Everyone just unit and buy mother stock tomorrow ... dont separate our bullet. We r weak if we separate. :)

When the drop is alot, rebound also wil be scary. Its not chasing high. TA shows signal of strong rebound. Monday will be bullish

To be safe ... for those wanna invest ... buy mother stock tommorrow
Buy at own risk if wanna call warrant.

* mother live son live , mother die son die*

Focus and use your bullet wisely :)

The price is still very attractive to alot of true investor ... Grab it when its still cheap sales. :)

“Oil demand usually slackens in the first quarter and into the second quarter, so sooner or later refinery intakes will have to slacken and the usual signal for that is lower margins,” KBC chief economist Stephen George said.

The timing of the revised production strategy comes just as refinery margins reach a three-year low, Barclays says, which is particularly telling. The oil price crash in late 2014 largely shapes the market. Hydroskimming facilities, which refine fuels in a relatively unsophisticated process, ****have it tough because their techniques do not allow for diesel or gasoline production*** like ***complex refineries.***

By Zainab Calcuttawala - Jan 18, 2018, 3:00 PM CST

European refineries mostly simple refineries?

HY main product is Mogas95 ( gasoline) and diesel and jet fuel. These 2 spread go up in relatively with brent oil price if u see the price chart in CME group

Hengyuan crack spread wont be affected much. Because Mogas95 price go up relatively with brent oil price.

Plus point for hengyuan when buying crude oil in usd as malaysia currency up so much in January
Hengyuan will have inventory gain too when currency up.

Hengyuan complex refinery systemis is flexible to adjust their product ratios which they tend to produce higher profit margin products like gasoline and diesel.

“Oil demand usually slackens in the first quarter and into the second quarter, so sooner or later refinery intakes will have to slacken and the usual signal for that is lower margins,” KBC chief economist Stephen George said.

The timing of the revised production strategy comes just as refinery margins reach a three-year low, Barclays says, which is particularly telling. The oil price crash in late 2014 largely shapes the market. Hydroskimming facilities, which refine fuels in a relatively unsophisticated process, have it tough because their techniques do not allow for diesel or gasoline production like ***complex refineries.***

By Zainab Calcuttawala - Jan 18, 2018, 3:00 PM CST


* Hengyuan is complex refineries

HY crack spread wont be affect much ... HY main product is Mogas95 ( gasoline) and diesel and jet fuel. These 2 spread go up in relatively with brent oil price if u see the chart. First half of 2018 will be alot of refineries shut down for maintainance world wide. Asian refineries product demand is still strong. Price will go up when demand is there but supply is limited. Brent crude oil increase,but malaysia currency also increase. Malaysia currency increased faster than brent oil price in January. I guess not much changes in cost as HY buying brent oil in USD

***Some of you maybe monitoring Mogas 92 crack spread from CME website. But remember Malaysia has no RON92 gasoline product for quite some time. To estimate Hengyuan profit margin, we need to monitor Mogas 95, diesel and Jet fuel products as these 3 products form more than 82% of HY products slate

I only sell company share when the company profit downtrend or company fundamental shows bad changes or price goes too much overvalued

When the price is too overvalued, people bising.
When the price is so undervalued, people fear to buy.

When u buy at undervalued price, the risk is lower ma. The worst also u might have temporary paper lost of 10 -15% (mother stock) ma.
But, if the stock price go bullish, u might have the chance to gain 30 or 40% or even higher ma.

* Fundamental is strong with so much positive catalyst. stick to pendulum theory ma. Why u worry?

We are investing a growing and evidences proved profit making company ma. Why worry? Price fluctuation or correction is normal before it can go to another new high. Fundamental always right ma .... takkan hy will drop till RM 2 back or become toilet paper. U only worry when u invest profit losing company or company without good fundamental ma.

no doubt ... imedic is a good medical apps which can connect the doctor and patient at anytime at anywhere. The problem is about patient data confidentiality. Thats why it is still not be accepted by most of the country eventhough in malaysia. Need some time for the public and old school medical personnel to accept imedic. World is improving everyday ma. Company prospect is good.

Dont let fear or ego affect your judgement when investing a so undervalued and profit making good company

no wonder we always miss " golden egg making chicken" . we only found it 1 year later after it has reached its full valued.

yaya ... the use 2016 eps to count PE for all the stock.

hidden meaning that PE13 x EPS311 = Hengyuan TP RM 40? hehe

Coming QR4 2017 should be good because of 20% of US refining capacity knocked out due to harvey hurricane strike. Gasoline and diesel prices to new high in 2017. ( Hengyuan main product)

QR12018 should not be bad as there will be more refineries maintenance shut down during 1st half of 2018 and supply at that time should be limited. Asia refined product demands still strong.

Summary:

1. High profit margin as Hengyuan plant is a complex type refinery which they can generate higher ratio of gasoline which has good crack spread (refined margin). Its gross profit is quite predictable just by monitoring the product future spread data.

2. The high quality of Hengyuan’s earning is supported by strong positive cash flow

3. Perception for Hengyuan is as a red chip China company is not true. In fact, Hengyuan has invested not only cash but their technology, experience from their China refinery plant and they should have strong motivation to generate enough cash flow to pay company USD350mil loan where they serve as guarantor. Once this debt is settled, Hengyuan will be a debt free company with high inventories value of RM1.1 billion and annual earning visibility of RM600-800 mil per year (if spread maintain at USD9 and above).

4. Some of the refinery companies delayed their plant maintenance for weeks or months in 2nd half of 2017 to 1st half of 2018 to reap high refinery profit in Q3 and Q4 of 2017 (especially after Harvey hurricane). There will be more refineries maintenance shut down during 1st half of 2018 and supply at that time should be limited. Asia refined product demands in Q4 (Oct to Dec) still strong (from Singapore gasoline future spread reference price) which paint a positive outlook for complex refiner like Hengyuan.

The advantages of complex refinery are as below:

1. More value from the product slate: Better yields of high-value products, such as gasoline, and middle distillates (diesel fuel) and lower ratio of low-value product (heavy fuel oil)

2. Ability to process a wider range of crude oil types: Greater flexibility in the choice of crude means refiners can use cheaper heavy crude oils to produce products that are more in demand, and increase profit margins through higher sales volume and greater crack spreads.

3. Flexibility to adjust to changing markets which they can adjust production to changes in market demand (for example, the growing demand for diesel rather than gasoline).

erception of China controlled companies (different with China red chip companies)

Hengyuan Shandong (China) has invested RM300 mil for its 51% of share in Shell refinery co (Malaysia).

One thing I would like to highlight that Hengyuan Shandong (China) acquired Shell refinery co with cash from pocket and become guarantor for loan of USD350 mil. This is TOTALLY different with other China red chip companies that they conducted IPO in Malaysia (mean they will receive cash from Malaysia’s investors). IPO mean owners of the companies sold their shares for cash (for expansion etc) but Hengyuan Shandong (China) is totally different with IPO which they brought over Shell refinery co for their 51% shares and need to settle all the banks loan owed by Shell refinery co. That why Hengyuan Shandong needs to secure an oversea USD350 mil term loan to settle all debts owed by Shell to local banks before the acquisition can be completed in Dec 2016 (acquisition needs approval from bankers).

Imagine if Hengyuan refinery Malaysia is not doing well and unable to pay the term loan (USD350 mil) debt after 5 years, who will suffer the most? It is HY Shandong China who becomes the guarantor for USD350 mil debt. I believe Hengyuan ShangDong (China) will has much higher motivation than any minority shareholders to make sure the company can generate good cash flow and profit to pay their USD350 mil term loan and also possible future dividend to direct reward themselves.

One of the reasons Shell want to sell Malaysia refinery plant is because they are not willing to invest in Euro 4 compliance. So it is not ONLY RM300 mil for its 51% share but a commitment for Hengyuan Shandong to invest for Euro 4 and 5 compliances. Hence it is in their interest to ensure that the refinery is run efficiently to ensure that margin is further improved and all loans payment is timely settled (but that is after 5 years actually).

Even with a RM580 mil capex for Euro 4 upgrade in 2018, the good news so far for minority shareholders is there is no cash call (no right issue), no company warrant (no dilution) issued and management announced that the RM580 mil will be generated through internal fund and loans. I believe the whole 2017 cash flow from operation is sufficient to fund this Euro 4 upgrade (even with surplus) in view of high spread (margin) from Q1 to Q4 (spread maintained at USD9.5 to 10 in Q3 and Oct).

I leave to you to think whether Hengyuan Shandong is a good management or not from their actions that they go to take loan for Euro 4 upgrade without cash call through right issue and continue to generate strong cash flow from operation in the Q1 and Q2 of 2017 (RM524 mil free cash flow generated in 6 months).

Prospect of Refinery Industry in 2018

Harvey hurricane knocked out almost 20% of US refining capacity in late August and sending gasoline and diesel prices to new high in 2017. To reap high profit during this period, some of the refinery companies delayed their plant maintenance for weeks or months. Consequently, there will be more maintenance shut down during 1H of 2018 and supply at that time should be limited.

The importance of refinery industry

Crude oil cannot be used without refine. It must be refined to manufacture finished products as below:

1. LPG – (Liquefied Petroleum Gas) – For Household or restaurants fuel needs

2. Gasoline/Naphtha – For Transportation Industry, For Petrochemicals Industry

3. Aviation Turbine Fuel (ATF) or Kerosene – For transportation (aircraft)

4. Diesel/Gasoil – For Transportation- For Petrochemicals Industry, For Transportation Industry

5. Fuel Oil – For Power plants, For Fuel needs in any commercial facilities

6. Paraffin wax - For packaging of frozen foods / Coatings for waxed paper or cloth

7. Petroleum Coke –For Road making / For Electrochemical industries for certain type of electrodes (used in steel/rebar making) (https://en.wikipedia.org/wiki/Graphite)

If for some reasons (like disasters), Singapore and our country’s refineries damage and shut down for months. What will happen? First is our transportation will be heavily affected and petroleum related products (packaging materials) will be in shortage and price may increase (as supplies are limited). Of course, we still can depend on some refined products inventories but a lot of petroleum related industries will be affected (including our daily life as petrol/gasoline price may shoot up).

Before we start discussing the complex and simple refineries, let us go through a brief definition as below:

Definition of 3 types refineries

Simple Refinery : Crude Distillation, catalytic reforming and hydrotreating distillates.

Complex refinery : Simple refinery plus a vacuum flasher, catalytic cracker, alky plant and gas processing

Very Complex refinery : Complex refinery plus a coker, which eliminate residual fuel (low margin products) production.

Profit Margin – Complex and Simple Refineries

The complexity of a refinery refers to its ability to process crude oil into value-added products. A simple refinery is essentially limited to distilling crude oil. For example, simple refinery system mainly making crude oil for gasoline, LPG and heavy fuel oil. The ratio of gasoline produced by complex refiner (Eg. HengYuan) is much higher than simple refiner (Petronm). The profit margin of gasoline is also much higher than fuel oil which indicates that profit margin of complex refiner is higher than simpler refiner IF crack spread is sustained at high level (above USD5).

There are several measures of complexity for refineries. The most publicly used is the Nelson Complexity Index (NCI). The NCI is a pure cost-based index. It provides a relative measure of refinery construction costs based upon the distillation and upgrading capacity a refinery has. Simple refineries employ limited processing technology and produce a product slate similar to the component make-up of the crudes they run. Very complex refineries utilize extensive processing technology and produce more gasoline and diesel (middle distillates or called gasoil).

The index assigns a complexity factor to each major piece of refinery equipment based on its complexity and compared with simple crude distillation, which is assigned a complexity factor of 1.0. The higher the NCI number of a refinery, the more complex it is and costly to build. For example, the Phillips 66 company reports that its American refineries range from a NCI of 7.0 to 14.1. A complex refinery has expensive secondary upgrading units such as catalytic crackers, hydro-crackers and fluid cokers. They are configured to have a high capacity to crack and coke crude into high value products.

The actual profit margin of Hengyuan and Petronm is depending on their plant operation efficiency (simple or complex refinery), storage location, crude oil costing (sour crude is cheaper than sweeter crude), hedging contract price and transportation.

Typical simple refiner gasoline ratio is about 20% as compared to complex refiner ratio of 30-40%. Besides, their much higher ratio (up to 30%) of Fuel Oil (heavy gas or oil) which is a very low profit margin (spread close to zero or negative) product. That may explain low profit contribution from Petronm's refinery segment as compared to their retails segment. Anyway, under high crack spread period in 2017 (USD9-10), Petronm will be benefited also from their refinery segment but not as big as Hengyuan.

High profit margin products : 44% (gasoil) + 38% (gasoline) + 6% (Jet fuel) +6% (LPG)

Low profit margin products : 2% (fuel Oil) + 3% (propylene) +1% (TOP)

HRC main products are Gasoil (diesel) and gasoline which their profit margin is much higher than fuel oil (2%). Simple refiner produce higher ratio of Fuel oil (heavy or light) which their crack spread is very low.

The timing of the revised production strategy comes just as refinery margins reach a three-year low, Barclays says, which is particularly telling. The oil price crash in late 2014 largely shapes the market. Hydroskimming facilities, which refine fuels in a relatively unsophisticated process, have it tough because their techniques do not allow for diesel or gasoline production like complex refineries.


* hengyuan is complex refineris. Main product is diesel and gasoline(mogas95) which have higher refining margin.

Monday we just buy mother stock ... our bullet must be focus. Near term tp 18 :)

Mother die son die .... we must make sure mother live first before thinking laterally of buying son. No matter how many son u have, u will still lose if mother die. The only all will win situation is we all together focus and make sure mother live first.

Yea .... star stock of 2018

Call warranty got expiry date and risky ... when things go out of track ... then u will have terrible lost

Mother up son up .... mother static son will static too . Best trategy is everyone buy and keep mother share, then everyone will get big angpow during chinese new year. tradely wisely.

We all should focus buying mother share only. We might lose the war if our bullet not focus on one stock only. No point buying alot of cw if the mother stock not going up. If we all should accumulate the power of ikan bilis and focus buying mother stock only , we will reach tp earlier and everyone will have happy ending.

Yes. Agree. Don buy call warrant if u r new. And everyone buy within limit. ... dont use the trading limit. Trade wisely

Cw co exercise price is Rm 18 with expiry date october of 2018
Cw cn exercise price is rm 24 with expiry date of septermber 2018

* From the exercise price , they already hint us that mother stock most probably will go up to rm 18 - 24 before sep - oct 2018 ma

If this is the case, ... they can buy more mother stock when it still at so low price ma .... when mother stock goes to tp. Then mother stock profit can cover for cw lost ma. Then everyone will have happy ending.

A huge group of united small fish wont lose to a shark

We are investing the company ma ... the price will reach tp when time reach ma. As long as we hold tight our ticket without fear when somebody selling cheap, eventually it will reach our TP ma. When there is cheap sales ticket ... we collect only as we confident company backgroup is good. When they want to buy back, they have to buy back with higher price

Sikit sikit jadi bukit ma ... its unbeateble when a group of small fish united ma. Furthermore , its possible to press down the price too much ma .... when the price go too low from where it should be .... will have more more people to come sapu when there is cheap sales ma. The buying volume will be more when the price go too low. Nobody will want to throw money in longkang just to press down the price ma. Its easier to follow direction of the flow of water ma. Its not easy when we go opposite direction to against the flow of the company which supported with so good fundamental and earning.

Everything will be alright if every investor hold tight when someone is creating fear ma. When got people throw cheap sales ticket then we grab. When they wanna buy back, they have to buy at higher price. The baseline of the stock price will slowly go higher.

Hengyuan already prove that they can do better than shell. Hengyuan grow up so fast after took over from shell.

Yea ... if we dont fight back this time , bursa will be hopeless if this thing keep happening again and again in future. Who else dare to invest in bursa anymore? It might happen again anytime in other counters that u have invested.

Petronm eps 154 rm 13.2
Hengyuan eps 311 rm 14.2

Lets say if hengyuan really dropped to eps 280 (discount) ... hengyuan still worth more than RM 14.20?

Cash flow in hand till 30 sep 2017 = 864 mil
Euro4 upgrade in Q3 2018 ... hengyuan is growing

Time will prove its value :)

Hengyuan main product is mogas95 or diesel. Crack spread will be normalize as price of diesel and mogas95 will follow up when brent oil price go up.

Monday get ready to collect cheap cheap ticket if there is. :)

Monday we all buy in and hold tight tight till chinese new year to get big angpow. We all ikan jerung and ikan bilis should unit together. Sikit sikt jadi bukit ... the power will be scary when we united. let hengyuan back to where it should be. Lets hand hold hand on the same boat to tp of 18 21 24. Just stay confirm with the fundamental ... fundamental will never bring u to holland . Only some not evidence based negative statement or news will. Thanks bro for sharing so many good articles or news Or analysis here. Lets huat on monday together :).

I m on the same boat with u all hyians .... we just share the right informations to retailers instead of keep on posting negative statement or pouring cold water. Everyone can go and check all the info given. All evidenced based.

FMU project revenue will make pworth rise in 2018. stay tune

Somebody collecting alot of tickets at 0.155 and 0.16 last friday. get your ticket fast before the flight take off.

Market still not yet discover this potential gem. Will meletup afte ophir oil field revenue come in

Myeg has make a move up last friday after sleeping for few days. Next week wil be FGV turns?

hengyuan is complex refinaries and petronm is only simple refinaries. Hengyuan can produce more diesel which have higher refining margin.

Hengyuan EPS 311 PE 4.6 ROE 56 current price RM 14.30
Petronm EPS 154 PE 8.5 ROE 29.6 current price RM 13.20

We worry when we bought some stock counter which is overvalued when sentiment down ...Hengyuan is so undervalued. I guess next monday everyone will panic buying. Dont miss the boat. Dont let fear affect your judgement. .

No doubt ... hengyuan is still very undervalued.

Company Earning stil uptrend is a fact.
Q3 alone earning 364 mil with EPS of 311 is a fact.
Coming Q4 report will be same or better than Q3 is a fact
Company earning more than 1 billion in a year is a fact

Fact never lies ...

We are investing the company , not investing market sentiment.
When market sentiment down , company profit will down? company business will shut down or still going on as usual?
When market sentiment up, company profit will up? company business will up or still remain the same?

Share price will swing to left or right when market sentiment up or down, which is temporary. It just like a pendulum. Finally, it will back to the point where it should be.

How much is a company worth for ? is based on company fundamental and earning. Time will prove fundamental facts r always right

TA and FA shows green light d. next week rebound would be powerful. As i said, when something good goes too undervaled, somebody will rush to grab if u dont

White knight will come next week ...

Some investor can earn 100% 200% 300% from a stock ... while some investor can make only 5% 10% 20% from a same stock ? whats the differences?

Hengyuan

Cash and equivalents in hand till sep 2017 846 mil ....
repaybale debts to pay in 12 months 1213 mil.
Q3 alone earning 361 mil.
Profit for the Q4 most probably same or better than Q3 as better crack spread (sep to dec 2017) ... inventories gained (due to oil price up) .... currency increased
Company profit uptrending, earning 1 billion per year

EPS 311
ROE 56
PE 4.6

I think hardly can find such a good stock with so good fundamental with so undervalued price.


* We need to think when profit taking hourly when we bought stock like sumatec and .... only *