STOCK FOCUS OF THE DAY
Dialog Group : Propelled by strategic Pengerang development Buy
We reiterate our BUY recommendation on Dialog Group with an unchanged sum-of-parts-based (SOP) fair value of RM2.24/share which includes the valuation of 600 acres of industrial and buffer land in Pengerang at RM30 psf. This implies a CY18F PE of 31x. Currently, property agents’ asking price for industrial land in Sg Rengit in Pengerang has reached over RM100 psf.
We maintain Dialog’s FY18F-FY19F earnings as FY17 normalised net profit of RM348mil, excluding lumpy gains of RM23mil mainly from an office-cum-warehouse sale in Singapore, came in within our and market expectations. We introduce FY20F earnings with a growth of 9%, underpinned by the full-year contributions of Pengerang Phase 2 and LNG terminal projects. Currently, Dialog is trading at a CY18F PE of 26x, below its 5-year peak of 29x. We view the premium as justified given Dialog’s long-term recurring cash flow-generating businesses, which are largely cushioned from volatile crude oil price cycles, and further underpinned by the Pengerang development’s multi-year value expansion.
Others :
Sunway : Buying land in Wangsa Maju Buy
Press Metal : Positive effects from ongoing reforms in China Hold
Petronas Gas : Earlier value erosion from TPA Sell
STOCKS ON RADAR
OKA Corporation, ViTrox Corporation, Dufu Technology Corporation, Prestariang
NEWS HIGHLIGHTS
Healthcare Sector : Malaysia’s medical inflation at double-digit pace
Plantation Sector : Top planters to export certified sustainable palm oil by end-2019
Taliworks : Taliworks 2Q net profit down 92%
Pharmaniaga : Pharmaniaga 2Q net profit falls 36.5%
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