Hong Leong Investment Bank has maintained a “BUY” recommendation for Dialog Group Bhd with an unchanged TP of RM3.38.
It said that its TP of RM3.38 implies an attractive 39% upside to the current share price. Valuation wise, Dialog is currently trading at FY23F P/E of 22x, which is at about a 30% discount to its pre-pandemic mean of 32x in 2019.
HLIB said that it would continue to like Dialog for its recurring income type of business model, and we deem it as one of the only listed secular growth stocks in the local oil and gas space.
On the outlook, HLIB said that Dialog will continue to be one of the key beneficiaries of Pengerang’s development due to its exposure in tank terminals, EPCC and maintenance services. In addition to Dialog’s Terminals Langsat 1 and 2 with a total capacity of 650,000 m3, Langsat 3 has commenced full operations for its 120,000 m3 storage facility in Jan 2020.
“The construction works of the 430,000m³ storage capacity under Phase 3A of Pengerang Deepwater Terminals (PDT) was completed in March 2021 whilst, the 85,000m³ capacity expansion of Langsat 3 is slated for full completion by the end of CY21.
“With the imminent ease of international travel restrictions in CY22, we see Dialog as a beneficiary as PDT will be able to welcome foreign clients and investors, potentially boosting Dialog’s downstream EPCC and midstream take-or-pay tank terminals business.”
