Upbeat on Dialog’s next step for PDT Phase 3A, Langsat 3
KUCHING: Dialog Group Bhd’s (Dialog) commencement of PDT Phase 3A and expansion of Langsat 3 garnered positive views from analysts thanks to the potential growth in recurring income from these projects.
In a report, the research team at Hong Leong Investment Bank Bhd (HLIB Research) said: “Its recurring income is expected to improve with the commencement of PDT Phase 3A and Langsat 3 despite impending revenue declines due to the declines in EPCC revenue from the completion of the aforementioned projects.”
It also pointed out that Dialog has already seen a pick-up in activities from its customers as its RAPID terminals are ready to be operational.
“For PT2SB, the cmpany is looking to add more tanks to the facilities at the request of customer. Dialog is also working and talking to various parties for the expansion of Phase 3A as the common infrastructure dedicated to Phase 3A is ready along with its Jetty 3.
“Dialog will also continue to expand Langsat 3 if there are request for offtakes from customers,” it said.
Nevertheless, it expected delays with regards to the timeline of expansion right now due to the movement control order imposed in Malaysia.
Aside from that, HLIB Research noted that Dialog is working towards participation of clean energy in New Zealand as the country is at the forefront of working towards carbon neutrality and the country is no longer giving offshore permits for O&G.
“It sees wind energy as a potential avenue as New Zealand is geographically strategic for the production of wind energy. It is also looking at other countries to expand its green energy footprint. Dialog would also explore opportunities to become an asset owner for renewables, following transfer its tank added.
As for the impact of Covid19 on the group’s performance, HLIB Research said Dialog has been affected by the lockdown measures imposed despite being classified as an essential service its build operate and (BOT) projects like terminal business,” it as supply has been disrupted due to the travel restrictions.
“Dialog is currently operating at about 60 per cent capacity to ensure all the necessary SOPs are in place. Having said that, Dialog believes that it is still on track for the completion of most of its projects.
“There has also been two rounds of salary cuts for senior management and one round of salary cut for mid-level management since the Covid-19 pandemic begun, no salary cut was imposed for junior/lower level employees.
“Its offices are also currently at less than 20 per cent capacity and it is currently in discussions with its customers to share some of these unforeseen costs,” it said.
Its recurring income is expected to improve with the commencement of PDT Phase 3A and Langsat 3 despite impending revenue declines due to the declines in EPCC revenue from the completion of the aforementioned projects.
HLIB Research