KUALA LUMPUR: Kenanga Research has maintained its Outperform call on Dialog with a target price of RM1.67 and reduced its CY15 PER valuation for the core businesses to 15 times in lieu of the weak sentiment of the oil and gas sector.
In a note on Monday, the research house said it has ascribed a premium of three times on sector average of 12 times, largely as Dialog typically trades at a premium due to its long-term business model.
It said that Dialog's Pengerang Phase 1A has achieved mechanical completion on March 31, 2014 and received the first oil shipment on April 12.
"The construction work for phase 1B has been completed and is now being commissioned for start-up. Phase 1C is due for mechanical completion by end-2014. Phase 2 was just given the “good-to-go” last week," it added.
It said that besides co-ownership of the tank terminal project, another Dialog subsidiary has entered into an Engineering, Procurement, Construction and Commissioning Contract and Alliance Agreement with PT-2 for the development of the Pengerang Terminal Phase 2 Project with a target EPCC cost of approximately RM5.5bil.
"We are positive on the news as Phase 2 of Pengerang has been long awaited; albeit the shareholding being lower-than-expected (initial thoughts were that it would be the similar 46%-
equity like Pengerang Phase 1)," it said.
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