T7 Global Bhd (T7 Global, 7228), is an integrated solutions provider specialises in Oil & Gas (O&G) upstream services. After its rebranding in 2016, it has diversified into aerospace and defence as well as specialised infrastructure construction having been in numerous constructions related projects over the past 3 decades. We like T7Global premised on (i) solid current orderbook of RM2.8bn; (ii) recurring leasing revenue from its MOPU projects for the next 5 to 10 years; and (iii) positive outlook on the O&G industry. BUY with a target price of RM0.54 based on 13x PER, a slight discount to its peers on Bursa Malaysia due to its smaller market capitalisation.

According to management, Bayan Field Mobile Offshore Production Unit (MOPU) and Nong Yao Thailand MOPU leasing made up 50% of its orderbook and the remaining comes from Engineering, Procurement and Construction, Operations & Maintenance (O&M), Integrated Well Services (IWS) and Offshore Construction Services (OCS) and infrastructure of Baggage Handling System (BHS) in KLIA. The Bayan field MOPU project awarded by Petronas Carigali in year 2020, has been completed and will start contributing in 1QFY23. While the Nong Yao Thailand MOPU from Busrakham G11 in end 2022 has commenced construction and is expected to be completed and contributing from Q4FY23 onwards. T7 Global also announced 2 contract wins worth approximately RM100m in Jan 2023, for the provision of head-hunting and recruitment services and facility decommissioning services. T7 Global is looking to secure more MOPU solutions in Malaysia and the Southeast Asian region.

T7 Global owns a fully automated Aerospace metal surface treatment facility in Serendah, Selangor with a tank size up to 3.2 meters and current capacity of 10,000 parts per month. The plant is currently running at 30% utilisation, nonetheless management is seeing increasing activities in the aircraft refurbishment and construction moving forward. Also in December 2022, T7 Global in a consortium with Siemens Logistics Pte Ltd had won a contract to upgrade the BHS at Terminal 1, KLIA. The project comprises of design, supply, installation, testing and commissioning a state-of-the-art BHS. This enables T7 Global to participate in similar projects on the international front.

T7 Global posted a commendable 9MFY22 result with RM8.8m PAT on the back of RM195.2m revenue, representing a YoY increase of 19% and 14% respectively. Its net gearing stood at 2.01x which is relatively high due to its nature of business which is capital intensive and project financing of the MOPUs.

Source: Rakuten Research - 16 Feb 2023

To sign up for an account: http://bit.ly/40BNqKI
[Youtube Tutorial] Account Opening & Enable Foreign Equity: http://bit.ly/3I5Jzxo