Posted by probability > 2022-06-06 22:13 | Report Abuse

why is it so difficult to understand or accept this model?
....................................

HY is just hedging monthly (full cost & revenue as per market crack spread) so that they secure the margin as they refine and sell.

The close the hedging by next month and hedge again for the next coming month. Their hedging margin lags 1 month from reported crack spread.

At any point of time, their hedging contract value will always be the 1 month swap margin contract which will be their monthly throughput value (3.5m barrels).

HY PAT basically lags 1 month from the crack spread chart.

Q2 PAT will be exactly what we see for the 3 months ( March, Apr & May) instead of (Apr, May and June).

Posted by stockraider > 2022-06-06 22:14 | Report Abuse

Exactly a potential opportunity to cheat & abuse bcos the hedging is opaque route to friendly 3rd party spore to act as a shield to hide....siphoning of cash or profit from hengyuan mah!
Posted by probability > 13 seconds ago | Report Abuse

why is it so difficult to understand or accept this model?
....................................

HY is just hedging monthly (full cost & revenue as market crack spread) so that they secure the margin as they refine and sell.

The close the hedging by next month and hedge again for the next coming month. They hedging margin lags 1 month from reported crack spread.

at any point of time, their hedging contract value will always be the 1 month swap margin contract will be their monthly throughput value (3.5m barrels).

HY PAT basically lags 1 month from the crack spread chart.

Q2 PAT will be exactly what we see for th3 3 months ( March, Apr & May) instead of (Apr, May and June).

Posted by probability > 2022-06-06 22:14 | Report Abuse

Q1 is distorted by the inventory written down and the way they had used some other derivative tools for inventory (which is completely not related to the refining margin swap).

Posted by stockraider > 2022-06-06 22:17 | Report Abuse

Inventory write down on Russian crude a device for sapu money loh!

Derivative of various products another devices to sapu money from HRC mah!

Lu tau boh ?

Posted by VTrade > 2022-06-06 22:18 | Report Abuse

Many sifu already give comment on this week strategy

Posted by probability > 2022-06-06 22:19 | Report Abuse

@raider, thank you - it will really benefit your Petron if you do not pollute HY forum with your large banner. Kindly post your findings in PetronM so that its easy for readers to find intelligent notes & discussion

Posted by stockraider > 2022-06-06 22:21 | Report Abuse

Hengyuan is a kon stock....it is raider responsibility to alert the naive from being kon mah!

Lu tau boh ?

Posted by hng33 > 2022-06-06 22:22 | Report Abuse

What is use of long term contract signed between hengyuan and shell malaysia, which just renew last year for another 5 year until 2026?

Almost of hengyuan refine are to supply to shell malaysia. It is mean for steady supply contract in which hengyuan only need to focus hedge its raw crude cost in meet expected refine price payable by shell malaysia, which in turn shell malaysia need to hedge it input refine cost based on mogas singapore to meet its selling retail price to end users.

Hengyuan need some refine margin swap as it currently export unqualified non euro5 dissel to oversea to swap by import qualify euro5 from oversea, to supply to shell malaysia

Posted by stockraider > 2022-06-06 22:24 | Report Abuse

The swap is just an excuse for HRC msia to kon & siphon money for its parent in china mah!

Posted by hng33 > 27 seconds ago | Report Abuse

What is use of long term contract signed between hengyuan and shell malaysia, which just renew last year for another 5 year until 2026?

Almost of hengyuan refine are to supply to shell malaysia. It is mean for steady supply contract in which hengyuan only need to focus hedge its raw crude cost in meet expected refine price payable by shell malaysia, which in turn shell malaysia need to hedge it input refine cost based on mogas singapore to meet its selling retail price to end users.

Hengyuan need some refine margin swap as it currently export unqualified non euro5 dissel to oversea to swap by import qualify euro5 from oversea, to supply to shell malaysia

Posted by TR6699 > 2022-06-06 22:25 | Report Abuse

True, he had been harrassing I3 forum for years now, promoting his insas in other forum.

lai3bu I have not seen anyone as annoying as Stockraider, keep repeating the same thing over and over again. nothing valuable to share
06/06/2022 10:19 PM

Posted by hengpetron > 2022-06-06 22:27 | Report Abuse

Stockraider spreading lies non
stop

Posted by stockraider > 2022-06-06 22:28 | Report Abuse

Very important the naive do not get kon in HRC mah!

Posted by stockraider > 2022-06-06 22:31 | Report Abuse

Insas kon meh ??

U go ask sifu sslee whether insas is kon or not mah!

Posted by stockraider > 2022-06-06 22:32 | Report Abuse

The naive need General Raider to protect them in kon HRC stock mah!

Posted by stockraider > 2022-06-06 22:40 | Report Abuse

Alerting people about devious HRC kon....is annoying meh ?
It is very noble mah!

Posted by MoneyMakers > 2022-06-06 22:43 | Report Abuse

S’raider definitely BS alot

But HY will still fall b’coz high crack spread unsustainable

Floating shares soo low @ 300Mil (vs glove few Bil), easily collapse 20% opening price when got few big sell orders @ syndicate run

Posted by probability > 2022-06-06 22:50 | Report Abuse

only using this model, you will find a huge derivative loss in Mar 22'to explain the observed derivative loss reported in Q1 22'

If you use any other smaller size contract, the derivative loss cannot be that high

Jan & Feb 22' there was barely change in crack spread to cause significant derivative loss

You need huge contract size that is closed with a big 'opportunity loss'' (derivative loss) in realizing the market crack spread which had expanded by Mar

It has to be monthly hedging as done by all refineries

Mar 22' crack spread is THE ONLY abnormal phenomenon that took place for HY compared to the last 5 years to explain the abnormally high derivative loss reported in Q1 22

all other changes like crude oil price were relatively normal


Posted by probability > Jun 6, 2022 10:13 PM | Report Abuse X

why is it so difficult to understand or accept this model?
....................................

HY is just hedging monthly (full cost & revenue as per market crack spread) so that they secure the margin as they refine and sell.

They close the hedging by next month and hedge again for the next coming month. Their hedging margin lags 1 month from reported crack spread.

At any point of time, their hedging contract value will always be the 1 month swap margin contract which will be their monthly throughput value (3.5m barrels).

HY PAT basically lags 1 month from the crack spread chart.

Q2 PAT will be exactly what we see for the 3 months ( March, Apr & May) instead of (Apr, May and June).

Posted by MoneyMakers > 2022-06-06 22:51 | Report Abuse

Aiyaa s’raider same as rr88/pang72

All known to BS whatever fits their trading position

Posted by probability > 2022-06-06 22:56 | Report Abuse

https://www.investment-and-finance.net/derivatives/r/refinery-margin-swap.html#:~:text=A%20commodity%20swap%20which%20allows,the%20spread%20is%20given%20up.

Refinery Margin Swap
.....................

A commodity swap which allows a refiner to hedge against a narrowing spread between crude oil prices and the prices of its refined products. Therefore, the right to profit from a potential widening of the spread is given up. This swap can effectively lock in a margin (known as a crack spread) by paying the floating price of a refined oil product and receiving the floating price of a crude oil input plus the crack spread.

The refinery margin swap is also known as a crack spread swap.

Posted by TR6699 > 2022-06-06 22:58 | Report Abuse

Just back to basic, refiner earn money base on crack spread. this has been proven especially in 2017 run.

Posted by probability > 2022-06-06 23:07 | Report Abuse

When HY was owned by Shell, they were not pressured to hedge because they sell to their own retail company (kiosk price automatically adjusted as per market pricing)

If HY at such huge refining throughput does not hedge - they may as well be a trader.

(Huge risk of loss if they dont hedge - imagine just after they bought feed stock, crude price crashes as refined oil will drop in tandem.)

PetronM who has a relatively small capacity does not need to hedge as they sell to their won retail Petron Kiosks.

Posted by probability > 2022-06-06 23:15 | Report Abuse

Occam's razor - the simplest explanation is always the correct interpretation.

Once you get the picture & its simplicity, you know nothing else can be more correct.

Posted by probability > 2022-06-06 23:21 | Report Abuse

There is no fcuking reason for HY to hedge margin at 50% and 50% at market (or whatever 25% / 75%) - its as good as saying that they want to reduce their refining capacity by 50% and be a trader on the balance throughput.

what fcuking logic is this?

Posted by OTB > 2022-06-06 23:25 |

Post removed.Why?

Posted by OTB > 2022-06-06 23:32 | Report Abuse

@valueguru,
I am a layman, I really find it very difficult to understand "Refining margin swap contract".

Based on your opinion, will there be a gain or a loss on "Refining margin swap contract" in Q2 2022 ?
Please enlighten me.
Thank you.

Posted by thumxj > 2022-06-06 23:43 | Report Abuse

Posted by hng33 > 4 hours ago | Report Abuse

The inventory loss incur in Q1 result is due to hengyuan source 17% crude oil from Russian. Hengyuan have last year renew 5 year extension to supply refine product to local Shell station. Shell have opt to cut tie to use any crude or refine produce source from Russian, these have resulted hengyuan force to written down these 17% inventory, replace with spot crude oil from other source.

Is hng33's statement not valid?

Posted by thumxj > 2022-06-06 23:45 | Report Abuse

Posted by hng33 > 4 hours ago | Report Abuse

Shell on 3 Mar declare termination tie to use any Russian oil, but Hengyuan may already order Russian crude ahead. Since Hengyuan have 5 year supply contract with Shell, it need to write down these crude and source from other crude supplier to meet 17% shortfall. The 17% crude source from Russian can be already in store tank or on shipment, Hengyuan need to sell these crude oil outright later without refine it to process fuel/gasoline/diesel.

These is one off case, its will NO repeat in next Q.

Remark: from hengyuan last year annual report, it source about 17% crude from Russian

Posted by cstanmyinvest > 2022-06-07 00:01 | Report Abuse

@Probability, will Hengyuan suffer huge derivative loss in May ( crack spread shot up from below $20 to above $30) just as it did in March ?

Posted by Zhuge_Liang > 2022-06-07 00:02 | Report Abuse

This faked accountant who is so good in bullshit does not have RM100k to invest in KLSE. What a big joke ?
This honest layman made multi-million profit in his share investment in KLSE.

Nothing to compare.
The difference is between the earth and the moon.

Posted by MoneyMakers > 2022-06-07 00:03 | Report Abuse

Aiyoyo looks like s’raider report/ban lai3bu..soo petty kikiki

Posted by MoneyMakers > 2022-06-07 00:04 | Report Abuse

Dont use derogatory words in i3..else will get banned by childish people like s’raider kikiki

Posted by probability > 2022-06-07 00:14 | Report Abuse

The derivative loss in Q2 22' will be the difference in Gross profit you derive for the 3 months (Apr + May + June) versus the Gross profit you derive for the 3 months (Mar + Apr + May) based on crack spread chart.

The PAT you derive for the 3 months (Apr + May + June) is the gross profit based on (Apr + May + June) from crack spread chart minus the derivative loss above

In simpler words the derivative loss for Q2 22' is:

= Apr 22' gross profit - Mar 22' gross profit




Posted by cstanmyinvest > Jun 7, 2022 12:01 AM | Report Abuse

@Probability, will Hengyuan suffer huge derivative loss in May ( crack spread shot up from below $20 to above $30) just as it did in March ?

Posted by probability > 2022-06-07 00:17 | Report Abuse

same way the derivative loss in Q1 22' was Mar 22' gross profit - Feb 22' gross profit

here we assume Jun 22'crack spread as averaging the same as for May 22'

Posted by Sslee > 2022-06-07 08:07 | Report Abuse

A swap is like a call or put warrant cash settlement on maturity.
So if you do a buy swap for crude oil at USD 100 and at maturity the crude oil market price is USD 130 then the banker will pay you USD(130-100) = USD 30. Gain on the buy swap

Similary if you do a sell swap of you fuel products at USD 100 at maturity the fuel products market price is USD 130 then you pay banker USD(130-100) = USD 30. Loss on this sell swap.
You then record these gain/loss into your P &L account

Before maturity you can record a fair value gain/loss based on your quarter end date crude oil and Fuel product market price.

No one will know on maturity date whether your fair value gain/loss will turn into during maturity date.

Example my Petronm-CY give me fair value gain of 30% now but who will know what it will be during cash settlement maturity date

Posted by brian3381 > 2022-06-07 08:18 |

Post removed.Why?

Posted by blackgold77 > 2022-06-07 08:18 | Report Abuse

lol, so qqq3333 is mother teresa here warning off people with no self-interests?

Posted by brian3381 > 2022-06-07 08:18 |

Post removed.Why?

Posted by blackgold77 > 2022-06-07 08:26 | Report Abuse

by the time people make losses, the fake accounts here already disappear also. kekekeke

Posted by subwayzzz > 2022-06-07 08:35 | Report Abuse

don't worry la
if you tahan seeing red, then you're one step closer of becoming rich loh
these people crying sky is falling, keep crying loh

Posted by Sslee > 2022-06-07 08:44 | Report Abuse

Just based of Henyuan bigger capacity refinery and the public crack spread from month April, May and June Hengyuan Q2 gross profit will be explosive but will this Gross profit turn into vey good NPAT, it will still depend on derivatives gain/loss

Posted by brian3381 > 2022-06-07 08:54 |

Post removed.Why?

Posted by Sslee > 2022-06-07 08:56 | Report Abuse

qqq3 is right, whether win or loss there are valuable lessons you can learn.

Posted by subwayzzz > 2022-06-07 08:56 | Report Abuse

why you guys one slap give people die?
let these discussions go on than you cry sky is falling la

Posted by Johnzhang > 2022-06-07 08:56 | Report Abuse

@Probability , this is what I think too . That means HY is locking in refining margins ( ie crack spread) at the rate they are happy about in Q1 2022 . As crack spread continues to rise , derivative loss from this refining margin contracts suffer huge losses as evidenced in fair value change of financial derivative in Q1 QR.
In this connection, refining margin derivative loss may still be very substantial for Q2 as crack spread has soared much higher since the closing of the 1st Q.
Correct me if I have misunderstood it.
———————-
Probability posted :
I see its simply hedging of margin hng33


Refinery Margin Swap
.....................

A commodity swap which allows a refiner to hedge against a narrowing spread between crude oil prices and the prices of its refined products. Therefore, the right to profit from a potential widening of the spread is given up. This swap can effectively lock in a margin (known as a crack spread) by paying the floating price of a refined oil product and receiving the floating price of a crude oil input plus the crack spread.

The refinery margin swap is also known as a crack spread swap.

Posted by nicholas99 > 2022-06-07 08:58 | Report Abuse

ceo of hengyuan didnt come out talk.. hard for the price to move. no confidence

Posted by nicholas99 > 2022-06-07 08:59 | Report Abuse

or continue goreng until next QR. haha

Posted by hengpetron > 2022-06-07 09:14 | Report Abuse

Hengyuan not moving
sidekick petronm in red

Posted by rr88 > 2022-06-07 09:16 | Report Abuse

Today is the D day. Drop day.
Run for yr life
Petron up, HY no up.
Petron uturn, reverses gear, HY will die.

Get out while it is still above 6.00.

They made 47mil last qtr but they lost 110mil on hedging. Nett they lost 63mil. No good.

Posted by hengpetron > 2022-06-07 09:16 | Report Abuse

lu tau boh

Posted by 888STOCK888 > 2022-06-07 09:18 | Report Abuse

Hello rr88 not yet 5.00 yet why you come back?