KUALA LUMPUR: Public Investment Bank Bhd (PublicInvest Research) has revised upwards its earnings forecast for Dialog Group Bhd by four to five per cent for financial year 2025 (FY25) - FY26 supported by an expected lift in the company's downstream earnings.
The firm upgraded its call on Dialog to "Outperform" with a higher target price of RM2.80.
PublicInvest research said excluding one-off items amounting to RM26.7 million, Dialog recorded strongerfourth quarter ended June 30, 2024 (Q4FY24) with a core net profit of RM165 million, higher by 43.2 per cent year-on-year (YoY).
The stronger result was mainly attributed to the increased production from upstream activities in Malaysia with the revenue from the domestic segment increasingly.
"Overall, Dialog recorded a full year FY24 core net profit of RM610.6 million, broadly in-line with our and consensus estimates at 103 per cent. "Moving forward, we expect Dialog to start FY25 on a clean slate without loss-making legacy EPCC projects as we understand that it has been completed by June 2024."
"Downstream-based earnings could also be lifted by new tariff revision on its Master Service Agreement (MSA) with Petronas, starting from July 2024. Further upside could be captured if Dialog is able to secure new tank expansion from the Pengerang Deepwater Terminal site," it said in a note.
In the near term, the EPCC team will focus on completion of its internal projects, which are 24,000m3 and 150,000m3 biofuel tanks in Tanjung Langsat Terminal, Dialog Morimatsu fabrication facility, and Malic Acid plant.
The segment would also be supported by new tariff revision on its Master Service Agreement from July 2024 onwards.
"Further upside for both downstream and midstream could be captured with new tank expansion for biorefinery plant, which has recently achieved final investment decision by Petronas and its partners, Enilive and Euglena in Pengerang Integrated Complex (PIC)," it added.
Dialog's share price was down 0.4 per cent to RM2.48 a share, giving it a market capitalisation of RM14 billion.