Aug 2022
Crude oil USD94-96
Crack spread 7-8
RON 97 selling price RM 4.40/liter

Dec 2021
Crude oil 94-96
Crack spread 7-8
RON 97 selling price was RM 3.40/litre

Remark: Gov delay in adjusting retail petrol pricing, benefiting PetronM total 750 retail station

RON 97 decrease just another 10sen to RM 4.40/l. These level is still RM 1.00/ l higher if compared to last year level RM 3.40 when crack spread at 7-8.

For information, Highest RON 97 at 4.90/l recorded when crack spread trade above 30.

Slow decreasing petrol price as compared to rapid normalize crack spread (input cost) offer great lag time arbitrary gain for PetroM total 750 nationwide petrol station, each have underground storage tank. Input cost rapid decrease, but, selling prices still retain elevated level.

Personally, expect 25sen special dividend

No need to bother who is he, just focus on stock itself as anyone can buy in open market and emerge as substantial shareholder now due to HISTORICAL depress price

Petron corporation's detail Q2 result have yet to release. Its result encompasse Philippine, Malaysia, Singapore and business range from crude oil. refined product, fuel, and marketing station in various countries.

Still need to wait for local PetronM to release result for more insight detail

As prices of finished products further surged in the second quarter, refining cracks also strengthened. Petron benefited from the strong regional refining margins with higher production at the refiner....

https://www.petron.com/news/petron-doubles-consolidated-net-income-in-h1-2022/

PetronM in long term valuation should be based on sum of part

1. Refinery business （30%）- valuation 4x (cyclical business)
2. Petrol station （70%） - valuation 10x (retail business)

Don forget PetronM aside as refiner, also possess valuable 750 retail station, each own underground storage tank for petrol/diesel, still selling at elevated RM 4.5/l

You have to compare the stock price level which is also already reach normalize level. But these normalize level have yet take into account upcoming Q2 result, which will boost EPS RM 2- RM 2.5. The company cash level, balance sheet and NTA, all have yet to reflect at current share price level.

Although stock price wont reflect totally the above Q2 profit on share price due to projection next Q3 downtrend EPS, but it will at least reflect certain fraction of above profit impact on stock price.

The significant boost in profit in Q2 (if EPS is RM 2-2.5) is already enough to cover next 4-5 year normalize EPS. Furthermore, the forward valuation and dividend also attractive to support the current share price as future normalize crack spread still give good profit margin, is profitable business + forward interest expense significant decrease,

To challenge 47sen resistance level

Crack spread above 20 in Q2 will record in the coming result, although is one-off windfall profit, an exception EPS will nevertheless boost company cash hoard significantly.

Bear in mind, if PetronM manages to record EPS RM 2 - RM 2.5 due to exception crack spread in Q2, it could potentially turn its balance sheet into NET CASH position, a significant game changer forward.

If based on historical data chart, crack spread above 10 is considered an outlier, a rare windfall profit.

The mean crack spread should range 5 to 8, which already gives very good profit margin as refinery cost operation breakeven level is around 4.

Hengyuan, pure refiner, need at least crack spread 4 to breakeven. At its annual report, hengyuan alrdy able to report profit for crack spread above 4.

Crack spread current level is normalize level at around 7. At these level refinery still is profitable business as its cost operation is around USD 4 to 5.

https://www.tradingview.com/symbols/NYMEX-D1N1!/

ready to go

It is never in Petdag/Boustead (BH petrol), a pure retail petrol business, to report FIXED profit due to fixed price at all. It is often commented factor that affect profit margin are sale volume + fuel price movement+ time lag affect factors on stockholding gain/loss

Each petrol station have underground fuel storage tank.

In additional, in its refinery site, it also have crude oil storage tank to store feedstock, it also have storage tank for petrol/diessel/jet fuel, the end product tanks.

Each of these above storage tanks above will offer a big arbitrary gain due to lag time effect and timing for Gov to adjust selling price.

Buy PetronM is more on its 750 retail petrol chain, quarter Malaysia petrol market share, rather than its volatile refinery business alone. PetronM refinery business is to complement its retail business as all its refine product is selling through its retail outlet

You can refer to other 2 listed company, Petdag (Petronas station) and Boustead holding (under trading division, refer to BH petrol station), both pure retail petrol station profit margin are affected by sale volume and fuel price movement

The possible reason could be Malaysia gov allow slower adjustment to retail price, allowing petrol station to enjoy higher lag time arbitrary gain as part of compensation due to Malaysia gov short budget, delay to pay subsidy on RON95 to retail station. The delay in payment for subsidy is main complaint by retail as it result in accumulated receivable for prolong time, affecting retail petrol cash flow and interest expense.

In last year Nov-Dec, the retail RON97 is at RM 3.50/l, crack spread (input cost) is at around 7; vs. retail RON97 now is still at RM 4.50/l for same crack spread at 7.

Malaysia gov seem granted retail petrol opportunity to capitalize on current still elevated selling price to end customer by adjusting slowly retail selling price against rapid decrease in crack spread

Bear in mind, PetronM retail petrol station still selling its petrol
RON97 at RM 4.50/l;
RON100 at RM 4.90/l;
RON 95 if unsubsidized at RON 4.30/l

You should checked what the retail petrol level last year when crack spread at 7-8. There is big lag time arbitrary gain for PetronM. capitalize on current elevated retail price level despite at current crack spread

The current rate is 2.25%, it is expect to hike further 2 x 0.25% by year-end to 2.75% and further 0.25% to 3% by Q1 2022

In additional to retail petrol station, refining business in long term should form just 1/4 valuation on petronm.

In fact, petron refining business should view as complement to its retail petrol as integrated fuel provider as all its refinary oil end product is sell to its own retail station, enjoy full profit margin in entire chain supply from trading, storage, refining, logistic, retail, end customer product

At least 2/3 valuation of petron should be reflect on its 3rd largest retain petrol station, a total of profit making 760 station, commanding about quarters of Malaysia petrol market share.

Added more at 4.68-4.72

Based on projected time that special will paid out to shareholders by end of these year, the estimated timeframe is

1. Payment date: Dec
2. Ex dividend date: Nov
3. Announced dividend datw : Oct
4. Bank Negara approval date: Sept
5. Affin board of director proposed special dividend date : Aug

Seem resistance barriers too strong, momentum need more time to regain power, stay tune

bullish momentum, testing resistance level

Be patient, allow some time for gestation, share price is currently at the upper band level, it just needs another booster special dividend to propel share price to breakout.

Technically, the Bollinger band just opened, bullish signal.

Cypark on track to retest recent high level 46sen and 49.5sen, once breakout, it will move significantly higher to above 50sen ahead of COD announcement

Now already August, by next month, many new power plant are ready for COD.

Be patient, juat wait little longer for official announcement in bursa.

Power plant COD is ultmost important for upfront huge built up cost power plant businesses model as it will end construction risk and begin new steady positve cash flow upon COD for next 25 year concessions

Share price can have fluctuations, but, business model is key determinant. Long term 25year power plant concession businesss allow cypark to shield from recession risk, geopolitical tension, inflation etc

Technically, chart show higher high ----> BULLISH

These total worth of RM 2 billion new power plant once start commercial operation these year will begin to receive steady recurring payment over 25 year concession period, make repayment debt total worth RM 1.4 billion, with the balance to start resume dividend payout on positive cash flow

COD COD COD, a total of 4 COD announcements will be made on bursa soon. 1 COD on WTE (RM 900m), 2 COD (2x 30MW, each RM 230m x 2) and 1 COD (100MW) , cost RM 550m for solar power, total worth RM 2 billion worth of power plant will commercial operation by 2022

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3280812

You can compare the RON97 price change to crack spread data. It is big lag time offer huge discrepancy gap, offer exceptional arbitrary gain for retail petrol outlet.

Above scenario clearly show petdag profitability dependent on

1. Sale volume.
2. Retail RON petrol selling price (output selling)
3. Crack spread (input cost)

Petdag retail petrol profit margin is NOT FIXED.

There is lag time factor between input cost (crack spread) and output selling price to customer at its retail station, offer arbitrary gain

Factor affecting retail petrol business earning as below show by petdag analyst comment.

1. E.g. FY21 earnings almost doubled YoY, with the group enjoying higher product prices, while volumes stayed marginally flattish YoY (-2%)

2. E. G. Core profit declined by -55.8% due to lower sales volume (-4%), higher product costs (+39%) and less favourable MOPS price trend.

3. 1HFY21 core net profit of RM266m came in below expectations at 39% of our, and 40% of consensus, full-year forecasts, dragged by a decline in product margin spreads amidst the normalisation of oil prices during the 2QFY21 quarter, coupled with lower-than-expected sales volumes.

4. . Post results, we lower our FY21E/FY22E earnings by 11%/5% on the back of lower margins spread and sales volume assumptions

5. Petronas Dagangan’s 1Q22 results missed expectations due to higher product prices, despite a higher sales volume (+20% YoY). Sales volumes for both the retail and commercial segments are expected to grow, but margins could be volatile.

6. While sales volumes are certainly expected to remain healthy in tandem with the resumption of economic activities, the volatile fluctuations of underlying crude oil and product prices remain, and thus, cost management may be crucial going forward.

7. However, we have seen a significant improvement over the financial year last year with quite good first-quarter performance. There are many other factors that impacting the business, not just the volume but is also the movement of prices

8. PetDag 4Q21 core profit rose 53% yoy and 15% qoq to RM137m driven mainly by recovery in sales volume following the reopening of more economic sectors. EBITDA margin, however, was compressed to 3.6% (4Q20: 5%, 3Q21: 5.1%) potentially as a result of lag loss from declining MOPS price during the quarter.

Latest petrol RON 97 retail price only decrease by 5sen, to RM 4.50/litre.

These pricr level RM 4.50/l is still higher 50% if compared to last Dec level at RM 3.00/l. These elevated retail level is despite crack spread already normalize to last Dec level at 9.

These clearly allow PetronM retail petrol continue enjoy extraordinarily arbitrary profit margin.

Agreed, but, the exception profit will not only happen in coming Q2 result, it will sustain to next Q3 due to lag time factor over highly discrepancy between normalize crack spread and retaining elevated retail petrol RON selling price. Its allow arbitrary gain for petronM retail petrol business

Affin CEO is busy accumulating share in open market ahead of his own decision making on special dividend soon

Based on total number of petrol station

1. Petronas: 1100
2. Shell: 950
3. Petron: 720

Based on profit over number of petrol stations, petronas derive RM 120m, explorate to petronM petrol retail divison should comand profit RM 78m, implying about 70% petronM profit actually derive from its petrol retail station, balance 30% profit is from more volatile refinary division..

Therefore, in turn if valuation, petronM should tag more closer to petronas dagangan instead of volatile earning hengyuan

The easiest way to change market perception is calling petronM to make separate division presentations in its Q result, allowing analysts to fetch fairer comparison valuation tag to its refinary business and retail petrol business duvision, to calculate sum of part valuation

The simple reason is market perception tend to lump petronm ( refinary business) with hengyuan instead group together petronm (retail petrol station) with petdag.

PetronM already completed installation new diessl hydrotreater worth USD 100m, enable it to produce direct diesel Euro 5

Retail selling price is the main source profit for PetronM on top of the refinery.

PetronM own third largest retail petrol station, just short behind Shell and Petronas.

PetronM derives dual source of profit = Petronas Dagangan (only sole profit from retail station) + Hengyuan (only sole profit from refinary)

Bear in mind, the direct retail selling price RON97 at RM 4.55/l (the highest is at RM 4.84/l) is real profit margin to be recorded by PetronM instead of reference indicator crack spread, normalize back to USD 9 from highest USD33.

These vast discrepancy correlation adjustment between crack spread indicator to actual retail selling price enable PetronM to enjoy even higher profit margin through local vast retail station direct selling to customer