Sslee blog
Should we invest in HRC and PetronM?
Dear all,
Crude Oil on the uptrend and many are interest on O&G stocks and should we take some position on HRC and PetronM?
Before you do so, please allow me to tabulate HRC and PetronM last 5 quarter result and some informations on where the profit came from?
HRC is pure refinery and derived profit from:
-
Refining margin
-
Inventories gains/losses
-
USD-MYR exchange gains/losses (As at 30.09.2020: Currency profile of borrowings in USD equivalent RM 899,263.000)
-
Hedge:
-
Forward foreign currency contracts
-
Forward priced commodity contracts
-
Commodity swap contracts
-
Refining margin swap contracts
-
Commodity options
-
Interest rate swap contracts
Whereas PetronM derived profit from
-
Refining margin.
-
Inventories gains/losses
-
Retail profit from PeronM stations selling petroleum products
-
Sales commission from Convenient store and F&B attached to its station
-
Hedge:
-
Forward foreign currency contracts
-
Commodity Swap
-
Tapis premium against Brent Crude (PetronM need low sulfur Tapis crude to produce their Euro4M mogas 5 gasoil)
|
HRC
|
|
|
|
|
|
Quarter
|
Revenue
|
PBT
|
NP
|
Inventories
|
|
|
RM'000
|
RM'000
|
RM'000
|
RM'000
|
|
30-Sep-20
|
1,588,139
|
152,013
|
154,912
|
1,072,354
|
|
30-Jun-20
|
1,213,813
|
251
|
48,672
|
971,192
|
|
31-Mar-20
|
2,549,347
|
-123,633
|
-124,123
|
962,702
|
|
31-Dec-19
|
3,145,899
|
95,626
|
21,567
|
1,491,087
|
|
30-Sep-19
|
3,225,121
|
813
|
-11,431
|
1,340,288
|
|
PETRONM
|
|
|
|
|
|
|
|
|
Quarter
|
Revenue
|
PBT
|
NP
|
Inventories
|
Ave Crude
|
Quarter diff
|
Sale volume
|
|
|
RM'000
|
RM'000
|
RM'000
|
RM'000
|
USD/barrel
|
USD/barrel
|
million barrel
|
|
30-Sep-20
|
1,684,365
|
124,189
|
97,640
|
458,051
|
43
|
14
|
7.7
|
|
30-Jun-20
|
1,024,298
|
-93,076
|
-69,288
|
368,643
|
29
|
-3
|
6.0
|
|
31-Mar-20
|
2,240,175
|
-113,086
|
-83,684
|
524,419
|
32
|
-35
|
8.1
|
|
31-Dec-19
|
2,914,599
|
39,669
|
28,966
|
706,564
|
67
|
5
|
9.2
|
|
30-Sep-19
|
2,772,117
|
47,803
|
34,424
|
561,243
|
62
|
-7
|
8.8
|
|
|
|
|
|
|
69
|
|
|
From the Crack spread you are able to know whether refining make any profit or not?
https://oilprice.com/oil-price-charts/46
The higher the crude oil price, the higher inventories and thus higher working capital and bigger bank overdraft facilities result in addition interest expenses.
Will HRC and PETRONM see the good old day where crack spread stay above USD 8/barrel in year 2017-2018?
Just monitor the crack spread chart in order not to miss out the opportunity if crack spread do go above USD 8/barral.
Note: HRC need a crack spread of USD3/barrel to breakeven.
Thank you
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1 person likes this. Showing 6 of 6 comments
Ok wat. Rm strengthening, crude oil px up, inventories gain. Crack spread stabile . Not that bad
2020-12-19 18:28
Dear OTB,
HRC Q3 result: Page 21
The average market prices of oil products for the current quarter saw some improvement against the margins recorded in the immediately preceding quarter, although they continued to be in the negative region. The positive combination of stock holding gains and support from oil margin swaps for the current period resulted in a comparatively higher gross margin and net profit against the previous quarter.
Some improvement against the margins recorded in the immediately preceding quarter, although they continued to be in the negative region.
Mean refining margin still negative for the quarter. And quarter profit is from stock holding gains and support from oil margin swaps.
The breakeven of USD 3/barrel is answer given by management for my 2018 AGM question.
It just mean refining only able to make profit before tax if crack spread is above USD 3/barrel.
The refining (direct + overhead + Interest + depreciation) cost is RM 3/barrel during FYR 2018.
It will be higher if they run Euro4 spec.
Q3 inventories gain base on Average Brent Crude per barrel Q2 USD 29 to Q3 of USD 43 is USD 14.
Q4 result will again depend on this inventories gain again. If average brent crude Q4 (Oct, Nov and Dec) is USD 49 then the inventories gain is USD 6 compare to Q3 of USD 14.
That about what I able to share with you.
Thank you
2020-12-19 22:20
Dear OTB,
From Q3 report: Cumulative 9 month 30th Sept 2020
Manufacturing expenses: RM 166,920,000
Administrative expenses: RM 63,489,000
Depreciation and amortisation: RM 89,023,000
Finance cost: RM 18,864,000
Total: RM 338,296,000
Sales volumes Barrel: 25,400,000
Cost per barrel: RM 13.32
USD to MYR: 4.15:Cost per barrel: USD 3.22
2020-12-19 23:24
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4.9 / 5.0
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
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well said sifu sslee, i concur
its a fake fundamental that retailers are chasing
2020-12-19 17:53