DLG’s  MYR193.3m  FY13  net  profit  met  our/consensus  full-year estimates,  at  100.7%/100.0%  of  the  respective  forecasts.  Business prospects continue to support growth, as evidenced by its 36.9%  y-o-y revenue growth. We continue to like the stock’s defensive qualities and solid  business  model.  Maintain  BUY,  with  a  revised  FV  of  MYR3.18 (from MYR3.16), based on our SOP valuation.

- In line. DLG’s MYR193.3m FY13 net profit (+11.7% q-o-q; +9.2% y-o-y) was  in  line  with  our  and  consensus  estimates,  accounting  for  100.7% and 100.0% of the respective full-year forecasts. Its revenue grew 6.9% q-o-q  and  36.9%  y-o-y,  mainly  attributed  to  increasing  engineering, procurement,  construction  and  commissioning  (EPCC)  activities  at  the Pengerang  Deepwater  Terminal  in  Johor  as  well  as  from  DLG’s international businesses.  

- 2.2 sen final dividend. DLG declared a final single-tier cash dividend of 2.2  sen  per  share,  bringing  the  total  dividends  paid  in  FY13  to  3.3  sen per  share.  This  translates  into  total  dividend  yield  of  1.2%  in  FY13, based on its last closing price of MYR2.68.

- Upstream  venture  intact.  Recall  that  DLG  currently  has  two  upstream ventures  on  its  plate:  i)  the  Balai  risk-sharing  contract  (RSC) development,  and  ii)  an  enhanced  oil  recovery  (EOR)  tie-up  with Halliburton. We note that the group has successfully drilled five wells and is  currently  planning  its  development  work  programme,  which  will contribute  positively  to  its  FY15F  earnings.  While  there  is  not  much clarity  on  its  EOR  project  currently,  we  are  positive  on  its  first-mover advantage, as we believe Petronas will likely dish out more EOR projects moving forward.

- Maintain  BUY.  We  reiterate  our  BUY  call  on  the  stock,  with  a  higher MYR3.18  FV  (from  MYR3.16),  incorporating  DLG’s  latest  net  debt numbers into our  SOP  valuation  (see  Figure 2). We see  more  room  for upgrades, as our FV does not include: i) the impact of its involvement in the  Balai  RSC,  ii)  the  full  potential  earnings  from  the  Pengerang centralised  tank  farm  (CTF)  project  (Phase  2  onwards),  and  iii)  further expansion of Tanjung Langsat (Phase 3 and beyond), which is currently on hold.

Source: RHB