HIBISCS 5199 HIBISCUS PETROLEUM BERHAD to see strong net earnings for FY22, FY23 from higher crude oil prices, says HLIB Research

 HIBISCS 5199 HIBISCUS PETROLEUM BERHAD to see strong net earnings for FY22, FY23 from higher crude oil prices, says HLIB Research

Hibiscus Petroleum Bhd's net profit is expected to increase more than three times to RM336.2 million in the financial year 2022 (FY22) and rise by another 86 per cent to RM625.6 million in FY23.

KUALA LUMPUR: Hibiscus Petroleum Bhd's net profit is expected to increase more than three times to RM336.2 million in the financial year 2022 (FY22) and rise by another 86 per cent to RM625.6 million in FY23.

Hong Leong Investment Bank (HLIB) Research said the increases would represent a superior compound annual growth rate (CAGR) of 146 per cent.

The bank-backed research firm said this would be mainly underpinned by additional production volumes from the completed acquisition of Fortuna International Petroleum Corp (FIPC) assets in January 2022 and significantly higher crude oil prices.

The research house is upbeat about Hibiscus's upcoming quarters' results as it will encompass additional offtake volume post-acquisition of the FIPC producing assets.

The firm said the acquisition of FIPC (Repsol assets) would increase production output (boepd) by almost 3-fold in FY22-FY23.

"FIPC assets would boost an additional 14,300 and 14,600 boepd for FY22-FY23, effectively increasing production output by almost three-fold to circa 22,100 and 23,400 boepd, respectively.

"As the acquisition of FIPC was completed only on January 25, 2022, we would only be able to see this asset's contribution to the Hibiscus group in its upcoming third quarter (Q3) FY22 results and beyond," it said.

The firm sees bright spots in Hibiscus as a pure-play upstream company.

"We expect oil prices to stay elevated due to the demand from economic reopening and rising concerns about possible oil supply shortage in the wake of geopolitical tensions in Eastern Europe and supply disruptions in the Caspian," it said.

HLIB Research has initiated coverage on Hibiscus with a Buy call and a target price of RM1.85 per share based on the net present value (NPV) of all of its producing assets' future cash flows (FCF) – based on each asset's targeted lifespan.

"At about only 4.5 times FY23 price per earnings (P/E), we believe that Hibiscus is a compelling case and is conspicuously undervalued given its strong foothold in the upstream energy space," it added.

https://www.nst.com.my/business/2022/05/794636/hibiscus-petroleum-see-strong-net-earnings-fy22-fy23-higher-crude-oil-prices