KUALA LUMPUR (May 20): Analysts maintained their positive outlook for Dialog Group Bhd, even though the group for the third quarter ended March 31, 2021 (3QFY21) reported a net profit drop of 9.85% to RM136.17 million from RM151.04 million a year ago.
Public Investment Bank Bhd maintained its “outperform” call with a revised target price (TP) of RM3.86 (previously RM4.05) per share, based on the group’s strong track record, defensive business model and steady recurring income generation from its tank terminal business.
“The group’s terminal business continues to run well with its joint-venture (JV) and associate contribution rebounding 123.9% quarter-on-quarter (q-o-q) to RM62.7 million.
“The previous quarter was dragged by a deferred tax charge for Pengerang Terminals (Two) amounting to approximately RM30 million to RM40 million.
“Tank terminal spots rates were up from S$5-S$5.50/cubic metre pre-Covid-19 levels to S$6.50-S$7/cubic metre currently,” said Public Investment Bank in a note today.
The research house estimated that moving forward, the terminal segment will continue to provide a stable income stream with the commencement of Terminal 5 in March 2021 for BP Singapore Pte Ltd.
Likewise, Kenanga Research also maintained its “outperform” call on the group, with a TP of RM3.50 (RM4.35 previously) per share, as it believes that the stock’s long-term outlook is still mostly intact and that its shares are a bargain buy at current levels.
“The resilience of its mid-stream terminal business may provide a defensive baseline to its earnings, with the long-term outlook mostly intact.
“Moving forward, Pengerang Phase 3A has already commenced operations going into 4QFY21, while the group is also targeting to expand its Langsat Terminal facility by another 85,000 cubic metres by mid-FY22. These expansion plans should provide the group with ample growth opportunities in the next one to two years,” analyst Steven Chan said in a note today.
Meanwhile, AmInvestment Bank Bhd maintained its “buy” call, with a lower fair value (FV) of RM4.15 (RM4.80 previously) per share. In a note today, the bank attributed this to an estimated group earnings recovery due to similar reasons put forward by Public Investment and Kenanga.
“With the commencement of Dialog Pengerang Phase 5’s 430 thousand cubic metre capacity for BP Singapore commencing March 2021 under Pengerang Phase 3, we expect the group’s core FY22 earnings trajectory to recover.
“Earnings growth will be subsequently supported by the completion of the Tanjung Langsat 3 terminal’s remaining 85 cubic metre capacity by the end of 2021, with another 100,000 cubic metres commencing 2021.
“Thereafter, Dialog still has ample acreage to double its Pengerang storage capacity, with a remaining 500-acre (202.34ha) zone comprising reclaimable land and the adjourning buffer zone,” said Aminvestment Bank analyst Alex Goh.
At 10.35am today, Dialog Group’s share price had slipped two sen or 0.69% to RM2.86 per share, with a market capitalisation of RM16.15 billion.
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