Monday, June 14

Kenanga Research remains positive on Dialog’s business model


KUCHING: The research arm of Kenanga Research Investment Bank Bhd (Kenanga Research) is remaining positive on Dialog Group Bhd’s (Dialog) long-term recurring business model after its visit to Pengerang earlier this week.

On Monday, Kenanga Research visited Dialog’s Pengerang site to get more updates on its various phases of the tank terminal facilities.

“Currently, the seven crude oil tanks and 50 petroleum products tanks totally up to 1.3 million m³ have been fully leased out to international oil majors and traders.

“In addition, there is extra land next to the terminals in which Dialog is able to expand the storage capacity by another one million m³,” it said.

Kenanga Research believed it will take at least 18 months to ramp up the additional storage facility.

As the expansion plan has not firmed yet, the research arm did not include the additional space into its forecast.

According to Kenanga Research, it came to understand that the Phase 2 project including a dedicated industrial terminal with storage capacity of 2.1m m³ and a deepwater jetty facility is on full stream.

The research arm noted that Dialog aims to complete and commission the terminals for the Refinery and Petrochemicals Integrated Development (RAPID) by 2019 while the completion of deepwater jetty facility is targeted at an earlier deadline of July 2017.

It further noted that this is to commensurate the expected commencement of operation of Dialog’s LNG terminals, which is situated next to the Phase 2 terminal.

“As of November 3, 2015, 312 vessels have been berthed at the Pengerang Deepwater Terminal and the numbers are expected to increase with the completion of the second deepwater jetty facility,” it said.

Meanwhile, Kenanga Research pointed out that Dialog’s fabrication division is expected to be busy following award of EPCC project on Pengerang phase 2.

“Furthermore, the company set up an extra fabrication facility in Pengerang in order to seize the growth of RAPID project in the next few years.

“Apart from the on-going Pengerang Phase 2 project, the yard is working on fabrication of moulded bullet tanks and large pressure vessels for Toyo-Thai Corp Ltd.

“This project is meant for RAPID project with an estimated project value of US$51 million,” the research arm said.

The research arm reckoned the fabrication yard to stay occupied in the near medium term benefiting from its strategic position to RAPID site.

Kenanga Research highlighted that Dialog continues to develop its matured fields of D35/D21/J4 to increase oil production.

That said, the research arm noted the contribution from upstream coupled with its specialist products and services are expected to remain weak in the medium-term amid a slowdown in the oil and gas (O&G) sector.

Overall, Kenanga Research believed that Dialog is on track to build on the group’s long-term recurring income generating asset base with multiple tank terminals put in place to capitalize on the potential growth in Malaysia’s downstream sector.