PhillipCapital has 'buy' call on T7 with 68 sen target price

NST Tue, May 07, 2024 08:27am - 1 month View Original


KUALA LUMPUR: T7 Global Bhd is poised to benefit from the anticipated resurgence in global industry capital expenditure (capex) amid rising crude oil prices, as outlined by financial services firm PhillipCapital.

PhillipCapital emphasised T7's strategic advantage to capitalise on the expected revival of upstream oil and gas (O&G) activities in Malaysia, citing its diverse involvement in hook-up and commissioning (HUC), maintenance, construction, modification (MCM), and well plug and abandonment (P&A) services.

According to the firm, T7's mobile offshore production units (MOPUs) represent a reliable source of earnings and recurring revenue.

T7's expansion into the regional market, notably securing its second MOPU for Busrakham G11, a subsidiary of Mubadala Energy, is scheduled to commence charter in the second quarter of 2024 for a five-year period.

PhillipCapital estimates that both MOPUs will contribute about 33 per cent to the net profit forecasts for 2024.

T7 is actively pursuing two additional MOPU projects, valued between RM800 million and RM900 million collectively. PhillipCapital underscores T7's optimistic outlook, underpinned by a substantial tender book worth RM3.8 billion. Furthermore, the company intends to participate in upcoming tenders for Petronas' Pan Malaysia hook-up and commissioning/modification (HUC/MCM) projects, expected to be awarded by the end of 2024.

PhillipCapital projects a net profit compound annual growth rate (CAGR) of 18 percent over three years, driven by the addition of two new MOPUs, the KLIA Terminal 1 baggage handling system (BHS) contract, and increased oil and gas (O&G) operations.

The firm has a 'buy' rating on T7 with a target price of 68 sen, citing the company's favorable positioning to capitalize on the upward trajectory in capital expenditure spending, potential for earnings growth, and consistent revenue streams.

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