market is still in denial mode, it wants to treat this refinery margin rise phenomenon like gloves

it has not figured out that the required margin for Hengyuan to hit RM 24 at PE 5 is only $ 13/brl
it can wait half a decade for the margin to reach that level..
the more you ponder deep on what is actually happening globally the increasingly evident the above would become

even Putin died, EU is not gonna tap into Russian oil & its refined products for the next few years till Russian economy collapse

FYI, the Hurricane season in U.S begins June and runs through November.

https://www.nbcnews.com/business/consumer/why-gas-prices-high-when-will-back-down-rcna28314

JP Morgan forecasts “higher for longer” refining margins
May 17, 2022
https://currencytrader.review/jp-morgan-forecasts-higher-for-longer-refining-margins/

after results may be HLIB will come with TP

scenario 3, should be hedging gain

hedging is only done when margin is thin, Q2 onwards you can be certain they wont hedge

quite a strong statement from HLIB:

“Our findings have led us to believe that the surge in refining product margins is a lingering problem arising from structural issues: surge in demand post-pandemic, supply shortage due to years of underinvestment and ESG-related pressures, and sanctions on Russian oil — all of which would not be able to be addressed in the immediate term,” it said."

well said..totally agree

MAY 15 2022

Read more at: https://www.deccanherald.com/opinion/how-russian-is-it-a-very-crude-question-1109435.html

While Europe may stop buying Russian crude, it’s unlikely to be able to avoid diesel fuel made from that crude. The direct diesel trade between Russia and European countries may halt, but products made from Russian crude in overseas refineries will still arrive at European ports. Russian crude processed in overseas refineries ceases to be Russian. Diesel produced at, say, an Indian refinery is Indian diesel, no matter whether the crude came from Saudi Arabia, Russia, or anywhere else. Products are made to tight specifications required in consuming countries and there is no mechanism to determine where the crude they were produced from originated.

Post removed.Why?

Updated with 3 more Russian vessels. April itself 4 vessels now!

https://klse1.i3investor.com/blogs/2017/2022-05-15-story-h1623242016-Twitter_tracker_shows_Russian_Urals_crude_coming_to_Malaysia.jsp

Since Urals dipped, they have actively increase the intake beginning April. At least 4 vessel per month now

updated with more vessel

https://klse1.i3investor.com/blogs/2017/2022-05-15-story-h1623242016-Twitter_tracker_shows_Russian_Urals_crude_coming_to_Malaysia.jsp

If every month 1 - 2 vessel, thats already huge savings...

Some news in Mar 22'- to show significance of Russian crude

https://english.alarabiya.net/business/energy/2022/05/11/Hungary-says-its-backing-of-EU-s-Russia-oil-ban-hinges-on-millions-of-dollars

MOL’s refining margins have been boosted by its cheap Russian oil intake and also a jump in its diesel and gasoline crack spreads.

According to MOL’s data, its refinery margin rose to $33.7 per barrel in March from $3.4 in February.

Difference between Urals and and Brent oil price from December 31, 2021 to May 5, 2022

https://www.statista.com/statistics/1298092/urals-brent-price-difference-daily/

Thu, Apr 28, 2022

Russian oil – oil tanker data revelation

https://www.express.co.uk/news/world/1602687/south-korea-news-russian-oil-tanker-data-ukraine-war-spt

Fifty-two were going to China, 28 to South Korea, 25 to India, nine to Japan and one to Malaysia


How many barrels can load in VLCC?

https://www.mol-service.com/blog/how-large-is-the-very-large-crude-carrier

Then, how much crude oil can load in VLCC, the Very Large Crude Carrier?
The size of cargo tanks varies from ship to ship, but many of the recently built VLCCs are designed to load about 2 million barrels of crude oil.

.....

Hengyuan processing capacity per Quarter is 10 million barrels, at 16% Russian Crude, it needs about 1.6 million barrels

https://twitter.com/RUTankerTracker

Need to scroll down to the particular date i mentioned in the posting to check & verify yourself

Malaysia does not recognise unilateral sanctions, remains non-aligned to any side

https://www.malaymail.com/news/malaysia/2022/05/08/saifuddin-malaysia-does-not-recognise-unilateral-sanctions-remains-non-alig/2057677

REPOSTING IMPORTANT INFORMATION JUST DISCOVERED.


Posted by probability > May 14, 2022 11:20 AM | Report Abuse X

Difference between Urals and and Brent oil price from December 31, 2021 to May 5, 2022

https://www.statista.com/statistics/1298092/urals-brent-price-difference-daily/


Thu, Apr 28, 2022

Russian oil – oil tanker data revelation

https://www.express.co.uk/news/world/1602687/south-korea-news-russian-oil-tanker-data-ukraine-war-spt

Fifty-two were going to China, 28 to South Korea, 25 to India, nine to Japan and one to Malaysia


How many barrels can load in VLCC?

https://www.mol-service.com/blog/how-large-is-the-very-large-crude-carrier

Then, how much crude oil can load in VLCC, the Very Large Crude Carrier?
The size of cargo tanks varies from ship to ship, but many of the recently built VLCCs are designed to load about 2 million barrels of crude oil.

.....

Hengyuan processing capacity per Quarter is 10 million barrels, at 16% Russian Crude, it needs about 1.6 million barrels

the above will have profound implication to Hengyuan's earnings, if only they manage to continue sourcing russian crude after the war..

i see its not that difficult considering its just a continuation of what they had already been doing in 2021

sorry, wrong calculation on russian oil savings above, the savings calculated was per month, for a quarter you need to multiply above savings by 3

Difference between Urals and and Brent oil price from December 31, 2021 to May 5, 2022

https://www.statista.com/statistics/1298092/urals-brent-price-difference-daily/

havent bring russian oil into the equation yet

just 16% of russian feed (as per annual report) at 30 USD/brl discount against brent

will be saving HRC 67m or net additional PAT of MYR 52m per qtr. That itself is like additional 17.4 cents pert qtr or 69 per annum, PE5 already RM 3.50

forget about all this refining margin rise, HRC share price rise havent even justify Russian crude oil savings which they had already been consuming....

who knows may be they can raise it more to 50% of their feed

It should gap up above RM7.33..with this kinda crack, if market really realize it should rise more than RM 1 the first trading day

the rise in crack spread we are seeing daily itself - used to be the average net refining margin per barrel in a year

Just 1 USD/brl refining margin translates to EPS of 11.5 per qtr. Thats 46 cents per annum. At PE 10 already RM 4.60

HRC price only rose from RM 5 to RM 7 now, merely RM 2 while crack spread rose from 15 to 29 now (about 14 USD/brl)...


again,

we only need $ 13/brl margin near term for TP RM 24 with PE 5 or $ 11/brl super long term margin with TP RM 40 at PE 10


Posted by pang72 > May 14, 2022 10:08 AM | Report Abuse

RECORD DAY FOR CRACK..
HRC WILL OVER 7.33 NEXT WEEK LIAO

6 months payback period, any regional refiners (asean) will be willing to take over just to satisfy local demand..

Even our old friend SHELL retail in Malaysia will be willing to buy back the refinery at triple the market cap now..easily

These western companies (shell) better give up their ESG stand.


Posted by probability > May 13, 2022 8:49 PM | Report Abuse X

US refiners will take over HRC company lor...LOL! HRC limit up lor...

No matter what Saudi Arabia do to increase oil output...they can only make crude oil price come down, but refining margin will keep going higher......
people will be desperately buying as long as there are refiners willing to sell their refined products.....crude oil not refined is useless

One thing we can be certain is at least 16% of its feed for Q1 22'would have been Russian oil at that by Feb 22'differential between Ural & Brent had averaged USD 5/brl and by March it averaged USD 30/brl.

Savings:
.......

(1) Feb 22'

3.3 m barrel per month x $5/brl x 16%:

MYR 11 m

(2) Mar 22'

3.3 m barrel per month x $ 30/brl x 16%:

MYR 67 m

Total = MYR 78 m

yup, govn is getting money from Petronas thats minting money anyway

At current market cap, with current cash flow, the payback is only 6 months. Market will again wake up to these facts over the weekend..

For the last 30 days average refining margin, every single day - had been higher than 20 $/brl . Market got spooked by tech stocks sell off (no logic for such high PE anyway).... Such sell off will only create stronger foundation going forward.
Its a good thing that its happening at such low price level of HRC... you will never regret holding on to it.

After tomorrow, you have only about 10 trading days before results.

DISTILLATE FOCUS
Gross margins are currently higher for making diesel (almost $60 per barrel) than for gasoline ($45 per barrel) reflecting the relative shortage of middle distillates

https://www.iqstock.news/n/rpt-column-diesel-shortages-lift-refining-margins-record-kemp-3872709/

Like that even Hengyuan give discount by $20/brl and AIR FREIGHT to US can make $30/brl margin already...

yup, peace guys... thanks klee

its peaceful coz market is still sleeping on Hengyuan

What Hengyuan delivered at its peak qtr (90 days) in 2017, Hengyuan is delivering every 30 days now...
but market is unable to see this and thinks its an imaginary illusion

unlike 2017 which was a short term phenomenon - a temporary blip due Hurricane Harvey, current situation (lack of new capacity investment) is acknowledged as structural change which can last half a decade to resolve

nevermind, let it be awaken gently (coz it became a heart patient in 2017)..

i am happy if crack spread stabilize at 13 USD/brl in the near term

long term even 11 USD/brl is enough to propel Hengyuan to RM 40 at PE 10

gd morning pang72, lets hope market wake up again on hengyuan today

oil price slight drop has absolutely no effects on hengyuan except on its inventory valuation at end of qtr (its just a stock check), all that matters is solely crack spread

any traders selling hengyuan coz of momentary oil price drop is unbelievable foolish and its opportunity for new comers

i cannot believe the crack spread had been at this level last few days
we only need 13 USD/brl for TP 24 at PE5

Post removed.Why?

"Refinery margins could nearly double and be sustained at high levels for the next half-decade, with global fuel markets seeing sustained lower supply due to a lack of investments," the brokerage stated.

........

Global research firm Morgan Stanley on Monday said that Reliance Industries Ltd is on a path towards a $20 billion-plus EBITDA

https://www.livemint.com/companies/news/ril-to-clock-20-bn-plus-ebitda-by-end-2022-says-morgan-stanley-11652095391914.html

"Refinery margins could nearly double and be sustained at high levels for the next half-decade, with global fuel markets seeing sustained lower supply due to a lack of investments," the brokerage stated.

........

Global research firm Morgan Stanley on Monday said that Reliance Industries Ltd is on a path towards a $20 billion-plus EBITDA

https://www.livemint.com/companies/news/ril-to-clock-20-bn-plus-ebitda-by-end-2022-says-morgan-stanley-11652095391914.html

Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman said on Monday the gap between crude prices and prices for jet fuel, diesel and gasoline was around 60% in some cases due to lack of investment in refining capacity.

https://www.reuters.com/world/middle-east/saudi-energy-minister-says-gap-between-crude-prices-fuel-mobility-prices-around-2022-05-09/

Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman said on Monday the gap between crude prices and prices for jet fuel, diesel and gasoline was around 60% in some cases due to lack of investment in refining capacity.

https://www.reuters.com/world/middle-east/saudi-energy-minister-says-gap-between-crude-prices-fuel-mobility-prices-around-2022-05-09/

sifu sslee who had once shaken the management of HRC has now endorsed Hengyuan already...
great news
Posted by Sslee > 5 minutes ago | Report Abuse

Most likely if crack spread can maintain at this level till end of year then many Hengyuan investors can buy a new Tesla or BMW EV car before CNY.

Thanks guys, lets hope it will eventually break its all time high soon
Lost a lot of money on other stocks, hope to recover it here
Posted by klee > 24 minutes ago | Report Abuse

Probability.You are the best here.Good luck to us.Cheerio.
Posted by subwayzzz > 22 minutes ago | Report Abuse

this one memang need to thank Probability. Great presentation of facts and figures

Q1 22' you guys need not worry - as it can never be lower than Q4 21' since inventory itself is equal or more than Q4 21

yes Pang72, frankly i was thinking of topping up today with whatever balance fund in other stocks but they are all bleeding heavily

market cant ignore hengyuan for too long...every day towards Q1 22'results is a ticking time bomb

Guys, saw 30 USD/brl against Tapis from this beruang posting.

If this is true, Hengyuan can make higher margin than regional refining margin data we have (asean or asia)

https://klse1.i3investor.com/blogs/stockideas/2022-05-08-story-h1622495595-HENGYUAN_PETRONM_a_new_golden_age_of_oil_refiners.jsp

30 USD/brl against Tapis? Crazy..

Simple deduction...its either A or B only


A) Worst scenario :
..............

Posted by probability > May 8, 2022 3:43 PM | Report Abuse X

Guys just imagine now Hengyuan is trading at RM 10, even if Q1 results is out with EPS 60 cents (purely from inventory gain - assume nothing much from refining margin from pure bad luck), would the price drop after results?

I really dont think so...it will look forward for Q2 results already

As such i think its good timing to go all in



B) Best scenario :
.................

If they manage to switch to russian crude in Q1 22' itself

Posted by klee > May 8, 2022 4:16 PM | Report Abuse

40 times 35= 1400 usd profit on top of crack spread differential

recheck the EPS...it shd be way more that

Posted by klee > May 8, 2022 4:21 PM | Report Abuse

If assume crack spread average usd25 for 2022.Hrc net profit may exceed Rm3 per share

yes, before covid lock down, in 2019 is 41.9 m barrels

Posted by klee > May 8, 2022 4:14 PM | Report Abuse

Probability.Is hrc's processing capacity at 40 mil barrels per yr?

This is once in a life time opportunity to make a killing...

with sound judgement and real intelligent calculated risk

Guys just imagine now Hengyuan is trading at RM 10, even if Q1 results is out with EPS 60 cents (purely from inventory gain - assume nothing much from refining margin from pure bad luck), would the price drop after results?

I really dont think so...it will look forward for Q2 results already

As such i think its good timing to go all in