• T7 Global has secured Package B3 for the provision of MCM services for Petrofac (Malaysia-PM304)

• This is one of the five available contracts in Package B3. Contract value is estimated to be RM100-150m, with a tenure of 5+3+2 years

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

Secured MCM job from Petrofac (Malaysia-PM304)

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 B3 by Petrofac (Malaysia-PM304) Limited. The contract is effective from 30 Oct 24, with a duration of 5 years, with an option to extend for an additional 3+2 years.

Third contract secured from Package B3

We understand that this contract is part of the overall Package B3, which has an estimated total value of RM500m over the 5 firm years. With this latest win, T7 has secured 3 out of the 5 available contracts in Package B3 thus far. While the official contract value was not disclosed, we estimate it to be worth c.RM100-150m, translating to an annual revenue of RM20-30m. Assuming a 9% net profit margin (in line with management’s guidance), this contract is expected to generate an annual PATAMI of RM2-3m over 2025–29, representing c.5% of our 2025E earnings forecast. This contract win bring its total Pan Malaysia package awards to c.RM800-950m. We remain positive on T7’s contract flow prospects, supported by its robust RM14bn tender book.

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 SOP-derived target price of RM0.68, which implies an 11x forward 2025E EPS. 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 of 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 - 6 Dec 2024