• Maintain BUY (TP: RM3.40). Excluding unrealized forex loss of RM20mn, Hibiscus Petroleum (Hibiscus) 3MFY25 core PATAMI of RM95mn (-39% YoY) was inline with our estimate at 29%. Weak 1Q25 performance was mainly dragged by lower sales volume from Anasuria and Kinabalu fields which suffered prolong outages. Notwithstanding, sales volume is set to rebound and grow as the company has completed the acquisition of the Brunei asset from TotalEnergies, boosting its total production by 62.5% to 27.3k boepd (1Q25: 16.8k boepd). The company declared a 1st interim DPS of 2sen which is similar to 1Q24 and target to pay a minimum of 8sen in FY25. This implies a decent dividend yield of 4.1%. Maintain a BUY call on Hibiscus with unchanged DCF-derived TP of RM3.40.

• Key Highlights. On quarterly basis, average production declined 17% QoQ to 16.8k boepd (4Q24: 20.2k boepd) due to annual major maintenance at PM3 CAA field and prolonged outage (from maintenance shutdown) at Kinabalu and Anasuria fields. Consequently, sales volume declined 21% QoQ to 1.7mn boe (4Q24: 2.1mn boe). Realised oil price was lower by 7% QoQ at USD84/bbl (4Q24: USD89.6/bbl) while realised gas price declined 9% QoQ to USD5.8/Mscf (4Q24: USD6.3/Mscf)

• Earnings Forecast. No change to our forecast.

• Outlook. Sales volume will rebound in upcoming quarters supported by additional sales contribution from Brunei asset following the completion of the asset acquisition on 14th Oct 2024. The company target to sell 5mn boe of oil and gas in the next 2 quarters (2Q-3Q25) thus putting it on track to achieve its sales volume guidance of at least 8.6mn boe in FY25 (+10% YoY). Production setback at Kinabalu and Anasuria fields is temporary as operation has normalised. 2Q25 production will also be boosted by North Sabah SF30 Waterflood Ph 2 project that has achieved first oil on 31st Oct 2024. This will be followed by drilling of 6 water injection wells and that the facility will commence injection in mid-CY2025.

Source: BIMB Securities Research - 20 Nov 2024