Unlikely get excess as right share already fully underwrite by investment bank, it will be 100% fully subscribe.

What is use of long term contract signed between hengyuan and shell malaysia, which just renew last year for another 5 year until 2026?

Almost of hengyuan refine are to supply to shell malaysia. It is mean for steady supply contract in which hengyuan only need to focus hedge its raw crude cost in meet expected refine price payable by shell malaysia, which in turn shell malaysia need to hedge it input refine cost based on mogas singapore to meet its selling retail price to end users.

Hengyuan need some refine margin swap as it currently export unqualified non euro5 dissel to oversea to swap by import qualify euro5 from oversea, to supply to shell malaysia

Refinary swap margin ia for hengyuan to buy dissel euro5 form oversea presumbly from its parent china hengyuan, to supply to Msia shell.

Refinary margin swap is to based on singapore mogas in which shell malaysia payable to hengyuan against input cost source from china refinary.


Hengyuan is act as trader

Management alrdy indicate it euro5 will complete by Q2. So, juat wait for next Q update.

Anyhow, as so long there is no too widly volatility like what happen in fed, hengyuan hedging on crude oil will not oncur too big loss again like in Q1, crude oil volatile from Q42021 USD 70+ to Q1 2022 USD 110+

Forward looking is positive impact on crack spread which increase almost triple from USD 12 to USD 33

It is untrue to assume..... This bcos msia petrol price pricing mechanism formula already has a natural hedge for crude oil volatility mah....

One of the key variables factor in Malaysia automated price mechanism formula ia crack spread, calculated based in Sigapore mogas market, average based on weekly crack spread data.

Refinary margin swap is because hengyuan only produce some euro5 dissel to meet shell demand. Hengyuan source part of dissel end product from other refiner.

By end Q2, hengyuan dissel plant should have capacity to product all euro5 dissel to meet Malaysia policy

hengyuan only need hedging on its input crude oil derivative as it need few week shipment time from various crude source supply. Hengyuan only source 50% crude from local Petronas, another 50% are mainly source from Russian, Arab and Asia. Hengyuan need to protect its profit margin from erode due to volatility crude oil cost.

hengyuan didn't need to hedge its refine end product as it have long term supply taker from Msia Shell until 2026. Most if no all of its refine end product are solely supply to Shell Malaysia.

Therefore, hengyuan hedging loss/gain mainly due to volatility in crude oil. If refine end product price increase as indicate by crack spread, hengyuan will only profit higher in tandem with higher crack spread

Malaysia Shell is sole taker for hengyuan refine product. It is Shell Malaysia to hedge refine product volatility in Singapore mogas platts market.

Hengyuan hedging mainly focus on its input crude oil cost to protect its refine end product rathet than vice versa

Hope hengyuan can seek compensation from Shell in regard to its own policy to abandon Russian oil. Afterall, sanction is not endorse by world organization.

Shell on 3 Mar declare termination tie to use any Russian oil, but Hengyuan may already order Russian crude ahead. Since Hengyuan have 5 year supply contract with Shell, it need to write down these crude and source from other crude supplier to meet 17% shortfall. The 17% crude source from Russian can be already in store tank or on shipment, Hengyuan need to sell these crude oil outright later without refine it to process fuel/gasoline/diesel.

These is one off case, its will NO repeat in next Q.

Remark: from hengyuan last year annual report, it source about 17% crude from Russian

The inventory loss incur in Q1 result is due to hengyuan source 17% crude oil from Russian. Hengyuan have last year renew 5 year extension to supply refine product to local Shell station. Shell have opt to cut tie to use any crude or refine produce source from Russian, these have resulted hengyuan force to written down these 17% inventory, replace with spot crude oil from other source.

Hengyuan hedging position is limit to 25% of each month revenue. Therefore, if crack spread is leap up three time higher, its 25% hedging position will incur loss, but balance 75% revenue will reap handsome spot profit. Off course, the extend of 75% revenue gain will offset partly by 25% hedging loss, resulting hengyuan still able to reap at least 40% revenue enjoy current crack profit margin.

As the US nears its all-important summer driving season, refiners are gearing up to run as hard as they can — even as roadblocks from feedstock shortages to the upcoming hurricane season threaten to get in the way.

With hefty margins, strong demand and tight supply, the incentive is there to run close to full out this year. Tight supply is a main factor encouraging higher run rates

https://www.reuters.com/markets/commodities/global-refiners-falter-efforts-keep-up-with-demand-2022-05-31/

https://www.theedgemarkets.com/article/us-crude-fuel-stockpiles-fall-tight-market-%E2%80%94-eia

The Company’s revenue grew by 22% for the quarter under review, driven by the drastic hike in the global
oil product price. Nevertheless, lower crack margin and decrease in stockholding gains as compared to 4Q
2021 affected the profitability.

Remark: Hengyuan already clearly indicate that its Q1 2022 result was lower than Q4 2021 due to dual factor, lower crack spread and lower stockholding gain.

Therefore, what will next Q2 result will be? with obviously hike more than 150% crack spread margin + additional bonus stockholding gain

Palm oil stock cannot perform not because of CPO price, but due to low crop production, windfall tax and high input fertiliser cost, low manpower.

He

For enquiries in regard to hengyuan business model including hedging, kindly email hengyuan or contact:
: +606 641 2000
: HRCPD-Corporate-Affairs@hrc.com.my

After Yinson-OR ease trading, Yinson price should recover next week onward to attract right subscription

Today share price weakness is last chance to accumulate as much as possible, to fully pack it in portfolio

Can fly

Time to buyback as kyy and otb have granted no to post new articles to promote hengyuan.

Time to buy now

Come back only after kyy pump and dump.

Almost ready to go......

Yes, i learnt bad experience with kyy in jaks. Therefore, i rectify position onward

kyy article is signal, even only target hengyuan, but somehow petroM will also get spill over adverse impact, when shark come, don fall become victim, stay away first, lets shark pump and dump, come back later.

kyy article is signal, when shark come, don fall become victim, lets shark pump and dump, come back later.

Repetition scenario happening, when kyy posted articles to promote, its right timing to exit first. Come back later

Repetition scenario happening, when kyy posted articles to promote, its right timing to exit first. Come back later

Continue to drag down by local, otherwise, just solely from Vietnam IPP, valuation will be higher. Next catayst is commission 50MW solar power next year and potential new renewal power project.

In additional, favourable legal outcome against star will be leap up for jaks

Steady profit from Vietnam Power plant.

Next Q will be higher as Vietnam power profit is USD denominated strengthen US, translating into higher RM profit

Hengyuan share price started to outperform in accord to crack spread widen begin 27 April. Please take note, Hengyuan performance is highly dependent to crack spread = profit margin rather than crude oil price or inventory gain.

The huge jump in profit margin = crack spread from USD 16 to USD 29, remain intact and will only reflect in next Q. Therefore, current elevated stock price will maintain ahead of next Q2 result. Crack spread is KEY profit determinant alike glove ASP. Take note, glove profit deriving force is ASP, not the feedstock holding

RON 97 retail price is RM 4.70

RON 95 retail price is RM 2.05 + Gov subsidy RM 2.45

ROM 97 retail price is RM 4.70

RON 95 retail price is RM 2.05 + Gov subsidy RM 2.45

Here is latest petrol price for Malaysia, it Clearly show even crude oil have stabilize around USD110, but, a significant hike in petrol price is happening now, wider the profit margin for refiner

https://ringgitplus.com/en/blog/petrol-credit-card/petrol-price-malaysia-live-updates-ron95-ron97-diesel.html

Here is latest petrol price for Malaysia, it Clearly show even crude oil have stabilize around USD110, but, a significant hike in petrol price is happening now, wider the profit margin for refiner

https://ringgitplus.com/en/blog/petrol-credit-card/petrol-price-malaysia-live-updates-ron95-ron97-diesel.html

Even as the price of crude oil continues to rise—raising the input costs for refiners—refined products prices have risen more, increasing the spread and beefing up the bottom line for refiners.

The crack spread is the difference between the price of crude oil and the price of refined products, which include gasoline, distillates, diesel, and jet fuel

Mr Sslee have quota example how gross refinery profit margin can be calaculated by taking one of the refiner product, gasoline as example as show below. Remark: Jet fuel profit margin is higher than gasoline
The retail price of RON97 petrol will be higher by 37 sen at RM4.70 per litre.
1 barrel equal to 159 liter.
Hence RON 97 is RM (4.70 x 159)= 747.30/ barrel
Usd to MYR 4.40
Hence 1 barrel of RON97 is USD(747.30/4.40) USD 169.8 / barrel.

Crude brent oil USD 112.5/ barrel.
Different RON 97 and Crude Brent oil is USD 57.3/ barrel.

These USD 57.3/barrel is gross profit margin, if take into operation cost, the profit margin will be USD 30/barrel = current crack spread

Even as the price of crude oil continues to rise—raising the input costs for refiners—refined products prices have risen more, increasing the spread and beefing up the bottom line for refiners.

The crack spread is the difference between the price of crude oil and the price of refined products, which include gasoline, distillates, diesel, and jet fuel

Mr Sslee have quota example how gross refinery profit margin can be calaculated by taking one of the refiner product, gasoline as example as show below. Remark: Jet fuel profit margin is higher than gasoline
The retail price of RON97 petrol will be higher by 37 sen at RM4.70 per litre.
1 barrel equal to 159 liter.
Hence RON 97 is RM (4.70 x 159)= 747.30/ barrel
Usd to MYR 4.40
Hence 1 barrel of RON97 is USD(747.30/4.40) USD 169.8 / barrel.

Crude brent oil USD 112.5/ barrel.
Different RON 97 and Crude Brent oil is USD 57.3/ barrel.

These USD 57.3/barrel is gross profit margin, if take into operation cost, the profit margin will be USD 30/barrel = current crack spread

Hengyuan and Petronm, both will record windfall profit due to expanding crack spread margin+ huge stockholding gain

Hengyuan and Petronm, both will record windfall profit due to expanding crack spread margin+ huge stockholding gain

PetronM is third largest retail petrol station, just short close to Shell. It have being most aggressive expansion as recent Malaysia increase petrol station are mostly monopoly by PetronM.

Petrol station offer PetronM steady income as retail selling petrol profit margin is highly protected by gov subsidy

Upcoming PetronM result will be both increase profit margin on refining and higher stockholding gain

PetronM increase crude storage capacity by ADDITIONAL 500,000 barrel in Q3 2021 is TIMELY, as its stockholding gain will be close and comparable to Hengyuan already

1. Subsea Construction (“SC”) vessels at work in the Caspian Sea (Russian client, Lukoil), contract value is approximately USD50.0 million. Offshore construction work is expected to be completed in 2022. These is goods news against rumour Russian risk default due to invasion

2. Mumbai Port FSRU project is being progressed and we will make an announcement on further details of the project once these are available. Likely will be mid june

3. Armada Claire to be sold or scrapped in 2022. Significant writeback provision will record once it materialize as these vessel already fully devalue/fully depreciated last year 2021. Therefore, any value created either through outright sell or scrap for few million USD, will boost armanda cash hoard, allowing it to further trim USD debt, cut interest expense, up profit attributed to shareholder. In additional, any final outcome from legal course over armanda claire claim against client will bring extra bonus cash as interim court show Armanda entitle few million claim already

4. Since almost all non performing OSV already disposed off (only 3 OSV remaining which already fully integrated for own operation). Thus, for now onwards, Operations segment results mainly boost through continue trim down debt, reduce interest expense, boots up net profit + bonus through strengthen USD currency + commencement of new 98/02 FPSO end of 2022 + upcoming new contract from India
revenue and lower operating costs in Q1 2022.

The earning will getting higher in next Q result, why? merely due to strengthen USD as all it profit is USD denominated, use its operating cash flow in USD to trim USD debt every quarter, trim down interest expense, boosts up profit in RM, increasing EPS staggering up on every Q forward

Tomorrow will recover

In the year under review, HRC registered a profit after tax of
RM82.7 million compared to the previous financial year which
reported a profit after tax of RM251.0 million. Refining margins
and crude prices continued to remain volatile during the year
resulting in a full year average Current Cost of Stock margin
(CCS) of USD3.44 / bbl (FY2020: USD5.23 / bbl) and gross profit
margin of USD7.23 / bbl (FY2020: USD 2.68 / bbl) including
the effects of crack swaps.

Stockholding gains / (loss) for FY2021 (including the effects
of commodity swaps) were USD0.39 / bbl (2020: (USD0.50) / bbl)

Remark: Upcoming crack spread is above USD 10/bbl + stockholding gain USD 20/bbl， what will upcoming EPS?

Hengyuan Refining Company Berhad (HRC or the Company) stands tall as Malaysia’s third largest refinery in Malaysia.

• We process crude oil from Malaysia and all over the world and have the licensed capacity to deliver up to 156,000 barrels per day of petroleum products to customers, mainly in Malaysia and Southeast Asia.
• Presently, our business activities are focused on refining and processing crude oil,
refinery operations and maintenance, and supplying refined products to our customers.
• We supply through three channels: the multi-product pipeline to the Klang Valley and KLIA, our truck loading gantry for local (Peninsular Malaysia) customers and exporting to vessels through our jetty to East Malaysia and oversea markets.

4. Fourth, are the sanctions and unilateral embargos — also known as self-sanctions — on Russian oil. Before the invasion of Ukraine, Russia was a major exporter not just of crude, but also of diesel and semi-processed oil that Western refiners turned into fuel. Europe, in particular, relied on Russian refineries for a significant chunk of its diesel imports. The flow has now dried.

Europe not only needs to find extra crude to produce the diesel and other fuels it’s not buying from Russia, but,

crucially, it needs the refining capacity to do so, too. It’s a double blow. Oil traders estimate that Russia has shut down 1.3 million to 1.5 million barrels a day of refining capacity as result of the self-sanctions.

Who’s benefitting? The pure-play oil refiners, which are quietly enjoying record-high profit margins. While OPEC and Big Oil get the blame, independent refiners are cashing-in. The sky-high crack margins explains why the share prices of US refining giants Marathon Petroleum Corp and Valero Energy Corp have surged to all-time highs. The longer the refiners make super-profits, the harder the energy shock will hit the economy.

3. Third, and perhaps most importantly, refining capacity has declined where it matters for the market now, and the plants that are operating are struggling to process enough crude to satisfy the demand for fuel. Martijn Rats, an oil analyst at Morgan Stanley, estimates that outside China and the Middle East, oil distillation capacity fell by 1.9 million barrels a day from the end of 2019 to today — that’s the largest decline in 30 years.

The downward trend started well before the pandemic hit, as old Western refineries struggled to compete, environmental regulations increased costs and the unfounded fear of peak oil demand amid the energy transition prompted some companies to close plants. The fuel-demand collapse triggered by Covid-19 only turbo-charged the trend, resulting in dozens of refinery operations shutting down for good in Europe and the US in 2020 and 2021. New capacity has emerged in China. However, Beijing tightly controls how much fuel its refiners can export so that capacity is effectively out of reach of the global market.