Results Note Earnings & Valuation Summary FYE 30 Jun 2019 2020 2021E 2022E 2023E Revenue (RMm) 2,386.5 2,303.4 2,612.5 2,716.4 2,830.0 EBITDA (RMm) 593.1 658.4 658.2 710.8 743.4 Pretax profit (RMm) 653.0 747.3 804.6 867.6 913.1 Net profit (RMm) 535.8 630.4 627.2 677.6 714.0 EPS (sen) 9.5 11.2 11.1 12.0 12.7 PER (x) 38.5 32.8 32.9 30.5 28.9 Core net profit (RMm) 535.0 588.3 627.2 677.6 714.0 Core EPS (sen) 9.5 10.4 11.1 12.0 12.7 Core EPS growth (%) 25.7 10.0 6.6 8.0 5.4 Core PER (x) 38.6 35.1 32.9 30.5 28.9 Net DPS (sen) 3.8 3.1 4.4 4.8 5.1 Dividend Yield (%) 1.0 0.8 1.2 1.3 1.4 EV/EBITDA (x) 27.9 25.0 22.9 21.5 20.7 Chg in EPS (%) - - New Affin/Consensus (%) 1.0 1.0 - Source: Company, Affin Hwang estimates RM3.66 @ 18 August 2020 Share price performance 1M 3M 12M Absolute (%) -4.7 3.7 3.7 Rel KLCI (%) -3.6 -7.3 5.1 BUY HOLD SELL Consensus 14 4 - Source: Bloomberg Stock Data Sector Oil & Gas Issued shares (m) 5,638.3 Mkt cap (RMm)/(US$m) 20,636.2/4,932.8 Avg daily vol - 6mth (m) 9.4 52-wk range (RM) 2.7-3.99 Est free float 52.9% Stock Beta 0.79 Net cash/(debt) (RMm) (670.8) ROE (FY21E) 14.4% Derivatives Yes Shariah Compliant Yes Key Shareholders Employees Provident 9.2% Wide Synergy Snd Bhd 7.7% Azam Utama Sdn Bhd 7.6% Source: Affin, Bloomberg 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 Aug-17 Feb-18 Aug-18 Feb-19 Aug-19 Feb-20 Aug-20 (RM) Tan Jianyuan, ACCA T (603) 2146 7538 E [email protected]Dialog Group (DLG MK) BUY (maintain) Price Target: RM4.30 Up/Downside: +18% Previous Target (Rating): RM4.30 (BUY) Supported by higher Malaysia activities Dialog’s FY20 core net profit at RM588m was within expectations, making up 101% of our and consensus full-year estimates Malaysian activities were higher qoq in 4QFY20 which may suggest higher Master Service Agreement (MSA) activities, offsetting the weaker upstream performance following the slump in global oil prices FY20 dividend payout ratio was lower at 28% (3.1sen) vs FY19 payout of 40% (3.8sen). Reiterate Buy with an unchanged target price at RM4.30. Dialog is one of our country and sector top Buys FY20 profit grew 10% yoy Dialog’s FY20 core net profit of RM588m (+10% yoy) made up 101% of our and consensus full-year forecasts. FY20 EBITDA grew by 11% yoy attributable to the consolidation of Halliburton Bayan Petroleum (HBP) since August 2019, and full operation of Langsat 3 additional capacity since January 2020. JV profit was higher by 34% yoy driven by higher Pengerang Deepwater Terminal (PDT) utilisation and storage rates. Higher local activities offset weaker international, JV showed one-off profit dip Malaysian activities recorded a 27% qoq increase in revenue, possibly from higher MSA work recognition, which helped to offset the weaker upstream revenue as global oil prices plunged. Middle East revenue dipped to its lowest since 4QFY17 on the back of a slowdown in upstream activities. JV profit declined 26% sequentially to RM54m (3QFY20: RM73m) largely due to a foreign translation loss recorded at the Pengerang LNG2 regasification terminal, which was guided to be around RM20m impact. Stripping that off, JV profit would have been relatively flattish. Otherwise, PT1SB continued to operate near full utilisation with storage rates well supported at SGD6.50-7/cbm. Country top pick buy, unchanged TP at RM4.30 We introduce our FY23 forecast, with no changes to our existing estimates. We maintain our SOTP-based target price at RM4.30, already factoring in a 3m cbm initial Phase 3 development, but yet to include the latest 200,000 planned Langsat 3 expansion. The latest Langsat 3 expansion plan, while immaterial to overall group capacity (+4.7%), is positive nonetheless, as it continues to showcase a high storage demand. Maintain Buy. Downside risks: weaker storage utilisation and rates, delay in Phase 3 construction work and securing new off takers. 19 August 2020 “Our country and sector top Buy”
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Upstream assets 1,209.6 0.21 NPV of FCFF at 6.6% WACC
Enterprise Value 24,846.4 4.42
Net Cash/(debt) (673.8) (0.12)
Equity Value 24,172.5 4.30
Langsat 1-3 Terminals (100% stake) 1,098.7 0.19
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Important Disclosures and Disclaimer
Equity Rating Structure and Definitions
BUY Total return is expected to exceed +10% over a 12-month period
HOLD Total return is expected to be between -5% and +10% over a 12-month period
SELL Total return is expected to be below -5% over a 12-month period
NOT RATED Affin Hwang Investment Bank Berhad does not provide research coverage or rating for this company. Report is intended as information only and not as a
recommendation
The total expected return is defined as the percentage upside/downside to our target price plus the net dividend yield over the next 12 months.
OVERWEIGHT Industry, as defined by the analyst’s coverage universe, is expected to outperform the KLCI benchmark over the next 12 months
NEUTRAL Industry, as defined by the analyst’s coverage universe, is expected to perform inline with the KLCI benchmark over the next 12 months
UNDERWEIGHT Industry, as defined by the analyst’s coverage universe is expected to under-perform the KLCI benchmark over the next 12 months
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