Period 1Q13
Actual vs. Expectations The 1Q13 results were broadly in line with
a net profit of RM46.8m, accounted for 22% of ours as well as the street’s FY13
full-year estimates.
Dividends No
dividend was declared in 1Q13 as expected.
Key Results Highlights The 1Q13 net income contracted by 6% QoQ
to RM46.8m from RM49.6m previously as the revenue eased 17% in the quarter. The
weaker results were mainly due to a lower contribution from Plant Maintenance
activities, especially in Malaysia and Singapore. Note also that the company’s
NZ-based Fitzroy Engineering reported poorer results in 1Q13 with its PBT
dropping 35% QoQ to RM2.8m from RM4.4m previously.
On a YoY comparison, the 1Q13 net profit rose 5% from that
of RM44.5m in 1Q12 while the revenue jumped 17% to RM417.0m from RM355.2m a
year ago. This was partly owing to the Pengerang CTF EPCC works, new earnings from
Jubail Supply Base and improved sales from the Specialist Products and Services
division.
Outlook Although 1Q13 was a soft start for FY13, we
are confident that Dialog will be able to meet our FY13 estimate as well as
that of the market consensus as Phase 1 of Pengerang CTF will be progressing
towards its tail end in 2H13, which means more billings ahead.
In addition, the forward earnings are expected to reach a
new high in FY13 with the full-year earnings impact of LT2, the EPCC jobs for Pengerang
CTF and the fabrication job for Balai Marginal Fields. These in-house
EPCC/fabrication jobs should keep Dialog busy until 2014.
Both the Balai RSC and Bayan OSC will turn Dialog from a
service provider to a developer and producer of oil/gas field, which will
provide it sustainable recurring incomes in the future.
Change to Forecasts No changes to our FY13-FY14E estimates
Rating MAINTAIN OUTPERFORM
Valuation Maintaining
our price target of RM2.79/SOP a share
Risks Delays
in its in-house EPCC jobs, which will impact its future recurring incomes
negatively.
Source: Kenanga
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