KUALA LUMPUR: Dialog Group Bhd's share price fell early Friday on investor concerns over a notice of arbitration filed by Tanjung Langsat Port Sdn Bhd (TLP) over the oil terminal project in Johor.
At 9.21am, Dialog was down 10 sen to RM3.59. There were 1.93 million shares traded.
The FBM KLCI fell 8.56 points to 1,850.96. Turnover was 239.90 million shares valued at RM128.26mil. There were 86 gainers, 340 losers and 185 counters unchanged.
On Thursday, Dialog said its unit Dialog E&C Sdn Bhd had received a notice of arbitration TLP for arbitral proceedings under the engineering, procurement, construction and commissioning (EPCC) contract dated Oct 18, 2006 and a settlement agreement dated May 13, 2011.
TLP and Dialog E&C entered into the EPCC contract for a 100,000 cubic metres oil terminal project. The EPCC contract price was RM89.5mil.
TLP alleged it has suffered losses and damages caused by a fire an part of the plant y which occurred on Aug 17, 2008, after completion of the project and handover of the Facility by Dialog E&C as the EPCC contractor.
RHB Research is maintaining a Buy recommendation on Dialog with an unchanged sum-of-parts (SOP) based fair value of RM3.71.
The research house said the potential claim of RM546.6mil to RM561.2mil makes up about 37.5%-38.6% of Dialog's equity as at Dec 2013. It also was at a net debt position of RM397.9mil.
"At this juncture, we are unable to determine the likelihood and actual quantum of the claim. We believe, however, this might be a long-drawn-out case and that the potential liability may eventually be smaller than the headline amount.
"According to its statement, management believes that this will not affect Dialog's FY14 operational and financial position. We are maintaining our Buy recommendation at the moment - pending more details - with an unchanged: i) SOP-based RM3.71 fair value, and ii) FY14/15 earnings estimates," it said.