• Maintain BUY (TP: RM0.62). T7 Global (T7) 9MFY24 PATAMI of RM29.4mn (+57.3% YoY) made up 69% of both our and consensus estimate. We deem this as within our estimate. Similar to previous quarter, 3Q24 earnings jumped 33.4% QoQ and 76.5% YoY to RM14.2mn mainly due to the progress of KLIA baggage handling system (BHS) contract. Following recent contract award of 2 packages of Pan-Malaysia MCM contract from IPC and ExxonMobil, its orderbook has expanded to RM4.5bn which will sustain its earnings over the next 5 years. Maintain T7 as a BUY with unchanged SOP-derived TP of RM0.62. This implies 8.2x FY25F fully diluted P/E.

• Key Highlights. Revenue rose 28% YoY to RM176mn driven by stronger revenue from Industrial segment that soared 308.9% YoY to RM98.8mn driven by BHS contract. This had more than offset slower revenue from Energy segment that declined 31.5% YoY to RM77.6mn. Note that for BHS contract, only 20% of the contract revenue has been invoiced to the client despite the actual work progress has reached 43%. The profit for the quarter could be higher if not due to soaring finance expenses that rose by 117% QoQ to RM16.8mn. This is due to higher borrowings to finance the purchase of jack-up rig for well decommissioning contract. We estimate the purchase price is amounted to RM316mn or USD70mn.

• Earnings Forecast. No change to earnings forecast.

• Outlook. We expect the company to sustain its earnings in 4Q24 earnings underpinned by (i) progress billing of BHS contract, and (ii) full quarter contribution from MOPU TSEVEN Shirley which has achieved first oil from Nong Yao field (Thailand) in mid of Aug 2024. Separately, the company was recently awarded with Pan Malaysia MCM contract Package B3 and B2 from IPC and ExxonMobil respectively. This has boosted its orderbook by 60.7% to RM4.5bn from RM2.8bn previously. Besides that, its tenderbook ballooned to RM14.4bn as it was invited to participate in FPSO leasing tenders.

Source: BIMB Securities Research - 28 Nov 2024