• 9M24 core net profit of RM27m (+43% YoY) is deemed to be in line with ours andconsensus estimates in expectation of lumpy 4Q24 recognition

• Stronger earnings driven by higher O&G activities and the KLIA BHS project

• Maintain BUY rating with SOP-derived target price of RM0.68

9M24 Core Net Profit of RM27m (+43% YoY) Met Expectations

T7 Global (T7) recorded a higher 9M24 revenue of RM459m (+37% YoY), driven by stronger performance from the energy division (+8% YoY) and industrial solutions segment (+108% YoY) on higher billing progress from the KLIA baggage handling system (BHS) project. 9M24 operating margin rose 4ppts YoY to 16% on stronger operating leverage. Overall, 9M24 core net profit came in higher at RM27m (+43% YoY), accounting for 63% of our and consensus full-year forecasts. We deem results to be within expectations on stronger 4Q24, as historically 4Q has accounted for 35-40% of full-year earnings.

Increase in Tender Book Signals Positive O&G Environment

T7 recorded a higher progress billing of RM47m for its KLIA BHS project in 3Q24, compared to RM37m in 2Q24, achieving c.40% completion as of end-3Q24. The group’s outstanding order book surged to RM4.5bn (+73% QoQ) with the award of Pan Malaysia Maintenance, Construction, and Modification (MCM) packages, with work set to commence in Dec 24–Jan 25. Elsewhere, the latest tender book of RM14.4bn more than doubled from RM6bn in 2Q24, driven by notable new bids, including MOPU and FPSO projects, MCM-related jobs, well plug & abandonment (P&A), and offshore facility decommissioning. We are encouraged by the strong tender book, reflecting a vibrant O&G environment and promising prospects for T7. In addition to O&G-related bids, T7 is bidding for projects similar to the current KLIA BHS work scope in Penang and Sabah.

Maintain BUY With RM0.68 Target Price

We reiterate our BUY rating and SOP-derived target price of RM0.68, which implies an 11x forward 2025E PE. We continue to like T7 as a beneficiary of robust domestic offshore activities, supported by its healthy RM4.5bn order book, providing long-term earnings visibility. Key risks to our BUY call include lower-than-expected work orders, unforeseen delays in the BHS project, and higher-than-expected operating costs.

Source: Phillip Capital Research - 28 Nov 2024