Research Houses Positive On Dialog's Long-term Ventures Despite Lower 3Q Profit

KUALA LUMPUR, May 16 (Bernama) -- Research houses are positive on Dialog Group Bhd’s long-term ventures in the upstream and midstream segments despite its lower net profit for the third quarter ended March 31, 2025 (3Q FY2025).

Dialog’s net profit decreased to RM134.96 million compared with RM156.16 million a year ago in the same quarter last year, while revenue fell to RM578.80 million from RM702.19 million.

MIDF Amanah Investment Bank Bhd believes that with the Brent crude oil expected to hover in a stable rangebound of US$60-US$70 per barrel, coupled with the increased global oil production and inventory, the two segments are anticipated to remain stable in the mid to long term.

However, the downside risks remain on the unpredictable changes within the global economy, subsequently influencing forex, petroleum product and feedstock prices and overall supply chain, including raw materials and workforce availability.

“We maintain our ‘Neutral’ call with a revised target price of RM1.85 (previously RM1.90), pending further guidance from the group. The target price is fair, given the reduced revenue downstream and the uncertainties on the forex trajectory in FY2025, following the ongoing trade tariffs and volatile oil prices,” it said in a note.

Echong the same, Hong Leong Investment Bank Bhd said post-kitchen sinking exercise in 2Q FY2025, Dialog’s downstream engineering, procurement, construction, and commissioning (EPCC) has returned to black in the current quarter.

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However, the investment bank said the earnings fell short of its and street forecasts due to increased tax expenses and a slowdown in regional activities as several large-scale projects were at stages of completion in 3Q FY2025.

“Nonetheless, we expect its downstream business to continue its upward trajectory, buoyed by its growing plant maintenance project pipeline and potential write-backs of its previous lumpy EPCC provisions,” it said.

It maintains a “Buy” call with a target price of RM2.59 per share.

Meanwhile, CIMB Securities Sdn Bhd expects downstream earnings to increase in 4Q FY2025, driven by its joint venture contribution with Morimatsu International Holdings Co Ltd, which offers engineering and fabrication services from its newly completed facility in Pengerang.

Construction of the facility was completed in 3Q FY2025.

“We expect steady earnings from the midstream segment, underpinned by sustained high utilisation rates of over 90 per cent and stable spot storage rates of S$6.0–6.5 per cubic metre (cbm).

“However, earnings outlook may be clouded by the upstream segment as crude oil prices fell below US$70 per barrel in 2Q FY2025 following the US tariff announcement, dampening global oil demand projections,” it said.

At 10.30 am, the counter fell 10 sen to RM1.67 with 8.26 million units traded.

-- BERNAMA