AmResearch raises Dialog’s FY16 earnings by 10%

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KUALA LUMPUR (June 27): AmResearch has foreast a 10% increase in Dialog Group Bhd’s FY16 earnings after incorporating additional engineering works arising from the expansion of the Pengerang Independent Terminal (PIT) development, analyst Alex Goh  said in a note today.

Dialog expects to complete PIT Phase 1’s storage facility by the end of the year.

It currently owns a 46% effective stake in PIT Phase 1 with Vopak (44%) and the Johor State (10%).

“We understand that negotiations are currently being held with other stakeholders for PIT Phase 2 and 3,” Goh said.

Goh maintains a “hold” call on Dialog but has revised its target price to RM 4.05 per share from RM 3.40 per share.

“Our higher SOP stems from incorporating an assumed 40% stake in RM4 billion liquefied natural gas (LNG) storage facilities, additional discounted cash flow contribution from its 20% stake in Roc Oil’s production fields...assumed 30% discount from an additional RM6 billion investment in Pengerang; and rolling forward of  the target PE valuations from FY15F to CY15F,” he said

Goh said that the stock currently trades at fair FY15 price earnings of 32 times near its 3 year average of 30 times.

At 4:02pm, Dialog was up 2 sen to RM3.79 per share with 2.37 million shares traded.