Dialog Group allocates RM1b in capex for FY2019

KUALA LUMPUR: Dialog Group Bhd is setting aside RM1 billion in capital expenditure for its internal, upstream and downstream investments for its financial year 2019.

Group’s chief financial officer Zainab Mohd Salleh, when speaking to the media after the annual general meeting today, said downstream business will dominate most of its capex next year at RM500 million.

“We will be allocating RM150 million for our internal capex, RM200 million for our upstream business.

“We are also exploring recurring income avenues from our investments in the Phase 1, 2 and 3 in Pengerang Integrated Petroleum Complex (PIPC) in Johor which we will mostly concentrate on next year.

“With Phase 1 and 2 already commencing, we are now focused on Phase 3 and we are securing partners ahead of the completion date,” she said.

Phase 1 comprises an independent terminal with an oil storage capacity of 1.3 million m3 with a dedicated deepwater jetty facility and is currently being expanded by another 430,000 m3.

Phase 2, which is a petroleum and petrochemicals terminal with estimated storage capacity of 1.3 million m3, will be fully completed in 2019.

Currently, Dialog is undergoing reclamation of the remaining 500 acres of land for its Phase 3, with the potential of developing another refinery and petrochemicals complex.

Dialog’s corporate services director Chew Eng Kar said the company is currently in talks with several multinational companies to partner in its Phase 3 in Pengerang.

“We are currently exploring the opportunities that arise from the development in Pengerang as we have enough land and the possibility of moving towards the oil and petrochemical industry.

“However, we have not made any firm decisions. If we do go in, we will be holding minority stake and we are looking for new partners for our Phase 3 project.

“We are confident to grow our bottomline as well as growing our storage facilities, maintenance services which we expect to be a recurring income avenue,” he said.

In April 2018, the group signed a memorandum of understanding with Johor state government to develop Pengerang Deepwater Terminal (PDT) Phase 3 for the construction of petroleum or petrochemical storage and a third jetty at the initial cost of investment of RM2.5 billion.

Dialog will have an 80 per cent equity stake and the Johor state 20 per cent.

Research firm AmInvestment Bank expects subsequent investments by other joint-venture partners will reduce Dialog’s stake while boosting Phase 3’s total investment value, given that Phase 2 had reached RM7.8 billion in a reclaimed area, half the size of Phase 3.

The research firm said this will be part of a 500-acre (202.34ha) zone comprising more reclaimable land and the adjoining buffer zone. Additionally, Dialog will be expanding its dormant Tanjung Langsat Terminal 3 into a 300,000 m3 storage facility.

For its financial year ended June 30, 2018, Dialog’s net profit rose by 41.6 per cent to RM528.3 million in from RM373.1 million in the previous year.

The Group’s total assets stood at RM6.37 billion as at June 30, 2018, representing an increase of RM548.5 million from RM5.82 billion last year.

Source: NST