CEO Morning Brief

Buy Hibiscus Shares on Higher Oil Prices, Says HLIB

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Publish date: Wed, 10 Apr 2024, 11:10 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (April 9): Hong Leong Investment Bank (HLIB) said that amid the current buoyant oil price environment, Hibiscus Petroleum Bhd stands out as a compelling investment opportunity, being a pure exploration and production player.

The research house said the Brent oil price had surged over US$90 (RM427.32) a barrel for the first time since October 2023, propelled by escalating geopolitical tensions in the Middle East, Opec+’s decision to maintain production cuts, Ukrainian strikes on Russia’s refineries, and strong purchasing managers index data in the US and China.

In a technical tracker on Tuesday, the research house said that looking forward, the outlook for oil prices is likely to remain elevated, due to the tightening oil supply outlook.

Direct proxy to elevated oil prices

HLIB said that notably, Hibiscus' share price performance is highly correlated with global oil prices, boasting a five-year beta of 1.9 times in relation to the Brent crude oil price.

“Hence, we advocate investors to accumulate Hibiscus to capitalise on the recent oil price rally.

“The breakout above its long-term downtrend channel on April 3 signals a trend reversal for Hibiscus.

“Bolstered by bullish indicators, the stock is poised to advance further towards RM2.83-RM2.91-RM3 levels. Cut loss at RM2.53,” the house said.

Source: TheEdge - 10 Apr 2024

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