You are on page 1of 2

BIMB SECURITIES RESEARCH

MARKET INSIGHT
PP16795/03/2013(031743)

Monday, 25 June, 2012

Company Update

Dialog
Higher and Deeper
Stock Data Bloomberg Ticker Market Cap Issued shares 52-week range (H) 52-week range (L) 3-mth avg daily volume Free Float Shariah Compliant Financial Derivatives DLG MK Altman Z-score 5,822.8 YTD price chg Equity 2,406.1 YTD KLCI chg 2.535 Beta 1.63 Major Shareholders 4.5 EPF 56.0% Azam Utama SB Y Wide Synergy SB DLG MK Equity Share Performance (%) 1mth 3mth Absolute 7.6% 7.1% vs. KLCI 3.6% 5.5% Financial Highlights FYE 30 Jun 2009 Turnover 1,104.5 (RMm) EBIT 96.9 Pretax profit 123.5 Core Net Profit 91.9 EBIT margin Pretax margin Effective tax rate ROE ROA Net Gearing (x) Core EPS (sen) Core EPS growth PER (%) (x) DPS (sen) Div. Yield (%) NTA/share (RM) Growth ratios Turnover EBIT Pretax profit Core Net profit Share Price Chart 7.0 1.3% 4.7% 1.4 15.6% 11.1% 10.4%

Buy
Price: RM2.38 Target Price: RM2.78 In line with our expectation ofPrice: corporate activities robust
within the domestic O&G segment, Dialog announced a MoU with global oilfield titan Halliburton, to jointly cooperate in pursuing job opportunities to re-develop mature oilfields in Malaysia. We see this a positive move for Dialog in beefing up its upstream execution capabilities which could also bring along not only jobs related to oilfield re-development but over a longer term serve as a good platform for the Group to move into independent oil player league. No change in forecast and target price of RM2.78. Robust corporate activities. A combination by local players on the need to improve their technical/service capabilities/offering suite and foreign players attracted by Petronas massive 5 year capex have created robust corporate exercise within domestic O&G segment YTD, which we have anticipated earlier on. We expect the trend will continue for a foreseeable future as more jobs are expected which usually entails Petronas local content/participation requirements. We view positively as a way to transform domestic players onto international league. Supportive demand background. With about 60% of Petronas domestic producing fields have been producing for 19-28 years, production in these fields may already be in a production plateau or even moved into a stage of declining production. As such, we see a natural demand for extension of the economic producing life of these affected oilfields via various re-development techniques. Strong partner = Better chance. Halliburton is one of the big names in the global oilfield services providers league. Dialogs ability to secure such a big player as its partner can be seen as a strong testimony on its track records and we believe that jobs winning chances for the JV would be good. No change in forecast. We made no change in our forecast. View & Valuation. We continue to favour the stock for its strong delivery track record and continue to see the company as one of the strong contenders for additional risk sharing contracts from Petronas which certainly would help boost its existing strong recurring earnings profile. Maintain our Buy call at SOP target price of RM2.78.

12mth 0.6% -3.0%

2010 1,139.1 118.6 150.0 118.3

2011 1,208.4 165.0 200.5 152.3

2012E 1,409.6 156.8 207.6 176.5

2013E 1,729.7 194.4 250.6 213.0

8.8% 10.4% 13.7% 11.1% 11.2% 11.2% 13.2% 16.6% 14.7% 14.5% -17.8% -16.9% -20.1% -20.0% -20.0% 20.9% 24.8% 26.1% 15.2% 16.7% 13.4% 13.9% 14.8% 9.0% 8.4% Net cash Net cash Net cash Net cash Net cash 3.8 4.9 6.3 7.3 8.9 21.6% 28.7% 28.7% 15.9% 20.7% 63.3 49.2 38.2 33.0 27.3 1.6 2.3 2.8 3.3 4.0 0.6% 0.9% 1.2% 1.4% 1.6% 0.19 0.21 0.24 0.49 0.53

39.7% 44.1% 27.0% 21.6%

3.1% 22.3% 21.5% 28.7%

6.1% 39.2% 33.7% 28.7%

16.7% -5.0% 3.5% 15.9%

22.7% 24.0% 20.7% 20.7%

Chiong Tong Chai chiongtc@bimbsec.com.my 03-26918887 ext 175

|1

25 June 2012
DEFINITION OF RATINGS BIMB Securities uses the following rating system:

Company Update: Dialog

STOCK RECOMMENDATION BUY Total return (price appreciation plus dividend yield) is expected to exceed 10% in the next 12 months. TRADING BUY Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain. NEUTRAL Share price may fall within the range of +/- 10% over the next 12 months TAKE PROFIT Target price has been attained. Fundamentals remain intact. Look to accumulate at lower levels. TRADING SELL Share price may fall by more than 15% in the next 3 months. SELL Share price may fall by more than 10% over the next 12 months. NOT RATED Stock is not within regular research coverage. SECTOR RECOMMENDATION OVERWEIGHT The Industry as defined by the analysts coverage universe, is expected to outperform the relevant primary market index over the next 12 months NEUTRAL The Industry as defined by the analysts coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months UNDERWEIGHT The Industry as defined by the analysts coverage universe, is expected to underperform the relevant primary market index over the next 12 months Applicability of ratings The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies. Disclaimer The investments discussed or recommended in this report not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of BIMB securities Sdn Bhd may from time to time have a position in or either the securities mentioned herein. Members of the BIMB Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgements as of this and are subject to change without notice. BIMB Securities Sdn Bhd accepts no liability for any direct, indirect or consequential loss arising from use of this report.

Published by

BIMB SECURITIES SDN BHD (290163-X) A Participating Organisation of Bursa Malaysia Securities Berhad Level 32, Menara Multi Purpose, Capital Square, No. 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur Tel: 03-2691 8887, Fax: 03-2691 1262 http://www.bimbsec.com.my

Kenny Yee Head of Research

www.bimbsec.com.my

|2

You might also like