Dialog Group Bhd has received reaffirmed BUY calls from RHB Investment Bank Bhd (RHB Research), MIDF Amanah Investment Bank Bhd (MIDF Research) and Maybank Investment Bank Bhd (Maybank IB) following its first-quarter financial year 2025 (1QFY25) results, which met analysts' expectations.

All three research houses highlighted Dialog's robust midstream performance and operational stability, with target prices set at RM3.09 by RHB Research and Maybank IB, and RM2.72 by MIDF Research, reflecting potential upsides of 55%, 57% and 37%, respectively.

For 1QFY25, Dialog posted a core net profit of RM160 million, marking a 16% year-on-year (YoY) increase but a 3% decline quarter-on-quarter. The earnings were supported by its midstream and downstream segments, with improved tank storage utilisation and tariffs offsetting a 19% drop in revenue due to lower upstream contributions and subdued downstream activities.

Analysts attributed the decline in upstream revenue to lower global oil prices and the disposal of Dialog's Jubail supply base in Saudi Arabia.

RHB Research maintained its positive outlook, noting that Dialog's midstream expansion, particularly at the Langsat Terminals and the Pengerang Deepwater Terminals, positions the company for long-term growth.

The addition of renewable fuel storage at Langsat by September 2026 is expected to command premium rates compared to traditional fossil fuel storage. RHB Research also highlighted Dialog's efforts to diversify into food-grade recycled PET production and new markets, which could bolster future earnings.

Meanwhile, MIDF Research echoed the optimism, emphasising the resilience of Dialog's Malaysian operations, which saw earnings increase by 41% YoY despite inflationary pressures and global geopolitical risks. MIDF Research also pointed to Dialog's ongoing expansion in Pengerang, where fabrication facilities aim to serve energy, pharmaceutical, and solar industries.

However, international operations experienced an 82% drop in earnings due to reduced activities and the divestment of the Jubail Supply Base.

Maybank IB noted that Dialog's tank terminal utilisation rates remained above 90% in 1QFY25, with stable tariffs between S$6 and S$6.50 per cu m per month. The research house expects margins to improve further as the company integrates new rates into its downstream contracts. It also cited the potential for Dialog to secure new tank terminal contracts, particularly in collaborations with ChemOne and Petronas, as critical to driving its recurring income and re-rating prospects.

With its strategic focus on midstream and downstream expansions, Dialog remains well-positioned for sustained growth, even as external risks loom over the broader energy market.