• Overview. Hibiscus 3QFY21 headline PATAMI rose 13% yoy to RM32m driven by higher oil price. However, excluding unrealised FX gain worth RM2.6m, core PATAMI declined 10% mainly affected by higher effective tax rate. Revenue rose by 23% yoy and 14% qoq to RM213m as average realised oil price rose to USD58.4/bbl (3QFY20: USD48.5/bbl, 2QFY21: USD40.1/bbl) which more than offset the impact of lower oil sales volume of 874k bbls (2QFY21: 1,123k bbls).

• Key highlights. Average daily oil production declined 2% qoq to 9,041 bpd (2QFY21: 9,260 bpd) dragged by lower production at Anasuria. North Sabah production was maintained following the completion of its first integrated coiled tubing unit Catenary campaign.

• Against estimates: Inline. 9MFY21 core profit declined 48% yoy to RM55.4m as lower oil price (-37% yoy to USD45.8/bbl) had more than offset the increase in oil sales volume (+19% yoy to 2.8m bbls). Overall, this made up 55% and 73% of our and consensus FY21F earnings forecast respectively. We deem this as within our estimate on expectation of even higher realised oil price in 4QFY21.

• Dividend. No dividend was declared during the quarter as expected.

• Outlook. The company has recently completed its bi-annual Offshore turnaround campaign at Anasuria which was commenced on 16th Apr for 29 days. Nonetheless, it expects to maintain its oil sales volume in the quarter utilising stored crude in the FPSO storage. This could bring its total FY21 sales volume to 3.7m bbls (FY20: 2.6m bbls) on the back of higher crude oil offtake of 13 cargoes (FY20: 12 cargoes) which is slightly higher than our estimate of 3.5m bbls.

• Our call. Maintain our BUY call on Hibiscus with unchanged TP of RM1.20, based on 1.3x P/B FY22F. Our premium valuation on the stock reflects our upbeat view on the company’s growth potential as it set to acquire multiple large producing assets in the SEA region.

Source: BIMB Securities Research - 24 May 2021