• Hibiscus’ 1QFY19 core earnings soared to RM99m on the back of record crude oil sales of 1.1m bbls. Overall, it came within ours and consensus’ forecast at 29%.

• Production at North Sabah and Anasuria were stable at 14.8k bpd and 3.2k bpd respectively while average opex were kept low at US$17.6/bbl and US$17.9/bbl respectively.

• Reiterate BUY with an unchanged DCF-derived TP of RM1.60. Despite the oil slide, we believe its long term growth prospect remains intact with several growth projects in the pipeline.

Strongest quarter ever

Hibiscus recorded its strongest performance since listing in 1QFY19 as core earnings soared to RM99m on the back of record sales volume. It sold 1.1m bbls of crude oil in 1QFY19, almost double the sales volume recorded in prior quarters (1QFY18: 558k bbls; 4QFY18: 623.5k bbls). There were 524k bbls of crude sold from Anasuria at average price of US$73.9/bbl while North Sabah sold 595k bbls at an average price of US$78.6/bbl. Overall, 1QFY19 core profits were in line with ours and consensus forecasts at 29% respectively.

Delayed cargoes boosted the earnings

On qoq basis, Hibiscus returned to the black, as it delivered 4 cargoes of crude oil in 1QFY19 – 2 cargoes each from North Sabah and Anasuria; in 4QFY18, it delivered 2 cargoes from North Sabah and none from Anasuria. The higher number of cargoes from Anasuria in 1QFY19 were due to oil shipments delayed owing to the drilling of a side-track well at the Guillemot-A field which commenced from 4 Jun 2018 until early Sep.

Satisfactory operational performance

The average facilities uptime at both North Sabah and Anasuria field declined slightly qoq at 93% (4Q18: 96%) and 88% (4Q18: 94%) respectively due to minor maintenance. Nonetheless, both fields recorded a stable average production of 14.8k bpd and 3.2k bpd respectively while average opex were kept low at US$17.6/bbl and US$17.9/bbl respectively.

Maintain BUY with unchanged TP at RM1.60

Maintain BUY with an unchanged DCF-derived TP of RM1.60. Our valuation is based on finite DCF with WACC of 9% (Table 4). Despite the slide in crude oil price, we believe its long term growth prospect remains intact with several growth projects in the pipeline.

Source: BIMB Securities Research - 28 Nov 2018