Dialog Group (DIALOG) is set to boost its storage capacity at Langsat Terminal 3 (DTL3) in Tanjung Langsat, Johor, with an expansion that will increase its ability to store both renewable and petroleum products.

According to Kenanga Investment Bank (Kenanga), the addition of 150,000m3 of storage, with two-thirds dedicated to renewable products and the remainder to petroleum, is anticipated to enhance Dialog Group's valuation by RM0.05 per share and reinforce its commitment to sustainability.

Kenanga maintains an OUTPERFORM rating for Dialog Group and has raised its target price by 2% to RM3.23 from RM3.18. The investment bank highlights that the new storage expansion, secured under a take-or-pay agreement with EcoCeres Limited, will significantly boost the group's recurring profit and strengthen its ESG (Environmental, Social, and Governance) profile.

In addition to the expansion, CGS International Stock Broking House (CGS) reports that Dialog Group has signed its first long-term take-or-pay tank terminal lease since 2019, indicating a positive shift in securing further contracts. Dialog will construct 150,000m3 of new tanks at Langsat 3, with 100,000m3 dedicated to EcoCeres's renewable fuels and the remaining 50,000m3 available for third-party leases.

CGS underscores that this development marks the end of a five-year drought in tank terminal contracts and suggests that Dialog Group is well-positioned to secure additional leases in the near future. The expansion demonstrates Dialog's ability to adapt to the energy transition, with storage rates for renewable fuels expected to command a premium, supporting the group's growth trajectory and potential for improved financial performance.

Overall, Dialog Group's strategic investments and successful execution of its expansion plans reinforce its positive outlook, positioning the company favourably in the evolving energy and storage sectors.