As you know, I have posted my buy recommendation on Hibiscus Petroleum a few days ago on my blog and on i3investor.com. I also recommended it during my talk to 750 young investors at Ideal Convention Centre Shah Alam, KL yesterday.
As a result of my recommendation, many readers who have bought it would ask me why the price came down. When the price went up, buyers would not ask nor they would thank me. A few critics, would always say that whenever I recommended any stock, they would sell because they did not believe my honesty. Fortunately, the daily traded volume is several million shares, these small punters would not affect the share market.
Although Hibiscus’ production cost is only about US $18 per barrel, its share price fluctuates because investors always look at the oil prices to decide to buy or sell. That is why the share price fluctuates.
It EPS for the last 4 quarters from 31 Sept 2018 to Dec 2017 were 6.3 sen, 6.22 sen, 5.26 sen and 0.72 sen, totalling 17.9 sen.
If you examine the share price chart and the oil price chart carefully, you will notice that the share price varies according with the oil price.
However, just based on the EPS for the last 4 quarters of 17.9 sen and its share price at around Rm 1.00, it is selling at 5 P/E.
Since the company is cash rich, I think it is a good buy because it has reasonable profit growth prospect which is the most powerful catalyst to move share price.
Remember you readers and small punters buy or sell does not affect the share price because the daily volume traded is several million shares
The above table shows its 5 years track record of revenues and production volumes, oil prices etc. It is a good stock to buy for long term, provided you do not use too much margin finance.