Analysts favour Dialog for positive tank terminal business growth
KUALA LUMPUR: Dialog Group Bhd’s (Dialog) first six months of 2018 (6M18) core net profit has met expectations and analysts continue to favour the stock for its increasing recurring income from its tank terminal business.
In a filing on Bursa Malaysia, Dialog reported that the group’s year to date revenue and net profit after tax for the current financial year ended December 31, 2017 were RM1.64 billion and RM284.4 million, higher by 8.3 per cent and 63.1 per cent, respectively against same period last year.
At 51 per cent and 50 per cent of the research arm of Kenanga Investment Bank Bhd’s (Kenanga Research) and consensus estimates, 6M18 core net profit of RM205.1 million came within expectations.
No dividend was declared as expected by Kenanga Research.
According to Kenanga Research, with the successful delivery of Phase 1 and good progress for Phase 2, Dialog is already in the midst of securing new potential partners for Phase 3 to build more petroleum and petrochemical storage terminals.
“With the remaining unutilised 200 to 300 acres of land, Dialog could construct storage terminals of up to five million cubic metres within the next five to 10 years in different phases. It would be a mixture of dedicated and independent storage terminals and the percentage of equity stake has yet to be firmed up at this juncture,” the research arm said.
The research arm also did not discount the possibility of Dialog building and owning 100 per cent of a portion of the additional capacity if the group’s financials are in a comfortable position.
“Note that we have yet to account for the 500-acre buffer industrial land surrounding Pengerang Phase 1-3.”
Kenanga Research continued to favour Dialog for the stock’s increasing recurring income from its tank terminal business following its acquisition of 45 per cent stake in Centralised Terminals Sdn Bhd (Langsat 1 and 2) from MISC Bhd and expansion with Langsat 3.
As such, it was still an ‘outperform’ call from Kenanga Research with formalisation of Phase 3 being the major re-rating catalyst to Dialog.