Hibiscus Petroleum (Hibiscus) reported core net profit of RM49.4m (+>100% YoY, 18.8% QoQ) in 2QFY22 on the back of higher revenue of RM284.4m (+49.5% YoY, 15.3% QoQ). For cumulative 1HFY22, the Group reported core net profit of RM90.9m, up from RM29m in 1HFY21. The Group had sold around 1.6 mbbls of crude oil in six off-takes within the period at higher realised oil prices of >USD70/bbl. The results make up 36.8% of our full-year expectations and 34.7% of consensus. Earnings are expected to be stronger in 2HFY22 nonetheless, with the consolidation of Repsol assets’ earnings. We make adjustments to our oil price assumptions throughout the lifespan of all the three producing assets, reflecting the current higher oil price environment and the long-term base oil price. Subsequently, our FY22–24 earnings estimates are adjusted higher by 8.8%, 3.4% and 1.3% respectively. Our Outperform call for Hibiscus is affirmed with a revised SOTP based TP of RM1.31 (from RM1.05 previously).

• QoQ highlights. The Group reported core net profit of RM44.9m (+18.8% QoQ) in 2QFY22 on the back of revenue of RM284.4m (+15.3% QoQ). The performance was mainly supported by higher realised oil price of >USD70/bbl. Performance of the Anasuria asset improved despite technical issues that the field is currently facing, with average daily production improved at 2,000 bbls/day with average uptime of 75% (1QFY22: 69%). OPEX/bbl was also improved to USD24.31/bbl as compared to USD27.94/bbl last quarter. The field reported RM16.9m net profit in 2QFY22 (+39.7% QoQ) with 256,224 bbls oil being sold at USD72.02/bbl.
  Performance at North Sabah was stable in 2QFY22 with the field selling 587,374 bbls of oil in two cargoes at realized oil price of USD75.15/bbl. The field recorded a net profit of RM43.6m (RM43.2m in 1QFY22). The field reported lower OPEX/bbl of USD13.06/bbl as compared to USD19.16/bbl in 1QFY22 as the planned maintenance activities performed at South Furious and Barton platform has been completed.

• On track to deliver 2.5 – 2.7 mbbls of oil from the two key assets. As of 1HFY22, the Group has sold 1,600,660 bbls of oil via six cargoes (four off-takes in North Sabah and two in Anasuria), translating to about 64% of the Group’s internal target of delivering 2.5 – 2.7 mbbls of oil in FY22. Management is maintaining the target though we see the likelihood the numbers would exceed the target (assuming all are running, similar to 1HFY22). With the completion of the Repsol acquisition last month, it is expected to add a further estimated 3 mboe of oil and gas.

Source: PublicInvest Research - 18 Feb 2022