HENGYUAN (4324) - (richDad): HENGYUAN - 3 reasons why it is a SELL now


1. Refinery margin has declined in 4Q (to be lower than 3Q).

HENGYUAN good earnings for 3Q this year is mainly caused by higher refinery margin caused by HURRICANE HARVEY. MOGAS 92 spread appreciated to the highest level in 2017 in Sep. However, things have normalized since then.

2. Next year earnings may decline due to 2.5 months scheduled downtime. 
The link to the 3Q result is here, go to the last page of the PDF file.

3. Stock price already up 116% since May.

I still maintain my long term Target Price of RM15 but I am taking profit now as the outlook for 4Q is not great. The earnings is also expected to decline next year due to the shut down. 
Proof of my previous writing is here...
and here
At that time, the share price was RM5.31 and yes the share price has doubled within 6 months.

4. Conclusion: 

I may be wrong as factors outside my control may push HENGYUAN share price higher. Looking at the 116% profit made, I will take the profit now.