• T7 Global has secured Package C1 for the provision of MCM & HUC services for Petronas Carigali

• Contract value is estimated to be RM500m, with a tenure of 5+3+2 years, bringing total Pan Malaysia contract wins to RM1.3-1.4bn

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

Secured MCM & HUC job from Petronas Carigali

T7 Global (T7) has announced that its wholly-owned subsidiary, Tanjung Offshore Services Sdn Bhd, has been awarded a Maintenance, Construction, Modification (MCM), and Hook- Up Commissioning (HUC) services contract for Package C1 (Peninsular Malaysia Asset) by Petronas Carigali Sdn Bhd (PCSB). The contract is effective from 27 Sep 24, with a duration of 5 years, and an option to extend for an additional 3+2 years.

Another Pan Malaysia package win

While no official contract value was disclosed, we estimate the contract to be worth c.RM500m, contributing an annual revenue of RM100m. Based on a net profit margin of 9% (in line with management’s guidance), this contract is expected to generate an annual PATAMI of RM9m over 2025–29, accounting for c.18% of our 2025E earnings estimate. With this award, T7’s total Pan Malaysia package wins now stand at c.RM1.3-1.4bn. We remain positive on T7’s contract flow prospects, backed by its solid RM14bn tender book, which includes MOPU and FPSO projects, MCM-related work, well plug & abandonment (P&A), and offshore facility decommissioning.

Maintain BUY with RM0.68 target price

We make no changes to our earnings forecast as this contract win falls within our assumption. We reiterate our BUY rating and unchanged SOP-derived target price of RM0.68, which implies a 2025E PE of 11x. We continue to like T7 for its positive earnings prospects, supported by its sizeable RM4.5bn order book that offers long-term visibility, with >50% comprising MOPU and Pan Malaysia packages providing 5–10 years of earnings clarity. 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 - 16 Dec 2024