Journey to Wealth
Dialog Group - OUTPERFORM - 25 June 2012
News Dialog Group Bhd (Dialog) announced last Friday that its wholly-owned Dialog D&P Sdn Bhd had entered into a MoU with Halliburton Energy Services (M) Sdn Bhd to jointly cooperate to pursue projects and opportunities in the redevelopment of mature oil fields in Malaysia.
Comments This is a positive development as the strategic alliance with Halliburton will develop its upstream oil & gas capabilities.
There is no issue here as its previous strategic alliance with Roc Oil was for marginal oil fields while this tie-up is for mature oil fields.
With this announcement, we believe that the alliance is close to securing a mature oil field project.
Meanwhile, according to Roc Oil, Balai Margin Fields is expected to see its first oil flow in as early as Oct this year. In 2Q 2013, the JV partners will decide on whether to pursue a full field development, with added gas production plans.
Outlook It is too early to gauge the potential earnings impact from this alliance.
Nonetheless, the group's profit is expected to reach new record levels from 2HFY12 onwards as new sources of income kick-in, such as those from LT2 and EPCC jobs from LT3, Pengerang CTF and Balai Marginal Fields contracts.
Forecast No changes to our estimates.
Rating MAINTAIN OUTPERFORM
Valuation We are maintaining our price target of RM3.09/SOP share.
Risks Risk to our call is any potential delays in its inhouse EPCC jobs, which will negatively impact its future recurring incomes.
Source: Kenanga
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