Affin Hwang: Dialog's Pengerang Deepwater Terminal phase two on track - The Star

Affin Hwang: Dialog's Pengerang Deepwater Terminal phase two on track
22 Mar, 2017
Source: The Star


PETALING JAYA: Dialog Group Bhd is on track to complete the second phase of its Pengerang Deepwater Terminal (PDT) project, which is located next to Petronas' Refinery and Petrochemical Integrated Development (Rapid) project in Johor, said Affin Hwang Capital Research.

Dialog's PDT phase two comprises tanks for both petroleum and petrochemical products with a total storage capacity of 2.1 million cu m. These tanks are dedicated specially for the national oil company Petroliam Nasional Bhd (Petronas).

Affin Hwang said Dialog was targeting to complete its phase two project by end-July 2019, with the petroleum portion to complete first by July next year.

"We gather that the petroleum portion has achieved 60% completion. The majority of the civil works has been completed with the remaining works left being the pumps, the installing of instruments and electrical parts.

Meanwhile, the petrochemical tanks are still at an early stage of work as the group has just acquired the piles and tank plates. Overall, phase two of the engineering and procurement, construction and commissioning (EPCC) works are targeted to be completed by end-January 2019," the research house said yesterday.

It said the first phase of Dialog's PDT project has been fully operational since 2015, and has since received over 970 vessels.

Dialog has an effective stake of 46% in phase one of the project and 25% in phase two.

The PDT project is expected to benefit from the announced Petronas-Aramco partnership, as it could potentially result in higher demand for tank terminals and deepwater marine facilities in the PDT.

Nonetheless, Affin Hwang said it did not see a near-term re-rating catalyst that would result in a major upside in Dialog's share price.

"Dialog shares are currently trading at 25.1 times forward 2017 estimate price-earnings ratio compared to an historical average of 30.8 times. However, we are in no hurry to upgrade the stock," it said, adding that it remained positive on Dialog's long-term PDT growth prospects

Despite the volatile oil market, for the second quarter ended Dec 31, 2016, Dialog posted a 17% jump in net profit to RM91.4mil from RM78mil a year earlier.

The company attributed the growth to higher contributions from its Pengerang terminal, where its storage capacity has been fully leased and it has secured better strorage rates.

A JP Morgan report reckoned that Dialog could be considering to expand its phase one capacity to 0.7 million-0.8 million cu m in the next 18-24 months.

"We estimate that this development could add about RM20mil-RM30mil earnings," it said.