Company Coverage
Dialog Group (DLG MK): 4QFY26: Downstream’s Year; FY27 Sets The Stage For Upstream
BUY (Maintained)
Current price:
Target price:
Upside:
RM1.96
RM2.95
+48.1%
Analyst
Highlights
FY26 results beat market expectation but were in line with ours. Segment-wise, downstream contributed most of the FY26 earnings growth yoy as DLG reverted the segment to sustainable profits following a legacy of loss-making EPCC projects in FY25. Midstream earnings were slightly lower yoy, as storage was already at peak-cycle earnings. Upstream did benefit from higher oil prices, but the quantum was smaller yoy due to equipment maintenance since 3QFY26, which had not fully reverted production volumes to normal levels.
FY27 sets the stage for upstream’s earnings redebut. Assuming the US Iran conflict prolongs, oil prices may remain high despite consensus expectation for oil prices to normalise towards US$70/bbl. Maintain BUY, with a target price of RM2.95.
Analysis
FY26 profit beat the Street’s estimates but was in line with ours, comprising 104%/109% of ours/consensus forecasts. A final interim DPS was proposed at RM0.03, bringing total FY26 DPS to RM0.047 (FY25:RM0.031). Downstream segment The downstream segment continued to lead the growth for both 4QFY26 and the full-year, generating sustained profits unlike FY25 when Dialog Group (DLG) was still executing the loss making legacy EPCC projects. Based on DLG’s guidance that downstream earnings mix reached 25% for both 4QFY26/FY26, we estimated that the segment’s earnings likely tripled in size relative to FY25.
Highlights
FY26 results beat market expectation but were in line with ours. Segment-wise, downstream contributed most of the FY26 earnings growth yoy as DLG reverted the segment to sustainable profits following a legacy of loss-making EPCC projects in FY25. Midstream earnings were slightly lower yoy, as storage was already at peak-cycle earnings. Upstream did benefit from higher oil prices, but the quantum was smaller yoy due to equipment maintenance since 3QFY26, which had not fully reverted production volumes to normal levels.
FY27 sets the stage for upstream’s earnings redebut. Assuming the US Iran conflict prolongs, oil prices may remain high despite consensus expectation for oil prices to normalise towards US$70/bbl. Maintain BUY, with a target price of RM2.95.
Analysis
FY26 profit beat the Street’s estimates but was in line with ours, comprising 104%/109% of ours/consensus forecasts. A final interim DPS was proposed at RM0.03, bringing total FY26 DPS to RM0.047 (FY25:RM0.031). Downstream segment The downstream segment continued to lead the growth for both 4QFY26 and the full-year, generating sustained profits unlike FY25 when Dialog Group (DLG) was still executing the loss making legacy EPCC projects. Based on DLG’s guidance that downstream earnings mix reached 25% for both 4QFY26/FY26, we estimated that the segment’s earnings likely tripled in size relative to FY25.
BUY (Maintained)
Current price:
Target price:
Upside:
RM1.96
RM2.95
+48.1%
Analyst
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This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
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