DIALOG’s valuation appears relatively undemanding when the lower risk of its recurring income business is taken into account. Earnings from tank terminals, catalyst handling and maintenance are sustainable and could cover at least 50% of its current profits.
The market for tank terminals is still massive particularly in the ASEAN region as one of the O&G hotspot, considering the fact that the leading tank terminal operator, Vopak, only owns less than 10 tank terminals in ASEAN countries, representing only 14% of its total tank capacity worldwide of 21.8m cu m.
We introduce our CY09 fair value of RM2.47on Dialog. The stock remains our choice of pick for the sector.
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