PETALING JAYA: The gradual moderating impact of Covid-19 lockdowns on labour and border restrictions will likely translate to a stronger second half of financial year ending June 30, 2022 (FY22) for Dialog Group Bhd.

       Recall that Dialog’s net profit for the first quarter ended Sept 30, 2021 had slid 4% year-on-year due to higher project expenses, primarily from raw material and logistics costs driven by global supply chain disruptions and delayed execution.

       According to AmInvestment Bank, the group is still in discussions with clients on recovering some of the Covid-19-related costs incurred in FY21 and first half of FY22, which may be incorporated into future billings of long-term contracts.

       In Singapore, Dialog works closely with its clients and partners to mitigate labour constraints via permit and visa approvals for plant maintenance jobs.

       The research house remained positive on the company, maintaining its “buy” recommendation on the counter with a fair value of RM3.75. The stock closed down one sen at RM2.89 on Friday.

       “Dialog currently trades at an attractive FY23 price-earnings of 25 times, well below its five-year peak of 40 times.

       “We believe Dialog deserves above-peer premium valuations, given its long-term recurring cash flow-generating businesses which are further underpinned by the Pengerang development’s multi-year value re-rating bonanza and low net gearing levels,” AmInvestment said in a note.

       It added that the completion of the 430,000 m3 Pengerang Terminal 5 at Phase 3A in March 2021 has raised the group’s Pengerang gross capacity by 13% to 3.8 million m3 and net capacity by 36% to 1.6 million m3.

       The storage of this wholly-owned terminal is dedicated for BP Singapore, which has a long-term storage agreement with Dialog.