Posted by nicholas99 > 2022-05-30 20:31 | Report Abuse

Yeah I think RM8-10 is no problem. I still think so.

Posted by brian3381 > 2022-05-30 20:31 |

Post removed.Why?

Posted by Jerichomy > 2022-05-30 20:33 |

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Posted by probability > 2022-05-30 20:34 | Report Abuse

The Israeli Oil Refineries posts Q1 loss Refinery margins increase, and refining profits rise

https://astraherald.com/the-israeli-oil-refineries-posts-q1-loss-refinery-margins-increase-and-refining-profits-rise-reuters/

Israel’s Oil Refineries (ORL) (ORL.TA) swung to a loss in the first quarter, as a revaluation of futures contracts offset a jump in revenue amid a steep rise in global oil prices.

ORL, Israel’s largest refining and petrochemicals group also known as Bazan, said on Sunday it lost $18 million in the January-March period compared with a $55 million net profit a year earlier. Revenue rose 77% to $2.26 billion.

Its adjusted refining margin was $9.3 a barrel in the first quarter, compared with $4.3 a year earlier but below Reuters’ quoted Mediterranean Ural Cracking Margin of $10.1.

“The war in Ukraine, which exacerbated the energy crisis in Europe, illustrates for us all the importance of local production for national energy independence,” said Chairman Moshe Kaplinsky.

Chief executive Malachi Alper said that since mid-March ORL has seen “unprecedented refining margins” that are expected to give a significant boost to the firm’s performance later in 2022.

Posted by Jerichomy > 2022-05-30 20:35 |

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Posted by cactus81 > 2022-05-30 20:44 | Report Abuse

@Probability, Thank for your analysis. I believe what your analysis will come true.

Posted by cactus81 > 2022-05-30 20:48 | Report Abuse

Q1 result before hedging and other loss is quite amazing. Now my head is full of questions how the hedging and inventory write down lead to erosion of profit. Fortunately, the management tean also mentioned the crack spread contribute to the profit of Q1. This mean that crack spread will contribute more to Q2 profit since the crack spread is much higher in Q2. So does the sale volume.

Posted by Investing_Bursa > 2022-05-30 20:50 | Report Abuse

@ probability

Share price of Israel’s Oil Refineries (ORL) (ORL.TA) also rebounded to higher levels in matter of 2-3 days

Posted by StartOfTheBull > 2022-05-30 20:50 | Report Abuse

So much about crack spread, refinery plants and bla bla bla. In the end.........

Posted by GrowthCapitalist > 2022-05-30 20:50 | Report Abuse

Aint sure if we get an early retracement before the QR or not. Bazan(ORL) had the same retracement after the QR report yet buckle up to uptrend.

https://www.tradingview.com/chart/uySfwbiC/?symbol=TASE%3AORL

Having mix feeling if drop more.

Posted by probability > 2022-05-30 20:51 | Report Abuse

@cactus81, yes...no doubt about crack spread directly benefitting its margin

hengyuan refinery is no different than any other refinery in the world

Posted by ngjack1991 > 2022-05-30 20:51 | Report Abuse

Basically the QR is good if compare with same quarter last year. This is how it suppose to be as every business got their own cycle and it's only make sense it compare same quarter last year. Even when doing business review is also the same. Just the problem is people get used to the perception that explosive QR mean much higher QR than last quarter

Posted by probability > 2022-05-30 20:52 | Report Abuse

Interesting to know - moment HY share price turns green all will be whacking.

Posted by Investing_Bursa > May 30, 2022 8:50 PM | Report Abuse

@ probability

Share price of Israel’s Oil Refineries (ORL) (ORL.TA) also rebounded to higher levels in matter of 2-3 days

Posted by Investmalaysiaa > 2022-05-30 20:52 | Report Abuse

All the supporters is like glove supported last year kikiki

Posted by GrowthCapitalist > 2022-05-30 20:54 | Report Abuse

Adding to the ORL part -->
Chief executive Malachi Alper said that since mid-March ORL has seen “unprecedented refining margins” that are expected to give a significant boost to the firm’s performance later in 2022.

Posted by 8888_ > 2022-05-30 20:54 | Report Abuse

Hengyuan’s profit growth is doubtful
https://koonyewyin.com/2022/05/07/hengyuans-profit-growth-is-doubtful/

Posted by 8888_ > 2022-05-30 20:55 | Report Abuse

KYY is right.

Posted by StartOfTheBull > 2022-05-30 20:58 | Report Abuse

Burn midnight oil and discuss till tomorrow 9.00am maybe it helps.

Posted by ngjack1991 > 2022-05-30 20:58 | Report Abuse

Kyy cannot pakai. The profit indeed is growth as compared to last year same quarter. Where got people compare last quarter when talk about growth. This misperception seem like started when glove rally where people see every quarter higher than last quarter. If you look at kyy track record, those stock he said can pakai all end in sharp drop in share price.

Posted by Jerichomy > 2022-05-30 21:00 |

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Posted by ngjack1991 > 2022-05-30 21:00 | Report Abuse

Anyhow I think most likely share price will drop tomorrow and any discussion doesn't affect the share price. Let the market to decide whether a particular stock is worth for the price or not. It's the market where buyer and seller decide the price base on the prospect

Posted by sikusiku > 2022-05-30 21:01 | Report Abuse

@probability

Would you mind elaborating a bit on your statement? What do you mean by when the spread widens, the risk due to hedging will disappears??

I'm not experienced when it comes to hedging, and I appreciate that your comments in the forum have been quite insightful and detailed.
---
all i can say is Hengyuan not doing any creative accounting - its purely on the way the hedging is done.

When the spread widens, risk due to hedging will disappear

Posted by probability > 2022-05-30 21:04 | Report Abuse

now we know HY can consistently sell around 10.7 million barrels per qtr

Q1 its only managed to capture crack spread at 11 USD/brl (hedging done in dec 21')

Q2 they will catch up with at least 22 USD/brl...

It its inevitable

all they need is 13 USD/brl...they will keep hitting EPS above RM 1 every quarter

Posted by brian3381 > 2022-05-30 21:05 |

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Posted by cactus81 > 2022-05-30 21:08 | Report Abuse

Q1 result is good. Earn more than corresponding period. Just less than our high expectations.

Posted by Leejunhan366 > 2022-05-30 21:12 | Report Abuse

Commodity options contracts with notional amount USD7,647,000 but its fair value is negative -RM200,034,000 very doubtfull.....

Posted by subwayzzz > 2022-05-30 21:16 | Report Abuse

Probability, despite the qr, your generous contribution is appreciated. Theoretical vs real values bound to have some differences. I’m still thankful for your post and I learnt something from it. Thanks!

Posted by everest29029 > 2022-05-30 21:19 | Report Abuse

hedging is a better word for gambling. You bet on futures derivatives based on your best guess of the future price direction.

At this point, there is no telling of which direction or how much have they bet on it. All you can see is after they are making losses or gain in the statement.

investing in HengYuan right now is like giving money to a gambler & let him make his betting choices.

Posted by probability > 2022-05-30 21:21 | Report Abuse

welcome subwayzz, its unfortunate that they did not have inventory gain (this is something i am unable to explain), else everything as per my gut estimate

for Q2, we dont need any inventory gain...just crack spread sustaining above 13 USD/brl will do..thats all we need going forward

In far future when crack spread suddenly reverse to a big drop, the hedging will result as gain during the qtr (reverse of what we see in Q1 now)

Posted by mf > 2022-05-30 21:25 | Report Abuse

Quarter Result on 31-Mar-2022[#1] QoQ - -73.60%

Posted by probability > 2022-05-30 21:26 | Report Abuse

Very simple:

If hengyuan cannot make money in line with crack spread in the future, then there is no reason for the crack spread chart to exist.

Posted by probability > 2022-05-30 21:34 | Report Abuse

Refined Oil Exports by Country
..............................

United States: US$60.7 billion (13.9% of refined oil exports)
Russia: $45.4 billion (10.4%)
Netherlands: $34.7 billion (8%)
Singapore: $27.4 billion (6.3%)
India: $26.2 billion (6%)
China: $25.5 billion (5.9%)
South Korea: $23.2 billion (5.3%)
United Arab Emirates: $19.6 billion (4.5%)
Malaysia: $12.8 billion (2.9%)
Belgium: $10.5 billion (2.4%)
Spain: $9.6 billion (2.2%)
Germany: $9.5 billion (2.2%)
Italy: $8.3 billion (1.9%)
United Kingdom: $7.4 billion (1.7%)
Canada: $7.2 billion (1.7%)

....

Imagine you take out Russia from the above supply, its just not possible to simply replace the 10% gap even if both China & India double their exports

In the future at most Russia can only sell its crude to India & China, but NOT REFINED OIL...

and India & China cannot simply double their refining capacity'

This is a long term phenomenon

Posted by GrowthCapitalist > 2022-05-30 21:36 | Report Abuse

Hi Probability

i have a question here --> as mentioned earlier

if the rise in refined products matched the rise in crude - the hedging loss or gain will be neutral (correct)

Q1 case, the refined products shot up way much higher than the crude oil rise (crack spread spiked), thats why they have a net hedging loss. --> Isn't a good thing if the refined product price is higher than crude oil, then only we could gain the revenue from here and indirectly contribute to the crack spread(higher means refined oil price increase)

So here is my quick question, hedging loss means they bought alot of crude oil at higher price(future price) that's made the loss in Q1? Are you referring to this?

so in Q2 they don't have to worry about inventory anymore, hence keep refining oil till end of 2022 since the inventory last till end of 2022. Correct me if i'm wrong.

Posted by ragate > 2022-05-30 21:43 | Report Abuse

Tomorrow heavy price plunge.

Posted by probability > 2022-05-30 21:44 | Report Abuse

@GrowthCapitalist,

1) On Inventory gain or loss - its straight forward. They need certain minimum inventory in their plant at all time. The valuation difference between reporting periods simply gets reported as inventory gain / loss.
(a portion of their inventory is hedged as i understand - as such the inventory gain or loss effects is dampened).

2) On shorting of the refined products, its like sell forward and have to buyback within a certain period. Imagine they sell at cheap price and later it shot up high...they are forced to buy at a higher price. The refined products shorting and going long for crude is done at the same time to neutralize. So when crude did not rise at the same magnitude the gain from going long on crude is way smaller than the loss in shorting refined products. This is how i roughly understand.

This Israel refinery loss on the first qtr sounds like that.

Posted by sikusiku > 2022-05-30 21:48 | Report Abuse

@probability

Thank you for very much for the explanation.

It is deeply appreciated!

Posted by harold8990 > 2022-05-30 21:50 | Report Abuse

shopping time tomorrow

Posted by investor2021trading > 2022-05-30 21:50 | Report Abuse

Singapore Mogas 92 Brent Crack Spread hit another record high of close to US$30 a barrel on Monday (May 23), which is way higher than its 2017’s peak of US$18 a barrel. Compared to a year ago, it was up more than four times.

“When refineries are at full capacity and yet can’t meet all the demand, that’s when the crack spreads tends to spike,” he said, noting that the upcoming financial results of downstream players should be commendable.

An O&G analyst who declined to be named said it was mainly driven by Russia’s oil export ban and the recovery in the aviation sector.

Your Stock Choice : Hengyuan or Petron

Hengyuan is currently trading at a trailing 12-month price-to-earnings ratio of 26 times versus Petron’s 8.1 times, according to Bloomberg.

Posted by GrowthCapitalist > 2022-05-30 21:50 | Report Abuse

Alright, now it make sense to all your understand and totally able to comprehend it! They are selling cheap and buying back at high price is a pain.

Just one clarification, when you said buy at higher price is crude or refined oil?

Normally, if the crude oil is expensive and the gasoil and gasoline are cheap the the company would make loss. However, i though refinery company goes with crack spread value, as long it stays high means your will be profitable. Unless, that's why i asked you earlier if they purchased the crude oil at higher price due to hedging

Posted by hng33 > 2022-05-30 21:55 | Report Abuse

Hengyuan share price started to outperform in accord to crack spread widen begin 27 April. Please take note, Hengyuan performance is highly dependent to crack spread = profit margin rather than crude oil price or inventory gain.

The huge jump in profit margin = crack spread from USD 16 to USD 29, remain intact and will only reflect in next Q. Therefore, current elevated stock price will maintain ahead of next Q2 result. Crack spread is KEY profit determinant alike glove ASP. Take note, glove profit deriving force is ASP, not the feedstock holding

Posted by brian3381 > 2022-05-30 21:57 |

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Posted by probability > 2022-05-30 21:58 | Report Abuse

closing the shorting done on the refined products. They have to buy the refined oil (their own at high price) which they had sold forward.

This means automatically their next hedging batch will go to a higher margin level. The exact detail mechanism i must admit i dont really know


Posted by GrowthCapitalist > May 30, 2022 9:50 PM | Report Abuse

Just one clarification, when you said buy at higher price is crude or refined oil?

Posted by GrowthCapitalist > 2022-05-30 22:06 | Report Abuse

@probability

why would they want to buy their own refined oil where they had refined it and good to sell! You can't do anything with refined oil for the refinery company unless they use for their daily usage whereby they can use their own inventory isn't?

i get where you are coming from though

Posted by brian3381 > 2022-05-30 22:10 |

Post removed.Why?

Posted by subwayzzz > 2022-05-30 22:11 | Report Abuse

My myvi is bought with cash. You jelly arh?

Posted by probability > 2022-05-30 22:11 | Report Abuse

https://www.mercatusenergy.com/blog/bid/72741/an-introduction-to-crack-spread-hedging

Posted by brian3381 > 2022-05-30 22:13 |

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Posted by brian3381 > 2022-05-30 22:14 |

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Posted by brian3381 > 2022-05-30 22:15 |

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Posted by brian3381 > 2022-05-30 22:15 |

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