PETALING JAYA: Dialog Group Bhd
’s long-term outlook remains largely intact, with its mid-stream assets to provide a degree of earnings defensiveness and resiliency amidst the short-term challenges the company faces.
Further development of its Pengerang Phase 3 asset is expected to serve as a potential re-rating catalyst for the stock, according to Kenanga Research.
That aside, Dialog has entered into a production-sharing contract with Petroliam Nasional Bhd or PETRONAS and Petroleum Sarawak Bhd, whereby Dialog will take on a 70% participating interest and operatorship of the Baram Junior Cluster Small Field Asset (BJCC) development.
RHB Research said BJCC was one of the six discovered resource opportunities featured in the Malaysia Bid Round 2022 that was launched early last year.
It said Dialog’s upstream division could account for one-third of total earnings from about 20% previously with the inclusion of the Pan Orient Energy Corp acquisition and uptick in Bayan oilfield services contract contribution.
RHB Research has maintained its earnings estimates and target price of RM2.98 a share for Dialog, but cited that downside risks include weaker-than-expected tank terminal rates and slower-than-expected expansion of Pengerang Phase 3.
Kenanga Research made no changes to Dialog’s financial years 2023-24 numbers, as earnings impact (if any, should the BJCC asset qualify the feasibility and commerciality assessment) will only kick in once the asset reaches its production stage four years later.
It maintains its “outperform’’ call on Dialog with a target price (TP) of RM3.10 a share.
MIDF Research has also maintained its “buy’’ call on the counter with a TP of RM3.70 per share on expectations that Dialog’s venture into the upstream segment will add more value to its revenue stream.
“Given that we are expecting stable but elevated crude oil prices for years to come, engaging in the upstream business is a positive way to diversify within the volatile energy market in the long run,” the research house noted in a report on Dialog yesterday.
