DIALOG SETS ASIDE RM1B FOR CAPEX

Company to allocate RM500m for downstream business, RM200m for upstream and RM150m for internal expenditure

DIALOG Group Bhd is setting aside RM1 billion in capital expenditure (capex) for its internal, upstream and downstream investments for its financial year 2019.

The group’s chief financial officer, Zainab Mohd Salleh, said the downstream business will dominate most of its capex next year at RM500 million.

“We will allocate RM150 million for internal capex and RM200 million for upstream business.

“We are exploring recurring income avenues from our investments in Phase 1, 2 and 3 in the Pengerang Integrated Petroleum Complex in Johor which we will mostly concentrate on next year.

“With Phase 1 and 2 commencing, we are now focused on Phase 3 and are securing partners ahead of the completion date,” she said after the company’s annual general meeting, here, yesterday.

Phase 1 comprises an independent terminal with an oil storage capacity of 1.3 million cubic metres (cu m) and a dedicated deepwater jetty facility which is being expanded by another 430,000 cu m.

Phase 2, which is a petroleum and petrochemicals terminal, with an estimated storage capacity of 1.3 million cu m, will be fully completed next year.

Dialog is undergoing reclamation work on the remaining 202.3ha for its Phase 3, with the potential of developing another refinery and petrochemicals complex.

Dialog’s corporate services director Chew Eng Kar said the company is in talks with several multinational firms to partner in Phase 3 of the Pengerang project.

“We are exploring opportunities in the Pengerang development as we have enough land and the possibility of moving into the oil and petrochemical industry.

“We have not made any firm decision. If we do go in, we will be holding a minority stake and are looking for new partners for our Phase 3 project.

“We are confident of growing our bottom line and storage facilities. We expect maintenance services to be a recurring income avenue,” he said.

In April this year, the group signed a memorandum of understanding with the Johor state government to develop Pengerang Deepwater Terminal Phase 3 for the construction of petroleum or petrochemical storage and a third jetty at an initial cost of RM2.5 billion.

Dialog will have an 80 per cent equity stake and the Johor state will hold a 20 per cent stake.

AmInvestment Bank expects subsequent investments by other joint-venture partners to reduce Dialog’s stake while boosting Phase 3’s total investment value, given that Phase 2 had reached RM7.8 billion in a reclaimed area, half the size of Phase 3.

The research firm said this will be part of a 202.34ha zone, comprising reclaimable land and the adjoining buffer zone.

Dialog will be expanding its dormant Tanjung Langsat Terminal 3 into a 300,000 cu m storage facility.

For its financial year ended June 30 this year, Dialog’s net profit rose 41.6 per cent to RM528.3 million from RM373.1 million in the previous year.

The group’s total assets stood at RM6.37 billion as at June 30 this year, representing an increase of RM548.5 million from RM5.82 billion last year.