KUALA LUMPUR: Affin Hwang Capital has tweaked its financial year 2018 to 2020 earnings for Dialog Group Bhd marginally higher by one to three per cent following its acquisition of MISC Bhd’s 45 per cent stake in Centralised Terminals Sdn Bhd (CTSB) for RM193 million.
Affin Hwang said together with the assumption that the deal will be funded by a 60:40 debt and equity mix, the revised forecast reflects the changes in accounting recognition for Langsat tank terminal, from associate level to consolidation under revenue line.
“We view this deal positively as this is in line with Dialog business strategy to further expand its current capacity with the expansion of Pengerang Deepwater Terminal (PDT) Phase 1 and 3,” it said.
Dialog announced on Monday that it will acquire a 45 per cent interest in CTSB owned by MISC, increasing its effective stake from 44 per cent to 80 per cent.
Post-acquisition, Dialog will consolidate CTSB’s revenue and earnings as opposed to recognition of earnings at the associate line just prior.
In addition, Dialog will take over MISC outstanding loan to CTSB which amounts to RM56 million.
The proposed acquisition is expected to be completed within one month.
Affin Hwang said it considered the valuation for the acquisition to be fair, which is at 17.7 times financial year 2017 price earnings, based on its forecast.
The Langsat tank terminal has been in operations since 2009 and currently has a total storage capacity of 647,000 cm³.