Dialog's 1QFY13 earnings came in within both our and consensus' expectations.  While  earnings were weaker  sequentially,  both  revenue  and  net  profit  grew  y-o-y  by 17.4% and 5.0% respectively. We continue to like Dialog as it is one of the most defensive  oil  and  gas  stocks with  a steady  business  model.  We  thereby  reiterate  our BUY recommendation with an unchanged fair value (FV) of RM3.45.

Within  expectations.  Dialog's 1QFY13 earnings came in within our and consensus'  expectations,  accounting  for  21.2%  of  our  and  21.8%  of  consensus'  full-year  forecast  respectively. Overall, the 1QFY13 net profit of RM46.8m was marginally lower q-o-q, by  5.7%,  but  5.5%  higher  y-o-y.  Revenue  dipped  16.6%  q-o-q  due  to  lower  contribution  from  its  plant  maintenance  activities  in  Malaysia  and  Singapore.  On  a  y-o-y  basis,  revenue  grew  17.4%,  underpinned  by  increased  sales  from  its  specialist  products  and  services  to  overseas  customers  as  well  as  its  Engineering,  Procurement,  Construction  and Commissioning (EPCC) works at  the Pengerang Independent Deepwater Terminal  project in Malaysia.

Catalysts for 2013. The company's potential catalysts next year may be in the form of  new customers, a higher take-up rate for Phase 2 of its Pengerang deepwater terminal  and  the  possibility  of  other  new  upstream  ventures  as  there  are  more mature  fields up
for  redevelopment  and more marginal  fields set  for  development.  Although  most  of the  catalysts mentioned here may not contribute to the company's FY13 earnings, they can  potentially contribute to revenue generated in the next three to five years.

Maintain BUY. We continue to like Dialog's prospects and its strategy of expanding its  sustainable  and  recurring  income  to  reinforce  its  position  as  a  leading  integrated  technical  services  provider.  We  are  thereby  reiterating  our  BUY  recommendation  on  Dialog,  with  an  unchanged  FV  of  RM3.45  based  on  our  sum-of-parts  valuation  pegged  to  FYE14  earnings.  Dialog  remains  our favourite stock in OSK's oil and gas universe,  alongside  SapuraKencana  Petroleum  (BUY,  FV:  RM3.00)  and  Dayang  (BUY,  FV:  RM2.90).

Source: OSK