Hibiscus Petroleum (Hibiscus) reported core net profit of RM52.7m in 4QFY21 as compared to a core net loss of RM35.3m in 4QFY20. Cumulatively, the Group reported core net profit of RM116.2m in FY21, growing from RM71.1m in FY20. This is in line with higher revenue and EBITDA growth of 24.5% and 78.5% respectively, thanks to higher realised oil prices and offtakes, and lower OPEX/bbl for both of its key assets. Overall, 13 offtakes with oil totalling 3.7 mbbls had been sold during the period. The results are above our and consensus expectation by 40% and 20% respectively. Given the stability in oil prices at above USD60/bbl coupled with the earnings consolidation from Repsol assets from 2HFY22, we believe the Group will register encouraging performances in the coming years. Earnings are expected to grow further by >100%. Our Outperform call for Hibiscus is affirmed with an unchanged target price of RM1.05.
- Oil price drives performance. The Group reported core net profit of RM52.7m (+52.6% QoQ) in 4QFY21 on the back of RM253m (+17.1% QoQ) revenue. The improvement is due to higher realised oil price during the quarter at USD62.67/bbl (3Q: USD54.04/bbl) reported for Anasuria for its 254,945 bbls oil sold, and USD72.07/bbl (3Q: USD60.46/bbl) for 608,006 bbls oil sold in North Sabah. Three offtakes with oil totaling 862,951 bbls have been sold. OPEX/bbl for Anasuria was high at USD38.22/bbl mainly due to the 2021 offshore turnaround carried out in the quarter, affecting the performance of the asset with the average uptime only at 53% while the average production rate was 1,642 boe/ day.
- Offtakes hit target. Overall, the Group sold 3.7 mbbls of oil via 13 cargoes (nine in North Sabah and four in Anasuria), meeting management’s revised target versus initial guidance of 3.4 mbbls via 12 offtakes.
- Earnings on the uptrend. Given the stability in oil price at above USD60/bbl coupled with the earnings consolidation from Repsol assets from 2HFY22, we believe the Group will register encouraging performances in the coming years. Earnings are expected to grow further by >100%. Futher opportunities beyond 2023 would come from new infill wells i.e. Teal West, Eagle Tieback and Marigold. While Marigold may only achieve first oil in late 2023, the Teal West and Eagle discoveries will be a key focus for management as potential tieback candidates to the Anasuria FPSO in the near term. Teal West contains approximately 7.1 mbbls of oil net to Anasuria, with implementation targeted in 2H2023.
Source: PublicInvest Research - 27 Aug 2021