Hengyuan’s 3Q net loss narrows on turnaround plan

KUALA LUMPUR (Nov 29): Hengyuan Refining Company Bhd’s net loss narrowed in the third quarter ended Sept 30, 2019 to RM11.43 million from RM122.49 million a year earlier, due to higher revenue.

Loss per share fell to to 3.81 sen from 40.83 sen, the group said in a filing today.

Hengyuan said revenue for the quarter jumped 56% to RM3.23 billion from RM2.07 billion a year ago, as the refinery recorded sales volume of 10.7 million barrels.

For the nine-month period, the group recorded a net profit of RM13.42 million, down 57% from RM30.91 million in the previous corresponding period. Revenue increased 9% to RM9.49 billion from RM8.73 billion.

“The overall financial performance of the comparative quarter and cumulative periods reflects the production downtime and operating expenditure incurred in delivering the Major Turnaround 2018 (which involved the shutdown of the refinery facilities due to a scheduled upgrade) which commenced on Aug 6, 2018,” the group said.

It noted that the market quoted product prices averaged US$72 per barrel for both the third quarter and cumulative period to date, compared with US$84 and US$81 in the respective comparative periods.

Therefore refining margins and crude prices are expected to remain volatile in the near term based on published forward market prices.

In a separate filing, Hengyuan said the progress of the company’s Euro4 Mogas project is delayed and is currently expected to be completed by the fourth quarter of 2020.

The delay, it said, is due to quality issues related to pipe fittings supplied by the EPCC LSTK (Engineering, Procurement, Construction and Commission Lumpsum Turnkey) contractor discovered by the company during a recent project review.

“To ensure that the quality and safety standards of the project are met, additional time is required for the contractor to procure and install the replacement fittings at their cost. The impact on the company’s profitability is expected to be minimal,” it said.

Hengyuan’s share price closed four sen or 0.91% lower at RM4.37, for a market capitalisation of RM1.31 billion.