PETALING JAYA: Dialog Group Bhd
remains confident that its business is well structured to manage and sustain itself through periods of economic uncertainty, oil price volatility and currency movements.
Executive chairman Tan Sri Ngau Boon Keat said the oil and gas services group’s diversification across the upstream, midstream and downstream businesses of the energy sector have helped the group weather different economic cycles in the past.
Looking ahead in the upstream sector, the overall outlook for the oil market has continued to improve following the demand disruptions caused by global events.
“Against this backdrop, the group will continue to grow its existing upstream business through the rejuvenation, redevelopment and operating of producing and mature oilfields,” he said in the company’s annual report.
Ngau emphasised that Dialog remains committed to expanding its expertise in the upstream business and will seek opportunities for its development and production services and assets, while incorporating new technological developments to enhance reliability and efficiency.
“Moving on to our midstream business, our primary focus will continue to be the ongoing development of Pengerang Deepwater Terminals (PDT) into the largest petroleum and petrochemical hub for the Asia Pacific region.”
Ngau said PDT Phase 3 (PDT3) has been designated for the development of more dedicated petroleum and petrochemical storage terminals for medium to
long-term customers, potentially comprising energy traders, multinational energy companies, refineries and petrochemical plants.
“This will support the further development of various downstream operations, including those at the refinery and petrochemical plants within the Pengerang Integrated Petroleum Complex.”
In the downstream business, Ngau said Dialog will continue to leverage on its strengths and established track record in integrated technical services comprising engineering, procurement, construction and commissioning (EPCC), plant maintenance and catalyst handling services and specialist products and services.
Separately, Ngau said that prolonged geopolitical conflicts and lingering post-pandemic impacts this year have continued to weigh heavily on global economic growth.
He added that this was further compounded by inflationary pressures and tighter monetary policies.
“As the economic environment is expected to remain challenging in the short to medium-term, we will continue to build and strengthen our competencies by investing in and upskilling our workforce, ensuring we remain efficient and competitive,” Ngau said.
For its financial year ended June 30 2024 (FY24), Dialog’s net profit rose to RM575.03mil from RM510.52mil in the previous corresponding period, while revenue grew to RM3.15bil from RM3.bil a year earlier.
In a recent report, Hong Leong Investment Bank Research (HLIB Research) noted that all downstream loss making EPCC projects have been completed by FY24.
“Coupled with new plant maintenance with PETRONAS kicking in from July onwards, we expect these segments to return to the black in the coming quarters. Hypothetically, even if there is zero external revenue from downstream EPCC as the group increasingly diverts their resources to internal jobs, the absence of losses would lift the group’s bottom line in FY25.
“We note that Dialog is in the midst of getting some claims over their past loss-making EPCC projects, but we are uncertain if it will turn fruitful,” the research house said.
“We maintain a ‘buy’ call on Dialog with unchanged sum-of-parts-derived target price of RM3.04. We like Dialog for its recurring income business model and its unique position in riding the future expansion of Pengerang via development of tank terminals,” the research house said.
