KUALA LUMPUR: Maybank Investment Research maintained its buy call on Dialog Group Bhd
and lifted its sum-of-parts-based target price to RM3.50, after incorporating the company's larger 46% effective stake at Phase 3 of the Pengerang Deepwater Terminals.
It said the launch of Phase 3 denotes Dialog's intent to develop a storage/ trading hub in Asia and position its Pengerang project as an ideal storage hub for strategic petroleum reserves among OECD countries.
"Dialog has signed a MOU with the State Secretary, Johor (Inc), or SSI to build, own & operate (BOO) the Pengerang Phase 3 facilities on an 80:20 equity sharing basis.
"The initial MYR2.5b investment for Phase 3 is largely for the reclamation of 300 acres of land and construction of a jetty.
"Consequently, the EPCC works for the reclamation, soil improvement and shore protection works for Phase 3, worth about MYR300m has been awarded to Penta-Ocean. Phase 3 will take 22 months to construct," Maybank IB noted in its report.
The research firm added that it is positive on the development with the Phase 3 facilities further boosting development post-RAPID at Pengerang.
It said it will be a catalyst to attracting new refinery/petrochemical investments in Pengerang and turn it into Asia's storage and trading hub akin to Rotterdam.
Maybank IB Research added that Phase 3 is targeted for mid-to-long-term independent/dedicated customers with 7-15 years contract tenures and handling higher value-added products such as petrochemicals.
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