abang_misai

very good article. This allows Amanahraya to get out at decent price.

2017-11-03 09:29

vinc3362

Great article. One of David's best article so far.

2017-11-03 10:01

probability

agree..this article is like an X-ray (or MRI scan) + Psychology analysis done by a doctor...on a beautiful young woman...

inside and outside all covered.

if only the doctor is 'man enough'.....he he

2017-11-03 10:31

probability

the recent blessings from Harvey (temporary phenomenon) is that at the least its debts and capex requirement will be met....and that is a long term permanent effect on the health of HY.

Harvey was basically an immunization injection.

2017-11-03 11:06

SpaceNeedle

Beside Shell Malaysia, any other customers? What are the percentages distribution among customers?

2017-11-03 11:11

siewnam

good article.. thanks David

2017-11-03 11:35

tftey

Good article. Thanks

2017-11-03 12:23

probability

http://washpost.bloomberg.com/Story?docId=1376-OYDB596KLVS001-1E9I04O9I2GCHJ5NH5HPJRQCC2

2017-11-03 14:34

probability

Oil Traders Set Sights on Seas as Diesel Renaissance Is Born (1)

Heesu Lee and Debjit ChakrabortyNov 02, 2017 2:40 am ET
(Bloomberg) -- It was only two years ago that the world’s biggest oil market was awash with diesel and profits from making the fuel cratered. Now the refined product is getting a new lease of life, and more demand is poised to emerge from the sea.
With crude’s bull market being underpinned by diesel consumption, Asian refiners could soon be scrambling to meet further appetite as a maritime rule in 2020 seeks to replace dirtier fuel that runs tankers. While shippers could add technology that’ll clean up their traditional power source, it’ll mean investing millions of dollars in each vessel -- an expense they may not be prepared to bear. Their other option is to use diesel.
“By 2020 is too short a time to find an alternative other than to shift to marine gasoil,” said Rakesh Mehra, Dubai-based strategic advisor at Gulf Petrochem Group, a company that runs a refinery in the Middle East as well as trades fuels and operates storage terminals. “This will drive diesel demand and that’s going to stay.”
The renaissance in diesel, also known as gasoil, has contributed to the surge in global benchmark Brent crude to the highest level in more than two years. It’s a far cry from 2015 when a flood of exports from China swamped the Asian market, dragging profits from making the fuel in the region to below $8 a barrel and the lowest level in at least five years.
After the average annual diesel margin in Asia declined for the past three years, it has rebounded in 2017 to more than $12 a barrel as industrial activity picks up in the region. Unexpected refinery outages at plants from Europe to the U.S. due to fires and hurricanes have also contributed to a slump in stockpiles of the fuel. China’s exports, meanwhile, dropped in September to the lowest since January as domestic demand increased.
More good news is coming in the form of the fight against pollution. The International Maritime Organization, a global shipping regulator, will cap the limit on sulfur content in fuel oil -- a residue from the refining process that’s used to power ships -- to 0.5 percent in 2020 from 3.5 percent now. One way of meeting the new emissions standards is to use an exhaust gas cleaning system, or scrubbers, that removes pollutants before they’re released into the atmosphere.
Shipping Uncertainty
Vessel owners may be skeptical about whether this technology, still in its infancy, will be economical in the long term. The uncertainty over how the rules will be implemented, as well as concerns the IMO could one day impose stricter regulations that render newly installed scrubbers obsolete, is keeping shippers on the sidelines, said Rahul Kapoor, an analyst at Bloomberg Intelligence.
“The easiest option, therefore, is to switch over to gasoil,” Gulf Petrochem’s Mehra said. “Gasoil with 0.1 percent sulfur is easily available.”
Most shippers will use less sulfurous diesel than spend $4 million to $10 million per ship to add scrubbers, Kapoor estimates. Just one out of every five ships that have come to the market in the last five years will install the cleaning system by 2020, said Suresh Sivanandam, a senior research manager for Asia refining at Wood Mackenzie Ltd.
Diesel consumption in Asia, home to nine of the 10 largest container ports in the world, will rise by an annual average rate of 5 percent from 2020 through 2026, according to BMI Research. That compares with growth of 1.6 percent a year from 2017 to 2019.
Profits in Asia from turning benchmark Dubai crude into diesel, known as the crack spread, more than doubled to $15.37 a barrel in September versus a record low in April 2016, according to data compiled by Bloomberg going back to 2010. It was at $12.35 as of 3:26 p.m. Seoul time on Thursday. Inventories in Asia are also tightening, with onshore middle distillate stockpiles in Singapore shrinking to 11.5 million barrels, down 22 percent from their peak in 2015, the year China began significantly increasing its overseas diesel shipments.
“These regulations are definitely good for refiners, especially in Asia,” said Arun Kumar Sharma, finance director of Indian Oil Corp., the nation’s biggest refiner. “Opening up of a new market for gasoil will further improve diesel cracks.”
Demand is likely to gain by as much as 300,000 barrels a day for gasoil in 2020, while fuel oil consumption may drop by 350,000 barrels daily, according to Ehsan Ul-Haq, a London-based director of crude oil and refined products at Resource Economist.
“By around 2020, the diesel market even looks tight unless refiners do something about it,” said Ul-Haq. “And there’s not much time left.”

2017-11-03 14:35

O3DURIAN

Thanks David.

2017-11-03 17:18

investor77

well written article, Hopefully price will go up.

2017-11-03 17:21

Pangsh62

Very good write up, thank you David.

2017-11-03 20:12

Hengyuan: SEXY BABE RM21!

Good work David!

2017-11-04 10:43

probability

Even if we assume the latest qtr earnings (~ 30 cents per qtr) is how we can expect for long term, considering its depreciation of 50M, its generating an average cash flow of 150M per qtr.

That is Cash per share of RM2 per annum. At ~ RM 8 share price, it gives a cash yield of 25%

With Cash yield of 25% + enough Cash reserve and inventory, risk is very minimal.
Doubling the current price with 50% payout still gives a dividend yield of 7.5%.

Perception and impression will change when the Cash reserve offsets its Debt.

If the crude price sustains at this level, huge inventory gain for qtr ending Sept 17 will be translated as cash by end of Dec 17.

2017-11-04 14:24

probability

with a 10 year product off-take agreement with Shell at MOPS crack spread, basically HY had ensured that it will generate RM 20 cash per share in 10 years using EPS of of just 30 Cents per qtr.

Note that at an average crack spread of just 6 USD/barrel, it will generate EPS of 45 cents per qtr.

so, people worried about demand..can forget worrying on that for next 10 years.

Well argued by David!

2017-11-04 15:01

cheoky

Great effort. Pls factor in hedging and actual gross refinery margin not just mogas Crack spread. It mislead retailers resulting buy or a sell at current price le

2017-11-04 15:06

stockraider

aiyoh...hedging is a neutral issue mah, how to factor in leh ??

Crack spread and refining margin is quite similiar loh, the higher the crack spread the higher the refining margin and vice versa loh...!!

2017-11-04 15:55

probability

The cost of investment of a new refinery dictates the expected return and thus the crack spread going forward.

One can work back from the Investment figures presented by David above, where the crack spread work out to be minimum 6 USD/brl to justify the investment, considering cost of capital of 10%.

Since the projected demand growth is higher than the new refinery investment capacity taking place....there is a natural force to sustain the margin above this level.

2017-11-04 16:02

stockraider

Raider think david lim has missed out the investment of Rm 700m that HRC going to do loh....!!

But even after the xtra investment, HRC is still the cheapest refinery available loh....!!

After the investment of Rm 700m, HRC refinery useful life is extended to 2050 loh...!!

2017-11-04 16:05

stockraider

UPDATE 1-Repsol profit leaps on refining and crude price gains

Reuters Staff

2 Min Read

(Adds details, opening share price)

MADRID, Nov 3 (Reuters) - Spanish oil major Repsol posted close to a 90 percent jump in third-quarter adjusted net profit after higher oil prices boosted its production division while its refining arm remained highly profitable.

Repsol’s performance echoed that of European competitors Shell, Total and BP, which all reported stronger quarterly profit on the back of the recovery in crude prices.

Average recurring net profit adjusted for one-off gains and inventory effects (CCS net profit) came in at 576 million euros ($671 million) in the July-September period, compared with a 553 million euro consensus in a Reuters poll of analysts.

Third-quarter production reached 695,000 barrels per day (bpd), versus 671,000 bpd in the same period of 2016 while the refining margin was $7 a barrel, up from $5.10 a year ago.

Net debt fell to 6.97 billion euros at Sept. 30, from 7.48 billion euros three months earlier, and is on track for the year-end target of less than 7 billion euros.

At the market open, Repsol shares edged up by 0.4 percent to 16.21 euros. ($1 = 0.8580 euros) (Reporting by Jose Elias Rodriguez; Editing by David Goodman)

2017-11-04 16:07

probability

Post removed.Why?

2017-11-04 16:19

probability

https://www.reuters.com/article/column-russell-refineries-asia/column-asian-oil-refiners-lose-profit-bump-from-harvey-but-may-get-china-boost-russell-idUSL4N1ML1UK

CHINA THE X-FACTOR

The peak winter demand season is coming, which usually boosts consumption of middle distillates such as heating oil.

Several refineries across Asia are also scheduling maintenance during October and November, which should tighten supply somewhat in the lead up to winter.

But perhaps the biggest potential upside for Asian refiners is the prospect of sharply lower product exports from China, which has emerged in recent years as a major supplier of gasoline and middle distillates such as diesel and jet fuel.

Refiners in China are required to have quotas in order to export surplus products and the authorities in Beijing have lowered the amount it will allow to be exported this year.

The quota awards for 2017 total 37.4 million tonnes of oil product exports, down some 19 percent from last year, according to a Ministry of Commerce document seen by Reuters.

Given that total product exports from China for the first eight months of the year were 32.8 million tonnes, this implies that only 4.6 million tonnes can be shipped in the last four months of the year.

That would represent a dramatic slowdown from the monthly rate of around 4.1 million tonnes in the January-August period.

Even if product exports don’t fall by as much as the quota awards suggest they should, it’s still likely that China won’t be exporting as much refined fuel in the last quarter of 2017.

China may export 1.0-1.2 million tonnes of gasoil in October, down from the year-to-date average of 1.3-1.4 million, according to Thomson Reuters Oil Research and Forecasts, which monitors shipments of crude and products.

If Chinese product exports are constrained by a lack of quotas, this will boost the fortunes of the rest of Asia’s refiners that supply export markets.

2017-11-04 16:25

probability

http://energyfuse.org/international-implications-rise-chinas-teapot-refineries/

2017-11-04 16:28

stockraider

Aramco talcock so long with Petronas of more than 1 yr, still not finalised the 49% investment in the Pengerang refinery ah ??


Saudi Aramco's RAPID US$7bil investment deal to be finalised soon - Rahman Dahlan

BANGKOK: Saudi Arabian Oil Company (Saudi Aramco) is expected to finalise soon its agreed investment of US$7 billion in the Petronas Refinery & Petrochemical Integrated Development (RAPID) project in Pengerang soon.

Minister in the Prime Minister’s Department, Datuk Abdul Rahman Dahlan said the government was giving both Petronas and Saudi Aramco an opportunity to resolve several technical issues regarding the investment deal.

“There are several terms and conditions that the parties have to meet and it is an ongoing process.

“I expect that it would not be long before they (Saudi Aramco) begin channelling their funds for the RAPID project,” he told Bernama in a recent interview.

Abdul Rahman was in Bangkok to attend the 7th Asian Ministerial Energy Roundtable which ended yesterday.

He took the opportunity to meet with Saudi Arabia’s Energy, Industry and Mineral Resources Minister, Khalid Abdulaziz Al-Falih, who also attended the one-day conference.

“We discussed the latest developments with regards to Saudi Aramco’s investment in RAPID. I find that there are no major issues to deal with, so it should be happening soon,” he said.

In February this year, Petronas and Saudi Aramco signed a Share Purchase Agreement, which enabled the Saudi Arabian oil and gas company to purchase a 50 per cent stake in the RAPID project.

The agreement saw both parties having an equal equity stake in selected ventures and assets of the venture.

The deal was made during Saudi Arabian Ruler, Raja Salman bin Abdulaziz Al-Saud’s visit to Malaysia.

According to Abdul Rahman, if the deal goes smoothly and becomes profitable, there was a chance that Saudi Aramco would increase its investments in Malaysia.

Malaysia’s strategic location in the Southeast Asian region has attracted interest, not only from Saudi Aramco, but also other global oil and gas companies, he said.

Asked to comment on whether the stronger bilateral ties between Malaysia and Saudi Arabia might lead to Petronas or Khazanah Nasional becoming an investor in Saudi Aramco’s public listing proposal, he said it was unlikely.

“I don’t think there are any special talks on Petronas or Khazanah Nasional becoming a cornerstone investor in Saudi Aramco’s initial public offering (IPO),” he said, but noted, that the companies may purchase the shares, once listed.

The plan to list five per cent of Saudi Aramco’s shares next year, valued at U$100 billion, would make it the world’s biggest IPO listing, and put the company’s value at US$2 trillion.

Abdul Rahman said although Bursa Malaysia was initially considered as one of the bourses to be involved in Saudi Aramco’s IPO listing, the plan did not materialise, as the company targeted the London Stock Exchange and New York Stock Exchange instead.

However, he did not rule out the possibility of Bursa Malaysia becoming involved should Saudi Aramco choose to list its subsidiaries in the future.--BERNAMA © New Straits Times Press (M) Bhd

2017-11-04 16:28

probability

If future of refining is so uncertain, market would not have given PE exceeding 15:

http://marketrealist.com/2017/09/ranking-7-refining-stocks-based-on-their-dividend-yields/

At Cash yield of 25% for HY, it only needs a payout of 15% to get a dividend yield of the above listed 7 refining stocks.

And since these a refineries....the location whether U.S or India or Singapore does not matter...the future perception should remain the same.

2017-11-04 20:05

neftegazconsultant

JP54 - D6 - JET A1 - D2 AVAILABLE ON CI DIP AND PAY FOB ROTTERDAM

WE HAVE AVAILABLE PETROLEUM PRODUCTS FROM RELIABLE REFINERY IN RUSSIAN FEDERATION WITH BEST AND QUALITY PRICE.
BELOW PRODUCT ARE AVAILABLE WITH BEST OFFERS - FOB CI DIP AND PAY ROTTERDAM

JP54: Quantity: 500,000-2,000,000 Barrels
JetA1: Quantity: 500,000-2,000,000 Barrels
D2: Quantity: 50,000-150,000 Metric Tons
D6 Virgin: Quantity: 400,000,000-800,000,000 Gallon

SERIOUS BUYERS PLEASE CONTACT US FOR MORE DETAILS WITH YOUR REQUIRED

Maksim Yaroslav (Mr.)
EMAIL: neftegazconsultant@yandex.ru
EMAIL: neftegazconsultant@mail.ru
Skype: neftegazconsultant
TEL: +7 9265036551

2018-05-20 04:25

neftegazconsultant

JP54 - D6 - JET A1 - D2 AVAILABLE ON CI DIP AND PAY FOB ROTTERDAM

WE HAVE AVAILABLE PETROLEUM PRODUCTS FROM RELIABLE REFINERY IN RUSSIAN FEDERATION WITH BEST AND QUALITY PRICE.
BELOW PRODUCT ARE AVAILABLE WITH BEST OFFERS - FOB CI DIP AND PAY ROTTERDAM

JP54: Quantity: 500,000-2,000,000 Barrels
JetA1: Quantity: 500,000-2,000,000 Barrels
D2: Quantity: 50,000-150,000 Metric Tons
D6 Virgin: Quantity: 400,000,000-800,000,000 Gallon

SERIOUS BUYERS PLEASE CONTACT US FOR MORE DETAILS WITH YOUR REQUIRED

Maksim Yaroslav (Mr.)
EMAIL: neftegazconsultant@yandex.ru
EMAIL: neftegazconsultant@mail.ru
Skype: neftegazconsultant
TEL: +7 9265036551

2018-06-03 23:21