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Maybank IB starts coverage on Hibiscus, target price RM1.70
KUALA LUMPUR (Feb 17): Maybank Investment Bank has initiated coverage on Hibiscus Petroleum Bhd at RM1.13 with a “Buy’ rating and target price (TP) of RM1.70 and said Hibiscus is the best play for a cyclical, rising energy price market.
In a note Tuesday (Feb 15), the research house said Hibiscus is fundamentally sound (low P&L break-even oil price; sub-USD40+/ boe), financially resilient, well-run and offers compelling growth (3-year NP CAGR of 53%) with undemanding valuations.
Maybank IB said Hibiscus, a pure upstream O&G operator is the most leveraged O&G play to capitalise on the strong energy push. FY22-24 earnings will grow by 35%- 54% for every US$10/bbl rise in oil price.
“It has a relatively low lifting cost (P&L break-even oil price of sub-USD40/boe).
“Our TP is conservatively pegged to US$10/ boe of EV/ 2P valuation (@ 10x FY23 PER), a 45% discount to its peer average of USD19/ boe.
“Accretive M&As, asset monetisation deals or additional 2P reserves upside would add to upside,” it said.
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