Dialog to scale new net profit highs

Dialog to scale new net profit highs
Business & Markets 2013
Written by CIMB Research
Wednesday, 15 May 2013 10:14


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DIALOG GROUP BHD []
(May 14, RM2.76)
Maintain outperform at RM2.71 with a revised target price of RM3.39 (from RM2.97): A laggard before the general election, Dialog saw its share price jumping 14% and outperforming the KLCI by 9% over the past week.

We anticipate further interest in the stock as Dialog’s JV continues to find drilling success at the Balai cluster as reported by Upstream, an international oil and gas newspaper.

Our target price rises as we now value Dialog’s businesses at 21.8 times price-earnings ratio (PER) in our sum-of-parts calculation, a 40% premium over our 2014 calendar year (CY14) target market PER which has been revised from 13.5 times to 15.6 times.

Attractive prospects for marginal and mature fields as well as developments in Pengerang, Johor (where Petroliam Nasional Bhd [Petronas] is undertaking a refinery and petrochemical integrated development project [RAPID]) are the potential catalysts that support our “outperform” call and a 40% premium over our target market PER.

Upstream had reported that Kuala Lumpur-based BC Petroleum Sdn Bhd (BCP) has spudded Bentara-3 well as part of its pre-development drilling programme at the Balai marginal field cluster, off the coast of Sarawak. Bentara-3 is the fifth well out of six in the programme that started operations last year and covers the Balai, Bentara, West Acis and Spaoh fields.

BCP is a JV that operates the Balai cluster risk service contract (RSC) and consists of Australia’s Roc Oil (48%), Dialog (32%) and Petronas Carigali Sdn Bhd (20%). The RSC is Dialog’s first upstream venture.



We are thrilled at the pace of the pre-development works at Balai. At the rate BCP is going, the pre-development programme will be completed by end-June 2013 at the earliest.

BCP will then make a decision on whether to move forward with full-field development before submitting a field development plan to Petronas, which owns the Balai cluster.

Stay invested. Things can only get more exciting, with more ageing fields up for redevelopment and more marginal fields set for development. We expect Dialog to scale new net profit highs in its 2013 to 2015 financial years ending June, giving a three-year earnings per share compound annual growth rate of 15.8%. — CIMB Research, May 13


This article first appeared in The Edge Financial Daily, on May 15, 2013.[You must be registered and logged in to see this image.]