KUALA LUMPUR: Hibiscus Petroleum Bhd
is undervalued and could be a compelling investment case.
According to Hong Leong Investment Bank (HLIB) Research, Hibiscus is trading at four times the financial year 2024’s forward price-to-earnings ratio and it is on track to record robust performance this year.
“Hibiscus reported a first-quarter financial year 2023 core net profit of RM135.3mil a 226% year-on-year gain,” the research house said.
It said the company’s core net profits were boosted by significantly higher realised crude oil prices and the recognition of Kinabalu Oil and PM3 commercial agreement area sales volumes from its acquired Fortuna International Petroleum Corp (FIPC) assets.
“We maintain ‘buy’ call on Hibiscus Petroleum with an unchanged target price of RM1.56 per share, which is derived based on a net present value of all its producing assets’ future free cash flows after accounting for each asset’s targeted lifespan,” HLIB Research said.
The research house added Hibiscus is in discussions with Petroliam Nasional Bhd and PetroVietnam to extend the recently acquired PM3 commercial agreement area’s producing licence by another 10 years, until 2037.
