KUALA LUMPUR, Hengyuan Refining Company Bhd (KL:HENGYUAN) said its major shareholder, Malaysia Hengyuan International Ltd (MHIL), has committed to subscribe for its full entitlement in the company’s ongoing rights issue.
“This commitment secures the minimum fundraising of RM155 million under the exercise,” Hengyuan said in a filing with Bursa Malaysia on Thursday, noting that the group is now on course to raise up to RM300 million through the exercise.
The rights issue will involve up to 300 million new shares and 150 million free detachable warrants, offered at one rights share for every existing share held and one warrant for every two rights shares subscribed. Proceeds from the exercise are primarily intended to fund the purchase of additional crude oil feedstock. Hengyuan remains the main supplier of Shell refined products in Peninsular Malaysia and has also expanded its customer base to include Petronas, Petron, and Five. Approximately 90% of Hengyuan’s refined products are sold domestically, with the remainder exported to Southeast Asia.
Hengyuan, 51.02%-owned by MHIL, expects to raise up to RM300 million from the rights shares, based on an illustrative price of RM1 per share. If the warrants are fully exercised at RM1.41 each, the company could raise an additional RM211.5 million over five years. The group is targeting a return to profitability by 2026 and, subject to this, the board may consider resuming dividends in the future.
Chief Financial Officer Yeo Bee Hwan said Hengyuan has invested more than RM2.2 billion over the past five years to boost production capacity and expand into higher-value products such as sustainable aviation fuel and Euro 5 gasoil.
Hengyuan has reported losses over the past three financial years, including a RM158 million loss after tax in FY2022, RM489 million in FY2023, and RM358 million in FY2024. The first half of FY2025 saw a net loss of RM353.69 million, compared with RM198.34 million in the same period last year, on revenue of RM5.89 billion, down 39% from RM9.61 billion. Hengyuan’s share price closed two sen lower at RM1.19 on Thursday, down 45% year-to-date.
