PETALING JAYA: Dialog Group Bhd
’s upstream earnings are expected to receive a boost from the Cendramas and Baram Junior Cluster projects in financial year 2027 (FY27); while ongoing engineering, procurement, construction and commissioning (EPCC) projects provide visibility for its downstream operations.
Hong Leong Investment Bank (HLIB) Research said both upstream assets are expected to commence production in the second quarter of FY27 (2Q27), increasing the segment’s contribution to group earnings.
“Looking into FY27, contributions from Cendramas and the Baram Junior Cluster, both expected to commence in 2Q27, should lift upstream’s earnings share to 30% to 40%, while midstream remains the key recurring earnings anchor at a circa 50%, with downstream contributing the remaining 10% to 20%,” it said.
The research house noted that upstream operations accounted for 25% of Dialog’s profit after tax in FY26, with midstream and downstream contributing 50% and 25%, respectively.
“Despite our expectation of softer Brent prices in FY27, we believe incremental production from these two assets should help cushion the impact of lower realised oil prices and natural production decline at existing fields, supporting overall upstream earnings resilience,” it noted.
Meanwhile, HLIB Research said several EPCC projects would support downstream earnings, including the 150,000 cb m Dialog Terminals Langsat 3 renewable fuel storage expansion and two developments at Pengerang.
“These projects should sustain downstream EPCC activities and provide earnings visibility over the construction period,” it said.
The research house also remained positive on Dialog’s midstream operations following a recent site visit to Pengerang Deepwater Terminals (PDT) in Johor.
“Dialog’s midstream segment remained resilient, with tank utilisation sustained above 90% and average independent storage rates holding steady at S$6 to S$6.5 /cb m/month,” it said.
It noted that incoming vessel traffic at PDT had increased more than fourfold from 532 vessels in FY19 to 2,159 vessels in FY25.
“We believe PDT’s strategic importance as a regional petroleum storage and logistics hub has increased following the US–Iran war, as disruptions to traditional shipping routes and heightened energy security concerns drive greater demand for alternative storage, cargo redistribution and marine logistics services outside the Hormuz.”
HLIB Research said the 614,000 cubic m Pengerang Terminals Five expansion remained on track for completion by mid-2028.
“Collectively, these projects should further strengthen Dialog’s recurring midstream earnings base over FY27 to FY28, supported by additional storage capacity and long-term contracted demand.”
The research house maintained its “buy” recommendation with an unchanged target price of RM2.49, citing Dialog’s diversified business model and approximately 660 acres of land available for future expansion at Pengerang.
