DIALOG–Fundamental Analysis (6 Mar 2016)

Fundamental Analysis as of FY15 – http://www.slideshare.net/lcchong76/dialog-fundamental-analysis-fy15

Excel – http://1drv.ms/1RuSXH4

Latest Financial – Q1 2016 Financial Report (16 Feb 2016) http://www.bursamalaysia.com/market/listed-companies/company-announcements/5000589

FY16 Q2 Results Highlight:

  • Dialog’s 2QFY16 earnings declined marginally by -2.2%yoy to RM78m, but grew on a sequential quarterly basis by +29.9%qoq. The sustainably strong earnings were largely contributed by the Malaysian operations which contributed approximately 73% of total earnings.
  • Earnings from the Malaysian operations which contributed approximately 73% of total earnings were higher due to higher work levels from the engineering and construction activities from its ongoing projects. These ongoing projects are Pengerang Deepwater Terminal Phase 2, MLNG Train 9, Toyo bullet tanks and SAMUR piping works.
  • The company’s international segment also recorded better year-on-year performance. The company noted that this was mainly attributable to higher fabrication activities in New Zealand, logistic services from Jubail Supply Base and sales of specialist products and services which are mainly denominated in USD.
  • Contribution from the tank farm business maintained its profitability for the second consecutive quarter at RM15m. This was largely attributable to terminal operations in Kertih, Tanjung Langsat and Pengerang. In addition, the Pengerang Independent Terminal has been fully leased.

Valuation:

DIALOOG-FY16-Q2-Football-Field

  • In my opinion, fair value of DIALOG range from 1.9 to 2.1. Uncertainty risk of fair value is MEDIUM.

Going Forward:

  • On prospects, Dialog said the drop in oil prices will lower the overall costs of processing, manufacturing and production of a wide range of petroleum and petrochemical products. This would have a positive impact on the midstream and downstream sectors of the oil and gas industry.
  • Phase 1 of the Pengerang Deepwater Terminal is in full operation with 1.3 million cu m fully leased out.
  • Phase 2 will have 2.1 million cu m of storage capacity, with a total investment cost of RM6.3 billion and is scheduled to be completed progressively in 2018 and 2019.
  • The Group had also embarked on the joint venture with PETRONAS Gas Berhad for the development of Liquefied Natural Gas (“LNG”) regasification facilities comprising a regasification unit and two units of 200,000 m3 LNG storage tanks with an initial send out capacity of 3.5 million tonnes per annum for a total investment cost of RM2.7 billion. This project is scheduled to be completed at the end of 2017.
  • In the upstream sector, production enhancement activities continue to be carried out in Bayan field and D35, J4 and D21 clusters. Efforts are ongoing to identify and mature new oil opportunities in these mature fields. In addition, the Group is seeking viable production assets which may become available.
  • Valuations may not very compelling, but not bad. DIALOG still appeals to funds seeking earnings stability.
  • I will continue to hold and accumulate this counter.

At the time of writing, I owned shares of DIALOG.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s