Hibiscus Petroleum Berhad

$HIBISCS / 5199 (HIBISCUS PETROLEUM BERHAD)
Research by CGSI

$HIBISCS / 5199 (HIBISCUS PETROLEUM BERHAD)

messy structuring of point as most qna are please bear with it

Key Points from Hibiscus Shareholders' AGM Meeting

Operational Focus
• Kinabalu: Focus on maintaining production.
• North Sabah: Prioritize growth capex and the SF waterflood project.
• Brunei: Concentrate on catching up on maintenance to bring the asset to a healthy level.
Financial Performance
• Lower profit in the latest reported quarter due to shutdowns and lower average selling prices.
• Entry into wind power is not being considered, with a focus on Malaysia's oil and gas strengths.
• PM3CAA extension is in progress, with an increase in 2P and 2C reserves to be announced once confirmed.
• No shareholder dilution planned, and capex can be internally funded through cash flow and debt facilities.
• Dr. Kenneth is happy with the company's share buyback program and won't buy shares simultaneously.
• Hibiscus conducts yearly reserve reports, and the results of the Brunei reserves report will be disclosed, but not the entire report.

UK Asset and Tax Implications
• The UK asset experienced some issues after maintenance, leading to a longer downtime and a drop in profit.
• The profit decline is not related to taxation.
• The company aims to maximize UK tax incentives by phasing out capex.
Reserves and Capital Allocation
• As of July 1, 2024, 2P reserves were 78 million boe and 2C reserves were 122 million boe.
• 1P reserves are estimated to be 60-65% of 2P reserves.
• Cash flow sensitivity won't be disclosed as it depends on oil prices.
• The company recommends analyzing historical EBITDA margins to assess the impact of oil price fluctuations.
• The capital priority framework includes:
o Repayment of bank loans and term loans
o Commitment to dividends
o Sanctioned capex projects
o Share buyback

Share Buyback Program
• NTA and EPS calculations exclude treasury shares.
• The share buyback price range is RM1.89 to RM2.65, with an average price of RM2.16.
UK Asset and Future Plans
• The UK asset's contribution is currently 10-12%, but it's expected to increase after the Teal West project.
• The company is closely monitoring the UK tax regime, but it's not under their control.
• The company is considering various options to maximize shareholder value, including divestment, farming down, and reducing capex.
• The company believes it is undervalued, with only an analyst valuation of RM1.60 and a target price of RM2.60 by most analysts.

Project IRRs
• Anansuria project: 689% IRR, expected IRR of 36%
• North Sabah project: 298% IRR, expected IRR of 15%
• Peninsula Group project: 96% IRR, expected IRR of 46%

Brunei Asset and Future Outlook
• The expected IRR for the Brunei asset is currently 15%.
• Some stakeholders are expecting increased gas production due to decarbonization efforts.
• The company is open to exploring more oil opportunities for sale.
• There is no policy to limit oil production.
Share Price and Market Dynamics
• The share consolidation has reduced volatility and increased access to institutional investors.
• The share price has tracked Brent oil prices past year, and recent increased net short selling has depressed the share price.
• The company is cautious about IEA demand forecasts, which have been criticized for being overly optimistic and biased towards European agendas.
• The company considers forecasts from various sources, including IEA, Rystad, and internal views, and adopts a conservative stance on Brent futures, but not as conservative as the IEA.

Capital Allocation and Share Price
• The capital allocation strategy remains unchanged, with similar approaches for oil prices below $60 and above $90.
• The management team believes that company growth is the best way to increase shareholder value and attract institutional investors.
• If the share buyback exceeds the shareholder mandate, the treasury shares will be cancelled, and the company can then buy back up to 10% of the remaining shares.
• The company will adhere to its capital framework, as capital is a precious resource.

$HIBISCS / 5199 (HIBISCUS PETROLEUM BERHAD)
Research by PBIV

$HIBISCS / 5199 (HIBISCUS PETROLEUM BERHAD)
Research by HLIB

KUALA LUMPUR: Hibiscus Petroleum Bhd has received regulatory approvals from Petroliam Nasional Bhd (Petronas) through Malaysia Petroleum Management to complete its purchase of a 30 per cent interest in PM327 production sharing contract (PSC).

© New Straits Times Press (M) Bhd

Titan Trading Notes For Monday [7/10/2024]:

$KLCI retraced back towards the 1629 points region with an overall negative market sentiment as we still saw over 600 counters closing red for the day. Daily trading volume settled around the 3.1 billion mark, mainly dominated by selling activities.

Main stocks that showed strong buying momentum would be the likes of ARMADA, MYEG, PESTECH, VELESTO, PERDANA, BAHVEST, HENGYUAN, YTLPOWR, and HIBISCS. All of which were able to sustain their rallies throughout the day on the top volumes list despite the weak market sentiment.

$ARMADA / 5210 (BUMI ARMADA BERHAD) since breaking out towards the RM 0.60+ regions back in July, had been retracing over the past few months here and formed a solid support region around the RM 0.45++ levels.

Recently, was able to rebound strong back towards the RM 0.515 main downtrend resistance with good volume here. This could be a sign that it's reached its dip region already and as long as able to hold above its RM 0.49 support, could breakout from this downtrend for a potential new wave up.

Will be monitoring ARMADA closely here as seems to have huge volume coming in.

$HIBISCS / 5199 (HIBISCUS PETROLEUM BERHAD) on the other hand was already able to breakout strong from its RM 2.25+ main downtrend resistance and rallied all the way towards the RM 2.35+ regions with huge volume and buying momentum on Friday.

For now looking strong here and as long as able to hold above its RM 2.25+ immediate support, could breakout from its RM 2.40+ EMA 200 long term resistance levels here on the daily chart soon in the coming week.

Will be monitoring HIBISCS closely here.

Hibiscus Petroleum Bhd jumped to the 50-day simple moving average (SMA) yesterday, in a third consecutive day of gains.

$HIBISCS / 5199 (HIBISCUS PETROLEUM BERHAD) INVESTOR DAY SEPT 2024...

$HIBISCS / 5199 (HIBISCUS PETROLEUM BERHAD)

$HIBISCS / 5199 (HIBISCUS PETROLEUM BERHAD)
Research by Public
Outperform - TP RM3.20

"Rapid Expansion"

Hibiscus Petroleum (Hibiscus) recorded a core net profit of RM149.0m, higher by 31.3% YoY, mainly due to higher oil offtake volume by +41.7% and favourable realised oil price. However, the result came in flat on a QoQ basis as planned maintenance works and shut downs offset its revenue growth. Full year FY24 numbers exceeds our and consensus numbers at 108.1% and 109.9% respectively. The deviation is largely due to elevated realised oil price at an average of USD92.10 per barrel throughout FY24. Despite exceeding estimates, we make no changes to our FY25/26 forecast as we assume the realised oil price will be moderate in the forecast period. We maintain our Outperform call and unchanged TP RM3.20 based on sum-of-parts valuation. We believe the share price is deeply undervalued, only trading at 3.6x earnings multiple with net cash of about 29.6 sen per share. In the last 3 months, Hibiscus has expanded through three projects: i) Acquistion of TotalEnergies EP Brunei ii) The maiden PSC direct award PKNB Cluster PSC and iii) PM327 farm-in agreement. We also note its PM3 CAA extension negotiation has been finalised, pending approval from both the Malaysian and Vietnamese governments.

Analyst:
Khairul Fahmi, CFA
khairul.fahmi@publicinvestbank.com.my

$HIBISCS / 5199 (HIBISCUS PETROLEUM BERHAD)
Research by Maybank
Sell - TP RM1.60

"4QFY24: Within; tight FCF in FY25E a worthy concern"

Hibiscus’s 4QFY24 results were within expectations. Our FY25-26E earnings are tweaked by +0%/+4% after: i) post-update of FY24 full-year figures; ii)a cut in USD/MYR LT assumption to 4.40 (from 4.60 previously); iii) a raise in our capex assumptions post-earnings call; and iv) lifting our LT Brent Oil price assumption to USD75/bbl (from USD65-75 previously). This also leads to a lower DCF-TP of MYR1.60 (-71sen). The stock is now a SELL. Based on our estimate, FCF may remain tight in FY25E.

Analyst:
Jeremie Yap
jeremie.yap@maybank-ib.com

$HIBISCS / 5199 (HIBISCUS PETROLEUM BERHAD)
Research by HLIB
Buy - TP RM2.95

"Strong showing from North Sabah"

Hibiscus recorded 4QFY24 core net profit of RM167.7m, bringing FY24 core earnings to RM555.9m (+34% YoY). The results beat our (110%) and consensus (108%) expectations. Core net profit rose 41% QoQ mainly aided by better PAT contribution from North Sabah as its offtake volume doubled. The group’s total offtake volume for 4QFY24 was 2.1m boe. Hibiscus guided for its tentative offtake volume schedule for the next 2 quarters to be 1.7m and 2.5m boe for 1QFY25 and 2QFY25. Despite the results beat, we maintain our FY25/26f forecasts to be conservative. We roll over the valuation base year to FY25f and increase our capex assumption. Maintain BUY call on Hibiscus with lower TP of RM2.95 – based on SOTP of all its producing assets’ NPV.

Analyst:
Brian Chin
brianchy@hlib.hongleong.com.my

Hibiscus Petroleum Bhd’s recent award of a 65% participating interest and operatorship in a production sharing contract (PSC) with Petroliam Nasional Bhd (PETRONAS) marks the first time the group has won a bid in Malaysia.

$ARMADA / 5210 (BUMI ARMADA BERHAD) $DELEUM / 5132 (DELEUM BERHAD) $YINSON / 7293 (YINSON HOLDINGS BERHAD) $HIBISCS / 5199 (HIBISCUS PETROLEUM BERHAD)

OTHERS3D Energi Limited (formerly known as 3D Oil Limited)'s ASX Release dated 10 July 2024

$HIBISCS / 5199 (HIBISCUS PETROLEUM BERHAD) ' Dr. Kenneth will be on BFM's “Breakfast Grille” tomorrow morning. For those interested, (and it's always a pleasure to listen to Dr. Kenneth), you can tune it to listen to his interview live at BFM 89.90 at 8am.

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - DATUK MICHAEL TANG VEE MUN

KUALA LUMPUR: Hibiscus Petroleum Bhd says its associate company in Australia, 3D Energi Ltd (TDO), has entered into a right of first refusal deed (ROFR) regarding the sale of its share of future gas production with a ConocoPhillips Australia (Copa) group company.

OTHERS3D Energi Limited (formerly known as 3D Oil Limited)'s ASX Releases dated 24 June 2024

$HIBISCS / 5199 (HIBISCUS PETROLEUM BERHAD)
Research by PIB
Outperform – TP of MYR 3.20

“Gassing Up In Brunei”

Hibiscus Petroleum (Hibiscus) announced that it has entered into a conditional sale and purchase agreement with TotalEnergies Holdings for the acquisition of the entire equity interest in TotalEnergies EP (Brunei) B.V for a cash purchase consideration of USD259.4m (~RM1.22bn). We view this development positively as it will boost Hibiscus’ gas reserve by more than double, increase overall production by 37% and lift its earnings its by 12% to 16% on average. We deem the price tag as fair given the current Brent oil prices market dynamics trading in the range of USD75-95/bbl throughout the remaining concession until 2039. We maintain our Outperform call with an unchanged target price of RM3.20 for now, though our DCF valuation could see an additional 12sen or 3.8% potential upside from this acquisition.

Analyst(s):
Khairul Fahmi, CFA
khairul.fahmi@publicinvestbank.com.my

$HIBISCS / 5199 (HIBISCUS PETROLEUM BERHAD)
Research by HLIB
Buy – TP of MYR 3.36

“Acquires 37.5% stake in Block B MLJ field ”

Hibiscus announced that it had entered into a conditional share purchase agreement for the purchase of TotalEnergies EP for a cash consideration of USD259.4m (RM1217.2m), funded by internally generated funds and debt facilities. The acquiree owns 37.5% operated interest in Block B Maharajalela Jamalulalam field (MLJ) field. Hibiscus daily production is expected to grow to 29kboed after adding c.7.9kboed of daily production (84% gas) from the MLJ field. The implied acquisition price-to-2P reserves for the deal is USD10.1/boe. We reckon the valuation is on the high side, but it is justified by its low opex profile at a mere USD5-6/boe. The acquisition may add 6.4%/37.8% to our FY25/26f forecasts. We arrive at an incremental NPV of USD263m but our TP may decline by 12 sen to RM3.24 (from RM3.36) as it is offset by the spike in net debt in FY25f. No change to our forecasts pending shareholders’ approval. Maintain BUY on Hibiscus with unchanged TP of RM3.36.

Analyst(s):
Brian Chin
brianchy@hlib.hongleong.com.my

Hibiscus Petroleum Bhd is seeking to expand its operations into Brunei via the proposed acquisition of TotalEnergies Holdings International B.V.’s 37.5% interest in Block B Maharaja Lela Jamalul Alam (MLJ) field, offshore Brunei, for US$259.4mil (RM1.22bil).

KUALA LUMPUR: Hibiscus Petroleum Bhd has proposed to acquire the entire equity interest in TotalEnergies EP (Brunei) B.V. (TotalEnergies Brunei) for a total cash consideration of US$259.4mil.

HIBISCS - Resumption of Trading

KUALA LUMPUR: Independent oil and gas exploration company, Hibiscus Petroleum Bhd today announced that it has signed a conditional share sale agreement with TotalEnergies Holdings International B.V.  to takeover TotalEnergies EP (Brunei) B.V for RM1.2 billion (US$259.4 million).

© New Straits Times Press (M) Bhd

KUALA LUMPUR: Independent oil and gas exploration company, Hibiscus Petroleum Bhd today announced that it has signed a conditional share sale agreement with TotalEnergies Holdings International B.V.  to takeover TotalEnergies EP (Brunei) B.V for RM1.2 billion (US$259.4 million).

© New Straits Times Press (M) Bhd

OTHERSPress Release - Hibiscus Petroleum Ventures into Brunei: Proposed Acquisition of Brunei Gas Producing Assets

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : NON RELATED PARTY TRANSACTIONSHIBISCUS PETROLEUM BERHAD ("HIBISCUS" OR "COMPANY")

PROPOSED ACQUISITION BY SIMPOR HIBISCUS SDN BHD, AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF HIBISCUS OF THE ENTIRE EQUITY INTEREST IN TOTALENERGIES EP (BRUNEI) B.V., A WHOLLY-OWNED SUBSIDIARY OF TOTALENERGIES HOLDINGS INTERNATIONAL B.V. ("PROPOSED ACQUISITION")

SUSPENSION OF SECURITIES

HIBISCS - Request for Suspension