Posted by VenFx > 2017-07-16 15:09 | Report Abuse

This is Seriously in depth study over Refiner.
Kambate !!! Icon8888

Posted by pputeh > 2017-07-16 15:40 | Report Abuse

Icon8888, great job. Trying to understand also susah. Thanks for the write up and yr indepth research. Salute to you for a great job.

Posted by 635789 > 2017-07-16 16:50 | Report Abuse

Well done & great research.

Posted by John Lu > 2017-07-16 21:56 | Report Abuse

Icon8888 so geng...i read 3 times also cannot understand...whatever it is, I just buy

Posted by paperplane2016 > 2017-07-16 22:19 | Report Abuse

哈哈

Posted by John Lu > 2017-07-16 22:22 | Report Abuse

Paper sifu...petronm and Hengyuan, which one u choose?

Posted by pitbull > 2017-07-16 22:57 | Report Abuse

Continue part 4
Hahaha

Posted by pitbull > 2017-07-16 22:59 | Report Abuse

Encore...Encore...Encore

Posted by probability > 2017-07-16 23:33 | Report Abuse

i can't see a more simple business than the one that has a steady continuous flow of throughput due to steady flow of consumption...

the volatility is only on the inventory valuation due to oil price fluctuations (with zero net cumulative effects) and the refinery margin, i.e the crack spread..

crack spread is "the one and only single variable" affecting the profitability of refinery

unlike other businesses with non-continuous revenue, where the management skills , competence, competitive edge, product superiority, demand etc plays an essential role in determining the success of the business...something difficult for investors to access and evaluate

refinery is basically a money printing plant...and you can see the rate it prints just by looking at the crack spread charts..

i think if an investor can't comprehend such basic common sense (logic)...i am unable to comprehend how they are investing on other stocks...

must be some 'magic formula'...he he

Posted by pang72 > 2017-07-17 00:23 | Report Abuse

What a good comment that read 3 x also cant understand, just buy!!

Posted by pang72 > 2017-07-17 00:24 | Report Abuse

With so many sifus recomendation, this is rare to see in i3. Only happen in Hengyuan so onw word is BUY

Posted by cheoky > 2017-07-17 01:24 | Report Abuse

basically i guess icon give a buy call with erring that crack spread is not plain sailing. Could go south in a matter of next second.but i am in both hehehe.still low downside. take risk la.

Posted by probability > 2017-07-17 13:33 | Report Abuse

can a competitor of a refinery of similar complexity factor kill its margins? The answer is "NO" without killing his own margins, i,e the crack spread.

Why?

Because the technology is pretty fixed - you can't invent a new technology which can improve the operating cost...the cost are pure energy and at the max perhaps you can improve by 0.5USD/brl... simply because you cant change the law of thermodynamics.

Now...the only thing they can use to compete is the economy of scale...purely by reducing the overhead cost per unit barrel. In other words go for a huge processing capacity with same human resources.

As we can see from PetronM plans for Refinery investment, the ideal capacity seems to be in the same range of HRC..considering foreseeable crack spread, demand and payback periods.

If you go too big (refinery capacity)...you are going to have huge inventory...and like a double-edged sword...when the crude oil is down trending you will incur enormous 'stock loss' and vice versa when it goes up.

On top of the ultra-thin Crack spread for years earlier, HRC suffered huge inventory losses when the crude oil price came down from 100 USD/brl to 40 USD/brl.

Now, at current Oil price...the possible inventory loss magnitudes in future will be minimal and chances of repetitions are almost Nil.

With current crack spread, and the certainty that its very unlikely to go below 6USD/brl - considering regional refining capacities in operations, HRC is well placed for a 'giant awakening'...

Posted by paperplane2016 > 2017-07-17 13:37 | Report Abuse

Posted by John Lu > Jul 16, 2017 10:22 PM | Report Abuse

Paper sifu...petronm and Hengyuan, which one u choose?


Choose BOTH! hahaha

Posted by John Lu > 2017-07-17 13:43 | Report Abuse

Paper sifu, alright!!



paperplane2016
11760 posts
Posted by paperplane2016 > Jul 17, 2017 10:40 AM | Report Abuse

MY TP

PETRONM-12 (54%)
HENGYUAN-18 (218%)

BELIEVE IT OR NOT!

HAHAHAH

Posted by 3iii > 2017-08-08 07:48 |

Post removed.Why?

Posted by joetay > 2017-08-08 08:24 | Report Abuse

ok article and but not in-depth enough to understand the crude oil refining biz.

the article neglected to mention in-depth complexity of a refinery and the crude/blended/semi-refined grades used since it will have an impact on refining margin.

another then-popular strategy not mentioned is arbitraging between wti and brent futures.