Thursday, Nov 20, 2003
The reaffirmation of Dialog Group Berhad (DIALOG)’s corporate credit rating of ‘AA-‘ reflects the Group’s continued strong financial profile; characterized by low gearing, strong cash flow position and good financial flexibility as well as its above average position in the highly specialized oil, gas and petrochemical industry backed by its commendable performance and safety track record.
DIALOG has shifted its focus from engineering, procurement, construction and commissioning (EPCC) activities to provision of specialist technical and technology services to support the upstream and downstream activities in the oil, gas, and petrochemical industry. In addition, DIALOG continues to be involved in marketing of specialty chemicals and equipment, provision of plant maintenance services, petroleum retailing and provision of centralized tankage facilities (CTF) to the oil, gas and petrochemical industry.
Increasing diversification into non-construction related activities saw a shift in the revenue contribution accounting for 64% (FY2002:37%) of the group’s revenue during FY2003. Due to the scarcity of EPCC projects in the region, most contracts secured during the year under review are relatively smaller and shorter term in nature. The group’s near term revenue growth is expected to be flat, with stable profitability on the back of strong contributions from CTF and recurring income earned from the long term chemical products supply agreement, petrol kiosk retailing and periodic plant maintenance services.
Operating profit margin dropped to single digit during the recent fiscal year due to provision for potential share of losses in BASF PETRONAS Chemicals Sdn Bhd’s (BPC) butanediol (BDO) complex in Gebeng. Future capital expenditure will be mainly concentrated on the development of new petrol stations which are expected to be funded from internal cashflows and a small portion in borrowings. The manageable level of debts will result in strong double-digit DSCRs. Given the group’s conservative policy on the use of debt as a funding source and continuous retention of earnings, group capitalization should remain solid. The very low leverage, comfortable amount of unutilized credit lines, growing capital base and the continued presence of strong institutional shareholders accord the group with good financial flexibility.
DIALOG has shifted its focus from engineering, procurement, construction and commissioning (EPCC) activities to provision of specialist technical and technology services to support the upstream and downstream activities in the oil, gas, and petrochemical industry. In addition, DIALOG continues to be involved in marketing of specialty chemicals and equipment, provision of plant maintenance services, petroleum retailing and provision of centralized tankage facilities (CTF) to the oil, gas and petrochemical industry.
Increasing diversification into non-construction related activities saw a shift in the revenue contribution accounting for 64% (FY2002:37%) of the group’s revenue during FY2003. Due to the scarcity of EPCC projects in the region, most contracts secured during the year under review are relatively smaller and shorter term in nature. The group’s near term revenue growth is expected to be flat, with stable profitability on the back of strong contributions from CTF and recurring income earned from the long term chemical products supply agreement, petrol kiosk retailing and periodic plant maintenance services.
Operating profit margin dropped to single digit during the recent fiscal year due to provision for potential share of losses in BASF PETRONAS Chemicals Sdn Bhd’s (BPC) butanediol (BDO) complex in Gebeng. Future capital expenditure will be mainly concentrated on the development of new petrol stations which are expected to be funded from internal cashflows and a small portion in borrowings. The manageable level of debts will result in strong double-digit DSCRs. Given the group’s conservative policy on the use of debt as a funding source and continuous retention of earnings, group capitalization should remain solid. The very low leverage, comfortable amount of unutilized credit lines, growing capital base and the continued presence of strong institutional shareholders accord the group with good financial flexibility.