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$HIBISCS (5199.MY)$ PETALING JAYA: Oil & gas company[Share L...
$HIBISCS (5199.MY)$ PETALING JAYA: Oil & gas companyHibiscus Petroleum BhdThe worst-case scenario for Hibiscus will end as long as the price of Brent crude oil remains above $70 per barrel.
Hong Leong Investment Bank Research (HLIB Research) stated that Hibiscus' positive outlook is supported by the completion of all its major annual maintenance activities, allowing production to normalize in the coming quarters.
As of the time of reporting, the trading price of Brent crude oil is around $73 per barrel.
"Given the rebound in earnings over the coming quarters and the not overly demanding valuation, we believe that the downside risk to its stock price seems quite limited.
In a statement, HLIB Research mentioned: "At the current price, Hibiscus' pe ratio is 3.5 times the earnings of the financial year 2026 (FY26), with a dividend yield of 3.9% (based on a conservative assumption of 7.5 sen)."
At the same time, with the additional sales donation support in Brunei's Block B MLJ Field, Hibiscus's sales are expected to rebound in the coming quarters.
The acquisition of this asset was completed on October 14, 2024.
BIMB Research points out that Hibiscus aims to sell 5 million barrels of oil equivalent (boe) of oil & gas in the second and third quarters of the 25th fiscal year.
This makes the group expected to achieve at least 8.6 million boe of sales guidance in the 25th fiscal year, a year-on-year increase of 10% (y-o-y).
"The production setbacks in the Kinabalu and Anasuria fields are temporary as operations have normalized.
"The North Sabah SF30 Waterflood Phase 2 project will also boost production in the second quarter, with the first oil achieved on October 31, 2024.
The research institution stated: "Subsequently, six water injection wells will be drilled, with the facility expected to start water injection in mid-2025."
In commenting on the performance of Hibiscus for the first quarter of the 25th year reported on November 19, BIMB Research stated that core profit after tax and minority interests (Patami) was 95 million (excluding an unrealized forex loss of 2000 rmm), consistent with its estimated 29%. Core Patami decreased by 39% year-on-year.
The weak performance in the first quarter of 2025 was mainly due to the decrease in sales volume of the Anazulia and Kinabalu oil fields, which suffered from prolonged power outages.
On the other hand, HLIB Research stated that Hibiscus's core earnings were 41.8 million ringgit, below expectations.
In the first quarter of 2025, core earnings plummeted by 75% year-on-year.
HLIB Research and BIMB Research have consistently maintained a "buy" rating for Hibiscus.
HLIB Research has lowered the target price from 2.95 ringgit to 2.45 ringgit, while BIMB Securities Research has kept the target price unchanged at 3.40 ringgit.
Hong Leong Investment Bank Research (HLIB Research) stated that Hibiscus' positive outlook is supported by the completion of all its major annual maintenance activities, allowing production to normalize in the coming quarters.
As of the time of reporting, the trading price of Brent crude oil is around $73 per barrel.
"Given the rebound in earnings over the coming quarters and the not overly demanding valuation, we believe that the downside risk to its stock price seems quite limited.
In a statement, HLIB Research mentioned: "At the current price, Hibiscus' pe ratio is 3.5 times the earnings of the financial year 2026 (FY26), with a dividend yield of 3.9% (based on a conservative assumption of 7.5 sen)."
At the same time, with the additional sales donation support in Brunei's Block B MLJ Field, Hibiscus's sales are expected to rebound in the coming quarters.
The acquisition of this asset was completed on October 14, 2024.
BIMB Research points out that Hibiscus aims to sell 5 million barrels of oil equivalent (boe) of oil & gas in the second and third quarters of the 25th fiscal year.
This makes the group expected to achieve at least 8.6 million boe of sales guidance in the 25th fiscal year, a year-on-year increase of 10% (y-o-y).
"The production setbacks in the Kinabalu and Anasuria fields are temporary as operations have normalized.
"The North Sabah SF30 Waterflood Phase 2 project will also boost production in the second quarter, with the first oil achieved on October 31, 2024.
The research institution stated: "Subsequently, six water injection wells will be drilled, with the facility expected to start water injection in mid-2025."
In commenting on the performance of Hibiscus for the first quarter of the 25th year reported on November 19, BIMB Research stated that core profit after tax and minority interests (Patami) was 95 million (excluding an unrealized forex loss of 2000 rmm), consistent with its estimated 29%. Core Patami decreased by 39% year-on-year.
The weak performance in the first quarter of 2025 was mainly due to the decrease in sales volume of the Anazulia and Kinabalu oil fields, which suffered from prolonged power outages.
On the other hand, HLIB Research stated that Hibiscus's core earnings were 41.8 million ringgit, below expectations.
In the first quarter of 2025, core earnings plummeted by 75% year-on-year.
HLIB Research and BIMB Research have consistently maintained a "buy" rating for Hibiscus.
HLIB Research has lowered the target price from 2.95 ringgit to 2.45 ringgit, while BIMB Securities Research has kept the target price unchanged at 3.40 ringgit.
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