KUALA LUMPUR (Sept 20): Hibiscus Petroleum Bhd rose 17.2% in an active trade at mid-morning today, after Public Investment Bank Bhd initiated coverage on the stock with an “Outperfom” rating and a target price of RM1.06, noting Hibiscus continues to deliver production from its first producing field, the Anasuria Cluster in UK with average circa 3500bbls/day, anchoring its position more prominently amongst its oil peers.

At 11.30am, Hibiscus was up eight sen to 54.5 sen, with 146.06 million shares traded, for a market capitalisation of RM700.22 million. Year to date, the counter has gained about 33%.

Earlier, the stock opened at 47 sen and hit its intraday high of 55 sen.

In a note today, the research house said it remains positive on the group’s performance, reaffirmed by its ability and perseverance to continue securing producing assets.

Public IB Research said the group announced another milestone in October 2016, the conditional sale and purchase agreement (SPA) for the group to acquire a 50% stake of the North Sabah Enhanced Oil Recovery (EOR) PSC.

“We are initiating coverage on Hibiscus with an Outperform call, with a target price of RM1.06, premised on our sum-of-parts valuation.

“Our valuation is based on the relative undervaluation of Hibiscus’ Anasuria Cluster asset valued at RM0.58, based on our DCF valuation with an 11.0% WACC, and after close review of its upcoming North Sabah acquisition based on its 2P reserves only, we believe would add another 48 sen to the group’s fair value,” the research house added.