Dialog’s 1HFY11 results were within expectations. Overall, the results were good,
with 2QFY11 net profit rising 8.8% q-o-q to RM36.0m contributed by the completion
of more jobs that fetch higher margin such as plant maintenance in Malaysia and
Singapore. We continue to like Dialog as one of the most defensive O&G stocks in its
sector and one that possesses a steady business model. Maintain Buy.
Within estimates. Dialog’s 1HFY11 results were within consensus and our expectations,
making up 48% and 50% of the FY11 forecasts respectively. Overall, the results were
good, with 2QFY11 net profit rising 8.8% q-o-q to RM36.0m on the back of completion of
more work that command higher margins such as plant maintenance in Malaysia and
Singapore. The 2QFY11 revenue remained quite consistent at RM268.5m due to
continuous contribution from its engineering and construction jobs in Malaysia and
Singapore and specialist products and services from its international operations. Finally, on
a YTD comparison, the 1HFY11 net profit of RM69.1m was 24.3% higher YTD despite a
slightly lower revenue of RM532.3m (down 8.9% YTD), thanks to a better product and
service mix that yield higher margins.
Maintain Buy. Our target price for the company remains unchanged at RM2.51 based on a
sum-of-parts valuation. Going forward, we believe its share price re-rating catalyst could
potentially be the commencement of the Pengerang Phase 1 construction, which we
understand would be very soon. Also, we gather from the industry that Dialog could be
involved in marginal oilfield development and if so, this would be an added catalyst for its
share price re-rating. In conclusion, we continue to like Dialog as one of the most defensive
O&G stocks in its sector, and one that possesses a steady business model and net cash
position of RM210.5m (RM191m as at 30 Sept 2010).
