MIDF Research upgrades Dialog, up tp price to RM3.50

KUALA LUMPUR, MIDF Research has upgraded Dialog Group Bhd to a buy with a higher target price of RM3.50 from RM3.24 previously, on better earnings prospect.

It has revised Dialog’s earnings forecast by 8.6 per cent and 8.3 per cent for the financial year 2019 and 2020 (FY19 & FY20), respectively, looking at the group’s better-than-expected earnings performance in the third quarter (Q3).

Dialog net profit grew 20.7 per cent to RM143.7 million in the Q3 ended March 31, 2019, while earnings expanded by 18.7 per cent year-on-year to RM145.2 million.

This brings its cumulative nine-month FY19 earnings to RM395.1 million, making up 89 per cent and 83.7 per cent of MIDF Research and consensus’ full-year earnings forecasts respectively.

Revenue, however, fell to RM636.6 million from RM867.37 million previously.

MIDF Research said it sees an improved earnings prospects primarily from cost savings and expansion of Dialog’s tankage business � including those of Dialog Terminal 1, Dialog Terminal Langsat 2 and Dialog Terminal Langsat 3.

“We opine that Dialog will be one of the key beneficiaries of the soon-to-be completed Pengerang integrated Complex (PIC), which is scheduled to commence operations in 2020.

“This is due to its exposure to the Pengerang Deepwater Terminals (PDT) tank terminals, Pengerang LNG 2 (PNLG2) and its expertise in engineering, procurement, construction and commissioning (EPCC) as well as maintenance services,” it added.

PIC is now 97 per cent completed.

MIDF Research also foresee that Dialog will be one of the front runners to secure more maintenance plant contracts once the PIC commences as Petronas is expected to award contracts of up to RM5 billion in the coming one to two years.

At 10.45 am today, it shares rose 23 sen to RM3.30 with 10.34 million shares changed hands.

Source: BERNAMA (News Agency)