MARC has reaffirmed Dialog Group Berhad (“DIALOG”)’s corporate credit rating at AA- (Double A minus), supported by DIALOG’s commendable balance sheet and cash flow position resulting from the Group’s prudent financial policy as well as its strong competitive position and safety track record in the highly specialized oil, gas and petrochemical industries. The corporate credit rating is, however, moderated by the general downward trend in the group’s revenue and profit stream.

DIALOG is principally an investment holding company and a component stock of the Bursa Malaysia’s Composite Index. Since 2002, DIALOG has embarked on a group-wide streamlining exercise which aims to reposition itself into a one-stop integrated service provider; specializing in the provision of specialist technical services and products to support the upstream and downstream activities in the oil, gas, and petrochemical industries. The move represents DIALOG’s proactive effort to diversify its income source in view of fewer EPCC (engineering, procurement, construction and commissioning) contracts within the oil, gas and petrochemical industries in the region. Nevertheless, with the strong uptrend in oil prices, the Group is ready to secure more EPCC projects moving ahead.

DIALOG’s competitive advantage lies in its capabilities in rendering a diverse range of services within the industry. Through the Group’s tie-ups and alliances with various foreign technology partners, DIALOG has demonstrated credibility in completing various jobs on time; within budgeted cost; and within quality and safety parameters. The technology know-how and proven track record serve as barriers to enter the industry.

During the period under review, DIALOG achieved 37% growth in its revenue. Nonetheless, profit before tax declined partly attributed to the lacklustre performance of the petroleum retailing division. The movements depicted by historical profitability during the past four fiscal years are a reflection of its strategic transition into an integrated service provider (from an EPCC contractor). Despite lower contract sizes as compared to EPCC jobs, the provision of services are superior in term of stable and recurring income while being less capital-intensive. MARC draws comfort from DIALOG’s solid capitalisation and cash flow position, particularly its minimal debt leverage position for the past few financial years. Going forward, the provision of technical services in the oil, gas and petrochemical industries shall remain as the Group’s focus. However, DIALOG, with its proven track record, is also able and ready to take on major EPCC contracts that offer adequate returns to the Group.