T7G has been bagging several contracts and could be seen as a laggard in the O&G sector. Currently, its orderbook stood at more than RM900m, with the tenderbook holding up at RM3bn. We believe traders’ would lookout for O&G maintenance players after a decent rally seen in CARIMIN, DAYANG and PENERGY over the past few weeks. Next phase of growth for T7G could be seen in aerospace segment, where the fully automated metal treatment facility will commence by end-2019. Based on our indicator, T7G could be poised for a breakout amid steady increase in momentum. Share price has surpassed RM0.505, next resistance is envisaged at RM0.55-0.575, with a LT TP set at RM0.63. Support is located at RM0.485-0.495, with cut loss set around RM0.48.

Stable contract flows being awarded in 2019. Following several contracts being awarded recently by (i) VME Process Asia Pacific Pte Ltd (provision of engineering, fabrication, procurement and supply of modular process packages in India), (ii) Vestigo Petroleum Sdn Bhd (to provide integrated well services under the Pan Malaysia PACs umbrella contract and (iii) Petronas Carigali Sdn Bhd (for the integrated well services for intervention, workover, and abandonment for PACs, the orderbook has grown to more than RM900m (tenderbook stood at >RM3bn).

O&G under traders’ radar. In addition, O&G maintenance related player such as CARIMIN, DAYANG, PENERGY have been rallying over the past few weeks, T7G could be seen as a laggard and may be looking for a catch up play in the near term.

Next phase of growth - aerospace. T7G’s fully automated metal treatment facility in Serendah Malaysia was completed in end-2018, with the factory built up area of 30.1k sq ft, equipped with up to 42 treatment tanks and is set to commence operations by end-2019.

Hovering above SMA200 and poise for a breakout. Based on our proprietary indicator, its trend is positive and the momentum is gaining traction; T7G could do a breakout. Resistance is located around RM0.55-0.575, with a LT TP set at RM0.63. Support is anchored around RM0.485-0.495 and cut loss stood at RM0.48.

Source: Hong Leong Investment Bank Research - 21 Nov 2019