T7 Global (7228) – Huge Upside Oil & Gas Counter

TARGET PRICE RM0.48 to RM1.00

1. Principal Activities

• Engineering, Procurement, Construction, Installation and Commissioning of oil and gas mobile production facilities

• Operation and Maintenance

• Integrated Well Services

• Supply and Servicing of Oil and Gas Products

• Also involved in Aerospace, Defence and Construction sector

2. Solid Fundamentals and Financial Performance

1Q2021 profits are 500% higher than 1Q2020, 2Q2021 profits are 33% higher than 1Q2020.

Profit margins have doubled from 2% to 4% due to higher oil prices

Highly likely that FY2021 will record higher profits than FY2020, we expect to see good results in the coming 3Q2021 and 4Q2021 profits.

But this is not including the Bayan Mobile Offshore Production Unit which is currently under construction. The asset should be delivered next year and we expect to see a 100% RISE in Profits in FY2022.

So if FY2021 we expect to see RM10 million in profits, FY2022 should see RM20 million in profits

RM20 million / 616 million shares = 0.03 x 15x PE = RM0.48 per share

Similar business with Yinson, trading at 15x PE now.

3. Share Price has not reflected potential upside in profits, still trading at lower range

4. Share Price has not reflected potential upside in profits, still trading at lower range

The Company share price is lagging crude oil price.

5. Expect to see more new project wins coming in 4Q2021

• Currently has RM2 billion orderbook

• Tendering for RM3 billion orderbook

• Expect to see more oil and gas contracts coming out soon due to better oil prices

• Rumour has it that they are tendering for MAHB BHS Contract with Siemens worth over RM1 billion, and the award is likely coming out by year end as the airport have to finish upgrading works in tandem for border reopening next year.

6. Going into renewables?

This is one of the few oil and gas counters that has yet to venture into the renewables energy sector and we expect some announcements to come in as early as 1Q2021.

7. Potential M&A in the cards?

We also heard T7 Global might be bidding for EPOMS, a subsidiary of Petronas which has annual profits of over RM20 million per year.

This could DOUBLE or TRIPLE the target price if it happens, closer to RM1 per share !!!.