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2022-09-04 13:37 | Report Abuse
u forgot how hurrcane harvey in US helped looks like
2022-09-04 13:37 | Report Abuse
u forgot how hurrcane harvey in US helped looks like
Posted by stockraider > 3 minutes ago | Report Abuse
Raider asklah....how could embargo on Russia....help Hengyuan & Petron....to make more money leh ??
The impact is remote mah!
Also Msia is not exporting diesel & gasoline to Europe mah!
This probability very panlai spin mah!
2022-09-04 13:33 | Report Abuse
ha ha even MM beginning to rationalize and realize...
great job MM!
Posted by MoneyMakers > 3 seconds ago | Report Abuse
S’raider u stuck high HY at what price during 2018 collapse (rm19-rm3)??
See u got crazy ptsd @ forever hate HY
2022-09-04 13:31 | Report Abuse
they hedge about 18 million barrels for a period of 24 months, about 20% of their sales throughput. 80% is free to capture market margin. The Cost of hedging reserve indicates what will be the implication to this hedged 18 million barrels if the phenomenally high margin of gasoline at 32 USD/brl at end of June 22' persist indefinitely. Its mark to market hedging loss/gain. We can expect the figure to reverse, when gasoline reverts to normal level by end of Sept 22'. Currently Gasoline crack spread is below hedged margin of 12.7 USD/brl at 7.8 USD/brl.
2022-09-04 13:26 | Report Abuse
they hedge about 18 million barrels for a period of 24 months, about 20% of their sales throughput. 80% is free to capture market margin. The Cost of hedging reserve indicates what will be the implication to this hedged 18 million barrels if the phenomenally high margin of gasoline at 32 USD/brl at end of June 22' persist indefinitely. Its mark to market hedging loss/gain. We can expect the figure to reverse, when gasoline reverts to normal level by end of Sept 22'. Currently Gasoline crack spread is below hedged margin of 12.7 USD/brl at 7.8 USD/brl.
2022-09-04 13:22 | Report Abuse
prove on the effects of hedging when crack spread drop below hedging level for balance hedged contract is here
Posted by Sslee > Sep 3, 2022 6:17 PM | Report Abuse
If you look into HRC quarterly report.
On 31/12/19. NAPS is RM 6.7045.
Q1 end 31/03/20 EPS negative 41.37 cents but NAPS is now RM 7.4418
Posted by Sslee > Sep 3, 2022 6:32 PM | Report Abuse
You can check what is the mogas92 crack spread on 31/03/2020.
2022-09-04 00:30 |
Post removed.Why?
2022-09-03 23:28 | Report Abuse
No going back to reliance on Russian gas from here
https://www.bbc.com/news/business-62779909
This is no coincidence. Russia's state-controlled gas giant announced an indefinite extension to a three-day maintenance halt to flows of gas through the continent's key energy artery, hours after leading western finance ministers vowed to escalate sanctions on Russian oil.
2022-09-03 23:15 | Report Abuse
Now lets see what happens, when Gasoline crack drops to its usual average of 5.7 USD/brl (currently its about 7.8 USD/brl)
Unrealized Cost of Hedging Reserve (COHR):
= (12.7 - 5.7) USD/brl x 18 million barrels
= 90 million USD or gain of MYR 395,000,000
When its a loss, COHR only shows the 'greater opportunity lost' compared to smaller opportunity gained by hedging - by locking down the margin.
When its a gain, COHR only shows the 'benefit of opportunity locked' compared to if you had not locked the opportunity available earlier.
As such, we can see why the above is not reported in P&L statement.
COHR gain of 395 million from loss of 1.1 billion will cause the NTA to jump by RM5 and if you add that to EPS of RM2, you get RM 7
that means by end of Q3, NTA is above RM12...
2022-09-03 23:12 | Report Abuse
The reason why HY shows large unrealized loss on Cost of hedging reserve (COHR) is because it has around 18 million barrels of refined products, e.g Gasoline crack spread that is hedged for next 24 months at 12.7 USD/brl margin.
This is the Refining Margin Swap Contract (RMSC) shown as USD 227 million (USD 12.7 crack x 18 million barrels hedged).
As per accounting rules, this hedged contract (RMSC) has to show the opportunity lost / gained presuming the current crack spread of these refined products at the end of reporting Q2 22' (30 June) persist indefinitely till all hedging contract matures (more than 24 months).
Unrealized Cost of Hedging Reserve (COHR) , loss / gain: (A-M) x V
A = hedged crack spread value, 12.7 USD/brl
V = barrels volume of refined products hedged, 18 million
M = Market pricing of the hedged refined product at end of reporting period (mark to market)
Since at the end of June 22', the avg crack spread of the refined products, e.g gasoline at 31.6 USD/brl, the opportunity lost for the period of hedging is
Unrealized Cost of Hedging Reserve (COHR):
= (12.7 - 31.6) USD/brl x 18 million barrels
= - 338 million USD or MYR 1,490,267,000
The above is what reported as (Asset 261,065,000 - Liabilities 1,751,332,000)
The above after taxation is placed into 'Other comprehensive
(expense)/income' , reported as Cost of hedging reserve (net of tax).
2022-09-03 20:16 | Report Abuse
@Tehka, Monday the crack spread will explode further...
Russia delays reopening of Nord Stream in blow to gas-starved Europe
https://www.reuters.com/business/energy/russia-says-nord-stream-gas-supplies-still-risk-stoking-european-fears-2022-09-02/
2022-09-03 19:32 | Report Abuse
@MM, did you have a look at what sslee shared above?
you can find the chart for Mogas92 here to trace its value on 30/3/2020
www.tradingview.com/symbols/NYMEX-D1N1%21/
2022-09-03 19:03 | Report Abuse
sslee done it again...
What a beautiful discovery! thanks sslee
Posted by Sslee > Sep 3, 2022 6:17 PM | Report Abuse
If you look into HRC quarterly report.
On 31/12/19. NAPS is RM 6.7045.
Q1 end 31/03/20 EPS negative 41.37 cents but NAPS is now RM 7.4418
Posted by Sslee > Sep 3, 2022 6:32 PM | Report Abuse
You can check what is the mogas92 crack spread on 31/03/2020.
2022-09-03 19:02 | Report Abuse
sslee done it again...
What a beautiful brilliant discovery! thanks sslee
Posted by Sslee > Sep 3, 2022 6:17 PM | Report Abuse
If you look into HRC quarterly report.
On 31/12/19. NAPS is RM 6.7045.
Q1 end 31/03/20 EPS negative 41.37 cents but NAPS is now RM 7.4418
Posted by Sslee > Sep 3, 2022 6:32 PM | Report Abuse
You can check what is the mogas92 crack spread on 31/03/2020.
2022-09-03 18:48 | Report Abuse
yes stockwin, just sapu the cw when time is right...
2022-09-03 18:04 | Report Abuse
The reason why HY shows large unrealized loss on Cost of hedging reserve (COHR) is because it has around 18 million barrels of refined products, e.g Gasoline crack spread that is hedged for next 24 months at 12.7 USD/brl margin.
This is the Refining Margin Swap Contract (RMSC) shown as USD 227 million (USD 12.7 crack x 18 million barrels hedged).
As per accounting rules, this hedged contract (RMSC) has to show the opportunity lost / gained presuming the current crack spread of these refined products at the end of reporting Q2 22' (30 June) persist indefinitely till all hedging contract matures (more than 24 months).
Unrealized Cost of Hedging Reserve (COHR) , loss / gain: (A-M) x V
A = hedged crack spread value, 12.7 USD/brl
V = barrels volume of refined products hedged, 18 million
M = Market pricing of the hedged refined product at end of reporting period (mark to market)
Since at the end of June 22', the avg crack spread of the refined products, e.g gasoline at 31.6 USD/brl, the opportunity lost for the period of hedging is
Unrealized Cost of Hedging Reserve (COHR):
= (12.7 - 31.6) USD/brl x 18 million barrels
= - 338 million USD or MYR 1,490,267,000
The above is what reported as (Asset 261,065,000 - Liabilities 1,751,332,000)
The above after taxation is placed into 'Other comprehensive
(expense)/income' , reported as Cost of hedging reserve (net of tax).
2022-09-03 17:34 | Report Abuse
did you not see the Dividend announcement? Ignorance and selective information absorption has no limits..
Posted by Income > Sep 3, 2022 5:32 PM | Report Abuse
Hello Sifu Sifu, you all talk until Cows come back to barn now sunset ohhhhh.
No use lah,
QUESTION 1:
Company no give dividends even if got huge profits… meaning WHAT?
I will continue Thinking Hard about the above Question lah.
2022-09-03 17:18 | Report Abuse
HY gives these details on their annual report 2021, pg 130
They hedge from futures forward till 2024 cos refining margin is usually very thin
Its pretty straight forward to figure out why such implication when Gasoline margin shot up to 32 USD/brl end of June 22' from avg of 6 USD/brl, and this never happened before at least for the last 14 years...
Posted by PSAi3alert > Sep 3, 2022 5:05 PM | Report Abuse
Why can't they just present the Financial Results, Financial Position, Liquidity, Return of Capital and Outlook straight up like how other refinery companies present theirs.
No gazing into the 12-months or 24-months crystal balls, please.
2022-09-03 16:40 | Report Abuse
COHR gain of 390 million from loss of 1.1 billion will cause the NTA to jump by RM5 and if you add that to EPS of RM2, you get RM 7
that means by end of Q3, NTA is above RM12...WTF!
2022-09-03 16:40 | Report Abuse
HY refinery margin update - 2/09/22 (DIESEL CRACK BLASTED ABOVE 50$/brl!)
...........
Diesel: https://www.tradingview.com/symbols/NYMEX-GOC1!/
Jet Fuel: https://www.tradingview.com/symbols/NYMEX-ASD1!/
Gasoline Mogas 92: https://www.tradingview.com/symbols/NYMEX-D1N1%21/
Gasoline Mogas 95 premium: https://www.tradingview.com/symbols/NYMEX-SMU1!/
From above:
1. Diesel at 46% yield, cracks USD 50.36/bbl
2. Jet fuel at 7% yield, cracks USD 38.40/bb
3. Gasoline Mogas 95 at 35% yield, cracks USD (4.07 + 3.71) / bbl
4. Rest of product yield at 12%, using Mogas 95 cracks USD 7.77/bbl
Gross refining margin:
= (0.46 x 50.4 ) + (0.07 x 38.40) + (0.35 x 7.77)+ (0.12 x 7.77)
= 23.18 + 2.70 + 2.72 + 0.93
= US $ 29.5 / brl
.................
Gross Profit at above derived present refining margin
= (10.7 million barrel sales per qtr) x ( US $29.5/brl) x (MYR 4.45/USD)
= 1.404 Billion MYR
...................
2022-09-03 16:40 | Report Abuse
Now lets see what happens, when Gasoline crack drops to ZERO (currently its about 7.8 USD/brl)
Unrealized Cost of Hedging Reserve (COHR):
= (12.7 - 0) USD/brl x 18 million barrels
= 228 million USD or gain of MYR 1,000,005
GAIN of 1 BILLION on Cost of hedging reserve in Q2
But those who understand the above, they know it does not matter and that for gasoline their earnings is always going to be at 12.7 USD/brl.....
2022-09-03 16:38 | Report Abuse
anyone have anyone questions on the above for verification feel free to ask, but do not accuse without any evidence or substantiation that HY is cooking their books! TQ
2022-09-03 16:37 | Report Abuse
Now lets see what happens, when Gasoline crack drops to its usual average of 5.7 USD/brl (currently its about 7.8 USD/brl)
Unrealized Cost of Hedging Reserve (COHR):
= (12.7 - 5.7) USD/brl x 18 million barrels
= 90 million USD or gain of MYR 395,000,000
When its a loss, COHR only shows the 'greater opportunity lost' compared to smaller opportunity gained by hedging - by locking down the margin.
When its a gain, COHR only shows the 'benefit of opportunity locked' compared to if you had not locked the opportunity available earlier.
As such, we can see why the above is not reported in P&L statement. It really does not matter - as what Rabbit2 said it becomes zero on maturity.
2022-09-03 16:36 | Report Abuse
the article was posted to explain this as i understand from a person with background in acc & finance (i am not)
ADDITIONAL EXPLANATION BY PROBABILITY:
The reason why HY shows large unrealized loss on Cost of hedging reserve (COHR) is because it has around 18 million barrels of refined products, e.g Gasoline crack spread that is hedged for next 24 months at 12.7 USD/brl margin.
This is the Refining Margin Swap Contract (RMSC) shown as USD 227 million (USD 12.7 crack x 18 million barrels hedged).
As per accounting rules, this hedged contract (RMSC) has to show the opportunity lost / gained presuming the current crack spread of these refined products at the end of reporting Q2 22' (30 June) persist indefinitely till all hedging contract matures (more than 24 months).
Unrealized Cost of Hedging Reserve (COHR) , loss / gain: (A-M) x V
A = hedged crack spread value, 12.7 USD/brl
V = barrels volume of refined products hedged, 18 million
M = Market pricing of the hedged refined product at end of reporting period (mark to market)
Since at the end of June 22', the avg crack spread of the refined products, e.g gasoline at 31.6 USD/brl, the opportunity lost for the period of hedging is
Unrealized Cost of Hedging Reserve (COHR):
= (12.7 - 31.6) USD/brl x 18 million barrels
= - 338 million USD or MYR 1,490,267,000
The above is what reported as (Asset 261,065,000 - Liabilities 1,751,332,000)
Out of the above a portion (which matures in 12 months) will go into 'Other comprehensive
(expense)/income' reported as Cost of hedging reserve.
2022-09-03 16:34 | Report Abuse
thanks for the below comment
Posted by PSAi3alert > Sep 3, 2022 4:32 PM | Report Abuse
probability,
I have to admit that I'm least confident in putting HY in the "Fat 'Kap Nar' running in the street" list.
2022-09-03 16:14 | Report Abuse
COHR gain of 390 million from loss of 1.1 billion will cause the NTA to jump by RM5 and if you add that to EPS of RM2, you get RM 7
that means by end of Q3, NTA is above RM12...WTF!
2022-09-03 16:13 | Report Abuse
COHR gain of 390 million from loss of 1.1 billion will cause the NTA to jump by RM5 and if you add that to EPS of RM2, you get RM 7
that means by end of Q3, NTA is above RM12...WTF!
2022-09-03 15:58 | Report Abuse
@PSAi3alert, i had some respect on you earlier when you tried to expose Serba. But unfortunately, over confidence can make one blind to rationality...
suggest you spend some time going through the derivations, annual report on their refining margin swap, and understand how cost of hedging reserve works before commenting
HY is not the only refinery in the world that reported huge earnings.
2022-09-03 15:52 | Report Abuse
Now lets see what happens, when Gasoline crack drops to ZERO (currently its about 7.8 USD/brl)
Unrealized Cost of Hedging Reserve (COHR):
= (12.7 - 0) USD/brl x 18 million barrels
= 228 million USD or gain of MYR 1,000,005,000
GAIN of 1 BILLION on Cost of hedging reserve in Q2
But those who understand the above, they know it does not matter and that for gasoline their earnings is always going to be at 12.7 USD/brl.....
2022-09-03 15:52 | Report Abuse
Now lets see what happens, when Gasoline crack drops to ZERO (currently its about 7.8 USD/brl)
Unrealized Cost of Hedging Reserve (COHR):
= (12.7 - 0) USD/brl x 18 million barrels
= 228 million USD or gain of MYR 1,000,005,000
GAIN of 1 BILLION on Cost of hedging reserve in Q2
But those who understand the above, they know it does not matter and that for gasoline their earnings is always going to be at 12.7 USD/brl.....
2022-09-03 14:03 | Report Abuse
Now lets see what happens, when Gasoline crack drops to its usual average of 5.7 USD/brl (currently its about 7.8 USD/brl)
Unrealized Cost of Hedging Reserve (COHR):
= (12.7 - 5.7) USD/brl x 18 million barrels
= 90 million USD or gain of MYR 395,000,000
When its a loss, COHR only shows the 'greater opportunity lost' compared to smaller opportunity gained by hedging - by locking down the margin.
When its a gain, COHR only shows the 'benefit of opportunity locked' compared to if you had not locked the opportunity available earlier.
As such, we can see why the above is not reported in P&L statement. It really does not matter - as what Rabbit2 said it becomes zero on maturity.
2022-09-03 14:03 | Report Abuse
ADDITIONAL EXPLANATION BY PROBABILITY:
The reason why HY shows large unrealized loss on Cost of hedging reserve (COHR) is because it has around 18 million barrels of refined products, e.g Gasoline crack spread that is hedged for next 24 months at 12.7 USD/brl margin.
This is the Refining Margin Swap Contract (RMSC) shown as USD 227 million (USD 12.7 crack x 18 million barrels hedged).
As per accounting rules, this hedged contract (RMSC) has to show the opportunity lost / gained presuming the current crack spread of these refined products at the end of reporting Q2 22' (30 June) persist indefinitely till all hedging contract matures (more than 24 months).
Unrealized Cost of Hedging Reserve (COHR) , loss / gain: (A-M) x V
A = hedged crack spread value, 12.7 USD/brl
V = barrels volume of refined products hedged, 18 million
M = Market pricing of the hedged refined product at end of reporting period (mark to market)
Since at the end of June 22', the avg crack spread of the refined products, e.g gasoline at 31.6 USD/brl, the opportunity lost for the period of hedging is
Unrealized Cost of Hedging Reserve (COHR):
= (12.7 - 31.6) USD/brl x 18 million barrels
= - 338 million USD or MYR 1,490,267,000
The above is what reported as (Asset 261,065,000 - Liabilities 1,751,332,000)
Out of the above a portion (which matures in 12 months) will go into 'Other comprehensive
(expense)/income' reported as Cost of hedging reserve.
2022-09-03 13:55 | Report Abuse
Now lets see what happens, when Gasoline crack drops to ZERO (currently its about 7.8 USD/brl)
Unrealized Cost of Hedging Reserve (COHR):
= (12.7 - 0) USD/brl x 18 million barrels
= 228 million USD or gain of MYR 1,000,005
GAIN of 1 BILLION on Cost of hedging reserve in Q2
But those who understand the above, they know it does not matter and that for gasoline their earnings is always going to be at 12.7 USD/brl.....
2022-09-03 13:45 | Report Abuse
they forward hedge up to 2 years plus of this amount...
2022-09-03 13:44 | Report Abuse
@Bob, they hedge at about 18% of their monthly throughput...
2022-09-03 13:36 | Report Abuse
HY refinery margin update - 2/09/22 (DIESEL CRACK BLASTED ABOVE 50$/brl!)
...........
Diesel: https://www.tradingview.com/symbols/NYMEX-GOC1!/
Jet Fuel: https://www.tradingview.com/symbols/NYMEX-ASD1!/
Gasoline Mogas 92: https://www.tradingview.com/symbols/NYMEX-D1N1%21/
Gasoline Mogas 95 premium: https://www.tradingview.com/symbols/NYMEX-SMU1!/
From above:
1. Diesel at 46% yield, cracks USD 50.36/bbl
2. Jet fuel at 7% yield, cracks USD 38.40/bb
3. Gasoline Mogas 95 at 35% yield, cracks USD (4.07 + 3.71) / bbl
4. Rest of product yield at 12%, using Mogas 95 cracks USD 7.77/bbl
Gross refining margin:
= (0.46 x 50.4 ) + (0.07 x 38.40) + (0.35 x 7.77)+ (0.12 x 7.77)
= 23.18 + 2.70 + 2.72 + 0.93
= US $ 29.5 / brl
.................
Gross Profit at above derived present refining margin
= (10.7 million barrel sales per qtr) x ( US $29.5/brl) x (MYR 4.45/USD)
= 1.404 Billion MYR
...................
2022-09-03 13:36 | Report Abuse
HY refinery margin update - 2/09/22 (DIESEL CRACK BLASTED ABOVE 50$/brl!)
...........
Diesel: https://www.tradingview.com/symbols/NYMEX-GOC1!/
Jet Fuel: https://www.tradingview.com/symbols/NYMEX-ASD1!/
Gasoline Mogas 92: https://www.tradingview.com/symbols/NYMEX-D1N1%21/
Gasoline Mogas 95 premium: https://www.tradingview.com/symbols/NYMEX-SMU1!/
From above:
1. Diesel at 46% yield, cracks USD 50.36/bbl
2. Jet fuel at 7% yield, cracks USD 38.40/bb
3. Gasoline Mogas 95 at 35% yield, cracks USD (4.07 + 3.71) / bbl
4. Rest of product yield at 12%, using Mogas 95 cracks USD 7.77/bbl
Gross refining margin:
= (0.46 x 50.4 ) + (0.07 x 38.40) + (0.35 x 7.77)+ (0.12 x 7.77)
= 23.18 + 2.70 + 2.72 + 0.93
= US $ 29.5 / brl
.................
Gross Profit at above derived present refining margin
= (10.7 million barrel sales per qtr) x ( US $29.5/brl) x (MYR 4.45/USD)
= 1.404 Billion MYR
...................
2022-09-03 13:35 | Report Abuse
HY refinery margin update - 2/09/22 (DIESEL CRACK BLASTED ABOVE 50$/brl!)
...........
Diesel: https://www.tradingview.com/symbols/NYMEX-GOC1!/
Jet Fuel: https://www.tradingview.com/symbols/NYMEX-ASD1!/
Gasoline Mogas 92: https://www.tradingview.com/symbols/NYMEX-D1N1%21/
Gasoline Mogas 95 premium: https://www.tradingview.com/symbols/NYMEX-SMU1!/
From above:
1. Diesel at 46% yield, cracks USD 50.36/bbl
2. Jet fuel at 7% yield, cracks USD 38.40/bb
3. Gasoline Mogas 95 at 35% yield, cracks USD (4.07 + 3.71) / bbl
4. Rest of product yield at 12%, using Mogas 95 cracks USD 7.77/bbl
Gross refining margin:
= (0.46 x 50.4 ) + (0.07 x 38.40) + (0.35 x 7.77)+ (0.12 x 7.77)
= 23.18 + 2.70 + 2.72 + 0.93
= US $ 29.5 / brl
.................
Gross Profit at above derived present refining margin
= (10.7 million barrel sales per qtr) x ( US $29.5/brl) x (MYR 4.45/USD)
= 1.404 Billion MYR
...................
2022-09-03 13:22 | Report Abuse
i am afraid not possible Zhuge
Posted by Zhuge_Liang > Sep 3, 2022 1:01 PM | Report Abuse
Posted by Ahahah > 11 minutes ago | Report Abuse
@probabilty my English is not good. That is what I try to explain in this morning but rejected by this 3i members.
Beside that they are using petrol to blend with diesel and selling as diesel at good price.
----------------
@probability,
Can gasoline blend with diesel and sell it as diesel after some rework ?
If it is feasible, then it is a good news to Hengyuan.
Please advise.
2022-09-03 12:57 | Report Abuse
Now lets see what happens, when Gasoline crack drops to its usual average of 5.7 USD/brl (currently its about 4.5 USD/brl)
Unrealized Cost of Hedging Reserve (COHR):
= (12.7 - 5.7) USD/brl x 18 million barrels
= 90 million USD or gain of MYR 395,000,000
When its a loss, COHR only shows the 'greater opportunity lost' compared to smaller opportunity gained by hedging - by locking down the margin.
When its a gain, COHR only shows the 'benefit of opportunity locked' compared to if you had not locked the opportunity available earlier.
As such, we can see why the above is not reported in P&L statement. It really does not matter - as what Rabbit2 said it becomes zero on maturity.
2022-09-03 12:56 | Report Abuse
ADDITIONAL EXPLANATION BY PROBABILITY:
The reason why HY shows large unrealized loss on Cost of hedging reserve (COHR) is because it has around 18 million barrels of refined products, e.g Gasoline crack spread that is hedged for next 24 months at 12.7 USD/brl margin.
This is the Refining Margin Swap Contract (RMSC) shown as USD 227 million (USD 12.7 crack x 18 million barrels hedged).
As per accounting rules, this hedged contract (RMSC) has to show the opportunity lost / gained presuming the current crack spread of these refined products at the end of reporting Q2 22' (30 June) persist for the next 12 months.
Unrealized Cost of Hedging Reserve (COHR) , loss / gain: (A-M) x V
A = hedged crack spread value, 12.7 USD/brl
V = barrels volume of refined products hedged, 18 million
M = Market pricing of the hedged refined product at end of reporting period (mark to market)
Since at the end of June 22', the avg crack spread of the refined products, e.g gasoline at 31.6 USD/brl, the opportunity lost for the period of hedging is
Unrealized Cost of Hedging Reserve (COHR):
= (12.7 - 31.6) USD/brl x 18 million barrels
= - 338 million USD or MYR 1,490,267,000
The above is what reported as (Asset 261,065,000 - Liabilities 1,751,332,000)
Out of the above a portion will go into 'Other comprehensive
(expense)/income' reported as Cost of hedging reserve.
2022-09-03 12:56 | Report Abuse
Now lets see what happens, when Gasoline crack drops to its usual average of 5.7 USD/brl (currently its about 4.5 USD/brl)
Unrealized Cost of Hedging Reserve (COHR):
= (12.7 - 5.7) USD/brl x 18 million barrels
= 90 million USD or gain of MYR 395,000,000
When its a loss, COHR only shows the 'greater opportunity lost' compared to smaller opportunity gained by hedging - by locking down the margin.
When its a gain, COHR only shows the 'benefit of opportunity locked' compared to if you had not locked the opportunity available earlier.
As such, we can see why the above is not reported in P&L statement. It really does not matter - as what Rabbit2 said it becomes zero on maturity.
2022-09-03 12:54 | Report Abuse
Now lets see what happens, when Gasoline crack drops to its usual average of 5.7 USD/brl (currently its about 4.5 USD/brl)
Unrealized Cost of Hedging Reserve (COHR):
= (12.7 - 5.7) USD/brl x 18 million barrels
= 90 million USD or gain of MYR 395,000,000
When its a loss, COHR only shows the 'greater opportunity lost' compared to smaller opportunity gained by hedging - by locking down the margin.
When its a gain, COHR only shows the 'benefit of opportunity locked' compared to if you had not locked the opportunity available earlier.
As such, we can see why the above is not reported in P&L statement. It really does not matter - as what Rabbit2 said it becomes zero on maturity.
2022-09-03 12:54 | Report Abuse
ADDITIONAL EXPLANATION BY PROBABILITY:
The reason why HY shows large unrealized loss on Cost of hedging reserve (COHR) is because it has around 18 million barrels of refined products, e.g Gasoline crack spread that is hedged for next 24 months at 12.7 USD/brl margin.
This is the Refining Margin Swap Contract (RMSC) shown as USD 227 million (USD 12.7 crack x 18 million barrels hedged).
As per accounting rules, this hedged contract (RMSC) has to show the opportunity lost / gained presuming the current crack spread of these refined products at the end of reporting Q2 22' (30 June) persist for the next 12 months.
Unrealized Cost of Hedging Reserve (COHR) , loss / gain: (A-M) x V
A = hedged crack spread value, 12.7 USD/brl
V = barrels volume of refined products hedged, 18 million
M = Market pricing of the hedged refined product at end of reporting period (mark to market)
Since at the end of June 22', the avg crack spread of the refined products, e.g gasoline at 31.6 USD/brl, the opportunity lost for the period of hedging is
Unrealized Cost of Hedging Reserve (COHR):
= (12.7 - 31.6) USD/brl x 18 million barrels
= - 338 million USD or MYR 1,490,267,000
The above is what reported as (Asset 261,065,000 - Liabilities 1,751,332,000)
Out of the above a portion will go into 'Other comprehensive
(expense)/income' reported as Cost of hedging reserve.
2022-09-03 12:43 | Report Abuse
The reason why HY shows large unrealized loss on Cost of hedging reserve (COHR) is because it has around 18 million barrels of refined products, e.g Gasoline crack spread that is hedged for next 12 months at 12.7 USD/brl margin.
This is the Refining Margin Swap Contract (RMSC) shown as USD 227 million (USD 12.7 crack x 18 million barrels hedged).
As per accounting rules, this hedged contract (RMSC) has to show the opportunity lost / gained presuming the current crack spread of these refined products at the end of reporting Q2 22' (30 June) persist for the next 12 months.
Unrealized Cost of Hedging Reserve (COHR) , loss / gain: (A-M) x V
A = hedged crack spread value, 12.7 USD/brl
V = barrels volume of refined products hedged, 18 million
M = Market pricing of the hedged refined product at end of reporting period (mark to market)
Since at the end of June 22', the avg crack spread of the refined products, e.g gasoline at 31.6 USD/brl, the opportunity lost for the period of hedging is
Unrealized Cost of Hedging Reserve (COHR):
= (12.7 - 31.6) USD/brl x 18 million barrels
= - 338 million USD or MYR 1,490,267,000
The above is what reported as (Asset 261,065,000 - Liabilities 1,751,332,000)
Out of the above a portion will go into 'Other comprehensive
(expense)/income' reported as Cost of hedging reserve.
...
Now lets see what happens, when Gasoline crack drops to its usual average of 5.7 USD/brl (currently its about 4.5 USD/brl)
Unrealized Cost of Hedging Reserve (COHR):
= (12.7 - 5.7) USD/brl x 18 million barrels
= 90 million USD or gain of MYR 395,000,000
When its a loss, COHR only shows the 'greater opportunity lost' compared to smaller opportunity gained by hedging - by locking down the margin.
When its a gain, COHR only shows the 'benefit of opportunity locked' compared to if you had not locked the opportunity available earlier.
As such, we can see why the above is not reported in P&L statement. It really does not matter - as what Rabbit2 said it becomes zero on maturity.
2022-09-03 11:14 | Report Abuse
Charlest, Stockraider, spent some time to understand what the articles shows. No one is trying to plug figures from the air...
Stock: [HENGYUAN]: HENGYUAN REFINING COMPANY BERHAD
2022-09-04 13:47 | Report Abuse
well explained sslee, they are accounting the unrealized loss not only up till year end but the whole maturity period of the balance refining margin swap contract if i am not wrong (or at least for those that matures next 12 months as someone said earlier)
Posted by Sslee > 2 minutes ago | Report Abuse
PSAi3alert,
For Q2 2022, the RM897.257M profits before tax already included the realised derivaties loss matured on April, May and June of RM 438,758,000.
For H1 2022, the RM 982,535,000 profit before tax already included the realised derivaties loss matured on Jan, Feb, March, April, May and June of RM 870,964,000.
Hence if HRC do not do the hedging the profit before tax should be RM 870,964,000 + RM 982,535,000.
Or profit before tax of about USD 20 per barrel.
That is what I say hedging is for during super good time the profit will be less and during bad time your loss will be less.
Since the unrealised derivaties is marked to market on 30/6/2022. Thus a very high unrealised loss because spread margin is almost at peak of USD 40+ on 30/6/2022.
If this peak spread margin presist till year end then H2 will have huge realised derivative loss but then again the physical business of buying crude, refining to finished product and sold the finished product will earned you super super fat refinimg margin of USD 40 per barrel.
You can expect about another 21 million barrel for H2.
So do the math.