Posted by Jaya > 2018-11-15 19:21 | Report Abuse

Under 7 tomorrow

Posted by Jaya > 2018-11-15 19:26 | Report Abuse

1.5b increased sales ytd but profit 55m down
Something seriously wrong here
Can anyone explain please if I am looking at it wrong

Posted by Jaya > 2018-11-15 19:38 | Report Abuse

This is more than declining refining margin
They need to look more closely at their manufacturing and sales coatings
This is a major disaster in my eyes
So they sold an extra 1.5b ytd at a major loss
My advise is to run run run

Posted by lincm86 > 2018-11-15 19:41 | Report Abuse

1. Higher revenue but lower profit due to crude oil price hike (compressed crack spread) and relatively flat sales volume.
2. Higher average crude oil price ($52 last year, $75 this year).
3. Volatile crude oil price this year (crack spread messy), better if crude oil price is stable.
4. Looks to make more than EPS 100cents this year, with PE7 or less.
5. How is this compare to other refinery in other parts of the world could be the better way to benchmark.

Posted by lincm86 > 2018-11-15 19:55 | Report Abuse

@ Jaya, I think this is the nature of refinery business.
Higher revenue because of higher crude oil price, In a way they are just processing the crude oil and make profit out of the value added process (Buy high sell high).

Profit drop not because of lower operating efficiency, but a matter of lower crack spread due to volatility in crude oil price.


Q. I wonder what is the different between "Other Operating Income" and "Other Income".
Is:
"Other Operating Income" (Reduce 11% compare 2017) = Refinery profit from processing crude oil?
"Other Income" (Increase 110% compare 2017) = Retail Petrol Station profit?

Posted by aleroe > 2018-11-15 20:51 | Report Abuse

Cumulative profit now is 250m

If we annualize it, the expected profit for the full year may be 333m

Now, what is the fair PE?

If we assume 7x, the implied market cap is 2.3b

Assume 8x, implied market cap is 2.7b

Assume 9x, implied market cap is 3.0b

You get the drift

Point is, at current share price, current market cap is less than 2.0b

Result for the year is still good — suggests an upside to current share price

Since oil price coming down this quarter, expectation to make more than 333m for the full year is higher — further upside is possible

Posted by sheldon > 2018-11-15 23:14 | Report Abuse

I feel the commentary is rather opaque - just repeating what we ourselves could determine form the data provided.

What I find somewhat disturbing is the steep rise in receivables. Why? - it drains the cash flow, we incur a financial cost, there may concomitantly be higher bad debts and the remote possibility of phantom sales (hopefully not).

Posted by dnlt > 2018-11-16 09:05 | Report Abuse

I think the rise in receivables are either from the government fixing the petrol prices OR related party transaction. PETRON was kind of expecting it as they raised the loans a couple of months back.

Posted by Jaya > 2018-11-16 09:21 | Report Abuse

Thanks for your comments but I am still not convinced

Posted by Jon Choivo > 2018-11-16 09:57 | Report Abuse

Increase in receivables is the rise in compensation for fuel subsidy. I bought more anyway.

Posted by kong73 > 2018-11-16 10:20 | Report Abuse

Buy and buy gentleman

Posted by 1910982335855168 > 2018-11-16 10:31 | Report Abuse

next year onwards no more fuel subsidy for 1500cc above & luxury cars and certain bikes, this will sure add more profit as the compensation for fuel subsidy will be lower, pls correct me if Im wrong sifus...

Posted by dnlt > 2018-11-16 10:42 | Report Abuse

When the fuel subsidy is removed, it wont add more profits. Instead better cash flow as they wont need to wait for the government to return the subsidized portion of the fuel price.

Posted by 1910982335855168 > 2018-11-16 10:46 | Report Abuse

thanks dnlt sifu

Posted by sheldon > 2018-11-16 11:26 | Report Abuse

TQ dnlt & Jon Choivo - you guys are indeed a sifus - respect bros!

Posted by dnlt > 2018-11-16 12:02 | Report Abuse

I think if the company do not have a large CAPEX for refinery upgrade, there should be a increase in dividends next year. I

Posted by kong73 > 2018-11-19 15:32 | Report Abuse

Dividend is good

Posted by kong73 > 2018-11-19 15:36 | Report Abuse

Maintain BUY with a new MYR9.50 TP from MYR10.70, 36% expected total return. This is pegged to lower 9x FY19F P/E. Petron’s 9M18 core profit was above expectations, as the drop in refining margins was not as steep as expected. 3Q18 core profit did plunge 52% YoY on weaker refining margin despite the flattish sales volume recorded. FY18F earnings have been adjusted upwards 24.4%, as the drop in margins was not as huge as expected. However, we maintain our FY19F-20F earnings. In our opinion, we believe the market has overreacted to Petron’s weak margins, with implied FY19F P/E at 6x.

Above expectations. Petron Malaysia posted a 3Q18 core net profit of MYR82m, bringing 9M18 core earnings to MYR257m. This was above our expectations – mainly due to the drop in refining margins not being as steep as we initially thought. YoY, core net profit in 3Q18 plunged 52% despite flattish sales volume (3Q18: 9.1bn bbls vs 9bn bbls last year). This was mainly due to the weaker refining margins caused by higher naphtha prices, which resulted in elevated oil prices. A similar core profit trend was observed in 9M18 as a whole, with a 16% decline witnessed due to a drop in refining margins.

Earnings weakness still within range. While Petron’s earnings have been admittedly weaker YoY, this has already been factored into our full-year net profit estimate, which implies a 35.4% plunge. We believe refining margins in the coming quarters will remain weak due to oil price strength – which typically drives feedstock costs – while end-product prices are expected to edge up at a slower pace. The company’s sales volume growth is expected to be maintained at positive levels (FY18 assumption: 4%), lending support to its earnings base.

In the medium term, we do not foresee Petron making hasty decisions by embarking on capacity expansions via a new plant or an upgrade of the existing Port Dickson Refinery. This is on expectations of weaker refining margins in the next two years due to oil price strength. In terms of improvement works, however, the company is acquiring an existing pipeline to relieve congestion at its Port Dickson product jetty. It has also started the design for a new diesel hydroeater unit to comply with the Euro 5 standard by 2020. This is in line with the Government’s policy that all diesel products sold in Malaysia must comply with this standard.

Maintain BUY with a new TP of MYR9.50. Our FY18F net profit has been adjusted 24.4% upwards, as our previous earnings assumption incorporated overly-conservative refining margin estimates. While we maintain our call, TP has been reduced after being pegged to lower P/E of 8x from 11x – this is based on rolled forward FY19F EPS. The reason why we pegged a lower P/E to Petron was due to its weak refining margins trend. We kept our recommendation intact though, as we believe the share price has overcorrected on the margins weakness.

Source: RHB Securities Research - 16 Nov 2018

Posted by PassiveInvestor > 2018-11-19 16:02 | Report Abuse

RHB's TP was 16.5 a year ago. Lol

Posted by lincm86 > 2018-11-20 13:23 | Report Abuse

There is still some warrants around by Maybank and Macquarie, trying to goreng?

Posted by Jaya > 2018-11-21 03:12 | Report Abuse

Ha buy and see what happens
Jump both feet in

Posted by Jaya > 2018-11-21 03:51 | Report Abuse

7.8 I leave

Posted by Jaya > 2018-11-21 05:50 | Report Abuse

Today can buy

Posted by Jaya > 2018-11-21 05:52 | Report Abuse

Happy if I can buy at 7.15

Posted by kong73 > 2018-11-21 10:01 | Report Abuse

Securities research update their target price base since petron shares price overeacted. Their recomendation buy call on Petron is revised based on higher oil price for their refining feedstock that is expected to reduce refining margin but overall petron is generating solid cash flow

Posted by Fabien Extraordinaire > 2018-11-21 15:50 | Report Abuse

Just hold la...

Posted by Jon Choivo > 2018-11-21 16:58 | Report Abuse

Dear Mr Market,

Please let the price remain at this level or even lower for the next 2 weeks. So that i can double my holdings.

Posted by Jaya > 2018-11-21 18:28 | Report Abuse

Jon Choivo
I think got 1 to 1.5 in this share by Christmas

Posted by PotentialGhost > 2018-11-21 21:22 | Report Abuse

Today bought some at 7.35. Oil price now 64. Petron will back to RM 13soon

Posted by Alex™ > 2018-11-24 12:01 | Report Abuse

Be like water.. Careful oil price bro... Stockholding loss alone is enough to kill

Posted by feet > 2018-11-25 09:42 | Report Abuse

what happen to crack spread? below 2 now?

Posted by lincm86 > 2018-11-25 12:26 | Report Abuse

Just trying to learn here.

Early July to early October 2018 (QR3):
Crack spread for MOGAS 92 around USD 6.00 (guesstimate from chart). average Brent crude USD75 (QR3).


Early October 2018 (for QR4)
Crack spread for MOGAS 92 sharp down since October 2018. Looks like average USD2 to 3 if kept low. Average Brent crude price looks to be USD6x if maintain.

https://www.cmegroup.com/trading/energy/refined-products/singapore-mogas-92-unleaded-platts-brent-crack-spread-swap-futures.html


So, QR4 in February 2019 should reflect the effects of the both stockholding loss and lower margin on low crack spread. Lower EPS is expected. Hopefully no loss on refinery side. While retail should help to make profit remain positive?

Posted by Jaya > 2018-11-26 12:35 | Report Abuse

Today picked up 7.1

Posted by sheldon > 2018-11-26 16:49 | Report Abuse

Petron has good steady earnings, good volume traded i.e. liquidity, good dividends & PM's son's interest. Why is it such a laggard? Why are suitors avoiding this counter?

Maybe because she's not a virgin? haha

Posted by Jaya > 2018-11-27 01:24 | Report Abuse

Sheldon
Time to wake this share up

Posted by icecool > 2018-11-28 22:53 | Report Abuse

@jaya are you a gambler or investor ?

Posted by icecool > 2018-11-28 23:53 | Report Abuse

btw jaya look at the chart the "W" breakout without volume fail now going into bear market careful

Posted by Jaya > 2018-11-29 01:12 | Report Abuse

Bro trust me la
This counter is ok

Posted by Jaya > 2018-11-29 01:13 | Report Abuse

Icecool
Both bro

Posted by Jaya > 2018-11-29 01:17 | Report Abuse

Icecool
In current climate no point looking at chart bro
Chart say one thing opposite happens

Posted by Jaya > 2018-11-29 01:18 | Report Abuse

I play market for holidays

Posted by Jaya > 2018-11-29 01:25 | Report Abuse

Icecool
Myeg is my investor head

Posted by Jaya > 2018-11-29 01:27 | Report Abuse

Petronm also held for 5 years bro

Posted by Jaya > 2018-11-29 01:40 | Report Abuse

DJ up

Posted by Jaya > 2018-11-29 01:41 | Report Abuse

Klee should follow suit

Posted by Jaya > 2018-11-29 01:41 | Report Abuse

Klse

Posted by Jon Choivo > 2018-11-30 11:27 | Report Abuse

Just so you guys know.

Crack spread for jetfuel is at US20. Almost all time high. If one is punting.

Posted by sheldon > 2018-11-30 14:48 | Report Abuse

"Jon Choivo Just so you guys know. Crack spread for jetfuel is at US20. Almost all time high. If one is punting."

Jon - where did you get this info?

Posted by soojinhou > 2018-11-30 14:51 | Report Abuse

On the flip size, gasoline crack is nearly zero. A barrel of oil refines into 20% gasoline and 4% jet fuel. So overall it's a net negative.

Posted by Jon Choivo > 2018-12-01 04:12 | Report Abuse

Its in the airasia cimb report.


https://www.thestar.com.my/business/business-news/2018/11/30/cimb-research-downgrades-airasia-from-hold-to-reduce/

====
Posted by sheldon > Nov 30, 2018 02:48 PM | Report Abuse

"Jon Choivo Just so you guys know. Crack spread for jetfuel is at US20. Almost all time high. If one is punting."

Jon - where did you get this info?