Hibiscus Petroleum’s 1HFY19 revenue of RM525.1m was higher by >100% YoY, mainly attributable to additional contribution from the North Sabah asset acquisition which was completed in March last year. In tandem with higher revenue, the Group reported core net profit of RM148.7m (>100% YoY) during the period against RM33.2m in 1HFY18. The performance was also supported by higher production efficiency from the Anasuria Cluster asset with average uptime of 91% in 1HFY19 versus 63% in 1HFY18. 1HFY19 core net profit numbers were in line with our full-year estimates, meeting 48.2% but fell short of consensus at 41.2%. We remain positive on Hibiscus’ long-term earnings outlook given its ongoing initiatives to constantly increase production levels in enhancing shareholder value. With oil prices currently stable at above USD60/bbl, we reckon it will provide further upside to the Group’s earnings. Our Outperform call is affirmed, with an unchanged TP of RM1.73 based on our DCF valuations.

• Higher efficiency in Anasuria. The field reported revenue growth of 83.9% YoY to RM242.2m and EBITDA of RM179.1m from RM67.4m in 1HFY18. The results were attributed to higher production efficiency with average uptime of 91% as compared to 63% in 1HFY18. Recall, the field was operated at a lower average uptime during the 1HFY18 period which was mainly due to a planned shutdown of the Anasuria FPSO for 31 days, from mid-Sept. About 797,914 bbls of crude oil were sold in 3 cargoes in 1HFY19 at an average realized oil price of USD68.45/bbl. For the 2QFY19 itself, 274,015 bbls of crude oil were sold at USD58.08/bbl. The asset achieved average uptime of 94% in 2Q and average daily oil equivalent production rate of 4,416 boe/day. This represents the highest production rate achieved since the acquisition in March 2016, largely driven by the contribution from the GUA-P2 side track well which commenced in Sept 2018.

• Stable contribution from North Sabah asset. In 1HFY19, the North Sabah asset recorded an EBITDA of RM138.4m on the back of RM280.1m revenue. The asset sold 888,910 bbls of crude oil in 3 cargoes including 293,624 in 2QFY19, at an average realised oil price of USD76.15/bbl. OPEX for 2QFY19 amounted to USD22.74/bbl was higher mainly due to planned maintenance activities performed at the offshore platforms during the quarter. Average OPEX for 1HFY19 is relatively stable at USD16.65/bbl.

Source: PublicInvest Research - 20 Feb 2019