DIALOG GROUP - The Star


DIALOG GROUP

18 Aug, 2017
Source: The Star

Outperform
BY PublicInvest Research
Target price: RM2.15

FOLLOWING Dialog Group's FY17 full year net profit of RM370.6mil, which exceeded consensus' expectations at 117% of estimates, PublicInvest Research expects the group to deliver better results going forward.

The research house said this was based on the group’s activities in the Pengerang area with the near-commissioning of SPV3, the RM2.7bil Liquefied Natural Gas (LNG) regasification facilities, in which it has partnered with Petronas Gas and the Johor state government.

“The current Pengerang Deepwater Terminal (PDT) phase one and construction of phase two have led to the securing of new potential partners for phase three – and to include the development of more petroleum and petrochemical storage terminals.

“PDT will provide more opportunities for the group to leverage on its core activities of engineering, construction, fabrication and plant maintenance services,” it said in a note. The research house strongly reaffirmed the “outperform” recommendation on the counter, supported by its target price of RM2.15.

The research house also adjusted its FY18-FY19 revenue and earnings forecast of between 5% and 8% and 3% respectively to account for the better contributions from its traditional businesses.

The group’s revenue for the fourth quarter came in at RM968.9mil, with earnings at RM103.5mil, underpinned by higher contributions from all divisions.

Engineering, construction and fabrication activities’ ongoing works in Malaysia included the PDT phase two, jetty topside works for Samsung in Pengerang and construction of a plasticiser plant for UPC Chemical in Kuantan.

The group’s international operations comprise of higher downstream activities in Singapore and Saudi Arabia.

The research house said its view on Dialog Group’s re-rating was premised on several factors including its LNG regasification facilities and the dedicated industrial terminal to Petronas to commence operations at their respective stages.

Other factors are Petronas’ unwavering commitment to downstream activities, the outlook on oil price stabilisation at US$50/bbl and further upside from Pengerang.


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