KUALA LUMPUR (Aug 20): Dialog Group Bhd's share price fell to its lowest in over three years at RM2.58 at Bursa Malaysia's afternoon break today after the oil and gas support services provider reported yesterday its first full-year net profit drop in 16 years to RM543.14 million for financial year ended June 30, 2021 (FY21) from RM630.36 million a year earlier.

At 12.30pm today, Dialog's share price settled down two sen or 0.77% at its intraday low of RM2.58, which is also the stock's lowest price in over three years since Dec 29, 2017 when the company's share price closed at RM2.51.

Today, Dialog registered a share trade volume of 1.05 million units as at 12.30pm after the stock was traded between RM2.58 and RM2.61 so far today. At RM2.58, Dialog has a market value of about RM14.55 billion based on the company's 5.64 billion issued shares.

Year-to-date, the stock's price has fallen to current levels from its closing price of RM3.47 on Jan 4, 2021.

Yesterday, Dialog said in a Bursa filing that FY21 full-year revenue dropped to RM1.61 billion from RM2.3 billion a year earlier.

For 4QFY21, Dialog said net profit fell to RM138.54 million from RM156.68 million a year earlier while revenue was lower at RM522.14 million versus RM539.94 million.

Today, CGS-CIMB Securities Sdn Bhd analyst Raymond Yap wrote in a note that Dialog's FY21 full-year core net profit of RM506 million met CGS-CIMB's expectation but was 5% below consensus forecast.

In accounting terminology, a company's core net profit is derived by excluding extraordinary items in the firm's financial statements.

"FY21 broke Dialog's 16 consecutive years of profit growth streak," Yap said.

He said CGS-CIMB, which has an "add" call for Dialog shares, has however lowered its target price (TP) for the stock to RM3.69 from RM3.82.

"After a 31% share price selldown over the past 12 months, Dialog's forward P/BV (price-book value) and P/E (price-earnings) valuations have declined to 2016 levels, and it may be worth a relook by longer-term funds," Yap said.

RHB Investment Bank Bhd analyst Sean Lim wrote in a note today that Dialog's share price has retraced about 25% year-to-date and that RHB sees the selldown in Dialog shares as likely led by factors including weak earnings recovery and lack of comprehensive strategies in energy transition.

"While we expect the growth trajectory to resume in FY22F, the recently announced venture into the recycling of plastic waste for the production of packaging materials for the F&B (food and beverage) industry could be seen as an initiative to progress in the company's sustainability journey in terms of its ESG (environmental, social, and governance) agenda," Lim said.

He said RHB, which has kept its "buy" call for Dialog shares, has however reduced its TP for the stock to RM3.14 from RM3.53.

According to Lim, RHB expects Dialog's earnings growth to resume in FY22 on the back of revenue recovery and better tank terminal earnings contribution.

He said Dialog's FY21 full-year results were within RHB's expectations.

"At 99% and 95% of our and street estimates, FY21 core earnings of RM506m (-16% year-on-year) came in within expectations," he said.