Monday, November 15, 2021

BIG BIG BIG INVESTMENT IN SARAWAK INTEGRATED HYDROGEN FACILTIES CAN BENEFIT BIG

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Listed company in KLSE which are engaging in clean energy are gaining momentum due to the foreseeable energy transition that is being pushed globally to reduce fossil fuel and adopt in clean renewable energy that emit lesser carbon.

While I tend to believe that fossil fuel cannot be totally phased out, the renewable energy is gaining traction as big corporate are putting in the big money into investing in clean energy, hence this movement will benefit the whole supply chain in the energy transition process.


According to the article by THE EDGE MARKETS, Sarawak is the spot chosen for the development of integrated hydrogen project which will be spearheaded by South Korean MNC giants, such as Samsung, LOTTE and POSCO INTERNATIONAL.


As the article mentioned, the investment for integrated hydrogen project in Sarawak is USD 12 billion, and another USD 2.7 billion for a fuel cell train system.

It also clearly mentioned that there is a clear investment potential for infrastructure players and storage developers. 

This directly point to BIG INDUSTRIES BERHAD as the infrastructure player for hydrogen gas in logistic and storage capacity.


As of now, BIG is slated to have a private placement which will need to be completed before end of December 2021 as the final extension given by BURSA MALAYSIA. The price of the private placement will be determined by volume weighted average price.

Current share issued of BIG is 52.9 million.

If BIG is to see private placement at RM 1.50 for 10% share (5.29 million), that will raise the company capital by around RM 8 million, which is a meagre amount considering that the whole supply chain investment will be more than USD 12 billion = RM 50 billion.



Now BIG is almost at the final stage of consolidation before a new break out in share price. RM 1.15 is a steady foothold. Breaking above RM 1.28 will signal a convincing uptrend.



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Thursday, November 11, 2021

VIS a VIS - MELAKA HOMEGROWN SEMICONDUCTOR PLAYER VIS TO MAKE IT BIG IN 2022

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Today I want to share about a potential semiconductor company that you might not heard before - VISDYNAMICS HOLDINGS BERHAD (VIS - 0120)

This MELAKA based company could be one of the uprising potential in 2022 as the growing demand in the semiconductor sector continue to see supply not able to cope with demand.


As you can see, when we think of semiconductor IT company, usually we will think about Penang. Penang is a house to big local player such as Vitrox, Pentamaster, MMSV and etc. 

But actually, Melaka is also a place where prominent semiconductor electronic player gathers around.


Melaka have prominent MNC player which are servicing the automotive industry such as INFINEON, DOMINANT OPTO, POSSEHL ELECTRONICS and others.


VIS is a key supplier to some of this prominent MNC which supplies IC and Chips to automotive industry and digital electronic good. Among them will be customer such as INFINEON TECHNOLOGIES which is planning to ramp up more production of chips.


According to news report, INFINEON will need to ramp up production to cater for the demand of the chip in the automotive sector. The share price of INFINEON had been on the rise as chip shortage push up prices.


The management at VIS had foresee that demand will pent up more as more usage of electronic will be needed in electric vehicle. The company had in November 2020 purchased 3 pieces of land in Melaka to expand their research and development as well as production.

The plant will be slated to be operational at mid of 2022, which will be looking to contribute to the financial performance of the company.


IS VIS STILL ATTRACTIVE DESPITE SHARE PRICE AROUND RM 1.50 ?


There are several reason to see VIS having more potential upside at the current market price

1. With 174.5 million shares issued, at the current price of RM 1.50, VIS market capitalization is just RM 263 million. There are plenty of upside as the company growth prospect is bright and demand of it's product are needed more and more. A well performing semiconductor company can easily ace into RM 1 billion market capitalization.


2. VIS can transfer listing into the main market with the current performance, which will open up more fund house / unit trust to invest into the company.

3. VIS current share base of 174.5 million can be candidate of bonus issue in the future.

4. The unique product that VIS offer can give an operation gross margin of 50% which is very high and lucrative. With the expansion completion in 2022, should VIS can score RM 100million in revenue, we can expect RM 50 million in gross profit margin. 


I tend to believe that if key customer continue to place more order with VIS for it's product, they will also buy the shares of VIS which will see VIS share price heading higher. This will be a win win situation for the customer and for VIS in a whole. 


IMPORTANT NOTICE

Please be informed, I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing my ideas and opinion on the market outlook. Any company mentioned should not be interpreted as a buy/sell/trade call. Please do your own research and buy/sell/trade at your own risk.

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Monday, November 8, 2021

CAN HENGYUAN REPEAT ITS GLORY FORM IN 2017 2018 ?

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As you know that I had mentioned about Hengyuan earlier, hence today I would want to tell you why I am optimistic on Hengyuan performance in the mere future for at least the next 6 months to come.

Here  I would want to show you the past trading chart of Hengyuan against the oil refinery crack spread. I will use the nearest regional global spot price, which is the Singapore Morgas 92 unleaded as a benchmark on Hengyuan pricing

If you want to refer to this oil crack spread in the future, here is the link

So what is packing in for Hengyuan in the coming short term future?



As you can see, Hengyuan had an exceptional run up in share price when it start to deliver stellar result from the quarterly earning. The share price had started to run in November 2017, and shot up to above RM 17 at the end of December 2017 heading into Jan 2018.

If you compare the chart on Singapore Morgas 92, there is a period of peak oil demand where refinery capacity is very fully loaded, where the oil crack spread shot above USD 14 per barrel.

This is usually an indication of a bottleneck whereby supply is limited and demand is furiously high, which is back in 2017.


Now coming to the end of 2021, where are we looking at?

Demand pull factor
1. Economy reopening from the coronavirus pandemic. Heavy industry restart operation, logistic and machinery are starting their engine and running again.

2. Higher pricing in Natural Gas and Coal had pushed power plant to take up crude oil as substitute feed stock for power producing in China. Coal price higher due to flooding in China.

3. Winter season which is coming to the northern hemisphere will pent up demand for power due to switching on of house heating equipment


Supply drag factor
1. Hurricane Ida disrupted 2 month of oil refinery operation in the US, which account for more than 30% of the US output

2. Oil cartel OPEC+ decision to follow the gradual increase of oil production will scramble buyer to buy more oil now in fear of price getting higher and higher which will spike high feed in cost due to demand more than supply.

Conclusion
With the above factor combining together, we might be able to see Hengyuan going back into 2017 2018 where result will be greatly improved.

At the current price of below RM 4.30, Hengyuan is definitely a attractive option for any investor looking for medium term oil sector exposure.

I had to informed that I had invested into Hengyuan based on my own research on the information I had researched on. However, this should not be construe as an investment decision for you as a reader. Please do your own concluding research and make your own investment decision to buy sell or trade in Hengyuan.

IMPORTANT NOTICE

Projection is based on estimation, and I am not responsible for the accuracy of the data provided. Please be informed, I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing my ideas and opinion on the market outlook. Any company mentioned should not be interpreted as a buy/sell/trade call. Please do your own research and buy/sell/trade at your own risk.



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Tuesday, November 2, 2021

Hengyuan Refining is at the right timing to capture the market boom on oil refining with big double digit margin in overall industry

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Oil price are rallying high, and will be expected to go higher. Oil refinery margins are going higher as the northern hemisphere of the earth enter into winter season.

With LNG gas at a tight supply and elevated high price, fossil oil had came into the picture. The reopening of the global economy after a series of Covid19 lockdown measure also continue to draw down on oil reserve in the US and China.

As an investor, what is there for you to capture the shifting of energy prices?

Hengyuan Refining Company Berhad (HENGYUAN - 4324) might be one of your consideration if you are looking to expose your investment in the oil and gas sector.

The pandemic from Covid19 had make prices very volatile, and had damage the demand of oil previously, hammering refinery margin into a tight spot. However, a series of global event had ensure that refinery company will be enjoying sweet margin at least for the next 6 months.

Source news from REUTERS

According to the news, refinery margin in Asia are hitting above USD 8 per barrel

Excerpt taken from the source news

REFINING MARGINS

Singapore complex refining margins, a proxy for refiner profitability in top oil consuming region Asia, hit their highest since September 2019 above $8 a barrel this month.

The margins had turned negative last year, plumbing a record low in May, as the pandemic eroded demand.

In Northwest Europe, refining margins topped $9 last week, the highest since April 2020, while U.S. Gulf Coast refining margins are currently around $14, up nearly three-fold from the same period a year ago, Refinitiv Eikon data shows.



Why Hengyuan refining will be all out in the balance month of 2021?

1. Demand for oil increase (transportation fuel - diesel, petrol)
2. Coal and natural gas supply crunch lead to higher price, power plant shift to oil as input to produce power.
3. Winter season in northern hemisphere of the earth
4. Hurricane Ida damage oil refinery capacity at US
5. Hengyuan to maximize refinery production before entering Year 2022 to save on Malaysian imposed prosperity tax for Year of Assessment 2022





The current price range had indicated that Hengyuan is rested at support line from the uptrend movement.

Technical rebound on the up trending line will potential see Hengyuan trading at RM 5.50. The uptrend movement is supported with brighter oil and gas investment sentiment. Fundamentally, it is backed with good refinery margin. Prospect of Hengyuan going for a big gain is very high.

The current price range below RM 4.30 will be a strategic entry to invest into Hengyuan to benefit from the booming refinery business.



HOW MUCH CAN HENGYUAN MAKE FROM THIS OIL REFINERY BOOM???

According to data, Hengyuan refinery capacity is 156000 barrel a day


Let's take refinery margin for HENGYUAN AT USD 9 per barrel.

156000 barrel x USD 9 x RM 4.15 (conversion) x 30 days = RM 174.8 million

Since we can expect the refinery margin to last for at least the coming 6 months, HENGYUAN POTENTIAL GROSS MARGIN EARNING for next 6 month can be as high as RM 1.05 billion.

That will be looking at a potential of 50 cents earning each for the next 2 quarters.

At the current price which is below RM 4.30, Hengyuan definitely look very attractive especially with the rising demand of oil and better oil refinery margin in play.



IMPORTANT NOTICE

Projection is based on estimation, and I am not responsible for the accuracy of the data provided. Please be informed, I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing my ideas and opinion on the market outlook. Any company mentioned should not be interpreted as a buy/sell/trade call. Please do your own research and buy/sell/trade at your own risk.



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