Journey to Wealth
Dialog Group - To build LNG terminal in Pengerang
News During yesterday's ETP progress update, PM announced that a consortium comprising Dialog Group Bhd, the State Government of Johor and Royal Vopak will invest RM4.08b to develop the Pengerang LNG Terminal Project, which consists of LNG storage and a regassification terminal.
The terminal will be the first Independent LNG Trading Terminal in Asia and will help establish Malaysia as Asia's LNG trading hub.
Comments This came as a surprise to us as this project never surfaced before this. However, we are positive on the news as this should bring another new source of recurring income to Dialog.
With this new project, Dialog and its partners will bring a total investment of over RM9b to Pengerang, beside the RM5b Pengerang CTF.
The project is still at the planning stage and a final investment decision will be made by Jun 2013.
The LNG terminal consists of two phases from 2013-2016 and 2013-2018 with storage capacity of 360k m3 each.
The shareholding structure of this project will be the same as Pengerang CTF.
To recap, Dialog owns a 51% stake in Pengerang Terminal Sdn Bhd (the remaining 49% is owned by Vopak), which owns a 90% stake in the Pengerang CTF (the State Government of Johor owns the remaining 10%).
Outlook Dialog's profit is expected to reach new record levels from FY13 onwards as new sources of income kick in such as those from LT2 and from in-house EPCC jobs from Pengerang CTF and Balai Marginal Fields.
Forecast In view of the limited information (the company has yet to make official announcement to the Exchange) and the investment decision will only be made in Jun 2013, we are keeping our estimates unchanged for now Rating Maintain OUTPERFORM
Valuation Maintain our new SOP-driven price target of RM2.79/share.
Risks Potential delays in its in-house EPCC jobs, which will negatively impact its future recurring incomes.
Source: Kenanga
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