How to handle Stress in a High Stress Environment or LEARNING HOW TO STOP SCREAMING AT PEOPLE

Lets go into the heart of Mr Market: Hengyuan, a good study in shifting opinions from fear to greed to fear.

https://oglinks.news/category-refineries/news/hengyuan-buys-shell-refining-malaysia

Hengyuan buys Shell Refining Malaysia

Falling oil prices are generally good for refiners, which buy crude oil, convert it into usable diesel or petrol, and then sell it on. As a result, the collapse of the price of oil from nearly $100 a barrel in 2014 to $29 a barrel at the end of January has been a boon to these companies.

Still, increasingly stringent emission regulations are taking their toll. Shell opted to sell the Malaysia unit after deciding that it would cost too much to upgrade the company’s technology to meet Euro IV pollutant emission standards for fuel and Euro V standards for diesel, which Malaysia is set to implement in 2017.

Hengyuan paid $66 million for Shell’s 51% stake, which represents a huge discount to its RM1.48 billion ($351.58 million) market capitalisation, based on a closing share price on January 29 of RM4.94.

But the total acquisition cost will be much higher since Shell Refining Malaysia has $350 million in debt, a large amount of which falls due this year.

Additionally, the technology upgrade costs are likely to run into the tens of millions of dollars. As a result, Hengyuan looks set to end up paying $480 million to acquire and upgrade the business, according to a senior executive familiar with the transaction.

He said Hengyuan bid for the company because it wants to build a market presence outside of China, where state-owned operator Sinopec dominates diesel and gasoline refining.

Hengyuan’s decision to buy a heavily indebted refinery in need of upgrade might seem a sign of its desperation to expand.

To make its position even more challenging, Malaysia’s state oil company Petronas is set to bring a huge new oil refinery dubbed Rapid online in 2020, making the country’s refining market a great deal more competitive. However, the executive argued that the deal still made sense for Hengyuan.

“Today Malaysia is short of fuel and capacity [and] has to import it all, so Hengyuan has four to five years to make money, fix the balance sheet, and find synergies,” he said. “Additionally, Chinese companies are producing too much diesel, so companies like this are learning to trade diesel in the region. Plus, even after Rapid comes online there is a theory Malaysia can combine with Singapore to become a major refining hub to the rest of Asia, which has shortfalls.”

While the consolidation of upstream oil assets will remain difficult in today’s conditions, the possibility exists for further refinery mergers and acquisitions in the coming months, the executive added.

“It’s very hard to conduct M&A in the upstream oil industry because the bid-ask cap is really big. Nobody wants to sell when the forward curve is at $50 [a barrel],” the executive said. “However, refinery margins are healthy, some companies are taking a longer term view, and if [the oil] majors want less [market share] they might wonder, ‘why not sell now?’"

Hengyuan’s offshore acquisition underlines the fact that there are more than just Chinese state-owned enterprises operating in oil and gas in Asia. “Many international majors think there are just three oil and gas companies in Beijing. This deal will open the eyes of the majors and might make them wonder of [the] demand [that] exists for some of their assets,” he said.

While Shell has sold its Malaysian refinery, the company is believed to have no plans to divest its profitable petrol distribution arm in the country.

I remember after reading this article in 2016, I realized that the future of Hengyuan was limited, as by 2020 RAPID would be up and fighting for market share with HY. The chinese company would take on some debt in upgrading works for the refining business, causing some problems should they decide to pass the costs back to the shareholders to fund growth via share dilution, sale of warrants and more debt load.

It was a business that I did not like, and would not consider buying, as it had already hit terminal growth. With stagnating revenue and low profit margins and a tight competitive market, it just wasn't a busines that I'd even want to be in.

If I never invested in it, I would not worry, I'd still sleep well at night.

Better to spend my efforts to invest in good quality growing companies with growing market leadership than buy a "fixer upper".

Why I Bought into Hengyuan - Koon Yew Yin

I see there are so many people writing articles and commentaries in i3investor on Hengyuan. Even during last week end, Mr Ooi Teik Bee with 4 of his friends who are also his clients came from KL to my house in Ipoh. He strongly recommended me to buy Hengyuan.

But he was pleasantly surprised that I told him that I started buying as soon as I saw that the company has been producing increasing profit in the last 2 quarters which were 69.27 sen EPS for quarter ending Dec 2016 and 93.14 sen for quarter ending March 2017, totalling 162.41 sen. Based on the result of the last 2 quarters, its annual profit will be about Rm 3.25 EPS. That is why so many investors are chasing to buy it because it is selling at P/E 2.

Where can you find such a good stock selling at such low P/E?

>>>

On hindsight this was a brilliant piece of business sense. The fact that the oil prices were so low was bound to introduce the idea that refiners using low prices could produce and sell product at lower prices and better margins.

This was posted in seeking alpha analyses on american shale producers.

But kudos to KYY on his brilliance in noticing the fact. I only found out a few months later upon HY share price increase tremendously.

But I was too lazy to sell my shares in Topglove at the time, as I had believed Adventa m&a would be a good growth trigger for topglov. But I must admit I was wrong on this, and KYY was very acute. But thinking on it, I realized that no matter how good the crack spread would be, it would be something that would never last.

I still remembered the historical profit margins, net debts, the Pengerang RAPID project and of course the fact that oil prices due to supply/demand would prove to increase up sooner or later.

This would at most be a one year thing, and playing the long game, there would probably no reason sell all of my stock just to buy a one year wonder.

>>>

Day 30 - The Greed of Man

If you remember the tulip craze, you would definitely have loved to hold the popcorn and watch the coming months. And a wonderful interesting few months it was. The greed and confidence of new investors with their theories on the intrisic value of HY kept going higher and higher, causing more and more investors from china and malaysia to drop ever increasing amounts of money into a business that the CEO himself said was a fixer upper(meaning things had to be upgraded and the profit would never be as good as one thought, Shell was willing to take a losss on the business, there should be a reason no?)

I repeat the popcorn show here in verbatim. Please note I am not out to condemn or humiliate any of the readers, but merely to show how irrational investors can be over a cyclical performance of a company with historical problems and sold at below RM2 per share to China companies (again).

Posted by stockraider > Dec 16, 2017 06:18 PM | Report Abuse

IT IS NOT UNREASONABLE HENGYUAN RM 22.00 TO RM 42.00

Posted by 360Capitalist > Dec 1, 2017 04:33 PM | Report Abuse

My Target RM37.00 within 36 months.
Heng Yuan just announced the quarterly earning with EPS RM 1.20 yesterday.
In fact when I said, HengYuan has capability of making EPS RM3.00 this year not many people believe including OTB.

With yesterday announcement, HengYuan is ranked among the Top 5 Best Stocks listed in Bursa Malaysia with EPS above RM2.00. Anyone can challenge, argue and comments in whatever manners they would like to, but time will tell the true value of this super undervalued stock.

Posted by Livermore > Dec 27, 2017 03:15 PM | Report Abuse

50 also no problem, now waiting to hit 30 first...i just bought in more today...my average cost only 12...is my big win stock

Posted by pang72 > Dec 27, 2017 03:16 PM | Report Abuse

Rm21 by Chinese new year. Thanks you!!

Posted by stockraider > Dec 30, 2017 01:59 PM | Report Abuse

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 ???
29/12/2017 20:08

THE ABOVE COMMENT IS VERY REALISTIC WE ARE ASKING HENGYUAN TO BE GIVEN A FAIRER PE RATING WE ARE NOT ASKING ABSURB NESTLE PE RATING OF 40X MAH..!!

Posted by pang72 > Dec 31, 2017 10:41 AM | Report Abuse

Why you can success as me.

2017 Fact.
1. Hengyuan rank no2 gainer in bursa.

This likely to repeat on 2018

Day 90 - The Fear of Man

It is at this point that if you took the time to understand carefully, the price of crude oil is sure to go up more than down in the long run. As your raw material prices go up, your profit margins and costs are sure to drop. Once you add it the refinery upgradeds works, your revenue and sales in 2018 is sure to suffer. And thus the panic selling begins. More popcorn:

Posted by paperplane > Jan 1, 2018 01:20 PM | Report Abuse

And no matter what kind of fake bullshit u all making now, I can happily avoid and forget it. I know things you all dunno what is happening next yr and years down the road.
China is definitely going to pump more.money to hengyuan to make it one of the biggest investment in China
You all can fly kite and talk all kind of nonsense. I don't give a damn now. After much reading this few days, I know something big is lining up for hengyuan. Rm 50 is not even a dream considering China govt strategic plan. Go fuck yourself naysayers. I dun fuck care.

You all can happily said crash lah, die lah, sell down ,melt down. What ever fuck lah. I am holding it.

Posted by stockraider > Jan 1, 2018 12:25 PM | Report Abuse

RAIDER TAKE ON UNCLE KOON ;

I THINK UNCLE KOON AND OTB HAD DISPOSE ALL ITS TRADING PORTION 0N HENGYUAN LAST FRIDAY .
THE MAIN REASON; IT ALREADY HIT THEIR SHORT TERM TP RM 18.00 AND THEY DO NOT WANT HOLD A LARGE POSITION OVER THE LONG WEEKEND HOLIDAY LOH...!!

THIS GENERAL RAIDER UNDERSTAND LOH, IT IS PART OF RISK MANAGEMENT, U DO NOT WANT TO OVER EXPOSE ON MARGIN, NO MATTER HOW GOOD THE SHARE MAH..!!

BUT THE POSITIVE INFO RAIDER DERIVE FROM KYY POSTING IS THAT THEY ARE BIG BUYERS TAKING OFF FROM THEIR HANDS, THIS ARE NOT MUM & POP, BUT LONG TERM FUND BUYER MAH....!!

GOING FWD, UNCLE KOON IS STILL HOLDING ON, TO HIS INVESTMENT POSITION ON HENGYUAN WHICH HE THINK GOT GREAT PROSPECT LOH...!!

AS RAIDER SAY, HENGYUAN SHARE PRICE ADVANCE NO LONGER DICTATE BY INDIVIDUAL ANYMORE GOING FWD, IT IS DRIVEN BY GROWTH IN EARNINGS AND IT IS EXPECTED IN Q4 AND THE RERATING OF PE TOO LOH...!!

UNLIKE SMALL SMALL COUNTERS...U NO LONGER DEPEND ON KYY ANYMORE LOH...!!

JUST BE BRAVE AND BELIEVE IN YOUR LONG TERM FUNDAMENTAL JUDGEMENT FOR HENGYUAN MAH...!!

Posted by probability > Jan 12, 2018 10:13 PM | Report Abuse

EITHER the management were super smart

by prudently foreseeing the upside of oil price was higher compared to getting lower about 9 months ago and thus stocked up a lot of inventory far ahead,

OR

they were forced to stock up refined products to cater the needs of Shell retails during mandatory turn around period end of 2018.

simply brilliant this Chinaman...

Posted by satan118 > Jan 21, 2018 12:43 PM | Report Abuse

Come on Nekosan, 3ii and others, it is still good year ahead for HY. We invest HY becoz we can understand the business thru various info from all of the sifu here. We are so blessed that everybody can share around the facts and figures. Even the petron will also spend more BILLIONS than HY in urgrading.Their BODs are not stupid too. Do u think someone who wrote the article (JUST WANT TO CARI MAKAN NIA) is better than those professionals in the oil field meh?We may also estimate their profit easily. So, if you want to make more $$$, just joint us in HY loh. Get in before those BIG FUND MANAGERS, there are still plenty $$$$ to collect loh. We don mind to collect together mah.

Posted by Stockhunter85 > Feb 4, 2018 12:51 PM | Report Abuse

eps going to be rm 3.40 to rm 3.70 after coming qr being release

PE 7 x EPS 3.50 (average) = rm 24 minimum?

Posted by tehka > Feb 20, 2018 04:37 PM | Report Abuse

Fundamentals is intact..
2017 EPS is exceeds Nestlé Dutch Lady British Tobacco Panasonic. 2017 king of EPS

Posted by lizi > Feb 21, 2018 07:30 PM | Report Abuse

HUAT AH HUAT AH HUAT AH, HENGYUAN PASTI HUAT !!!

Posted by stockraider > Feb 26, 2018 10:56 AM | Report Abuse

THE TRUTH IS HENGYUAN IS THE TRULY WORLD CHAMPION STOCK ITS EPS RM 3.40 EXCEED THE MOST EXPENSIVE STOCK IN KLSE NESTLE WITH EPS RM 2.75 LOH...!!

PLEASE NOTE WE ARE PREVENTING FALSE AND FAKE NEWS FROM NAYSAYERS FROM CAUSING, BIG BIG LOSSES TO LONG TERM INVESTORS FROM SELLING TO PREMATURELY LOH;
Promoters should not be tearing their shirts and hairs because others have alternative views.

REMEMBER THE STORY OF SAD ADMIRER OF 3iii AHMOI UNABLE TO AFFORD TO SEND HER SON TO AUSTRALIA TO STUDY BCOS LISTENING TO 3iii SELLING HER HENGYUAN AT RM 3.66 LOH..!!
AHMOI BEST FRIEND AHFAH HANG ON TO HENGYUAN DUMB DUMB, TODAY BASED ON HER PROFIT, IS ABLE TO FINANCE HER SON STUDY IN AUSTRALIA, JUST BASED ON HENGYUAN INVESTMENT ALONE LOH...!!

DO NOT LET Dragon & 3iii TO DO THIS TO U, LIKE WHAT HAPPEN TO AHMOI LOH...!!
DO NOT LET PONDANS....PONDAN U LOH...!!

The Voice of Reason, never listened to but Put to Blame

Posted by 3iii > Jan 2, 2018 10:20 PM | Report Abuse

>>>>Henyuan Good people with good intention to help others like stockraider and probability will earn a lot in stock market, good karma for them like sifu OTB. 3iii is sick with evil intention, that's why he told ah moi to sell at 3.60. Very bad karma. Whoever is sincere amd honest in this forum, many i3 members can feel it. 3iii you must ask yourself why people HATED you so much in the first place?
02/01/2018 21:52<<<

It is not over until the fat lady sings.

Let me decipher your post.

Good and bad people.

Hated you.

Don't you think this has a lot to do with your perception?

If you focus on the issues, you will not need to feel like so.

There is a group of people who discussed that hengyuan is great and is worth $32. There is another group (maybe smaller) who think that hengyuan is doing well today but its earnings may not be sustainable and is worth a certain valuation. If you look at this from the issues discussed, you do not need to be personal.

So, I suggest you examine your own thinking.

Tan KW | Publish date: Fri, 29 Dec 2017, 04:27 PM

Don't be misled, Hengyuan is no Nestle, Dutch Lady, BAT. Not even Oldtown. It is not even Top Glove or Hartalega or Airasia. Hengyuan is Not near.

In investment, the most popular word as provided by Warren Buffett is the "moat" - which means certain strength - being special i.e. in another words think of it as a brand cult aka Nike, Nestle (Milo, Nescafe), Starbucks, Google, Facebook. In those companies, we do not even look at NTA value.

What is Hengyuan? Before the rapid share rise - less than 10% in Malaysia I guarantee would not even heard of the name. It has a 10 year supply contract with Shell. Luckily, at this moment due to global oil supply constraint, margins for refineries (oil processing) has gone sky high. That is in playing cyclical stocks, and one gets lucky or may not through luck but perhaps some level of manipulation these stocks goes up. Sometimes certain companies may see profit performance goes up but the share price does not rise the same.

A Nestle or Dutch Lady has sustainability. They can control their own destiny. They can control supply i.e. in Nestle's case milk, coffee beans, cocoa and put back the price control into the market i.e. consumers like you and I. Companies like Nike for example may price their products much higher than a much lesser branded goods, but they still sell. There are still people who buys.

Hence, companies like Hengyuan will not get the 30x PE. This is crazily manipulative. Nike, Nestle, Dutch Lady, Maxis can get the 30x PE.

The Lesson to learn from all this

In all this time, there were many lessons to learn and many advise to be given. You could have looked at charts, you could have read felicity very excellent article on this long before the panic selling began. You could have avoided losing money by not even speculating in the first place. Because this is what it is. It is not investing. It was purely gambling and speculation that HengYuan could do miracles.

Now you may ask me why I did not sell all my shares in QL, TOPGLOV, YINSON and PBB and sailang into HENGYUAN in all this time and make big monies lo? My question to that is why take an unknown risk in things you have no knowledge about?

In the space of 1 year, everyone suddenly became an expert on crack spreads and refining business consultants.

Everyone seem to know how to time the market, know at what price to buy and what price to sell. Great for them!

I stuck to concepts I knew about, basic businesses that were easy to understand with little in the form of nasty surprises.

Even if I wanted to invest in hengyuan, I would probably have done it after the fixing upper was done. And some form of stability had been apparent in the earning, revenues and profit margins.

Thats when you decide to buy or sell a stock. Long term profits will always be better than short term success.