FW: AmBank Research - Dialog Group : Value-accretive Tanjung Langsat expansion BUY, 13 Nov 2017

 

 

STOCK FOCUS OF THE DAY         

Dialog Group : Value-accretive Tanjung Langsat expansion           BUY

 

We reiterate our BUY recommendation on Dialog Group with a higher sum-of-parts-based (SOP) fair value of RM2.75/share (from an earlier RM2.70/share), which implies a CY18F PE of 37x – 20% below its 5-year average of 46x. Our higher SOP stems from the inclusion of an assumed 300,000 m3 expansion of storage facilities in Tanjung Langsat, increasing the 650-acre buffer land value in Pengerang by RM20 psf to RM70 psf and raising CY18F P/E multiples for the group’s specialist/technical/maintenance services to 18x from 15x earlier.

 

Dialog has entered into an agreement with Johor Corp to lease 2 land parcels, measuring 35 acres for 30 years, for RM62mil. The price works out to RM43 psf for the 30-year lease, which is comparable to industrial land leases in Tanjung Langsat. All-in, we remain positive on this value-accretive acquisition which expands the group’s longer term recurring earnings base. Dialog now trades at a CY18F PE of 28x, below its 5-year average of 46x. We view the premium valuation as justified given Dialog’s sustainable recurring cash flow-generating businesses and further underpinned by the Pengerang development’s multi-year value expansion.

 

Others :

Lafarge Malaysia : A subdued 3QFY17 on the cards                           HOLD

Petronas Gas : Steady results amid new Gas Supply Act impact  SELL

Plantation Sector  : Inventory up 8.4% MoM in October                 NEUTRAL

 

 

QUICK TAKE

Plantation Sector  : News flow for week 6 –10 November             NEUTRAL

 

 

ECONOMIC HIGHLIGHT

Philippines : Pressure on peso remains

 

 

NEWS HIGHLIGHTS

MAHB : Dismisses competition fears in Istanbul

Spritzer : Eyes export markets, to place out stake to Singapore fund

BLand : Gets go-ahead for BCity

Digital Economy : Digital tax may boost indirect tax collection by up to 5%’

 

 

 

DISCLAIMER:

The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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