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RAM Ratings affirms DIALOG Group’s senior and subordinated sukuk ratings at AA2 and A1; outlook stable
Published on 30 Dec 2025.
RAM Ratings has affirmed the respective AA2/Stable and A1/Stable ratings of DIALOG Group Berhad’s (DIALOG or the Group) RM3 bil Senior Islamic Medium-Term Notes and RM3 bil Subordinated Perpetual Islamic Notes. The subordinated notes are rated two notches below the senior notes to reflect their higher loss severity and increased risk of non-performance relative to senior obligations.
The affirmation reflects DIALOG’s strong business fundamentals, underscored by its diversified earnings profile across the upstream, midstream and downstream segments of the energy value chain. The Group’s financial resilience is further anchored by a robust balance sheet and healthy liquidity position. DIALOG continues to lead the domestic tank terminal sector, with midstream capacity expanding to 5.1 mil cubic metres. Importantly, a significant portion of earnings stems from contracted services, ensuring long-term revenue visibility.
While FY Jun 2025 performance was impacted by one-off impairments and write-offs that did not affect cash flow, the Group’s financial profile remains consistent with its current ratings. Excluding these non-cash items, pre-tax profit would have been higher at RM484 mil. Looking ahead, the Group’s earnings are expected to rebound strongly from FY Jun 2025 levels, driven by the absence of the above-mentioned one-off charges as well as improved midstream and downstream contributions. In 1Q FY June 2026, revenue and pre-tax profit rose to RM657 mil and RM156 mil, respectively (1Q FY June 2025: RM634 mil and RM151 mil), signaling early recovery. Downstream performance is anticipated to improve gradually following the conclusion of loss-making contracts by end-2025. Additionally, margins are expected to benefit from stronger contributions from integrated technical services, particularly plant maintenance, as well as the recently announced engineering, procurement and construction contract for its 25%-indirect joint venture, Pengerang Terminals (Two) Sdn. Bhd., for the construction of biofuel storage and handling facilities.
As at end-September 2025, DIALOG’s total debt increased to RM2.29 bil, but its gearing and net gearing remained strong at 0.37 times and 0.04 times, respectively. Although capex may exceed RM3 bil over the next three years and will be partially funded through new borrowings, the Group’s strong liquidity and prudent financial management are expected to keep gearing below 0.60 times. Funds from operations coverage is anticipated to remain above 0.30 times, notwithstanding the expected rise in debts.
The reaffirmed ratings are moderated by execution risks associated with simultaneous expansion initiatives and investments with longer gestation periods, which could stretch its financial position if those expansion projects are not properly implemented. Nevertheless, RAM Ratings takes comfort in DIALOG’s proven track record of financial discipline, risk aversion, and strategic partnerships that help mitigate operational and market risks.
Analytical contact
Chew Wei Li
(603) 2708 8301
weili@ram.com.my
Thong Mun Wai
(603) 2708 8255
munwai@ram.com.my
Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my
The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.
RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.
Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.
Published by RAM Rating Services Berhad
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