• T7 Global has secured Package B3 for the provision of MCM for IPC Malaysia B.V. 
   
• The contract value is estimated to be RM300-400m, with a tenure of 5+3+2 years, bringing the latest order book to an estimated RM3.5bn
   
• Maintain BUY rating with SOP-derived target price of RM0.68

Secured MCM Job From IPC Malaysia B.V.

T7 Global (T7) has announced that its wholly-owned subsidiary, Tanjung Offshore Services Sdn Bhd, has been awarded a Maintenance, Construction, Modification (MCM), and HookUp Commissioning (HUC) services contract for Package B3 by IPC Malaysia B.V. The contract is effective from 25 Oct 24 and has a duration of 5 years, with an option to extend for an additional 3+2 years.

Another Pan Malaysia Package Win

This marks T7’s second Pan Malaysia package win. We believe the contract value for this package to be lower than the previously awarded ExxonMobil Package B2 (Guntong), estimated to be in the range of RM300-400m, which would imply an annual revenue of RM60–80m. Assuming a 9% net profit margin (in line with management’s guidance), this contract is expected to generate an annual PAT of RM5–7m over 2025–29, representing 10- 13% of our 2025E earnings forecast. This contract win brings T7’s total outstanding order book to an estimated RM3.5bn. We expect continued positive flow of contract awards in the coming weeks, with only 6 of the 18 available HUC/MCM Pan Malaysia packages announced to date.

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 second Pan Malaysia contract win strengthens our positive outlook 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 - 13 Nov 2024