Dialog enters recovery year driven by midstream recurring income

PETALING JAYA: Analysts expect Dialog Group Bhd’s near-term outlook to be firmly constructive as its financial year 2026 (FY26) is shaping up as a recovery period driven by its midstream recurring-income base and a stabilising downstream execution profile.

Maybank Investment Bank (IB) Research said:“We like Dialog for its recurring income portfolio and cash flow stability from its midstream tank terminal assets. Dialog remains our top pick for the sector.”

It has maintained its “buy” call on the counter with a target price of RM2.21.

MBSB Research similarly saw Dialog as a turnaround story, noting that its 1H26 results delivered a solid recovery and were generally consistent with its expectation and market expectations where it anticipated a rebound in profitability following FY25’s weaker performance.

Operationally, both reports pointed to stable, high utilisation at the tank terminals as the earnings anchor.

MBSB Research noted: “The midstream segment was a key driver of the quarter’s improvement as higher tank storage occupancy contributed positively to earnings, demonstrating stable demand for storage services amid crude oil price volatility.”

Financially, the recovery is already visible in headline numbers.

Maybank IB Research reported 2Q26 core net profit of RM137mil which brought 1H26 core earnings to RM275mil.

MBSB Research highlighted that 1H26 revenue was RM1.41bil (up 7.5% year-on-year) while profit after tax jumped to RM297mil – “representing a more than 100% increase from RM23mil” a year earlier.

A key swing factor was the sharp rebound in joint venture (JV) and associate contributions.

MBSB Research noted that the share of profit from JVs and associates rose significantly to RM76.4mil for the quarter compared with RM7.6mil a year ago.

Both reports also expected downstream to no longer be the drag it was in FY25.

Maybank IB Research said Dialog’s downstream segment was profitable in 2Q26.

MBSB Research echoed this shift, stating that downstream operations delivered better profitability supported by stronger operational execution and disciplined cost management.

Maybank IB Research outlined a multi-year pipeline including expansions tied to renewable fuel tanks and biorefinery-linked storage, concluding that multi-year growth prospects remain intact.