Publiclnvest keeps `overweight` call on Dialog Group shares
16 February 2018
Source: New Straits Times
KUALA LUMPUR: Public Invest ment Bank Bhd (Publiclnvest) is excited about Dialog Group Bhd's prospects on the back of the firm's 60.2 per cent jump in net profit to RM276.7 million in the six months ended December 31 last year.
The higher net profit was aided by a RM65.6 million fair value gain recorded on the disposal of a jointly controlled entity.
Group revenue during the six months rose eight per cent to RM1.64 billion from RM1.51 billion, Dialog said in its filing to Bursa Malaysia.
"We leave our earnings estimates unchanged however, confident that increased contributions from the Langsat Terminals and its associates (Pengerang Deepwater Terminal (PDT) projects) in subsequent quarters will bring numbers in line," said Publiclnvest in a report yesterday.
"We like Dialog for its operational track record and steady growth strategies and reaffirm our 'outperform' recommendation with a sum of-parts-derived target price of RM2.89," said the investment bank.
Dialog's Malaysian operations continued to be the mainstay, with midstream and downstream activities inclusive of engineering, construction and plant maintenance services for various proOIALOG GROUP BHD 2.3 FEBRUARY 15 RM2,72 AUG SEP OCT NOV DEC JAN '18 FEB jects as the key drivers towards profitability.
Overseas contributions were weaker in the second quarter of 2018, down 22.8 per cent year-onyear due to lower sales of specialist products and services in India, Russia and Australia; reduced engineering and construction activities in Singapore, and; reduced fabrication activities in Australia and New Zealand.
"Where we differ from consensus is our expectation of higher associate and joint venture-related contributions, in particular from its PDT projects," said Publiclnvest.
The current quarter saw an associate Pengerang LNG (Two) Sdn Bhd achieve its commercial operation and receive the first commercial liquefied natural gas (LNG) cargo at its newly-commissioned regassification terminal at the PDT.
Dialog's on-going PDT operations, which have 1.3 million cubic metres (m3) under Phase 1, are on course to see capacities expanded by an additional 430,000 m3 while construction of Phase 2 and securing of potential partners for Phase 3 remain on track.
With a handy RM1.4 billion war chest, the group is also on the lookout for viable production assets for possible acquisitions. Exciting times lie ahead," said Publiclnvest.