DIALOG GROUP


DIALOG GROUP BHD

21July, 2017
Source: The Star

Outperform
Target price: RM2.15

DIALOG Group's current Pengerang Deepwater Terminal (PDT) Phase 1 and the construction of Phase 2 have led it to new potential partner s for Phase 3 - and to include the development of more petroleum and petrochemical storage terminals, said Publiclnvest Research.

It noted that PDT will continue to provide more opportunities for the group to leverage on its core activities of engineering, construction, fabrication and plant maintenance services. The research house said it likes the prospect s o f this project, as the contract is on a take or pay basis, with an expected internal rate of return (IRR) of 10 % for the duration 25 years (+25 years option).

"We visited Dialog's PDT recently, and are encourage d by the positive progress updates." We are reaffirmed of our outperform recommendation, "it said.

The group's next milestone - SPV3, the RM2.7bi l liquefied natural gas (LNG) regasification facilities in which it partnered with Petronas Ga s an d Joho r stat e government , has complete d pre-commissioning tests and will be receiving its first cargo on August 26,2017, ahead of the initial completion date targeted for end-2017. Contribution s from SPV 3 will flow through as associate earning s and will be reflected from the fourth quarter of 2017 onwards, through Dialog's 25 % shareholding.


 The research house also cite d a Bloomberg report on a new development in the oil market - an offshore supermarket in an d about the Strait s o f Malacca. "This new strategy now mean s that traders are less beholden to the uncertainties of future s prices. At the request of buyers, the y ca n supply as little as 100, 00 0 barrel s o f oil from tankers for delivery in Asia within a week, "it noted.


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