I'm prepared to lose big ! Hard to come by company like this, therefore just not willing to let go.

Am adding more to take advantage of bashed down level as well as seeing stronger balance sheet with excellent FCF. Just hold till end of the year.

Sifu probability, thanks for the clarifications. You are too well versed in this highly specialized biz. Should help us run Petronm biz one day to boost its eps to its max......who knows !

Sifu probability, thought Sumato88 mentioned the inventory was 50% hedged ? So why still affecting the margins so much ? This part a little confused to me ? Need clarifications, thks.

aseng gor, pls revert on the good deed................would you ?

Sifu paperplane2016 is damn smart...............hahahahaha good one.

By sifu probability, what a great illustration !

Stock: [HENGYUAN]: HENGYUAN REFINING CO BHD
Jun 22, 2017 06:42 PM | Report Abuse

guys, for once and for all, view HRC refinery as per the following milk business model and try to really understand it:

(1) you have pipeline (or milk barrels in stock) of say 10m3 = 10,000 liter volume inside. This is the only batch you bought from a the cow owners before making any deal with the buyer - retails.

(2) Next you buy from the cow owner a fixed batch size of 20,000 liters at say RM10/liter and always sell with the prevailing milk margin of RM 1/liter to the retailers. Meaning you will sell at RM 11/liter to the retailers.

(3) Market milk margin (RM 1) changes as per the market dynamics and every purchase you make with the cow owner is justified by a deal made with the cow milk buyer (retail) at the SAME QUANTITY.

Meaning, if you buy from the cow owner a fix batch of say 20,000 liters at price of RM10/liter, you make sure first you have made the deal with the retailers at RM11/liter for a batch of 20,000 liters.

(If HRC dont do this...they might as well be an oil trading company than a refinery)

So your CCS margin = 20,000 liters x RM 1 = RM20,000
for this Contract no.1.

Now, while you are making the second Contract no.2, the market milk price say drop to RM5/liter, you make Contract no.2 with the same market margin of RM 1/liter and if the batch size = 20,000 liters , you still make the same CCS margin of = RM 20,000. If the market margin is RM1.5/liter you deal with retailers is at RM230k with gross profit of RM 23,000.

So..it goes to Contract no.3, no.4 and so on...your profit is purely determined by the market margin. This is exactly the same as refinery crack-spread margin which had been very healthy from the beginning of the year 2017.

So if you have 10 such contract for a qtr, your profit is:
= 10batch x RM 20,000/batch
= RM 200,000


(4) Now what did you lose because the price of milk had dropped?
You only lose the value of the stock in pipeline which is 10,000 liters by a drop in the price of RM5/liter = 50,000 which is one time event recoverable when the price rises back.

aseng gor, noticed you have changed your communication style and become very professional in this forum. It's good to see that........haha. Welcome back.

Later sifu probability will explain to you the above doubts as sifu probability is a very forgiving individual. Trust me.

Jay, don't do that.

Your comments are perfectly alright. Those who comment badly about the share price (when it comes down) are immature investors or having some hidden objectives or just waste their time talking nonsense. Just continue commenting what you think is right.

Who says good stock won't drop, anything can happen in equity market. No share will go up in straight line.

Those who agree with me, please come forward and comment. I am pretty sure they are many readers who like the professional and indepth comments from those who share.

Anyway, noted and thanks cpng for your good intention and warning.

Hi sumato88, you are still the most welcome expert here. Like your comments and insight very much. My salute to you.

cpng, since your comments are quite making sense, would appreciate you share some deep thought view with us here for which the share is considered overpriced based on FCF and earnings, would you ??

Still awaiting for your expert's comments. Thanks in advance.

But don't undervalue OPEC's influence as US oil represents only a fraction of world output. More US producers are getting squeezed too in return if price continues to go lower and lower until they become bankrupt

@逍遥子,Jay & probability, thank you all for the monitoring and update.

Anyone managed to get the email address of Petronm's CFO during AGM ? Perhaps can share it here as need to check with her the degree of impact against such drop of crude oil price

2Q earning should not be badly affected as this lower crude price was only recent given another few more days to end the 2Q

Hopeless counter, run fast

Yes, can go 50% in it

Really coming down sharply again, time to reenter when lower

@ aseng, so just tell us if you add at this level given the prerequisite conditions?

Quote by Warren Buffett :

"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."

Quote by Warren Buffett :

"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

@ probability, like your sharing which makes sense. Anyway, tqvm

Hopefully cleansing is done thoroughly again this round, all short term players knocked out

Adding double and lock up till end of the year, see if time can tell the price will go up above 8 or not. High chance won't go very far wrong.

Will it be good, any guesses ??

Most would only buy when it moves above 8, that's common too.

When panic, no one cares about anything, that's the human behaviour.

Sold 20 lots earlier at 8.80 without dividend, now buying back

Panic selling, time to accumulate

逍遥子, let's say crude oil price stays around 43-45, 3Q eps should be a repeat of Q4 2016 as that time crude price was low and Petronm made better profit.

逍遥子, 3Q eps will be higher than 40 sen ?

Recharging

Cleaning process has been so far so good to kick out those who are short term.

Buy when it is rock bottom, won't go wrong that far

How low can it go ?? Is it at good value, need advice.