• T7 Global has secured Package B2 (Guntong) for the provision of MCM for ExxonMobil Exploration and Production Malaysia
   
• The contract, valued at RM500m, has a tenure of 5+3+2 years, bringing the latest orderbook to an estimated RM3.1bn
   
• Maintain BUY rating with SOP-derived target price of RM0.68

Secured MCM Job From ExxonMobil

T7 Global (T7) announced that it has been awarded one of the Maintenance, Construction, Modification (MCM), and Hook-Up Commissioning (HUC) services contracts for Package B2 (Guntong) by ExxonMobil Exploration and Production Malaysia (EMEPMI). The contract, effective 1 Dec 24, has a 5-year duration, with an extension option for an additional 3+2 years.

Positive Contract Win With Better Margins

With overall MCM service rates increasing by c.20%, the net profit margin for this contract is expected to be higher than the previous MCM contract. Assuming a net profit margin of 9% (in line with management guidance), the estimated contract value of RM500m is projected to generate RM9m in PAT annually over 2025–29, representing 18% of our existing 2025E earnings forecast. With this contract win, T7’s total outstanding order book is estimated at RM3.1bn. We expect more positive contract award flow in the coming weeks, with only 4 of the 18 available HUC/MCM Pan Malaysia packages announced so far.

Maintain BUY With RM0.68 Target Price

We make no changes to our earnings forecast as this contract win falls within our order book replenishment assumption. We reiterate our BUY rating and SOP-derived target price of RM0.68, which implies an 11x forward 2025E EPS. This contract win reinforces our positive view on T7’s earnings prospects (2025E EPS growth: 21%), supported by its sizeable order book with long-term earnings visibility (>50% comprised of MOPU with 5-10 years earnings visibility). Key risks to our BUY call include unforeseen operational delays in existing MOPUs, unforeseen delays in the BHS project and work orders, and higher-than-expected operating costs.

Source: Phillip Capital Research - 6 Nov 2024