Crude Oil Updates – 26 May 2016

As a follow up of my previous post on crude oil on 28 Apr 2016, looks like my prediction is still valid, but the time frame is shorter than I expected.

Crude Oil Full0716 Future

 

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Fundamental Analysis 101 (ENGLISH)

This course will be delivered in ENGLISH!

Organizer: Investalks Academy

Venue: Investalks Academy, 12-1, Jalan Perubatan 3, Pandan Indah, 55100 KL.

Date: Saturday, May 28 at 9 AM – 6 PM

Fee: RM288 for public; RM188 for student

Learning Objectives:
1. Learn the basic techniques in analysing financial statements
2. Learn how to analyse important information in Annual Report and Quarterly Report.

Contents:
1. What is Fundamental Analysis?
2. Contents in Annual Report and Quarterly Report
3. Financial Statements
4. Income Statement
5. Balance Sheet
6. Cash Flow Statement
7. Linking the 3 Financial Statements
8. Financial Ratio Analysis
9. Other Important Information in AR and QR

101 doesn’t cover estimation of intrinsic value. creative accounting and other advanced topics. This course is designed for beginner. If you are veteran investor or accountant, you may find it boring.:)

Maximum of registration: 20

Participants will be invited to join Investalks Academy group, where participants can get support from instructor.

Registration:
1. Bank in
a. Bank: Maybank
b. Account No.: 514383562062
c. Account Name: Ivestalks Enterprise

  1. Send the payment receipt to investalksacademy@gmail.com
  2. For student, please scan your student ID and then send to investalksacademy@gmail.com
  3. Please register yourself by filling in this form: http://goo.gl/forms/ZMvoiQM2rB

PCHEM–Fundamental Analysis (11 May 2016)

Excel – Download the analysis file

Latest Financial – Q1 2016 Financial Report (9 May 2016)

FY15 Q4 Results Highlight:

  • PCHEM’s 1Q16 earnings declined by -2.1%yoy and -15.9%qoq to RM592m premised on weaker headline revenue.
  • Olefins & derivatives. Although average product prices for this segment were negatively impacted by sharp declines in crude oil and naphtha prices in 1Q16, 3M16 segment revenue improved by +7.6%yoy to RM2.2b while profit increased by +26.6%yoy to RM461m. The commendable increase in revenue and profit were largely due to higher sales volume, strong USD and very strong plant utilisation rate of 97% compared with 95% in 1Q15. Segment profit margin also expanded by +3.1ppts to 20.5%. (MIDF 10 May 2016)
  • Fertilisers & Methanol. Similar to the O&D segment, plant utilisation rate also recorded improvements from 87% in 1Q15 to 89% in 1Q16. Unfortunately, the increases in sales volume and production from increased methane supply were not able to offset the large decline in urea prices. Urea prices in 1Q16 were soft due to ample supply while ammonia and methanol prices were weak due to sluggish demand. Overall 3M16 segment revenue and profit declined by -9.9%yoy and – 33.4%yoy respectively. (MIDF 10 May 2016)
  • Plant utilisation rate for 1Q16. PChem’s group plant utilisation rate in 1Q16 improved to 92% from 90% in 1Q15 due to feedstock supply reliability. This is still above the world-class performance threshold of +85%. (MIDF 10 May 2016)

Valuation:

PCHEM-FY16Q1-Football-Field

In my opinion, fair value of PETGAS range from 6.7 to 7.0. Uncertainty risk of fair value is from HIGH.

Going Forward:

In the next 1-2 years, I think PCHEM earnings may be inconsistent because ASPs are weakening in tandem with the drop in global crude oil prices as demand remains volatile due to the uncertainties surrounding the broader economy.

PCHEM’s business is defensive, plus its unrivalled production cost and balance sheet strength. It is also now viewed as a growth company, with a series of plant commissioning in the pipeline all the way to 2019. All these new projects will bring it up in the value chain and ensures strong demand with decent margins. (14 Mar 2016)

Valuations may not very compelling, but not bad. PCHEM still appeals to funds seeking earnings stability

I will continue to accumulate this counter for my family member.

At the time of writing, my family member owned shares of PCHEM.

PETGAS–Fundamental Analysis (11 May 2016)

Excel – Download the analysis file

Latest Financial – Q1 2016 Financial Report (9 May 2016)

FY15 Q4 Results Highlight:

  • PETGAS net profit decreased marginally by 0.6% YoY due to higher tax expenses of 8.3% (effective tax rate increased from 21.2% to 22.7%). Revenue increased by 2.7% YoY, primarily attributable from higher gas processing and regasification revenue. PBT margin drop slightly from 51.9% to 51.2% resulted from higher repair and maintenance cost.
  • Regasification of LNG posted the highest growth among PGB 4 core business activities. This segment grew by RM7.3m or 4.8% YoY due to higher storage fees attributed from the strengthening of USD against RM.
  • For the gas processing segment, segment revenue rose by +1.2%yoy to RM327.1m in-line with higher capacity booking from PETRONAS. Segment profit however remained flat at RM259.4m due to higher repair and maintenance costs. Segment margin contracted by -0.9ppts to 79.3%.
  • Although revenue for the Utilities segment rose by +1.4%yoy to RM252.9m, segment profit disappointed as 1Q16 profit sunk by -13.3%yoy to RM48.6m. The decrease in profitability is largely due to higher operating costs. Profit margin also contracted by -3.3ppts to 19.2%. Management guided that this is due to lower offtake by customers.

Valuation:

PETGAS-FY16Q1-Football-Field

In my opinion, fair value of PETGAS range from 23 to 24.5. Uncertainty risk of fair value is MEDIUM.

Going Forward:

The stock price movement of PetGas has been fairly resilient, trading sideways within the band of RM21-23 per share since mid-August 2014 despite the >-50% drop in global crude oil prices

Upside room of this stock is slightly limited due to a lack of fresh catalysts (the Pengerang regasification terminal will only come onstream at the end of the decade)

Valuations may not very compelling, but not bad. PETGAS still appeals to funds seeking earnings stability

I will continue to hold PETGAS, and may accumulate PETGAS in the future.

At the time of writing, I owned shares of PETGAS.

GTRONIC – Some Thoughts

THIS IS NOT A BUY/SELL CALL!

GTRONIC has been in my watch list for long time. However, I didn’t invest in it because the prices were rising too fast in the past. It was always overvalued.

In the past few days, I flipped my previous studies and did further validation on GTRONIC. I am still slightly puzzled. Just one poor quarterly result caused a huge dip in GTRONIC prices (5.3 to 3.3).

My guess is it was due to panic sell by individuals. Perhaps, they don’t even know how GTRONIC makes money.

I observed that since Apr, directors and EPF have been accumulating GTRONIC heavily. To be exact, EPF disposed a little bit of shares, but accumulation was much higher.

I am seriously considering to buy GTRONIC now.

LC’s Forex Trading System – 7 May 2015

I fine tuned this slide with some minor changes.