KUALA LUMPUR (Aug 9): Analysts expect oil and gas services firm Dialog Group Bhd (KL:DIALOG) to post a strong set of fourth-quarter results, driven mainly by its storage business, and contracting work in the Middle East.
They also expect Dialog, which is due to announce its results next Thursday (Aug 15), to see higher production from the upstream division as operation days normalise at its Thailand assets as well as bottoming losses from legacy engineering, procurement, construction, and commissioning (EPCC) projects.
AmInvestment Bank said the company will probably report a core net profit (CNP) of RM155 million for the fourth quarter ending June 30, 2024 (4QFY2024), an increase of 34% year-on-year and 3% quarter-on-quarter (q-o-q).
This would bring the research firm’s full-year projected CNP for FY2024 to RM589 million, which is within consensus estimate. “Our forecast incorporates a final dividend per share (DPS) of 2.4 sen based on a 37% payout. Hence, we expect the group’s full-year DPS to reach 3.9 sen or a full-year yield of 1.7%,” it said in a note.
AmInvestment also noted that the upstream segment is expected to see gains as production from the L53/48 concession has stabilised at 2,000 barrels per day.
Further, gains are anticipated in Dialog’s downstream segment, as its legacy EPCC projects near completion.
In addition, the group is expected to benefit from the conclusion of its previous plant maintenance contract terms with Petronas, said the research firm.
Meanwhile, UOB Kay Hian in a separate note said Dialog’s Middle East oil and gas contracting work volumes remain robust, even in light of the Saudi rig suspension.
"This resilience supports the earnings recovery of Dialog’s Saudi Arabia-based subsidiary, Jubail Supply Base.
"We expect strong 4QFY2024 results by mid-August, driven by continued strength in storage income, and potential q-o-q improvements in the Middle East and downstream earnings.
“We [also] see clearer signs of earnings recovery driven by multiple fronts and not only from storage projects.
"At the same time, for the downstream business, Dialog can shift its resources to work on several internal EPCC jobs, and avoid committing to high-risk EPCC projects while demonstrating cost control,” it added.
A wide majority of 12 analysts have “buy” calls on Dialog, with only three having “sell” recommendations. The 12-month target price was RM2.85, representing a potential upside of 17.3% from its current target price of RM2.43.
At Friday’s noon break, shares of Dialog settled at RM2.43, up seven sen or 2.97%, giving it a market capitalisation of RM13.72 billion. The share price has gained over 17% so far this year, amid a broad rally in the energy sector, as oil prices stay elevated.