Dialog’s 1QFY13 earnings came in within both our and consensus’ expectations. While earnings were weaker sequentially, both revenue and net profit grew y-o-y by 17.4% and 5.0% respectively. We continue to like Dialog as it is one of the most defensive oil and gas stocks with a steady business model. We thereby reiterate our BUY recommendation with an unchanged fair value (FV) of RM3.45.
Within expectations. Dialog’s 1QFY13 earnings came in within our and consensus’ expectations, accounting for 21.2% of our and 21.8% of consensus’ full-year forecast respectively. Overall, the 1QFY13 net profit of RM46.8m was marginally lower q-o-q, by 5.7%, but 5.5% higher y-o-y. Revenue dipped 16.6% q-o-q due to lower contribution from its plant maintenance activities in Malaysia and Singapore. On a y-o-y basis, revenue grew 17.4%, underpinned by increased sales from its specialist products and services to overseas customers as well as its Engineering, Procurement, Construction and Commissioning (EPCC) works at the Pengerang Independent Deepwater Terminal project in Malaysia.
Catalysts for 2013. The company’s potential catalysts next year may be in the form of new customers, a higher take-up rate for Phase 2 of its Pengerang deepwater terminal and the possibility of other new upstream ventures as there are more mature fields up
for redevelopment and more marginal fields set for development. Although most of the catalysts mentioned here may not contribute to the company’s FY13 earnings, they can potentially contribute to revenue generated in the next three to five years.
Maintain BUY. We continue to like Dialog’s prospects and its strategy of expanding its sustainable and recurring income to reinforce its position as a leading integrated technical services provider. We are thereby reiterating our BUY recommendation on Dialog, with an unchanged FV of RM3.45 based on our sum-of-parts valuation pegged to FYE14 earnings. Dialog remains our favourite stock in OSK’s oil and gas universe, alongside SapuraKencana Petroleum (BUY, FV: RM3.00) and Dayang (BUY, FV: RM2.90).
Within expectations. Dialog’s 1QFY13 earnings came in within our and consensus’ expectations, accounting for 21.2% of our and 21.8% of consensus’ full-year forecast respectively. Overall, the 1QFY13 net profit of RM46.8m was marginally lower q-o-q, by 5.7%, but 5.5% higher y-o-y. Revenue dipped 16.6% q-o-q due to lower contribution from its plant maintenance activities in Malaysia and Singapore. On a y-o-y basis, revenue grew 17.4%, underpinned by increased sales from its specialist products and services to overseas customers as well as its Engineering, Procurement, Construction and Commissioning (EPCC) works at the Pengerang Independent Deepwater Terminal project in Malaysia.
Catalysts for 2013. The company’s potential catalysts next year may be in the form of new customers, a higher take-up rate for Phase 2 of its Pengerang deepwater terminal and the possibility of other new upstream ventures as there are more mature fields up
for redevelopment and more marginal fields set for development. Although most of the catalysts mentioned here may not contribute to the company’s FY13 earnings, they can potentially contribute to revenue generated in the next three to five years.
Maintain BUY. We continue to like Dialog’s prospects and its strategy of expanding its sustainable and recurring income to reinforce its position as a leading integrated technical services provider. We are thereby reiterating our BUY recommendation on Dialog, with an unchanged FV of RM3.45 based on our sum-of-parts valuation pegged to FYE14 earnings. Dialog remains our favourite stock in OSK’s oil and gas universe, alongside SapuraKencana Petroleum (BUY, FV: RM3.00) and Dayang (BUY, FV: RM2.90).
Source: OSK
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