DIALOG Group: BUY, target price RM1.43

OSK Research Sdn Bhd has maintained its "buy" call on Dialog Group, with a higher target price of RM1.43 as it factors in contribution from the Langsat Terminal 2 in Tanjung Langsat, Johor, instead of the centralised tankage facility (CTF) project in Pengerang.

"Although the focus in on Pengerang, its longer term nature means we still exclude it from our forecasts and sum of parts fair value," it said.

Instead, the research house said it factors in the contribution from Langsat Terminal 2 (targeted completion 2011) thus raising its target price for Dialog to RM1.43.

"We continue to like the stock's steady and defensive nature, and the fact that it is one of the very few oil and gas companies with net cash of RM203 million.
OSK said over the longer term of seven to 10 years, Dialog expects demand for its CTFs to be strong given its strategic location in south east Johor and the lack of new storage facilities in Singapore.

The CTF is a massive project undertaken by Dialog and its joint venture (JV) partner, Vopak, via a 51 per cent: 49 per cent new JV company.

Vopak is the world's largest independent tank terminal operator, specialising in the storage and handling of liquid and gaseous chemicals as well as oil products.

The Johor state government owns a 10 per cent equity stake in the project while the Dialog Vopak JV owns the remaining 90 per cent.