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Overview
Financial Highlight
HeadlinesBusiness Background Hibiscus Petroleum Bhd along with its subsidiaries is engaged in exploration and development of oil and gas. It has operations in Middle East, Norway and Oceania regions.
  linheng So Basically, there is no such thing as pressing price to get a better conversion ratio. Conversion price is fixed at 66cents. CPRS issued at RM1.00. One CPRS gives you 1.515151 Hibiscus share. As a CPRS Holder, you cannot even choose the time to convert ( Anyway 2 years Only to Maturity ) since there is Mandatory conversion on a pro rata basis for any acquisition. Proceeds not used will be redeem by the co with a certain premium based on a certain ratio. Why do people buy then? There is a certain amount of interest paid if the CPRS is not converted (Unlikely cos mandatory conversion upon acquisition of assets ) 16/10/2020 3:00 AM linheng So my opinion is that if the issue of CPRS is successful, than share price will shoot up. 16/10/2020 3:03 AM micsoh Now is 50sen, it represent 1.5b share currently issue, after issue crps which is 3b at 66sen, so average price will be=50+66+66(sen), 182÷3=60sen, this is the least cost per shae, and consider the current 1.5b share buying cost is 50sen, you think is it reality? 16/10/2020 8:50 AM Dericlock it depends on if tranche 1 is successful or not. So there's possible chance the shark see blood in the water, press down the price to make tranche 1 looks unattractive and fail. Hence go tranche 2 with lower average price where indicates the big boy can convert more shares with CRPS. And go further and further with more tranche and lower price...... 16/10/2020 9:08 AM Dericlock @micsoh, CRPS will not be converted but only once the acquisition done. So in theory, the shares price is not diluted even CRPS issued but only till acquisition done and CRPS converted. Share price does not just with simple math and averaging as what calculated, it based on the earning and asset value behind. So the share price will be adjusted based on the quality of the asset acquired by HIbiscus with CRPS 16/10/2020 9:11 AM micsoh Yeah, I just want to assume the least cost per share price, I know it's impossible all the current share holder cost per share is 50sen, I think mostly above this figure.we can assume all the money being use for acquired asset since it's purpose is for this. 16/10/2020 9:23 AM micsoh As for the qty of share Convert, you don't expect it can get more if press price down, it's mostly will use weight average method for assign the balance share after first tranch, remember it listing qty is 3b. 16/10/2020 9:31 AM Newbn00b I think Deri get my idea. The shark will press down the price to make 0.66 unattractive and asking/looking for much lower conversion price. So, the price will not go up until hit their target price. Don't dream on shares price will up until CRPS is all done 16/10/2020 9:58 AM micsoh If I am shark I will not take this kind of risk, u need to know this is not the compulsory u will get buying qty of crps u desert once u summit the application, if it is not case then how u going to cover the loss u suffer for pressing down the price? 16/10/2020 10:09 AM micsoh If this proposal is for the current share holder then maybe it can success,. 16/10/2020 10:10 AM Dericlock @micsoh, if open for shareholder then it might not success. Haha, shareholders generally defer from adding more money to company (even though it is for expansion). Anyhow, i believe the main determining factor is the success of tranche 1. If tranche 1 get fully subscribed then the base point is 66c. But if need tranche 2 or 3,4,5 then, god knows how low can it go. I really hope hibiscus have enough potential subscriber before lauching this CRPS. Also the quantity of shares to be issued is not fixed, the circular did said, they will report to bursa if more shares to be issued due to the conversion price is lower than current 66c 16/10/2020 11:02 AM micsoh Dericlock, I believe first tranches will be success issue all out crps, the management must had consider the consequences if first tranche not success. As for the circular part I am not read yet, will find time to read again 16/10/2020 11:10 AM Dericlock @micsoh, i really do hope so. If not then it sounds stupid and also all the 1st tranche subscriber will making losses too. And Dr ken subscription will be a determining point, if he didnt subscribe full then i may consider to sell all. Coz it is a sign where management's interest not align with company's prospect and more on the side of cashing out 16/10/2020 11:15 AM Dericlock So for the Hibiscus price to go above 66c determined by 2 party. haha 1 party that is the subscriber of 1st tranche, then they will wish to have hibiscus higher than 66c to make profits another party is those who not subscribe to tranche 1, and wanna get more discount in coming tranche. Of course, the big boy who buy a lot warrant C will cry, unless they can make magic happen to have stock price back to 1.12. For us retailers, just can suck our thumb and watch the show 16/10/2020 11:18 AM micsoh But in other point of view, if price did go up to 66sen before 12nov, at that time first tranches will be sold out because 66sen maybe is the cheaper price , people fear they will get less share if subscribed for second tranches. 16/10/2020 11:24 AM  Winner128 Frozen actually is one of signal.... If this counter no potential for investor hit up now is going down already not a frozen condition.... Frozen mean someone under control and waiting timing for shut up.... 20/10/2020 11:28 AM hendrycheah Winner is right..Hibi is trading around 53 to 50 since early September while Dayang had fallen from 1 to 0.845 20/10/2020 11:59 AM twynstar Resource from HLIB Q&A on the CRPS ( 1 ) 1) Does the CRPS exercise require EGM approval from common shareholders? Yes. Targeting approval in early November. 2) Would there be another EGM on asset acquisition? Yes. Another EGM would be held for the approval of the proposed acquisition. 3) Would the CRPS holders be able to vote against any asset acquisition and if they vote no, would they be able to recoup their money at a fixed interest rate of 4% p.a.? Only common shareholders will have voting rights with regards to asset acquisitions. CRPS holders would not have any voting rights on the said matter. CRPS holders would only be able to re-coup its investments at an interest rate of 4% p.a. if the proceeds raised are not utilized for asset acquisition. We believe that there would be adequate and fair check and balances as we believe that common shareholders would not support an asset acquisition which they deem to be value dilutive. Any unutilized proceeds raised would be paid back to CRPS holders at the aforementioned annual interest rate. 4) In the event where they (Hibiscus) do not utilize the proceeds from the CPRS, how are they going to raise the money for the interest due from the CRPS? The proceeds would be first parked under an Islamic trust account upon the subscription of the CRPS. If the Company raises RM2bn and fails to acquire any asset after 2 years, Hibiscus would have to repay c.RM80m in interest (4% p.a.) back to CRPS holders. Part of this interest due would be generated from the Islamic trust account while the balance would have to come from its internal cash reserves. 5) Why should existing shareholders vote to approve the CRPS exercise? The current conversion price of RM0.66 for the first tranche of CRPS is c.32% higher than the yesterday’s closing price. Hence, this may serve as a near term benchmark pricing and if the assets were to perform, the upside for common shareholders could be higher. 6) Wouldn’t potential CRPS holders wait for the second tranche, with the possibility that they would be able to get their CRPS at a lower conversion price? The management is confident that it has already identified the assets that it would like to acquire and it will fall within its investment hurdle rates. The management believes that the acquisition would be value accretive for CRPS holders despite the current conversion premium and there would still be a lot of interest with regards to the subscription of the CRPS. Investors might miss out on the opportunity to invest in the CRPS if the first tranche of the CRPS is fully subscribed (as there will be no second tranche if this happens). 7) How big would the asset size be and how many assets are Hibiscus looking to acquire? Hibiscus has identified 1-3 assets with a combined value of RM2bn or more (asset will be financed through debt for any value exceeding RM2bn), which is at least c.6x the combined acquisition value of North Sabah and Anasuria (c.RM320m). 20/10/2020 9:43 PM twynstar Resource from HLIB Q&A on the CRPS ( 2 ) 8) What would happen to investment returns if the price of the proposed asset acquisition exceeds RM2bn? Hibiscus intends to finance any amount exceeding RM2bn via debt. Hence, common shareholders would potentially have a higher net IRR on its investment as the 12% IRR hurdle rate is based on project IRR (e.g. if total acquisition cost: RM3bn, D/E: ½, CoD: 4%, its equity IRR would be at least 16% as the hurdle rate for project IRR is 12%.) 9) What is the long-term oil price assumption used on its investment decisions? Hibiscus’ has a Brent oil price forecast of USD40/bbl for CY20 and c.USD45-50/bbl for CY21-25. The long-term Brent oil price forecast is based on Brent oil futures from the Intercontinental Exchange (ICE). 10) What is the estimated economic life of assets acquired? While Hibiscus would need to acquire a producing asset, we believe that the new acquisition would have a moderate to long useful life. Hibiscus would not acquire any asset which is close to the end of its economic life. 11) Would Hibiscus be able to successfully deliver on its new asset, in the event that it successfully utilizes all of its proceeds for asset acquisition? Hibiscus has had a strong record with regards to the operations of PSCs. This can be seen through the strong operational performance of both its Anasuria and North Sabah assets. Hibiscus has managed to maintain an opex/bbl of below USD15/bbl for its North Sabah field and below USD20/bbl for its Anasuria field in FY20 despite challenging economic conditions. Hibiscus has also won 3 awards from the Malaysia Upstream Awards 2020: (i) Best Emerging Production Arrangement Contract, (ii) Gold award for wells excellence category and (iii) Bronze award for drilling excellence category. While we cannot assume that the new asset would do just as well Anasuria and North Sabah, its track record for the aforementioned fields can possibly provide some good assurance towards the operational performance of its new assets. 12) What is management’s commitment towards the take-up of the CRPS? Dr. Kenneth (CEO & Founder) has pledged to subscribe a minimum of 8m and up to 50m of CRPS at an issue price of RM1.00 per CRPS. We believe that the allotment to Dr. Kenneth is expected to strengthen the alignment of interests between the management and shareholders of the Company. 20/10/2020 9:47 PM linheng Assuming that the CPRS is fully subscribed and the assets acquired, the producing assets will be 7X, but at current share price the minority share holders who can sell the shares are very few. CPRS is converted at 66 cents. Assuming current shareholders price is on the average of 56 cents there should be minimum resistance to the share price from current to 66 cents. Hope to see this scenario soon when oil price spike, but hopefully after the completion of the CPRS and the acquisition of the assets. 21/10/2020 5:43 AM linheng Will continuing toping up. Will sell my remaining glove stock (Comfort) and put into this counter. Sinovac vaccine already being sold to the public in China at USD60 for 2 dose. People flew in from other places to have the vaccine. Already got long Q. 21/10/2020 5:46 AM Newbn00b I really hope those big sharks go ahead finish off first trench else thing will get ugly. 21/10/2020 7:09 AM micsoh Six time the size now, now one day around 9000 bpd, let assume 4times it can achieve, like this at least 30000 per day, wow. 21/10/2020 9:19 AM micsoh **The current conversion price of RM0.66 for the first tranche of CRPS is c.32% higher than the yesterday’s closing price. Hence, this may serve as a near term benchmark pricing and if the assets were to perform, the upside for common shareholders could be higher. Means at least worth 66sen in near term. 21/10/2020 10:24 AM Dericlock thanks @twynstar for sharing. But the questions from HLIB, most of them are really a pointless or i would say without doing any homework beforehand. Most answers can be obtained from their circular. For item 6, fully subscribed, hmm, i am skeptical on it. 2 billion is not that easy to be swallowed especially oil price is uncertain now. Well, will see how it goes. Hibiscus price is getting lower everyday, the lower it goes the less attractive the tranche 1 become, and less subscriber for it. Now is a tug war between hibiscus and the shark behind that wanna more discount on tranche 2. I have to admit. i am not so positive so far 21/10/2020 10:28 AM micsoh Daily share price is not the issue, if it want to push, they can push to 66sen easily in one day, the important is the asset it acquired. If u see price every day, it sometime will give u downward impression, when it up, u will see many people jump out and tell u " see, I tell u before" kind of hindsight. 21/10/2020 10:37 AM Dericlock The asset the acquired, i will leave it to the expert in hibsicus. As we are not expert in valuing the potential and value of the asset remaining life and value. But there sure is many potential asset in malaysia alone, Exxon, repsol, petrofac etc. And hibiscus have a dedicated criteria on purchasing suitable asset, so they know what to choose with it. But choosing right asset and CRPS conversion price is a loosely related thing. so even hibiscus doing a great job in choosing a good asset, yet if the CRPS conversion price is extremely low then means big boy able to buy in deep discount (let say Rm1 asset in 40c price) which will deeply dilute the current shareholder's stake and destroy the current value So at the end, even hibiscus become highly lucrative betshareholders getting nothing in return as the stakes in hibiscus is getting smaller and smaller and also accompanying it up and down for many years 21/10/2020 10:57 AM micsoh This crps price is base on its asset acquired value, if not they cannot simply said I want to issue crps without any propose or expansion, u need to do presentation to interested investor, can u just tell your investor u don't have any idea is this crps worth to subscribe or not? Or tell them it all decided by share market price? If market on Nov 11 is 40sen, then it worth 40sen only?, I think u have misunderstood compare it with current market 21/10/2020 11:20 AM micsoh Market is changing from time to time, what about if on Nov price shoot to rm1?, Then u tell investor now crps not more 66sen? It all depends on how investor value these asset not market price, I can tell u if now share price shot to 66sen , there will be many people come out tell u this crps is very cheap to subscribe. 21/10/2020 11:31 AM Newbn00b With current and oil price forecast, we are going to enjoy cheap petrol at least another year. Hibiscus share holder has to be long term investor for some time 21/10/2020 1:15 PM  DragonG https://protect2.fireeye.com/v1/url?k=4b1e7323-15533efe-4b1fa0ce-000babff757a-20116f100560ec8d&q=1&e=4f78837d-e7e1-4f3f-912a-eae139a99263&u=https%3A%2F%2Fhibiscuspetroleum.us2.list-manage.com%2Ftrack%2Fclick%3Fu%3D733371612371c9595d2a2a631%26id%3D2ab6ce3f5f%26e%3Da4a0d7bfaa 21/10/2020 1:43 PM Dericlock @micsoh, the CRPS price is RM1 but the conversion is based on the 5 days average price. And tranche 1 is fixed at 66c and do not based on asset acquired value (indeed they have no confirmed asset acquisition yet, just potential). So if market price did indeed fall to 40 c in nov, and tranche 1 is not fully subscribed then tranche 2 will based on 5 days average again. So market price will indeed affect the attractiveness of CPRS. And CRPS will worth more if the hibiscus price if let say go to rm1, because you are now eligible to convert 66c per share, hence a straight earning of 34c (excluding diluting effect). 21/10/2020 3:01 PM Dericlock so if let you have a friend wanna sell you personally his own house let say 1mil, but on market selling 600k per unit. Will you think this deal is attractive enough? or more likely you will drop the deal and go and purchase from open market? 21/10/2020 3:04 PM micsoh Like I said before when u buy 3b in market, the price will be push higher like rocket, u can't expect all 3b is 66sen in cost at that time.hibiscus share qty is not much just 1.5b only , if u deduct boss and the institution holding, they normally not easy dispose their share one, than how much free float in market? So if big player want to buy in big bulk, this crps provide the great opportunity with very share is fix at 66sen.When oil market recover, hibiscus share price will much higher than 66sen, but if don't believe it at least worth more than 66sen in future, better don't touch this share. They have said they had identify several asset in mind, this mean they had plan in earlier. I don't think these shark can subscribed qty they want. And the boss also hind investor the size of asset which is 6times compare with current one. 21/10/2020 3:38 PM hendrycheah Deric, I'm fully agreed with you. But by taking CRPS, they are almost risk free, HIbi will activate the conversion of stock of 66c when they have confirm getting the assets they wanted and when this news is out in the market, the stock price would fly over the roof. Even If HIbi lost the bid, they still can get 4% interest yearly, but if they get the shares in the open market, they are open to the risk of price volatility. 21/10/2020 3:40 PM micsoh Don't care too much about whether price will up to 66sen or not before 12nov, just see what kind of asset they get, this kind of event sometime will made your fortune double if the asset is good. 21/10/2020 3:53 PM Dericlock @micsoh, the asset quality obtained is one topic but the dilution effect of CRPS is another topic. So if tranche 1 fail or not fully subscribed then will move on to consecutive tranche, and if price maintain as what it is then the conversion price for tranche 2 will be lower than 66c. So with lower conversion price, each CRPS can convert more hibiscus shares, and current shareholder's stake in hibiscus will be further diluted. As an example, if u have 10% stake in a 1 million earning company, means your portion of earning is 100k. But because of the company perform a CRPS, and your stake diluted to 1% and the company able to grow to 10 million. Will you enjoy the growth of the company? So the losses to shareholders due to dilution is confirmed, but the potential growth is a question mark. And the worst part is the more tranche it is, the heavier the dilution is. 21/10/2020 4:10 PM micsoh So u means if price drop to 40sen, than management will fix the price to 36sen, and issue 5.5b and immediately boss become small shareholder? and boss allow that happen, will u do that if u were him? 21/10/2020 4:15 PM Dericlock i have no doubt on the hibiscus' capability of getting good asset. And is it a good time? i think yes due to the low oil price and many international player getting out from msia. But is it a good time to raise fund? i think hibiscus just miss the golden opportunity. What hibiscus doing now is selling its asset cheap to get fund and trying to buy another bigger asset that "probably cheap" . Is it worth the bet? up to shareholders to think about 21/10/2020 4:15 PM Dericlock @micsoh, 10% premium....so it's conversion price is 40c+10%=44c, and how you know the boss are not the subscriber of the CRPS? By buying a lot more CRPS he can increase his stakes in hibiscus? Only interest of the retail shareholders are being ignored here as we are not eligible to subscribe for CRPS. (Or perhaps you are eligible) 21/10/2020 4:18 PM micsoh Yeah, it's 44sen my mistake, share issue will be 4.5b, that's also a lot.i don't know how much u want to buy hibiscus share, if not big, why don't u buy in market, just 50sen only? Why u envy the crps ? If boss say every shareholder is entitled to subscribe, I mostly dump already. 21/10/2020 4:28 PM Newbn00b Only Deri understand my concern about dilution and trench 1 not going to make it when I mentioned it on September. The boss will further press down the price to lower conversion rate of CRPS. By doing this, they will further dilute our share and gain the most out of it on current CRPS play. 21/10/2020 5:09 PM mariner06lai It is question of asking comparation between orange and apple even both of them are categorized as fruit. 22/10/2020 7:13 PM  |
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