Investing the Smarty Way

What's next for HengYuan Share Price

SmartyAlek
Publish date: Sun, 31 Dec 2017, 08:04 PM
SmartyAlek
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Someone asked the following questions, I decided to answer them from another perspective.
 
1) Is the trend reverse?
 
I don't think this is a trend reversal. the high volume on Friday show that 16.30 is a strong support. whoever wanted out had already done so on Friday. Refer 28 Aug ( a day after lower Qr announced), there was a drop of RM1 with high volume, then the price slowly trend up. It simply means that all the sellers are exhausted and price is ready to go higher.
 
2) Can I buy when the price go lower?
 
If you think that Hengyuan deserves a PE10 and that Q4 qr will be excellent, then keep buying. The price did not go up 5-8% a day without good reason. I dont think those who buy higher and higher for the past few weeks are without good foresight. Also do you think that so-called sharks would buy higher and higher each day then suddenly trigger a big drop by throwing tens of millions worth of shares out in a few minutes. Price shouldn't drop anymore, If it drops it means that we need more time to exhaust the sellers and you can start buying more and more
 
3) Can I buy if the price rebound? When this rebound, it would be strong and price would quickly move towards 25.
 
4) Or should I wait for the price to break new high before buying? if it breaks, price would move up very quickly I don't think you can get any tickets without full-time monitoring. I don't advocate this method of playing.
 
Understand that price can be manipulated to some degrees. on 28Aug operators who see the HY potential could be throwing out big blocks cheaply to cause others to think that it is a bad Qr when they are actually accumulating. or possibly those without great foresight sold their holdings. sellers exhausted, more buyers who see the potential join in, so price continue upwards
 
Last Friday with the help of the TA comment, operators saw an opportunity to collect more tickets by throwing out millions of worth of shares within a few minutes to trigger a sell-down.
 
Or possibly some funds (sharks) who have plans to exit soon was frightened that the TA securities comment might trigger a sell-off. so they quickly threw out all their holdings first. If this is the case, then other funds which see the potential in HY had collected all of the tickets and are ready to push HY to higher price.
 
Or possibly investment banks who have been accumulating for sometime at lower prices, they throw out all their holdings in attempt to reverse the uptrend to minimize their losses from warrants. but note that other funds which see the potential in HY had collected all of their tickets and are ready to push HY to higher price.
 
Worst case scenario, investment banks were the one who triggered the sell-down and also at the same time collected the tickets. they can now sell bit by bit to press the price down. But if they do this, will they be in a better position than to settle the warrants at higher price. So I think this scenario is not sensible. But never know someone made some wrong calculations and came out with this idea.
 
Therefore to truly predict if price will go up or down next, we need to know who is holding the tickets, who has been buying and who has been selling and who throw out the millions last Friday and who has the intention to buy/sell more. without knowing all these, it is difficult to predict the (short-term) price movement just by looking at some charts (so called TA).
 
Fundamentally HY is unchanged. its value will be unlocked sooner or later no matter who the operators are and what their intentions are. You can see that my answers all point to Buy because I know fundamental analysis works and HY has good fundamentals, and (long-term) price movement will be up.
 
I can tell you many bursa counters with 1-2 QR turnaround can easily goreng till PE20 based on that 1 profiting Qr annualized. If you annualized this HY 120 EPS (=480), at a mere PE10 you are already looking at RM48. Is not that much to ask for RM25 by next Q4 qr release. The main concern of many people is that HY cant sustain a high EPS. But do you think HY cant even achieve a 60 eps per quarter on average for the next year?
 
Short-term price movement depends on the strength of the numerous sharks at play now. what retailers can do is to buy for the good fundamentals as I believe more sharks want HY to up than down, as sharks also look for good fundamentals counter to goreng. some sharks are not so ethical, they help to push up, earn peanuts and run away. But we definitely need them to help propel the share price to HY deserved PE of 10. Let's see who can win this battle as there are not much tickets left.
 
Also It will be oil play in 2018. PE of msian oil/refinery counters can go towards 30 like all the semicon counters last year.
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Discussions
4 people like this. Showing 12 of 12 comments

John Lu 《HENGYUAN upgrade to SIA LANG》 TP RM30

Sia Lang already mah...TP 30

2017-12-31 20:07

LA777

Well done and thanks for sharing!

2017-12-31 20:27

skyhawk

Good luck to u...

2017-12-31 21:11

Cnlim

Your analysis is good for reading

2017-12-31 21:25

continental

thanks for your response. Based on your answer and also some advice I got from my TA friends, I decided to buy on break out. Your answer on (4) where the price will move up quickly on breakout seems similar to what friends told me. Here are their advices.

"According to my TA friends, buy on break out is important and smart move from TA perspective because it confirm the trend is still intact. For example, for Hengyuan to go RM30, it must break RM19.20 successfully. Their argument is that, it is pointless to buy if trend is over. Vice-versa, it is never too late to buy if trend is confirm intact. "

2017-12-31 21:26

martinam

The Chairman of HY Malaysia is also Chairman of HY China. HY China is a success and now he wants the same success for HY Malaysia. He has personally told Raider that he is not interested in bonus issues and share splits. Perhaps, he gets emense satisfaction and pride when he proves to his countrymen that HY's success is no fluke and can be replicated outside China. So, how is he to prove that HY Malaysia is a success - from the price of the share of course! The higher the better! Do you believe he can do it?

2017-12-31 21:30

Cnlim

Yes provide HY consistently churning minimum 2 dollar per share for 3 years n HY will fly ✈

2017-12-31 21:37

Adrean

Good info

2017-12-31 22:17

njue76

Never sell..buy only

2017-12-31 22:21

martinam

China State oil refineries are envious of HY China because it outperforms them. You can say that Chairman HY has a mission. Let's believe in him.

2017-12-31 23:38

stockraider

Hengyuan: My Understanding - Koon Yew Yin
Author: Koon Yew Yin | Publish date: Mon, 1 Jan 2018, 10:10 AM

On the last trading day of the year, Friday morning the price of Hengyuan shot up to Rm 19.20 from Rm 17.96, the closing price of the day before. Many people believed fund managers would push the price higher for window dressing.
The price has risen from Rm 3.00 to Rm 19.20, an increase of 640% within 12 months. This phenomenal rise has created history in our local stock market.

Let us look at last Friday’s figures:
The closing price of Thursday Rm 17.96
Opening price on Friday Rm 18.42

Day’s high Rm 19.20
Day’s low Rm 15,94’
Closed at Rm 16.30.

Total volume traded 127 million shares.
Estimated value 127 million shares X say Rm17 = Rm 216 million.

Obviously, there were more sellers than buyers on Friday. As a result, the price fell.

As I said many a time, no share can go up or come down continuously for whatever reason. Sooner or later, there will be a price correction. After about 2 hours of trading, the price suddenly dropped more than Rm 3 within 30 minutes.

There are various types of shareholders. Some are day traders who buy and sell frequently. Some are short term investors who will sell when the price achieves its target. Some are serious long-term investors who would buy based on good fundamentals and hold for a long time.

Statistics shows that long term investors make more money than the other types of investors and there are more losers than winners in day trading.

On Friday, obviously there was panic selling. I think even the long term investors were also selling.
Many of my friends who have followed me to buy Hengyuan asked me for my opinion. What should they do?

It is a matter of human psychology. Sellers are fearful that the price will continue to drop and buyers believe the price will soon recover and will continue its climb.

Its fundamentals have not basically changed.

Based on the unusually high volume traded daily, I believe many institutional investors from China are buying aggressively. They are so bullish because they can see that both its revenue and profit are increasing. Its 1st half year EPS was Rm 1.20. Its 3rd quarter EPS was Rm 1.21 and they expect its 4th quarter EPS to be more than its 3rd quarter because its crack spread or profit margin has been better during the 4th quarter as shown in the Crack Spread chart below.

Hengyuan’s profit essentially depends on its margin of profit or crack spread, EXCHANGE RATE AND CRUDE OIL.

Petron Refining in comparison with Hengyuan

Its half year EPS was 73.9 sen. Its 3rd quarter EPS was 39.3 sen. The total EPS for 3 quarters was 113.2 sen.
On Friday it dropped Rm 1.06 to close at Rm 13.54 per share.

Hengyuan is very much cheaper in terms of P/E ratio.

My opinion:
Looking at the huge volume of 127 million shares traded last Friday, I believe there were many institutional investors who have been buying aggressively, took advantage of the cheaper prices to buy more than usual.
I strongly believe its share price will continue to rise especially when its annual result is announced before the end of February 2018.

RAIDER OPINION:
U NEED TO KNOW HENGYUAN PE 5X IS CONSIDER A SMALLCAP COMPARE TO PETDAG PE 20X, WITH ONLY 300 MILLION SHARE V PETDAG 1000 MILLION SHARE.

IN TERMS OF EPS AND ABSOLUTE EARNINGS HENGYUAN ACTUALLY EXCEED PETDAG BUT HENGYUAN MKT CAP IS RM 5 BILLION V PETDAG RM 24.5 BILLION, USING COMMON SENSE AND JUST BASIC MATHS, U NOTICE THE GAP BETWEEN HENGYUAN & PETDAG IS VERY WIDE, THERE IS A BIG LEG ROOM FOR HENGYUAN TO FURTHER ADVANCE TO CATCH UP WITH PETDAG VALUATION LOH....!!

THE CHINESE FUND IS VERY HAPPY WITH HENGYUAN PE 5X, WHEN THEY COMPARE TO THE VALUATION OF THEIR OWN REFINERY LIKE SINOPEC PE 13.5X AND WARREN BUFFET REFINERY PHILIP 66 PE 22X LOH....!!

2018-01-01 11:34

probability

Post removed.Why?

2018-01-01 19:20

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