15/11/2023 11:38 AM

KUALA LUMPUR, Nov 15 (Bernama) -- Research houses are maintaining their ‘buy’ calls on Dialog Group Bhd after its first quarter for financial year 2024 ended Sept 30, 2023 (1Q FY2024) came in within consensus expectations.

Maybank Investment Bank (Maybank IB) said Dialog recorded a stellar quarter, raking in a core net profit of RM137.8 million which was within expectations at 25 per cent of its and 24 per cent of consensus full-year forecasts, respectively.

The results also marked the group’s best performance in more than three years, Maybank IB said in a note today.

“We make no changes to our FY2024-2026 earnings forecasts and sum-of-parts (SOP) based target price (TP) of RM2.43.

“We continue to like Dialog for its operational/financial stability from its dedicated midstream tank terminal assets. Developing Pengerang to its full potential remains its key agenda," it said.

Meanwhile, RHB Investment Bank Bhd (RHB IB) expects Dialog to deliver a 4.0-11.0 per cent year-on-year (y-o-y) earnings growth in FY2024-2026 on the back of margin improvements.

However, it introduced a lower TP of RM2.79 for Dialog’s shares, taking into account a higher six per cent environmental, social and governance discount as a result of another year of increase in its total Scope 1 and 2 emissions in FY2023. 

The investment bank also expects the group’s downstream activities to remain robust in terms of engineering, construction and plant maintenance, and see an improved outlook for its fabrication and specialty products arm.

“Cost challenges and margin pressures are likely to persist in the near term, but we expect margins to improve y-o-y in the coming quarters following the tail-end of certain legacy projects.

“Meanwhile, Dialog’s maiden venture into specialty chemicals production could further diversify its earnings base, but earnings from this business could be rather volatile, depending on product spreads," it noted.

At the same time, Hong Leong Investment Bank (HLIB) said Dialog's core net profit was slightly below its estimates but within consensus expectations.

The investment bank also lowered Dialog’s SOP-derived TP to RM2.31 from RM2.38 previously and cut the group’s FY2024 earnings forecasts by 5.7 per cent as it lowered profit margin assumptions for engineering, procurement, construction and commissioning downstream business.

Nevertheless, HLIB retained its earnings forecasts for the group for FY2025 - 2026.

At 10.40 am, Dialog’s shares gained four sen to RM2.14 with 1.95 million shares traded.


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