Hengyuan Refining Company Berhad said it is firmly on track to raise up to RM300 million through a proposed renounceable rights issue of up to 300 million new ordinary shares together with up to 150 million free detachable warrants on the basis of one rights share for every one existing Hengyuan share held and one warrant for every two rights shares subscribed for at an issue price and on an entitlement date to be determined and announced later.
Malaysia Hengyuan International Limited, Hengyuan’s major shareholder holding 51.02% of Hengyuan’s issued shares, has undertaken to subscribe for its full entitlement of rights shares. This commitment secures the minimum fundraising of RM155 million under the exercise.
The group adds that bulk of the proceeds from the rights issue is intended for the purchase of additional crude oil feedstock, the main raw material used in the refining and manufacturing of petroleum products. Maintaining adequate feedstock levels is expected to improve production efficiency, lower unit costs per barrel, and strengthen overall competitiveness.
In FY2024, Hengyuan recorded revenue of RM17.2 billion, representing an 12% year-on-year increase, driven by higher demand for refined products. The Company remains the primary supplier of Shell refined products in Peninsular Malaysia, while broadening its customer portfolio to include Petronas, Petron, and Five.
Currently, approximately 90% of Hengyuan’s refined products are sold domestically, with the remainder exported within Southeast Asia.
Madam Yeo Bee Hwan, Chief Financial Officer of Hengyuan Refining Company Berhad, said “Over the past five years, Hengyuan has invested more than RM2.2 billion in capital expenditure to enhance production capabilities and expand into higher-value products such as sustainable aviation fuel and Euro 5 gasoil. These initiatives have supported revenue growth and stronger customer demand.
The proposed rights issue will provide the Group with the working capital to secure additional feedstock and support operational efficiency, while also strengthening our equity base and financial flexibility.
Supported by our major shareholder, MHIL, and the progress of our strategic initiatives, Hengyuan is targeting a return to profitability by 2026. Subject to achieving profitability, the Board will also consider the resumption of dividends in the future, as set out in the Company’s 2024 annual report.”
