• Overview. Hibiscus 2QFY22 core PATAMI rose 19% qoq to RM50m mainly on higher sales volume. Revenue increased 15% qoq to RM284m as total oil sold was 11% higher at 843k bbls (1Q22: 757k bbls) which more than offset slightly lower realised oil price USD74.2/bbl (1QFY21: USD75.3/bbl). The higher volume was also underpinned by the sales of Anasuria’s overlift volume of 90k barrels but profit will only be recognised in 3QFY22. On yoy basis, 1HFY22 earnings was more than doubled to RM91m as higher oil price more than offset the impact of lower oil sales volume which declined 25% yoy to 1.6m bbls (1HFY21: 2m bbls).

• Key highlights. Average daily oil production improved 11% qoq to 8,024 bpd underpinned by higher uptime following the completion of maintenance program in the preceding quarter.

• Against estimates: Inline. 3MFY21 core PATAMI made up 28% of our FY2022 estimate. We deem this as within our forecast in anticipation of stronger 2HFY22 profit coming from consolidation of Repsol’s asset.

• Outlook. The company has completed the acquisition of Repsol’s FIPC assets and this will contribute to its bottomline immediately in coming quarter. Management expects this will contribute additional 2.5m BOE to its 2H22 sales volume and boost its daily production to 23,000 boepd. Besides that, it has also refreshed its 5-year mission to achieve production target of 35k-50k boepd and 2P reserves of 100MMboe by 2026.

• Our call. Maintain BUY with an unchanged TP of RM1.40 as we peg 1.3x P/B to its FY23F book value. This is equivalent to +1SD to its 5- year forward P/B. We think this is fair as the company is in asset acquisition drive amidst foreign PSC leaving the country.

Source: BIMB Securities Research - 18 Feb 2022