• Maintain BUY (TP: RM3.40). Hibiscus Petroleum (Hibiscus) FY24 core PBT of RM876mn (+21% YoY) was inline with our estimate at 97%. Revenue grew by 16% YoY to RM2.7bn driven by higher oil and gas sales volume by 9% YoY to 7.8mn boe. We are optimistic on its growth as the acquisition of the Brunei asset from TotalEnergies will add by at least 10% to sales volume to 8.6mn boe in FY25. The company declared a 4th interim DPS of 1.5sen bringing FY24 DPS to 7.5sen which implies yield of 3.2%. Maintain a BUY call on Hibiscus with unchanged DCF-derived TP of RM3.40.

• Key Highlights. On quarterly basis, average production slipped 4% QoQ to 20.2k boe/day due to facilities shut down for maintenance activities at North Sabah and Kinabalu field. Notwithstanding, sales volume rose by 15% QoQ and 18% YoY to 2.1mn boe driven by inventory drawdown leading to higher sales volume from North Sabah field (Table 5). This led to higher revenue of RM738mn (+22% QoQ and 47% YoY). However, higher revenue was partially offset by higher opex for maintenance activities, leading to a largely flattish EBITDA of RM352mn (4Q23: RM328mn, 3Q24: RM366mn). Realised oil price remained elevated at USD89.6/bbl (3Q24: USD91.3/bbl).

• Earnings Forecast. No change to our forecast.

• Outlook. Management has guided that sales volume is projected to increase by at least 10% YoY to 8.6mn boe in FY25 driven mainly by additional sales contribution from Brunei asset (assuming the completion of the asset acquisition in Oct 2024). This bodes well for its earnings in FY25. Operationally, the company is rapidly pursuing its expansion plan in order to achieve its 2026 production target of 35-50k boe and 100mn boe of 2P oil and gas reserves. Recently, it was awarded with PKNB PSC by Petronas which boosted its 2C resources by 47mn boe or 80% to 106mn boe. However, the asset may turn into production by only in CY2028. In near term, production will be boosted by first oil from UK Teal West and North Sabah SF30 Ph 2 in 1HFY26 and 1HFY25 respectively.

Source: BIMB Securities Research - 28 Aug 2024