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Hong Chew Eu
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Retired Group CEO of i-Bhd. Now a full time blogger
In 2024, Hibiscus can be described as a regionally focused, independent upstream oil and gas company. It has operatorship control over a diversified portfolio of producing and development assets across Malaysia, Vietnam, and the United Kingdom.
This marks a significant evolution from just six years ago, when Hibiscus had only two core assets. Since then, its total assets have nearly tripled, from RM2.4 billion in 2019 to RM6.6 billion in 2023, reflecting the company’s strategic acquisition-led growth.
To fund this expansion, Hibiscus has tapped both debt and equity markets. Between 2019 and 2024:
• Total debt increased from RM5 million to RM749 million
• Total equity expanded from RM1.2 billion to RM3.1 billion
While ROA improved from 11.6% in 2019 to 13.1% in 2024, the enlarged capital base has diluted returns to shareholders. ROE declined to 16.1% in 2024, down from 20.6% in 2019, despite a spike to 35.5% in 2022 following the Repsol acquisition and elevated oil prices.
With crude oil prices declining in the wake of ongoing trade tensions and tariff-related uncertainties, there are concerns about Hibiscus’s ability to sustain its current profit levels.
Lower demand and weaker pricing could pressure margins, particularly given the company’s increased cost base. The declining share price since the start of the year may be a reflection of these market concerns.
However, one mitigating factor is the historically moderate correlation between oil prices and Hibiscus’s ROE. Over the past 12 years, the correlation between year-end Brent crude prices and the company’s ROE has only been about 40%.
This suggests that while oil prices do influence profitability, ROE is shaped by a more complex mix of factors — including production volume, capital discipline, cost control, and timing of investments. As such, the potential profit impact of lower oil prices may not be as severe as feared.
MISC: A Transformation in Progress, Returns Yet to Follow
Between 2019 and 2024, MISC Berhad transitioned from a conventional energy shipping company into a forward-looking provider of sustainable maritime and energy solutions. This transformation was shaped by decarbonisation trends, the energy transition, and a strategic push toward innovation.
A key milestone was the successful commissioning of the FPSO Marechal Duque de Caxias in Brazil, with the Offshore Business contributing about 12% of Group revenue in 2024.
Despite these strategic shifts - global expansion, entry into deepwater markets, and fleet modernisation - financial returns have yet to show meaningful improvement.
ROE in 2024 stood at 3.2%, below the 4.0% recorded in 2019, despite a brief rebound during 2022–2023. This reflects a transitional earnings phase, as capital-intensive projects like FPSOs and low-emission tankers are only beginning to contribute materially to earnings.
Legacy challenges, especially in Marine & Heavy Engineering, and a large equity base have also suppressed ROE. As a result, MISC currently maps into the Quicksand quadrant in the Fundamental Mapper—where strategic intent is clear, but financial outcomes lag.
However, this should not be mistaken for a failed transformation. With new assets now operational and legacy drag expected to ease, MISC is well-positioned to improve its returns - though the market has yet to fully price in this potential.
In the context of the Fundamental Mapper, MISC could move out of its current position in the Quicksand quadrant once improving returns begin to materialise. The recent decline in its share price suggests that the market has not yet recognised this trajectory.
From Shipbuilder to Profit Machine: How Coastal Contracts Reinvented Itself
On a weekly chart for Bursa Coastal Contracts, the technical picture remains bearish. The stock is in a long-term downtrend, with selling pressure evident in the momentum indicators and weak participation reflected in below-average trading volume.
However, the fundamentals tell a different story.
In 2019, Coastal was primarily engaged in shipbuilding, ship repair, and vessel chartering. Yard operations and marine-related activities were the core of its business. Since then, the company has undergone a strategic transformation:
• 2021–2023: Coastal significantly reduced its emphasis on shipbuilding and shifted its focus toward offshore gas infrastructure, particularly in gas processing and compression services.
• 2024: Coastal is now predominantly involved in energy infrastructure support services, delivered through long-term contracts under joint ventures - most notably the Perdiz and EMC gas compression projects in Mexico.
This transformation has placed the company in a stronger profit position. Return on equity rose from 1.2% in 2019 to 9.3% in 2024, reflecting improved capital efficiency and a more resilient income base.
Importantly, this change in business model is fortuitous, given the declining crude oil prices following the global tariff war. In 2019, Coastal's performance was closely tied to oil prices, as demand for newbuild vessels and charter services moved in tandem with offshore exploration activity.
By contrast, in 2024, while it still serves the upstream oil and gas sector via PEMEX, its exposure to volatile crude prices is now indirect.
Yet, the recent decline in Coastal’s stock price appears disconnected from its improved fundamentals and reduced risk profile - as illustrated in the Fundamental Mapper.
If you want to understand more about the impact of declining crude oil prices on other Bursa E&P companies, join me this at today’s podcast
Yinson’s FPSO Fortress: Immune to Oil Price Swings?
On a weekly chart, Yinson stock is in a clear downtrend with negative momentum, but the volume spike may signal growing investor attention — either panic selling or the start of bottom fishing. Watch closely for price stabilization or divergence in MACD to confirm a possible reversal.
Fundamentally, Yinson remains anchored by a resilient FPSO business that has grown stronger, more tech-driven, and better aligned with ESG priorities over the past six years. Its foray into renewables has de-risked the business without diluting its FPSO identity, which continues to serve as the financial and operational core.
Yinson’s FPSO revenue is contract-driven, offering long-term stability and earnings visibility with minimal sensitivity to crude oil prices. Revenue growth is primarily driven by project execution, fleet expansion, and operational performance - not oil price movements.
As such, a short-term decline in crude oil prices due to tariff-driven macro concerns should not materially affect Yinson’s profitability in the immediate to short term.
However, it is important to note that future demand for FPSO projects is indirectly tied to crude oil prices, as lower prices can reduce upstream investment appetite. If prices remain depressed over a prolonged period, this could slow the award of new FPSO contracts and affect long-term growth prospects.
Given this context, the recent decline in Yinson’s share price could reflect market concerns over a potential prolonged downturn in crude oil prices and its implications for future contract flow, even if near-term earnings remain stable.
If you want to understand more about the impact of declining crude oil prices on other Bursa E&P companies, join me this at this Thursday podcast
Is the Market Sleeping on Bumi Armada’s Turnaround?
Over the past six years, Bumi Armada has transitioned from a dual-segment model - comprising FPSO operations and Offshore Marine Services - into a focused, integrated offshore production business.
The offshore support vessel segment was gradually scaled down, and by 2022, all operational assets were consolidated under a single Operations unit. A new Technology, Engineering & Projects unit was also established to provide engineering consultancy and project support services.
Geographically, Bumi Armada streamlined its footprint while maintaining a presence in key offshore regions across Asia, Africa, and Europe. By 2023, its operations spanned five continents, but with fewer, more strategically aligned assets focused on high-value, long-term production contracts.
These strategic shifts have yielded strong results. Net profit surged from RM 38 million in 2019 to RM 656 million in 2024, while ROE improved from 1.2% to 11.3%. This improvement is reflected in its Goldmine quadrant in the Fundamental Mapper.
Can this performance be sustained amid declining crude oil prices triggered by the current tariff war?
According to the company, its core revenue is not directly tied to crude oil prices. This is due to its long-term, fixed-rate FPSO contracts, which provide stable cash flows regardless of short-term oil price movements.
While broader market conditions - such as lower crude prices - may affect future contract opportunities or investment cycles, Bumi Armada’s current revenue base remains largely insulated from these fluctuations.
Has the market missed this picture, given the declining stock price since the start of the year?
If you want to understand more about the impact of declining crude oil prices on other Bursa E&P companies, join me this at this Thursday podcast
Petra Energy's Comeback Story—Is It Already Under Threat?
In 2019, Petra Energy was primarily a brownfield services provider, focused on hook-up and commissioning, maintenance, construction and marine support. By 2023/24, it had transformed into a petroleum contractor and operator:
• Sole operator of the Banang oilfield under a Technical Services Agreement with PETRONAS.
• Production sharing contract (PSC) operator for Block SK433 (onshore Sarawak) via a Petroleum Contract with PETROS.
This marked a strategic leap from service contractor to resource holder. Profitability declined from 2019 to 2022 due to transitional costs, pandemic-related project delays, and early upstream investments.
A turnaround followed in 2023, driven by improved marine utilization, stronger service execution, and higher contributions from Banang. This progress is reflected in its Goldmine position on the Fundamental Mapper.
Yet, just as returns improve, Petra now faces the challenge of falling crude oil prices. While its PSC terms are undisclosed, such contracts typically link revenue to oil prices through cost recovery and profit-sharing mechanisms.
If prices stay low, financial performance may come under renewed pressure - depending on the duration of the current tariff war. The question is: Has the market priced this in?
From Car Seats to Cash Machine: Pecca Growth Story
Pecca Group Berhad is primarily engaged in the styling, manufacturing, distribution, and installation of leather upholstery for seat covers, serving both the automotive and aviation industries.
Between 2019 and 2024, the Group underwent a significant transformation - shifting from a niche automotive leather seat cover manufacturer to a diversified business with multi-sector ambitions. Over this period, Pecca recorded a 13% CAGR in revenue, while PAT grew at twice that pace. ROE rose from 10% in 2019 to 25% in 2024.
There is strong qualitative evidence that this growth is sustainable:
• The Group has diversified into aviation MRO, healthcare PPE, and electric vehicle (EV)-related businesses, reducing reliance on its traditional automotive segment.
• It maintains long-term partnerships with major carmakers securing recurring revenue streams.
• Its venture into aviation interior refurbishment and maintenance taps into a high-margin, high-barrier market with scalable potential.
• The acquisition of a business in Indonesia extends its footprint into Southeast Asia’s largest automotive market.
• Continuous investment in cleanroom facilities, automation, and production capacity has enhanced efficiency and positioned the Group to support further growth.
Pecca’s strong business fundamentals are reflected in its positioning on the Fundamental Mapper, where it stands out as one of the best-performing companies. However, the run-up in its stock price means that the margin of safety is now limited, making it a high-quality business, but one to approach with valuation discipline.
Is Hong Leong Industries ROE turnaround sustainable?
Hong Leong Industries Berhad is a Malaysia-focused company engaged in the manufacturing and distribution of motorcycles, ceramic tiles, and automotive parts.
Over the past six years, the Group has transformed from a diversified industrial conglomerate into a focused, consumer-centric business. It exited the low-margin fibre cement segment and ventured into automotive spare parts, building on its strong position in the motorcycle industry.
Despite the strategic pivot, revenue and profit grew modestly at around 4% CAGR. ROE declined from 24% in 2019 to a low of 14% in 2022 but has since rebounded, reaching 26% on a Dec 2024 LTM basis. This was driven by a shift toward higher-margin, scalable operations. The share price has mirrored this recovery, trending upward since late 2023.
The Group’s position in the Goldmine quadrant of the Fundamental Mapper highlights its strong fundamentals and manageable investment risk. The key question now is whether the ROE recovery can be sustained.
With the fibre cement divestment, HLI operates more efficiently. Strong brand positioning and new recurring income streams support profitability, while lean operations and disciplined capital allocation place the Group in a god position to sustain ROE in the mid-20% range.
As far as I can tell, Hup Seng does not have any exports to the US. So there are not likely to be impacted directly by the high tariff. Unfortunately, if the tariffs cause a global economy decline, then its business will be impacted. Your guess is as good as mine in whether we will see a global economic decline
Bursa Furniture Stocks Just Got Slammed – what is your next move?
Oof… stocks have taken a beating lately, thanks to those new US tariffs. If you’re holding Bursa-listed furniture stocks like I am, it feels like a double-whammy. Not only are we caught in the overall market drop, but companies with big US exposure are likely to see their earnings take a hit too.
But it's not just about short-term earnings. These tariffs also affect how investors value companies — because when uncertainty rises, so does the discount rate. That’s a double blow to valuations.
And let’s be real — no one knows how long this new trade order will take to settle. Will things ease up after the next US election? Or are we heading into a long-term shift in global trade?
If you’re trying to value companies in this environment (like I am), one approach I’ve been toying with is this: break the valuation into two parts. First, estimate the value over the next 2 to 4 years — maybe aligned with the US election cycle. Then, add on the value assuming some kind of “new normal” kicks in after that.
It’s not perfect, but it gives me a framework to think through the uncertainty instead of just reacting emotionally.
So — do we cut loss or hang in there? I haven’t made a final call yet, but I’ll share how I’m thinking it through. If you’re in the same boat, maybe it’ll help you too.
