KUALA LUMPUR: Shares in Dialog Group Bhd rose marginally in early trade Friday after securing a RM248mil engineering, procurement, construction and commissioning (EPCC) contract.

       The integrated oil and gas service provider climbed one sen or 0.35% to RM2.88 at 9.19am.

       Dialog’s wholly-owned Dialog E & C Sdn Bhd, secured the contract from PRPC Utilities and Facilities Sdn Bhd for the EPCC of a titanium nitrile butadiene latex (NBL) outside battery limit facility project for the Pengerang Integrated Complex (PIC).

       The group said Dialog E&C will construct the required interconnecting and utilities line and a new effluent treatment plant facility in the PIC as part of PRPC Utilities and Facilities' growth programme.

       It said the project will commence immediately and is expected to be completed by the second quarter of 2023.

       While neutral to this project given its negligible contribution to Dialog’s earnings, PublicInvest Research said this contract nonetheless should keep the group’s EPCC segment busy for the next 20 months and also to help increase the utilisation of its yard.

       “We kept our forecast unchanged as we have assumed contract replenishment in our earnings projection. This contract is expected to contribute c. 0.9% and 1.3% to the Group’s FY22 and FY23 bottom line respectively,” PublicInvest said.

       “Our outperform call on Dialog is maintained with an unchanged target price of RM3.86. We still like Dialog for its strong track record, defensive business model and steady recurring income generation from its tank terminal business,” it added.

       MIDF Research opined that this new project would be the pioneer to more contract wins for the group.

       “Dialog has been consistent with the performance of its non-cyclical tank terminal and maintenance operations, and winning the bid only further proves that Dialog has the capacity to sustain for FY22. Hence, we retain our earning estimates for Dialog for FY22,” it said.

       MIDF has maintained its “buy” call and target price of RM3.65 for Dialog. Its target price is based on a PER of 32x pegged to EPS22 of 11.4sen.

       “We continue to view Dialog positively for its long-term prospects given its resilient business structure and strong contributions of its Dialog Pengerang and Tanjung Langsat Terminals.

       “Coupled with the expectation of supply-demand balance of crude oil and natural gas in FY22, subsequently more contracts on plant operations and maintenance, we believe Dialog’s financial performance will remain on the upside in the near future,” it added.