Stock Focus Dialog future earnings to be spurred by Pengerang terminal, say analysts

by **Cals** Fri 14 Feb 2014, 12:40

Stock Focus Dialog future earnings to be spurred by Pengerang terminal, say analysts

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Friday, 14 February 2014 11:55

KUALA LUMPUR (Feb 14): Dialog Group Bhd’s earnings in the second half of its financial year will continue to be spurred by higher contributions from the Pengerang terminal in Johor, say analysts.

Yesterday, the company reported strong results for its second financial quarter to December 2013.

At 11.38 am today, Dialog rose 1 sen or 0.3% to RM3.27. The stock saw some 3.8 million shares exchange hands.

CIMB Research said the oil & gas service provider, through its involvement at the Pengerang terminal, is the biggest beneficiary of the oil & gas initiatives under the economic transformation programme (ETP).

Dialog is involved in the engineering, procurement, construction and commissioning (EPCC) activities in Phase 1 of the Pengerang’s tank terminal.

“Works are expected to commence soon at Phase 2, as land reclamation works have been completed,” said Norziana Mohd Inon, a research analyst at CIMB IB.

On Dialog’s 2Q results, Norziana said the continuing EPCC activities at Pengerang have supported its 40% growth in net profit and a new high for its 1H bottomline.

“It contributed to Dialog’s new net profit high in FY14.

“We estimate that around 85% of the EPCC works have been completed at Phase 1, which is expected to be operational in mid-CY14,” she said.

Norziana said she had upgraded target price (TP) for Dialog to RM3.62 from RM3.40 and is calling ‘add’ for the stock at current price of RM3.26.

She also raised her FY15 and FY16 earnings per share by 7%.

Meanwhile, MIDF Research said it had raised TP to RM3.41 from RM3.15, but maintained ‘neutral’ for Dialog.

The research house is also bullish on the prospects of Pengerang, which it currently reaps profits from EPCC works.

“We are maintaining our earnings estimates at this juncture,” said MIDF’s research analyst Aaron Tan Wei Min.

He said: “We reckon the recent price pullback presents short-term buying opportunities given the fundamentally sound nature of the company.”