Dialog's PDT on track to support the Rapid project - The Malaysian Reserve

FYE DEC 31 2016A 2017E 2018E 2019E
REVENUE (RM mil) 2,534,5 2,612.8 2,754.6 2,897.4
NET PROFIT (RM mil) 294.9 316.5 364.4 382.1
EPS (sen) 5.6 6.0 6.9 7.3
PER (x) 29.8 27.8 24.1 23.0


Dialog's PDT on track to support the Rapid project
22 Mar, 2017
Source: The Malaysian Reserve


TARGET Price: RM1.68

by Affin Hwang Investment Bank Bhd (March 21)

hosted a site visit for over 20 local investors to the southern part of Johor where we visited Dialog Group Bhd's flagship Pengerang Deepwater Terminal (PDT) project.

Our focus was primarily on PDT Phases 1&2 as well as Dialog's fabrication facility, with the aim to have better clarity on the project's progress and better understanding of the project as a whole. We also caught a glimpse of the progress on Petroliam Nasional Bhd's (Petronas) Refinery and Petrochemical Integrated Development (Rapid) project which is situated beside Dialog's PDT. This visit reaffirmed investors that PDT is shaping up nicely and is on track to support the Rapid project.

The successful PDT Phase 1 was fully operational since 2015 and has since received over 970 vessels. We remain positive of Dialog's long-term PDT growth prospects.

Special-purpose vehicle (SPV) 2 and 3 progressing well. PDT Phase 2 is comprised of tanks, for both petroleum and petrochemical products with a total storage capacity of 2.1m cu m which are dedicated specially for Petronas.

This terminal also has a deep water jetty facility, which consists of 12 berths with water depths up to 24m that is able to accommodate very large crude carriers vessels. We gather that the petroleum portion has achieved ~60% completion. The majority of the civil works have been completed with the remaining works left being the pumps and mainly instruments and electrical.

Dialog is targeting to achieve mechanical completion for its petroleum tanks by end-July 2018.

Overall, Phase 2 of the engineering, procurement, construction and commissioning work is targeted to be completed by end-January 2019. SPV 3, which consists of two units of 200k cu m liquefied natural gas storage tanks, is expected to receive its first shipment by end-August 2017, which should result in maiden income stream flowing in.

Fabrication yard remains busy. Dialog's fabrication yard was seen occupied with moulded bullet tanks and large pressure vessels, which are to be progressively delivered to ToyoThai Corp Ltd. This is meant for Rapid's Steam Cracker Complex. We understand that four more outstanding bullet tanks are to be delivered.

Valuation. Our earnings forecasts are unchanged following the site visit. Maintain 'Hold' rating and an SOTP derived 12M TP of RM1.56.