CLSA Fengshui Index 2025

 Again, it is CLSA yearly fun Fengshui Index 2025. Good to serve as a guidance to all.

https://www.clsa.com/special/FSI/2025/ 

Are they accurate? I dont think so, look at their own historcial track record here:

https://www.clsa.com/special/FSI/2025/?section=previous-years

Wise words from Howard Marks

 Wise words from Howard Marks

Average S&P 500 Return by Zodiac Year

 Visualized: Average S&P 500 Return by Zodiac Year 🐍

https://lnkd.in/gqDUpKja

Someone shared this earlier and projected a crash in 2025-2026. Will this be true?

Malaysia's Golden Era- the 80s. Will it repeat this time?

In my opinion, Malaysia's golden era was during late 80s to mid of 90s. I still recall almost every Malaysian have a good success story to tell then.

1. GDP was growing at high single-digit number to marginally 10% during this period of time, I believe with such growth consistently 8-9 years, a lot of SMEs had taken off successfully.

2. EPF returns were also amazingly high during that period of time, ranging 7.5% - 8.25% then.

3. Local stock markets seemed to be doing extremely well as you can see in 2nd graph, though the volatility were also scary at the same time.

6/58 Jackpot, will it hit RM100million soon?

The recent frenzy run has caused the whole town discussing on the jackpot, which hit around RM93 million now (and sure the business is really good at Berjaya Toto). I wonder if it will hit the all time high of above RM100 million soon.

If you guys are not aware, the jackpot hit at high previously on 4 April 2022, almost 3 years back at RM97.75million if I'm not mistaken.

What was the number then?

5, 12, 20, 22, 29, 41.

I would not want to encourage gambling, but what strategy one can play from here is more of the discussion I want to discuss on:

1. Do your home work. If you are not already aware, you can actually do your statistics studies via ToTo own website. Download them from txt file and convert into your excel spreadsheets.

Here: https://www.sportstoto.com.my/results_download.asp

2. Do your statistic studies, or with help of ChatGpt which is even more convenient nowadays. If you remove certain numbers set, your probability actually improve according to your condition given, pure maths, which your chatgpt can help simulate

3. Choose your game. 6/58 can actually be played in 3 ways: normal 6 number picking, or system bet which you're allowed to pick up to 15 numbers, if 6 hit, walah, you get the jackpot, or ezbet play, where you pay lesser on picking up to 15 numbers, but the payout will be in ratio, for example 1/35 if you choosen 15 numbers, hence payout lower with cost of only RM286

Last but not least, actually the latest results there is a winner already whom pick 6 digits successfully, but via ezbet, hence payout still small compared to RM90million.

Rate Cut and S&P 500

Is Rate Cut good or bad for the S&P 500 Index return? Perhaps we should assess the situation in certain time horizon to look at each cycle, prior deploying a strategic move for short term targets.

Rate Cut or No, SPX inched higher in long run (at least for 40 years now from 1984 to 2024)

Malaysia GDP 2025 to be above 5%

Malaysia’s growth is set to sustain last year’s pace and exceed 5% in 2025, as strong foreign direct investments and support from local funds shield the economy from any global risks, Second Finance Minister Amir Hamzah Azizan tells Bloomberg's Haslinda Amin in an exclusive interview in Kuala Lumpur.

source: https://www.youtube.com/watch?v=wexTT0GSgqs

Why Market drop? Fed just said they will pivot again in last FOMC meeting

Yes, you guess it again, U.S economy is much stronger than expected, no sign of slowing down.

If you'd followed latest progress, market is thinking a likely 1 cut or NO cut at all for 2025. Market is fast in readjusting this expectation.

The market is pricing in just ONE Fed rate cut for 2025. This is down from nearly 5 rate cuts expected in September

Great Chart: @AugurInfinity, Global Markets Investor

2024 KLSE i3 Forum stockpick results

I did not snap pic my picks in 2024 stockpick competition, but here set a record for my own.

I ranked 25/78, as usual, always near top 30 and above average. Not a bad return at 20% compared to KLCI Index of around 13%. 

source: https://klse.i3investor.com/web/blog/detail/stock_pick_2024/2024-12-31-story-h496982491-Stock_Pick_Year_2024_31_Dec_Result

My pick back in 2024:

lesson learnt for 2024, do not be over optimistic in near term recovery of tech related sector although global semi conductor recovered. Recovery at local market could be a mixed bag also. D&O was really a surprise to me how it pen out as I expect it to recover since 2023 end. A hard lesson there.

人生有多少个10年, First Lesson on Financial Freedom

I'm planning my retirement soon, moving into semi-retirement soon. It's time to come back one of my likes- blogging and random nagging again! Wow, I just realised I started here 15 years ago!

In the first month of 2025, it marks an opportunity to share a valuable refresher for all investors. Cheers.

• First, accumulate towards 500,000, then the compounded interest will take care of you! 10K annually is it a lot to ask for? Not really. It's average 833.3 per month.
• If you are typical Malaysian, RM833 per month with EPF contribution of say 24% from both yourself and employer, the salary requirement will be around RM3,500. Your salary and benefits should increase along as you grow more experience.
• Then, 7% is it too much to ask for? Yes for certain capital market, but hey, we are at good country with EPF returning us good dividend track record many years near to 6%, I'm happy enough!

Chart below is EPF return since 1952, 6% is really achievable

source: https://mypf.my/investing/retire/epf-historical/#google_vignette

Top 10 stock valuation ratios

http://intelligentinvestor8.blogspot.com/2014/05/jae-juns-top-10-stock-valuation-ratios.html

1. Cash Conversion Cycle (CCC)


• CCC = Days Inventory Outstanding + Days Sales Outstanding – Days Payables Outstanding 
• 
• It measure of management effectiveness on cash management. How efficiently the business turn cash over. The lower the better.
• CCC  is a relative number. It need to compare with historical average and competitor's figure to determine whether it’s good or not. 
• CCC with decreasing trend is peferable. 
• Need to be cautious with bing increase - possible cash shortage and inventory issues.
2.  Cash Return on Invested Capital (CROIC)
• CROIC = FCF / Invested Capital
• Invested Capital = Shareholders Equity + Interest Bearing Debt + Short Term Debt + Long Term Debt
• The numerator can interchange with owner earnings - depending on the company and situation.
• CROIC is a lumpy figure and it is not going to be flat line. We need to look for some levels of consistency.
• CROIC > 13% consistently is a sign of moat - mean FCF is +ve and the business is a strong performer in the industry.
3. EV/EBIT
• EV/EBIT = Enterprise Value / Earning before Interest and Tax
• Buffett’s rule of thumb is to pay 10x pretax when acquiring businesses. 
4. FCF  to Sales
• FCF to Sales = FCF / Sales
• What percentage of sales is converted directly to FCF. - The higher the better
• Any company hash FCF to Sales > 10% is a FCF generating machine.
5. FCF to Short Term Debt
• Whether the company can cover it’s short term debt with FCF. Not by borrowing or diluting, but with internally generated funds. 
• < 1, the company doesn't generate enough FCF to cover its debt. If the ratio consistently < 1, there is a high change of trouble. 
• > 1, the debt can be covered without borrow more.
6. Inventory Turnover
• Inventory Turnover = COGS / Average Inventory
• Measure how quickly company sell it inventory
• The goal is to quickly turn inventory into cash, then reinvest the cash back into inventory, and then turn it to cash again for even more profits. 
• Compare inventory turn over with similiar companies.
• High inventory turnover can be achieved via
• Tight inventory management (excellent)
• Reducing price to quicky sell (bad)
7. Magic Formula Yield
• Magic Formula Yield = EBIT/EV
• It can be used to compare against earnings of another stock, sector or the whole market and even bond yields.  
• A relative valuation to use it with reference.
• Look for EY >= 10%
8. Piotroski Score
• It is a quality score that leads to an easier valuation.
• The first four criteria of the Piotroski Score count towards profitability.
• Points 5-7 of the Piotroski Score, looks at the health of the balance sheet in terms of debt and the number of shares outstanding. 
• The last two factors of the Piotroski Score looks at operating efficiency.
1. Positive net income compared to last year
2. Positive operating cash flow in the current year
3. Higher return on assets (ROA) in the current period compared to the ROA in the previous year
4. Cash flow from operations greater than Net Income
5. Lower ratio of long term debt to in the current period compared value in the previous year
6. Higher current ratio this year compared to the previous year
7. No new shares were issued in the last year
8. A higher gross margin compared to the previous year
9. A higher asset turnover ratio compared to the previous year
• How to use?
• Look for trends. Increasing? or Decreasing?
9. Price to Intrinsic Value
• This one is tricky. How to get intrinsic value?
• Intrinsic value can be caculated via DCF, Graham Net Net, Graham Growth Value, Katsenelson's Absolute P/E, EV/EBIT, etc...
• The idea behind using a price to intrinsic value ratio is to invest in the most undervalued stock.  If you have 10 stocks - how do you know which one to buy? Go for the one with lowest ratio
10. DuPont model for ROE
• 3 step formula or 5 step formula
• ROE is a way to measure the effectiveness of management. Now you can see in which area management is exceeding or lacking.
• To find which element to blame if ROE not perform well.

Altman Z score case studies

What You Will Learn

• How Altman Z stocks work
• An updated performance chart of the Altman Z screener
• 5 stocks reviewed using the components from the Altman Z formula

I don’t try to reinvent the wheel.
I’m a boring guy so when I try to come up with ideas, I prefer to look at things that are proven.
I’ll let Mark Zuckerberg or Elon Musk change the world.
My tendency is to simply mash two good or OK ideas that work.
Since 2014, it’s been the Altman Z screener that I track and value investing.
The Altman Z formula is already proven and papers and tests prove the effectiveness if used correctly.
Same with value investing.
Value investing works and it’s been proven. I’m not saying that value investing works all the time. There are ups and downs.
See this chart below to get a real grasp of how different asset classes performed.

Performance by Asset Classes | Source: A Wealth of Common Sense

What does this show?
There’s more than one way to build wealth or do well in the markets.
So when you combine two good ideas, they can be great.

• French fries and ketchup
• Music and chores
• Electrons and protons
• Sleep and a comfy bed
• You get the point

For the past two years, Altman Z and Value Investing have gone hand in hand.

Quick Recap of Altman Z

The Altman Z score is a bankruptcy check score created by NYU Professor Altman back in 1968.
The score predicts whether a company will go bankrupt within 2 years. Back when the test was performed in 1968, the Altman score had an accuracy rate of 72%.
Further tests performed by Altman in 1999 and 2000 showed the accuracy to be in the 80-90% range.
It’s widely adopted by auditors but less so by investors.

The Altman Z Score

First the formula.

Z = 1.2 X1 + 1.4 X2 + 3.3 X3 + 0.6 X4 +1 X5 where
X1 = Working Capital/Total Assets
X2 = Retained Earnings/Total Assets
X3 = EBITDA/Total Assets
X4 = Market Value of Equity/Total Liabilities
X5 = Net Sales/Total Assets

Here are the rules for interpreting the Altman Z score.

• When Z is >= 3.0, the firm is most likely safe based on the financial data.
• When Z is 2.7 to 3.0, the company is probably safe from bankruptcy, but this is in the grey area and caution should be taken.
• When Z is 1.8 to 2.7, the company is likely to be bankrupt within 2 years.
• When Z is <= 1.8, the company is highly likely to be bankrupt.

When you take a closer look at each Altman Z component above, they are used as single stock metrics in many places and by lots of investors already.
So in a way, you’ve already been using parts of the Altman Z without knowing it.

ALERT: Grab a FREE copy of the Altman Z spreadsheet right now

General Points to Understand About Each Component

These are general pointers. Be sure to read the full discussion to see the pros and cons of each.
X1 = Working Capital / Total Assets
The more working capital there is compared to the total assets, the better the liquidity situation.
X2 = Retained Earnings / Total Assets
The lower the ratio, the company is funding assets by borrowing instead of through retained earnings.
X3 = EBITDA / Total Assets
EBITDA / Total Assets is a variation of ROA. Instead of net income, EBIT is used for the numerator.
This ratio looks at the company’s ability to generate profits from its assets before deducting interest and taxes.
X4 = Market Value of Equity / Total Liabilities
This ratio is supposed to show you how much of the company’s market value could decline before liabilities exceed assets.
If the stock price is high, then this ratio also goes up.
X5 = Net Sales / Total Assets
Simply asset turnover.
The more money you can generate from assets, the better.

Now, Why You Should Take Notice

This performance should explain it clearly.

Altman Z Stocks Performance

And here’s another reason why you should take second notice based on the 2015 Q2 results of the Altman Z screen

Earlier, I noted down the list of Altman Z stocks outperforming the market by just under 10%.
When I re-ran the results to today’s date, the performance is 14.6% despite the market volatility compared to the S&P’s total return of 4%.

So how do you use the Altman Z score to your advantage?
The common method is to use the Z score to identify potential issues with stocks.
The better way is to break down and look at each component. That way, you can choose financially sound stocks.

10 Current Altman Z Stocks to Check Out

Based on the latest Altman Z score, here are 10 stocks that are showing up on my screen with additional value-centric stats I always track.
The 10 stocks are:

10 Altman Z Stocks

1. World Fuel Services Corp. (NYSE:INT): fuel logistics, transaction management and payment processing company
2. Sanderson Farms Inc. (NASDAQ:SAFM): poultry processing company
3. Pacific Ethanol (NASDAQ:PEIX): ethanol based company
4. Global Partners LP (NYSE:GLP): midstream logistics and marketing company for petroleum
5. TravelCenters of America (NYSE:TA): operates and franchises travel centers and gasoline station/convenience store locations.
6. GameStop (NYSE:GME): video game retailer
7. Western Refining (NYSE:WNR): crude oil refiner
8. Valero Energy Corp. (NYSE:VLO): oil refiner
9. Delek US Holdings (NYSE:DK): oil refiner
10. Avnet (NYSE:AVT): distributes electronic components, semiconductors, and IT solutions

Stocks like World Fuel Services aren’t cheap at first glance with a P/FCF of 38.
Also 5 of the 10 stocks are also energy related. Not my favorite sector but when the entire sector is being trampled on, that’s the best place to start.
Going back to the pointers about each Altman Z component above, here’s the data for 5 of the stocks (click the image to enlarge) or download this spreadsheet with the data to see it better..

Click to Enlarge or Download the Data

I’ve used the Old School Value analyzer here to pull in all this data automatically and cleaned up the formatting to make it easier to analyze.
But you can download the free version of the Altman Z calculator via email as part of the mini valuation course if you subscribe to this blog.

ALERT: Grab a FREE Altman Z spreadsheet as well as a mini valuation course

What Do I See?

From these 5 stocks and based on the generalized explanations, what do I see?
X1 = Working Capital / Total Assets
I see that World Fuel Services and Sanderson Farms are the most liquid.
X2 = Retained Earnings / Total Assets
Pacific Ethanol is the worst of the bunch needing funding by borrowing. Without digging in, I can tell it has a bad balance sheet.
X3 = EBITDA / Total Assets
Sanderson Farms has the highest ratio which means that of the 5 stocks, it’s able to generate the highest profit from its assets.
X4 = Market Value of Equity / Total Liabilities
Sanderson Farms has the highest ratio which means that it’s stock price is very high or it doesn’t have much liabilities compared to its market cap.
X5 = Net Sales / Total Assets
World Fuel Services wins this one with the highest asset turnover ratio, meaning it generates more dollars from its assets.

Summary

Although I compared 5 totally different companies, can you see how useful it is when you compare competitors side by side?
Instead of comparing stock prices, volume or other useless metrics side by side, try this method out.
The Altman Z score is much more versatile than a single score.
Some people may claim that it’s outdated, but you’ve seen how useful it is.
And with the way it’s been performing, it will be a shame if you ignore it.
Don’t forget to download your spreadsheet.

Read more: http://www.oldschoolvalue.com/blog/investing-strategy/altman-z-stocks-beating-market-ytd/#ixzz3gRETDsyi

WSOP: World Series Of Poker

WSOP, the poker game has always been a nice game to watch. It tested ones strategy and psychology. The game is pretty much like Investment field.,and many good money managers, fund hedge managers are good if not great poker cards player.

About WSOP

https://en.m.wikipedia.org/wiki/World_Series_of_Poker_Circuit

The World Series of Poker Circuit is a series of poker tournaments held annually at a variety of casinos since 2005 as a build-up to the World Series of Poker (WSOP).

All Championship events are competed in no limit Texas hold 'em; preliminary events may be different poker variants.

Starting with the 2011 WSOP Circuit, the WSOP Circuit National Championship was held as a closed event for participants of various circuit events.

In 2015, the WSOP International Circuit was launched, with rounds in Canada, Latin America, the Caribbean, Europe, Asia-Pacific and Africa. The WSOP Circuit National Championship was replaced by the WSOP Global Casino Championship, featuring the winners from both WSOP Circuit and WSOP International Circuit.^[1] The International Circuit has expanded to 13 tournaments for the 2017/18 season.

WSOP famous players

http://www.wsop.com/players/

WSOP Players

SORT BY BRACELETS	SORT BY RINGS	SORT BY CASHES	SORT BY EARNINGS
Phil Hellmuth 15	Valentin Vornicu 12	Douglas Carli 192	Antonio Esfandiari $22.2mm

CLSA Fengshui 2018

I have always been reading this fengshui chart.
https://www.clsa.com/special/fsi/2018/

On Sunday, 4 February, the Earth Dog marks his territory. Again, we attempt to plot the pattern and relative magnitude of the HSI's monthly movements in the year ahead using a Fortune Scale. The spirits forbid us from associating ourselves with any number masquerading as a scientifically determined HSI target! So how will we fare this year?

今年2018年学习总结-半年的想法和review

好久没有写东西了。太忙了，顾着学习也没有自己停下来review 自己的现况。或许写下来记忆和思考会更加全面。

今年如我早前的猜想(马后炮下)，买股票不如hold cash. 今年到7月末，几乎超过一半的人都会跑输FD 的 4%。不信我就去看看i3 results.
http://klse.i3investor.com/blogs/stock_pick_2018/167668.jsp
拿Top15就好了

1	Stock Pick 2018 - veron4best	22,324.50	22.32%
2	Stock Pick 2018 - x3mg33	13,865.93	13.87%
3	Stock Pick 2018 - mbs7633	9,123.50	9.12%
4	Stock Pick 2018 - jay1212	7,687.15	7.69%
5	Stock Pick 2018 - Yew Meng	7,238.14	7.24%
6	Stock Pick 2018 - gohkimhock	-392	-0.39%
7	Stock Pick 2018 - joetay	-1,063.37	-1.06%
8	Stock Pick 2018 - Jon Choivo	-1,622.79	-1.62%
9	Stock Pick 2018 - smartly	-1,956.41	-1.96%
10	Stock Pick 2018 - apexuser	-4,188.50	-4.19%
11	Stock Pick 2018 - Ng Shu Tsung	-4,345.08	-4.35%
12	Stock Pick 2018 - leekh5555	-4,509.49	-4.49%
13	Stock Pick 2018 - Intelligent Investor	-4,653.80	-4.65%
14	Stock Pick 2018 - Diamond7	-4,741.03	-4.74%
15	Stock Pick 2018 - mrk2ca	-5,615.54	-5.62%

今年反而会玩Put, short 的人可能还会有不错的回报，可能或多少都因为是美国继续hike interest 有关，加上trump 来个trade war,真的惊险万分。
去年我看了Clsa fengshui,还有一些风水的预测，我看马来西亚的packaging business还算不错吧。
这几年几乎网络平台造就了很多老师，tyyap,tan hin, David, 等等。免费学习下也不错。

目前每天还是很喜欢阅读网页和Blog.以下就简单给大家看看我常去的网站吧

http://oldjimpacific.blogspot.com
http://donovan-ang.blogspot.com
https://omightycap.wordpress.com

Bloomberg 的 free live 是每天必看，还有就是我也喜欢中国和台湾的金钱爆节目，真的可以学习到很多知识。

看完这些，有时间还会看看金和金有关的网站，和风险有关的zerohedge.com

未来趋势都在AI 和大数据，一定要学习。因为可能人类真的会失去50%的工作机会。我觉得还是资金最大的人赢，资本方可以炒掉全部人，就让机器做决定还有实行。Return 搞不好更加好。
今年马来西亚换政府，很多政策会改变。不过目前来看，我还是看好tollroads. 因为我觉得很难Cancel or abolished.必须缓慢而且按部就班吧。较新的high way 可能比较安全，例如ekovest 的 Duke, WCEHB 的 West Coast highway.
希望未来的现金流不错吧。

今年不但美金跑赢，就连美国大多的科技股票也跑赢。其中FAANG 最厉害

全球资产泡沫化？？

过去几年里，全球资产泡沫已经愈演愈烈。

数据显示，2016年底全球房地产价值为228万亿美元，而2017年底，全球房地产价值已经创下281万亿美元的新纪录。

2017年底的全球主流资产价值：

全球房地产价值为281万亿美元，国债价值为105万亿美元，全球股票总值为83万亿美元，而黄金白银仅为3.1万亿美元。

2016年的全球主流资产价值：

全球房地产价值为228万亿美元，国债价值为100万亿美元，全球股票总值为70万亿美元，黄金白银为3.1万亿美元。

2016年到2017年，仅仅一年的时间，全球房地产价值增长23%，国债价值增长5%，全球股票价值增长22%，而黄金白银几乎没有变化。

2015年的全球主流资产价值：

2015年到2017年两年来看，黄金白银和其他资产的差距进一步扩大，2015年至2017年全球房地产价值增长64万亿美元，股票价值增长28万亿美元，国债价值增加11万亿美元，而黄金白银还是近乎零增长。

分析机构Money Metals News Service表示，短短两年内，全球房地产、国债和股票总价值上升就超过了100万亿美元，市场处于极度泡沫状态，预计在未来的10年内，这三类资产的价值就将缩水50%，庞大的资金将从这些被极度高估的资产中流出，贵金属市场将再次受到人们的青睐，长期来看，黄金白银价格将迎来大涨。

PETRONM – 简单毛利计算

目前，PETRONM在全马拥有580间油站。根据管理层在今年股东大会上的描述，PETRONM油站的全马市占率已来到新高的19%。根据2016年数据统计，全马一共拥有27.6m注册车辆。换句话说，全马一共有5.24m车辆在PETRONM添油。

保守估计，假设每一辆车的添油开销平均为一个月RM200，那么每个月添的汽油将是90公升左右，相等于每年大约1,100公升的汽油。由于油站可以从每公升汽油赚取固定5仙的毛利 (Gross Profit) ，PETRONM一年可从每辆车赚取平均RM55的毛利。以19%的5.24m车辆计算，PETRONM一年可从其下游业务稳赚RM288m的毛利。

值得一提，汽油对于车辆就犹如水分对于人类般重要。为了确保可在路上行驶，添油是无法避免的。换句话说，PETRONM的下游业务可说是常做常有。

再换个算法，PETRONM的波德申炼油厂一天可提炼88,000桶汽油，相等于一年32.1m桶。巧合的是，集团在FY16全年也是同样出售32.1m桶汽油。数据显示，一桶汽油相等于大约160公升的汽油，也就是说PETRONM在一年出售5.14b公升的汽油。以油站每公升固定5仙的毛利，集团每年可赚取RM257m的毛利。

这两个算法的结果非常相近，油站一年可取得介于RM250-300m的毛利。必须注意，这只是PETRONM其中一项收入，还未包括炼油利润和一次性库存收益/亏损。

炼油毛利主要是从炼油赚幅 (Crack Spread/Refining Margin) 扣除炼油成本 (Refining Cost)计算出来。根据新加坡期货数据，今年的炼油赚幅平均处于每桶USD9。数据显示，全球市值最大的石油企业【EXON MOBIL】炼油成本为每桶USD3-4。假设估计PETRONM的炼油成本为每桶USD5-6，那么其炼油毛利将会是每桶USD3左右。以一年32.1m桶计算，PETRONM可从炼油活动赚取USD96.3m，相等于RM409m的毛利 (USD/MYR = 4.25)。

综合油站和炼油这两项收入，PETRONM可从中赚取大约RM670-700m的毛利。值得一提，集团在FY15和FY16分别录得RM534m和RM564m的毛利，而在最新季度FY17Q1录得RM183m的毛利。若年度化，集团今年有望交出RM732m的毛利数据。因此，以上推算出的RM670-700m毛利是可被接受的。

别忘了，本专页还未把库存收益/亏损的因素计算在内。在2015年，原油价格从年初的每桶USD53走低至12月的每桶USD35，相等于34%的跌幅。这导致PETRONM在FY15录得RM49m的库存亏损，之后才在FY16录得RM60m的库存收益。然而，其FY16的RM60m收入仅占全年毛利的11%。显然的，原油价格的走势对于PETRONM的影响不大。

今年，原油价格从1月的每桶USD56下滑至目前的USD48，相等于14%的跌幅。那么，大家认为PETRONM又会录得多少的库存亏损呢？这个答案交由大家去思考。再次强调，以上的算法只是专注在毛利润，而非净利润。当然，这只是本专页个人的推断和预算，并不能作准。

Why was Esso sold to Petron

As discussed in my earlier article, Exxon would probably be lesser interested in downstream operations of a mid-size country. My biggest question when Exxon sold the Malaysian downstream operations to Petron - was why would Petron be sold at RM3.59 per share or at total valuation of RM939 million back in 2012.

The final Net Asset value on the books for Esso Malaysia before sold to Petron

If one is to refer here, Exxon basically sold a 88k/bpd refinery (albeit an old one), 560 petrol station business where 420 assets are owned (a very valuable asset), 10 fuel distribution terminals (very valuable as well) and the rights to the retailing business (even more valuable) rather than one starting and building the business one by one - which is almost impossible. Think about it. That to my surprise was sold at a valuation of below RM1 billion.

If one can remember, Petron Philippines which bought the 65% stake, subsequently offered to purchase all the remaining 35% shareholders at the similar RM3.59 offering. About 8+% took up and that is why they now hold 73+% of Petron Malaysia. I made a reference to the Independent Advise by Kenanga during then, which one can read them here and here. Basically, what Kenanga advised was for the 35% minority shareholders to not accept the deal as it was deemed unfair.

For those whom do not intend to read the advise, basically Kenanga based upon the advise from Esso Malaysia's past performances and dividends that it had provided prior to 2012. Needless to say, I am not impress with the information that was provided as they have not much data to provide beyond the past performances.

Something more that was amiss that it missed out in the advise. Esso Malaysia was sitting on very old assets which probably have not been revalued. I am not able to determine what are the Revised Net Asset Value (RNAV) for these assets as most probably these assets are never revalued. It is good to note that for Esso or Petron now, these revaluation is not important as the exercise would probably benefits WTW or Raine and Co rather then the shareholders. However, during a disposal, usually these are done - but in this exercise during 2011/12 it was not considered at all.

In the last probably 9 years of Petron's / Esso's disclosure, these assets are not revealed but I managed to dig through and see what was disclosed in 2005. Many of those assets were bought decades ago and how much would they be valued now? Note that there are 420 of these petrol station assets.

Some of petrol station assets in KL

Some of assets in Selangor

Even more petrol station assets in Selangor

Assets in Perak

Assets in Negeri Sembilan

The ones which I picked are a portion of what they revealed in the 2005 Annual Report. Subsequent to that, Esso (later Petron) just picked the top 10 assets to disclose. Anyway, as in many businesses, I would agree that these assets are for its business and there are little possibilities Petron would be selling them - unless they are really strategic or the assets may not produce the return that is expected of them from the petrol marketing business.

Another key point in the agreement between Exxon, the seller and Petron is the supply. What probably is key is that (as provided below) Petron gets its continuous supply from ExxonMobil. This works both ways as Exxon gets to have its product taken up while Petron's refinery continuously gets its supply. One should note that for a refinery, consistent supply is very important if one is not able to get the supply from its own fields (which Petron does not have any).

Without yet looking at the business profitability and future prospects, one should note that these are very key features for Petron Malaysia to continue to position itself among the downstream players.

My observation is that Petron Malaysia at this stage - its hardest period is perhaps a thing of the past. The early 3 years, I felt that it was at the stage where it had to prove to people as Petron is a new brand in Malaysia - it could have gone the Projet direction, and maybe not as well received as we see in BHP. The way I see it is that Petron is now at ramping up stage.

I have also been asked on my observation on Hengyuan (which purchased the Port Dickson refinery from Shell) as against Petron Malaysia. Again, I am not an expert in this, but based on what I am able to gather Hengyuan seems to be a capable refiner (which is why the Shell petrol that you buy in Malaysia most probably all of them come from Hengyuan's refinery). However, on its operational efficiency, that has yet to be seen as Hengyuan which fully completed the acquisition in early 2016, it seems to me has yet to make the upgrades towards  the current refinery.

On the other hand, Petron Malaysia has done so after taking over the business since 2012. It has managed to be Euro4 compliant. To me, at this stage Petron seems to be the safer hands for an investor but that does not necessarily mean that Hengyuan will not be a good investment in the long term.

Whether Petron Malaysia is expanding its refinery business, that has yet to be finalised. I believe the management would have weighed the situation carefully and smartly. Malaysia itself has enough refinery capacity for our own usage especially for gasoline consumption. And at the moment, Petron's 88k/bpd seems to be not fully utilised. Or it could be going for a much efficient one in the long term. From what I have read, Petron may look for other downstream opportunities from the potential new refinery - i.e. petrochemical products.