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Friday, December 16, 2011

Dialog Group - Fuelling its ETP projects with a rights issue (CIMB)

Shareholders should take up their rights entitlement given the 46% discount in the RM1.20 rights price. The rights issue, which comes with free warrants, will be earnings dilutive but will give Dialog the balance sheet to finance the Balai and Pengerang projects. Though the cash call and full warrant exercise could dilute our EPS forecasts by up to 18-21% and knock 13% off our target price, it would not change our Outperform call. We continue to value the stock at its SOP value.

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