Posted by John Lu 《 HIBISCUS 》 TP RM2 > 2018-01-19 23:17 | Report Abuse

Well said!! Awesome!! China style goreng!! 1 day can drop 20% and up 20%...40% swing!! Stock king 2017/18 towards rm30

Posted by investor77 > 2018-01-19 23:32 | Report Abuse

Excellent article to dispel all hearsay about crack spread going down. Fair estimate of after tax eps for year is around 3.40 rgt.

Using very conservative PE of 5, Price is RM17.00, 6x, price is RM 20.00

About CW, still believe value for money, with reasonable premium is CWs - CD, CE and CF. CB is really undervalued !!

Monday, for sure gap up !! Hoping HRC will go beyond RM 19.00, so that most of us will recover our losses, especially for those too stunned to cut loss !!!

Posted by ooihk899 > 2018-01-19 23:37 | Report Abuse

Davidtslim, many thanks for the writeup. Also I think you should take the below cost into considerationwhen caculating the net profit.


Name of Related Party Nature of RPT Amount of RPT
(USD)
Shell International
Petroleum Company
Limited
Payment for the provision of
Information Technology (IT)
transition and separation
services by SIPC to HRC
USD8,712,574
(Equivalent to
RM35,547,302
based on the
exchange rate of
USD1 = RM4.08
as at 14 December
2017)

Posted by cheoky > 2018-01-19 23:41 | Report Abuse

big bro come out 2 days earlier. u perhaps save lots of human life lo.

Posted by cheoky > 2018-01-19 23:43 | Report Abuse

above can capitalized bo?

Posted by probability > 2018-01-19 23:47 | Report Abuse

Any cost for Services incurred where the expected Benefit is not recognized immediately has to fall in to capital (investment) and accounted via D&A over its beneficial lifespan of the service.

Posted by ooihk899 > Jan 19, 2018 11:37 PM | Report Abuse

Davidtslim, many thanks for the writeup. Also I think you should take the below cost into considerationwhen caculating the net profit.


Name of Related Party Nature of RPT Amount of RPT
(USD)
Shell International
Petroleum Company
Limited
Payment for the provision of
Information Technology (IT)
transition and separation
services by SIPC to HRC
USD8,712,574
(Equivalent to
RM35,547,302
based on the
exchange rate of
USD1 = RM4.08
as at 14 December
2017)

Posted by Snoopy仔 > 2018-01-20 00:03 | Report Abuse

Marvelous articles~~~~ HY is just a miracle!!!!

Posted by longkanginvestor > 2018-01-20 00:17 | Report Abuse

This is the writeup i have been looking forward to..good job

Posted by stockraider > 2018-01-20 00:19 |

Post removed.Why?

Posted by longkanginvestor > 2018-01-20 00:20 | Report Abuse

Coupled with the detailed explaination by probability, there is no reason for the stock price to dip further despite heavy manipulation
Luckily i held to my shares despite the recent selldown and extreme pessimism

Posted by stockraider > 2018-01-20 00:30 | Report Abuse

THE MANIPULATOR BULLETS HAVE BEEN ALL EXHAUSTED, MAJORITY OF THEIR SELLING HAD BEEN ABSORBED BY CHINA FUNDS LOH...!!

NOW EVERYONE SCRAMBLING TO GET BACK IN AS Q4 RESULT IS VERY STRONG, THEY ARE AFRAID MAY MISS THE OPPORTUNITY LOH...!!

Posted by longkanginvestor > Jan 20, 2018 12:20 AM | Report Abuse

Coupled with the detailed explaination by probability, there is no reason for the stock price to dip further despite heavy manipulation
Luckily i held to my shares despite the recent selldown and extreme pessimism

Posted by longkanginvestor > 2018-01-20 00:38 | Report Abuse

Posted by stockraider > Jan 20, 2018 12:30 AM | Report Abuse

THE MANIPULATOR BULLETS HAVE BEEN ALL EXHAUSTED, MAJORITY OF THEIR SELLING HAD BEEN ABSORBED BY CHINA FUNDS LOH...!!

NOW EVERYONE SCRAMBLING TO GET BACK IN AS Q4 RESULT IS VERY STRONG, THEY ARE AFRAID MAY MISS THE OPPORTUNITY LOH...


Yes they are desperate because there is not much time left before the announcement of the explosive q4 result. They need to push it down fast because after this there is no more chance to collect low

Posted by HENGYUAN Sexy Babe @ RM21 > 2018-01-20 01:34 | Report Abuse

This is one of the best, if not the best analysis I have seen in i3 so far. None of Malaysia analyst can write so well ,I mean those investment bank analyst also can't write so well like David! My salute to him. He is the real sifu we all should learn from!

Posted by slts > 2018-01-20 06:07 | Report Abuse

look like syndicates at work again
your calculation all bullshits ?????????

Posted by ken > 2018-01-20 06:30 | Report Abuse

slts,
Please let us know which particular item David is bullshitting. We will verify and David can correct it if it is as you said.. Unfortunately you make general statement which no one can help you. David spend hours and hours to prepare this report. Don't you think you are so irresponsible?

Posted by YLR33 > 2018-01-20 06:58 | Report Abuse

From the charts different between both gasoil

Posted by YLR33 > 2018-01-20 07:07 | Report Abuse

from the charts, difference between both gasoil & mogas 95 and brent crude, we can seen 4th qtr is better than 3rd qtr, but one IB analys said that 4th Q crack spread is 20% less than 3rd Q, is he saying is true? Or is he lie?

Posted by YLR33 > 2018-01-20 07:09 | Report Abuse

thank you very much David for this excellent article

Posted by YLR33 > 2018-01-20 07:21 | Report Abuse

regarding the crack spread, i could be interpret the charts wrongly, sorry

Posted by Ricky Kiat > 2018-01-20 08:36 | Report Abuse

thanks u ,bro davidtslim.

Posted by LA777 > 2018-01-20 09:15 | Report Abuse

David, thanks for sharing!

Posted by Equityengineer > 2018-01-20 09:18 | Report Abuse

Perfect article. Resonate with the calculation given.

Posted by probability > 2018-01-20 11:28 | Report Abuse

This kinda information no Investment Bank analyst will ever provide you.

Note Fuel Oil crack spread can go to negative level, whereas Diesel is at 11 USD/brl.

Meaning Hengyuan has a special ability to convert Fuel Oil to Diesel which sells at at a differential of 12 USD/brl compared to PetronM's Fuel Oil.

When you discount 30% yield of a 45 k bpd of current throughput of PetronM (as Fuel Oil does not generate income), the effective capacity of PetronM is just 30k bpd.

Thus, Hengyuan at 120 kbpd is at the least 4 x times more valuable than PetronM refinery.

If Investment Bank can cover PetronM which produces 30% Fuel Oil with a target price > 16, hope they know what to do with HY soon...

Posted by probability > 2018-01-20 11:31 | Report Abuse

The Fuel Oil yield of 30% is precisely the reason why PetronM is going ahead with a RM 14 Billion investment for an upgrade.

Posted by mmk79 > 2018-01-20 12:08 | Report Abuse

This i3 got a lot of hidden tiger crouching dragon people. DAVID IS DEFINITELY one of them besides many other sifus like OTB,Icon,KYY., Probability and so forth.

Posted by mmk79 > 2018-01-20 12:09 | Report Abuse

This i3 got a lot of hidden tiger crouching dragon people. DAVID IS DEFINITELY one of them besides many other sifus like OTB,Icon,KYY., Probability and so forth.

Posted by probability > 2018-01-20 16:00 | Report Abuse

Jan 20, 2018 02:17 PM | Report Abuse

Lets not forget one has 14 Billion to depreciate in their accounting in 20 years and the other had 0.5 Billion where at current depreciation wont last more than 3 yrs.

By the way...for those purely from Accounting background who understand depreciation very well....stainless steel vessel and pipes has oxidation resistance for a few 100 years

Posted by probability > 2018-01-20 16:02 | Report Abuse

Jan 20, 2018 02:21 PM | Report Abuse

Meaning..a new plant (refinery) or an old plant has basically no difference...except that the new plant will face a lot of hiccups (downtime) after commissioning the first few years till all technical issues are resolved and fine tuned.

Posted by probability > 2018-01-20 16:10 | Report Abuse

aiyo demusangKing...dont make me call u deKingMusang

Posted by 林俊松 > 2018-01-20 16:53 | Report Abuse

Actually if you pay attention to November quarterly report Section B3 Current year prospects, the management already hints us about the drop in refining margin.

Refining margins are expected to be lower in the near term based on market published forward
prices and refining margins. Operational efficiency, product quality, hydrocarbon and financial risk
management continue to remain key areas of focus in optimising the Company’s performance for
the current financial year.

Therefore, the recent fall in share price must have something behind. Better exercise cautions and buy after Q4 out to play safe. Buying nothing is better than buying the wrong stock. Just a faithful advice.

Posted by probability > 2018-01-20 21:14 | Report Abuse

people have done thorough research spending hours going through their annual reports and presenting the mechanics of its margin derivation with data collected tediously from beginning of the year till 31 dec, and you think they dont know about Section B3 drafted by the management on last qtr report sometime early october?

use your common sense my friend

Posted by equitywarrior > 2018-01-21 08:36 | Report Abuse

Why so noisy about Hengyuan? Expecting RM21 = 47% upside?

Better switch to this stock, upside more than 80%, follow link here...
https://klse.i3investor.com/blogs/superprofitstock/144840.jsp

Posted by pjseow > 2018-01-21 08:37 | Report Abuse

Probability and other refinery sifus ,
I have more than 30 years of manufacturing experience in semicon industries and I am trying to use some logical thinking and common sense on Hengyuan 's expenditure on upgrades versus the others . The sifus has been telling us that Hengyuan need to spend only RM 700 million to upgrade its old refinery to become the state of the art refinery meeting new standards plus making higher premium products . Why others are so stupid and do not know how to copy Hengyuan 's cheaper methods ( one fifth or one tenth the cost ) rather than spending multibillions . Does Hengyuan has its trade secret in upgrading the cheaper ways which no other refineries can do ? Are such upgrade patented by Hengyuan that others cannot copy? If ten others need to do the expensive ways and Hengyuan is the only one who can do the much cheaper way , who do you think will be doing the "right " way. Is my common sense common ?

Posted by slts > 2018-01-21 08:39 | Report Abuse

HY punters r a greedy lot
the sky is the limit for them

Posted by pjseow > 2018-01-21 08:48 | Report Abuse

In any tender process , if I receive 5 tender quotations for an upgrade , 4 of them have +/ 10 to 20 % price differences and there is one with 50 % or 90 % lower than the other 4 , I will not award the project to such vendor even though it is the cheapest but is ridiculously lower . Chances are this vendor will lose money , run away and unable to complete the project because his quote does not make sense .
Common sense tell me to believe the 4 ( price differential is acceptable ) than the one with ridiculously lower price .

Posted by davidtslim > 2018-01-21 12:13 | Report Abuse

Pjseow: Actually I think petronm upgrade is not merely an upgrade. Due to its equipment is too old, maybe most the old equipment and piping may not able to be reused. So the upgrade may need to change a lot of old equipment and may include new construction of buildings (look like building a new refinery). While for Hengyuan upgrade, it is mainly on Euro 4M upgrade where the main purpose of this upgrade is to reduce the sulfur content etc to make the fuel cleaner. I think one of the main equipment is filter for HY upgrade. HY ever perform two major upgrade in 1999 and 2013 and I believe most of their equipment still can be reused. This explain the big different between HY and Petronm upgrade cost. HY upgrade may not add directly the processing throughput HY but after the upgrade and major maintenance, machine efficiency should be higher that may leader to higher output efficiency.

Posted by davidtslim > 2018-01-21 12:20 | Report Abuse

Pjseow: If u compare China Yunnan refinery setup cost and Petronas RAPID cost, their difference also big where China refinery system can be built at much lower cost and still running well. I think there are a lot of made-in-china products which they have decent quality but with much lower price as compared to many other countries. With technology breakthrough, it is possible to produce things that are cheaper and with decent quality.

Posted by pjseow > 2018-01-21 13:29 | Report Abuse

David ,thanks so much for your clarification . I would like to say that I benefited a lot from your numerous write ups on Hengyuan . The big disparity on the cost for upgrades between HY and other refineries had puzzled me in the last few weeks . Based on what I read in Stock Performance Guide by Dynaquest , Shell spent RM 1 billion in 1999 to transform from a simple refinery of 105kbpd into a 156kbpd complex refinery . In Feb 2013, Shell also spent another 810 million for the additional 6000 tons per day diesel processing unit . Petronm or previously Esso had also transformed from a 75kbpd capacity into a 88kbpd refinery producing a range of products such as motor gasoline, diesel , LPG.jet fuel ,kerosene etc. Based on my logical thinking ,with today's easy accessible information technology and know how ,PEtron should be able to spend similar and proportionate amount to upgrade its 88kpd capacity into similar state of the art refinery meeting the new Euro 4 and 5 standards .

Posted by jennychin > 2018-01-21 20:59 | Report Abuse

@davidtslim....conclusions is HY TP RM28?

Posted by supersaiyan3 > 2018-01-29 04:09 | Report Abuse

Average cost for building new refinery (Petron Corp Philippines)

= (8+14 billion / (90) kbpd

= RM0.16 billion or RM160 mil per 1kbpd

Average cost for upgrade existing refinery (Petronm)

= 14 billion / 90 kbpd

= RM0.16 billion or RM160 mil per 1kbpd

Can't be the same lah.

Posted by 3iii > 2018-03-03 15:18 | Report Abuse

>>>>Total gross profit = 383 + 51.8 mil = RM435.2

Estimated admin cost, depreciation, manufacturing expenses and Finance cost = 127 mil (based on Q3 figure)

There is high possibility of forex gain and small amount of other income in Q4 (as per Q3 report)

Let assume similar forex gain as per Q3 forex gain (50 mil as RM actually strengthen in Q4 more than Q3), and same other income of 9 mil.

Estimated Net income before tax in Q4 = 435.2 – 127 +50 + 9 = 367 mil.

Profit before tax of RM367 mil translated to EPS of 122.6 sen in Q4.<<<<<




Actual Q4 2017 results

Profit before tax 247.296 million

Net Profit 183.553 million.

EPS 61.18



The actual EPS for this quarter Q4 2017 was about 1/2 of that estimated by the author of the above article.