HIBISCUS Petroleum Bhd will achieve strong core earnings growth despite its recent exit from exploration permit in Gippsland Basin, offshore of Australia, said a local research house.
BIMB Securities has maintained a ‘Buy’ call on the counter with an unchanged target price of RM1.30.
“No impact to earnings from this development [Aussie exit]. We remain optimistic that Hibiscus will achieve a 25% core earnings growth in FY23 aided by full-year impact from Repsol Exploración SA’s FIPC (Fortuna International Petroleum Corp) assets,” it said in a note released this morning.
Hibiscus ended three sen down at 93 sen when trading ended yesterday, below its one-year average of RM1.
In August, the company told the local exchange that it had surrendered its VIC/P57 petroleum exploration permit to the Australian National Offshore Petroleum Titles Administrator before the project moved into the next stage with an exploration well commitment costing A$31 million (RM93.62 million). it added that a farmout exercise for the project was unsuccessful.
At the current price level, BIMB Securities Sdn Bhd believed the market has not fully reflected the value of FIPC to Hibiscus, Malaysia’s first listed independent oil and gas (O&G) exploration and production company.
In January, Hibiscus said Petroleum Bhd informed the investing public that its indirect wholly owned subsidiary, Peninsula Hibiscus Sdn Bhd, had completed the acquisition of the entire equity interest FIPC from Repsol.
In a comment then, Hibiscus MD Dr Kenneth Pereira said the additional volumes from acquisition of the “high-quality O&G assets” from Repsol allowed the company to close off the 2022 financial year on a strong note.
For the financial year ended June 30, 2022 (FY22), Hibiscus posted RM613.06 million in net profit – some six times for FY21 — on the back of RM1.7 billion in turnover.
In its note, BIBM Securities noted that the Aussie permit required the drilling of exploration well within the next three years.
“We understand that the company has decided to exit the permit to prioritise its resources towards other producing assets primarily in South-East Asia and the UK. We expect there will be no impact to its financial as the company has fully written-down this asset in 3QFY22 for RM1.9 million,” it said.
It expected Hibiscus to deliver a robust core earnings growth of 25% year-on-year to RM428 million in FY23 underpinned by full-year impact of structural volume growth from Repsol’s FIPC assets. — TMR/pic source: hibiscuspetroleum.com