Posted by probability > 2022-09-02 19:57 | Report Abuse

HY Complex refinery margin update - 1/09/22 (with gasoline at almost zero crack)

.................


Diesel: https://www.tradingview.com/symbols/NYMEX-GOC1!/

Jet Fuel: https://www.tradingview.com/symbols/NYMEX-ASD1!/

Gasoline Mogas 92: https://www.tradingview.com/symbols/NYMEX-D1N1%21/
Gasoline Mogas 95 premium: https://www.tradingview.com/symbols/NYMEX-SMU1!/

From above:

1. Diesel at 46% yield, cracks USD 46.5/bbl
2. Jet fuel at 7% yield, cracks USD 36.0/bb
3. Gasoline Mogas 95 at 35% yield, cracks USD (0.79 + 3.71) / bbl
4. Rest of product yield at 12%, using Mogas 95 cracks USD 4.50/bbl

Gross refining margin:

= (0.46 x 46.5 ) + (0.07 x 36.0) + (0.35 x 4.5)+ (0.12 x 4.5)
= 21.39 + 2.52 + 1.57 + 0.54
= US $ 26.02 / brl
.................

Gross Profit at above derived present refining margin

= (10.7 million barrel sales per qtr) x ( US $26.0/brl) x (MYR 4.45/USD)
= 1.238 Billion MYR
...................

If there is still derivative loss for Diesel above, we can expect derivative gain for Gasoline. It would be certainly fair to assume that it can only be gain (as HY hedged at USD 12/brl for gasoline) and at the minimum it would be fair to assume zero hedging loss/gain.

Using worst scenario,

the PBT would be:
= 1.138 Billion MYR

PAT would be: = 853 Million MYR, EPS = 2.84 for Q3
..................


accounting cash flow hedge loss of Q2 at 244 million

the PBT would be:
= 894 Billion MYR

PAT would be: = 670 Million MYR, EPS = 2.23 for Q3 ( still exceeding Q2)
...................

Posted by probability > 2022-09-02 19:58 | Report Abuse

Remember however that the above is assuming ZERO crack of gasoline for July & Aug which had passed, with only another month left for Q3 results to be secured. So it can't be far out from above.

It would be reflective of Q4 you can say at current margin.

Posted by Johnzhang > 2022-09-02 20:16 | Report Abuse

The conman KYY once mentioned that HY will not make more profit because there is no price increase for petrol and diesel. See what kind of profit HY generated in Q2!
Senile conman KYY try to ‘find bone in the egg’.

Posted by gohkimhock > 2022-09-02 21:02 | Report Abuse

You have to give KYY credit this time. He got it right here. Promoters can continue to hoodwink newbies but I can assure you the profit reported earlier cannot be sustained. Scr3w me if I am wrong in my prediction for next quarter and I am not going to curse anyone.

Posted by probability > 2022-09-02 21:03 | Report Abuse

HENGYUAN - How to calculate its refinery margin? & Why share price hesitating to move up despite Q2 EPS of RM 2.2?

https://klse1.i3investor.com/blogs/2017/2022-09-02-story-h1627801128-HENGYUAN_How_to_calculate_its_refinery_margin_Why_share_price_hesitatin.jsp

Posted by gohkimhock > 2022-09-02 21:07 | Report Abuse

@probaility When i see those fancy calculations, one guy came to my mind. Last time the Jaks promoter..

Posted by probability > 2022-09-02 21:14 | Report Abuse

@goh, not really promoting...studying only.... at this cheap share price and dividend given by management - you still think 'promotion'...sad :(

Posted by gemfinder > 2022-09-02 21:16 | Report Abuse

Wasting time reading the long essay. Kyy is corect

Posted by stockraider > 2022-09-02 23:23 | Report Abuse

Very important u should ask what is the current crack spread as at 2-9-2022?

sept 2022- USD 0.80
0ct 2022 - USD (0.70}
Nov 2022- USD (0.65}
Dec 2022= USD {0.18}

From the above trend the future crack spread trend is highly unattractive with low yield & negative yield loh!

A reasonable yield crack spread should be around USD 4 mah!

This mean Prtron future 12 mths for 31-12-2022 performance will not exceed profit of Rm 289m or EPS Rm 1.07!

Whereas HRC 31-12-2022 future 12 mths performance will not report better result of loss rm 475m or loss of Rm 1.58 per share loh!

Posted by Sslee > 2022-09-02 23:38 | Report Abuse

Sometime I do not know whether to laugh or cry when so many people still believe in KYY who invented his own Brent crack spread margin.

Please know what is mogas92 crack spread margin, diesel crack spread margin and jet fuel spread crack margin.

Posted by stockraider > 2022-09-02 23:41 | Report Abuse

Correctloh....!

With Hengyuan languishing at Rm 475m losses as at 30-6-2022....very hard for it to catch up with negative crack spread loh!

Posted by MoneyMakers > 9 minutes ago | Report Abuse

Walao Oct/Nov/Dec future crack all alrdy turn (-)

Totally collapse leh

Posted by stockraider > 2022-09-03 00:32 | Report Abuse

Posted by probability > 43 seconds ago | Report Abuse

well said Zhuge..

this people like raider is the root cause many valuable people like Rabbit2 dont come to i3 often

Posted by stockraider > 2022-09-03 00:34 | Report Abuse

Already highlighted to U...Hengyuan people cannot be trusted,,,,still refuse to accept ah ?
The most question for those people who invest in hengyuan is to ask whether the derivative executed are actually a faked device to siphon money from the company loh ?


The most danger question is the hedging instrument is completely unrelated to business hedging but it is a device instrument to siphon money from hengyuan loh!

The red flags can be seen by;

1. Many qtr of hedging losses loh!
2. Very suspicious long dated of the hedging instrument loh!
3. Extremely large hedging value has been contracted mah!
4. Extremely Huge hedging losses incurred todate loh!

If the above suspicion is proven true.....then hengyuan will eventually be worthless just like Serba loh!

Posted by probability > 43 seconds ago | Report Abuse

well said Zhuge..

this people like raider is the root cause many valuable people like Rabbit2 dont come to i3 often

Posted by Sslee > 2022-09-03 00:47 | Report Abuse

qqq3,
Tell me what is KYY mean by Brent crack spread margin?

If he refer to mogas92 crack spread margin then do he know HRC 2021 refining yield?

Posted by Sslee > 2022-09-03 00:50 | Report Abuse

qqq3,
If I remember rightly, you are the one recommended JAKS and SENDAI to KYY and you promote JAKS and SENDAI day and night in i3.

Posted by Sslee > 2022-09-03 00:53 | Report Abuse

If KYY is ignorance then that make people who just take whatever wrote by KYY as true is what?

Posted by stockraider > 2022-09-03 00:54 | Report Abuse

Raider already explain loh!

I m shocked Hengyuan has hedging of more than 3 yrs long....what type of coockkeed hedging hengyuan is doing leh ?

Posted by Sslee > 2022-09-03 00:56 | Report Abuse

By the way all the JAKS promoters are right in the Vietnam power plant earning projection.

But they are damn wrong on ALP and management

Posted by stockraider > 2022-09-03 00:58 | Report Abuse

Correctloh....!!

Raider also pointed out JAKS is a kon mah!

Posted by Sslee > 28 seconds ago | Report Abuse

By the way all the JAKS promoters are right in the Vietnam power plant earning projection.

But they are damn wrong on ALP and management

Posted by Sslee > 2022-09-03 01:00 | Report Abuse

Stockraider,
It just mean the refining margin swap contracts can be as long as 3 years.

I will be very happy if in Q2 HRC hedge the refining margin for 3 year at USD 12-25 per barrel.

Posted by stockraider > 2022-09-03 01:04 | Report Abuse

Correction!

Favorite kon counter loh!

Posted by qqq3333 > 1 minute ago | Report Abuse

jaks and sendai are kyy favorite counters at a certain point in time........................................ride it well as I do make money..............ride it wrong lose money, what more to say?

Posted by Sslee > 2022-09-03 01:07 | Report Abuse

Stockraider,
Do you understand what I try to explain below on refining margin swap contracts?

If you use only Mogas92 crack spread: USD 31.58
Equation:
V x A=226,945,000 or V=226,945,000/A
V x (31.58 – A) = 1,490,267,000/4.397

226,945,000 x (31.58 – A) = 338,928,133 x A
7,166,923,100= (338,928,113 + 226,945,000) x A
A= 7,166,923,100/565,873,133
A= 12.665
V=226,945,000/12.665
V= 17,918,718

What I trying to say in above example are:
Volume of outstanding refining margin swap contract is 17,918,718 barrels
Average outstanding refining margin hedged is USD 12.665 per barrel
And the spot refining mogas92 margin on 30/6/2022 is USD 31.58 per barrel

Hence your outstanging 17,918,718 at your average refining hedged at USD 12.665 per barrel will recorded a mark to market (as on 30/6/2022 is USD 31.58 per barrel) fair value loss/unrealised loss of 17,918,718 x (31.58- 12.665) = USD 1,490,267,000/4.398.

If you assume at the end of Q3, 6 million barrels mature and average realised refining margin in Q3 is USD 16 per barrel and at 30/9/2022 the spot Mogas92 refining margin is USD 10

Thus your loss on this 6 million barrels mature refining margin swap contracts USD 6 million x (16- 12.765)
But your physical gross profit is USD 6 million X 16.
Hence your net gross profit is USD 6 million X [ 16 + (12.765 - 16) ] = USD 6 million X 12.765.
The acceptable margin per barrel when HRC make this refining margin swap at USD 12.765.

And your balance refining margin swap (17,918,718 - 6,000,000) barrel mark to market (as on 30/9/2022 spot Mogas92 refining margin USD 10 per barrel) fair value gain is USD 11,918,718 x (12.765 -10).
Note once the spot refining margin drop below your hedge refining margin of USD 12.765 your outstanding refining margin swap contracts will have mark to market fair value gain

As 6 million mature on Q3 HRC might have enter another X million barrel refining margin swap at USD Y per barrel acceptable to HRC

Hope above will help.

Posted by stockraider > 2022-09-03 01:07 | Report Abuse

U ask your palmoil boss who is involve in olein....is he willing to write fixed contract on palm olein for more than 3 years long ??

Posted by Sslee > 4 minutes ago | Report Abuse

Stockraider,
It just mean the refining margin swap contracts can be as long as 3 years.

I will be very happy if in Q2 HRC hedge the refining margin for 3 year at USD 12-25 per barrel.

Posted by stockraider > 2022-09-03 01:14 | Report Abuse

This is theoretical could be correctloh!

But raider highlight this red flags...it is unlikely due to coincidence loh!

1. Many qtr of hedging losses loh!
2. Very suspicious long dated of the hedging instrument loh!
3. Extremely large hedging value has been contracted mah!
4. Extremely Huge hedging losses incurred todate loh!

If the above suspicion is proven true.....then hengyuan will eventually be worthless just like Serba loh!



Posted by Sslee > 2 minutes ago | Report Abuse

Stockraider,
Do you understand what I try to explain below on refining margin swap contracts?

If you use only Mogas92 crack spread: USD 31.58
Equation:
V x A=226,945,000 or V=226,945,000/A
V x (31.58 – A) = 1,490,267,000/4.397

226,945,000 x (31.58 – A) = 338,928,133 x A
7,166,923,100= (338,928,113 + 226,945,000) x A
A= 7,166,923,100/565,873,133
A= 12.665
V=226,945,000/12.665
V= 17,918,718

What I trying to say in above example are:
Volume of outstanding refining margin swap contract is 17,918,718 barrels
Average outstanding refining margin hedged is USD 12.665 per barrel
And the spot refining mogas92 margin on 30/6/2022 is USD 31.58 per barrel

Hence your outstanging 17,918,718 at your average refining hedged at USD 12.665 per barrel will recorded a mark to market (as on 30/6/2022 is USD 31.58 per barrel) fair value loss/unrealised loss of 17,918,718 x (31.58- 12.665) = USD 1,490,267,000/4.398.

If you assume at the end of Q3, 6 million barrels mature and average realised refining margin in Q3 is USD 16 per barrel and at 30/9/2022 the spot Mogas92 refining margin is USD 10

Thus your loss on this 6 million barrels mature refining margin swap contracts USD 6 million x (16- 12.765)
But your physical gross profit is USD 6 million X 16.
Hence your net gross profit is USD 6 million X [ 16 + (12.765 - 16) ] = USD 6 million X 12.765.
The acceptable margin per barrel when HRC make this refining margin swap at USD 12.765.

And your balance refining margin swap (17,918,718 - 6,000,000) barrel mark to market (as on 30/9/2022 spot Mogas92 refining margin USD 10 per barrel) fair value gain is USD 11,918,718 x (12.765 -10).
Note once the spot refining margin drop below your hedge refining margin of USD 12.765 your outstanding refining margin swap contracts will have mark to market fair value gain

As 6 million mature on Q3 HRC might have enter another X million barrel refining margin swap at USD Y per barrel acceptable to HRC

Hope above will help.

Posted by Sslee > 2022-09-03 07:05 | Report Abuse

Stockraider,
If you check HRC 2020 financial account when covid cause mogas92 to negative HRC actually make realised Fair value gain on derivative financial instruments of RM 1,124,316,000.

Posted by CharlesT > 2022-09-03 08:38 | Report Abuse

Looks like SSLee's faith in HY now is as good as his faith in Xinquan many years ago.....

Posted by Sslee > 2022-09-03 08:39 | Report Abuse

D1N1!
SINGAPORE MOGAS 92 UNLEADED (PLATTS) BRENT CRACK SPREAD FUTURES (CONTINUOUS: CURRENT CONTRACT IN FRONT)NYMEX
4.066
D
USD
+3.277
(+415.34%)

Stockraider,
Now how?

Very important u should ask what is the current crack spread as at 2-9-2022?

sept 2022- USD 0.80
0ct 2022 - USD (0.70}
Nov 2022- USD (0.65}
Dec 2022= USD {0.18}

Posted by Sslee > 2022-09-03 08:41 | Report Abuse

CharlesT,
I only have small position in HRC.
But I invested more in Petronm and will continues top up.

Posted by Sslee > 2022-09-03 08:46 | Report Abuse

Just for information.
Repost from HRC forum.

HRC do a big volume long hedging contracts.

Petronm with Refinery + marketing most likely just do a one month commodity swap to protect the inventories value and a small volume of margin swap contracts
Note: It will take one month (crude purchase-delivery- processing- finished product- sold)

And petronm used a different accounting standard where the profit before tax already included in derivatives realised and unrealised gain/loss.

So if Petronm Q2 you take out the unrealised derivaties loss of RM 166,799,000.
The PBT should be RM 240,671,000 + RM 166,799,000.

By the way the unrealised derivatives loss of RM 166,799,00O is added back to operating cash flow.
YTD 2022 the Petron M operating profit before changes in working capital is RM 637,742,000.

Posted by CharlesT > 2022-09-03 09:06 | Report Abuse

Yeap Petronm much safer.

For all China Boss's Co, apply a discount of 90%

Posted by kebling98 > 2022-09-03 09:13 | Report Abuse

Uncle! You are using 92 crack to judge a company who sell mogas 95&97. Lu jiapa Liao ? Jiapa faster go jia yok Liao.

Posted by stockraider > 2022-09-03 09:59 | Report Abuse

"Notice that Petron Eps attributable to shareholders & Petron comprehensive income to shareholders are the same bcos Petron treat Hedging gain & loss must flow thru the P&L which is the rightful treatment loh!
Petron reported a positive position after flowing thru its hedging losses to the P&L top line, this should be what hedging operation should be all about by smoothing out its profitability but not in hengyuan case with losses run into billions ?"

There is no justfication Hengyuan valuation should be supported due to wrongful reporting of its profit & huge losses of its derivative mah!

Let Raider summarised hengyuan position loh!

1.HRC Q2 for 30-6-2022
2. HRC 6mts 30-6-2022

1a.Profit/{loss} attributable to shareholder............Rm 667m
1b. Profit/{loss? comprehensive to shareholder...Rm {412}m
number of shares Rm 300m
1a. Eps Rm 2.22
1b Eps Rm {1.37}

Culmulative 6m
2a, Profit attributable to shareholders..... Rm 714m
2b. Profit comprehensive income shareholders Rm (475m}

2a, EPS Rm Rm 2.38
2b. Eps Rm {1.58}

Notice that Petron Eps attributable to shareholders & Petron comprehensive income to shareholders are the same bcos Petron treat Hedging gain & loss must flow thru the P&L which is the rightful treatment loh!
Petron reported a positive position after flowing thru its hedging losses to the P&L top line, this should be what hedging operation should be all about by smoothing out its profitability but not in hengyuan case with losses run into billions ?

But hengyuan do not loh! It keep the hedging loss as no impact to EPS loh!

If we standardised the treatment like Petron....Hengyuan will be reporting huge losses loh!

Rightfully Hedging losses should flow thru P&L mah!

Thus Hengyuan performance appear very bad compare to Petron loh!

The most danger question is the hedging instrument is completely unrelated to business hedging but it is a device instrument to siphon money from hengyuan loh!

The red flags can be seen by;

1. Many qtr of hedging losses loh!
2. Very suspicious long dated of the hedging instrument loh!
3. Extremely large hedging value has been contracted mah!
4. Extremely Huge hedging losses incurred todate loh!

If the above suspicion is proven true.....then hengyuan will eventually be worthless just like Serba loh!

Posted by stockraider > 2022-09-03 10:06 | Report Abuse

The point is Hengyuan has Rm 2.8 billion loan to deal with besides the more than the Rm 1 billion in losses mah!

Posted by qqq3333 > 44 seconds ago | Report Abuse

sslee...............hedging gains, if any ,will not drive HY higher than fair value ..................... professionals are interested in its fair value of the sustainable operations.................................................................................. and when things turn south, it never rains but it pours...............die lo.

Post a Comment

Posted by stockraider > 2022-09-03 10:13 | Report Abuse

A potential kon....is a worthless to investors loh!
Just leave hengyuan alone mah!
Sell b4 too late loh!

Posted by qqq3333 > 16 seconds ago | Report Abuse

but I disagree HY will be worthless ......................... HY still serve its corporate interest , except the corporate interest may not be minority shareholders in Malaysia. ............... in China those teapot refineries like HY are subject to a lot of controls so it makes sense for them to have a refinery in Malaysia ............. and can service China when necessary.

I think corporate interest is more about serving China then about share price or minority share holders. ................ and transfer pricing is surely a major consistent problem.

Posted by CharlesT > 2022-09-03 10:13 | Report Abuse

At least now HY gives RM0.10 div....100% higher than 2019....

Got improvement lah

Posted by stockraider > 2022-09-03 10:15 | Report Abuse

Yes but it is bait to justify the trap mah!

Get out b4 too late mah!

Posted by CharlesT > 16 seconds ago | Report Abuse

At least now HY gives RM0.10 div....100% higher than 2019....

Got improvement lah

Posted by CharlesT > 2022-09-03 10:25 | Report Abuse

Posted by stockraider > 9 minutes ago | Report Abuse

Yes but it is bait to justify the trap mah!

Still, a RM0.10 bait is better than a RM0.05 bait.........right?

Posted by CharlesT > 2022-09-03 10:29 | Report Abuse

Frankly i dont have the ability of Probability to write such a long analysis n prediction on Q3 profit......

But I have a different skill sets with me lah...

My 6 senses......I predict HY's price will break below RM4.00 in short term.

Those wanna speculate can buy so later....if say China Boss goreng again say LU b4 Q3 of EPS RM2.23 then all horseh liao...

Posted by CharlesT > 2022-09-03 10:30 | Report Abuse

Who knows history always repeat itself

Posted by stockraider > 2022-09-03 11:07 | Report Abuse

If siphoning money is true to my suspicion....then it will be bankrupted loh!

What obligation to shell if bankrupted leh ?

Lu tau boh ?

osted by qqq3333 > 43 minutes ago | Report Abuse

Posted by stockraider > 5 minutes ago | Report Abuse

The point is Hengyuan has Rm 2.8 billion loan to deal with besides the more than the Rm 1 billion in losses mah!

========

HY is not at bankrupcy risk, at least not yet .............................. but HY still got a lot of obligations to Shell /malaysian government to upgrade its facilities.

Posted by Sslee > 2022-09-03 11:56 | Report Abuse

sslee....................... people say crack spread negative, u jump in to buy HY.., even if small sums, ....................what were u thinking? just doesn't make sense.

I just point out the fact, if refining margin become negative HRC can just stop all the physical buying crude, refine it and selling the finished product to prevent physical negative margin (assume negative USD 2 per barrel)

And at the quarter end just report Zero revenues and purchased and PBT included refining margin derivative gain of: USD
Volume x hedge refining margin of [A - (-2 average physical margin for the quarter).
= USD V x (A+2)
If V is 6 million barrel
A is USD 15 per barrel
= USD 6,000,000 x 17
= USD 102,000,000
= USD

Posted by stockraider > 2022-09-03 11:59 | Report Abuse

U think they will do that ??

If the objective is to kon loh?

Posted by stockraider > 49 minutes ago | Report Abuse

If siphoning money is true to my suspicion....then it will be bankrupted loh!

What obligation to shell if bankrupted leh ?

Lu tau boh ?

osted by qqq3333 > 43 minutes ago | Report Abuse

Posted by stockraider > 5 minutes ago | Report Abuse

The point is Hengyuan has Rm 2.8 billion loan to deal with besides the more than the Rm 1 billion in losses mah!

Posted by Sslee > 45 seconds ago | Report Abuse

sslee....................... people say crack spread negative, u jump in to buy HY.., even if small sums, ....................what were u thinking? just doesn't make sense.

I just point out the fact, if refining margin become negative HRC can just stop all the physical buying crude, refine it and selling the finished product to prevent physical negative margin (assume negative USD 2 per barrel)

And at the quarter end just report Zero revenues and purchased and PBT included refining margin derivative gain of: USD
Volume x hedge refining margin of [A - (-2 average physical margin for the quarter).
= USD V x (A+2)
If V is 6 million barrel
A is USD 15 per barrel
= USD 6,000,000 x 17
= USD 102,000,000
= USD

Posted by Sslee > 2022-09-03 12:00 | Report Abuse

Or RM 102,000,000 x 4.47
= RM 455,940,000

Posted by Sslee > 2022-09-03 12:03 | Report Abuse

Stockraider if HRC wanted to con you they can just siphon out realised fair value gain on derivative financial instruments of RM 1,124,316,000 in year 2020

Posted by CharlesT > 2022-09-03 12:06 | Report Abuse

Do u see the cash now?

Posted by OTB > 2022-09-03 12:06 |

Post removed.Why?

Posted by stockraider > 2022-09-03 12:07 | Report Abuse

They already started siphoning mah....from gain of Rm 1.1b....now it is a loss of more than Rm 1.1b mah!

Do u know....more than Rm 2.2b....has just disappear ah from 2020 to 2022 todate now leh ?

Posted by Sslee > 1 minute ago | Report Abuse

Stockraider if HRC wanted to con you they can just siphon out realised fair value gain on derivative financial instruments of RM 1,124,316,000 in year 2020

Posted by CharlesT > 2022-09-03 12:09 | Report Abuse

So far after the Chinaman took over Shell in 2017, they paid 2 cents, 4 cents n 10 cents now..total 16 cents

Posted by OTB > 2022-09-03 12:10 | Report Abuse

Sslee and probability,
Do not waste your time here.
KYY did not do his homework well.
Hence he lost a lot of money in KLSE in last 2 years.
He simply talked without facts and figures.
He never learn any skill in KLSE, still the same outdated rules.

Posted by CharlesT > 2022-09-03 12:13 | Report Abuse

I3 is just too toxic..

Better to group together in Telegrams....like Glove Telegram Groups