KUALA LUMPUR (Feb 22): Hibiscus Petroleum Bhd saw its share price rise by 2.1% or 2 sen to 98.5 sen after the oil and gas player posted a higher net profit for its second quarter ended Dec 31, 2017 (2QFY18).
The latest result is also the group's eighth consecutive quarter of profitability since Hibiscus acquired Anasuria Cluster, its first producing asset, about two years ago.
As of 10.28am, the stock was trading at 98.5 sen with about 14 million shares changing hands.
A trader based in Kuala Lumpur told theedgemarkets.com that the stronger result driven mainly by higher oil price continued to bode well for Hibiscus.
"If you look at the latest result, you can see that despite the lower average uptime of 63% from 90% in the previous corresponding quarter at the back of its planned shutdown of the Anasuria floating production storage and offloading for vessel for 31 days, Hibiscus continues to record stronger revenue and profit.
"The higher oil price has benefit the group's earnings and investors are confident of its performance moving forward if oil price maintain at current level," he said.
As of writing, Brent crude oil price edged lower by 0.9% to US$64.83 per barrel.
Earlier today, Public Investment Bank had also issued a report and lifted the target price for Hibiscus to RM1.08 from RM1.06 previously, with its "outperform" recommendation being re-affirmed.
According to the research house, 274,644 barrels of crude oil were sold at an average of US$62.93 per barrel in 2QFY18 as compared to 246,132 barrels in 1QFY18 at US$51.54 per barrel. It also said Hibiscus had recently announced plans to undertake a free warrant issue on the basis of one for every five existing ordinary shares held, subject to shareholders' approval.
"While this essentially expands its share base by 20% upon full exercise of the said warrants over the next three years and may be dilutive, we are leaving our sum-of-parts derived RM1.08 valuation unchanged for now given the potential uplift from the conversion of 2C (best estimate of contingent resources) to 2P (proven and probable) reserves for the North Sabah field, which we have not accounted for in our computations.
"Assuming a 50% conversion, we are estimating the group's overall fair value to be bumped up to RM1.17 (post-dilution)," it said.