The research house has maintained its “buy” call on Dialog said the oil and gas services firm’s nine months to March 31 FY16 core earnings made up 76% of its full year’s forecast and Dialog’s investment thesis was intact.

“It is net cash, atypical to its industry peers, testament to its lean  management and largely cashflow driven tank terminal businesses. Our target price of RM1.90 is SOP-based,” Maybank said.

Maybank said Dialog’s headline net profit of RM79mil in third quarter ended March 31 FY16 comprised a RM9mil exceptional gain from forex gain. Excluding that, it said Dialog’s core net profit of RM70mil took  9MFY6/16  earnings to RM195mil.

Lower sales of specialist products and services were the main reason behind the weaker quarter-on-quarter performance. Associated profit contribution from its tank terminal business remained steady, at RM15mil in  3QFY16,  fuelled  by  its  Kertih and Pengerang Phase 1 operations.

“Earnings growth will be pedestrian over the next two years,  which is expected. The excitement comes when its Pengerang Phase 2 (SPV2: a 2.1m m3 capacity of a dedicated terminal for Petronas; a 25 year contract) and phase 3 (SPV3: a 3.5m tpa send out regasification capacity and a  400,000 m3 LNG terminal) operations commence in first quarter 2019 and fourth quarter 2017 respectively.

“This will provide progressive  earnings growth from FY18. There is further upside if Dialog is able to secure strategic terminal partners for subsequent phases beyond Phase 3),” Maybank said.