18 July, 2017
Source: The Star

Buy (Maintained)
Fair value : RM2.24

ONGOING construction works being undertaken by Petroliam Nasional Bhd for the surrounding Pengerang Integrated Petroleum Complex , have reached up to 54% completion stage.

Dialog's buffer land between the main land and its reclaimed area is slightly larger at 650 acres.

Also, the total proposed area to be reclaimed has expanded from 500 acres to 680 acres , increasing the group' s land by 2.7 times from its original allocation to 1,330 acres.

When Dialog' s Pengerang Deepwater Terminal (PDT) in Johor was mooted , the group envisioned the project to cost RM5bil with storage facilities of five million cubic metres.
From the investments in Phase 1, SPV2 , and SPV3 , the total cost of investments already committed has more than doubled to RMllbil, exceeding the PDT' s original estimates . It is expected to double again over the next 10 years.

Meanwhile , the progress work for PBT phase two project is on schedule with the second jetty on track to begin operations on Aug 26, together with the first liquefied natural gas tank.

Currently , phase one's jetty has been operational with a utilisation rate of 50% to 60% since the first quarter of 2015.

For the Pengerang liquefied natural gas (LNG) regassification project, in which two tanks with a combined capacity of 200,000m3 are being built at a cost of RM2.7bil , the first tank will be completed soon while the second tank by December 2017 . This project will provide LNG for the 1.220MW power plant, which will also provide up to 1,480 tonnes per hour of steam for plants within the Rapid complex.

For Pengerang Terminal 2 , also designated SPV 2 , on the phase two reclaimed land, the targeted commissioning is still scheduled for 2019 , in tandem with the completion of Rapid.

Dialog is trading at a calendar year 2018 forward price-earnings multiple of 26 times, below its five year peak of 29 times.

"We view the premium as justified given Dialog' s long-term recurring cash flow-generating businesses, which are largely cushioned from volatile crude oil price cycles, and further underpinned by the Pengerang development's multi-year value expansion, " said Amlnvestment Bank.