Calvin,

Your red flags do not seem convincing enough. These are all your personal views without much evidence to support when those events are going to happen in future and to what extent its impacts on oil price in the near future. Even if it might happen in the next 10-20 years, the stock market cannot and difficult to discount that happenings in the next 10-20 years.

Changes of external auditor will matter a lot not internal auditor as it is common to have several internal auditors in the audit committee. Don't hold personal bias against all china companies and people, as an investor u should look at the facts and figures, not to speculate what your belief unless you obtain illegal inside information about the company!

I do admit small capital companies tend to be manipulated by some syndicates, but today you can see even some oil companies e.g. Petronm, Petdag, pchem, petgas... their shared all went up, don't tell me all these companies are manipulated by syndicates!!!

Calvin,

Your red flags do not seem convincing enough. These are all your personal views without much evidence to support when those events are going to happen in future and to what extent its impacts on oil price in the near future. Even if it might happen in the next 10-20 years, the stock market cannot and difficult to discount that happenings in the next 10-20 years.

Changes of external auditor will matter a lot not internal auditor as it is common to have several internal auditors in the audit committee. Don't hold personal bias against all china companies and people, as an investor u should look at the facts and figures, not to speculate what your belief unless you obtain illegal inside information about the company!

I do admit small capital companies tend to be manipulated by some syndicates, but today you can see even some oil companies e.g. Petronm, Petdag, pchem, petgas... don't tell me all these companies are manipulated by syndicates!!!

Investing should be more business like, as business owner you should study the basic economics of your business, the financials and your competitive strategy before your start to invest. As a speculator you try to speculate the near future events that will drive the price of what you bought, if u are right, you may earn substantially but if u are wrong u suffer greatly! Your results as a speculator tend to fluctuate wildly n most of the time you don't sleep soundly especially you borrow further to invest. Because of the large turnover, speculators tend to incur large trading costs and wild flatuation in price, it is difficult for compounding effects to work for their investment.

As an investor you study the assets, earning powers and cash flow of the business and understanding the basic economics of the business in making its earnings and cash flows. Your first principle of investing is to protect your principal from erosion through your ignorance of the risks involved. But total risk avoidance is not possible for share investing, if you cannot take calculated risk then best to put your money in money market or FD or some quality bond funds.

Even you study the fundamental and historical financials of the business, you are not foolproof from losses if the fundamentals slowly turn bad until you discovered it as these are a lot future uncertainties beyond the human reach and ability to control so some keep in touch with your investment is key to monitor your investment risk and return as the fundamentals can either turn down or up over time due to industry competitions, regulations, technology and political issues. It is best to concentrate your investment on less than 10 different counters which are within circle of competence to understand and monitor. Let the compounding effects to work for you year in year out consistently if you can hold a few quality business with competitive advantages or small companies with decent growth 10% above n with a decent return on equity at least 15% above.

Business valuation is an art more than a science. It may be tempted to look at the historical balance sheets, P/Ls and cash flow statements for clues on the current valuation of a company. If you are accounting savvy, analysis of balance sheets, P/L and cash flow statements will likely help to you uncover some hidden value that may not be obvious to a lot of investors based on technical analysis or inferior analysts' reports to buy shares. But the limitations of accounting information is its historical in nature, some valuable assets not meeting accounting recognition criteria will not be reflected in accounts, good business model and management cannot be discovered through analysis of financial statements.

Nevertheless, financial statements analysis is the first starting point to check how healthy a company's financial position and performance currently and in the past.
As a value investor, I always start with objective analysis by checking the latest balance sheet for clue on company's cash and short term investment, liquidity, long-term debts position and any valuable assets e.g. real estates in prominent location not fully reflected in the balance sheets. Then, I look at the P/L position in the past to discern the normalized earnings of the company whether that normalized earnings consistent with the cash flow statements presented to ensure accounting earnings were actually translated into actual cash flow to the company concerned. Lastly, I will examine the subjective side of the business by evaluation the company's earning sources and business model to check whether the company can compete successfully within its industry. The subjective side of the business part is difficult to perform due to future uncertainties beyond our human ability to predict. That's why Warren Buffett always buy companies with simple business model within his circle of competence to understand so that he is more likely to know the future cash flow of a company to actually put a value on it.

Having said that, how to use the above value investing approach to value Hengyuan? First, the company latest quarterly report 31 Dec 2017, balance sheet showed cash in bank and FD holding about RM510 mil, current ratio is about 4, total current assets is RM2.8 bil more than cover its entire liabilities (both short and long term) of RM2 bil. Latest quarterly EPS was 61.18 cents (profit after taxation is about RM180 mil) with cash flow from operating activities after depreciation was about 311 mil. It does has a very healthy financial position and performance recently.

We can see its operating results started to improve in year 2015 till today with oil price hovers around USD60-70 today thanks to the OPEC production curb, the world commodities price is picking up with the growth in world economy but the likelihood of large fluctuation either move up or down substantially in oil price in the near future is dim as concerns over the volume of US shale oils supply, Federal Reserve tightening policy and US-China trade wars will cap its upward trends in future.

Hengyuan is a cyclical company which cash flows and earnings will be moving up during the times when commodities cycle is picking up, so one should expect its market price to go wild when the cycle is peak like the year 2008 and the recent year 2014. So it is hard to find normalized earnings and cash flow of Hengyuan in the past, it is about timing of buying the shares during commodities picking up time. Like what I said in the beginning, valuation is an art more than a science. I prefer to put a range of value on a company and see how much margin of safety I have if I were to buy a company's shares at market value today. Usually I require at least 30% margin of safety before I will invest in the shares.

If one is to review the balance sheet of the company, its NTA is RM5.9 per share, if using earnings base to value I will conservatively use the latest quarterly EPS 61.18 cents (EPS RM2.4 per year) as a guide for the year 2018 and using PE ratio 6 (due to small capital company), one can come to a value of RM14.40. IF one would to put a weighting of 20% on book value and 80% on earnings based value, then one can come to a valuation of Hengyuan at about RM12.70. Market price today is about RM9.2, margin of safety is about 40%. So it does provide a good margin of safety for the value investor to buy at the current market price.

The above is my personal impartial opinion, please check with your financial advisers before you invest in the shares.

Business valuation is an art more than a science. It may be tempted to look at the historical balance sheets, P/Ls and cash flow statements for clues on the current valuation of a company. If you are accounting savvy, analysis of balance sheets, P/L and cash flow statements will likely help to you uncover some hidden value that may not be obvious to a lot of investors based on technical analysis or inferior analysts' reports to buy shares. But the limitations of accounting information is its historical in nature, some valuable assets not meeting accounting recognition criteria will not be reflected in accounts, good business model and management cannot be discovered through analysis of financial statements.

Nevertheless, financial statements analysis is the first starting point to check how healthy a company's financial position and performance currently and in the past.
As a value investor, I always start with objective analysis by checking the latest balance sheet for clue on company's cash and short term investment, liquidity, long-term debts position and any valuable assets e.g. real estates in prominent location not fully reflected in the balance sheets. Then, I look at the P/L position in the past to discern the normalized earnings of the company whether that normalized earnings consistent with the cash flow statements presented to ensure accounting earnings were actually translated into actual cash flow to the company concerned. Lastly, I will examine the subjective side of the business by evaluation the company's earning sources and business model to check whether the company can compete successfully within its industry. The subjective side of the business part is difficult to perform due to future uncertainties beyond our human ability to predict. That's why Warren Buffett always buy companies with simple business model within his circle of competence to understand so that he is more likely to know the future cash flow of a company to actually put a value on it.

Having said that, how to use the above value investing approach to value Hengyuan? First, the company latest quarterly report 31 Dec 2017, balance sheet showed cash in bank and FD holding about RM510 mil, current ratio is about 4, total current assets is RM2.8 bil more than cover its entire liabilities (both short and long term) of RM2 bil. Latest quarterly EPS was 61.18 cents (profit after taxation is about RM180 mil) with cash flow from operating activities after depreciation was about 311 mil. It does has a very healthy financial position and performance recently.

We can see its operating results started to improve in year 2015 till today with oil price hovers around USD60-70 today thanks to the OPEC production curb, the world commodities price is picking up with the growth in world economy but the likelihood of large fluctuation either move up or down substantially in oil price in the near future is dim as concerns over the volume of US shale oils supply, Federal Reserve tightening policy and US-China trade wars will cap its upward trends in future.

Hengyuan is a cyclical company which cash flows and earnings will be moving up during the times when commodities cycle is picking up, so one should expect its market price to go wild when the cycle is peak like the year 2008 and the recent year 2014. So it is hard to find normalized earnings and cash flow of Hengyuan in the past, it is about timing of buying the shares during commodities picking up time. Like what I said in the beginning, valuation is an art more than a science. I prefer to put a range of value on a company and see how much margin of safety I have if I were to buy a company's shares at market value today. Usually I require at least 30% margin of safety before I will invest in the shares.

If one is to review the balance sheet of the company, its NTA is RM5.9 per share, if using earnings base to value I will conservatively use the latest quarterly EPS 61.18 cents (EPS RM2.4 per year) as a guide for the year 2018 and using PE ratio 6 (due to small capital company), one can come to a value of RM14.40. IF one would to put a weighting of 20% on book value and 80% on earnings based value, then one can come to a valuation of Hengyuan at about RM12.70. Market price today is about RM9.2, margin of safety is about 40%. So it does provide a good margin of safety for the value investor to buy at the current market price.

The above is my personal impartial opinion, please check with your financial advisers before you invest in the shares.

Business valuation is an art more than a science. It may be tempted to look at the historical balance sheets, P/Ls and cash flow statements for clues on the current valuation of a company. If you are accounting savvy, analysis of balance sheets, P/L and cash flow statements will likely help to you uncover some hidden value that may not be obvious to a lot of investors based on technical analysis or inferior analysts' reports to buy shares. But the limitations of accounting information is its historical in nature, some valuable assets not meeting accounting recognition criteria will not be reflected in accounts, good business model and management cannot be discovered through analysis of financial statements.

Nevertheless, financial statements analysis is the first starting point to check how healthy a company's financial position and performance currently and in the past.
As a value investor, I always start with objective analysis by checking the latest balance sheet for clue on company's cash and short term investment, liquidity, long-term debts position and any valuable assets e.g. real estates in prominent location not fully reflected in the balance sheets. Then, I look at the P/L position in the past to discern the normalized earnings of the company whether that normalized earnings consistent with the cash flow statements presented to ensure accounting earnings were actually translated into actual cash flow to the company concerned. Lastly, I will examine the subjective side of the business by evaluation the company's earning sources and business model to check whether the company can compete successfully within its industry. The subjective side of the business part is difficult to perform due to future uncertainties beyond our human ability to predict. That's why Warren Buffett always buy companies with simple business model within his circle of competence to understand so that he is more likely to know the future cash flow of a company to actually put a value on it.

Having said that, how to use the above value investing approach to value Hengyuan? First, the company latest quarterly report 31 Dec 2017, balance sheet showed cash in bank and FD holding about RM510 mil, current ratio is about 4, total current assets is RM2.8 bil more than cover its entire liabilities (both short and long term) of RM2 bil. Latest quarterly EPS was 61.18 cents (profit after taxation is about RM180 mil) with cash flow from operating activities after depreciation was about 311 mil. It does has a very healthy financial position and performance recently.

We can see its operating results started to improve in year 2015 till today with oil price hovers around USD60-70 today thanks to the OPEC production curb, the world commodities price is picking up with the growth in world economy but the likelihood of large fluctuation either move up or down substantially in oil price in the near future is dim as concerns over the volume of US shale oils supply, Federal Reserve tightening policy and US-China trade wars will cap its upward trends in future.

Hengyuan is a cyclical company which cash flows and earnings will be moving up during the times when commodities cycle is picking up, so one should expect its market price to go wild when the cycle is peak like the year 2008 and the recent year 2014. So it is hard to find normalized earnings and cash flow of Hengyuan in the past, it is about timing of buying the shares during commodities picking up time. Like what I said in the beginning, valuation is an art more than a science. I prefer to put a range of value on a company and see how much margin of safety I have if I were to buy a company's shares at market value today. Usually I require at least 30% margin of safety before I will invest in the shares.

If one is to review the balance sheet of the company, its NTA is RM5.9 per share, if using earnings base to value I will conservatively use the latest quarterly EPS 61.18 cents (EPS RM2.4 per year) as a guide for the year 2018 and using PE ratio 6 (due to small capital company), one can come to a value of RM14.40. IF one would to put a weighting of 20% on book value and 80% on earnings based value, then one can come to a valuation of Hengyuan at about RM12.70. Market price today is about RM9.2, margin of safety is about 40%. So it does provide a good margin of safety for the value investor to buy at the current market price.

The above is my personal impartial opinion, please check with your financial advisers before you invest in the shares.

If oil price moves substantially up, this will increase refinery cost. But if it moves substantially down, demand will be depressed n revenue might not cover fixed cost of the plant. Hovering about RM60-65 Will be profitable.

Dear Calvin,

Thanks for appreciation my contributions.

Alternative energy does threaten fossil fuel consumption in future, but it now only comprises very small portion of total energy consumed in the world. Changes to alternative energy use does take long time and affordability and technology issues in developing countries like Asia n Africa countries. Most importantly Political issues inside the big oil companies and government.

A PE of 6 does take into the discount of small company and liquidity issues. From the value investor perspective based on assets, profitability and cash flow positions, I remain positive on its current market price being attractive to hold unless oil price move substantially up or down in short term of which the probability is small in this environment.

Business valuation is an art more than a science. It may be tempted to look at the historical balance sheets, P/Ls and cash flow statements for clues on the current valuation of a company. If you are accounting savvy, analysis of balance sheets, P/L and cash flow statements will likely help to you uncover some hidden value that may not be obvious to a lot of investors based on technical analysis or inferior analysts' reports to buy shares. But the limitations of accounting information is its historical in nature, some valuable assets not meeting accounting recognition criteria will not be reflected in accounts, good business model and management cannot be discovered through analysis of financial statements.

Nevertheless, financial statements analysis is the first starting point to check how healthy a company's financial position and performance currently and in the past.
As a value investor, I always start with objective analysis by checking the latest balance sheet for clue on company's cash and short term investment, liquidity, long-term debts position and any valuable assets e.g. real estates in prominent location not fully reflected in the balance sheets. Then, I look at the P/L position in the past to discern the normalized earnings of the company whether that normalized earnings consistent with the cash flow statements presented to ensure accounting earnings were actually translated into actual cash flow to the company concerned. Lastly, I will examine the subjective side of the business by evaluation the company's earning sources and business model to check whether the company can compete successfully within its industry. The subjective side of the business part is difficult to perform due to future uncertainties beyond our human ability to predict. That's why Warren Buffett always buy companies with simple business model within his circle of competence to understand so that he is more likely to know the future cash flow of a company to actually put a value on it.

Having said that, how to use the above value investing approach to value Hengyuan? First, the company latest quarterly report 31 Dec 2017, balance sheet showed cash in bank and FD holding about RM510 mil, current ratio is about 4, total current assets is RM2.8 bil more than cover its entire liabilities (both short and long term) of RM2 bil. Latest quarterly EPS was 61.18 cents (profit after taxation is about RM180 mil) with cash flow from operating activities after depreciation was about 311 mil. It does has a very healthy financial position and performance recently.

We can see its operating results started to improve in year 2015 till today with oil price hovers around USD60-70 today thanks to the OPEC production curb, the world commodities price is picking up with the growth in world economy but the likelihood of large fluctuation either move up or down substantially in oil price in the near future is dim as concerns over the volume of US shale oils supply, Federal Reserve tightening policy and US-China trade wars will cap its upward trends in future.

Hengyuan is a cyclical company which cash flows and earnings will be moving up during the times when commodities cycle is picking up, so one should expect its market price to go wild when the cycle is peak like the year 2008 and the recent year 2014. So it is hard to find normalized earnings and cash flow of Hengyuan in the past, it is about timing of buying the shares during commodities picking up time. Like what I said in the beginning, valuation is an art more than a science. I prefer to put a range of value on a company and see how much margin of safety I have if I were to buy a company's shares at market value today. Usually I require at least 30% margin of safety before I will invest in the shares.

If one is to review the balance sheet of the company, its NTA is RM5.9 per share, if using earnings base to value I will conservatively use the latest quarterly EPS 61.18 cents (EPS RM2.4 per year) as a guide for the year 2018 and using PE ratio 6 (due to small capital company), one can come to a value of RM14.40. IF one would to put a weighting of 20% on book value and 80% on earnings based value, then one can come to a valuation of Hengyuan at about RM12.70. Market price today is about RM9.2, margin of safety is about 40%. So it does provide a good margin of safety for the value investor to buy at the current market price.

The above is my personal impartial opinion, please check with your financial advisers before you invest in the shares.

Business valuation is an art more than a science. It may be tempted to look at the historical balance sheets, P/Ls and cash flow statements for clues on the current valuation of a company. If you are accounting savvy, analysis of balance sheets, P/L and cash flow statements will likely help to you uncover some hidden value that may not be obvious to a lot of investors based on technical analysis or inferior analysts' reports to buy shares. But the limitations of accounting information is its historical in nature, some valuable assets not meeting accounting recognition criteria will not be reflected in accounts, good business model and management cannot be discovered through analysis of financial statements.

Nevertheless, financial statements analysis is the first starting point to check how healthy a company's financial position and performance currently and in the past.
As a value investor, I always start with objective analysis by checking the latest balance sheet for clue on company's cash and short term investment, liquidity, long-term debts position and any valuable assets e.g. real estates in prominent location not fully reflected in the balance sheets. Then, I look at the P/L position in the past to discern the normalized earnings of the company whether that normalized earnings consistent with the cash flow statements presented to ensure accounting earnings were actually translated into actual cash flow to the company concerned. Lastly, I will examine the subjective side of the business by evaluation the company's earning sources and business model to check whether the company can compete successfully within its industry. The subjective side of the business part is difficult to perform due to future uncertainties beyond our human ability to predict. That's why Warren Buffett always buy companies with simple business model within his circle of competence to understand so that he is more likely to know the future cash flow of a company to actually put a value on it.

Having said that, how to use the above value investing approach to value Hengyuan? First, the company latest quarterly report 31 Dec 2017, balance sheet showed cash in bank and FD holding about RM510 mil, current ratio is about 4, total current assets is RM2.8 bil more than cover its entire liabilities (both short and long term) of RM2 bil. Latest quarterly EPS was 61.18 cents (profit after taxation is about RM180 mil) with cash flow from operating activities after depreciation was about 311 mil. It does has a very healthy financial position and performance recently.

We can see its operating results started to improve in year 2015 till today with oil price hovers around USD60-70 today thanks to the OPEC production curb, the world commodities price is picking up with the growth in world economy but the likelihood of large fluctuation either move up or down substantially in oil price in the near future is dim as concerns over the volume of US shale oils supply, Federal Reserve tightening policy and US-China trade wars will cap its upward trends in future.

Hengyuan is a cyclical company which cash flows and earnings will be moving up during the times when commodities cycle is picking up, so one should expect its market price to go wild when the cycle is peak like the year 2008 and the recent year 2014. So it is hard to find normalized earnings and cash flow of Hengyuan in the past, it is about timing of buying the shares during commodities picking up time. Like what I said in the beginning, valuation is an art more than a science. I prefer to put a range of value on a company and see how much margin of safety I have if I were to buy a company's shares at market value today. Usually I require at least 30% margin of safety before I will invest in the shares.

If one is to review the balance sheet of the company, its NTA is RM5.9 per share, if using earnings base to value I will conservatively use the latest quarterly EPS 61.18 cents (EPS RM2.4 per year) as a guide for the year 2018 and using PE ratio 6 (due to small capital company), one can come to a value of RM14.40. IF one would to put a weighting of 20% on book value and 80% on earnings based value, then one can come to a valuation of Hengyuan at about RM12.70. Market price today is about RM9.2, margin of safety is about 40%. So it does provide a good margin of safety for the value investor to buy at the current market price.

The above is my personal impartial opinion, please check with your financial advisers before you invest in the shares.

Business valuation is an art more than a science. It may be tempted to look at the historical balance sheets, P/Ls and cash flow statements for clues on the current valuation of a company. If you are accounting savvy, analysis of balance sheets, P/L and cash flow statements will likely help to you uncover some hidden value that may not be obvious to a lot of investors based on technical analysis or inferior analysts' reports to buy shares. But the limitations of accounting information is its historical in nature, some valuable assets not meeting accounting recognition criteria will not be reflected in accounts, good business model and management cannot be discovered through analysis of financial statements.

Nevertheless, financial statements analysis is the first starting point to check how healthy a company's financial position and performance currently and in the past.
As a value investor, I always start with objective analysis by checking the latest balance sheet for clue on company's cash and short term investment, liquidity, long-term debts position and any valuable assets e.g. real estates in prominent location not fully reflected in the balance sheets. Then, I look at the P/L position in the past to discern the normalized earnings of the company whether that normalized earnings consistent with the cash flow statements presented to ensure accounting earnings were actually translated into actual cash flow to the company concerned. Lastly, I will examine the subjective side of the business by evaluation the company's earning sources and business model to check whether the company can compete successfully within its industry. The subjective side of the business part is difficult to perform due to future uncertainties beyond our human ability to predict. That's why Warren Buffett always buy companies with simple business model within his circle of competence to understand so that he is more likely to know the future cash flow of a company to actually put a value on it.

Having said that, how to use the above value investing approach to value Hengyuan? First, the company latest quarterly report 31 Dec 2017, balance sheet showed cash in bank and FD holding about RM510 mil, current ratio is about 4, total current assets is RM2.8 bil more than cover its entire liabilities (both short and long term) of RM2 bil. Latest quarterly EPS was 61.18 cents (profit after taxation is about RM180 mil) with cash flow from operating activities after depreciation was about 311 mil. It does has a very healthy financial position and performance recently.

We can see its operating results started to improve in year 2015 till today with oil price hovers around USD60-70 today thanks to the OPEC production curb, the world commodities price is picking up with the growth in world economy but the likelihood of large fluctuation either move up or down substantially in oil price in the near future is dim as concerns over the volume of US shale oils supply, Federal Reserve tightening policy and US-China trade wars will cap its upward trends in future.

Hengyuan is a cyclical company which cash flows and earnings will be moving up during the times when commodities cycle is picking up, so one should expect its market price to go wild when the cycle is peak like the year 2008 and the recent year 2014. So it is hard to find normalized earnings and cash flow of Hengyuan in the past, it is about timing of buying the shares during commodities picking up time. Like what I said in the beginning, valuation is an art more than a science. I prefer to put a range of value on a company and see how much margin of safety I have if I were to buy a company's shares at market value today. Usually I require at least 30% margin of safety before I will invest in the shares.

If one is to review the balance sheet of the company, its NTA is RM5.9 per share, if using earnings base to value I will conservatively use the latest quarterly EPS 61.18 cents (EPS RM2.4 per year) as a guide for the year 2018 and using PE ratio 6 (due to small capital company), one can come to a value of RM14.40. IF one would to put a weighting of 20% on book value and 80% on earnings based value, then one can come to a valuation of Hengyuan at about RM12.70. Market price today is about RM9.2, margin of safety is about 40%. So it does provide a good margin of safety for the value investor to buy at the current market price.

The above is my personal impartial opinion, please check with your financial advisers before you invest in the shares.