Posted by Johnzhang > 2022-08-27 11:45 | Report Abuse

@probability.
$166.8 mil is accrued in Q2 as provision for hedging loss , whereas only $109.8 is charged as other expenses in the account. There is a difference of $57 mil ($166.8 - 109.8 mil)
I assume there is provision write back to account for the difference.
Commodity Hedging loss provision made in Q1 was $52+ mil and could have been written back when those commodities contracts provided for didn’t suffer the loss as anticipated in the provision. This could explain the difference.
On the same basis, if the outstanding contract provided in Q2 finally being square off at same or lower crude price, the provision sum $166.8 mil may come in as profit after GP line .

Just for some mind stimulating discussion and masturbating the mind . Hahaha..

Posted by probability > 2022-08-27 11:52 | Report Abuse

OK thanks for the info John. Not coming from accounting background, this realized and unrealized effects is something i never placed effort to understand till now..plain lazy..:(

have a feeling what you are saying is true...

let hardworking sifu sslee also comment :)

90% sure he was the one who asked all the Q&A to petronM earlier

Posted by Sslee > Aug 27, 2022 8:36 AM | Report Abuse

https://www.petron.com.my/investor-relations/corporate-governance/

You can read the rest on above link.
6.
Click on: Questions and Answers MEW!

Posted by Sslee > 2022-08-27 12:55 | Report Abuse

Me,
If people still not satisfied with petronm Q2 EPS of 68 cents than please sell and I intend to collect Petronm slowly and steadily.

I am more interest with refining margin monthly average and HRC Q2, Q3 result because I bet on C24 and C26 which has maturity date on 27/01/23 and 03/04/23

Posted by i3lurker > 2022-08-27 13:04 | Report Abuse

I never liked Petron
nothing so far had my mind yet, ... .. yet

Posted by Sslee > 2022-08-27 13:31 | Report Abuse

i3lurker,
I just need to invest my spare money that can give me dividend more than FD rate and at the same time with improve EPS the capital gain if share price appreciate.

Posted by i3lurker > 2022-08-27 13:55 | Report Abuse

I am a newbie today ... ... coz I have not bought any share today.
:)

I also use the F word for "shock and awe" effects
:)

Posted by PSAi3alert > 2022-08-27 14:27 | Report Abuse

i3lurker, SSLee,

Should take a look at solar.

To meet the Paris agreement of preventing Earth's average temperature from rising more than 2 degrees Celsius above preindustrial level, the energy economy need to shift to 100% renewable energy using solar energy and other clean energy sources.

As at 2021, Malaysia's solar capacity was around 1,800MW, representing 2.4% of total energy consumption.

Malaysia's solar capacity will need to grow 30-50% over the next five years just to catch up in terms of W per capita.

Despite coal prices quadrupling from USD50/tonne to USD200/tonne, Malaysia's electricity price of 39.45 sen per kWh remains one of the cheapest in the region. And it will remain suppressed until end of 2024. However, a surcharge of 3.7 sen per kWH for non-domestic users from 1H22 has increased electricity for commercial and industrial users to over 43 sen per kWh.

Solar projects' levelized cost of energy is around 22 sen per kWh.

Makes economic sense to shift towards solar.

Most importantly, it's good for Mother Earth.

---

2021 Solar PV capacity and W per capita

_____________________ Capacity (MW) _____ W per capita
China _______________ 306,973 _____________ 217
European Union ____ 178,700 _____________ 400
United States _______ 95,209 ______________ 289
Japan _______________ 74,191 ______________ 590
Australia ___________ 19,076 _______________ 742
South Korea _______ 18,161 _______________ 350
Vietnam ___________ 16,660 _______________ 171
Taiwan _____________ 7,700 ________________ 327
Thailand ___________ 3,049 ________________ 44
Malaysia ___________ 1,787 ________________ 55
Singapore __________ 433 _________________ 76


_________________ price/sh _________ mkt cap _________ PE
Solaredge _____ USD 287.93 ______ USD 16.02B _____ 112
First SOlar _____ USD 121.75 ______ USD 12.98B _____ 69
JinkoSolar _____ USD 59.78 _______ USD 2.96B _______ 39
Longi Green ___ CNY 53.06 _______ CNY 400.69B ____ 38
Sungrow _______ CNY 131.65 ______ CNY 195.53B ___ 120
JA Solar ________ CNY 65.03 _______ CNY 151.54B ____ 55

Solarvest _____ RM 0.83 _________ RM554M __________ 55
Pekat _________ RM 0.545 ________ RM348M _________ 19
Samaiden _____ RM 0.70 _________ RM270M _________ 24

Not considered
KPower !fake projects
Cypark !smell of rubber stamps

.

Posted by Sslee > 2022-08-27 15:39 | Report Abuse

The last time I invested in Ranhill because of potential water rate hike and solar project. I had to cut loss because of poor devidend and reduce EPS (profit all go to non controlling interests and cost all pass to Ranhill).

The latest LSS4 solar bidding at low electricity price will cause all LSS4 winners losing their pants.

Note: Someone told me the solar capacity drop very fast after few years in operation.

Posted by sheldon > 2022-08-27 16:19 | Report Abuse

Yada yada blah blah blah.
Intellectuals, please tell us the bottom line.
Is the market for Petron shares on Mon 29 Aug going to ...
A. rise up like superbull
B. bounce up & down a little around where it is
C. drop despite all the huffing & puffing of a great EPS ?

Posted by i3lurker > 2022-08-27 16:30 | Report Abuse

I am not gonna invest in any fossil fuel company.

short term gambling like in Armada case, off and on, ... yes
but other than that, answer is no.

Posted by investor77 > 2022-08-27 16:37 | Report Abuse

Agree, hope HYuan dont disappoint us. Dividends if given is a bonus as Stockraider says HYuan stingy being China controlled company, maybe because of delay in Subsidy payments by Govt. Petron has good results and yet price went down. Hope Petron CY, HYuan C25, C 39 besides C 24,26, will also go up as it is more sensitive to price rise since former has lower conversion ratio of 4 and 5 to !.

Posted by Johnzhang > 2022-08-27 16:42 | Report Abuse

@probability ,
This sentences appeared under performance review in the latest QR.

Quote :
The sustained hike in prices resulted in strong regional refinery cracks, improving overall margins and lifting operating income to RM362,323 thousand, more than five-fold from last year's RM66,506
thousand. The bullish price outlook as at reporting date, however, required accrual of temporary
mark-to-market loss provision on outstanding commodity hedges, tempering net profit to
RM183,479 thousand, though still surpassing last year's RM42,013
Unquote:

I must bring you to the reason (bullish outlook) for making temporary provision loss on outstanding commodity hedges.
I wonder if the provision is an excuse to temporary ‘hide high profit’ and aim to even out performance for next qtr or next 2 qtrs?

Brent crude was on general uptrend from early April to early June and reached the peak at $121 on 8th June( up from $100 to $121). Thereafter, Brent had been on general downward, bottoming at $91 around mid Aug . It has since rebounded to $100 now. With this crude price development, I wonder is there is any necessity to make provision for hedging loss on outstanding contract which are most likely fixed at prices higher than after 2Q closing?

What’s your take?

Posted by PSAi3alert > 2022-08-27 16:48 | Report Abuse

I'm not thinking of the LSS4 bidders that put in 17.68 sen per kWh to as high as 24.81 sen/kWh. (People like ALP of Jaks do not make money by generating power, coal or solar)

During the gold rush, sell shovels.

Companies like Pekat are doing that by selling to LSS4 winners and other commercial and industrial; and consumers. Pekat's 12 megawatt-peak (MWp) grid-connected solar PV system at Proton is rather interesting.

Solar degradation is at a rate of 0.5% to 1.0% per year. Just need to wash the panels to remove dust build up. (But, Malaysia do not have a maintenance culture. Look at the dirty outlook of Istana Budaya and compare against the Sydney Opera House).

Ranhill just came up on my radar. Water tariff hike for non-domestic users is effective Aug 2022.

.

Posted by probability > 2022-08-27 16:50 | Report Abuse

@John, the word 'outstanding commodity hedges' means to me that this is transaction in 'futures market' that has not been offset with the expected 'cash market' transaction in the coming month at prevailing market prices...

This means, the provision will be effective if the prevailing commodity price maintains in Q3..

Its unrealized - coz they have not cleared the hedging portion.

Remember the twins transaction concept i mentioned earlier. This is what i can think at the moment.

Posted by probability > 2022-08-27 16:53 | Report Abuse

@John, FYI

Posted by probability > Jun 12, 2022 2:08 PM | Report Abuse

Sample business transaction of HY
................................

Say John you are the Shell retailers in Malaysia

Myself and my twin brother represent HY. I deal with CASH MARKET and my twin brother deals with FUTURES MARKET.

Our sales volumetric achievable in a month is 4.0 million barrels, 1.0 million barrels per week.

1) CASH MARKET transaction done by me;

I deliver refined oil to you exactly every Friday at 1 million barrels.
Every week at the same time Friday, i also buy crude oil from Petronas at the same volume 1.0 million barrels.

You pay me as per current market value of refined oil (spot price matching singapore hub crack spread) and i pay petronas as per the current brent spot price.


2) FUTURES MARKET transaction done by twin brother. You can view this exactly like stock market.


Every time i deliver 1 millon barrel to you, my brother will clear back 1 million barrels from the futures market buy selling back at current futures the 1 millon barrels he had gone LONG 4 weeks ago.

At the same time he will also clear 1 million barrels refined oil by buying back at current market the refined he had gone SHORT 4 weeks ago.


If my twin brother lost money in Futures market that he is forced to do (cover back his long and short positions) due to my cash market transaction in parallel, its derivative loss. If he had made money, then its a derivative gain.

Posted by probability > 2022-08-27 16:57 | Report Abuse

in income statement, they are trying to tell 'what is the true present status' of their income if current condition of the commodity prices maintains going forward...

This is a logical assumption to make (that current prices maintains) to see the consequences in advance and tell the shareholders via the financial statement (Income statement) - though it is yet to happen.

Posted by Sslee > 2022-08-27 17:10 | Report Abuse

What I understand on commodity swap contract is to protect the inventories from sudden loss/gain if price make a U turn.

So what is a loss in commodity swap (realised or unrealised) already or will become gain in revenue when you sold your inventories at higher price.

Similarly what is a gain in commodity swap (realised or unrealised) already or will become lose in revenue when you sold your inventories at lower price.

The ptoportion is depend on how many % you hedge your inventories

Posted by i3lurker > 2022-08-27 17:18 |

Post removed.Why?

Posted by probability > 2022-08-27 17:20 | Report Abuse

@sslee, what you are saying is the same thing.

The unrealized portion of the hedging loss (what John said above) will become a gain if the price of the commodity goes back to the price level they hedged by the next qtr.

But, the gain is not a real gain - as they will report a lower gross profit (due to cash market transaction) by the same magnitude.

Posted by probability > 2022-08-27 17:23 | Report Abuse

they will not call it as realized gain in hedging in next qtr if price goes to the same level they hedged, but zero hedging loss and reduce the gross profit by the same amount

Posted by Sslee > 2022-08-27 17:32 | Report Abuse

Commodity Price Risk
Commodity price risk is the risk that future cash flows from a financial instrument will fluctuate because of changes in market prices. The Group enters into various commodity derivatives to manage
its price risks on strategic commodities. Commodity hedging allows stability in prices, thus offsetting the risk of volatile market fluctuations. Through hedging, prices of commodities are fixed at levels acceptable to the Group, thus protecting raw material cost and preserving margins.

For consumer (buy) hedging transactions, if prices go down, hedge positions may show mark-to-market losses; however, any loss in the mark-to-market position is offset by the resulting lower physical raw material cost.

While for producer (sell) hedges, if prices go down, hedge positions may show mark-to-market gains; however, any gain in the mark-to-market position is offset by the resulting lower selling price.

Posted by Johnzhang > 2022-08-27 17:37 | Report Abuse

@Sslee and probability,
fully agreed to the concept of hedging - loss in commodity hedges is eventually offset with gain in GP in the same period (the key word is same period). Now, Petron made in advance a loss provision in current period for any anticipated commodity swap loss in future period .

For a simplified illustration ,
In July ‘s account :
Commodity swap loss -$100
GP gain due to lower COS. +$100
Nett impact to earnings is $0.

If I have booked the July commodity swap loss in advance in June , I will gain $100 in GP in July . This is because the commodity swap loss in July is squared off with the provision made in June .

Sorry for the lengthy deliberation on the same topic .

Posted by probability > 2022-08-27 17:40 | Report Abuse

actually i dont mind having a Teams meeting discussion to have our understanding all aligned :)

it will be great if sslee creates a whatsapp group for all 3 of us

what you say sslee?

but at this moment i am just lazy to study / investigate to understand this...

lets just wait for the results

Posted by probability > 2022-08-27 17:41 | Report Abuse

thanks John & Sslee for the clarifications

Posted by i3lurker > 2022-08-27 17:45 |

Post removed.Why?

Posted by Sslee > 2022-08-27 17:45 | Report Abuse

i3lurker,
I bought into Petronm recently because of no more covod lockdown, everyone is free to drive their car and petrol station business is thriving.

Moreover the refining margin from a poor single digit into good double digit (world short of refining capacity and the Russia oil and fuel products boycott in coming year) thus Petronm should be a good buy.

Posted by i3lurker > 2022-08-27 17:47 | Report Abuse

when Global Funds keep on dumping shares of specific counters, they already calculated risks of bankruptcy going up and up.

=> there is NO Fat Pregnant Duck Waddling Down the Street.

Be Aware.

Posted by i3lurker > 2022-08-27 17:49 | Report Abuse

hedging costs money
hedging costs is the USD Interest rate costs

Those who over hedge => sure go bankrupt
Those never hedge => sure go bankrupt

Do I need this problem?
Answer => NO Way hohseh !!!


Sslee

i3lurker,
I bought into Petronm recently because of no more covod lockdown, everyone is free to drive their car and petrol station business is thriving.

Moreover the refining margin from a poor single digit into good double digit (world short of refining capacity and the Russia oil and fuel products boycott in coming year) thus Petronm should be a good buy.

2 minutes ago

Posted by Sslee > 2022-08-27 17:51 | Report Abuse

The best is still let the quarterly finamcial report speak for itself.
Petronm
Q1 EPS RM 39.4 cents.
Q2 EPS RM 68 cents

Posted by probability > 2022-08-27 17:52 | Report Abuse

next qtr sure even higher...just sapu the call warrants!

Posted by Sslee > Aug 27, 2022 5:51 PM | Report Abuse

The best is still let the quarterly finamcial report speak for itself.
Petronm
Q1 EPS RM 39.4 cents.
Q2 EPS RM 68 cents

Posted by i3lurker > 2022-08-27 17:54 | Report Abuse

please have a little bit of respect for Global funds who sold down PetronM from 6plus down to 5plus
They have solid reasons since USD interest rates are going up !!!

those who are arrogant in share market ... ... all sure die one.

Posted by Sslee > 2022-08-27 17:55 | Report Abuse

i3lurker,
No risk no gain. No pain no progress.

Posted by i3lurker > 2022-08-27 17:59 | Report Abuse

risks management means not too many eggs put inside PetronM

do NOT go all in or you will DIE!!!

Posted by Sslee > 2022-08-27 18:00 | Report Abuse

So I have no problem buying when the Global funds is selling as long as I was paid yearly dividend for the waiting.

By the way Petronm NOSH 270 million. Petronm hold 73.6%.

Posted by Sslee > 2022-08-27 18:03 | Report Abuse

i3lurker
Thanks for the advise risks management means not too many eggs put inside PetronM.

You already know I put 50% into Insas and I will only use my monthly spare money to top up Petronm.

Posted by i3lurker > 2022-08-27 18:04 | Report Abuse

the pattern is standard for this type of companies ... ...

Happens as follows:-
as USD rates rise to around 8% per annum,
swap rates start to bite into Gross Profits Margin
Companies reduce Hedging to reduce swap rates
a sudden jump in Global crude oil prices to USD150 per barrel means company will operate at a Gross Loss
Company stops all operations
Old Man [who bought what he misunderstood] flies from East Malaysia and jumps from Penang Bridge.

end of fairytale
QED

Posted by i3lurker > 2022-08-27 18:04 | Report Abuse

Excellent !!!

Sslee

i3lurker
Thanks for the advise risks management means not too many eggs put inside PetronM.

You already know I put 50% into Insas and I will only use my monthly spare money to top up Petronm.

59 seconds ago

Posted by Sslee > 2022-08-27 18:05 | Report Abuse

So I have no problem buying when the Global funds is selling as long as I was paid yearly dividend for the waiting.

By the way Petronm NOSH 270 million. Petron corp hold 73.4% petronm (correction)

Posted by i3lurker > 2022-08-27 18:13 | Report Abuse

PetronM should be classified as a high risk counter suitable for purchase for age group 20 - 30 years old only

reason is if lost everything still can earn back money.

Posted by i3lurker > 2022-08-27 18:14 | Report Abuse

since I am only 6.5 years old and NOT 7
PetronM is not suitable for me at all.

:)

Posted by DickyMe10 > 2022-08-27 18:27 | Report Abuse

RM 2.67 coming soon!

Posted by i3lurker > 2022-08-27 18:27 | Report Abuse

sslee

PetronM
High Risk High Return
at the right timing all can make a a Big Huge Bundle from PetronM enough to retire on so long as you accept the risks

INSAS
Low Risk Low Return
frankly its a hell of a boring counter and traded hardly as well as hardly traded

Posted by i3lurker > 2022-08-27 18:28 | Report Abuse

adios

Posted by miracle_trader > 2022-08-27 19:17 | Report Abuse

anybody pump petron fuel to support?

Posted by Sslee > 2022-08-27 19:54 | Report Abuse

i3lurker,
From Insas CEO

"Current market is uncertain, but we are looking out for good investment opportunities. If u have, pls connect me.

Those deals in the market now are mostly real estates"

Do you have any good business investment opportunities please give Dato' Wong a call.

Posted by Sslee > 2022-08-27 20:13 | Report Abuse

Petronm retail petrol station profit is government regulated fixed price margin per liter business model. So as long as sales is above fixed cost breakeven volume it is sure to make profit and the higher the sales volume the higher profit will be earned.

The refinery profit is depend on refining margin/cracks spread. At current crack spread it should be very profitable.

Posted by miracle_trader > 2022-08-27 21:00 | Report Abuse

not scared at all

Posted by i3lurker > 2022-08-27 21:10 | Report Abuse

only intelligent people can be scared

Posted by Johnzhang > 2022-08-28 09:34 | Report Abuse

Our pump prices for petrol 95 and diesel are stable because our beloved government pay for the difference between domestic and international price . Look into the pricing mechanism to understand it.
———————-
The government has reiterated that the country’s fuel subsidy bill for 2022 is projected to rise to about RM30 billion, based on global oil prices being what they are at present. In May, that projection for 2022 was placed at RM28 billion, but this was then revised to RM30 billion earlier this month.

Economy minister Datuk Seri Mustapa Mohamed said this would be 170% higher than the RM11 billion spent on fuel subsidies last year. He said that the year-to-date Brent crude oil price currently stands at around US$106 per barrel, a discrepancy of US$40 against the federal Budget 2022’s assumption that the average crude oil price would be priced at US$66 per barrel.

Posted by probability > 2022-08-28 09:35 | Report Abuse

Diesel Pinch Looms as World Seeks Relief From Pricey Gas

26 August 2022

- Fuel stockpiles thin at key hubs in Europe, US and Asia
- Profits for making diesel poised to surge as demand increases

https://www.bloomberg.com/news/articles/2022-08-25/diesel-pinch-looms-as-world-seeks-relief-from-pricey-natural-gas#xj4y7vzkg