KUALA LUMPUR: Affin Hwang Capital Research has maintained its Hold call on Dialog Group
, with a higher target price of RM2.15 from RM2.10 previously, following its plan to increase its stake in the Langsat tank terminal project.
The oil and gas player had announced that it entered into a share purchase agreement with MISC to acquire its 45% interest in the jointly controlled Centralised Terminals Sdn Bhd (CTSB).
Post-acquisition, Dialog’s effective stake in the project would increase from 44% to 80%, resulting in a change of accounting recognition from associate level to consolidation under revenue line.
The research house tweaked its FY18-FY20 earnings marginally higher by 1% and 3% to reflect the changes.
“We view this deal positively as this is in line with Dialog business strategy to further expand its current capacity with the expansion of Pengerang Deepwater Terminal (PDT) Phase 1 and 3,” the research house said in a note on Tuesday.
According to the announcement, Dialog will also take over MISC’s outstanding loan to CTSB, which amounts to RM56mil.
The proposed acquisition is expected to be completed within one month.
The research house said it considered the valuation for the acquisition to be fair, which is at 17.7x FY17 PE, based on its forecast.
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