DIALOG (7277) : Dialog Group - Coming up(stream) roses
Target RM1.83 (Stock Rating: ADD)
Upstream contributions from the PSC for three fields and Pengerang’s Phase 1C EPCC works were behind Dialog’s 5% growth in 1Q15 net profit, which broadly met expectations at 13% of our FY15 forecast and 17% of consensus estimates. We expect a stronger 2H on the operations of Phases 1A and 1B, and more upstream contributions as Dialog aims for another record year in FY15. Our target price drops marginally as we update our SOP calculation. We continue to value the stock at 21.2x CY16 P/E, a 30% premium over our target market P/E of 16.3x. Pengerang’s attractive outlook, which includes RAPID, is the potential re-rating catalyst that supports our Add call.
1Q net profit up 5% yoy
Maiden contributions from the production-sharing contract (PSC) for the D35, D21 and J4 fields and engineering, procurement, construction and commissioning (EPCC) activities at Phase 1C at the Pengerang tank terminal contributed to the 5% yoy growth in Dialog’s 1Q15 net profit. EBITDA margin advanced to 13%, the highest since 1Q12, thanks to the PSC’s upstream contributions. The absence of an interim dividend was expected. EPCC works at Phase 1C (crude oil) are expected to be completed next month, while Phase 1B (petroleum products) is being commissioned for start-up. Phase 1A, which achieved mechanical completion on 31 Mar 2014, has received more than 50 shipments since the first crude oil shipment on 12 Apr 2014.
Phase 2 steps on the gas
While Phase 1 caters for crude oil and petroleum products, Phase 2 is being prepared for the construction of liquefied natural gas (LNG) regasification facilities in a partnership comprising Petronas Gas (65%), Dialog (25%) and the Johor state government (10%) (see our note dated 14 Nov). Phase 2 is slated to be operational by Oct 2017. In addition to its own developments in Pengerang, Dialog is eyeing EPCC opportunities at Petronas's US$27bn refinery and petrochemical integrated development (RAPID) next door.
The only way to go is up(stream)
We expect more contributions from the D35, D21 and J4 fields to flow. Meanwhile, development works are ongoing at the Bentara field in the Balai marginal field cluster, while production enhancement and re-development activities continue at the Bayan enhanced oil recovery project.
Source: CIMB Daybreak - 19 November 2014
Target RM1.83 (Stock Rating: ADD)
Upstream contributions from the PSC for three fields and Pengerang’s Phase 1C EPCC works were behind Dialog’s 5% growth in 1Q15 net profit, which broadly met expectations at 13% of our FY15 forecast and 17% of consensus estimates. We expect a stronger 2H on the operations of Phases 1A and 1B, and more upstream contributions as Dialog aims for another record year in FY15. Our target price drops marginally as we update our SOP calculation. We continue to value the stock at 21.2x CY16 P/E, a 30% premium over our target market P/E of 16.3x. Pengerang’s attractive outlook, which includes RAPID, is the potential re-rating catalyst that supports our Add call.
1Q net profit up 5% yoy
Maiden contributions from the production-sharing contract (PSC) for the D35, D21 and J4 fields and engineering, procurement, construction and commissioning (EPCC) activities at Phase 1C at the Pengerang tank terminal contributed to the 5% yoy growth in Dialog’s 1Q15 net profit. EBITDA margin advanced to 13%, the highest since 1Q12, thanks to the PSC’s upstream contributions. The absence of an interim dividend was expected. EPCC works at Phase 1C (crude oil) are expected to be completed next month, while Phase 1B (petroleum products) is being commissioned for start-up. Phase 1A, which achieved mechanical completion on 31 Mar 2014, has received more than 50 shipments since the first crude oil shipment on 12 Apr 2014.
Phase 2 steps on the gas
While Phase 1 caters for crude oil and petroleum products, Phase 2 is being prepared for the construction of liquefied natural gas (LNG) regasification facilities in a partnership comprising Petronas Gas (65%), Dialog (25%) and the Johor state government (10%) (see our note dated 14 Nov). Phase 2 is slated to be operational by Oct 2017. In addition to its own developments in Pengerang, Dialog is eyeing EPCC opportunities at Petronas's US$27bn refinery and petrochemical integrated development (RAPID) next door.
The only way to go is up(stream)
We expect more contributions from the D35, D21 and J4 fields to flow. Meanwhile, development works are ongoing at the Bentara field in the Balai marginal field cluster, while production enhancement and re-development activities continue at the Bayan enhanced oil recovery project.
Source: CIMB Daybreak - 19 November 2014
