Posted by Sslee > 2022-12-30 13:00 | Report Abuse

Dear Neoh Jia En,

Can you please kindly explain the below:
HRC Quarter 3: Fair value loss on derivatives financial instruments: RM 364,570,000. Cumulative 9 months RM 1,235,534,000?
Whereas Petron Malaysia managed to turn Q2: Derivatives Realized loss: RM 207,862,000. Unrealized loss: RM 166,799,000 to Quarter 3: Derivatives Realized gain: RM 139,957,000 and Unrealized gain RM 7,588,000

Outstanding refining margin swap contracts as at 30/09/22 Liabilities: RM (1,257,369,000) far exceeded Assets RM 169,473,000? Then how under P&L reporting other comprehensive (expense)/income: Q3 is RM 422,463,000 when the fair values of outstanding financial instruments were net liabilities of RM 1,113,870,000?

Quarter 2 revenue of USD 151 per barrel
Quarter 3 revenue of USD 124 per barrel
What are the reasons per my calculation crude purchase in Q3 USD 136.453/barrel even higher than Q2 of USD 126.71/barrel when average Dated Brent dropped to USD 101/barrel in Q3 from the USD 114/barrel in Q2?

Posted by Sslee > 2022-12-30 13:03 | Report Abuse

From Petron Corp quarterly report on crack spread
https://www.petron.com/investor-relations/our-financial-reports/
Q1 2022
Prices of Dubai crude USD 95.6/barrel
Gasoline cracks USD 17.8. Price USD (95.6 + 17.8) = USD 113.4 /barrel
Diesel cracks USD 21.6. Price USD (95.6 + 21.6) = USD 117.2/barrel
Kero-jet cracks USD 16.2. Price USD (95.6 + 16.2) = USD 111.8/barrel
Q2 2022
Prices of Dubai crude USD (101.8X2- 95.6) = 108/barrel
Gasoline cracks USD (26.4X2-17.8) = 35. Price USD (108 + 35) = USD 143/barrel
Diesel cracks USD (36.6X2-21.6) = 51.6. Price USD (108 + 51.6) = USD 159.6/barrel
Kero-jet cracks USD (27.7X2-16.2) = 39.2. Price USD (108 + 39.2) =USD 147.2/barrel
Q3 2022
Prices of Dubai crude USD (101.2X3- 95.6-108) = USD 100.3/barrel
Gasoline cracks $ (22X3-17.8-35) = 13.2. Price USD (100.3 + 13.2) = USD 113.5/barrel
Diesel cracks $ (38.1X3-21.6-51.6) = 41.1. Price USD (100.3 + 41.1) = USD 141.4/barrel
Kero-jet cracks $(29.3X3-16.2-39.2) = 32.5. Price USD (100.3 + 32.5) = USD 132.8/barrel

Posted by Neoh Jia En > 2022-12-30 15:27 | Report Abuse

Hi Sslee, your first question can be partly answered using contents in this first write-up. Since PETRONM does not use hedge accounting, what it recorded as FV G/L of derivatives in P&L is intuitive: refining margin spiked in 2Q and crashed in 3Q, hence its derivatives used for hedging had a FV loss in 2Q and gain in 3Q, including those that were unrealised and intended for hedging of future sales.

For Hengyuan which has adopted hedge accounting, its FV loss of derivatives in 2Q was not fully reflected in P&L, with unrealised FV losses recorded in OCI. In 3Q when the matching hedged sales occurred, these FV losses were recycled to be recognised in P&L. As to why didn’t those derivatives turned profitable when the refining margin crashed in 3Q, it’s also a question that I have.

For your second and third question, my next write-up may provide the explanation. The hints are Hengyuan presents its OCI net of reclassification adjustments; and realised hedging losses for refining margin swaps are recognised in “Purchases.”

Anyway, thanks for sharing your complaint to Bursa on JAKS few years ago. I did refer to your case before filing my complaint on YNH Property.

Posted by qqq47660 > 2022-12-30 16:03 | Report Abuse

definitely this is public service and a work of love....but so complex so wonder IB analysts also dare not touch.

Posted by Sslee > 2022-12-30 16:06 | Report Abuse

It is illogical to record Q3 the OCI is gain of RM 422,463,000 when the fair values of outstanding financial instruments were net liabilities of RM 1,113,870,000.

Posted by qqq47660 > 2022-12-30 16:16 | Report Abuse

Sslee

It is illogical to record Q3 the OCI is gain of RM 422,463,000 when the fair values of outstanding financial instruments were net liabilities of RM 1,113,870,000.

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I bet u, all the so called illogical stuffs will disappear once u have a chance to sit down with the accountant. logical illogical depends on the questioner.

Posted by Neoh Jia En > 2022-12-30 16:17 | Report Abuse

It's because much of these negative FV/outstanding liabilities was accumulated from 2Q...

Posted by Sslee > 2022-12-30 17:20 | Report Abuse

The fair values of outstanding financial instruments were as on 30/09/2022 with net liabilities of RM 1,113,870,000

Posted by Sslee > 2022-12-30 17:50 | Report Abuse

qqq3,
I remember asking too many question on derivatives during TA AGM and TA management arranged/forced the Auditors to stay back and explain to me Tony Tiah betting on USA OTC level 3 derivative financial assets after the AGM in private.

The auditors were very kocky and imply should they charge by hour? I gave them a "are you kiddy me look" and demand them to advise Tony Tiah not to gamble on these so called Level 3 OTC derivatives financial assets.