PETALING JAYA: Hibiscus Petroleum Bhd
is seen as one of the clearest domestic proxies to rising crude prices, with analysts expecting the upstream producer to benefit from sustained geopolitical risk in the oil market, firmer realised prices and stronger second-half (2H26) sales.
AmInvestment Bank Research (AmResearch) has initiated coverage on Hibiscus with a “buy” call and a target price of RM2.60, arguing that the stock has yet to fully reflect elevated Brent assumptions despite stronger global oil fundamentals.
At RM2.24, the research house said the counter still implies Brent crude at only about US$80 per barrel, below its own US$95 per barrel base case.
The brokerage said part of this upside is being driven by escalating geopolitical tensions around the Strait of Hormuz, where crude transit disruptions are increasingly affecting physical supply rather than merely sentiment.
“We see 20% total return (including dividends) as its current share price appears to lag spot Brent,” the report said, noting that “geopolitics is becoming an increasingly important driver of oil prices”.
Its oil outlook assumes a US$15 per barrel geopolitical premium on top of a normalised Brent price of US$80, bringing the forecast to US$95 per barrel.
According to the report, normal crude flow through Hormuz is around 20 million barrels per day, but effective supply reaching the market has fallen sharply to about 7.6 million barrels per day.
This leaves a gross shortfall of 12.4 million barrels per day.
Even if strategic petroleum reserves are released, this would cover only about 18% of the gap, suggesting a prolonged tightness in supply.
AmResearch said this backdrop places Hibiscus in a favourable position because of its strong oil-price sensitivity.
Operationally, Hibiscus is expected to deliver stronger earnings in financial year 2026 (FY26), supported by its low-cost producing assets and rising production volumes.
AmInvestment projects FY26 core net profit at RM312.1mil, up about 10% year-on-year, driven by stronger sales in the second half of the financial year.
Sales volume is projected at 4.7 million barrels of oil equivalent (boe) in 2H26 versus 4.4 million boe in 1H26, putting the group on track to meet its upgraded full-year guidance of nine million to 9.4 million boe.
The group’s low operating cost remains a major earnings cushion. Average operating expenditure is estimated at US$21 to US$23 per boe, allowing Hibiscus to remain profitable even under weaker oil scenarios.
“Hibiscus’ Malaysian PSC portfolio is low cost, with group breakeven of US$21-US$23/boe, supporting resilient margins and allowing stronger oil prices to flow efficiently into earnings and cash flow,” the research report noted.
Meanwhile, the balance sheet remains supportive. Hibiscus had RM786mil in cash and bank balances as at Dec 31, 2025, while cash generated from operating activities reached RM923mil in 1H of FY26.
The research house said management has guided for a 10 sen dividend if average realised oil prices exceed US$75 per barrel in FY26.
With 1H realised prices already at US$72 per barrel and a four sen interim dividend declared, analysts believe the threshold is achievable, implying a forward dividend yield of about 4.5% to 5%.
