Friday, December 16, 2011

RHB Research maintains Outperform on Dialog Group

KUALA LUMPUR (Dec 16): RHB Research Institute is maintaining its Outperform on DIALOG GROUP BHD [] and fair value of RM3.65 a share.

The research house said on Friday it was positive about Dialog's corporate exercise involving the rights issue with warrants.

On Thursday, Dialog announced that the rights issue has been priced at RM1.20 a share for the new rights and RM2.40 a warrant.

The price of the new shares was a discount of 46.5% to the estimated theoretical ex-price of RM2.23/share (based on the five-day volume weighted average market price of Dialog up to Dec 14.

'We believe the additional discount is mainly to entice shareholders given the volatile market conditions, but the higher exercise price for the warrants suggests that the company is confident on delivering in the longer term,' it said.

RHB Research it was positive on the exercise despite the potential dilutive impact, as both projects are already secured and will propel Dialog's long-term growth prospects.

It said that Dialog remained one of its premium-play picks as it still liked the company for its long-term project visibility and sound management track record.

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