HFC

HollyFrontier Corp

Energy


Presented:01/27/2017
Price:$29.09
Cap:$5.12B
Current Price:$43.27
Cap:$8.26B

Presented

Date01/27/2017
Price$29.09
Market Cap$5.12B
Ent Value$6.06B
P/E RatioN/A
Book Value$26.41
Div Yield0.04%
Shares O/S175.99M
Ave Daily Vol3,444,821
Short IntN/A

Current

Price$43.27
Market Cap$8.26B
HollyFrontier Corp. is an independent petroleum refiner and marketer which engages in the production of high-value light products such as gasoline, diesel fuel, jet fuel and other specialty products. It operates its business through two segments: Refining & Holly Energy Partners. The Refining segment includes the operations of El Dorado, Tulsa, Navajo, Cheyenne and Woods Cross Refineries and NK Asphalt. It involves the purchase and refining of crude oil and wholesale and branded marketing of refined products, such as gasoline, diesel fuel and jet fuel. The Holly Energy Partners segment includes all of the operations of Holly Energy Partners, a consolidated VIE, which owns and operates logistic assets consisting of petroleum product and crude oil pipelines and terminal, tank age and loading rack facilities in the Mid-Continent, Southwest and Rocky Mountain regions of the United States. The company was founded in 1947 and is headquartered in Dallas, TX.

Publicly traded companies mentioned herein: Holly Energy Partners (HEP), HollyFrontier Corp (HFC)

Highlights

The presenter is long shares of HollyFrontier Corp (HFC) and sees the potential for the refiner to do well under the Trump administration. The refinery business represented 97% of HFC’s 2016 revenue [HFC also owns 37% of HEP (~3% of revenue, or $360mm) and is in the process of acquiring Petro-Canada, a lubricants business). The renewable identification number (RIN) program has been a material headwind to the business, and a modification to the Renewable Standard Fuel (RSF) program could add $3.50+ per share to the stock price. Additionally, a widening of the spread between the market prices for refined products and WTI could add another $5/ share of value. This combination could drive 30% upside for shareholders from current levels ($29) over the next 12 months. The presenter explained each piece of his thesis as follows:

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Idea Discussion

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