KUALA LUMPUR (May 17): CIMB IB Research has maintained its “Add” rating on Dialog Group Bhd at RM3.22 with a higher target price of RM4.59 (from RM4.04) and said it expects Dialog’s quarterly earnings to continue rising, as Pengerang Phase 2’s SPV2 is gradually commissioned.

In a note May 16, the research house said Dialog currently owns 100% of PP3, but will eventually own 80% of the common tankage facilities and Jetty 3, and 90% of Pengerang Phase 3, giving up stakes to the Johor state government.

It said that eventually, Dialog will rope in additional equity partners in the future, but Dialog’s ultimate stake is not yet known.

“Speaking to the company, we understand that Dialog will be comfortable with a majority stake, having gained operating expertise and experience, which is in contrast to its minority 46% stake in SPV1 and 25% stake in SPV2, which are earlier phases.

“Our SOP-based target price is now raised to RM4.59, as we incorporate a base-case equity stake in Pengerang Phase 3 of 60%, up from 45% earlier,” it said.