Priceless information. Well done!

Congrats to petron shareholders! Much higher than I had anticipated. This is inline with the rise in crack spread.

yes, your request motivated me to write. Thanks

http://mobapp-plain.klsescreener.com/v2/announcements/bursa_announcement?directUrl=http://disclosure.bursamalaysia.com/FileAccess/viewHtml?e=2797486

It is in RM, refer page 2.

Posted by Lau333 > Oct 14, 2017 03:31 PM | Report Abuse

FutureEyes,

A typical hedge aims to protect against the downside at the expense of some upside. Based on info that you just shared, I interpret that HRC made gains from hedges in 2 months where crack margin rocketed up. That means HRC managed to lock-in prices only at the later stage of rally.
If the amount is in USD, that is extra ~RM50m. Good call by the management. That is some extra 16 Sen to PBT.

I wonder where you get this from. Care to share?

The RRPT refers to the settlement of mark-to-market gains or losses, computed as the difference between the refining margins hedges (also known as crack spread hedges) and the corresponding market average crack spread for each month. The arising gains or losses are settled in cash in the following month.

Settlement of mark-to-market positions by HRC to Mercuria Singapore for hedging contracts that expired on 31 August 2017:
+ 6,408,450

Settlement of mark-to-market positions by HRC to Mercuria Singapore for hedging contracts that expired on 30 September 2017:
+ 6,792,957

...............................

Does that mean their hedging was causing gains compared to the market average crack spread for each month?

lets wait till end of September to see the overall crack spread and brent closing price

I have not sold a single share
Q3 performance in all consideration should be really good.
Reason are all there to be better than Q1.

probability, I can agree with you. thanks bro!

My prediction on Petronm came true. On HRC, it forces me to revise my inventory loss calculation.

I am now extremely optimistic on HRC Q2 results.

I am hoping for someone to challenge my derivations above.

Optimism is good, but not to the point of becoming blind.
some even want to close their eyes intentionally.

hissyu2, please read again my article with the assumptions i had used to derive the brent price.

note also, the refining margin i had used as 8USD/brl for Q2 versus Q1 of 9USD/brl is very high considering the drop in jet fuel crack spread and gasoline relative to Q1.

Another quick way of seeing the impact on Bataan Refinery Earnings is this way:

1 Billion peso loss = 85M for shut down of 30 days as per Ang.

https://www.pressreader.com/philippines/business-world/20170517/281569470656950

45 days shutdown impact via proportional estimate:
= (45/30) x (85 M)
= 127.5 M reduction in Bataan Refinery profit

Thus 90 days (1 QTR), is equivalent 255M Bataan refinery profit generation.

By putting the above figures on Q1 Earnings split , ROP is derived to be 93M.

For 2nd qtr Bataan refinery profit without inventory losses becomes = 127.5M

Taking the max possible inventory losses of 83M (after tax of 65M), the minimum possible Bataan refinery profit for Q2 becomes:

= 127.5 – 65
= 62.5M


Thus PetronM net Profit for Q2 max :

= Total Profit of Petron Corp – Bataan Refinery profit – ROP profit – PetronM sister co profit
= 221M – 62.5m – 93M – 14M
= 51.5M (EPS of 17 cents only)

Another quick way of seeing the impact on Bataan Refinery Earnings is this way:

1 Billion peso loss = 85M for shut down of 30 days as per Ang.

https://www.pressreader.com/philippines/business-world/20170517/281569470656950

45 days shutdown impact via proportional estimate:
= (45/30) x (85 M)
= 127.5 M reduction in Bataan Refinery profit

Thus 90 days (1 QTR), is equivalent 255M Bataan refinery profit generation.

By putting the above figures on Q1 Earnings split , ROP is derived to be 93M.

For 2nd qtr Bataan refinery profit without inventory losses becomes = 127.5M

Taking the max possible inventory losses of 83M (after tax of 65M), the minimum possible Bataan refinery profit for Q2 becomes:

= 127.5 – 65
= 62.5M


Thus PetronM net Profit for Q2 max :

= Total Profit of Petron Corp – Bataan Refinery profit – ROP profit – PetronM sister co profit
= 221M – 62.5m – 93M – 14M
= 51.5M (EPS of 17 cents only)

The above derived EPS of 21 cents is higher because I had intentionally reduced the effective operation to 55 days instead of 59 days expected.

Another quick way of seeing the impact on Bataan Refinery Earnings is this way:

1 Billion peso loss = 85M for shut down of 30 days as per Ang.

45 days shutdown impact via proportional estimate:
= (45/30) x (85 M)
= 127.5 M reduction in Bataan Refinery profit

Thus 90 days (1 QTR), is equivalent 255M Bataan refinery profit generation.

By putting the above figures on Q1 Earnings split , ROP is derived to be 93M.

For 2nd qtr Bataan refinery profit without inventory losses becomes = 127.5M

Taking the max possible inventory losses of 83M (after tax of 65M), the minimum possible Bataan refinery profit for Q2 becomes:

= 127.5 – 65
= 62.5M


Thus PetronM net Profit for Q2 max :

= Total Profit of Petron Corp – Bataan Refinery profit – ROP profit – PetronM sister co profit
= 221M – 62.5m – 93M – 14M
= 51.5M (EPS of 17 cents only)

The above derived EPS of 21 cents is higher because I had intentionally reduced the effective operation to 55 days instead of 59 days expected.

It is in ROP: Rest of the Operations in Philippines, 93M

One can wait for PETRONM results before entering HRC

http://klse.i3investor.com/servlets/forum/600129916.jsp

http://klse.i3investor.com/servlets/forum/600129916.jsp

market (including yourself and myself) may not really care on its worth as much as it does on the qtrly EPS

Market will take time to digest this information.
The earlier one can go through and understand, the better.

To PETRONM shareholders, especially call warrants holders, suggest to exit by tomorrow as I will be publishing an article probably Monday evening on its possible unsatisfactory earnings based on Petron Corp earnings reported on 8th August 2017.

To PETRONM shareholders, especially call warrants holders, suggest to exit by tomorrow as I will be publishing an article probably Monday evening on its possible unsatisfactory earnings based on Petron Corp earnings reported on 8th August 2017.

To PETRONM shareholders, especially call warrants holders, suggest to exit by tomorrow as I will be publishing an article probably Monday evening on its possible unsatisfactory earnings based on Petron Corp earnings reported on 8th August 2017.

Note, my article is not misleading.

It was a very practical, realistic estimations. Q1 results could be due to stock gain resulting from improved products margins.

I agree with InsiderR points below (no hedging by HRC), and thus made a conservative estimation.

Note, as I had mentioned earlier you will obtain exactly the same inventory loss by accounting any fraction you wish on the inventory as refined products provided the refining margins remained the same between reporting period.

If you can see through my article content, you will realize it was meant to remove the misleading bias (too much weightage given) by market on quarterly earnings.


Posted by InsiderR > Aug 12, 2017 11:42 AM | Report Abuse

Q2 inventory loss can be recovered in q3? Nobody can guarantee. How well the crude oil will perform in Aug & Sept still unknown. And nobody knows which day exactly HRC place order for crude. Buy high sell low is very likely, everythg depends on how good are HRC crude experts. Also, pls take note HRC has no hedging as of today. For inventory loss, u may go through Shell previous reports, it is possible inventory loss can wipe out all your margin when crude up/down tremendously. It is not as simple as just minus crude price at end of the mth/qtr with early of the mth/qtr. Anyway, counting down remaining +/-10 trading days for Q2. Good lucks!

yes

Posted by Alex Foo > Aug 11, 2017 11:05 PM | Report Abuse

i reread your article. i think you covered that. so inventory loss is a temporary phenomenon to be offset in next quarter. It means Q2 so-so, Q3 huat, right? =)

Fix the barrels of Crude and Product out of the 4700k barrels say 50/50.

using your reference crude oil price and refining margins at the concern starting month end ending month end you can calculate the total value of the inventory (including crude + products) respectively at both periods.

Their difference in value is the stock loss/gain.

It would be exactly the same as above if there is no change in refining margin between the reporting period above and if there is indeed a change say by 1 USD/brl drop in margins from 9USD/brl to 8USD/brl as per article above, you have to reduce the end value of the products fraction accordingly.

This will result with a greater stock loss than calculated above.


Posted by Jeffbkt > Aug 11, 2017 10:33 PM | Report Abuse

End product margin definitely will not follow the decrease rate of crude oil price. Anyway, you can use the previous quarter which has the stock/inventory loss to prove your calculation is correct.

you have a point, but you can assume a margin value (X) to add to the crude price and fix a ratio (y) between the crude and products, and yet you will derive exactly the same stock loss value above.

This can be mathematically shown, but not presented on the above article in order not to confuse the readers.


Posted by Jeffbkt > Aug 11, 2017 10:22 PM | Report Abuse

Not right to consider 100% of inventory are made up of only crude oil. We are not sure the ratio of crude oil and the end product but definitely not 100%.

I create blogs

advise investors not to go in now, some information will be released over the weekend which may have detrimental effect

aseng, you got stuck in PetronM?

No worries, just wait there till Hengyuan reaches you.
Its slow but surely.
Then both will move together.

You just need some patience.

strange i3 admin is not doing anything to ban this guy. he had basically spoiled the whole i3 website like a computer virus.

The figures for Mycron are very accurate. I wanted Choo Bee's gross margin for Dec16 to be somewhat closer to Mycron's tube segment and thus used 18,000.

But you are right I could have used the figures you had mentioned.

I cannot move the price like Icon after the posting on Lion Industries, but who knows I may at least hit the EPS 6.7 like Icon predicted for Lion.

you are perfectly right probability.

600k to buy in ekovest tmr

back to 1.43

steel is doing well

Looks like Prestar will overtake Mycron soon.

This is certainly a big potential company.

My calculation earlier appears inline with your EPS estimation without the Impairment loss.

Probability, thank you for the in-depth information. It is an eye opener

Choo Bee is just waiting to utilize its full Capacity

thanks Benjamin. Any clue when they had stopped sourcing from megasteel this year?

Thanks for the excellent info chonghai.

Really appreciate that Benjamin.

Ok. Its EAF instead of BOF. Guess government policy did not help the lower energy (electricity) cost. Probably the China manufacturers are using BOF technology, and thus have the added advantage of lowering fuel cost. Thanks Benjamin.

Benjamin, that is true fundamentally in an overview. However, i am of the opinion they do not generate electricity by themself as it appears they have not paid the electricity bills. Electricity tariff is in theory related to fuel cost. But it all depends on government policy.

But i am certain fuel is the major cost for heat generation purpose. Perhaps you can enlighten me more.

Major cost of production is Fuel. This is an energy intensive business.

Fuel is burnt to produce whatever heating requirement in the production process - smelting.

Fuel via a gen set is used to convert to electrical energy which drives all the machines in the HRC making. It takes a lot of energy to move & mold steels.

Despite the extremely low fuel price environment, if Megasteel is unable to pay the bills, i am afraid they never will.

This also partly answers the reason for Megasteel's demise.

That was 2013...they might have changed their product mix considering which is more competitive (to avoid constraint imposed by high cost raw material from Megasteel), unlike Mycron who had procured the Steel Tube Segment ~ 2 years ago and did not have the luxury to do so.