More good news for Hengyuan

The refining company attributed the better revenue to higher average product prices in the current quarter of US$76 per barrel compared with US$65 per barrel in the comparative period.

KUALA LUMPUR: Hengyuan Refining Co Bhd's share price gains of about 30% over a six-trading-day period from Nov 6 to Tuesday is but a part of a bigger story for the petroleum refiner and manufacturer.

Hengyuan's share price has risen about 430% year-to-date, making it among the best performers on Bursa Malaysia in 2017.  Formerly known as Shell Refining Company (Federation of Malaya) Bhd, the company is among Malaysian refiners who have reaped the benefits of a low oil price environment caused by the global supply glut situation. 

Sector peer Petron Malaysia has also seen strong gains in its share price in 2017, having risen about 206% year to date. But in comparison, Hengyuan is trading at a cheaper price-earnings multiple of 6.55 times versus Petron Malaysia's 9.56 times.

As at June 30, 2017, Hengyuan posted a first half profit of RM363.89mil, a 74.67% increase from RM208.32mil in the previous corresponding period. Earnings per share jumped to 121.30 sen from 69.44 sen.

But there may be more good fortune on the cards for Hengyuan. 

On Tuesday, it was announced that the counter was included in the MSCI Global Small Cap Indexes, along with three other Malaysian equities, giving them a higher profile and improved sentiment among investors.

Looking at the price chart, Hengyuan has been on an upward trend since January 2017, where it started at a year's low of RM2.41, and rose to an intraday high of RM10.98 on Tuesday, a level not seen since June 2011. At 12.30pm, the stock was trading at RM10.72 with 1.47 million shares exchanging hands.

In terms of its technical outlook, at its current share price, Hengyuan is once again touching the upper trend line, which means some consolidation may be in the books before it continues its ascent. 

The technical indicators are certainly backing this view.