PETALING JAYA: Dialog Group Bhd
is set for another strong year in the financial year ending June 30, 2027 (FY27) with the start-up of the Cendramas and Baram Junior clusters expected to lift upstream earnings, while new midstream capacity should further strengthen its recurring income base.
Hong Leong Investment Bank (HLIB) Research said the two upstream assets, which are expected to commence operations in the second quarter of FY27 (2Q27), should help offset the impact of lower realised oil prices and natural production declines from existing fields.
In 4Q26, Dialog posted a record quarterly core net profit of RM196.2mil, up 33.4% quarter-on-quarter and 42.1% year-on-year (y-o-y), lifting FY26 core earnings 46% to RM617.6mil.
Earnings before interest, taxes, depreciation and amortisation (Ebitda) surged 89% y-o-y.
HLIB Research said the strong performance was driven by both Malaysian and international operations.
It was further supported by higher upstream earnings on stronger US-Iran-led Brent prices, increased contributions from ongoing downstream engineering, procurement, construction and commissioning (EPCC) projects, and higher specialist products and services sales internationally.
It noted that Ebitda margins also improved significantly, aided by the absence of EPCC losses and impairments that weighed on the previous year’s performance.
“We gather that Dialog’s FY26 profit-after-tax earnings mix was broadly 25% upstream, 50% midstream and 25% downstream.
“Moving into FY27, the commencement of Cendramas and Baram Junior Cluster (both commencing from 2Q27) is expected to shift the upstream earnings mix higher to 30% to 40%, while midstream remains the key recurring earnings anchor contributing 50%, and downstream at about 10% to 20%,” HLIB Research said in a report.
It expects the group’s planned maintenance activities at its Malaysian upstream operations to extend into 1Q27.
However, HLIB Research said the maintenance is part of the group’s annual cycle and is expected to be temporary, with production and revenue from the Malaysian upstream assets expected to normalise once the work is completed.
As for the midstream segment, that will remain as the anchor for stable recurring cash flow, according to the research house.
HLIB Research has a “buy” call on Dialog with an unchanged sum-of-the-parts-derived target price of RM2.52.
Shares of Dialog were trading at RM2.01 at the time of writing.
