PublicInvest Research

Author: PublicInvest   |   Latest post: Wed, 1 Apr 2020, 9:06 AM


Dialog Group - Right on Track

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Dialog’s 2QFY20 core earnings of RM153.2m (+11.2% QoQ, +10.7% YoY) were within expectations, accounting for 47.1% and 49.2% of our and consensus estimates. Excluding a fair-value gain of RM28.5m which was reported in 1QFY20 for acquiring an additional 25% stake in Halliburton Bayan Petroleum (HBP) and other exceptional items amounting to RM3.2m, Dialog’s 1HFY20 core net profit jumped by 15.2% YTD to RM290.9m despite a slight decline in revenue by 3.3% YTD to RM1.25bn. Overall, 1HFY20 performance was mainly supported by higher contribution from JV profits (+60.1% YTD) with the commissioning of the second phase of PDT2. Dialog’s FY20 earnings are on track with our projections, with further contributions expected from PDT2, Langsat 3, and progressive commissioning at phase 1E. Our FY20-22F earnings estimates are maintained, and Outperform call also affirmed with an unchanged sum-of parts TP of RM4.10. We continue to like Dialog for its strong track record, defensive business model and steady recurring income generation from its tank terminal business.

  • 2QFY20 results highlight. Dialog reported lower revenue of 5.2% QoQ to RM612.3m in 2QFY20. It was mainly due to slower activities on the local front, dropping by 12.2% QoQ possibly due to plant maintenance services. Nonetheless, it was partially offset by a full quarter contribution from the additional 25% stake in HBP which was acquired in Aug-19. Further contribution will be seen from 3QFY20 onwards as the Group added a further 20% stake in HBP in Dec-2019, pushing its shareholding to 95% currently. Overseas operations saw stronger performances, contributed by higher engineering, construction, fabrication and plant services activities and increased specialist products and services sales.
  • Better numbers ahead. While 2QFY20 profit contributions from its JVs were relatively flat sequentially at RM57.1m (1QFY20: RM57.8m), we expect this to improve in 2HFY20 with more contributions from PDT2 and Langsat 3 which has commenced full operations for its 120,000 m3 storage facility in Jan-20, as well as progressive commissioning at phase 1E towards full capacity of 430,000 cbm.
  • All running well at PDT Phase 3. Reclamation works on the 300-acre plot was completed on schedule (end-2019). Meanwhile, construction of a storage terminal, common tankage facilities including shared infrastructure and deep-water marine facilities (Jetty 3) are progressing well, on track for completion by mid-2021 to cater for BP Singapore at Pengerang Terminal 5, providing storage tanks with capacity of 430,000 m3 for clean petroleum products and storage services.

Source: PublicInvest Research - 14 Feb 2020

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