KUALA LUMPUR (Nov 11): Shares of Dialog Group Bhd (KL:DIALOG) extended their sharp decline amid concerns over the company’s potential exposure to a project delay in Pengerang.
Dialog fell nearly 6% on Tuesday, its largest single-day decline since April 9, adding to the previous day’s 4% decline. The two-day rout wiped more than RM1 billion from its market capitalisation. At the last price of RM1.77, the stock is at its lowest in nearly three months.
The Edge Malaysia weekly reported over the weekend that ChemOne Group Pte Ltd, the Singapore-based promoter of the Pengerang Energy Complex (PEC), is experiencing a setback to achieve financial closure for the large-scale integrated refinery and petrochemical complex.
The project was originally scheduled to start in the final quarter of 2028. However, the latest guidance indicates start-up in the first quarter of 2029 instead.
"The complexities involved suggest the PEC project could be delayed by months and that it is not likely to commence in 1Q2029," CGS International said in response to The Edge’s report.
The news could also mean that the construction of new storage tanks for PEC, in which Dialog is expected to have 60% equity interest, could be delayed as well, CGS International flagged.
The complex involves a condensate refinery designed to produce up to 2.5 million tonnes of aromatics annually, and another 3.9 million tonnes of refined petroleum products, and 50,000 tonnes of hydrogen.
The Edge also reported that the project’s Italian contractor, which quoted US$2.5 billion, has seen its costs escalate substantially. ChemOne is reportedly seeking a new contractor, possibly from China.
If ChemOne replaces its Italian contractor, it could lose a substantial chunk of financing provided by the Italian export credit agencies, which means that ChemOne has to secure alternative financing, CGS International said.
Still, Dialog could sign a separate long-term storage contract for one million cubic metres — likely with 90% equity interest — that may come online as soon as 2027, the house noted.
Dialog currently has 5.3 million cubic metres of total tank capacity and the potential additional could provide medium-term re-rating catalyst for the stock if it materialises, CGS International added.