Thursday, November 13, 2008
Petronas might become a LOSS making company!!!
Let's look at the company which contributes 44% of Malaysian government's revenue in 2008:
http://www.petronas.com/internet/corp/centralrep2.nsf/Src/WebDoc*Investor+Relations+Default/?Open
In 2007, Petronas revenue was RM184billion, expenses 108b, profit before tax 76b.
In 2008, Revenue RM228b, expenses 118b, profit before tax 95b.
FY2008 FY2007 FY2006 FY2005 FY2004
Revenue 223.1 184.1 167.4 137.0 97.5
Profit Before Tax 95.5 76.3 69.4 58.0 37.4
Not included in annual report but easily calculated:
(Expenses) 127.6 107.8 98.0 79.0 60.1
You can see that expenses are going up 10billlion each year.
You also notice that Petronas is cunningly leaving out the expense section in their annual report, hoping to exploit the fact that many people have poor mental arithmetic.
This is not surprising, since our malaysian governments entire BUDGET 2008 was 177 billion. And these champions in Petronas expenses in 2008 was 128 billion.
If we assume that last year they were selling oil at USD120 (which is cheap considering that it was over USD 155 for a while)
If we assume that they will be selling oil at USD 55, their revenue for 2009 and will be HALVED to RM110b (their revenue in 2004 was only 97.5billion. So this is not unrealistic)
In other words... Assuming expenses for Petronas stay constant (no lay offs, no cancelling of projects, etc). (In fact the way they are trying to expand, expenses are projected to go up yet another year, to over 120b! )
Petronas is expected to go from a profit of 95B to a loss of RM10billion in 2009!
Edit: Btw, for those who have been saying that expenses might drop accordingly... wrong. Normally, for a company, when revenue drops in half, it means that SALES in UNITS have dropped in half. So it is expected that costs would drop accordingly, since production has halved. In this case, it is SELLING PRICE that has dropped by over 60%.
For an easier to understand example, imagine if you have an accounting firm, and the government announces: Effective immediately, ALL accounting fees charged will be cut by 60%. Losses to be borne by the firms themselves.
Having your final sale price for your product cut by half is far far far worse than having your sales figures cut in half. It's a DISASTER of epic proportions.
This is a complete disaster for our country, if there isn't some sort of huge mistake here. Checking with some other independant analysts, my projected figures appear sound, so it is looking more and more likely that this will materialize.
I'm really really surprised that Lim Kit Siang hasn't got his people investigating this.
Maybe the accountants and analysts see something that I don't. Maybe Petronas has a lot of long term oil contracts. Which actually brings out a whole other barrel of fish, but whatever...
I DEMAND that Petronas provide some transparency!
Remember, as I said, Petronas contributed 44% of government revenue in 2008.
http://thestar.com.my/news/story.asp?file=/2008/11/12/parliament/2518320&sec=parliament
Abdullah talking about our fundamentals still being strong. How strong will our fundamentals be if government income is reduced by 44%?
How will our economy handle the shock of around 100billion in income just disappearing?
If this is true, Malaysia will not only go into a recession next year... it will be SEVERE. Our GNP is less than RM800billion. So... 100billion lost revenue by petronas would be a recessionary drop of 12%. That's rather ridiculously large!
EDIT: Everyone has been asking why government has not reduced our Petrol Prices.
It's BLARDY OBVIOUS when looked at it from this angle.
We Rakyat are subsiding Petronas. If gov drops petrol too much, Petronas is gonna lose too much money. Therefore, it is up to us, the Rakyat, to bear the burden. By paying USD90 for our oil, from our own BLARDY GLC Petronas.
I am an ANGRY INVESTOR!!!!
http://www.petronas.com/internet/corp/centralrep2.nsf/Src/WebDoc*Investor+Relations+Default/?Open
In 2007, Petronas revenue was RM184billion, expenses 108b, profit before tax 76b.
In 2008, Revenue RM228b, expenses 118b, profit before tax 95b.
FY2008 FY2007 FY2006 FY2005 FY2004
Revenue 223.1 184.1 167.4 137.0 97.5
Profit Before Tax 95.5 76.3 69.4 58.0 37.4
Not included in annual report but easily calculated:
(Expenses) 127.6 107.8 98.0 79.0 60.1
You can see that expenses are going up 10billlion each year.
You also notice that Petronas is cunningly leaving out the expense section in their annual report, hoping to exploit the fact that many people have poor mental arithmetic.
This is not surprising, since our malaysian governments entire BUDGET 2008 was 177 billion. And these champions in Petronas expenses in 2008 was 128 billion.
If we assume that last year they were selling oil at USD120 (which is cheap considering that it was over USD 155 for a while)
If we assume that they will be selling oil at USD 55, their revenue for 2009 and will be HALVED to RM110b (their revenue in 2004 was only 97.5billion. So this is not unrealistic)
In other words... Assuming expenses for Petronas stay constant (no lay offs, no cancelling of projects, etc). (In fact the way they are trying to expand, expenses are projected to go up yet another year, to over 120b! )
Petronas is expected to go from a profit of 95B to a loss of RM10billion in 2009!
Edit: Btw, for those who have been saying that expenses might drop accordingly... wrong. Normally, for a company, when revenue drops in half, it means that SALES in UNITS have dropped in half. So it is expected that costs would drop accordingly, since production has halved. In this case, it is SELLING PRICE that has dropped by over 60%.
For an easier to understand example, imagine if you have an accounting firm, and the government announces: Effective immediately, ALL accounting fees charged will be cut by 60%. Losses to be borne by the firms themselves.
Having your final sale price for your product cut by half is far far far worse than having your sales figures cut in half. It's a DISASTER of epic proportions.
This is a complete disaster for our country, if there isn't some sort of huge mistake here. Checking with some other independant analysts, my projected figures appear sound, so it is looking more and more likely that this will materialize.
I'm really really surprised that Lim Kit Siang hasn't got his people investigating this.
Maybe the accountants and analysts see something that I don't. Maybe Petronas has a lot of long term oil contracts. Which actually brings out a whole other barrel of fish, but whatever...
I DEMAND that Petronas provide some transparency!
Remember, as I said, Petronas contributed 44% of government revenue in 2008.
http://thestar.com.my/news/story.asp?file=/2008/11/12/parliament/2518320&sec=parliament
Abdullah talking about our fundamentals still being strong. How strong will our fundamentals be if government income is reduced by 44%?
How will our economy handle the shock of around 100billion in income just disappearing?
If this is true, Malaysia will not only go into a recession next year... it will be SEVERE. Our GNP is less than RM800billion. So... 100billion lost revenue by petronas would be a recessionary drop of 12%. That's rather ridiculously large!
EDIT: Everyone has been asking why government has not reduced our Petrol Prices.
It's BLARDY OBVIOUS when looked at it from this angle.
We Rakyat are subsiding Petronas. If gov drops petrol too much, Petronas is gonna lose too much money. Therefore, it is up to us, the Rakyat, to bear the burden. By paying USD90 for our oil, from our own BLARDY GLC Petronas.
I am an ANGRY INVESTOR!!!!
Jasonred79 invested at
12:32 PM
3 Comments
3 Comments:
in my opinion, some expenditures will be reduced in accordance with revenue. So,i think expenditures for 2009 shud be lower than 2008.i might be wrongly anyway..
Dude, just starting to read your blog. Lots of useful & interesting points, but perhaps a wee bit emotional when it comes to Petronas. I am not a huge fan of them either...but you have to hand it to them for taking charge of our oil industry from the major players in the 70s and and at least doing something right the past three decades or so...
Damien aka "Master Chief"
Damien. I am emotional about everyone, not just Petronas.
Read the Blog Title.
I am the ANGRY investor.
Not the calm cool collected investor. ha.
ching. Yes expenditure will be reduced. But what do you think are the chances that they will reduce their expenses by, say, 20 billion per year?
Look. This is not the same as, say, the CAR industry. Cars, when revenue drops, it is basically because you produce a car for RM1 each + RM100 fixed cost. You sell 500 cars for RM2 each. You profit is 1000-500-100=400. For cars, when revenue goes down, it usually means you only sold 400 cars. IE profit= 800-400-100= 300.
For Petronas though the PRICE PER BARREL is what has fallen. In other words, for them it is more like last year fix cost is RM100, cost per barrel is RM1, they sell 100 barrels for RM3, profit is 300-100-100=100. This year, your sell price is RM2. So you STILL sell 100 barrels but this time your profit =200-100-100... = ZERO. You get the difference?
Expenditure goes down when NUMBER of UNITS SOLD goes down. Not when SELL PRICE per unit sold drops in half!
Damien, they have done nothing right that any other moron couldn't do. In fact, if you look carefully, you will notice that Petronas is one of the worst run oil companies in the world.
Frankly, if we had someone GOOD in charge, Malaysia would be... well, not as rich as some Middle East countries. But we'd be freaking close!!! ... Look at BRUNEI if Saudi is too far for your eyes.
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