InsiderR , if the crack spreads were less than US 5 for the period during the period from 3rd Oct 2016 and also the period from 6th March 2017 is correct , then Petronm earnings during these 2 qtrs seems not affected by such low crack spreads. The eps for q4 2016 was 41.7 sen and eps for Q1 for 2017 was 40.20 sen . I think my judgement that Petron earnings ( with retails ) are cushioned by the more volatile earnings of refinery due to wide swings of crack spread within a few months . Hence , Petron share price should be relatively more stable .

OMG . I just read it .

Davidtslim had written his 6th Article on Valuation of HY.
When he wrote this article , HY 's price was slightly above RM 8 which gave a market capitalization of RM 2.5 billion for HY. He normalised the cost of 1kbpd by dividing market cap of 2.5 billion with its capacity of 112 bpd. This give a cost of 22 million per kbpd. With today's stock price of RM 17 , the market cap is RM 5.100 billion . THe cost per 1kbpd is RM 45.5 million per kbpd. Petron market cap is RM 3.575 billion with a refining capacity of 88kbpd. Its cost of 1kpd is RM 3.575/88k = RM 40 million per kbpd which is lower than HY . I do agree that the 1kbpd of Petron does not generate as much profit as the 1kbpd of HY at the current crack spread of US 9 per barrel. However when the crack spread went down to less than 5 , Petron 's 1kbpd capacity will generate better earning than the same 1kbpd capacity of HY because Petron's earning has both the refining earning + retailed earning .

Dear Raider

My comments and opinion as follows

1. While Petron expected 2018 earnings is after tax , HY's taxes in 2018 is still an unknown . The IBs also cannot gain access to the HY management and will not be able to have coverage on this stock .

2. Petron did not announce any shutdown in 2018 . A normal shutdown is about 3 to 4 weeks for maintainance . HY s planned shutdown of 2.5 months
in Q3 18 is more on switching to Euro 4 and 5 compliance .

3. I am talking about Petron additional earnings through retailing business beside refinery earning . The 1000 shell stations's earnings goes to Shell not HY because the Shell stations does not belong to HY.

4. The proposed and planned increase in Petron refining capacity plus upgrade which cost RM 3.5 billion will not come from Petron internal borrowings but through the parent company's support per my understanding . THe company may have private placement or right issues. THis will not affect the balance sheet.
5. I do agree with you that the room for HY's price to go up is higher than PEtron because of very low PE . THe potential upside of HY could be double the current price if and only if a PE of 12 will be accorded by the market .

Since HY and Petronm are like brother and sister , I consider the brother HY a more riskier bet than its sister Petron . Well , I do agree that the return could be much higher if you bet on a riskier candidate . At the moment I feel more comfortable with the sister who is more predictable and not as risky.

Thanks raider for the write up on Petron by both RHB and Public Bank.
Although Petron and HY are like brother and sister , they are different .
Petron has 580 petrol stations which do petrol and diesel retailing plus mini markets . I am switching to Petron because of the following reasons .
1. Petron earnings in 2016 and 2017 is after paying taxes. Hence its
2018 earnings are more predictable . We also expect its Q4 earning to
be very high ( due to high crack spread plus inventory gain).
2. There is no planned shutdown in 2018
3. The 580 petrol stations provide a stable and more predictable
earnings . If Q4 make a record earning like HY , then we expect total
eps for 2017 to be more than RM 160 s.
4. Petron is debt free and in a net cash position.
4. HY was covered by RHB and Public bank . Both give a PE of 12 .
Assuming an estimated eps of RM 160 in 2018 , then its target price should be RM 19.2 . THere is an upside of RM 6.00 which represent an upside of 45 % .

The last 10 days are big corrections for HY stock which has skyrocketed since Q3 result was out . I had sold all my HY shares which I bought from RM 7.20 onwards till RM 11.10 . I am happy with my 100 % profits . Fundamentally , HY is still a good stock with potential to go up to RM 30 in one or two years time . I have decided to switch to other stocks which meet my five criterias of stock selection . My special thanks to OTB, Raider, KYY, Davidtslim,ICON 888, Futureyes , PRobability, Lau , ctteo and some other writers who provided good write up and insights about HY business . Without their writeups , I may not have achieved such profits .

The time is 16.42 now . It looks like HY will be closing in the red at 16.98 with 8 sen down . Petron is 2 sen up closing in green at RM 13.30.
Market down by 4.88 points . I think HY and Petron will be range bound until last 2 weeks of Feb .

If Q4 make RM 360 million ( eps 120 sen ) , then the 24 % tax will be exactly RM 86 million. Starting from Q1 18 onwards , HY has to start paying taxes for its profit unless HY can use the RM 495k reinvestment allowance to offset the taxes incurred .

There is no doubt that Q4 17 will have record profits. I am waiting for David's article which he promised will be published in two weeks time . Hope his article will provide more insight about taxes which may be incurred in 2018 . I have gained a lot from his numerous reports .

Airasia meets the five criteria of stock selection

1. It has consistent growth since it was founded
2. It has positive cash flows
3. It has attractive PER of 7 only
4. It has good ROE of almost 28 %
5. It has quite an attractive Dividend Yield also .

It is not easy to find such stock which meets all the 5 critieria .

A number of i3 friends tend to equate HY with Petron and PetDag . There are not exactly the same . HY is 100% refinery , PetDag is 100% oil retailer and Petron have both refinery plus retails . The oil retailers have very stable profits because the retail prices are fixed by the government using APM which provides a profit margin on top of the crude oil prices plus covering the retailers administrative costs . Profits of retailing are almost quaranteed . This business has almost no risk unlike the refinery business which depends on the worldwide fluctuating crackspreads. In 2011,2012,2013 and 2014 Shell lost money big time whereas Petron do not lost as much relatively and only lost money for 2 years during these 4 years because it was cushioned by the profits of its retail business . PetDag 's profits are not affected during these periods and deliver strong profits . The 550 plus Petron stations also had mini markets which operate like Seven Eleven . Markets tend to give a higher PE for businesses which never lose money . Where on earth can you find business which sure make money ones . It is natural and logical for PetDag to have a higher PE of between 16 to 20 while Petron has a smaller PE ( 12 to 15? and HY a PE of 10 to 12 ?) .

Based on numerous articles written on HY's Q4 expected earning , majority will agree that 2017 will be an exceptional year with a total eps of approximately RM 3.60 . It looks like most investors have factored in such expectations . Good investors need to be forward looking and to anticipate what will be 2018 eps . Based on estimates from some i3 articles , the 2018 earning will be between RM 2.00 to RM 2.70 in view of Q3/Q4 shutdown plus potential taxes which HY need to pay for the profits made . THe prices in the last few days reflected an equilibrium has been achieved where potential investors are neither excited with record profits which will be announced in late Feb nor worried about the lower 2018 profit compared with 2017 . Assuming when HY announced its Q4 result which give a total 2017 eps of RM 3.60 , the current price of RM 17.24 will give a PE of 4.8 which is very very low . However , the price of RM 17.24 will give a PE of 7.35 for 2018 total average eps of RM 2.35 ( average of 2.00 and 2.70 ) . The question now is whether the market will give a higher PE of more than 7.35 when 2018 deliver a eps of RM 2.35 . Personally , PE of 7.35 is considered too low for a company which deliver a total of 4 years profits consistently from 2015 to 2018 .

EPS of 2015 was 117 s
EPS of 2016 was 113 s
EPS of 2017 is 360 s ( forcasted )
EPS of 2018 is 235 s ( forcasted )

It looks like everyone is expecting Q4 17 will have better result than Q3 .Based on KYY's golden rule , it is a " buy" until the Q4 result is out during end of Feb . Then in March , everyone will try to anticipate whether Q1 18 result will be better or worse off than Q4 17 result . With the lower crack spread in Jan and a possibility of paying taxes , Q1 result will most likely be worst off than Q4 . By following the golden rule , then quickly sell during the 2nd or third week of March . Similarly , everyone knew Q3 18 will be shut down and the eps will be negative . Will everyone try to sell now , sell in Q 2 ,Q3 or sell in Q4 just before the result is announced ??? Food for thought .

OTB is good at both FA and TA . These two knowledge combined are very powerful tools . He may have seen the shooting star reversal and took the fast action . The small hammer yesterday could also be another reversal of the down trend .

There is nothing wrong if OTB sold his HY shares above his target price of RM 15 which he had consistently said in the forum . Since his target was met much earlier and even higher ,there is nothing wrong if he sells above RM 18 during the last day of Dec 17 or earlier. He may have re collected the same amount of shares at below 17 in the last few days . He may have made a few hundred thousands from the difference in prices and yet maintain the same number of shares now .

I read the 5 important criteria of stock selections from a book written by Goldeye. THe 5 criteria in order of importance are

1. Consistent Growth
2. Positive Cash Flow
3. PER
4. Return of Equity ( ROE)
5. Dividend Yield ( DY)

You can use these criteria to compare Hy with PetDag or Nestle . Growth is the most important criteria while DY is the least important .

I also noticed that the absence of a few active HY promoters who almost made comments every few hours in the last few days . Have they sold their HY shares during the peak of RM 17.30 to 19.00 on last Friday till last this Wednesday with the sharp reversals ?

Although we expect Q4 17 result to be excellent , big players will be concerned with 2018 earnings . The crack spread has gone down from the peak of more than US 9 in Q4 to just more than 7 now in Jan 18. Another concern will be taxes in Q1 18 onwards . Can someone enlighten us whether HY will use up all the deferred losses in 2014 carried forward to cover the taxes of profits in 2017 . Q1 result will be less than RM 1 eps if HY were hit by both lower crack spread and the need to start paying 24 % tax from the profits .

Wow. HY went up by RM 1.66 with a PE of 5.77 . HY is relatively still undervalue if you compare with the Steel counters which a few commentators said that HY is similar to these cyclical Steel counters rs which the markets tend to give low PE s . Ihe lnstitution buyers has been bullish with the steel sectors since the beginning of 2017 when it started to turn around . AnnJoo had a PE of 10.72 despite the fact that in 2015 it had huge loses . Similarly LionInd also went up with a PE of 7.52 despite the fact that in 2016 it still lose money big time . Lastly , Masteel which went up to a PE of 8.41 despite the fact that it loses money in 2015. Hengyuan made an eps of 117 sen , 113 sen in 2015 and 2016 respectively and with a record profit in 2017 . In comparison, HY is definitely qualified for higher PE than the 3 steel counters . Why shouldnt HY be accorded higher PE like 8, 9 , 10 or even 11 ??

We should welcome different view from other i3 subscribers even their views sound weird or absurd . This will make the forum more interesting .
A movie with only good guys will not be nice to watch . A movie must have a mixture of good , bad or comical guys . I can still remember a 1966 movie " Lost in Space " . The movie is interesting only because there is a " clown " like character who always behave differently from the rest .

Wow, HY went up one ringgit with huge volume of 4.2 million shares . THe uptrend is intact . It looks like HY's PE will be moving upwards to 7 before 4th qtr result is out by end Feb. Once the expected super good result is out , the PE will move up further to 8 ,9 or even 10 .

The big losses by Shell due to the more than huge losses of due to 50 % plunge in oil price in 2014 which strike fears into the markets in both 2015 ,2016 and even till early 2017. Despite Shell started making 117 s and 113 s profits respectively for 2015 and 2016 , the PEs were about 3 . In 2017 , the PE s move from 3 to 6 when confidence resumes. If history were to repeat itself , the PE s will move to 12 in 2018 if the company with new management of HY continue to make huge profits . THe PE will even move up to more than 20 if FY 2018 deliver another superb result similar to 2017 .

Based on the Dynaquest Stock Performance guide , there was a gradual improvements of PE from 2004 to 2009 . The average median PE for 2004 was 3.1 . In 2005 , the median PE went up to 6 . In 2006 ,it went up further to 12 and then hit the highest median PE of 30 in 2009. The markets are always lagging in responding to changes in EPS . If history were to repeat itself , the PE of HY will be rising as more and more peoples and institutions have more confidence with the company with its rising eps .
Markets have 2 sxtremes . Either it is extremely fearful and bearish or extremely greedy and bullish . In life , we should choose the middle path . Neither fearful nor greedy .

While I agreed with some that we should not compare HY with Nestle ,Dutch Lady, I have made comparisons with Cyclical stocks which have recovered from 2015 ( Penta and JHM) and 3 Steel Stocks which recovered to profitability in 2016 . While the cyclical technological stocks have been given PE of more than 25 , the steel stocks were given at least a PE of more than 7 even though they recovered their profitability in 2016 which is one year later than both HY, Penta and JHM. Based on these comparisons , I feel that HY should be given a PE of at least 8 at the current moment . As the recovery becomes more certain and consistent a higher PE of 10 , then 12 will be given by the MR Markets. Facts will speak the truth .

Let's look at PEs for Steel stocks for the last 3 years

EPS ( sen ) Current PE
2015 2016 2017 (3qtr)
Ann Joo -27 33 29 10.60
Lion Ind -20 -106 12 7.26
Masteel -21 9 23 7.95

HengYuan 117 113 242 5.24

All the 3 steel stocks were losing money in 2015 .As for Lion Industry , they lose money even in 2016 . All the 3 stocks had PE for more than 7.
Shell started to make money in 2015 which is one year earlier than the 3 steel stocks . But yet the PE was only 5.24 . Dont you think HY should be given a PE of more than 7 based on the above statistics ??

Since the oil prices plunged more than 50 % in 2014 ,Shell Refinery was making already profits in 2015 and 2016 as follows
EPS
2015 117 sen
2016 113 sen

When HY took over in early 2017 , the 3 qtrs total eps is
242 sen . With an expected eps of at least 120 sen in Q4 ,
the total EPS of HY will be RM 3.62 . Is it too much to ask for a PE of 12 for such companies which had turnaround and had a record more than 3x profits in 2017 ??? Penta and JHM had a similar turnaround in 2015, 2016 and 2017 . Do you know what PE the markets give to Penta and JHM ?? IT is more than 25.

Soo Jin Hou , I think you are right . HY has tax losses of RM 763 million in end 2016 which can be carried forward to 2017 , 2018 and 2019 until it was fully utilised . Even in the whole of 2017 , HY made an eps of RM 3.60 or a profit of RM 1.080 billion , the 24 % tax is only about RM 250 million which can be offset from the RM 763 million. THere is still substantial leftover for 2018 and 2019 . In such scenario , we can still expect HY to make about RM 2.70 in 2018 .

Hengyuan was the great winner in 2017 and yet none of the 2017 participants identified HY in their stock selection during the end of 2016 . This year a number of participants choose HY in their 2018 competition . Will there by a black horse in 2018 that no one identified ? In life , sometime we cannot use our eyes , ears and brains to choose the best . We may need to smell it . Haha . Happy New Years to all i3 subscribers .

There is a good write up by Lau333 in i3 under the heading Hengyuan " A perspective from the Flow vs Fundamental " . THe article provides his views on crack spread , stockholing gain for Q4 and 2018. It also gives you a projection of how 2018 earning will be like taking into consideration the expected Q3 shutdown and 24 % tax plus some tax allowance from capital expenditure in 2018.

Good analysis by the Lau 333. I do agree with him that PE of 12 is fair comparitively with other refineries . I also agree with him that the current range bound crack spread in 2017 is not abnormal compared with the past year. I also agree with him that there will be a huge inventory gain in Q4 with the closing of $66.41 crude oil price yesterday .As such, Q4 result is expected to be as good if not better than Q3. Hence we expect 2017 total EPS to be at least 360 sen ( 242+120). Moving forward , with Q3 shutdown, 24 % tax and some tax allowance from the RM 700 capital expenditure , we can assume a total earning of 55% of 360 sen for 2018 which is estimated to be 198 sen . Assuming a PE of 12 , the target price should be 198 x 12 = RM 23.76. With last Friday closing at RM 16.3 ,looks like there is still some 30 % upside .

I have been buying HY from RM 7 till RM 11.10 since end July . I am still holding them without selling . There were corrections along the way . The worst correction was in end Aug when HY announced its Q2 result of 28 sen per share . HY dropped RM 1 in a single day . That was a 12 % drop. HY continued with the uptrend to RM 19 from September onwards till yesterday afternoon when there was another sharp correction of 9 % .The correction was a natural correction without any bad news like sudden drop of crack spread or anticipation of bad 4 results . Comparing the two corrections since August , the 12 % correction due to poor Q2 result is more scary relatively. THere were more uncertaintly due to the fact that Q2 result was bad . However , the price recovered from Rm 7 to RM 10 before Q3 result was out . Then a big bang from 10 to RM 11 when Q3 delivered superbed result . It climbed from 11 to 19 all the way . I believe HY will recovered with anticipation of good Q4 results due to better crack spread and big inventory gain . The stronger ringgit also help HY's debt which is in US dollars .

I do agree with Felicity 's article that Hengyuan cannot be compared with Nestle , Dutch Lady which has a PE of 30x . However , KYY did not ask HY to be accorded a PE of 30x but only 1/3 of it at 10x only . Now . Can HY be compared with small caps like JHM and Penta which are favoured by many IB s ?? Both Penta and JHM did not make profits before 2015 . THese companies are very similar to HY which started to make profits from 2015 onwards with record profits in 2017 . These companies were accorded PE of more than 25 now by the markets with very optimistic views of strong growth in automotive and semicon sectors in 2018 . Shouldnt HY be give only a PE of 8 ( 1/3 of Penta and JHM PE) with an optimistic crack spread outlook and high demand of refined oil products ?? A PE of 8 will give HY a price of RM 3.11 x 8 which is 24.88 ???

I do agree that Hengyuan cannot be compared with Nestle and Dutch Lady which gets PE of 30x. But KYY did not say he expect Hengyuan to have a PE of 30x . He is just expecting a PE of 10x ( 1/3 of 30 ) . Is PE of 10 x too much to ask for for HY which made 117 sen in 2015, 113 sen in 2016 and more than 310 sen in 2017 ?? Look at some stocks like Penta , JHM which are small caps companies compared with HY . These companies were losing money or has no profits from 2010 till 2014 . Like HY , they started to make money from 2015 onwards with record profits in 2017. Both stocks had a PE of more than 25 now . Markets are betting on the growth of automotive and semicon related growth . Why cant HY be given a PE of just 8 ( 1/3 ) of Penta and JHM PE and bet on the strong crack spread of oil refinery ???

wow, finally , HY hit the RM 15 target which was expected to reach by end Feb 18 but reached 2 months earlier . I am happy that I have been holding the HY shares which I bought from RM 7.20 till 11.10 . With another 5 days to go , the average crack spread of more than RM 9 and the expected crude oil price of more than US 63 will make the Q4 result better than Q3 . THe inventory gain plus more than 10 % better crack spread than Q3 will enable Q4 eps to be more than Q3 . Hence the rolling 4 qtrs eps will be more than RM 3.60 which is about 50 sen more than the current rolling 4 qtrs eps of RM 3.11 . I will hold until Q4 result is out in Feb 18/

Happy to see these rubbish deleted by the Admin.

I just read an article in i3 by teoct. Based on his research , the demand for oil will continue from the current 97 million barrel per day to 110 million barrel per day in 2040 . THe current refining capacity is tight ( 85 % utilization) and just meeting the demand . THis tight situation will continue until 2020 when the additional capacity will slowly exceed the increasing demand from 2020 onwards . Hence the current crack spread of US 9 dollar per barrel and above will continue till 2020 . It looks like the HY exceptional profits in 2017 can sustain until 2020 if oil price remain at below US 80 per barrel and the supply continue to be tight until 2020 . It is the low oil prices which spur the demand.

Bitcoin.com founder Emel Oldenberg had sold all his bitcoin . Bitcoin market drop about 14 % today .

We are coming to the end of 2017 . I just remember KYY 2 golden rules for investment in stocks .

1. Next year profit must be better than this year
2. PE must be less than 10 .

Will HY 's profit for 2018 more than 2017 ?
1. Average crack spread for 2018 is expected to be better than 2017 based on crack spread futures ( from the edge )
2. There is a 2.6 months shut down in Q3 2018 compared with 2017 3 weeks shut down
3. Need to pay tax in 2018 since the remaining deferred tax exemption from the losses of previous years might have been used up.
4. PE will still be less than 10 in the next few months . I do not expect HY stock price to reach RM 30 in the next few months .

Can the better crack spread in 2018 cover up the negatives from the shutdown and some taxes need to be paid such that the total eps for 2018 continue to be more than RM 3 ?

Based on articles from both The Edge ( HY Discount price over Petron ) and article from Davidtslim, the crack spread for Q4 and crack spread futues for Q1 and Q 2 of 2018 continue to be good ( above 9 ).
Crack spread future for Q3 2018 is still good with above 8 . With only 10 more days to go before closing the Q4 numbers , the result for Q4 17 is expected to be as good if not better than Q3 17 . Even if we assume the Q4 EPS to be 121 sen , the full year EPS for 2018 will be 363 sen . With Q2 and Q3 generating more than 950 million cash , we expect Q4 will also generate more than 500 million cash . This is sufficient to pay off a big chunk of the RM 1.3 billion loan which was due in 2020 and 2024 . With crack spread futures for both Q1 and Q2 at more than 9 , the results are also expected to be good if the crude oil prices remain above $ 60 per barrel . The expected 1 billion cash generated from the first half of 2018 should be able to fund the intended upgrade which cost RM 700 million. My opinion.

Airasia started moving up the last few days . My special thanks to ICON888 who shared with us the financials of Airasia in early 2016 when its price was about RM 1.70 . I analysed what he shared and bought at RM 1.80. ALmost at the same time Tony Fernandes also bought a billion ringgit worth of Airasia at RM 1.80 through private placements . I had been buying up from RM 1.80 and stopped at RM 3.20 . I had more than 40 % gain inclusive of the twice dividend at 12 sen each . If ICON had not shared his analysis in i3 , I wouldnt have bought Airasia .
My special thanks to him again for sharing .

Hi 3iii, you also made some money ( $23,800 ) on HY ? You bought HY ?
I am surprised but I am happy if you made some money . Finally you are convinced HY is worth buying even at the current price .

Wow , looks like RM 13 is reaching soon . With another 2 weeks to go , the sifus will be able to give a good estimate of Q4 17 result . If Brent continue to be at $ 60 and above on 31st Dec and crack spread maintaining at the current margin of more than $ 9 per barrel , we can expect equal or better Q4 result as Q3 based on Davidstlim 's analysis . THe strenghtening of Ringgit will also help in debt repayment which is in US denomination . Assuming Q4 has similar result as Q3 which is RM 120 sen eps , then the rolling 4 qtrs eps will be 311 + 121-69 sen which is equal to 363 sen . This is better than the current rolling 4 trs of 311 sen . A PE of 5 already give the value at RM 18.15 .

HY has a good run up today and its price surpass Petronm for the first time . The next target for HY to catch up its PetDags market prices . For HY to catch up with PetDag , it has to deliver consistent results for at least 5 more qtrs and start to pay dividend . HY just need to deliver a 4 qtrs eps of RM 2.40 . Assuming a reasonable PE of 10 for a consistent profits of 9 qtrs , the market price will be RM 24 . An average eps of 60s per qtr looks achievable and reasonable even with an average crack spread of 5 dollars .

wow. HY went up almost RM 1 . For the first time HY price is matching Petronm price. The RM 3.5 gap between the two counter closed to zero .
It is like Rabbit and the Tortoise race . THe Rabbit ran at high speed and leading first . THen the rabbit take a nap while the tortoise is slowly catching up and will finally outrun the Rabbit .

3iii, There are 3 types of investors . The short term . medium term and long term as what KYY has mentioned earlier . Based on his observations , the short term earn the least while the long term types earn the most .
The short term investors will buy and sell within days , weeks or months
.THe medium terms will buy and sell within months or years while the long term investors including the major shareholders or founders will keep and hold for years . If the company is fundamental strong and continue to grow , then the long term investors will gain the most . Based on my own experience , if I had kept Top Glove , Kossan , Elsoft , Vitrox, Inari , Hartelega, Penta , JHM and some other fundamentally good stocks , I would have earned much much more . THere are all 10 baggers .
Hengyuan had delivered strong fundamentals with good PE , strong cash flows . Will Hengyuan be another one of the above ? It depends on the new management . Will I be medium term or long term investors , it depends on my foresight and the coming qtrs results and trends of oil refining industry. There is no right or wrong .

With one more month to go , Q4 result is expected to be good if the oil price trend continue to be above US 60 per barrel , crack spread continue to be at US 9 per barrel and our ringgit continue to be at around RM 4.1 vs 1 US dollar . Since the management had confirmed that there is no shutdown in Q4 , the 3 surprises ( inventory loss , forex loss and 3 weeks shutdown ) which affected Q2 result badly will not happen in Q4 . IF Q4 also showed good result , then it be be five consecutive qtrs of profits for HY since 2008. As the company profits become more and more consistent , a higher PE will be awarded by the market . A PE of 6 will be considered reasonable for a company with five consecutive qtrs of profits . As the company continue to perform and deliver profits after profits in subsequent qtrs , markets will give higher and higher PE matching to the PE s obtained to Petronm and PetDag. Of course , HY should continue to pay off its debt until debt free and then pay dividend like what Petronm and PetDag are doing .

Congratulations to those who bought , hold and believed that HY Q3 will deliver more than 100 eps per share . The estimation by David , Futureeyes , StockRaider ,OTB and some others are very close . With the latest eps of 120 sen , the total eps for 4 rolling qtrs is 320 sen . THis is the first time Hengyuan/Shell delivered 4 consecutive qtrs of profits since 2008. With the current crack spread trend and oil prices , we expect Q4 to be profitable too . Even with a conservative eps of 69 sen profit for coming Q4 , the total eps of rolling 4 qtrs eps will remain at 320 sen. Assuming a PE of 5 , the value of Hengyuan should be at RM16.00.

Shell REfinery had an accumulated loss of more than 1 billion when the oil price plunge steeply from middle of 2014 till 2016 . When Hengyuan bought 51 % of Shell REfinery , there are still hundreds of millions of accumulated losses which can be used to offset the profits made in the coming qtrs so that Hengyuan still do not need to pay tax . When a company lose money , the bargaining power is reduced significantly . When Shell sold to Hengyuan at a a "relatively" low price , you cant use any valuation to justify why Shell management is " stupid " . To give you another example , Agilent sold its component division to KKR and Silverlake in 2005 with a certain price .It was considered a fair price then. No one knew the new CEO Hock Tan from Penang can grow Avago and now Broadcom to 50 x the price KKR and Silver lake bought in 2005 . Was Agilent directors stupid ? I dont think so . The new buyers can always see opportunities which the seller cannot see . That is why the deal goes through. They are always many " canon behind the horse " who become clever after what happen.

With the advantages of inventory gain plus good crack spread , Petronm q3 17 result should be considered a let down although it is much better compared with the same qtr of preceding year . The rolling eps per year for Petronm is 155 sen which give a PE of about 8 with a price of 12.2 . Compare with Hengyuan with a current rolling eps of 163 sen ( q3 16 ,q4 16 ,q1 17 and q2 17 ) before q3 result announcement , it give a PE of 6.55 at the price of 10.7 .Please note that Q3 16 is a loss qtr with 26 sen eps . Hence , an eps of 100 sen in q3 17 will give a rolling yearly eps of 163 + 26 +100 sen = 289 sen. This will give a PE of 3.7 . This is so much " cheaper " than Petronm with a PE of 8. There is a lot of margin of safety to purchase Hengyuan with such a low PE .I would have sell Petronm and buy Hengyuan . This may explain why Petronm drop 20 sen whereas Hengyuan went up by 6 sen after Petronm result was announced .

wow. 10.46 now . panic buying