Posted by abang_misai > 2017-10-01 12:43 | Report Abuse

Semua dah masok perangkap beli Hengyuan pada harga RM8.00.

Posted by newbie5354 > 2017-10-01 12:44 | Report Abuse

Why I divide RM 101.51 million by 15,172,283 sq ft I get RM 6.69/sq ft not 15 sen? Bought above RM 8 die die must cheat?

Posted by Alex Foo > 2017-10-01 12:50 | Report Abuse

haha, fix d =)

Posted by Alex Foo > 2017-10-01 12:50 | Report Abuse

thx newbie, my math rosak =(

Posted by rojakmee > 2017-10-01 12:56 | Report Abuse

Per sq ft in PD for Industrial land is around RM40 TO RM60, if take RM50/6.69=7.5, revaluation gain on land itself is 6.5*101=RM656Million.

Posted by CharlesT > 2017-10-01 13:03 | Report Abuse

Unless they close shop n lelong their land....if not just paper gain

Posted by CharlesT > 2017-10-01 13:06 | Report Abuse

It will b more relevent if they r in property biz

Posted by Alex Lee > 2017-10-01 13:10 | Report Abuse

Aiya, no scheduled and unsecured shut down in Q3. Crack spread high. No need to look for buyers as contractually Shell Malaysia will take all products. Surely Q3 results new record. Even put a joker like me to manage the operation results also phenomenal.

Posted by rojakmee > 2017-10-01 13:17 | Report Abuse

the paper gain is yet to be reflected in the accounts like most company in Bursa

Posted by limch > 2017-10-01 13:41 | Report Abuse

Agree. Sell property means no more refinery business.

CharlesT Unless they close shop n lelong their land....if not just paper gain
01/10/2017 13:03

Posted by Alex Foo > 2017-10-01 13:48 | Report Abuse

aiyo...then why shell sell below rm2? they didn't revalue the land prior to sale?

Posted by stockraider > 2017-10-01 13:51 | Report Abuse

THE MAT SALLEH ARGUE THAT THE LAND IS USE FOR REFINERY PURPOSE...SO NO VALUE THE LAND LOH...!!

IF THEY REVALUE...RAIDER THINK THEY CAN GET RM 500 MILLION BASING ON ABOUT RM 30+ PSF JUST ON THE LAND LOH...!!

Posted by Alex Lee > 2017-10-01 14:05 | Report Abuse

Shell is not as civilized as 1MDB loh. One of the conditions for the Buyer is no retrenchment and benefit cuts for the existing PD employees. With that kind of conditions, not easy to get Buyer

Posted by Alex Lee > 2017-10-01 14:07 | Report Abuse

Make no difference to Hengyuan as engineers pay are higher in China

Posted by Alex Lee > 2017-10-01 14:08 | Report Abuse

I am not joking. I am a Malaysian based in Shanghai

Posted by rojakmee > 2017-10-01 14:22 | Report Abuse

If land is revalued, the RM650 million goes to P&L just like inventory are valued in the quarterly report

Posted by CharlesT > 2017-10-01 14:31 | Report Abuse

No impact on cash flow...nta increase

Posted by Alex Lee > 2017-10-01 14:44 | Report Abuse

Revaluation might have tax consequences. Most effective measures to change market perception is dividends. No need a lot lah as now is the time to reinvest for the future. But dividends will send a strong signal to the market that HY is no typical red chip. I know market is wrong to perceive HY that way but things are the way they are

Posted by Beary > 2017-10-01 15:14 | Report Abuse

Wah...15172283sf equals 350 acres woh.


Betul kah?

Such a big paddy field chicken jumping on the street?

And nobody catch?

Hahahahahaha...

Posted by Beary > 2017-10-01 15:22 | Report Abuse

大田鸡 waiting for Alex Foo to catch?

Hahahahahah..

Posted by Beary > 2017-10-01 15:30 | Report Abuse

Alex Foo,

I always think gwailohs are not very bright.

But I believe they are not that stupid loh.

Hahahahaha....

Posted by stockraider > 2017-10-01 15:32 | Report Abuse

Posted by Beary > Oct 1, 2017 03:14 PM | Report Abuse

Wah...15172283sf equals 350 acres woh.


Betul kah?

Such a big paddy field chicken jumping on the street?

And nobody catch?

Hahahahahaha...

Beary
528 posts

Posted by Beary > Oct 1, 2017 03:22 PM | Report Abuse

大田鸡 waiting for Alex Foo to catch?

Hahahahahah..

Beary
528 posts

Posted by Beary > Oct 1, 2017 03:26 PM | Report Abuse

Alex Foo,

I always think gwailohs are not very bright.

But I think they are not that stupid loh.

Hahahahaha...

TRUE MAH...U LOOK INTO PG 135 OF UR 31-12-2016 HENGYUAN ANNUAL REPORT LOH...!!

NO BLUFF U MAH....!!

SOME MORE ALL THE LAND FREEHOLD WOH....!!

Posted by musangfoxking > 2017-10-01 15:33 | Report Abuse

@ Beary
You look like an angel
Walk like an angel
Talk like an angel
But i got wise
You are the DEVIL IN DISGUISE!

kikikikikkiki

Posted by Beary > 2017-10-01 15:35 | Report Abuse

I don't know about the report lah.

My common sense told me its fishy loh.

Where got such big land there?

Posted by stockraider > 2017-10-01 15:37 | Report Abuse

Posted by Beary > Oct 1, 2017 03:35 PM | Report Abuse

I don't know about the report lah.

My common sense told me its fishy loh.

Where got such big land there?

U GOT COMMON SENSE MEH ??

U NO COMMON SENSE MAH....!

Posted by Beary > 2017-10-01 15:39 | Report Abuse

Oh now I know why.

They measure the sea also.

Hahahahahaahhha...

Posted by Beary > 2017-10-01 15:42 | Report Abuse

Please notice ah...

I never say its not true.

I query only.

Teacher says don't understand must ask right?

Hahahahahahah...

Posted by stockraider > 2017-10-01 15:56 | Report Abuse

UST IMAGINE LOH....THE LAND VALUE OF SHELL FREEHOLD LAND ALONE ALREADY WORTH RM 500 MILLION...OR RM 1.67....AND THE MAT SALLEH SOLD HENGYUAN FOR RM 1.92 PER SHARE....WHY SOLD SHELL FOR RM 1.92 PER SHARE LEH ??

IT IS NO WONDER THE CHINA MAN ARE LAUGHING TO THE BANK MAH...!!

SOME MORE SELF DESTRUCTION SIMPLY GO AND WRITE OFF AND IMPAIR RM 461 MILLION OF VALUABLE REFINERY ASSETS LOH...!!

2) Hengyuan (previously known as Shell Refinery Company (SRC)) (Deal announced Feb 2016, closed Dec 2016)

Not too dissimilar to Anasuria, the sale of 51% stake in SRC for a meagre sum of RM 1.92 per share (or US$66m) was driven by the desire to avoid capital investment more than anything else.

So firm was its decision not to invest further in SRC than it chose to impair the refinery asset by RM461m in 4QFY2015, officially declaring to the world it would not upgrade the refinery.
At worst, Shell was prepared to go as far as converting the refinery to an oil terminal, essentially writing off the whole asset. To Shell, US$66m sale is a welcome upside from a complete write off!!

This is akin to your neighbor selling his house way below the market value because he is migrating oversea and not coming back. Would you similarly sell your house at that price?
Well, unless one of your neighbor is a certain EPF…!

A perfectly fine refinery with a name plate capacity of 156kbpd and is upgradable to meet Euro 4M and 5 standard at a relatively modest sum of US$160m which we found out later.

How big is the discount then? A brand new 260kbpd, recently commissioned in Yunnan, China was built at the cost of US$4.4b, or roughly US$1.6b per 100kbpd capacity.

At RM1.80 per share, total Enterprise Value (EV = Market cap + Debt - Cash) based on 4QFY2015 data was around RM1.85b or just US$282m per 100kbpd name plate capacity (USD:MYR 4.2:1), a mere 18% of the sticker price of a brand new refinery. Adding up 150% of the reported US$160m upgrade cost will increase EV per 100kbpd to US$436m, just some 27% of a brand new refinery.

The math get more interesting if you consider than for every RM1 increment in Hengyuan's price is equal to 2.9% of a brand new refinery. What does that mean? Well, if you value the refinery at 33% of a brand new refinery that is more than 100% gain from Shell selling price of RM1.80. At 40%, that's more than triple the Shell selling price.

THE MORAL OF THE STORY IF UR BUSINESS ARE DRIVEN BY FEAR AND REFUSAL TO SOLVE PROBLEM...U WILL ALWAYS HAVE THE PROBLEM OF SELLING AT GIVE AWAY PRICES LOH....!!

THE LATEST HALF YR EPS OF HENGYUAN ALREADY SHOWED A TREMENDOUS RESULT OF RM 1.21 AND FREE CASH FLOW OF RM 1.44 PER SHARE FOR HALF YR CONFIRMED THAT HENGYUAN IS UNJUSTIFABLY SOLD AT ALMOST GIVEAWAY PRICES BY THE FORMER OWNER LOH...!!

ON DEEPER INSIGHT & ANALYSIS HENGYUAN CAN WORTH MORE THAN RM 15.00 PER SHARE LOH...!!

Posted by tenmil > 2017-10-01 15:58 | Report Abuse

The comments on why Shell sell SRC got deleted. Too bad, I thought that's the most intelligent post so far.

Posted by tenmil > 2017-10-01 16:03 | Report Abuse

I am wrong. Stockraider used of replacement cost valuation just up the game. Seem like I3 is not for amateurs only.

Posted by Alex Foo > 2017-10-01 16:28 | Report Abuse

haha, beary, real kah? sea got freehold one?

if yes, huat liao lo, my town out there beyond the beach area, sealand for sale~

how much RM psf? inside got fish ah, cram ah, sotong ah~

Posted by Alex Foo > 2017-10-01 16:29 | Report Abuse

u go see in annual report. many random lot number, i dunno how to trace. But it's sekitar port dickson la.

Posted by Alex Foo > 2017-10-01 16:29 | Report Abuse

maybe china company want to pack up the land and send back to china, i don't know

Posted by Alex Foo > 2017-10-01 16:29 | Report Abuse

and if sea, then pack up the water also

Posted by Alex Foo > 2017-10-01 16:30 | Report Abuse

haha tenmil, i3 here apa ppl also got. still waiting you to contribute positively. come and share your insight at hrc forum.

Posted by tenmil > 2017-10-01 16:41 | Report Abuse

No insight la, just load up

Posted by tenmil > 2017-10-01 16:44 | Report Abuse

Alex Lee comments at 1pm pretty much sum up on my view of HY coming results

Posted by Ricky Yeo > 2017-10-01 17:28 | Report Abuse

A few years ago someone wrote on i3 saying Public Bank should worth more than what it was selling back then given that all the lands they own under their branches have not been revalued for 20 years, perhaps more.

Posted by Ricky Yeo > 2017-10-01 17:28 | Report Abuse

Let's think about this. The indisputable truth on how much a business should worth is dependent on the cash flows it can generate over its entire lifetime. What produce those cash flows? Assets. Assets create value. Assets namely property, plants and equipment or PPE. So does revaluing the lands changes the cash flows? No. Those machinery would not suddenly spin faster after the land become more valuable. This is point one.

Posted by Ricky Yeo > 2017-10-01 17:39 | Report Abuse

ROA return on assets form one of the pillars of Return on Equity ROE. When the land is valued at cost, ROA will be higher, same as ROE, compared to if it get revalued, the ROA and ROE will be lower. In other words, how much is the land actually worth is irrelevant as it has been reflected inside the ROE, which is not a hidden information from the public market. Point two.

Posted by Ricky Yeo > 2017-10-01 17:42 | Report Abuse

Point three. When you analyze the profit or cash flows of a business, you have already factor in what is inside the balance sheets, the assets and everything. Going back and add them is double counting. That is not different from saying "I have a property that generate $24K in rental income (cash flows) a year, at 20x it should worth $500K, but I have not include the land, which should worth another $250K, therefore the whole property is worth $750K!". What kind of logic is this.

Posted by probability > 2017-10-01 19:58 | Report Abuse

i think this is not really as straight forward as Ricky had stated...

because the land' NPV is unchanging (usually)...it is actually separately generating value, though invisible in terms of cash flow (1) at the average cost of capital...making its NPV fixed (assumption 1)


The cash flow Ricky is saying here is only the value of the PPE , its NPV of future cash flows(2)...

As such, in my opinion you should add the values of the land with the PPE (provided my assumption 1 is true).


it becomes a little more obvious if you assume the cash generated by the PPE is reinvested by acquiring more land where the true value of their total investment is measured in terms of final land area acquired with the PPE value is depreciating to zero at the end.




As long as the Land's value appreciates as per C

Posted by Ricky Yeo > Oct 1, 2017 05:42 PM | Report Abuse

Point three. When you analyze the profit or cash flows of a business, you have already factor in what is inside the balance sheets, the assets and everything. Going back and add them is double counting. That is not different from saying "I have a property that generate $24K in rental income (cash flows) a year, at 20x it should worth $500K, but I have not include the land, which should worth another $250K, therefore the whole property is worth $750K!". What kind of logic is this.

Posted by probability > 2017-10-01 20:09 | Report Abuse

however, one should not be misled in accounting the revaluation gain.

What matters is the true present value of the land (1) + the NPV of the PPE based on discounted cash flow generated by the PPE alone (2).

so (1) + (2) matters...

the revaluation is basically due to future value of the land increasing at COC as such it wont add to NPV. But it is important to know what is its present value to compare with stock price to see the bargain.

If say the land increase in future value at a higher rate than COC - due to say sudden intense demand for the area concern, its NPV does increase.

Posted by myportfolio > 2017-10-01 20:13 |

Post removed.Why?

Posted by probability > 2017-10-01 20:29 | Report Abuse

Imagine if the NPV calculated from the cash generated by the "PPE + land" as a bundle of investment to generate cash comes to a value (A) lesser than the current land value (B), does it mean the stock price should be - A only?

No right?

we have to consider the land value B too....

Posted by stockraider > 2017-10-01 23:27 | Report Abuse

Probability,

Perfectly correct, there is 2 element in computing the NPV, the operating free cashflow over the years and the terminal liquidation value...u need to add this together & discount using a fair rate to determine the npv loh...!!

Thus the terminal value consist of estimating the value of the land loh...!!
Revaluation of land..is important bcos it represent actual mkt value of the land mah...!!

Posted by probability > 2017-10-01 23:37 | Report Abuse

yes, the final selling price of the land is the final tsunami cash flow...he he

Posted by stockraider > 2017-10-01 23:45 | Report Abuse

why the land value of hengyuan is very important leh ??

a sizeable valuable assets of hrc is land mah...!!

Today hengyuan land worth Rm 500 million...but 30 yrs from now, it is worth Rm 4 billion loh...land usually appreciate overtime mah...!!


Investor enjoy good free cashflow as well as land capital appreciation loh....!!

Posted by Ricky Yeo > 2017-10-02 06:17 | Report Abuse

@ probability - You call it invisible cash flow for a reason, land does not generate cash flows that can be TAKEN OUT by the owner no matter how many times the land value appreciates.

This is a 'Either Or' Logic.
The owner of the business either liquidate the whole business NOW to unlock the land value and lump sum cash flow. Doing this will terminate all future cash flow.

Or the owner continue the business as a going concern into the future and the invisible cash flow from land appreciation will never be taken out.

Read more: https://www.wallstreetoasis.com/forums/how-dcf-accounts-for-assets-value

Keep this thread open until we come to a clear understanding. This needs to be a win-win situation where we all learn.

Posted by Alex Foo > 2017-10-02 09:39 | Report Abuse

haha, actually my initial point of opening this thread is to prove that this china company has some tangible asset in our motherland la.

I pengsan when ppl keep equal xinquan with hrc. Maybe ppl got burnt too much and scare of red chip now.

on a side note, i like intelligent discussion. Like Ricky's ROA analysis. If i understand you correctly, revaluating the land will cause the "asset to go up". Assuming same return, it will show a lower ROA over time. Then it might give a picture that HRC is operating with lower efficiency.

Betui ah like that?

But leh, everything must up to date ma~ haha