Analysts bullish on outlook for Dialog Group

PETALING JAYA: Analysts are bullish over Dialog Group Bhd’s business outlook after its full-year profit expanded 25.7% to RM370.64 million.
PublicInvest Research, which affirms an “outperform” recommendation with a target price of RM2.15, said it has adjusted Dialog’s FY18 and FY19 revenue and earnings between 5% and 8% and 3% respectively, to account for the better contributions from its traditional businesses.
The research house noted that Dialog’s FY17 performance missed earnings forecast, as it had assumed contributions from the future projects slightly ahead of schedule on the associate level.
However, it believes that its FY18 onwards projections will be met, considering the group’s delivery of its next milestone – SPV3, the RM2.7 billion liquefied natural gas (LNG) regasification facilities – to be completed ahead of schedule.
“The current Pengerang Deepwater Terminal (PDT) Phase 1 and current construction of Phase 2 has led to the securing of new potential partners for Phase 3 – and to include the development of more petroleum and petrochemical storage terminals. PDT will furthermore provide more opportunities for the group to leverage on its core activities of engineering, construction, fabrication and plant maintenance services,” it said.
AmResearch, which has reiterated a “buy” call on Dialog with an unchanged fair value of RM2.24, is maintaining the group’s FY18 and FY19 earnings as FY17 normalised net profit of RM348 million (excluding lumpy gains of RM23 million mainly from an office-cum-warehouse sale in Singapore) came in within its expectations.
It said the Pengerang development undergirds Dialog’s long-term growth prospects as the group is currently securing new potential partners for Phase 3 and future phases, which will be part of an additional 800-acre zone comprising further reclaimable land and the adjoining buffer zone.
This caters to additional petrochemical, storage and support facilities which will be needed to support Petronas’ nearby Refinery and Petrochemical Integrated Development (Rapid) project.
Meanwhile, MIDF Research said Dialog’s share price for the past five months has been volatile on the upside, stoked by positive news flows from Pengerang and solid earnings. The research house is maintaining its “neutral” call with a higher target price of RM1.99.
Dialog shares were up 2 sen to close at RM1.95 yesterday on some 19.6 million shares done, giving it a market capitalisation of RM11 billion.