HLIB Research said Hibiscus’ positive outlook is supported by the fact that all its major annual maintenance campaigns have been completed.
PETALING JAYA: The worst will be over for oil and gas company Hibiscus Petroleum Bhd
as long as Brent-grade crude oil prices stay above US$70 per barrel.
Hong Leong Investment Bank Research (HLIB Research) said Hibiscus’ positive outlook is supported by the fact that all its major annual maintenance campaigns have been completed, allowing production to normalise in the coming quarters.
As of press time, Brent crude was trading at about US$73 per barrel.
“We reckon the downside risks to its share price seems fairly capped going forward, in light of the earnings rebound in the coming quarters and undemanding valuation.
“At its current price, Hibiscus trades at an attractive price-earnings ratio of 3.5 times on earnings for financial year 2026 (FY26) and a decent dividend yield of 3.9% (based on conservative assumption of 7.5 sen),” HLIB Research said in a note.
Meanwhile, BIMB Research foresees Hibiscus’ sales volumes rebounding in the upcoming quarters, supported by additional sales contributions from the Block B MLJ Field in Brunei.
The asset’s acquisition was completed on Oct 14, 2024.
BIMB Research noted that Hibiscus aims to sell five million barrels of oil equivalent (boe) of oil and gas in the second and third quarters of FY25 .
This puts the group on track to achieve its sales volume guidance of at least 8.6 million boe in FY25, which is an increase of 10% year-on-year (y-o-y).
“Production setbacks at the Kinabalu and Anasuria fields are temporary as operations have normalised.
“Second-quarter production will also be boosted by the North Sabah SF30 Waterflood Phase 2 project that achieved first oil on Oct 31, 2024.
“This will be followed by drilling of six water injection wells and the facility commencing injection in mid-2025,” the research house said.
Commenting on Hibiscus’s results for 1Q25 reported on Nov 19, BIMB Research said the core profit after taxation and minority interests (Patami) of RM95mil – excluding an unrealised foreign exchange loss of RM20mil – was in line with its estimate at 29%. Core Patami was down 39% y-o-y.
The weak 1Q25 performance was mainly due to lower sales volume from the Anasuria and Kinabalu fields, which suffered prolonged outages.
HLIB Research, on the other hand, said Hibiscus’ core earnings of RM41.8mil were below expectations.
Core earnings slumped 75% quarter-on-quarter in 1Q25.
HLIB Research and BIMB Research have maintained their “buy” calls on Hibiscus.
HLIB Research lowered its target price to RM2.45 from RM2.95, while BIMB Securities Research kept its target price unchanged at RM3.40.
