Hibiscus Petroleum Berhad (Trading Buy)

• HIBISCS is Malaysia’s first listed independent oil and gas exploration and production company with a diverse asset portfolio which encompasses multiple interests in concessions in the United Kingdom and Australia while also having involvements in several production-sharing contracts in Malaysia and Vietnam.

• HIBISCS’ topline in 1QFY22 came in at RM246.7m (+69% YoY) while their net profit soared to RM41.5m (+315% YoY) attributed to higher oil prices.

• Going forward, amid the prevailing elevated oil prices, consensus is expecting HIBISCS to report a net profit of RM272.0m in FY June 2022 and RM415.7m in FY June 2023. This translates to forward PERs of 7.4x this year and 4.8x next year, respectively.

• Technically speaking, the stock currently offers an attractive trading opportunity as: (i) it may continue to tread along the upper band of an upward sloping price channel, and (ii) its uptrend remains intact given the movements above the 200-day MA.

• With the ADX indicator confirming an uptrend is currently underway, HIBISCS shares could test our resistance targets of RM1.13 (R1; 13% upside potential) and RM1.24 (R2; 24% upside potential).

• Our stop loss price level is pegged at RM0.89 (representing a downside risk of 11%).

TH Plantation Bhd (Trading Buy)

• On the longer-term chart, THPLANT’s share price has plunged to a low of RM0.185 (in end-March 2020) or a decline of 73% from its peak of RM0.685 (in end-Dec 2019). Thereafter, the stock recovered to tread above an upward sloping trendline amid rising CPO prices.

• Earnings-wise, THPLANT (which owns plantation estates in Malaysia and produces various palm products such as fresh fruit bunches, palm kernel and crude palm oil) saw its topline for its latest reporting period (3QFY21) coming in at RM205.9m (+23% YoY) lifted by higher ASP for its palm products. Rising in tandem was their bottom line which increased 70% YoY to RM26.8m from RM15.8m in the preceding period due to cost synergy benefits derived from the group’s prudent management in reducing the impact from labour shortage. This took net income for the cumulative period of 9MFY21 to RM68.4m (+447% YoY).

• The stock is currently treading above the 200-day MA, suggesting that its uptrend pattern remains intact.

• With the ROC indicator heading higher above the zero-line, we anticipate the stock could advance to challenge our resistance levels of RM0.70 (R1) and RM0.78 (R2), which translate to upside potentials of 10% and 23%, respectively from yesterday’s closing price of RM0.635.

• On the downside, our stop loss has been set at RM0.58, which translates to a downside risk of 9%.

Source: Kenanga Research - 4 Feb 2022