KUALA LUMPUR (May 28): Hengyuan Refining Co Bhd posted a net profit of RM16.31 million in the first quarter ended March 31, 2019, against a net loss of RM124.12 million a year ago, on improved refining margins, lower operating expenses and unrealised foreign exchange loss.

The group posted earnings per share of 5.44 sen, versus losses per share of 41.37 sen previously, its stock exchange filing showed.

Revenue fell 13.79% to RM2.20 billion, from RM2.55 billion in the previous corresponding period.

“The sales volume for the current quarter stood at 8.1 million barrels, compared to 10 million barrels in the comparative quarter. However the company’s margins improved after incorporating stock-holding gains and the effects of both crack and commodity hedges, compared to the comparative quarter during which the company had suffered higher crude premiums and stock-holding losses,” Hengyuan said.

It added that global refining margins improved during the quarter as global market confidence returned, mainly attributed to the economy reopening from Covid-19 lockdowns and OPEC’s continued effort to control crude supplies.

In addition, it said operating expenses fell mainly due to lower maintenance services spend, as a result of the reduction in sitewide activities brought about by the Movement Control Order.

The group recorded unrealised foreign currency exchange losses of RM48.5 million, compared with RM72.77 million a year earlier.

It attributed the unrealised forex losses incurred in the current quarter to the US dollar-denominated borrowings and trade payables, following the ringgit weakening from RM4.01 to RM4.15 against the greenback.

On prospects, Hengyuan said despite the latest overwhelming outbreak of mutated Covid-19 in India, the global oil consumption is on the mend, led by a vigorous recovery in China and the United States.

While the oil industry remains challenging, Hengyuan said it will continue to focus on the operational efficiency, product quality, hydrocarbon hedging and financial risk management in optimising the company’s performance.

Hengyuan’s shares were up 26 sen or 4.8% at RM5.68, valuing the group at RM1.7 billion. Some 2.25 million shares were traded. Over the past year, the counter has gained some 63% from RM3.49.

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