KUALA LUMPUR (June 8): Hibiscus Petroleum Bhd rose as much as 13 sen or 19.85% to a high of 78.5 sen this morning, as analysts are positive on the group’s recent acquisition from Repsol Exploración, SA.

At 11.22am, the counter pared some gains at 71.5 sen, still up six sen or 9.16%.

The counter was the second most actively traded stock this morning, with 125.9 million shares traded.

Public Investment Bank’s analyst Nurzulaikha Azali said in a note today she viewed the acquisition as timely in light of the favourable oil price environment, with a significant impact on the group’s production and earnings immediately upon completion.

These assets are expected to increase the group’s production rate, including gas, to 26,800 barrels of oil equivalent (boe) per day with oil production rate to increase from 9,000 barrels per day (bpd) to 18,500 bpd, she said.

The group’s earnings momentum will also be supported by the current favourable oil price at more than US$60 per barrel, she said.

Meanwhile, according to her, there is access to gross proved plus probable (2P) reserves of 20.6 million barrels (mmbbl) of oil reserves and 83.6 billion standard cubic feet (bscf) for gas reserves.

“We adjust our FY22/23 earnings forecast accordingly, seeing the group’s bottom line enhanced by about 149.3%/250.5% with an incremental value to our discounted cash flow (DCF) based valuation of 52 sen based on 10% discount rate,” she said.

She maintained an "outperform" call on the stock with a revised DCF based target price (TP) of RM1.05 (from 76 sen previously).

BIMB Securities Research’s analyst Azim Faris Ab Rahim also in a note today raised Hibiscus FY22/FY23 earnings by 35%/191% to account for the new asset.

“Upon completion of the transaction, this asset will double its oil production to 18,500 bpd and boost its 2P oil reserves by about 50% to 67 mbbls,

“Besides that, it will also diversify its earnings base into gas with expected production of 47 million standard cubic feet (mmscf) per day (8,000 boe per day) and total 2P reserves of 82 bscf (14 million boe),” he said.

He reiterated a "buy" call on Hibiscus with an unchanged TP of RM1.20 based on 1.3 times of FY22 forecast price to book.