Use margin line, added all to hengyuan at 4.13-4.15

TA bullish now

With absent of RM 80m one of impairement loss incur in previous Q2, the next upcoming Q3 should deliver additional 1sen on top of Q2 EPS. In additional, USD profit is strengthen further by another 5% in Q3 if compared to Q2. Therefore, next Q3 should deliever up to EPS = 4.5sen

Technically, Armanda share price is about turning UP point, reversal chart is expected next

To know better PetronM business, refer to latest PetronM management comment on Q&A in latest annual meeting

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

As PetronM refine 20% oil into gasoline, it need to import from its holding company Petron corp in philippines. Therefore, PetronM manage to minimize loss making gasoline
https://www.tradingview.com/symbols/NYMEX-D1N1!/

On the other hand, PetronM maximum handsome profit through refine majority 60% oil into diesel and jet fuel, which profit margin ow at elevated high level
Diesel
https://www.tradingview.com/symbols/NYMEX-GOC1!/
jet fuel
https://www.tradingview.com/symbols/NYMEX-ASD2!/

PetronM refine component product are majority produce diesel and jet fuel, both combined form 60% refine product.

Currently, these 2 refine product command historical highest crack spread range, allow PetronM to realize highest profit margin.

PetronM only product 20% gasoline which is now at loss making margin.

The balance refine product is LPG, at elevated profitable margin

Historical, petronM payout at least 20% net profit as dividend.

Based on 1H and expected 2H EPS, PetronM upcoming dividend could worth at least 48sen, >10% yield

Allocate balance fund to add all armanda at 38sen

sold all affin at 2.25

https://www.qcintel.com/article/euro-oil-products-diesel-cracks-at-fresh-highs-as-strikes-continue-9145.html

https://www.qcintel.com/article/euro-oil-products-diesel-cracks-at-fresh-highs-as-strikes-continue-9145.html

https://www.tradingview.com/news/reuters.com,2022:newsml_L4N31J0T1:0-gasoil-margins-up-further-on-steady-oil-europe-support/

https://www.tradingview.com/news/reuters.com,2022:newsml_L4N31J0T1:0-gasoil-margins-up-further-on-steady-oil-europe-support/

ARMADA steady profit from FSOP is USD denominated, strengthen USD translate to higher RM profit

Built up position few weeks beforehand and at current low depress price to enjoy higher margin of safety.

Built up position few weeks beforehand and at current low depress price to enjoy higher margin of safety.

The earlier limit up ahead of previous Q2 may no repeated in upcoming Q3 result. But, share should still able react positively if Q3 EPS can manage deliver around RM 2 and writeback some earlier hedging loss.

Now is right timing to built up position ahead of Q3 result next month. Although hengyuan expect to deliver lower Q3 earning if compared to Q2, but coming Q3 result EPS still is expect to RM 2 due to sustain elevated crack spread for diessel and jet juel.

Current depress level offer limited downside risk, should gradually on recoveery path ahead of coming Q3 result

bought back hengyuan at 4.16-4.17

bought back PetronM at 4.48-4.50

sold hiaptek at 23sen, locked profit first

Now, only need to wait for next month Q result, expect to deliver EPS = 4.2- 4.5sen

Holding most armanda in portfolio, at cost 38sen.

Added more to armanda, all at 38sen

Current crack spread
1. Gasoline, incur loss making
2. Dissel, continue making good profit
3. Jet fuel, continue making good profit

Remark: the nett impact on EPS is upcoming Q3 is lower than Q2

Hedging position
1. Gasoline, revert to profit making due to slump in gasoline crack spread
2. Dissel, continue loss making due to continue elevated crack
3. Jet fuel, continue loss making due to continue elevated crack.

Remark: the nett impact on comprehensive income is pare down quarterly hedging loss.

Continue strength in USD is added profit to armanda as all its long term rental fees in FSOP is USD denominated.

Armada always response positively on its Q result due to increasing profit and trim debt continuing. Just wait for coming Q next month

Current crack spread
1. Gasoline, incur loss making
2. Dissel, continue making good profit
3. Jet fuel, continue making good profit

Hedging position
1. Gasoline, revert to profit making due to slump in gasoline crack spread
2. Dissel, continue loss making due to continue elevated crack
3. Jet fuel, continue loss making due to continue elevated crack

bought back armanda at 38sen

sold back RHB at 5.72-5.73

sold back HLC at 6.32-6.34

At 21sen, and dividend yield 4.8%, downside risk is extreme minimum

MRT3 + RTS + Penang LRT/tunnel need a lot of local steel.

Associate, eastern steel is highly profitable, earning tax free profit, export mainly to China which is now in the middle pump prime to stimulus massive infrastructure growth

bought hiaptek at 21sen

sold back supermax at 69sen.

Whether or not commodity swap can fully mitigate big stockholding loss due to steep decline in crude oil storage value remain a question. But, for certain, it will record less profit in Q3 than in Q2.

Daily Crack spread = Purchase price of crude oil - selling price of finished products gasoline, diesel and jet fuel

Net crack spread = (Purchase price of crude oil + operation cost + maintenance cost ) - selling price of finished products gasoline diesel and jet fuel

Its real funny why many calculations use daily publish crack spread to arrive net profit but ignore the fact that for refinery to refine crude oil, its need operating cost including use some of feedstock as fuel to operate plant, electricity/manpower/Maintenace/chemical to crack crude into different component etc.

In general, to run refinery plant, it need at least crack 4-5 to operational breakeven. Current depress gasoline crack is actually loss making or merely near breakeven

Upcoming Q3 definitely lower than Q2 result. The reason are

1. Average crack spread in Q3 is lower than Q2
2. In Q2, there is one-time writeback inventory gain RM 54m, these writeback is non recurrence in next Q3
3. Realize and unrealize forex loss will increase due to further strengthen in USD.
4. Stockholding loss. Crude oil storage tank purchase price is > USD100 in Q2, but mark to market price based on first in first out in Q3 < USD 90 now. On average incur -USD12-14/barrel loss.
5. Refinery gasoline is now at operation loss as gross crack spread tumbling below breakeven cost USD 5. However, refinery crack for diesel and jet oil still command high profit margin.

However, the above factors is partially offset by
1. Hedging gain on gasoline crack spread but, Hedging on diesel and jet oil may continue at loss due to continue elevated crack.

Remark: In early next year 2023, hengyuan will have major 5 year plan Maintenace shutdown, which could last 1-2 month period.

Very funny, can ukraine withstand tactical nuclear weapon!? first few strike will already destroy almost all weapon from US. Can US continue supply unlimited weapon to ukraine? Russian possess 1600 unit of tactical nuclear weapon is far more than US only have 300 unit. US is self-interest country, only mind its own core interest.

Rusian will use Tactical nuclear weapon only if Ukraine contine attack its new territory. Once tactical nuclear weapon force to launch, the first few strike will create stop war effect already. EU, US, ukraine will all refrain to conter attack as it will lead mutual destruction. Afterall, everyone know Putin escalate to de-escalate aim is to stop war

Sslee

You must know history squence event first. US first nuclear bomb is actually taken from Jerman when it defeated Jerman first. Then, US only use these new invented nuclear bomb on Japan later

In world war II, US also adpot escalate to de-escalte strategy to stop war. US use nuclear bomb Japan, force it to surrender. If without nuclear bomb, Japan will continue virgourously defend its territory and occupied land in China and Asean country.

Once temporary easefire achieved, EU (lead by France) will take role to replace Nato (lead by US). Both China and India will help EU to inititate peace negiotation between Ukranine and Russian. As pease talk is prolong process, tension will still retain at border alike what happen between Isreal and palestine.

Remark: Currently all parties inculding Russian/ukranie/EU, all wanted easefire, but only US wan prolong war as part of its strategy to weaken Russian economy. But if US territiroy, its core interest is under threat due to Russian initial tactical nuclear weapon, US will force to join on peace negiotation.

Russian own 1600 tactical nuclear weapon, specific design to target limited battle field. Its power is about 1/15 bomb in japan, capable to destroy limited strike on military target without causing widespread radioactive fallout.

Russian own world most powerful submarine

hahahaha, you think Rusian nuclear cannot reach US ??? actually, go to look at world map. Russian and US actually is neighbour country :)

Russia action is escalate to de-escalate to stop war

If Russian initiate nuclear war, EU or US wan counter attack, it will lead mutual destruction. US is fear of nuclear war as it absolute none of its core interest

Once temporary easefire achieved, EU (lead by France) will take role to replace Nato (lead by US). Both China and India will help EU to inititate peace negiotation between Ukranine and Russian.

Remark: Currently all parties inculding Russian/ukranie/EU, all wanted easefire, but only US wan prolong war