Dialog shares at new high after analysts raise target price
|Dialog shares at new high after analysts raise target price |
29 Aug, 2017
Source: The Star
PETALING JAYA: Shares in Dialog Group Bhd shot up to a new all-time high after analysts raised their target price for the stock on a bullish earnings outlook.
The stock climbed to a high of RM2.08 yesterday before succumbing to quick profit-taking to close at RM2.03, with 20.9 million shares being traded.
Kenanga Research yesterday upgraded Dialog to an "outperform", with a new target price of RM2.30 based on the company's break-up value.
The target price valued the company at about 32 times its projected earnings for the financal year ending June 30, 2019 (FY19).
Meanwhile, Maybank Investment Bank yesterday raised its target price from RM2.23 to RM2.26.
"Dialog's strong cashflows, atypical to the industry, largely from its tank terminal operations, will support the higher dividends," it said.
The bank has forecast a threeyear net profit compounded annual growth rate of 14% (FY18-FY20), driven by the group's V3 regasification and tank terminal business.
Dialog is the developer of the Pengerang Deepwater Terminal (PDT) project, which is located next to Petroliam Nasional Bhd's (Petronas) Refinery and Petrochemical Integrated Development (Rapid) project in Johor.
"With the successful delivery of phase one and good progress for phase two, Dialog is already in the midst of securing new potential partners for phase three to build more petroleum and petrochemical storage terminals," Kenanga said.
Last week, Dialog's partner, Netherlands-based Royal Vopak NV, announced its intention to expand the deepwater independent liquid storage terminal of phase one in Pengerang.
The expansion will add 33% to phase one's capacity, which was completed in 2015.
"Given that its share price has surged 30% year-to-date, suggesting that the market could have priced in some of these positives, we believe the formalisation of Phase 3 will be the major rerating catalyst in the long run," it said.
Meanwhile; the company is also expected to benefit from Petronas' renewed emphasis to develop its downstream activities,
"Subsequently, we believe Dialog is able to capitalise on the demand for maintenance work for these storage facilities, refineries and its associated assets, given the existing maintenance relationship with Petronas Chemicals Group Bhd," Kenanga said.
Meanwhile, Publiclnvest Research said Dialog's activities in the Pengerang area would ensure the delivery of even better results going forward, especially with the near-commissioning of the RM2.7bil liquefied natural gas regasification facilities in which it has partnered Petronas Gas Bhd and the Johor state.
"The current PDT phase one and current construction of phase two has 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.