PETALING JAYA: Analysts view Dialog Group Bhd
as a relatively defensive proxy within the oil and gas (O&G) sector due to its recurring tank terminal income and strategic exposure to regional energy infrastructure growth amid prolonged Middle East tensions.
In a note, CGS International (CGSI) Research said it expects the O&G support services player to post an even stronger fourth quarter of 2026 (4Q26), underpinned by higher crude oil prices and increased plant maintenance activities.
“We expect Dialog to deliver stronger profits for 4Q26 because average Dated Brent crude prices rose to US$115 per barrel between April 1 and May 13, 2026 (US$111 per barrel as at May 13), which is 42% higher than the 3Q26 average of US$81 per barrel,” it said.
CGSI Research has maintained an “add” call and a target price of RM2.46, driven by the near-term catalyst of stronger earnings alongside long-term tank terminal and upstream growth.
Dialog’s 3Q26 core net profit rose 8% quarter-on-quarter to RM143.1mil, supported by a 1.7% rise in pretax profit and lower effective tax rates.
Revenue for the quarter climbed 20.4% year-on-year (y-o-y) to RM696.9mil, while nine-month core earnings surged 47.6% y-o-y to RM410.6mil, largely due to the absence of major foreign exchange and engineering, procurement, construction and commissioning-related losses recorded a year earlier.
CGSI Research noted that while Dialog benefited from higher realised oil prices following the escalation of the Iran conflict, maintenance activities at its oilfields limited the upside from stronger crude prices during the quarter.
It said Dialog is currently executing a major plant turnaround at Petronas Chemicals Group Bhd’s facilities in Kertih, which should further lift earnings in the current quarter.
“In the longer term, we expect Dialog’s tank terminal division to grow faster due to rising interest from oil traders and independent tank terminal storage providers to diversify away from exposure to the Middle East in favour of geopolitically-stable South-East Asia,” the research house said.
CGSI Research said Dialog’s continued access to base oil supplies from Bintulu has enabled it to secure incremental demand from offshore drillers amid shortages caused by the Iran conflict.
Hong Leong Investment Bank (HLIB) Research also maintained its “buy” recommendation with a higher target price of RM2.52, citing Dialog’s diversified earnings base and strong exposure to future tank terminal expansion in Pengerang.
HLIB Research said Dialog’s tank utilisation rates remained above 90%, supported by stable tanker storage rates, while increasing global interest in diversifying petroleum storage away from the Middle East could further elevate Pengerang’s strategic value.
The research house highlighted that Dialog has about 660 acres of available buffer land for future expansion.
It added that New Zealand is exploring fuel storage options in Malaysia and Singapore following disruptions linked to the Iran war, potentially strengthening Pengerang’s role as a regional storage and logistics hub.
CGSI Research pointed to several medium-term growth drivers, including Dialog’s planned 25% stake acquisition in the Cendramas production sharing contract from September 2026, which is expected to contribute to its earnings immediately.
The group also continues to expand its renewable fuel storage infrastructure at Langsat and Pengerang.
An analyst told StarBiz that he remains optimistic on Dialog’s prospects for the rest of FY26, noting that its successful pivoting towards renewable energy storage amid the volatile oil market will contribute positively to the group.
