Hengyuan sinks into red in Q3 with net loss of RM54million

KUALA LUMPUR (November 26): Hengyuan Refining Company Bhd (Hengyuan) reported net loss of RM 54.04 million for its third quarter ended September 30, 2021 (3QFY21), compared to net profit of RM 154.91 million a year ago, mainly due to currency losses caused by the strengthening US dollar and tax build-up the year before, according to its Friday filing.

The O&G refinery group recorded a loss per share of 18.01 sen compared to earnings per share of 51.64 sen last year.

Quarterly revenue doubled to RM3.25 billion, from RM1.59 billion for the same period last year, the group’s filing revealed.

Hengyuan said that its quoted market prices for the quarter were US $ 82 per barrel as it achieved sales volumes of 9.5 million barrels, both higher than the last year, mainly due to improved product cracks and better crude processing margin, with oil demand picking up amid improving Covid-19 situation in many countries.

“Manufacturing expenses were lower compared to the comparative quarter and year-to-date due to ongoing cost optimization initiatives offset by higher finance costs. The company recorded a net foreign exchange loss of RM 18.6 million in the current quarter with mitigation efforts to minimize exposure to fluctuations of the Malaysian ringgit against the US dollar through currency hedging.

“The disproportionate tax burden in the current quarter and cumulative period was mainly due to the denial of certain expenses for tax purposes and the under-recognition of tax in the previous year. The comparative periods include the recognition of deferred tax assets on previously unrecognized tax losses ”, indicates the file.

For the nine months ended September 30, 2021 (9MFY21), the group recorded a net loss of RM 97.11 million on net profit of RM 79.46 million last year despite revenue growth of 49% to RM 7.95 billion compared to RM 5.35. billion last year. Its loss per share amounted to 32.37 sen, against earnings per share of 26.49 sen.

The group said global demand for oil is expected to increase as the world slowly recovers from the pandemic, but the situation is still fraught with uncertainty as cases of Covid-19 could resume during the winter. He notes that despite the surge in demand, the oil industry remains difficult, with OPEC + members deciding to remain cautious about the oversupply of the global oil market.

“The company remains cautiously optimistic about the overall market outlook and will continue to focus on operational efficiency, product quality, hydrocarbon coverage and financial risk management in order to optimize the performance of the company. In addition, the company will also continue its fight against the risks of Covid-19 by implementing rigorous security management measures, ”indicates the group’s file.

Hengyuan shares fell 17 sen or 4.22% to close at RM 3.86, giving the oil and gas refinery group a market cap of RM 1.16 billion.

Ann J. Cox