• Maintain BUY (TP:RM0.62). T7 Global (T7) 1HFY24 PATAMI of RM15mn (+43% YoY) made up 36% of both our and consensus estimate respectively. We deem this as within our estimate as its earnings are seasonally stronger in 2H. 2Q24 earnings rose 130% QoQ and 65% YoY to RM14.4mn mainly due to stronger earnings contribution from industrial segment i.e. the progress of KLIA baggage handling system (BHS) contract. We foresee 2H24 earnings to be boosted by maiden income from MOPU TSEVEN Shirley which has achieved first oil from Nong Yao field (Thailand) in mid of Aug 2024. 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 44% YoY to RM150mn due to (i) higher revenue from energy segment (i.e. MCM and IWS contracts) by 37% YoY to RM76mn, and (ii) higher revenue from industrial segment (led by construction revenue from KLIA BHS contract) by 53% YoY to RM74mn. PATAMI margin expanded to 7.1% (2Q23: 6.2%, 1Q24: 3.5%) as KLIA BHS contract contributing to stronger profit margin.

• Earnings forecast. No change to earnings forecast.

• Outlook. The company recently was awarded with a new contract from Ministry of Defence Malaysia (MINDEF) for the supply of airfield surveillance radar system that is worth RM74.6mn. The contract duration spans for 5 years until 4th Aug 2029 and it will help to maintain its orderbook at circa RM2.8bn. Its tenderbook remain robust at more than RM4bn that is comprised of (i) MOPU projects, (ii) platform decommissioning jobs, and (iii) MCM contracts within Malaysia.

Source: BIMB Securities Research - 30 Aug 2024