HY Complex refinery margin update - 26/08/22
...........

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 45.95/bbl
2. Jet fuel at 7% yield, cracks USD 34.30/bb
3. Gasoline Mogas 95 at 35% yield, cracks USD (10.00 + 3.96) / bbl
4. Rest of product yield at 12%, using Mogas 95 cracks USD 13.96/bbl

Gross refining margin:

= (0.46 x 45.95 ) + (0.07 x 34.30) + (0.35 x 13.96)+ (0.12 x 13.96)
= 21.14 + 2.40 + 4.88 + 1.67
= US $ 30.1 / brl
.................

Gross Profit at above derived present refining margin

= (10.7 million barrel sales per qtr) x ( US $30.1/brl) x (MYR 4.4/USD)
= 1.417 Billion MYR
...................

ok superpanda - just move on.. thought my msg will end the arguments.

hope it ends and go for more fruitful discussion

yes John, some just seems to enjoy poking others..could be many useless motives like ego, sadism, revenge, brag etc...

and useful motives too - to bring down share price using deceptive information
its unfortunate part of human nature...

just focus where its most beneficial to self

@Blee, agree..

Post removed.Why?

@superpanda, i think much people values Johnzhang's opinion than yours as he had shown integrity...

once you show disrespect and lack of integrity, eventually people no longer value your opinion..

your comments are just a waste of forum space then

no doubt there are no rules set in the real world including forum here....any meaningful interaction needs some basic social etiquettes, integrity, honesty, reliability etc..

these are unwritten rules for mutual benefit

sslee is a great asset to i3, all the questions asked to PetronM during AGM that has been documented was likely from sslee

sslee made a lot of money from CW i think..aiming to be significant shareholder of Petronm..

not the money itself i mean..ha ha

yes - will share the money made too...

i am hoping EPS above RM 1 will do...

the price movement effects will happen once market understands how HY is deriving the earnings...

if market dont understand - we will teach ..he he


Posted by CharlesT > Aug 26, 2022 1:20 PM | Report Abuse

If this Q can make EPS rm2 but cant bring the price back to RM6+...

Then if Q3 of EPS goes back to RM0.20 u think share price then can go back to RM6 ah

ha ha...past bite still lingers...

this is true if the russian oil sanction will be cancelled..

Posted by Mikecyc > Aug 26, 2022 1:11 PM | Report Abuse

Haha I had posted in i3 on August 2020 on Nitrile Gloves Demand vs Supply for 7 Glove Companies , that Supply can meet the Demand in a Year time span starting from September 2020 to August 2021 ….

its very very probable for this TP to come true by Dec 2022, provided the below crack spread maintains till end of the year and russian oil sanction takes place by 5th Dec 2022 as decided by EU.

https://www.tradingview.com/symbols/NYMEX-GZ1!/

almost certain with the above two conditions

Posted by NoviceJ > Aug 26, 2022 11:35 AM | Report Abuse

If the share prices is @RM18.89 I'm a Very very happy man
Thank you Probability for the clarification

use the below as a very fair guidance

Posted by Johnzhang > Aug 14, 2022 4:15 PM | Report Abuse

Hi probability, Thanks for the explanation.

Total expenses after GP (ie manufacturing, Adm, Dep & Amortisation, Finance) was $95M for Q1 2022, $100M per qtr average for 2021 and $106M per qtr average for 2020. Your $80+100 M = $180M expenses for Q2 is well above the actual in recent qtrs and therefore with huge buffer built-in.

Your estimated GP is $1,056 M
less hedging loss ($100M)
less Expenses ($180M)
-------------------------------------
PBT $776M

Tax $100m @24% ($24M)
Tax $676M @33% ($223M)
-----------------------------------------
NPAT $529M
EPS $1.76

The upside are :
1. lower expenses than the $180M built-in the calculation
2. Higher GP from significantly higher Diesel yield (46 vs 34%) and lower Fuel oil.

The reservation i have if the Management's actual hedging deviate from the model described by you. Let's wait for the QR with much excitement.


We look forward to the exciting QR.

need to deduct manufacturing, s&A cost etc..interest and tax before arriving at PAT and EPS

Posted by NoviceJ > Aug 26, 2022 10:50 AM | Report Abuse

Hope that your forecast profit will come true Base on Probability estimate and if we work out the sum
1417/300=4.72
4.72X4Q=18.89 per year profit
Guess what will the share prices be

It is for certain that HY hedging loss / gain will be neutral soon.. i.e zero.

.....

If not in Q2, it will be in Q3...and then even gain after that.

hedging gain /loss only occurs when a variable is changing such as expansion or contraction of margin (price difference between refined products & feed crude), or the oil price changes...

as long as the change in these variable is not on the same direction continuously indefinitely, the hedging gain / loss will eventually come to a stand still...and reverse when the direction changes

its like the tail catching up with head and going at same speed eventually.

at times the tail speed is slower (hedging loss) and at times faster (hedging gain)...but it can never runaway from the average head speed (the gross profit).

HY Complex refinery margin update - 26/08/22
...........

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 45.95/bbl
2. Jet fuel at 7% yield, cracks USD 34.30/bb
3. Gasoline Mogas 95 at 35% yield, cracks USD (10.00 + 3.96) / bbl
4. Rest of product yield at 12%, using Mogas 95 cracks USD 13.96/bbl

Gross refining margin:

= (0.46 x 45.95 ) + (0.07 x 34.30) + (0.35 x 13.96)+ (0.12 x 13.96)
= 21.14 + 2.40 + 4.88 + 1.67
= US $ 30.1 / brl
.................

Gross Profit at above derived present refining margin

= (10.7 million barrel sales per qtr) x ( US $30.1/brl) x (MYR 4.4/USD)
= 1.417 Billion MYR
...................

wah...after uncle Koon say Hengyuan has very 'Erotic' earnings, you guys started behaving one kind already..LOL!

@TakeProfits, i dont think it will limit up, but it may eventually go up higher than 30%....just keep it for sometime. Sell whenever you feel profit is good enough for you.

Kasi limit up tomorrow!

Fantastic results of PetronM as predicted by Sslee... congrats!!

@Goldberg, thats for Q3 results

Sorry MM, i cant be bothered to explain when i had posted too many information concerning this here earlier...

go ahead say what you want here..np

@BobAexlrod, help me calculate the below with the latest figures from crack spread chart link below: - TQ
.........................................

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 42.98/bbl
2. Jet fuel at 7% yield, cracks USD 34.54/bb
3. Gasoline Mogas 95 at 35% yield, cracks USD (11.35 + 3.84) / bbl
4. Rest of product yield at 12%, using Mogas 95 cracks USD 15.19/bbl

Gross refining margin:

= (0.46 x 42.98 ) + (0.07 x 34.54) + (0.35 x 15.19)+ (0.12 x 15.19)
= 19.77 + 2.42 + 5.31 + 1.82
= US $ 29.3 / brl
.................

Gross Profit at above derived present refining margin of US $29.3/brl

= (10.7 million barrel sales per qtr) x ( US $29.3/brl) x (MYR 4.4/USD)
= 1.379 Billion MYR
...................

A Big Bang? Anticipating the Impact of Europe’s Sanctions on Russian Energy

https://carnegieendowment.org/eurasiainsight/87318

So, if we assume that the total of the current 7.5 million bpd of Russian petroleum exports will be slashed in half, with the other half managing to make its way past the sanctions barriers, the world petroleum balance would be short 3 to 4 million bpd, which is comparable to all of Western Africa’s production or Japan’s consumption. Such a disruption has the potential to exceed the previous oil crises of 1973, 1979, and 1991, and unlike the previous disruptions, it promises to last not just a few weeks or months, but years.

.........

they say YEARS...

The above is very much like i had estimated for Diesel alone.

EU consumes 820,000 bpd of Diesel currently from Russia. Thats 2 million barrels per day capacity of a complex refinery.

I believe EU & US is determined to weaken nuclear power russia and completely move away from dependence on their fuel.

This is marathon, do not give up on Hengyuan easily...

Bear in mind that EU will also likely not import refined oil from countries that buy russian oil, as it effectively means they are still supporting russian oil business.

India had been systematically reducing russian oil intake recently.

@sonyx123, the cause of the recent rise could be either on anticipation of good results for qtr ending June 22' or due to the fact that diesel shortage in EU is benefitting refineries from Asia who are able to sell at good margin and this is expected to be a prolonged phenomenon potentially worsened further when sanction is in full force by Dec 22'.


I believe the latter is the actual reason.

820,000 bpd diesel is imported by EU from Russian despite US exporting as much as possible to EU. Its difficult to fill this gap unless 2 million barrels per day refinery capacity comes up outside Russia.

https://www.google.com/finance/quote/543373:BOM?sa=X&ved=2ahUKEwjs8fv7jNr5AhXNi_0HHY1CDkUQ3ecFegQIFhAg&window=1M

glad to hear that from you John.. lets hope for the best

thanks Zhuge, lets hope results is as expected

Posted by Zhuge_Liang > Aug 23, 2022 4:40 PM | Report Abuse

Good job done by probability.
Thank you for your excellent work

newbird33, every qtr report you will find that figure there

its the hedging contract size for a month throughput (3.5 million barrels)

check all the qtrly report for the last 2 years - its value is proportional to the price of oil / refined products during the period at 3.5 m barrels

Posted by newbird33 > Aug 22, 2022 11:23 PM | Report Abuse

Pls dun be over confident on Hengyuan's results. As at 31.03.2022, it betted USD291M on refining margin swap contracts and has a loss of RM339M. That's why its EPS for Q1 was so low.

@Zhuge, Lets replace the gross profit of 1.37 billion derived above on below simplified EPS calculation of Johnzhang.


Your estimated GP is $1,379 M
less hedging loss ($0M)
less Expenses ($180M)
-------------------------------------
PBT $1200M

Tax $100m @24% ($24M)
Tax $1100M @33% ($363M)
-----------------------------------------
NPAT $813M
EPS $2.71


Johnzhang posted > Aug 14, 2022 4:15 PM | Report Abuse

Hi probability, Thanks for the explaination.
Total expenses after GP (ie manufacturing, Adm, Dep & Amortisation, Finance) was $95M for Q1 2022, $100M per qtr average for 2021 and $106M per qtr average for 2020. Your $80+100 M = $180M expenses for Q2 is well above the actual in recent qtrs and therefore with huge buffer built-in.

Your estimated GP is $1,056 M
less hedging loss ($100M)
less Expenses ($180M)
-------------------------------------
PBT $776M

Tax $100m @24% ($24M)
Tax $676M @33% ($223M)
-----------------------------------------
NPAT $529M
EPS $1.76

@Zhuge, i think going forward the hedging loss will become minimal and can even turn into hedging gain as expansion of refining margin peaked in June 22'.

This effectively means the gross profit we calculate above using the crack spread is what will be reported actually.

In terms of taxation, i have no idea whether the rate will be higher than current.

I realized a lot of useful information related to derivatives or hedging on Q&A session with PetronM. I think the person who had asked these questions are very much from i3 :)

Refer Questions 15 till 21

https://www.petron.com.my/wp-content/uploads/2022/07/63rd-AGM-Summary-of-Proceedings-and-Appendix-A-Questions-from-Shareholders_2022.pdf


Posted by Zhuge_Liang > Aug 22, 2022 10:46 PM | Report Abuse

probability,
Can make a net PAT of 1.0 billion in Q2 2022 and Q3 2022 respectively or an EPS of 3.00 ?
Is the above assumption possible ?

@Zhuge, i think going forward the hedging loss will become minimal and can even turn into hedging gain as expansion of refining margin peaked in June 22'.

This effectively means the gross profit we calculate above using the crack spread is what will be reported actually.

In terms of taxation, i have no idea whether the rate will be higher than current.

I realized a lot of useful information related to derivatives or hedging on Q&A session with PetronM. I think the person who had asked these questions are very much from i3 :)

Refer Questions 15 till 21


https://www.petron.com.my/wp-content/uploads/2022/07/63rd-AGM-Summary-of-Proceedings-and-Appendix-A-Questions-from-Shareholders_2022.pdf

Check out HY refining margin tomorrow

You are going to see a pleasant surprise:)

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

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 42.98/bbl
2. Jet fuel at 7% yield, cracks USD 34.54/bb
3. Gasoline Mogas 95 at 35% yield, cracks USD (11.35 + 3.84) / bbl
4. Rest of product yield at 12%, using Mogas 95 cracks USD 15.19/bbl

Gross refining margin:

= (0.46 x 42.98 ) + (0.07 x 34.54) + (0.35 x 15.19)+ (0.12 x 15.19)
= 19.77 + 2.42 + 5.31 + 1.82
= US $ 29.3 / brl
.................

Gross Profit at above derived present refining margin of US $29.3/brl

= (10.7 million barrel sales per qtr) x ( US $29.3/brl) x (MYR 4.4/USD)
= 1.379 Billion MYR
...................

you have only 4 trading days before market realizes the truth (Hengyuan Q2 results will be out by 26th Aug).

After that, opportunity to make immense return will partially offset.

Study the data presented above carefully and make your own decision.

You need not follow anyone's advise - just verify it.

the sanction on russian oil is only beginning in Dec 22' and full restriction by Feb 23'....i think its a long cold war...just like Iran..

it may take ages before Russian are tamed down...

during this time, even just one refinery going off-line for some reason will spike up refinery margin tremendously....

Whatever reason that has propelled Harta share price to come down, will be the same reason for Hengyuan share price to move up.

PLEASE calculate HENGYUAN'S EPS per QTR with the above QTR profit.

It has only 300 million outstanding shares.

GO FOR HENGYUAN - IF YOU WANT TO RECOVER BACK LOSSES FROM HARTA!

HY refinery margin update
.........................................

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 42.98/bbl
2. Jet fuel at 7% yield, cracks USD 34.54/bb
3. Gasoline Mogas 95 at 35% yield, cracks USD (11.35 + 3.84) / bbl
4. Rest of product yield at 12%, using Mogas 95 cracks USD 15.19/bbl

Gross refining margin:

= (0.46 x 42.98 ) + (0.07 x 34.54) + (0.35 x 15.19)+ (0.12 x 15.19)
= 19.77 + 2.42 + 5.31 + 1.82
= US $ 29.3 / brl
.................

Gross Profit at above derived present refining margin of US $29.3/brl per QTR

= (10.7 million barrel sales per qtr) x ( US $29.3/brl) x (MYR 4.4/USD)
= 1.379 Billion MYR
...................

Europe Gas Jumps as Latest Russian Cut Plan Stokes Supply Fears

https://www.bloomberg.com/news/articles/2022-08-22/europe-gas-jumps-as-supply-fears-return-with-planned-pipe-works

European gas prices surged after Moscow’s move to shut a major pipeline ramped up fears of a prolonged supply halt, leaving Germany once again guessing as to how much Russian fuel it can count on this winter.

Benchmark futures rose as much as 16%, also driving up electricity prices to fresh records. The key Nord Stream pipeline will stop for three days of maintenance on Aug. 31, again raising concerns that the link won’t return to service as planned after the works. Europe has been on tenterhooks about shipments through the link for weeks, with flows resuming only at very low levels after it was shut for works last month.

......

Diesel crack is exploding - you will see it tomorrow

Just see the price movement of the below pure refinery stock in India:

https://www.google.com/finance/quote/543373:BOM?sa=X&ved=2ahUKEwjs8fv7jNr5AhXNi_0HHY1CDkUQ3ecFegQIFhAg&window=6M

Refining margin live data is also rising...

Remember - the sanction has not even been made effective yet (another 4 months to go).

@Zhuge, we will

Thanks Sslee, very interesting info. I guess those Q&A were from you :)...he he

Interesting, do share the link if possible

Posted by Sslee > Aug 22, 2022 3:11 PM | Report Abuse

From Petronm 63th AGM minutes Q&A published at Petronm website.

60% diesel? Walao eh.. i have never heard of such refinery

where you get this info sslee :)

Posted by Sslee > Aug 22, 2022 3:03 PM | Report Abuse

Petronm simple refinery (original design to feed on low sulfur Tapis crude with typical yield 60% diesel and jet fuel, 20% gasoline and the balance LPG and byproduct.

NO...

Actual profit depends on the margin secured during hedging via Futures.

Gross profit depends on timing of real 'exchange' of goods & money.

Difference between the two, is hedging gain or loss.

Trust the above is simple enough to understand.

Posted by KooSan > Aug 22, 2022 2:19 PM | Report Abuse

So in short, the profitability depends on how much the hedged? And whether the oil price increase?

sslee, do not entertain stockraider. He is brain damaged..