Posted by qqq3 > 2018-03-16 02:59 | Report Abuse

the risks to a minority shareholder....
- how are minority rights protected? what is the track record of the holding company? How financially sound is the holding company? Hengyuan ,Shangdong is known as a teapot, because it is competing against the state owned giants ...lots of problems/ issues they have.
- what are their plans in acquiring this plant in Malaysia?
- what are the merits of the eps from this very old plant with minimum depreciation? and therefore inflated profits and eps.
-the plant has a cost of $ 3 billion , NBV of $ 800 milllion and annual depreciation of $ 150 million.
a similar plant today will cost $ 6 billion to $ 10 billion...but the more important question is...how long can this plant be economically viable?
-what is the scenario when Rapids is ready in 2020?
-Shell is already supplying Euro 5 diesel to East Malaysia ( you can see that from advertisements)...surely not from this plant.

I mean, you can make the calculations look very complicated and impressive...but, is it on the right track?

There are 3 parties....Shell who thinks it is worth scrap , Hengyuan, Shangdong who is willing to take it over.....and as minority shareholders, are your rights protected?

As a portfolio manager...your priorities are good management, good business, your rights are protected, the company has good and strong parents, you can get your share of the future earnings, the earnings are stable and predictable...and preferably growing.

How much are you willing to pay? To gamble?

me...I think Hengyuan came to Malaysia not to benefit the minority shareholders in Malaysia, but to secure a refinery outside China.....they are obvious advantages to them in this strategy.

me...unlike Pteron who has to deal with the Malaysian public because they have petrol stations and retail customers......this Hengyuan do not even need to deal with the Malaysian public as long as they don't break the laws of the country...and it is not their practise to meet analysts or journalists to discuss their plans.

Posted by qqq3 > 2018-03-16 03:09 | Report Abuse

we are talking about a company with $ 12 billion turnover a year......and only 300 million shares. ...the fluctuations translated into the PL and eps is going to be wild....both + and -................are you ready for the rides?

Posted by qqq3 > 2018-03-16 05:28 | Report Abuse

with such turnover, such high risk of stock losses, fluctuations in currencies, crude prices, engineering risks and financial risks and huge capital requirements......nobody will do this business unless they think they can do $ 100 million pre tax profits per quarter. ...or say $ 1 EPS per annum........that is the minimum required profit target......so, what is the fair price....until things change or plant obsolete and cannot use.

Posted by qqq3 > 2018-03-16 05:34 | Report Abuse

the fair price is probably around current levelsubject to short term fluctuations.....and until things get clearer with the shareholders' plan and with Rapids., .....

in the longer term, this company will be involved in transfer pricing between China and Malaysia and no more transparency.

Posted by lkoky > 2018-03-16 07:27 | Report Abuse

very well said.

Posted by CharlesT > 2018-03-16 07:40 | Report Abuse

Talk more sense than Stockraider n other jokers

Posted by Flintstones > 2018-03-16 07:47 | Report Abuse

Like what Tom always said there are so many dream makers on i3. It is up to readers to filter what is good analysis or trash

Posted by soojinhou > 2018-03-16 09:26 | Report Abuse

In a research paper in Facts Global Energy, it was posited that global refinery utilization will remain tight above 86% up to 2025. As we know, utilization at that rate is considered fully utilized. Your analysis fail to address the causes that result in significant improvement in crack spread at the present moment compared to previous years. Due to poor profitability in the past, oil majors have underinvested in refineries. Look, a shutdown caused by Hurricane Harvey caused mayhem across the entire refinery sphere, to the point HY is able to book massive profits halfway across the globe. What does that tell you? It indicates that at the present moment, there is a shortage of refining capacity globally with very little spare capacity, where utilisation rate is at 83%. Yesterday's news revealed that US gasoline inventory is low, while crude inventory remains high, a condition that's very favorable to refineries. Even though crack spread has softened somewhat since January, most of the fact point to a tight market in the refinery business which will keep crack spread buoyant in the near term, at the very least.

Posted by qqq3 > 2018-03-16 09:42 | Report Abuse

soo...assuming this refinery makes a lot of money.....what is the track record of this holding company in respect of the rights of Malaysian minority shareholders in sharing a portion of the profits?

truth be told.....all the buying and selling in this share in recent months is done by retailers such as you, very few by fund companies except for the selling by old shareholders.......

Posted by Jon Choivo > 2018-03-16 10:01 | Report Abuse

But really, my concern now is if i missed out on something.

"The refinery made losses last time as they had to sell to Shell at a low price."

Specifically this. Anyone have any idea where i can find it in the Annual Report or?

Posted by Jon Choivo > 2018-03-16 10:12 | Report Abuse

@soujinhou

Good point. Now the question is, how quickly can previously closed refineries be reopened? And how hard is it to upgrade current refineries. How much time will it take?

A lot of things can happen in 6 months to a year.

The analysis of this company is a little too hard for me. They don't have a retail division to make earnings a little more stable. The Refinery business is not top class i think.

Phillips 66, a refinery in the US never made a loss for the last 8 years. At worst, in 2010, earnings dropped to less than a billion USD.

Posted by joetay > 2018-03-16 10:23 | Report Abuse

btw @jon,

ur analysis is unbiased, unlike the jokers in hy.

seldom see any good analysis in this forum.

Posted by qqq3 > 2018-03-16 10:40 | Report Abuse

I estimate they will make 40 sen net EPS March quarter...whether share price up or down up to you.

Posted by qqq3 > 2018-03-16 10:48 | Report Abuse

For Dec 2017 quarter, I estimated they will make 50 sen net EPS, they reported 61 sen net EPS.

So I was quite accurate for Dec quarter.

Posted by joetay > 2018-03-16 11:06 | Report Abuse

@jon and @sou,

the higher than usual crack spread is only localized in us refineries.

the reason is becos of supply and demand.

Posted by Jon Choivo > 2018-03-16 11:10 | Report Abuse

I think to an extent spreads are global as oil and its products can be shipped very efficiently even in an embargo.

VITOL have very clearly shown that when they shipped oil from iran despite the US embargo.

Posted by joetay > 2018-03-16 11:23 | Report Abuse

ah, thats where most ppl r mistaken between physical and futures.

the crack spread calculated by most here r based on nymex prices but the actual traded physical prices r different.

as a result, the refining margins of us refineries and non-us refineries r different from what most here calculated.

thats why there is the arbitraging trades between different geographic regions.

Posted by Unlevered > 2018-03-16 23:52 | Report Abuse

@jon

May I know why interest expenses and income are excluded to calculate real earnings? I thought interest expenses were part of cost of doing business.

Posted by joetay > 2018-03-17 00:07 | Report Abuse

if one wants to know how efficient a manufacturing plant is operationally, interest expenses/incomes r excluded.

Posted by qqq3 > 2018-03-17 00:15 | Report Abuse

HY says themselves they benefited from the hurricane damage in Sept and Dec quarters......expected the March results to be lower.

Posted by Unlevered > 2018-03-17 00:25 | Report Abuse

@joetay
I see. Thanks

Posted by qqq3 > 2018-03-17 00:43 | Report Abuse

accountants are accountants but can accountants think beyond accounting and get into investing?

Posted by Jon Choivo > 2018-03-23 13:54 | Report Abuse

Limpeh is a chartered accountant.

Its not about your paper qualifications, its about your mind and how you think.

qqq3 accountants are accountants but can accountants think beyond accounting and get into investing?
17/03/2018 00:43

Posted by qqq3 > 2018-03-23 14:25 | Report Abuse

choivo capital


so now you are in private equity and asset management?

asset management very tough job. Every client have different risk appetite.

Posted by qqq3 > 2018-03-23 14:28 | Report Abuse

last 12 months, the big caps and the conservative managers did well.


the cowboy ones have their cowboy methods exposed and found wanting.

Posted by paperplane > 2018-03-23 14:29 | Report Abuse

Jon did a good job.

Posted by Jon Choivo > 2018-03-23 14:37 | Report Abuse

KLCI big caps are very overvalued, that's why our KLCI index performance over 20-30 year less than FD.

Conservative managers who only buy big caps are not conservative. SAPRNG is a big cap.

You are only conservative if your conservative when it comes to valuation, and that can come from any stock or asset class imho.



Posted by qqq3 > Mar 23, 2018 02:28 PM | Report Abuse

last 12 months, the big caps and the conservative managers did well.


the cowboy ones have their cowboy methods exposed and found wanting.

Posted by Jon Choivo > 2018-03-23 14:43 | Report Abuse

I am still in audit, the fund is something i do on the side.

It is, if you want every cent and every investor.

I don't. I want only the investors who understand my philosophy perfectly (its pro's and con's), willing to give long term money (3-5 year lock)

But its still stressful, knowing that people are relying on your. And this is their savings built over a long time. Other than their family, this is probably the second most important thing to them.

I have to say, for the last 2 months, i did consider just paying everyone back with interest and just invest on my own. Its easy for me to just take on the paper loss, because i know its not real, i know what my stuff is worth.

But it my not be so easy for others. However, they have my word that principle and profit is guaranteed. And they know i am unleveraged and have enough cash in hand to pay them all now if they want.

I guess we'll see in 5 years (at least) if im possibly any good as an investor, or just good at talking. Bu we'll know for certain in 20. I hope i last that long.




Posted by qqq3 > Mar 23, 2018 02:25 PM | Report Abuse

choivo capital


so now you are in private equity and asset management?

asset management very tough job. Every client have different risk appetite.

Posted by qqq3 > 2018-03-23 14:50 | Report Abuse

You are only conservative if your conservative when it comes to valuation, and that can come from any stock or asset class imho.
================================================================
Sapura...only $ 3 billion market cap.....not really a big cap.


There are good reasons why big caps and monopolies and GICs have premium valuations........

there are more to valuations than meets the eye.

returns per beta is also very important.


example.....two stocks both go from $ 10 to $ 20.

Stock A slow and steady go from $ 10 to $20.

Stock B wild fluctuations, up and down go from $ 10 to $20.

any genuine investor would prefer stock A.

Posted by Jon Choivo > 2018-03-23 14:57 | Report Abuse

Haha qqq3,

Different strokes for different folks.

You place more care on volatility of price. And you consider it risk.

For me, price volatility is not a risk to me. Risk for me is permanent loss of capital.

If i buy an overvalued company, in my mind, i just made an instant loss, because if i were to buy a private company, i would never touch it at that valuation.

Now, if i could predict prices with a high accuracy and have an edge in it, i would be a trader. But i can't.

The only thing i know i can do well in, is being somewhat accurate in determining a range of intrinsic value for a company.

So my only criteria is, discount to intrinsic value.

Now, i definitely do feel a little inclined and have opinions on the market, and where the price may move according to the charts. But this does not determine my investment. But i may lean a little here and there. :)

Posted by qqq3 > 2018-03-23 15:22 | Report Abuse

jon

actually it is the other way round.....there is less certainty about intrinsic value and more certainty about what is a good company/ good share.

Posted by Jon Choivo > 2018-03-23 15:25 | Report Abuse

How do you mean, care to elaborate?



qqq3 jon

actually it is the other way round.....there is less certainty about intrinsic value and more certainty about what is a good company/ good share.
23/03/2018 15:22

Posted by qqq3 > 2018-03-23 15:31 | Report Abuse

jon

actually it is the other way round.....there is less certainty about intrinsic value and more certainty about what is a good company/ good share.

my definition of good includes things like....predictability, responsible organisation, minority rights, size, industry, and of course most important...is History.....unless it is a start up then of course no history and have to be evaluated on growth prospects.

Posted by Jon Choivo > 2018-03-23 15:34 | Report Abuse

Ahh,

I see. I do focus on that as well. but i also have a belief i abide by.

There is no company so good, that a high enough price will not turn it into a bad investment. And there is no company so bad, that a low enough price will not turn it into a good investment.

My favorite companies are of course, good companies at fantastic prices. But they are hard to get. But if this market continues, it will be come alot easier!

Posted by qqq3 > 2018-03-23 15:35 | Report Abuse

intrinsic value then becomes the last step.....not the first step.

and is the most uncertain step in the process.

Posted by qqq3 > 2018-03-23 15:37 | Report Abuse

jon...

the reality is...the range of possible value or acceptable value for a truly great company is much wider than you think.

Posted by qqq3 > 2018-03-23 15:39 | Report Abuse

maths and valuations may sound objective and scientific....

but actually maths and valuations is the one that has the biggest acceptable range.

Posted by qqq3 > 2018-03-23 15:57 |

Post removed.Why?

Posted by qqq3 > 2018-03-23 16:02 | Report Abuse

actually who is more interested in prices?

traders and speculators like me....I don't intend to hold for long so both entry and exit are the most important factor.


traders and speculators have completely different set of parameters from investors.......

https://klse.i3investor.com/blogs/qqq3/151380.jsp

Posted by Jon Choivo > 2018-03-23 17:21 | Report Abuse

Haha, i dont think i know OTB beyond knowing who he is on i3.

Yeah, i think we are coming from completely different perspective.

https://klse.i3investor.com/blogs/PilosopoCapital/150345.jsp

I wrote something similar.

Posted by paperplane > 2018-04-13 13:59 | Report Abuse

Jon, so your above still hold true???

Posted by Jon Choivo > 2018-04-13 14:02 | Report Abuse

I stand by it.

As i said, things will obviously be very different moving forward if HY was really selling refined products to Shell at below market price. But i cannot find anything in the reports that say that.

Also HYSD is a good refiner, So could be a positive. They may actually run it well.

Which is why im holding my 2-3% position.

Posted by paperplane > 2018-04-13 14:05 | Report Abuse

ok.