2018年3月14日星期三

HENGYUAN 4324 恆源 RM 8.59 投资:

在石油行业,炼油商的利润直接与原油价格和炼油产品价格之间的差值挂钩,这种价差被称为裂解价差。像大多数制造商一样,炼油商处于两个市场之中:需要买进原材料的市场和卖出成品的市场。由于炼厂的产量根据装置的配置、炼制的原油种类及其满足市场季节性产品需求而有所变化,因此有不同类型的裂解价差可以帮助炼油商对冲原油和炼油产品的不同比例,而炼油商必须评估自己的状况,制定与其具体现货市场运作相协调的裂解价差期货市场策略。
--Mogas 95的未来合约交易价格:
http://www.cmegroup.com/…/singapore-mogas-95-unleaded-platt…
简单说裂解价差=成品銷售价(汽油,柴油,煤油)減去原油价:
佔Hy 38%的汔油,其3,4,5,6月份仍有75美元。
布伦特原油为64.8美元。
https://tradingeconomics.com/commodity/brent-crude-oil
因此Hy Q1,Q2的业积仍有看头,起码在汽油销售方面有10.2美元的裂解价差。
另佔Hy 销售43%的柴油也相接近,只要布伦持原油维持在55至70元间公可仍有可观净利。
只供参考,買卖自负。


1

HENGYUAN & PETRONM: Upgraded to TP 1388

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HENGYUAN  &  PETRONM:  Upgraded  to  TP  1388
 
Yesterday for once the Short Selling Machines turned nett buyers after HENGYUAN created the perfect double bottom at betul betul 824.
TP now upgraded to  busuk busuk  1388
 
CHEERS ...
 
Join the FUN Managers ..
 
I'm Crazzzy. How can I be Crazzzy again Making Money In Stocks ?
2

Valuing Hengyuan - Discounted Cash Flow Method

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Subsequent to my analysis titled ‘Hengyuan – No Doom For 2018’, there have been strong discussions on the need to use the Discounted Cash Flow (“DCF”) method to value HRC.
There are various methods to value a company and DCF is certainly a popular method. Personally, I have reservations about this method as it involves too many crucial variables where minor tweaks to these variables will lead to the valuation result to differ significantly. And it goes without saying that everyone will have an opinion on what constitutes the best numerical value when it comes to applying these variables; this inevitably makes for even more disagreements on the result of the valuation. Furthermore, DCF requires projection far into the future; 10 years is a common time period used. My opinion is the further the projection into the future, the less reliable the numbers are.
But the use of DCF is not without merit. Personally, I find that DCF is useful when valuing a stable company where the operations are mature, the industry it operates within is stable, and its historical accounting numbers do not fluctuate significantly. Under these conditions, the analyst is allowed to work within a more predictable environment leading to more reliable numbers being used in the forecast and projections. Unfortunately, I do not see HRC falling within these criteria as the refinery business is highly volatile. Nevertheless, I am also intrigue by what sort of numbers may possibly come up for HRC via applying the DCF method.



PROJECTING GROSS PROFIT
Here are some key assumptions:
1. Average gross profit for the past 8 latest reported quarters (1 January 2016 to 31 December 2017) is used as the base number. In determining this average, quarters with the highest and lowest gross profit were disregarded to eliminate unusual fluctuations.
2. Based on information available from the quarterly reports, a minor 3-week shutdown was identified in Q2 2017. The gross profit for the said quarter was normalised for our averaging purpose.
3. Major shutdown of 75 days is assumed in Year 2018.
4. Statutory shutdowns of 25 days each is assumed in Year 2021, Year 2024 and Year 2027 on the basis that a statutory shutdown is required every 3 years.
5. Post Year 2018 plant upgrade exercise, capacity of HRC is increased by 10% beginning Year 2019.


NEW TERM LOAN IN 2018
Here are some key assumptions:
1. US$300,000,000 was drawndown on 23 January 2018 to repay existing term loans. At foreign exchange rate of 3.927 on that date, the new term loan amounted to RM1.178 billion.
2. The tenure of the new term loan is 5 years.
3. In 2016, HRC’s effective interest expense rate was 3.62% per annum to 5.27% per annum (2015: 1.36% per annum to 4.44% per annum). The average interest rate is 3.67% per annum. (Source: Latest available audited financial statements)
4. Based on this average interest rate, monthly loan repayments amount to RM21,520,000 (including interest expense) with 1st repayment in February 2018.

LOAN FOR MAJOR PLANT UPGRADE IN 2018
1. US$160,000,000 has been budgeted for this exercise. Based on US$ exchange rate as at 14 March 2018 of 3.9085, the loan amounted to RM625,360,000.
2. The tenure of the new term loan is 5 years.
3. In 2016, HRC’s effective interest expense rate was 3.62% per annum to 5.27% per annum (2015: 1.36% per annum to 4.44% per annum). The average interest rate is 3.67% per annum. (Source: Latest available audited financial statements)
4. Monthly loan repayment amount to RM11,424,000 (including interest expense) with 1st repayment in October 2018.

OTHER INCOME
Other income is assumed at the average of the past 8 most recent quarters (1 January 2016 to 31 December 2017). In determining this average, quarters with the highest and lowest other income were disregarded to eliminate unusual fluctuations.


MANUFACTURING EXPENSES
1. Average manufacturing expenses for the past 8 latest reported quarters (1 January 2016 to 31 December 2017) is used as the base number. In determining this average, quarters with the highest and lowest manufacturing expenses were disregarded to eliminate unusual fluctuations.
2. Manufacturing expenses for Q2 2017 was normalised for our averaging purpose due to expenses incurred for an unplanned maintenance shutdown.
3. Manufacturing expenses is adjusted accordingly based on number of production days in the year.


ADMINISTRATIVE EXPENSES
1. Average administrative expenses for the past 8 latest reported quarters (1 January 2016 to 31 December 2017) is used as the base number. In determining this average, quarters with the highest and lowest administrative expenses were disregarded to eliminate unusual fluctuations.
2. Inflation rate of 3.5% per annum is applied for each progressing year.


TAXATION EXPENSE
1. Current taxation rate of 24% is assumed for all years.
2. Reinvestment allowance amounting to 60% of 2018’s major upgrade exercise amount to RM375,800,000.
3. Depreciation is assumed as capital allowance for taxation purpose. Average depreciation expense for the past 8 latest reported quarters (1 January 2016 to 31 December 2017) is used as the base number. In determining this average, quarters with the highest and lowest depreciation were disregarded to eliminate unusual fluctuations.
4. Capital allowance of 14% is applied for capital expenditure incurred in 2018’s major upgrade exercise.
5. Interest expense is recognised proportionately at 8.8% of loan repayments made.



CHANGES IN WORKING CAPITAL
1. Working capital is calculated as current assets less current liabilities.
2. The annual change in working capital is determined based on the percentage change of gross profit.


DISCOUNT RATE OF 3.17%
1. The discount rate is calculated based on the the Weighted Average Cost Of Capital method.
2. Market value of HRC's equity is determined based on it's share closing price as at 14 March 2018 of RM8.53 i.e. RM2.559 billion.
3. Market value of HRC's debts amounted to RM1.205 billion as at 31 December 2017.
4. Cost of equity is determined at Maybank's fixed deposit rate of 3.35% per annum.
5. Cost of debt of HRC is 3.67% per annum as discussed above.

VALUATION
Using the discounted cash flow method of valuation based on the assumptions and estimates presented above, HRC is valued at RM19.55 per share.