FW: AmBank Research - Dialog Group: Pengerang Phase 3 highlights strategic value BUY, 6 Apr 2018

 

 

STOCK FOCUS OF THE DAY

Dialog Group: Pengerang Phase 3 highlights strategic value                          BUY

 

We reiterate our BUY recommendation on Dialog Group with unchanged forecasts and sum-of-parts-based (SOP) fair value of RM3.38/share, which implies an FY19F PE of 38x ¬– 157% below its 5-year average of 46x. Our SOP has already incorporated the DCF accretion from Pengerang Phase 3, assuming a similar investment structure as Phase 2.

 

We remain convicted of Dialog’s embedded value largely anchored by its Pengerang development, following the memorandum of understanding (MoU) with the Johor state to develop common tankage facilities, shared infrastructure and dedicated deepwater Jetty 3 in Deepwater Terminals Phase 3, which involve the construction of petroleum/petrochemical storage and handling tank terminal business

 

At the current stage, Dialog’s footprint in Pengerang has expanded from the original plan of only 500 acres by 2.7x to 1,330 acres, catering to additional petrochemical, storage and support facilities which will be needed to support Petronas’ nearby RAPID project.  Currently, Dialog is trading at a FY19F PE of 34x, below its 5-year peak of 46x. We view the premium as justified given Dialog's long-term recurring cash flow-generating businesses, and further underpinned by the strategic Pengerang development's revaluation dynamics.  

 

 

Others :

Gamuda: Lands PDP for KL-Singapore HSR North                                               BUY

Protasco: Bags three road maintenance concession extension                    BUY

Hong Leong Bank: Digital transformation to yield higher cost savings        HOLD

 

 

RETAIL RESEARCH

Stocks On Radar: CCK Consolidated, Lee Swee Kiat, Inari Amertron, Frontken

 

ECONOMIC HIGHLIGHT

Malaysia: Trade surplus remains strong

 

NEWS HIGHLIGHTS

GHL Systems: To buy payment solution firm for RM80m

Benalec: Gets RM21.6m contract from Oriental Holdings

Latitude Tree: Vietnam plant sustains RM21.45m damage from fire

 

 

 

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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