KUCHING: Dialog Group Bhd (Dialog) has acquired the balance 60 per cent equity interest in Singapore-based EC-Dialog Pte Ltd (EC-Dialog) and analysts are slightly positive on the move.
Given the relatively low cash proceed, the research arm of AmInvestment Bank Bhd (AmInvestment Bank) said this transaction – based on net asset valuation – would not have any significant impact on the group’s earnings.
To note, Dialog acquired EC-Dialog for for S$2 million or about RM7 million in cash from Winsome Management & Services Pte Ltd.
“However, the additional stake in EC-Dialog enables the group to obtain full ownership of the research and technological know-how of catalyst handling while consolidating its catalyst handling services presence in Malaysia and Asia-Pacific region.
“Hence, we are mildly positive on this development as Dialog’s catalyst handling specialists provide a one-stop solution for commissioning and maintaining catalytic reactors, vessels and columns for refinery, petrochemical and chemical facilities.
“It presently owns a full range of patented technology which includes ‘Closed-circuit, Closed-loop’ systems, Ultra low attrition, zero-dust emission & zero-spillage hoppers,” it added.
Meanwhile, AmInvestment Bank noted that at this stage, the main driver for Dialog’s earnings momentum lies in its Pengerang tank terminal development in Johor.
“Recall that the group’s progress on the RM6.3 billion PDT Phase 2 remains on track as the RAPID complex stays on schedule with progressive completion in 2018 to 2019,” it said.
Additionally, it pointed out that the RM2.7 billion LNG regasification plant and storage tanks, in which Dialog has a 25 per cent equity stake, are scheduled for completion by end-2017.
“For the Pengerang LNG regasification project, which will have a combined capacity of 200,000 m3, the first tank will be completed by July 2017 while the second by December 2017,” it added.
The research team also pointed out that Dialog is developing 170 acres of industrial estate to support petrochemical industries in the buffer zone between the 500-acre land being reclaimed and the Pengerang mainland.
“We have not included any potential land value accretion for the buffer zone’s estimated 500 acres in our SOP, which could be raised by an additional 12 sen or six per cent at a conservative assumption of RM30 per square feet,” it added.
Currently, it noted, Dialog is trading at a 2017 forecast price earnings of 27-folds, below its five-year peak of 29-folds.
“We view the premium as justified given Dialog’s long-term recurring cash flow generating businesses, which are largely cushioned from volatile crude oil price cycles,” it added.