We will just leave the forum for you from now, waiting for your input.

Bro stockmanmy, after such a long chat, its' time and your turn for you to please elaborate and tabulate with facts in informative manner what uncertainties you see, since Grandmaster probability gave misleading comments.

If you can't, all your comments here completely carry no weight, but Grandmaster probability's are.

Bro stockmanmy, totally agreed that Petron and HengYuan have huge uncertainties in its quarterly results. It has been the case.

That's why the technical discussion here to understand better.

I still hope he can be friends as money is not everything in life. Its never too late to realize ill will is in fact Not in born. Each individual was born with pure and clean heart to begin with.

Bro stockmanmy, besides making money, we need to make friends too. Hope you could become friends to everyone.

Bro stockmanmy, please excuse us for a while, would you ?

aseng gor, my maid not around yet. I will continue the tutorial once she is back.............hahahahah. You all carry on first.

Oh, I am incorrect ? Let's review......

aseng gor, incorrect lah ! Stock loss must be deducted from CCS margin.

Everyone here, pls take note of this formula used to ensure consistent wave length when discussing the analysis by Grandmaster probability :

The gross profit they report is the FIFO margin profit which is the Sum of CCS Margin profit - Stock loss.

"Gross Profit = FIFO margin = CCS margin - stock loss"

CCS margins for HRC are higher by around 2USD

Jeffbkt, the quarterly thruput i.e. 9.5K for HY is incorrect. Shld it be 9.5M instead ? It shld

Hope the other G-5 members will comment too

Grandmaster probability, you really could address all concerns that I raised in very informative manner which I'm entirely impressed. You are simply the best technical expert I ever met. Cheers and good night. Will continue as and when there are validations to be made. Thank you.

But do you have any idea why refinery margin was "extremely" low in 2016 vs 2015 based on Jay's table ? Other than lower crack spread, what else can it be ?

Grandmaster probability, thank you for your invaluable sharing. Now, I really getting closer to see the benefits of low crude oil price for the company.

Because its finance costs will be cut quite rapidly towards year end 2017.

Already double added last week...............hahahahaha

Noted that gross profit for Mar17's 183M though appears lower than Dec16's 232M, it was in fact a good 30% growth against the quarterly average of RM141M in 2016 (based on Jay's table).

I am quite convinced too that the 2Q EPS will be a record given the current scenario + the continued effort by management to improve the biz's cost efficiency which already seen from Q4 2016 to Q1 2017.

Grandmaster probability,

Your illustrsation earlier as such :

"Net gross margin = - 24M + 97M + 105M
= 178M (EPS is more than 32 Cents)


say instead if on 30Jun17, the crude drops by another 3USD to 42USD/brl, the stock loss is extra by another 10M.

now the total gross profit becomes:
= 178 - 10
= 168 M (EPS is more than 29 cents)"

From the above, needed a little clarification :

(a) As to how you get the forecast EPS for this 2Q ?

(b) Any idea how much is the actual total gross profit for 1Q ? Is it somewhere in last fin. result ?

Grandmaster Probability, even your sharing which is quite technical and not easy to digest all, I still trust the logic of it. Would only blame myself and the market timing, no one else if things turn against. After all, I'm always prepared to lose big !

Don't worry about our decision. Generally, only immature and inexperienced individuals with narrow hearts will exhibit this trait based on my observations.

Hi Chong Jiunn Hau, your query may already be answered here :

Check out Grandmaster probability's post earlier :

"From Jay's table, we can derive the following:

PetronM refinery margin (CCS):

2015 = 4.5 USD/brl
2016 = 1.3 USD/brl

HRC reported (CCS):

2015 = 7.0 USD/brl
2016 = 4.06 USD/brl

The difference or 'premium' on average of HRC over PetronM is ~ 2.6 USD/barrel.

Now, from Jay's table we know that Retail (marketing) segment on average is giving a gross profit of 105M per qtr. Assume the latest qtr it had improved to 110M/qtr. This means the refinery gross profit contribution on the recent quarter is ~ 120M.

Thus the current CCS margin of PetronM is:
= 120M / (48k brl/day X 90 days)
= RM28/brl
= 6.6 USD/brl


now, if you add the same premium of 2.6USD/brl to derive HRC margin, you will get the following:
= 6.6 + 2.6
= 9.1 USD/brl

Check out the throughput of HRC and the reported Gross margin...it will exactly match this.

Note that, for the last qtr ending Mar17...it is indeed a stock loss as the crude price had dipped during the period. As such the above Margins are conservative CCS margin and not FIFO margins including any stock gains."

FYI, below is one of the recent comments posted by Sumato88 prior to the presentation. It appears to answer some of the questions in some readers' minds :

"Wow, just realized so many "experts" here talking about how oil price crash will erode Petronm's profit. Looks like everyone is worry about that. Believe it or not, I am still a believer and holding my shares in Petronm. I think time will tell who is right or wrong. As I said earlier, if you buy or sell Petronm's share based on oil price movement, my suggestion is to trade crude oil future.

I must admit that crude oil price movement does have impact to Petronm but the impact is only limited to its inventory holding (typically about 3 weeks) where management hedge half of it (makes sense to hedge as you source your crude from independent oil producer, unlike Shell Refining in the past where they don't hedge as they source from the parent co, this also explains the higher volatility of shell's profit)

I think the key to refining profit is still the refining margin where Jay pointed out correctly that 2Q17 refining margin is still better than 1Q17. Someone also pointed out that crude oil price crash from usd100/bbl in 2014 to 55 (average) and 44 (average) in 2015 and 2016 respectively but Petronm doesn't seem to be affected as it reported higher profit in 2015 (rm221m) and 2016 (rm238m).

Some of you may ask why? I attribute that to 3 factors, (1) refining margin is still the major profit driver, (2) whatever inventory gain and loss is 50% hedged, & (3) the inventory holding at any point in time is only 3 weeks, hence the inventory exposure is on 3 weeks rolling basis. That means the impact is limited to 3 weeks out of 52 weeks if oil price stabilizes after the sudden plunge. Oil price move up and down everyday, so refinery will have inventory gain or loss everyday. That is the reason why Petronm's 2015 & 2016 profit doesn't correlate with oil price crash.

And last but not least, I am still bullish on Petronm's retailing biz, which offers stable profit and growing volume. This is the jewel of the biz."

Grandmaster probability, reallly appreciate your input which was spectacular, a round of applause for you Grandmaster !

First, could other G5 members (逍遥子, Jay, Sumato88, probablity, paperlane => G5 Team) validate and comment on the presentation. Any comments with basis here are welcome and deemed constructive !

This discussion will enable us to learn together and continue to understand the business better, let's roll, cheers !
25/06/2017 08:58

Ok, probability sifu. Just go to have a long break (guess you are too tired by now). Meanwhile, let's us here screw the derivations for you the next few days.......oops typo should be read as scrutinise instead.

probability sifu, thanks again for the in-depth presentation. You are truly the master of this commodity business inside out (frankly speaking, even Mr Ang may not be that competent as you in this calculation ). I am sure most readers (including me and of course the maid for sure) are not able to fully understand these rather complex calculations.

How about illustrating eps forecast for 2017 like what you did in HRC forum ? Most of here are eager to find out the quarterly earnings for this year in relation to the impact of changes in crack spreads amid fluctuating oil price. Care to share this part, if you don't mind ?

probability sifu, we all understand this is just a rough indication of analysis against other variables which are uncertain and not possible to be entirely accurately assessed. And I'm sure many of us here are mature enough to sieve through the workout by you. After all, this is just an illustration based on several assumptions.

No obligation on your part to convince anyone. Instead, we appreciated and noted so much of your selfishlessly hard work here.

probability sifu, remember to focus on the presentation and we are all waiting. thanks in advance.

That's why don't play play with the maid, can be multi-tasking when requested.

Hahaha, this maid has nice figure too !

So, aseng gor you started to lose confidence in the figures extracted ??

And maid is gonna to manage the investments too later, is it a good idea ?

probability sifu, maid wants me to do housework instead now !! Hahahahaha........., how ??

probability sifu, maid can be multi-tasking too at times !

Hope the following estimated crack spreads are also helpful for your "Kung Fu" presentation this evening :

2016 :
Jan : -9.7
Feb : -9.8
Mar : -10.2
Apr : -11.0
May : -11.3
June : -10.9
July : - 10.4
Aug : - 10.2
Sept : -10.5
Oct : - 10.1
Nov : -8.6
Dec : -7.8

Cheers !

probability sifu, my maid has not reverted to me yet. Would update once available.........hahaha.

But, I didn't give average of the month. Only picked month end figures. Hopefully it's acceptable to sifu probability.

逍遥子, based on the link originally posted by Sifu Jay.
http://www.cmegroup.com/apps/cmegroup/widgets/productLibs/esignal-charts.html?code=D1N&title=JUN_2017_Singapore_Mogas_92_Unleaded_%28Platts%29_Brent_Crack_Spread_&type=p&venue=0&monthYear=M7&year=2017&exchangeCode=XNYM

Posted by probability sifu :
http://www.thestar.com.my/business/business-news/2015/07/27/petroleum-refineries-bucking-oil-downtrend/

http://www.oil-price.net/en/articles/who-benefits-from-lower-oil-prices.php

probability sifu, become very sleepy once heard homework ! Immediately sleep like a baby, what a excellent sleeping pills......hahahahaha.

Anyway, woke up fresh this morning to crack my head to get the crack spreads as requested :

2016 :
Jan : 6.8
Feb : 5.9
Mar : 7
Apr : 7.8
May : 6.8
June : 5.2
July : 4.4
Aug : 5
Sept : 6.3
Oct : 6.7
Nov : 6.8
Dec : 8.6

2017 :
Jan : 9.1
Feb : 8.7
Mar : 9.7
Apr : 7.5
May : 10.4
June : 9.9 (till 23rd)

Hope the above data are not too far from the figures based on the graph given. All are not rounded up or down.

probability sifu, hope you could still share it even if not solid, or else can't sleep tonight.......hahaha thanks in advance !

probability sifu, just read your analysis of crack spread and net gross margin on HY for each quarter, would you mind showing one for Petronm ? Sure a lot of readers here are interested to know. Appreciate your kind sharing.

aseng gor, noted idiots amended to jokers........typo error, my apology.

Now the cloud is clearer.

Still, our team of sifus (core and died hard members consisting of 逍遥子, Jay, Sumato88, probablity, paperlane => G5 Team) are much intelligent with high IQ than those idiots/bloggers who claim to know so much. Keep up the good work, G5 Team !

OOMMGG , thanks for your valuable input and sharing

skyea gor, must congratulate you in making decent profits from Petronm during its AGM.

Would need to find out the reason for you to continue following up the counter ? Why not spend your time into researching other better companies if Petronm has disappointed your expectations so profoundly, care to share it out, if you do't mind and have an open heart.

The chairman went to toilet lah, can't tahan anymore. Bumped into him inside the loo. Hahahahahaha

Guess he must have lost some money. Otherwise, why wasting time here despite not in favor of the counter.

逍遥子, not totally your fault. You are just trying to help all of us here. Keep up the good research. Cheers

Good, then add more since prepared to lose big and switching from Carlsberg and AEONCr

So fast ?? No yet, still accumulating