Periodic/Sector reports
Dialog Group (DLG MK): 4QFY26 Results Preview: No Surprises, Upstream “Debut” For FY27
BUY (Maintained)
Current price:
Target price:
Upside:
RM1.98
RM2.95
+49.0%
Analyst
Highlights
- FY26 results unlikely to surprise. After several quarters of outperformance, we expect 4QFY26 to be largely consistent qoq, despite the temporarily high O&G prices triggered by the US-Iran conflict. Storage (midstream) will continue to reflect multi-cycle highs, though our analysis of Royal Vopak’s 2Q26 results (showing a flattish MENA JV income qoq) seems to hint that any upside to storage ancillary income are not material catalysts.
- Upstream will “reboot for debut” and be the centre of attention in FY27. For 4QFY26 upstream, we understand that the maintenance activities which impaired 3QFY26 upstream results (25% earnings mix), were still ongoing and volumes were gradually recovering. However, DLG’s upstream portfolio will see accretion from several new PSCs including BJC. The material gas field has good progress for early first gas by Oct/Nov 26 (vs initial expectation of 2027). We see early startup track record and improving upstream data transparency as key factors to rerate DLG’s upstream valuation in our SOTP. Maintain BUY and target price of RM2.95.
Analysis
- Royal Vopak’s 2Q26 insights detailed the resiliency of the storage terminal business against geopolitical conflicts and trade disruptions.
Vopak highlighted how some of its existing storage terminals had a greater and instrumental role in navigating higher demand for national energy sovereignty and energy affordability. They often require reliable control over diverse and competitively priced global supply sources. These more than offset the negative shocks impacting the Fujairah terminals. Also, there is an urgent systemic need to decarbonise – as by doing so, energy independence can be formed from traditional energy sources, but long-term resilience of power grids must not be overlooked. Hence, these justifies the higher future capex allocation to Battery Energy Storage System.
- Storage remains stable and at multi-cycle highs. Vopak’s 2Q26 MENA JV EBITDA was similar qoq at US$22m. This is a reliable indication of Dialog
Group’s (DLG) upcoming 4QFY26 Malaysian JV income by 20 Aug 26 (3QFY26: RM74m), and corroborates our view that despite the heighted
energy security demand, storage occupancy and rates will remain at multicycle levels (>90% uptime, monthly storage rates capped at average S$6-7/cbm). Although we were guided of increased throughput activities (which implies higher ancillary income), we take a more prudent view by assuming this is not a major catalyst.
Highlights
- FY26 results unlikely to surprise. After several quarters of outperformance, we expect 4QFY26 to be largely consistent qoq, despite the temporarily high O&G prices triggered by the US-Iran conflict. Storage (midstream) will continue to reflect multi-cycle highs, though our analysis of Royal Vopak’s 2Q26 results (showing a flattish MENA JV income qoq) seems to hint that any upside to storage ancillary income are not material catalysts.
- Upstream will “reboot for debut” and be the centre of attention in FY27. For 4QFY26 upstream, we understand that the maintenance activities which impaired 3QFY26 upstream results (25% earnings mix), were still ongoing and volumes were gradually recovering. However, DLG’s upstream portfolio will see accretion from several new PSCs including BJC. The material gas field has good progress for early first gas by Oct/Nov 26 (vs initial expectation of 2027). We see early startup track record and improving upstream data transparency as key factors to rerate DLG’s upstream valuation in our SOTP. Maintain BUY and target price of RM2.95.
Analysis
- Royal Vopak’s 2Q26 insights detailed the resiliency of the storage terminal business against geopolitical conflicts and trade disruptions.
Vopak highlighted how some of its existing storage terminals had a greater and instrumental role in navigating higher demand for national energy sovereignty and energy affordability. They often require reliable control over diverse and competitively priced global supply sources. These more than offset the negative shocks impacting the Fujairah terminals. Also, there is an urgent systemic need to decarbonise – as by doing so, energy independence can be formed from traditional energy sources, but long-term resilience of power grids must not be overlooked. Hence, these justifies the higher future capex allocation to Battery Energy Storage System.
- Storage remains stable and at multi-cycle highs. Vopak’s 2Q26 MENA JV EBITDA was similar qoq at US$22m. This is a reliable indication of Dialog
Group’s (DLG) upcoming 4QFY26 Malaysian JV income by 20 Aug 26 (3QFY26: RM74m), and corroborates our view that despite the heighted
energy security demand, storage occupancy and rates will remain at multicycle levels (>90% uptime, monthly storage rates capped at average S$6-7/cbm). Although we were guided of increased throughput activities (which implies higher ancillary income), we take a more prudent view by assuming this is not a major catalyst.
BUY (Maintained)
Current price:
Target price:
Upside:
RM1.98
RM2.95
+49.0%
Analyst
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