• Including its latest MCM win from Hibiscus Oil & Gas Malaysia, T7’s outstanding order book reached an all-time high of c.RM4.7bn

• 2025E earnings growth momentum to be driven by its 2 MOPUs, MCM jobs, P&A and BHS

• Maintain BUY rating with SOP-derived target price of RM0.66

Ramping Up Hiring to Cater to the High MCM Work Inflow

Following the latest MCM contract award from Hibiscus Oil & Gas Malaysia, T7 has secured a cumulative RM2bn in MCM-related contracts, bringing its order book to a record-high of RM4.7bn. In preparation for the anticipated increase in work orders, T7 has been aggressively expanding its workforce to allow for the simultaneous execution of multiple MCM jobs, including 3 Pan Malaysia packages. We estimate the combined MCM projects will contribute RM400–450m revenue in 2025E, accounting for c.50% of our revenue forecasts.

BHS Project to See a Stronger Ramp-up; Enya JUR Commenced Work

Regarding current O&G project development, both the Mobile Offshore Production Units (MOPUs) operate at full capacity. The Enya jack-up rig has commenced work at Labuan on nine wells, with operations on nine wells expected to be completed by end25. Following this, the jack-up rig will be redeployed to Peninsular Malaysia and Sarawak for the remaining 44 wells, keeping it busy for 2-3 years. Meanwhile, the KLIA baggage handling system (BHS) project has reached c.40% completion as of end24, compared to 29% as of end23. Progress has been slower than anticipated, mainly due to KLIA being an operational airport and unable to close certain sections to facilitate construction work. We gather that T7 is also bidding for other government-related projects with a scope and potential contract value similar to that of the BHS project.

Maintain BUY With RM0.66 Target Price

We reiterate our BUY rating and unchanged SOP-derived target price of RM0.66, which implies a 2025E PE of 11x. We remain positive on T7’s earnings prospects for 2025 (+21% YoY), underpinned by contributions from its 2 MOPUs, MCM jobs, P&A, and BHS project. Key risks to our BUY call include unforeseen operational delays in existing MOPUs, unforeseen delays in MCM work orders and BHS project, and higher-than-expected operating costs.

Source: Phillip Capital Research - 16 Jan 2025