Dialog Group Bhd

08 July 2019

Source: The Edge


AM INVESTMENT RESEARCH (JULY 2): Dialog secure d a five-year group wide master service agreement for integrated turnaround main mechanical and maintenance mechanical static services from Petrolia m Nasional Bhd, which has an option for extension. With this master service agreement, Dialog will be able to more effectively develop and expand its work - force to service Petronas' operations, particularly land-based plant facilities. We are positive on this development, which provide s improved visibility to Dialog's long-term recurring revenue. However, we maintain our forecast s as management is unable to provide any guidance on the potential increase in domestic-base d service income. The group's main earnings driver is still its Malaysian operation s which account for 90% of 9MFY1 9 PBT. Up from 87% in 9MFY18. Dialog trades at a CY20F PER of 31 times. We view this premium as justified given its long-term recurring cash flow-generating businesses, which are largely cushioned from volatile crud e oil price cycles, and underpinned by the Pengerang development's multi-year value rerating bonanza and healthy net cash balance.