Stable outcome for Dialog in 2QFy24
KUCHING: Dialog Group Bhd’s net profit increased to RM148.29 million in the second quarter ended December 31, 2023 (2QFY24), from RM127.15 million in the previous corresponding quarter due to higher production from its upstream activities.
Revenue rose by 7.8 per cent to RM859.21 million during the quarter under review from RM797.01 million previously.
In a filing to Bursa Malaysia, the group said its midstream activities continued to contribute a stable revenue stream from the operation of Dialog Terminals Langsat and Dialog Terminals Pengerang.
“The profit contribution from these activities for the current quarter has improved against the corresponding quarter last year due to increased occupancy rate,” it said.
On the international front, Dialog reported higher revenue and profit after tax from increased activities at the Jubail Supply Base, Saudi Arabia.
“The engineering, construction, fabrication and plant maintenance activities in Singapore, Australia and New Zealand, and sales of specialist products and services in various countries also contributed positively to the group’s better performance in the current financial quarter due to the improved business environment,” it said.
The team with MIDF Amanah Investment Bank Bhd (MIDF Research) expect to see challenges ahead for Dialog, causing friction in performance forecast.
“Being an integrated oil and gas company with diversification on every division within the sector, including sustainable and green energy, Dialog is at an advantage among its energy services peers,” it said in its analysis yesterday.
“However, the vulnerable exposure towards oil price volatility, geopolitical risks, inflationary pressures on materials and manpower, and the ever-evolving consumer demand for crude products, petrochemicals and green fuel, puts the group at an uncertainty risk in 2024.
“Nonetheless, we opine that, with Dialog’s further plans to expand its storage farm and improving its EPCC operations, the risks could possibly be mitigated and lessened.”
Meanwhile, Kenanga Investment Bank Bhd (Kenanga Research) saw that Dialog’s earnings are on an upward trajectory, buoyed by improved occupancy rates at its Langsat terminals and enhanced performance in the upstream segment, notably in production.
“The company has also seen an easing of cost pressures, with operating expenses growing by a manageable four per cent in 1HFY24.
Furthermore, the completion of legacy EPCC contracts, which had previously suffered from unfavourable cost bases, marks a significant step towards stabilising its financial outlook.
It continued to like Dialog for its resilient earnings from its non-cyclical businesses such as operation of storage facilities and plant maintenance; its earnings growth and diversification driven by the forays into upstream investments; and its strong track record in project execution.