The company has a strong orderbook of about RM2.5bwhich is expected to be fully recognised within the next 10 years

by M JAY SHEILA / pic source: t7global.com.my

T7 GLOBAL Bhd has been recommended to a ‘Buy’ at Mercury Securities Sdn Bhd, with a 52-week target price of 61 sen, for its attractive expansion and diversification plans.

In a note released today, Mercury Securities noted that the company has a strong orderbook of about RM2.5 billion which is expected to be fully recognised within the next 10 years.

It added that the company also has a tender book of approximately RM2 billion and a tender success rate of about 30% that if successful, will strengthen its orderbook.

Going forward, it said the company expects more plug and abandon (P&A) jobs due to spending by Petroliam Nasional Bhd to plug and abandon more wells in the near future, noting that the Hibiscus 1 P&A and three workover wells are expected to contribute about RM100 million to revenue every year in 2023 and 2024.

The report noted that T7 Global’s mobile offshore production unit (MOPU) projects present a growth catalyst.

It said about three years ago, the company secured a MOPU leasing contract from Petronas Carigali Sdn Bhd for Bayan Gas Phase 2 redevelopment, which is expected to contribute positively to revenue in 2H23 and will provide earnings visibility for the next 10 years.

In 2022, it said the company secured the Nong Yao MOPU project which is currently under construction and is expected to be fully operational and contribute positively to revenue by the first quarter 2024 (1Q24). This project is expected to provide earnings visibility for the next five years.

“Moving forward, we expect the engineering, procurement, and construction (MOPU) and intelligent well system (IWS) segment to be the main revenue drivers for the company’s energy division,” according to the report.

The company, managed by CEO Tan Kay Zhuin along with a key senior management team with more than 20 years of experience in the oil and gas industry, has recorded a two-year revenue compound annual growth rate (CAGR) of 38.9% from FY20 to FY22, the report added.

At 12.30pm lunch break today, the stock was trading at 42 sen, with 189,300 exchanging hands for the first half of the day.