ANNOUNCEMENT DETAILS

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ANNOUNCEMENT DATE
:
20-Jan-2023
CATEGORY
:
RATING ANNOUNCEMENT
SUB-CATEGORY
:
RATING ANNOUNCEMENT
TITLE
:
DIALOG Group Berhad
ISSUER NAME
:
DIALOG GROUP BERHAD
DESCRIPTION
:
CONTENT
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RAM Ratings has reaffirmed the respective AA2/Stable and A1/Stable ratings of DIALOG Group Berhad's (DIALOG or the Group) RM3 bil Senior Islamic Medium-Term Notes and RM3 bil Subordinated Perpetual Islamic Notes. 

The reaffirmation of the ratings reflects our expectations of an ongoing earnings recovery over the medium term, supported by the Group's strong business positions in tank terminals (midstream segment) and engineering, procurement, construction and commissioning (EPCC) operations (downstream), as well as the rising prominence of its oil and gas (O&G) production assets (upstream). 

DIALOG's revenue rebounded significantly to RM2.32 bil in FY Jun 2022 (FY Jun 2021: RM1.61 bil) on the back of a better top line performance by all three segments. Pre-tax profit however slipped to RM529.55 mil (FY Jun 2021: RM583.60 mil), crimped by inflationary pressure and manpower constraints, particularly in the Group's EPCC jobs. Margin compression is anticipated to moderate in the coming quarters. Earnings of the downstream segment are supported by broader margins from new contracts secured on a higher cost base. Meanwhile, contributions from a newly acquired producing oil field in Thailand will benefit upstream operations. Over the medium term, DIALOG is expected to gain from a pick-up in EPCC and plant maintenance jobs, and the scaling up of its tank terminals business. 

Debts continued to rise to RM2.73 bil as at end-September 2022 in view of ongoing business expansion, although gearing remains strong at 0.49 times (end-June 2021: RM2.21 bil and 0.45 times, respectively). Coupled with high cash balances, net gearing was a robust 0.17 times (end-June 2021: 0.15 times). Despite erosion of earnings and cashflow in fiscal 2022, given elevated costs, the Group's funds from operations (FFO, including dividends received) debt coverage was lifted to 0.29 times by higher dividends from associates (fiscal 2021: 0.26 times). DIALOG's debt levels are expected to continue t
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