KUALA LUMPUR (Sept 20): Public Investment Bank Bhd has initiated coverage on Hibiscus Petroleum Bhd with an “Outperform” rating at 47 sen and target price of RM1.06 and said 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.
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.
It said in October 2016, the Group announced another milestone, the conditional sale and purchase agreement (SPA) for the Group to acquire the 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,” it said.