KUALA LUMPUR (Feb 26): Hengyuan Refining Co Bhd saw its net profit surge by nearly eightfold to RM171.52 million in its fourth quarter ended Dec 31, 2020 (4QFY20), from RM21.57 million last year, thanks to higher average market prices of oil products.

"The company recorded stockholding gains as it realised sales of inventories that were accumulated during 3QFY20 when crude prices were low," said Hengyuan, adding that the positive effects of margin and commodity hedges further helped uplift the gross oil margins, which were put in place as part of its risk management measures.

Earnings per share, accordingly, jumped to 57.17 sen, from 7.19 sen. Quarterly revenue, however, was down 42% to RM1.82 billion, from RM3.15 billion in 4QFY19, no thanks to lower sales volume as a result of the Movement Control Order that was implemented since mid-March of last year, according to a filing with Bursa Malaysia today.

The group also declared an interim dividend of four sen per share, in respect of the financial year ended Dec 31, 2020 (FY20), payable on April 15.

For the full FY20, its net profit grew by over seven times to RM250.98 million, from RM34.98 million in the previous year, while revenue was 43.2% lower at RM7.18 billion, from RM12.64 billion.

On prospects, Hengyuan said the latest progress in vaccine development and distribution has fed hopes of demand growth for oil products globally.

"However, the Organization of Petroleum Exporting Countries foresees that the market demand continues to be soft throughout 2021, and the oil consumption is not expected to return to pre-pandemic levels until 2022," Hengyuan added.

While the challenges around the oil industry remain unabated, Hengyuan said it will continue to focus on operational efficiency, product quality, hydrocarbon hedging, and financial risk management in optimising the company's performance.

At 3.31pm, Hengyuan's shares were up 25 sen or 4.26% to RM6.12, valuing it at RM1.84 billion. Some 5.66 million shares were traded today. Over the past year, the counter has gained some 61% from RM3.81.