Positive on Dialog`s 5-year contract with Petronas

04 July 2019

Source: Borneo Post (KK)



KUALA LUMPUR: It was two thumbs up for oil and gas player Dialog Group Bhd (Dialog) having secured a master service agreement for turnaround and maintenance works from Petroliam Nasional Bhd (Petronas) through its wholly owned subsidiary, Dialog Plant Services Sdn Bhd.

On Monday, Dialog secured a 5-year groupwide master service agreement for integrated turnaround main mechanical and maintenance mechanical static services from Petronas, which has an option for extension.

The contract covers integrated plant turnaround works and daily maintenance work on mechanical statistic for Petronas' plants group-wide.

Currently, the team at Amlnvestment Bank Bhd (Amlnvestment Bank) noted tha t Dialog provides such plant turnaroun d and daily maintenance services to Petronas on shorter term contracts for individual plants separately.

"With this master service agreement on a longer duration, Dialog will be able to more effectively develop and expand its workforce towards servicing Petronas' operations, particularly land-based plant facilities.

"Hence, we are positive on this development which provides improved visibility to Dialog's long-term recurring revenue, even though its past service contracts tend to be renewed on a consistent basis," it said in its notes yesterday.

"However, we maintain our forecasts as management is unable to provide any guidance at this junctur e for the potential increase in domesticbased service income."

Notwithstanding Dialog's extensive overseas operations, Amlnvestment Bank saw that the group's main earnings driver still stems from Malaysian operations which account for 90 per cent of its pre-tax profit for the first nine months of financial year 2019 (9MFY19) - up from 87 per cent in 9MFY18.

"The group has reached progress stage of 62 per cent for the 300-acre land reclamation of Pengerang Phase 3, which involves the construction of a petroleum/petrochemical storage and a third jetty at an indicative initial cost of RM2.5 billion, in which Dialog holds an 80 per cent equity stake and the Johor state 20 per cent," it added.

"This is in addition to a 500-acre zone comprising further reclaimable land and the adjoining buffer zone. Additionally, Dialog will be expanding its dormant Langsat Terminal 3 into a 300,000 cubic meter storage facility."