KUALA LUMPUR: AmInvestment Research has maintained its Buy recommendation on Dialog Group
with a higher sum-of-parts fair value of RM2.45 a share.
The valuation implies a CY18F price-earnings of 35x, 24% below its five-year average.
This is based on assumptions that there will be an additional one million cubic metres of storage for Dialog's 45.9% stake in the Pengerang Deepwater Terminal (PDT); Phase 3, which Dialog is in the process of negotiating with off-takers, will have the same storage capacity and equity stakes as Phase 2's 2.1 million cubic metres; and that valuation of Pengerang land is raised from RM30psf to RM50psf for Dialog's 65% stake in the larger 650-acre industrial and buffer zone.
"We have also raised Dialog’s FY18F-FY20F earnings by 5%-8%,incorporating higher contributions from Pengerang Phase 1 and an increase of RM100mil for the group’s FY18F-FY20F engineering, procurement and construction order book assumption," said the research firm.
It notes that the progress of PDT Phase 2 is on track as the Rapid complex remains on schedule with progressive completion in 2018-2019. The RM2.7bil regasification plans and storage plants, in which dialog has a 25% equity stake, are scheduled for progressive completion from Q4 2017 to Q2 2018.
"The overall Pengerang development undergirds Dialog’s long-term growth prospects as the group is currently securing new potential partners for Phase 3 and future phases, which will be
part of an additional 890-acre zone comprising further reclaimable land and the adjoining buffer zone.
"This caters to additional petrochemical, storage and support facilities which will be needed to support Petronas’ nearby RAPID project. Currently, 440 acres, which account for 65% of the reclaimable land area of 680 acres, has been developed."
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