, pub-5475981771945671, DIRECT, f08c47fec0942fa0

What's the Stock of the Day?

What's the Stock of the Day?

According to AmBank Research, Dialog Group’s multiple tank and downstream prospects in Pengerang means the stock is a BUY. The research house says it maintains BUY with an unchanged sum-of-parts-based (SOP) fair value of RM3.75/share.

“This reflects a neutral ESG rating of 3 stars. This also implies an FY23F PE of 32x, near its 5-year average of 31x. Pending the upcoming results next month, we maintain our forecasts for now,” says the research firm.

The gradually moderating impact of Covid-19 lockdowns on labour and border restrictions is likely to translate to a stronger 2HFY22. Recall that Dialog’s 1QFY22 net profit slid 4% YoY from higher project expenses, principally raw material/logistics costs.

The 85K m3 additional storage of Dialog’s Tanjung Langsat 3 was completed in December 2021, raising the group’s total gross capacity by 1% to 5.1mil cubic metres (m3) and effective net capacity by 3% to 2.6mil m3.

Besides tank storage projects, it is exploring renewable energy solutions such as hydrogen, solar and carbon capture storage as part of its ESG commitments.

“Dialog currently trades at an attractive FY23F PE of 25x, well below its 5-year peak of 40x. We believe Dialog deserves above-peer premium valuations given its long-term recurring cash flow-generating businesses which are further underpinned by the Pengerang development’s multi-year value re-rating bonanza and low net gearing levels,” it says.  

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