recent qtrs and therefore with huge buffer built-in.

Your estimated GP is $1,056 M
less hedging loss ($100M)
less Expenses ($180M)
-------------------------------------
PBT $776M

Tax $100m @24% ($24M)
Tax $676M @33% ($223M)
-----------------------------------------
NPAT $529M
EPS $1.76

@Zhuge, i think going forward the hedging loss will become minimal and can even turn into hedging gain as expansion of refining margin peaked in June 22'.

This effectively means the gross profit we calculate above using the crack spread is what will be reported actually.

In terms of taxation, i have no idea whether the rate will be higher than current.

I realized a lot of useful information related to derivatives or hedging on Q&A session with PetronM. I think the person who had asked these questions are very much from i3 :)

Refer Questions 15 till 21

https://www.petron.com.my/wp-content/uploads/2022/07/63rd-AGM-Summary-of-Proceedings-and-Appendix-A-Questions-from-Shareholders_2022.pdf


Posted by Zhuge_Liang > Aug 22, 2022 10:46 PM | Report Abuse

probability,
Can make a net PAT of 1.0 billion in Q2 2022 and Q3 2022 respectively or an EPS of 3.00 ?
Is the above assumption possible ?

@Zhuge, i think going forward the hedging loss will become minimal and can even turn into hedging gain as expansion of refining margin peaked in June 22'.

This effectively means the gross profit we calculate above using the crack spread is what will be reported actually.

In terms of taxation, i have no idea whether the rate will be higher than current.

I realized a lot of useful information related to derivatives or hedging on Q&A session with PetronM. I think the person who had asked these questions are very much from i3 :)

Refer Questions 15 till 21


https://www.petron.com.my/wp-content/uploads/2022/07/63rd-AGM-Summary-of-Proceedings-and-Appendix-A-Questions-from-Shareholders_2022.pdf

Check out HY refining margin tomorrow

You are going to see a pleasant surprise:)

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

Diesel: https://www.tradingview.com/symbols/NYMEX-GOC1!/

Jet Fuel: https://www.tradingview.com/symbols/NYMEX-ASD1!/

Gasoline Mogas 92: https://www.tradingview.com/symbols/NYMEX-D1N1%21/
Gasoline Mogas 95 premium: https://www.tradingview.com/symbols/NYMEX-SMU1!/

From above:

1. Diesel at 46% yield, cracks USD 42.98/bbl
2. Jet fuel at 7% yield, cracks USD 34.54/bb
3. Gasoline Mogas 95 at 35% yield, cracks USD (11.35 + 3.84) / bbl
4. Rest of product yield at 12%, using Mogas 95 cracks USD 15.19/bbl

Gross refining margin:

= (0.46 x 42.98 ) + (0.07 x 34.54) + (0.35 x 15.19)+ (0.12 x 15.19)
= 19.77 + 2.42 + 5.31 + 1.82
= US $ 29.3 / brl
.................

Gross Profit at above derived present refining margin of US $29.3/brl

= (10.7 million barrel sales per qtr) x ( US $29.3/brl) x (MYR 4.4/USD)
= 1.379 Billion MYR
...................

you have only 4 trading days before market realizes the truth (Hengyuan Q2 results will be out by 26th Aug).

After that, opportunity to make immense return will partially offset.

Study the data presented above carefully and make your own decision.

You need not follow anyone's advise - just verify it.

the sanction on russian oil is only beginning in Dec 22' and full restriction by Feb 23'....i think its a long cold war...just like Iran..

it may take ages before Russian are tamed down...

during this time, even just one refinery going off-line for some reason will spike up refinery margin tremendously....

Whatever reason that has propelled Harta share price to come down, will be the same reason for Hengyuan share price to move up.

PLEASE calculate HENGYUAN'S EPS per QTR with the above QTR profit.

It has only 300 million outstanding shares.

GO FOR HENGYUAN - IF YOU WANT TO RECOVER BACK LOSSES FROM HARTA!

HY refinery margin update
.........................................

Diesel: https://www.tradingview.com/symbols/NYMEX-GOC1!/

Jet Fuel: https://www.tradingview.com/symbols/NYMEX-ASD1!/

Gasoline Mogas 92: https://www.tradingview.com/symbols/NYMEX-D1N1%21/
Gasoline Mogas 95 premium: https://www.tradingview.com/symbols/NYMEX-SMU1!/

From above:

1. Diesel at 46% yield, cracks USD 42.98/bbl
2. Jet fuel at 7% yield, cracks USD 34.54/bb
3. Gasoline Mogas 95 at 35% yield, cracks USD (11.35 + 3.84) / bbl
4. Rest of product yield at 12%, using Mogas 95 cracks USD 15.19/bbl

Gross refining margin:

= (0.46 x 42.98 ) + (0.07 x 34.54) + (0.35 x 15.19)+ (0.12 x 15.19)
= 19.77 + 2.42 + 5.31 + 1.82
= US $ 29.3 / brl
.................

Gross Profit at above derived present refining margin of US $29.3/brl per QTR

= (10.7 million barrel sales per qtr) x ( US $29.3/brl) x (MYR 4.4/USD)
= 1.379 Billion MYR
...................

Europe Gas Jumps as Latest Russian Cut Plan Stokes Supply Fears

https://www.bloomberg.com/news/articles/2022-08-22/europe-gas-jumps-as-supply-fears-return-with-planned-pipe-works

European gas prices surged after Moscow’s move to shut a major pipeline ramped up fears of a prolonged supply halt, leaving Germany once again guessing as to how much Russian fuel it can count on this winter.

Benchmark futures rose as much as 16%, also driving up electricity prices to fresh records. The key Nord Stream pipeline will stop for three days of maintenance on Aug. 31, again raising concerns that the link won’t return to service as planned after the works. Europe has been on tenterhooks about shipments through the link for weeks, with flows resuming only at very low levels after it was shut for works last month.

......

Diesel crack is exploding - you will see it tomorrow

Just see the price movement of the below pure refinery stock in India:

https://www.google.com/finance/quote/543373:BOM?sa=X&ved=2ahUKEwjs8fv7jNr5AhXNi_0HHY1CDkUQ3ecFegQIFhAg&window=6M

Refining margin live data is also rising...

Remember - the sanction has not even been made effective yet (another 4 months to go).

@Zhuge, we will

Thanks Sslee, very interesting info. I guess those Q&A were from you :)...he he

Interesting, do share the link if possible

Posted by Sslee > Aug 22, 2022 3:11 PM | Report Abuse

From Petronm 63th AGM minutes Q&A published at Petronm website.

60% diesel? Walao eh.. i have never heard of such refinery

where you get this info sslee :)

Posted by Sslee > Aug 22, 2022 3:03 PM | Report Abuse

Petronm simple refinery (original design to feed on low sulfur Tapis crude with typical yield 60% diesel and jet fuel, 20% gasoline and the balance LPG and byproduct.

NO...

Actual profit depends on the margin secured during hedging via Futures.

Gross profit depends on timing of real 'exchange' of goods & money.

Difference between the two, is hedging gain or loss.

Trust the above is simple enough to understand.

Posted by KooSan > Aug 22, 2022 2:19 PM | Report Abuse

So in short, the profitability depends on how much the hedged? And whether the oil price increase?

sslee, do not entertain stockraider. He is brain damaged..

walao sslee...now only you understood this, so much of discussion between myself and Johnzhang on this earlier with notes and articles made:(


Posted by Sslee > Aug 22, 2022 12:47 PM | Report Abuse

Now I understand how Petronm do a commodity swap as hedging.
Example: Today Petronm just buy physical oil 1 million barrel at USD 80 per barrel.

Since the 1 million barrel on oil will reach PD then into storange tank and process into finish products in 30 days time hence Petronm make a commodity swap with counterparty at USD 80 per barrel for 600K barrel maturity 30 days later.

At the end of 30 days the average 30 days oil market price is now USD90 per barrel hence Petronm need to pay counterrparty 600K x USD(90-80) = USD 6 million.

For this commodity swap Pertonm make a derivatives lose of USD 6 million but that lose will actually be recovered by stock gain because the USD 80 per barrel 30 day ago purchased is now worth more (USD 90) in inventories gain.

Similarly if the average 30 days oil market price drop below USD 80 what gain from commodity swap will be losses in value of inventories.

From below, we can deduce the following for Petron Corp refinery:

Q2 2022 crack spread:

Gasoline: 26.4 x 2 - 17.8 = USD 35/brl
Diesel: 36.6 x 2 - 21.6 = USD 51/brl
Jet fuel: 27.7 x 2 - 16.2 = USD 39/brl

But since HY hedges, it lags by a month from above for Q2.

Posted by Sslee > Aug 21, 2022 7:51 PM | Report Abuse

Q2 are better then Q1 as indicated by Petron Corp Q2 report.

Q1 2022, the Average refining crack increased from
1. Gasoline cracks from USD 7.1/bbl to USD 17.8/bbl
2. diesel cracks from USD 5.8/bbl to USD 21.6/bbl
3. kero-jet cracks from USD 3.3/bbl to USD 16.2/bbl.

First half 2022 Average refining cracks increased from
1. Gasoline crack from USD 8.5/bbl to USD 26.4/bbl
2. diesel cracks from USD 6.4/bbl to USD 36.6/bbl,
3. kero-jet cracks from USD 3.9/bbl to USD 27.7/bbl

do the maths in terms of refining capacity from below figure and rising demand

This effectively means refinery that produce 960,000 bpd of Diesel in russia will be going offline.

Posted by VTrade > Aug 21, 2022 4:10 PM | Report Abuse

Any possible impact on saluran 2
If dibuka ?

https://energypost.eu/eus-latest-sanctions-on-russian-oil-what-are-they-and-will-it-work/

The significance of the Shipping Insurance ban
..............................................

A critical part of the sanctions package (Article 3n) concerns shipping insurance.

After a six-month phase in period, EU companies cannot provide “technical assistance, brokering services or financing or financial assistance, related to the transport, including through ship-to-ship transfers, to third countries of crude oil or petroleum products” from Russia. The United Kingdom is expected to follow suit.

Cutting off shipping insurance and reinsurance from the European Union and United Kingdom — the heart of the maritime insurance industry:

— will hinder Russia’s ability to redirect crude oil and petroleum products to other regions.

........

I see other regions (like India / China) if at all provide their own maritime insurance to enable importing of russian oil, would rather buy russian crude oil at a discount and make hefty profit at their refinery than buying refined products from russia to compete with their own refined products.

Its also highly possible that EU will restrict Import of refined products from countries like India & China that import oil from russia.

This effectively means refinery that produce 960,000 bpd of Diesel in russia will be going offline.

All refineries outside russia will be the king makers then.

The below answers why EU is importing more Diesel presently.

https://energypost.eu/eus-latest-sanctions-on-russian-oil-what-are-they-and-will-it-work/

Q2: Can Europe cope without Russian oil?

A2: Global crude flows are changing quickly. In the past few months, Europe has started to import more oil from the United States, West Africa, and the Middle East. European refiners seeking substitutes for Urals blend could turn to crude oil streams from Norway, Nigeria, Iraq, and the United States, although spot cargoes of many crude oil streams are limited in a tight market. Replacing lost volumes from Russia is no small task, but refiners frequently adjust to changing supply conditions.

The drop in Russian exports in the past two months has been lower than expected. Even as more oil and gas majors and commodity traders have stopped lifting Russian cargoes, the country has been able to sell more volumes to Asia, particularly India.

Because there is a phase-in period before the sanctions take place, it is possible that Russian oil exports to Europe will increase in the next six to eight months before the trade becomes illegal.

EU is panicking and trying to stock as much as possible for winter and 2023

Russian diesel exports grow in July despite sanctions

www.nasdaq.com/articles/russian-diesel-exports-grow-in-july-despite-sanctions

Still, Russian diesel exports rose to 963,357 barrels per day (bpd) in July, up by 1.15% on the year and the highest since March this year, according to data from Energy analytics firm Vortexa.

OMG, EU is still importing 820,000 bpd Diesel....

https://graphics.reuters.com/EUROPE-DIESEL/RUSSIA/egpbkdyzbvq/chart.png

THE ABOVE IS THE MOST IMPORTANT INFORMATION I HAVE EVER SHARED HERE - kindly go through the above and ponder deep

some summary:
...........

- Big difference between Complex & Simple refinery margin
- Simple refinery produces Fuel Oil at negative crack and low margin of Gasoline will close their production. i,e they will act as a leverage to Complex refinery.
- HY Diesel production capacity
- Complex refinery like HY high yields of Diesel at 46% .
- Diesel product is having very high margins.
- Where to see Diesel margin, i.e its crack spread
- Unlike gasoline consumers who has a choice to postpone their travel or work from home, diesel consumers do not have a choice as they are consumed by heavy machinery & transportation equipment essential for manufacturing of goods & transportation.
- Imminent Natural gas shortage in EU & winter will further increase diesel demand before the sanction takes full effect
- Russian sanction has barely taken effect (their exports had only reduced 5% so far).
- 12 refinery equivalent production of Diesel is not replaceable in 6 months.

THE 'NEXT HIT' :

https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/petrochemicals/072722-refinery-news-roundup-some-maintenance-continues-in-russia

As of June 30, complex refining margins increased 160% from February 22 to Rub21,000/mt ($382/mt), while simple refining margins quadrupled, reaching Rb5,000/mt over the same period, Petromarket told S&P Global Commodity Insights.

Finding alternative outlets for fuel oil and the switch to bitumen production in the summer months has also provided a relief to less complex refineries whose storages were flooded with fuel oil as international buyers avoided taking it, according to market sources. However, the situation might reverse again as the road repair and construction season ends with the advent of cold temperatures, and refineries increase fuel oil production.

The situation appeared to improve in May as the bitumen production season started, helping to reduce the residual fuel oil yield, according to a recent report by S&P Global.

However S&P Global analysts expect the "NEXT HIT" to come when 700,000 b/d of diesel that typically flows to Europe will have to be rerouted.

The EU ban on Russian oil imports takes effect in early 2023.

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

HY produces, 10.7 million barrels per qtr
= 118,800 bpd

at 46% yield, you have

= 55,000 bpd Diesel

So, how many HY like refinery you need to fill the gap of 700,000 bpd of Diesel?

= 700,000 bpd / 55,000 bpd
= 12 refinery
............

Remember most refinery in Europe is simple type that has yield less than 30% Diesel. The above is truly conservative. Such shortage can never be filled unless Russia finds alternative buyer for their Diesel to countries like India which would then need to export to EU - something that seems very difficult due to the way its sanctioned..

Lets look forward for the 'next hit' where EU basically loses equivalent 12 refinery while we admire the current beauty of Diesel crack

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